No more scandals, vows new Olympus board

Posted at 06/28/2012 6:13 PM

TOKYO - The new board of Japan's Olympus pledged Thursday there would be no more accounting scandals at the camera and medical equipment maker, as it defended a payout to its whistleblowing former chief.

President Hiroyuki Sasa, who was appointed earlier this year after the firm was rocked by a massive loss cover-up scandal, said Olympus was revamping its corporate governance and internal auditing measures.

"We will strengthen our governance, including internal auditing, and will establish a system to deal with a scandal if something happens by any remote chance," Sasa told shareholders at the company's annual meeting in Tokyo.

He said that the measures were being taken to ensure "that we will never have such scandals again."

Olympus's reputation, and Japan's corporate governance image, were badly damaged after its British former chief executive blew the whistle last year over $1.7 billion worth of losses that the company had moved off its balance sheet.

The firm initially denied allegations it had used past acquisitions and outsized consultant fees to hide the huge losses dating back to the 1990s, but eventually admitted wrongdoing.

In March, the company and three former senior executives -- including ex-president Tsuyoshi Kikukawa -- were charged over their role in the scandal.

Olympus has since announced a major overhaul that includes cutting about seven percent of its workforce, while its new chief has publicly said he is seeking a capital injection to shore up the company's finances.

On Thursday, some shareholders cast doubt on promises to clean up the firm, pointing to a separate scandal involving accounts that were allegedly falsified by the head of Olympus's South Korean unit.

"I'm very, very worried about this issue of false statements that the executive of your South Korean unit made," said a shareholder who identified himself as Masatora Takenouchi.

"Can you swear that past problems will never ever happen again?"

Board member Yasuo Takeuchi said Olympus had sacked the executive earlier this month and was continuing to probe the matter.

Another investor questioned whether a reported 10.0 million pound ($15.6 million) payout to former Olympus chief Michael Woodford -- who blew the whistle on the cover-up scheme -- was "hush money."

Another board member Hideaki Fujizuka defended the move as prudent to settle an employment tribunal case launched by Woodford in England.

"We judged that reaching a settlement to concentrate on our business would be in the company's interest, giving consideration to opinions from Japanese and British lawyers," he said.

Olympus executives declined to comment on earlier reports that Sony would inject over $620 million into the firm, saying only that they were "negotiating with more than one company".

The firm's shares closed 0.24 percent higher in Tokyo trade on Thursday at 1,247 yen.

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