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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.

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. 

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