Olympus CSR Report 2012

Special Edition

Rebuilding Trust: The First 100 Days

Commitment to ComplianceOlympus Corporation
At Olympus Corporation, we sincerely regret that past financial accounting misconduct has caused ourcustomers and society enormous difficulties and undermined stakeholder confidence. With this in mind,
and in keeping with our company’s “Social IN” philosophy, the new management team hereby declares
our commitment as follows:

To regain stakeholder trust and to enhance corporate value, Olympus’
management is committed to complying with all laws and regulations andrespecting social norms at all times.
In the effort to achieve sustainable growth, the management team reaffirms the importance of laws, regulations and social norms and will work to foster a corporate culture where each employee, as a member of the
Olympus Group, will consider what is right and act in accordance with our company’s guiding principles.
We will thoroughly investigate any violations to this commitment, past or present, taking corrective actions
and implementing preventive measures as necessary.
By transforming our organization, we aim to create new value for society, to improve communication withall stakeholders, and to increase the transparency of our decision making.
We reaffirm our basic mission of creating value for society through innovative technology, quality products
and unparalleled service, and we pledge that all employees of the Olympus Group will make a concerted
effort to help people worldwide lead healthier and more fulfilling lives.

Hiroyuki Sasa
President and Representative Director, Olympus Corporation

Editorial Policy
We would like to offer our humble apologies for the enormous
concern and inconvenience experienced by our stakeholders
as a result of prior financial irregularities. At Olympus, we takesuch matters very seriously, and we are working to restore
the trust of our stakeholders and society through the timely
disclosure of information, primarily through news releases
and updates on our website.

After the publication of this report, we will continue to apprise you of our efforts through updates on our website andthe release of our next Corporate Social Responsibility (CSR)
Report in December 2012.
We welcome your comments regarding this report as wellas any concerns you continue to have about our company.
Thank you for giving us the opportunity to earn back yourtrust as we move forward.

On April 20, 2012, Olympus established a new management
team at a special general meeting of shareholders. We havecompiled this report in our efforts toward total transparency.
The report provides stakeholders with a consolidated recordof the events leading up to the discovery of the irregularities. It
also outlines the initiatives we have put in place during the first
100 days of new management. We are committed to preventing similar events in the future and rebuilding the company
and your trust.

[Contact]
E-mail: csr_info@ot.olympus.co.jp[Scope of Report]
Olympus Corporation, consolidated subsidiaries, affiliated companies[Period]
October 2011–July 2012
Note: Some of the information contained in this report refers to dates
outside of this time period.
NoticeThis report was based on information available at the date of publication. For the most current information, please refer to the latest
disclosure documents available on our company website.

Contents
Corporate Profile/Financial Highlights ……… 2

Submit opinions andinquiries

Messages from Senior Management ………… 3
Information Concerning
the Financial Misconduct ……………………… 5

Reports concerning
the CSR policies
and activities of the
Olympus Group

Reinforcement of Corporate Governance
Structure and Improvement ofInternal Control Systems ……………………… 8
Fostering a Compliance-Oriented
Corporate Culture ……………………………… 9
Third-Party Opinions …………………………… 13

1

Olympus CSR Report 2012

Special Edition

WEB

Olympus CSR Activity Website
http://www.olympus-global.com/en/corc/csr/

Corporate Profile/Financial Highlights
Profile of the Olympus Group
Please visit the investor relations website for
updates and detailed information.

Consolidated net sales, operating income, net income■ Consolidated net sales ■ Operating income ■ Net income(100 millions yen)

14,00011,2899,808

10,000WEB

8,831

Investor Relations
http://www.olympus-global.com/en/corc/ir/summary/

Olympus Corporation
Established
Head office

Activities
CapitalOctober 12, 1919
Shinjuku Monolith, 3-1 Nishi-Shinjuku
2-chome, Shinjuku-ku,
Tokyo 163-0914, Japan
Manufacture and sale of precisionequipment¥48,332 million (as of March 31, 2012)

8,471

8,485

6,000
1,129

2,000
0
-2,000

2007

612

427

546

-506
2008

2009

Segment contributions toconsolidated net sales in fiscal 2011
Others 5.8%

MedicalSystems
41.2%

Information andCommunication
27.0%

384
39

525

2010

355
-490
2011 (fiscal year)

Consolidated net sales
by market in fiscal 2011
Others 2.5%

Japan
46.9%

Asia &
Oceania
12.7%

Business Fields
Medical Systems
Manufacture and sale of medical endoscopes, surgicalendoscopes, endotherapy devices, etc.

Life Science & Industrial
Manufacture and sale of biological microscopes, industrial microscopes, industrial endoscopes, non-destructive
testing equipment, etc.

Imaging Systems
Manufacture and sale of digital cameras and IC recorders

Information and Communication

Imaging
Systems
15.1%

EuropeNorth
America
19.5%

18.4%

Consolidated number of employees
40,00035,77236,50335,37634,391

34,112

2007

2008

2009

2010

2011 (fiscal year)

30,000

Sale of mobile telephones, etc.

20,000

Other Activities

10,000Development of systems, manufacture and sale ofbiomaterials, etc.

Life Science& Industrial
10.9%

0

Medium-Term Vision Toward Realization of a New Olympus
Olympus Corporation has adopted a new five-year, medium-term vision, starting in fiscal year 2012. The new
vision aims to return the company to the basic founding values of Olympus. Our goal is to make a fresh startand regain the trust of our stakeholders, build our company anew, and enhance corporate value.

Corporate Management Policies (Overview)
Under the new management structure, we have designatedthree corporate management policies: “Back to Basics,” “OneOlympus,” and “Profitable Growth.” We aim to achieve growthwith profitability by adopting “Back to Basics” as the principle
behind all our actions and strategies. We will make a concerted effort to share values and goals among our employees
around the world to build “One Olympus.”

