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November 27, 2007 |
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SANYO ELECTRIC: Cooked Books to Pay Dividend, Sources Say Sanyo Electric Co. may have paid dividends to shareholders in fiscal 2003 and earlier years despite a lack of funds, Japan Times says, citing sources close to the matter. The sources told Japan Times that the Securities and Exchange Surveillance Commission might recommend that the Financial Services Agency fine Sanyo over accounting irregularities in accordance with a stricter regulation on surcharges introduced in December 2005. The report explains that the SESC has been probing Sanyo Electric on suspicion of fabricating financial statements. Sanyo, the sources said, is suspected of paying out a per-share dividend of JPY6, for a total of JPY11.1 billion, both in fiscal 2002 and fiscal 2003. The total amount exceeded the reserves usable for dividend payments, Japan Times says. The report points out that it is illegal for a company to pay a dividend when it does not have surplus funds. However, the sources told Japan Times, Sanyo inflated profits by understating appraisal losses on its shareholdings in struggling subsidiaries. The SESC might view the move as misleading investors, the sources added. Sanyo is said to have underestimated the losses thinking the units' earnings would recover. According to the SESC, Sanyo's net profit for FY2002 and FY2003 would have been significantly lower and left it devoid of enough resources to pay a dividend had the losses been processed appropriately, the sources further said. Sanyo Electric is expected to submit corrected reports for the six years through March 2006 to the Kanto Local Finance Bureau in December, Japan Times relates. About Sanyo Electric Headquartered in Osaka, Japan, Sanyo Electric Co., Ltd. -- http://www.sanyo.com/ -- is one of the world's leading manufacturers of consumer electronics products. The company has global operations in Brazil, Germany, India, Ireland, Spain, the United States and the United Kingdom, among others. * * * In March 2, 2007, Fitch Ratings placed SANYO Electric Co. Ltd.'s BB+ long-term foreign and local currency issuer default and senior unsecured ratings on rating watch negative. |
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