Olympus Corp. executives have given contradictory explanations about a British company acquired in 2008, with the latest comments suggesting large gains given to a financial advisory company had long been planned all along.
Olympus executives previously said that after Olympus bought Gyrus Group Ltd., it decided not to list the stock of the medical equipment company. Due to the change in strategy, Olympus then decided to provide preferred Gyrus stock to the financial advisory company as part of the payment for its role in the acquisition, they said.
However, former Olympus Executive Vice President Hisashi Mori and Hideo Yamada, a standing corporate auditor, recently told a third-party investigative committee that the decision to give preferred Gyrus stock to the financial advisory company was made beforehand, sources said.
That indicates that even before the acquisition, Olympus executives had no intention of listing Gyrus stock.
The sources said prosecutors were questioning Mori and Yamada about the matter.
Olympus gave huge amounts of money to the financial advisory company to cover losses from past stock transactions that had been concealed for many years.
According to sources with the third-party committee, Olympus acquired Gyrus in February 2008 for about 215 billion yen ($2.8 billion at current exchange rates).
The financial advisory company and a related investment fund established in the Cayman Islands were paid about 30 percent of the acquisition price for serving as an intermediary in the acquisition.
The amount paid was meant to cover unrealized losses of stock transactions made by Olympus.
Under the initial contract with the financial advisory company, payment for services provided was to have been m ade in cash and a right to obtain new shares issued by Gyrus.
But in September 2008, after the acquisition, the agreement was revised on the grounds there was no longer any possibility of listing Gyrus stock as initially planned. The investment fund was given preferred shares in Gyrus for 18.4 billion yen under a highly favorable condition of receiving dividends amounting to 85 percent of profits.
In March 2010, Olympus bought back those shares for 57.5 billion yen after the investment fund made the request. That was about three times the value of the issued shares.
Both Mori and Yamada were involved in the Gyrus acquisition and, according to sources, have told the third-party committee that a decision had been made beforehand to set aside the preferred shares to the financial advisory company.
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