WEB

Basic Strategies (Overview)
Using the new management policies as a foundation, we will
implement the following strategies to rebuild Olympus andcreate new corporate value:
1. Rebuild our business portfolio and optimize the allocationof our management resources
2. Review our cost structures
3. Restore our financial health
4. Restructure our governance

Information about our medium-term vision toward the realization of a new Olympus can be found on the following website:
http://www.olympus-global.com/en/news/2012a/nr120608corpe.html

Olympus CSR Report 2012

Special Edition2

Messages from Senior Management
Building a new, transparent future
I have a deep respect and admiration for Olympus. We
are the only company in the world that has research,development and manufacturing capabilities to provide
increasingly effective endoscopy solutions for assisting
health care professionals with the diagnosis and treatment of their patients. We also have established a global competitive edge in our other core business areas.
I became Chairman of Olympus in April 2012. Since
then, I have visited various Olympus facilities to learn
about the Company’s activities and have talked withas many employees as possible. I learned that theCompany’s original mission, “To contribute to the betterment of society through the development of quality
products and solutions,” is firmly rooted, as a universal value, across the employee base. In this company,
where employees take pride in their jobs and appreciate the art of designing and manufacturing products,“monozukuri,” I am thoroughly convinced that our business growth and renewal is fully achievable.
To begin our reform efforts, a new management team,including myself, has taken action to regain shareholder confidence. We have completely replaced the oldmanagement structure with a totally new organizationcommitted to moving Olympus forward. As describedin this report, we are also implementing reforms in theareas of governance and compliance. With the establishment of sincere and highly transparent corporate management, I believe we will continue to realize
healthy growth and the maximization of our corporate
value. It may take some time but I believe that Olympus
is well on its way to regaining the full confidence andcomplete trust of our current and potential customers,
suppliers and shareholders.
On behalf of the entire Olympus Group, I pledge that
we will continue to move forward, guided by a renewed
commitment to ethical conduct, until our actions haveconvinced you, our stakeholders, that Olympus has
moved beyond our recent issues and is once again
worthy of your complete confidence and trust.

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Olympus CSR Report 2012

Special Edition

Yasuyuki Kimoto
ChairmanRestoring our standards through leadership and fairness
I believe that our shareholders, customers, suppliers,
employees and their families, and the general public,
feel a sense of betrayal as a result of the recent misconduct. I have directly experienced the anger that thissituation has engendered.
A company cannot undertake quality business activities unless it has the understanding, confidence andsupport of its stakeholders and society. Olympus shattered this relationship through its own shortcomings
and became the focus of public mistrust as a consequence. I regret the enormous disruption and concern
experienced by so many people.
In the past, Olympus has shown weaknesses in theareas of corporate governance and compliance. Vital
information has been monopolized by only a few executives and divisions, and our decision-making processes have been gravely deficient in transparency andgood faith. Obviously, this situation led to a lack of accountability. Why did this situation occur? I attribute theerrors of judgment made by the previous management
team to a flawed perception of society, which led inturn to the distortion of the standards on which management decision-making was based.

Second, Olympus will continue to supply products andservices that contribute to human health and happiness. The mission that has guided our activities under
our “Social IN” management philosophy is to offer newvalue through business while becoming involved in society and sharing values. We will renew our awarenessof this fundamental mission, and we will do everythingin our power to provide products and services that help
people enjoy healthy and happy lives.
Olympus is ready to begin its journey toward restoring your trust. If you believe that there is more that we
can or should do, please tell us. I promise that we will
listen to your input and use it to help us in our rebuilding efforts.
We look forward to your support and thank you foryour patience.

I believe that we must take another look at the criteria
and judgment standards that we need to apply when
making decisions, and ensure that those standards areshared by everyone in our organization, from the new
management team to front-line workers. As the leaderof approximately 40,000 employees comprising the
Olympus Group, I will make the following two pledges
to ensure that our management decision making is in
keeping with the values of society.
First, we will build a corporate culture in which all decisions are based on fairness, transparency and goodfaith. We will rebuild our governance and compliancestructures, correct the distortions in our values and restore the founding principles of our company by applying the amended Olympus Group Corporate Conduct
Charter and Olympus Group Code of Conduct, together with the Compliance Commitment declared by the
management team.

Hiroyuki Sasa
President and Representative Director

Olympus CSR Report 2012

Special Edition

4

Information Concerning the Financial Misconduct
Delays in Reporting of Past Losses, Loss Elimination Schemes
After the collapse of the bubble economy, Olympus incurred massive unrealized losses
as a result of its investments in financial assets. By the second half of the 1990s, thoselosses had reached almost ¥100 billion. To avoid the discovery of these unrealized losses
following the introduction of market value accounting for financial assets, Olympus transferred the financial assets on which it had incurred unrealized losses up to the year ended
March 2000 to multiple funds (receiver funds) at their book value. This had the effect ofremoving these assets from the consolidated balance sheet and delaying their inclusionin the accounts.
Starting in 2007, a small group of Olympus executives sought to dispose of the losses bysupplying a total of ¥135 billion to eliminate the receiver funds, using methods that included (1) the acquisition of three domestic subsidiaries, Altis, News Chef and Humalabo, fromthe receiver funds at inflated prices, (2) the payment of advisory fees when Gyrus Group
PLC was acquired, (3) the treatment of “goodwill” in connection with Gyrus and the threedomestic subsidiaries in the accounts as assets.

Discovery of Financial Misconduct and Appointment of
the Third Party Committee
On October 14, 2011, Mr. Michael Woodford, who had raised concerns about the lack oftransparency in past transactions at a meeting of the Board of Directors, was dismissed fromhis posts as Representative Director, President and CEO. However, media reports questioned the appropriateness of the acquisition of the three domestic subsidiaries and the subsequent treatment of the impairment of those assets. Questions were also asked about othermatters, including payments to advisors in relation to the Gyrus acquisition. Stakeholders
demanded that Olympus explain the situation. This led to the formation by Olympus of a
Third Party Committee on November 1, 2011, consisting of attorneys and certified public
accountants with no conflicts of interest with Olympus. The Third Party Committee wascommissioned by the company to investigate whether past acquisitions had involved inappropriate actions, and whether there had been unsound management decisions. During thisinvestigative process, it was discovered that accounting for past losses had been delayed,
and that the acquisitions in question had been used to eliminate the aforementioned unrealized losses. The Third Party Committee was then asked to investigate the circumstances
surrounding the delays in accounting for individual losses.

[Market value accounting]With this accounting system, assets andliabilities are assessed at market values atthe end of each accounting period, andthese values are reflected in the financial
statements. In Japan, financial instruments
were traditionally valued at acquisition
prices (book values), but market value accounting has been applied since financial
years starting in or after April 2000 (in orafter April 2001 for certain types of financial assets).

[Outline of loss separation]O l y m p u s u s e d th e re c e i ve r f u n d s topurchase financial instruments and otherassets affected by losses at book value,
using money supplied in various ways.
For example, Olympus arranged for banks
to provide the receiver funds with loans
secured by the company’s deposits andother assets, or money was supplied to
the receiver funds from business investment funds established by the company.

[Outline of loss elimination]
A total of ¥135 billion was paid to the receiver funds. This amount consisted of approximately ¥72 billion for the acquisitionof the three domestic subsidiaries, andapproximately ¥63 billion for fees relating
to the acquisition of Gyrus.

