Fraud at Nidec: Failure of Nagamori’s Charismatic Management Style

Editorial

17:19 JST, March 13, 2026

This incident appears to mark the failure of one of Japan’s most charismatic business leaders. Under his leadership, which drove the company’s rapid growth, accounting fraud was rampant to an astonishing degree.

Major motor maker Nidec Corp. has released a third-party committee’s investigation report that confirmed numerous accounting irregularities in many parts of the company.

Nidec failed to report losses on valuation of products that continued to be manufactured despite dwindling sales prospects. To inflate profits, it also reportedly delayed expense recognition.

The company is facing an enormous impairment loss, which is estimated at about ¥250 billion. Nidec also provided false explanations to its auditor and concealed relevant documents. It is fair to say that trust from investors has been lost.

This accounting fraud could constitute falsification in securities reports. The third-party committee must continue to conduct its investigation thoroughly.

It is only natural that Shigenobu Nagamori resigned as honorary chairman and four other executives, including the chairman who was a founding member, also stepped down from their positions.

Nidec’s predecessor, Nippon Densan Corp., was founded by Nagamori in 1973. As the Japanese economy entered an era of low growth, the management of many companies became defensive. Amid these circumstances, Nagamori instead drove his company to achieve high growth through actively pursuing mergers and acquisitions, earning a reputation as a charismatic leader.

The third-party committee has found no evidence that Nagamori directly orchestrated the misconduct, but it concluded he “should bear the greatest responsibility.” The fact that improper accounting practices were allowed to become widespread under his leadership is problematic.

The investigation report pointed to pressure from Nagamori, who relentlessly pursued growth. It also mentioned numerous harsh statements made by him.

Nagamori cornered executives who failed to meet performance targets, harshly reprimanding them with such statements as “You are all a bunch of irresponsible bastards with zero motivation,” and “You should be ashamed of yourselves.”

Such pressure cascaded down to Nidec’s division chiefs and executives of the company’s subsidiaries, leading to the proliferation of accounting fraud in order to make it appear as if the company achieved its desired figures. Nagamori must take the third-party committee’s findings seriously.

Nidec’s sales surpassed ¥1 trillion, which had been a goal since the company’s founding, in fiscal 2014, and then ¥2 trillion in fiscal 2022, achieving milestones one after another. Amid this rapid growth, oversight bodies, such as an audit panel and outside directors, failed to fulfill their functions.

It appears the company completely failed to keep up in developing a governance structure commensurate with its scale.

In Japan, corporate governance reforms gained full-fledged momentum in 2015. But even afterward, fraudulent practices at major companies, such as Toshiba Corp. and Nissan Motor Co., have continued unabated. Business leaders must take to heart that merely cosmetic governance reforms are meaningless.

 (From The Yomiuri Shimbun, March 13, 2026)