Olympus concealed losses for years – can we trust Japanese accounts?

The Olympus mystery - the huge payments made for services around their acquisition of UK firm Gyrus seems to have been partially solved this week. Three top managers resigned and admitted that the money was used (in some way that isn't quite clear) to disguise huge losses Olympus made back in the 1990s on securities investments - losses that may have totalled more than $1 billion, according to Reuters.

So not as dramatic perhaps as the huge fraud that some suggested; or payments to Japanese organised crime gangs, which was another hypothesis. But more interesting than purely mega-incompetent procurement of professional services, which was another slim possibility.

But the "truth" is even more worrying in some ways, as it suggests systematic deception of shareholders, regulators, staff and customers over many years. It also raises questions about whether any other Japanese firms might be hiding the true state of their finances.

Something else to think about in terms of supplier risk and information - can we really believe the accounts?

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First Voice

  1. Dan:

    Using external companies to get huge losses off the balance sheet – thats exactly what Enron did. Have auditors learned nothing?

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