Behind the colossal losses of Westinghouse (WH) that was disclosed on February 14 by Toshiba, we see Toshiba’s undeniable tendency to cover up their frauds.
On February 21, 2017 a following news was put on Nikkei.
The board meeting, which was urgently called on December 21 last year, was shattered by a report with depressing silence among directors for ten seconds. When the chairman, Mr. Shiga reported that losses of billions dollars might be caused by the WH’s nuclear power plant business, the board members gasped without a word. After a while, there was a question from one of directors, “We have already recorded the impairment, haven’t we?” Then, an answer followed, “This is another one”. The president, Mr. Tsunakawa, repeatedly grumbled, “I couldn’t understand what you are talking about at all”.
This scene seems to me a déjàvu because I remembered an article on the Nikkei On Line dated November 28, 2015 which reported the press conference on November 27, 2015 held by the President at the time, Mr. Muromachi. who was to explain the more than 100 billion yen (US$ 1 billion) losses caused by the impairment accounting for the goodwill of WH. There, he answered to one question from one of news reporters saying, “I didn’t recognize it at all.”
This article further described this problem as follows.
Mr. Muromachi was the Executive Vice President during the period from June 2008 to June 2012. After he was in a position of regular counselor (Jyonin Soudanyaku) for one year, he came back to a directorship position and a member of the Auditing Committee. Then, he was appointed as the Chairman on June 2014 and the President on June 2015. The person at such important positions for long time said that he did not recognize at all the 10 billion yen impairment losses caused by the core subsidiary.
If the President Muromachi really did not recognize it, it means that this problem was never discussed at the Board Meeting and that they did not properly disclose the fact of the impairment losses. Does it mean that the business division responsible for controlling WH intentionally disguise the losses?
On the other hand, if the impairment losses was on the agenda of the board meeting, His unawareness of the losses possibly means that he ignored the fiduciary duties.
As it is described above, I think the President Muromachi and other board members ignored their fiduciary duties if this problem was never discussed at the board meeting.
However, given the fact that the media raised this impairment losses of WH as a great concern when the Toshiba’s fraudulent accounting was unveiled, it is unbelievable that the board was unaware of this problem up until that time. I cannot help saying that they are in cahoots over covering it up, which was more abominable than ignorance of fiduciary duties. Is it only me who thinks the play at the board meeting on December 21, 2016 was just farcical?
The scene where the President Tsunakawa, who was expected to lead the new management team elected at the shareholders meeting on June 24, 2016 for management reform, repeatedly grumbled, “I couldn’t understand what you are talking about at all” shows us that he was deceiving us or otherwise he was utterly incapable for management. This comment must be applied to every other director as well.
In particular, the Chairman Shiga, who reported to the board on December 21, 2016 that losses of billions dollars might be caused by the WH’s nuclear power plant business, is originally from the nuclear power business division. The reason why he was appointed as the Chairman was that any person except Mr. Shiga could not operate the nuclear power business under the national policies even though it was said that he was a little bit doubtful regarding the fraudulent accounting, according to the Chairman of the Appointment Committee.
By any stretch of the imagination, it is deceitful that the person who is an expert of the nuclear power business of the company says, “losses of billions dollars might be caused by the WH’s nuclear power plant business” pretending that he has only received the news a couple of days ago. Perhaps, any person except him cannot conceal the losses related to the nuclear power business.
By Masatoshi Yasuda