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Olympus’s Mounting Financial Woes

November 9, 2011

Japanese camera and medical device maker Olympus is facing questions over its efforts to cover up investment losses for about 20 years.

Former CEO Michael Woodford has accused the company of siphoning off over $1.5 billion through offshore funds in order to hide non-performing securities that the company wanted to keep off its balance sheet, according to Bloomberg News. He was fired last month after just two weeks on the job once he started raising questions about suspicious advisory fees and acquisitions by the company.

His whistle-blowing has led to a wave of high-level resignations and terminations at Olympus, including of the chairman, executive vice president and internal auditor, not to mention a big hit to the company’s stock.

But the company’s outside auditors may also face questions. Olympus and its long-time auditor KPMG parted ways in 2009 after the firm began raising questions and then hired Ernst & Young. With the FBI now reportedly probing the company, the auditors are likely to be asked what they found in Olympus’s books.

Woodford told Reuters a forensic accountant is needed to find out where the money has gone. The auditors should be able to shed some light on the matter.

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