Olympus brings suit against current, former execs over accounting scandal
Scandal-plagued Olympus is suing 19 current and former executives and board members for roughly $50 million in the wake of an accounting scheme that hid more than $1 billion in losses for many years. However, the company is allowing the board members and President Shuichi Takayama to stay--at least until April--despite the allegations against them.
Ousted head Michael Woodford brought the accounting irregularities to light last year and was summarily fired. But, after initially denying the accusations, the Japanese camera and medical equipment maker eventually admitted that it had hidden $1.5 billion of losses over roughly two decades, the BBC notes. Woodford is suing the company for unfair dismissal.
The company's shares climbed roughly 30% after the Tuesday announcement, with investors betting the legal action could head off a threatened delisting by the Tokyo Stock Exchange, according to The New York Times.
Some analysts are keeping certain execs on board--even for a short period--could work against making meaningful changes at the company. Olympus "continues to suffer under shoddy corporate governance and an utterly discredited board," Southeastern Asset's Josh Shores, said in a statement quoted by the Times. "We maintain that the board should be replaced and a new board should oversee the company's revival."
Analyst Nicholas Smith likened the board to condemned men. "Essentially, everyone feels they are on death row. It does seem extremely strange to have the death row cell inside the company," he said, as quoted by Reuters. Furthermore, because they would be unable to make strategic decisions in the coming months, making the company more vulnerable to a takeover. Rumored potential buyers or partners in a new capital tie-up include Fujifilm Holdings, Hoya, Panasonic and Sony, the news service added.
Still, one law professor saw the filing of the suits as a start of a series of suits and countersuits. "It's all part of the natural fallout to be expected with each party trying to stake their positions and to protect their legal interests," said Eugene Tan, assistant professor of law at the Singapore Management University, as quoted by the Japanese Times. "We'll see suits and countersuits taking place in the next couple of weeks, if not months."