March 28, 2024

Olympus Executives May Seek to Keep Jobs

Officers and board members who were not directly implicated in a scheme to cover up past losses should not have to step down, the president, Shuichi Takayama, said at a news conference here, appearing to reverse a promise that management and directors would resign en masse.

Mr. Takayama’s position flouts recent recommendations by a third-party investigative panel, which called the Olympus management “rotten to the core” and urged the entire board to go.

The reluctance of management to step aside has increased investor apprehension about Olympus, which booked a $1.3 billion reduction in net assets on Wednesday as it accounted for the previously hidden losses. It also booked a net loss of 32 billion yen, or $412 million, for the six months through September.

The loss has raised concerns that the company might be forced to sell assets or raise fresh capital, and that it might even be taken over by rivals or funds, analysts said.

Olympus shares, which had trimmed losses in recent weeks, slumped by more than 20 percent on Thursday. “That is shareholder-repugnant,” said Nicholas Smith, a Japan strategist at CLSA Asia-Pacific Markets. “There’s no way they’re going to accept the current board staying on, particularly foreign investors.”

Olympus, which makes medical endoscopes as well as cameras, admitted last month to hiding losses on investments in the 1990s with an elaborate scheme involving offshore money, inflated acquisition payouts and a network of obscure brokers. Regulators and law enforcement authorities on three continents are investigating.

Mr. Takayama said rebuilding the company would require members of the current board to stay. He said the company would call a meeting of shareholders in March or April, where some directors could seek reappointment.

“The current directors are imperative for a solid turnaround,” he said.

Mr. Takayama did not deny that he would continue as president to lead those efforts. Only a few directors have quit after being implicated in the cover-up, including the former chairman and a former executive vice president. Asked why the company would not follow the recommendations of the investigative panel, Mr. Takayama said he felt the guidance was open to interpretation.

“I think there is some wiggle room in whether or not everyone must be replaced at once,” he said.

He also said that Olympus was considering new sources of capital to shore up its balance sheet, though he offered no clues of possible partners and no more details of a turnaround plan.

It was unlikely, Mr. Takayama added, that he or his colleagues could find a way to work with Mr. Woodford, who was fired unanimously by the board in October after blowing the whistle on Olympus’s finances.

Mr. Woodford, a British national who was one of Japan’s few foreign chief executives, is seeking to lead the company again with a fresh slate of executives. He has said the board was tainted in the scandal and has no right to choose its successors.

Mr. Takayama said he had no plans to meet Mr. Woodford, who is in Japan to rally shareholder support for his return bid. “Unfortunately, I have doubts about whether we can work together with Mr. Woodford,” Mr. Takayama said, citing what he said was a combative stance by the ousted chief executive.

Olympus’s frail finances and uncertainty over who will lead the company have undermined investor confidence even as it met a critical deadline on Wednesday to announce second-quarter earnings, clearing a major hurdle to avoiding a delisting by the Tokyo Stock Exchange.

The exchange, however, can still delist Olympus, which is 92 years old, if it deemed the transgressions serious enough. Doing so would be a weighty but potentially contentious decision, given inconsistencies by the Japanese authorities in punishing white-collar crime.

Rating and Investment Information, a Tokyo-based credit research company, said Wednesday that it was slashing its rating of Olympus two levels to BBB-, just one notch above investment grade, with a view to a further downgrade. It said that equity capital had “eroded more than expected” and that there was a possibility of additional losses from shareholder lawsuits.

The company has withdrawn its earnings forecasts for this fiscal year, citing uncertainties ahead.

The verdict on who will lead Olympus will come down to shareholders. Southeastern Asset Management, Olympus’s biggest overseas shareholder, has insisted that the current board go.

But some institutional investors in Japan have indicated they stand by Olympus, including Bank of Mitsubishi UFJ, one of Olympus’s largest lenders and a top shareholder.

Mr. Woodford has said that, if he returned to Olympus, his plan would be to build on investor confidence in fresh management at the company to recapitalize it. He said that he would not support selling stakes to other companies because that would rob Olympus of its independence.

