Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: cpt :: empanelment :: due date for vat payment :: VAT RATES :: Central Excise rule to resale the machines to a new company :: VAT Audit :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: articles on VAT and GST in India
« Mergers and Acquisitions »
 The Role Of Brand In Petroleum Mergers And Acquisitions
 Mergers and Acquisitions: What Happens After the Announcement?
 Agency mergers and acquisitions continue to be strong for first-half 2016
 The Intricacies Of Financial And Legal Relationships In M&A
 3 integration considerations for Mergers & Acquisitions
 Mergers and acquisitions take centre-stage as funding for start-ups dries up
 Mergers and Acquisitions reach highest quarterly value in India
 18 digital health exits (mergers, acquisitions, and IPOs) in Q3 2016
 Number of mergers and acquisitions rise in 2016, Experian finds
 Indian startups are more willing than ever to acquire and be acquired
 India’s mergers and acquisitions reaches highest quarterly value in Q3 2016: Report

Electronics giant Olympus hid investing losses in big merger payouts
November, 08th 2011

Olympus said Tuesday that more than $1 billion in merger payouts were used to hide years of losses on investments, an acknowledgment that is an abrupt about-face for the company, which had denied any wrongdoing in the wake of a widening scandal.

That revelation alone could make this one of the biggest accounting fraud cases in corporate history. It is also a spectacular turn of events amid a boardroom battle that has pitted Olympuss former British chief executive turned whistle-blower, Michael C. Woodford, against an otherwise all-Japanese company board.

Mr. Woodford was fired in mid-September after trying to force an investigation into a series of acquisitions, made before his appointment as president in February. He has since released internal documents to the news media and called for the entire company board to resign. Since the accusations, Olympus has lost half its stock market value as many questioned the companys governance.

Olympus, which is based here in Tokyo, had categorically denied any wrongdoing over the deals, made from 2006 to 2008. Just last week, the company appointed a panel of outside experts to investigate, a measure Olympus said was aimed at assuaging investor fears.

But in an extraordinary statement issued Tuesday, the company said the panel found that the money for mergers had in fact been used to mask heavy losses on investments racked up since about 1990.

The panel found that Olympus channeled money through several investment funds to eliminate latent losses, the company said in the statement, without elaborating. The revelations came as a surprise because the panel had not been expected to reach any conclusions for at least several more weeks.

The payouts in question involve $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.

The Federal Bureau of Investigation and the Securities and Exchange Commission in the United States are also investigating the Gyrus deal, according to people familiar with the matter.

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 Olympuss main line of business of producing cameras and other electronics. Those businesses had not made money before being acquired, according to the credit ratings agency Tokyo Shoko Research.

At a news conference, the companys new president, Shuichi Takayama, bowed deeply in apology. It is true that there were inappropriate dealings, he said. Our previous statements were in error. But he stopped short of acknowledging fraud at the company, and said that no money had flowed out of the company. He said Olympus was still investigating the case and was still unprepared to reveal the scale of past losses.

Mr. Takayama also said that Hisashi Mori, an executive vice president, had been fired over his involvement in the cover-up. Hideo Yamada, who is also implicated, has offered his resignation, he said. He reiterated the companys position that Mr. Woodfords departure had to do with his aggressive Western-style management style rather than his inquiries into the acquisitions. Mr. Takayama said that despite the disclosure, he hoped to keep Olympuss shares listed on the Tokyo Stock Exchange. Its shares were down nearly 30 percent Tuesday afternoon.

Mr. Woodford, who worked at Olympus for 30 years, had begun to look into those payouts after a Japanese financial magazine, Facta, published an expos on the deals. In September, Mr. Woodford commissioned a report by PricewaterhouseCoopers into the Gyrus deal that raised concern over actions taken by Olympus management, including a lack of due diligence.

Based on the report, Mr. Woodford called for a full investigation in a letter dated Oct. 11. He urged the companys chairman at the time, Tsuyoshi Kikukawa, and other members of the board to resign, accusing them of calamitous errors and exceptionally poor judgment and comparing them to rogue traders.

But the next day, the Olympus board unanimously voted to oust Mr. Woodford. He said he was not permitted to speak at the board meeting, and was advised to leave the country immediately.

Mr. Kikukawa resigned in late October. In a statement at the time, he denied wrongdoing.

Questions remain over Olympuss links to the obscure investment and advisory companies that facilitated those acquisitions, including an investment fund incorporated in the Cayman Islands, as well as Axes, a company that oversaw those funds from the United States and Japan.

The Global Company, an investment advisory firm based in Tokyo, was closely involved in setting up the three companies as well as facilitating their sale to Olympus, according to a New York Times investigation. Executives at those companies have not been available for comment.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions