Britain’s Serious Fraud Office will prosecute Olympus and its subsidiary over a scandal to cover up massive losses, the Japanese camera and medical equipment maker said Wednesday.
It is the latest turn in an affair that badly damaged Japan’s corporate governance image and turned the company’s first foreign leader into a high-profile whistle-blower.
“Having completed its investigation, the SFO has decided to bring a prosecution against the company and Gyrus Group Limited, a U.K. subsidiary,” an Olympus statement said.
“We just received the notice last night and so are still going through it,” Olympus’ Tokyo-based spokeswoman said. “We will decide our response after carefully reviewing the content of the charges.”
A Tokyo court in July handed suspended prison sentences to three former Olympus executives for engineering a scheme to hide about $1.7 billion in losses that had accumulated since the 1990s by using outsized consulting fees and buying up unrelated companies.
The Tokyo District Court also slapped the company with a ¥700 million fine.
The men and the firm did not contest the charges brought by Japanese prosecutors.
The company has already been fined about ¥192 million by the Financial Services Agency.
Separately, Japanese tax authorities have ordered Olympus to pay about ¥5 billion in back taxes and penalties related to the coverup, local media have reported.
The coverup was exposed in late 2011 by Michael C. Woodford, who was appointed Olympus’ chief executive but quickly fired when he questioned the firm’s past conduct.
The SFO alleges that Olympus and Gyrus provided “misleading, false or deceptive” information to their auditors for fiscal years 2009 and 2010, the Japanese firm said.
“After a hearing date before the Magistrates’ Court, it is expected that the matter will be transferred to the Crown Court for the future steps of the proceedings,” Olympus said in the statement.
It remains difficult to estimate the level of fines in Britain, should the prosecution result in a guilty verdict, the firm said.
Along with Japanese and British authorities, U.S. investigators are also probing the affair.
“This won’t influence Olympus’ fundamentals,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo, adding that a decline in Olympus’ stock price would be temporary.
Olympus fell as much as 6.3 percent to ¥2,700 in Tokyo trading Wednesday, the biggest intraday fall since Aug. 22. The shares traded down 2.9 percent at ¥2,798 as of 3:11 p.m.
Olympus has undergone a major overhaul that included cutting about 7 percent of its workforce and forging a capital alliance with electronics giant Sony Corp., which is seeking to tap the lucrative medical-equipment market.