Japanese shareholder revolt as securities watchdog recommends Toshiba be fined nearly £40m
Toshiba’s headache continues after the Japanese securities watchdog recommended that it be fined a record 7.37 billion yen (£39.7m) for a massive accounting violation.
The scandal at the Japanese conglomerate has already resulted in the departure of its chief executive officer, coupled with financial losses, and an asset sell-off, but now the firm also faces a shareholder revolt.
Toshiba began an official probe in May this year which discovered that the company had overstated operating profits by a total of 151.8 billion yen (£780m), roughly triple the figure Toshiba had initially estimated.
Even worse, the CEO of Toshiba was found to have been aware of a profit inflation scheme going back to 2008. The CEO and a number of other executives resigned following the release of an independent inquiry findings.
The following financial fallout hit the firm hard and in September it posted a full year net loss of $318m (£209m) after a delay caused by the scandal and the sale of another unit in an effort to improve its finances.
Toshiba sold a 4.6 percent stake in Finnish firm Kone (a lift maker) earlier in the year for $946.2 million (£620m). And in October it also offloaded its imaging sensor business to Sony, as the Japanese company’s new president Masashi Muromachi began a restructuring of its semiconductor division.
But Toshiba’s tarnished corporate image will take some restructuring.
“This is a grave incident, whose impact is large,” Kiyotaka Sasaki, secretary general at the Securities and Exchange Surveillance Commission (SESC), was quoted by Reuters as saying.
Sasaki also said that Toshiba’s board failed to function as intended, and the firm has since appointed more outside directors.
The SESC made the recommendation about the record fine to the Financial Services Agency which tends to follow its advice.
The turmoil at the Japanese conglomerate has also continued with the news that 50 individual shareholders have launched a formal lawsuit in Tokyo.
The lawsuit seeks 301.99 million yen (£1.63m) in damages after shares in the firm slid alarmingly following the accounting scandal.
Toshiba is a manufacturing conglomerate that has 200,000 staff and makes a range of products including televisions, DVD players and electronics, as well as laptop computers. It also makes medical equipment and equipment for the power utility market.
Do you know all about IT and the law? Take our quiz!