16/02/2012 World Business Report

Israel. Thanks for joining us on World

Business Report. The former president of the Japanese camera

maker Olympus is arrested with two other former executives suspected

of a $1.7 billion fraud. General Motors is expected to

report strong results but the road ahead is less rosy for its European

Opel unit. The Australian airline Qantas said

profits fell over 80% to two strikes and fuel costs.

Japanese police have arrested the former President of Olympus.

Tsuyoshi Kikukawa is being questioned about his role in one of

the biggest financial scandals of the country. He is suspected of

being part of a long-term cover-up of losses amounting to $1.7 billion.

They are also investigating other form as Olympus invest --

executives. Our correspondent has more. Bring us up to date and

reminders of the background. This story became public in October.

Olympus's chief executive blew the whistle of one of the biggest

accounting scandals in Japanese corporate history. He said he had

been fired for questioning internally some unusual advisory

payments and acquisitions. Olympus subsequently admitted it had been

hiding investment losses. More than $1.5 million worth. Dating back

decades. Regulators, police and prosecutors have been investigating.

Prosecutors have arrested three former executives. The former

chairman and president Tsuyoshi Kikukawa, a executive vice-

president, and the company's former auditor. They were blamed by

Olympus in a report by any independent panel. They blame for

orchestrating the cover-up. there a feeling that we have got

this situation now but we could have gotten their earlier?

Certainly there has been concern in Japan and elsewhere that what has

happened at Olympus, is enormous hall in the balance sheets, could

remain hidden so long, it says worried things about the state of

corporate governance in Japan. It is too lax. There are not enough

independent directors. Not enough oversight. People are looking at

what is happening and the say this is a sign that the rule of law is

going to play a proper role in Japanese companies and that what is

happening at Olympus is a part of that.

To know Motors is expected to show a strong performance for the past

three months, but not as strong as earlier in the year. It was doing

you well in America and China, but the European arm is struggling.

GM's Opel business is expected to lose $300 million in the last

quarter. It has shut plants and In America, General Motors has

turned a corner. Sales jumped 13% in the US in 2011. The company is

now profitable. The US has been great. An increase in sales and

market share and profitability. All things that you want to have.

in Europe, they are struggling. The manufacturer has lost money for

well over a decade. Demand has slumped with the eurozone crisis.

It everyone knows Opel is a problem, they say. Workers, government and

shareholders. The problem is the cost per unit is to hire. It

creates a dilemma in terms of finding the right solution. While

Opel in Europe will require more restructuring, GM at home was a

deal with a pension fund that is massively underfunded. The new

smaller cars, their increasingly popular, are not as profitable.

it was a large pick-up truck or best CV, it can makes two was three

times the profit of a smaller car. It is always been a struggle for

the US car companies. GM is done a better job but that in the last few

years and has had some success, but the impact has been worse on their

profitability. General Motors is a global player. It is doing well at

home in the markets like China. But it is struggling in South America

end in Europe. Some of the problems may be economic but others are to

do with the business. Those are the issues that it must deal with

quickly. Let's talk about the airline

industry. 500 jobs may be going at Qantas. Our correspondent has more.

Clearly some difficult times for Qantas. They have released their

results and we may see job losses. That is right. Turbulent times, I

should say. They announced these job losses today, 500 of them. They

said profits were down 83%. All of that thanks to strikes and fuel

costs. The strikes were last year, Qantas grounded its entire fleet.

It was unprecedented. It they said it is going to close some

international routes. The profits were hit by the industrial dispute.

The strike cost them $200 million last year and they have been

triggered by a restructuring plan that Qantas had announced which

included a proposal to outsource some of its services. It is

expected to result in a thousand job cuts in the Australian

operations. Higher fuel prices were the other factor. It cost them

these proffer losses. Qantas is not having a good time.

The defence firm releases its preliminary annual figures on

Thursday. It has taken a big hit because of cuts in defence spending

in the UK and the USA. It has been trying to compensate by developing

another market by arms sales in India. That has hit a snag. So what

next? Recent months have been torrid.

Combats like the UK scrapping of the reconnaissance plane have

scrapped revenues. Over the past two years alone, they have had to

low of 15,000 people from its 100,000 strong workforce. It hoped

to new business would come from a drive into India. But in the recent

race to win a big order, it lost the lead. They had a strategy that

was widely lauded as making more trouble home markets partnership

with larger companies. Nice defence in the US. So they would be an area

of domestic growth. This has not gone according to plan. They were

loss of forces ranged against them. Domestic interest did not want a UK

firm dominating. They still have strong revenue streams. They supply

Euro fighters to Saudi Arabia. It is taking a driving two countries

eager to upgrade. But some worry whether it is plying back enough of

its profits into developing next generation defence systems for the

leading military powers. Electronics, cider, the potential

that is offered by things that we don't necessarily feel and touch.

It is very large. Let us hope that they can bring their shareholders

on site. There is a degree of risk. The profits are floodlighting.

Shareholders would like to see it strip out more costs. Over the

coming year, they are expected to shed some of its least profitable

operations. It is thought it could include the Fleet Support based in

Portsmouth. Let me show you how the markets are

faring in Asia. You may remember that we saw a six-month high for

the Nikkei. It has come down from that as you can see. The issue of