Olympus Sues Ex-Execs; Did Yakuza Have a Hand in Billion-Dollar Fraud?

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OlympusOlympus Corp., the Japanese optics manufacturer now embroiled in a massive accounting scandal, is suing several executives, seeking millions of dollars in damages.

The targeted officials are current Olympus President Shuichi Takayama and three ex-directors who were identified by investigators as having been involved in a $1.7 billion fraud. Over a period of more than a decade, former Chairman Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada were key figures in a scheme to hide securities losses from Olympus investors by overpaying for small, obscure companies, an outside panel recently reported.

The situation for Takayama et al. could have been much worse: A company panel has suggested that Olympus sue the men for 90 billion yen ($1.17 billion) in damages. Instead, having considered its former executives' ability to pay, the firm decided to seek only several billion yen.

ScandalThe scandal, which has wiped out almost 60% of Olympus's market value, came to light in October, after newly-appointed CEO Michael Woodford began asking questions about suspicious mergers and acquisitions transactions, as well as payments to entities based in places like the Cayman Islands. Woodford ordered an investigation by PricewaterhouseCoopers, which found grave problems with the company's internal controls. When he presented this report to the board of directors, Woodford was fired. That same evening, he flew to London and requested an investigation by the British Serious Fraud Office.

Woodford, who has said he will sue Olympus for unfair termination, recently gave up on a fruitless three-month campaign to convince shareholders to return him to the top spot at the firm, and to dump its board.

"The board has to go," Woodford told Bloomberg Television in October, "they're all toxic, they are all contaminated." The current directors have said they will resign and hold an extraordinary shareholders meeting to choose their successors in March or April.

No Clear Links Found to Organized Crime ... Yet


The investigation into Olympus is ongoing, and could lead to criminal charges. There have even been rumors, reported in the Japanese press, of a connection to the yakuza, Japan's organized crime syndicates. Brokers who were involved in the fraudulent acquisitions might have had ties to organized crime, meaning that payments from Olympus could have wound up in the pockets of "antisocial forces" (as Japanese media outlets call the yakuza).

According to
The Economist, "The Tokyo stock exchange delists a firm if it sees ties to the yakuza," but no evidence of this has yet emerged in the case of Olympus, which is fortunate for investors: As Reuters explains, "Delisting would cut the firm off from equity markets and jeopardize its funding at a time when fresh capital is needed to repair its balance sheet."

The stock exchange is also supposed to delist a company if wrongful financial reporting has a "material impact," which certainly seems to be the case with Olympus' enormous fraud. But, as The Economist notes, "Japanese regulators sometimes interpret such rules in creative ways." Currently, the Nikkei is finalizing plans to keep Olympus listed, although designated as a "security on alert" -- essentially, a form of probation requiring the company to demonstrate improvement in corporate governance. The exchange will also fine Olympus 10 million yen -- about $129,700.



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15 Comments

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head4la

So the board members will resign, indicating they aren't fit to serve, but somehow they are fit to choose their successors? A simple word to stockholders: SELL!

January 11 2012 at 1:04 PM Report abuse rate up rate down Reply
roajewels

Read "The Yamato Dynasty" a fascinating look into the Japanese psyche- the invisible machine which governs all aspects of buisness and indeed life is astounding

January 11 2012 at 12:23 PM Report abuse rate up rate down Reply
rachelpaints

Looks like the Japaneses are finally doing American business practices in earnest- you know rob and cheap everyone and by all means bite the hands that feed you. " its just business." Honest business dealing is the exception, not the norm. When businesses start eating their own young and seniors, and it becomes every man for himself at the top time is short for us all.

January 11 2012 at 11:59 AM Report abuse rate up rate down Reply
Pirates

Wow, investment Fraud. Who would have guessed that in these last days of The Dark Age we live in. Invest in yourself, you fools. Buy seeds, food, tools and physical commodities and keep your well earned money out of their hands.

January 11 2012 at 11:36 AM Report abuse rate up rate down Reply
Our Staff

Here I quote: As Reuters explains, "Delisting would cut the firm off from equity markets and jeopardize its funding at a time when fresh capital is needed to repair its balance sheet." The stock exchange is also supposed to delist a company if wrongful financial reporting has a "material impact,"

And those involved with the financial collapse crippling the United States and world wide? What happened to the laws here? CEO's walked away with HUNDREDS OF MILLIONS while the world watched and Americans lost everything? Some even took jobs during and after with the NY Federal Reserve with Obama? How does this add up without any prosecution? Millions of foreclosures. Millions unemployed. Millions bankrupt losing all they have as well as so many small businesses? And justice is calling President Obama as is American Business and Economic Recovery.

January 11 2012 at 11:18 AM Report abuse rate up rate down Reply
Bud

The give alleagence to satan and lately satan has laughed in their faces..each one will have thier time come up and pay for that contract they signed to serve him,,They all pay even before they die..then they pay eternity for their Evils.

January 11 2012 at 11:04 AM Report abuse rate up rate down Reply
Hello Bush Girl

So, again, we need to be surprise by this? Seriously, truth be told, it is probably the tip of the iceberg. People always act surprised and create news of the news over things like these. What amazes me is that Huffpost will print anything---even the bra size of a CEO of whatever company if they can get away with it. They need to concentrate on newsworthy endeavors.

January 11 2012 at 10:57 AM Report abuse +1 rate up rate down Reply
bba007

As we can see the corporate slim balls are not limited to the US and Europe. They are all over and toxic.

January 11 2012 at 10:51 AM Report abuse +3 rate up rate down Reply
saithix1980

Resistance of a New America releases in 6 days if you have not seen it check it out. This book is going to be awesome! Just Google PercyClayNovels and it should come up.

January 11 2012 at 10:35 AM Report abuse rate up rate down Reply
gmfr

It took a pissed off ex investigating exec. to bring this suit? Where are our governments? In the pockets of these multinational very flush companies is where! Wake up, PPL! or things willl continue and we'll be accepting more and more Sh*t!

January 11 2012 at 10:09 AM Report abuse +2 rate up rate down Reply
1 reply to gmfr's comment
Robert

Japan has had its hands full with human suffering and the destruction of property on the scale of Hiroshima bombing since umm the EARTHQUAKE !! Forgive them if they missed hidden dark criminal financial dealings ..

January 11 2012 at 12:21 PM Report abuse rate up rate down Reply