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Toshiba's CEO Has Quit Over a $1.2 Billion Profit Scandal

Illustration for article titled Toshibas CEO Has Quit Over a $1.2 Billion Profit Scandal

Toshiba has announced that its CEO, Hisao Tanaka, is resigning because the company exaggerated its operating profits by a staggering $1.2 billion over the past six years.

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A team of financial investigators has discovered an environment of intimidation which led to the massive accounting lapses. The BBC reports that the investigators wrote:

“Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors. Therefore, when top management presented ‘challenges,’ division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors.”

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Toshiba’s vice-chairman, Norio Sasaki, has also resigned, though there’s no evidence that either he or Tanaka gave direct orders to fiddle the accounts. Japan’s finance minister, Taro Aso, has referred to the irregularities as being “very regrettable”.

[Toshiba via Bloomberg]

Image by AshtonPal under Creative Commons license.

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DISCUSSION

And who sets the tone of corporate culture? That starts at the top. Tanaka knew full well the happenings of his own company—anyone with an eye for business can see accounting stuff go very wrong, very fast (I do this daily at my own job). That said, like most business leaders anywhere in the world, Tanaka will enjoy a golden parachute and walk away without so much as a polite inquiry from the courts.