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KDDI, one of Japan’s big three telecoms providers, said that as much as ¥246bn ($1.5bn) of revenue came from fictitious transactions, marking the latest scandal for a leading Japanese company.
The telecoms group postponed the release of its third-quarter results on Friday because of an ongoing probe into “suspicions regarding inappropriate transactions” at its subsidiaries Biglobe and G-Plan, which provide internet connections and advertising services.
It added that it “confirmed suspicions that employee(s) of the subsidiaries executed fictitious transactions in the advertising agency business, despite there being no actual advertisers”.
The fraudulent transactions have been confirmed to span across three financial years and could impact the group’s operating income by ¥50bn.
KDDI, whose flagship mobile brand is au, identified that about ¥33bn of funds were sent to external parties as agency fees as part of the scheme of fictitious transactions.
The scandal follows a probe into improper accounting at a subsidiary of Nidec, the world’s largest motor manufacturer, which faced a warning that it could be delisted, and Chubu Electric, which fabricated seismic data for a nuclear plant that it was hoping to reopen.
The lapses come as the Tokyo Stock Exchange has been seeking to overhaul the level of corporate governance in the Japan market to attract overseas investors and enhance the value of its companies.
KDDI first disclosed the issue to the market last month, after realising that revenue figures may have been overstated.
As a result, it set up a special investigation committee chaired by legal professionals and certified accountants, which is due to complete its report by the end of March.
Chief executive Hiromichi Matsuda said in a press conference lasting almost two hours that “this incident has seriously damaged the credibility of KDDI as a whole”.
