Olympus' management was rotten, but it wasn't linked to organised crime

The full report is 178 pages long; the summary is 38 pages. Olympus' own investigation into just what has been going on in its company was conducted by five lawyers and one accountant. It unearthed lots of very dodgy financial transactions and a culture at the top of the management tree that resembled a mediaeval personal monarchy, but the concerns that Olympus was somehow linked to 'antisocial forces' (that's the delicious euphemism for Yakuza) seem to be unfounded.

The broad summary of just how the management conceived to cover up losses that amounted to around ¥132 billion (roughly £1.09 billion; $1.7 billion) amounts to a structure that wasn't subject to sufficient checks and balances on its activities; a culture that was intolerant of questioning (hence Michael Woodford's dismissal); an executive that ran the company almost as its own fiefdom, without consideration for the company, its employees, and its shareholders; a succession of auditors that do not appear to have their jobs properly; not making proper financial disclosures to the Tokyo Stock Exchange; and inadequate staff rotation that allowed misdemeanours to take place unchecked.

At the centre of the book-cooking were Hisashi Mori and Hideo Yamada, the former vice-president and internal auditor respectively. They dreamed up an elaborate scheme that concealed the losses Olympus had accrued from high-risk investments in the early 1990s. Through a combination of external agents' advice and Olympus' own poor management practices, they were able to get away with it for over 13 years.

It was when Michael Woodford was appointed as CEO in October, and dismissed two weeks later for rocking the boat when he asked some pertinent questions about the acquisition of a British medical imaging company called Gyrus, that the scandal came tumbling out into the public sphere. Since then, the company's shares have plummeted and it is at risk of being delisted from the Tokyo Stock Exchange, not to mention undergoing investigation by the Japanese authorities, the SFO in London, and the FBI in the USA.

Meanwhile, the investigating committee has recommended an overhaul in the senior management, changes to the company's management systems and mindset, an end to nepotistic appointments, and for those who were involved to be held legally responsible.

Doubtless Olympus is heaving a sigh of relief that nothing else unsavoury was trawled up in this investigation, but there's still a long way to go to recover their credibility and the company's share prices.