* Chan Ming Fon to appear in U.S. federal court on Friday
* U.S. authorities say he was paid $10 million for role in
fraud
* $1.7 bln fraud started in 1990s, Olympus admits improper
accounting
* Three former executives have pleaded guilty to fraud
By Erin Geiger Smith
Dec 20 (Reuters) – A former Singapore banker was arrested in
Los Angeles on Thursday and accused of helping “liquidate”
hundreds of millions of dollars in the Olympus Corp
accounting scandal, one of the biggest corporate frauds in
Japan’s history.
Chan Ming Fon, who resides in Singapore and is a citizen of
Taiwan, is the latest former executive to become ensnared in the
$1.7 billion accounting cover-up at the camera and medical
equipment maker.
Three former Olympus executives pleaded guilty over charges
related to the fraud in September, and the company has also
admitted it used improper accounting to conceal massive
investment losses under a scheme that began in the
1990s.
Court papers said Chan was paid $10 million by Olympus or
entities controlled by Olympus for his role in the decade-long
fraud.
He is charged with one count of conspiracy to commit wire
fraud, which carries a maximum penalty of 20 years.
Olympus declined to comment. Chan’s family in Singapore
could not be reached for comment.
Chan, 50, was interviewed by the Federal Bureau of
Investigations (FBI) this week, and was being held in custody on
Thursday night ahead of scheduled appearance on Friday in a
federal court in Los Angeles, U.S. authorities said.
“The defendant had a direct role in the secret liquidation
of hundreds of millions of dollars of Olympus investments. He
then waged a six-year campaign to conceal that misdeed by lying,
certifying to auditors that the investments still existed years
after liquidation,” said FBI Assistant Director-in-Charge George
Venizelos.
The accounting fraud at 93-year-old Olympus was exposed in
October 2011 by chief executive Michael Woodford, who was fired
after he questioned dubious deals that were later found to have
been used to hide losses.
The three former executives who pleaded guilty had been
identified by an investigative panel, commissioned by Olympus,
as the main suspects in the fraud seeking to delay the reckoning
from risky investments made in the late-1980s bubble economy.
Former chairman Tsuyoshi Kikukawa, former executive vice
president Hisashi Mori and former auditor Hideo Yamada pleaded
guilty to charges that they inflated the company’s net worth in
financial statements for five fiscal years to March 2011. They
are awaiting sentencing.
Revelations of the huge accounting fraud have revived calls
for more outside scrutiny of its boardrooms but have failed to
trigger sweeping corporate governance reforms similar to those
introduced a decade ago in the wake of U.S. scandals such as at
Enron.
TRAIL OF INTRIGUE
In 2005, Chan established an entity in the Cayman Islands
called SG Bond Plus Fund, the complaint said.
Until about 2010, Chan submitted false and misleading
documents to Olympus’ outside auditor regarding hundreds of
millions of dollars’ worth of assets purportedly maintained by
Chan at SG Bond for the benefit of Olympus, it said.
Chan had actually transferred the assets to a British Virgin
Island-based entity controlled by Olympus, the complaint said.
The case is filed in federal court in New York.
An investigative panel report, commissioned by Olympus last
year, mentioned a banker referred only by his last name Chan as
an outside collaborator who first met Olympus executives Yamada
and Mori in 1998.
At the time “Chan” was working at Commerzbank in Singapore,
but resigned in 2000. After leaving Societe Generale in 2004,
the report said Chan formed his own company where he continued
to work for former Olympus executives.
