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.
…
Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.Read More »
A: Because all the documents are outside the organization being defrauded.
When it comes to corruption and bribery, it only takes a little planning for a fraudster to keep all the papers that contain any trace of a fraud outside the organization. A minimal amount of planning will mean there is no paper inside an organization that contains a hint of a problem.
I’ve discussed this issue using the example of an alleged fraud in the city next to where I live. The alleged part of the story is slowly turning to fact with one participant, the mayor, entering a plea agreement.
Now think about auditing the city. All the pieces of paper that show any hint of the fraud are outside the city hall. How would the city’s auditor find that?
…
Q: Why are corruption and bribery frauds so difficult to discover?Read More »
In March 2011 I discussed a corruption case in the city next door to where I live.
The local newspaper reports that the mayor has pled guilty to accepting a $5,000 bribe from a local business. From the Daily Bulletin: Ex-Upland mayor pleads guilty, the very short version of the story:
{The mayor} was accused of conspiracy, extortion and bribery offenses that led the business owners to pay $45,000 in bribes.
…
Guilty plea in corruption trial mentioned a year agoRead More »
Sometimes you get fun results when you look at two news articles side by side. Let’s look at the responses of securities regulators in the US, China, and Japan. Hat tip to Going Concern for highlighting the articles.
Olympus fine
Japan’s securities market regulator proposed a fine of $2.5M against Olympus for conducting a $1.7 billion financial fraud that was spread over 13 years – Japan market watchdog recommends $2.5 million fine for Olympus.
Let’s put that proposed fine into perspective. All amounts will be in US dollars.
…
The Wall Street Journal headline says Panel Clears Ernst & Young in Olympus Probe.
Cool update on the investigation, huh? An official panel looks at E&Y’s role and concludes their auditing was okay. They have no legal liability.
I was quite interested in the article. Then found out the details.
…
Panel clears E&Y over Olympus auditing – far less to the report than meets the eyeRead More »
On Wednesday, prosecutors in Japan filed official charges against six individuals for their role in the accounting scandal at Olympus. They also filed charges against Olympus.
The six charged include the ex-chairman, former executive vice president, former corporate auditor and three outside bankers.
…
Prosecutors file official charges in Olympus fiascoRead More »
I previous mentioned the arrest of 7 former officials and advisors in the Olympus fiasco. Also mentioned that I did not know what the arrests mean in the context of the Japanese legal environment.
The Wall Street Journal article Arrests Go Beyond Olympus provides me some context. (Article behind paywall, so grab your copy of Friday’s WSJ before you toss it. Better yet, get an online subscription.)
It would seem that the prosecutors are seriously pursuing the case.
…
Arrests in Olympus accounting scandal point to a serious and expanding investigationRead More »
Seven former officials and advisors to Olympus have been arrested for their alleged roles in the accounting fiasco at the company. See the Wall Street Journal article, Tokyo Makes Arrests in Olympus Scandal (article behind paywall).
…
Arrests start from the Olympus accounting scandalRead More »
An investigative panel set up by Olympus released a report saying the external auditors couldn’t have found the fraud.
The panel also blamed five internal auditors for helping with the cover up. Olympus has sued the five.
An Internet search today indicates there are 270 articles discussing this. Here are a few you can browse:
One panel of investigators appointed by Olympus pointed fingers at the external auditors. I discussed this report in my guest post at re: The Auditors.
In contrast, this new panel isn’t pointing fingers at the external auditors. They are blaming the internal auditors for the costs incurred to investigate the cover up.
…
Investigators for Olympus aren’t pointing fingers at KPMG and E&YRead More »
Yesterday I mentioned that Olympus was going after its former chairman and two others.
Today we found out who was sued.
A WSJ report indicates Olympus has sued 19 executives, including the current president and four current directors who are also senior executives over the fiasco of hiding a $1.7M loss.
…
Olympus sues current board members and current presidentRead More »
Olympus has sued its former chairman and two other individuals. According to the Wall Street Journal article, Olympus Sues Former Chairman (all articles behind a pay wall), when the company made announcement, they didn’t give details of the suit or even say exactly how people are being sued.
Most interesting tidbit in the article is the lawsuit was based upon an independent report from three lawyers regarding the role of the board in the scandal. That report will be released on January 10, according to the article.
Hint that there’s major, useful news on the horizon:
…
Francine McKenna asked me to combine my short comments on the Olympus fraud into a guest post on her blog.
I’m quite happy to announce my revised, expanded, and edited discussion is available. You can read the full thing at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud
Many thanks to Francine for the wonderful opportunity to speak to a big audience.
Olympus had a hard deadline of Wednesday to file its second quarter earnings report or face automatic delisting from the stock exchange. It met the deadline.
Along with the quarterly report, Olympus announced restated financial statements for the last five years.
Here are a few tidbits from today’s news reports of interest to us auditors.
Size of the fraud hasn’t change – currently at $1.58B.
…
Olympus releases restated earnings- an auditor’s observationRead More »
Article in the Wall Street Journal on 12-7-11 gives more background on the methodology of the Olympus fraud: Panel Calls Olympus ‘Rotten’ at Core. (article behind paywall)
I made a few updates on my part 2 post. Have a few more comments in this post – things that are interesting to me.
Hiding losses was legal and normal
Apparently, moving underwater investments off the books was so common in Japan that it had a nickname, tobashi. …