News

In September of last year, it was discovered that inappropriate activities had been conducted at Shimadzu Medical Systems Corporation (President: Yoshiaki Miura, Head Office: Osaka, Japan. Hereafter referred to as "Shimadzu Medical" and together with our company, referred to as "our company et al.".), a Shimadzu subsidiary engaged in the sale and maintenance of medical device products, in connection with the maintenance and inspection of X-ray equipment installed at medical institutions. Since then, we have established an external investigation committee to investigate the matter, and we have received the report of the investigation. We would like to report the results of the investigation and our future actions as follows.
Our company takes seriously the occurrence of this incident at our company subsidiary, and in order to prevent such an incident from happening again in the future, we take seriously the facts found by the external investigation committee, the cause of the incident and the recommendations for preventive measures, and will promptly formulate and implement specific preventive measures.
We deeply apologize to medical institutions, patients, and all other stakeholders for the inconvenience and concern we have caused.
Shimadzu Medical's business scope is limited only in Japan.

1. Overview of Fraud

The internal investigation by our company et al. has confirmed that from 2016 to 2018, a service technician affiliated with the Shimadzu Medical Kumamoto office replaced parts of X-ray equipment (X-ray tube equipment or X-ray high voltage equipment) at 5 medical institutions in Kumamoto Prefecture ^※ for compensation by attaching a commercially available external timer to the starter of the X-ray equipment (the power supply circuit from the equipment) and intentionally causing a starter error after a certain period of time to prevent X-rays from being irradiated and to pretend it was a failure of the X-ray equipment (Hereafter referred to as "this fraud.")
This fraud temporarily blocks the supply of power by means of an external timer, does not affect the mechanical function of the X-ray machine itself, and does not affect the patient's life or body. In addition, we have not received any reports from medical institutions regarding health hazards caused by the fraud.

2. Investigation Policy by the External Investigation Committee

After receiving an internal report that a Shimadzu Medical service technician was acting improperly, our company et al. conducted an internal investigation from May 2022 and discovered this fraud as described in 1. above. In order to prevent such a situation from occurring again in the future, our company et al. established the external investigation committee consisting only of experts with deep knowledge and experience in investigating corporate fraud in September 2022 to conduct a thorough fact-finding investigation, analyze the cause of the incident, and formulate steady preventive measures.
Composition of the External Investigation Committee
Chairperson: Yusaku Kurahashi (Attorney, NAKAMURA, TSUNODA & MATSUMOTO)
Committee member: Toshiaki Mori (Attorney, Toshiaki Mori Law Office)
Committee member: Hiroyuki Nishishima (Certified Public Accountant, KPMG FAS Co., Ltd.)

In the course of the investigation, the external investigation committee indicated that there are multiple circumstances that make it difficult to identify misconduct, such as the fact that there is no evidence left behind in the case of this fraud. Therefore, rather than making a specific finding of misconduct, a policy of investigation was proposed to select cases in which the possibility of misconduct could not be ascertained with certainty, and our company et al. accepted the investigation policy on the premise that we would proactively compensate customers for the cases so selected in order to put the restoration of trust from stakeholders as the top priority.

3. Findings of the External Investigation Committee

As a result of its investigation, the external investigation committee has judged the findings of the internal investigation into the 5 cases of this fraud described in 1. above as legitimate.
On the other hand, except for the 5 cases of this fraud that were specifically identified through the internal investigation, while it was not possible to determine exactly when or where the fraud occurred, the committee selected 38 cases (Kumamoto, Miyazaki, Kagoshima, and Nagasaki Prefectures) ^※as "cases where there are circumstances to suspect the possibility of impropriety and no evidence to show that the transaction is normal or to deny the possibility of impropriety has been confirmed" under the investigation policy described in 2. above, and concluded that it would be preferable to compensate medical institutions unless they firmly refuse to do so, even if evidence based on a high degree of probability of impropriety was not confirmed in these cases. 
Our company et al. provide appropriate compensation and others to the 5 medical institutions specifically found to have committed the fraud through the internal investigation. Furthermore, our company et al. have decided to propose appropriate compensation and others to the medical institutions selected by the external investigation committee for the 38 cases, believing that the first priority should be to recover the trust of stakeholders, including medical institutions and patients. 

4. Future measures

(1) Measures to Prevent Recurrence

The investigation report by the external investigation committee provides the following recommendations for measures to prevent a recurrence of this fraud. In line with these recommendations, our company et al. will promptly formulate concrete measures to prevent a recurrence and make every effort to regain public trust.

• Redesigning the Performance Evaluation System to Fit the Expected Roles of Organizations and Individuals
  In order to conduct business evaluations that encourage personnel to provide maintenance services in line with customer interests, we will clarify the expected roles of organizations and individuals in relation to maintenance services and redesign our business evaluation system to match these expected roles.
• Strengthening the Development of Managers’ compliance awareness
  We will enhance education and training for managers on the development of compliance awareness, improvement of leadership skills and internal control practices.
• Strengthening Internal Control Functions
  We will work to enhance the internal control function by improving the sophistication of monitoring (such as strengthening the control function of the administrative departments against the business units), investing in IT to coordinate various systems, strengthening the information reporting system, creating a transparent organization, and improving the effectiveness of the internal reporting system.

(2) Disposition of Related Parties

In order to take seriously the occurrence of this fraud and the recommendations from the external investigation committee, and to clarify management responsibilities, we will take the following actions:
Yoshiaki Miura, President & CEO, Shimadzu Medical: Pay cut by 10% (one month)
Hidekazu Kubota, Managing Director, Head of the Technology Division Shimadzu Medical: Dismissal from the position of Managing Director, Dismissal of the Head of the Technology Division

In addition, we will take strict action against the employees involved in this fraud in accordance with our internal rules.
 

5. Impact on Performance

We believe that this matter will have a minor impact on our financial results, but we will promptly announce any matters that should be disclosed in the future.

Once again, we deeply apologize to all concerned for the inconvenience and concern we have caused. Under the responsibility of management, including the measures described above, all officers and employees will work together to thoroughly implement measures to prevent a recurrence and strive to restore trust. We look forward to your continued support.

• ※ Kumamoto, Miyazaki, Kagoshima, and Nagasaki Prefectures are located in the Kyushu region of western Japan.