Business / Corporate

Third-party panel to probe Toshiba bookkeeping

Kyodo

Toshiba Corp. said Friday it has set up a third-party committee to probe accounting irregularities regarding its past infrastructure projects, amid growing fears the matter may spiral further and erode trust in the electronics giant.

The company said in a statement that the committee is comprised of two certified public accountants and two lawyers, including Koichi Ueda, a former superintending prosecutor of the Tokyo High Public Prosecutor’s Office. Ueda heads the committee.

The in-house investigation has centered on three divisions inside the company that undertake infrastructure projects in electricity generation, transportation and other areas.

So far, it has found nine cases in which project costs were underestimated or reserves against losses were posted incorrectly, Toshiba said.

The committee will widen the scope of the investigation to detect whether other accounting reports were improperly filed, the company said.

“I deeply apologize” for the irregularities, Toshiba President Hisao Tanaka said at a news conference in Tokyo following the first meeting of the committee.

“We will cooperate fully with the investigation and make every effort to restore confidence in the company,” Tanaka said.

Asked whether the accounting reports in the nine cases were manipulated, Tanaka said only, “We will leave the judgment to the investigation by the third-party committee.”

Major causes of the irregularities were the “high priority of budget achievement” in the company and the “imperfect function of internal controls for accounting reports,” Toshiba said in the statement.

Toshiba has said it may have to downwardly revise its operating profit balance by just over ¥50 billion for the three years through March 2014 as a result of the in-house probe.

Further downward revisions are possible if more accounting irregularities are unearthed by the third-party committee.

Late last week, Toshiba withdrew its projections for consolidated earnings for the business year ended March 31 because of the irregularities.

To clarify the responsibility of management, all executives and directors of Toshiba will give up parts of their salaries from this month, Tanaka said, adding his own salary will be cut by 50 percent.

The company is expected to release fiscal 2014 results as early as June.