Japan prosecutors raid Olympus
Wednesday, December 21, 2011
TOKYO (AP) — Japanese prosecutors raided the headquarters of Olympus Corp. and the home of its former president Wednesday as part of an investigation into the cover-up of massive losses at the camera and medical equipment maker.
A trail of dark-suited officials was shown on national television marching solemnly into the company’s downtown Tokyo office building.
Olympus said it would fully cooperate with the investigation by prosecutors, police and financial authorities.
“We apologize deeply again for the great troubles and worries we have caused our shareholders, investors, customers and others,” it said in a statement.
Tokyo prosecutors said the home of former President Tsuyoshi Kikukawa, suspected of helping to orchestrate the cover-up, was also raided, as were the offices of three companies used in the scheme.
The deception at Olympus dates back to the 1990s and involved an elaborate scheme to hide 117.7 billion yen ($1.5 billion) in investment losses. It only came to light in October when then President Michael Woodford blew the whistle on what he thought was strange and excessive spending.
Woodford, a Briton, had been a rare foreigner to head a major Japanese company.
The scandal has raised serious questions about corporate governance in Japan, and whether major companies are complying adequately with global standards.
Woodford was fired after he confronted the company’s board of directors with his doubts. In recent weeks, he has been trying to stage a comeback to the top, by appealing to shareholders, employees and others that his return will work to clean up Olympus.
Woodford had questioned exorbitant fees for advice on the acquisition of British medical equipment maker Gyrus Group and other expensive acquisitions in 2008.
Woodford is demanding the resignation of the entire board, including President Shuichi Takayama, who replaced him and initially declared in a news conference that the spending was legitimate.
The battle over who will lead the camera and medical equipment maker and its 40,000 employees could come to a head at the next shareholders’ meeting. A date has not been set.
The new Olympus management has expressed a willingness to consider alliances in an effort to get its finances back in order.
Olympus delayed reporting earnings because of the accounting irregularities, but met the stock exchange’s deadline earlier this month, averting automatic removal from the market.
The company could still be delisted if the criminal investigation discloses major misbehavior.
In the past, erring executives have rarely got prison time for their roles in shady bookkeeping.
Covering up for investments that went sour after the 1980s “bubble” economy burst was so widespread in Japan that a special term describes the practice, “tobashi.”
Olympus stock plunged amid the scandal but has recouped some of those losses in recent weeks. On Wednesday it was trading down 1.5 percent at 1,049 yen.