For the past six, almost seven years, Toshiba, the electronics company has been declaring its operating profits in billions of dollars. Only, it did not exactly make that much, reveals an independent panel report. According to that report, the company overstated its profit by almost triple the actual figure, coming to a total of 151.8bn yen ($1.22bn, £780m). This scandal has led to the Toshiba CEO resigning as President along with some high-level executives at Toshiba.
In a statement released by the company, “It has been revealed that there has been inappropriate accounting going on for a long time, and we deeply apologise for causing this serious trouble for shareholders and other stakeholders. Because of this Hisao Tanaka (64), our company president, and Norio Sasaki (66), our company’s vice chairman… will resign today, (July 21 2015).” Both executives joined Toshiba sometime in 1970 but between 2009 and 2013, Sasaki assumed the position of president and within that time, most of the inflated profits were recorded.
Toshiba is about 140 years old in business, but 7years ago, the company experienced a financial crash and senior managers began imposing unrealistic performance targets and within the company, there was a corporate culture in which one could not go against the wishes of superiors such that when top management presented ‘challenges’, division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors.
More interesting is the fact that, though this information is just reaching the west and the rest of Africa, it has been in the Japanese media for about two months and anticipation is building up as to the implications of such act.
Concerns around the company bouncing back as competition for the likes of Samsung and Lenovo do not appear reassuring as there is a possible lawsuit in the US brewing. However, shares did rise yesterday when Toshiba closed with a 6% gain on the stock market; an indication perhaps that, investors are positive that after the series of resignations, Toshiba might just be headed in the right direction.
