Board of Olympus Corp signals they will all quit over $1.7bn accounting fraud
Scandal: Olympus president Shuichi Takayama has said the company’s entire board could quit over a $1.7billion accounting fraud
Olympus Corp’s board has signalled plans they will quit over a $1.7billion accounting fraud, sparking a battle for control of the firm with the former CEO who blew the whistle on the scandal.
At a news conference today, Olympus said one director had resigned and the whole board could go once the firm submits its second-quarter earnings next week.
An external investigative panel report, unveiled yesterday, concluded that several former executives spent 13 years running a complex scheme to hide huge investment losses on the company’s balance sheet.
Olympus president Shuichi Takayama said: ‘Our corporate governance was severely criticised. As the representative of the company, I apologise sincerely.’
Ex-CEO Michael Woodford, sacked in October after questioning murky deals, is campaigning to return to head up the 92-year-old maker of cameras and endoscopes and has called for an extraordinary shareholders’ meeting to pick a new board.
Mr Takayama, who took over after the scandal broke, said the earliest a meeting could be held was late February and the management would not resign before then.
He said: ‘We are still considering the plan (for a new president) that we will submit… we don’t know what Mr Woodford is thinking, but he has said he will pursue a proxy fight, so we think there will be certainly be a proposal.
Charges: Customers look at digital cameras at a shop in Tokyo. An independent report has revealed former executives spent 13 years covering up investment losses
‘We will have the shareholders meeting decide,’ he said, although he did acknowledge Mr Woodford for ‘pointing out problems that the current board failed to do’.
Olympus also set up an outside committee to advise whether to file criminal complaints or sue those responsible for the scandal, which has halved the value of the firm’s shares.
Announcing the new committee, which is to report its recommendations by January 8, the once-proud firm also said that senior executive director Makoto Nakatsuka had quit the board, the third to do so since the scandal erupted.
Whistle blower: Michael Woodford, former CEO of Olympus, was sacked after questioning shady deals in the company
Mr Nakatsuka was found yesterday to have helped the two main architects of the cover-up, former internal auditor Hideo Yamada and ex-executive vice president Hisashi Mori, to manage Olympus’s financial assets in the late 1980s, when it embarked on risky investments that led to the losses.
Olympus, which still risks being kicked off the Tokyo stock market and forced into a humiliating sale of core assets, said it would set up a second external panel to examine the responsibility of the firm’s auditors.
The damning report published yesterday, prepared by outside legal and accounting experts, said Olympus management was ‘rotten to the core’, ruled by a culture of absolute corporate loyalty and a desire to flatter financial performance.
Takayama has already said Olympus will consider legal steps, including criminal complaints, against those found responsible.
He has blamed Mori and Yamada for masterminding the cover-up, and the panel found that two former company presidents were also told of the concealment.
Olympus faces a number of hurdles in its struggle to survive.
It must meet next week’s deadline for submitting its results for the six months to end-September – a task that requires combing through and sorting out decades of cooked books.
Even if it meets that deadline, the Tokyo Stock Exchange could still delist Olympus shares depending on the scale of the previous financial misstatements.
One of the few glimmers of hope from the panel report was its conclusion that there was no evidence of a much-rumored link between the scandal and organized crime.
If a link were found — and police are still investigating – Olympus would likely be delisted from the stock market.