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Olympus trio avoid prison for fraud

Ex-execs guilty of hiding massive losses; firm fined ¥700 million

Kyodo, AFP-JIJI

The Tokyo District Court on Wednesday found three former Olympus Corp. executives guilty of covering up massive investment losses at the medical equipment and digital camera maker, handing them suspended prison terms.

Former Olympus Chairman Tsuyoshi Kikukawa, 72, and Hideo Yamada, 68, a former standing auditor with the company, were sentenced to three years in prison, suspended for five years. Former Vice President Hisashi Mori, 56, was given a 30-month prison term, suspended for four years.

Presiding Judge Hiroaki Saito also fined Olympus ¥700 million.

All three former executives had pleaded guilty to falsifying financial statements from fiscal 2006 to 2010 by overstating the company’s net assets by ¥41.6 billion to ¥117.8 billion in order to cover up investment losses.

The wrongdoing came to light in October 2011 when the firm’s president at the time, Michael C. Woodford, a British national, blew the whistle on dubious accounting related to the Japanese company’s corporate acquisitions.

The Briton was abruptly fired after raising concerns about the accounting, with Olympus initially denying any wrongdoing.

It later admitted the fraud and axed Kikukawa and other executives as Japanese, U.K. and U.S. authorities started probing the affair, which grabbed global headlines.

Olympus subsequently agreed to a reported £10 million ($15 million) payout to Woodford to settle a wrongful dismissal suit.

The company has already been fined about ¥192 million by the Financial Services Agency.

Separately, Japanese authorities have ordered Olympus to pay about ¥5 billion in back taxes and penalties related to the cover-up, media reports said.

Prosecutors had sought penalties of up to five years in prison for the three former executives and a fine of ¥1 billion for the company, saying the loss concealment was “a systematically premeditated crime” led by successive Olympus chiefs, including Kikukawa, and carried out by Yamada and Mori. They had also said the scandal “severely damaged trust in securities markets both in Japan and abroad.”

Kikukawa said during the trial that he felt he could not disclose the massive losses for fear that the company could go bankrupt.

Defense lawyers of the three former executives had sought suspended sentences, saying the initial decision to conceal the huge losses was made by previous Olympus presidents.

Indictments have also been filed against three businessmen who were arrested last month on suspicion of illegally receiving money from Olympus in return for aiding the cover-up.

Nobumasa Yokoo, 59, a corporate executive, and his associates, Taku Hada, 50, and Hiroshi Ono, 51, face charges regarding the overseas transfer of ¥2.2 billion received as a reward for instructing company executives in the best ways to conceal the losses.

Since the scandal broke, Olympus has announced a major corporate overhaul, including a deal with Sony that saw the pair establish a joint medical equipment venture.

The business was launched after Sony said it would invest ¥50 billion in Olympus. While it is better known by the public for its cameras, Olympus controls about 70 percent of the global market for medical endoscopes.

  • kyushuphil

    Very good. Confirms what all Japanese schools teach.

    If you just follow the status quo, and never ask questions, and cram to please the ethics-free, otherwise mindless agendas of authorities, you please all at the top who are never accountable.

    So, on goes the status quo.

  • Ron NJ

    So this is “justice” then? Fine the company, slap on the wrist for the executives that perpetrated it, and they get to keep their all of their assets – including all those shady foreign holdings in America and the Caribbean? I should be surprised, but I can’t honestly say that I am.

    • 151E

      Never conflate justice with the law.

  • Frank Schirmer

    Why use this extreme photo of Michael Woodford and a normal one of Kikugawa? I don’t think that is ethical journalism.

    • Ron NJ

      Ethical journalism? In my Japan? Surely you jest.

  • boo

    Japanese justice system strikes again! As per usual