December 14, 2011 / 2:07 AM / 7 years ago

Kikukawa banked on takeover scheme to hide losses: report

(Reuters) - Former Olympus Corp president Tsuyoshi Kikukawa had said in 2008 that taking over three domestic companies would make hidden investment losses “go down by a lot,” people familiar with the cover-up told the Nikkei business daily.

Investigators see Kikukawa’s comment as a possible link between him and others reportedly involved in the cover-up, the daily said.

Olympus has also established a reform committee with former Asahi Kasei Corp president Shiro Hiruta and two attorneys, the newspaper said.

The panel will have the power to influence board decisions and has been formed as part of the company’s plan for strengthening corporate governance, the daily said.

Olympus is alleged to have paid inflated prices for Altis Co, Humalabo Co and News Chef Inc and used the excess money to cover losses on securities investments hidden off its balance sheet, Nikkei said.

In 2003-05, two investment funds set up by Olympus bought stock in the three companies for about 700 million yen ($8.96 million), the daily said.

Subsequently, Olympus bought the funds’ holdings, as well as shares owned by other parties for about 60 billion yen and invested 73 million yen in the three companies, the paper said.

Olympus had initially planned to write off the goodwill from these acquisitions over a period of 10 years or so. But after auditors raised doubts, Olympus booked a 55.7 billion yen write-down in the year ended March 2009 and a further 1.3 billion yen charge in the following fiscal year, the daily reported.

$1 = 78.1100 Japanese yen Reporting by Sunayan Bhattacharjee in Bangalore; Editing by Supriya Kurane

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