Toshiba Bosses Quit Over $1.2bn Profit Scandal

The $1.2bn (£755m) accounting scandal at Toshiba has resulted in the resignations of its chief executive and eight other senior staff.

They were announced following the publication of an independent report which concluded the company had overstated profits over a period of six years and that senior management were complicit in fiddling the figures to bolster Toshiba's finances.

Chief executive Hisao Tanaka, who is also the technology manufacturer's president, confirmed his departure at a packed news conference in Tokyo.

Beforehand, he had bowed his head for nearly half a minute in a gesture meant to convey deep shame and contrition.

It was also announced that Toshiba's chairman was to run the company pending the appointment of a new management team next month.

Tanaka's predecessors, Norio Sasaki, now a vice chairman, and Atsutoshi Nishida, an adviser, were among the other people to give up their posts.

The scent of scandal first surfaced in early April when the company ordered an investigation into its accounting.

The investigators hired by Toshiba confirmed that the firm "systematically" inflated profits in parts of the business which were struggling financially, including personal computers.

It said that under an initiative known as "Challenge", employees were made to feel "cornered into resorting to inappropriate measures" to meet inflated targets.

In essence, the books were cooked in an attempt to shore up Toshiba's finances.

In a release to shareholders last night, Toshiba said it took the failings "very seriously" and apologised but said it would take time to digest the findings and recommend courses of action.

These were expected to include asset valuations, possible division sales to account for losses and a restatement of profits.

The firm, which also counts TVs and nuclear power systems among its products, has been unable to close its books for the latest financial year and was forced to cancel its dividend as the investigation took its course.

The disclosure is likely to lead to regulatory fines and possible criminal charges.

Toshiba's share price, which has lost around a quarter of its value since April, gained 6% on Tuesday as investors welcomed the end of the uncertainty.

However, the profits overstatement has further tarnished the reputation of corporate Japan in the wake of a separate but similar accounting scandal at Olympus .

Among the chief concerns is a conformist attitude in Japanese businesses, where whistleblowers have weak legal protections.

Auditors are also likely to face serious questions on their oversight of Toshiba's accounts.