Former executives arrested over Olympus fraud
Thursday 16 February 2012
Four months after one of Japan's
biggest corporate scandals, police and prosecutors today arrested
seven men, including the former president of Olympus Corporation and ex-bankers, over their role in a $1.7 billion accounting fraud at the medical equipment and camera maker.
Tokyo prosecutors arrested ex-President Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada on suspicion of violating the Financial Instruments and Exchange Law, officials said.
Also arrested were former bankers Akio Nakagawa and Nobumasa Yokoo and two others suspected of helping hide huge investment losses through complex M&A deals.
The three former executives had been identified by an investigative panel, commissioned by Olympus, as the main culprits in the fraud, seeking to delay the reckoning from risky investments made in the late-1980's bubble economy.
The scandal was exposed in October by then-CEO Michael Woodford, who was sacked by the Olympus board after querying dubious M&A deals later found to have been used to conceal the losses. Woodford campaigned to win his job back, but gave up that bid last month, blaming cosy ties between management and big Japanese shareholders and citing the strain on his family.
"After going to hell and back, this is a day to remember," Woodford said in an email today. The Briton, who was a rare foreign CEO in Japan, plans to write a book about his experiences uncovering the scandal.
The arrests come as investors focus on who will run the once-proud company when its management steps down at an April 20 shareholders meeting, and whether Olympus will seek a capital tie-up to fix its balance sheet.
Olympus is banking on that April meeting marking a turning point in the scandal, with at least six of its 11-member board, including current President Shuichi Takayama, set to resign.
His successor is likely to be one of three board members the panel said were not responsible for the cover-up - Masataka Suzuki, Kazuhiro Watanabe and Shinichi Nishigaki - said a source familiar with the matter, who did not want to be identified due to the sensitivity of the issue.
"The arrests of former executives won't impact possible tie-ups with Terumo, Sony, Fujifilm and others," said a sell-side equity manager at a Japanese firm, who did not want to be named as he is not authorised to talk to the media.
"Olympus continues to be very attractive to other companies because of its endoscope business."
Last year, the investigative panel found Kikukawa, Mori and Yamada had played leading roles in a 13-year scheme to hide the losses, and they are among 19 executives Olympus is suing over the scandal.
The panel said it found no evidence of involvement by organised crime, despite speculation that "yakuza" gangsters were somehow involved in the cover-up scheme.
An Olympus spokesman said the company would cooperate fully with the investigative authorities. It is also under investigation by law enforcement agencies in Japan, Britain and the United States.
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 A politically correct lefty goes to see Top Gear live – you'll probably believe what happened next
- 3 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 Snoop Dogg on why he doesn't regret displaying misogyny towards women
Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
Woman accidentally shoots herself in the head while posing for a selfie
How China's richest man Li Hejun lost $15bn in an hour - and made a fortune
Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
Snoop Dogg on why he doesn't regret displaying misogyny towards women
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...