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Tamara Roth
Accounting 101
5/5/11

AKAI

Akai was founded in 1929 by a Japanese manufacturer by the name of Saburo Akai.
(Wikipedia) At its peak in the 1990¶s, 100,000 workers were employed there and Akai
was a $40 billion dollar a year company. Akai was a leading company in acquisitioning
and ³rescue of well-known but tarnished brand names such as Singer Sewing Machine
Co. of the U.S. and Sansui Electric Co., the Japanese consumer-electronics maker.´
(L.P.)

James Ting, chairman of the Akai consumer electronics company, had been a very
respected businessman for many years. He was very successful at building up the
companies Akai had obtained. However, his lavish spending habits, using company
funds for personal use, caused Akai to collapse in 2000. At that time, Akai owed its
creditors over $1 billion. Just one of Ting¶s spending sprees consisted of arriving at a
meeting in Rome on a chariot that was similar to those ridden in the days of Ben Hur.

In 1998, Ting signed paperwork stating that $300 million was being invested into a
company called Micromain. In 2000, the entire amount was written off as a loss. It was
later found that the investment had never taken place at all. (LTD)

Suddenly, 1999, Akai reported a loss of $1.75 billion. Shortly thereafter, most of the
companies owned by Akai had stopped doing business, gone into bankruptcy, or were
taken over by other companies. (L.P.) Borelli Walsh accused Ting of stealing over $800
million from the company.

Ernst & Young, the accounting firm for Akai was accused of being negligent in finding
questionable financial activities of Ting and his company. Borelli Walsh, who was the

  
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liquidator of Akai, sued Ernst & Young. According to Borelli Walsh, the accounting
company should have spotted such a large scale case of theft. (LTD)

In the meantime, Ernst & Young had been doing an internal investigation. From the
investigation, they found that one of their partners had ³doctored´ records for both a
1998 and 1999 audit.

James Ting had committed theft from his company, Akai, and an unnamed partner had
committed fraud by falsifying Akai¶s accounting documents. In 2005, Ting was found
guilty of false accounting and sentenced to 5 years in prison. He served only 1 year. His
sentence was overturned because of ³errors in the prosecution¶s case.´ (LTD) A criminal
case against Ting was never proven. As for the Ernst & Young partner, all I can say is
that he is no longer employed with them.

As for the companies themselves; it appears that Akai is still in business after having
been restructured. Their website is http://www.akai.com/index.asp. They still specialize
in electronics. Ernst & Young is still a thriving accounting firm, having overcome this
scandal.

  
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