[Members of the Third Party Committee]
Chairperson: Tatsuo Kainaka
Attorney at Law, former judge of theSupreme Court, former Superintendent
Public Prosecutor of the Tokyo High Public
Prosecutor’s OfficeMember: Hideki Nakagome
Attorney at Law, former Chief Justice of
the Nagoya High Court

Member: Tomoyoshi Arita
Attorney at Law, former Superintendent
Public Prosecutor of the Fukuoka High
Public Prosecutor’s OfficeMember: Osamu Sudo
Attorney at Law

Member: Eiji Katayama
Attorney at Law

Member: Katsuaki Takiguchi
Certified Public Accountant< Chronology of the Schemes >Fiscal
2000

2008–
2010

November
2011

5

Losses on investment in financial assets expand following thecollapse of the bubble economy, reaching almost ¥100 billion by
the second half of the 1990s.
A scheme is developed by a small group of Olympus executives
to conceal unrealized losses by moving them off the balance
sheet. By the year ended March 2000, unrealized losses on theaffected financial assets had been separated from the consolidated accounts by transferring them to multiple funds at bookvalues.

December2011

Market value accounting is introduced, effectivefrom financial years starting in or after April 2000.

The off-balance-sheet losses are eliminated through the purchase of three domestic subsidiaries from the receiver funds at
inflated prices, and through transactions relating to the acquisition of Gyrus, including the payment of a large financial advisory
fee and the purchase of dividend preferred stock.

January
2012

The issue of sizeable expenditure on the acquisition of the threedomestic subsidiaries and Gyrus comes to light.
On November 1, the Third Party Committee is appointed by
Olympus to investigate past acquisitions.
On November 8, the Third Party Committee reports the facts
uncovered during its preliminary investigation, including delaysin accounting for past losses, and is asked to expand the scopeof its investigation.

Olympus CSR Report 2012

Special Edition

March
2012
April
2012

> > > > > > > > > > > > > >> > >> > > > >> > >> > > > >> > >> > > > >> >> > >> > >> > >> >> > >Around1998> > > > > > > > > > > > > >> > >> > > > >> > >> > > > >> > >> > > > >> >> > >> > >> > >> >> > >1990s

On December 6, the investigation report is received from the Third Party Committee. In addition to reporting the facts, including delays in accounting for losses in previous financial
years, the Committee also provides recommendations on related matters, including theneed to improve governance and take steps to prevent recurrences.
On December 7, the company establishes the Management Reform Committee, Director
Liability Investigation Committee and Non-Director Liability Investigation Committee.
On December 14, amended financial statements and quarterly reports are submitted.
On December 21, Olympus becomes the subject of criminal investigations by the Tokyo
District Public Prosecutor’s Office, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission.
On January 7, a report is received from the Director Management Liability Investigation
Committee. On January 8, a suit for damages is lodged in the Tokyo District Court seeking
to establish the liability of past and current directors.
On January 16, the report of the Non-Director Liability Investigation Committee is received,and on January 17 a suit for damages is lodged in the Tokyo District Court seeking to establish the liability of past and present corporate auditors.
On January 17, the Nomination Committee is established to nominate candidate directors
and corporate auditors for election at a special general meeting of shareholders.
On January 20, a demand for payment of a listing agreement violation penalty amounting to¥10 million is received from the Tokyo Stock Exchange.
On January 21, Olympus is designated by the Tokyo Stock Exchange as a “security on
alert.”On March 7, the Tokyo District Public Prosecutor’s Office files charges on suspicion that
Olympus has violated the Securities and Exchange Act and the Financial Instruments and Exchange Act (fraudulent financial reporting). Indictment documents are received on March 28.
On April 20, a special general meeting of shareholders is convened. A new management
team is appointed and all members of the old management team resign.

Investigation Report by the Third Party Committee
Olympus cooperated fully with the investigation by the Third Party Committee and did everything in its power, including the provision of information, to uncover the truth about these
events. The report received from the Third Party Committee on December 6, 2011 identified
various facts, including actions to delay accounting for losses and dispose of losses. The
Committee also commented on the following matters.

WEB

Reports from the Third
Party Committee and other
Investigative Committees

English translations of the reports
from the Third Party Committee andother committees can be viewed here.

http://www.olympus-global.com/en/
info/2011b/if111206corpe.pdf

Involvement with Antisocial Elements
The Third Party Committee found no evidence that antisocial elements were involved in actions relating to the disposition of losses, or that any individual had misappropriated funds.

Need for Improvement of Corporate Governance
The Third Party Committee found that the Olympus Board of Directors failed to carry out its supervisory responsibilities as the hub of corporate governance, and that the Board of Corporate
Auditors failed to investigate and scrutinize activities thoroughly. The Committee therefore
called for urgent improvements in these areas.

Causes of Situation, Preventive Measures
The Third Party Committee found that the actions concerned had been carried out in secretby a small group of senior executives under the direction of top management, that the actions
had been skillfully concealed, and that almost none of the required information had been provided to the Board of Directors or Board of Corporate Auditors. This situation was attributed
to a corporate culture that was dominated by one person with additional problems relating
to the attitudes of corporate officers. As a result there was no freedom to express opinions
or concerns. The Third Party Committee also found that the various corporate departments
were not fulfilling their responsibilities as stipulated in the Companies Act. It therefore provided
recommendations that included the replacement of corporate officers, an in-depth review of
the company’s approach to corporate governance, and the reinforcement of management
oversight.

Actions in Response to the Report of the Third Party Committee[1] Establishment of the Liability Investigation Committees and Actions Basedon Findings
On December 7, 2011, the day after it received the report of the Third Party Committee,
Olympus established the Director Liability Investigation Committee and Non-Director Liability
Investigation Committee to examine the legal liabilities of present and former directors, corporate auditors, executive officers and accounting auditors in relation to the misconduct. To
ensure the independence of both committees, all members were individuals who had no conflicts of interest concerning Olympus. Olympus worked closely and in good faith with both ofthese committees.
The two committees submitted their reports on January 7 and January 16, 2012, respectively.
They concluded that 19 current and former directors and five current and former corporate auditors had legal exposure based on their conduct. Having received these reports, the Olympus
Board of Corporate Auditors resolved that it would be appropriate to pursue the liabilities of
the 19 directors, and on January 8, a lawsuit was filed claiming compensation of up to ¥3,610
million. The Board of Directors similarly resolved that it would be appropriate to pursue theliabilities of the five current and former auditors, and on January 17 a lawsuit claiming compensation of up to ¥1,000 million was filed.

Settlement with
Mr. Michael Woodford

Members of the Director
Management Liability
Investigation Committee
Chairman: Kazuo Tezuka
Attorney at Law, Vice Chairman,
Daini Tokyo Bar Association

Member: Hideki MatsuiAttorney at Law

Member: Satoru Mitsumori
Attorney at Law

Members of the Non-Director
Management Liability
Investigation Committee
Chairman: Akira Watanabe
Attorney at Law

Member: Atsushi Toki
Attorney at Law

Member: Yoichiro Yamato
Attorney at Law, former Presiding
Judge, Osaka High Court

Mr. Woodford filed a claim for compensation against Olympus in a British Employment Tribunal on the grounds that actions by Olympus, including the dismissal of Mr. Woodford from his posts as Representative Director, President and Chief
Executive Officer, constituted unfair dismissal under the British Employment Rights Act of 1996.
On May 29, 2012, the parties agreed to a settlement under which Mr. Woodford would withdraw his employment tribunal
claim, while Olympus would pay a cash settlement of 10 million pounds sterling (approximately ¥1,245 million). This agreed
settlement ended all disputes between Mr. Woodford and Olympus concerning the dismissal of Mr. Woodford and othermatters.

