GungHo Online Entertainment announced on August 14 that the company has dismissed a former executive employee for embezzlement on July 24. The company is consulting with a criminal investigative authority to determine if a criminal complaint can be filed against the former GungHo Online Entertainment executive.
According to the statement (2) released by GungHo, the former executive had misappropriated close to 246 million yen ($1.67 million) of company funds by issuing fictitious business orders to themselves via a work-matching service operated by a third-party company for several years. The employee acted as a contractor and caused an outflow of nearly 100 million yen (roughly $681,000) by paying outsourcing fees to a business partner while no actual business was conducted. After the company’s first investigation, GungHo formed an internal investigation team by two independent auditors.
GungHo has implemented preventative measures to avoid situations like this from happening again. Specifically, the company notes that its enhancing compliance education and training programs, improving internal controls over the approval process for vendor orders, and closer monitoring its internal audits.
Moreover, the company is taking responsibility for its management by reducing CEO Kazuki Morishita’s three-month base salary by 30%. Executive directors will also receive a 10% reduction in the base salary. GungHo also noted that the impact of the employee’s embezzlement on the consolidated financials results for fiscal year ending in December 2025 is irrelevant.
