Financial Ethics: OLYMPUS, The $1.7 Billion Fraud

In today’s world, we can found a lot of scandals and fraud on the news. What causes all this scandals and fraud occurred in the market? Is it because of greed of money or gain of the company value? When come to the ethical decision, I have always wondered how many decision maker will think ethically instead of its own gain. Today, I will talk about the topic of Olympus, $1.7 billion accounting fraud which is related to the financial ethics.

As you all know, Olympus is a large multinational corporation around the world. However, this scandal had made the Japanese people feel embarrassed about it. This scandal is found out by the first foreign leader, Michael Woodford during 2011. Woodford find suspicious that the money of 1.2 billion has disappeared in the account and he got fired after questioning this to Kikukawa. So, he started to investigate this mysterious payment. In this case, Tsuyoshi Kikukawa, Mori and Yamada are involved in this fraud by doing illegal practice of moving loss- making investments off shore. It sounds foolish that Kikukawa hide up 1.2 billion losses since he started working as CEO of Olympus instead of announce it to the public.  The total losses of 1.2 billion is cleared by acquired three defunct companies at a minimal valuation cost and sell them to Olympus at an inflated price of $550 million and Kikukawa contrives a new scheme paying on inflated fee to the financial advisers for Gyrus acquisition that cost $67 million. With all the losses that are cleared, Kikukawa thought he had buries this secret and Olympus could start again with a clean slate. Why Kikukawa decided to do that? Is it because the gain of the company in which the 1.2 billion losses will cause a decrease in share price or he is trying to protect the reputation of the company? However, what he did is an illegal practice and he had cause a bad reputation to the company. In 12 February 2012, Kikukawa and the members that participate in this fraud are arrested and punished.

After all, I doubt about how many people will act like a professional instead of employee when they come to the point of making decision for the company. How many of you will think of whether it is fair to the investors and how many of you will consider of what you might gain for making the decision? Please share your opinion with me.

 Much appreciated.