ALM Properties, Inc.
Page printed from: International News
Select 'Print' in your browser menu to print this document.
Olympus Executives Receive Suspended Sentences
The Asian Lawyer
A former Olympus Corp. chairman and two other executives received suspended sentences on July 3 for their role in helping to cover up $1.7 billion in losses at the Japanese camera and medical equipment maker.
Tokyo District Court Judge Hiroaki Saito sentenced former chairman Tsuyoshi Kikukawa and former auditor Hideo Yamada to three years in prison but suspended the sentences for five years. Former executive vice president Hisashi Mori received two and a half years, although that sentence was suspended for four years. The judge also fined the company $7 million.
While prosecutors called for stiffer sentencing for Kikukawa—five years in prison—and a $10 million fine for Olympus, Bloomberg reported that the judge opted for leniency because the decision to hide the losses was made by former presidents Masatoshi Kishimoto and Toshiro Shimoyama.
“Kikukawa and Yamada succeeded in a negative legacy and weren’t involved in the decision-making process to hide losses,” Bloomberg quoted Judge Saito as saying in court. “They were distressed and didn’t benefit personally from hiding losses. Mori followed their orders.”
Suspended sentences are not uncommon in corporate fraud cases in Japan. The heads of the two companies--Internet portal Livedoor and Seibu Railway Group--involved in the most recent major securities fraud scandals before Olympus also both received suspended sentences.
When the scandal first broke in late 2011, Scott Nonaka, a Tokyo based litigation partner with O’Melveny & Myers told The Asian Lawyer that public reaction would be more muted than it would be in the U.S.
"There's public concern, but it's not like it you'd see in the U.S.," Nonaka said at the time. "You don't have that anger about corporate greed. There's an understanding that these guys weren't trying to line their own pockets. They were, in their minds, acting to protect the interests of the company."
The massive accounting fraud was exposed by former Olympus chief executive officer Michael Woodford. In an October 2011 letter to Kikukawa, Woodford outlined his findings that Olympus had hidden losses through a number of acquisitions and the payment of $687 million in advisory fees. He was later fired and subsequently filed a wrongful termination suit that was settled under confidential terms.
Mori Hamada & Matsumoto partner Takashi Miyatani was copied on Woodford’s letter. The firm declined to comment on its involvement, if any, in this case or on the judge’s decision.