Muromachi: Pledges to take corrective measures.
Bloomberg
Tokyo
Japan’s Securities and Exchange Surveillance Commission recommended fining Toshiba Corp about ¥7.37bn ($60mn) for falsifying earnings, the largest financial penalty ever sought by the watchdog. The company promised a restructuring plan this month.
Toshiba misled investors by filing false financial statements for several periods including 2012 and 2013, according to a Monday statement from the regulator. The commission is still considering whether to recommend penalties against former top company executives, people familiar with the matter have said.
Toshiba replaced its top management and is raising cash by selling shareholdings and operations in the wake of Japan’s biggest accounting scandal since camera maker Olympus Corp’s $1.7bn in irregularities in 2011. The Tokyo-based electronics and industrial group, which has lost about 40% of its value since disclosing an internal probe on April 3, has set aside ¥8.4bn to cover possible fines in the case.
“The company will do its utmost to prevent this from happening again,” President Masashi Muromachi said in Tokyo after the SESC announcement. The company will detail a restructuring plan by December 31 and won’t pay earnings-linked bonuses to executives for the year ended March 2015, he added.
Toshiba, which makes nuclear power plants, semiconductors, washing machines, TVs and laptop computers, also faces lawsuits from shareholders.
Regulators have yet to announce results of probes seeking evidence for possible criminal prosecutions of former executives, including the three ex-presidents who quit the company after investigators concluded they caused subordinates to falsify results.
This case is “extremely regrettable,” a government spokesman, Yoshihide Suga, said in Tokyo. “It’s important that Toshiba rebuilds its corporate structure and makes proper efforts to prevent a recurrence.” Former presidents Hisao Tanaka, Norio Sasaki and Atsutoshi Nishida resigned in July and the company has cut executive pay, trimmed its workforce and revamped its board amid a scandal that widened repeatedly as more irregularities were uncovered.
The company has said it is suing the three former chief executive officers and two former chief financial officers, seeking ¥300mn of damages.
Toshiba said October 1 it had identified 30 more executives involved in the accounting scandal and would punish them, while allowing them to keep their jobs.
“Changing CEOs doesn’t mean Toshiba has improved,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co in Tokyo, which doesn’t hold the company’s shares. “It could take five to 10 years to regain trust from investors.”
Toshiba has been selling assets to raise cash. It announced the sale of its image-sensor chip operations to Sony Corp last week and sold stakes in Finnish escalator maker Kone Oyj and Japanese medical equipment manufacturer Topcon Corp.
Toshiba is considering combining its PC operations with those of Fujitsu and Sony Corp spinoff Vaio, Muromachi said yesterday. Toshiba got about 7% of its revenue, or about 128bn yen, from PCs in the September quarter, according to data compiled by Bloomberg.
Worldwide PC industry shipments are on course to shrink 4.9% to below 300mn units this year after peaking at 364mn in 2011, according to IDC Corp.
The company is also considering a deal with struggling display maker Sharp Corp to combine washing machine and refrigerator operations, Muromachi said. Sharp issued a statement earlier saying it wasn’t in talks with Toshiba to merge its so-called white goods business.
