Slaughters secures success for Olympus as SFO drops prosecution

Partner Jonathan Cotton instructed Cloth Fair Chambers’ John Kelsey-Fry QC and Clare Sibson for hearings in the Crown Court and Matrix Chambers’ Lord Ken Macdonald QC for hearings in the Court of Appeal’s (CoA) criminal division.

Partner Ewan Brown and associates Angela Taylor, Laura Benghiat and Simon Osborn-King were also involved during the investigation phase of the case.

The Slaughters team worked alongside legacy Bingham McCutchen’s Tokyo office (now part of Anderson Mori & Tomotsune) on Japanese aspects of the case and with Sullivan & Cromwell on US issues.

The case kicked off in 2011 when Olympus’s then-CEO Michael Woodford blew the whistle on $1.7bn (£1.06bn) of questionable deals that were later admitted to be fraudulent. After being sacked Woodford went public with his misgivings, concerning a series of payouts made by the company for acquisitions between 2006 and 2008.

The SFO charged Gyrus and Olympus in September 2013 of making a statement to an auditor which was misleading. The body instructed 5 Paper Buildings’ Jonathan Caplan QC to lead the case, with 6KBW College Hill’s Duncan Penny as junior. Penny was appointed silk in 2014 but retained the instruction.

The case went to the High Court in February 2014, when Mr Justice Eder ruled that the offence with which the companies were charged could not be committed by the UK company under audit. However Eder J also rejected Gyrus’s argument that directors’ reports and financial statements were not capable of constituting a statement made to the auditors, under the terms of  the section of the Companies Act which the SFO was relying on for its case.

The CoA upheld Eder J’s rulings on both issues. Following consideration of the CoA judgment, the SFO decided to offer no evidence against Olympus and Gyrus and the case was dropped.

The SFO added that it could not have prosecuted individuals in this case because Japan does not extradite its nationals.

In a statement Olympus said: “The company and GGL co-operated fully with the Serious Fraud Office’s investigation but did not accept that the offences with which they were charged could, as a matter of law, be made out against them. Both of the Crown Court and the Court of Appeal have accepted this argument of the company and GGL.”

Brown was also instructed by Olympus to defend it against an employment tribunal claim brought by Woodford in 2012. The case later settled. Simmons & Simmons partner Mark Hewland represented Woodford.

In February 2013 Cotton was instructed by the SFO to bring claims against businessmen Vincent and Robert Tchenguiz, which settled out of court in July 2014. Earlier this year it emerged that Slaughters had been retained by the SFO to advise it on costs issues related to the Tchenguiz case.