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The Toshiba booth at CES

Toshiba Bosses Expected to Resign Over Accounting Scandal

July 20, 2015
President Hisao Tanaka and former president Norio Sasaki will resign Tuesday, according to Japanese media, after downgrading the company's operating profit by almost $1.3 billion over five years.

TOKYO — Top Toshiba executives were systematically involved in overstating more than $1.2 billion in profits, the firm’s independent panel has warned in a report to be released Monday, according to Japanese media.

The firm has hired an outside team of investigators to look into its accounting irregularities, which were unveiled after the nation’s securities watchdog probed its balance sheet earlier this year.

Toshiba said last week that the third-party panel, headed by a former Tokyo prosecutor, would release a summary of the report at around 9:00 p.m. local time (1200 GMT).

The accounting irregularities are believed to have affected its mainstay infrastructure-related, semiconductor, television and personal computer businesses.

Toshiba, which makes various products from batteries to nuclear reactors, has already admitted that some of its businesses would need to go under the microscope, although the extent of the problems — and who is responsible — remains unclear.

But public broadcaster NHK, quoting unnamed sources, said the panel had concluded that the firm had committed “organized wrongdoings” over the scandal with the involvement of its top managers.

The panel is expected to warn that the firm needs to downgrade its operating profit by more than 150 billion yen ($1.21 billion) over the last five years to March because it overstated earnings and postponed reporting necessary costs, NHK said.

The Nikkei business daily, which estimates Toshiba’s downward revision at 160 billion yen ($1.29 billion), said the firm may separately book an additional 70 billion yen ($563 million) in extra losses, which would expand its downgrading by a combined 230 billion yen ($1.85 billion).

The Securities and Exchange Surveillance Commission is considering asking the government to impose penalties on Toshiba on suspicion of misstatement, the Yomiuri Shimbun newspaper said.

Toshiba president Hisao Tanaka is expected to resign over the scandal Tuesday, when the firm plans to hold a news conference, the Nikkei said. Tanaka and former president and current vice chairman Norio Sasaki are among those behind the profit-padding, local media said, as they allegedly put excessive pressure on subordinates to achieve profit targets.

Sasaki, who served as Toshiba president from June 2009 to June 2013 — covering most of the period during which the company allegedly inflated the profits — will also resign over the scandal, according to reports.

Toshiba has said it was revoking its earnings forecast — a 120 billion yen ($965 million) net profit on sales of 6.7 trillion yen ($53.91 billion) — for the past fiscal year and would not pay a dividend. It has not given a date for the release of its revised results.

Copyright Agence France-Presse, 2015

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