Japanese game company executive embezzles $2.35 million by sending fake outsourcing job orders to themselves 

GungHo Online Entertainment, the developer and publisher of Puzzle & Dragons, recently revealed that a former senior executive-level employee had been embezzling company funds over the past few years. GungHo made the announcement on August 14, after firing the employee on July 24. 

The employee created fictitious work orders through an online outsourcing platform, listing GungHo as the client and themselves as the contractor, i.e., the recipient of the fake jobs. By pocketing the payments, the former executive embezzled about 246 million yen (roughly $1.67 million). In a separate scheme, they also made improper payments to a certain third party, driving total damages to GungHo to $2.35 million. These payments were likewise disguised as fictitious outsourcing orders.

The misconduct was discovered through a joint investigation GungHo conducted with external legal and accounting firms after initial suspicions arose within the company. GungHo stated that they are taking a strict stance on the matter – in addition to firing the employee, they have contacted investigative authorities and are preparing to file criminal charges. They reflect on the fact that the executive held excessive authority, making it difficult for other employees to detect irregularities.  

Alongside implementing preventative measures, GungHo’s leadership will take responsibility for the incident through pay reductions. CEO Kazuki Morishita will receive a 30% monthly salary reduction for 3 months, and executive directors will have their pays docked by 10% for the same period. 

Related article: Activist investor of Japanese game developer GungHo requests dismissal of CEO, calls him “unqualified and completely unaware of his responsibilities”   

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