NYK: Impact of Embezzlement Case in Chinese Subsidiary Minimal
The impact of the embezzlement case in NYK Car Carrier China on Nippon Yusen Kabushiki Kaisha’s (NYK) consolidated financial results will be minimal, the company said following an investigation into the matter.
NYK explained that the “inappropriate accounting” by former locally-hired management personnel from its Shanghai-based subsidiary engaged in finished car logistics would not require any changes to be made to the previous consolidated results, including those for the nine-month period ending December 2017.
“Furthermore, it is estimated that the amount which may be influenced in the future due to the above tax reassessment is approx. RMB 53.4 million (approx USD 8.4 million) and the entire amount of this is scheduled to be reflected in the financial results for the year ending in March 2018,” NYK added.
The Japanese shipping giant reported the case in February 2018, saying that an investigation had been launched into suspected “unlawful expenditure” being committed from 2013 to 2017.
The investigation report revealed, among other things, that approx. RMB 47.4 million (USD 7.5 million) was paid from NCCC in the name of service fees for services which had never been provided, in addition to the payment of around USD 500,000 for an “unnecessary and inappropriate agreement”.
The misappropriated money by the former management would be difficult to collect, according to NYK, hence the company estimates around USD 8.4 million in additional taxes and penalties arising from the case.
The investigation is being reported on the back of a USD 486.6 million fine imposed on maritime car carriers by the European Commission.
These include Chilean maritime carrier CSAV, the Japanese carriers “K” Line, MOL and NYK, and the Norwegian/Swedish carrier WWL-EUKOR, which participated in a cartel concerning the intercontinental maritime transport of vehicles.
NYK, which was fined EUR 141.82 million (USD 175 million), explained that it had already recognized USD 186 million as provision for the fines in its nine-month report ending December 31, 2017.
Hence, the company doesn’t expect to be impacted by the fine when it announces results for the fiscal year ending March 2018.
World Maritime News Staff