February 22, 2019

Olympus Board Signals Intent to Resign

At a news conference, Olympus said one director had resigned, others may follow and the entire board could go once the company submits its second-quarter earnings, due by Dec. 14, and takes steps to put the disgraced company back on track.

An external investigative panel report, unveiled Tuesday, concluded that several former executives spent 13 years running a complex scheme to hide huge investment losses off the company’s balance sheet.

“Our corporate governance was severely criticized,” said Olympus’s president, Shuichi Takayama. “As the representative of the company, I apologize sincerely.”

The former chief executive, Michael C. Woodford, fired in October after questioning murky acquisition deals, is campaigning to return to lead the 92-year-old maker of cameras and medical equipment and has called for an extraordinary shareholders’ meeting to pick a new board.

Mr. Takayama, who took over after the scandal broke, said the earliest such a meeting could be held was late February. He said the management would not resign before then and would pick its own slate of candidates.

“We are still considering the plan” for a new president, Mr. Takayama said. “We don’t know what Mr. Woodford is thinking, but he has said he will pursue a proxy fight, so we think there will certainly be a proposal.”

“We will have the shareholders meeting decide,” he added, although he gave a nod to Mr. Woodford for “pointing out problems that the current board failed to do.”

Olympus also set up an outside committee to advise whether to file criminal complaints or sue those responsible for the scandal, which has cut the value of the company’s shares by half and fanned fears about Japan’s corporate governance generally.

“We deeply regret that we have given a very negative impression to Japan and possibly the world,” a grim-faced Mr. Takayama said.

Announcing the new committee, which is to report its recommendations by Jan. 8, the company also said that its senior executive director, Makoto Nakatsuka, had quit the board, joining others who have left since the scandal erupted.

In the report released Tuesday, Mr. Nakatsuka was found to have helped the two main architects of the cover-up, the former internal auditor Hideo Yamada and the former executive vice president Hisashi Mori, to manage Olympus’s financial assets in the late 1980s, when it embarked on risky investments that led to the losses.

Olympus, which is still at risk of being kicked off the Tokyo stock market and forced into a humiliating sale of core assets, said it would set up a second external panel to examine the responsibility of the company’s auditors.

The damning report, prepared by outside legal and accounting experts, said Olympus management was “rotten to the core,” and ruled by a culture of absolute corporate loyalty and a desire to flatter financial performance.

Mr. Takayama has said that Olympus will consider legal steps, including criminal complaints, against those found responsible. He has blamed Mr. Mori and Mr. Yamada for masterminding the cover-up, and the panel found that two former company presidents were also told of the concealment.

Olympus faces a number of hurdles in its struggle to survive. It must meet the deadline next week for submitting its results for the six months to end-September, a task that requires combing through and sorting out decades of cooked books. Even if it meets that deadline, the Tokyo Stock Exchange could still delist Olympus shares depending on the scale of the previous financial misstatements.

Mr. Takayama, the company’s president, said that as far as he knew, Olympus’s liabilities had not exceeded assets at any point since 2000, but he admitted the company’s capital situation was tough and said that it might sell assets or accept a capital tie-up with another company.

“We haven’t decided our direction on that at this point but, as you mention, the capital situation is very difficult,” he said. “Therefore, we can’t deny that this is a possibility. If there is such an opportunity, we would like to consider it.”

One of the few glimmers of hope from the panel report Tuesday was its conclusion that there was no evidence of a much-rumored link between the scandal and organized crime. If a link were found — and the police are still investigating — Olympus would most likely be delisted from the stock market.

The police, prosecutors and the securities watchdog are still investigating the Olympus affair and are expected to step up their inquiries now that the independent panel has issued its report.

Article source: http://feeds.nytimes.com/click.phdo?i=71fcfe27701b7bb8256c75408f04daf3

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