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Former Olympus chairman gets suspended sentence for role in massive accounting scandal

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olympus stock 1020
olympus stock 1020

Three former Olympus officials, including disgraced ex-chairman Tsuyoshi Kikukawa, all received suspended prison sentences today for their role in an accounting fraud that threw the company into turmoil. Bloomberg reports that Kikukawa and auditing officer Hideo Yamada got three-year sentences suspended for five years, and executive vice president Hisashi Mori got two and a half years suspended for three.

The relatively light sentences take into account that much of the fraud was set into motion before the executives were involved. “Kikukawa and Yamada succeeded in a negative legacy and weren’t involved in the decision-making process to hide losses,” said a Tokyo district judge. “They were distressed and didn’t benefit personally from hiding losses. Mori followed their orders.”

Former presidents escaped arrest

Masatoshi Kishimoto and Toshiro Shimoyama, the former Olympus presidents who oversaw the accounting fraud before Kikukawa, escaped arrest in February because the statute of limitations had expired.

"There is no mistake. The entire responsibility lies with me," said Kikukawa when pleading guilty in September, going on to admit that the scandal "destroyed the image of Japanese companies internationally." The former president admitted that he "struggled over whether to make the massive losses public," but couldn't do it due to "a lack of decisiveness."

The fraud was exposed by former CEO Michael Woodford, who discovered that Olympus' leadership covered up $1.7 billion in losses by cooking the company's books to exaggerate takeover costs. Olympus was fined ¥700 million (about $7 million) today for the affair.