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. Last Updated: 07/27/2016

Scandal Bedevils Electronics Firms

TOKYO -- Leading electronics makers Mitsubishi Electric Corp. and Toshiba Corp face the possibility of a further decline in already weak earnings due to news of their links to Japan's widening racketeer scandal, according to analysts Tuesday.

An executive from each firm was arrested late Monday on suspicion of making illegal payments to corporate racketeers. On Tuesday, police raided their headquarters seeking evidence of involvement in the scandal, which has already enveloped some of Japan's most prestigious corporations.

Steven Myers, senior analyst at Tokyo branch of Jardine Fleming Securities, said the news was not only damaging to their brand names but a distraction at a time when they need to focus on rebuilding their business strategies.

"The scandal will likely have a negative impact on the companies' earnings," he said.