Olympus’ Troubles Continue: Company in Talks to End Kickback Probe

Japan’s Olympus Corp is in talks with the U.S. Department of Justice to determine whether its U.S. medical business violated fraud and anti-kickback laws, the company admitted.

The camera and medical equipment maker entered the discussions to end the investigation, which began in November 2011, during the last quarter of 2014, executives said.

The company did not disclose the size of any potential settlement, but said its consolidated operating results may be “materially adversely affected.”

Olympus bigwigs said the investigation relates to potential issues under the Anti-Kickback Statute and the False Claims Act, which outlaws over-billing and defrauding the government.

Dozens of healthcare and medical device companies have been targeted in recent years for overcharging government health programs, including Medicare.

The investigation appears to be separate from the massive accounting fraud allegations exposed in 2011 by former CEO Michael Woodford. He was fired after questioning accounting transactions that were later found to have been used to hide losses.

Olympus eventually admitted it used improper accounting to conceal investment losses, and restated five years of financial results.

A former Singapore banker pleaded guilty in federal court in New York in 2013 to helping Olympus orchestrate the $1.7 billion fraud. The U.S. Attorney’s office in Manhattan has been investigating the banker’s former employer, Commerzbank AG, for possible anti-money laundering lapses in connection with the fraud.

Company executives also said in 2012 that Olympus had uncovered possible violations of a U.S. foreign bribery law in its Brazil business, and reported the allegations to the U.S. Department of Justice.
A spokeswoman for the Justice Department would neither confirm nor deny the existence of any investigation.