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Olympus executives sentenced, avoid jail time

Jul 5, 2013 at 22:35:05 GMT

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More than a year after their arrest in February 2012 for hiding massive corporate losses dating back to the 1990s, three former Olympus executives this week received suspended jail terms for crimes they admitted committing. In a story marked as one of the largest frauds in Japanese history, the executives conspired to cover up approximately $1.5 billion in investment losses. Olympus itself was fined ¥700 million (about $7 million) for the actions of Tsuyoshi Kikukawa, former chairman, Hideo Yamada, former auditor, and Hisashi Mori, former executive vice president.

Former CEO Michael Woodford and Chairman Tsuyoshi Kikukawa pose for the company's 2011 Annual Report

The scandal came out in October 2011 when Michael Woodford, a UK citizen who was the company's first non-Japanese chief executive, was fired after his own investigations revealed accounting improprieties in the company's corporate acquisitions, including excessive payments to consultants. Following the revelations, Olympus shares lost nearly 80 percent of their value.

The main reason offered in a Bloomberg story for the short and suspended sentences is that former Olympus presidents Masatoshi Kishimoto and Toshiro Shimoyama were the ones who made the decision to conceal the losses, and Kikukawa was only continuing the coverup. Kishimoto and Shimoyama are immune from prosecution because the statute of limitations has expired.

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Comments

Total comments: 53

Kalin,
Your assessment of Woodford shows a more objective analysis of what he actually did and its effects than most.

Please do the same for the convicted three. Liars they certainly were. Crooks they were not. There is no proof, and at this point no credible allegation (this has been investigated pretty thoroughly) that they ever lined their own pockets.
They kept hiding embarrassing losses that they hoped they could recuperate, but the hole just got bigger and bigger.

I do agree that no one involved looks good, and thought the worst of all of them, until I actualy researched K's career. Brilliant engineer and visionary, especially in imaging, and came in as a reformer. Could likely have got a top job anywhere. Continued, or at least approved the accounting fraud. Will likely be lucky to get an engineering job. Sad story indeed, especially for those of us who really enjoy Olympus cameras (and look forward to further miniaturization and streamlining of their end-o-scopes!)

Comment edited 2 minutes after posting

0 upvotes

absolutely they are crooks - you admit it yourself: "they kept hiding embarrassing losses"

0 upvotes

IDK, Woodford always gave the impression he went into the whistle-blowing biz with the intent to destabilize and then take over the company rather than for some noble reasons. He failed miserably but not before he had caused even more damage than the crooks before him

Not a single person involved in this looks good.

1 upvote

I certainly agree with the general sentiments expressed here, and have personally had to experience the inequities of the justice system and the victimization of workers. Canada's "own" Conrad Black is among the worst examples.

But working as an advocate and counsellor for people wronged by employers and the Unemployment Insurance system has also taught me to really look at the facts. These are, as the Japanese Investigative Commission documents in great detail, rather different from such cases as Black's or Stewart's or the Enron filth's attempts to essentially line their own pockets.

They did something wrong and stupid and essentially got caught up in their own web of lies and deceit (to paraphrase Shakespeare). But while I initially believed W., a closer look at his background, as well as his repeated, painfully obvious attempts to manipulate public credulity and shareholder insecurity spurred me to investigate further.

The truth is always more complicated than simple fables.

Comment edited 2 times, last edit 5 minutes after posting

0 upvotes

More white collar criminals getting hand slapped. What kind of message those that send to other management personnel ? Bet if the administrative assistant was caught taking home toner ink she would get a prison term.

10 upvotes

Sad to see people simply join an angry mob based on headlines. A few simple facts.

1. There is no evidence that these 3 stole anything, or personally benefited from continuing the hiding of losses.

2. The huge damage to Olympus' share value resulted from W's sensational accusations of theft of huge sums and even of his life being in danger, none of which were ever substantiated.

3. K has an outstanding background as an innovative engineer (Wikki), W as a ruthless corporate cost-cutter, including the slashing of US support infrastructure (Reuters)

4. When share value partly recovered as the nature of the "missing
millions"became clearer W did his best to reignite the panic, and enlisted aid in his takeover bid.

5. The 3 are completely disgraced in a country where "face" and reputation are paramount. W. got a very substantial settlement from a company that is struggling to survive.

W is the real winner here, unlike some real whistleblowers crouching in airports and embassies.

