Investigation Report
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TRANSLATION FOR REFERENCE PURPOSSE ONLY Investigation Report January 7, 2012 Olympus Corporation Director Liability Investigation Committee TRANSLATION FOR REFERENCE PURPOSSE ONLY January 7, 2012 To the Board of Auditors of Olympus Corporation Olympus Corporation Director Liability Investigation Committee Chairman Commissioner Kazuo Tezuka [seal:] Kazuo Tezuka Commissioner Hideki Matsui [seal:] Attorney Hideki Matsui Commissioner Satoru Mitsumori [seal:] Attorney Satoru Mitsumori TRANSLATION FOR REFERENCE PURPOSSE ONLY List of Abbreviations and Terms Abbreviation/Term Official name and explanation EXEMPTED LIMITED PARTNERSHIP AGREEMENT between Olympus/ GCI Cayman that sets forth such items as the transfer of 30 billion yen (said amount is Agreement Dated March 1, 2000 revised accordingly) to QP at the request of Olympus for the purpose of short-term money management The 2009 Committee’s Report A report dated May 17, 2009 by 3 outside experts that includes attorneys Twenty First Century Global Fixed Income Fund Ltd. A Pass-Through Fund of Cayman registry that was involved in the Singapore Route. The Director is Mori. Money was transferred to 21C in the form of Hillmore and Easterside having made loans, etc., and money was transferred in the amounts of 20 billion yen to 21C Proper and 19.3 billion yen to CFC respectively in the form of 21C subscribing for bonds issued by Proper and CFC. Note that out of the 20 billion yen that was transferred to Proper, 8 billion yen was transferred to CFC by means of Proper subscribing for bonds issued by CFC. Axam Investments Ltd. A Cayman company formed on November 19, 2007 by Sagawa in order to receive the money that was to be paid by Olympus accompanying the Gyrus acquisition as part of AXAM the Loss Separation Settlement Scheme. The stock options and the Warrant Purchase Rights granted to Axes from Olympus as part of the FA fee was assigned from AXES to AXAM for 24 million dollars. Axes America LLC A company that Sagawa formed in the state of Delaware that executed the FA Agreement with Olympus at the time of the Gyrus acquisition. The Warrant Purchase Rights and stock options were granted as part of the FA fee; and, the purchase price for AXES said Warrant Purchase Rights as well as the purchase price for the Preferred Shares that (Axes America) were issued in place of the stock options that were used in the settlement of the separated losses. Note that AXES had been abbreviated as “AXAM” in the FA Agreement and the Revised FA Agreement, but it is a different company from “AXAM Investments Ltd.” that is listed as “AXAM” in this Report. Creative Dragon SPC A Pass-Through Fund that was mainly involved in the Loss Separation Settlement CD Scheme. It was used at the time the money for the shares in the Three Domestic Companies (13.7 billion yen) and for the purchase of Gyrus’ Preferred Shares (620 million dollars), etc., that was paid to DD and GT was made to flow back to Olympus. Central Forest Corp. One of the Receiver Funds. A Fund of Cayman registry that Sagawa and Nakagawa set CFC up by March 1998 after Yamada and Mori requested that Sagawa and Nakagawa establish Receiver Funds for “Tobashi” that would be excluded from Olympus’ consolidated accounting. Dynamic Dragon II SPC A Pass-Through Fund of Cayman registry. Using as its resources the 13.7 billion yen DD total that was paid to GT/ DD as the money for the shares in the Three Domestic Companies, Easterside made a CD investment, and subsequently, it went through GPAI, TEAO, LGT-GMI, and flowed back to Olympus. Easterside Investments Limited A special-purpose company in the British Virgin Islands that was involved in the Singapore Route. It received an investment (approximately 30 billion yen) from the Easterside Singapore Branch of SG Bank using a deposit in the name of Olympus at said bank as collateral, and injected capital into the Receiver Funds (QP), etc., through 21C and Proper. Olympus was borrowing bonds from SG Bond that said Fund had invested in, and was encashing them. FA Financial Advisor FA Agreement The Financial Advisor Agreement dated June 5, 2006 between Olympus and AXES Global Company Co., Ltd. A company formed by Yokoo and others, and the substantive administrator of GCI Cayman. GC TRANSLATION FOR REFERENCE PURPOSSE ONLY Global Company Investment Co., Ltd. GCI A company formed by Yokoo and others, and the substantive administrator of GCI Cayman. GCI Cayman Limited A company formed by Yokoo and others. It is the General Partner to Neo and GCNVV, GCI Cayman and in addition to having received fund management fees (management fees) from Neo and GCNVV, it was also paid contingent fees and