Toshiba Says 30 More Executives Named in Accounting Scandal
(Bloomberg) Toshiba Corp. said it has identified 30 more executives involved in an accounting scandal that has already led to resignations of three former presidents and reduced reported profit by about $1.3 billion.
The managers will be punished, but will stay on at the company, President Masashi Muromachi told reporters at a briefing in Tokyo on Thursday. Muromachi also vowed a “far- reaching restructuring” of underperforming businesses, including job cuts in appliances, personal computers, televisions and semiconductors.
Toshiba has lost about $6 billion of market value since the company withdrew its earnings forecast in May and announced an accounting probe that was later expanded. So far, former presidents Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida have quit and the company has revamped the board, increasing the number of outside directors.
“There must be many people involved and the repercussions need to be much more severe,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo. “If there isn’t a fundamental change at the company, who’s to say this will not happen again 10, 20 years later?”
Muromachi on Wednesday won shareholder approval to lead the company at an extraordinary meeting that included calls for his resignation. Share-owners angered by the damage done to the 140-year-old brand interrupted the proceedings several times, shouting over the president.
Unfit to Lead
“You were chairman when this happened, what in the world were you doing?” one of the shareholders asked during a question-and-answer session at the meeting. Another investor drew applause when he said Muromachi was unfit to lead the company regardless of whether he knew about the improprieties or not.
Muromachi had overseen the company’s chip business and served as chairman during the more than six-year period when managers at operations from personal computers to power plants overstated earnings. The 40-year company veteran said he will step down within three years.
After acknowledging that it overstated earnings, Toshiba reduced net income by a total of 155.2 billion yen ($1.3 billion) for the years ending March 2009 to March 2014, plus the first three quarters of the next year.
Toshiba’s shares gained 2.2 percent to 306.9 yen at the close in Tokyo, prior to the announcement. The gain pares the stock’s decline this year to 40 percent, compared with a 2.5 percent gain in the benchmark Topix index.
The company received a vote of confidence from its banks this week amid uncertainty about the eventual costs for an accounting scandal that is still been investigated by regulators. Sumitomo Mitsui Banking Corp., Mizuho Bank Ltd. and Sumitomo Mitsui Trust Bank Ltd. added a two-year 400 billion yen credit commitment.
Toshiba has set aside 8.4 billion yen to cover possible fines related to the accounting irregularities.
“This crisis presents Toshiba with a rare opportunity,” Ichiyoshi Asset’s Akino said. “There is a chance to push through the kind of drastic restructuring that until now simply wasn’t possible.”