Remarks by Shozaburo Jimi, Minister of State for Financial Services

December 16, 2011

Press Conference

As I have repeatedly stated, it is highly regrettable from the viewpoint of market fairness and transparency, that the Olympus Corporation has been engaged in deferring the posting of losses from securities and other investments for many years.

It is troubling to see investors, both domestic and abroad, question the fairness and transparency of the Japanese financial markets, and thus I have requested the Olympus Corporation to get to the bottom of the affair and promptly disclose accurate information - I believe it is not appropriate to judge that all the listed companies and financial markets in Japan are not well-disciplined, based on this incident regarding the Olympus Corporation.

Following the request, the Olympus Corporation submitted corrected securities reports for the last five years on December 14, based on the findings in the report by the Third Party Committee published on December 7.

1. As I have mentioned previously, in cases where there are doubts of violations of the Financial Instruments and Exchange Act (FIEA), the Securities and Exchanges Surveillance Commission (SESC) will undertake necessary actions including rigorous investigation and surveillance. I believe this principle is being applied to the Olympus case as well, and actions taken as necessary.

2. Also, in cases where there are doubts of violations of the Certified Public Accountants Act, the Financial Services Agency of Japan (FSA) will make necessary inquiries and take appropriate measures in accordance with the Act. This principle will be applied to this case as necessary, too.

3. In order to ensure market fairness and transparency, the FSA has been making ceaseless efforts to upgrade its financial market system through successive amendments to the FIEA and listing rules, among others. As the truth of the affair unfolds, the FSA should check to see whether there is room for improvement in the regulations and their implementation. The FSA should work in close cooperation with relevant parties and take appropriate preventive measures against recurrence of such dishonest practices. Possible areas to be checked include the following.

  • (1) On corporate governance, we should consider measures to achieve truly effective corporate governance for individual companies, while avoiding excessive adherence to formalities. In this regard, we expect progress of the ongoing discussion at the Legislative Council of the Ministry of Justice. Also, listing rules and disclosure regulations need to be reviewed so as to clarify the role and the degree of independence of independent directors currently required by exchanges.

  • (2) With regard to auditing, the FSA should analyze why external auditors could not effectively fulfill their function in relation to this incident. Based on the outcome of the analysis, the FSA, in close cooperation with the Japanese Institute of Certified Public Accountants and other relevant bodies, needs to take actions such as improving auditing procedures so as to deal with accounting fraud in the future.

  • (3) It has been pointed out that one of the key factors underlying the Olympus case was the involvement of collaborators outside the company such as money brokers. The FSA will consider measures to correct and prevent such behaviors by money brokers, while closely watching new findings on this affair.

  • (4) To prevent recurrence of dishonest practices such as the Olympus case, the FSA, in close cooperation with the SESC and stock exchanges in particular, needs to strive to enhance its information collection and analysis, and to strengthen inspection and monitoring functions to ensure accuracy of securities reports and other financial disclosure documents. In addition, the FSA and stock exchanges together will consider measures to strengthen disclosure requirements on Mergers and Acquisitions.

In order for Japanese companies to achieve sound and strong growth, it is essential that we restore investors' confidence in the Japanese financial markets. As the Minister of State for Financial Services, I am committed to doing everything in my power to move it forward.

(End)

Site Map

top of page