Olympus board vows to quit
Business Day - Dec 12th 2011, 08:58
The entire board of Japanâ€™s Olympus has signalled its plan to quit â€” possibly as early as February â€” over a $1,7bn accounting fraud, and to set up an outside committee to advise whether to sue those responsible.
At a news conference yesterday, Olympus said one director had quit and Olympus president Shuichi Takayama said the entire board would step down once it had submitted second-quarter earnings, due by Wednesday next week, and taken steps to put the company back on track.
Mr Takayama said an extraordinary shareholders meeting could be held as soon as late February, and that would be the earliest possibility for management to resign.
The news follows the release on Tuesday of the findings of a separate investigative panel, which concluded that several former executives spent 13 years on a complex scheme to hide losses off balance sheet.
Announcing the new committee, the 92-year-old maker of cameras and medical equipment also revealed that senior executive director Makoto Nakatsuka had quit the board, the third to do so since the scandal erupted in October.
Mr Nakatsuka was found on Tuesday to have helped the two main architects of the cover-up, former internal auditor Hideo Yamada and former executive vice-president Hisashi Mori, to manage Olympusâ€™s financial assets in the late 1980s, when it began the series of risky investments that led to the losses.
"Our corporate governance was severely criticised. As the representative of the company, I apologise sincerely," Mr Takayama told reporters.
Earlier, Kyodo news agency reported that Mr Takayama would be among those whose actions would be examined by the new committee.
Olympus, which still risks being delisted from the Tokyo stock market and forced into a humiliating sale of core assets, also said it would set up a second panel to examine the responsibility of its auditors.
The board, already battling to maintain credibility after one of Japanâ€™s biggest accounting scandals erupted two months ago, faces a delicate task in pursuing the wrongdoers.
Made up almost entirely of directors who served during the 13-year cover-up of investment losses, the board was trashed in Tuesdayâ€™s report, but it remains in charge until shareholders can agree on a new team.
The report by outside legal and accounting experts said Olympus management was rotten to the core, citing a desire to flatter financial performance and a culture of craven loyalty.
Kyodo said the new panel would consider the possibility of seeking damages from those responsible for the cover-up.
Mr Takayama has already said Olympus will consider legal steps, including criminal complaints. He has blamed Mr Mori and Mr Yamada for masterminding the cover-up, and the panel found that two former company presidents were also made aware of the cover-up.
One of the few glimmers of hope from the panelâ€™s report was its conclusion that there was no evidence of a much-rumoured link between the scandal and organised crime. If such a link were found â€” and police are still investigating this aspect in a separate inquiry â€” Olympus would likely be delisted.
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