Olympus shares drop over 5% after CEO resigns over drug allegation

Shares of Japanese camera giant Olympus Corp fell on Monday after the company announced the resignation of its chief executive officer over a drug allegation.

The stock slid 5.3% on the Tokyo Stock Exchange following news of Stefan Kaufmann’s resignation, according to LSEG data. So far this year, Olympus shares have jumped 31.9%, outperforming Japan’s benchmark Nikkei 225, which has risen 13.3%.

In a notice, Olympus said that it received an allegation that the German national had purchased illegal drugs. 

“Olympus, in consultation with outside legal counsel, immediately investigated the facts, made a report to the investigative authorities, and cooperated fully with their investigation,” the company said.

“Based on the results of the investigation, the Board of Directors unanimously determined that Mr. Stefan Kaufmann likely engaged in behaviors that were inconsistent with our global code of conduct, our core values, and our corporate culture.”

Kaufmann, 56, who had worked at Olympus for two decades, complied with a request to offer his resignation, the company added. He took the reigns of the company and efforts to expand its medical equipment division last April from former CEO Yasuo Takeuchi, who transitioned into an executive chairman role.

Takeuchi will now return to his CEO duties as the company considers positions for Kaufmann’s replacement.

CNBC was unable to reach Kaufmann for comment.

Olympus’ leaders have seen their fair share of controversy over the years. In 2011, the company admitted it had used fraudulent accounting practices to cover up losses on investments over the course of decades. The scandal was revealed by whistleblower Michael Woodford, a former CEO of the company, and lead several former executives to plead guilty on charges of falsifying accounts.

Japan’s tough laws on drugs have put a number of foreign executive’s careers in jeopardy. In 2015, a Toyota Motor executive from America resigned after she was arrested and then released in Japan on suspicion of illegally importing the painkiller oxycodone.