Olympus Corp has filed 19 lawsuits against current and former members of its board, including current president Shuichi Takayama and former CEO Tsuyoshi Kikukawa, in an attempt to make up for more than 86 billion yen ($1.1 billion) in damages caused by one of Japan’s worst accounting scandals in its history.
Kikukawa, who presided over the cover-up of more than $1.5 billion in investment losses that began in the early 1990s, has been sued for the highest amount of damages at 3.61 billion yen ($46.8 million), while other executives including former executive vice president Hisashi Mori and former company auditor Hideo Yamada haven been sued for 2.81 billion yen and 3.01 billion yen respectively.
Current Olympus president Shuichi Takayama was also sued for 500 million yen as the company sought to target a culture of “yes men” who failed in their duty to stop a “rotten” core of executives from duping auditors, regulators and investors.
All of the six current directors being sued will step down after an extraordinary shareholder meeting is held in March or April, said the company in a statement cited by the Wall Street Journal on Tuesday.
In response to the news, Olympus’ share price, which has fallen by as much as 80 percent since news of the scandal broke, managed to surge by more than 28 percent on the Tokyo Stock Exchange during morning trading on Tuesday.
According to a Reuters report, the Tokyo Stock Exchange is also unlikely to delist the company from its bourse, though the company would probably be given a “security on alert” designation, which would effectively allow it to remain traded provided it showed steady improvement in its internal controls.
"As Olympus shares are likely to be remain listed, investors are now eyeing the company to be in the target of M&A. In this kind of mood, shares are being bought back heavily today," Okazaki added.
According to Mitsuo Shimizu, an equity analyst at Cosmo Securities Co, the company’s decision to sue its current and former executives could help Olympus in its attempt to remain listed.
“By suing, the company is making it clear who was responsible for hiding losses,” said Shimizu in an interview with Bloomberg BusinessWeek. “It may help convince the exchange to have Olympus remain listed.”