Amid reports that its accounting practices are under investigation by Japanese regulators, Sanyo Electric disclosed that it may restate its earnings, reported the Associated Press.
A Sanyo spokesman told the AP that board members at the electronics giant agreed to consider a “revision and correction” of unconsolidated results for the four fiscal years ending March 2004. “But it’s not a final decision yet,” he reportedly added, “and we don’t know when the correction will be released.”
Last Friday, the company acknowledged that it was being investigated by Japan’s Securities and Exchange Surveillance Commission, according to the AP. Noboru Takayama, a spokesman for the regulator, told the AP that it does not comment on ongoing cases. The company stated that it was cooperating fully.
Company spokesman Ryo Hagiwara, however, would not confirm a Japanese newspaper report that Sanyo may have falsified its fiscal 2003 earnings report, according to the AP.
Japanese media have accused Sanyo of underestimating $1.56 billion in unconsolidated losses on its stockholdings in subsidiaries for the fiscal year ended March 2004, reported the AP. Those media have also reportedly alleged that Sanyo postponed the write-down of most of its subsidiaries’ losses until the following two years. Financial Services Minister Yuji Yamamoto said Sanyo might face penalties if the reports were true, the wire service also noted.
The Sanyo investigation follows news of questionable accounting practices at several other Japanese companies. According to the AP, machinery giant Komatsu stated last week that it was being probed by securities authorities and may be fined for violating insider trading laws in a 2005 share buyback; former executives at Internet services company Livedoor are now on trial for falsifying earnings; and in December, brokerage giant Nikko Cordial was fined by securities authorities for manipulating profits.
“What is going to weigh on people’s minds is whether all this can snowball into a Japanese Enron,” Motomi Hiratsuka, head of sales trading at BNP Paribas, told Dow Jones Newswires.