News Column

Index chairman Ochiai arrested over false earnings report

May 27, 2014

Tokyo prosecutors Wednesday arrested Chairman Masami Ochiai and President Yoshimi Ochiai of bankrupt mobile game maker Index Corp. for their alleged falsification of the firm's earnings report.

They are suspected of having overstated sales to produce a net profit of 240 million yen for the year to August 2012, despite the company being actually insolvent at the time with a net loss of some 600 million yen after remaining in the red for five years on end.

Index is alleged to have carried out circular transactions with trading partners to artificially inflate their sales.

Before the arrest, chairman Ochiai had denied the allegation in an interview with Kyodo News. President Ochiai, 48, is the wife of chairman Ochiai, 54.

Index, founded in 1995, filed for bankruptcy protection with the Tokyo District Court under the civil rehabilitation law late last June after its financial profile deteriorated due to the failure of its creditor, the Incubation Bank of Japan, in 2010.

Before the filing, the Securities and Exchange Surveillance Commission raided the company's Tokyo head office and chairman Ochiai's house over the suspected scheme to overstate sales.

Last month, the court cancelled rehabilitation procedures for Index, leading the company to launch bankruptcy procedures. The firm has already sold its business operations.

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Source: Japan Economic Newswire

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