Olympus: Chairman and President Kikukawa resigns and attacks Woodford: “he did not like Japan”

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Before friends, now enemies. Kikukawa and Woodford.

Olmypus CEO Tsuyoshi Kikukawa “has stepped down due to a series of media reports on the company’s problems and a plunge in its share price“. (Source: Reuters). But the whole current Olympus board is still devoted to Kikukawa and I don’t think that will be enough to stop the critics. Today Olympus lost -7% at Nikkei (Source: Bloomberg).

A couple of days ago Kikukawa attacked ex-Ceo Woodford with an internal company memo. Electronista writes that: “In the memo, Kikukawa stated that Woodford’s recent actions were the result of nothing more than a failed power grab. Using Woodford’s initials, Kikukawa stated that, Director MCW was not satisfied unless he could control everything himself.” And the most surprising attack is that Woodford broke company management rules, and even “did not like Japan.”. If you want to read Olympus explanation of the story and arguments against Woodford read their official statement: http://www.olympus-global.com/en/corc/ir/tes/pdf/nr111019.pdf

P.S.: The New York Times posted some details about the mysterious Cayman company owners. And one more article form the NYT (Click here) about the acquisition story.

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  • Miroslav

    Good news. When will the manager responsible for m4/3 planning resign?

  • calxn

    There maybe some truth or misunderstanding to Kikukawa’s interpretationof the events. It’s curious why Woodford didn’t first confront and demand an explanation of these dealings before sending out memos and asking for resignations of those involved. Until clear explanations are provided about these payments, the court of public opinion will be against Olympus.

    • nicwalmsley

      You have not read the documentation Woodford made public available. He did try and address it internally first.

    • Ahem

      As Nic said, he did. Financial Times has extensive coverage on this affair, and it is clear that Mr Woodford went via proper channels, and only started escalating to the Board and externally when all other avenues were exhausted (he was mainly just ignored by everyone within the company).

      • Chris

        Really? He sent the findings of the PwC report with the demand for resignations, rather than asking for a response to the allegations. That doesn’t sound like exhausting all avenues…

        • That was the LAST of his actions. You might want to go back and look at his earlier ones.

          • Chris

            How would that change anything? He presents entirely new information that he has commissioned without informing the board and which forms the basis for his case, doesn’t ask for a response even though he admits he hasn’t got enough information to allege any particular crime, and is so aggressive that he surely realised that he wouldn’t get any further information or clarification. It may have been the ‘LAST’ thing he did, but it was surely the most important too.

            He may have been perfectly transparent, but transparency and research skills don’t always go together.

            • > He presents entirely new information that he has commissioned

              IIRC, MR.W commissioned *another* audit of the transaction by PWC. Previous auditor had the same opinion that the deal smells. There was nothing “entirely new” in the second audit – just the confirmation of what original audit said.

              • Chris

                Oh? Hadn’t heard that. Why did he miss that out of his account, then? Link?

            • Raist3d

              He needed to commission an independent study without telling the board. The reasons for that should be patently obvious. He did raise several issues before resorting to what he did. You need to read what went on.

              • Chris

                I wasn’t talking about his decision to independently commission the report, just his decision to spring the findings on the board without giving them a viable chance to reply.

                If he didn’t have enough information to make specific charges then he weakened his case by not giving them a chance to reply. That is not very skilful.

                He seems a very principled individual, but also perhaps a self-righteous one. You don’t see the police arresting someone then going running to the media making insinuations when they don’t even have enough information to charge the suspect. The reasons for that should be patently obvious. Eye-rolling emoticon.

                • physguy88

                  By the time he got the second PwC report any corporation in the world would have enough cause to fire Kikukawa. The only question at that point was should the man also go to jail.

                • meh

                  But the Ernst & Young and KPMG reports that were previously done (look it up yourself on google, you will find plenty of articles on it) both showed the same issue and Olympus’s board response was just to dump the auditors and move along like nothing had happened..

                  There was nothing new in the last report, just that he wanted to commission one himself to be in no doubt I guess?

                • Raist

                  It is irrelevant in light that Olympus own audit was ignored years ago, along with all the letters and attempts to find a response. By the time he “sprung up” as you said with *a second audit* pretty much to the company, it was time for some serious action.

                  HE DID ask the board many times about irregularities before doing anything. Only when he was getting no answers he commissioned the independent audit- which as said- validated another independent audit the company had conducted already but ignored.

                  If you say “you don’t see the police running” blah blah blah is because he had quite extensive documentation about some rather serious irregularities. This show isn’t over yet in either case.

