Toshiba is facing a stiff charge off that could range between 300-400 billion yen, or $2.4 – $3.2 billion, from improper accounting practices resulting in a massive overstatement of the company’s profits from the past six years. The report is expected to chiefly describe how the irregularities occurred, including the institutionalized practice of overstating profits and management’s involvement, as well as the methods each business division used.
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Muromachi is considered a safe pair of hands to lead Toshiba through its current turmoil before handing the reins to a successor.
July 17 – Toshiba says third-party committee to submit report to the firm on July 20.
At this point, Toshiba reportedly has not made a full calculation of the overstated profits.
Toshiba’s stock had dropped more than 20 percent since May, when Toshiba warned over the ballooning accounting “irregularities” and yanked its earnings forecast – a 120 billion yen net profit on sales of 6.7 trillion yen – for the past fiscal year.
“There was a corporate culture at Toshiba under which it was impossible to go against the intentions of superiors”, wrote the committee, in an English translation by the Wall Street Journal.
The executives – including Tanaka, vice chairman and former president Norio Sasaki and adviser and former president Atsutoshi Nishida – strongly pressured Toshiba divisions in e-mails and meetings to meet budget targets, worsening the accounting improprieties, the source said.
It has recently come to light that a number of top executives in Toshiba Corporation are reportedly involved in the accounting scandal that is currently affecting the company, as reported by Reuters.
“Institutional investors and other long-term funds have already unloaded Toshiba shares, so currently the stock price is being driven by short-term investors”, said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management.
The third-party committee will also look into the role that top officials played in the irregularities, focusing on whether they had knowingly encouraged wrongdoings.
The Japanese finance minister, Taro Aso, said the case could undermine confidence in corporate governance in Japan.
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