Olympus and ex-executives plead guilty to fraud charges

Japanese camera and medical equipment maker Olympus and three of its former executives yesterday pleaded guilty to charges related to a $1.7bn (€1.35bn) accounting cover-up.

The scandal was exposed last October by CEO Michael Woodford, who was sacked by the Olympus board after querying dubious deals later found to have been used to conceal the losses.

Revelations of the fraud revived calls for more outside scrutiny of its boardrooms but have failed to trigger sweeping corporate governance reforms similar to those introduced a decade ago in the wake of US scandals such as at Enron.

“The full responsibility lies with me and I feel deeply sorry for causing trouble to our business partners, shareholders and the wider public,” Tsuyoshi Kikukawa, the ex-chairman told the Tokyo district court at the start of the trial.

“I take full responsibility for what happened.”

Prosecutors charged Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada with inflating the company’s net worth in financial statements for five fiscal years to Mar 2011.

The three had been identified by an investigative panel — commissioned by Olympus — as the main suspects in the fraud seeking to delay the reckoning from risky investments made in the late-1980s.

The indictment did not specify what penalties the prosecutors would seek, but lawyers have said the three could face up to 10 years in jail and fines of up to 10m yen (€101,842). Olympus could be fined over 100m yen, Japanese media report.

What if any impact the company’s guilty plea will have on Olympus will depend on what sentence, including a possible fine, the court hands down, said Olympus spokesman Tsuyoshi Oshima. That decision, he said could be several months away.

“Lawsuits from share-holders are possible,” he said. The drop in Olympus’s share price has already spurred 12 lawsuits, he said.

— Reuters