Executives at Toshiba Corp.’s troubled U.S. nuclear unit pressured subordinates to understate losses related to nuclear plant construction, sources said Thursday.
Toshiba now faces the risk of having to pay damages to those former employees of the U.S. nuclear power unit, Westinghouse Electric Co., if they file suits claiming harassment by former President Danny Roderick and other executives, the sources said.
The possible damages likely would not have a major impact on Toshiba’s financial results, according to the sources. But the matter could reignite concern over corporate governance as Toshiba is already struggling to put behind it an accounting scandal in 2015 involving three former presidents pressuring subordinates to overstate profits.
The Tokyo Stock Exchange put Toshiba shares on its watch list when that accounting scandal broke, and urged the company to strengthen its internal controls. The TSE has continued to deliberate over whether Toshiba should be removed from the list or delisted, and the new revelation of accounting-related harassment at its U.S. nuclear unit could impact that review.
On Tuesday, Toshiba said it expects to post a loss of ¥712.5 billion ($6.25 billion) from its U.S. nuclear business in its results for the April-December period. But Toshiba delayed issuing official, audited results, saying a whistleblower alleged “inappropriate pressure” at Westinghouse Electric over the purchase of a U.S. nuclear plant construction company, the main cause of the massive loss.
Toshiba Chairman Shigenori Shiga, an ex-president of Westinghouse, and Roderick stepped down from their positions to take responsibility for the loss.
Roderick and other executives pressured the employees over the asset value of the U.S. nuclear plant construction company it purchased in 2015, according to the sources.