PracticeAuditOlympus in court for allegedly misleading EY auditors

Olympus in court for allegedly misleading EY auditors

Serious Fraud Office alleges Olympus and UK subsidiary made false or misleading statements to its EY auditors at Westminster magistrates

Olympus in court for allegedly misleading EY auditors

OLYMPUS CORPORATION is in a UK court defending itself against Serious Fraud Office allegations that it made false or misleading statements to its auditors EY.

Gyrus Group, a UK subsidiary of Olympus, and Olympus are being prosecuted by the SFO at a Westminster magistrate’s court, The Financial Times reports.

Court papers allege shares were issued “for a fraudulent purpose” to conceal the extent of losses in securities and other trading at Olympus. It is also claimed that Olympus made a statement about the Gyrus financial statements, to auditors EY which was “misleading, false or deceptive”.

The case largely centres on the issue of preference shares by Olympus to its financial adviser Axes America. It is claimed that Olympus told its EY auditors the shares were remuneration, but the SFO allege those shares were used for fraudulent purposes.

The shares were sold by Axes to Olympus Finance UK, so that the purchase price could be transferred to Olympus Corporation in Japan, to conceal the extent of the company’s losses.

Gyrus was a Berkshire-based medical systems company, acquired by Olympus for $2.2bn (£1.4bn) in 2008.

Olympus is also accused of misleading its previous auditor KPMG’s affiliated Japanese arm AZSA, which were replaced by EY’s affiliated Japanese arm ShinNihon, in 2009.

The court case was adjourned until 24 September when it will be transferred to Southwark Crown Court.

The accounting scandal was revealed in 2011, by British ex-chief executive Michael Woodford, who turned whistleblower and raised questions about suspicious merger and acquisition activities.

Just two months ago three former Olympus executives were handed suspended jail sentences for their part in the accounting fraud uncovered in 2011.

Former president Tsuyoshi Kikukawa, former director and auditor Hideo Yamada and former executive vice-president Hisashi Mori were sentenced after pleading guilty last year to charges of falsifying accounts to hide massive investment losses at the company.

Olympus was also ordered to pay 700m Yen (£4.5m) in fines, earlier this year.

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