Olympus whistleblower tells board to quit

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, as three key figures implicated in the scandal quit the Japanese firm.

Michael Woodford returned to the company's Tokyo headquarters six weeks to the day 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, told reporters the entire board was culpable in a 100 billion yen ($1.3 billion) cover-up dating back to the 1990s.

Some media reports have put that figure 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.

"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, adding that he remained open to returning as Olympus' chief but was "not begging to come back."

"There were some areas of consensus... It was much more constructive than I had anticipated."

The 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.

"The company decided to accept their resignations as we have judged there will be no problem in getting their cooperation for the investigation," Olympus said, referring to an ongoing probe of the firm's accounts.

"The three people have cooperated sincerely on the investigation since the problem came to light and they said they would do so in the future," it added.

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.

Woodford declined to give further details about Friday's board meeting, but said Olympus must meet a December 14 earnings deadline to avoid being delisted from the Tokyo stock exchange.

"I made clear it would be wrong to delist the company," he said.

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

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.

On Thursday, the firm's new president, Shuichi Takayama, said the scandal-hit company's management team was prepared to step down when Olympus was back on the road to recovery.

© 2011 AFP

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