Olympus shareholders sue over bookkeeping scandal

November 17, 2011 by MassDevice staff

It took a month for shareholders of Olympus Corp. (TYO:7733) to file a lawsuit over a bookkeeping scandal that's put the endoscope maker's share price in the cellar.

Olympus has admitted to a decades-long scheme to conceal losses using fictitious payments to dummy merger & acquisition consultants. The scandal has cost a series of high-level executives their jobs and pared 6 3.5 percent from Olympus shares since the scandal broke Oct. 14, after the firing of then-CEO ( and current whistleblower) Michael Woodford.

Olympus head Shuichi Takayama, its third president in less than a month, last week pointed the blame at three former executives: chairman Tsuyoshi Kikukawa, who took over the corner office for a couple of weeks in between Woodford's termination and the appointment of Takayama; executive vice president Hisashi Mori, who was fired; and internal auditor Hideo Yamada, who has tendered his resignation.

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Now shareholders represented by investor Lloyd Graham are seeking class status for a lawsuit accusing the company and its top management at the time – including Woodford – of complicity in the loss-hiding scheme.

"[D]efendants knew that the public documents and statements, issued or disseminated by or in the name of the company, were materially false and misleading," according to court documents. "The ongoing fraudulent scheme described in this complaint could not have been perpetrated over a substantial period of time, as has occurred, without the knowledge and complicity of the personnel at the highest level of the company, including the individual defendants."

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