An investigative panel on Tuesday found no link between organized crime and Japan's disgraced Olympus Corp, an outcome that may help it survive a $1.7 billion accounting scandal that ranks as one of the nation's worst.
The maker of cameras and medical equipment faces delisting from the Tokyo market, and a bleak future as an independent firm, if proof is found to support a much-rumored link between yakuza gangsters and its efforts to hide losses off its books.
But the panel, a group of outside experts hired by Olympus to get to the bottom of the scandal, reported no evidence of yakuza involvement and instead blamed two former executives for cooking the books over 13 years to flatter its financial performance.
Within the scope of the loss cover-up process investigated by the panel, there was no confirmation of involvement by anti-social forces, the panel's report said, using a common Japanese euphemism for organized crime.
The core part of management was rotten and the parts around it were also contaminated by the rot, the report added.
Olympus has lost about half its market value since its sacked CEO, Englishman Michael Woodford, triggered the scandal in mid-October, going public with concerns over murky accounting and some expensive and questionable acquisitions.
Speculation of yakuza involvement had quickly surfaced, given they have a long history of trying to extort money from companies by threatening to expose their secrets, and because Woodford had fled Japan after his sacking, citing safety fears.
The panel report said former executive vice president Hisashi Mori and ex-internal auditor Hideo Yamada had crafted a scheme as long ago as 1998, along with several investment bankers, to hide investment losses suffered earlier in that decade as Japan's stock market crashed.
The panel was also critical of Olympus' auditors over the years under investigation, KPMG AZSA and Ernst & Young ShinNihon, and said the concealment of losses amounted to 134.8 billion yen ($1.73 billion) at its peak.
Olympus shares had jumped as much as 15 percent earlier on Tuesday, extending a three-week rally fuelled by growing hopes that the stock would not be delisted and that, instead, a few former executives would bear the brunt of any punishment.
The panel's findings so far represent no major new surprise for investors, though some doubts exist about its ability to get to the bottom of such a complex and murky affair, which involves numerous, obscure counterparties and investment firms.
The panel has limited powers of investigation and was hired by the same board that sacked Woodford, who blew the whistle on the scandal immediately after he was fired as CEO in October.
I would have thought they didn't have the expertise to probe that (involvement by organized crime), said Jamie Allen, secretary-general of the Asian Corporate Governance Association, whose members include institutional investors that collectively manage assets of more than $10 trillion.
That's really a job for the police. So even if they say there's no evidence, obviously I don't think that's going to satisfy everybody because they'll want to know what the police come up with.
Olympus remains under joint investigation by Japanese police, prosecutors and the markets regulator, though it is not clear when these official investigations will wind up.
($1 = 77.8200 Japanese yen)
(Additional reporting by Mari Saito in Tokyo; Writing by Mark Bendeich; Editing by Richard Pullin and Ian Geoghegan)