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NEC worker faked purchases, inflated sales

Posted: 27 Mar 2006     Print Version  Bookmark and Share

Keywords:Spencer Chin  NEC Corp.  faked business deals  inflated sales 

NEC Corp. has launched an internal probe after finding that an employee at its engineering unit allegedly faked business deals and inflated sales by Rs.1,371.75 crore ($310 million) over half a decade, according to an online Business Week report.

For the current fiscal year ending in March, the amount of inflated sales at NEC Engineering Ltd is estimated at Rs.502.68 crore ($113.6 million) on an operating income inflated by Rs.351.79 crore ($79.5 million), the Tokyo-based company was quoted as saying in a statement.

According to the report, NEC said it has set aside funds to cushion any possible negative impact and does not expect the problem to have a big influence on earnings.

The fictitious purchases and sales, which ran from 2001 to Dec. 2005, are believed to be the product of only one employee, and the company reportedly said it failed to initially detect the problem because "it did not fully confirm all the details" of the transactions.

NEC disclosed that it will file a criminal complaint against the employee, who allegedly embezzled money from the transactions, according to the report. The falsified earnings come as NEC battles a drop in profits due to increased competition in the chip and mobile phone industry.

- Spencer Chin
EE Times

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