Former Olympus Executives Arrested

The New York Times is reporting this morning that three former leaders of Olympus Corp. were arrested by prosecutors yesterday in Tokyo, "on suspicion of violating the Financial Instruments and Exchange Law." Taken into custody were Tsuyoshi Kikukawa,  Hisashi Mori, and Hideo Yamada. Although all three have resigned, Kikukawa was the President and Chairman, Mori Executive VP, and Yamada the coporate auditor when the scandal, which has had repercussions nationally in Japan, broke sensationally last October. Also arrested were several bankers implicated in the complex cover-up of large losses dating back decades.

We haven't reported every development of the Olympus case here, because I haven't wanted to turn TOP into "the Olympus scandal blog." However it looks like the new beginning is slated for a shareholders meeting on April 20th, when a number of Board members will step down and a new Chairman will be named.

...Unfortunately it also looks like the endoscope side of Olympus's business is sound, whereas it's the camera division that's being blamed for corporate losses. That means the camera side is exposed to possible, er, changes during restructuring. We'll keep an eye on the company's progress and plans in the months to come.

Mike
(Thanks to Rob Atkins)

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Original contents copyright 2012 by Michael C. Johnston and/or the bylined author. All Rights Reserved.

Comments

[Earl Dunbar]

I read somewhere, recounted by a photographer encountering an Olympus camera rep, that the camera division was in good financial shape and insulated from the troubles. Of course that would be his public statement, but one hopes it's the case. We shall see.

[DC Wells]

More on the crime beat, this time street variety: Nikon Rumours reports that a van transporting $150,000 worth of Nikon D4s, D800s, lenses, etc. to a Dublin photo show was stolen today. You may find that you have several new readers from Ireland soon.

[Bill Mitchell]

I preordered an Olympus E-M5, so based on my previous luck and experiences (Minolta, Rollei, Konica, Zeiss, etc), I expect Olympus to suck the big one before my warranty runs out.

[TBannor]

Wow, arresting executives and bankers for suspected malfeasance. What a novel concept!

[Roberto M.]

Bill Mitchell,

C'mon, take one for the rest of us - cancel your order!

[PWL]

Well, I HOPE this doesn't meant the end of the camera division. I just pre-ordered the EM-5, so I hope I'm not backing a losing horse. (And I'd heard the camera division was A-OK, too. One reason I decided to take a chance on this camera).

[Ed]

Olympus' camera division ceased to be relevant at the end of the OM era, IMNSHO.

[Robert Roaldi]

You mean there's places where they arrest financial criminals?

[Miserere]

Robert Roaldiwrote:
You mean there's places where they arrest financial criminals?

Don't worry, Robert, it's in a country far, far away :-)

[Peter Gilbert]

Re: Camera division in good shape. I hope you are right, but then there's this (from Wikipedia):

Honne (本音?) refers to a [Japanese] person's true feelings and desires. These may be contrary to what is expected by society or what is required according to one's position and circumstances, and they are often kept hidden, except with one's closest friends.

Tatemae (建前?), literally "façade," is the behavior and opinions one displays in public. Tatemae is what is expected by society and required according to one's position and circumstances, and these may or may not match one's honne.

Having worked with Japan for over 25 years and lived there for 6, I would be careful of what you hear. You might well be getting the Tatemae

[David Wilcox]

Looks like seppuku time. D

[Michael Elenko]

Maybe what happened to Pentax will happen to the Olympus camera division. Hoya kept the profitable endoscopy business and sold the Pentax money losing camera operations to Ricoh for a mere $124 million.

The most attractive part of Olympus cameras appears to be their mirrorless products, whereas the most attractive parts of Pentax appear to be their DSLR line and the 645D. Both companies share the "small is beautiful" product design value, so perhaps a merger would work. Ricoh is big enough to snatch up Olympus camera operations without significant risk.

[David H.]

Yes, there is a place where they do arrest crooked executives and financial criminals. Other than the US and most other countries Japan is one of them. The really cool thing is, that the majority here get 2 year prison sentences. Suspended. Some have even been known to return to the company AFTER being released from prison.

I am sure that these guys won't get a 2 year suspended slap on the wrist. After all, they caused international embarrassment not just domestic "confusion." Of course I also sit in the pumpkin patch every autumn waiting on the arrival of the Great Pumpkin too.

Deja vu all over again so far. As predictable as sunrise.

[Eamon Hickey]

@ Earl

I read somewhere, recounted by a photographer encountering an Olympus camera rep, that the camera division was in good financial shape and insulated from the troubles.

Sorry to be a downer, Earl, and I don't want to pile on (I like Olympus a lot and hope it thrives), but if an Olympus rep said this, he/she was completely mistaken.

Olympus's camera division is losing money (a lot last year and even more the year before) and has been "troubled", as they say, for the past decade. Among Wall Street types, it's been the accepted wisdom for years that Olympus should close the division down.

Olympus has been subsidizing the camera division's poor performance with the enormous profits it makes in its medical equipment division (endoscopes, primarily), which accounts for more than 70% of the company's gross revenues.

And the division is not "insulated" in any way from Olympus's troubles -- there has been at least some outside pressure on Olympus (from shareholders and the banks that hold its debt) to close the camera division for years, and the recent accounting scandal, which has put Olympus in a difficult financial position, is only intensifying that pressure.

Against that depressing reality, Olympus clearly wants to continue making cameras. I really hope they do, but they will have to start making money at it. And pretty soon.

[Jim Hart]

Mike, I know you don't want to start up a long conversation on the status of Olympus... but the news today from Michael Woodford seriously has me rethinking my move to the OM-D.

Woodford's comment below, an out take from today's amateurphotographer.co.uk article:

----------------------------------------
"Yesterday, Woodford voiced his fears for the future of the camera business amid speculation that Olympus may form a partnership with another company...

'You know, if the camera business is managed properly, its medical business should be immensely profitable and the camera business can remain a part. It can never be particularly profitable… but the lens and sensor technology, and the name – it shouldn't die or be shrunk.'

He doesn't believe Olympus would be able to hive off its camera division while probes into the scandal are ongoing and many viewing the firm as 'toxic'. (My bold. Jim.)

'I don't think they could sell it. I have said that publicly. Who would buy it? And it would be very expensive to close. It would put a further strain on the balance sheet.' "

Full article available at

http://www.amateurphotographer.co.uk/news/Olympus_whistleblower_to_fight_for_camera_business_survival_news_311498.html

Regards,

Jim