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SFO drops case against Slaughter and May client Olympus

The UK Serious Fraud Office has dropped its case against Slaughter and May client Olympus two years after charging the Japanese photo company with making false and misleading financial statements.

The SFO offered no evidence against Olympus, which had instructed Slaughters to defend it from the charges, following a Court of Appeal judgment in February ruling that English law does not criminalise the misleading of auditors by the company under audit.

Slaughters disputes and investigations partner Jonathan Cotton led the defence of Olympus and its subsidiary, Gyrus. Supported by litigator Ewan Brown, the team instructed John Kelsey-Fry QC of Cloth Fair Chambers and Lord Ken Macdonald QC of Matrix Chambers as counsel.

The SFO said in a statement: ‘The SFO could not have prosecuted individuals in this case because Japan does not extradite its nationals.’

The decision to enter no evidence in court against Olympus is the latest in a string of embarrassments for the SFO, which in July last year agreed to pay property tycoon Robert Tchenguiz £1.5m in damages over a botched investigation into the collapse of Icelandic banks. Incidentally Slaughter and May had acted for the SFO on that case, with a team lead by Cotton.

The SFO became the first international fraud agency to bring charges against Olympus following one of the biggest financial frauds in Japan’s history was uncovered by British chief executive Michael Woodford.

Sacked just two weeks into his tenure at the Japanese corporation after challenging the Olympus board over payments, Woodford reported Olympus to the SFO over its acquisition of British medical equipment maker Gyrus for £1.1bn in 2008. A Japanese court ordered Olympus to pay £4.5m in fines at the start of 2013, with an SFO investigation launched swiftly after.

Subscribers can read more in the feature article: ‘Hard graft – The pan-Europe bribery crackdown.’