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Japan PM’s Fears Over Olympus Scandal

Michiyo Nakamoto and Mure Dickie in Tokyo

Yoshihiko Noda, Japan’s prime minister, has called for clarification about a string of controversial payments made by camera maker Olympus, saying that the furore threatens to tarnish Japan’s reputation as a rules-based market economy.

Yoshihiko Noda elected as Japan prime minister
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The comments by Mr Noda, made in an interview with the Financial Times, highlight growing concern among Japanese policymakers and business leaders that the scandal will be seen as symptomatic of wider problems of governance and regulation. “What worries me is that it will be a problem if people take the events at this one Japanese company and generalise from that to say Japan is a country that [does not follow] the rules of capitalism,” Mr Noda said. “Japanese society is not that kind of society.”

The premier’s move to speak out reflects widespread unease about the impact the scandal involving Olympus could have on Japan’s reputation.

It is highly unusual for a Japanese prime minister to comment on events involving a private company but Olympus has come under intense international scrutiny since it dismissed its British president and chief executive Michael Woodford this month.

The 30-year Olympus veteran claims that he was fired after confronting executives over more than $1 billion he believes that “disappeared” into the hands of financial advisers and investment funds in past acquisitions.

Mr Noda acknowledged that it might be considered inappropriate for a prime minister to comment on a private company but said that Olympus had indicated that it would set up a third-party committee to look into the payments. “I want them to fully clarify the facts and act on them appropriately,” he said.

Olympus has rejected criticism of its handling of the acquisitions, saying the payments were legal and appropriate. However, the resignation of Tsuyoshi Kikukawa, Olympus chairman and then-president, on Wednesday has not ended pressure over what critics say appear to have been huge overpayments for advice and assets.

“I would not like the rest of the world to lump Olympus together with Japanese companies in general,” said the head of one major Japanese asset management company. But he said Japan had improved corporate governance standards greatly over the past decade. “I would not like the rest of the world to lump Olympus together with Japanese companies in general.”

Atsushi Saito, chief executive of the Tokyo Stock Exchange, said that the TSE was pushing Olympus to disclose more information on its past acquisitions.

He warned that Olympus could face a shareholder lawsuit if it intentionally chose people who favoured the company line to join the third-party investigation committee.

“There are laws in place to protect shareholders,” Mr Saito told a news conference.

- Additional reporting by Lindsay Whipp and Jonathan Soble