Olympus ex-chairman gets suspended sentence Tsuyoshi Kikukawa arrives at the Tokyo District Court on Wednesday Tsuyoshi Kikukawa, the disgraced former chairman of Olympus, and two other executives received suspended sentences on Wednesday for their role in orchestrating a vast accounting fraud at the Japanese optical equipment maker. Mr Kikukawa, Hideo Yamada and Hisashi Mori had admitted lying to regulators and shareholders for over a decade in an effort to hide more than Y100bn ($1.3bn) of losses on speculative investments made by the company. Suspended sentences are the norm in cases of false financial reporting in Japan, particularly if the perpetrators are not seen to have profited personally from their crimes. Mr Kikukawa claimed during his trial that he engaged in the long-running scheme in order to protect the company. IN Industrial Goods "The loss-hiding was initiated by previous presidents, so it cannot be denied that they inherited a rotten legacy," the Tokyo district court said of the defendants, though it added that they bore "heavy responsibility" for the fraud. The Olympus affair was one of Japan's largest accounting scandals, and its exposure in late 2011 threatened to ruin the nearly century-old company, which has since sold a minority stake in itself to Sony. The role of a British executive, Michael Woodford, in exposing the wrongdoing drew worldwide attention to the case. Mr Woodford said he did not want to stir further controversy by criticising the court's decision not to send Mr Kikukawa to prison. Instead, he urged broader reform of corporate governance systems that he believes allowed Olympus's problems to fester. "The lessons of this sad tale should be obvious to anyone who is paying attention, and I do so hope that people in Japan are paying attention," he said. Mr Kikukawa ran Olympus, which makes digital cameras and surgical endoscopes, for a decade as president and chairman. Unusually in Japan, where most leaders of manufacturing companies are engineers or salesmen, he spent his career in the company's finance division, where even before his elevation to the top job he helped to oversee the effort to dig Olympus out of its speculative hole. That hole was first dug during Japan's late-1980s bubble, when like many companies Olympus diverted profits into the booming market for stocks and real estate. Instead of coming clean about losses when the bubble burst in the early 1990s, it tried to make back its money through undisclosed new investments, but only succeeded in burrowing itself deeper. A committee established by the company after the scandal estimated that Olympus had lost a little over Y100bn by the start of the 2000s, not including some Y30bn in fees to outside financial advisers who aided in the cover-up. Four advisers have been charged in the affair. Mr Kikukawa attempted a final squaring of Olympus's losses in the mid-2000s, using a series of acquisitions as cover to funnel money from the company to the off-balance-sheet entities where its losses were hidden. It was those deals that Mr Woodford questioned after he became Olympus's president in 2011, and which triggered Mr Kikukawa's downfall. When Mr Woodford was sacked in October of that year, after less than six months on the job, he revealed his suspicions about the deals to the Financial Times. None of the executives who led Olympus before Mr Kikukawa has been charged. Japanese financial reporting laws were tightened in 2000, and experts say the accounting dodges that the company used to disguise its problems, such as shifting bad assets to allied companies or shell entities, may not have been strictly illegal before then. Mr Kikukawa and Mr Yamada received a sentence of three years, suspended for five years, while Mr Mori received a two and a half year sentence, suspended for four years. None will serve time in prison unless they commit new crimes during the suspension period.