Japanese Trust Banks likely to Sue Toshiba Corp. over 2015 Accounting Scandal

Company - Pavan Pandey - Jan 30,2017

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japanese trust banks likely to sue toshiba corp over 2015 accounting scandal

Japanese trust banks (Mitsubishi UFJ Trust and Baking Corp.) are preparing to sue country’s multinational company, Toshiba Corp., over its 2015 accounting scandal.

This a fresh headache for the Tokyo-based conglomerate as it scrambles to offset a separate forthcoming multi-billion dollar write-down.

On Monday, Mitsubishi UFJ and Banking Corp. stated that it is preparing to seek $8.7 million (1 billion yen) in damages on behalf of its customer pension funds after Toshiba Corp.’s shares fell in the wake of the accounting scandal two years ago. The specified trust bank is a unit of Mitsubishi UFJ Financial Group. Earlier this month, the trust banks started notifying clients, including pension funds about the scheduled charge.

According to sources with the acquaintance of the matter, declining to be recognized as they were not certified to communicate to the media houses, two other Japanese trust banks, Mizuho Trust & Banking Co and Sumitomo Mitsui Trust Bank Ltd. are also making similar suits.

The spokespersons for the two banks fully declined to comment.

According to a local media, the Chairman of Toshiba Corp., Mr. Shigenori Shiga is ready to step down to take responsibility for the upcoming charge – estimated at around $6 billion. 

The news follows a statement by the Toshiba Corp. on Friday that the struggling conglomerate will sell a smaller stake in its memory chip business to increase funds and that its overseas nuclear division – the cause of company’s current woes – was now under review.

The Japanese Government Pension Investment Fund has already indirectly prosecuted Toshiba Corp., with Japan Trustee Services Bank, which holds Toshiba stakes on behalf of GPIF, looking for damages of approximately 13 billion yen in a complaint filed with the Tokyo District Court.

In October 2016, Toshiba Corp. stated 45 overseas institutional investors filed a complaint seeking 16.7 billion yen in compensations since it first confessed to reporting exaggerated revenues going back to 2008. That is in addition to complaints from individuals and 15 groups in Japan that total 15.3 billion yen.