Toshiba execs face investor wrath over accounting scandal

Shareholders arrive at a Toshiba shareholders meeting at the Makuhari Messe in Chiba on Sep 30, 2015. (Photo: AFP/Kazuhiro Nogi)

CHIBA, Japan: Toshiba executives on Wednesday (Sep 30) faced the wrath of shareholders who demanded an explanation after one of Japan's best-known companies was hammered by a billion-dollar accounting scandal.

Nearly 2,000 shareholders turned up to an investor meeting outside Tokyo, peppering a new management team with questions about the affair which led to the resignation of Toshiba's president and seven other top executives in July.

"There are many admirable people working at Toshiba who must have expressed concerns about what was going on - who ignored them, who killed their opinions?" demanded one shareholder who identified himself by the surname Kodama.

New president Masashi Muromachi's deep bows to the audience - a common act of contrition among Japanese executives - seemed to do little to persuade investors that he could overhaul the 140-year-old firm's corporate culture.

Shareholder Takayuki Otake called on Toshiba's new boss to reveal what he knew about the scheme, sparking applause among other investors.

"I truly regret what happened," said Muromachi, who temporarily cut his salary in response to the affair, and who noted he was cleared of any wrongdoing.

A company-hired panel found top executives pressured underlings to inflate Toshiba's bottom line for years.

Mitsuro Nagai blamed the problem on Japan's rigid "salaryman" culture and a general tendency not to challenge bosses.

"The salarymen are too obedient to authority," the shareholder told AFP. "This happens everywhere but especially in Japan - one cannot say clearly what they are thinking."

On Wednesday shareholders approved plans to cut the size of Toshiba's board while appointing more outside directors, a move welcomed by some.

"The company seems to be making efforts to change past practices so I think they are going in the right direction," said 65-year-old Hiroshi Yajima.

Best known for televisions and electronics, Toshiba's vast business was dented by the financial crisis, while the 2011 Fukushima disaster squashed demand for atomic power at home in a big blow to the firm's key nuclear division.

Top executives complained of "shameful results" that could not be made public, and a company-hired panel found they masterminded the years-long scheme to hide poor results.

The affair was one of the most damaging accounting scandals to hit Japan in recent years. It came to light as the country adopted a long-awaited corporate governance code aimed at improving firms' transparency.

Another investor voiced concern that the scheme - which saw profits fraudulently boosted on paper by about US$1.2 billion since the 2008 global financial crisis - would attract huge lawsuits against Toshiba and further damage its share price.

"I need to know whether it's time to cut my losses and sell the shares before they just become pieces of paper," a retired woman in her sixties told AFP, noting it was her first time attending the meeting.

Toshiba's Tokyo-listed shares have lost 40 per cent since the scandal broke in early April. They closed up 2.91 per cent at ¥300 (US$2.50) on Wednesday.