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The Avanti Group accounting fraud review on Japan's Prosecution of Britain10 Years AgoBritain
to Prosecute Japan’s Olympus for Fraud
TOKYO
— British authorities plan to prosecute Olympus, the Japanese manufacturer that
was embroiled in a $1.7
billion
accounting fraud two years ago, reviving a scandal after a Japanese court
imposed modest fines and suspended sentences on several executives.
Olympus,
along with its British unit, Gyrus, a medical equipment company, will be prosecuted by
Britain’s Serious Fraud Office on charges of falsifying financial statements in
2009 and 2010 in a breach of Britain’s Companies Act, the company said in a
statement Wednesday.
Olympus,
which is based in Tokyo, admitted in late 2011 that it had operated a
long-running scheme to cover up $1.7 billion in losses after its newly
installed chief executive, Michael C. Woodford, uncovered irregular accounting
practices at the company.
The
internal allegations led Olympus to fire Mr. Woodford, a British national. But
he went public with evidence of wrongdoing and has since submitted evidence and
testimony to British, American and Japanese investigators.
The
British investigation began in November 2011, but it has taken until now to
collect the evidence, said a spokesman for the Serious Fraud Office. The
Japanese and British authorities have been in contact over the investigation,
the spokesman said.
The
first British court date was set for next week, and the case is likely to be
heard in the fall. It was unclear what the maximum penalties could be if the
company was found guilty.
In
Japan, a local court in July handed three Olympus executives, including
Tsuyoshi Kikukawa, former president, suspended sentences and fined the company
700 million yen ($7 million). Olympus also was hit with separate fines of 192
million yen from Japan’s Financial Services Agency and 10 million yen from the
Tokyo Stock Exchange, which elected to keep Olympus stock listed.
Olympus’s
limited censure by the Japanese authorities set off criticism among corporate
governance experts that the company had been let off too lightly. It also
highlighted the tendency here for criminal responsibility in corporate scandals
to fall on individuals, often picked to take the blame for the sake of the
company.
Olympus,
a leading maker of medical endoscopes and digital cameras, has appeared to move
on. Last year, it settled a multimillion-dollar lawsuit brought by Mr. Woodford
over discrimination and unfair dismissal. The company’s share price, which
plummeted after the initial revelations of fraud, has since recovered to
prescandal levels.
After
revealing big losses in 2011, Olympus has also climbed back into the black,
booking a net profit of 8 billion yen for the latest fiscal year through March,
in contrast to a 49 billion yen loss the previous year.
In
its statement, Olympus said that it was difficult to predict the extent of
penalties that might be imposed by British authorities and that any impact on
its finances was unclear.
Mark
Scott contributed reporting from London. |