Fujitsu on Wednesday denied allegations by Kuniaki Nozoe, its former president, that he was forced to resign for false reasons.
The company said Mr Nozoe’s failure to break off ties with an investment fund suspected of links to organised crime made him unfit for the job.
Mr Nozoe has denied ties to “antisocial forces”, a reference to organised crime.
He has demanded that Fujitsu’s statutory auditor sue two of its directors for losses he says the group suffered after making him stand down.
Fujitsu’s stance sets the stage for a court clash between a company and its former head in a country where such disputes are almost never aired publicly.
Fujitsu said last September that Mr Nozoe had stepped down “due to illness”.
However, after he asked to be reinstated last month, it said he had agreed to resign because of his links to a company of “unfavourable reputation”.
Fujitsu said: “There is no truth in Mr Nozoe’s allegation of fraud or coercion, nor any truth to his allegations that he resigned based on erred judgement.
“Mr Nozoe chose to submit his resignation after being presented with the fact that he continued to have a close relationship with the representative of a company that was suspected of having ties to antisocial forces.”
Fujitsu said that in February 2009, Mr Nozoe looked at involving the fund in a possible sale of Nifty, Fujitsu’s internet service provider division.
The company said that it heard from “multiple financial institutions” about “questions as to whether this fund had connections to antisocial forces”.
Fujitsu said Naoyuki Akikusa, senior executive adviser, warned Mr Nozoe about the problem.
Mr Nozoe has denied he was warned.
Michiyoshi Mazuka, chairman, said he did not know precisely how the warning to Mr Nozoe was worded.
Mr Mazuka defended the decision to confront Mr Nozoe and ask for his resignation with a small group of company elders, rather than in front of the board.
A majority of the company’s board agreed to ask Mr Nozoe to go, he said.
In less than two years as president, Mr Nozoe upset some colleagues with a drive to focus Fujitsu on providing IT services to companies and governments.
He sold Fujitsu’s hard disk division to Toshiba and reached a deal to outsource the production of the group’s most advanced semiconductors to Taiwan’s TSMC.
Mr Nozoe’s lawyer could not be reached for comment on Wednesday.