Inflating your operating profits is a big, BIG no-no from both a business and legal standpoint. This is something that the executives at Toshiba are learning the hard way after it came to light that they’ve been inflating profits for years, and CEO Hisao Tanaka has been forced to resign as a result. He’s certainly not going to be the last executive to do so either.
Toshiba Corp. chief executive Hisao Tanaka resigned on Tuesday, a day after a panel said he and other executives bore responsibility for overstated profits for several years, according to media reports. The executives inflated operating profits by $1.2 billion by setting unrealistic profit targets, the panel found. In response to the accounting scandal, Toshiba said it would reorganize its corporate governance. This means eight of 16 board members are stepping down, including Tanaka and Norio Sasaki, who has been serving as vice chairman. Current chairman Masashi Muromachi will serve as interim chief executive.