Japanese corporate giant Toshiba overstated profits by 152bn Yen (£780m) over a seven-year period, according to a scathing report on a scandal which has claimed the scalp of its chief executive and caused shares to plummet by more than a quarter since May.
The Japan Times says the report by independent investigators, published by Toshiba today, alleges that the irregularities reflected a corporate culture that "avoided going against superiors' wishes". It adds that top company bosses, including president and CEO Hisao Tanaka and his predecessor, vice chairman Norio Sasaki, were aware of the overstatements.
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The Financial Times says the scandal first came to light in April following "anonymous tips" to Japan's accounting watchdog. The company announced the appointment of independent investigators in May and warned that profits may need to be revised downwards by 55bn Yen.
It was forced to scrap its full-year dividend and its shares subsequently shed more than 25 per cent of their value, but they bounced back by six per cent today as investors expressed relief the revisions were not even worse.
According to the report, profits were overstated in a number of ways that would have been difficult for auditors to detect, including a failure to reflect rising costs or negative exchange rate fluctuations. It said the activities were caused by aggressive short-term targets dubbed "the challenge", which became harder to meet in the wake of the financial crisis and the Fukushima nuclear accident.
While the events should not mortally wound a company that generated £1.3bn profit in 2013, Seijiro Takeshita, a professor at the University of Shizuoka, told Bloomberg the "loss of face" in conservative Japanese corporate circles would be a "heavy penalty".
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