TOKYO (Reuters) - Toshiba Corp’s (6502.T) lawsuit against former executives linked to a $1.3 billion accounting scandal is a defensive maneuver that highlights a lack of sincere reform, lawyers and corporate governance experts said.
The 300 million yen ($2.44 million) in damages Toshiba is seeking pales in comparison with the over $7 billion decline in its stock market value since the accounting problems came to light in early April.
Moreover, lawyers said, Toshiba has yet to fully explain why it is limiting its lawsuit to just five former executives, effectively absolving some current officials who were in senior roles during the years it was padding profits.
Such doubts highlight worries that Japan’s newly-implemented corporate governance guidelines could fail to bring about substantial improvements in management accountability.
The laptops-to-nuclear conglomerate said on Saturday that it sued five former executives, including three former CEOs, for mismanagement. The move came after an individual investor threatened to sue executives including current CEO Masashi Muromachi, unless Toshiba did so itself.
“What investors are most concerned about is whether the current top executives, including the chairman and CEO, are responsible ... It feels strange that the company has not touched on why the current CEO is not held accountable,” said Nobuo Gohara, a lawyer who took part in an audit of Olympus Corp (7733.T) after its accounting scandal in 2011.
“You can’t really say we’re seeing better corporate governance at work when the company has sued just so that it won’t get sued.”
The unnamed investor had demanded that Toshiba sue 28 former and current executives including Muromachi for 1 billion yen in damages. Yoshihiko Kin, a lawyer representing the investor, said the lawsuit, while better than nothing, was lacking.
“We’re considering a lawsuit against the executives who were not sued by the company,” he told Reuters.
Previous CEO Hisao Tanaka, his two predecessors, and a string of other senior officials resigned in July. Muromachi, a director during most of the period the company inflated its earnings, was promoted to CEO.
Toshiba has said it inflated its profits by about 155 billion yen over roughly seven years. Third-party investigators blamed senior management as well as a culture that discouraged employees from questioning authority.
Toshiba has since appointed more outsiders to its board of directors, in a nod to the new corporate governance code promoted by Prime Minister Shinzo Abe.
But corporate law expert Daisuke Yuki, at Nozomi Sogo Attorneys at Law, said it was still unclear how much effort had gone into establishing that others were not responsible.
Toshiba declined to comment.
Additional reporting by Ritsuko Ando; Editing by Stephen Coates