Sanyo's Chairwoman Resigns Amid Accounting Probe

March 19, 2007
Departure could be result of power struggle.

Japan's Sanyo Electric announced March 29 the resignation of its chairwoman Tomoyo Nonaka, one of Japan's top female executives, as it grapples with big losses and allegations of window dressing. The company said in a statement that Nonaka -- a former journalist -- had resigned for personal reasons, but local media said she had quit because of the Sanyo board's refusal to fully probe suspected accounting irregularities. Analysts said her departure reflected a three-way power struggle between Nonaka, 52, president Toshimasa Iue -- a member of Sanyo's founding family -- and its large investment bank stakeholders.

"I think that there was conflict among the management, between those who climbed up Sanyo's ladder, those who came from outside and those from financial organizations," said Fitch Ratings electronics analyst Tatsuya Mizuno. "Nonaka brought forth new ideas, but she had very little experience concerning electronics. I think she lacked business experience as well as internal support from the company," Mizuno said.

Last year Sanyo issued $2.6 billion worth of new shares to Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking, which together took five of the nine seats on Sanyo's board. Analysts said that ever since it has been the banks who have wielded the real power at Sanyo -- not Nonaka, whose appointment in 2005 made her one of just a handful of top female company executives at major companies in Japan.

The former television anchorwoman submitted her resignation after her calls for a full in-house investigation were rejected by the board, the Nikkei business daily reported earlier. Sanyo said last month that it would review its past earnings and might correct its unconsolidated results for the four financial years up to March 2004, after Japan's securities watchdog launched a probe into its accounts.

According to earlier media reports, the company is suspected of underestimating 190 billion yen (US$1.62 billion) in unconsolidated losses on its stockholdings in subsidiaries for the business year to March 2004, postponing the write-down of most of the losses.

But Sanyo spokesman Akihiko Oiwa denied that Nonaka had quit because of disagreement over how to respond to the window dressing allegations. "I don't think it was the direct cause of her resignation. She and the board members must have agreed on the policy to launch an in-house investigation panel," Oiwa said.

Copyright Agence France-Presse, 2007

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