Fraudulent conduct by Company employees
Nippon Air Conditioning Services Co.,Ltd. (the filing company)
One business office under the jurisdiction of a specific branch of the Company (the business office in question) and one facility of the customer in question. The measuring instruments involved were of 5 types: insulation resistance meters, ammeters, thermometers, pressure gauges and tension meters. The 4 types subject to the comprehensive inspection under the additional investigation were ammeters, voltmeters, insulation resistance meters and thermometers.
① Excessive workloads and a decline in compliance awareness among the employees in charge; ② a rigid personnel structure and a system that left calibration to field personnel; ③ the failure of the normal reporting lines to function; and ④ the failure of internal training and education and the internal whistleblowing system (compliance hotline) to function
Company response
An internal investigation is being conducted mainly by the Quality Control Department and the Governance Oversight Department, in cooperation with the Company's legal counsel. A cross-functional investigation will be conducted across all companies in the Group by 29 July 2026.
(1) Rebuilding the corporate culture. (2) Strengthening monitoring functions and the checking framework: revising the system under which calibration of measuring instruments was left to field personnel; making double checks by quality control coordinators mandatory and ensuring that they are carried out; and having the Quality Control Department conduct regular internal inspections (once a year) of the management status of calibration certificates and other documents issued by third parties. (3) Improving the effectiveness of internal training and education and strengthening the reporting lines and compliance hotline: conducting compliance training and education for all officers and employees as soon as practicable and continuing it every year; creating an open workplace environment, including through appropriate personnel rotation; and promoting understanding of the purpose of the compliance hotline and the protection of whistleblowers, while ensuring its proper operation. In addition, attendance by a quality control coordinator at in-house calibration will be mandatory, the preparation and storage of in-house calibration records will be reliably implemented, and the Quality Control Department will conduct regular internal inspections (once a year) of the implementation status of in-house calibration and the management status of the records.
The Company takes seriously its management responsibility for having been unable to detect the fraudulent conduct by the employees involved over an extended period and is considering the necessary deliberations and other measures. Deliberations by the disciplinary committee regarding the employees involved are ongoing.
Revision to the earnings forecast: Not disclosed. The impact on consolidated results is "currently considered to be immaterial."
The Company will conduct re-inspections of all equipment covered for the customer in question using measuring instruments bearing calibration certificates and other documents issued by third parties. The Company also plans to conduct re-inspections for all customers for whom measuring instruments that had not undergone in-house calibration or were nonconforming had been used. The Company is considering taking strict action, including deliberations on disciplinary measures and legal measures against the employees involved, and will implement measures to prevent recurrence.
The Company will promptly announce any matters that should be disclosed if they arise.
| Item | Details |
|---|---|
| Event name | Fraudulent conduct by Company employees |
| Date of occurrence | From 2013 to 2026 |
| Date recognized / date notice received | 23 June 2026 (when the Company received a report of suspicious circumstances from the customer in question) |
| Subject Entity | Nippon Air Conditioning Services Co.,Ltd. (the filing company) |
| Target Locations / Products | One business office under the jurisdiction of a specific branch of the Company (the business office in question) and one facility of the customer in question. The measuring instruments involved were of 5 types: insulation resistance meters, ammeters, thermometers, pressure gauges and tension meters. The 4 types subject to the comprehensive inspection under the additional investigation were ammeters, voltmeters, insulation resistance meters and thermometers. |
| Cause | ① Excessive workloads and a decline in compliance awareness among the employees in charge; ② a rigid personnel structure and a system that left calibration to field personnel; ③ the failure of the normal reporting lines to function; and ④ the failure of internal training and education and the internal whistleblowing system (compliance hotline) to function |
| Impact on Earnings Forecast | Revision to the earnings forecast: Not disclosed. The impact on consolidated results is "currently considered to be immaterial." |
| Investigation structure | An internal investigation is being conducted mainly by the Quality Control Department and the Governance Oversight Department, in cooperation with the Company's legal counsel. A cross-functional investigation will be conducted across all companies in the Group by 29 July 2026. |
| Measures to prevent recurrence | (1) Rebuilding the corporate culture. (2) Strengthening monitoring functions and the checking framework: revising the system under which calibration of measuring instruments was left to field personnel; making double checks by quality control coordinators mandatory and ensuring that they are carried out; and having the Quality Control Department conduct regular internal inspections (once a year) of the management status of calibration certificates and other documents issued by third parties. (3) Improving the effectiveness of internal training and education and strengthening the reporting lines and compliance hotline: conducting compliance training and education for all officers and employees as soon as practicable and continuing it every year; creating an open workplace environment, including through appropriate personnel rotation; and promoting understanding of the purpose of the compliance hotline and the protection of whistleblowers, while ensuring its proper operation. In addition, attendance by a quality control coordinator at in-house calibration will be mandatory, the preparation and storage of in-house calibration records will be reliably implemented, and the Quality Control Department will conduct regular internal inspections (once a year) of the implementation status of in-house calibration and the management status of the records. |
| Directors' and officers' liability | The Company takes seriously its management responsibility for having been unable to detect the fraudulent conduct by the employees involved over an extended period and is considering the necessary deliberations and other measures. Deliberations by the disciplinary committee regarding the employees involved are ongoing. |
| Outlook | The Company will conduct re-inspections of all equipment covered for the customer in question using measuring instruments bearing calibration certificates and other documents issued by third parties. The Company also plans to conduct re-inspections for all customers for whom measuring instruments that had not undergone in-house calibration or were nonconforming had been used. The Company is considering taking strict action, including deliberations on disciplinary measures and legal measures against the employees involved, and will implement measures to prevent recurrence. |
| Planned follow-up disclosure | The Company will promptly announce any matters that should be disclosed if they arise. |
Items this document does not state (13)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.The Company cites excessive workloads and a decline in compliance awareness among the employees in charge, a rigid personnel structure and a system that left calibration to field personnel, the failure of the normal reporting lines to function, and the failure of internal training and education and the internal whistleblowing system as the causes.