Japan-based Daio Paper still reeling from losses suffered largely because of former chairman's illicit loans, for which the company has taken a special write-off of 4B yen; Daio top executives face 30% cut in bonuses over scandal

LOS ANGELES , May 21, 2012 () –

Daio Paper Corp. is still suffering from illicit loans to the Japanese company’s former chairman, recently releasing its financial results showing a loss for the second consecutive year, reported The Mainichi Daily News on May 19.

The Japanese papermaker wrote off approximately 4 billion yen (US$50.4 million) related to loans that Mototaka Ikawa used for gambling and might never repay. Ikawa, who is the grandson of the company’s founder, has been indicted for breach of trust for borrowing 5.53 billion yen from group companies.

Blaming themselves for the losses, President Masayoshi Sako and other Daio Paper executives might see their bonuses slashed by 30% in fiscal year 2012, according to Daio Paper, The Mainichi Daily News reported.

When Daio Paper’s founding family left the company in the aftermath of the scandal, the number of group companies fell to 19 from 37. This trimmed the company’s pretax profit by about 2.2 billion yen. The founding family has held majority stakes in a number of subsidiaries.

The company also plans to replace its auditor with PricewaterhouseCoopers Aarata when the contract with Deloitte Touche Tohmatsu LLC expires in June. Deloitte fell short in its investigation of Ikawa’s illicit borrowing, reported The Mainichi Daily News.

In releasing its financial results on May 18, Daio Paper said that the group’s net losses in fiscal 2011 totaled 5.32 billion yen. Pretax and operating profit figures were down by 16.2% and 21.6%, respectively, for the business year ended March 31.

Daio Paper expects to stop the losses in fiscal 2012, with a projected 2.2% increase in profit to 5 billion yen on sales of 418 billion yen, reported The Mainichi Daily News.

The primary source of this article is The Mainichi Daily News, Tokyo, Japan, on May 19, 2012.


 

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