Toshiba accounting scandal said to be growing in scope; losses mount

Top officials at Toshiba are under scrutiny as part of an investigation into accounting irregularities that could result in a management overhaul at the Japanese conglomerate, which makes medical imaging devices among many other products, Reuters reported.

The news agency, citing unnamed sources close to the matter, said the probe has grown from reviewing accounting errors at the company's infrastructure business to interviews with top executives and a review of internal emails.

The growing scandal is the biggest of its kind in Japan since medical device and camera maker Olympus said in 2011 it used false accounting to hide investment losses. Since the Toshiba investigation began earlier this year, the company has lost 25% of its market value, or about $4 billion, Reuters said.

There are also reports Toshiba is considering selling part of its stake in Westinghouse Electric, which could generate about $1.7 billion, according to the Nikkei business daily. Other sources have said profit writedowns at Toshiba could reach $1.2 billion.

The accounting probe is expected to be completed in the next few weeks. Much of the investigation has centered on pressure from top managers to increase revenue outside the company's slumping nuclear business in the wake of the Fukushima nuclear disaster in 2011, the sources told Reuters.

In February 2014, Toshiba Medical Systems renewed a three-year deal with Varian Medical Systems ($VAR) to supply medical imaging components. At the time of the announcement, the agreement was said to be worth about $515 million.

- check out the Reuters story