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Evidence For The Defence Required – 9 September 2013

Member: Nifa

News that the serious Fraud Office (SFO) has this week charged Olympus with making misleading statements to an auditor means that the camera and medical equipment firm will have to find evidence in its defence.  This means that both sides will almost certainly engage the services of a team of forensic accountants as part of their legal battle, in a bid to find every shred of evidence that exists.


Former President at Olympus, Michael Woodford said in October 2011 that he asked the SFO to investigate a report about payments made by the Japanese company to advisers in a 2008 deal.  He told one interviewer that he advised the SFO at the time to send forensic accountants in to “find out where the money has gone, who worked with Olympus, who has cooperated with Olympus and who received fees from Olympus”.


Mr Woodford, the first non-Japanese CEO went public with his knowledge of the dealings after the Olympus board fired him for raising questions. The company was fined 700 million yen (£4.5m) in Japan and three executives pleaded guilty to covering up losses.  Central to the cover-up was a $687m advisory fee related to the acquisition by Olympus of a subsidiary company called Gyrus, which together with its parent company has now been charged by the SFO with offences of “making a statement to an auditor which was misleading, false or deceptive, contrary to section 501 of the “Companies Act 2006”.


The firms will now have to prove that their statement to the auditor was not false or deceptive and the best way to do that is to get a team of forensic accountants on the case, who can piece together the evidence that what they said was accurate. Unfortunately for them, the SFO will no doubt be taking Mr Woodward’s advice, so it will be a case of who uncovers the truth when the matter comes to court.


Author: Roger Isaacs, 9 September 2013

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