Ex-Olympus execs sentenced, but is it a deterrent or a slap on the wrist?
posted Wednesday, July 3, 2013 at 6:26 PM EDT
Now that the dust has largely settled on the Olympus accounting scandal, and the company's stock price has returned to normalcy, the story has largely dropped out of the headlines. That changed today, though, with the sentencing of several key (and now ex-)executives -- including Olympus' disgraced former chairman.
When the scandal first broke, it dragged the company's price on the Tokyo Stock Exchange from ¥2,526 to as low as just ¥420, by the time the bottom was reached. You may have been expecting a stiff sentence to deter a repeat of a situation that left Olympus short of US$1.7 billion, and with its stock in tatters. If so, you'll be surprised to find that three senior executives who assisted with the coverup have been handed suspended sentences, while those on whose watch the scandal began face no consequences at all.
For their part in continuing to hide the massive losses of their predecessors, one-time Olympus chairman and CEO Tsuyoshi Kikukawa, executive vice president Hisashi Mori, and corporate auditor Hideo Yamada have each received suspended sentences. Kikukawa and Yamada's sentences call for a three year jail term suspended for five years, while Mori receives a two and a half year sentence, suspended for four years. Former Olympus presidents Masatoshi Kishimoto and Toshiro Shimoyama were beyond the reach of the court, as the statute of limitations on their actions had long-expired. Olympus itself, meanwhile, must pay ¥700 million (US$7 million) in fines.
News of what would seem to be rather light sentences will likely not sit well with those who lost significant sums as Olympus' stock tanked in the wake of the scandal, but the story is not over yet. Although all five men have realistically received little more than a smack on the wrist, between today's court decision and the statute of limitations expiration, Olympus has pending cases against 19 individuals, together seeking some US$165 million in damages. Kikukawa, Mori, and Yamada are all included among their number, and all three men may yet face a significant consequence for their actions in the case.
More details on today's sentencing are available from Bloomberg. Further information on the case itself can be found in our coverage from when the story broke in October 2011, as well as our subsequent coverage of the case.