Toshiba CEO Quits ‘House Of Cards’ Inflated By $1.2 Billion
Toshiba CEO Hisao Tanaka resigned Tuesday after securities regulators uncovered fraudulent numbers on the company’s balance sheet. The Wall Street Journal reported that the Japanese industrial and electronics company overstated profits to the tune of $1.2 billion (152 billion yen) over a seven-year period. Eight other executives quit their posts along with Tanaka in acceptance of blame for the falsified figures of the Japanese technology manufacturer inflating its profitability picture. The fallout to the investigation, CBC reported, was a stock plunge for Tokyo-based Toshiba, of 17 percent.
The inflated overall figure came to about triple the total on the initial statement by Toshiba, BBC noted. Throughout the company’s 140-year history manufacturing products from electronics to nuclear plants, the accounting “house of cards” boondoggle stands out as the most damaging event ever.
According to CBC, the deception continued through March of this year, a fact taken into account by investigators studying the case. Japanese regulatory bodies are mandated to shore up corporate governance while respecting the trend by private companies in the direction of independent oversight.
The 2011 Fukushima nuclear plant disaster presented a major hurdle over which corporate officials had to adjust long-term projections. Toshiba supplied the reactors for Units 3 and 5 in the plant run by the Tokyo Electric power company, and developed the capacity to build light water reactors in line with Japan’s robust nuclear expansion program. But the public outcry from the Fukushima disaster resulted in all 48 of Japan’s reactors to be taken offline, impacting Toshiba’s projected earnings.
Toshiba has made public its efforts to complete its accounting revisions and put together an accurate report of its true financial standing. CBC indicated that an emergency stockholder meeting is expected to take place in September for the presentation of this report.
For the benefit of the press, Toshiba CEO Hisao Tanaka, Chairman Masashi Muromachi and Corporate Executive Vice-President Keizo Maeda bowed together in contrition for the financial debacle. They did the ceremonial act to open a news conference at company headquarters in Tokyo last Tuesday.
“I deeply apologize to all stakeholders for causing these problems,” the Toshiba CEO said. “This has resulted in the largest damage ever to our corporate image.”
According to The Wall Street Journal, the chief executive officer stated that he had not been aware of any inappropriate accounting practices being committed at the time they were done.
Masashi Muromachi will serve as interim Toshiba CEO, and replacements for eight of the 16 board members stepping down will be announced by the month’s end.
[Image via Getty Images]
