Toshiba CEO Quits Amid $1.2B Accounting Scandal

Hisao Tanaka, Toshiba's CEO (pictured above), was among the executives at the tech giant who handed in their resignation amid a $1.2 billion accounting scandal. Toshiba chairman Masashi Muromachi will temporarily replace Tanaka.

An independent inquiry revealed that Tanaka knew the company was falsely pumping up profits over several years -- to the tune of about one-third of its earnings. All told, eight corporate executives resigned, including the CEO, three senior executive vice presidents and one corporate executive vice president.

EUThe company takes the matters pointed out in the investigation report by the independent investigation committee very seriously, and will seek to establish a new corporate culture under new management and governance structures,EU Toshiba said in a statement. EUThe entire company will make every effort to regain the trust of shareholders, investors, all other stakeholders and the public, and asks for your understanding and ongoing support.EU

Shocking Revelations

The cover-up started in 2008, according to the investigation. While the computer chip and PC business struggled financially, executives posted unattainable earnings estimates to spur the company to perform under EUThe Challenge Initiative.EU When the company failed to meet the estimates, executives cooked the books.

"I see this as the most damaging event for our brand in the company's 140-year history," Tanaka told reporters at a news conference today. "I don't think these problems can be overcome overnight."

This is the latest -- and one of the largest -- financial scandals ever to hit Japan. Olympus Corp. fudged its books in the 1990s by hiding $1.5 billion. Mitsubishi Motors had a running financial scam brewing for decades that was finally exposed in 2000. Sanyo Electronics also got caught cooking its books in 2007.

"That a company that represents Japan, to be doing something like this institutionally, was shocking," Koichi Ueda, attorney and head of an outside panel of...

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