On Monday, a record fine was recommended by Japanese regulators to be imposed on Toshiba Corp. for its $1.9 billion accounting scandal. They are attempting to shore up confidence in the securities market of the country, which was heavily damaged by the actions of the electronics and industrial company and a fine of $60 million is deemed adequate in this regard. If it goes ahead, it would be the biggest fine to be imposed in the country for accounting-related violations, but it is much less as opposed to the fines that have been imposed on US companies in similar cases.
Regulators asserted that they had pursued investigation of the Toshiba scandal with special rigor because it happened just as Shinzo Abe, the country’s Prime Minister is trying to attract more foreign investment by raising the accountability of firms to their shareholders and encouraging transparency. Securities and Exchange Surveillance Commission’s security-general, Kiyotaka Sasaki said that they had taken the case seriously because of the public attention that Toshiba’s name commands and had thoroughly explored the fundamental problems. Speaking at a news briefing, he said this was important because Toshiba isn’t just one of the top companies of Japan, but also a global company and the incident occurred when the country is trying to boost corporate governance.
Masashi Muromachi, the president of Toshiba also spoke out on Monday and said that the company would speed up its restructuring efforts. At a separate news conference, he stated that the firm was exploring options for its computer-operation business after people with knowledge of the matter had spoken out last week that that the company was in discussions with other PC makers about a possible merger. Part of Toshiba’s semiconductor business has already been sold off to Sony Corp. Previously, Mr. Muromachi had said that he was considering a sale of the stake in the remaining chip operation, which is the biggest money-maker for the company.
He asserted that his aim was to carry out reforms without imposing a lot of restrictions. It was widely expected that a fine would be imposed on Toshiba as the company had already announced that they had set aside about $8.4 billion for paying off any potential penalties. The fine cannot be imposed by the commission due to lack of authority, but it has requested the Financial Services Agency to do it. This summer, the management structure of Toshiba was also reorganized with three former chief executives giving up their roles.
These three executives and two other officials had been sued by the firm for $2.4 million in damages due to their connection with the scandal. An outside panel had come to the conclusion that aggressive management targets had led to the overstatement of profits worth $1.9 billion in the last seven years. The chairman of the company’s audit committee, Ryoji Sato said that they were planning to increase the amount of damages sought from the former officials, but an amount wasn’t specified. Since the scandal came to light, the Japanese firm has been plagued by investor doubts.