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Olympus accounting case kicks off in London

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11th Sep 2013
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Japanese camera giant Olympus Corporation misled auditors over the purpose of US$620m of shares, the Serious Fraud Office (SFO) has told a court in London.

Olympus and UK subsidiary Gyrus Group are being prosecuted by the SFO, who allege they made misleading or false statements.

Company representatives appeared at Westminster Magistrates’ Court on Tuesday (10 September), however the hearing has now been adjourned to 24 September when it will be transferred to Southwark Crown Court.

As revealed in court papers filed in the Westminster court, one charge against Olympus alleged it told Ernst & Young (EY) that an issue of 176,981,106 preference shares was remuneration for financial advice, but the shares had been issued for a fraudulent purpose.

The SFO said that in February 2011 the group knowingly made a statement regarding the financial statements of Gyrus in the form of a letter to EY which was “misleading, false or deceptive”.

It added that Olympus director Hisashi Mori signed a representation letter on behalf of the group which was sent to the auditor setting out two transactions.

According to court papers the company allegedly asserted that financial adviser Axes America had identified Gyrus as a suitable company for Olympus to purchase and Axes had received preference shares in Gyrus in payment.

In March 2010, the preference shares in Gyrus were sold by Axes to Olympus Finance UK for US$620m.

The prosecution said the shares had not been remuneration for financial advice but had been issued for a fraudulent purpose - so that they could be purchased by Olympus Finance UK.

Gyrus also faces four related charges of making a misleading or false statement to auditors at KPMG and EY.

The Olympus fraud came to light in 2011 when the then chief executive, Michael Woodford, was sacked after just two weeks for challenging the board over several large and obscure payments relating to acquisitions.

After becoming a whistleblower and being dismissed, he then sued for unfair dismissal and reached an out of court settlement in May last year.

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