GungHo shareholder demands $2.25M recovery from former company head over employee fraud

Now GungHo must decide whether to satisfy the shareholder’s demand and pursue legal action against its former head. For now, the company has confined itself to promising an additional investigation into the circumstances of the case.

Investment fund LIM Advisors has demanded that Japanese game publisher and developer GungHo Online Entertainment sue former CEO Kazuki Morishita. The shareholder believes that the top executive failed to provide an adequate internal control system, allowing an employee to embezzle corporate funds for several years.

According to Toyo Keizai, the Hong Kong-based fund LIM Advisors is seeking to recover 356 million yen (around $2.25 million) plus late interest from Morishita. Morishita currently serves as chairman of the board and chief development officer at GungHo.

On November 2, the company confirmed receipt of the demand in an official notice to shareholders. GungHo has not yet made a decision on filing a lawsuit. First, auditors and members of the supervisory board must conduct their own investigation and determine further actions.

The investor’s claims stem from a large-scale fraudulent scheme orchestrated by the former head of GungHo’s systems division. The company first publicly reported the violations in August 2025. In July 2026, the former employee was dismissed and arrested on suspicion of breach of trust.

According to police, from January to December 2022, he created fake accounts under aliases on a contractor-sourcing platform, posing as an independent contractor. The employee then placed fake work orders through them—such as inspecting products for technical flaws—and transferred company funds to his personal accounts. In this manner, he received approximately 40 million yen (about $250,000) across 12 payments.

GungHo conducted its own investigation, which revealed that the fraud had been going on for significantly longer. The company estimates that between 2017 and 2025, the employee embezzled about 246 million yen (approximately $1.6 million).

LIM Advisors believes Morishita shares responsibility for the incident, having failed at the time to establish an effective internal control system capable of preventing such abuse.