“INCREASING profits is important,” declared Hisao Tanaka, the chief executive of Toshiba, a conglomerate, as he resigned on July 21st, “but it must be grounded in a basis of fair accounting.” The audience might have questioned his right to carry on preaching. The day before, an investigative panel found that Mr Tanaka and two predecessors had incited subordinates to cook the firm’s books and inflate profits by ¥152 billion ($1.2 billion) over seven years to 2014. It is one of Japan’s biggest-ever accounting scandals.
The employees’ techniques hailed from accounts-fiddling 101: overstating profits, booking them too early, and pushing back losses and the recording of charges. Yet what makes their actions unusual in the annals of book-keeping shenanigans is that they received no explicit instructions. Instead, top management set impossible targets and relied on a Japanese corporate culture of obedience and loyalty that led people lower in the hierarchy to do whatever it took to meet them.
The false accounting began under Atsutoshi Nishida, the chief executive between 2005 and 2009, who...
from The Economist: Business http://ift.tt/1OzPJm3
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