Japanese trust banks to sue Toshiba over 2015 accounting scandal

Japanese trust banks are set to sue Toshiba Corp over its 2015 accounting scandal, a fresh trouble for the conglomerate even as it faced a separate imminent multi-billion dollar writedown.

The news follows an announcement by the conglomerate on Friday, that it would sell a minority stake in its memory chip business to raise funds and that its overseas nuclear division - the cause of its current woes - is now under review.
 
Chairman Shigenori Shiga had expressed willingness to step down and take responsibility for the upcoming charge, projected at around $6 billion.

The announcements did little to clear up much of the uncertainty surrounding Toshiba and its shares lost 4 per cent in morning trade yesterday.

"No explanations were offered as to the ultimate scale of the impairment losses to be recorded in the business or how the company intends to control risk going forward," Takeshi Tanaka, an analyst at Mizuho Securities, wrote in a note to clients.

Mitsubishi UFJ Trust and Banking Corp said yesterday that it was preparing to seek 1 billion ($8.7 million) in damages on behalf of its client pension funds following the drop in Toshiba shares in the wake of the accounting scandal two years ago. The bank formed part of the Mitsubishi UFJ Financial Group.

According to commentators, though the conglomerate has over 600 different businesses, it will not be easy for it to raise cash from the fire-sale.

While Toshiba's two biggest enterprises are nuclear reactors and semiconductors, the Tokyo-based company also operated in other lines of business including elevators, a general hospital, software services and light bulbs and also owned a lettuce-growing factory. In 2015, Toshiba undertook a round of asset sales following which eliminated many that would have been easy choices.


According to Satoshi Tsunakawa, Toshiba's president, the company was looking at selling shareholdings, real estate and other assets in order to come up with capital. ''We will keep considering all options as needed and promptly, and take all necessary steps,'' he said at a briefing in Tokyo Friday.