Japan's Olympus Corp said on Monday that a third-party panel appointed by the company to look into an accounting scandal has, so far, found no evidence that funds from its M&A deals went to organized crime syndicates or that "yakuza" gangsters were involved.
Japanese police, prosecutors and securities agencies in Japan, the United States and Britain are investigating Olympus after the firm admitted this month that it hid losses on securities investments for decades, disguising some as acquisition payments and fees.
The scandal at the once-proud firm has rekindled concerns about lax corporate governance in Japan and revived worries about links between companies and organized crime.
A unit from the Tokyo Metropolitan Police Department's organized crime division has joined the investigation, a source familiar with the matter said on Friday. But the source added it was premature to say if gangsters were involved.
Noting reports by foreign and domestic media on possible organized crime involvement, Olympus said in a statement: "The committee, in its investigation to date, has not found such facts." The panel's final report is due out in early December.
The problems at Olympus first came to light when the company fired its British CEO, Michael Woodford, who then campaigned publicly to get Olympus to come clean about the dubious deals.
Woodford, who will meet authorities in Japan this week, had raised unspecified security concerns about returning to Tokyo, but told Reuters he expects Japanese authorities to ensure his safety while in the country.
Speculation has simmered since the scandal broke that the deals could be linked to "anti-social forces," a euphemism in Japan for organized crime.
Olympus shares jumped 16 percent to close up their daily limit on Monday on persistent speculation that the maker of cameras and endoscopes may avoid delisting despite the scandal.
The affair has raised the prospect of the company being delisted from the Tokyo stock exchange, but speculators who believe Olympus' core medical equipment business still has value have been buying shares on hopes a delisting will not happen.
Instead, they are betting that executives responsible for the scandal will bear the brunt of any punishment.
"It's been over a month since the scandal emerged. There hasn't been good news and the outlook for the company is still unclear, but the stock sometimes rises on buying by those who hope for short-term gains," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"I think fears of delisting are fading after foreign shareholders requested that the stock remain listed. The Tokyo Stock Exchange (TSE) might be sensitive to outside pressure from foreign shareholders," he added.
Olympus has admitted to improperly accounting for part of $1.3 billion in M&A payments going back to 2006, although an independent panel commissioned by the firm to investigate the matter is still trying to get to the bottom of the issue.
A large share of these payments went to obscure Cayman Islands companies that have since closed, making it difficult to trace the money.
Tokyo prosecutors, who Japanese media said had questioned Olympus ex-president Hisashi Mori on a voluntary basis on Friday, are expected to soon question the firm's former president, Tsuyoshi Kikukawa, and internal auditor Hideo Yamada over their roles in the scandal.
The Hong Kong-based Asian Corporate Governance Association, whose members include institutional investors that collectively manage assets of more than $10 trillion, urged the Tokyo exchange on Friday not to delist Olympus.
Institutional investors, however, have been reducing their stakes as the investigation progresses.
The Tokyo exchange has placed Olympus on a watch-list as a possible prelude to delisting. If the firm misses a December 14 deadline for filing its financial statements for the six months to September, it will be automatically delisted.
Even if Olympus meets the deadline, the bourse can still delist the stock depending on the scale of its past financial misstatements or if the firm is found to have done business with organized crime syndicates.
(Additional reporting by Kirstin Ridley in London and Lisa Twaronite; Writing by Linda Sieg; Editing by Mark Bendeich and Matt Driskill)