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There was massive financial fraud at Westinghouse. Even though the nuclear industry is in a downturn, the troubles at Westinghouse are self inflicted - Toshiba
by barkingcat 10y ago
There was massive financial fraud at Westinghouse. Even though the nuclear industry is in a downturn, the troubles at Westinghouse are self inflicted - Toshiba bought them, but found out almost all of the unit's profits are misreported, leading to them spending money on "nothing" basically. The unit earned no money and was threatening to sink Toshiba the entire keiretsu. This is Toshiba trying to save itself by closing down the tide of red.
The source of the troubles was Westinghouse's purchase of CB&I Stone & Webster, and it spun out of control.
- mikeash 10y agoThat's really interesting. How did Toshiba manage to acquire them without uncovering the fraud first?
- barkingcat 10y agoLying and coverup. It's fraud - people refusing to tell or put things down on official financial reports, writing false statements, signing false financial reports, using non GAAP, unusual accounting methods, etc. Also, audits and due diligence didn't uncover the magnitude of the problem. It took a whistleblower to get the story out to upper management. https://www.thestar.com/business/2017/02/14/toshiba-chairman-resigns-over-massive-projected-nuclear-losses.html https://www.thestar.com/business/2017/02/14/toshiba-chairman... this article outlines the contract issues, but there were other issues at play at the same time http://www.reuters.com/article/us-toshiba-accounting-workingcapital-idUSKBN14H1WT http://www.reuters.com/article/us-toshiba-accounting-working...
- amorphid 10y agoReminds me of HP's acquisition of Autonomy. https://www.recode.net/2015/5/5/11562326/hps-5-billion-fraud-lawsuit-against-former-autonomy-executives-is-now https://www.recode.net/2015/5/5/11562326/hps-5-billion-fraud...
- thrillgore 10y agoI just don't think Japanese companies have a process on dealing with foreign M&As and fraud mitigation. When Hitachi acquired the spanish manufacturing company AnsaldoBreda, there were similar fraud accusations.
- jessaustin 10y agoSony's acquisition of Columbia/TriStar hasn't gone particularly well either...
- thrillgore 10y agoI don't know if that's fraud as much as they just aren't using that business right. Sony is weird, having an entertainment division they keep writing off when their only profitable consumer products division is PlayStation.
- jessaustin 10y agoIt may not have been fraud fraud, but they paid $4.8B and wrote off $2.7B of that within five years. Somebody didn't know exactly what he was buying...
- genkaos 10y ago"...When Hitachi acquired the italian manufacturing company AnsaldoBreda..."
- seanmcdirmid 10y agoIt was the acquisition of an acquisition, really meta if you ask me. On its own, Toshiba acquiring Westinghouse was fine, but when Westinghouse acquired CB&I, it all went to hell.
- bhc 10y agoWestinghouse only closed Stone & Webster acquisition in late 2015, so it seems like the fraud started while Stone & Webster was still owned by CB&I. The whole saga is bizarre because CB&I sued Westinghouse claiming it was paid too little for S&W [1] a few months after the sale was finalized, and then a few months later sued Westinghouse again [2] seeking to wipe out their liabilities in the S&W's businesses. [1] http://www.powermag.com/cbi-sues-westinghouse-over-2b-closing-agreement-claim/ http://www.powermag.com/cbi-sues-westinghouse-over-2b-closin... [2] https://www.bna.com/chicago-bridge-iron-n73014448199/ https://www.bna.com/chicago-bridge-iron-n73014448199/
- masklinn 10y agoIt doesn't seem like S&W is all of the trouble, the bankruptcy seems to be blamed on Westinghouse's inability to deliver its AP1000.