Toshiba’s chief executive and president Hisao Tanaka resigned Tuesday in the wake of revelations that the company had overstated its profits for the past six years.
According to an independent report, the Japanese electronics and engineering giant had padded profit numbers by 156 billion yen ($1.26 billion) between April 2008 and March 2014. The improper accounting practices were brought to light by an independent panel hired by the company.
Toshiba’s vice-chairman Norio Sasaki and several senior executives have stepped down as well. About half of Toshiba’s board have vacated their positions.
Masahi Muromachi will take over as interim chief executive for the company until a new leader is appointed in September.
Tanaka blamed managers for the events. He said during a news conference at Toshiba headquarters: “This was due to a systematic cover-up led by the managers and a lack of knowledge in business management.”
“I apologize from my heart to all the stakeholders.”
The profit padding first came to light in February when Japanese regulators noted irregularities. Toshiba volunteered to dig into its records, but then turn the investigation to a third party in May. During that time, what was thought to be millions of yen mushroomed to billions.
The financial manipulations took root in 2008 during the global downturn where then president Atsutoshi Nishida demanded that his subordinates fix their “embarrassing” profit numbers, according to Bloomberg. The managers manipulated the numbers to artificially inflate stated profits and then were able to hide their work.
Shares of Toshiba stock dropped by 20 percent when the scandal first came to light.
There are signs that investor confidence in the company is being restored by the change in guard. Toshiba’s stock rose 6 points on Tuesday, although shares are still down 20 percent since April when the scandal broke, according to Reuters.