termination fees at the time GCNVV was terminated. G.C. New Vision Ventures, L.P. A Fund established on March 1, 2000 that also had the purpose of being used in the scheme to provide money to the Receiver Funds. Multiple Funds have invested in GCNVV GCNVV, but all such money was paid by Olympus. On the one hand, GCNVV used a portion of the money to invest in venture companies, and while the amounts varied depending on the time period, it provided approximately 30 billion yen to the Receiver Funds (QP). PS Global Investable Markets-O One of the investment products called a class fund that was set up and being managed by the LGT Bank Group. Through an account that was opened at LGT Bank, Olympus and its wholly-owned subsidiary, OAM, purchased investment equity in the LGT-GIM GIM (LGT-GIM) Fund in January 2000 in order to inject into the Receiver Funds the capital for the Receiver Funds to acquire by transfer at book value the financial assets Olympus held that carried unrealized losses (the purchase amounts were 15 billion yen on the part of Olympus and 20.3 billion yen on the part of OAM). GPA Investments Ltd. A Pass-Through Fund that was mainly involved in the Loss Separation Settlement GPAI Scheme. It was used at the time the money for the shares in the Three Domestic Companies (13.7 billion yen) and the purchase of Gyrus’ Preferred Shares (620 million dollars), etc., that were paid to DD and GT was made to flow back to Olympus. Global Target SPC A Pass-Through Fund of Cayman registry. Using as its resources the 13.7 billion yen GT total that was paid to CD/ DD as the money for the shares in the Three Domestic Companies, Easterside made a CD investment, and subsequently, it went through GPAI, TEAO, LGT-GMI, and flowed back to Olympus. It is believed to be a Fund that involves Walch, who assisted Yamada, Mori and others in Gurdon Overseas S.A raising capital through the LGT Bank route. In September 2008, 1.259 billion yen was paid from Neo. Genesis Venture Capital Series 1 Ltd. A Pass-Through Fund of Cayman registry that was involved in the Singapore Route. Money was transferred to GV in the form of Proper and CFC subscribing for bonds issued by GV in the amount of 4 billion yen on the part of Proper and 5.1 billion yen on GV the part of CFC. At the time GCNVV was established in March 2000, GV became its Limited Partner along with Olympus, and it contributed 5 billion yen of cash to GCNVV. This cash, however, is assumed to have been expended from the 9.1 billion yen that was transferred from Proper and CFC. Hillmore East A special-purpose company that was involved in the Singapore Route. It received an Hillmore investment (15–45.6 billion yen) from the Singapore Branch of Commerzbank using a deposit in the name of Olympus at said bank as collateral, and injected capital into the Receiver Funds (QP), etc., through 21C and Proper. New Investments Ltd. Class Fund IT Ventures One of the investment products called a class fund that was set up and being managed ITV by the LGT Bank Group. After Olympus floated into ITV the excess money that was raised for the purpose of executing the Loss Separation Scheme, it had ITV invest in ITX, the Three Domestic Companies, and multiple venture companies in Japan. ITX ITX Corporation LGT Bank in Liechtenstein AG The bank of the Principality of Liechtenstein that was used in the Europe Route. It LGT Bank loaned money (approximately 30 billion yen in total) to Receiver Funds (CFC) using Japanese government bonds, etc., that Olympus had deposited at said bank as collateral. It is believed to be a Fund that involves Walch, who assisted Yamada, Mori and others in Nayland Overseas S.A raising capital through the LGT Bank route. 950 million yen was paid from Teao. TRANSLATION FOR REFERENCE PURPOSSE ONLY Neo Strategic Venture, L.P. A Pass-Through Fund (Limited Partnership) of Cayman registry that was involved in the Europe Route. Established on March 15, 2000, its General Partner is GCI Cayman, and NEO its Limited Partner is TEAO. Out of the capital that was injected from GIM by way of TEAO (30 billion yen), it injected 19.4 billion yen into Receiver Funds (QP). Outside of that, several cash transfers were mutually conducted between NEO and QP. NEWS CHEF NEWS CHEF Inc. OAM Olympus Asset Management Ltd. OCA Olympus Corporation of Americas OFH Olympus Finance Hong Kong Ltd. OFUK Olympus Finance UK Ltd. OUKA Olympus UK Acquisition Limited Perella Perella Weinburg Partners UK LLP. A Pass-Through Fund that was involved in the Singapore Route. Established by Yamada and Mori. 20 billion yen was transferred from 21C to Proper in the form of 21C subscribing for bonds, out of which 8 billion yen was transferred from Proper to Proper Receiver Funds (CFC).