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Wednesday, Dec. 7, 2011

Coverup probe finds no mob link

Olympus board must go, panel says


Staff writer

Olympus Corp. hid ¥134.8 billion in losses amid efforts to conceal the camera and medical equipment maker's soured investments since the 1990s, an independent panel appointed by the firm to probe its accounting scandal concluded Tuesday, denying it found any mob links.

The amount includes ¥117.7 billion in losses the firm attempted to cover up and costs related to the losses, including fees paid to financial advisers.

In announcing the findings, the panel urged Olympus to replace its current board of directors to prevent a further lack of proper corporate governance.

The panel also credited the company's ex-CEO, Michael C. Woodford, for bringing the wrongdoing to light. Woodford, a British national, was fired in October after raising questions about the firm's dubious transactions, and particularly about its massive fees paid to a now-defunct Cayman Islands-based adviser in connection with its purchase of U.K. medical equipment maker Gyrus Group PLC. Woodford's exit prompted the firm's shares to nosedive.

The panel didn't say anything about Woodford's ongoing proxy fight to gain support from a majority of Olympus shareholders to return to the firm's helm.

The panel claimed it found no evidence that the firm had ties with "antisocial groups" — a euphemism for organized crime groups — and denied previous media reports alleging funds flowed from it to yakuza.

Olympus initially denied any wrongdoing but later acknowledged it had used inflated advisory fees and other acquisitions to hide bookkeeping losses from past investments gone bad. It is being probed by authorities in Japan, Britain and the United States for alleged accounting fraud.

"As a result, it is sad that a very limited number of top executives knew about it (the coverup) and that the board of directors and auditors did not work well," said Tatsuo Kainaka, a lawyer and chairman of the panel.

It stressed that its findings, compiled in a 24-page document, are based on voluntary hearings and an analysis of company computers, and that it was not authorized to pursue a criminal probe.

The six-member panel, including lawyers and an accountant, said the coverup was mainly led by former Executive Vice President Hisashi Mori and former corporate auditor Hideo Yamada.

They were believed able to keep latent losses from securities investments off the books after getting permission from Masatoshi Kishimoto, who was president at the time, and that the coverup was continued by Tsuyoshi Kikukawa.

Information from AP added



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