Japan's Olympus faces investor, watchdog pressure

21st October 2011, Comments 0 comments

Shareholders in Japanese camera giant Olympus have called for an investigation into a series of acquisition deals at the centre of a bitter row with its ousted British chief executive.

An investor group said late Thursday it wants the deals examined after they were flagged as troubling by former Olympus Chief Executive Michael Woodford, who was stripped of his executive posts a week ago.

The camera and medical equipment company said it was preparing to respond to shareholder concerns and promised to set up a panel of experts to investigate the issue.

Olympus paid billions of dollars for four small and mid-sized firms between 2006 and 2008, as well as nearly $700 million to an adviser. It subsequently wrote off about $730 million from its investment in three of those companies.

Japan's Nippon Life Insurance, the largest shareholder in Olympus with an 8.3 percent stake, said it had asked the company for a clear explanation of what happened, a rare move for traditionally passive domestic investors.

Southeastern Asset Management, the firm's second-biggest shareholder, and Harris Associates LP, its fourth-largest shareholder, said they sent letters to the Olympus board, several Japanese regulators and the Tokyo Stock Exchange with a list of questions, and November 16 deadline for a response.

The trio, which together owns about 17 percent of Olympus shares, also called for an independent third-party audit.

"We want answers from Olympus to these very disturbing public allegations. It's their responsibility to all stakeholders to provide these answers," said Josh Shores, a senior analyst and principal at Tennessee-based Southeastern.

David Herro, chief investment officer at Chicago-based Harris, said: "Clearly, there are a lot of serious questions surrounding corporate governance at Olympus, especially around (mergers and acquisitions)."

Herro said he hoped the company would "put in place a management team more in tune with modern governance practices."

Olympus said in a statement Friday that it was preparing to respond to the shareholder letters, and would disclose more information if necessary.

"We are preparing to set up a third-party committee, comprised of attorneys, accountants and other experts," to probe the issue, the company said.

The firm's ousted chief earlier said he had sent a letter to Japan's Securities and Exchange Surveillance Commission asking it to look into the deals, as pressure continues to mount on the embattled company's management.

The feud has hammered the firm's stock with Olympus shares, which closed Friday at 1,231 yen, down nearly 50 percent from before the abrupt ouster of Woodford, Olympus' first non-Japanese president and chief executive.

Olympus said the Briton was demoted over "differences in management style", only six months after being appointed president and two weeks after he was also named chief executive.

But the 30-year company veteran contradicted that account, saying was instead removed after he wrote to the company's chairman over the fee payments and urged him to resign, citing major governance concerns.

The Tokyo bourse said it would urge Olympus to disclose more information on the firm's acquisitions in recent years.

© 2011 AFP

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