Toshiba execs resign in $US1.25bn accounting scandal

The false accounting is Japan's biggest earnings scandal since the Olympus affair of 2011

Toshiba CEO and President Hisao Tanaka (right) addresses a press conference July 21, 2015, in Tokyo at which he resigned over an accounting scandal. Chairman Masashi Muromachi (left) will replace him.

Toshiba CEO and President Hisao Tanaka (right) addresses a press conference July 21, 2015, in Tokyo at which he resigned over an accounting scandal. Chairman Masashi Muromachi (left) will replace him.

Executives at electronics and industrial giant, Toshiba, resigned on Tuesday after a committee reviewing its earnings said the company padded its operating profit by about ¥156 billion (US$1.25 billion) over six years to the end of 2014.

Leaders at the company, which makes everything from vacuum cleaners to nuclear power plant equipment, were part of a "systematic" effort to embellish the earnings, according to the report by the independent committee, which Toshiba commissioned in May. The sum includes about ¥4.4 billion of incorrect earnings discovered in an internal probe by Toshiba.

As the company announced his resignation, President Hisao Tanaka apologised to a packed news conference at Toshiba headquarters in Tokyo.

"I recognise there has been the most serious damage to our brand image in our 140-year history," said Tanaka, who is to be succeeded by Chairman Masashi Muromachi. "We take what the committee has pointed out very seriously, and it is I and others in management who bear responsibility."

Toshiba said former presidents Norio Sasaki and Atsutoshi Nishida would also step down from executive positions to take responsibility for the accounting irregularities.

The firm said it would correct its earnings reports in light of the findings by the outside panel, which was scheduled to hold its own briefing later on Tuesday.

"A corporate culture existed at Toshiba in which superiors' wishes could not be defied," states the report by the committee, which was led by a former Tokyo prosecutor.

It adds that the company president and subordinates "continuously implemented inappropriate accounting practices" to achieve top executives' earnings goals, which were dubbed "challenges."

The scandal is the biggest accounting fraud to rock corporate Japan in years and comes less than two months after Japan introduced new corporate governance rules to attract more foreign investment. The rules call for listed companies to have independent outside directors.

Camera maker Olympus was the focus of one of the biggest financial scandals in Japanese history after British CEO Michael Woodford revealed in 2011 that he was fired for questioning acquisitions and payments that totalled hundreds of millions of dollars. Three Olympus executives received suspended prison sentences in relation to the scandal in 2013.

Tim Hornyak covers Japan and emerging technologies for The IDG News Service. Follow Tim on Twitter at @robotopia.

Join the PC World newsletter!

Error: Please check your email address.

Tags consumer electronicstoshibabusiness managementgovernance

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Tim Hornyak

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?