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September 24, 2012

Olympus former president pleads guilty of fraud

Former president of Japanese camera maker
Olympus, Tsuyoshi Kikukawa has pleaded guilty over charges of
accounting fraud at the first hearing trial at the Tokyo district
court.

Earlier this year Olympus filed a suit against
its former president and 19 executives for allegedly covering up
losses of $1.7bn.

Kikukawa said during the proceedings that not
only the case troubled shareholders and employees but destroyed the
image of Japanese companies at the international level, according
to media reports.

“There is no mistake. The entire
responsibility lies with me,” Kikukawa was quoted saying as he
appeared in court.

Former executive vice president Hisashi Mori
and former auditing officer Hideo Yamada have also pleaded
guilty.

The scandal emerged in October 2011 when
former chief executive Michael Woodford blew the whistle over
accounting irregularities dating back from 1990. Woodford claimed
Olympus’ board paid excessively large adviser fees of acquisition
deals which were used to hide billions in losses and he was
dismissed as a result.

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The Japanese Institute of Certified Public
Accountants (JICPA) and Japan’s Financial Services Agency (FSAJ)
launched an investigation in November 2011 that found executives
accountable for the $1.7bn scandal cover up.

The investigation also concluded that some
aspects of auditors’ conduct at the time, KPMG Asza and Ernst &
Young (E&Y) ShinNihon, were “not appropriate” and
“questionable”.

The former president and the two former
executives might face 10 year imprisonment penalties and $208m in
damages. 

Related links

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