Olympus – Attestation Update

Another Olympus fiasco, with $640M penalty. No individual prosecutions.

Leave a Comment / Fraud, Other stuff / Jim Ulvog

The U.S. unit of Olympus admitted it made payments to doctors and hospitals as an inducement to buy Olympus equipment. The company agreed yesterday to pay $646M and enter into two deferred prosecution agreements in return for settling two criminal charges.

I don’t usually follow Foreign Corrupt Practices Act settlements, but this one caught my eye. I’ve not previously been aware of the Anti-Kickback Statute, which prohibits kickbacks from vendors to health care providers in the federal medical reimbursement marketplace. Olympus admits to violating both sets of laws.

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Another Olympus fiasco, with $640M penalty. No individual prosecutions.Read More »

Another Olympus fiasco, with $640M penalty. No individual prosecutions. Read More »

Commerzbank joins the billion-dollar-fine club

Leave a Comment / Other stuff / Jim Ulvog

The newest member of the elite club of banks that write billion dollar checks to settle up with the regulators is Commerzbank AG, the second largest bank in Germany.

After reading several reports on the billion and a half settlement, it seems to me that their corporate culture, at the core personality level, is to be not overly concerned about complying with US law.

The two primary issues are aiding and abetting the billion-dollar Olympus fraud and processing a quarter billion dollars of wire transfers for Iranian and Syrian customers banned from the US banking system.

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Commerzbank joins the billion-dollar-fine clubRead More »

Commerzbank joins the billion-dollar-fine club Read More »

Olympus sued by 6 banks over accounting fraud; largest in a series of suits

Olympus back in news – will face fraud charges in England

Leave a Comment / Accounting, Fraud / Jim Ulvog

The British Serious Fraud Office (SFO) will prosecute Olympus and its sub in England, Gyrus, for fraud.

The Olympus press release on this page says the SFO will bring criminal charges against the company. The statement says: …

Olympus back in news – will face fraud charges in EnglandRead More »

Olympus back in news – will face fraud charges in England Read More »

Suspended sentences for senior Olympus officials in $1.7B fraud

1 Comment / Audits, Fraud / Jim Ulvog

Suspended sentences all around.

The Bloomberg report, Ex-Olympus Chairman Gets Suspended Sentence for Fraud, says the three senior staff charged a year ago received suspended sentences after their guilty pleas.

The individuals and their sentences: …

Suspended sentences for senior Olympus officials in $1.7B fraudRead More »

Suspended sentences for senior Olympus officials in $1.7B fraud Read More »

My guest post at re: The Auditors is at the top of the list for her favorites of 2012

2 Comments / Accounting, Audits, Fraud / Jim Ulvog

Wow! My guest post on the Olympus fraud, How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud, (link below) is at the top of Francine McKenna’s list of favorite posts for 2012.

Her comment: …

My guest post at re: The Auditors is at the top of the list for her favorites of 2012Read More »

My guest post at re: The Auditors is at the top of the list for her favorites of 2012 Read More »

Olympus scandal – the CEO’s bio is released

Leave a Comment / Audits, Fraud / Jim Ulvog

“Exposure: Inside the Olympus Scandal: How I Went from CEO to Whistleblower“, from the former Olympus CEO Michael Woodford is out this week.

The first review I’ve seen is at The Economist: Paying a price for doing what’s right.

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Olympus scandal – the CEO’s bio is releasedRead More »

Olympus scandal – the CEO’s bio is released Read More »

Former president of Olympus and two others plead guilty

1 Comment / Fraud / Jim Ulvog

Associated Press reports the ex-president pled guilty to securities law violations. Two other senior staff pled guilty as well.

The AP report can be found in the Wall Street Journal article, Ex-President of Japan’s Olympus Pleads Guilty.

The Reuters report can be found in the New York Times article, Guilty Pleas in Trial Over Olympus Scandal.

The three individuals pleading guilty:

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Former president of Olympus and two others plead guiltyRead More »

Former president of Olympus and two others plead guilty Read More »

Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anyway

Leave a Comment / Audits, Fraud / Jim Ulvog

Reuters reports that the Japanese regulator, Financial Service Agency, criticized KPMG and Ernst & Young for their audits of Olympus. Then they partially retracted their criticism.

