August 5, 2015 / 6:16 AM / 5 years ago

Toshiba CEO apologizes to Japan PM office for accounting scandal

A man walks past a logo of Toshiba Corp at an electronics store in Tokyo July 21, 2015. REUTERS/Thomas Peter

TOKYO (Reuters) - Toshiba Corp’s chief executive apologized to Prime Minister Shinzo Abe’s office on Wednesday after revelations of wide-spread accounting irregularities at the industrial conglomerate embarrassed government efforts to improve the country’s corporate governance.

Masashi Muromachi, interim CEO, met with an aide to Abe and apologized for the “inconveniences caused”, a company spokeswoman said.

An independent inquiry last month found Toshiba had inflated its profits by $1.2 billion over several years. Previous CEO Hisao Tanaka, his two predecessors and a string of other senior officials resigned from their roles.

The scandal came as Abe’s government has been trying to bolster global investors’ confidence in Japan Inc with better corporate governance guidelines.

Among large Japanese firms, Toshiba has particularly close ties with the government, with former and current executives sitting on various policy committees.

The affair has prompted previous vice chairman Norio Sasaki, a former CEO, to quit his roles on government panels including a committee on industrial competitiveness. The former chairman of the company’s audit committee, Makoto Kubo, stepped down from his position on a government accounting panel.

Sadakazu Osaki, head of research at Nomura Research Institute’s Center for Strategic Management and Innovation, said the apology reflected the degree to which Toshiba executives were involved in government panels.

“This is because it’s Toshiba. I don’t think a normal company would’ve done that,” he said.

(This version of the story was refiled to correct spelling of accounting in sixth paragraph)

Reporting by Ritsuko Ando and Nathan Layne; Editing by Rachel Armstrong

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