Olympus sues 19 current, ex-board members

The company said that it was demanding 3.61 billion yen ($47 million) from former president Tsuyoshi Kikukawa, who allegedly played a major role in the scandal that rocked global confidence in Japanese corporate governance.

The lawsuits, filed on Sunday at the Tokyo District Court, also demand 3.01 billion yen from former auditor Hideo Yamada and 2.81 billion yen from former vice president Hisashi Mori.

The three men had been named earlier by a special investigation panel set up by the company as cen- tral figures among a small group of top executives that hid at least 134.9 billion yen in losses from bad investments in the 1990s.

In total, the company is seeking 16.54 billion yen from individuals named by a separate committee of three company-appointed lawyers that was tasked with examining the board’s responsibility for the scandal.

Olympus’ board of auditors decided to sue the men based on the committee’s 200-page report.

That followed an earlier report by the six-member investigation panel of former judges and outside ex- perts, also commissioned by the company, that revealed details of the scandal in December and condemned Olympus’ top management as “rotten.”

Overpriced payments

Olympus has admitted that it had used overpriced acquisitions and consultant fees to hide the losses.

Among them was the $2 billion purchase of British medical-instruments company Gyrus in 2008, in which Olympus paid $687 million to a little-known financial adviser based in the Cayman Islands.

British former chief executive Michael Woodford, who blew the whistle on the scandal, is not among those being sued.

Six current board members, including President Shuichi Takayama, who is asked to pay 500 million yen, have been named in the case, leav- ing only five other board members apparently free of blame.

Olympus said that the current board members named in the lawsuits would resign after the next extraordinary shareholders’ meeting, scheduled for March or April.

“The current board members who were judged to have responsibility by the panel and were sued shall resign in ways that will not interfere with the operation of the company, once the extraordinary shareholders’ meeting is finished,” the company said.

The scandal came to light after Woodford, the company’s first nonJapanese president, went public to the international media when he was sacked by the company in October.

Japanese, British and US authorities have launched investigations into Olympus, with Tokyo prosecutors, police and regulators raiding its headquarters in Tokyo last month and questioning its former executives in the alleged fraud.

However, after months of campaigning to overhaul the Olympus board, Woodford last week gave up his efforts to return to lead the company, blaming a lack of support from major Japanese institutional shareholders.

He vowed to sue his former employer over his firing, saying he would be seeking damages.

Olympus under Kikukawa denied Woodford’s allegations only to later admit its wrongdoing.

The company avoided having its shares automatically pulled from the Tokyo Stock Exchange when it filed its delayed earnings report on a December 14 deadline, revealing a 32.3 billion yen loss in the first half of the year.

Shares in Olympus skyrocketed on Tuesday, after a three-day weekend in Japan, following the company’s latest announcement and weekend media reports that the Tokyo market would allow the company to stay listed.

The shares soared 19.94 percent to close at 1,263 yen, about a half of the level seen before Woodford was ousted, but significantly higher than the closing low of 460 yen on November 11, less than a month after his departure.

The bourse may designate Olympus as one of its securities on alert, the Nikkei business daily said on Monday, meaning that the company would have to file annual progress reports on efforts to improve its governance and disclosure. A delisting would remain possible if sufficient progress was not made within three years, it said.

The Tokyo Stock Exchange is expected to make its decision about Olympus later this month, the Nikkei said.