Toshiba Sues Three Former Presidents Over Accounting Scandal

Toshiba Incoming CEO Hisao Tanaka News Conference

Atsutoshi Nishida, chairman of Toshiba Corp., from left, Hisao Tanaka, corporate senior executive vice president, and Norio Sasaki, president and chief executive officer, shake hands at a news conference in Tokyo.

Photographer: Junko Kimura/Bloomberg
  • Company seeking 300 million yen damages from former executives
  • Second-quarter earnings rise 38 percent after selling holdings

Toshiba Corp. sued three former presidents as the maker of personal computers and power plants tries to recover from accounting irregularities that have led to profit writedowns of more than $1.2 billion over almost seven years. Shares fell.

Toshiba is also suing two former chief financial officers as it seeks 300 million yen ($2.4 million) of damages, the Tokyo-based company said in a statement Saturday. The former presidents are Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida, who stepped down in July.

Japan’s biggest accounting scandal since Olympus Corp. in 2011 has already prompted management changes, a board revamp and asset sales at the industrial group. Prime Minister Shinzo Abe has said Japan needs more support from global investors and has pressed companies to improve corporate governance with more transparency and independent board members.

Market Slump

The stock fell 7.5 percent to 310 yen in Tokyo on Monday, the biggest decline in six months. Toshiba has lost about a third of its market value since disclosing it was investigating accounting irregularities in April.

Toshiba said Oct. 1 it had identified 30 more executives involved in the accounting scandal and would punish them, while allowing them to keep their jobs. One day earlier, President Masashi Muromachi won shareholder approval to lead the company at an extraordinary meeting that included calls for his resignation. Investors angered by damage done to the company interrupted proceedings several times, shouting over the president.

Toshiba has set aside 8.4 billion yen to cover possible fines related to the accounting irregularities.

The company also reported earnings Saturday, with net income rising 38 percent to 49.6 billion yen in the three months ended September, helped by asset sales. The company previously said it sold stakes in medical equipment maker Topcon Corp. and Finnish elevator and escalator maker Kone Oyj.

Toshiba had an operating loss of 79.5 billion yen for the quarter.

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