Toshiba is on the edge of insolvency, the ailing company lost a second CEO in as many years on February 14 as a second major accounting scandal came to fruition. Toshiba had delayed issuing the results of an audit, but admitted it was set to lose $3.4bn in the year running to March 2017. The multinational conglomerate was considered a pillar of the 1980s Japan Inc. relationship between government and business in Japan. Their interests are embedded throughout the infrastructure supply chain down to end point users and up to power generation.
Power generation is where Toshiba is now stirring up issues and judgement is being cast on its record and its record keeping skills. Toshiba announced a $6.2bn write down in value on its nuclear construction business. Having acqired a majority stake in Westinghouse Electric Company in 2006 the company had 87% share by 2013, spending a total of $7bn. Within the conglomeration, through chains of ownership snaking between companies, bad assets were bought. As a result no one wants to bu the nuclear business. Toshiba’s alternative is to break into the microchip business, where it has a value exceeding $13bn.
In 2015 the company overstated profits by $1.2bn, supposedly its trio of CEOs were rivals who didn’t like each other. The stock price of Toshiba has fallen by 50% since December 2016. The consequences of this are numerous, for one thing it highlights Japan’s issues with corporate governance. Other household name firms such as Hitachi and Mitsubishi subsidiary received $150 million in fines for cartel behaviour in the car parts market.
The impact of Toshiba’s retreat has created uncertainty over a nuclear power station underdevelopment in Cumbria, UK. Moorside, near Sellafield, is being developed by NuGen, whom Toshiba own a 60% share. Toshiba president Satoshi Tsunakawa told reporters in Tokyo the firm would be involved in the scheme “on the condition that we don’t take responsibility over construction work”. Another spokesperson from Toshiba told the BBC they had never committed to building the plant.
Local, business and political leaders warned the withdrawal would be have implications for the economy. Chris Jukes, a senior officer for the GMB union, called on the government to fund the project in event of Toshiba’s exit. MP for Westmorland and Lonsdale in Cumbria and Liberal Democrat leader Tim Farron described the nuclear industry as the “backbone of the local economy”. The £10bn ($12.5bn) project is one of the ‘next generation’ of nuclear power plants in the UK. It is expected power six million homes.
The entwined relationship of business and politics is well represented in Copeland, with the area awaiting the date of a by-election forced by the resignation of their Labour MP to work at Sellafield nuclear power plant. In light of Britain’s exit from the European Union several stress-tests of Global Britain’s solo venture are landing at once.