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Former Olympus Chairman and President, and six others arrested over scandal

By dpreview staff on Feb 16, 2012 at 19:16 GMT

The former President and Chairman of Olympus who oversaw the financial mismanagement that has seen the company's value more than halved, has been arrested. Tsuyoshi Kikukawa and his former vice-president Hisashi Mori who has also been arrested, were only forced out of the company after ex-CEO Michael Woodford spoke out, saying he was removed for uncovering their actions. Company auditor Hideo Yamada and four bankers connected to the cover-up of billions of dollars-worth of investment losses were also arrested.

The arrests come ahead of the shareholder meeting in April at which many of the incumbent board members, present during the scandal, are expected to resign. Meanwhile, several large companies rumored to include Fujifilm, Sony and medical business Terumo are looking at pursuing a tie-up with Olympus, which is dominated by its profitable, market-leading endoscope division. The camera business, which makes up just 15% of the overall company, is forecast to contribute a loss of around $114m this year (down from a loss of $190m in 2010/2011), on the back of a 7.2% rise in sales, mainly in the Japanese market.

Meanwhile, in an interview with the UK's Amateur Photographer magazine, Woodford said his book about the scandal (called 'Exposure') will be launched in Japan to co-incide with the shareholder meeting on April 20th.

Comments

Total comments: 228
12
micahmedia
By micahmedia (Feb 16, 2012)

...this is sad. The new digi OM looks good. Real good. It's a shame the hard workers that comprise the rest of the company will suffer the poor decisions of the board members.

0 upvotes
MarkIC
By MarkIC (Feb 16, 2012)

I totally agree, for a comapny that is such a innonvative leader this is such a shame.
If there is a take over/merge lets hope they dont loose their engineering flair

Comment edited 30 seconds after posting
1 upvote
shoevarek
By shoevarek (Feb 17, 2012)

Do I miss anything? What's so innovative about Olympus's camera business? When I check Oly forum I see only complains about old sensor developed and produced by Panasonic. Their m43 cameras seem to be tiny step upgrades one over another. What is so breath taking that they developed or produced recently, or within few last years for that matter?

1 upvote
Entropius
By Entropius (Feb 17, 2012)

The Oly forum has been taken over by people who obsess over sensor performance, sadly. But go to the Nature and Wildlife forum, and you'll see a disproportionate number of good pictures taken with E-5's and others. Turns out the Olympus shooters who don't want to whinge about sensors and just want to take pictures are just posting elsewhere.

1 upvote
shoevarek
By shoevarek (Feb 17, 2012)

That's fine and I can very believe Olympus makes good cameras. Just as about any major manufacturer. Their products do some things right, some just adequately and in some respects are lacking.

What suprises me are claims that Oly is some kind of the innovation leader. I do not see it. Their (low) market position does not seem to be caused by offering cutting edge but pricy products. If they exit camera market it will be sad for their current userbase but they will in time find comparable or better products on the market.

0 upvotes
sauchiyong
By sauchiyong (Feb 19, 2012)

Of course Olympus is the leader in term of camera inovation. They developed first TTL flash, Full Syc flash, Ultrasound Sensor Cleaning, live view, art filters and now 5 axis in camera stablizer... They can not compete with Nikon & Canon yet because sensor technology is not here yet for FT to have good ISO performance...

0 upvotes
shoevarek
By shoevarek (Feb 20, 2012)

I am not a camera historian but by quick look on the net it looks like... Minolta introduced in body IS and followed with its own dust reduction system year after Olympus. Sony introduced EVF in SLR body. Fuji introduced hybrid viewfinder. Canon introduced first affordable DSLR, first full frame camera with video capability , Af micro adjustment etc. I bet Nikon came up with some ideas in the meantime as well. Most of those manufacturers introduced series of new sensor technology.

I do not see any clear innovation leadership from Olympus. If it was a leader it would make better products. Its cameras are good but do not separate themselves from the pack. If Olympus really is leading with number of digital camera related patents then it probably should think through where it puts R&D money to as its innovations seem not convincing to the buying public.

0 upvotes
sauchiyong
By sauchiyong (Feb 20, 2012)

All the innovations mension in my reply were recieved well and many other start to copy and soon become standard features. Many of the one you mension are already common goal... which can not call innovative or they are not accepted as standard for others. It take so much more to be different and we need a leader in camera industry like olympus. Can you imagine what is like to have DSLR without ultrasound sensor today? And they got an award from Japanese goverment for this innovation...

