Olympus got swept up in an accounting scandal earlier this year when former British CEO Michael Woodford revealed that the company had been hiding $1.7 million.Nobody spoke up, and Woodford was fired.
Today former President Tsuyoshi Kikukawa pleaded guilty to falsifying financial statements and faces up to 10 years in jail.
The scandal has shaken the Japanese business world, but it won’t change the country’s entrenched corporate culture.
Why? Because Japan’s leading businesses and its government are incredibly close and resistant to change. They’re so cozy that the combination of the two is known as “Japan Inc.”
Just like at Olympus, issues are overlooked in the name of stability.
Possible government interference in private equity firm KKR’s attempted takeover of struggling chipmaker Renesas is just the latest example.
Rather than admit that Renesas, created from loss-making divisions of other companies, is struggling and could use real restructuring, Japan may join with local blue chip companies to block KKR and essentially bail the company out.
The KKR deal is an opportunity to begin to break up a club that supports a problematic corporate culture. Halting the deal would only delay changes that have to happen, discourage other foreign investors, and show that the lesson of Olympus hasn’t sunk in.
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