Olympus Scandal: Mr. Woodford Vs. Mr. Takayama

by Cesar Bacani, 28 November 2011

0 comments

Facebook

Digg

Twitter

topics:
Management Risk Management

tags:
corporate governance non-executive directors Olympus

At one point in his press conference in Tokyo after returning to Japan for the first time since he was fired as president and CEO of Olympus Corporation, Michael Woodford was asked whether the country should have more foreign CEOs.

“After my experience, do you think they are queuing up?” the British executive quipped. But he went on: “It would be sad if no more gaijins (foreigners) come . . . Japan needs people who are going to challenge and scrutinize.”

Woodford’s 25 November media briefing capped an extraordinary week in the continuing Olympus saga. After media reports that organized crime (Yakuza) figures may have received hush money from the company, the dramatic tension intensified as it was announced that Woodford would fly to Tokyo to speak with Japanese police – and attend an Olympus board meeting, where he would come face to face with the man who hired and fired him, Tsuyoshi Kikukawa.

Meanwhile, a Japanese shareholder demanded that Olympus investigate 37 incumbent and former board directors, 11 incumbent and former corporate auditors, and two incumbent and former external auditors – that would be KPMG AZSA LLC and Ernst & Young ShinNihon LLC – for breach of care.

In the US, where a limited tranche of Olympus shares trade in the form of ADRs, an investor filed a class action suit against Kikukawa, Woodford and new company president Shuichi Takayama for allegedly filing false statements on the company’s financial condition.

And the threat of a delisting from the Tokyo Stock Exchange continued to hang over the company. Olympus may be dropped from the rolls if it fails to submit its financial results for the second quarter of the fiscal year on or before 14 December – or if it is found to have knowingly funnelled money to the Yakuza.

Board resignations

In the event, the Woodford-Kikukawa showdown did not materialize. The day before the board meeting, Kikukawa and Hisashi Mori, formerly Olympus executive vice president, sent in letters of resignation. Hideo Yamada also stepped down as corporate auditor.

President Takayama had identified the three men as responsible for covering up investment losses dating back from the 1990s by inflating advisory fees related to the 2008 takeover of British medical equipment maker Gyrus Group and the purchase price of several local enterprises. Woodford was ousted after he questioned some of the payments.

So Woodford met with only 12 of his 14 fellow directors, including Takayama, who all voted to strip him of his posts as president and CEO on 14 October. He remained a board director, however, since only the shareholders can fire him from this post.

According to Woodford, the meeting was constructive and less tense than it could have been had Kikukawa and Mori been there. At the press conference afterwards, Woodford described Takayama as the director he felt the “most warmth” for, although he also said that his successor lost credibility when he initially defended the questioned transactions.

Comment on this article

Your name: *

E-mail: *

The content of this field is kept private and will not be shown publicly.

Homepage:

Comment: *

Web page addresses and e-mail addresses turn into links automatically.
Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <a> <p> <span> <div> <h1> <h2> <h3> <h4> <h5> <h6> <img> <img /> <map> <area> <hr> <br> <br /> <ul> <ol> <li> <dl> <dt> <dd> <table> <tr> <td> <em> <b> <u> <i> <strong> <font> <del> <ins> <sub> <sup> <quote> <blockquote> <pre> <address> <code> <cite> <embed> <object> <strike> <caption>
Lines and paragraphs break automatically.
Use  to create page breaks.

More information about formatting options

Verification Code

This question is for testing whether you are a human visitor and to prevent automated spam submissions.

What is the fourth word in the phrase "ofavaxu riboseh zud wacago hihuj"?: *

Accounting and Regulations

CFO innovation Asia Accounting and Regulation the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Accounting Regulation, IFRS, US GAAP, Tax, investor relations, corporate governance, Corporate Law, Financial Regulators, Internal Audit, Audit, Corporate Law.

Auditing, Investor Relations, Law and Compliance, Tax

Finance and Banking

CFO innovation Asia, Finance and Banking the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Corporate Finance, trade finance, treasury and risk management, capital expenditure, Banking, mergers and acquisitions

Cash and Liquidity Management, Corporate Finance, Insurance, Treasury Management

Management

CFO innovation Asia the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Management, Corporate Governance, Human Resource Management, Compensation and Benefits, Mergers and Acquisitions, Professional Development, Corporate Real Estate, Risk Management, Budgeting and Forecasting, Business Process Management, Business Process Reengineering, Outsourcing.

Budgeting and Planning, Business Expense Management, Human Capital Management, Outsourcing and Shared Services, Risk Management

Metrics

Corporates, Financial Services

Technology

CFO innovation Asia Technology the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Systems, Business Intelligence, EPR, Accounting software, CRM, Cloud Computing, Telecommunications, Business Process Outsourcing, Business Process Management Software.

Business Intelligence, Enterprise Software and Systems, Financial Systems, Security

CFO innovation ASIA