Toshiba chief executive resigns over accounting scandal

Hisao Tanaka quits after probe finds high-level management “systematically” inflated Japanese firm’s profits for years.

Toshiba Corp President and Chief Executive Officer Hisao Tanaka arrives for a news conference at the company headquarters in Tokyo
Hisao Tanaka was among nine high-level executives and directors to step down [Reuters]

Hisao Tanaka, Toshiba’s chief executive and president, has resigned over a $1.2bn accounting scandal blamed on management’s overzealous pursuit of profit that has battered one of Japan’s best-known companies.

Tanaka was among nine high-level executives and directors, including his predecessor Norio Sesaki, to step down after an independent report found them complicit in a years-long scheme of “systematically” inflating profits.

“It has been revealed that there has been inappropriate accounting going on for a long time, and we deeply apologise for causing this serious trouble for shareholders and other stakeholders,” said a company statement.

The panel, headed by a former Tokyo prosecutor, painted a picture of a corporate culture where underlings could not challenge powerful bosses who were intent on boosting profits at almost any cost. 

Chairman Masashi Muromachi will take over as president in the interim, Toshiba said.

The findings drew a rebuke from Japan’s finance minister Taro Aso, who called the affair “woefully regrettable”.

“This could damage the credibility of the Japanese market,” he said.

Share price up

Despite the storm engulfing the company, Toshiba shares jumped on Tuesday as the report ended months of uncertainty about the extent of the accounting problems, and who was to blame.

“The numbers are out and investors have no further reasons to sell for the moment, so we are seeing some repurchasing momentum,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management, told Bloomberg News.

Toshiba’s accounting scandal began when securities regulators uncovered problems as they probed the company’s balance sheet earlier this year.

The findings mean Toshiba will have to restate its profits by about $1.2bn for the period between April 2008 and March 2014. It is unclear whether it will affect the fiscal year ending March 2015.

Best known for its televisions and electronics, including the world’s first laptop personal computer and DVD player, Toshiba has more than 200,000 employees globally and also operates in power transmission and medical equipment.

Among the divisions affected by the inflated profits are the infrastructure, audio-visual and semiconductor businesses, the summary said.

Source: AFP


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