Six former high-rollers from the Olympus Corporation were charged by Japanese police this week as an ongoing investigation into the hiding of huge losses - which has already cost several careers - continued apace.
The sextet, including former chairman Tsuyoshi Kikukawa, were arrested three weeks ago. On Wednesday they were charged with falsely inflating the company's financial value in an attempt to cover up massive losses stemming from enormous takeover deals. It was just the latest twist in the ongoing saga which has rocked Japan's notoriously-secretive corporate culture.
Towards the end of last year, the company's British CEO Michael Woodford broke cover and announced an internal investigation into a string of alleged dodgy coverups and false accounting entries made to cover massive losses from M&A activity. Foremost amongst the fishy-smelling deals was 2008's $2.2 billion purchase of British company Gyrus Group, the terms of which included a punchy $687 million "advisory fee". That's 31% of the deal value, thought to be the highest M&A fee ever paid. But when Woodford (the company's first ever non-Japanese CEO) started asking questions he was slung out of the company, just two weeks into in the job. Cue furore, and Woodford skipping the country, fearing for his safety.
After some shilly-shallying in the Japanese media about a "culture clash", enormous international press attention led to an admission that some of the accounting may have been "inappropriate". That was back in November. Heads rolled at the top and the authorities raided the company's premises, culminating in the arrests of the executives who could each face up to 10 years in jail.
So what now? Olympus has seen its share price halved, and there's no end in sight. And the "exhausted" Woodford is currently going after his former board-level colleague for unfair dismissal, and has lined up Simmons & Simmons. On the other side, looms Slaughter and May. Should be an interesting fight.
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The sextet, including former chairman Tsuyoshi Kikukawa, were arrested three weeks ago. On Wednesday they were charged with falsely inflating the company's financial value in an attempt to cover up massive losses stemming from enormous takeover deals. It was just the latest twist in the ongoing saga which has rocked Japan's notoriously-secretive corporate culture.
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Some Olympus executives looking bashful, yesterday |
Towards the end of last year, the company's British CEO Michael Woodford broke cover and announced an internal investigation into a string of alleged dodgy coverups and false accounting entries made to cover massive losses from M&A activity. Foremost amongst the fishy-smelling deals was 2008's $2.2 billion purchase of British company Gyrus Group, the terms of which included a punchy $687 million "advisory fee". That's 31% of the deal value, thought to be the highest M&A fee ever paid. But when Woodford (the company's first ever non-Japanese CEO) started asking questions he was slung out of the company, just two weeks into in the job. Cue furore, and Woodford skipping the country, fearing for his safety.
After some shilly-shallying in the Japanese media about a "culture clash", enormous international press attention led to an admission that some of the accounting may have been "inappropriate". That was back in November. Heads rolled at the top and the authorities raided the company's premises, culminating in the arrests of the executives who could each face up to 10 years in jail.
So what now? Olympus has seen its share price halved, and there's no end in sight. And the "exhausted" Woodford is currently going after his former board-level colleague for unfair dismissal, and has lined up Simmons & Simmons. On the other side, looms Slaughter and May. Should be an interesting fight.