Sony, Panasonic maneuver for Olympus stake in wake of scandal

In the wake of a $1.5 billion accounting scandal, Sony and Panasonic are maneuvering for a stake in tarnished Japanese imaging company Olympus.

Business school lesson No. 4329: don't fudge the numbers.

In 2011, Japanese imaging company Olympus did just that -- to the tune of $1.5 billion or more -- and has since paid the price. When a complete picture of the scandal emerged, the reaction wiped out $4 billion of the company's market value.

How's that for return on investment?

Now the company's fighting to stay afloat. This morning, the company indicated that it will seek investments from some of its most bitter rivals -- Sony and Panasonic -- to boost its capital. Both of those companies make cameras and medical imaging equipment that compete with Olympus' product portfolio.

The company insists it will retain its brand and independence, and promises that there won't be any more scandals. But it took a whistleblower from another country to shed light on the original problem. It won't be easy to rebuild that trust with a corporate pinkie-swear.

To underscore the point, an excerpt from Bloomberg Businessweek's deeper look back in February:

Woodford exploded. “I’m the president of this company trying to understand $1.5 billion in transactions. Our profits last year were around $350 million. This is four to five years’ profit spent. Do you understand the magnitude of this?”

Mori was silent.

“Who do you work for, Mori-san?” Woodford asked. “Who do you work for?”

He expected Mori to say Olympus. Instead, he said, “I work for Mr. Kikukawa. I am loyal to Mr. Kikukawa.”

That’s when Woodford knew that, as he said, “something was terribly, terribly wrong here.”

With something that ingrained, it will be a long road to recovery for Olympus. And it's debatable whether the company's name is too tarnished to preserve.