U.S. Makes Arrest in Olympus Accounting Scandal

Federal agents arrested a former bank executive in Los Angeles on Thursday in connection with the accounting scandal that erupted last year at Olympus, the Japanese camera and medical equipment maker.

Prosecutors in New York said that the executive, Chan Ming Fon, received more than $10 million from Olympus for assisting in its accounting fraud.

The Federal Bureau of Investigation said Mr. Chan, 50, was a citizen of Taiwan living in Singapore. He was charged with conspiracy to commit wire fraud, with a maximum potential penalty of 20 years in prison. His lawyer was not disclosed.

“As alleged, Chan Ming Fon was handsomely paid to play an international shell game with hundreds of millions of dollars of assets in order to allow Olympus to keep a massive accounting fraud going for years,” said Preet Bharara, the United States attorney in Manhattan, in a news release.

The authorities did not identify the financial institutions with which Mr. Chan was affiliated.

In February, the Japanese authorities arrested seven people in connection with the accounting missteps at Olympus, including Tsuyoshi Kikukawa, the company’s former chairman. Mr. Chan was not among those seven.

The company has admitted that executives set up a scheme to cover up $1.7 billion in losses. The illicit maneuvers came to light after Olympus fired Michael C. Woodford, its British chief executive, in October 2011. Soon after, Mr. Woodford made allegations of accounting misdeeds at Olympus.

The Olympus scandal rocked the Japanese corporate sector. The case is being watched closely to gauge how serious the Japanese authorities will be in their pursuit of white-collar crime. The men arrested in February could each serve up to 10 years if found guilty.

The allegations against Mr. Chan could shed more light on Olympus’s elaborate accounting ruses. The company hid losses sustained in the 1990s, later masking them with inflated acquisitions and payments through shadowy overseas funds.

Mr. Chan was a principal at a fund that received large payments from Olympus, according to the F.B.I. The bureau contends that Mr. Chan told Olympus’s auditors in 2009 that the fund held hundreds of millions of dollars on behalf of Olympus, in the form of conservative investments like Japanese government bonds. The complaint says, however, that the money had been passed on to an entity controlled by Olympus to pay off a loan.

In the complaint, the F.B.I. said that Mr. Chan “acknowledged that it was wrong to assist Olympus in deceiving its auditor.”

DealBook: Sony Agrees to Acquire Stake in Olympus

TOKYO — Sony is set to become the biggest shareholder in Olympus with an investment of 50 billion yen, or $645 million, investment, the two companies announced Friday.

The deal could give struggling Sony a jump-start in the lucrative medical equipment business, while helping to bolster Olympus’s balance sheet following its $1.7 billion accounting scandal.

Sony and Olympus will form a joint venture to develop and manufacture endoscopes and other medical devices, the companies said in a statement. Olympus controls about 70 percent of the world’s market for medical endoscopes.

The two companies will also consider cooperating in digital cameras, they said.

Sony, struggling after four years of losses because of its slumping TV business, has been looking for new sources of revenue. It entered the medical device field last year by acquiring the American medical diagnostics firm Micronics for an undisclosed sum. Sony’s president, Kazuo Hirai, has said medical businesses could one day be a major profit driver.

Meanwhile, Olympus, which admitted last year to hiding losses for over a decade, is desperate to shore up its capital.

It replaced its entire board, restated five years of earnings and took a $1.3 billion write-down after acknowledging that it obscured what it said were past investment losses in inflated mergers and acquisition payments.

The deal announced on Friday calls for Sony to take a 11.5 percent stake in Olympus by buying new Olympus shares for 1,454 yen a share — a 4 percent discount to Friday’s closing price.

The two companies will set up a joint company by the end of the year, of which Sony will hold 51 percent and Olympus will hold 49 percent, the companies said. Sony will also select a director to serve on Olympus’s board.

In statements, Hiroyuki Sasa, the Olympus president, and Mr. Hirai of Sony both stressed that the deal would bring together Sony’s technological edge in digital imaging with Olympus’s already-dominant position in the medical field.

‘‘By accepting an investment from Sony, we will not only strengthen our financial base, but also combine our strengths and develop the kind of medical devices that we may not have been able to develop on our own,‘‘ Mr. Sasa said.

Sony will position the medical field ‘‘as one of Sony’s future core businesses,’’ Mr. Hirai said.

Olympus shares gained 1.7 percent to 1,520 yen in Tokyo on Friday, after the Nikkei business daily carried a report on the deal in its morning edition. Shares in the company, which lost nine-tenths of their value after the scandal erupted last October, have recovered to almost half their pre-scandal levels.

Shares in Sony fell 1.1 percent to 919 yen. Its shares have already slumped 34 percent this year.

On Tuesday, Standard & Poor’s cut Sony’s long-term debt rating a notch to BBB, the second-lowest investment grade, and warned of further downgrades unless Sony turns its business around.

Bits Blog: Olympus and Apple Join Google With Wearable Computing

At left Google Glass, Olympus Meg 4.0 in the middle. At right, Apple patent for a goggle-like display. 

It seems that everyone in tech has been busy working on wearable computing and augmented reality glasses.

Last week, Sergey Brin, Google’s co-founder, showed off augmented reality Google Glasses at the company’s Google I/O annual developer conference.

Now Olympus is pulling the curtains back on its own wearable computer glasses. In a news release, Olympus announced the “MEG 4.0 ultracompact wearable display prototype,” which it said “can be used in everyday life.” The company said that the MEG 4.0 “display does not obstruct the view of the outside world” and that the glasses only weighed 30 grams, including the battery.

The Meg 4.0 requires a Bluetooth connection to a smartphone, which is then used to share information back to the Olympus display. Pricing and a release date were not discussed in the release.

Meanwhile, Apple also seems to be working on wearable computers.

The company has filed repeated patents for displays that are embedded in goggles and glasses. This week Apple was also awarded a patent for a “Peripheral treatment for head-mounted displays” that can be used to project an image into someone’s eye.

While some companies focus on glasses as wearable computers, there is always the possibility of computerized contact lenses.

Babak Parviz, who is working at Google on the company’s glasses project, specializes in bionanotechnology, which is the fusion of tiny technologies and biology. Mr. Parviz was part of a team that built a tiny contact lens embedded with electronics.

A report issued by Forrester Research earlier this year noted that wearable computing will bring a “new platform war,” not dissimilar to the mobile app battles today, between Apple, Google, Microsoft, Amazon and Facebook, along with each company’s developer communities.

“Imagine video games that happen in real space,” the report said.  “Or glasses that remind you of your colleague’s name that you really should know. Or paying for a coffee at Starbucks with your watch instead of your phone.”

As I noted in my column in The New York Times this week, these wearable computers are the future and will finally “allow technology to get out of the way.”