TOKYO (AFP) – (AFP) – Scandal-wracked Olympus and three of its former top executives pleaded guilty in court on Tuesday over charges that they deliberately hid losses worth $1.7 billion after a series of bad investments.
Former president Tsuyoshi Kikukawa apologised in Tokyo District Court and said he would take “full responsibility” for the crime that came to light when his British successor blew the whistle roughly a year ago.
“All responsibility rests with me as the president. I shall take full responsibility,” Kikukawa told the court at its first hearing.
“I sincerely apologise for all the troubles that I caused,” he said as he admitted charges that he falsified the firm’s official financial filing between 2007 through 2011 to inflate the apparent net worth of Olympus.
The case was originally thrust into the spotlight last year by Michael Woodford, who replaced Kikukawa at the head of the company and became the first foreigner to lead the camera and endoscope maker.
The Briton initially internally questioned the company’s past acquisitions and outsized consultant fees, suspecting that the moves might have been used to hide losses dating back to the 1990s.
He was abruptly demoted shortly before exposing the scheme, as Kikukawa took the helm again, and Olympus initially denied allegations.
The company later admitted its wrongdoing and sacked executives involved in the scandal, including Kikukawa, as Japanese, British and US authorities launched probes into the firm.
Kikukawa’s guilty plea Tuesday was joined by two fellow former Olympus officers, ex-vice president Hisashi Mori and former auditor Hideo Yamada, and the company itself.
Prosecutors say that Olympus started using a complex accounting mechanism to hide losses that came from bad investments made in the 1990s, with the firm’s top officers including presidents, approving the moves.
According to the indictment, Kikukawa, Mori and Yamada conspired with outside advisers to hide the losses via purchases of foreign companies and overpriced consulting fees.
The company has already been fined $2.4 million for its wrongdoing by Japan’s Financial Services Agency.
Separately, Japanese authorities have also ordered Olympus to pay about five billion yen in back taxes and penalties related to the loss cover-up scheme, according to local media.
Since the scandal broke, Olympus has announced a major overhaul that includes cutting about seven percent of its workforce, while internally promoting a new president.
Woodford’s efforts to return to lead the company, with support from individual and foreign shareholders, was blocked by major Japanese investors.
The company subsequently agreed to a reported 10.0 million pound ($15.6 million) payout to Woodford to settle a wrongful dismissal lawsuit.
At the Tokyo Stock Exchange, Olympus shares stood around 1,475 in early afternoon, roughly half of their level before the scandal, but well above the all-time intraday low of 424 on on November 11, about a month after the news broke.
The company is in tie-up talks with Sony, which wants to expand its medical segment as a pillar of future income and is reportedly offering a $642 million capital injection.
Sony is reportedly asking for a seat on the Olympus board, while the troubled firm seeks to restore its balance sheet after reporting a net loss of 48.99 billion yen in the fiscal year to March.
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