On March 14, 2007, Seiko Instruments Inc. (SII) filed a civil lawsuit against Mr. Junichi Hattori with the Tokyo District Court. The basis for the lawsuit is that during his service as SII Chairman, Mr. Hattori illegally obtained approximately 100 million yen from SII, by increasing the cost for land acquisition in Thailand.
At the November 16, 2006, SII board meeting, Mr. Hattori was removed from his position with the company due to questionable management decisions. Following his removal, his actions as Chairman were investigated and some improper operation was uncovered.
In July 2005, Mr. Hattori managed the acquisition of a plant site in Thailand. The site was purchased by J. Hattori Co., Ltd. (51% local capital and 47% investment by Mr. Hattori) and was then resold to SII through Seiko Instruments (Thailand) Ltd. (SIT).
Mr. Hattori increased the acquisition cost of the site to SIT, and SIT then transferred the increase to J. Hattori Co., Ltd. The lawsuit contends that the balance between the reported cost and the actual cost, 100 million yen, was illegally obtained by Mr. Hattori and was transferred to his personal bank account in Thailand.
In December 2006, SII sent a formal written request to Mr. Hattori and asked for his written explanation. However, Mr. Hattori failed to respond. In addition to significant financial damage, SII also recognized that his actions were deliberate and premeditated, and decided to file the lawsuit.
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