Japan financial chief confirms Olympus probe

AP News
|
Posted: Nov 11, 2011 3:16 AM
Japan financial chief confirms Olympus probe

The minister in charge of Japan's financial regulator said Friday it will move quickly to investigate camera and medical equipment maker Olympus, which is embroiled in a scandal over the concealment of huge investment losses.

Financial Services Minister Shozaburo Jimi said the scandal had tainted Japan's image internationally, and his agency is "determined to move quickly."

Olympus, which has said it covered up investment losses that date to the 1990s, now risks being delisted from the Tokyo Stock Exchange.

The scandal centers around $687 million in payments for financial advice and expensive acquisitions of companies unrelated to its mainstay businesses.

The fiasco came to light last month, when Chief Executive Michael Woodford, a Briton and a rare foreigner heading a major Japanese company, raised questions about the payments and called for executives to resign.

He was fired by the board on Oct. 14. At that time, Olympus said Woodford was too wayward and had not matched Olympus' ways.

Jimi said in a statement that he expects Olympus to carry out its own investigation and come clean.

Olympus has set up a panel to investigate. The panel said earlier this week that it found accounting irregularities and executives had hidden investment losses dating, reversing initial denials of wrongdoing.

But Jimi also stressed the government will act quickly to investigate possible violations.

Jimi said the investigation arm of the Financial Services Agency was ready to carry out "rigorous investigations and surveillance" on Olympus, and take necessary action.

"It is trouble to see investors, both domestic and abroad, question the fairness and transparency of the Japanese markets," he said, calling the Olympus cover-up "highly regrettable."

In recent weeks, analysts have expressed concern that Olympus will be seen by the international community as typical of Japan Inc., threatening to tarnish the image of an entire nation.

Others say the case highlights the weaknesses of Japan's system of corporate governance, which needs to be updated and beefed up by outside experts.

Olympus stock has erased about four-fifths of its value over the last month because of the scandal. It slipped nearly 5 percent to 460 yen Friday on the Tokyo Stock Exchange. The exchange has warned Olympus will be delisted if it can't report earnings by Dec. 14.

___

Follow Yuri Kageyama on Twitter at http://twitter.com/yurikageyama