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Ex-CEO wants Olympus to come clean on cover-up scandal, confident justice will be served
TOKYO (AP) ' Olympus Corp.'s former CEO expressed confidence Thursday that justice would be served as Japanese investigators probe the cover-up of massive investment losses at the company that has become one of Japan's biggest financial scandals.
But Michael Woodford, 51, who met with Japanese prosecutors, police and financial authorities earlier in the day, acknowledged the investigation into the huge accounting irregularities that date back decades at Olympus will likely take a long time.
He also told reporters he was prepared to return to lead the Tokyo-based camera and medical equipment company with a new "dream team" of directors.
Woodford was fired as CEO last month after questioning dubious accounting at Olympus, but he remains on the board and can only be removed by shareholders.
He said he plans to confront the Olympus board Friday. He already has spoken with the Tokyo District Public Prosecutors Office, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission.
Woodford said Japan cannot evade getting to the bottom of the scandal, because he had gone so public, the scandal has the attention of the international media, and U.S. and British authorities are also investigating.
"This story will be different," he said. "Olympus may be the way this country changes, maybe a bit for the better."
He was speaking at a panel at a Tokyo hall sponsored by The Economist magazine and answered questions from other reporters and guests.
Under intense pressure, Olympus 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 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 Japanese corporate governance, which has been repeatedly criticized as falling behind global standards.
Recent media reports have pointed to possible ties between Tokyo-based Olympus and organized crime, but an outside panel created by Olympus to investigate its accounting has said it has so far found no evidence of such ties.
Woodford was a 30-year employee at Olympus and had led its European business. He said the dubious investments were handled by headquarters in Japan.
Japanese corporate practices, such as cross shareholding, in which friendly companies hold shares in each other, worked to silence opposition, he said.
If accepted back as head of Olympus, Woodford promised change, picking the American model of corporate transparency and governance.
"I would make sure my company was exemplary," he said.
But he refused comment on another legal case of a Japanese whistleblower, in which a Japanese court ruled against the company and for the Olympus employee. In that case, Olympus is appealing to the Supreme Court a ruling that the company penalized the worker unfairly.
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.
Olympus announced late Thursday it officially accepted the resignation of the three from the company board, saying they have "sincerely" cooperated in the investigation so far and are expected to do so without the titles. That means the three men won't attend Friday's board meeting.
Prosecutors are questioning the executives, according to Kyodo news agency.
Takayama, the new president, said in a statement that "We, the current management, are prepared to resign our post as soon as we see Olympus taking the road to recovery." Takayama, however, said he is not leaving immediately because his task is to tackle the crisis and get over "mounting problems."
The company must fully investigate the scandal and change its management system to one that is socially acceptable, he said.
"Any attempt of self-protection among the management is not acceptable," Takayama said, adding that he planned to present reform plans at the next shareholders' meeting.
Olympus 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.
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 had surged 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.
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