Singapore's sovereign wealth fund said on Saturday it has sold most of its holdings of Olympus Corp on concerns of wrongdoing, the first major shareholder to show that it has lost all confidence in the scandal-hit Japanese medical device and camera maker.
Japanese authorities are investigating Olympus after the company admitted this week that it hid investment losses for decades using funds from M&A payments. Media reports on Saturday said police and regulators were joining forces in a rare collaborative effort to examine the cover-up.
GIC, which is the acronym for Government of Singapore Investment Corp, was the 10th biggest shareholder in Olympus, with 2.17 percent as of the end of March, according to Olympus' latest annual report. "GIC disposed of almost all of its investments on first suspicion of possible wrongdoing in Olympus," the Singapore fund said in a statement. GIC added it currently has only an insignificant holding under a portfolio managed by an external fund manager. It said the majority of its investment was made in the midst of the global financial crisis.
The Tokyo District Public Prosecutors Office's special investigations unit, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission will team up to probe Olympus' cover-up of investment losses, Japanese media reported on Saturday.
Nikkei has said the concealment could have exceeded 130 billion yen ($1.68 billion) at its peak, and said the company's creditors were likely to press for a change in lending terms. Lenders will confront Olympus next week to demand an explanation on its accounting, a banking source said on Friday, though he denied reports they would seek more security over their loans.
Tokyo's stock exchange has told Olympus it will be delisted if it fails to report earnings by December 14, which could effectively leave the 92-year-old company cut off from equity capital markets at a time when its shares have already lost more than three-quarters of their market value since the scandal erupted on October 14. Delisting would take effect on January 15 in principle if Olympus does not meet the reporting deadline. Even if Olympus meets the deadline, the bourse could still decide to delist the company, depending on the scale of its past misreporting.
Nikkei reported separately, quoting sources, that a majority of the 100-plus businesses acquired during former Olympus President Tsuyoshi Kikukawa's tenure are losing money. Kikukawa stepped down on October 26. Most of the acquired firms, in areas such as pet care services, DVD production and others with little apparent connection to Olympus' core operations, were unlisted and therefore not required to make their financial details public, Nikkei said.