(UPDATED) Investigative panel report is out: “Olympus top management was rotten”
The investigative panel published their Olympus report (Source: Reuters). UPDATE: You can download the pdf here.
Summary: Olympus had a huge speculation loss in the nineties. To cover the losses (and save Olympus?) Hideo Yamada and Hisashi Mori elaborated a “loss separation scheme” to hide the losses ($1.7 Million $) in acquisitions and fees. The report states that part of the management was aware of that (“rotten”), but that there is no link to the organised crime. That damaged the shareholders and the report clearly says that “fraudulent accounting” has been done. The report clearly advice the responsible managers to resign. In short, a revolution is needed.
The reaction of the market has been positive. Olympus shares had jumped as much 9% percent today (Source: Bloomberg). The main reasons for the jump is the chance that Olympus will not be delisted at the Tokyo exchange and that part of the board will probably have to resign.
But here is the “bad” question to you: What if they tried to hide the losses to keep the Olympus business alive? Wondering if Olympus would have survived if they wouldn’t have done that “loss separation scheme”.
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Recent comments
Comment from olyguy: Woodford is part of the scheme. The bes...
Comment from lnqe-M: Thank you....
Comment from YouDidntDidYou: this article echoes a lot of my sentimen...- Comment from lnqe-M: Olympus has liver in 20 year at the lose...
Michael
6 months ago |Positive news then. I hope this keeps Olympus listed and that they can re-focus their efforts on making quality products. We saw recently that Woodford is a fan of the PEN series of cameras, so I think it’s fair to say that we can expect a continuation of the camera line under him
.
Georg Panzer
6 months ago |I hope you are right Michael aka Gakuranman – I enjoy your blog!
tmrgrs
6 months ago |Yes Michael I agree. The sooner Woodford takes over again, the better it will be for Olympus and all of us who like their cameras. Time to clean house in that board room.
YouDidntDidYou
6 months ago |this article echoes a lot of my sentiments http://www.forbes.com/sites/stephenharner/2011/11/10/olympus-and-honor/
Stephen Harner:
“What I had from the beginning believed–and what recent revelations confirm–is that the motives of the executives who approved the transactions were “honorable” in the sense that they were not to put money into their own pockets (except to the excusable degree of wanting to keep their jobs) at the expense of the company.”
lnqe-M
6 months ago |Thank you.
olyguy
6 months ago |Woodford is part of the scheme. The best way to put your man in is to make him the hero.
Solar
6 months ago |Did Woodford not hold a position in the executive of the company?
Thom Hogan
6 months ago |Yes, he did. When he obtained that position he almost immediately did what the report suggested that ALL the other board members and executives SHOULD have done far sooner. So what’s your point?
Solar
6 months ago |My point is that he is most likely tarred with the same brush as his fellow executives in the highest level of management within the company. Executive management reports to the board. It is not reasonable to accept that he had no knowledge of these activities prior to his last position within the company.
If the company is to survive, then it needs a clean start, with as little baggage as possible. Mr W, whistleblower or not, is too much baggage to carry moving forward with as there will always be suspicions about his past knowledge and involvement.
Thom Hogan
6 months ago |You don’t seem to be following the plot. It actually is very reasonable to conclude that he had no knowledge of these activities prior to his being appointed to both the parent company and the board earlier this year. It’s his activity that outed the whole deal in the first place.
Note that I haven’t specifically written that I think that Woodford should be returned to the Olympus executive suite. I’m not sure whether that would be a good or bad thing at this point. However, the only way he’s likely to be returned to the company is if the shareholders believe that’s the best shot at turning around the company.
The problem at the moment is that we have a board that is completely tainted by the scandal. So they can’t say they represent shareholder interest. Yet you need a board to proceed. Something’s got to give. The highest likelihood is what I said before: that deals were made in a back room somewhere about how to move forward. We won’t know what those are until we see evidence that something is changing at Olympus.
Solar
6 months ago |I think we agree to disagree on that point Thom. I am uncertain of the media coverage that is following this in Japan, but from the international press coverage Mr W’s return to Japan was like a circus, and that is when it first struck me that not all is as it may first appear. Nobody makes it to high levels in any company if they are not a calculated and successful political animal.
Agreed, that a new board and “leadership”is needed immediately. To drag the company out of the pit, it would help if it was a high profile name or 2 with maximum credibility.
