Misconduct at Nidec: Will Nagamori be able to avoid giving an explanation?

An investigative report has uncovered 844 instances of quality-related irregularities at Nidec Corp., a major Japanese motor manufacturer. Founder Shigenobu Nagamori's leadership style appears to have been a significant factor in the company's problems. According to the report, misconduct spread from the accounting department to the manufacturing floor.

The company is accused of falsifying product inspection data and reusing unfit parts without customer approval. While the company claims there are no current safety concerns, quality is crucial for manufacturers, and these issues cannot be ignored. Despite not being directly instructed by Nagamori or other management, the company culture fostered under his leadership encouraged a mindset among employees that such irregularities were inevitable.

Senior executives reportedly imposed unreasonable demands on frontline staff, creating an environment where fraud could flourish. If problems were reported, it might have led to production halts, shipment rejections, or financial losses, causing staff to fear accountability and be silent about issues. To avoid further misconduct, the company must prioritize quality, change its corporate culture, and ensure the independence of its quality assurance department.

Currently, Nidec's stock is designated as a "Security on Special Alert" by the Tokyo Stock Exchange. If the company fails to improve its internal control systems by the end of October, it risks delisting, and its situation may worsen. Notably, Nagamori, a charismatic business leader, has not publicly addressed these widespread allegations, despite being the one who shaped the company's culture.