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UK fraud office hauls Olympus into court over accounting scandal

Japanese firm faces rap for beancounting coverup

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Japanese camera firm Olympus will be prosecuted by the UK's Serious Fraud Office along with its British subsidiary Gyrus Group following a £1bn accounting scandal at the company.

The SFO has been investigating both companies after three of Olympus' former execs admitted to falsifying financial statements, overstating net assets by up to a billion pounds in order to cover losses.

The accounting fraud came to light when ex-CEO Michael Woodford was sacked in late 2011, after raising concerns about the £450m paid out in fees after the purchase of Gyrus Group, a UK medical device manufacturer, for around £1.3bn.

The company's three Japanese execs, former chairman Tsuyoshi Kikukawa and executives Hisashi Mori and Hideo Yamada, were all sentenced for their role in the fraud in Tokyo, but were given suspended prison terms.

The case is one of the biggest financial frauds in Japan's history and was initially denied by the firm before the execs came clean. Woodford claimed that he had been dismissed over the issue and reported the firm to the SFO, which led to Japan launching its own investigation. Woodford has since settled his dispute with the firm for £10m.

A Japanese court ordered Olympus to pay £4.6m in fines earlier this year and the SFO is likely to pursue fines against the company as well.

In a statement, Olympus said it was difficult to figure out how much of an impact the fraud office prosecution would have on its bottom line.

“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,” the firm said.

"As it is difficult to predict the outcome of this matter or estimate the level of fines that may be imposed on the Company and GGL, the potential financial impact of this prosecution on Olympus Group’s business is unclear," it said.

A spokesman added that the firm was also under investigation by the US Department of Justice. ®

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