Thom Hogan
6 months ago |So you’re blaming Woodford for the media frenzy? Remember Enron? Remember what happened when the disclosures started to hit from them?
Funny thing happens when you turn on multiple 24-hour-a-day news channels: they need news. They’ll invent it if they don’t have it, and they’ll swarm it if it actually looks like it might be a real story. Would you want to be the last to report the biggest corporate fraud in recent history?
Solar
6 months ago |My comments regarding the media circus are an observation from somebody not on the inside, like all here. I have been part of an executive management team in the past reporting too, and wining and dining a board to get what the executive wants. The most successful are the politically and goal (read selfish) orientated individuals. Some tow the line and others look for short term strategies to climb. Some can walk away and some cannot. Unless one is on the inside and has full knowledge then views / comments are pure speculation. That relates to my opinions and all others here
Karl
6 months ago |At this point the board and top management will have to go. Rudderless, replacement management will have to make its mark quickly, shedding unperforming business units and focusing on profitability, as well as handling shareholder lawsuits and the issue of loan covenants that take effect if the company is delisted.
This makes it MORE likely that it will sell off the small and underperforming camera business in order to focus on its endoscope business, which by far is its strongest division.
In fact, considering all the legal and financial/lawsuit implications of this scandal, the easiest way to get out of this mess would be for a new management team to sell off most divisions (including cameras), and immediately become a smaller but profitable and focused medical products company.
Thom Hogan
6 months ago |Yes, the board is toast after this report. Top management unfortunately consists of many of those people. Since this is a camera site, remember that the current President (and board member) came from being being the head of imaging. We’re now down to the number three person in imaging likely to be in charge, at best.
The question this forum needs to pay attention to is whether or not imaging has a clear leader with clear plans, both strategic and tactical, to fix things in the division. I don’t know the answer to that question.
tester13
6 months ago |I am sure that Nikon board and your friends are the same
Ragnarok
6 months ago |I am sure you are 15.
tmrgrs
6 months ago |tester13, you are an imbecile.
YouDidntDidYou
6 months ago |…if Olympus survives and grows from this I will be happy, if Woodford is reinstated as CEO again I will be disappointed.
…if Olympus gets de-listed from this Nikon fanboys and their pope will be happy, if Woodford is made CEO again they will be happy
If Woodford had been at the helm 5-10 years ago there wouldn’t be a micro four thirds mirrorless right now, also he doesn’t know what direction to take micro four thirds…
Anyways looks like Olympus might just be out of the woods.
Also:
In the documents it provided its bankers, which it made public on Thursday, Olympus laid out plans to reduce its heavy burden of interest-bearing debt from Y654.1bn as of the end of September to Y408.7bn by March 2015. The documents included preliminary earnings estimates that point to an operating profit of Y35.6bn for the year to next March, higher than last year’s Y33.7bn
Karl
6 months ago |Didn’tDid’nt’s (Amir Frank’s) knowledge is little, and his pro-Oly speculation is high. How does he know that mirrorless wouldn’t have existed under Woodford 5-10 years ago? He doesn’t but as a Olyfanboy his hatred for Woodford’s decision to reveal the illegal scandals hidden by Olympus make him despise anything the man has done, and absurdly ascribe actions to him he never made (and that Amir has no proof of either).
What kind of childish garbage is talking about “Nikon’s Pope”? Please Amir, try to be more of an adult.
flash
6 months ago |Did Woodford make it public before he was let go? No.
Did Woodford know their was something amiss before he was made President, and again before he was made CEO? Definitely before he was made CEO and mostly likely before he was President (unless he was completely daft, it is not that big a company, their was a board inquiry, etc.)
Was Woodford active in moving assets out of the Image Division? Yes
As such he is not a white as snow etc. Even as a CEO he is not experienced or has enough outside respect to successfully navigate Olympus in its current state (It would take a somebody, no a British schoolboy).
The company, in the condition it is in, will fail and be sold if Woodford comes back.
Thom Hogan
6 months ago |> Did Woodford make it public before he was let go? No.
It seems pretty clear that upon learning of the Tobashi loss, Woodford attempted to do internally what the independent committee is now recommending. When he proved unable to do that and the board has its infamous 15-minute meeting (which was called out as clearly wrong by the investigating committee), he went public as the only other way of trying to get Olympus’ completely negligent board to address its responsibilities. If YOU (and the others who keep bringing up this point) wouldn’t have done the same steps as Woodford did in the same situation, it just shows that you aren’t at all interested in running a company in a legal and diligent manner.
