A former president and vice president of Kanebo Ltd. both pleaded guilty Wednesday at the Tokyo District Court to falsifying financial statements.

Takashi Hoashi, 69, the former president, and Takashi Miyahara, 63, the former vice president, covered up a capital deficit of 81.9 billion yen in fiscal 2001 and 80.6 billion yen in fiscal 2002 on a consolidated basis, and issued falsified financial statements showing excess assets in violation of the Securities and Exchange Law.

The two admitted to the charges.

Prosecutors said in their opening statement the two falsified financial statements "to maintain their positions and the company's financial credit" because they thought the announcement of a capital deficit would lead to Kanebo's failure and their resignations.

The two allegedly collaborated with four certified public accountants at ChuoAoyama PricewaterhouseCoopers, a Japanese partnership of the PricewaterhouseCoopers group, in the accounting fraud.

Three of the four accountants were indicted over their involvement in the fraud.

During the opening statement, the prosecutors read out a confession by the accountants, in which they said they helped Kanebo falsify the financial statements to cover up the company's past window-dressing and to avoid responsibility for their involvement in the fraud.

Kanebo was delisted from the Tokyo Stock Exchange in June after an in-house Kanebo panel concluded that former management had engaged in accounting fraud by extending loans to affiliates under unreasonable terms.

Kanebo, once a leading textile and cosmetics company, is currently undergoing restructuring under the government-backed Industrial Revitalization Corp. of Japan.

It has pulled out of the textile business and its cosmetics division has been spun off to enable the company to concentrate on pharmaceutical products, food and sundries.