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Olympus faces a possible levy
Source: Agencies |
November 14, 2011, Monday
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JAPAN'S securities watchdog may recommend that a levy be imposed on Olympus Corp for false financial reports, a source familiar with the case said yesterday, a move which could prevent a delisting of the company's shares over one of the country's biggest corporate scandals.
The Securities Exchange and Surveillance Commission may, however, urge that criminal charges be sought against former executives and others involved in dubious M&A deals used to hide big investment losses, the source added.
Japanese authorities are investigating Olympus after the 92-year-old maker of cameras and endoscopes admitted last week that it hid investment losses for decades using funds from M&A payments. Media reports have said police, prosecutors and regulators were joining forces in a rare collaborative effort to examine the cover-up.
The Olympus scandal has rekindled concern about corporate governance in Japan and worries that other firms may have engaged in similar misdeeds. Politicians have begun considering legal revisions to tighten controls.
But authorities also appear concerned about the fallout for investors and the market if Olympus is delisted. Olympus's largest foreign shareholder, Southeastern Asset Management, said last week that delisting would have negative ramifications for foreign investment in Japan.
The source told Reuters that the SESC would make a final decision on its recommendations to the Financial Services Agency after seeing the results of a third-party panel investigating the case, as well as corrected versions of Olympus' financial statements.
The panel's report is due in early December.
The SESC believes Olympus's concealed losses, which could have exceeded 130 billion yen (US$1.7 billion) at their peak, were cleared by 2008 and that there is nothing wrong with the firm's current financial position, the Yomiuri newspaper said.
Criminal prosecution of Olympus could cause the firm to be delisted, resulting in a serious impact on investors, the Yomiuri said in its English language edition. "The commission is therefore planning to deal with the company's window-dressing through administrative sanctions," the newspaper added.
Tokyo's stock exchange has told Olympus it will be delisted if it fails to report first-half earnings by December 14, which could effectively leave the company cut off from equity capital markets.
The Securities Exchange and Surveillance Commission may, however, urge that criminal charges be sought against former executives and others involved in dubious M&A deals used to hide big investment losses, the source added.
Japanese authorities are investigating Olympus after the 92-year-old maker of cameras and endoscopes admitted last week that it hid investment losses for decades using funds from M&A payments. Media reports have said police, prosecutors and regulators were joining forces in a rare collaborative effort to examine the cover-up.
The Olympus scandal has rekindled concern about corporate governance in Japan and worries that other firms may have engaged in similar misdeeds. Politicians have begun considering legal revisions to tighten controls.
But authorities also appear concerned about the fallout for investors and the market if Olympus is delisted. Olympus's largest foreign shareholder, Southeastern Asset Management, said last week that delisting would have negative ramifications for foreign investment in Japan.
The source told Reuters that the SESC would make a final decision on its recommendations to the Financial Services Agency after seeing the results of a third-party panel investigating the case, as well as corrected versions of Olympus' financial statements.
The panel's report is due in early December.
The SESC believes Olympus's concealed losses, which could have exceeded 130 billion yen (US$1.7 billion) at their peak, were cleared by 2008 and that there is nothing wrong with the firm's current financial position, the Yomiuri newspaper said.
Criminal prosecution of Olympus could cause the firm to be delisted, resulting in a serious impact on investors, the Yomiuri said in its English language edition. "The commission is therefore planning to deal with the company's window-dressing through administrative sanctions," the newspaper added.
Tokyo's stock exchange has told Olympus it will be delisted if it fails to report first-half earnings by December 14, which could effectively leave the company cut off from equity capital markets.
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