The committee probing a massive cover-up of losses at Japan’sOlympus said Tuesday two former presidents approved the long-running scheme and that core management at the firm had been “rotten”.
The panel of lawyers and an accountant chosen by Olympus said Tsuyoshi Kikukawa and his predecessor Masatoshi Kishimoto had backed the plan to hide 134.9 billion yen ($1.73 billion) in losses tied to speculative investments.
Kikukawa quit the company last month as the scandal engulfed the camera and medical equipment maker, which at one point saw about 80 percent wiped off the value of its shares.
In its 185-page report, the six-member panel also identified former vice president Hisashi Mori and former internal auditor Hideo Yamada as central figures behind the cover-up that stretched back to the late 1990s.
“This is an incident carried out secretly by some executives under the leadership of top management,” it said.
“The core of (Olympus) management was rotten and those around them were also contaminated.”
The report slammed Olympus for its “low level of transparency and governance” and added: “Many on the board were yea-sayers and we cannot help saying the board had become a mere facade.”
“Shifting losses off the books and trying to cover them up over a long period of time is the behaviour of those who do not understand compliance.”
The hard-hitting report said anyone objecting to the actions of senior executives could expect to get sacked “even if it was the right thing”, citing Olympus’ whistleblowing former chief executiveMichael Woodford as proof.
Woodford, the company’s first ever non-Japanese president and chief executive, was ousted on October 14 after making public allegations about the cover up and serious governance problems at the 92-year-old firm.
The Briton remained on Olympus’ board until last week when he resigned his directorship, which freed him to talk to shareholders about launching a battle to boot out the company’s board and put him back in a leadership role at the company.
Woodford on Tuesday said the report showed the “massive scale of malfeasance” at Olympus.
“Now, the work of revitalising Olympus can proceed only under untainted executives,” he was quoted as saying by Dow Jones Newswires.
The cover-up used a process called “tobashi” — which translates literally as “blow away” — in which investment losses are moved off a company’s accounts into areas where investors cannot see them.
Several Olympus deals have come under the microscope including the $2 billion purchase of British medical-instruments company Gyrus in 2008, in which Olympus has admitted paying $687 million to a little-known financial adviser based in the Cayman Islands.
On Tuesday, Tatsuo Kainaka, a former Supreme Court judge who chaired the panel, dismissed speculation that corrupt activities at Olympus were linked to Japan’s notorious Yakuza organised crime syndicates.
“We followed the flow of money, and there was no route going to anti-social forces,” he told a news briefing after the report’s release, using a common euphemism for organised crime.
He added that the long-running scheme was only known to a handful of executives and was “extremely difficult to uncover”.
“The schemes they used were crafty. Information was shared among only a small group,” he said.
“I think this can happen anywhere in the world, not just Japan.”
In a statement following the report’s release, Olympus said it would correct its earnings for the past five years and was still aiming to meet a December 14 deadline to release its overdue accounts.
Olympus could be delisted from the Tokyo Stock Exchange if it misses the deadline.
The embattled company, which is facing several legal and regulatory probes and has been hit with a class-action lawsuit filed by a US investor, said it would take the report “into serious consideration”.
The company’s volatile shares closed 9.07 percent higher Tuesday at 1,190 yen, about half their value before Woodford’s ouster.