Three former Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) executives including chairman Tsuyoshi Kikukawa got a suspended sentence for their roles in the accounting scandal at the camera maker. The Tokyo District Court ordered three year suspended prison terms to Mr. Kikukawa and auditor Hideo Yamada, and ex-vice president Hisashi Mori got two and a half years imprisonment suspended for four years. None of them will face immediate jail time.
The court also ordered Olympus Corporation to pay 700 million yen ($7 million) in penalties. The former Olympus Corp. executives falsified financial reports to mask losses of about $1.7 billion. The District Court’s decision comes about two years after whistleblower Michael Woodford brought the issue into the public.
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Kikukawa & Others Inherited The Scandal
Prosecutors had demanded a 5-year imprisonment for Kikukawa, and 1 billion yen penalty for Olympus. But Judge Hiroaki Saito stated that the scandal was started way back in the 1990s by the predecessors of Kikukawa, and he just inherited the aftermath. There were no evidence that Kikukawa, Mori or Yamada pocketed any money, report Kanoko Matsuyama & Takashi Amano of Bloomberg.
Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) has also been sued by the Government of Singapore Investment Corporation Pte Ltd. and State Street Bank and Trust & Co. that seek 19.1 billion yen in damages. Kikukawa and other executives pleaded guilty in September last year. The fraud that was disclosed in October 2011 destroyed the image of Olympus Corp (OTCMKTS:OCPNY) (TYO:7733).
Former President Of Olympus Blew The Whistle
Michael Woodford, the first foreign CEO of Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) uncovered the accounting discrepancies, and notified the company board. But the Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) board refused to take any action. So, Woodford went public with his findings.
Finally, Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) and its three former executives admitted to using fraudulent takeover deals to hide losses since the 1990s. Woodford was immediately fired by the company in October 2011. Reports of the scandal sent Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) down 82 percent within just a few weeks.
Kikukawa took over as the new CEO and told media that Woodford’s management style was not a good fit for the camera maker. But Mr. Woodford revealed his side of the story to media, forcing Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) to conduct an independent review. The review reports showed that the fraudulent scheme involved a network of obscure brokers, offshore money and inflated acquisition payouts.
Olympus Corp (OTCMKTS:OCPNY) (TYO:7733) shares skidded 3.17 percent to $31.42 at 10:41 AM EDT.