Olympus admits it used advisory fees to cover up stock loss
updated 10:40 pm EST, Mon November 7, 2011
Olympus investigation confirms scandal
Olympus in the wake of an independent investigation confirmed late Monday that it had been engaging in questionable, if not illegal, activity surrounding its advisor fee scandal. It said investment losses made in the 1990s had been covered up by paying a supposed advisor $687 million during the buyout of Gyrus, masking the difference. It had also spent $940.1 million to buy a trio of Japanese companies between 2006 and 2008 but had promptly written off $700 million of that value.
Company officials apologized to shareholders.
The findings could lead to a major upheaval at the company and possible criminal charges. CEO Michael Woodford had been fired from the company by Chairman Tsuyoshi Kikukawa and the board for challenging the mismatch in fees. Forcing Woodford out immediately raises concerns that Kikukawa forced him out to prevent him from revealing the truth. The chairman resigned last month claiming innocence, but the voluntary exit was itself suspicious.
Calls from Woodford and investors have already come suggesting that every board member and executive connected to the scandal be forced to resign. Woodford has said he was open to the possibility of returning as CEO, but only if shareholders voted in favor of the step. He remained on the company board after being pushed out of the CEO position. [via WSJ]
