Toshiba sues 5 former execs for $3.4 million after accounting scandal

Toshiba sued five former executives for damages over their alleged roles in a huge accounting scandal.
Toshiba sued five former executives for damages over their alleged roles in a huge accounting scandal.PHOTO: REUTERS

Tokyo (AFP) - Toshiba said on Saturday (Oct 7) that it had sued five former executives for damages over their alleged roles in a huge accounting scandal, as it announced a deep six month operating loss.

The announcement came as the 140-year-old company attempts to restore its reputation following a billion-dollar profit-padding scandal, stemming from top executives pressuring underlings to systematically inflate financial figures for years.

Following a probe by a company-hired panel of experts, Toshiba said it was demanding the men, including three former presidents, pay a combined 300 million yen (S$3.4 million).

The amount could increase if the firm finds additional grounds to seek further damage, Toshiba said.

The company will release the outcome of the experts' investigation on Monday, after reviewing privacy concerns for individuals and customers concerned, Toshiba said.

"We sincerely apologise for causing great concern to shareholders, investors and other stakeholders," Toshiba said in a statement.

Toshiba, which sells everything from rice cookers to nuclear reactors, has admitted that it had inflated profits by about US$1.2 billion (S$1.2 billion) since the 2008 global financial crisis.

In what is considered to be one of the most damaging accounting scandals to hit Japan in recent years, the case forced the incumbent president and seven other top executives to resign earlier this year.

Meanwhile, Toshiba also announced a whopping operating loss of 90 billion yen for six months to September.

The operating loss - its first in six years for the first half - compares with a year-earlier 137.8 billion yen profit.

The firm cited deterioration of its PC and appliances businesses, while its mainstay chip business faced falling prices that also pressured profits.

But Toshiba managed to see a six-month net profit of 37.3 billion yen, down 29 per cent from the same period last year, after selling stakes in subsidiaries.

The firm's overall sales during the period dropped 4.5 per cent to 2.97 trillion yen, Toshiba said.

The company said it was not able to announce forecasts for the year to March 2016.

The company added that it has officially received documents related to a class action lawsuit filed in the United States against the firm and former executives in connection with the financial scandal that sent Toshiba shares nosediving.

Toshiba said it would request the court to drop the case.