Japanese camera manufacturer Olympus has found itself embroiled in a controversy with some mysterious Cayman Islands-based companies.
The Wall Street Journal says that Olympus paid much of the $1 billion it spent on three Japanese start-ups to mysterious businesses in the Cayman Islands. The WSJ saw an independent 2009 panel report by auditors for Olympus' board. At the same time, the biggest shareholders in the start-ups were reported as "European funds".
The start-ups were not exactly raking it in. None had over $12 million in revenue according to their most recent records. They were a recycling company called Altis, a dietary supplement company called Humalabo and a microwave-safe food container manufacturer called News Chef.
Two of those were owned by a company called Neo Strategic Venture. That particular outfit was started in the Caymans in 2000 and dissolved by 2008.
A company executive said he hasn't a clue about the companies, claiming the only information is the name of them along with their bank account details. After Olympus gave them the money, it's reported that three companies were either dissolved or shut down.
Later, reports the WSJ, Olympus allegedly wrote off most of the value of the start-ups.
Bizarre, then, the amount of money which was reportedly funneled through.
British CEO Michael Woodford, who was sacked this month, was trying to get to the bottom of the matter.
Woodford had sent Olympus' chairman at the time a letter saying the company had made "calamitous errors".Olympus' reasoning for Woodford's departure, the Wall Street Journal reports, is rather different. It was his "managerial style" the board had problems with.
Olympus' handling of the case has done it no favours. The Telegraph reports that stock market analysts have 'deserted' the company, Goldman Sachs being the first to pull the plug.
Share prices have accurately emulated a yo-yo. But new chairman Shuichi Takayama, replacing the resigned Tsuyoshi Kikukawa, refuses to take the blame.
Instead, it's Woodford at fault for exposing the scandal in the first place, according to Takayama.
"If this secret information hadn't been leaked there would have been no change in our corporate value," he correctly declared, sort of missing the point.