U.S. probes Toshiba accounting, sources say

Toshiba Corp. is under investigation by the American government over allegations that it hid $1.3 billion (U.S.) in losses at its nuclear power operations, according to two people familiar with the matter.

The Justice Department and the Securities and Exchange Commission are looking into whether fraud was committed, said the two, who asked not to be named because the investigations aren’t public.

The probes, they said, follow one by Japan’s securities regulator, which found that Toshiba falsified financial statements and documents involving its issuance of corporate bonds.

U.S. authorities are scrutinizing allegations made in an internal review published last year by the Tokyobased company, the two people said.

The report, a 334-page version of which was published in English on Toshiba’s website in December, said management was complicit in padding profits for almost seven years.

It led to the resignations of top officials, including Hisao Tanaka, Toshiba’ president and CEO.

The investigation into Toshiba’s accounting practices had been limited to its home country, where regulators fined the company $62.1 million — the largest penalty ever imposed — and fined its former auditor, Ernst & Young Shin Nihon, $17.4 million and barred it from accepting new business for three months. Toshiba president Masashi Muromachi, who took over as the scandal unfolded last year, promised to take steps to overhaul operations.

The stock fell 8 per cent to192 yen in Tokyo, the biggest drop since Feb. 5.