Japan's disgraced Olympus Corp is preparing to take legal action, including possible criminal complaints, against any executives found responsible for the accounting scandal engulfing the firm, according to an internal staff e-mail.
The memo, obtained by Reuters Wednesday, was sent to Olympus employees Tuesday by the firm's new president, Shuichi Takayama, who says he is striving to restore trust in the once-proud maker of cameras and medical equipment.
We will wait for the third-party panel to report and we are preparing to take firm legal action, including criminal complaints, against any manager it finds responsible, Takayama wrote in the e-mail, referring to an independent panel the firm has commissioned to investigate the scandal. The email did not name specific executives.
Investors are speculating that several Olympus officials will bear the brunt of any punishment for the scandal, hoping that the company itself will avoid the ultimate market sanction, a delisting from the Tokyo stock exchange.
The scandal, in which Olympus has admitted to hiding losses from investors for decades, has wiped out 70 percent of the company's market value and triggered investigations by police and regulators in Japan, the United States and Britain.
But Olympus shares jumped 15.6 percent on Wednesday, closing up by the limit of 100 yen at 740 yen, on hopes that executives, not the company, would face the severest consequences. Trading had ended before news of the staff email.
As long as market participants think that Olympus will not be delisted, the stock will continue to rise. The market is buying back what they sold last week, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
Olympus president Takayama has blamed his predecessor, Tsuyoshi Kikukawa, who quit on Oct. 26, along with former vice president Hisashi Mori and internal auditor Hideo Yamada, for the coverup. Mori has been fired and Yamada has offered to resign.
The scandal burst into the open after Olympus fired its then British CEO, Michael Woodford, on Oct. 14 and Woodford went public with his doubts about some questionable M&A deals carried out over the past five years by Olympus.
After weeks of denial, Olympus admitted last week that funds related to its $2.2 billion purchase of UK medical equipment maker Gyrus in 2008, which involved a huge advisory fee of $687 million, as well as payments totaling $773 million for three tiny domestic firms, were used to hide losses on securities investments stretching back to 1990.
(Additional reporting by Ashutosh Pandey in Bangalore, Mari Saito and Taiga Uranaka in Tokyo; Writing by Linda Sieg; Editing by Mark Bendeich and Matt Driskill)