Tokyo steps up pressure on Olympus

11th November 2011, Comments 0 comments

Japan on Friday vowed to "take every measure necessary" if needed to improve corporate oversight as disgraced company Olympus whip-sawed on the stock market ahead of a potential delisting.

The comments highlight the government's growing concern about the fallout of the scandal on Japan Inc as the economy struggles to recover from the global downturn and the March 11 earthquake.

Shares in the company saw volatile trade on Friday in the wake of the firm's loss cover-up scandal and after the Tokyo bourse on Thursday put it on watch for possible removal from the index.

Olympus, which tumbled 17.12 percent Thursday, fell more than 10 percent in the opening minutes on the Tokyo Stock Exchange, before surging 9.5 percent at one point in midmorning trade.

They closed down 4.95 percent at 460 yen.

Pressure has mounted on the Japanese camera and precision equipment maker amid reports police are probing the firm after it admitted concealing losses for decades.

Tokyo on Friday stepped up the pressure, as the country's financial services minister said his Financial Services Agency, a government watchdog, would carry out "rigourous investigations" if criminal activity is suspected.

Shozaburo Jimi said the agency would "move quickly, in close cooperation with relevant bodies including the Tokyo Stock Exchange, to urge the company to take steps to accurately grasp the truth and make timely disclosure".

He added that the issue was "highly regrettable from the viewpoint of market fairness and transparency".

Jimi, who is a government minister as head of the agency, added that he was "determined to take every measure necessary, if any issues for improvement were to be identified through the untangling of this case."

Olympus on Tuesday revealed that it had covered up investment losses from the 1990s and then tried to conceal them with acquisitions made between 2006 and 2008. The deals had come under scrutiny due to the size of fees involved.

Its stock was placed on the TSE's watchlist Thursday for possible delisting after the company said it would miss a Monday deadline to report its quarterly results.

It will be taken off the index if it fails to report by December 14, a move that would effectively wipe out the value of its shares and could trigger investor lawsuits, analysts say.

"It is troubling to see investors, both domestic and abroad, question the fairness and transparency of the Japanese markets," said Jimi.

Olympus shares have lost more than 80 percent of their value since the scandal broke on October 14 when the company ousted British CEO Michael Woodford, who alleged overpayments in the acquisition deals.

"Without some forensic accounting it is tough to know what the company is worth," an equity strategist at a foreign brokerage told Dow Jones Newswires.

Jiji Press news agency said former chairman and president Tsuyoshi Kikukawa had admitted he was involved in loss cover-ups.

Kikukawa, 70, made the admission to a third-party panel Olympus set up to probe the past buyout deals, the news agency said without naming sources.

Kikukawa was president for a decade from 2001, the period when Olympus made the four deals under a third-party panel probe.

He replaced Woodford when the Briton was stripped of his executive posts but later resigned as public scrutiny on the buyout deals intensified.


© 2011 AFP

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