> Did Woodford know their was something amiss before he was made President, and again before he was made CEO? Definitely before he was made CEO and mostly likely before he was President (unless he was completely daft, it is not that big a company, their was a board inquiry, etc.)
Woodford wasn’t on the board prior to being made President. There’s no evidence that he knew of any of this prior to that. Indeed, IIRC he was against the Gyrus acquisition under the terms offered. The investigative report seems to back up his timeline of events. It appears that the board’s response to his inquiries about details of this matter were all met with “you don’t need to know that” (despite the fact he was on the board).
> Was Woodford active in moving assets out of the Image Division? Yes
What assets were those?
> As such he is not a white as snow etc.
I believe you fail to make your point. Worst case, we don’t know how snow white he is. Best case, he’s the only responsible adult in Olympus management.
> Even as a CEO he is not experienced or has enough outside respect to successfully navigate Olympus in its current state (It would take a somebody, no a British schoolboy).
I assume you, as usual, have a typo in your last line (“not a…”). Why resort to high-school level name calling? As for experience, he’s run Olympus Europe quite successfully. I doubt that he’d have any issues running Olympus US. So your real complaint seems to be “he won’t be able to change the corporate culture in Japan, and it needs to be changed.” That’s certainly possible. But Olympus has a real problem now. It’s current management, pretty much all of it, has been called out as irresponsible by the independent committee that Olympus hired. The question is exactly who can come in and fix all the problems the company has?
> The company, in the condition it is in, will fail and be sold if Woodford comes back.
It may fail no matter who comes in. It has no legitimate management after the independent report.
tester13
6 months ago |Something tells me it is 99% propaganda in your post, mr. Hogan.
Ragnarok
6 months ago |Can’t you add something meaningful instead of pure fanboy rage? Thom’s are some of the only adult comments here.
Thom Hogan
6 months ago |Propaganda for what?
I actually happen to use and like my Olympus m4/3 cameras. I’d like to see the company survive and improve their products.
Thom Hogan
6 months ago |Enlighten me. How do you reduce debt by Y246 billion with profits of Y69.3 billion? The only way I know how to do that is with asset sales.
YouDidntDidYou
6 months ago |@Thom Hogan
“Enlighten me. How do you reduce debt by Y246 billion with profits of Y69.3 billion? The only way I know how to do that is with asset sales.”
is equal to about 3 years profits… agreed?
1.well they could improve their already strong cash flow by reducing the amount of credit they give eg encourage suppliers to pay them faster.
2.they could sell/licence some of their intangible assets eg patents etc
3.they could raise loans
4.they could grow profits
5.sell and lease back property they own
6. issue more shares!
7. they could employ some as influential as yourself to bad mouth the competition at any and every opportunity (probably the most cost effective).
8. the could launch cameras with apps and do a profit share/commission on each one sold (works for Apple)
9. reduce your costs
10. increase your selling price/margin (difficult at the moment)
I’m pretty sure that you realise Olympus wasn’t talking about reducing their debt within 24 hours.
ckb
6 months ago |What you have suggested will only increase profits marginally. You are still Y100 billion short. The 69.3 billion is already with cost cutting of operations. Who will lead them to this? As my good Japaese friend told me cost cutting is “most difficult” (roughly translated means take your idea and the donkey you rode in on and get the hell out of my office).
It would be great if you could get a hospital/medical facility pay early.
I previous years Olympus have separated certain facilities from Imaging and Industrial products to make those divisions easier to sell or close. Looking at the different divisions only medical sticks out as a good buy, but everything else you need to have someone who will buy, invest in it and the sell again.
Last I saw the App store really made a pitiful profit in comparison to the rest of Apple
.
Thom Hogan
6 months ago |No. Is equal to almost 10 years profits according to your own numbers. And you were saying that the debt would be reduced by that amount in essentially two years (technically about two and a quarter years at this point).
2 and 5 are “asset sales”
3 would be replacing long-term debt at low interest rates with short-term debt with high interest rates, which seems counterproductive
1, 4, 8, 9, and 10 would raise the profits. But you said what the expected profits would be already are in your initial statement, which is why I challenged it.
