Former executives, bankers arrested over Olympus fraud

February 16th, 2012

Reuters Canada
By Mayumi Negishi and Nobuhiro Kubo
Feb 16, 2012

TOKYO (Reuters) – Japanese police and prosecutors have arrested seven men, including the former president of Olympus Corp and ex-bankers over a $1.7 billion accounting fraud — one of the country’s biggest corporate scandals.

Tokyo prosecutors arrested ex-president Tsuyoshi Kikukawa, former executive vice president Hisashi Mori and former auditor Hideo Yamada on suspicion of violating the Financial Instruments and Exchange Law, officials said Thursday.

Also apprehended were former bankers Akio Nakagawa and Nobumasa Yokoo and two others suspected of helping hide huge investment losses through complex takeover deals at the endoscope and camera maker.

The three former executives 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 bubble economy.

The scandal was exposed in October by chief executive Michael Woodford, who was sacked by the Olympus board after querying dubious deals later found to have been used to conceal the losses. Woodford campaigned to win his job back, but gave up that bid last month, blaming cozy ties between management and big Japanese shareholders and citing the strain on his family.

“After going to hell and back, this is a day to remember,” Woodford said in an email Thursday.

But he told a hastily-called London news conference that many questions remained unanswered. “These were huge amounts of money and we need to understand to what extent the banks were involved,” he noted. “We’ve come a long way, but I don’t think we are at a point at which we have closure.”

The Briton, who was a rarity as a foreign CEO in Japan, plans to write a book about how he uncovered the scandal.

Read more