Olympus sues own execs over loss-hiding (Yomiuri, 10.1.2012)

Olympus Corp. has filed a lawsuit against former and incumbent executives of the company, including former Chairman Tsuyoshi Kikukawa and President Shuichi Takayama, over their alleged involvement in a cover-up of massive investment losses. According to sources, the major optical equipment maker filed the lawsuit Sunday with the Tokyo District Court against about 20 former and incumbent executives, demanding they pay several billion yen in compensation.

On Saturday, a committee of lawyers investigating the involvement of successive board members in the scandal concluded that about 20 people, including Takayama, bear responsibility in the cover-up of investment losses. The committee later submitted a report to the company saying Olympus has suffered damages of about 90 billion yen in activities related to the cover-up.

According to sources, the committee has found that the damage was caused mainly by corporate acquisitions aimed at camouflaging the investment losses and also by excessive dividends paid to stockholders despite the lack of sufficient profits.

In addition to three executives alleged to be directly involved in the cover-up--Kikukawa, former Vice President Hisashi Mori and former standing auditor Hideo Yamada--the committee concluded that other former and incumbent board members, including Takayama, are also responsible for the cover-up due to their failure to fulfill their duty of care.

The amount of compensation Olympus demanded each individual pay is believed to vary in accordance with the level of their involvement in the cover-up. The company plans to announce the details of the lawsuit on Tuesday, including the total amount and breakdown of the compensation.

According to the sources, the company has sued six of the 11 incumbent board members, including Takayama. In December, Takayama said the company's executive team will decide whether to resign after the investigative committee reached a conclusion. He also has suggested that the executives will resign at an extraordinary meeting of shareholders scheduled in March.

However, following the committee's harsh stance on incumbent executives, it is likely that Takayama and other Olympus executives will be forced to quit at an early date.

In reaction to the cover-up scandal, an individual stockholder had demanded Olympus file a damage suit against former and incumbent board members. The lawsuit will proceed with Olympus itself as a plaintiff, according to sources.