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Serious Fraud Office drops charges against camera-maker Olympus Serious Fraud Office drops charges against camera-maker Olympus
(about 4 hours later)
The Serious Fraud Office has dropped fraud charges against Japanese camera-maker Olympus and its UK subsidiary Gyrus Group relating to an accounting scandal four years ago.The Serious Fraud Office has dropped fraud charges against Japanese camera-maker Olympus and its UK subsidiary Gyrus Group relating to an accounting scandal four years ago.
The move follows an appeal court ruling in February which found that companies cannot be held criminally responsible for misleading their own auditors under English law.The move follows an appeal court ruling in February which found that companies cannot be held criminally responsible for misleading their own auditors under English law.
The SFO stressed it has been unable to bring prosecutions against individuals in the Olympus case because Japan does not extradite its nationals.The SFO stressed it has been unable to bring prosecutions against individuals in the Olympus case because Japan does not extradite its nationals.
The Japanese group and its Gyrus unit were charged by the SFO two years ago in relation to audits for 2010 and 2011. The UK charges followed revelations of a $1.7bn (£1.1bn) accounting scandal at the Japanese firm, which have since resulted in fines and prosecutions in Tokyo. The Japanese group and its Gyrus unit were charged by the SFO two years ago in relation to material that had been made available to auditors in 2010 and 2011. The UK charges followed wider revelations of a $1.7bn (£1.1bn) accounting scandal at the Japanese firm, which have since resulted in fines and prosecutions in Tokyo.
But on Tuesday a British judge ended proceedings against Olympus and Gyrus after the SFO told the court it would not offer evidence, according to Bloomberg. But on Tuesday a judge at Southwark crown court formally ended proceedings against Olympus and Gyrus after the SFO said it would not offer evidence.
With a prosecution of Gyrus effectively blocked, prosecutors are thought to have considered whether to press ahead with charges against parent company Olympus — something it has now decided against.
The failed Olympus case is a blow for the SFO’s director, David Green, who has made clear he wants to hold corporations directly to account for criminal conduct where appropriate.The failed Olympus case is a blow for the SFO’s director, David Green, who has made clear he wants to hold corporations directly to account for criminal conduct where appropriate.
In an interview with the Guardian two years ago, he said: “The way companies work today, the email chain tends to get rather sparse among very senior managers … But if a [company] has gained from dishonesty, why should it be able to chuck a few mid-ranking people overboard and sail onwards?”In an interview with the Guardian two years ago, he said: “The way companies work today, the email chain tends to get rather sparse among very senior managers … But if a [company] has gained from dishonesty, why should it be able to chuck a few mid-ranking people overboard and sail onwards?”
Related: Michael Woodford: the man who blew whistle on £1bn fraudRelated: Michael Woodford: the man who blew whistle on £1bn fraud
The Olympus scandal emerged in 2011 when its then chief executive, Michael Woodford, turned whistleblower over an alleged $1.7bn accounting fraud he said had taken place over 13 years. Green said he had discovered it two weeks after taking the top job, and took his findings to the SFO in London. Green has done much to repair the reputation of the SFO since 2012, when he took charge of a then crisis-striken agency, reeling from a costly and error-ridden investigation into property tycoons Vincent and Robert Tchenguiz, both of whom won damages.
After allegations of missing money surfaced, the company’s share price fell 82% in a month. Olympus has since been fined 700m yen (£3.77m) in Japan and three executives pleaded guilty in 2013 to covering up losses at the maker of endoscopes and cameras. Since his appointment, Green has secured convictions in relation to high-profile hedge fund and libor-fixing cases, and continues to pursue investigations linked to large companies including Rolls-Royce, ENRC and Barclays.
A lawyer for Olympus told Bloomberg the company was planning to make a statement to the market in Japanese trading hours on Wednesday. However, prosecutors have also suffered a number of bruising failures. A judge heavily criticised prosecutors last year after the collapse of a bribery case against London businessman Victor Dahdaleh. The SFO was also admonished last year by a second judge over unorthodox efforts to bring a prosecution in relation to businessmen linked to a mining rights controversy in South Wales. The courts threw out the SFO’s case, leaving it facing a £6m bill.
The Olympus scandal emerged in 2011 when its then chief executive, Michael Woodford, turned whistleblower over an alleged $1.7bn accounting fraud he said had taken place over 13 years. Woodford said he had discovered it two weeks after taking the top job, and took his findings to the SFO in London.
Initially Woodford was ousted as chief executive for questioning Olympus’ past acquisitions, though it later became clear these deals had been used to mask losses.
After allegations of hidden losses surfaced, the company’s share price fell 82% in a month. Olympus has since been fined 700m yen (£3.77m) in Japan and three executives pleaded guilty in 2013 to covering up losses at the maker of endoscopes and cameras.
Olympus said it had cooperated fully with SFO investigators but “did not accept that the offences with which they were charged could, as a matter of law, be made out against them”.