On Tuesday, Japanese prosecutors asked the Tokyo District Court to award a 5-year prison term to the former president of camera and medical equipment manufacturer Olympus for his involvement in a cover-up of $1.7 billion in losses. They also asked that the company be ordered to pay a 1 billion yen (approx. $10.6 million) fine as punishment for executives intentionally hiding nearly a decade’s worth of losses and bad investments.
The prosecutors stated before the court that the huge fine amount, unmatched in Japan, was justified as Olympus had not only ruined its reputation both domestically and internationally, but damaged Japan’s entire corporate image. After pleading guilty to his involvement last September and stating that he would accept full responsibility, former president Tsuyoshi Kikukawa is facing the longest jail term, although it is a mere 5 years. The prosecution is asking for shorter sentences for ex-vice president Hisashi Mori and auditor Hideo Yamada, as they were both heavily involved in one of Japan’s largest financial scandals. Olympus as a whole has also admitted to falsifying financial records and using an elaborate accounting method to hide losses dating back as far as the 1990s.
The corporate fraud was blown open in 2011 shortly after British national Michael Woodford was named as Olympus’ first foreign head. He began asking questions and digging up shady records, resulting in his abrupt termination after uncovering the truth. Once it became clear that it too late to continue denying allegations, Olympus admitted to the coverup and began firing executives who knowingly participated, while at the same financial authorities from the U.S., U.K., and Japan began launching investigations. The company eventually settled with Woodford to pay $15.6 million in a wrongful dismissal lawsuit, and it has already been fined for $2.4 million by Japan’s financial regulator.