By Ritsuko Ando and Reiji Murai
TOKYO (Reuters) - An independent investigation of Toshiba Corp's accounting irregularities is looking at the role played by top officials, people familiar with the matter said, a move that could force a management overhaul at the Japanese conglomerate.
As the probe has widened from looking into accounting errors at Toshiba's infrastructure business to checking books for a broad range of operations, investigators have interviewed upper management and examined internal e-mails in an effort to find the root cause of the irregularities, the people said.
Toshiba has been unable to close its books for the past financial year and seen its market value slide by a quarter or $4 billion due to the accounting scandal - which has become Japan's biggest since camera maker Olympus admitted in 2011 it used M&A deals to conceal investment losses.
Investigators' central theory is that executives, worried about the impact of the 2011 Fukushima disaster on its nuclear unit, set overly aggressive targets in new businesses such as smart meters and electronic toll booths, encouraging the understating of costs and overestimating of revenue in those divisions, the sources added.
"Perhaps there was a feeling that as long as they could just get through the immediate fiscal year, that was good enough," said one company source.
Profit writedowns could come to more than 150 billion yen ($1.2 billion), a separate source has said - an amount at least three times more than initial estimates. Other people familiar with the matter have said Toshiba is set to tap banks for a credit line worth up 600 billion yen.
The sources declined to be identified as they were not authorized to talk to media. Toshiba said it did not know the content of the investigation and has denied that it is seeking a credit line.
The laptops-to-nuclear conglomerate first disclosed accounting irregularities in early April, two months after financial regulators ordered a report on past bookkeeping. The probe, led by two accountants and two lawyers, is due to conclude in mid-July.
A regulatory source said Toshiba would likely be fined at the very least and that the regulator would see if the probe uncovers malicious intent before deciding whether to pursue a criminal case.
HARD TO STAY
The Nikkei business daily reported on Thursday that Vice Chairman Norio Sasaki, who served as company president between 2009 and 2013, would likely step down from the board of directors. A source familiar with the matter said it could be "tough" for Sasaki to stay.
Sasaki, current CEO Hisao Tanaka and other board members were reappointed at a recent shareholders' meeting. But the company is holding another such meeting in September, an opportunity that analysts believe could be used to reshuffle management and draw a line under the problem.
In addition to a credit line, sources said Toshiba is also considering selling assets including part of its stake in U.S. nuclear unit Westinghouse. Other media reports have said that those funds could be used to make up for any profit writedowns.
The company said it had been considering lowering its 87 percent stake in the U.S.-based nuclear power company for some time, and that this had nothing to do with the accounting probe.
The current accounting investigation is Toshiba's second in less then two years. In October 2013, it announced it had found that its medical subsidiary, Toshiba Medical information Systems, had overstated results for several years.
(Additional reporting by Takahiko Wada; Editing by Edwina Gibbs)