June 23, 2023
Kobelco Construction Machinery Co., Ltd.
The purpose of this news release is to inform you of the discovery of misconduct (the “Misconduct”) committed by a former director (the “Former Director”) of Sasainakamura Co., Ltd. (the “Subsidiary”), which is a subsidiary of Kobelco Construction Machinery Co., Ltd. (“KCM”).
It is truly regrettable that such an incident has happened, and we would like to offer our deepest apologies to our clients and stakeholders for the tremendous inconveniences and a great deal of concern that may result from the incident.
It has been confirmed that, between 2007 and 2022, the Former Director repeatedly committed misconduct in which he placed a fictitious order to a vendor for construction work, with which he had had a relationship, siphoned the Subsidiary’s money in the name of contracted service charge, funneled a part of the paid amount back to himself, then used it for entertaining clients or pocketed it. As of now, an outflow of about 1.2 billion yen has been confirmed.
Upon discovery of the Misconduct, KCM and the Subsidiary immediately appointed an outside attorney and conducted an internal investigation. To recover the damage incurred by the Subsidiary and to clarify accountability, we are working on taking legal proceedings including a criminal complaint against the Former Director as well as outside parties who cooperated in the Misconduct.
In response to the Misconduct, KCM Group will not only put effort into reviewing its purchasing and ordering operations and into enhancing its internal control for recurrence prevention, but it will also improve the effectiveness of its internal audit to ensure control.
Furthermore, it will work on organizational restructuring in order to create workplaces with more open communications and to implement a corporate culture reform.
Again, it is truly regrettable that such an incident has happened. We take it very seriously and dedicate ourselves to recovering the trust by further enhancing our compliance framework and ensuring thorough observation of relevant laws and regulations.
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*The information contained herein is as of the date this announcement was made and it may be changed without prior notice.