Comment edited 3 minutes after posting

3 upvotes

I thought Woodward made a pretty compelling case in Exposure.

0 upvotes

I have to say that defending these executives is simply not acceptable. Further you use false logic:

Point #1: False. The investments were made to improve O's profitability. When they failed they should have faced their shareholders, honestly admit their mistake and apologize. They benefited by hiding their failure and retaining their positions.

2. The damage to O stock occurred because O's Management FACTUALLY hid losses resulting from improper and investments. They hid the losses in a way that made in look like money-laundering to organized crime. W just did his job.

3. Irrelevant. The Enron CEO and Chairman were brilliant financial minds and businessmen. The McKinsey Partner from India was at the forefront of KPO. They all still committed crimes. By your logic bank robbers should be allowed to go free because they are stand up guys.

4. W turned down O's Board when they offered to reinstate him.

5. In corporate Japan, many Execs still feel that they did the right thing.

Comment edited 2 times, last edit 48 seconds after posting

3 upvotes

This is an excellent spin. Personally, I like to go with the politician's favorite, "there is enough blame to go around". This assures that no one is really responsible for anything and they just got caught up in an unfortunate turn of events.

An interesting argument though, that fudging the facts is sorta ok so long as no money was made from it.

0 upvotes

And so it goes on ... but what **I** want to know, is where is my E-7 ???

Still using a much-loved, 5 Mpixel CCD based Olympus E-1, one of the best DSLRS from (errrr) about 10 years ago. And wanting to leverage my investment in glass, accessories and more.

Brian

4 upvotes

Nice to see you have a high sense of priorities in your life.

1 upvote

Great camera the E1. I had one with the 14-54, 11-22 and 50-200. Have some really nice pictures, great colour. I actually miss it. Probably will buy one again, out of fond nostalgia. After all, five megapixels is enough for the majority of people's needs.

Comment edited 4 minutes after posting

0 upvotes

Once again, the Japanese 'cultural' norm of management by consensus shields the clear perpetrators from personal responsibility. So typical, a cliche really.

2 upvotes

I think it's worth pointing out, Olympus's main product line is in Endoscopy. Cameras are a small, but important part of their business. I've almost been tempted to purchase two or three of their excellent cameras and certainly have been shafted by one or more of their endoscopes;)

2 upvotes

Bend over BlackAdder ... it's *** time!!!

[for our US cousins, this is a reference to a cult GB comedy that didn't involve Benny Hill] ;-)

Brian

1 upvote

PS - just as well the cameras are small, because ... oops, no, better not go there! 8-)

Brian

1 upvote

such is Japanese Corporate Culture at play with politics , yes , you are not guilty if you are just fellowing in others food steps. What a REASON really.

2 upvotes

I would suggest that seppuku is appropriate.

3 upvotes

Hai! You beat me to it...
If they need a second, I'm available. Not cheap, but enthusiastic.

0 upvotes

Should you get the job, I'd suggest a baseball bat instead of katana...

0 upvotes

judge:
"I want every mirrorless model and lens released for the next 8 years. So do my grandkids!"

Olympus suit:
"We can arrange that."

judge:
"Why did you stop making DSLRs? I loved your E-series DSLRs."

Olympus suit:
"Business reasons forced us to abandon our Four Thirds users. We are very sorry for that. Our engineers were very proud of the work they did but it's us suits that ultimately decide what products are released."

Judge:
"I see..."

4 upvotes

That's the trouble with the Japanese; they copy everything we do in the USA.

10 upvotes

Well Said!!

0 upvotes

Thus, "Equal Justice" becomes the World's #1 oxymoron.

9 upvotes

download a few MP3 as a student from bittorrent and you will be facing a fine that will ruin your live.

be a corporate scumbag that steals millions... smile and enjoy a happy life.
prison is for poor people. the rich can get away with every fraud you can imagine.

there are two laws... one for rich and one for poor people.
even the dumbest persons should have noticed this by now.

that´s how our societys work today.
there is need for a new revolution.... power to the people not the 1% and the corporations.

33 upvotes

If USSR has taught us anything, revolutions don't stick. There's really no substitute to 99% who mind their rights and their business - rather than get distracted with polarizing issues not affecting them or trapped in escapist consumer mentality, abandoning their power and responsibility as citizens.

