Tokyo steps up pressure on scandal-hit Olympus

11th November 2011, Comments 0 comments

Japan on Friday moved to contain the fallout from the Olympus scandal, highlighting Tokyo's concern about its potential impact on how foreign investors view the nation's markets.

Prime Minister Yoshihiko Noda said the scandal surrounding the disgraced company must be dealt with strictly for Japan to secure market confidence.

"It is very regrettable that Olympus dealt with its financial accounting inappropriately," Noda told reporters, referring to Olympus' admission Tuesday that it concealed investment losses dating back to the 1990s.

"We have to address it sternly when such an inappropriate case surfaces. By doing so, I would like to secure confidence in Japan's financial market."

Noda's comments came after Japan's financial services minister made a rare statement about an individual company and pledged "rigorous investigations" into Olympus if it is found to have broken financial rules.

Pressure has mounted on the Japanese camera and precision equipment maker after the Tokyo Stock Exchange put it on delist watch on Thursday, amid reports police and other authorities were probing the firm.

Financial services minister Shozaburo Jimi said the Financial Services Agency, Japan's financial regulator, would "undertake necessary actions including rigorous investigations" wherever there were concerns over possible violations of financial rules.

He said the FSA 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".

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

He also said he was "determined to take every measure necessary, if any issues for improvement were to be identified through the untangling of this case" in terms of boosting oversight measures.

Shares in the company, which tumbled 17.12 percent Thursday, whip-sawed in volatile trade on Friday before closing down 4.95 percent at 460 yen.

The firm 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.

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

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 investigation.

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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