Toshiba Subsidiary Accused of False Sales Reports

25 Nov

Japanese firm Toshiba, which finally turned a corner following its accounting scandal last year, was recently accused of falsely reporting its sales records in its subsidiary Toshiba EI Control System, Japanese media reported.

According to the media report, the overstated sales by Toshiba EI Control System totaled 520 million Japanese yen (US$4.61 million) as of the end of September this year. This was the third time in recent years Toshiba and its subsidiaries were accused of false accounting.

The report said Toshiba said employees in its subsidiary, Toshiba EI Control System, in Fukuoka on Kyushu Island, began fabricating orders and acceptance certificates and falsely reporting sales in 2003.

Toshiba said it will correct its financial reports up until September and take actions to prevent similar events from happening again. However, some industry observers believe the latest accounting scandal will once again hurt the company’s credibility.

Following the accounting scandal in 2015, Toshiba found itself in legal struggles as 45 foreign institutional investors including Allianz Global Investors sued Toshiba for damages caused due to the Japanese firm’s falsified accounting scandal. The foreign investors demanded a compensation of 16.65 billion yen.

In addition, some 100 individual investors from Japan also filed a lawsuit against Toshiba, demanding 500 million yen in damages from Toshiba and its five former executives. Also, a bank in Japan also took Toshiba to court, seeking 12 billion yen in damages from the 2015 accounting scandal that involved US$1.3 billion overstated profits.

In 2015, Toshiba was found to have understated its costs and overstated profits between April 2008 and the end of 2014. The company was fined 7.37 billion yen by the Japanese government. Several of Toshiba’s former executives resigned and the company’s stocks fell rapidly as a result of the scandal. Toshiba finally turned a corner recently as the mobile memory market recovered.

(Photo courtesy of shutterstock)

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