Electronics giant Toshiba expects loss after scandal
Japanese-based company plans to bring in outside directors
TOKYO— Japanese energy and electronics giant Toshiba Corp. says it expects to book a loss in the current fiscal year and is beefing up its management standards after an investigation found extensive problems with its accounting and corporate governance.
The company said Tuesday that it plans to add more outside directors to help ensure stricter oversight.
A probe found under-reporting of project costs and losses in many divisions in a scandal that prompted the resignations of former company president Hisao Tanaka and two other top executives.
Toshiba has announced plans to revise its earnings by 152 billion yen ($1.6 billion) or more to correct the mistakes. The company did not give a specific forecast for the fiscal year which ends on March 31, 2016.
The management reshuffle plan calls for Toshiba’s chairman and interim president, Masashi Muromachi, to stay on as president. An outside board member will be named chairman. The newly organized board is to have 11 members, seven of whom will be outside directors.
The report by the investigation commit- tee into the accounting problems outlined many instances of company officials under-reporting costs, delaying reports of losses and other abuses including “channel stuffing,” or inflating sales figures by putting more products into a distribution channel than it can sell.
In many cases it attributed the missteps to worries that upper management would not accept the losses and to lax internal controls. No charges have been filed related to the problems, which date back at least six years.
Toshiba has pledged to create a functional whistleblower system to help stave off future abuses.