scandal scandal precipitated october british born suddenly ousted chief executive international optical equipment manufacturer company president months weeks prior promoted chief executive officer exposed biggest longest running loss hiding arrangements japanese corporate history according wall_street_journal board chairman appointed positions assumed title ceo president incident raised concern endurance schemes strength corporate governance japan apparently irregular payments acquisitions resulted significant asset charges company accounts exposed article japanese financial magazine come attention japanese press speculated connection japanese organised crime defended allegations despite matter quickly corporate corruption scandal called billion billion investment losses dubious fees payments dating late 1980s suspicion covert payments criminal organisations october replaced chairman president ceo november company admitted company accounting practice inappropriate money cover losses investments dating 1990s company blamed inappropriate accounting president executive vice president scandal developed biggest longest lived loss financial scandals history corporate japan wiped company stock market led resignation board investigations japan arrest past present japanese directors senior managers alleged criminal activities cover raised considerable turmoil concern japan prevailing corporate governance transparency japanese financial markets received reported million damages dismissal time announced shed jobs workforce percent manufacturing plants reduce cost base background major japanese manufacturer optical equipment listed according accounts year ended march consolidated net sales billion billion year total shareholders equity billion billion group employs close people world assets billion march included billion billion goodwill asset leadership president company revenues increased billion billion profits relatively constant billion 1980s japanese corporations relied investments bolster profits particularly exports eroded strong president admitted industrial daily newspaper main business struggling need earn meaning financial engineering invested financial derivatives risky investments boost profits said remember attempt conceal losses tenure president president wasn case financial reports come memory time treasurer wouldn heard financial details president turn denied involvement instead suggested possible said supervised poorly losses billion value investments investment ended june subject market rumours suffered trading losses derivatives caused shares percent rumours denied subsequently announced record profits september announced written billion investment emerging market bonds company disclosed interim results october lost nearly billion interest rate currency company reported lost billion scheme according annual report year ended march showed billion million prior period adjustment loss related purchase preference shares unnamed party goodwill balance sheet increased billion account purchase noted ratio company debt relative equity ranks percent highly geared japan largest companies commented capital base equity ratio percent weakest peer group constituent assets principally goodwill billion exceeds net assets billion external growth having spent billion period company aggressive strategy external growth criticism according employee acquisitions process funds movements tight control small circle executives japanese business daily quoted saying businesses acquired tenure majority loss making investments diverse sectors pet care dvd production little connection core business significant acquisition british medical equipment maker acquired cost billion equivalent times turnover times year paid billion million acquired small venture firms contrast sold profitable unit built years billion approximately times turnover free capital exposure scandal background inquiries british born veteran years previously executive managing director european director noticed strange company acquisition scope instead handled tokyo set resign matter stayed acquisition promoted oversee european businesses appointed main board july matter surfaced attention president drawn german colleagues article alleged undisclosed payments series acquisitions outside core camera business notably sum million apparently paid advisers acquisition said asked report stated lunch meeting august compliance officer revealed ordered staff tell allegations busy dealing matters dismissed article tabloid journalism learning second article referring payments anti social forces japanese criminal organizations notes start remained lone japanese journal accounting irregularities scandal broke western media sources exposed matter began write series letters concerns governance issues relating company acquisitions activities copied later letters company threatened resign receive satisfactory responses acquisition costs goodwill million year acquisitions april promoted post president chief operating officer replacing non japanese chairman appointment ceo months appointment president october elevated chief executive officer stating appointment president board extremely pleased progress leadership role exceeded expectations time appointment time appointment regarded unlikely choice reports rumours got job easy control japanese observers saw speaks japanese chairman new pet article views saying fact company picked ranking foreign executive director virtually significant responsibilities total pool potential candidates including vice president responsible medical instruments set promotion announced press statement calling news conference press release praise mentioned success cutting costs presented new global face according reminded privately appointing president authority hire fire decide board members tier management signalling little puppet new_york_times similarly suggested promotion intended greater sense loyalty board suggested reduce motivation resign business noted announcement english web page talking commented title changed ceo real change company leadership soon realise appointment ceo removal ceo intention promotion deter questions intended effect following appointment persisted pressing issue questionable transactions based belief internal probe necessary answers engaged accounting firm substance suspicions copied final letters senior members organisation japan europe united_states global chairman ceo report highlighted deals success fee fee closing acquisition