December 9, 2011 4:42 pm

Olympus faces scandal fallout

Olympus faced more fallout from its accounting scandal as a panel of legal experts commissioned by the Japanese camera maker called its management “rotten at the core” and said that its board had been packed with “yes men”.

The panel, led by a former Japanese supreme court judge, concluded in a report issued on Tuesday that a group of executives broke the law by secretly shifting more than $1bn of investment losses off the company’s books for up to two decades.

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But it stopped short of endorsing calls from some investors that Olympus’ remaining board members resign immediately. Three directors including the company’s chairman had already lost their jobs since the scandal emerged, and a fourth resigned on Wednesday.

Michael Woodford, the ousted British chief executive whose revelations touched off the affair, said the report showed Olympus’s top management is unfit to lead the company. He will return to Japan next week to drum up support for an extraordinary shareholders’ meeting and for his potential return as chief executive in a new board.

Law enforcement agencies and regulators are also investigating the affair. Olympus promised to examine the role of as many as 70 current and past executives, auditors and others and it was considering requesting criminal charges be brought against several former executives.

The report showed in fresh detail how Olympus shifted depressed assets off its books by selling them to “outside” funds that it secretly controlled, and described how some Y135bn ($1.7bn) flowed through shell companies in Singapore, the Cayman Islands, Europe and Japan.

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