A month into its cover-your-eyes scale accounting scandal, Olympus has been officially linked to the Japanese Yakuza, according to a memo from Japanese officials. Here's how things unravelled so fast.
Back in 2008, Olympus paid some shadowy "financial advisor" a $US687 million fee after the disasterous $US2.2 billion takeover of a medical equipment company. And that fee is looking more and more likely to have actually been an attempt to hide dramatic losses. By laundering them, essentially, through companies known to have Yakuza ties.
In Japan, companies used to be able to hide losses by using a practice called "tobashi", which basically let them sell bad assets -- stuff they'd lost money on -- to other companies, and then buy them back later, once they could afford to. Except the payments would be disguised as sweetheart deals or, naturally, advisory fees. And it turns out that the companies running Olympus's tobashi deals were known to have ties to the Yakuza.
Flash forward three years to October 14, when then-Olympus CEO Michael Woodford was fired -- sending the company's stock into a tailspin. Olympus at the time said Woodford was being let go because of managerial differences, but -- and here's where the crazy started -- Woodford has literally gone to ground since his dismissal, claiming that the real reason he was fired is that he started asking questions about the $US687 million payment. "I've been advised by contacts in Japan that I should take care of my safety. There is a potential for organised crime to be behind some of this," he told ABC World News.
After Woordford's claims, the FBI immediately launched an investigation into the fee. And while Olympus has been denying claims that it's in bed with "anti-social groups", executives keep resigning, including Chairman Tsuyoshi Kikukawa, who had replaced Woodford as CEO. Kikukawa claims he stepped down to "restore confidence in the company", and definitely, absolutely, totally not because the Japanese securities watchdog had started sniffing into all of the questionable deals Woodford pointed out.
The sad part is that Olympus is in the middle of making some really awesome products right now, like the wonderful PEN EP-3. Here's hoping that a few billion in missing funds possibly funnelled to an underground organised crime syndicate doesn't mess that up too badly. [New York Times, Reuters, Verge]