Sanyo Electric Co.’s has finally admitted that authorities are investigating its accounting practices, which sent its share price down by almost a third at one point. The fresh probe against the company could be a major blow for Goldman Sachs Group Inc. and other large investors in the company.
The Osaka-based electronics company has stated that it has been approached by the Securities and Exchange Surveillance Committee about its past accounting. The struggling Japanese electronics maker Sanyo came under investigation for allegedly fraudulent accounting to cover up losses.
The recent development is certainly not good news for the investors in the company. Last year in January, 2006, Goldman Sachs combined with Sumitomo Mitsui Financial Group and Daiwa Securities SMBC had invested around $2.6 billion in return for preference shares and five seats on the board of Japanese electronics company Sanyo. The deal provided Goldman and Daiwa SMBC, both of which invested just over $1 billion, a stake that can be converted after mid-March into 24.5 percent of the company’s equity.
In the meanwhile, the Japanese financial authorities launched an investigation into Sanyo’s accounting practices, sending shares in the electronics giant tumbling drastically and sparking fears of a ‘Japanese Enron’. The investigation could hamper the turnaround effort at Sanyo, which is projecting a third straight year of losses.