deal million acquisition paid small firms based based examined transactions resulting million write convened emergency board meeting october arriving late cancelled circulated agenda asked board consider removing post chief executive allowed speak vote motion carried unanimously retained seat board directors circulated staff email day stating departure differences management style ignored established decision making processes created managers organization vastly different expected accelerate decision making speed management removal appointed president ceo week later accused having created gang direct reports supposed immediate subordinate resigned october restore confidence company new management press conference declared clean continued accuse attempting seize power maintained alleged offences included intimidation staff contrast alleged forced departure linked prior acquisitions payments questioned particularly billion deal acquire british medical equipment maker said board toxic contaminated november announced resign board saying decision unrelated official investigations japan usa added resignation necessary context committed ensuring best possible opportunity succeed going forward starting new board directors company initial announcements following departure conference investors october reported research note vice president said company sue releasing internal information news media issued statements october defending acquisitions saying determined great potential medical health care industries press reported companies capital funds combined business value estimated billion billion denied acquisitions unrelated core business description given companies october fit group strategy contradicted later statement initially described engaged environmental solutions business proposing resources recycling reduction focused plants october disclosure unit mainly engaged recycling business medical waste described initially said undertake research development sale skin improving substances fungus known later statement said mainly engaged development health ingredients extracted mushroom basic description maker microwave changed added disease prevention foods objects wish profound apology distress trouble caused recent series media reports fall stock prices triggered recent change president shall provide updates timely manner disclosure network website hope conclude situation quickly possible restore society trust bring customers business partners shareholders employees past acquisitions mentioned media handled appropriate evaluation procedures transactions way improper setting external panel experts examine report acquisitions activity said october value stakes companies impaired billion quarters acquisition cost blaming worsened external environment following recession later admitted business prospect diverged assumption time investment press conference tokyo october president blamed decline company share price saying secret information leaked change corporate value said amounts paid pay considering value gain acquisition future justified purchase small japanese companies strategy find new growth areas reduce reliance business main speaker criticised journalists responses addressing issues internal investigation delegated task selecting members party panel investigate allegations men appointed board june physician visiting professor executive business daily november announced composition party panel headed lawyer supreme_court justice panel include lawyers certified public week november announced dismissed resigned press conference revealed known absolutely scheme informed earlier week said responsible initial investments covered losses company best interests heart news conference apologised highly inappropriate disposal losses said addressed size origin past losses identity executives approved initial cover exact means executed reason took long dispose bad assets ahead awaited board meeting november attended directors announced resignation enjoyed observer status board resigned separately current president said board members resign path revival clear said care company resign near future according executives including pay cuts percent starting december responsibility accounting scandal salary mid january published panel report decided individuals responsible outside standing held responsible billion having head accounting division time losses 1990s held jointly responsible billion overlooking illegal activities report cleared responsibility accounting fraud company concluded scheme concealed report said case hiding illegal acts manipulating experts opinions law enforcement action following dismissal quickly travelled london passed file information requested police protection hinted payments linked forces board japanese newspaper went suggest payments linked reported relevant authorities jurisdictions investigating case fbi given files suspicious transactions opened case mid october federal law enforcement agencies including federal prosecutors manhattan taken interest sec said examining experts speculated investigators assessing officials money illicit acts involved fbi said working disclosed investigated unnamed sources said unit tokyo police dealing organised crime involved investigation reported taken interest case new_york_times published details official investigators memorandum prepared tokyo prosecutor office stated true magnitude losses billion billion said questionable acquisition payments investments advisory fees billion accounted way investigators named net software maker acquired company known largest japan organizations acquisitions advised identified companies links organised crime headquarters visited japanese prosecutors december investigation said home president targeted authorities looking wrongdoing japanese authorities arrested seven individuals connection case february president executive vice president internal arrested associates external responses actions accounts 1990s japanese affiliate big accounting firm collapsed remained took point major issues signalled company reported raised questions firm reports signed clean reports according email sent chairman public replaced expressed disagreement accounting treatment acquisition case signed accounts raised question upper house diet apparently failed stop cover said look role according letter filed companies resigned partly client accounting qualified accounts related party took issue accounting treatment preference shares letter dated april considered