Olympus Corp. (TYO:7733) plans to examine its corporate structure as it struggles to keep its head above water amid an accounting scandal that’s slashed more than half the value from its stock price in six short weeks.
In an internal memo obtained and confirmed by Reuters, the Japanese endoscopy giant said it will review its organization and its corporate governance rules after admitting to hiding hundreds of millions of losses.
“They will make clear the optimal business structure and the proper profit structure to promote the steady further development of our business,” president Shuichi Takayama wrote to Olympus employees, according to the news service.
The internal probes come amid speculation that Olympus will look to save its $2.6 billion endoscope business at any cost, including selling off other assets. The company’s under-performing camera business, its flagship microscopy unit, an industrial testing business and a mobile phone unit are all potential candidates for a fire sale.
With so much chum in the water, rival firms are keeping a close eye on the case, un-named investment banker told Reuters, which noted that bids are unlikely until the waters are a little clearer.
The internal panel will focus on a ¥30 billion ($384 million) overseas investment fund believed to be a so-called “tobashi” scheme designed to conceal losses, according to Reuters.
Japan’s SEC begins on-site probe
The Olympus investigators are likely to be working alongside Japanese securities regulators, as the Japanese Securities & Exchange Surveillance Commission has launched an on-site probe at the company’s Tokyo headquarters.
The SESC will seek in-house financial documents about the company’s M&A activities and will review how the company slid the investment losses off the books.
U.S. and U.K. authorities are conducting their own probes to find out whether Olympus broke any rules in their jurisdictions.
Yesterday, Akio Nakagawa, a key figure in the scandal, was found living in Hong Kong.
The Japanese banker, whose company received an unprecedented $687 million payout during the Tokyo-based technology giant’s $2.2 billion acquisition of the Gyrus Group in 2008, was found living in a luxury high-rise near Hong Kong’s financial district.