Accounting For The Olympus Fraud

Spending my weekend to watch the Olympus: 1.7 Billion Dollar Fraud, which is talking about corporate corruption scandal on how the well-known Japanese optical company hide up losses and kept the secret for more than two decades. This documentary is about the corporation dismissed its president and CEO, Michael Woodford over culture differences in management style. Despite there being minimum coverage, media reported an alleged scandal where board members of the company voted to get rid of Woodford for whistle blowing on $1.7 billion dollar fraud.

Former chairman Tsuyoshi Kikukawa and two other former executives pleaded guilty in September 2012 for covering up losses at Olympus for 13 years starting in the 1990s. The $1.7 billion fraud was revealed by the company’s former president Michael Woodford in 2011. Perhaps, the reason behind for the former executives to cover losses probably is to make a healthy book of account which will resulting the increasing of shares prices, thus lead to the corporate to pay more bonuses. According to Pawel Bilinski, director of the Centre for Financial Analysis and Reporting Research at Cass Business School, claimed that the accounting scandal will be arise is due to the  pressure to meet short-term market expectations in terms of financial and share price performance.

“Bonuses and share options are often linked to hitting particular targets and these pressures may entice executives to engage in creative accounting. Companies can also manage their operations by delaying investments or selling assets to reach certain goals. As long as there are market pressures, we can expect some firms to resort to creative accounting to shore up their performance.”

Michael Woodfrod blew the whistle on a 1.7bn dollar fraud at Olympus and resulting in dismissed from his position after he confronted senior executives about the scandal. It demonstrates that even people at the top of an organisation can find themselves in a "whistle-blower" role. He stands tall as an example of leadership. Would you do the same thing—or would you just shut up and go on?