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January 4, 2017

Toshiba could face fresh accounting scandal after profit padding allegations

The allegations are part of the Japanese watchdog’s long-running investigation into Toshiba’s accounting scandal.

By CBR Staff Writer

Investors in Toshiba are facing new worries as the Japanese watchdog suspects the company of misreporting profits by about JPY40bn ($339.59m) over three years.

The Asahi newspaper reported that the Securities and Exchange Surveillance Commission (SESC) is planning to present new evidence to Japanese prosecutors, alleging that Toshiba’s former top management played a role in the padding of profits in the three fiscal years through March 2014.

Citing unidentified sources, the newspaper reported that the SESC found Toshiba of reporting profit gains in its computer operations during the 2012 to 2014 financial years, even though it did not generate any profit.

Toshiba and the SESC declined to comment on the report. The company’s former top executives have denied any wrongdoing.

The newspaper noted that Toshiba’s two CEOs and a chairman at the helm of the company during that period were involved in the alleged cheating process.

The probe is reportedly expected to result in formal criminal charges against the company and its former executives.

toshiba

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The allegations follow the SESC’s long-running investigation into Toshiba’s accounting scandal.

Last October, a group of shareholders, mainly foreign institutional investors, sued Toshiba over its accounting scandal, seeking over JPY 16.7bn (about $160m) in damages.

The 45 unnamed shareholders filed a lawsuit in the Tokyo District Court, seeking compensation for damages caused by its inappropriate accounting.

After the accounting scandal, Toshiba decided to execute ‘bold structural reform of unprofitable businesses’ including sale of fixed assets.

In November 2015, the company sued five former executives for damages over their alleged roles in the scandal.

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