“Toshiba’s chief executive and president Hisao Tanaka is to resign after the company said it had overstated its profits for the past six years,” reports the BBC News. The total amount of the overstatement is $1.22 billion.
Tanaka “will be succeeded by chairman Masashi Muromachi, with vice-chairman Norio Sasaki also stepping down,” the article says.
So how does an overstatement like this happen over so long a timeframe?
The BBC reports that an independent inquiry “found that the misreporting of profits began after the financial crash seven years ago, when senior managers began imposing unrealistic performance targets.
“’Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors,’ the report said. ‘Therefore, when top management presented “challenges”, division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors.’”