Comment edited 1 minute after posting
0 upvotes
shoevarek
By shoevarek (Feb 21, 2012)

On one hand I definitely can. I was using DSLR without that feature for a few years with no issues.

On the other hand I can not. In the same way as I can not imagine using camera without features I have mentioned in my previous post.

I am not sure I agree with your definition of innovation. It seems to me you are contradicting yourself. Art filters are not standard in professional cameras. There are also few different implementations of sensor cleaning solutions. The common goal in photo industry should be and hopefully is delivering cameras with better image quality. Applying your definition of innovation would mean that any company that comes up with new and better sensor is not really innovative.

If however I apply term innovation as defined in wiki or other dictionary sites then I can see many innovators in camera market. Olympus somehow does not seem to lead the pack. Of cause I do not have knowledge on the number of patents registered by each company, so it is just my 2c

0 upvotes
danaceb
By danaceb (Feb 16, 2012)

And just to think, had he been in the USA all he would have to do is buy a few heads in congress and he would be untouchable.

Say what you will about white collar crime in Japan and how rampant it is, we let our executives get away with far worse on a daily basis. Merrikan executives only remotely have to worry about arrest granted they completely destroyed the company and name padding their golden parachute. Destroying billions in jobs and from investor pockets? no problemo granted you handed off that steaming pile somehow.

10 upvotes
Richard Murdey
By Richard Murdey (Feb 17, 2012)

So what happened to those Enron guys again?

0 upvotes
D1N0
By D1N0 (Feb 16, 2012)

Scoundrels!

0 upvotes
Francis Carver
By Francis Carver (Feb 16, 2012)

Okay, so the Japanese legal system is mighty slow.... but once the stones start grinding -- look out everyone!!!!

This company is going down the gurgler, one way or the other. It's only a matter of time. Too bad, maybe, but you can only get away with these sorts of high crimes for a limited time. Now, it's just about over for the once mighty Oly.

R.I.P, Olympus.

0 upvotes
tkbslc
By tkbslc (Feb 16, 2012)

I doubt it. A few execs take the fall and all the blame and everything is hunky dory. That's how it usually works and why you form a corporation. Corporations can't be thrown in jail.

1 upvote
Francis Carver
By Francis Carver (Feb 16, 2012)

They already took the fall. This here now is a CRIMINAL prosecution now. Big difference.

0 upvotes
453C
By 453C (Feb 16, 2012)

What of it? Your R.I.P. seems very premature. The company still has valuable assets and strong market position.

The facts of the scandal haven't changed since last fall. The investigation began, and has led to these arrests of people that were already discredited. The damage to the value of Olympus stock appears to have already occurred. Sure, there's more house cleaning to be done, but the big surprises are probably over.

The speed of the legal system has actually been quite good, btw.

1 upvote
Francis Carver
By Francis Carver (Feb 16, 2012)

I only meant their camera side business. That's probably a goner. They gonna have to be chopped down in size and importance drastically.

0 upvotes
Jolly Oly
By Jolly Oly (Feb 16, 2012)

Francis how old are you, 12 ?

9 upvotes
Tim in upstate NY
By Tim in upstate NY (Feb 17, 2012)

There are some 12 year olds who may be offended by that question.

4 upvotes
Richard Murdey
By Richard Murdey (Feb 17, 2012)

My prediction, FWIW

Olympus will be broken up, with the medical imaging parts going one way and the camera parts going somewhere else... most obviously Panasonic, though they may not be interested.

m43 was a good thing, and Olympus are on a roll with that right now, but at the end that's all they have: their dSLRs are dead, compact digicams are unprofitable for everyone as the market saturates.

1 upvote
Riprap
By Riprap (Feb 16, 2012)

Want to see your investments through a different lens? Choose Olympus, gain a different perspective.

1 upvote
space2k
By space2k (Feb 16, 2012)

Well then. They are just going to have to give us loyal Olympians a 50% discount on the OM-D to make us forget about this.

