Japanese prosecutors today arrested three former Olympus executives, including the company's ex-chairman, over their alleged roles in orchestrating a cover-up of massive losses at the camera and medical equipment maker. Former chair Tsuyoshi Kikukawa, along with executives Hideo Yamada and Hisashi Mori, were arrested on charges of violating securities and financial laws, prosecutors said. Four consultants at other companies linked to Olympus were also arrested. Olympus as a corporation could face charges, too.
The scandal surfaced late last year when Olympus President Michael Woodford, who was later fired for blowing the whistle, raised questions about huge payments for financial advice and acquisitions of companies unrelated to the company's mainstay businesses. Olympus at first denied any wrongdoing, but later acknowledged it hid $1.5 billion in losses dating back to the 1990s. Kyodo today reports that Kikukawa, Yamada, and Mori have told prosecutors that they were involved in the cover-up. Kikukawa resigned from all posts at Olympus last year. The company is suing him and 18 other former and current executives for damages. (Read more Olympus stories.)