Japan's Olympus to face British fraud prosecution

Britain's Serious Fraud Office will prosecute Olympus and its subsidiary over a huge loss cover-up scandal, the Japanese camera and medical equipment maker said Wednesday. It is the latest turn in an affair that badly damaged Japan's corporate governance image and turned the company's first foreign leader into a high-profile whistleblower. "Having completed its investigation, the SFO has decided to bring a prosecution against the company and Gyrus Group Limited, a UK subsidiary," an Olympus statement said. Olympus' Tokyo-based spokeswoman said: "We will decide our response after carefully reviewing the content of the charges." A Japanese court in July handed suspended jail sentences to three former Olympus executives for engineering a scheme to hide about $1.7 billion in losses that had accumulated since the 1990s by using outsized consulting fees and buying unrelated companies. The Tokyo District Court also handed the company a 700 million yen ($6.9 million) fine. The men and the firm did not contest the charges brought by Japanese prosecutors. The company has already been fined about 192 million yen by Japan's Financial Services Agency. Separately, Japanese authorities have ordered Olympus to pay about 5.0 billion yen in back taxes and penalties related to the cover-up, local media have reported. The cover-up was exposed in late 2011 by Michael Woodford, who was appointed Olympus' chief executive but quickly sacked when he questioned the firm's past conduct. The SFO alleges that Olympus and Gyrus provided "misleading, false or deceptive" information to their auditors for fiscal years 2009 and 2010, the Japanese firm said. "After a hearing date before the Magistrates' Court, it is expected that the matter will be transferred to the Crown Court for the future steps of the proceedings," Olympus said in the statement. It was difficult to estimate the level of fines in Britain, should the prosecution result in a guilty verdict, the company said. Along with Japanese and British authorities, US investigators are probing the affair. Olympus has undergone a major overhaul that included cutting about seven percent of its workforce and forging a capital alliance with electronics giant Sony, which is seeking to tap the lucrative medical equipment market.