Japanese trust banks preparing to sue Toshiba

> Legal action over 2015 accounting scandal

TOKYO: Japanese trust banks are preparing to sue Toshiba Corp over its 2015 accounting scandal, a fresh headache for the conglomerate as it scrambles to offset a separate imminent multi-billion dollar writedown.

The news follows an announcement by the struggling conglomerate on Friday that it will sell a minority stake in its memory chip business to raise funds and that its overseas nuclear division – the cause of its current woes – was now under review.

Chairman Shigenori Shiga is ready to step down to take responsibility for the upcoming charge – estimated at US$6 billion (RM26.6 billion), local media have also reported.

The announcements on Friday failed to clear up much of the uncertainty over Toshiba and its shares lost 3.7% yesterday.

“No explanations were offered as to the ultimate scale of the impairment losses to be recorded in the business or how the company intends to control risk going forward,” Takeshi Tanaka, an analyst at Mizuho Securities, wrote in a note to clients.

Mitsubishi UFJ Trust and Banking Corp said yesterday it is preparing to seek ¥1 billion yen (RM38.5 million) in damages on behalf of its client pension funds after Toshiba’s shares slid in the wake of the accounting scandal two years ago. The bank is a unit of Mitsubishi UFJ Financial Group.

Two other trust banks, Sumitomo Mitsui Trust Bank Ltd and Mizuho Trust & Banking Co, are also preparing similar suits, said sources with direct knowledge of the matter, declining to be identified as they were not authorised to speak to the media. Representatives for the two banks declined to comment.

In October, Toshiba said 45 overseas institutional investors filed a suit seeking ¥16.7 billion in damages since it first admitted to reporting inflated profits going back to 2008. That is in addition to suits from 15 groups and individuals in Japan that total ¥15.3 billion.

The Tokyo Stock Exchange has placed Toshiba on its watch list since September 2015, following the revelation of the accounting scandal, and the exchange demands improvement on corporate governance and compliance measures.

The watch list status has made it effectively impossible for Toshiba to resort to new share issues to raise funds. The company is required to submit a report on its internal control measures to the exchange in March. – Reuters