Together, Reducing Fraud Worldwide
An Overnight Scandal Years in the Making
Japan-based Olympus Corporation was founded in 1919 and is known worldwide as a leading manufacturer of medical supplies and cameras. They are most notably known for their endoscopes, but have forged a profitable business making medical and surgical equipment, microscopes, cameras and scanners.
On Feb. 16, Japanese prosecutors arrested three of Olympus’ top executives and four of its consultants for an accounting fraud uncovered last April by ousted CEO and whistleblower Michael Woodford. What has unfolded since Woodford’s discovery has been a rollercoaster ride with one twisting turn after another.
A quick Google search of the company sums up its recent fall from grace in a decade-long, $1.7 billion scandal that began to unravel in October 2011. Even its home page looks like the desolate graveyard of a once thriving multi-national corporation.
Here is a timeline of how it all went down:
April 2011: As a 30-year veteran of Olympus, Woodford is promoted to President of Olympus.
July 2011: Two articles are published in Facta magazine detailing questionable advisory fees Olympus paid when acquiring three different companies and also alluding to monetary ties to the Japanese mob; Woodford confronts Olympus Chairman Tsuyoshi Kikukawa and Group President Hisashi Mori a week later about the fees and is ignored. Woodford begins to realize that something is not right.
July/August 2011: Woodford commissions an outside auditor, PricewaterhouseCoopers, to investigate and compile a report regarding the questionable fees.
September/October 2011: Woodford confronts the Board on multiple occasions and emails the unfavorable report to Kikukawa urging him and Mori “to face the consequences of what has taken place, which is a shameful saga by any stretch of the imagination. It is clear that the current situation is now untenable and to move forward positively the necessary course of action is for you both to tender your resignations from the Board.”
Oct. 14, 2011: Woodfood is abruptly fired at a Board meeting in a 15-0 vote. Woodford immediately contacts Japanese and British press, the FBI and Britain’s Serious Fraud Office to hand over the results of a months-long investigation.
Oct. 26, 2011: After press coverage worldwide and the raiding of the corporate office, Olympus admits to a decade-long, $1.7 billion accounting fraud and Kikukawa resigns.
January 2012: Olympus sues 19 current and former executives for $47 million in damages and Woodford files suit for wrongful dismissal.
Feb. 16, 2012: Japanese prosecutors arrest three of Olympus’ top executives, including Kikukawa and Mori, and four of its consultants.
Inside Olympus: the Fraud, the Whistleblower and the Ongoing Investigation
Michael Woodford, Olympus Whistleblower
The Cliff Robertson Sentinel Award
“The credibility of Olympus has largely failed due to the discovery [of] its long-term fraudulent accounting led by top management. Olympus should remove its malignant tumor and literally renew itself.”
— Independent report issued by Olympus to investigate and determine fraudulent actions
© 2013 Association of Certified Fraud Examiners, Inc. All rights reserved.