Factbox: Investigations into Japan's disgraced Olympus

TOKYO Wed Nov 30, 2011 8:01am EST

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TOKYO (Reuters) - Authorities in Japan, Britain and the United States are probing a decades-old cover-up of investment losses at Japanese camera and medical equipment firm Olympus Corp.

Following are details of the various investigations into Olympus, which has lost more than half its market value since the accounting scandal broke in mid-October. It now faces the prospect of arrests and risks being delisting from the Tokyo market.

JAPAN

A panel of external experts, including a former supreme court judge, was appointed by Olympus on November 1 to look into its past acquisitions after former chief executive Michael Woodford blew the whistle on a string of questionable deals.

The panel, due to report its findings in early December, may recommend the company ask authorities to prosecute senior executives, which in turn could lead to arrests.

Olympus initially denied any wrongdoing, but current company president Shuichi Takayama later blamed his predecessor, Tsuyoshi Kikukawa, as well as former vice-president Hisashi Mori and former internal auditor Hideo Yamada for the cover-up.

Japanese media have quoted Kikukawa as saying he had only learned of the cover-up long after becoming president in 2001, while Mori and Yamada reportedly told the panel they had started shifting losses off-shore from 2000.

The three could not be reached for comment.

Potential charges could include filing false financial statements, fraud and aggravated breach of trust -- an offence that can include embezzlement -- although proving breach of trust would be difficult because of the need to show that the offence had been committed for personal gain, lawyers said.

Japan's securities watchdog, prosecutors and police, meanwhile, have launched a rare joint investigation into the company. The Securities and Exchange Surveillance Commission (SESC), has begun an on-site investigation, a media report said on Tuesday, and could also file its own criminal complaint against individual executives.

Speculation about organized crime simmers. If executives are found to have dealt knowingly with organized crime, the company will likely be delisted from the Tokyo Stock Exchange.

CEO-turned-whistleblower Woodford said after meeting that Japanese authorities last week that he was satisfied they would conduct a thorough investigation.

UNITED KINGDOM

Britain's Serious Fraud Office (SFO) has also launched a formal investigation into Olympus.

Britain has no extradition treaty with Japan, but lawyers say the SFO has been spurred into action because of a UK connection to one of the deals at the centre of the scandal.

Olympus paid a whopping $687 million fee to a boutique U.S. financial firm for advising on the $2 billion purchase of UK medical services firm Gyrus in 2008. The fee payment was made mostly by a UK Olympus acquisition vehicle, Olympus Finance UK, and was channeled through Barclays Bank and Deutsche Bank.

The SFO investigates and prosecutes serious or complex fraud and corruption and works closely with external agencies and overseas prosecutors.

UNITED STATES

The U.S. Federal Bureau of Investigation and federal prosecutors in New York have been looking into the $687 million advisory fee, the bulk of which was paid to a now-defunct Cayman Islands firm. Lawyers say that if suspected criminal activity is found, potential charges could include wire fraud.

(Reporting by Linda Sieg and Isabel Reynolds in Tokyo, Basil Katz and Paritosh Bansal in New York and Kirsten Ridley in London)

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