Japanese prosecutors sought a five-year jail term Tuesday for the former head of Olympus for his involvement in a $1.7 billion loss cover-up scandal that hammered Japan’s corporate governance image.
They also asked the Tokyo District Court to slap a whopping one-billion-yen ($10.6-million) fine against the disgraced camera and medical equipment maker whose top executives hid losses stemming from bad investments for years.
“The huge amount involved is unmatched in the past. It eroded domestic and international confidence in the (Japanese) market,” prosecutors told the court, according to Jiji Press news agency.
The defendants will have the chance to speak at a court hearing next month.
“We have laid out our argument and are waiting for the verdict,” an Olympus spokesman said Tuesday without elaborating.
Former company president Tsuyoshi Kikukawa is facing the heaviest jail term of five years with prosecutors requesting shorter sentences for former Olympus vice president Hisashi Mori and auditor Hideo Yamada, who were also key figures in the scandal that was exposed by a whistleblower.
In September, the trio pleaded guilty to charges they falsified financial results between 2007 and 2011, with Kikukawa telling the court he would take “full responsibility” for the crime.
Olympus has also admitted to the scheme which saw complex accounting methods used to hide losses tied to bad investments made in the 1990s.
The case was brought to light in 2011 by Michael Woodford, the firm’s first foreign leader, who initially questioned executives about past acquisitions and outsized consultant fees.
The Briton was abruptly demoted shortly before exposing the scheme, as Kikukawa took the helm again, and Olympus initially denied allegations.
The company later admitted its wrongdoing and sacked executives involved in the scandal, including Kikukawa, as Japanese, British and US authorities launched probes into the firm.
Olympus subsequently agreed to a reported 10.0 million pound ($15 million) payout to Woodford to settle a wrongful dismissal lawsuit.
The company has already been fined $2.4 million for its wrongdoing by Japan’s Financial Services Agency.