Toshiba’s Future Imperiled on Nuclear Woes, Dubious Ethics

The future of Toshiba Corp. is imperiled over ballooning costs at its U.S. nuclear unit Westinghouse, which filed for bankruptcy protection last month. Behind a great Japanese brand's fall from grace is a fateful decision to bank on an expensive overseas purchase. And no one had calculated on a nuclear catastrophe.

Price drops in oil and natural gas, as well as beefed up safety regulations that kicked in after the 2011 Fukushima disaster, are chipping away at the appeal of nuclear power.

But perhaps more fateful was Toshiba's corporate culture of chasing big money at the cost of ethics and governance, already brewing as it headed to the 2006 purchase of Westinghouse, according to former employees and observers.

In an embarrassingly unprecedented move, the Tokyo-based company, long synonymous with Japan's modernization, reported financial results this month without an audit. It had earlier delayed it twice. It projected a 1.01 trillion yen ($9.2 billion) loss for the fiscal year ended in March, and warned of "substantial doubt about the company's ability to continue as a going concern."

It was first in the little things that Muneo Morokuzu noticed signs of what he saw as an erosion of accountability at Toshiba. It hadn't always been that way. During the early decades after he joined Toshiba in 1970, he had been proud of what he called "a spirit of humanity" among the workers.

Toshiba's history goes back nearly a century and a half, rooted in telegraphs and lamps. Its U.S. history spans more than 50 years. One of the company founders, Ichisuke Fujioka, a samurai's son, brought the incandescent light bulb to Japan, forging an alliance with General Electric, and came to be known as "the Thomas Edison of Japan."

People at Toshiba, like Morokuzu, were the chosen of Japan.

But Morokuzu began to see things he found disturbing --...

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