Olympus admits hiding losses for 20 years

guardian.co.uk, Alex Hawkes, Tuesday 8 November 2011

Olympus president Shuichi Takayama at the news conference. He told reporters
 'I was absolutely unaware of the facts I am now explaining to you. The previous
presentations were mistaken' Photograph: Toru Hanai/Reuters

• Shares down 70% in last month

• Vice-president to be dismissed

• Company's future in doubt

• British ex-boss calls for board to resign

Shares in scandal-hit Japanese camera-maker Olympus tumbled 30% in Tokyo after the company admitted it had been hiding losses going back more than twenty years, and sacked its vice president.

The firm may consider criminal complaints against former executives, it added. The company's shares have lost 70% of their value in the last month after British ex-CEO Michael Woodford blew the whistle on questionable fees paid as part of M&A transactions.

Olympus said on Tuesday that acquisitions had been used to cover up losses on bad investments. The company said it had been deferring losses since before the 1990s.

The revelations could leave the company open to criminal charges for suspected accounting fraud, as well as shareholder lawsuits, putting its future in doubt.

"This is very serious. Olympus admitted it has made false entries to cover its losses for 20 years. All people involved in this over 20 years would be responsible. There is a serious danger that Olympus shares will be delisted. The future of the company is extremely dark," Ryosuke Okasaki, chief investment officer at ITC investment partners, told Reuters.

Vice-president Hisashi Mori will be dismissed, the company said. President Shuichi Takayama said former president and chairman Tsuyoshi Kikukawa, Mori and auditor Hideo Yamada were responsible for the suspect transactions.

"I was absolutely unaware of the facts I am now explaining to you. The previous presentations were mistaken," Takayama told reporters.

Woodford was sacked on 14 October after questioning huge payments made as part of M&A transactions. In one case, the acquisition of British medical equipment maker Gyrus, the advisory fee of $687m (£430m) was equivalent to a third of the total consideration paid. The purchase was one of those used to hide long-standing investment losses, Olympus said on Tuesday.

Woodford said this morning that the Olympus board should resign. "The position of the board and non-execs is untenable now."

A panel of six, including a former Japanese supreme court justice, is examining Olympus's past deals.

Separately, Reuters named a Japanese banker based in the US as a key figure related to the Gyrus transaction. Akio Nakagawa worked for the New York-based firm that won the fee, and has had dealings with Olympus for three decades, the news agency reported.

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