0 upvotes
Biowizard
By Biowizard (Feb 16, 2012)

OM-D - when I first saw this, I did have a few moments of "April 1st?" running through my head. I mean micro-4/3 is lovely, but the cameras just feel TOO small to be REAL - however good their results might be. A camera the size of the original OM-1 was lighter than the opposition, but still easy to hold steady with a long lens, and in all senses, a "real" camera. And of course, one of the OTHER major USPs of the OM-1 was its AMAZING viewfinder, which was about 33% biggrer in magnifcation, AND brighter, than anthing Canon, Nikon, Pentax or Minolta could manage at the time. And there's the rub: the OM-D doesn't even sport a pentaprism. Its name is a disgrace.

Brian

2 upvotes
Francis Carver
By Francis Carver (Feb 16, 2012)

Nobody in the business world cares about YOU, the retail level customer. That means zero in the greater scheme of things in determining whether this particular evil-doer company will survive in its present shape, or be chopped up and done with.

0 upvotes
453C
By 453C (Feb 16, 2012)

"And there's the rub: the OM-D doesn't even sport a pentaprism. Its name is a disgrace."

That perfectly illustrates how much you know about MFT.

1 upvote
Biowizard
By Biowizard (Feb 16, 2012)

MFT? I'd be delighted to learn yet another acronym ... but here's the funny thing which everyone seems to have lost in their haste to make new business: ultimately, if you build something people want, they'll buy it, and you'll get rich. It seems everyone wants the new Nikon D800. And Nikon will make pots of money out of it.

Brian

1 upvote
GBC
By GBC (Feb 16, 2012)

Mirrorless Interchangeable lens cameras have 50% market share in Japan, a majority of those being "MFT".

Nikon has a contracting market in which to sell it's D800.

1 upvote
453C
By 453C (Feb 16, 2012)

Biowizard, for someone that likes to spout off about Micro Four Thirds, I'm surprised you don't know that "MFT" is a very common acronym for the system. Then again, given the content of your spouting, I'm not surprised.

Why bring up the D800? Olympus lost its battle between 4/3 & APS-C, but now they have a way to gain market share with MFT, which has definitely been chewing into crop DSLR sales. You may think the OM-D series is a joke, but it shows signs of being a big seller for Olympus, and of being a strong evolutionary step for the MFT mount.

1 upvote
Humboldt Jim
By Humboldt Jim (Feb 17, 2012)

Very few dSLRs have pentaprisms. They are mostly pentamirrors.

It is not the 4/3 format itself that puts it at a disadvantage, its lack of support for its potential.

HJ

0 upvotes
AbrasiveReducer
By AbrasiveReducer (Feb 16, 2012)

Geesh. These guys need better lawyers. Over here, we pay top management huge sums to just go away when they lose a lot of money.

3 upvotes
tkbslc
By tkbslc (Feb 16, 2012)

Or maybe we need a better legal system in the US?

1 upvote
thx1138
By thx1138 (Feb 16, 2012)

The chances of a good legal system in the US are far less than a good political or health system or probably even gun control.

5 upvotes
453C
By 453C (Feb 16, 2012)

I'll take the U.S legal system over any other, broken parts and all. There are far worse systems in the world, and taken as a whole, I haven't seen a better one yet.

Comment edited 1 minute after posting
1 upvote
Anepo
By Anepo (Feb 17, 2012)

"I haven't seen a better one yet."

Are you actually being serious? I sure hope your being sarcastic.

0 upvotes
453C
By 453C (Feb 19, 2012)

No, I'm quite serious. Now what?

0 upvotes
topstuff
By topstuff (Feb 16, 2012)

I'd hate to work in Olympus marketing charged with getting the media to focus on new products.

It's not good PR to have the management in jail when trying to promote the company.

I read this in a business book somewhere.

2 upvotes
453C
By 453C (Feb 16, 2012)

The arrested folks are no longer employed by Olympus.

If the products are good enough, they can probably stand on their own. MFT is taking off, and the new OM-D series should help the Camera division. Medical Imaging appears to be doing just fine.

0 upvotes
justmeMN
By justmeMN (Feb 16, 2012)

New Marketing Slogan: "At Olympus, our cameras are as creative as our accounting." :-)

14 upvotes
Francis Carver
By Francis Carver (Feb 16, 2012)

Company is now totally cooked, not just its books. It's only a matter of time now -- weeks, maybe months. Then finito. One way, or the other.

0 upvotes
453C
By 453C (Feb 16, 2012)

Francis, say hi to HappyVan at the next Olympus Haters meeting.

