Olympus whistleblower ramps up ouster campaign

1st December 2011, Comments 0 comments

Whistleblower Michael Woodford on Thursday ramped up his campaign to oust the board of Japan's scandal-wracked Olympus and return to his old job under the leadership of a new slate of directors.

The Briton resigned his own directorship in a move that freed him to talk to shareholders about re-populating the boardroom and installing him at the helm of a company that has been in a tailspin since his firing last month.

Setting out his stall for a battle against the board, Woodford said he was resigning because the current directors were not fit to clean up the 92-year-old company, which used expensive acquisition deals to mask investment losses dating back 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 released in New York.

"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."

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

And in comments carried by Japan's Kyodo news agency, the former Olympus president said he wanted to work with the company's stakeholders.

"The reason that I've done it is that I believe it would be an opportunity for me to mobilise interested parties in Olympus and those shareholders who want real change," he said.

"I believe I will be in a position to have an alternative slate of directors and it will be a classic proxy vote, so there will be choice there."

Proxy battles -- in which like-minded shareholders join forces to remove the board -- are rare in Japan, where big institutional investors typically have cosy relations with management.

But foreign shareholdings in Olympus have increased in recent weeks as Japanese investors such as Nippon Life Insurance cut their stakes, while the camera maker Olympus scrambles to meet a December 14 deadline to release its quarterly earnings.

Failure to file by that date will lead to its shares being delisted from the Tokyo bourse.

In Tokyo, the company was tight-lipped, confirming only that Woodford had renounced his spot on the board.

"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.

Olympus shares closed 2.34 percent higher at 1,049 yen, less than half their price before Woodford's ouster.

The Briton 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.

Woodford said he had been sacked 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 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.

Several 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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