Police and prosecutors raided the headquarters of embattled camera-maker Olympus on Dec. 21 as a probe into corporate wrongdoing that has shamed Japan stepped up a gear.
Nearly 10 weeks after allegations of massive corporate subterfuge emerged in the international media, the slow-motion raid got under way while the Tokyo Stock Exchange was shut for lunch. Dozens of suited men carrying briefcases marched into the firm's headquarters to begin their search for evidence of who was responsible for a scheme that saw more than $1.7 billion in losses hidden from investors.
The homes of past executives were also targeted, with media reports suggesting more than 20 locations had been hit simultaneously.
"Today the Tokyo District Public Prosecutor's Office, the Tokyo Metropolitan Police and the Securities and Exchange Surveillance Commission raided our company," Olympus said. "Our company... continues to fully cooperate with the investigative authorities with the aim of fully revealing the facts of this matter."
The 92-year-old camera and medical equipment maker has already acknowledged that it concealed investment losses stemming from the 1990s.
A panel of lawyers and accountants appointed by the firm said this month that former president Tsuyoshi Kikukawa and his predecessor Masatoshi Kishimoto were instrumental in the cover-up. The home of 70-year-old Kikukawa was one of the places raided, local media said.
The panel said a small group of top executives hid at least 134.9 billion yen (US$1.73 billion) in losses from bad investments in the 1990s, with their report describing top management as "rotten" and "contaminated."
Management used complicated layers of investment funds, international corporate acquisitions and consultant fees in a bid to launder the losses, while fellow executives looked the other way.
Investigators, who have interviewed key players in the alleged fraud, hope to build cases by March against Kikukawa as well as former vice president Hisashi Mori and former internal auditor Hideo Yamada, Kyodo News said.
A week ago Olympus avoided having its shares automatically pulled from the Tokyo Stock Exchange when it filed its delayed earnings report, revealing a 32.3 billion yen loss in the first half of the year. The firm also filed corrected earnings reports for the past five fiscal years, fixing results up until March 2011 to account for the investment losses it had shifted off its books.
Japan's biggest corporate scandal in years erupted on October 14 when British chief executive and president Michael Woodford was sacked after raising questions about company acquisitions and huge payments to a little-known adviser based in the Cayman Islands. Woodford, the firm's first ever non-Japanese president, went public with his allegations and a firestorm soon engulfed the company. After initially denying anything was amiss, the Olympus board acknowledged there were problems and appointed an independent panel to probe Woodford's claims.
Kikukawa and other top managers have now left the firm while Japanese, UK and U.S. authorities have launched official investigations into the company.
Woodford resigned his post on Olympus' board and subsequently threatened to launch a so-called proxy battle to garner support to boot the company's management at its next shareholder meeting.
Company president Shuichi Takayama has pledged that the firm's executives will be replaced "at an appropriate time... after they pave a way forward to rebuild the company".
The firm has announced it is setting up committees to determine whether 70 former and current board members, auditors and other executives were culpable in the accounting scam.
Copyright Agence France-Presse, 2011