Tokyo prosecutors have charged Olympus and six key figures in the $1.7 billion accounting fraud at the camera and endoscope maker, tightening their case in the investigation of one of Japan’s biggest corporate scandals.
Prosecutors have today charged ex-chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada with inflating the company’s net worth in financial statements for the fiscal years ended March 2007 and 2008, in violation of the Financial Instruments and Exchange Law.
Ex-chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada are among those charged with falsifying securities reports.
Also charged were former bankers Akio Nakagawa, Nobumasa Yokoo and Taku Hada, prosecutors said in a statement.
The six were arrested in February on suspicion of filing false financial statements to help hide huge investment losses through complex takeover deals at the company. Prosecutors did not charge a seventh person they arrested last month.
Japan's nearly 100 percent conviction rate doesn't look good for the six defendants, but maybe now that charges have been filed, the entire board is resigning, and Olympus has sued 18 of its former executives with fraud, things can start getting back to normal for the troubled company.
The scandal came to light in October last year after former chief executive Michael Woodford claimed that he was fired for questioning accounting practices at the firm.
Mr Woodford said he had raised specific concerns about Olympus' payment of $687m to financial advisers during the acquisition of UK medical equipment company Gyrus.
Woodford was fired in October after raising his concerns. He recently gave up his comeback attempt after failing to win support from major investors including Japanese megabanks.
Olympus initially denied any wrongdoing but later acknowledged the hiding of investment losses.
Olympus has admitted to hiding these losses for over twenty years, in one of Japan's biggest corporate scandals.
The troubles all stem from Olympus's attempt to cover up approximately $1.7 billion in losses by exploiting Japanese accounting loopholes, and the three non-Olympus defendants are suspected of coaching the company in how to do it. The men are Akio Nakagawa, the former managing director of the Tokyo branch of Paine Webber (an American asset management firm); Nobumasa Yokoo, the president of Japanese consulting firm (and search engine nightmare) Global Company; and Taku Haneda, another Global Company employee.
The ex-Olympus executives charged are former CEO Tsuyoshi Kikukawa, former vice president Hisashi Mori, and former auditor Hideo Yamada. The charges come at the behest of the Japanese Securities and Exchange Surveillance Commission (SESC), which believes the group conspired to overstate Olympus's book value by more than ¥110 billion in each of its 2007 and 2008 financial reports. The six men were originally arrested back in February, along with a seventh, Global Company employee Hirofumi Ono, who has not been charged.
Prosecutors on Wednesday also rearrested Kikukawa, Mori, Yamada and Nakagawa on suspicion of also submitting false financial statements for the fiscal years ended in March 2009, 2010 and 2011.
In Japan it is common for prosecutors to re-arrest suspects under new but related counts. They must decide within 20 days whether the suspects are to be formally charged over the fresh allegations.
If convicted, Olympus faces fines of up to ¥700 million (about $8.6 million), while the executives involved each face fines of up to ¥10 million (about $124,000) and up to ten years in prison.
The scandal has caused Olympus shares to lose more than 50% of their value on the Tokyo Stock Exchange (TSE).
The firm was also put on a watch-list by the bourse when it delayed the filing of its account statements in wake of the scandal. The firm must file regular accounts as a condition for its place on the exchange.
Olympus barely met its mid-December deadline to avoid being removed from the Tokyo Stock Exchange by filing corrected earnings for the April-September first half and for the past five fiscal years.
The Tokyo Stock Exchange in January decided against delisting Olympus shares, concluding that there were no accounting irregularities large enough to distort investor judgment. The exchange said Wednesday that the charge against the company won't affect that decision.
Though the TSE did not delist the company on that occasion, analysts said that the charges now brought against Olympus have once again raised a threat to the company's future on the stock exchange.
Prosecutors on Wednesday also rearrested Kikukawa, Mori, Yamada and Nakagawa on suspicion of also submitting false financial statements for the fiscal years ended in March 2009, 2010 and 2011.
In Japan it is common for prosecutors to re-arrest suspects under new but related counts. They must decide within 20 days whether the suspects are to be formally charged over the fresh allegations.
If convicted, Olympus faces fines of up to ¥700 million (about $8.6 million), while the executives involved each face fines of up to ¥10 million (about $124,000) and up to ten years in prison.
The scandal has caused Olympus shares to lose more than 50% of their value on the Tokyo Stock Exchange (TSE).
The firm was also put on a watch-list by the bourse when it delayed the filing of its account statements in wake of the scandal. The firm must file regular accounts as a condition for its place on the exchange.
Olympus barely met its mid-December deadline to avoid being removed from the Tokyo Stock Exchange by filing corrected earnings for the April-September first half and for the past five fiscal years.
The Tokyo Stock Exchange in January decided against delisting Olympus shares, concluding that there were no accounting irregularities large enough to distort investor judgment. The exchange said Wednesday that the charge against the company won't affect that decision.
Though the TSE did not delist the company on that occasion, analysts said that the charges now brought against Olympus have once again raised a threat to the company's future on the stock exchange.
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