Tsuyoshi Kikukawa, the former Olympus Corp. (7733) chairman who pleaded guilty to concealing losses at the Japanese camera maker, said his predecessors prevented him from disclosing the deficits after he became president.
Kikukawa told the Tokyo District Court yesterday that former presidents Masatoshi Kishimoto and Toshiro Shimoyama vetoed his suggestion to announce about 100 billion yen ($1.2 billion) in losses he was only told about a few months after he was appointed president in 2001.
“Former presidents stopped me and scolded me, saying, ‘Don’t be stupid,’” the former executive said in court.
Kikukawa, former Executive Vice President Hisashi Mori and Hideo Yamada, a former auditing officer, pleaded guilty in September to using fraudulent takeover transactions to hide losses for 13 years starting in the 1990s. The court is now considering sentencing, which could be as long as 10 years in jail and as much as 10 million yen in fines.
Olympus President Hiroyuki Sasa also submitted a guilty plea for the company’s role in the fraud on the first day of the trial of the company and its three former executives in September. The camera and endoscope maker faces as much as 700 million yen in fines.
Tsuyoshi Oshima, an Olympus spokesman, declined to comment on Kikukawa’s remarks regarding the failure to disclose losses. Kishimoto and Shimoyama couldn’t be reached for comment.
Kikukawa said he would have turned down the offer to be president had he known about the losses. While he had attended meetings with Mori, Kishimoto and Yamada before becoming the president, though, he didn’t understand what they told him about the losses, he said.
“I don’t know why former presidents didn’t deal with it when the scratch was still shallow,” said Kikukawa. “But I didn’t think they were malicious, so I didn’t feel resentment.”
The losses at Olympus were exposed by Michael Woodford a few months after he was appointed as the company’s first non- Japanese president in 2011. The accounting fraud “destroyed the image of Japanese companies internationally,” Kikukawa told the court in September.
Investment losses at Olympus swelled after the Japanese stock market crashed in 1989 and reached about 118 billion yen by 2003, according to an independent panel commissioned by the company.
Olympus has sued 19 former executives including Kishimoto and Shimoyama over the cover up.
Founded in 1919 as a microscope and thermometer maker, Olympus produced its first camera in 1936 and a predecessor to the modern-day endoscope in 1950, according to its website. The company controls over 70 percent of the global market for endoscopes, instruments doctors use to peer inside the body to help diagnose disease.
Olympus gained 0.8 percent to 1,383 yen as of the close of trading in Tokyo yesterday. The shares have more than doubled in the past 12 months after dropping more than 80 percent in the two months after Woodford was fired in 2011.
To contact the editor responsible for this story: Jason Gale at email@example.com