Olympus CSR Report 2012

Special Edition

6[2] Establishment of Management Reform Committee
After the financial misconduct, Olympus immediately established two internal teams to scrutinize its governance and vision, reformed its management structure and reviewed its businessactivities. On December 7, 2011, the Board of Directors resolved to establish a Management
Reform Committee consisting of outside experts with no Olympus-related conflicts of interest.
Its tasks were to examine and communicate discussions within the company before reports
and proposals are submitted to general meetings of shareholders. This committee commenced its deliberations in December.

[Members of the Management
Reform Committee]
Kazuo Kawakami
Attorney-at-law, former Chief
Prosecutor, Trial Division,
Supreme Public Prosecutor’s Office

Motoyoshi Nishikawa
Attorney-at-law, former Managing
Director, Nippon Steel Corporation

Shiro Hiruta
Senior Adviser,
Asahi Kasei Corporation

Measures to Prevent Recurrences
The investigation report of the Third Party Committee identified areas of weakness and recommended measures to prevent recurrences. Based on this report, the internal scrutiny teams
examined the issues from the viewpoints of strengthening the corporate governance structure,
improving internal control systems, and reviewing compliance systems. With advice from theManagement Reform Committee, they formulated the following preventive measures designed
to ensure that incidents of this type would never happen again.

1

Strengthen Corporate
Governance Structure2

Improve Internal Control
Systems• Clear separation of executive• Improvement of internal checks• Reinforcement of supervi-• Appropriate management of• Fairness in selection of out-

• Prevention of fraudulent activi-

and supervisory functions

sory authority and functions
over executive functions
side directors and corporate
auditors, and expansion of
the roles and functions ofoutside directors and corporate auditors

and balancesbusiness investments, subsidiaries and affiliated companies
ties through improvements tohuman resource management
systems• Enhancement of internal audits• Active disclosure of

3

Review Compliance
Systems• Improvement of manage-

ment team’s complianceawareness, and establishment of clear accountability• Establishment of systems

to support further reinforcement of compliancepromotion• Fostering of consistentawareness of compliance• Improvement of whistle-

blowing systems

information

Designation as “Security on Alert,” Violation of Financial
Instruments and Exchange Act
On January 21, 2012, the Tokyo Stock Exchange designated Olympus shares as a“security on alert.” In addition, Olympus received a notice demanding payment fora listing agreement violation, the penalty of which amounted to ¥10 million. Moving
forward, Olympus will be required to submit a “Written Confirmation of InternalManagement System” detailing the status of its internal management systems andother matters to the Tokyo Stock Exchange every year. The designation will be
lifted if the Tokyo Stock Exchange determines, on the basis of these reports, that
there are no problems with Olympus’ internal management systems.
On March 6, 2012, the Securities and Exchange Surveillance Commission
filed charges with the Tokyo District Public Prosecutor’s Office on suspicion
that Olympus had violated the Securities and Exchange Act and the Financial
Instruments and Exchange Act (submission of fraudulent financial reports). On
March 7, 2012, Olympus received notice from a prosecutor in the Tokyo District
Public Prosecutor’s Office that it had been indicted according to the facts stated in
the original charges.
On April 13, 2012, the Securities and Exchange Surveillance Commission gave notice to the Prime Minister and the Commissioner of the Financial Services Agency
that it would be issuing a surcharge payment order. On July 11, 2012, Olympus was
informed by the Financial Services Agency that a decision had been made to issue
a surcharge payment order. In accordance with this decision and the payment order, Olympus paid a surcharge of ¥191,819,994 to the national treasury.

7

Olympus CSR Report 2012

Special Edition[Security on Alert]
This designation is applied to a company
that is at risk of delisting from the public
exchange for various reasons, such as
the inclusion of fraudulent information in
financial reports. After investigation, if it isfound that the situation does not warrant
delisting but that there is a strong needfor improvements in the company’s internal management systems, the company
receives this designation.
If a company is designated as a “Security
on Alert,” it must submit a “Written Confirmation of Internal Management System” detailing information about internalmanagement systems and other mattersto the stock exchange after the elapseof each year following the designation.
The designation will be lifted if the stock
exchange finds on the basis of this written confirmation that there are no issues
relating to the company’s internal management systems or other matters.
(Summary of information on the websiteof the Tok yo Stock Exchange Group,
Inc. http://www.tse.or.jp/english/rules/sr/
tokusetsu.html)

First 100 Days Since the Establishmentof the New Management Structure

Reinforcement of Corporate Governance Structure
and Improvement of Internal Control Systems
formance of business operations by executive officers. The
Chairman, who cannot be the President, serves as Chairmanof the Board of Directors. Independence and objectivity are
key requirements for the nomination of outside directors.
Individual directors apply their expertise to the managementof Olympus through the decision making and supervisory activities of the Board of Directors. Upper limits have been set
for the terms of office and ages of the President and senior
executive managing officers.

Changes to Corporate Governance Structure
By adopting an executive officer system, Olympus has established a governance structure which separates the functionsof executive officers, who are responsible for the performance of business operations, and directors, who are responsible for management decision making and the supervisionof the performance of operations. Based on lessons learned,
Olympus has further clarified this separation of roles andstrengthened its supervisory functions.

Officers

Six highly independent outside directors make up the majority of the 11-member Olympus Board of Directors. In principle,
the Board of Directors meets once a month to allow timely decision making on important aspects of management, such as
management strategies. It also effectively supervises the per-Chairman .................Yasuyuki Kimoto
Representative
Director/President ....Hiroyuki Sasa
Director....................Hideaki Fujizuka
Director....................Yasuo Takeuchi
Director....................Shigeo Hayashi

Outside Director .......Takuya Goto
Outside Director .......Shiro Hiruta
Outside Director .......Sumitaka Fujita
Outside Director .......Motoyoshi Nishikawa
Outside Director .......Hikari Imai
Outside Director .......Kiyotaka Fujii< Corporate Governance Structure (Extract) >General Meeting of Shareholders
Appointment/
Dismissal

Proposals regarding the appointment/
dismissal of directors

Appointment/Dismissal

Accounting Auditor

・Make decisions on important matters

Accounting
audit

Board of Directors ・Supervise the execution of business duties

Supervision

・Nominate Chairman, President, Director,
and Auditor candidates

Compensation Committee
・Develop director compensation proposals
and compensation standards for executive officers

Chairman・Assist the President’s decision-making throughparticipation in deliberations on important matters

Strengthening the Functions of the Corporate
Auditors and Board of Corporate Auditors
To ensure that audits are conducted fairly, Olympus has invited a person from outside the Olympus organization to become one of its two Standing Corporate Auditors, in addition
to the two Outside Corporate Auditors. To provide support for
the Corporate Auditors, the number of staff in the Corporate
Auditors’ Office has been increased.
A Message from the Non-Olympus Standing Corporate Auditor

Masashi Shimizu
Former General Manager, Financial Inspection
Department, Nippon Life Insurance Company

Corporate Auditors are responsible for the establishment of a quality corporate governancesystem capable of ensuring public confidence inthe company. In view of the issues identified by
the Third Party Committee, Olympus has assembled a team of Corporate Auditors with expertise in law, accounting,taxation and financial management, as well as business operations,
to audit the performance of its business operations fairly and independently. The Corporate Auditors will strive to build a sound andtransparent governance structure to ensure that the recent financial
misconduct is never repeated.

