Toshiba facing record fine over accounting scandal

Japanese securities watchdog recommends a $60m fine for firm as speculation mounts over its future direction

The Japanese securities watchdog has suggested that Toshiba is to be fined an eye-watering ¥7.37bn (£40m) over its accounting violation.

Toshiba’s CEO Hisao Tanaka resigned in the summer after an independent probe found the vendor had overstated its profits to the tune of ¥151.8bn over the past seven years.

According to Reuters, the vendor’s stock has plummeted by about 40 per cent since April, when the irregularities first came to light.

In the same article, Kiyotaka Sasaki, secretary general at the Securities and Exchange Surveillance Commission (SESC), said at a briefing: “This is a grave incident, whose impact is large.”

He added that the watchdog had taken a "new approach" in its investigation due to the vendor’s position as a global company and its importance to Japan’s business image, but said the US-style board adopted by the company had "failed to function" as intended.

Toshiba has set aside about ¥8.4bn to cover any administrative penalties and has sued five former executives, including Tanaka, for mismanagement, seeking damages of ¥300m.

Speculation was also rife that the scandal could prompt a spin-off or sale of its PC business as the firm licks its wounds and looks to restore order.