Scandal-hit Japan firm Olympus, ex-officials charged

Prosecutors said Wednesday they had charged scandal-hit Olympus and three former senior executives over a huge loss cover-up at the company that rocked confidence in corporate Japan. It came as the 20-day detention period of former president Tsuyoshi Kikukawa, named as a key player in a scheme to shift $1.7 billion of losses from the camera-maker's balance sheet, expired. Tokyo District prosecutors said Kikukawa, two other former Olympus executives, Hideo Yamada and Hisashi Mori, and three financial advisers falsified the company's balance sheet in fiscal 2006 and 2007. The same charge was also laid against Olympus as a corporate entity, reflecting the prosecutors' view that the alleged crime was also an act of the organisation, not only of an isolated group of corporate executives. If found guilty, the company faces up to 700 million yen ($8.7 million) in fines. The individuals may face fines up to 10 million yen and up to 10 years in prison for a guilty verdict under the Financial Instruments and Exchange Act. The indictment only covers a portion of roughly 100 billion yen in investment losses the firm incurred in the 1990s, as outlined by a special panel of lawyers and former judges commissioned by Olympus. The panel found that Olympus, under the corrupt management, had spent 135 billion yen in the following years to wipe out the losses via a series of complex financial moves, acquisitions and over-priced consultant fees, making it one of the country's biggest ever financial scandals. Meanwhile, the Tokyo prosecutors again arrested four of the six men named in the indictment on suspicion of falsifying corporate statements in other financial years. The three disgraced former Olympus officers and financial adviser Akio Nakagawa officially will now be investigated with view to further charges that they lied in Olympus' financial documents relating to fiscal 2008, fiscal 2009 and fiscal 2010. Olympus Corp. also faced the same fresh suspicions in the three years, the prosecutors said. The 92-year-old firm apologised for "troubles caused" to stakeholders. "We take the indictment seriously and we are resolved to continue strengthening the structure of our corporate governance," it said in a brief statement. The trio of former Olympus officers had been named by the company's special investigation panel as central figures among a small group of top executives that hid and tried to get rid of the losses in secret. The Securities and Exchange Surveillance Commission on Tuesday urged prosecutors to sue the men and the company. The Tokyo Stock Exchange said criminal charges against the company would not in themselves mean Olympus would be expelled from the bourse. "We will consider whether to delist Olympus or not if prosecutors disclose fresh facts, but an indictment on facts we already know is not a condition for delisting," an exchange spokesman told AFP. Investors largely ignored the indictment announcement, which had been widely expected. Olympus shares ended down 1.07 percent at 1,286 yen, trimming earlier losses and off the intraday low of 1,270 in early trade before the announcement. The scandal, which has seen Olympus haemorrhage value on the Tokyo Stock Exchange, erupted in a blaze of international publicity when British chief executive and president Michael Woodford was sacked in October. Following his sacking, Woodford launched aggressive media offensives against his former bosses, questioning the firm's past acquisition deals and the outsized consultant fees it had paid.