Nidec Accounting Scandal: Time to Break With 'Charismatic Management'

Multiple cases of suspected accounting irregularities have surfaced at motor manufacturer Nidec Corporation, formerly known as Nippon Densan Corporation. The company has now released the findings of an investigation conducted by an independent third-party committee.

In its findings, the committee concluded that the root cause of the accounting misconduct was "excessive pressure to deliver results." It traced that pressure to the company's founder, Shigenobu Nagamori, saying it stemmed from "unrealistic performance targets that were set, and the extremely strong pressure applied to achieve them."

A Clean Break

The committee said it found no evidence that Nagamori directly ordered or led the accounting misconduct. Nevertheless, it concluded that Nagamori bore the greatest responsibility.

Nagamori had already stepped down in December 2025 from his post as chairman and CEO of the global group. At the end of February, he also relinquished his position as chairman emeritus.

Still, if Nidec is to regain public trust, it must show that it has fully broken with a management structure dependent on Nagamori. The company needs to introduce a robust framework with outside directors and others to oversee and provide checks and balances on its top management.

Its accounting irregularities may also constitute violations of the Financial Instruments and Exchange Act. Nidec must move urgently to put in place measures to prevent a recurrence of such accounting misconduct.

*Kaku Hirao (center), head of the third-party committee investigating Nidec's accounting scandal, speaks at a press conference on March 3. (©Sankei by Masahiro Sakai)*

Charismatic Leadership and Its Risks

Nagamori founded Nippon Densan in 1973. He aggressively expanded the company through mergers and acquisitions, building it single-handedly into a global company with more than ¥2 trillion JPY ($12.6 billion USD) in consolidated sales. That track record earned him a reputation as a "charismatic manager."

But the report also catalogs language from Nagamori that bordered on power harassment. In emails and memos to senior executives, he used unusually harsh language. Among other things, he wrote, "Every single one of you is lazy and irresponsible," and, "Are you going to run away and leave me with nothing but losses?"

The report depicts a company in which fraudulent practices became routine under Nagamori's relentless pressure to meet targets. Losses that should have been recognized were left unbooked, and the recording of expenses was postponed.

Accounting scandals involving top management have surfaced before at companies such as Olympus and Toshiba. These cases show how difficult it is to stop misconduct when it involves a chief executive wielding near-absolute authority.

Do companies have adequate systems in place to properly oversee top management? Nidec should also serve as a cautionary lesson, one that many businesses would do well to take to heart.