circumstances connected hold office brought attention company members creditors firm succeeded expressed reservations accounts uncertainty lack information noted annual reports filed late instead filing month statutory limit accounts filed year company year end late november global chairman said firm complied legal obligations pass information related acquisition removed andrew said pretty evident significant fraud number parties japanese firm forced billion dubious certain acquired assets firm signed financial statements year contained questionable figures members global network apparently expressed grave reservations inquiry questioned signing accounting treatment preferred shares thorough review turn questioned accuracy inquiry findings concluded problems terms guidelines looking said powers investigation limited inability question outgoing firm stock market reactions market billion october immediately sacked end day fallen billion billion analysts concerned corporate governance issues company balance sheet immediately downgraded stock ratings upgraded rating report dated october suspended coverage removed office announced october coverage company halted reported singapore sovereign wealth fund principal shareholders immediately disposed percent stake hint scandal share price days running market fears shares company meet reporting mandatory deadline quarterly results week november announced stake reduced percent percent uncertainty reduced stake percent percent major foreign institutional investors pushed bring ousted chief executive fund manager owning respectively percent percent percent stake believed best candidate lead clean investors demanded company state affairs domestic investors including percent stake demanded prompt action november reported asked company bring case executives court billion billion company failing sue rights group lawyers shareholders rights american law firms announced initiating investigations directors seeking investors purchased november november grounds company share price inflated false accounting directors hidden substantial losses false statements material quotation price shares november fallen percent scandal erupted price continued volatile trading halted price hit upper limit price falls november threat trading shares halted buy orders heavily outnumbered sell orders price rose upper limit trading took place hours buy orders share price rose straight trading sessions reaching point november long time employees shocked angry felt betrayed executives responsible bringing public humiliation company director started web site called demanding clean company love circulated petition targeted employees calling percent market share scandal caused anxiety concern medical profession sees foreign shareholders supported fight replace board failed gain support japanese institutions bank identified company main warned fail disappointed silence acknowledged won vote chief executive major shareholders creditors company decision publicly disclose accounting irregularities running company difficult january failing secure support japanese institutional shareholders said week public scandal taken enormous emotional toll family announced abandon fight control board instead lawyers initiated legal proceedings london seeking unspecified damages dismissal year contract convened extraordinary shareholders meeting april vote proposal new board approve accounts board slate consisted candidates majority completely independent company sought promote executive officer president candidate chairman senior executive largest proposed director company argued candidates qualified advisory firm urged investors vote proposed president citing lack experience corporate manager turnaround situation expressed concern banks interests ahead shareholders recommended shareholders approve accounts grounds undermine legal want pursue future foreign shareholders oppose nominations citing influence banks corporate governance concerns expressed concern investor confidence information provided company decline chair new working team discuss reforms company act strengthen corporate governance questioned corporate system functioning properly company acting proper check management representative director tokyo argued affair pointed dysfunctional board didn know fact board approved payment correct decision acquisition price tag justified sales forecast companies billion billion fiscal year ending march said practically impossible achieve noted combined sales targets companies fiscal year march subsequently reduced percent combined billion million despite suspicions wrongdoing strongly denied suggestions transactions illegal unauthorized said truly corporate uncomfortable questions internal external teams evaluated acquisitions capabilities senior managers board members accepted sky high approved deals business said similarly size losses management responsibility question commentary entitled noted possible believe accused trio directors thought hiding failure predecessors lose face noted accounting scandals uniquely japanese nice piece corporate satire conceal losses exploiting widespread habit paying acquisitions writing advisory fee especially creative criticised weakness governance particularly directors executives executives company head noted answer tough questions manipulation discovered properly questioned view columnist said japan corporate culture denial ignoring problems letting keeps running world values agility innovation transparency demonstrates old japan lack senior executives inadequate disclosure challenge authority absolute corporate boards regardless share performance observed independence directors inadequate said japanese executives moderately paid compared american ones shareholders assume directors smart devoted people working good tough questions rarely asked star said company apology fall share price possible emphasis effect cause remark fall share price reflects common flaw mindset people run listed companies lose sight fact manage businesses share prices press conference early november minister said market question standards corporate governance listed companies journals linked case subject scandal involving diversion funds chairman commentary new_york_times said cause losses rooted plaza accord caused value dollar slide end heavily japanese exports turns effort company balance sheet accurate appears chairman reacted stolen tried clean mess damaging reputation generations executives floyd says party