TOKYO -- Toshiba's accounting scandal is widening. It is now expected that the Japanese industrial conglomerate will need to downwardly revise its past operating profits by over 150 billion yen ($1.21 billion).
The big question now is: What is the root cause of Toshiba's longstanding inappropriate bookkeeping practices?
Sources familiar with the matter point at a monthly meeting presided over by Toshiba's president and attended by other top executives, including vice presidents and the chief financial officer.
The meeting is an important regular event for the company. Business units and major subsidiaries report their monthly results and other matters during these meetings. Top management is said to have put strong pressure on the units to achieve their budget targets.
According to the sources, underperforming units and subsidiaries would come under fire at the meetings, and the executives who give the briefings would feel a strong sense of anxiety every month.
This became a factor that forced many at Toshiba's units and subsidiaries to push themselves so hard, the sources said, that they eventually engaged in inappropriate accounting practices.
Toshiba incurred a record net loss of about 340 billion yen in fiscal 2008, which ended in March 2009, as its core semiconductor business deteriorated amid the global financial crisis that struck in the autumn of 2008.
In 2011, meltdowns at the Fukushima Daiichi nuclear power plant dealt a severe blow to Toshiba's nuclear power plant business.
Toshiba's questionable bookkeeping then began to spread to the company's main businesses. Vice Chairman Norio Sasaki was serving as president at the time.
Toshiba had previously said it would need to downwardly revise its operating profits for the five years through fiscal 2013 by 54.8 billion yen due to accounting errors mainly related to infrastructure-related work.
But there are believed to have been more accounting irregularities, including those related to personal computer parts transactions, semiconductor inventory valuations and TV sales promotion costs.
As a result, Toshiba is now expected to revise down its operating profits for the five years through fiscal 2013 by more than 150 billion yen.
The company has not been able to close its books for fiscal 2014 due to the scandal.
Calls are growing louder both inside and outside Toshiba for Vice Chairman Sasaki, who has led the infrastructure division, and President Hisao Tanaka to take responsibility for the widening scandal.
A third-party investigative committee is scheduled to release a report on its findings in the middle of this month; the report is also expected to take up management responsibility.