Japanese motor maker Nidec confirmed on May 13 it identified suspected improper conduct involving unauthorized changes to materials, processes, and designs in quality control, affecting more than 1,000 cases [1, 2]. The company is preparing for impairment charges of ¥250 billion (about RM6.23 billion) linked to the irregularities [1].
Nidec shares fell sharply, dropping up to 18% in Tokyo following the announcement and hitting the daily limit down for the day [1, 2]. The stock has also been removed from the Nikkei 225 and Topix indexes, with the Tokyo Stock Exchange warning potential delisting if management issues persist [1].
Founder Shigenobu Nagamori resigned amid the ongoing scandals, which have included bookkeeping irregularities since last year at subsidiaries in Italy, Switzerland, China, and the company’s automotive electric-motor inverter unit [1]. Oasis Management Co, which holds a 6.74% stake in Nidec, has called for governance reforms at the company [1].
Nidec said it will conduct a comprehensive quality inspection and set up an investigation committee composed of external experts to probe the extent of the tampering [1, 2]. Citigroup analyst Takayuki Naito said, "If the quality tampering allegations prove true, Nidec could face additional cost increases and revenue declines" [1].
The company announced the suspected improper conduct and plans for the external expert investigation on May 13 [1, 2]. The next concrete development will be the outcomes from the newly established investigation committee and the results of the comprehensive quality inspections.
