Death clouds fraud investigation at Apple display supplier
Japan Display Inc. (JDI), a supplier of LCDs to Apple, has amassed several years of financial losses – as well as debts to Apple. Apple has gradually been turning away from LCDs for its smartphone products but still uses them in lap-top computers. JDI has been the subject of a complex 2019 bail-out plan that is thought to include Apple, without which the company has said it may have to close.
The allegations of fraud came from a former employee who was dismissed from the company at the end of 2018 for theft. The employee faced criminal charges that he stole money by authorising payments to fake companies for non-existent outsourcing work. The estimated damage to JDI was previoulsy given by JDI as JPY578 million (about US$5.3 million).
This is a relatively small amount and suggested that the administrative official worked alone.
In a statement JDI said the former employee had subsequently told the company he was acting under instructions from senior management when he was at JDI. JDI responded to this by saying it would set up a committee with independent members to investigate the accounting of the company’s finances.
Next: “I apologize with my death.”
The dismissed former employee was found unconscious at a Tokyo hotel on Friday November 29 and died at hospital, according to local reports. One report said the fired employee left a note saying: “I apologize with my death.”
One possibility is that the misrepresentation of JDI’s accounts could be greater than the impact so far identified. If so it could have echoes of the accounting scandal that occurred at Toshiba Corp. between 2009 and 2014 and eventually resulted in the resignation of senior Toshiba management in 2015.
JDI changed its senior management team in September 2019. In particular Yoshiyuki Tsukizaki, formerly CEO, and Sadahiro Numazawa, formerly chief operating office, left their posts and stood down from the board of directors.
“JDI will fully cooperate with the investigation by the Special Investigation Committee and intends to proceed the investigation promptly. In addition, JDI will promptly disclose the facts revealed as a result of the investigation by the Special Investigation Committee as soon as we receive the investigation report,” JDI said in a statement.
JDI had been informed by China’s Harvest Tech Investment Management Co. Ltd. that US$100 million out of the expected investment would be secured by receiving relevant support from JDI’s customer – thought to be Apple. On September 26, 2019, JDI received a letter from “the customer” stating that “the customer” intends to invest US$200 million in JDI.
JDI was formed in 2011 by Innovation Network Corporation of Japan (INCJ), which financed the merger of the LCD divisions of Sony, Toshiba and Hitachi into one entity by investing two hundred billion yen (about US$1.84 billion).
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