Auto parts execs forgo pay after price fixing case

AP News
Posted: Sep 29, 2011 10:27 PM
Auto parts execs forgo pay after price fixing case

The Japanese auto parts company pleading guilty to price-fixing in the U.S. promised to prevent a recurrence Friday, with its top executives returning part of their pay in a sign of remorse.

Furukawa Electric Co. said it has been cooperating fully with U.S. authorities. It concluded an agreement Thursday with the U.S. Justice Department to plead guilty and pay a $200 million fine on charges of taking part in a cartel with rivals in the U.S. for wiring for vehicles. Three Furukawa executives will serve prison sentences.

Chairman Hiroshi Ishihara and president Masao Yoshida are returning 50 percent of their pay for three months, according to the company. Two other senior executives, Masahiro Yanagimoto and Suguru Shinozaki, are returning 30 percent and 25 percent of their pay for three months.

Toshinori Kimura, a company spokesman in Tokyo, said several price-fixing cases had surfaced at Furukawa Electric about three years ago in Japan.

The company concluded an internal investigation in late 2009, including group companies and outside legal counsel, to stamp out the problem, and remains committed to compliance with laws around the world to regain public confidence, he said.

Kimura said the latest U.S. move was for past price-fixing that was stopped when the company put measures in place after its 2009 investigation.

The Justice Department says Furukawa conspired with other cartel members to fix prices of wiring harnesses, or groups of wires that link brakes, transmission and other parts in a car, for 10 years starting in January 2000.

Three Furukawa executives, all Japanese, who pleaded guilty to roles in the cartel, will serve prison time in the U.S. ranging from a year and a day to 18 months, according to the department.

It is rare for foreign executives to serve any U.S. prison time for price-fixing, much less serious felony time of more than a year behind bars. Such severe penalties are also rare in Japan for price-fixing.

Kimura said two of the executives were working at the company's 100 percent-owned U.S. subsidiary, while a third was in Japan. He declined to give further details, including when they would appear in court.

The Justice Department and court documents identified them as Junichi Funo, Hirotsugu Nagata and Tetsuya Ukai.

Furukawa Electric said in a statement it will rack up a special loss of 15.3 billion yen ($200 million) in the second quarter of this fiscal year to account for the $200 million fine.

It was unclear how many automakers were affected by the conspiracy, how many models were affected and how much the price-fixing scheme inflated parts prices.

Furukawa Electric declined to give details about the companies that it supplied.

The Justice Department did not identify the other companies involved in the cartel. It said two of the Furukawa Electric executives who pleaded guilty worked in sales to Honda Motor Co.

Word of the investigation surfaced in February of 2010 when the FBI raided the U.S. offices of three parts makers that supply Toyota Motor Corp. and other manufacturers.


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