Auditors

Chairman of
the Board of Directors
President andRepresentative Director
Proposal

Executive Committee

Board ofCorporate Auditors

Audit

・Composed of majority outside directors

Nominating Committee

Appointment/Dismissal

Reports &proposals

Compliance
Committee

・Two statutory
auditors (one ofwhom is external)
・Two outside
corporate auditors

Instructions& advice

Supervision

Audit

Business Execution

Chairman

Corporate Auditors
Standing Corporate Auditor ............. Takashi Saito
Standing Corporate Auditor ............. Masashi Shimizu (non-Olympus)
Outside Corporate Auditor ............... Nobuo Nagoya
Outside Corporate Auditor ............... Katsuya Natori

Improvement of Internal Control Systems
Olympus has initiated a project to strengthen its internal
control systems. The first step will be to clarify the position of each head office unit and its checks and balances.
Additionally, Olympus will build stronger mechanisms, revise
rules and ensure that those rules are consistently applied.
Olympus will also develop a structure to provide comprehensive control of subsidiaries, affiliated companies and business investments, which will also be monitored under newly
adopted guidelines. Finally, the staff involved in internal audits
will be increased, and there will be closer collaboration between audits by Corporate Auditors and audits by certified
public accountants.

Olympus CSR Report 2012

Special Edition8

First 100 Days Since the Establishmentof the New Management Structure

Fostering a Compliance-Oriented Corporate Culture
The Management Team’s
Commitment to Compliance
On May 22, 2012, Olympus announced that its management
team had adopted a Commitment to Compliance to prevent
future misconduct by reforming management attitudes toward compliance and establishing clear accountability. This
commitment is a pledge by the management team to apply
our management philosophy with high ethical standards.
In formulating the commitment, we sought the opinions of
the Executive Committee, which is responsible for executive management oversight. We also included views from

Promoting Compliance andClarifying Responsibilities
In April 2012, Olympus appointed a Chief Compliance Officer(CCO) whose task is to clarify compliance-related responsibilities. The company also established a Compliance Committee
chaired by an outside director to advise the Board of Directors
on measures that can strengthen compliance activities on a
global basis. The committee met for the first time on June 7,2012 to analyze issues and discuss initiatives.
On May 10, 2012, Olympus held a global compliance meetingfor compliance officers from regional headquarters, including
overseas regional headquarters. The purpose of this meeting was to examine the global and regional implementationof compliance-related policies and measures, and to identify issues. Olympus will continue to hold these meetings at
quarterly intervals. Policies and measures put forward at themeetings will be implemented according to the organizational
structure in each region. Within Japan, this role will be car-

< Compliance Promotion Structure >Reports &proposals

Compliance Committee

Instructions& advice

Reports

Reports &proposalsRequests

Board of Directors

President

Global Compliance Meeting
Members: CCO, Regional Compliance Officers

EuropeAmericas

Asia

Actions undertakenby the compliance organization
with each region

9

Olympus CSR Report 2012

(The text of the management team’s Commitment toCompliance can be found on Page 1.)

ried out by the Compliance Promotion Committee. Based on
situations discussed and issues raised at the meetings, theCCO will regularly report to the Compliance Committee on
the compliance situation of the Olympus Group as a whole.
Compliance Committee Members
Chairperson .... Motoyoshi Nishikawa (Outside Director)
Member .......... Kiyotaka Fujii (Outside Director)
Member .......... Yoichiro Hamabe (Outside Committee Member, Attorney-at-law)Member .......... Masahito Kitamura (Chief Compliance Officer)

Compliance officers from Europe, the Americas, Asia and Japan attended thefirst global compliance meeting, which was held in Tokyo on May 10, 2012.
The second meeting was held in Pennsylvania, U.S.A., on July 30, 2012.

Motoyoshi Nishikawa

Executive
Management
Committee

CCO

Through this commitment, we have pledged to make compliance our first priority, to go back to our basics as a company
that provides value to society through its innovative technology, quality products and services, and contributions to human health and happiness.

A Message from the Chairperson of the Compliance Committee

General Meeting of Shareholders

Members: Outside Directors,
Non-Olympus Members, CCO

outside directors and academic experts. The commitment
was made public in the form of a document signed by
Hiroyuki Sasa as Representative Director, President and Chief
Executive Officer.

Japan
Compliance
PromoteCommittee

Special Edition

CSR
Committee
Eachorganization

Outside Director

While these have been extraordinarily challenging
times for Olympus, a range of initiatives are being
implemented to strengthen our compliance. This is
no time for half-measures or half-hearted efforts.
I am told that Olympus was traditionally a company in which people could discuss matters freely and harmoniously.
All employees need to be keenly aware of the fact that complianceis essential to the survival of their company. They must also strive tobring back a corporate culture based on the free flow of views andideas. Above all, employees must immediately report any mattersthat cause them the slightest concern directly to their supervisors,
who must take all such matters seriously and ensure that they are
fully investigated.
As chairperson of the Compliance Committee, I intend to work withthe utmost diligence to restore confidence in Olympus through thecreation, application and administration of compliance systems.

First 100 Days Since the Establishmentof the New Management Structure

Enhancement of Integrity Hotline Systems
In the past, employees wishing to report issues in Japan
could submit their concerns via a point of contact within thecompany using the Compliance Hotline. In May 2012, an external point of contact was established to allow employees
to speak to an attorney outside of the company. This new
system provides greater assurance of anonymity, since theattorney providing the service will never, without the approvalof the whistle-blower, divulge any information that could be
used to identify the individual to staff within the company.

participation in outside seminars, study sessions organizedin cooperation with the attorney in charge of the external
whistle-blower contact point, and preparation for qualification as Certified Business Ethics Experts under the systemadministered by the Association of Certified Business Ethics
Experts of Japan.
Note: Separate compliance and integrity hotline and helpline systems
have been established in each region worldwide.