The Reuters article, Japan regulator raps KPMG, Ernst & Young for Olympus work, says the two firms

…lacked operational management systems to ensure proper auditing that would spot and flag dubious transactions.

The regulators didn’t find any “intentional acts of grave negligence” according to the article.

I guess that means they should have had the foresight to develop some unidentified management system that would have identified the fraud.

The two firms have to develop a business improvement plan and report on their progress every six months.

An official then essentially retracted the criticism. Check out this comment:

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Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anywayRead More »

Japanese regulators slightly criticize Olympus auditors then say the corrective action plan they require wouldn’t have found the fraud anyway Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.

2 Comments / Accounting, Fraud / Jim Ulvog

Here are some more journal entries that describe how Olympus moved money in their accounting fiasco.

‘Michael’ asked a great question at re: The Auditors about my guest post on the Olympus accounting fraud.

The full article with my reply can be found at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud.

Here is his question, with slight editing:

If they actually bought the tiny companies for way more than they were worth, this would not fix their problem, they would just have the original losses plus the new losses on the companies that they overpaid for.

The only way this works is if they claimed to pay $1,000,000 for the companies but in reality only paid $100,000. Is this the case?

For example if they paid $1,000,000 for the subsidiary you would.

Dr. investment 100,000

Dr. goodwill 900,000

cr. cash $1,000,000

There would be no cash in the subsidiary, just goodwill. So how could the subsidiary purchase the financial assets that were seriously underwater? The subsidiary would have to actually pay the inflated fair value for this to work?

A very good question, Michael.

I’ll go into more detail on how the money was moved and my read on what summarized entries would be. I posted my reply at re: The Auditors. Francine McKenna has allowed me to reprint my response. Here is my explanation:

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How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco. Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.

Leave a Comment / Audits, Fraud / Jim Ulvog

The Wall Street Journal reports Olympus and Ex-CEO Woodford Settle Lawsuit with expected payment to Michael Woodford for approximately $15 million.

The article, behind a pay wall, indicates the settlement is moving towards approval by the Olympus board.

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Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus. Read More »

Range of U.S., Chinese, and Japanese regulators’ responses to fraud in today’s news – Olympus and Longtop

Leave a Comment / Accounting, Audits, Fraud / Jim Ulvog

Sometimes you get fun results when you look at two news articles side by side. Let’s look at the responses of securities regulators in the US, China, and Japan. Hat tip to Going Concern for highlighting the articles.

Olympus fine

Japan’s securities market regulator proposed a fine of $2.5M against Olympus for conducting a $1.7 billion financial fraud that was spread over 13 years – Japan market watchdog recommends $2.5 million fine for Olympus.

Let’s put that proposed fine into perspective. All amounts will be in US dollars.

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Range of U.S., Chinese, and Japanese regulators’ responses to fraud in today’s news – Olympus and LongtopRead More »

Range of U.S., Chinese, and Japanese regulators’ responses to fraud in today’s news – Olympus and Longtop Read More »

Panel clears E&Y over Olympus auditing – far less to the report than meets the eye

Leave a Comment / Accounting, Audits, Fraud / Jim Ulvog

The Wall Street Journal headline says Panel Clears Ernst & Young in Olympus Probe.

Cool update on the investigation, huh? An official panel looks at E&Y’s role and concludes their auditing was okay. They have no legal liability.

I was quite interested in the article. Then found out the details.

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Panel clears E&Y over Olympus auditing – far less to the report than meets the eyeRead More »

Panel clears E&Y over Olympus auditing – far less to the report than meets the eye Read More »

Prosecutors file official charges in Olympus fiasco

1 Comment / Accounting, Fraud / Jim Ulvog

On Wednesday, prosecutors in Japan filed official charges against six individuals for their role in the accounting scandal at Olympus. They also filed charges against Olympus.

The six charged include the ex-chairman, former executive vice president, former corporate auditor and three outside bankers.

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Prosecutors file official charges in Olympus fiascoRead More »

Prosecutors file official charges in Olympus fiasco Read More »