It’s a brand name that’s likely to be found in many Australian homes – perhaps tucked away in the corner of a TV or laptop.
But it is a brand in great difficulty. The current woes are just the latest in a string of scandals that have “humiliated” a once proud 145-year-old company worth over A $ 20 billion.
According to commentators, the Japanese giant Toshiba is in deep “crisis”, a crisis which even dragged the Japanese Prime Minister.
A scathing investigation, which Toshiba bosses tried to prevent from taking place, accused management of pressuring Japan’s Commerce Ministry to “beat up” the company’s foreign shareholders.
Press Agency Reuters one major shareholder reported as saying it was “the world’s worst corporate scandal in a decade”.
The big company, which in its time made everything from televisions to nuclear reactors, is no more than a shadow of itself. He has already had to take drastic measures to survive. Now, some are wondering if it can continue to operate as an independent entity.
âThings cannot continue as they are at Toshiba, both for the company and for the credibility of Japan’s corporate culture,â Brooke Masters wrote in the Financial Time.
Over the past six years scandals and economic missteps have plagued Toshiba.
Company that would become a global icon
Formed in 1875, what would become Toshiba originally produced telegraph equipment, then added torpedoes and mines to its arsenal. In 1939, the company renamed itself Tokyo Shibaura Electric Company, which would eventually be abbreviated as Toshiba.
He became a pioneer of computers, televisions, refrigerators and microwaves. It is on these products that the Toshiba name will be found in homes around the world, a powerful symbol of Japan’s technological prowess.
Scandal hits Toshiba
Then, in 2015, Toshiba was rocked by an accounting scandal that had seen its profits swell by AU $ 1.5 billion over the previous seven years.
Worse was yet to come, with its early 2000s investments in nuclear power heading south as well. In 2017, Toshiba announced that it would write down AU $ 8 billion to the value of its reactor division in the United States.
He started selling some of his famous units, including his chips, computers and televisions. But it remains extremely important to Japan because of its core business of reactors and defense equipment.
After all of the red ink spill, activist shareholders, many of them overseas, wanted change at Toshiba. The company, apparently singing from the same hymn sheet, said they wanted “Establish a new corporate culture”.
The first non-Japanese independent directors were elected to three of the 11 board positions at the 2019 Annual General Meeting (AGM).
RELATED: Nissan to Stop Making Sedans for the Japanese Market
Large investors intrigued by the vote
A year later, the 2020 AGM elections drew near with the possibility of an old guard clutch losing their posts.
One of Toshiba’s main shareholders, the Singapore-based hedge fund Effissimo Capital Management, had nominated three candidates to the board, including its co-founder.
He was amazed that none of the three were elected.
Effissimo urged Toshiba management to give the green light to an independent investigation into a possible vote on “irregularities” at the 2020 AGM.
But the bosses pushed back and made an internal investigation instead which reported nothing untoward had happened.
Dissatisfied, Effissimo managed to convince shareholders in March that an independent investigation was now essential. This in itself was extraordinary as Japanese shareholders generally trust the management of their companies.
RELATED: A ‘Reckless’ Decision That Killed Britain’s Retail Giant
“Explosive” report criticizing Toshiba management
The report of that investigation, released last week, was called “explosive”.
He claimed that Toshiba management “devised a plan to effectively prevent shareholders from exercising theirâ¦ voting rights at the AGM” when the meeting itself was “not managed fairly”.
He further alleged that Toshiba persuaded Japan’s Commerce Ministry to help keep activists at bay by exerting “undue influence over certain shareholders.”
The report details an email it says is between Toshiba executives about Effissimo which allegedly said, “We will ask (the ministry) to beat them for a while.”
The objective was to get Effissimo to withdraw his appointments to the board of directors.
“If we are aggressive, we can get them” with foreign ownership rules, then cabinet secretary and now Prime Minister Yoshihide Suga reportedly told the executive, referring to rules designed to protect essential industries to the national security of Japan, reported Reuters.
Asked about his alleged comment, Mr Suga said: âI am absolutely unaware of this. There was nothing like that â. He denied the allegations, as did the ministry.
Management has also reportedly pressured other large foreign shareholders to vote to keep board members in place.
Some of the actions raised “suspicions of violations of laws and regulations in many places”.
The report was “Surprising, disappointing and, in some areas, deeply disturbing”, said four Toshiba board members, George Zage III, Ayako Weissman, Paul Brough and Jerry Black, in a statement.
the FTMs Masters said it was a “humiliation” on Toshiba’s part when he refused initial requests for an independent report, then engaged in “dark arts” to defeat his critics .
“Now the resulting report has plunged Toshiba into crisis,” she wrote.
âToshiba has experienced three financial scandals in six years, and the government has stepped in at least twice to help management fend off investor challenges.
âIf it’s a transformed corporate culture, what was the old one like? “
The company has now found itself with few advocates.
âAll of Japan Inc. is not rushing to defend Toshiba,â said Brian Heywood, CEO of Taiyo Pacific Partners, an activist fund in Japan. Japan time.
In a statement, Toshiba said it âtook seriouslyâ the report’s findings.
“We will take steps to identify the root cause without delay, objectively and transparently, including the involvement of third parties.”
The future of the iconic company uncertainm
Next month, Toshiba will face shareholders at the 2021 AGM where new faces will seek election to the board of directors.
Contused, the company said two directors who stood for re-election would no longer do so while two other board members would resign.
Toshiba Chairman Osamu Nagayama apologized on Monday but refused to resign himself, claiming to want to “fulfill my functions”.
Meanwhile, UK hedge fund CVC Partners had already filed an A $ 25 billion offer for the company.
Toshiba rejected the offer and instead announced it would conduct a strategic review of the company.
But the vultures revolve around the injured icon. A foreign takeover of Toshiba or even its complete dismantling are now possible.
It’s a slow disgrace for the brand that once introduced Japan to the world.