Japan uncovers illegal cost-cutting at Nissan, suppliers not paid in full

Under threat from heavy fines by Japan’s Fair Trade Commission, Nissan has paid back money it owed to more than 30 suppliers for decades.

According to a report by Japan’s Kyodo News agency, Nissan had held back about 3 billion Yen (~RM 94.4 million) in payment, the biggest shortfall in such contract payments since 1956, when Japan’s subcontractor law was implemented.

Nissan's illegal cost-cutting could have been taking place for decades, a source told Kyodo News, with suppliers likely accepting it over fears they could lose business with Nissan if they complained.

Meanwhile, Jiji Press’ report said Nissan is believed to have unilaterally reduced payments by several percent from the amounts agreed with suppliers. It added that Nissan may have started the practice decades ago, implying that the practice started during Carlos Ghosn’s term as CEO.

In response, Nissan released a statement to the Japanese media, saying “We are awaiting the final judgments by the Japan Fair Trade Commission, which investigated some of our business translations with suppliers that allegedly violated the Subcontract Act.”

“Subsequently, we have returned the appropriate amount to relevant suppliers. At this time, we decline further comment,” Nissan added, according to translations made by Automotive News.