Ex-CEO wants Olympus to come clean on scandal

AP News
Posted: Nov 24, 2011 1:39 AM
Ex-CEO wants Olympus to come clean on scandal

The former chief executive of Olympus Corp. spoke with Japanese investigators Thursday, reiterating his determination to get to the bottom of one of Japan's biggest financial scandals involving a cover-up of massive investment losses.

Michael Woodford, 51, plans to confront the board of the Japanese camera and medical equipment maker at a meeting Friday _ a day after speaking with the Tokyo District Public Prosecutors Office, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission.

Woodford, who was fired last month after questioning dubious accounting at Olympus, remains on the board and can only be removed by shareholders. He declined comment on what he was going to tell prosecutors. He returned to Japan on Wednesday.

Under intense pressure, the embattled company has admitted that a $687 million payment to an obscure Wall Street firm for financial advice and expensive acquisitions were used to cover up investment losses dating to the 1990s.

The board abruptly ousted Woodford last month for questioning the deals and payment. At the time, Olympus said Woodford was sacked because his management style was incompatible with the company's culture.

The scandal has cast a harsh light on corporate governance in Japan, which has been repeatedly criticized as falling behind global standards. Recent media reports have also pointed to possible ties between Tokyo-based Olympus and organized crime.

A third-party panel created by Olympus to investigate its accounting has said it has so far found no evidence of any ties with the underworld.

Woodford told the throngs of media gathered at Narita International on Wednesday that he is not afraid to be back in Japan and would press for answers during his stay.

"This isn't going to go away, the truth will come out," he said. "Please now have the dignity, at least the dignity, to accept that the game is up."

Woodford went public with his concerns after his sacking, and has become a hero among circles hopeful for better corporate governance in Japan.

Tsuyoshi Kikukawa resigned as president on Oct. 26 and was replaced by Shuichi Takayama. The company blamed the accounting scheme on Kikukawa, former executive vice president Hisashi Mori and ex-auditor Hideo Yamada.

Prosecutors are questioning the executives, according to Kyodo news agency.

Olympus now risks being delisted from the Tokyo Stock Exchange unless it can rectify past filings with regulators by reporting revised earnings by Dec. 14.

The company's shares lost four-fifths of their value after the scandal erupted in mid-October, but have since recovered on optimism that Olympus will avoid removal from the stock exchange.

The issue gained 17 percent Thursday, its maximum gain allowed for a single day, to finish at 1,019 yen.

The Tokyo Stock Exchange was closed Wednesday for a national holiday. Olympus shares surged 20 percent Tuesday after the panel said it had found no evidence of links to organized crime.

The practice of hiding investment losses through funny bookkeeping and paper companies has surfaced before in Japan, especially in the 1990s, when mergers and acquisitions became a way for companies to survive in the depressed economy that followed the bursting of Japan's real estate bubble.

Such scandals have previously ensnared other major names in Japan Inc., such as Yamaichi Securities Co., which went bankrupt in 1997, and cosmetics maker Kanebo, which was forced to undergo a government-backed bailout in 2005.

Woodford is speaking on a panel and with reporters Thursday evening, and has a press conference Friday at the Foreign Correspondents' Club of Japan in Tokyo.


Follow Yuri Kageyama on Twitter at http://twitter.com/yurikageyama