An independent panel issued a damning report into the US$1.7 billion accounting scandal at Japan’s Olympus Corp, urging legal action against executives behind the cover-up and the replacement of others who knew about it.
“The core part of management was rotten and the parts around it were also contaminated by the rot,” the 178-page report, commissioned by the company, said.
“In the worst possible sense, the situation was that of the tribal culture of the Japanese salaryman,” it added, referring to a culture of absolute loyalty to the company.
The panel criticized the external auditors of the once venerable maker of cameras and medical equipment.
However, it found no link with organized crime.
Olympus has lost about half its market value since its sacked CEO, Michael Woodford, went public with concerns over murky accounting and some expensive and questionable acquisitions.
Speculation of yakuza gangster involvement had quickly surfaced, given that criminal outfits have a long history of trying to extort money from Japanese companies and because Woodford had fled Japan after his sacking on Oct. 14, citing safety fears.
The panel instead blamed former executive vice president Hisashi Mori and ex-internal auditor Hideo Yamada for cooking the books over 13 years to flatter Olympus’ financial performance and also said it had found no evidence to suggest any executives had personally gained from the scandal.
“A factor in the longevity of the cover-up was the existence of external players who advised, helped and assisted in the concealment while knowing full well that such accounting practices were illegal,” the report said.
“Olympus must take this opportunity to extract the tumor that centers around its former management group and literally aim to renew its body and soul,” it added.
The panel recommended changes to the boardroom, in a suggestion likely to support Woodford’s campaign to retake his old job.
It listed 10 main reasons behind the scandal, ranging from bad personnel management to the incompetence of external auditors, but put the blame squarely on the executive management, which it said lorded over operations with no accountability.
Olympus shares had jumped as much as 15 percent early yesterday.