Sacked Olympus boss passes papers to Serious Fraud Office
British executive trades allegations and legal threats with Japanese camera maker
Published 18/10/2011 | 05:52
Michael Woodford, the chief executive fired by Olympus after just two weeks in the post, yesterday told the company he "welcomed" their threats of legal action, as he passed crucial documents to the UK's Serious Fraud Office.
The first foreign chief executive of the precision equipment-maker said he was fired after raising "serious governance concerns" at the group, adding it was "inexplicable, incredible that a massive Nikkei-listed company could carry on this way". Olympus's share price, which fell over 17 per cent on Friday, fell a further 24 per cent yesterday.
Mr Woodford, a Briton who had worked at the company for 30 years, was appointed chief executive at the beginning of October after six months as president. Last Friday, he was ousted, with the company blaming a culture clash. He told The Independent that Olympus was run as a "total emperor system" and he was "shocked" by the events of his short-lived reign.
He yesterday passed documents, including a series of letters he had written to the board, and a report from PricewaterhouseCoopers investigating a deal Olympus had secured in 2008, to the SFO. The UK was brought in as the majority of the deal was paid through Olympus Finance UK. The SFO declined to comment.
Mr Woodford said his departure was not prompted by his lack of Japanese-style management but by a series of letters he wrote raising concerns over four deals secured by Olympus. He flew back to the UK over the weekend saying he feared for his personal safety.
Olympus said yesterday that it was considering legal action for disclosing confidential information. Yet, Mr Woodford was bullish. He said: "I welcome it. Come to the High Court. There is a clear public interest in this case."
The last letter, dated 11 October, was sent to chairman Tsuyoshi Kikukawa calling for his resignation along with that of executive vice president Hisashi Mori, following revelations about the four takeovers. He said they should: "Face the consequences of what has taken place, which is a shameful saga by any stretch of the imagination. It is clear that the situation is untenable.".
He said: "I had a horrible feeling there would be resentment about bringing it up." Three days later he was removed as president and chief executive at an emergency board meeting. Mr Woodford said he first became aware of issues around several Olympus acquisitions in July following the publication of an article in a niche Japanese financial journal. Facta published a report into three small businesses Olympus bought for ¥70bn in 2008. A year later it wrote down a similar amount as an impairment loss. The other contentious deal and the one the SFO may scrutinise, is that of Gyrus, a British medical equipment manufacturer. Mr Woodford called in PricewaterhouseCoopers to investigate. What was most extraordinary about the deal was the advisory fee to a company called Axes, made up more than a third of the cost at $687m.
Mr Woodford first sent a letter to Mr Mori in September flagging up "serious governance concerns" over the takeovers, and demanding a response to a series of questions. PwC's report several weeks later found "potential misstatements made in Gyrus' 2009 audited accounts and potential unlawful financial assistance provided by Gyrus to Olympus in relation to the transaction".
Mr Woodford sent a further five letters calling for action and in one drew parallels with the alleged UBS rogue trader, adding "the senior management resigned in recognition of the lack of adequate controls". In his final letter, he said the auditors' report had shown a "catalogue of calamitous errors and exceptionally poor judgement". Mr Kikukawa, who will take over as chief executive, subsequently called the meeting to remove Mr Woodford. The Briton attended but was not allowed to talk.