Corporate Scandals
Corporate Scandal
I. Olympus
Updated: April 20, 2012
Olympus Corporation, founded in 1919, is a manufacturer of digital cameras and electronic equipment. Based in Tokyo, the multibillion-dollar company has operations worldwide.
In mid-October 2011, Olympus was rocked by scandal when its former chief executive and president, Michael C. Woodford, who is British, was suddenly fired. The company’s chairman, Tsuyoshi Kikukawa, blamed a culture clash, but Mr. Woodford, a 30-year Olympus employee, said he was fired after trying to force an investigation into a series of acquisitions made before he was appointed chief.
One of the deals in question involved $687 million in fees Olympus paid to an obscure financial adviser over its acquisition of the British medical equipment maker Gyrus in 2008. That fee amounted to roughly a third of the $2 billion acquisition price, a fee amount more than 30 times the norm.
Olympus also acquired three small companies in Japan for a total of $773 million, only to write down most of their value within the same fiscal year. Those companies — Altis, a medical waste recycling company, Humalabo, a facial cream maker, and News Chef, which makes plastic containers — had little in common with Olympus’s main line of business. Those businesses had not made money before being acquired, according to the credit ratings agency Tokyo Shoko Research.
At first, Olympus denied any wrongdoing over the deals, which were made from 2006 to 2008. But on Nov. 8, the company admitted it had used $1 billion in payments to cover up losses on investments.
By mid-November, according to an internal memo prepared by Japanese police, officials there were trying to determine whether much of the money went to front companies with links to organized crime. The memo said investigators were trying to find out if Olympus worked with organized crime syndicates to obscure billions of dollars in past investment losses, and then paid them exorbitant sums for their
I. Olympus
Updated: April 20, 2012
Olympus Corporation, founded in 1919, is a manufacturer of digital cameras and electronic equipment. Based in Tokyo, the multibillion-dollar company has operations worldwide.
In mid-October 2011, Olympus was rocked by scandal when its former chief executive and president, Michael C. Woodford, who is British, was suddenly fired. The company’s chairman, Tsuyoshi Kikukawa, blamed a culture clash, but Mr. Woodford, a 30-year Olympus employee, said he was fired after trying to force an investigation into a series of acquisitions made before he was appointed chief.
One of the deals in question involved $687 million in fees Olympus paid to an obscure financial adviser over its acquisition of the British medical equipment maker Gyrus in 2008. That fee amounted to roughly a third of the $2 billion acquisition price, a fee amount more than 30 times the norm.
Olympus also acquired three small companies in Japan for a total of $773 million, only to write down most of their value within the same fiscal year. Those companies — Altis, a medical waste recycling company, Humalabo, a facial cream maker, and News Chef, which makes plastic containers — had little in common with Olympus’s main line of business. Those businesses had not made money before being acquired, according to the credit ratings agency Tokyo Shoko Research.
At first, Olympus denied any wrongdoing over the deals, which were made from 2006 to 2008. But on Nov. 8, the company admitted it had used $1 billion in payments to cover up losses on investments.
By mid-November, according to an internal memo prepared by Japanese police, officials there were trying to determine whether much of the money went to front companies with links to organized crime. The memo said investigators were trying to find out if Olympus worked with organized crime syndicates to obscure billions of dollars in past investment losses, and then paid them exorbitant sums for their