UPDATED! Olypmus Executives Arrested Over Cover-up

Posted: February 17th, 2012 | Author: The Technoid | Filed under: Digital Camera News, UPDATED! | Tags: Business Economics and Finance, Business News, Company News, Fraud, Japan, Manufacturing, Michael Woodford, Olympus | No Comments »

UPDATE! 26 September 2012: Japanese camera maker Olympus and three of its former executives have pleaded guilty to charges relating to a $1.7 billion accounting cover-up. The scandal was exposed last October by chief executive Michael Woodford, who was sacked by the Olympus board after querying past acquisitions by the company and the payment of vastly inflated consultancy fees.

The former president of Japanese camera-maker Olympus Hisashi Mori, has been arrested over a nearly $2 billion cover-up at the company. Six others have also been taken into custody over one of Japan’s biggest corporate scandals. Japanese prosecutors allege that the seven suspects used shady accounting to hide $1.7 billion in investment losses. The scandal was exposed by the company’s former chief executive Michael Woodford, who was fired when he confronted the board about the cover-up.

Japanese prosecutors arrested the firm’s former president Tsuyoshi Kikukawa on suspicion of violating laws banning falsification of financial statements.

The company’s former vice president Hisashi Mori was arrested, along with former auditor Hideo Yamada. Also taken into custody were a former brokerage firm executive and three former employees of a major securities company who are alleged to have advised Olympus management about how to cover up the massive losses ::::

Three of the Olympus executives have reportedly admitted to prosecutors their involvement in the falsification of financial statements. Japan’s public broadcaster reported that prosecutors would press ahead with their probe into the scandal and continue to raid locations related to the case. Olympus says it is cooperating with police to uncover the facts.

PREVIOUS POST: Disgraced Japanese company Olympus must file a quarterly financial report tonight or risk being delisted from the Tokyo Stock Exchange. The camera maker today filed corrected earnings reports for the past five financial years, but has yet to file the July-September 2011 results that are required. Last month, the 92-year-old company admitted to hiding billions of dollars in losses on securities investments over the past decade. The scandal first came to light when former chief executive Michael Woodford was fired earlier this year after blowing the whistle on the dodgy accounting. Woodford, who returned to Tokyo yesterday to campaign to get his job back, is urging current Olympus board members to step down.  READ MORE

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Former Executives Plead Guilty

UPDATE! 26 September 2012: Japanese camera maker Olympus and three of its former executives have pleaded guilty to charges relating to a $1.7 billion accounting cover-up. The scandal was exposed last October by chief executive Michael Woodford, who was sacked by the Olympus board after querying past acquisitions by the company and the payment of vastly inflated consultancy fees.

It was later revealed that they were part of an elaborate scheme to conceal losses dating back to the 1990s.

Olympus initially denied any wrongdoing, but the company later changed its position and sacked the executives it said were involved. Revelations of the huge accounting fraud revived calls for more outside scrutiny of its boardrooms but have failed to trigger sweeping corporate governance reforms.

“The full responsibility lies with me and I feel deeply sorry for causing trouble to our business partners, shareholders and the wider public,” ex-chairman Tsuyoshi Kikukawa told the Tokyo district court at the start of the trial.

“I take full responsibility for what happened.”

Prosecutors charged Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada with inflating the company’s net worth in financial statements for five fiscal years to March 2011.

The three former executives had been identified by an investigative panel, commissioned by Olympus, as the main suspects in the fraud.

The indictment did not specify what penalties the prosecutors would seek, but lawyers have said the former executives could face up to 10 years in jail and fines of up to 10 million yen ($128,400).

The company could be fined more than 100 million yen, according to the Japanese media.

Mr Woodford had initially campaigned to win his job back, but has since given up, blaming cosy ties between management and big Japanese shareholders and citing the strain on his family.

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