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Four senior Toshiba executives, including two board members, have been forced to step down after a heated four-hour emergency board meeting on Sunday.
The meeting, which drives one of Japan’s most famous industry names, even deeper into a governance crisis, followed the publication last week of damn report in the company’s collusion with the government to suppress activist investors.
He Independent report of 147 pages, which was compiled by outside lawyers, arose from an unprecedented shareholder revolt and provides explicit details about the “dark arts” campaign orchestrated by Toshiba and officials from the Ministry of Economy, Trade and Industry (Meti). The report also alleges that the campaign was carried out with the knowledge of then-Cabinet Secretary – now Prime Minister – Yoshihide Suga, a claim he denied.
The content of the report horrified several members of the Toshiba board. In a joint statement Friday, four of the non-executive directors said management and the board had taken actions “unacceptable and directly against the interests of our shareholders”. In a rare act of rebellion, they said they no longer supported the full list of Toshiba-nominated board candidates for the June 25 annual shareholder meeting.
On Sunday, the same four board members issued a statement saying they were delighted to find that “under the direction of the President [Osamu] Nagayama today announced a series of important changes by Toshiba.
Despite this, several of Toshiba’s major shareholders said in private that they believed the situation required the resignation of the chairman of the board, a position that could gain momentum as investors consider whether to vote against Nagayama’s appointment and other Toshiba AGM board executives.
The four expelled Toshiba executives include the chief and a second member of the audit committee who previously deceived the board by concluding that there was no harm surrounding the company’s annual shareholders ’meeting in 2020. According to people close to him in the situation, Sunday’s board meeting discussed whether all members of the audit committee should have at least a certified internship (CPA) qualification.
Among the four executives who are now forced to step aside, Masaharu Kamo and Masayasu Toyohara stood out in the report. Both executives dealt directly with the ministry: Toyohara, according to investigators, called on the government to “beat” its most troubled shareholders.
Kamo, here it was stolen of McKinsey just last year, was also considered a key executive of the group’s replacement plan after an accounting and financial crisis.
The report focused on Toshiba’s 2020 AGA, in which the company’s top investors led an effort to vote for then-Toshiba chief executive Nobuaki Kurumatani. He narrowly survived that vote, but through a process the independent report concluded that “it was not carried out fairly.”
Kurumatani resigned in April, getting investor attention focused on the board’s promise to appoint a strategic review committee (SRC) to lead the company through its crisis. One of the committee’s most urgent tasks, two of its largest investors told FT, will be to evaluate the company’s potential bids from privately held companies following a $ 20 billion CVC takeover bid.
Despite multiple calls intensified by independent board members and investors for Toshiba to call SRC members on Sunday, people close to the situation said it had not yet happened.
In his first formal statement since the independent report was released, Toshiba said Sunday it would take steps to identify the root cause of the problems surrounding the 2020 AGA.
“We will clarify responsibilities, take appropriate action to prevent recidivism, and use that experience to improve transparency in our management,” the Toshiba statement said.
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