3 upvotes

Well said, Henry and Alec. Revolutions do not need to be violent. It can be a revolution in thinking and action, citizens taking back control of their government by getting involved and voting. Let's hope that's the path taken. But the edge the Supreme Court gave to big money is great. Still...it's heartening to see big money fail to win the day in many elections...so the people still have a chance.

But, as Alec points out, only if they can overcome the manipulation of wedge issues used to keep them apart by the 1%, who well understand the game being played and are very serious about it.

Meanwhile, photography provides a welcome sanctuary and some peace in this crazy world.

4 upvotes

Shouldn't they be doing hara-kiri now?

7 upvotes

"accounting improprieties ... including excessive payments to consultants."

Maybe the judge was one of the consultants? Fraud like this needs to be punished severely or it will continue.

12 upvotes

Classic white collar crime case. Bloody ridiculous.

13 upvotes

I totally agree. Get off scott free basically. If you have money, you can. Just amazing the hypocrisy it all is.

The larger the dime the smaller the crime.

Comment edited 25 seconds after posting

9 upvotes

A $7M fine for a $1.5B crime against investors. Yeah, that should show them, nicely done Japan. And we wonder why we have no confidence in the stock market...

15 upvotes

I rob a bank for $1000, I get 15 years...

25 upvotes

Yes but did you threaten anyone with a Magnum (that's a gun, not an ice-cream) or hit anyone over the head?

3 upvotes

The problem with that is $1K does not buy much government or justice. If you stole $10B and allocated wisely to the three branches of government, you could be playing golf with that same bank's president, discussing the preferential rate at which you'd loan back that money.

12 upvotes

. . . and I presume everybody knows what happened to the American head of the company who let the cat out of the bag. . . Gee, you don't ? He had to find another job.

How honorable for all concerned.

12 upvotes

He was English, actually. But yes, he got a raw deal.

10 upvotes

On a positive note, he didn't go to jail, and his reputation wasn't destroyed. Investors will likely trust him.

2 upvotes

Anyone knows what Woodford is doing now, after he exposed the scandal?

1 upvote

Woodford got a settlement that I recall, after that I haven't heard or sought out anything more - yet.

3 upvotes

He got a £10 million settlement and is now doing the rounds as a consultant on business ethics.

2 upvotes

That's not too bad. I'd love to have him as the CEO in a company where I own stocks though.

1 upvote

If you look closely at the blindfolded statue of justice, you will see gremlins tipping the scales...

3 upvotes

Isn't it great that the original perps can't be charged because the statute of limitations has expired on their crimes?

Makes me feel like a chump for being honest!

As a teenager, I saved my money mowing several neighborhood lawns to buy an OM-1. Makes me sick what those guys did to that great company.

12 upvotes

What's even worse are the crimes of the current marketing dept against photography - the wonderful OM-1 replaced by gimmick laden DSLRs. Same applies to Nikon and Canon. Please Olympus give us a digital OM.

0 upvotes

Today it seems being honest isn't tolerated where as being a liar or cheat is practically celebrated. At your last breath you have to look back on your life and either be happy with yourself or disgusted. I'll look back and be happy with who I am/was and that is reason enough alone to being an honest man.

8 upvotes

@cgarrard. well said, sir!

2 upvotes

Wow. How many people have or will have commited petty crimes, and will or have been ordered to spend at least 30 days in jail?

"Kikukawa was ONLY continuing the coverup."

I guess money really does talk.

14 upvotes

It doesn't talk, people just have a major issue with temptation vs. doing the right/moral/ethical thing. There is a trend in this world to blame the inanimate object for humans bad decisions/traits etc., which is a form of denial or lack of accountability that needs to be addressed much more often. Never blame an inanimate object, only the person doing the act.

2 upvotes

I think you miss my point. I'm not blaming money or those who have it. I fault the ones in charge that allow those with money to face a different justice than those with out such riches.

2 upvotes

No I got your point. I was ranting about the popular saying "money talks". I took that portion only of what you said then ran with it because it reminded me of something that I see so often. I'm not saying you personally are doing so.

In general I find way too many sayings in our culture that are designed to hide the blame behind the object, instead of the person. You get used to saying things like that instead of examining yourself.

Maybe you missed my point, which is quite ok.

0 upvotes

Well I'll leave it to what I originally said and meant to keep this from going any further, and no I got your point which is why I responded.

1 upvote

So much for justice!

10 upvotes

Total comments: 53

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