(Reuters) — Toshiba (TYO:6502) CEO Hisao Tanaka and a string of other senior officials resigned today for their roles in the country’s biggest accounting scandal in years.
Tanaka will be temporarily replaced by chairman Masashi Muromachi after an independent inquiry found the CEO had been aware the company had inflated its profits by $1.2 billion over a period of several years.
“I see this as the most damaging event for our brand in the company’s 140-year history,” Tanaka told a news conference after making a ritual deep bow of contrition to a flurry of camera shutters and flashes. “I don’t think these problems can be overcome overnight.”
Muromachi is considered a safe pair of hands to lead Toshiba through its current turmoil before handing the reins to a successor. The company plans to announce next month the delayed business results for the financial year ended in March.
Tanaka’s predecessors as presidents of the laptops-to-nuclear conglomerate, vice chairman Norio Sasaki and adviser Atsutoshi Nishida, will also step down after the 3rd-party report showed they played a part in the overstatement of profits going back to the 2008 financial year.
A total of 8 officials resigned today and Tanaka said that the company is now considering appointing outside directors to over half of its board seats.
Yesterday’s report by an outside panel of accountants and lawyers said Toshiba had overstated its operating profit by ¥151.8 billion ($1.22 billion), roughly triple Toshiba’s initial estimate.
Tanaka and Sasaki pressured business divisions to meet difficult targets and knew they were overstating profits and delaying the reporting of losses, amid a culture of not going against the wishes of superiors, the report said.
