Olympus fraud bosses dodge actual jail time

The former chairman of Olympus and two other former top brass have received suspended sentences over the $1.7bn accounting fraud they orchestrated. Not really a punishment for one of the biggest ever corporate frauds, eh?

by Michael Northcott
Last Updated: 04 Sep 2013

So Tsuyoshi Kikukawa, and two other Olympus bosses, Hisasha Mori and Hideo Yamada have, have dodged a spell behind bars. They had admitted to lying to regulators and shareholders for more than 10 years whilst trying to cover up a $1.7bn gaping hole in Olympus’ finances. But instead of being put away, Kikukawa has received a sentence of three years, suspended for five, and will serve no time in prison unless he commits any other crimes in the five-year period.

The fraud was originally brought to light when the former chief executive of the corporation, Briton Michael Woodford, was given the sack for challenging the chairman and board over certain payments. He raised the alarm when some extremely large payments relating to the firm’s acquisitions came to his attention. 

In MT’s interview with Michael Woodford, published in March this year, Woodford explained that when he piped up demanding answers about the financial shenanigans, he was fired ‘on grounds of gross misconduct.’ Kikukawa later claimed that Woodford had ‘ignored the firm’s organisational structure’, and that his style of management was not in line with the rest of the board. Woodford blew the whistle to an FT journalist the day he was sacked, and the scandal went global. 

Of course, before a judge in September last year, Kikukawa admitted everything, conceding: ‘As the representative director and president, I bear full responsibility. I struggled over whether to make the massive losses public, but out of a lack of decisiveness I couldn’t do it.’ All Woodford’s fault, then.

Some might feel that it is a little unjust - a white-collar criminal of the highest order allowed to walk free –but you stand a much better chance of dodging an actual spell in jail if you are not considered to have profited personally from the cover-up. Kikukawa will be able to go home and quietly enjoy his pension, a kick in the teeth for Raj Rajaratnam the chief protaganist of the Galleon Group fraud was sentenced to 11 years in jail, back in 2011.

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