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Now whistleblower, fired Olympus CEO Woodford back in Japan and calling for corporate change
TOKYO (AP) ' When Michael Woodford took Olympus Corp.'s top job after three decades of toil for the Japanese camera maker, he knew the business inside out ' or so he thought.
Months later he compared himself to a character in a fictional thriller as his whistleblowing of massive corporate deception puts him at the center of investigations spanning three continents.
"I feel myself in this John Grisham novel," the 51-year-old Briton said Friday to a packed house at the Foreign Correspondents' Club of Japan. "Flying to New York to meet the FBI. References to organized crime. Boardroom conflicts. Character assassination. The whole thing has been a bizarre way to live."
Woodford, who was fired as CEO of Olympus last month but remains a director, returned to Japan this week to meet with prosecutors, police and regulators and to face the board for the first time since his firing and self-exile in England.
Then-President Tsuyoshi Kikukawa asked Woodford to become president last year, admiring his work running the company's European business.
Their relationship quickly deteriorated as Woodford began sniffing in dark places that Kikukawa did not want exposed. Prompted by an expose in a small Japanese magazine called Facta, Woodford wanted answers to alarmingly high pricetags for dubious acquisitions and $687 million paid to an obscure Wall Street firm for financial advice. The magazine even suggested there might be links to the yakuza ' Japan's mafia.
Instead, board members voted to fire him on Oct. 14, after six months on the job. They blamed cultural differences. Woodford didn't understand Japan. He didn't spend enough time here. He hated Japan.
Woodford, who said he loves Japan, called it "black propaganda" by Olympus. He decided to fight back by going public with what he knew.
His revelations triggered one of the biggest scandals to ever hit corporate Japan. Olympus has since admitted that massive payments were used to cover up investment losses dating to the 1990s.
Kikukawa stepped down 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. They all resigned from the board Thursday.
The company has established a third-party panel to investigate. Meanwhile, authorities on three continents are conducting their own inquiries. Olympus faces potential delisting if it can't report its revised earnings by Dec. 14.
Woodford suspects that in choosing a gaijin, or foreigner, Kikukawa was just looking for someone who could produce cash and profits.
"Doing that would start to push those horrible secrets and things further into the past," he said Friday. "We'd be successful. He'd be acclaimed personally as somebody who had great vision to choose the gaijin salaryman who became president."
The strategy has certainly worked for a handful of other Japanese companies.
Sony Corp. is led by Welsh-born CEO Howard Stringer. Nissan Motor Co.'s CEO is Carlos Ghosn, who is Lebanese-Brazilian-French. Both men are credited with implementing major restructuring and cost cuts to bring their companies out of the red.
Their status as outsiders was hailed as a key reason for their success. Business schools study Ghosn's efforts, and he has even been depicted as a comic book hero.
But Stringer and Ghosn never had to deal with the level of wrongdoing that Woodford discovered.
The Briton met this week to discuss his discoveries with the Tokyo District Public Prosecutors Office, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission.
The board meeting Friday morning was tense but civilized and constructive, he told reporters. He didn't get an apology or any handshakes, but the group agreed that it needed to prevent Olympus from being delisted by the Tokyo Stock Exchange.
Takayama, the new president, issued a statement Thursday that the leadership is prepared to resign "as soon as we see Olympus taking the road to recovery."
The statement and the meeting convinced Woodford that "there was a recognition that the remaining directors at some point need to go." The group did not discuss a timetable nor the possibility of reinstating Woodford.
The scandal has cast a harsh light on Japanese corporate governance, which has been repeatedly criticized as lagging global standards. Japanese corporate practices, such as cross shareholding, in which friendly companies hold shares in each other, worked to silence opposition, he said.
"There's lots of good companies with lots of good products and value," Woodford said. "But they're run by mediocre boards or worse."
That has left Japanese companies falling behind globally against nimble and aggressive rivals like South Korea. Woodford expressed confidence in Olympus' core strengths and said it can move forward if it cleans house, sheds unprofitable businesses and conducts a thorough investigation.
Woodford is not itching to return but would if asked by shareholders, he said. He acknowledged it might not be a popular idea with everyone because he's "shaken the tree and the monkeys have fallen out, and a few gorillas."
"If Japan doesn't want me, then has Japan changed?" Woodford said. "It doesn't have to be me personally, but it does need people who are going to challenge, scrutinize, say 'Why are we doing that? We should stop that.'"
Foreigners might not want to sign up after Woodford's recent saga.
"Do you think after my experience they're going to be queuing up?" he said with a laugh.
Follow Tomoko A. Hosaka on Twitter at http://twitter.com/tomokohosaka