Toshiba CEO and Board Members Resign after Accounting Scandal

September 10, 2015

Unlocking Word Meanings

Read the following words/expressions found in today’s article. 

1. overstate /ˌoʊ vərˈsteɪt/ (v.) – to say that something is higher than the actual amount
Example: The company overstated its earnings because of an accounting mistake.

2. profit /ˈprɒf ɪt/ (n.) – the money earned by a business
Example: The company’s profit increased because of the new marketing strategy.

3. manipulate /məˈnɪp yəˌleɪt/ (v.) – to change or control something for selfish reasons
Example: He manipulated the results of the customer survey.

4. restore /rɪˈstɔr/ (v.) – to bring back to the previous condition
Example: It will take time and effort to restore a broken relationship.

5. overhaul /oʊ vərˈhɔl / (v.) – to change something completely
Example: The team overhauled their presentation right before the meeting.   


Read the text below.
Toshiba’s CEO and president resigned after an investigation revealed that the company had overstated its profit for more than seven years.

CEO Hisao Tanaka, along with other executives such as Vice Chairman Norio Sasaki and Adviser Atsutoshi Nishida, resigned in July this year. Half of the company’s 16 board members have also left their positions. In addition, some of the remaining board members are expected to resign because of this issue. 

Independent investigators found that Toshiba had overstated its profits in some of its projects in order to meet the company targets. From 2008 to 2014, Toshiba’s overstatement of its profit added up to a total of ¥151.8 billion or $1.22 billion.

The investigators also reported that the overstatement of profit was within the knowledge of Tanaka and Sasaki. While Tanaka did not exactly ask any of the employees to fake the accounts, the pressure that he and Sasaki put on the company led department heads to manipulate target figures.

As the company works on restoring the trust of its investors, Toshiba’s chairman, Masashi Muromachi is acting as interim chief executive. The company also plans to overhaul its structure and the way it is managed. Toshiba also considers taking directors from outside the company to take the place of half of its board members.

This recent scandal may be the biggest one to affect the reputation of Japanese corporations since the Olympus scandal in 2011. During the early 1990s, Olympus was found to have hidden its losses amounting to $1.7 billion.

Viewpoint Discussion

Enjoy a discussion with your tutor.  

Discussion A

·         How can this scandal possibly affect Toshiba?
·         What else do you think Toshiba can do to earn back the trust of its investors?

Discussion B

·         Why do you think some companies resort to cheating to meet its targets?
·         What measures can be done to prevent or stop companies from cheating?

September 10, 2015