Olympus scandal
| Key players |
Olympus Corporation: Michael C. Woodford, Tsuyoshi Kikukawa, Hisashi Mori, Hideo Yamada; Intermediaries: Hajime Sagawa, Akio Nakagawa, Nobumasa Yokoo Auditors: KPMG, Ernst & Young |
|---|---|
| Suspicious acquisitions | ITX (2003), Altis, Humalabo and News Chef (2005–2008), Gyrus Group (2008) |
| Missing assets | ¥376 billion yen ($4.9 billion) |
| Whistleblower | ex-CEO Michael Woodford (later won damages for wrongful dismissal) |
| Corporate casualties | Tsuyoshi Kikukawa, Hisashi Mori, Hideo Yamada and others |
| Official investigations | Serious Fraud Office, Federal Bureau of Investigation, Financial Services Agency, Tokyo Metropolitan Police, Securities and Exchange Surveillance Commission, |
The Olympus scandal was precipitated on 14 October 2011 when British-born Michael Woodford was suddenly ousted as chief executive of international optical equipment manufacturer, Olympus Corporation. He had been company president for six months, and two weeks prior had been promoted to chief executive officer, when he exposed "one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history", according to the Wall Street Journal.Tsuyoshi Kikukawa, the board chairman, who had appointed Woodford to these positions, again assumed the title of CEO and president. The incident raised concern about the endurance of tobashi schemes, and the strength of corporate governance in Japan.
Apparently irregular payments for acquisitions had resulted in very significant asset impairment charges in the company's accounts, and this was exposed in an article in the Japanese financial magazine FACTA and had come to Woodford's attention. Japanese press speculated on a connection to Yakuza (Japanese organised crime syndicates). Olympus defended itself against allegations of impropriety.
Despite Olympus' denials, the matter quickly snowballed into a corporate corruption scandal over concealment (called tobashi) of more than 117.7 billion yen ($1.5 billion) of investment losses and other dubious fees and other payments dating back to the late 1980s and suspicion of covert payments to criminal organisations. On 26 October, Kikukawa was replaced by Shuichi Takayama as chairman, president, and CEO. On 8 November 2011, the company admitted that the company's accounting practice was "inappropriate" and that money had been used to cover losses on investments dating to the 1990s. The company blamed the inappropriate accounting on former president Tsuyoshi Kikukawa, auditor Hideo Yamada and executive vice-president Hisashi Mori.
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