A Hong Kong-traded unit of Foxconn Technology Group (富士康科技集團), known in Taiwan as Hon Hai Precision Industry Co (鴻海精密), is suing the electronics giant’s Japanese business over an investment that went awry, in a sign of internal tumult at the Apple Inc assembly partner.
Foxconn’s cable unit FIT Hon Teng Ltd (鴻騰精密) filed the suit in Japan on Aug. 3 against Sharp Corp, which the Taiwanese conglomerate has controlled since 2016.
The Tokyo District Court on Monday held a hearing on the matter, FIT Hon Teng said in a statement yesterday.
The dispute stems from FIT Hon Teng Singapore subsidiary’s purchase of preferred shares in lens maker Kantatsu Co from Sharp in 2019.
FIT Hon Teng said it later found out that Kantatsu had used improper accounting practices and executed fraudulent transactions from 2018 to last year, resulting in the company writing down its Kantatsu holding.
FIT Hon Teng is now demanding that Sharp return ￥5.9 billion (US$51.6 million) for the purchase of the Kantatsu shares plus damages.
Late last year, Sharp set up a panel to look into accounting issues at Kantatsu.
Foxconn’s flagship unit Hon Hai Precision Industry Co (鴻海精密) is the majority shareholder of FIT Hon Teng and owns a 36 percent stake in Sharp, Bloomberg data showed.
Hon Hai derives about 50 percent of its annual sales from assembling iPhones and other devices for Apple.
One of Taiwan’s biggest conglomerates, Foxconn entered a new era when founder Terry Gou (郭台銘) stepped down as Hon Hai’s chairman in 2019.
Gou handed over the reins to Young Liu (劉揚偉) and remains a board member at Hon Hai.
A Sharp representative in Taipei declined to comment.
Hon Hai did not immediately respond to an e-mail seeking comment.
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