Japan’s Securities and Ex-Change Surveillance Commission (SESC) recommend to fine Toshiba a 7.37 billion yen ($59.84 million) for a massive accounting violation.
The proposed fine would be the largest in Japan for accounting violations. The previous record fine was 1.6 billion yen paid by industrial conglomerate IHI Corp in 2008.
Over a period of seven years, Toshiba claimed that its profits were $1.3 billion higher than they really were.
The fine needs to be approved by the Financial Services Agency. The Securities and Exchange Surveillance Commission will make the recommendation to the Financial Services Agency as early as this month.
“This is a grave incident, whose impact is large,”
Kiyotaka Sasaki, the secretary general at the Securities and Exchange Surveillance Commission (SESC), said at a briefing.
Toshiba has already set aside 8.4 billion Yen ($68 million) to pay such a fine. The tech giant itself has sued five former executives, including three former chief executives, for mismanagement.
On the same day, a lawsuit was filed by 50 individual shareholders, who are seeking $2.45m in damages from the company itself along with three former chief executives and two finance chiefs after its stock plunged following the accounting scandal from the company.
In July, its chief executive, president, and six other high-level executives resigned from the organization within the scheme to inflate gains over many years.
The huge 140-year-old company’s stock has fallen about 40 percent since April when it was first questioned about false accounting practices. It inflated profits by around 155 billion yen over seven years to hide poor results.
Intended to be more transparent, Toshiba was one of the first Japanese companies to import a US-style board structure which, with more outside directors. But Mr. Sasaki said that the board failed to function accordingly.