Major Accounting Scandal Rocks Toshiba; CEO, Other Executives, Resign
In the wake of a major accounting scandal involving overstated earnings, Toshiba Corporation of Japan has announced the resignation of its CEO and several other executives, and has appointed Masashi Muromachi as its new CEO following the resignation of Hisao Tanaka. The firm has issued a reported on the accounting irregularities, which involves accusations that executives overstated earnings by up to $1.2 billion over the last several years.
Half of Toshiba’s 16-member board of directors have also resigned.
The accounting irregularities began to unfold in April 2015, when financial regulators began an investigation and alerted Toshiba to possible irregularities. Toshiba then reported it was investigating possible accounting inaccuracies in one of its divisions. The firm reported tens of millions of dollars’ worth of accounting discrepancies, an amount that quickly rose to a total of about $1.2 billion in overstated earnings in almost all areas of its business, including PCs and semi-conductors.
The full version of the investigation report is currently only available in Japanese, with an English translation scheduled to be released at a later date.
Announcing his resignation, former CEO Tanaka stated: “We are taking what has happened very seriously and we would like to apologize from our hearts to, starting with the shareholders, and to all the stakeholders.” Toshiba also stated said in a letter to investors Monday that it would “take procedures to correct past financial results as necessary.”