Sanyo Electric faces being delisted from the Tokyo Stock Exchange after admitting that it underestimated losses for seven years because it failed to understand accountancy rules and had weak management processes.

Japan’s Securities and Exchange Surveillance Commission yesterday accused the troubled electronics manufacturer of deliberately faking earnings figures and urged its more senior regulator, the Financial Services Agency, to fine the company.

Sanyo admitted yesterday that it had understated losses since 2000. The company said that it had now booked six billion yen (£26.5 million) in additional losses over the past seven years. Sanyo had reported earlier an accumulated loss of Y372.6 billion over the same period.

The company said that it had paid too much in dividends compared with the performance of the group between 2002 and 2004. Sanyo paid dividends worth Y28 billion for the five half-year periods ending between September 2002 and September 2004, but a restatement of its earnings for six years to March 2006 showed that the company did not have enough money to justify these payouts.

The problems come after the company admitted this year that it had falsely claimed that it had made a profit in 2003 rather than a loss.

Sanyo insisted yesterday that the accounting errors arose from incompetence rather than a deliberate attempt to mislead shareholders.

At a press conference, Seiichiro Sano, the president of Sanyo, apologised and said: “We take the earnings correction very seriously. We will create a system so that something like this is never repeated.” Mr Sano promised to cut the salaries and retirement payments of present and former management as a recognition of the accounting mistakes.

The accounting problem comes as Sanyo has been fighting against increased competition from cheaper Asian rivals. Sanyo started making bicycle lamps after the Second World War before growing into a global electronics group.

It has been forced to cut thousands of jobs to cope with fierce competition. After three years of losses, Sanyo returned to the black in the first half of the current financial year and

2000 announced a major investment in rechargeable batteries in an attempt to find a new source for growth.

Last year the company was forced to sell $2.6 billion worth of new shares to Goldman Sachs, Daiwa Securities and Sumitomo Mitsui Banking to persuade them to help to restructure the struggling company. The banks were also granted five seats on the nine-man board, giving them control It said that it had underestimated of the company. losses at its poorly performing semiconductor and liquid crystal display businesses on the ground that it had expected earnings to recover eventually. The company said that the wider losses would not affect its consolidated results during the years in question.

A Japanese Government investigation into the earlier accounting irregularities was seen as a factor in the resignation in March of Tomoyo Nonaka, the chairman of Sanyo, who had been ranked as one of Japan’s top female executives.

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