I have little doubt that if Olympus were to be able to start with a clean financial statement and be 100% transparent moving forward that they could eventually clear their long-term debt. But it will take pretty strong cost cutting, asset sales, and time. They’d also need to avoid any further downturns–another recession could hurt such a comeback plan.
The problem I see is that they have little ability to raise new capital. Thus, they have to get by on what they can generate. That’s not insignificant, but the hurdle they put in their own way is quite large. We’re talking billions of dollars here.
YouDidntDidYou
6 months ago |@Thom Hogan
3. I wouldn’t recommend anyway.
2 and 5 I know are types of assets, but they would be in preference in selling other types of assets (Olympus might even have patents that are no longer useful to themselves but might be useful to other companies).
“The problem I see is that they have little ability to raise new capital.” true but it can be done, will take them about 3-5 years (which is just enough time before Canon or Nikon doing anything revolutionary in the camera world), endoscopes and imaging are both now performing strongly
Thom Hogan
6 months ago |> those were your numbers that you pulled from somewhere!!!!
No, they were not. I was simply using the numbers you were citing in your post: “In the documents it provided its bankers, which it made public on Thursday, Olympus laid out plans to reduce its heavy burden of interest-bearing debt from Y654.1bn as of the end of September to Y408.7bn by March 2015. The documents included preliminary earnings estimates that point to an operating profit of Y35.6bn for the year to next March, higher than last year’s Y33.7bn” You might not recognize them because I actually did the math reduction (654-408 does not equal 35+33).
Those numbers do not lead me to the conclusion that “Anyways looks like Olympus might just be out of the woods” as you cited just before providing those numbers.
YouDidntDidYou
6 months ago |@Thom Hogan
glad you agree that selling assets isn’t the only way to reduce debt…
Apology accepted.
Thom Hogan
6 months ago |Yes, and it appeared that you quoted them in support of your position. I was simply responding using your own cited information. But thank you for the apology.
We now return you to your regular debate… ;~)
Miroslav
6 months ago |I’m wondering how does $1.7 billion rank in the corporate scandals charts. Top 10? Top 100? Anybody? Olympus scandal has entered Wikipedia list at http://en.wikipedia.org/wiki/Accounting_scandals . And not many of those companies are still around
.
Karl
6 months ago |It was reported to be the biggest corporate scandal in Japan’s history.
tester13
6 months ago |I know another.
Just have piles of financial shit on account without calculating it at the real market prices.
And getting new debts to cover another.
Seems pretty common now
Bob B.
6 months ago |Sorry to be so specific…but I am so fed up with two-mouthed, greedy corporate heads and politicians these days. “Rotten”. What does that mean exactly? Can we be a little more specific. Were they thieves? Did they break the law and can they be incarcerated? “Rotten” is a term the old lady next door would use to describe the situation.
It would appear that a lot of peoples’ lives are being ruined by their greed, dishonesty, narcisism..and their lies. I hope that they have more consequence than to lose their positions.
Mr. Reeee
6 months ago |Do you think any of those responsible will ever do time?
Look at the whole US bank and Wall Street thing. Not only did they screw their clients, but they then got payola from the government, again at US taxpayers’ expense. Later, the Justice Dept trots out a couple of Indian immigrants for a perp walk, while the bigwigs get away scot-free and continue to fly between their zillion dollar houses in private jets and helicopters.
What a racket, eh?
Bob B.
6 months ago |Capitalism is headed into its decline (think Rome). Greed prevails (fear of not having as much money as the guy next to me..I just need MORE and throw a little power in there too while your at it), ethics in the dumper. Its all simple, human fear, but damn…things sure are lopsided. If the pendulum does not swing back …I think these are the rumblings of a big tsunami worldwide. Its all right in front of us.
People are buying books from psychopaths in power who have revolving charges at Tiffany’s (think Newt), because they want to emanate, THAT? We is in trouble.
Dummy00001
6 months ago |> Look at the whole US bank and Wall Street thing.
This is a poor extrapolation. In most of the developed world, people who have committed a crime are still criminals.
I’m not aware of any other country beside US where this whole occult thing going around “don’t punish the winner.” But in US masses actually believe the B.S.
> Not only did they screw their clients, but they then got payola from the government, again at US taxpayers’ expense.
