(Bloomberg) Camera and medical equipment maker Olympus Corp.’s former chairman Tsuyoshi Kikukawa pleaded guilty to covering up losses at the Japanese camera maker in an accounting fraud case that sparked criticism of ineffective corporate governance in Japan.
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“The entire responsibility lies with me,” Kikukawa said in Tokyo District Court yesterday, the trial’s first day. “The action troubled shareholders, business partners, employees and the public.”
Kikukawa, former Olympus executive vice president Hisashi Mori, and Hideo Yamada, a former auditing officer, all pleaded guilty today to using fraudulent takeover transactions to hide losses for 13 years starting in the 1990s. The executives face as much as 10 years in jail and 10 million yen ($128,000) in fines, according to a legal database operated by the government.
“We’re looking for a strong reaction from the court in terms of a strong sentence,” said Jamie Allen, secretary general of the Asian Corporate Governance Association. “That’s what investors are looking for and clearly that’s what the government would like.”
Olympus president Hiroyuki Sasa also submitted a guilty plea today for the company’s role in the fraud. The camera and endoscope maker faces as much as 700 million yen in fines for violating the rules, according to the government database.
Olympus’s market value has shrunk 42 percent since the Oct. 14 dismissal of former chief executive officer Michael Woodford, who had challenged Kikukawa and the board over inflated takeover payments. Woodford’s whistleblowing led to an investigation that uncovered the accounting irregularities.
The accounting fraud “destroyed the image of Japanese companies internationally,” Kikukawa said today in court.