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Five years sought for Olympus chairman

Kyodo

Prosecutors sought a five-year prison term Tuesday for former Olympus Corp. Chairman Tsuyoshi Kikukawa for colluding with two others to cover up massive investment losses at the firm.

Prosecutors at the Tokyo District Court also requested prison terms of 4½ years for former Olympus auditor Hideo Yamada, 68, and four years for former Executive Vice President Hisashi Mori, 55, while saying the company should pay a fine of ¥1 billion.

Kikukawa, 72, Yamada and Mori are accused of colluding to submit false financial reports that overstated Olympus’ net assets by ¥41.6 billion to ¥117.8 billion to the Finance Ministry over a five-year period through fiscal 2010.

The high-profile scandal broke when ousted Olympus Chief Executive Officer Michael C. Woodford in October 2011 blew the whistle on dubious accounting related to the firm’s acquisitions, including the 2008 buyout of British medical firm Gyrus Group PLC.

“It’s a crime that shook the credibility of our country’s capital markets,” one of the prosecutors told the court. “He (Kikukawa) bears the heaviest responsibility, as he made the final decision and had his aides carry out the plot.”

Failures in financial management in the 1990s after the downfall of the asset-inflated bubble economy caused the camera and medical equipment maker around ¥100 billion in latent losses, according to investigations.

To keep the losses out of sight, the company employed a scheme called “tobashi,” an accounting trick involving moving around impaired securities to defer booking latent losses in earnings reports.

Kikukawa has said in court that he did not reveal the losses to protect the company.

The three former executives pleaded guilty to covering up the losses when their trial began last September.

The former executives’ defense team will make its final argument April 23.