As we have outlined in previous newsletters, Olympus has been the subject of on-going investigations for breaches of the Financial Instruments and Exchange Act (FIEA). On 3 July 2013 three former executives of Olympus were issued with suspended prison terms by the Japanese courts for their roles in the scandal.
The scandal, which came to light in 2011, is one of the biggest financial fraud cases in Japan; the prosecution of individuals involved has been taking place over the last 5 years.
Tsuyoshi Kikukawa (former Olympus chairman), now 72, pleaded guilty in 2012 to charges of falsifying accounts to cover up losses of $1.7bn on speculative investments made by Olympus. Kikukawa was issued with a 3 year prison term, suspended for a 5 year period.
Hisashi Mori, now 56, and Hideo Yamada, now 68 (both former executives of Olympus) also pleaded guilty to lying about the speculative investments to regulators and shareholders for over a decade. Mori was sentenced to 2.5 years in prison with a 4 year suspension. Yamada on the other hand received a 3 year prison term, suspended for 5 years, for his role in the scandal.
Although Kikukawa, Mori and Yamada have received prison sentences, none of them will actually serve this time unless they are found to have committed new crimes during their respective suspension periods. The defence lawyers for these three businessmen successfully argued that their sentences should be reduced to suspended prison terms as the initial decision to conceal the large losses were made by previous Olympus presidents.
In addition, Olympus was ordered to pay $7m in fines for its role in the scandal.