An individual shareholder of Toshiba Corp. has demanded that the company file a ¥1 billion damages suit against 28 current and former executives for ruining the firm’s credibility by turning a blind eye to widespread mis-accounting.
If the Tokyo-based industrial conglomerate fails to do so within 60 days, the shareholder, who is in his 60s and from Nara Prefecture, threatens to take the case to the Tokyo District Court. He says he will do so in association with a lawyer from an Osaka-based legal team that works for shareholders’ rights.
In his written request Tuesday, the man alleges that the executives, including former President Hisao Tanaka, knew of the improper accounting but failed to stop it or attempt to correct it. Tanaka resigned in July to take responsibility for the scandal.
The damage to credibility and the cost of setting up a third-party panel to look into the scandal amount to at least ¥1 billion, he argues.
Toshiba declined to comment on the matter as it had yet to confirm the demand.
A body of lawyers is also planning to file a group damages lawsuit against Toshiba, possibly by year-end.
After looking into improper accounting practices over nearly seven years through December 2014, Toshiba said Monday it found earnings before tax had been overstated by ¥224.8 billion and its net balance by ¥155.2 billion.
In a delayed report for fiscal 2014 ended March, the maker of products ranging from semiconductors to nuclear plants logged a group net loss of ¥37.83 billion, a huge reversal from its ¥60.24 billion net profit in the previous year.
President Masashi Muromachi has said Toshiba plans a “bold restructuring” of the industrial group to regain investor trust.
“We welcome these moves as a first step toward restoring market confidence,” Masaya Yamasaki, an analyst with Nomura, said in a report dated Monday. “Toshiba needs to step up structural reforms aimed at improving earnings.”
Nomura resumed coverage of Toshiba stock with a neutral rating and share price forecast of ¥380, compared with a buy and target of ¥650 when it suspended its recommendation in May. At least seven other brokers have suspended coverage, according to data compiled by Bloomberg.
“In the long run, it is unclear how Toshiba will change,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo.
Toshiba nominated Shinzo Maeda, former president of cosmetics-maker Shiseido Co., as chairman of the board. It will reduce the number of directors to 11 from 16 and will appoint at least half from outside the company.
Toshiba also outlined steps to reform a corporate culture blamed for pressuring managers to meet unrealistic targets, and to reinforce the audit committee’s supervisory function.