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Olympus scandal probe widens.

TOKYO: As attention in the Olympus accounting scandal turns to whether funds used to cover up losses were funnelled to criminal groups, scrutiny is set to increase on deals not yet in the spotlight, including an ill-fated $780 million investment in technology firm ITX.

Olympus and affiliated firms spent $4.1 billion on 57 acquisitions since 2000 in an aggressive push to diversify its operations and grow outside Japan. The largest was its $2.2 billion buyout of British medical equipment firm Gyrus in 2008, Thomson Reuters data shows.

To date the scandal has centred on a $687 million advisory fee tied to the Gyrus deal and its purchase of three obscure, loss-making domestic firms for $773 milllion between 2006 and 2008. Olympus has admitted it paid excessively in both cases to cover securities losses stretching back 20 years. With suspicion growing among investigators that criminal groups may have been involved, a more thorough review now appears certain.

Focus on ITX

Much of the focus will likely fall on ITX, a former technology venture investor that played a key role in the group's diversification drive since 2000. "There needs to be a full house-cleaning and ultimately everything needs to be checked, including ITX," according to Josh Shores, a principal at Southeastern Asset Management, which holds around five per cent of Olympus, the camera and medical device maker's top non-Japanese shareholder.

A unit from the Tokyo Metropolitan Police Department's organised crime division has joined an investigation into the scandal, though gangster involvement has not yet been confirmed, a source with knowledge of the matter told Reuters on Friday.

The New York Times has reported that Japanese officials were investigating an apparent $4.9 billion hole in Olympus' accounts and possible payoffs to crime syndicates, citing a memo circulated at a meeting of regulators, prosecutors and police.

Olympus has said that a former vice-president had told the company none of the funds involved in the cover-up had gone to "anti-social forces" - a euphemism for mafia in Japan - but the firm was waiting for a report from an independent panel, due next month.

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Publication:Times of Oman (Muscat, Oman)
Date:Nov 20, 2011
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