New Accounting Fraud Case Brings Spotlight Back to Olympus

By Michael Foster, Big4.com Blogger

After external auditors for Olympus were cleared of responsibility in one of the largest fraud scandals in Japanese history, the electronics firm continues to face legal pressure in Japan. Now, the firm has reported separate corrupt practices connected to its Brazil practice to U.S. regulators.

The case involves “irregularities” connected to a doctor training program in the South American country, which the firm reported to the American Department of Justice.

DOJ chairman Yasuyuki Kimoto said that his department “might agree to some sort of violation of the Foreign Corrupt Practices Act in Brazil.”

The violations would be levied against how Olympus accounted for doctors’ expenses related to travel, meals, and entertainment. While the amount of money is small for the multi-billion dollar multinational–Brazil accounts for less than 2.5 per cent of the firm’s sales, according to Bloomberg–the scandal compounds last year’s surprise case involving an accounting fraud scheme that involved top-level executives at the Japanese firm and caused the company’s stock to plummet, in addition to the resignation of key Olympus officials and a restatement of the firm’s earnings.

Both KPMG and Ernst & Young were cleared of responsibility in the Olympus accounting scandal back in January. Japanese regulators looked at the work of both firms and concluded that “the masterminds of this case were hiding the illegal acts by artfully manipulating experts’ opinions,” according to the report clearing the firms of responsibility.