At a news conference Thursday, Mr. Woodford criticized Mr. Takayama’s intention to stay.

“Should that man be the president and custodian of one of Japan’s iconic companies?” he said. “How dare he!”

“It would scare away investors all over the world,” Mr. Woodford said.

Yasuko Kamiizumi contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=7b643ce061091bef69575ff4eba7e688

Dissolution of Hacker Group Might Not End Attacks

But security experts said on Sunday that the dissolution of the group might not signal an end to the attacks, which have hit dozens of Web sites, including those of prominent targets like the Central Intelligence Agency, the United States Senate, the Arizona state police and Sony.

Indeed, in its farewell message posted on Saturday, the group, also known as LulzSec, urged other hackers to join the “revolution” aimed at governments and corporations that it started recently with Anonymous, a much larger collective of politically minded hackers from which many of the LulzSec members sprung.

“It looks like these sort of ‘hacktivist’ ideas are spreading and gaining popularity,” said Dino A. Dai Zovi, a prominent independent security consultant. He said that LulzSec appeared to be trying to inspire others to join a sprawling, if fragmented, array of local groups, which could feed more attacks.

In recent weeks, LulzSec has become a target itself, as global law enforcement authorities and rival hackers have gone after the group. One man associated with LulzSec, Ryan Cleary, was arrested last week in Britain. Meanwhile, a growing assemblage of rival hackers has been working to unmask the core half-dozen LulzSec members and feed information on them to the authorities.

American officials on Sunday characterized the attacks carried out by LulzSec as “nuisances” rather than real security threats. One government official said that LulzSec had never penetrated government servers or stolen any classified information.

“What we are really worried about is people getting access to our systems, or putting malware on it,” said the official, speaking on condition of anonymity.

The official said that even though it was possible that LulzSec had disbanded, hackers tended to operate in a world of shifting alliances and it would be easy for a new group copying LulzSec’s techniques to appear in the future.

“All it takes is one guy in his basement to do this, not an organized group,” the official said.

On Monday, the Department of Homeland Security plans to introduce a system to help institutions eliminate common programming errors that allow hackers to easily infiltrate databases and steal user names and passwords. The agency’s hope is that the program, which is voluntary, will make it easier for companies and agencies to better secure their corners of the Internet, thus contributing to a safer global network.

Some security experts and hackers were skeptical of LulzSec’s sudden about-face and said they believed the group intended to continue its activities. The latest announcement could be just another ploy for attention, rival hackers said on Twitter and on private online message boards.

Over the last several weeks, LulzSec had said repeatedly on its Twitter feed that it planned to continue attacking governments and financial institutions indefinitely.

Members of LulzSec did not respond to phone calls and e-mails on Sunday.

Whatever happens to LulzSec, the brash and public brand of hacking that it embraced and defined may be here to stay, some experts say. The group’s attacks on prominent targets, accompanied by raucous bragging on social networks and chat rooms, helped it amass more than 280,000 followers on Twitter. It has used that megaphone, as well as chat rooms, to try to recruit more hackers to its ranks.

Some of LulzSec’s activities had a political tinge. For example, it said its theft and public disclosure of Arizona law enforcement records was in response to the state’s tough laws aimed at illegal immigrants. But the group claimed that its hacking was primarily a celebration of the “lulz,” or laughs, and the members seemed to lap up the media attention they generated.

But if LulzSec had continued, it would have faced an increasing risk that its members would be captured, said Chris Wysopal, the chief technology officer of the security firm Veracode.

“By stopping now and regrouping, I think they will live to hack another day,” he said. “If anything, there will be more people hacking in their footsteps.”

Mr. Wysopal added, “Until they’re arrested — if they ever do get arrested — I don’t think anything will slow down.”

Mark Mazzetti contributed reporting.

Article source: http://www.nytimes.com/2011/06/27/technology/27hack.html?partner=rss&emc=rss