AP Interview: Woodford upbeat on Olympus comeback

AP News
|
Posted: Dec 15, 2011 5:54 AM
AP Interview: Woodford upbeat on Olympus comeback

The ousted chief of Olympus, the Japanese camera-maker under investigation for hiding investment losses for years, is confident about making a comeback _ a return he vows will clean up the company's scandal-tainted management for good.

Michael Woodford, the former President and Chief Executive at Olympus Corp., said Thursday he was lining up shareholder support and talking to other "influential people in the Japanese establishment" for his return to the company.

Woodford, in town this week for such meetings, declined to give specifics, saying the discussions were "delicate." But he was clearly upbeat about the prospects, claiming he had enough support to call a general shareholders' meeting _ a key move for managerial change.

"I wouldn't be putting myself through this enormous physical and emotional effort if I didn't think it could be successful," he told The Associated Press, weary but exhilarated from the flood of email from Olympus employees cheering him on.

"This is uncharted territory. You have the world looking at this story," he said at a Tokyo hotel.

The deception at Olympus, dating back to the 1990s, to hide 117.7 billion yen ($1.5 billion) in investment losses became known only when Woodford blew the whistle. He questioned exorbitant fees for advice on the acquisition of British medical equipment maker Gyrus Group and other expensive acquisitions in 2008.

Woodford recalled that he thought the Gyrus purchase was unwise at the time, but said he never dreamed it involved anything illegal.

Woodford, a 51-year-old Briton and a rare foreigner to lead a major Japanese company, was fired in October after confronting Olympus directors.

Woodford is demanding the resignation of the entire board, including President Shuichi Takayama, who replaced him and initially declared in a news conference that all the spending was legitimate.

"It's offensive to common sense," said Woodford, who had worked for Olympus for about three decades.

The battle over who will lead the camera and medical equipment maker and its 40,000 employees could come to a head at the next shareholders' meeting. Takayama said Thursday that might be held in March or April.

Olympus met its deadline to avoid being removed from the Tokyo Stock Exchange by filing corrected earnings for the April-September first half and for the past five fiscal years on Wednesday.

But it is still under a criminal investigation, and could be delisted later on.

Olympus appointed three outsiders to a new reform committee Thursday to beef up governance and present a plan to shareholders. The committee is in addition to an earlier panel announced by Takayama, which is investigating the scandal.

The Olympus fiasco has prompted soul-searching in Japan Inc. on living up to global standards. Ruling and opposition legislators met with Woodford earlier this week to hear his ideas about governance.

The company's loss of 32.3 billion yen ($414 million) for the first half of the fiscal year, through September, a reversal from a 3.8 billion yen profit a year earlier, was mainly from the economic downturn and losses from Thai flooding, Takayama said.

The company now has a gaping hole in its balance sheet after coming clean on the $1.5 billion of hidden losses.

"Capital adequacy ratio is a big problem, and we are considering how we can overcome it," Takayama told reporters. "We are considering various options, including a capital tie-up and operational or sales tie-ups."

Woodford said he was opposed to alliances, which he said would likely compromise Olympus' independence, and he had better ways to get capital to shore up its hobbled balance sheet.

"Because of the strong cash flows and profitability of the medical business, we could raise funding from additional sources without losing our sovereignty," he said.

Olympus should focus on core businesses _ medicine, microscopes, industrial products and cameras and other consumer products _ and stop acquiring unrelated companies, such as those in pet food, plastic plates and cosmetics, he said.

He promised a more transparent Olympus, with more outside board members. He said he was already preparing the candidates.

Olympus stock, which plunged after the scandal hit, has recouped some of the losses but dropped 21 percent to close at 1,041 yen Thursday.

A third-party panel set up by Olympus, including a former Japanese Supreme Court judge, released the findings of an investigation earlier this month, which said top executives who were "rotten to the core" had orchestrated the accounting cover-up spanning three decades.

A faked $687 million fee for financial advice and overvalued acquisitions were part of an elaborate deception utilizing overseas banks and several funds to keep the massive losses off the company's books, according to Olympus. Japanese magazine Facta was first to report the dubious money.

It is still unclear if Woodford will manage a comeback.

Some people, such as former board member Koji Miyata, see him as a hero and have begun an online campaign to bring back Woodford.

Miyata says Woodford, a 30-year employee at Olympus, was groomed from the start to lead the company.

"There are a lot of senior managers who might be good for the No. 2 post, but someone who is destined to be No. 1 is totally different," he said in a recent interview with The AP.

"He has principle. He is uncompromising," he said of Woodford, whom he has known for 25 years. "He isn't swayed. He doesn't avoid confrontation. He sticks to his guns that what is wrong is simply wrong."

But others say the scenario is up in the air.

Decisions from Japanese megabanks, overseas investors and other players are still unclear, said Hideaki Miyajima, economy professor at Waseda University in Tokyo.

"His return is possible," he said. "But Olympus still has a full range of options."

Woodford, who sees himself as a "salaryman," denied it was his nationality that might make him Olympus' savior.

"I'm sure there are some Japanese people who could do similarly to me," he said. "I know the company. I've worked there. It doesn't matter if I'm English or Japanese, in that sense."

___

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


Most Popular