Japan's Olympus faces moment of truth in accounting

Mon Dec 5, 2011 5:22pm EST

The Olympus logo on its camera is seen in this illustrative photograph taken in Tokyo November 24, 2011. REUTERS/Kim Kyung-Hoon

The Olympus logo on its camera is seen in this illustrative photograph taken in Tokyo November 24, 2011.

Credit: Reuters/Kim Kyung-Hoon

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(Reuters) - The fate of Japan's disgraced Olympus Corp may become clearer on Tuesday, when it is expected to release the findings of an investigation into an accounting scandal that has threatened to bring the 92-year-old firm to its knees.

Olympus, a maker of cameras and medical equipment, has lost more than half its market value since the scandal erupted in October and now risks being delisted from the Tokyo stock market, a humiliation that could force it into asset sales.

The findings of an outside investigative panel, which was formed by Olympus in early November, will show the firm hid up to $1.67 billion in losses from its investors in an accounting cover-up that stretched as far back as the 1990s, a source familiar with the panel's inquiries has told Reuters.

The panel has found former executive vice president Hisashi Mori and ex-internal auditor Hideo Yamada led the cover-up, the source said.

But the panel has found no evidence to support rumors of involvement by organized crime in the concealment, and it stops short of suggesting any criminal charges, the source added. The issue of criminal complaints would be left to Olympus to pursue.

The Nikkei newspaper said on Tuesday that two ex-presidents, Tsuyoshi Kikukawa, who served from 2001 until the scandal broke, and his predecessor, Masatoshi Kishimoto, were both thought by the panel to have been made aware of the accounting tricks.

"Kishimoto, who held office from 1993 to 2001, told the committee he knew nothing about the cover-up, while Kikukawa said he found out about the losses only recently," the Nikkei said, quoting sources familiar with the investigation.

The Olympus board will meet on Wednesday to discuss its next steps, once investors had had time to digest the panel's findings, the daily said. The panel is made up of outside experts and is headed by a former supreme court judge.

One of Olympus's most pressing and immediate challenges is to meet a December 14 deadline to iron out its accounts and report its second-quarter results, a necessary step in order to keep its listing on the Tokyo Stock Exchange.

Olympus, though, remains under joint investigation by Japanese police, prosecutors and the markets regulator, and its board faces a call to shareholders for their removal by the firm's former British chief executive, Michael Woodford.

Woodford, who blew the whistle on accounting tricks at the company after his sacking from the top job in October, has launched a campaign to oust the current board and replace it with his own team of candidates led by him as nominated CEO.

(Writing by Mark Bendeich, editing by Richard Pullin)

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Comments (5)
JamVee wrote:
Who needs the “Yakuza”?

When they can hide $1.7 Billion in losses, for years, THEY ARE organized crime!

Dec 05, 2011 9:30am EST  --  Report as abuse
bloggerswamp wrote:
Duh and no charges are laid. Somebody got robbed of 1.67 Billion. Everybody that knew should get Jail Time

Dec 05, 2011 10:38am EST  --  Report as abuse
HolyChrist wrote:
Deregulation and tax breaks for the “job creators”. How many stories like this do we need to realize that corporations are not self-governing and do not have the public in their best interest.

Dec 05, 2011 12:04pm EST  --  Report as abuse
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