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2ND LD: Ex-Kanebo president, 2 former execs arrested for window dressing.

TOKYO, July 29 Kyodo


Tokyo prosecutors arrested a former Kanebo Ltd. president and two other former executives Friday on suspicion of submitting falsified financial statements to financial authorities in violation of the Securities and Exchange Law.

Takashi Hoashi, 69, Takashi Miyahara, 63, a former vice president, and Kenzaburo Shimada, 59, a former executive in charge of financial affairs, allegedly covered up more than 70 billion yen in capital deficit and 5.7 billion yen in net deficit on a consolidated basis in fiscal 2001 and fiscal 2002 and submitted falsified financial reports, investigative sources said.

The Tokyo District Public Prosecutors Office searched Hoashi's and Miyahara's houses, both located in Tokyo's Setagaya Ward, and ChuoAoyama PricewaterhouseCoopers, a Tokyo-based auditing board, which audited Kanebo's financial statements.

Hoashi allegedly ordered senior accounting division staff to falsify the books saying, ''Our company employees will lose their jobs,'' the sources said.

Based on Hoashi's demands, Miyahara and Shimada ordered the accounting division to falsify the books including by inflating sales and underreporting expenses.

The allegations came to light in an in-house investigation after the company asked the Industrial Revitalization Corp. of Japan, the public bailout body, to help revive its operations in March last year.

In April, the household products maker said it had falsified statements to show it was in the black despite posting a consolidated loss of 26.1 billion yen in fiscal 2001 and 21.8 billion yen in fiscal 2002.

The company had a negative net worth on a consolidated basis for nine years, from fiscal 1995 through fiscal 2003.

''We will fully cooperate with the investigative authorities to clarify the details of the allegations and will do our utmost to retain public trust,'' Akiyoshi Nakajima, a Kanebo executive, said after the arrests.
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Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:Aug 1, 2005
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