Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, December 8, 2015, 11:13 am to 11:25 am)

[Questions and answers:]

Q.

I would like to ask about the Toshiba accounting scandal. Yesterday the Securities and Exchange Surveillance Commission (SESC) made a recommendation that the Financial Services Agency order Toshiba to pay an administrative monetary penalty, so would you please give us your comments on the Toshiba accounting scandal and any future measures to be taken?

A.

I am aware that the Securities and Exchange Surveillance Commission has found that false statements were made on material issues in the securities filings Toshiba had submitted in previous fiscal years, and that yesterday the SESC recommended that an administrative monetary penalty payment order be issued in accordance with the Financial Instruments and Exchange Act. In light of this recommendation, the Financial Services Agency decided on December 7 to begin hearing procedures. It is extremely regrettable in this particular case that false statements were made over such a long period of time. In any event, I think that tough action needs to be taken to ensure fairness in securities transactions and to protect investors.

Q.

I have an additional question on the Toshiba matter. The Securities and Exchange Surveillance Commission and the Financial Services Agency announced yesterday that they would be following up on Toshiba’s disclosure regime and governance practices to prevent any recurrences. The legal basis for this was said to be Article 26 of the Financial Instruments and Exchange Act, but Article 26 of that Act only allows for reports to be ordered. My question, then, concerns just how far the Securities and Exchange Surveillance Commission and the Financial Services Agency can go in instructing Toshiba and whether they even have the authority to do so. I would appreciate hearing your thoughts on this point.

A.

The Financial Services Agency does not comment on individual cases of this type involving listed companies. We will be considering specific follow-up, but I cannot say any more than that.

Q.

I would like to ask about two points concerning the Toshiba matter. First, yesterday’s briefing by the Securities and Exchange Surveillance Commission stated that this recommendation of an administrative monetary penalty was based on inspections of disclosure statements, and that the possibility of criminal charges being filed in future against Toshiba executives could not be ruled out. I am interested in hearing what you think regarding future criminal charges against Toshiba’s executives.

A.

I am well aware that a recommendation was made to issue an administrative monetary penalty payment order based on the considerable number of false statements during an extended period, and that an order for payment of an administrative monetary penalty does not preclude the filing of charges. As I noted in response to the previous question, I cannot say anything beyond that regarding individual cases.

Q.

I understand that the Financial Services Agency is investigating Ernst & Young ShinNihon, which was in charge of the accounting audits for Toshiba in this matter. The fact that this accounting scandal was not uncovered through accounting audits could impact confidence in listed companies in Japan, so I would like to hear your thoughts on the investigation of the accounting audits.

A.

I believe the Certified Public Accountants and Auditing Oversight Board has launched an investigation of Ernst & Young ShinNihon and, if it is determined that there were problems with the accounting audits, then there will be no choice, of course, but to deal with this severely.