Japan's Olympus defends controversial deals

27th October 2011, Comments 0 comments

Olympus on Thursday defended payments made in a series of deals at the centre of a scandal that has hammered the camera maker's shares and triggered a pair of leadership changes in less than two weeks.

However, the Japanese company's share price rebounded 23 percent in Tokyo trade on Thursday, one day after its under-pressure chairman and president resigned in the wake of the scandal.

Olympus has been mired in crisis since ousting its British chief executive and president on October 14, who contends he was fired because he raised questions about payments made in a series of deals between 2006 and 2008.

His replacement, Tsuyoshi Kikukawa, who oversaw the questioned deals resigned on Wednesday, as the company looked to arrest the decline of its stock price amid rising concern from investors and its customers.

Among four deals queried by Woodford was the $1.92 billion acquisition of British medical-instruments company Gyrus Group in 2008 and the $687 million that Olympus has admitted it paid an adviser based in the Cayman Islands on the deal.

Also under scrutiny is the purchase of three small Japanese companies unrelated to its core precision instruments business for a total of 73.49 billion yen ($966 million at current rates) between 2006 and 2008, before heavily writing down their value a year later.

They include a cosmetics firm, a company that makes microwaveable food containers and another that recycled medical waste.

Olympus has said it has done nothing illegal.

New president Shuichi Takayama on Thursday held a press conference saying that the fees paid were not excessive and were based on a "fair assessment".

"The fees were determined at the contract signing, so we do not believe they were unreasonably expensive," the company said in a statement.

Shares in Olympus jumped in early trade on Thursday after Kikukawa's resignation, climbing over 22 percent to 1,350 yen in the afternoon.

Briton Michael Woodford was dismissed only six months after being appointed president and two weeks after he was also named chief executive.

The 30-year company veteran, Olympus' first non-Japanese president and chief executive, said he was removed after he wrote to Kikukawa and urged him to resign over the payments, citing major governance concerns.


© 2011 AFP

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