Toshiba recently admitted to overstating its earnings by ¥224.8 billion (£1.2bn) over seven years — and it’s now been hit by a ¥7bn (£40 million) fine.
The fine has been recommended by the Securities and Exchange Surveillance Commission (SESC) to the Financial Services Agency and would be the largest ever fine for accounting violations in Japan. The FSA is yet to respond to the recommendation, but generally defers to the SESC’s advice.
The accounting scandal took place over several years and involved several members of the Toshiba’s top management staff. Hisao Tanaka, president of the company, was forced to quit following disclosure of the irregularities and much of the board was replaced.
Investigators blamed a “corporate culture” within Toshiba that forced managers to carry out “inappropriate accounting practices to meet targets in line with the wishes of their superiors”. This included overstating profits and pushing back the reporting of losses or poor performances.
Since the scandal surfaced, Toshiba’s stock price has plummeted by 46 percent. Damages from the company and its former chief executives are being sought by 50 individual shareholders following the fall in value.