Panel urges legal action in damning Olympus report

Tue Dec 6, 2011 12:19pm EST
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By Mayumi Negishi and Yoko Kubota

TOKYO (Reuters) - An independent panel issued a damning report on a $1.7 billion accounting scandal at Japan's disgraced Olympus Corp on Tuesday, urging legal action against "rotten" executives responsible for the cover-up and the replacement of other board members.

The six-man panel found no link with organized crime, however, an outcome that might help the 92-year-old maker of cameras and endoscopes remain listed on the Tokyo stock exchange and survive a scandal that ranks among Japan's worst.

"The core part of management was rotten and the parts around it were also contaminated by the rot," the panel said in its report, which was commissioned by the company and ran to more than 200 pages.

"In the worst possible sense, the situation was that of the tribal culture of the Japanese salaryman," it added, referring to a culture of absolute corporate loyalty.

The panel put the blame squarely on the executive management and also criticized external auditors who signed off on the books of the once venerable company.

Olympus has lost about half its market value since it fired British CEO Michael Woodford on October 14 for querying shady deals. Woodford promptly blew the whistle publicly to shed light on murky accounting and expensive and questionable acquisitions.

Woodford, who is seeking shareholder and would-be investor support to oust the board and return to his job, said he was pleasantly surprised at how "explicitly condemning of the existing board" the panel was.

The report might force the board to hold an extraordinary meeting which could dismiss the remaining top management and reinstate him, Woodford said.   Continued...