Apparently, your 2nd Amendment doesn’t work as expected. Or probably the situation isn’t as dire – for you to realize the brokenness of the political system and actually do something about it. Or you naively expected to win against professional politicians (most of whom are of the “1%”) with talking and politicking?
Thom Hogan
6 months ago |Try actually reading the report rather than Admin’s summary of it ;~)
“long term fraudulent accounting lead by top management.” Is that specific enough for you? Names are named. 11 steps are given to prevent a recurrance, including “[all] executives…involved…should be eliminated” and “Directors who processed the problematic case with a short 15-minute meeting should also be replaced” (that would be the current board of directors).
The report also lists specific laws that were broken.
Bob B.
6 months ago |Thanks Thom…let’s hope the board members are prosecuted. The elite think that they are untouchable. (and most of them are). That has to change. If there are enforceable, mandatory consequences including jail time, for these kinds of actions things will start to come around.
st3v4nt
6 months ago |Enough with this news already….if Olympus going to fall because of this scandal so be it….then we can remember it as a company that once produce a great camera and great lenses….if not then please give us the real news about m4/3 and 4/3 that have relation with real photography not some news about how the company should be managed…yes we as a consumer and fanboy want the company that produced our product go to direction that we like….but sadly they aren’t and judging by the fact that they never listen to our need on their product anyway what makes you so sure that they will listen us how to run a company….I just need that ‘vaporcamera’ called PEN Pro with fast AF and great performance in low light but since it may never exist perhaps it’s time to moving on and looks elsewhere….
Ranger 9
6 months ago |Admin wrote: “What if the Olympus panel did what they did to save the company? What if they tried to hide the losses to keep the Olympus business alive?”
In a corporation, the company belongs to its shareholders. The shareholders are entitled to accurate information about the company’s business results, so they can evaluate the performance of its managers.
Here the managers made bad decisions that lost huge amounts of the shareholders’ money. Then they used deception to hide the consequences of their mistakes from the shareholders so they could keep their jobs and continue collecting their salaries.
It’s hard to see how you can call this “saving the company” or “keeping the business alive.” It sounds to me more like plain old stealing.
Dummy00001
6 months ago |> I am having some troubles: What if they tried to hide the losses to keep the Olympus business alive? Wondering if Olympus would have survived if they wouldn’t have done that “loss separation scheme”.
If public company is not doing well, first reaction of stockholders is not to shutdown the company immediately – but try to replace the leadership.
The management was likely trying to save their own arses, not prevent Olympus sinking.
lnqe-M
6 months ago |Good point.
Thom Hogan
6 months ago |Not only was management trying to save their own butts, but they were using Enron-like tactics to conceal what was going on (get things off the books, then back on the books in a way that hides what actually happened).
As for Admin’s “having some troubles” comment: it really doesn’t matter what the motivation of Olympus management was, they were violating laws, breaching fiduciary interests, hidding fraudulent activity from those who actually owned the company, and stifling those who tried to tell the truth. One thing the investigative report doesn’t mention is “where was Japanese regulation and oversight?” Completely MIA.
Further, basically Admin seems to believe that a company has a right to existence, even if it is operating outside the law. Yes, it’s a shame if employees at the bottom of the heap lose their jobs because upper management pulls the kind of shenanigans that we see here, but having a job isn’t exactly a right. Moreover, as the report points out, Olympus brewed a culture of non-compliance (see solution #8, trying to address that).
tester13
6 months ago |I think company has right to exist even if mr. Hogan things that it have no such right
Ragnarok
6 months ago |Not only you don’t add anything worth reading but you are starting to insult people. I hope Admin does something.
David
6 months ago |Well, then you are an idiot. The company exists through other people’s money. They didn’t sign up to fund either an illegal money making scheme for executives, nor a welfare program for workers. If the company can’t be run legally and somewhat transparently then it doesn’t deserve to exist.
DonTom
6 months ago |Currently, it seems that Governments get to decide whether or not a company has a right to exist after failing.
Who can say if this is correct? It depends on so many factors. But it certainly doesn’t look like the directors of Olympus cared about the long term viability of the company. I hope the sword falls swiftly, and that Woodford et. al. can get on with the process of sorting out the mess. If the camera division is sold, let’s hope the buyer wants to keep on the current path. If not, there’s still Panasonic, and other choices coming every year. I don’t expect to get more than 5 years out of electronic systems, my Olympic camera (including the lenses) fits in that. In 4 years time, there will still be plenty of choice.
