After months of uncertainty and allegations thrown out left and right, Olympus admitted today that it has been hiding company losses for the past two decades.
Here’s what’s up: Including the 2008 takeover of medical equipment maker Gyrus, the company used four acquisitions to cover up losses on securities investments, as well as advisory fees. Bloomberg reports that the company payed inflated fees to takeover advisors, which effectively covered up Olympus losses from the 90′s.
Three executives are at the heart of the corporate scandal, now-President Shuichi Takayama told reporters in a press conference. EVP Hisashi Mori and auditor Hideo Yamada are both no longer with the company, as they were directly involved with the cover-up along with former Olympus Chairman Tsuyoshi Kikukawa. Takayama claims he was completely unaware of the wrongdoing up until this point.
The revelation came about after an independent investigation took a hard look at Olympus’ past records. In October, then-CEO Michael Woodford was fired after only two weeks at his post. While Woodford maintained his removal was due to allegations he’d made about the company’s financial maneuvering, Olympus simply cited his management style. Lo and behold, just a few short months later Mr. Woodford has now been seemingly vindicated. Around $1.5 billion was, indeed, filtered through offshore funds to cancel out soured securities investments, reports Shukan Asahi Magazine.
Not surprisingly, Olympus shares have plummeted, down 30 percent. 5-percent Olympus shareholder Josh Shores told Reuters that “ignorance is no defense. If you were there and not aware of it, then you were incompetent. If you were there, and aware of it without asking tough questions, then you were negligent. Either way, you need to leave.” Shores wants the entire board replaced.
“This is very serious,” said ITC Investment Partners chief investment officer Ryosuke Okazaki. “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.”