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Another Olympus fiasco, with $640M penalty. No individual prosecutions.

Leave a Comment / Fraud, Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

The U.S. unit of Olympus admitted it made payments to doctors and hospitals as an inducement to buy Olympus equipment. The company agreed yesterday to pay $646M and enter into two deferred prosecution agreements in return for settling two criminal charges.

I don’t usually follow Foreign Corrupt Practices Act settlements, but this one caught my eye. I’ve not previously been aware of the Anti-Kickback Statute, which prohibits kickbacks from vendors to health care providers in the federal medical reimbursement marketplace. Olympus admits to violating both sets of laws.

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Another Olympus fiasco, with $640M penalty. No individual prosecutions.Read More »

Another Olympus fiasco, with $640M penalty. No individual prosecutions. Read More »

Current estimate of Toshiba book-cooking is at $1.9B, surpassing Olympus

1 Comment / Fraud /
Cleaning up the numbers. Image courtesy of DollarPhotoClub.com
Cleaning up the numbers. Image courtesy of DollarPhotoClub.com

After delaying their earnings announcement a while, Toshiba announced a ¥224.8B pretax write-down for accounting irregularities which hits net income for ¥155.2B.

That would be US$1.87B pretax and US$1.29B after-tax. Even if those amounts don’t increase that means Toshiba has out Olympused Olympus at $1.7B.

The now-admitted fraud ran for seven years, not the six previously mentioned.

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Current estimate of Toshiba book-cooking is at $1.9B, surpassing OlympusRead More »

Current estimate of Toshiba book-cooking is at $1.9B, surpassing Olympus Read More »

Olympus sued by 6 banks over accounting fraud; largest in a series of suits

Leave a Comment / Fraud /

Bloomberg reports Olympus Sued for $273 Million After 13-Year Fraud.

Six banks filed suit claiming 27.9 billion yen ($273M) damages from the drop in stock price after the fraud was disclosed.

The article says Olympus was sued in November 2012 by a group of investors. That claim was for 19.1B Yen ($186M). That one had been preceded by 14 other suits.

Olympus sued by 6 banks over accounting fraud; largest in a series of suits Read More »

Suspended sentences for senior Olympus officials in $1.7B fraud

1 Comment / Audits, Fraud /

Suspended sentences all around.

The Bloomberg report, Ex-Olympus Chairman Gets Suspended Sentence for Fraud, says the three senior staff charged a year ago received suspended sentences after their guilty pleas.

The individuals and their sentences: …

Suspended sentences for senior Olympus officials in $1.7B fraudRead More »

Suspended sentences for senior Olympus officials in $1.7B fraud Read More »

Former president of Olympus and two others plead guilty

1 Comment / Fraud /

Associated Press reports the ex-president pled guilty to securities law violations. Two other senior staff pled guilty as well.

The AP report can be found in the Wall Street Journal article, Ex-President of Japan’s Olympus Pleads Guilty.

The Reuters report can be found in the New York Times article, Guilty Pleas in Trial Over Olympus Scandal.

The three individuals pleading guilty:

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Former president of Olympus and two others plead guiltyRead More »

Former president of Olympus and two others plead guilty Read More »

Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anyway

Leave a Comment / Audits, Fraud /

Reuters reports that the Japanese regulator, Financial Service Agency, criticized KPMG and Ernst & Young for their audits of Olympus. Then they partially retracted their criticism.

The Reuters article, Japan regulator raps KPMG, Ernst & Young for Olympus work, says the two firms

…lacked operational management systems to ensure proper auditing that would spot and flag dubious transactions.

The regulators didn’t find any “intentional acts of grave negligence” according to the article.

I guess that means they should have had the foresight to develop some unidentified management system that would have identified the fraud.

The two firms have to develop a business improvement plan and report on their progress every six months.

An official then essentially retracted the criticism. Check out this comment:

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Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anywayRead More »

Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anyway Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.

2 Comments / Accounting, Fraud /

Here are some more journal entries that describe how Olympus moved money in their accounting fiasco.

‘Michael’ asked a great question at re: The Auditors about my guest post on the Olympus accounting fraud. 

The full article with my reply can be found at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud.

Here is his question, with slight editing:

If they actually bought the tiny companies for way more than they were worth, this would not fix their problem, they would just have the original losses plus the new losses on the companies that they overpaid for.

The only way this works is if they claimed to pay $1,000,000 for the companies but in reality only paid $100,000. Is this the case?

For example if they paid $1,000,000 for the subsidiary you would.

  • Dr. investment 100,000
  • Dr. goodwill 900,000
  •      cr. cash $1,000,000

There would be no cash in the subsidiary, just goodwill. So how could the subsidiary purchase the financial assets that were seriously underwater? The subsidiary would have to actually pay the inflated fair value for this to work?

A very good question, Michael. 

I’ll go into more detail on how the money was moved and my read on what summarized entries would be.  I posted my reply at re: The Auditors. Francine McKenna has allowed me to reprint my response. Here is my explanation:

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How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco. Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.

Leave a Comment / Audits, Fraud /

The Wall Street Journal reports Olympus and Ex-CEO Woodford Settle Lawsuit with expected payment to Michael Woodford for approximately $15 million.

The article, behind a pay wall, indicates the settlement is moving towards approval by the Olympus board.

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Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus. Read More »