YouDidntDidYou
6 months ago |@DonTom
actually if the board didn’t care about the company’s long term viability they would of declared all their loses in 1999 and not try to dilute the huge lose over many future years at great personal risk.
ckb
6 months ago |They have not really given a reason. It was stupidity and ego that they did not declare their loses in the early 2000′s.
No one ever commits fraud for a company without a personal and lucrative reason. It is not risk it is fraud.
YouDidntDidYou
6 months ago |they declared 1 and half billion but figured the market wouldn’t accept a bigger loss.
Thom Hogan
6 months ago |It’s much more nuanced than that. First, the losses in question would have been declared far earlier than that. Second, initially it was apparently only a few key people who knew about them. Unfortunately, the corporate culture at Olympus was such that as things escalated, so did the number of people who knew about it and did nothing about it. Even as Woodford was rooting around trying to figure out what was going on he was being told by both those above and below him to “pay no attention to what’s going on behind the curtain.”
As I note further down: I think you mean “short term viability.” The cover up did nothing but make the problem worse monetarily, but it did by some time before it had to be dealt with. It has to be dealt with now. I can’t see any scenario where jobs aren’t lost. How many, for how long, and where in the company, we don’t know yet. But covering things up did not increase the long-term viability of the company. As we’ve just seen, it almost destroyed it.
Thom Hogan
6 months ago |Let’s try a little test, tester13. Enron. Right to exist? Madoff’s management company. Right to exist?
By your logic, it seems that someone who commits a crime should not be punished. Essentially you’re espousing an anarchist philosophy.
In the case of a business that has shareholders and debt holders (remember, 5 to 1 debt to equity here), failing to punish said business for fraudulent activity means that instead you’re punishing the shareholders and debt holders even more than they already are. The board should have been looking after the shareholder’s rights. They were not. At a minimum, they have to go, as the independent commission THEY HIRED even said.
You (and others) seem to think I have something in for Olympus and want to see it gone. Absolutely not true. Just the opposite. I want to see it making the best cameras it can and be healthy financially. However, getting there is not necessarily a sure thing given what the executives and board did. The report (which I doubt you actually read) pointed out that the lack of corporate oversight was widespread, fraudulent, and in many cases in violation of laws. No one internally questioned what was going on. Except Woodford shortly after he was brought to Japan.
Voldenuit
6 months ago |the real question should be: “What if Olympus hadn’t bet the farm on poor investments and speculative spending outside of their core competency?”
And the answer would be: “Then they wouldn’t have had massive losses to cover up”.
lnqe-M
6 months ago |Oky to day, maybe the E and Pen series not go so bad, so i think the is realy Olympus IS series from more than 20 years bake so is reason for the lose.
nobody
6 months ago |Thanks, Thom Hogan, for sharing your insight and knowledge!
Please carry on and ignore all that hostile ignorance of stupid fan boys that attack you!
mewmew
6 months ago |My words + ..
Fan
6 months ago |Toshiba should buy the camera division. They have camcorders but no cameras!
lnqe-M
6 months ago |Why not Epson, and why only camera division.
bli
6 months ago |Ah… Toshiba — another scandal ridden company
— I’m referring to the “Toshiba scandal” of ca 1984, when it was revealed they had provided technology to the Soviet Union for producing quiet submarine propellers. But they survived. Let’s hope Olympus survives, too.
BS Artiste
6 months ago |Sorry, but there is no excuse for committing fraud on the shareholders to “keep the company alive.” The fraud was to protect the board malfeasance from resulting in those managers being fired.
The company is the shareholders, and the shareholders are the company. All comapnies are in business to maximize the shareholder value because shareholders are the ones who are putting their capital at risk.
BS Artiste
6 months ago |Saying that the corrupt management was trying to protect the company is like saying that citizens should be beaten by government leaders for the citizens’ own good.
YouDidntDidYou
6 months ago |@BS Artiste
or like seeing someone drowning but you see a sign that says no swimming do you let them drown or obey the sign or your wife is heavily pregnant/extremely ill, you live 50km from the hospital do you drive and break the speed limit or wait an hour for an ambulance to make the round trip?
Curly
6 months ago |Aw, come on. Are you pretending or are you really this stupid? Wow!!!
