Serious Fraud Office to launch inquiry into Olympus scandal

UK fraud watchdog is latest regulatory body to examine payments in fees on takeover deals
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The Independent Online

The Serious Fraud Office has become the latest regulator to launch an investigation into Olympus as it emerged that the scandal-hit camera and endoscope maker has vowed to take legal action against any executives involved in the corporate cover up.

The UK fraud watchdog said in a statement yesterday: "We have opened an inquiry into Olympus and are liaising with other organisations and international colleagues following information given to us by the Olympus chief executive."

Michael Woodford, who passed documents to the SFO after he was ousted as Olympus's chief executive last month for raising "serious governance concerns" to the Japanese company's board, called the UK investigation a "very positive development".

Since Mr Woodford was ousted the company has been in turmoil. This month it admitted covering up losses for two decades. A series of regulatory bodies beyond the SFO are scrutinising payments in fees and potentially inflated prices of non-core takeovers totalling over $1.3bn (£823m) relating to four of Olympus' transactions in 2008.

In Japan, the Tokyo Metropolitan Police and the Security and Exchange Surveillance Commission are studying the case. In the United States, the Federal Bureau of Investigation, the Department of Justice and the Securities and Exchange Commission are also investigating.

"You need people who have the legal right to follow the money; that's how you get to the truth," Mr Woodford said. "And we need to uncover the detailed truth."

Questions still remain over the size of the original losses, how they were disguised and where the money ended up. The Briton is preparing to meet a delegation from independent panel set up by Olympus to investigate. He will then fly out for further meetings with authorities in the US.

Yesterday it also emerged that the newly installed president Shuichi Takayama had sent an internal memo to Olympus staff outlining the action awaiting those involved. The memo, seen by Reuters, said: "We will wait for the third-party panel to report, and we are preparing to take firm legal action, including criminal complaints, against any manager it finds responsible."

Olympus has also held meetings with creditors in an attempt to reassure them that the company can meet all of its financial obligations. These institutions are understood to have included Japanese financial giants Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group.

Creditors and investors have raised fears after the group saw 80 per cent of its value evaporate since firing Mr Woodford and the subsequent revelations of wrongdoing. The scandal forced Olympus to delay its financial results for the first half, as it waits for the results of the third-party investigation. This could mean the company is forced to delist after 62 years on the Tokyo Stock Exchange. It has until 14 December to file the document.