Toshiba chief executive Hisao Tanaka will step down in September along with other board members including vice chairman Norio Sasaki to take responsibility for accounting irregularities, sources familiar with the matter said.

The Japanese conglomerate has hired a third-party committee to investigate past book-keeping practices which sources say led to profits being overstated by more than 170 billion yen (€1.08 billion). That’s more than triple Toshiba’s initial estimate of around 50 billion yen.

Other sources with knowledge of the probe have said investigators were looking into the role that top officials played in the irregularities, focusing on whether they had knowingly encouraged malfeasance. The committee is expected to release its findings next week.

The scandal is a reminder Japan is still in the early stages of a campaign backed by prime minister Shinzo Abe to improve corporate governance.

Toshiba’s shares have slumped around 27 per cent in Tokyo since April when the company first disclosed irregularities in its books.

The independent committee is likely to say Toshiba needs a governance overhaul, and more than half of its board could be replaced at the next shareholders’ meeting in September, sources said on Wednesday.

The sources declined to be identified because they were not authorised to speak with media.

A Toshiba spokeswoman said the company had not yet made any decision on the matter and was waiting for the third-party committee to release its findings.

Reuters