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3 accountants plead guilty in Kanebo window-dressing case.

TOKYO, March 30 Kyodo

Three certified accountants who formerly worked for ChuoAoyama PricewaterhouseCoopers pleaded guilty Thursday to playing roles in falsifying the financial statements of Kanebo Ltd., once a leading textile and cosmetics firm, in conspiracy with the company's executives in fiscal 2001 and 2002.

The three are Kuniaki Sato, 63, Seiichiro Tokumi, 58, and Kazutoshi Kanda, 56. They were working at the Japanese unit of the PricewaterhouseCoopers group of the United States at the time when Kanebo's books were cooked.

The three said at the day's hearing in their trial at the Tokyo District Court that there are ''no doubts'' about the allegations.

According to the indictment, the three conspired with former Kanebo President Takashi Hoashi, 70, and former Vice President Takashi Miyahara, 64, to falsify Kanebo's financial results and submit the falsified statements to the Kanto Local Financial Bureau of the Finance Ministry in violation of the Securities and Exchange Law.

Sato and Kanda were involved in Kanebo's covering up a capital deficit of 81.9 billion yen in fiscal 2001 and 80.6 billion yen in fiscal 2002 on a consolidated basis and issued falsified financial statements showing excess assets, while Tokumi played a role only in falsifying the fiscal 2001 financial report, according to the indictment.

Prosecutors said at the trial that Sato and Tokumi had long overlooked illicit accounting by Kanebo, and were concerned that they would be held responsible for this if Kanebo failed.

The prosecutors also said that Kanda had not been able to oppose the cooking of the firm's books.

On Monday, the Tokyo court sentenced Hoashi to two years in prison, suspended for three years, and Miyahara to 18 months in prison, also suspended for three years, for falsifying the financial statements.

The court also recognized that the Kanebo executives had conspired with the three accountants in its Monday judgment.

Kanebo was delisted from the Tokyo Stock Exchange last June after an in-house panel concluded that former members of its management had engaged in accounting fraud, extending loans to affiliates under unreasonable terms.

Kanebo underwent restructuring under the government-backed Industrial Revitalization Corp. of Japan.

It has pulled out of the textile business, and its cosmetics division, Kanebo Cosmetics Inc., has been spun off to enable the company to concentrate on pharmaceutical products, foods and sundries. Household products maker Kao Corp. has acquired Kanebo Cosmetics.

A group of domestic investment funds consisting of Advantage Partners Inc., MKS Partners Ltd. and Unison Capital Inc. has been selected as a new sponsor and is seeking to make Kanebo a wholly owned subsidiary.
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Publication:Japan Weekly Monitor
Date:Apr 3, 2006
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