An investigation shows the Japanese multinational has cooked its books over seven years.
Nevil Gibson talks about Toshiba on NBR Radio and on demand on MyNBR Radio.
To build your own NBR Radio playlist and enjoy instant on-demand access to any audio, sign up for our FREE smartphone-only subscription to NBR ONLINE.
Japanese business has been rocked by another scandal as Toshiba chief executive Hisao Tanaka and his senior managers resigned over crooked accounting.
Mr Tanaka and half of the 16-strong board quit after an outside investigation said he and other current and former executives overstated profits by more than $US1.2 billion over seven years.
“I deeply apologise to all stakeholders for causing these problems,” Mr. Tanaka said at a news conference, though he said he hadn’t been aware of any inappropriate accounting. “This has resulted in the largest damage ever to our corporate image.”
Mr Tanaka has been chief executive since 2013 and his predecessor, Norio Sasaki, who has been serving as vice chairman, has also resigned. Mr Sasaki also stepped down from a panel that advises Prime Minister Shinzo Abe on economic policy.
Toshiba chairman Masashi Muromachi will act as interim chief executive and more board member changes will be announced by the end of the month.
In a 300-page report, the independent panel hired to investigate the matter said the three most recent chief executives played active roles in inflating Toshiba’s operating profit by ¥151.8 billion ($US1.22 billion) since 2008.
The report goes on to say the executives put intense pressure on the company’s business units, ranging from personal computers to semiconductors and nuclear reactors, to achieve unrealistic profit targets.
“The improper accounting procedures were continuously carried out as a de facto policy of the management,” the report said. “And it was impossible for anyone to go against the intention amid Toshiba’s corporate culture.”
The revelations have shocked the Japanese business world, as Mr Abe has been pushing for greater transparency in its major companies to attract more foreign investment.
Toshiba is one of Japan’s oldest and, until now, respected companies. It was founded in 1938 as Tokyo Shibaura Electric, a merger of two companies dating from the late 19th century.
In 2011, two executives at camera company Olympus were found to have overstated its profits by $US1.7 billion.
Japanese companies are not unique in their offending.
UK supermarket operator Tesco admitted accounting fraud last year after overstating its profit by £250 million and the US corporation Enron collapsed in 2001 after falsely claiming revenues of nearly $US111 billion.
To build your own NBR Radio playlist and enjoy instant on-demand access to any audio, sign up for our FREE smartphone-only subscription to NBR ONLINE.
