Olympus, executives admit guilt in cover-up

Published Sep 26, 2012

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Antoni Slodkowski Tokyo

OLYMPUS and three of its former executives pleaded guilty yesterday on charges related to a $1.7 billion (R14bn) accounting cover-up in one of Japan’s biggest corporate scandals.

The scandal at the camera and medical equipment maker was exposed last October by chief executive Michael Woodford, who was sacked by the Olympus board after querying dubious deals used to conceal the losses.

Revelations of the huge accounting fraud revived calls for more outside scrutiny of Japanese boardrooms but have failed to trigger sweeping corporate governance reforms similar to those introduced a decade ago in the wake of US scandals such as at Enron.

“The full responsibility lies with me and I feel deeply sorry for causing trouble to our business partners, shareholders and the wider public,” former chairman Tsuyoshi Kikukawa told the Tokyo district court at the start of the trial nearly a year after the cover-up first came to light.

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 the 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 seeking to delay the reckoning from risky investments made in the late-1980s bubble economy.

The indictment did not say 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 (R1m). The company could be fined more than ¥100m.

Olympus filed corrected financial statements for five years in December last year, revealing a $1.1bn dent in its balance sheet. Three sources said yesterday that Sony was likely to approve a plan this week to invest ¥50bn in Olympus, becoming its biggest shareholder with 10 percent. – Reuters

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