Brits Drop Fraud Case against Olympus

The British Serious Fraud Office has dropped a two-year case against Olympus Corp. and a British medical equipment subsidiary, which it had accused of making misleading statements to auditors.

Nancy Crotti

The case sprang from a high-profile accounting scandal at Olympus, which broke in 2011 after British CEO Michael Woodward was fired for questioning the Japanese company's previous acquisitions. They proved part of a plan to conceal about $1.7 billion in investment losses, according to a report in the Wall Street Journal.

Three former Olympus executives received suspended sentences in Japan in 2013, but that country does not extradite nationals, so no individuals could be charged in England.

An English appeals court judge ruled last year that a company could not be held criminally responsible for misleading its own auditors. The fraud office announced Tuesday that it had no further evidence to offer against Olympus and its British subsidiary, Gyrus Group Ltd. The companies make cameras and endoscopes.

"The Company and GGL cooperated fully with the Serious Fraud Office's investigation but did not accept that the offences with which they were charged could, as a matter of law, be made out against them," Olympus said in a press release from its Tokyo office.

Olympus' legal troubles continue in the United States. The Department of Justice is investigating the company's duodenoscopes in light of superbug outbreaks at hospitals in Seattle, Los Angeles and outside Chicago. The company also faces civil lawsuits, which claim the Japanese electronics giant redesigned its Olympus TJF-Q180V duodenoscope last year, but provided hospitals and doctors with cleaning instructions for an older model.

At least seven patients were infected and two died from carbapenem-resistant Enterobacteriaceae (CRE) at UCLA's Ronald Reagan Medical Center. Hospital officials think 179 patients may have been exposed to CRE from a contaminated, reprocessed Olympus duodenoscope.

In the May 2015 financial filing that revealed the U.S. government investigation, Olympus noted that it had recorded a nearly 59 billion yen (about $472 million) provision related to an anti-kickback investigation that the DOJ started in 2011. Olympus said at the time that it was in discussions with U.S. officials to resolve the matter, which involved sales activities of Olympus' Olympus Corp. of the Americas subsidiary.