Olympus and Three Former Executives Charged in $1.7 Billion Accounting Scandal

Prosecutors in Tokyo said that they have charged Olympus and three of its former executives over loss cover-up involving $1.7 billion.

Ex-chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former auditor Hideo Yamada were charged with violating Japanese law by falsifying financial statements. Olympus, as a corporate entity, was also charged with the same falsifying securities reports. Three financial advisers were also named in the indictment on suspicion of fabricating corporate statements of fiscal 2006 and 2007.

If found guilty under the Financial Instruments and Exchange Act, Olympus could face a fine of up to $17.3 million. There will be further investigation on charges that were faked in financial documents relating to fiscal 2008, 2009 and 2010.

The company takes the prosecution by the Tokyo District Prosecutors' Office with utmost seriousness and will continue to make every endeavor to enhance the corporate governance systems, Olympus said in a statement.

In November, the firm admitted that it had hidden the losses after the allegations were first aired by Michael Woodford when he was ousted as chief executive and president the month before. Olympus’ Tokyo headquarters and its affiliated offices were raided on Dec. 21 by prosecutors after the company said in November that Kikukawa and two other executives colluded to hide losses from securities investments from the 1990s.

The company inflated takeover costs of the London-listed Gyrus Group Plc and three Japanese companies with the intention of boosting goodwill, according to the Dec. 6 panel report. Yamada and Mori planned to write down the goodwill over years to cancel out losses that were kept off Olympus’s balance sheet.