Ex-CEO says Olympus 'could survive' scandal

25th November 2011, Comments 0 comments

The ousted chief executive of Olympus told fellow board members Friday to step down because of a huge accounting cover-up but said the Japanese firm "could survive" the scandal.

Michael Woodford made the comments following a board meeting at the company's Tokyo headquarters, six weeks after being dumped as the first ever non-Japanese president and chief executive in the camera-maker's nine-decade history.

Woodford, who remains a director despite his ousting, called for the board to be axed over the cover-up, which local media said could reach more than 100 billion yen ($1.3 billion) in losses dating back to the 1990s.

Other reports have pegged the loss figure at around $5 billion.

The Briton described a special board meeting held Friday as "tense" but added there was a general agreement that the current slate of directors would have to be replaced.

"They've taken the company to its knees, not me," he said.

"None of them can say they should be a director of the company... that was accepted," Woodford told the Foreign Correspondents' Club of Japan after the meeting.

"There were some areas of consensus (at the meeting) -- it was much more constructive than I had anticipated."

Despite the unfolding scandal, Woodford said Olympus was a "fantastic business" with its core camera and medical equipment operations still strong.

"If the banks are supportive, which I believe, Olympus could survive as an independent entity, very much so," he said.

"Our factories will continue to produce (quality) products because people want to buy them."

Woodford said he was open to returning as the firm's chief but was "not begging to come back", and stressed it was crucial for Olympus to meet a December 14 deadline to release its earnings, and avoid a delisting from the Tokyo stock exchange.

The only reason to delist the firm was if speculation about the cover-up's ties to organised crime could be proven, Woodford said, adding there was "no evidence" to support the claims.

"I made clear (at the board meeting) it would be wrong to delist the company," he said.

"The priority is to get the accounts out by December 14."

The board meeting had been set for a showdown between Woodford and the three main figures implicated in the cover-up, but on Thursday the company announced that former chairman Tsuyoshi Kikukawa and two other directors had quit the board.

Kikukawa resigned in October as president -- not long after replacing the ousted Woodford -- and chairman, while Hisashi Mori was sacked as executive vice president earlier this month and auditor Hideo Yamada "showed his intention to resign", the company said.

The trio had remained as board members but have now left, the company said.

Mori and Yamada allegedly manipulated books by employing a scheme called "tobashi" -- which translates literally as "blow away" -- moving investment losses off their accounts into areas where investors would not see them.

Mori reportedly led four deals including the $2 billion purchase of British medical-instruments company Gyrus in 2008, in which Olympus has admitted paying $687 million to a little-known financial adviser based in the Cayman Islands.

Earlier, Woodford said the board "is all contaminated. Absolutely. They made all these decisions. All of them have to go."

"It's financial misreporting on grand scale. It's false accounting on grand scale," he added.

Alongside investigations in the US and Britain, Japanese police and government regulators are also probing the scandal, which has seen millions of dollars wiped off the value of the company as the stock price has plunged.

Amid media speculation that Yakuza organised crime syndicates could have had a hand in the financial shenanigans, the Briton said he was pleased with the attitude of the Japanese authorities, who assured him the case would be investigated thoroughly.

"I think justice will be done," he said in a speech at a media event Thursday. "They gave assurance to me that they will follow the money."

Olympus shares rose 8.63 percent Friday to close at 1,107 yen, less than half their value the day before Woodford's sacking.

© 2011 AFP

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