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HK THOTS 2 : FINANCIAL SCANDAL @ OLYMPUS, THE CAMERA MANUFACTURER : SATYAM’S COUSIN IN CRIME?

When it comes to cameras nowadays, the brands that immediately come to mind would be Canon, Sony, Nikon, Lumix, Konica and of course Olympus.

When it comes to established brands, Olympus was one that immediately comes to mind.

Olympus was way ahead of it’s rivals during the earlier years that it was synonymous to the Ferraris of the camera world.

Even today, Olympus is a leading manufacturer of endoscopy products.

How things change if the value and quality of a company is not maintained at it’s highest level.

I am of course referring to the financial scandal at Olympus arising from the whistle blowing of its previous Managing Director, Michael Woodforde.

As more details are revealed by it’s current President, it is beginning to sound like the same kind of rubbish that occurred at India’s Satyam …… where US$1.0 billion of cash reported in the accounts of Satyam did not exist at all!

We are now told that unrealized losses in Olympus’ earlier investments are not reported (as required under accounting rules) but are ‘re-classified’ as costs of subsequent investments made by Olympus.

This means that these subsequent investments are artificially inflated by these ‘costs’ that should have been reported as investment losses!

This has the effect of artificially boosting the profits of Olympus!

The immediate question of those in the know would be ‘what the hell were the auditors doing during the past 20 years’?

I understand KPMG were the auditors during that time. Ernst &Young are the current auditors.

It really makes one wonder if the financial statements of major companies the world over show true and fair views of their financial position.

Doubts as to their reliability would arise if one is to believe the famous novelist and playwright, Balzac, who said that behind every great fortune lay a crime!

At a more practical level, someone mentioned that  it appears safer to steal large sums of money with a pen than small sums with a gun!

If so, God help us all!


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