Olympus eyes $1.2 billion suit, president may resign

TOKYO Sun Jan 8, 2012 12:14am EST

Olympus Corp President Shuichi Takayama speaks at a news conference in Tokyo December 15, 2011.   REUTERS/Kim Kyung-Hoon

Olympus Corp President Shuichi Takayama speaks at a news conference in Tokyo December 15, 2011.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Scandal-tainted Olympus Corp is considering suing current and former executives for compensation totaling about 90 billion yen ($1.2 billion), while its new president is considering resigning, a source familiar with the matter said.

The endoscope maker is preparing a suit to help cover damages from a $1.7 billion accounting fraud that has savaged the 92-year-old firm's finances, market cap and reputation, the source said.

The suit is likely to include current executives who failed to spot the 13-year cover-up or question exorbitant advisory fees made for acquisitions, he said.

Olympus said in a statement that it would announce the contents of any suit on Tuesday. It declined to comment on whether its president Shuichi Takayama planned to step down.

Takayama, who took the helm of the medical device maker in October, had resisted calls that he resign. He has said he was not involved with hiding losses, and that his first responsibility was to rebuild the company's business after the scandal wiped out 60 percent of its market capitalization.

But an external panel appointed by the company named Takayama as one of six current board members in breach of fiduciary duty by allowing former chairman Tsuyoshi Kikukawa and others to thin out Olympus's assets, the source said.

The company's main lender and major shareholder, Sumitomo Mitsui Financial Group, has backed existing management and its efforts to seek a capital tie-up to shore up its finances.

Takayama replaced former president and chairman Tsuyoshi Kikukawa in October, after ousted British CEO Michael Woodford blew the whistle on Kikukawa's involvement in the accounting fraud.

Woodford on Friday dropped his bid to return to lead Olympus, and said he would sue the company for unfair dismissal.

The company is likely to pick Takayama's successor from among the three board members the panel said were not responsible for the cover-up -- Masataka Suzuki, Kazuhiro Watanabe and Shinichi Nishigaki -- the source said.

The panel's report recommends that Kikukawa, former vice president Hisashi Mori and former auditor Hideo Yamada shoulder the bulk of the damages for masterminding the loss cover-up scheme, the source said.

($1 = 77.1150 yen)

(Reporting by Reiji Murai; Writing by Mayumi Negishi; Editing by Robert Birsel)

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Comments (3)
WeWereWallSt wrote:
A $1.2bn suit. Now we’re getting somewhere…

But resigning to take responsibility? He’s kidding, right? We want most of these guys to prostrate themselves in front of Michael Woodford and apologize to the guy.

This sorry saga has a long way to go.

WeWereWallStreet.com

Jan 08, 2012 12:19am EST  --  Report as abuse
alekseev.biz wrote:
Such concealment and tax evasion schemes are also in the Russian state-owned companies. This was confirmed in various media. It is very difficult to do business in Russia, where there are corrupt officials

Jan 08, 2012 8:21am EST  --  Report as abuse
GA_Chris wrote:
Mr Woodford deserve a ton of credit for taking on such an enormously corrupt board and shareholders. If only some of the3 CEO of our banks had similar integrity.

Jan 08, 2012 9:25am EST  --  Report as abuse
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