2 upvotes
Anepo
By Anepo (Feb 16, 2012)

"Buy olympus, our prices are so low that it's criminal"

1 upvote
Tim in upstate NY
By Tim in upstate NY (Feb 17, 2012)

Yeah, HappyVan and Francis should get a room together.

1 upvote
Biowizard
By Biowizard (Feb 16, 2012)

Sad to hear what is going on my with all-time favourite Japanese Optics Company. My first serious SLR was a black OM-1, in 1976. I still have it, with 4 prime Zuikos, and it still takes perfect photos - if I can find any decent film. And I love my E-1, which is now 6 years old, and still taking lucious, if only 5MP, photos.

How can such a brilliant and innovative company - that brought us all the first self-cleaning sensor, the first (and still ONLY) range of camera with built-in pixel mapping, the first live-view SLR, not to mention the first small-enough-to-tote SLR (said OM-1), half-frame 35mm camera (Pen) and so much more - end up in this state of fraud?

Whatever camera I buy next, I TRULY wish that OLYMPUS SURVIVES and continues to innovate. And I hope the fraudsters rue the day they even dared mention the Marque, let alone sully it.

Brian

3 upvotes
Stephen Carpenter
By Stephen Carpenter (Feb 16, 2012)

Only? I think you'll find that ALL Konica Minolta and Sony DSLRs have auto pixel mapping.

0 upvotes
Biowizard
By Biowizard (Feb 16, 2012)

Thanks - glad to hear Sony et al have take it on. One of my major bugbears about buying Nikon (with the D800 hot on my shopping list), is that they require a return-to-factory solution that costs money and wastes weeks of time. Possibly a major reason why my next DSLR might yet be an E-5 rather than a D800 ...

Brian

0 upvotes
viking79
By viking79 (Feb 16, 2012)

Pentax has had pixel mapping for several years now too.

0 upvotes
marike6
By marike6 (Feb 16, 2012)

"An E-5?" That would be a forward thinking purchase.

Comment edited 26 seconds after posting
0 upvotes
Biowizard
By Biowizard (Feb 17, 2012)

@viking79 ... even better - so why can't Canon and Nikon do it?

Once a year or so, I take a 2s "dark" shot with my lens cap on, then do Pixel Mapping, and repeat the shot, before importing both into Photoshop and XORing them to look for signficiant differences. For the first 3 years or so, there were some prominent "dead" or "hot" pixles in the image. Since then, there've been none (touch wood) ... but the idea that each time they were visible on mid-low light shots, I'd either have to live with it and spend additional time in Photoshop, or send my camera off for a costly software update, us very sad.

I still love Olympus ... if only their OM-D was a 36x24mm "full frame" camera with an OM mount, I'd be living in a tent on their doorsteps in order to buy S/N 000000001 ...

Brian

0 upvotes
sauchiyong
By sauchiyong (Feb 20, 2012)

Ok, I line up right after you

0 upvotes
ryansholl
By ryansholl (Feb 16, 2012)

and I hope they meet a blue-collar prison.

1 upvote
Cy Cheze
By Cy Cheze (Feb 16, 2012)

Don't count on it. People convicted of financial fraud in Japan seldom serve senteces over three years. The fine levied against the company was a token sum. The real question is whether Kikukawa's and his collaborators adhere to omertà and finish their "sabbaticals" (study Zen, paint landscapes) without telling anyone wherethe nest eggs are hidden.

1 upvote
Writerman
By Writerman (Feb 16, 2012)

Omerta...crossing cultures there, aren't you? Honestly, from where does such Hubris sprout that people really think they can get away with this ghastly financial abuse. The Brit who turned up all this stuff probably deserves a knighthood for his courage.

1 upvote
Melbourne Park
By Melbourne Park (Feb 16, 2012)

If it was hidden nest eggs, the company would not be threatened.

The one third commission for almost a billion dollar purchase, was a way for Olympus to put 300 million back into the company. So, by paying 300 million more for a company, and giving that $300 million to as a commission, and then getting that money into the company, the company could then use that cash to show profits.

If it was mere theft, it would not be an issue. The problem is, that such tricks hide financial losses.

0 upvotes
YouDidntDidYou
By YouDidntDidYou (Feb 17, 2012)

@Writeman
he's already bought himself a knighthood.

0 upvotes
Total comments: 228
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