Former Olympus president Tsuyoshi Kikukawa may soon spend up to five years of his life in prison for his role in Olympus’ massive financial scandal that rocked corporate Japan back in 2011. Prosecutors allege that Kikukawa orchestrated a coverup of $1.7 billion in company losses, one of the biggest frauds in Japanese history and the country’s equivalent of America’s Enron scandal.
Here’s a bizarre tale of Photoshop and fraud: Back in August of 2012, TechCrunch published a piece accusing a young woman named Shirley Hornstein of tricking Silicon Valley with Photoshopped photographs. By inserting herself into other people’s snapshots with the rich and famous, and by using made-up job titles and citing non-existent connections, Hornstein was able to wiggle into inner circles of the valley’s tech elite.
Check out the two memory cards above. One of them is a counterfeit card while the other is a genuine one. Can you tell which is which? If you can’t, we don’t blame you. Japan-based photography enthusiast Damien Douxchamps couldn’t either until he popped the fake card into his camera and began shooting. The card felt a bit sluggish, so he ran some tests on his computer. Turned out the 60MB/s card was actually slower than his old 45MB/s card.
While it’s not unusual to come across counterfeit memory cards — it’s estimated that 1/3 of “SanDisk”-labeled cards are — what’s a bit concerning is how Douxchamps purchased his: he ordered the cards off Amazon — cards that were “fulfilled by Amazon.”
The Olympus scandal that rocked the business world last year was one of the biggest cases of financial fraud ever seen in corporate Japan. The Economist has published an interesting piece on why Japanese capitalism might not learn from the mistake:
At one point Olympus’s shares lost about 80% of their value, yet its institutional shareholders uttered not “one word” of criticism against the company’s board […] For many, the Olympus scandal highlighted the need for more checks and balances. Mr Woodford (pictured), whose angry memoir is to be published this month, likens Japanese boardrooms to “Alice in Wonderland”. They need more assertive shareholders and regulators, and more independent directors, he reckons.
Keidanren, Japan’s big-business lobby, appears to have drawn the opposite conclusion. Olympus had three external directors, a high number for Japan […] The problem, in Keidanren’s view, was too much external scrutiny.
After the United States was rocked by its own series of financial scandals in the early 2000s, the government increased regulation by passing the controversial Sarbanes–Oxley Act of 2002.
After the Olympus scandal, Japan Inc wants less scrutiny [The Economist]
Image credit: Photo illustration based on The Donatello Boardroom by ShellVacationsHospitality and Search. by Jeffrey Beall
Every social network has its share of spammers, but one type of fake account seems to be working particularly well on Instagram: airline accounts offering free flights. Roger Cheng of CNET writes,
The accounts have been pretty effective at garnering followers. Delta’s fake account already has 21,000 followers after it promised a free trip for the first 20,000 people who followed and shared the account. Likewise, the JetBlue account has 20,000 followers. The American Airlines profile has 5,963 followers after it promised a free round-trip flight to the first 5,000 followers. The accounts themselves are fairly bare aside from a few pictures and the offer itself. But there are no rules listed for the promotion, or means of contacting the airlines to collect on the free flight.
Airlines have begun disavowing the accounts, and Instagram has already removed a number of them (including a couple of the ones mentioned by Cheng). It seems like Instagram needs to launch a “verified user” system like the one Twitter implemented a few years ago.
Beware: Fake airline Instagram accounts promise free flights [CNET]
It looks like the Olympus financial scandal is finally coming to an end. It has been nearly a year since it came to light that there were massive cases of fraud and coverups going on in the upper echelons of Olympus management. What started as a CEO’s firing quickly spiraled into one of the biggest scandals to ever hit corporate Japan — the country’s equivalent of the US’ Enron fiasco.
In the end, a number of the company’s top executives were arrested after submitting their resignations. The trials for those former bigwigs are only now starting to get underway. Three of them, including former chairman Tsuyoshi Kikukawa (pictured above), pleaded guilty today to charges of falsifying accounts and covering up more than $1 billion in losses. The camera company itself also filed a guilty plea.
Former Olympus CEO Michael Woodford has gotten his wish: the entire Olympus board resigned this week in the aftermath of the company’s epic financial scandal and stock tumble. They did, however, pick a new president and chairman before handing in their letters of resignation. Hiroyuki Sasa from the company’s medical equipment marketing division was picked for president, while banker Yasuyuki Kimoto has been chosen as chairman. The changes are expected to be finalized at an April 20th shareholders meeting. Sasa has promised to both win back public trust and to prevent another scandal from every occurring.
(via New York Times via Engadget)
Image credit: Olympus Film Camera by Matt Cunnelly
An update to the financial scandal over at Olympus, which has quieted down quite a bit in recent days: former Chairman and President Tsuyoshi Kikukawa has been arrested with six other people (including three former executives) for “suspected violation of Japan’s Financial Instruments and Exchange Act”. As you might remember, Kikukawa replaced ex-CEO Michael Woodford after Woodford’s abrupt dismissal and stated that the move was because Woodford — who’s from the UK — didn’t fit into the company’s culture. Less than two weeks later, Kikukawa himself stepped down as the company found itself in an international financial fraud case.
Olympus Ex-Chairman Kikukawa Arrested With Six Others After Payment Fraud [Bloomberg]
Update: Apparently Michael Woodford has being approached by Hollywood to discuss making a movie about his whistle blowing and the ensuing scandal.
Black-suited investigators raided and searched 20 different sites today over Olympus’ ongoing accounting scandal. Among the sites searched were the company’s headquarters, the office buildings of subsidiary companies, and the homes of executives involved in the fraud. The company is also looking to raise cash by issuing $1.3 billion in new shares. Sony, Fujifilm, Panasonic, Samsung, and Hoya have been named as companies who are potentially interested in snapping up a piece of Olympus.
Olympus offices, homes raided in accounting scandal [Reuters]
Olympus has been in the photography game since introducing its first camera back in 1936, but its future as a major player is at risk now that the company is caught up in one of the largest corporate scandals Japan has ever seen. According to Reuters, the company is reviewing its business structure, and there is speculation that it may be forced to sell off assets to survive.
While the company may be best known for its cameras, its actually built around a $2.6 billion endoscope business, of which it virtually holds a worldwide monopoly. Its camera business, on the other hand, is operating at a loss. According to investment bankers, other camera manufacturers are following the Olympus saga closely, but will likely hold off on making a move until things clear up more.
Olympus to review business structure amid scandal (via 43 Rumors)
Image credit: Olympus OM-30 SLR camera (OM-F) by csaveanu