Olympus Scandal

...

II Point of View

Michael Woodford – Former CEO and President of Olympus Corporation.

III. Problems

Hiding losses in japan was so common they called it tobashi scheme. Before 1999 audit hiding losses became illegal in japan thus making Olympus choke on their scheme forcing them to hide it and control its financial statements. Olympus have to take a loss of 95 Billion Yen because of Japans embracing a new accounting system.

- What are the changes Olympus must do in order to avoid this fraud again?

- How come any of its employees did not question the decision of its leader?

- Why is the whistleblowing policy ineffective?

- How poor Olympus’s corporate governance?

- How did the Japanese culture affect help Olympus in its scandal?

IV. Objective

- Analyze the reasons how did the scheme went perfectly.

- To encourage its employees to question its leader.

- To improve its whistleblowing policy.

- To strengthen its corporate governance in which is the reason why the fraud occurred perfectly.

- To identify the culture of japan when it comes to the relationship of its leaders and followers.

V. Alternative Course of Action

- Have an independent internal and external accounting committee to avoid any manipulation.

- Change the corporate culture of Olympus to one that is focused on compliance with policy, not just following order.

- The Whistleblower system should be reformed and must guarantee the safety of its employee when reporting a problem. The officer should be an independent lawyer.

- An overhaul of the top management of the corporation and its committees and choosing its right officer.

- Form an independent investigative committee thus making sure that all of its employee or directors should follow the policy.

VI. Recommendation

I recommend the company to overhaul the top management and pick its right officer since it is very hard to change the culture and practices of a country. Back then Olympus have corrupt top management even the whistleblowing officer is included in the scandal thus suppressing its employees to question the top management about the decision that are being made. By overhauling and putting the right officer in the top management with the help of the independence of its committees, manipulations would be hard to occur thus avoiding the accounting fraud to happen again and strengthening its corporate governance to rebuild Olympus corporate structure that has been shattered by the scandal