It’s stacks-on for Toshiba’s accounting scandal legal wrangles

It’s stacks-on for Toshiba’s accounting scandal legal wrangles

The company fends off another legal action from investors

Toshiba has received yet another legal action filed against it from disgruntled investors over the fallout of its 2015 accounting scandal.

The embattled Japanese tech company told shareholders on 20 July that it had received the formal complaint outlined in an action for compensatory damages in relation to the “accounting issue”.

The fresh action against the company was filed with the Tokyo District Court by six foreign institutional investors on June 16, 2017, seeking compensatory damages in the amount of 9,226,668,044 yen (almost $104 million).

The action was made on the grounds of damages incurred due to the company’s inappropriate accounting scandal. The company said it was served with the complaint on 19 July.

Toshiba said that part of the impact of the legal action was reflected in the financial outlook it announced in June.

The company also updated investments on the status of previous legal actions that have been brought against it over the accounting scandal.

“As of today, other than the [latest] action, the company has been served with 28 complaints, including 26 complaints that were announced on June 13, 2017, and the total amount sought in these actions, including the [latest] action, is approximately 117.2 billion yen (just over $1.3 billion)," the company told investors.

It was revealed in July 2015 by a committee reviewing its earnings that the company, also publicly-listed on the Tokyo Stock Exchange, had padded its profits by almost US$1.3 billion over a six-year period ending 2014.

Toshiba, which is currently also embroiled in deep financial woes following a massive write-down of subsidiary, Westinghouse Electric Company, told shareholders on 13 June that it had been served with a legal action over the accounting issues.

Meanwhile, Toshiba is also embroiled in a legal battle with Western Digital (WD) in its efforts to sell off its stake in the flash memory business it operates in partnership with WD subsidiary, SanDisk.

The sale of the business was prompted largely by the massive losses incurred from the Westinghouse Electric Company business.

After Toshiba moved to put its flash memory business stake up for sale earlier this year, Western Digital dug its heels in, seeking arbitration over the proposed sale, despite Toshiba having selected a consortium of buyers as the preferred bidder for the business.

In early July, Toshiba took to the Superior Court of California in a bid to keep Western Digital from blocking the sale of its memory chip business.

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