Former Olympus VP probed in financial scandal

Executives at the camera-manufacturing giant are accused of hiding decades worth of financial losses from stakeholders.

    The Olympus scandal has rekindled concerns about lax corporate governance laws in Japan [Reuters]

    Hisashi Mori, ex-vice president of camera-giant Olympus, has been voluntarily questioned by Japanese prosecutors as part of an investigation into a corporate accounting scandal, Reuters news agency reported.

    Prosecutors, who questioned Hisashi Mori on Friday, are also likely to hold hearings with former chairman and president Tsuyoshi Kikukawa and auditor Hideo Yamada, sources said.

    The camera manufacturing giant is being investigated after company executives admitted that they hid investment losses for decades using funds from acquisition deals.

    The scandal has rekindled concerns about lax corporate governance in Japan.

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    Olympus investigated for cover-up

    It has also revived worries about links between companies and organised crime, as investigators are probing possible involvement by Yakuza gangsters in the complex scheme used to hide the investment losses.

    Links between companies, politicians and Yakuza gangsters have a long tradition in Japan.

    Authorities have been cracking down on such relationships for decades. Recent laws have not only targeted crime syndicates, but also firms that do business with them.

    Olympus has admitted to improperly accounting for only part of $1.3bn in payments linked to acquisitions dating back to 2006, although an independent panel commissioned by the firm to investigate the matter is still looking into the accusautions.

    A large share of these payments went to obscure Cayman Islands firms, making it difficult to trace the money.

    Since news of the scandal broke out last month Olympus has lost more than 70 per cent of its market value.

    Major shareholders like Nippon Life and Mitsubishi UFJ Financial Group have sharply reduced their shareholdings in the company.

    The Tokyo Stock Exchange has put Olympus shares on a watch list, with a possible prelude to delisting if any evidence is found of financial irregularities.

    Delisting Olympus from the Tokyp Stock Exchange would effectively cut it off from equity capital markets, constraining its funding and making it harder for its lenders to keep supporting the firm in its battle to avoid having to sell off its core businesses.

    SOURCE: Agencies


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