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Japan: Prosecutors charge Olympus and former executives

Tokyo prosecutors have filed charges against embattled camera-maker Olympus and three of its former executives over their involvement in a $1.7 billion accounting fraud.

Olympus scandal 2012 03 07Enlarge
Olympus is itself suing current and former executives over the accounting scandal, including current President Shuichi Takayama (pictured), in a bid to reassure investors and possibly recover a tiny amount of the total losses wiped off the firm’s books. (JIJI PRESS/AFP/Getty Images)

Tokyo prosecutors have filed charges against Olympus and three of its former executives over a $1.7 billion accounting scandal at the embattled Japanese camera-maker.

The charges come four months after the firm admitted covering up massive investment losses incurred in the late 1980s bubble economy for as long as 20 years, in one of Japan’s biggest-ever corporate scandals.

In a statement, the Tokyo District Public Prosecutor’s Office said it had charged the firm and its ex-chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada with falsifying securities reports for the fiscal years beginning in April of 2006 and 2007, The Wall Street Journal reported.

The three men were arrested last month. A further three outside investment advisers, who allegedly helped Olympus conceal its losses, have also been charged in connection with the affair.

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Wednesday’s indictment covers only a portion of the massive losses incurred by the firm. If found guilty, Olympus faces fines of up to $8.7 million, while the six individuals could be fined up to $125,000 and sentenced to a maximum of 10 years in jail, according to the Agence France Presse.

The Securities Exchange and Surveillance Commission (SESC) will also recommend that the Financial Services Agency, a government body overseeing banking, insurance and securities, fine the firm for more than $1.2 million for false accounting, Reuters reported.

In a statement, Olympus said: “The company takes the prosecution by the Tokyo District Prosecutors’ Office with utmost seriousness and will continue to make every endeavour to enhance the corporate governance systems.”

The scandal at the firm broke in October when former chief executive Michael Woodford claimed he was ousted by the firm’s board two weeks after his appointment for raising concerns about the company’s accounting practices.

Though Olympus initially denied the allegations, it later admitted it had been concealing losses for almost two decades. The firm is now being investigated by law enforcement agencies in Japan, the US and Britain.

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Olympus shares have lost more than 50 percent of their value on the Tokyo Stock Exchange over the scandal, while the firm was also put on a watch-list by the bourse when it held back on filing required regular account statements in the wake of the fraud revelations, the BBC reports.

The company is itself suing current and former executives over the affair, including current President Shuichi Takayama, in a bid to reassure investors and possibly recover a tiny amount of the total losses wiped off Olympus’ books.

Olympus has also proposed a new board of management to replace Takayama and other directors and try to regain public trust. Shareholders will vote on the nominees at an extraordinary general meeting on April 20.

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http://www.globalpost.com/dispatch/news/business-tech/120307/japan-prosecutors-charge-olympus-and-former-executives