Olympus slapped with DOJ inquiries, Terumo shareholder lawsuit

Japan's Olympus ($OCPNY)--an endoscope giant also known for its cameras--is facing problems on multiple fronts today.

On the one hand, as Bloomberg reports, the company disclosed that it reported possible violations of U.S. law regarding a doctor-training program in Brazil to the Department of Justice. Separately, Olympus faces DOJ scrutiny over its U.S. marketing operations.

And then there is Japan's Terumo, a medical equipment maker. About a week after announcing a desire to merge with Olympus with a nearly $640 million investment, Terumo announced that it is suing Olympus for damages regarding lost shareholder value concerning Olympus' sizeable accounting scandal made public late last year, Reuters reports. Olympus acknowledged that it used bogus accounting moves to hide enormous investment losses for years. Terumo--which already owns about 2.1% of Olympus--will file a lawsuit under Japan's Financial Instruments and Exchange Act, alleging that Olympus should have disclosed the accounting fraud before signing "a business and capital tie-up" at that time, according to the Reuters story.

Terumo, in an unusual move, made its merger offer public in the face of Olympus' ongoing discussions for similar investments with Sony and Fujifilm.

At issue in the DOJ/Brazil matter could be how Olympus handled doctors' travel, meals or entertainment expenses, Olympus Chairman Yasuyuki Kimoto said in a previous interview cited by Bloomberg. To resolve the apparent "irregularities in our activities," Kimoto told Bloomberg that the company "might agree to some sort of violation of the Foreign Corrupt Practices Act in Brazil." Even with a proposed resolution, Olympus shares plunged 6.8%, according to the Bloomberg story, which notes the DOJ's look into Olympus U.S. marketing operations could be part of a wider look at other medical device companies.

Meanwhile, in a push to recover from its accounting scandal and shore up its finances, Olympus continues with plans to cut 2,700 jobs, mostly in overseas manufacturing.

- read the Bloomberg story
- check out the Reuters piece

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