YouDidntDidYou
6 months ago |@BS Artiste
Sorry, but there is no excuse for committing fraud on the shareholders to “keep the company alive.” they were keeping the company alive for it’s long term future instead of it going belly up in 1999…
“The company is the shareholders, and the shareholders are the company. All comapnies are in business to maximize the shareholder value because shareholders are the ones who are putting their capital at risk.” Get real!
DonTom
6 months ago |So, Declan, are you in business at youdidntdidyou.com just to keep the company alive, or to put food on your table as the shareholder? Would you commit fraud to maintain your lifestyle? Actually, the answer is on the payment section of your website, where you say: “cash *under the table is best*”
Says a lot about your smarts and your (dis)honesty, no wonder you think that the Olympus directors were fine upstanding men!
Stick to photography, looks like you could do with the practice.
YouDidntDidYou
6 months ago |@DonTom
I didn’t say they were upstanding men, but I do know that a lot of managers and business owners would, do or did the same thing when and if they are in the same position in the real world, so I can sympathise.
I’m in business for the good times and the bad just like a marriage or raising kids.
Actually I prefer my payments to come in a traceable manner, so the payment section of my website suggests I have a sense of humour.
btw I currently run 2 other businesses and have run many others in the past, so no I won’t be sticking to photography and as far as I can tell I run it in a more honest manner than most of my local competitors.
DonTom
6 months ago |@YDDY. Glad to hear that you have assume every reader of your website has a sense of humour. Never met an Inland Revenue man with one myself, but you could get lucky……
Crap tho, to say you sympathise with business people who would do the same thing. Robbing Peter to pay Paul is never acceptable, especially when you are doing it to save your own skin. What irks me ( and the averge Japanese working stiff), is that these people are so bloody two-faced about it. Sacking Woodford while preaching cultural insensitivty? While you are the person duping hard workers and shareholders? I guarantee there won’t be many tears shed when the Olympus board slink out the back door.
Lying and fudging accounts really shouldn’t be anything to sympathise with. Perhaps it’s time to have a good hard look at your own ethics, from a wider field of view.
YouDidntDidYou
6 months ago |@ DonTOM
lol I had a inland revenue investigation this summer and another one about 9-10 years ago and yes some inland revenue officers do have a sense of humour and no they didn’t find anything they shouldn’t of. In some respects they were surprised in my honesty with customers.
Accounts are just a financial snapshot of what is going on in a business over an arbitrary period of time eg do a profit and loss on a wedding photography business over 3 months of the winter and it’s running at a loss, do the same over 3 months of Summer and it’s running at a loss.
Shareholders do accept run at a loss it depends on how much and for how long and prospects, Amazon is the perfect example they ran at a loss for it’s first 7 years.
http://www.nytimes.com/2001/02/02/business/amazing-amazon-losses-grow-as-they-seem-to-shrink.html
bli
6 months ago |Assuming the descriptions we have heard so far are true, another question is very interesting: how on earth could the problem start? How on earth could the management do property speculations, which I assume is outside of the business area of Olympus?
ckb
6 months ago |I guess you were too young to know about the bubble economy where prices for land and housing in Japan went to astronomical heights in the mid to late 80′s. The prices fed upon themselves until people realized that 50 year mortgages that were tied to the family would not hold value. Prices hit a peak and then market popped and the value of land and housing went down to about 35% of peak value almost overnight.
It was easy money for companies until the bubble burst. Also while companies had profits at home through the bubble economy they left profits offshore in form of land and buildings in the USA. They had to sell their holdings in the US after the bubble burst and they were again taken to the cleaners because everyone knew they had to liquidate quickly because they were in trouble at home.
It was a short sighted strategy that allowed companies to make extravagant purchases abroad. They acted like kings and did not entertain the idea that their grand holdings would not be liquid enough when required.
It was easy to lose money and instead of declaring loses and moving on they went to elaborate schemes to hide them. Most schemes for hiding loses were easily found in corporate statements and cleared in the early 2000’s. However, Olympus kept on hiding theirs. That is what concerns me. They may have accounted for the loses in the independent panels report however they do not explain why they continued the scheme when in the early 2000’s they could have come clean with a get out of jail free card. Why would rotten management would not take a get out of jail free card?
Thom Hogan
6 months ago |It was a pretty normal thing in Japan. They even had a name for it.
