Printer Friendly

UPDATE1: Prosecutors search Olympus offices over loss coverup.

TOKYO, Dec. 21 Kyodo

(EDS: ADDING INFO AT LAST 7 GRAFS)

Prosecutors searched Olympus Corp. headquarters and related locations on Wednesday in connection with their investigation into the falsification of the company's financial reports to cover up massive investment losses.

The special investigative unit of the Tokyo District Public Prosecutors Office jointly conducted the search with Tokyo's Metropolitan Police Department and the Securities and Exchange Surveillance Commission in a bid to build a case by March against former executives of the company, which covered up 117.7 billion yen in investment losses dating back to the 1990s.

Investigators suspect former Olympus Chairman and President Tsuyoshi Kikukawa, 70, former Executive Vice President Hisashi Mori, 54, and Hideo Yamada, a 66-year-old former Olympus auditor, led the accounting fraud and did not book the massive losses in financial reports for the fiscal year ending March 2007 and subsequent years.

In addition to Olympus headquarters, several dozen locations including the homes of Kikukawa and other former executives and three Japanese firms that were acquired by the precision instrument maker to conceal its investment losses are being raided, investigative sources said.

Senior police and surveillance commission officials have indicated that the camera and medical equipment maker would not be held criminally responsible as a corporate entity, since Olympus has already erased its past losses and maintains the status of a blue-chip company.

While the criminal liability of Kikukawa, Mori and Yamada will likely be raised, Olympus could just face administrative punishment in the form of fines, they said.

When questioned by investigators, Mori and Yamada admitted their involvement in concealing the losses and said they had reported the matter to Kikukawa, according to the sources.

Meanwhile, members of a third-party investigative panel set up by Olympus to probe the scandal said Wednesday the company has paid more than 7 billion yen to workers of financial institutions as a reward for their cooperation in covering up its investment losses.

More than 3 billion yen has been paid to five officials of German and Lichtenstein banks, who have since resigned, in addition to official commissions, and 3.5 billion yen to former workers of major securities firms, they said.

Mori has told the panel that the money had been paid to the European bank officials in return for their help in procuring funds to cover up the losses. Olympus is planning to seek the return of some 7.2 billion yen in total as the money paid cannot be considered legitimate commissions, company sources said.

Of the 3.5 billion yen paid to the former brokerage officials, about 2.4 billion yen went to an investment advisory firm headed by one of them and 1.1 billion yen to a fund linked to another, panel members said.

Investigators will also question the former brokerage officials to find out how they helped Olympus establish a scheme for concealing its losses, the investigative sources said.

The Lichtenstein bank extended loans to one of the investment funds used for the coverup at Mori's request, using Japanese government bonds deposited by Olympus as collateral, the panel members said.

An official of the German bank's Singapore branch also supported Mori and Yamada in their bid to procure funds to purchase assets with latent losses, they said.
COPYRIGHT 2011 Kyodo News International, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Japan Weekly Monitor
Date:Dec 27, 2011
Words:544
Previous Article:UPDATE3: Olympus eyes boosting capital by 100 bil. yen.
Next Article:N.Y. stocks rally as eurozone fears retreat.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |