Tokyo Police To Probe How KPMG Missed Financial Irregularities At Olympus

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Professional services firm KPG are set to cabe asked to to explain how they managed to miss years of accounting irregularities at Japanese digital camera Company Olympus, who is currently under investigation by the FBI, Scotland Yard and the Japanese Police for hidden losses, potential fraud, secret Cayman Island accounts and missing millions.

 Japan’s Financial Services Agency will investigate whether Olympus’s auditors knew about the hidden losses or were negligent in their checks, a source with knowledge of the matter told Reuters.

KPMG were auditors and advisors to Olympus until 2009 with several analysts now claiming that the Company should have done more to follow up on red flag accounting irregularities.

Last night Olympus was put on watch for a possible delisting from the Tokyo Stock Exchange after saying on Thursday it would not meet its deadline to submit its latest earnings.

The company, which this week acknowledged wrongdoing for the first time in a scandal involving more than $1bn in acquisition-related payments, had already delayed its earnings release due on Tuesday and faced a mandated deadline of November 14.

Olympus now has until December 14 to produce its earnings report for the six months ended September 30 or face an automatic decision to delist. That would leave investors one month to trade the stock until mid-January.

Local management in Australia are not saying whether the scandal has impacted sales in Australia.

The latest moves ratchets up the pressure on the beleaguered company, whose stock sank by its daily limit of 17 per cent on Thursday on fears of a delisting and on reports in the Japanese press that the police are now investigating the company.

Yomiuri, the Japanese daily newspaper, reported that police had requested documents from Olympus related to the acquisitions, while another newspaper, the Asahi, said the regulatory Financial Services Agency and the Tokyo Stock Exchange were questioning company executives over the affair.

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