Olympus shareholder calls for reinstatement of ex-CEO

TOKYO Wed Nov 9, 2011 6:04pm EST

Olympus Corp's President Shuichi Takayama reacts at a news conference in Tokyo, November 8, 2011. REUTERS/Toru Hanai

Olympus Corp's President Shuichi Takayama reacts at a news conference in Tokyo, November 8, 2011.

Credit: Reuters/Toru Hanai

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TOKYO (Reuters) - Japanese police have launched a full investigation into the financial scandal engulfing Olympus Corp, a newspaper said Thursday, as a major investor joined increasing calls for a wholesale clean-out of the board.

Tokyo Metropolitan Police are investigating the firm's concealment of investment losses for possible violation of financial laws, the Yomiuri newspaper said, adding that police had asked Olympus for internal accounting documents and would also question Olympus executives and related officials.

Police would work with markets watchdog the Securities and Exchange Surveillance Commission and Tokyo prosecutors, which were already investigating, and swap information with the U.S. markets regulator and Federal Bureau of Investigation, it said. A police spokesperson declined to comment on the report.

Olympus has lost three-quarters of its market value since the scandal broke last month, when sacked chief executive Michael Woodford went public with allegations that the company had not properly accounted for about $1.5 billion in payments related to mergers and acquisitions.

Tuesday, the crisis escalated when the company dropped weeks of denials and stunned investors by admitting to hiding substantial investment losses for decades and using the unusual payments to assist in the cover-up.

Olympus said the revelation had come to light through an independent inquiry it had commissioned, and it blamed three senior executives for the cover-up. It remains unclear if all three have yet relinquished their executive and boardroom positions. The Olympus inquiry continues.

Earlier Thursday, a big foreign shareholder in Olympus, a once-venerable maker of cameras and medical equipment, called on the firm to reinstate its sacked chief executive to lead a "clean up" and added its voice to demands for wholesale sackings.

UK fund manager Baillie Gifford & Co, which says it holds more than 4 percent of Olympus, said CEO-turned-whistleblower Woodford should return to the helm of the company.

"What Olympus needs now is a thorough clean-up and we believe Michael Woodford is the best man for the job," Baillie Gifford partner and its head of developed Asia equities, Elaine Morrison, said in a statement.

"The current management of Olympus has been discredited by its original response to Mr. Woodford's allegations and its poor communications with shareholders. We expect all directors or employees linked to this wrongdoing to be dismissed and have their ties to the company severed."

This week, Olympus's biggest foreign shareholder, Southeastern Asset Management, also demanded a wholesale clean-out of the firm's board of directors.

Southeastern, which holds about 5 percent of Olympus, called for an extraordinary meeting of shareholders to sweep out all the remaining directors and its internal-audit board.

Lenders to Olympus are also reported to be restless, with Jiji news agency reporting Wednesday that creditor banks are considering changing conditions for their loans.

(Reporting by Mark Bendeich; Editing by Richard Pullin)

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Comments (2)
JamVee wrote:
In a country where the vast majority of people wouldn’t even think of running a red light, it’s revealing to find out that their business people can be just as dishonest as anywhere else. What I find particularly interesting is that such a large number of people could keep a secret that long. Nobody “caved” until a lone Westerner, stumbled on their crimes and exposed them to the world. Hari-Kari anyone?

Nov 09, 2011 7:15am EST  --  Report as abuse
Shareholders screwed yet again by dishonest executives, who in fact are just ordinary criminals. Go figure.

Nov 09, 2011 12:52pm EST  --  Report as abuse
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