Japanese trading company Itochu was attacked by short-seller Glaucus Research in July 2016 alleging that it was manipulating accounting policies and had overstated profits by ¥213bn in FY15, or 70%. Glaucus alleged that Itochu had used three questionable accounting tactics: (i) avoiding impairments on Colombian coal mining operation Drummond International, (ii) recognising accounting gains on Taiwanese food group Ting Hsin by reclassifying an associate to other investments and (iii) inappropriately recognising earnings from an associate CITIC over which it had no control. Arguably, time has proven Glaucus correct.

Last updated March 2022

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