Olympus scandal

The Olympus scandal was a case of accounting fraud exposed in Japan in 2011 at optical equipment manufacturer Olympus. On 14 October, British-born Michael Christopher Woodford was suddenly ousted as chief executive. He had been company president for six months, and two weeks prior had been promoted to chief executive officer, when he exposed "one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history", according to ''The Wall Street Journal''. Tsuyoshi Kikukawa, the board chairman, who had appointed Woodford to these positions, again assumed the title of CEO and president. The incident raised concern about the endurance of tobashi schemes, and the strength of corporate governance in Japan.

Apparently irregular payments for acquisitions had resulted in very significant asset impairment charges in the company's accounts, and this was exposed in an article in the Japanese financial magazine ''FACTA'' and had come to Woodford's attention. Japanese press speculated on a connection to Yakuza (Japanese organised crime syndicates). Olympus defended itself against allegations of impropriety.

Despite Olympus' denials, the matter quickly snowballed into a corporate corruption scandal over concealment (called ''tobashi'') of more than 117.7 billion yen ($1.5 billion) of investment losses and other dubious fees and other payments dating back to the late 1980s and suspicion of covert payments to criminal organisations. On 26 October, Kikukawa was replaced by Shuichi Takayama as chairman, president, and CEO. On 8 November 2011, the company admitted that the company's accounting practice was "inappropriate" and that money had been used to cover losses on investments dating to the 1990s. The company blamed the inappropriate accounting on former president Tsuyoshi Kikukawa, auditor Hideo Yamada and executive vice-president Hisashi Mori.

By 2012 the scandal had developed into one of the biggest and longest-lived loss-concealing financial scandals in the history of corporate Japan; it had wiped 75–80% off the company's stock market valuation, led to the resignation of much of the board and investigations across Japan, the UK and US. Among the people criminally charged in this scandal, only two securities brokers went to prison for 3–4 years. A shareholder derivative suit in 2019 fined three Olympus board members for 59.4 billion yen (USD 594 million), the largest of its kind in Japanese history. This scandal also raised considerable turmoil and concern over Japan's prevailing corporate governance and transparency and the Japanese financial markets. Woodford received a reported £10 million ($16 m) in damages from Olympus for defamation and wrongful dismissal in 2012; around the same time, Olympus also announced it would shed 2,700 jobs (7% of its workforce) and around 40 per cent of its 30 manufacturing plants by 2015 to reduce its cost base. Provided by Wikipedia