Corruption charges are rocking the Japanese IT heavyweights

Jul 21, 2015 11:07 GMT  ·  By

As we foresaw in a previous article, Hisao Tanaka is free from his job as CEO at Toshiba. Accounting scandals about overstated company profits of about 170 billion yen ($1.3 billion) have finally caught up with him.

Tanaka stepping down was somewhat to be expected, we previously presented the crisis Toshiba goes through at the moment and how it was part of a bigger operation orchestrated by the Japanese government to inspect possible corruption charges within Japan's leading IT giants.

The crisis began during this year's spring when accounting forgeries were discovered by Japanese government's audit at Toshiba showing that the company had declared $1.2 billion in false profit. The investigation found that the top management lied about operating profits for over six years in order to meet internal targets, being linked with two of the major economical disasters that have struck Japan in the last seven years, the Fukushima disaster, and the worldwide financial crash of 2008.

Desperate moves in crisis times are paid later in full

Apparently, Toshiba declared the false profit numbers in order to hide its continually disastrous financial figures that have started to suffer since 2008 and were hit the hardest during the Fukushima disaster. To maintain the financial meltdown Toshiba was going through that time, smart meters and electronic toll booths sales have been grossly overstated in order to justify the false profits it was reporting to the Japanese government.

Bloomberg says Chairman Masashi Muromachi will fill the vacant chief executive role for now and help replace the management team with a new one. Together with Tanaka, the entire top-brass of Toshiba has resigned, amounting to eight high-level executives that were found responsible together with Tanaka in faking accounting reports.

The writedowns for Toshiba in the latest crisis fallout seem to go to fully three times the initial 55 billion yen ($442 million).

Japanese foreign investments appear to be on halt for the moment as government audits move on and most Japanese companies wait until this anti-corruption wave dies down.