Olympus whistleblower Woodford quits board

1st December 2011, Comments 0 comments

Japan's scandal-hit Olympus said Thursday its ousted chief executive Michael Woodford has quit the company's board, as reports said he was working on an "alternative plan" for managing the firm.

"We announce that the company received a resignation letter from board director Michael Woodford today and that he resigned as company board director as of today," Olympus said in a brief statement.

Woodford said he was resigning because the current board was not fit to carry out its promises of cleaning up Olympus after expensive acquisition deals were used to mask investment losses dating back over two decades.

"The promise for reform or reconstruction by (Olympus president Shuichi Takayama) and the current board carries little or no credibility and is continuing to harm Olympus and its long-term future," Woodford said in a statement, according to Dow Jones Newswires.

"Following my resignation, I intend to liaise with all interested stakeholders with a view to formulating a proposal for the constitution of a new board," he was quoted as saying.

Dow Jones said Woodford stressed in a telephone interview that he is not "walking away" from the embattled camera and medical equipment maker, and is instead working on an "alternative plan" for managing the firm.

Japan's Kyodo news agency quoted Woodford as saying he would wage a proxy battle to win shareholder support for the move -- a rare strategy in Japan, where big institutional investors are typically reluctant to go against management with whom they have close ties.

But foreign shareholdings in Olympus have increased in recent weeks as Japanese investors such as Nippon Life Insurance sold their holdings, while Olympus scrambles to meet a December 14 deadline to release its quarterly earnings, and avoid a delisting of its shares from the Tokyo bourse.

Olympus shares rose 4.48 percent to 1,070 yen in afternoon trade, still less than half their price before Woodford's ouster.

Woodford was dumped on October 14 as the first ever non-Japanese president and chief executive in the firm's nine-decade history, but retained his seat on the board.

He said he had been ousted after voicing concerns over high-priced acquisition deals in recent years and alleged serious flaws in corporate governance.

Olympus initially denied any overpayments in the deals, but later admitted funds had been used to hide investment losses dating back to the 1990s.

Some company shareholders and employees have campaigned for Woodford to be reinstated as head of the firm.

Local media have reported the company's hidden losses could total more than 100 billion yen ($1.3 billion), while other reports have pegged the figure as high as $5 billion.

Japanese authorities have launched a probe into the scam while Woodford has also met with US law enforcement officials.

Adding to its mounting troubles, Olympus has said a US investor filed a class-action lawsuit against the company accusing it of presenting false financial statements for at least five years.

Three main figures implicated in the cover-up -- former chairman Tsuyoshi Kikukawa and two other directors -- quit the company's board last week.

The scheme reportedly used a process called "tobashi" -- which translates literally as "blow away" -- in which investment losses are moved off a company's accounts into areas where investors would not see them.

At least four deals have come under the microscope 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.

© 2011 AFP

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