One Foxconn Unit Sues Another in Sign of Internal Discord
One Foxconn Unit Sues Another in Sign of Internal Discord
(Bloomberg) -- A Hong Kong-traded unit of Foxconn Technology Group 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. filed the suit in Japan on Aug. 3 against Sharp Corp., which the Taiwanese conglomerate has controlled since 2016. The Tokyo District Court held a hearing on the matter on Oct. 18, FIT Hon Teng said in a statement Wednesday, adding it’ll continue to monitor the litigation.
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 2020, resulting in the company writing down its Kantatsu holding.
FIT Hon Teng is now demanding Sharp to return 5.9 billion yen ($51.5 million) for the purchase of the Kantatsu shares plus damages. In late 2020, Sharp set up a panel to look into accounting issues at Kantatsu.
Foxconn’s flagship unit Hon Hai Precision Industry Co. is the majority shareholder of FIT Hon Teng and owns a 36% stake in Sharp, according to Bloomberg data. Hon Hai derives about 50% 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 stepped down as Hon Hai’s chairman in 2019 to launch an eventually unsuccessful presidential bid. Gou handed over the reins to Young Liu and remains a board member at Hon Hai.
A Sharp representative in Taipei declined to comment. Hon Hai did not immediately respond to an email seeking comment.
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