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Entire Olympus Board Likely to Quit in February

December 7, 2015

business

It looks like the road to recovery is going to be pretty painful for Olympus. At a press conference this morning (7 December 2015) President Shuichi Takayama, announced that the entire board will quit once they’ve done what they need to do to get the company back on track.

A tarnished Olympus camera

Image by Energetic Spirit, via Flickr

The Japanese camera and medical equipment giant have been at the centre of one of the world’s largest accounting scandals. At the start of November they admitted to hiding investment losses after sacked CEO Michael Woodford blew the whistle on the rascally financial reporting. An external committee set up to investigate has found that the total hidden losses are a whopping $1.7 billion… Wow, how on earth do you cover up losing $1.7 billion? Somehow I don’t think ‘The cheque’s in the post’ would cut it.

Allegedly, Olympus paid massive financial advice fees to an organisation which funnelled the money back to the company through shell corporations. Hajime Sagawa, the banker who did the funnelling, has just divorced his wife.  The generous soul let her have the vast majority of their fortune and even sold her their luxury Florida pad for just $10. His whereabouts are currently unknown, but his brother-in-law reckons he’s taken a little trip to the Cayman Islands.

On the bright side, a report produced by the committee found no evidence of embezzling or the involvement of ‘anti-social groups’ (a Japanese euphemism for the mafia). This is extremely important as any evidence of the involvement of criminal gangs would have seen Olympus automatically delisted from the Tokyo Stock Exchange (TSE).

Being delisted would be disastrous for the 93-year-old Japanese corporate giant; it would likely force them to sell off some of the most important parts of their business.

Olympus are still having to fight hard to avoid being delisted. They’ve got to submit corrected financial reports by the 14th of December or they’re out. And if the TSE decide the losses are too big they’ll still be kicked out.

The investigation in to the scandal is massive; the dodgy dealing are being looked into by Japanese police, prosecutors, the markets regulator, UK’s Serious Fraud Office and the FBI. On top of that Olympus have set up three external investigative committees: one to do a general investigation of the scandal, one to look at the role of the company’s auditors and one to go after the employee’s involved.

The investigation into the employee’s will look at the possibility of suing those responsible or even pursuing criminal charges against them.  They’re currently planning to focus on 70 people including past and current members of the board. I reckon they’d probably like to talk to Sagawa, but it might just prove a little difficult to get a hold of him; I mean who could be bothered to deal with this stuff when they’re busy soaking up the sun on a beach in the Caymans.

While all this scandal has been traumatic for Olympus, it might just prove to be the best medicine for their ills. Coming clean and ditching the dodgy directors could help the Japanese camera giants heal, evolve and focus on the future.

Do you think Olympus will be kicked out the Tokyo Stock Exchange? Will they ever get back to their best? Share your thoughts in the comments box below.

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