Should the government rescue Toshiba?

Toshiba must reveal the full scale of its financial problems within one month or face being de-listed from the Tokyo Stock Exchange.

The company has twice failed to submit audited accounts which show how much money it has lost on its investment in nuclear power in the United States.

Toshiba has said the problems will cost at least six billion dollars but the full cost could be higher. Toshiba has debts relating to the Westinghouse nuclear power business America. Its auditors say it is difficult to assess the full scale of the problems.

There is now a debate about whether the Japanese government should rescue Toshiba, which employs nearly two hundred thousand people worldwide.

The Financial Times correspondent in Tokyo, Leo Lewis, says that a rescue deal would not fit well with Prime Minister Shinzo Abe’s business policy. He is pressing Japanese corporations to be more accountable to shareholders.

The government is reluctant to bail out companies which lose money through strategic mistakes. Shareholder activist groups complain this often happens in Japan and therefore corporate misdeeds go unpunished.

However, the powerful business group the Keidanren has suggested a rescue is required. The Keidanren’s chairman Sadayuki Sakakibara said “we must find a solution” to Toshiba’s problems because it is such an important company.

Toshiba wants to sell parts of its business to cover its losses. However, there are not many potential buyers for the Westinghouse nuclear power operation in America. There are contradictory reports in the media about whether the Koreans are bidding of if they have ruled themselves out.

Toshiba’s best asset is its memory chip business, known as Nand. The FT suggests that it is worth $20 billion.

The Japanese usually avoid selling companies to foreigners. Therefore, a rescue by other Japanese companies is likely, provided Toshiba can produce a credible, audited set of accounts and avoid the disgrace of having its shares taken off the Tokyo Stock Exchange, where they have been traded since 1949.

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