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GungHo Online Entertainment Dismisses Former Senior Executive for Embezzlement With Plans to File Criminal Charges

Japanese game developer GungHo Online Entertainment announced on Thursday that it has dismissed a former executive-level employee for embezzlement on July 24, and it is consulting with a criminal investigative authority to discuss the possibility of filing a criminal complaint against them.

The employee had misappropriated approximately 246 million yen (about US$1.675 million) of company funds by making fictitious business orders to themselves through a work-matching service operated by a third-party company for several years. The employee, acting as the contractor, caused an outflow of about 100 million yen (about US$681,000) by improperly paying outsourcing fees to a business partner, despite no actual business. Following the initial investigation, GungHo formed an internal investigation team by two independent auditors.

In order to prevent this in the future, the company is enhancing compliance education and training programs, improving internal controls over the approval process for orders with external vendors, and better monitoring its internal audits. In addition, the company is reducing the executive compensation to five directors to clarify management responsibility, including a 30% reduction in three month base salary for the Representative Director and President, CEO, and a 10% reduction in the base salary for the Executive Director.

The company stated that the impact of the employee's embezzlement on the consolidated financial results for the fiscal year ending in December 2025 is irrelevant.

GungHo Online Entertainment is known for its puzzle game Puzzle & Dragons. The company hosts the Japanese server of the MMORPG Ragnarok Online. GungHo has also worked on the TEPPEN, Ninjala, and Disney Pixel RPG games.

Source: GungHo Online Entertainment (link 2), 4Gamer (杉浦諒)