investigation report commissioned need tell happened fraud finally company took job questioned japanese firm signed financial statements year members global network apparently refused clean bills financial heath analyst suggests poor performance japanese low pay shortage certified public fees fifth comparable companies japan compared economist said scandal accounting mindset response japanese single sad incident view rules enforcement japan institutions governance internal corporations external prosecutors change japan change aftermath scandal recognised year bravery sunday_times person year march corporate governance worldwide speaks human rights laws road safety states given millions pounds charities stated received death threats exposing cover reported awarded million damages dismissal book film undertaken stated concerns far learning scandal japan response secretive change areas highlighted scandal wider aftermath scandal announced shed jobs workforce percent manufacturing plants reduce cost base july sentenced years prison years suspended party fraud sentenced years prison years suspended fined million million usd april banks filed civil suit fraud seeking additional billion damages corporate culture exposed scandal seen inspiration record breaking drama details suspect transactions early 1990s main broker went bankrupt accumulating billion investment losses succeeded main broker prompted collapse new mark market accounting rules mandatory time companies obliged disclose losses investments timely manner reported fee million equal percent acquisition price paid middle man usually percent proof released report showed sum million advisory payments paid company june months receiving final fees struck local company registry non payment license fees revealed axes fee included fees paid acted financial advisor law firm acted legal advisers telegraph said seen documents indicating director received million advisory fee acquisition said employees link caused shares fall bank denied involvement claiming based speculation fact started careers colleagues axes according head japan early 1990s long standing relationship banker attested use bermuda based funds valued hundreds millions dollars manage balance sheet japanese accounting having negotiated success fee combination cash stock transferred stock component affiliate registered stock sold million banker dealt worked cited certain transactions spotlight having founded late 1990s persuaded invest billion venture capital fund acquisition information technology group older brother chief financial officer elder group executive officer majority owners introduced small companies executive acquired billion news chef maker microwave according wall_street_journal acquired companies based funds reported informed sources shell companies transaction took place april paid equivalent million funds named special purpose vehicles payments funds flowed noted large number frequent complex corporate changes ownership determined paper trail dynamic dragons network elusive japanese firms invested ties identities constantly shifting associate professor suggested complexity scheme obscure money trail crime reporter said acquired companies shared addresses office space companies different names employees creating web real paper companies tracking money difficult alleged japanese authorities considered involved corporate blood brother said involved acquisition schemes members crime conduct economic activities forces possibility supplied cash organised crime result panel set rejected reports allegations acquisition funds found way organised crime panel chairman said committee confirmed facts investigations far structure commission mid june paid registered axes america sum million basic fees agreed pay completion fee percent acquisition price addition basic fee advisory work relating acquisitions year later agreed rate completion fee axes increased percent mixture cash share options million acquisition announced paid million cash portion agreed completion fee september cash advisors success fee issued million preferred stock advice company according paid million nominally cash settlement regulatory preferred stock allotted september head investor relations identity investments publicly known months later days preferred stock allotted benefit professional advice supplemental agreement signed officers gave power veto important decision business preferred shares million authorised board subsequently negotiated increase value shares finally paid million march according corporate filing value time disclosed million notes executives delayed accounting true cost success fees march time struck months timeline joins surgical salesman later managing director british medical subsidiary late 1980s 1990s makes substantial losses financial trading believed attempt poor trading results japan weak currency losses unlawful widespread practice known scheme buys companies paying far worth balance fees middle man controlling matter directly japan companies europe region deals billion responsible considerable business europe attempts tender resignation strange european acquisitions oversight instead directly controlled tokyo officials acquisitions later public scandal revisited ceo given plausible promoted run entire european business accepts april appointed president chief operating officer july allegations corporate irregularities surface japanese magazine weeks september october hearing allegations email german colleagues unable find satisfactory answers internally writes times board ceo seeking answers rebuffed end september asks chief executive claims role ceo october appointed chief executive officer ceo following board vote previous day september company press release stated april appointment president board extremely pleased progress leadership role exceeded expectations time appointment remains chairman early october lacking satisfactory responses outside practice investigate october dismissed short board meeting leaves concerns publicly november makes related scandal november resign board remainder state resign december unsuccessfully attempts regain previous ceo role lacks sufficient support december reportedly makes plans reduce allies ability intervene means stock arrangements voting power december raided law enforcement february arrests tokyo president executive vice president settle claim damages reported million subject approval june board meeting agreed
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