Olympus has further enhanced the system by adopting corporate regulations which require all matters reported by whistle-blowers to be fully investigated. It also requires employees
to make every effort to report any concerns. Olympus has
also expanded access to this system to include employees ofsuppliers that deal directly with Olympus Group companies
in Japan.

Compliance cards
will be distributed
to executives andemployees inJapan.

Additionally, Olympus is providing education for the staff
who administer the internal contact point. Activities include

Revision of Management Philosophy
and Corporate Conduct Charter
As part of our efforts to build compliance awareness, wehave revised the Olympus Group Management Philosophy,
the Olympus Corporate Conduct Charter and the Olympus
Group Code of Conduct.
The basic concepts behind our “Social IN” management philosophy remain unchanged, but we have redefined the “ThreeINs” to achieve consistency with the Corporate Conduct
Charter.

nies in Europe, the Americas and Asia were also reflected.
Olympus then sought the opinions of outside experts, including specialists in business ethics and law. After deliberations
by the Executive Committee, the new charter was ratified by
the Board of Directors and adopted on June 20, 2012.
The Code of Conduct was also revised to achieve consistency with the Corporate Conduct Charter. The revised version
reflects the social responsibility principles stipulated in the latest international guidelines and provides clear guidance on“the day-to-day” for individual employees.

We regard the Corporate Conduct Charter as the most important source of guidance for all members of the Olympus
Group, from directors to employees. This Charter reflects thesocial responsibility principles required under the latest international guidelines, including the 2011 OECD Guidelines
for Multinational Enterprises, ISO 26000 (guidance on social
responsibility), the 10 principles of the United Nations Global
Compact, and the 2010 edition of the Charter of Corporate
Behavior of the KEIDANREN (Japan Business Federation).

(Information about the management philosophy
Corporate Conduct Charter can be found on Page 12.)

The actual revision process began with a two-day retreat fora task force consisting of 30 key employees from Olympus
Group workplaces in Japan. This was followed by a half-day
session of intensive discussions. As a result, an initial draft
was developed and this formed the basis for draft proposals,
in which the views of employees of Olympus Group compa-

Task force members convened to develop a draft of the Corporate Conduct
Charter.

WEB

andOlympus Group Corporate Conduct Charter
http://www.olympus-global.com/en/corc/csr/olycsr/
philosophy/csrcorporate/

Olympus CSR Report 2012

Special Edition10First 100 Days Since the Establishmentof the New Management Structure

Enhancement of Compliance Education
Olympus has employed various activities to enhance CSR
and compliance education, including the distribution of CSR
guidebooks and compliance cards, as well as e-learning,group seminars and more. We are determined to avoid future
misconduct and build a new Olympus by further improving
compliance education, including education about related
laws and regulations.

Management Messages and Dialogue
Olympus has continually reiterated the importance of compliance to its employees in communications via the intranet,
including the President’s statement announcing the appointment of the new management team as well as subsequent
messages about their compliance commitment. In addition,
the President and CCO are working to ensure that a consistent compliance environment and a culture of openness are
created in our workplaces. Part of that effort includes holding“town meetings” for various groups, including the Olympus
Group Corporate Conduct Charter task force, corporate executives, and staff in overseas subsidiaries. We will continue
to reinforce our commitment to compliance via messages
from our management team, as well as direct dialog with
employees.

Rank-Specific Education

Note: The above activity is limited to Japan. Local activities will be
developed at each regional headquarters.

< Laws/Regulations Targeted for PrioritizedCompliance Reinforcement Efforts >Jurisdictional
Category

Name of Law/Regulation, etc.
• Act on Prohibition of Private Monopolization and Maintenance ofFair Trade (Antimonopoly Act)

Japanese laws
and regulations• Unfair Competition Prevention Act• Act against Delay in Payment of Subcontract Proceeds, etc. to

Subcontractors (Subcontracting Law)

• National Public Service Ethics Act, code of ethics for public

servants• Fair competition rules

Overseas laws
and regulations• Laws and regulations relating to bribery• Laws and regulations relating to unfair competition• Laws and regulations relating to antisocial elements

Training for Directors and Employees
Since July 9, 2012 we have provided compliance-related elearning for officers and employees, focusing primarily on theamended Olympus Group Corporate Conduct Charter andOlympus Group Code of Conduct. Starting in October, we
will conduct a series of training programs on CSR, including
compliance. E-learning about specific laws, regulations andsocial norms will also be provided.

The President stressed the importance of compliance in aspeech he gave at an executive forum held when the new
management team took office. There was also a presentation by the CCO concerning compliance initiatives. On July20, 2012, Dr. Yoshinari Koyama, Professor of Business
Administration, College of Economics, Kanto Gakuin
University, presented a lecture on the subject of “BusinessMisconduct and Compliance” for Olympus’ managementlevel personnel, including directors, auditors, executive officers and division managers. There will be further training for
management-level personnel in October. We will also provide
training to meet the needs of employees at each level, including newly promoted personnel and new employees.

Note: The above activity is limited to Japan. Local activities will be
developed at each regional headquarters.

Note: The above activity is limited to Japan. Local activities will be
developed at each regional headquarters.

May

Function-Based Education
Specialized, function-specific training, including attendance
at lectures by outside experts and group seminars conducted by external organizations, is being provided for corporate staff whose tasks require higher levels of knowledge
and awareness, such as employees staffing the helpline, andmembers of the Compliance Promotion Committee. In addition, we have implemented ongoing training programs to11

educate relevant staff about laws and regulations relating tovarious aspects of our business, including CSR procurement,
trade controls and the prevention of fraudulent transaction
practices.

Olympus CSR Report 2012

Special Edition< Main Education Activities Since the Establishmentof the New Management Team (Activities in Japan) >PeriodAttendees

Summary

As required from
April onwards

All employees

President’s message via intranet

Executives

President’s presentation
CCO’s presentation on complianceorganization

Helpline contact
point staff

Seminar for helpline contact point staff

Workplace
representatives

Meeting between Corporate Conduct Charter
formulation task team and CCO

April

Progressively from
Relevant divisions
April onwards

As required fromMay onwards

Trade-related education (seminars for eachdivision)

All employees

President’s presentation

Executives

E-learning about mental healthCompliance Promotion
CCO’s presentation
Committee
Relevant divisions

Divisional seminars about the prevention of
fraudulent business practices
Environment-related e-learning (regulations
on chemical substances)

June

All employees

E-learning about the Act against Delay inPayment of Subcontract Proceeds, etc. to
Subcontractors

Executives

President’s presentation
E-learning about compliance

All employees

E-learning about information security/protection of
personal information

Executives

President and CCO town meeting

Management

Lectures by outside experts

JulyFirst 100 Days Since the Establishmentof the New Management Structure

Fostering a Compliance-Oriented Corporate Culture< The Olympus Group’s Management Philosophy >CCO Message

Masahito Kitamura

The Olympus Group strives to realize better health andhappiness for people by being integral members of society,sharing common values, and proposing new values throughits business activities. This “Social IN” concept is key to thebasic Olympus philosophy underlying all our activities.
Social IN comes from Social Value IN the Company, aconcept of incorporating social values into the Company’s
activities.

