Toshiba Sues Five Former Executives Over Accounting Scandal

  • Company seeking 300 million yen damages from former presidents
  • Second-quarter earnings rise 38 percent after selling holdings

Toshiba Corp. sued five former executives as the company tries to recover from accounting irregularities that have led to profit writedowns of more than $1.2 billion over almost seven years.

Toshiba is suing three former presidents and two former chief financial officers for 300 million yen ($2.4 million) of damages, the Tokyo-based company said in a statement Saturday. Those being sued include Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida, who stepped down in July to take responsibility for improper accounting.

Japan’s biggest accounting scandal since Olympus Corp. in 2011 has already prompted management changes, a board revamp and assets sales at the industrial group that makes everything from nuclear reactors to chips and laptop computers. 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

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 the damage done to the 140-year-old brand interrupted the 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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