Posted by Joel CHUA Yong Sheng , Year 3 undergrad at the School of Business, Singapore Management University
NEW YORK – A former Singapore banker pleaded guilty in federal court in New York on Wednesday to helping Japan’s Olympus Corp orchestrate a US$1.7 billion (S$2.1b) accounting fraud.
Prosecutors said that Chan Ming Fon helped secretly liquidate hundreds of millions of dollars of Olympus investments over six years and then lied to auditors by certifying that the investments still existed.
In court on Wednesday, Chan, 50, described through an interpreter how he provided false information to an auditor about an Olympus-backed investment portfolio he managed. He said he led the auditor to believe the portfolio was safe, when the assets had actually been liquidated and transferred to another entity to repay an undisclosed loan.
“I know that I participated in the previously described transactions, and I acknowledge that my conduct was wrong,” said Chan, who pleaded guilty to one count of conspiracy to commit wire fraud. Before working for Olympus, Chan had been a banker at Commerzbank AG.
Chan was the first executive from outside Japan to be indicted over the accounting scandal at Olympus, a 93-year-old maker of cameras and medical devices.
The accounting fraud was exposed in 2011 by former Chief Executive Michael Woodford, who was fired after questioning accounting transactions 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.
Chan was arrested in Los Angeles in December.
Chan, who is cooperating in an ongoing investigation, will be released on a $3 million bond secured with $1.5 million in cash and the California home of his sister, where he will live. US District Judge Laura Taylor Swain scheduled Chan to be sentenced on January 10. He faces a maximum of five years in prison. The case is US v. Chan, US District Court, Southern District of New York, No. 13-cr-00052.