Japan Inc Rocked By Massive Accounting Fraud: Toshiba CEO Quits After Admitting 7 Years Of Cooked Books
While Abenomics has been an unmitigated disaster for Japan’s ordinary population, where the soaring stock market has benefited the top decile of the population while everyone has been slammed by a record 25 consecutive months of declining real wages and soaring input costs, there had been one bright spot: corporate earnings, which unlike in Europe or even the US, have been growing at a steady double-digit clip. What was surprising is that Japan was perhaps the one place where currency debasement was leading to an immediate flow through to rising EPS.
Then on Friday, a report out of Reuters caught our attention when news hit that 140 year old electronics conglomerate, and “pillar of Japan Inc“, Toshiba had inflated profits by a stunning $1.2 billion for a whopping 7 years, with fabricated figures amounting to 30% of the company’s “profits” since 2008!
Suddenly we saw Japan’s profitability “renaissance” in a very different light as Toshiba’s scandal suggested that, if endemic, Japan Inc’s house of soaring profits was built on nothing more than fabricated foundations.
And while we await to see which other companies will admit they too had been cooking their books in the past few years, we will have to do it without Toshiba’s CEO Hisao Tanaka, who together with five members of his senior staff, resigned earlier today.
According to the FT, “Tanaka said on Tuesday at a news conference, following a 15-second bow of contrition, that he “felt the need to carry out a major overhaul in our management team in order to build anew our company.” “We have suffered what could be the biggest erosion of our brand image in our 140-year history.”
