Olympus Sued for $273 Million After 13-Year FraudTerje Langeland
Olympus Corp. was sued by six banks for a total of 27.9 billion yen ($273 million) in damages, the largest amount among civil lawsuits filed against the Japanese camera and endoscope maker over a 13-year accounting fraud.
The banks seek compensation for damages resulting from false financial statements filed by Olympus between fiscal 2000 and the first quarter of fiscal 2011, the Tokyo-based company said in a statement today. Olympus said it received a notice from the plaintiffs’ attorneys that the lawsuit was filed April 7 and hasn’t yet been served with the suit.
Olympus in November lowered its profit forecast for the fiscal year ending March, citing cash set aside for lawsuits. The company cut its net assets by $1.3 billion in 2011 after admitting it tried to conceal past losses by inflating fees to advisers and overpaying for takeovers.
“This is just a reminder to the market of the contingent risk associated with the past of Olympus,” said Claudio Aritomi, a Tokyo-based analyst at Macquarie Group Ltd. “There was always the risk there could be more coming.”
The banks suing the company are Mitsubishi UFJ Trust & Banking Corp., Master Trust Bank of Japan Ltd., Japan Trustee Services Bank Ltd., Trust & Custody Services Bank Ltd., Nomura Trust & Banking Co., and State Street Trust & Banking Co., according to today’s statement.
Mitsubishi UFJ Trust and Master Trust Bank of Japan are seeking a total of 12.4 billion yen in compensation for losses incurred when they sold Olympus shares, which plunged after reports the camera maker’s financial reports were misstated, said Takeshi Yuki, a Tokyo-based spokesman for Mitsubishi UFJ Trust.
“The firms manage money on behalf of their clients,” Yuki said. “Recovering the loss is our top priority.”
Olympus fell 1.9 percent to 2,991 yen as of the close in Tokyo trading, compared with a 2.1 percent drop in Japan’s benchmark Topix index.
The total amount sought in the case, filed in Tokyo District Court, is the largest among the civil lawsuits against Olympus, Tsuyoshi Oshima, a company spokesman, said by phone.
“We will respond to it properly after closely examining the court claim,” Oshima said.
The world’s biggest maker of endoscopes said in November 2012 it was sued by a group of 48 investors, including State Street Bank and Trust Co. and Government of Singapore Investment Corporation Pte Ltd., for 19.1 billion yen. The lawsuit followed 14 similar cases in Japan in which investors were suing over the accounting fraud, Olympus said at the time.
Former chairman Tsuyoshi Kikukawa and two other former executives pleaded guilty in September 2012 for covering up losses at Olympus for 13 years starting in the 1990s. The $1.7 billion fraud was revealed by the company’s former president Michael Woodford in 2011.
Olympus was fined 700 million yen, and the three officials received suspended sentences from the Tokyo District Court.
Last September, Olympus was charged in the U.K. for allegedly deceiving auditors at a subsidiary.
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 75 percent of the global market for endoscopes, instruments doctors use to peer inside the body to help diagnose disease.