Toshiba to face $60 mln fine over profit overstating scandal

In the lawsuit filed with the Tokyo District Court on December 7, 50 individual investors are demanding a total of 300 million yen in damages for a plunge in their Toshiba shares due to the scandal.

Toshiba’s accounting missteps have come to light not even five years after fellow Japanese manufacturer Olympus’s own accounting scandal.

Toshiba, in early September, restated its earnings for period from the fiscal year ending March 2009 until the third quarter of fiscal 2014, resulting in writedowns totaling 155 billion yen. An independent probe blamed aggressive earnings goals and a corporate culture that discouraged staff from questioning bosses.

(TOSYY.PK, TOSBF.PK) said Monday that the country’s securities industry watchdog has recommended that a fine of 7.37 billion yen, or $60 million, be imposed on the company for accounting-related violations.

“This is a grave incident, whose impact is large”, Kiyotaka Sasaki, secretary general at the Securities and Exchange Surveillance Commission (SESC), said at a briefing.

Toshiba has confirmed that it will issue a restructuring plan, which may include exiting from one or more less profitable markets, by the end of the year, and will not be paying performance-linked bonuses to any executives for the last financial year. But Sasaki said Toshiba’s board failed to function as intended.

The electronics to nuclear power conglomerate has since appointed more outside directors and set out to restructure its business, including selling off unprofitable divisions.

The SESC made the recommendation to the Financial Services Agency which tends to act accordingly.

The move was widely expected after Toshiba said it had put aside 8.4 billion yen to pay for potential fines.

The scandal at the Japanese conglomerate has already resulted in the departure of its chief executive officer, coupled with financial losses, and an asset sell-off, but now the firm also faces a shareholder revolt. Takuji Yano, a spokesman for the FSA, which oversees the commission, declined to comment.