A law suit that claims nearly $10 million in damages has been filed against Toshiba by Japan’s $1.3 trillion public pension fund. The damages have been claimed after the fund lost money following the accounting scandal that pushed down the electronics company’s share price, the pension fund representatives said.

The accounting scandal the embroiled the Japanese electronics company is believed to be valued at $2.1 billion. Following the scandal, in addition to about 50 individual shareholders who have filed suit against Toshiba, the Government Pension Investment Fund is believed to be the first institutional investor in Japan to sue the electronic company. The pension fund is the world’s largest of its kind.

The fact that a lawsuit filed by one of its asset managers against Toshiba in May was made on behalf of the fund was confirmed by a GPIF spokesman. While declining to make detailed comments on the law suit and the damage claims, a representative for the asset manager, the Japan Trustee Services Bank Ltd., said that it pursues lawsuits on behalf of investors whose money it manages. The first hearing of the case was held Tuesday.

There were no comments made from Toshiba citing that the lawsuit is pending.

In a bid to attract more foreign investment, Japanese Prime Minister Shinzo Abe pushed companies to increase their transparency and accountability to shareholders since last year and it was this effort that reportedly led to the unfolding of the Toshiba accounting scandal.

The Abe government unveiled the Japan Stewardship Code outlining the corporate responsibilities towards shareholders and investors in 2014 as the prime minister urged investors to work to improve medium- and long-term returns for clients and pensioners.

In what is presumably one of the biggest accounting scandals to have hit the Japanese industry in recent years, Toshiba had conceded in September last year that it had over stated its annual earnings by ¥224.8 billion ($2.1 billion) over a period of seven years. This admission had resulted in the share prices of the company plummeting down.

However market experts say that after a scandal, it isn’t uncommon for large investors to sue companies responsible for the scandals for damages. In March this year, German car maker Volkswagen faced a barrage of laws suits from nearly 300 institutional investors where the value of the claimed damages touched a €3.3 billion ($3.7 billion) following the emissions-cheating scandal unearthed in the U.S. and to which the company conceded.

According to documents filed with the Tokyo District Court, as a result of the drop in its share price, the Japan Trustee Services Bank is asking for ¥964 million ($9.2 million) in damages from Toshiba. Plummeting down from the price at which the company shares were acquired, the price of Toshiba’s shares had fallen roughly ¥85 to ¥247.7 at the close of trading April 22.

Pension reserves for the national pension system as well as private-sector employees are managed by GPIF.

(Adapted from The Wall Street Journal)

Categories: Economy & Finance, Regulations & Legal, Uncategorized