In Toshiba's scandal, blame samurai code

The Toshiba Corporation has struggled since at least 2008 to meet its financial targets. In 2015, the company made a shocking admission: Because of its struggles, Toshiba had committed a multi-year $1.22 billion accounting fraud that culminated in the resignation of CEO Hisao Tanaka in July of that year. What made this most surprising was that Toshiba had been perceived as “a totem of strong and virtuous Japanese corporate governance.” (See Toshiba: behind the numbers, Financier Worldwide, October 2015.)

Although Toshiba’s management and board of directors have made significant efforts to improve internal controls and corporate governance programs since its 2015 admission of fraud, new issues raised in late 2016 and early 2017 show that the organization still struggles with ethical problems and potential side effects of the 2015 scandal.

How can Toshiba, an iconic brand known around world, continue to have such serious false accounting issues? How can fraud, deceit, lying and cover-ups be the modus operandi of a respected international corporation that employs close to 200,000 employees worldwide?

In this analysis, I’ll examine the root causes of Toshiba’s corporate governance shortcomings that led to the documented accounting fraud and that threaten the survival of the organization today.