
Olympus Corp. (TYO:7733) admitted to channeling money through investment funds to hide losses in the wake of a growing scandal sparked by former CEO Michael Woodford.
The Tokyo-based technology giant revealed that nearly $1.5 billion in possibly illegal payments were used to conceal heavy losses on investments over the last two decades.
Olympus head Shuichi Takayama, its third president in less than a month, 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 new president Shuichi Takayama; executive vice president Hisashi Mori, who was fired today; and internal auditor Hideo Yamada, who has tendered his resignation.
Regulators in the U.S. and Japan are investigating allegations that Olympus channeled more than $1.5 billion through offshore funds after suspicions were aroused by Woodford, according to Bloomberg BusinessWeek.
Olympus shares have lost more than 70 percent since Woodford’s mid-October termination, falling from a closing price of roughly $31.91 (¥2,482) Friday, Oct. 13, to about $9.44 (¥734) in mid-morning trading today, the stock’s lowest point in 16 years.
Woodford, the company’s first non-Japanese CEO, was sacked two weeks into his appointment. Woodford maintains that he was fired for questioning $687 million in possibly illegal payments to acquisition advisors in 2008. Auditor Yamada insists that the inquiries had nothing to do with the termination, and that Woodford’s aggressive management style didn’t fit the company’s culture.

Woodford
Olympus, which has a corner on 70 percent of the endoscopic camera market, launched in internal probe into the fee scandal after Woodford took his concerns to the media, the U.K.’s Serious Fraud Office and the U.S. Federal Bureau of Investigation.
The company found that the record-setting $687 million paid to financial advisors during a $2.2 billion acquisition of Gyrus Group in 2008 and a payment of $773 million for three small domestic companies were used to keep losses off the books, Reuters reported.
"This is very serious. Olympus admitted it has made false entries to cover its losses for 20 years. All people involved in this over 20 years would be responsible," ITC Investment Partners chief investment officer Ryosuke Okazaki told the wire service. "There is a serious danger that Olympus shares will be delisted. The future of the company is extremely dark."