Japanese lawmakers went on an arrest spree today, nabbing seven people who were allegedly involved in the Olympus accounting coverup.
According to the New York Times, Tsuyoshi Kikukawa, former Olympus chairman and president, was among the men arrested in Tokyo today. Japanese prosecutors told the Times that Kikukawa and two other former Olympus executives, have been detained on suspicion of falsifying financial statements. Two investment bankers and two of their associates were also arrested for alleged involvement in the coverup.
Olympus' trouble started in October when the company--led by Kikukawa--fired president and CEO Michael Woodford. Following his dismissal, Woodford presented documents to the media allegedly showing odd accounting practices, payouts, and other financial dealings designed to coverup the company's losses over more than a decade.
In December, Olympus restated five years of earnings and revealed a $1.1 billion deficit on its balance sheet that investors had never known existed.
Even without today's arrests, Olympus would have some serious work cut out for it. The company recently announced that it will lose about $410 million this year, and its newly discovered financial troubles have sent shareholders fleeing. It's not time to sound the alarms just yet, Olympus says, but the bleeding must be stopped or drastic measures might needed to fix the ailing company.