The Associated Press reports that the Former CEO of the camera maker and several ex-bankers were arrested over the $1.7 billion Olympus fraud on Thursday. Police officers in Japan had been investigating the scandal for more than four months after the company requested them to do so.
Ex-President Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and former auditor Hideo Yamada were arrested by prosecutors because they were found guilty of violating the Financial Instruments and Exchange Law. Former bankers Akio Nakagawa and Nobumasa Yokoo were also put behind the bars because they used M&A deals to conceal their huge investment losses.
Former CEO Michael Woodford exposed the scandal in October 2011 when he discovered that the strange M&A deals were used to cover irregularities. Woodford was one of the few British CEOs who work for Japanese companies. The fraud made such a big impact upon him that Woodford decided to write a book about the entire scandal. He declared on Thursday that he is glad to see the problems were finally solved.
Olympus is now struggling to recover its economic stability. The management of the company is preoccupied to find a new CEO for the manufacturer of medical equipment and cameras because the current executives will step down on April 20. It remains to be seen whether Olympus will seek a capital tie-up in order to restore its balance sheet.
The resignation of the current CEOs and the employment of the new executive will be made during the shareholders meeting which will take place in April. According to spokespersons’ declarations, six members will resign that day including President Shuichi Takayama. The successor will most likely be selected from the three board members who were not involved in the fraud.
Despite the problems that the company recently faced, Olympus continues to remain an attractive firm due to its endoscope business. As a consequence, sources claim that it is possible for the camera manufacturer to sign deals with companies like Terumo, Sony and Fujifilm because the latter are interested in the segment of the medical equipment.
