Toshiba sues three former CEOs amid accounting scandal

Japan Electronics company Toshiba Inc has sued five former executives including three former Chief Executive Officers for huge losses on the biggest accounting scandal in Japanese corporates.

The scandals involved $1.3 billion (152 billion yen) in inflated net profits over almost seven years.

The Japan company is seeking damages totalling $2.44 million (300 million yen) by filing a lawsuit to the previous CEO Hisao Tanaka, his two predecessors and two former chief financial officers.

Hisao Tanaka and seven top executives were forced to resign in July after the company revealed overstated profits about three times the firm's initial estimate.

Senior strategist at Nomura Securities Co. said, as reported on Reuters, that the lawsuits are expected to increase and strengthen corporate governance.

The lawsuit was filed based on a report of overstatement profit investigation to 98 former and current executives submitted by an independent panel.

The independent panel was set up in September by the company after an individual shareholder demanded the company to file a lawsuit against 28 former and current executives for 1 billion yen in damages, according to CNBC.

The panel consists of three lawyers concluded that the executives' ignorance over disputable accounting practices caused damage to the company.

Toshiba, the 140-year-old company, has attempted to boost sales in consumer electronics. The firm's product range includes TVs, computers and kitchen appliances. The company also has a stake in the nuclear power industry.

The accounting scandal has already prompted management changes, a board revamp and asset sales. Toshiba said that it has agreed to sell its image sensor business to Sony Corp and overhaul its semiconductor business.

Toshiba previously said that it sold stakes in medical equipment maker Topcon Corp. and Finnish elevator and escalator maker Kone Oyj.

The company is also trying to sell down a $7.4 billion deal to U.S. Liquefied Natural Gas (LNG) which it signed two years ago.

According to Financial Times, Toshiba reported an operating loss, the first loss in six years, of 90.5 billion yen for the April to September period compared to a profit of 137.87 billion a year earlier. The net profit was down 29% and revenue decreased 4.5%.

The company's shares fell 7.5% in early Monday trading, the biggest intraday drop in two months.

The firm's equity ratio, a measure of capital strength, was at 16.5%. It is lower than other electronics companies such as Mitsubishi Heavy Industry's 32% and Hitachi's 24%.

Toshiba has set aside as much as 8.4 billion yen to cover possible fines related to the accounting scandals.