You are correct, however, it really gets right to the core of ethics. You’ve got a company that’s marginally profitable (or worse, slightly unprofitable). But you’ve got a wad of cash sitting around earning little or nothing, and there’s this apparently lucrative market out there that just goes up and up and can’t possible go down, can it? So you invest your cash into that to get higher returns, which because all this is on your official books, makes the company suddenly look much more profitable than it is. Only problem is that it can down, because it was a clear bubble.
Funny thing is, we just went through the same thing. What Olympus did was no different than all the betting that went on with unsecured mortgages here in the US. It sure made your bottom line look better, and it couldn’t possibly go down, could it? Of course it could, it was a clear bubble. The only question was when it would burst, and how badly. Funny thing is, those players had all that information right at their fingertips, except they couldn’t/didn’t read it. Just as long as someone said it was AAA and they could get a CDO or CDS on it, no problem.
What our politicians are getting wrong in response to the 2007/2008 bubble burst is actually the same thing the Japanese politicians got wrong when their real estate bubble burst. The result was deflation, stagnation, lost decade, whatever you want to call it. Guess what’s headed our way? ;~(
We see all kinds of excuses in these things: “everyone else was doing it” is a common one. But it still boils down to one thing: you’re a public company. You have shareholders. Your responsibility is to them, both morally and legally. If you can’t stand up and say “I made a mistake, we lost money” but instead put into play a convoluted scheme to hide what happened, that doesn’t make you a good person. It makes you a bad person who’s breaking the law and not just putting employee jobs on the line, but investor assets, as well.
It’s a fool’s thinking to believe that “we can save jobs” by creating a fraudulent scheme to hide everything. In the short term, maybe. But let’s look at both then and now.
Then: had Olympus reported the loss a few executives probably would have been shuffled off to early retirement, the company would have had to cut expenses (and likely jobs) to scrape by.
Now: Olympus is finally getting around to declaring the loss and as a result will lose ALL of its executives, board, and more to early retirement in the courtroom, and the company will have to cut expenses (and likely jobs) to scrape by.
What was gained? Well, a bunch of executives held onto their jobs at the (now) risk of criminal and civil prosecution (in Japan, executives are held for shareholder losses). That’s about it. If anything, the cover up weakened the company far more than the original problem would have. The monetary amount involved has skyrocketed, the company piled up debt during this period, and now something has to happen to resolve all that.
Vivek
6 months ago |“Olympus top management was rotten”
Replace Olympus with any other corporate name you can think of and there will always be some truth to it. Just because the others aren’t in the news do not exclude them from this.
Kylberg
6 months ago |Admin – an answer to your question: By hiding losses not only is criminal, it also ment that nesscary moves/changes to make Olympus profitable did not happen. Hiding losses in a companyis like digging the grave for a it.
To some others: Not all corporations act illegal. Most follow rules, not least towards the stock market = their owners. Most companies do not dig their own grave like Olympus did.
lnqe-M
6 months ago |Shareholder can also be rotten, the only we so buy Olympus camera and lens so not is rotten.
Kylberg
6 months ago |Ethics in company is one thing, products another. – But, if Oly did the right things, they would probably had the finacial muscle to develop m4/3 with f.i. new and better sensors instead of three years of tweaking.
lnqe-M
6 months ago |Olympus has liver in 20 year at the lose, i can not see them not can live three year to.
Michael Hobart
6 months ago |The PDF file that is linked above is a 30 page summary in English rather than the full 178 page report. It is useful that this is available in English now (rather than having to depend on problematic online translators ). It would be more useful if the full 178 page report is made available as I am sure there are many more details in it. The Tokyo stock exchange had suspended trading while they studied the report.
Reading over the various news articles, it is clear that Olympus LEGALLY has to provide revised financial reports for the current and last five fiscal years, at a minimum, to avoid the start of the delisting process on 14 December. It also appears that as a PRACTICAL matter they are going to have to revise their financial reports back to the time the financial mess started, circa 20 years ago. That will be a daunting task.
Depending upon the analysis of this report, their financial reports, and the results of the various official investigations, they still may be delisted even if the results are submitted in time.
SLO
6 months ago |I just want to thank Thom Hogan for his wonderful insights. Thom I appreciate you taking the time to clarify the situation and give thise of us who do not work for a big corp an view into the ethics and responsibilities involved.
I will enjoy my EP3 until it’s worn out, and then I will move on. All things are ephemeral.