updated 07:30 pm EST, Mon February 20, 2012
Internal choice comes in wake of $1.7b fraud
Scandal ravaged Olympus will appoint an insider, Hiroyuki Sasa, as its next president. The appointment, reported by Nikkei [sub. required], will be effective April 20, and comes in the wake of the resignation of its former president, Shuichi Takayama, who took responsibility for the company's $1.7 billion accounting fraud and subsequent cover-up. Earlier this month, seven former Olympus executives and their investment advisers were arrested for violations related to the fraud.
Olympus's financial misconduct first became public in October after the Company fired its first non-Japanese CEO Michael Woodford. Although Woodford was a 30 year veteran with the company, Olympus claimed his removal was due to a conflict of management philosophy. Woodford claimed that he was fired because he was a whistleblower and had approached the board of trustees with evidence of long-term financial misconduct. Woodford's allegations, which centered around the payment of $773 million for questionable acquisitions and $687 million in related fees paid to several Cayman Island based investment advisers, caught the interest of Japanese officials who began investigating the imaging company.
The investigations led to the discovery of alleged systematic accounting and reporting fraud by Olympus executives. The extent of the fraud grew to over $1.7 billion over a twenty year period. Late last week, Japanese authorities arrested former Olympus President Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada, as well as four investment bankers and charged them with violation of that country's Financial Instruments and Exchange Law.
Sasa was selected by an in-house for the presidency after a month long search by an internal nominating committee. He has served as both head of research and marketing at Olympus Medical Systems, one of the company's core businesses. Olympus is also going to overhaul its board and replace its chairman. Nikkei reports that the new chairman is expected to come from Sumitomo Mitsui Banking, one of Olympus' major lenders. [via Reuters]