olympus

6 Execs Charged In Olympus Loss Coverup Scandal

olympus
Preston Waters

Japanese prosecutors formally charged Olympus Corp.’s former chairman and five other people Wednesday in a high-profile scandal involving a cover-up of massive investment losses at the company. Tokyo prosecutors said in a statement that they formally pressed charges against Tsuyoshi Kikukawa, two other former executives at the Tokyo based medical equipment maker, along with three other men from consulting companies who collaborated in the scandal.

The six men were arrested in mid-February on suspicion that they falsified the company’s financial statements from 2006 to 2007.

Prosecutors started a fresh investigation of the four former Olympus employees Wednesday over alleged additional falsification from 2008 to 2010.

Olympus has said it hid 117.7 billion yen ($1.5 billion) in investment losses dating to the 1990s.

The scandal surfaced late last year when then-President Michael Woodford raised questions about payments for financial advice and acquisitions of companies that were not related to Olympus’ mainstay operations.

Olympus initially denied any wrongdoing but later acknowledged the hiding of investment losses.

The company late last month renewed the board and picked new leadership.

Hiroyuki Sasa, 56, with experience in the company’s key medical equipment business, would become president, with Yasuyuki Kimoto, 63, former executive at Sumitomo Mitsui Banking Corp., which is Olympus’ main bank, becoming chairman. The changes will become official at shareholders’ meeting in April.

Kikukawa resigned from all posts at Olympus last year. The company is suing him and 18 other former and current executives for damages in the cover-up.

The scheme came to light after Woodford blew the whistle and has raised questions about corporate governance in Japan and whether major companies are meeting global standards.

Olympus’s internal investigation found that some executives were involved in the deception.

Woodford was fired in October after raising his concerns. He recently gave up his comeback attempt after failing to win support from major investors including Japanese megabanks.

Olympus barely met its mid-December deadline to avoid being removed from the Tokyo Stock Exchange by filing corrected earnings for the April-September first half and for the past five fiscal years.

Associated Press

Preston Waters

Preston Waters

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