Risk register · entry
Q-F · FraudOlympus accounting scandal
Twenty years of steady books at a camera giant. The losses had been flying away the whole time.
The fifth quadrant, where the thing was never real. The tell is that the story is too clean.
Why this quadrant
Two decades of steady results, while unrealised losses from 1990s speculation sat in unconsolidated offshore funds and were never marked. They were eventually cleared by routing inflated acquisition fees back into the vehicles holding them, so both the audited earnings and the acquisition programme were products of the concealment rather than records of the business. The number that did not fit was a 687 million dollar advisory fee on a 2 billion dollar deal.
The record
- By 2003 the losses separated from Olympus's balance sheet under the loss separation scheme totalled 117.7 billion yen, up from about 96 billion yen when the scheme was consolidated around 1999-2000.certain
- A total of 134.8 billion yen (about $1.7bn at 2011 exchange rates) was applied to settling and maintaining the scheme: 63.2 billion yen paid for the warrants and preferred shares tied to the Gyrus acquisition, plus 71.6 billion yen routed to the funds holding the separated losses.certain
- Olympus paid $687 million in compensation to the financial advisers Axes and Axam in connection with the Gyrus acquisition, part of which was used to cover the tobashi losses.certain
- In March 2010 Olympus's UK subsidiary repurchased dividend preferred shares from Axam for $620 million (57.9 billion yen) against a book value of 16.5 billion yen.certain
- Olympus's unrealised losses on financial assets had reached roughly 95-100 billion yen by around September 1998, before the separation scheme was formalised.high
Sources
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