Chief Compliance Officer
Olympus Corporation

The most important priority for the new management
team established in April 2012 is to restore the trust of our
stakeholders. My first important task after becoming CCO
was to issue this report.
During its first 100 days, our new management team has worked relentlessly
to rebuild Olympus through the various initiatives described in this report.
As a result of this work, we have become aware of internal weaknesses
and structural problems that for many years remained unnoticed. The entire
Olympus team has worked together under the leadership of the President
to take our first steps toward the creation of a new Olympus, and I am convinced that we will be able to regain the trust of stakeholders.
However, improvements to our organization and structures are not enough.
We cannot truly rebuild Olympus unless the spirit is also in place.

Integrity in Society

Creating Innovative ValueI believe that we have been given an excellent opportunity not only to prevent recurrences of past misconduct, but also to transform Olympus intoa truly global enterprise. We need to build on the traditional strengths of
Olympus, including our commitment to technology and quality, and to work
tirelessly to turn Olympus into a company that will once again enjoy the trustof customers and stakeholders throughout the world.

Social Involvement

We aim to establish firm ties with society
through INtegrity, INnovation and INvolvement.

A crisis is also an opportunity. We have accepted the task of rebuilding
Olympus into a global company, one that will be respected as a world leader
in compliance. That is a heavy responsibility, and one that we are determined to fulfill. We look forward to your continuing support.

< Olympus’ Corporate Conduct Charter >Guided by the fundamental concept of “Social IN” and a keen awareness of our responsibilities as a corporate member of society,and as a company on which diverse people with different cultures and value systems depend, the Olympus Group continues toprovide value to society by enhancing people’s lives through the products and solutions that we design and deliver.
At the Olympus Group, we are committed to conducting our affairs with a strong sense of ethics, and accordingly, will strictly comply
with all relevant laws and regulations. We have revised the Olympus Corporate Conduct Charter to serve as the basis for making
appropriate decisions and taking responsible actions. All members of the management team and all employees of the Olympus Group
hereby pledge to act in accordance with the new Corporate Conduct Charter in their global corporate activities.

< INtegrity >(Integrity in Society)< INnovation >(Creating Innovative Value)< INvolvement >(Social Involvement)

1. Adherence to High Ethical Standards

3. Delivering Innovative Value

5. Harmony with the Environment

We will prioritize the spirit of compliance under any circumstances and will never tolerate
any action that violates laws and regulations,social norms or internal rules.

Olympus strives to play an integral role inhelping people around the world lead healthierand more fulfilling lives. To enhance people’s
lives, the Olympus Group will continue to offer
innovative value.

Respecting the importance of people’s safety
and health and the essential role of naturein supporting their lives, the Olympus Groupwill contribute to a healthy environment andpursue sustainable development of society
through business activities and technologicaldevelopments that are in harmony with nature.

We will create an environment within theorganization where no concern pertaining tocompliance will be ignored. Moreover, we will
implement training and provide guidance to allparties concerned.
We will consistently oppose any antisocial
force or organization posing a threat to the order and safety of civil society and completely
dissociate ourselves from any relation withthem.
2. Respect for Human Rights
In all corporate activities, the Olympus Groupwill respect all internationally recognized human rights and will prohibit forced labor, childlabor or discrimination based on race, beliefs,
gender, age, social position, family lineage,
nationality, ethnicity, religion or disability.

To that aim, we constantly seek to provide
safe, high-quality products and services thatengender loyalty and affection for our brandand that are meaningful to society, while taking sufficiently stringent measures to protect
customers’ information.
4. Working Environments with Vitality
The Olympus Group will provide a safe andhealthy working environment where individuality and diversity are respected and personal
development is fostered. This environment willallow employees to strive for the highest levelof skill and knowledge, and enable the innovative creation of value sought by society.
We will aim to create working environmentswith a high level of transparency in management, to share information without seeking tohide or obfuscate unfavorable truths, and an
atmosphere in which free and vigorous discussion is encouraged.

6. Contribution to Society
The Olympus Group is always mindful of the
impact our decisions have on stakeholders
and society, and we will actively seek out thevoices of stakeholders, including customers,
business partners, shareholders, employees
and communities, and sincerely respond totheir questions, concerns and needs.
The Olympus Group regards itself as a citizen
in each of the communities where employees
live and work, and we recognize the importance of supporting community organizations,programs and activities. Additionally, we will
always respect the culture and practices of
the countries and regions where the Group
engages in business.
Adopted on June 20, 2012

Olympus CSR Report 2012

Special Edition

12

Third-Party
Opinions

We asked independent experts to express their views on the recent misconduct and our
subsequent response. Below are their opinions which we highly regard. These opinions
will be fully considered by the entire Olympus Group as we move forward to regain our
reputation as a company that can justify the trust and expectations of all stakeholders.

Hiroshi Ishida

Associate Professor, Kwansei Gakuin University
Executive Director, Caux Round Table Japan

Hiroshi Ishida was born in Tokyo in 1966. After graduating with a degree in economics from Seijo University, he worked for the
Industrial Bank of Japan in market dealing, planning and other areas. He has been active in the Caux Round Table Japan since
October 2000 and became the organization’s Executive Director in 2006. Mr. Ishida is also an associate professor at Kwansei Gakuin
University.

Since the discovery of the misconduct involving the concealment of huge losses, all Olympus Group employees
have been working in complete solidarity under the leadership of the new President, Mr. Sasa, with a determination
to do everything necessary to restore the trust of society. I
admire that and would like to offer my sincere encouragement. Yet at the same time I would also like to present
some advice from the perspective of business ethics.
I believe that the issues that have come to light as a resultof the scandals should not be attributed solely to problems
in the management decision-making process. Rather, theglobal Olympus Group employees should accept ownership of the problems and work relentlessly to identify thefundamental causes.
First and foremost, all Olympus Group employees shouldshare values concerning the question of why Olympus exists. To achieve this sharing of values, the following advice
should be taken to heart.

Luigi Colantuoni1) Maintain a commitment to appropriate conduct that goesbeyond mere compliance with laws and regulations.
The Olympus Group should not assume that it is enoughsimply to include compliance training in its educational
programs.
2) Disclose decision-making processes from theviewpoints of transparency and accountability.
The Olympus Group should engage in serious dialog withstakeholders about the extent to which management
decision-making processes can be disclosed. It should
also be aware that its own logic may not apply to the outside world.
3) A chieve a balance between “excellent” and “good.”
The Olympus Group has announced its management
team’s Commitment to Compliance and revised its
Corporate Conduct Charter. It must now ensure that theseconcepts are fully understood and consistently applied by
all group employees. It must also provide a clear roadmap
indicating what needs to be done to build Olympus into a
company that is not only excellent, but also good.

