Olympus scandal 'not good for Japan image

The scandal engulfing Japanese camera maker Olympus over massive advisory payments risks tarnishing the image of corporate Japan, the country's prime minister has said. In an interview with the Financial Times, Prime Minister Yoshihiko Noda called for clarification on the issue and said he was concerned it would be seen as part of a wider problem in the country's business culture. "What worries me is that it will be a problem if people take the events at this one Japanese company and generalise from that to say Japan is a country that (does not follow) the rules of capitalism," he told the paper, adding: "Japanese society is not that kind of society." Noda's comments come as concern grows among policymakers over the impact of the scandal, which has shone a light on the sometimes murky world of dealmaking in the Japanese boardroom. Olympus has been mired in crisis since ousting its British chief executive and president Michael Woodford on October 14, who contends he was fired because he raised questions about payments made in a series of deals between 2006 and 2008. Among four deals queried by Woodford was the $1.92 billion acquisition of British medical-instruments company Gyrus Group in 2008 and the $687 million that Olympus has admitted it paid an adviser on the deal. Woodford was dismissed only six months after being appointed president and two weeks after he was also named chief executive. The 30-year company veteran, Olympus' first non-Japanese president and chief executive, said he was removed after he wrote to chairman Tsuyoshi Kikukawa and urged him to resign over the payments, citing major governance concerns. Kikukawa assumed Woodford's roles but, under increasing pressure as media scrutiny and shareholder anxiety has intensified, resigned on Wednesday. Noda's comments come days after Daio Paper, a tissue paper company listed on the first section of the Tokyo Stock Exchange, revealed the outcome of a probe into claims its former chairman had used more than 10 billion yen ($132 million) of company funds on gambling expeditions. Japanese media reported Mototaka Ikawa, whose grandfather founded the company in 1943, had used the cash in casinos in Las Vegas and Macau, staying in luxury suites at some of the finest hotels. The company's investigations revealed 26 separate loans had been made to Ikawa, with nearly six billion yen still not back in corporate coffers. On Friday Daio Paper said it was looking into a possible criminal complaint against the former chairman.