Scandal-hit Olympus sets up panel to examine deals

1st November 2011, Comments 0 comments

Scandal-hit Japanese camera maker Olympus Tuesday announced the names of a panel set up to probe allegations of massive overpayments in takeover deals that have rocked the company.

The six-member committee, headed by former Supreme Court judge Tatsuo Kainaka, will also include four lawyers and one certified accountant, the firm said.

They will investigate four acquisitions that Olympus made between 2006 and 2008, including a $1.92 billion deal for British medical-instruments company Gyrus Group, for which Olympus has admitted to paying $687 million to a little known financial adviser based in the Cayman Islands.

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. The company heavily wrote down their value a year later.

Olympus said in a statement that the panel members were selected, in line with the Japan Federation of Bar Associations, by two independent board members who had not been in their posts when the deals were made.

"The committee members' independence from the company is secured," the Olympus statement said.

The panel will scrutinise the four deals to determine whether "any unjust or inappropriate actions or any inadequate management decisions were made," it said.

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

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 chairman Tsuyoshi Kikukawa and urged him to resign over the payments, citing major governance concerns.

Kikukawa assumed Woodford's roles but, under increasing pressure as media scrutiny and shareholder anxiety intensified, resigned last week.

The scandal prompted an intervention this week from Prime Minister Yoshihiko Noda who said he was concerned it could be seen as part of a wider problem in Japan's business culture.

"What worries me is that it will be a problem if people take the events at this one Japanese company and generalise from that to say Japan is a country that (does not follow) the rules of capitalism," he said in an interview with the Financial Times, adding: "Japanese society is not that kind of society."

© 2011 AFP

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