CEO of Japan’s Toshiba to resign over doctored books which inflated profits by US$1.2 billion

PUBLISHED : Tuesday, 21 July, 2015, 4:19pm
UPDATED : Tuesday, 21 July, 2015, 6:46pm

Toshiba’s chief executive is stepping down to take responsibility for doctored books that inflated profits at the Japanese technology manufacturer by 151.8 billion yen (US$1.2 billion).

Toshiba acknowledged a systematic cover-up, which began in 2008, as various parts of its sprawling business including computer chips and personal computers were struggling financially.

Tokyo-based Toshiba’s prospects in nuclear power, one of its core businesses, were shaken after the 2011 Fukushima disaster set off public fears about reactor safety, making new nuclear plants unlikely in Japan.

All 48 of the nation’s working reactors are now offline.

CEO Hisao Tanaka is met reporters on Tuesday to formally announce his resignation. Japanese government officials said they have been notified of the plan.

The scandal highlights how Japan is still struggling to improve corporate governance despite recent steps to improve independent oversight of companies.

In 2011, Olympus Corp, which makes medical equipment and cameras, was embroiled in a scandal after its president Michael Woodford, a Briton, blew the whistle on the company’s cover-up of losses.

Olympus eventually acknowledged it hid 117.7 billion yen (US$1.5 billion) in investment losses dating back to the 1990s. And Woodford won some praise in Japan for his courage in bringing dubious old-guard company practices to light.

Japanese society is conformist and values team work so much it tends to frown upon whistleblowers, and their legal protection lags compared to those in the West.

Toshiba has repeatedly apologised to shareholders and customers. It has set up an outside investigation group to analyse why the scandal happened and propose what needs to be done to prevent a recurrence.

Japanese media reports said Tanaka’s predecessors, Norio Sasaki, now a vice chairman, and Atsutoshi Nishida, an adviser, will also give up their posts.