Ebara Corp., a maker of hydraulic pumps, said Friday one of its auditors claimed an investigation of a managing executive's use of funds was insufficient and refused to approve its financial statements.
The auditor said he had "doubts" about the documents, the Tokyo-based company said in a release to the Tokyo Stock Exchange. The firm on Dec. 17 said its investigation concluded the executive made ¥320 million in improper payments between May 2004 and July 2006. Ebara said it continues to seek damages from the executive.
"The directors have not disclosed information necessary for the investigation to me," the company quoted the auditor, Yoshio Omori, as saying. "Therefore, I assume that there exists a violation of laws and regulations."
Ebara proposed that shareholders approve the financial statements, saying it believes the probe was sufficient.
"It's rare for an internal auditor to not approve a company's financial report," said Fujio Ando, who manages Asian equities as managing director at Chibagin Asset Management Co. in Chiba. "Based on the company statement alone, it's hard to tell whose claim is correct."
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