For now, Chairman Masashi Muromachi will replace Mr. Tanaka as interim CEO while the company recruits a new management team to be announced in mid-August, reported Bloomberg. I don’t think these problems can be overcome overnight.
The investigation found that Mr. Tanaka and other executives bore responsibility for the scandal in which the Japanese industrial and electronics giant overstated profits by more than $1.2 billion over seven years.
If Toshiba is found to have made misstatements in violation of the Financial Instruments and Exchange Act, the watchdog would recommend the FSA to impose a monetary penalty on the company, the sources said. They also set overly aggressive targets in new businesses such as smart meters and electronic toll booths, encouraging the understating of costs and overestimating of revenues.
“That a company that represents Japan, to be doing something like this institutionally, was shocking”, he told reporters Tuesday.
Toshiba first flagged potential accounting irregularities in May. Sources have said regulators were beginning their own review of Toshiba’s book-keeping, based on Monday’s report.
A Toshiba executive brushed off suggestions that the $5.4 billlion the company invested in Westinghouse in 2006 had weighed on its finances and led to improper accounting, saying the business was doing well.
The deal comes a day after Toshiba’s president resigned amid an accounting scandal regarding overstated profits. Shares in the firm fell 1.7 per cent today, and have dropped around 20 per cent since early April when the accounting issues came to light.
The reported profit was roughly triple Toshiba’s initial estimate, reported Reuters.