Japanese camera maker Olympus has filed suit against its former chairman and several other top former and current executives for their roles in helping cover up approximately $1.7 billion in losses.
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The company filed suit in a Tokyo district court, the Japan Times said on Monday. Ousted chief executive Michael Woodford also filed suit against the company last week for wrongful dismissal. Woodford had blown the whistle on the accounting scandal at the company and hoped to be reinstated. However, he has reportedly given up on being re-appointed after failing to secure enough support from institutional investors to mount a proxy battle to replace the Olympus board and win reinstatement.
An in-house panel has been investigating the accounting scandal and recommended suing more than 10 executives, including the former president and chairman, Tsuyoshi Kikukawa, to recover money from the losses. Others sued include former executive vice president Hisashi Mori and former auditor Hideo Yamada, according to The Wall Street Journal. The current president of the company, Shuichi Takayama, may also be targeted.
The Japanese company released a third-party report last month from an outside panel of legal experts that termed its corporate management “rotten to the core” and filled with “yes men” (see Olympus Tries to Clean up Its Accounting). Woodford questioned suspicious transactions on the company’s books that he discovered last year only weeks after he started the job. He went public and accused the company of siphoning off more than $1.5 billion through offshore funds to hide non-performing securities that it wanted to keep off its balance sheet (see Olympus’s Mounting Financial Woes). Olympus also allegedly inflated the fees it paid to investment advisors for a $2.1 billion acquisition of Gyrus Group and overpaid for the acquisitions of three other companies, Altis, Humalobo, and News Chef, in order to generate a goodwill impairment loss.
Late last month, a panel set up by Ernst & Young’s Japanese affiliate, Ernst & Young ShinNihon, said it found no problems with the firm’s audits of Olympus, according to Reuters, but acknowledged that it had limited information about the work of former auditor KPMG Azsa.