Chief Representative for North-East Asia, Total
President, Total Trading International S.A., Tokyo Branch

Luigi Colantuoni graduated in Chemical Engineering at the University of Napoli, Italy in 1979 and received the INSEAD MBA in
Fontainebleau, France in 1985. After working as Managing Director of Atotech Japan, Vice President of Atotech Far East, and CEO
of Sartomer, he became Total’s Chief Representative for North-East Asia and President of Total Trading International S.A., Tokyo
Branch. Mr. Colantuoni is also a board member of the French Chamber of Commerce and Industry in Japan and a member of theFrench government’s advisory committee on international trade.

I would like to share some considerations with all employees of Olympus, as I have lived thirteen years in Japan
during a total of three different assignments and I have
had plenty of opportunities to admire and respect theJapanese people, their abilities and their values.
What has happened in your company in recent times may
have shocked many of you, created mistrust in management, led to doubts about the future of the company andgiven you feelings of sadness and uncertainty.
This is all behind, and I am sure that each staff of Olympus,
all its executives have only one goal now: restoring an excellent corporate governance and apply it in an exemplary
way worldwide.
Good corporate governance has two aspects: the hardware, as a clear set of rules, globally, to which each entityof the group complies, following a well defined code of

13

Olympus CSR Report 2012

Special Edition

conduct, where professional ethics is the cornerstone;
and the software, as corporate values based on honesty
and transparency, in good as in difficult times.
It is with an attitude of deep humility and with great humanity that the whole workforce of Olympus will emerge
from the troublesome period, regain the confidence ofeach stakeholder, capitalize on the success of its products and set an example worldwide of how a corporation can learn from past mistakes and restore an imageof excellence.
I trust you share this vision and I am convinced you will
work in this way to make it happen.
Olympus will then emerge stronger than ever.

Kaori Kuroda

Executive Director, CSO Network Japan

After working for a private sector company, Kaori Kuroda went overseas to study and was employed in the Center on Japanese
Economy and Business of Columbia University’s Business School. She has also worked for the Asia Foundation in Japan. She has
been employed by the CSO Network since April 2004 and was also involved in the formulation of ISO 26000 as an expert representing Japanese NGOs.
Ms. Kuroda has also been involved in the “New Public Commons” Promotion Conference. Other posts include membership of the
Subcommittee on Economic Cooperation of the Trade and Economic Cooperation Committee of the Ministry of Economy, Trade andIndustry’s Industrial Structure Council.

On July 6, the Financial Services Agency issued a business improvement order against two audit corporations
that had been responsible for auditing the accounts ofOlympus Corporation. On June 29, an Olympus employee
won a lawsuit brought against Olympus on the grounds
that he had been unfairly reassigned after reporting issues
within the company. Judging from media reports about
these matters, the general public seems to believe thatthe discovery of misconduct involving the concealment oflosses is not over.
The Olympus incidents have also attracted considerable
attention in the international community. A totally different
incident involving another company came to light aroundthe same time, leading to criticism about the general stateof corporate governance in Japan. These problems arehaving serious repercussions that go far beyond the direct
impact on shareholders and employees.
It is never easy to regain trust once it has been lost. Somecompanies have brought in outsiders to improve all as-

Toshio Arima

pects of their organizations. However, once the crisis isover and share prices have started to recover, problems
often start to occur again. The structural issues that cause
these problems are likely to be rooted in corporate cultures. Unless these are rightly addressed and dealt with,changes to human resource management systems, introduction to new structures, and improved and strengthened systems would not endure.
According to this report, the Olympus Group’s Corporate
Conduct Charter has been revised by a team of 30 employees. As a global enterprise, Olympus needs to bring
employees of overseas group companies into this process, and to do everything possible to foster an open corporate culture. Without such a culture, the principles ofsocial responsibility, as stated in ISO 26000, including
accountability, transparency, ethical conduct, respect for
the interests of stakeholders, respect for the rule of law,respect for international behavior norms, and respect forhuman rights, will never take root.

Board Member, United Nations Global Compact
Chairman of the Board, Global Compact Japan Network

Toshio Arima was born in Kagoshima Prefecture in 1942. After graduating from the College of Liberal Arts of International Christian
University in 1967, he joined Fuji Xerox. He became President and Representative Director of that company in 2002. In 2007 he retired as President and was appointed as an Executive Advisor to the Board. In the same year, he became a Board Member of theUnited Nations Global Compact. Since 2008 he has been Chairman of the Board of Global Compact Japan. Since 2010 he has also
served as Chairperson of Japan Platform, an approved NPO.

I would like to make a few comments on the occasion of
the publication of this CSR Report, which is a record of
the efforts made by Olympus to rebuild trust over a 100day period.
Olympus has reflected deeply on the recent misconduct
and taken steps to prevent recurrences, including the appointment of a Chief Compliance Officer. It has also radically restructured its governance systems as part of its
recovery and renewal efforts. This record of initiatives over
a 100-day period describes the measures put into effectby Olympus as it takes the first steps toward the realization of its goals.
Olympus is a signatory to the United Nations Global
Compact, the purpose of which is to promote the sounddevelopment of the corporate community and globalization. It was with profound regret that I learned of the recent
misconduct and was forced to accept your application forsuspension from the Global Compact. However, we firmly

believe that Olympus will eventually be able to return to the
Global Compact. We see your efforts to restore your reputation as evidence of your commitment to work in goodfaith toward the realization of CSR-based management inaccordance with the 10 principles of the United Nations
Global Compact, which span the four areas of humanrights, labor, the environment and the prevention of corruption. CSR-based management depends above all on
leadership from the top, but sustained effort at the workplace level is also crucial. Global enterprises in particularneed to monitor and respond to new global trends and theunique needs of individual regions. The Global Compact
Japan Network, to which 160 Japanese companies belong, will be ready to assist Olympus from these various
perspectives when it is ready to return to the Compact.
I look forward to the emergence of a new Olympus withconfidence in your ability to move forward toward theachievement of that goal.

Olympus CSR Report 2012

Special Edition

14

In consideration of the environment, this report was printed using vegetable inks on
paper certified by FSC® as having been produced in appropriately managed forests.

Olympus Corporation
CSR Department, Group Compliance Division
Shinjuku Monolith, 3-1 Nishi-Shinjuku 2-chome, Tokyo 163-0914, Japan
Olympus Corporate Social Responsibilities Activity Website

TEL: +81-3-6901-9299

http://www.olympus-global.com/en/corc/csr/

E-mail: csr_info@ot.olympus.co.jp
Issued in November 2012 (X020-12E ①1211C) Printed in Japan