Japan's NEC Corp admitted on May 29 that some of its employees had engaged in bogus deals worth 2.2 billion yen (18 million dollars) and received kickbacks from subcontractors.
The discovery was made by the Tokyo Regional Taxation Bureau, which determined that the electronics giant had paid insufficient taxes as a result of the faked orders to subcontractors, NEC said in a statement.
Ten employees of the group are accused of padding orders and obtaining some 500 million yen in kickbacks over seven years which they used as a slush fund for wining and dining, it added.
NEC said it would consider filing criminal charges and a compensation claim against the employees. "The company is taking punitive measures against those found in an internal probe to be involved in the illegal deals," the statement said.
"It is regrettable that such illegal deals occurred when companies are required to further strengthen legal compliance and strictly control employees," it added.
It is the second high-profile case of fraudulent activities in just over a year at NEC, which last March said a manager at its engineering subsidiary inflated sales by 36.3 billion yen over several years for personal gain.
The electronics maker said its earnings would not be affected by the discovery. Investors shrugged off the announcement, with the price of NEC shares closing up four yen or 0.64 percent at 625 yen.
NEC said last week that it returned to black in the past year and forecast net profit will more than triple this year as its IT business recovers and the company benefits from restructuring.