Post by leerain on Nov 7, 2011 20:35:08 GMT -8
Tsuyoshi Kikukawa The controversy over payments led to the resignation of Olympus' former chairman Tsuyoshi Kikukawa
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Shares in Olympus fell as much as 30% on Tuesday after the company admitted to hiding losses on securities investments for decades.
The company said it had used funds related to past acquisitions to cover these losses.
This is the biggest disclosure Olympus has made since former chief executive, Michael Woodford, claimed that he was fired for raising questions about them.
Olympus executive VP, Hisashi Mori, has been dismissed as a result.
"It's big. Olympus was supposed to be a paragon of corporate society," said Darrel Whitten of Investor Networks Inc, an investor relations consultancy.
Untenable position?
The controversy surrounds the payments made by Olympus to financial advisors as part of its acquisition of companies including British firm Gyrus.
The payments came to light when Mr Woodford claimed that he had been forced out of the company for raising questions about these and other accounting practices.
For its part, Olympus maintained that it had done nothing wrong and launched a third-party investigation into the matter.
"Through this process (of the third-party investigation), we found that from the 1990s the posting of losses on securities investments had been deferred," the company said in a statement.
The company also admitted that it had channelled money related to the acquisitions through various funds and other measures to defer posting losses.
After the company released the statement, Mr Woodford was quoted by the Reuters news agency as saying that "the position of the board and non execs is untenable now".
Keiji Isaji, an attorney with K&L Gates law firm in Tokyo added "the members of the board appear to have breached their fiduciary duty owed to the company and to the shareholders".
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