Olympus, a Japanese company that deals in the lucrative medical equipment business and also in digital cameras, is today in the middle of a legal and media firestorm.

Three years ago in 2008, Olympus  acquired Gyrus group, a British company that specializes in medical equipment for $2 Billion U.S. At the time it was the largest takeover of a foreign company that a Japanese firm had ever undertaken. However the controversy lies in the fact that out of that $2 Billion, an estimated $687 million in shares and cash was paid out to two bankers for “takeover advice.”

Enter Hajime Sagawa and Akio Nakagawe, two previously relatively unheard of bankers on Wall-Street. The pair ran a company named Axes, which was the recipient of the $687 million advice fee. This sum is 30 times the average nominal fee paid out to firms and individuals in exchange for consultations (36% of the takeover, as opposed to the usual 2%).

Courtesy of the Sacremento News

These events were brought to light by the ex-CEO of Olympus, Michael Woodford, who was recently fired when he attempted to bring these massive consultation fees to regulatory services’ attention.  I can only speculate as to what the motives behind this vast payout could be; deeper ties between the two bankers and Olympus, to kickbacks to Olympus executives.

I will be following this story as it progress quite attentively, as the case is now under federal investigation.


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