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Honda smells something fishy in its trading subsidiary

TOKYO -- Something's fishy at Honda Motor Co.

In January, the company had to book a 15 billion yen ($184 million) special charge that serves as a cautionary tale about the risks of corporate overreach and mission drift.

The extra costs, according to Honda, were to cover improper business transactions at the Seafood Section of the automaker's trading subsidiary, Honda Trading Corp. It's well known Honda has units making motorcycles, lawnmowers, tillers, outboard motors and even a new jet airplane.

At least those all have engines. But a business trading shrimp and sardines?

Apparently, the subsidiary had been buying seafood at prices inflated beyond market values since 2004 and repeatedly buying and selling it back and forth, according to Honda. The charge Honda booked in January was to account for those hidden losses, the company said.

The main role of Honda Trading Corp. is to deal with auto and motorcycle parts and raw materials. But its stretch into seafood and agriculture products shows what can go wrong when a company strays from its main competency into areas off the radar of the executive suite.

At Honda's Jan. 31 earnings announcement, Executive Vice President Koichi Kondo said auditors were still investigating the transactions and expected to release a report this month.

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