Former Olympus boss guilty of cover-up
25/09/2012 - 07:39:15Former Olympus president Tsuyoshi Kikukawa admitted guilt today over a cover-up scandal of massive investment losses at the top Japanese camera and medical equipment company.
The scandal emerged last year when Michael Woodford, the British chief executive who turned whistleblower, raised questions about payments for financial advice and dubious acquisitions. Mr Woodford was then sacked.
Tokyo prosecutors have charged the company, Kikukawa and other officials, arrested in February, with breaking laws regulating securities exchanges by falsifying company financial statements.
If found guilty, individuals face up to 10 years in prison, a €99,000 fine, or both. The company can be penalised with a fine of up to €6.8m.
Olympus has said it hid €1.1bn in investment losses going back to the 1990s.
"There is no mistake. The entire responsibility lies with me,'' Kikukawa told the Tokyo court.
Three other Olympus executives also pleaded guilty and the company also entered a guilty plea.
Kikukawa read from a piece of paper and apologised for ``all the troubles caused to investors, customers, employees and the general public''.
Prosecutors outlined in detail the elaborate schemes concocted over the years, using overseas bank accounts, paper companies and transactions it controlled behind-the-scenes, all to keep massive losses off the company books for years.
Kikukawa, who also served as chairman at Olympus, wore a dark suit and kept his head down as the charges were read to the court, which was packed with reporters and members of the public who had drawn lots to listen in. He said he had often pondered coming forward with the wrongdoing but could not do it.
The Olympus scandal has tarnished the reputation not only of a once prized manufacturer but also of Japan Inc as the nation struggles to improve in corporate governance.
Mr Woodford, one of a handful of foreigners to lead a major Japanese company, was a key player in bringing the scandal to light.
He has emerged as a hero in Japan, where outspoken people are rare and whistleblowers are routinely treated as outcasts. He has consistently defended Olympus products and the honesty of the rank-and-file workforce, while slamming Kikukawa and others at the top.
Mr Woodford initially tried to make a comeback at the company, but had to give it up when he learned that through a system of cross-shareholdings, management had a lock over appointments.
But he sued in a British court, accusing Olympus of unlawful firing and discrimination, and won a €12m settlement from Olympus in June.
In his new book, to be published in November, Mr Woodford tells the story of his nightmarish treatment at Olympus. He also speaks out against Japanese corporate culture that he says sacrifices competence and transparency for apparent stability, while ruthlessly destroying “the nail that sticks out”.
Olympus, which is suing Kikukawa for damages, carried out investigations into the scandal and admitted to various fraudulent schemes.
The company barely avoided being delisted from the Tokyo Stock Exchange last year by filing corrected earnings for the previous five fiscal years. Its stock has plunged and has not recovered to levels before the scandal.
Japanese electronics and entertainment conglomerate Sony, eager to bring Olympus’ endoscope and camera business under its wing, has hinted it may invest in Olympus. The courtroom apology from Kikukawa may work as a plus for such a deal in helping draw a close to the scandal.
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