Japan's Toshiba Corp. said on Saturday it has sued five former executives, including three former chief executives, over mismanagement, in an apparent attempt by the current leadership to distance itself from a $1.3 billion accounting scandal.
The laptops-to-nuclear power conglomerate also said it swung to an operating loss of 79.5 billion yen ($645.66 million) in the three months through September, from a 90.2 billion yen profit a year earlier.
The dismal results, which had been flagged this week, adds pressure on Toshiba to implement drastic restructuring steps that are long overdue as its profit-padding masked many unprofitable businesses.
"We're lagging behind in restructuring the unit in charge of personal computers, television and home appliances," Toshiba's chief financial officer, Masayoshi Hirata, told a news conference.
In a statement released at the news conference, Toshiba said it was seeking damages totalling 300 million yen ($2.44 million) from previous CEO Hisao Tanaka, his two predecessors and two former chief financial officers.
The lawsuit, filed with the Tokyo District Court on Saturday, was based on a report submitted by an independent panel investigating liability of 98 former and current executives for the overstatement of profits over seven years.
The panel of three lawyers concluded that the executives' negligence over dubious accounting practices caused damage to the company, Toshiba said.
The three former executives resigned in July, but denied any direct involvement. They were not immediately available for comment.
Toshiba set up the independent panel in September after an individual shareholder demanded the company file a lawsuit for 1 billion yen in damages against 28 former and current executives.
It was Japan's worst corporate scandal since medical equipment maker Olympus Corp. was found to have covered up $1.7 billion in losses in late 2011.
Olympus sued more than 20 former and incumbent executives for damages.
Toshiba announced a plan to sell its imaging sensor business to Sony Corp. in October, but a wide range of other loss-making operations remain untouched.
Separately on Friday, Toshiba said it is trying to sell down a $7.4 billion commitment to U.S. liquefied natural gas (LNG), which it signed two years ago as part of a plan to sweeten sales of turbines for power plants.
A plunge in Asian gas prices means an expected U.S. export bonanza has fizzled out before it even started, and has left the giant conglomerate potentially exposed to LNG processing fees of up to $370 million a year.
Toshiba confirmed in an interview that it is looking to cut its commitment in the early years of the 20-year contract, but declined to comment on cost.
"We have to admit the competitiveness of (U.S.) LNG is getting weaker compared to JCC prices," said Akira Nakatani, a manager in Toshiba's LNG group, referring to the typical price mechanism for long-term supplies to Japan.
In recent weeks, Toshiba has held talks with oil and gas majors, utilities, trading houses and other potential LNG buyers to try to offload its commitments, according to six industry sources. Nakatani declined to comment on the names of possible buyers.
Other Asian buyers are also trying to reduce their exposure to long-term LNG import obligations, as their demand wanes along with stalling conomic growth and as excess supplies become available cheaply on the spot market.
Toshiba may find it difficult to exit its commitment, say industry experts.
The issue stems from a 2013 decision to buy the right to liquefy 2.2 million tonnes of LNG annually from 2019 from the proposed Freeport LNG export plant in Texas.
The purchase of the so-called tolling agreement by an electronics conglomerate that makes everything from computers to vacuum cleaners stunned the market.
"It was like Sony buying LNG," said Tom O'Sullivan, an independent energy consultant and former investment banker with many years experience in Japan.
Toshiba's plan was to pitch LNG supplies as a sweetener to likely Asian buyers of its electricity turbines used in combined cycle gas-fired power plants, said Nakatani.