Toshiba chief executive to resign over scandal

Toshiba's chief executive and president Hisao Tanaka is to resign after the company said it had overstated its profits for the past six years.

He will be succeeded by chairman Masashi Muromachi, with vice-chairman Norio Sasaki also stepping down.

On Monday, an independent panel appointed by Toshiba said the firm had overstated its operating profit by a total of 151.8bn yen ($1.22bn, £780m).

The overstatement was roughly triple an initial Toshiba estimate.

The finance minister, Taro Aso, said the case could undermine confidence in corporate governance in Japan.

He added the accounting irregularities at Toshiba were "very regrettable",.

Japan's government has been trying to regain global investors' confidence with better corporate governance after Olympus, was found to have covered up $1.7bn in losses in late 2011, in what was until now Japan's worst corporate governance scandal.

The report's findings are expected to lead to the restatement of earnings, a board overhaul and potentially hefty fines for Toshiba.

The inquiry found that the misreporting of profits began after the financial crash seven years ago, when senior managers began imposing unrealistic performance targets.

"Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors," the report said.

"Therefore, when top management presented 'challenges', division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors."

Mr Tanaka and his predecessor Mr Sasaki are among eight high-level executives who have now resigned after the independent report found senior management complicit in a scheme to inflate profits over several years.

Regulators are believed to be starting their own review of Toshiba's book-keeping, based on Monday's report.

Shares in Toshiba rose 6% on the Nikkei stock exchange in Japan on relief that the report had few nasty surprises. But they are still down around 23% since Toshiba first disclosed cases of accounting irregularities in early April.