Olympus being sued by six banks over 2011 scandal

Reuters, TOKYO

Thu, Apr 10, 2014 - Page 15

Olympus Corp yesterday said six Japanese trust banks have filed a lawsuit against the endoscope maker seeking ¥27.9 billion (US$273 million) for damages relating to a US$1.7 billion accounting scandal in 2011.

The six banks, which include State Street Trust and Banking Co Ltd, Mitsubishi UFJ Trust and Banking Corp and The Nomura Trust and Banking Co Ltd, are seeking compensation for false financial statements submitted by Olympus in the 11 years to 2011.

Damages from the scandal continue to weigh on Olympus, with the announcement marking the fifth lawsuit it has publicly recognized. The company says that nearly 20 cases have been submitted to courts seeking a total of ¥85.6 billion.

Olympus at its last earnings briefing said it would set aside ¥17 billion to settle three of the cases it has publicly recognized, which sought a total of ¥44 billion and were brought by overseas investors and medical equipment maker Terumo Corp.

The other two claims, including the one announced on Thursday last week, are seeking a total of ¥41.1 billion.

The six Japanese banks acted to meet a three-year deadline for submitting cases against Olympus since the scandal was uncovered, a public relations officer at Mitsubishi UFJ said. An exact cut-off date has not been decided by the court.

The five other trust banks had no immediate comment.

The six are seeking damages on behalf of investors whose funds they held, a representative at one who declined to be named said.

Olympus saw its shares and profit dive in 2011 after former CEO Michael Woodford alerted prosecutors and the media to a series of payments designed to cover up investment losses.

The medical equipment maker wrote down the value of several deals made over a decade, including its US$2 billion purchase of UK firm Gyrus in 2008. Olympus also paid the world’s largest advisory fee, equivalent to one-third of the purchase price, in that deal.

Three former Olympus executives, including former chairman Tsuyoshi Kikukawa, were found guilty by a Japanese court in July last year. They were handed suspended jail sentences while the company was fined ¥700 million for violating securities laws.

Since then the company has swung back to profit, with Sony Corp paying ¥50 billion to become its biggest shareholder last year, when it also raised US$1.2 billion in a share issue.