Toshiba CEO promises turnaround in 5 years

To address accounting scandal, big losses in nuclear business

TOKYO — Nobuaki Kurumatani, the outsider tapped to lead scandal-tarnished Japanese electronics company Toshiba Corp., is promising a turnaround in five years by reshaping its operations and boosting profitability.

Kurumatani, the first outsider to be appointed chief executive at Toshiba in more than half a century, acknowledged the system of governance and risk management had been weak. He stressed he brought to the company his experience in the financial sector, where compliance controls were tougher.

Toshiba has been embroiled in an accounting scandal involving massive doctoring of books.

“I feel that the organization is determined to change,” Kurumatani told reporters Tuesday at Toshiba’s Tokyo headquarters.

Toshiba has also racked up heavy losses in its nuclear business and is selling its lucrative computer-chip business to avoid going belly-up.

At the centre of the losses is the acquisition of CB&I Stone & Webster by its U.S. nuclear unit Westinghouse, which filed for bankruptcy protection last year.

Kurumatani said the company will withdraw from all overseas nuclear operations, and the future of the energy business is moving toward renewables.

Costs of building nuclear reactors have surged due to beefedup safety measures after a March 2011 accident at a plant in Fukushima in northeastern Japan sent three reactors into meltdowns.

“Toshiba has many dedicated employees and talented engineers,” Kurumatani said. “Things go well when things are good. But once things start going wrong, then it keeps going wrong.”

Toshiba’s chair stepped down last year, but veteran Satoshi Tsunakwa has stayed on as president and chief operating officer and will be working with Kurumatani toward a turnaround.

Kurumatani’s rise is an effort by Toshiba to put on a fresh face to a long-pristine brand that has plunged from grace not only over the Westinghouse fiasco but also because of spiralling accounting scandals that raised serious questions about its ethical practices.

Efforts to reform corporate governance turned up more embarrassing wrongdoing, which dated back years.

A graduate of the prestigious University of Tokyo, Kurumatani most recently served as president of CVC Asia Pacific Japan, an investment fund.

Before that, he was deputy president and a director at Sumitomo Mitsui Financial Group, one of Japan’s biggest banking institutions and a major Toshiba lender.

Unlike previous Toshiba executives with backgrounds in engineering, Kurumatani built his career in corporate planning, public relations and auditing.