Cosmetics maker in major accounting fraud
inflating profits by about $2 billion over the five-year period to
March 2003, in what could be Japan's largest accounting fraud
involving a non-financial firm.
Releasing corrected financial reports, Kanebo said that it had reported consolidated net losses in all five years from 1999 to 2003, ranging from 16.2 billion yen in 2000 to 142.1 billion yen in 2003. The company initially reported that it had made net profits in four out of five years.
Shares in Kanebo fell 13 per cent on Wednesday to close at a four-month low.
The restatement of earnings could see Kanebo's share listing on the Tokyo Stock Exchange being reviewed.
But group is currently undergoing restructuring by the government's Industrial Revitalization Corp, which last year split off Kanebo's cosmetics business and sought buyers for electronics and textiles assets.
However in a statement it said: "The revision is related to inappropriate management practiced by Kanebo in the past. Kanebo now has an appropriate management system in place."
Kanebo said there would be no change to its forecasts for the past fiscal year. The firm has forecast profits of $2.92bn for the 12 months to 31 March.