                  What I find quite appalling is how some people seem to ignore the crass mismanagement and potentially illegal dealings of Olympus and focus on Woodford.

                  • Chris

                    Raist. He has extensive documentation, but not enough to enable specific allegations of wrongdoing. This is hugely important.

                    What I find quite appalling is how some people seem to ignore the principle of ‘innocent until proven guilty’. It looks like Olympus have some serious questions to answer; quite properly the Serious Fraud Office and the FBI are investigating. They may find proof of illegal activity; they may not. Currently the Olympus board haven’t even been charged with anything, let alone convicted.

                    I’m not talking about the ‘crass mismanagement and *potentially* illegal dealings’ because I believe in due process and that to comment on the substantive facts of a case sub judice would mean contempt of court. I am not worried about breaking a law; I would believe the same irrespective of what the law is.

                    I believe Woodford made procedural mistakes; others may disagree. You may believe my statements are appalling based on your sense of morality; I believe yours is appalling based on mine. If Olympus are convicted then I shall condemn them; in the meantime I recommend to you the principle of the presumption of innocence.

                    • physguy88

                      I think you are confused.

                      Innocent until proven guilty BEYOND A REASONABLE DOUBT applies in criminal convictions. It does not apply to firings, or taking the case to the authorities who can then properly investigate wrongdoing, or discussing matters on the internet, or deciding whether you should purchase a product or dump a certain stock.

                      By asking Woodford to have prove Kikukawa’s guilt before going to the authorities, you are asking him to BE the legal system and meet criminal standards of conviction without having the resources of the government. That would be the definition of folly.

                      Woodford was obligated to go to the authorities after having reasonable suspicion of criminal wrongdoing, which he clearly does. He was obligated to confront Kikukawa on the shareholders’ behalf after realizing that Kikukawa and associates have caused enormous losses. For those things he did NOT need to have prove BEYOND A REASONABLE DOUBT. In fact, in civil litigation in the US, the standard of proof is PREPONDERANCE OF EVIDENCE, a far lower bar that Woodford has already met.

                      Kikukawa has been proven, by preponderance of evidence, to have caused enormous losses at Olympus. By Olympus’ own admission this is the case. This is more than sufficient to get him fired, and him being the Chairman of the Board, Woodford HAD to confront him in this way.

                      Latter events showed this to be prudent.

                    • Chris

                      I disagree, physguy88. I didn’t talk about to what degree certainty is required and nor did I say I cared about what particular legal jurisdictions might require. I just said that as a moral principle I believe in the presumption of innocence pending the results of a full investigation. Surely that’s not so controversial?

                      I’m not asking Woodford to ‘be’ the legal system anymore than I’d ask a prosecutor to also be judge and jury. He clearly has enough info to warrant a very serious investigation; what he does not have is enough info to warrant insinuating Olympus is entwined with organised crime etc.

                      The site won’t allow any more ‘children’ for the ‘parent’ post, and I’m taking that as a hint!:-)

  • It is interesting how Woodford came to the press with very specific business blunders that were committed and perhaps fraudulent, etc….and all that Kikukawa and the board can come back with are personal attacks (“he did not like Japan” ?????), against someone who truly had the interest of the health of the company and the shareholder as priority number one.

    • Brod1er

      Exactly my thoughts. The chair’s comments are very ‘playground’ compared to the specific allegations from Woodford. Where is the substantive rebuttal? Gives me an indication of which way this is going.

      • Ahem

        Yep, this is truly incredibly incompetent handling of the allegations from the (now former) CEO and Board. It frankly stinks. They have FBI and UK authorities investigating them, and it’s only a matter of time when the Japanese authorities can’t continue ignoring it further.

        • Greed is a disease…and it has been running rampant …worldwide. Ugly stuff.

  • Of course he had to resign. Pity he didn’t do that when Woodford asked him too! But hey, doesn’t every crook blame everyone else for their downfall? I’m sure the entire Olympus board will be gone by the end of the year, the shareholders will see to that. Extra-ordinary AGM to come?

  • MJr

    But Japan is awesome !

  • Alexander

    …he don’t have to like Japan but he has to love Olympus!

    I think I don’t have to wait anymore for a new Olympus camera. It is probably better to look for an other brand!?…

    • lnqe-M

      Question is, like he, fish and chips or sushi. :-D

  • So after reading those two NYT articles: looks like Nomura Corp = Yakuza Financial Crime School! Wonder what dirt/ hold they had on Kikukawa, or if he was just plain greedy? I doubt he’ll get to enjoy the money if that was the case.

  • Fuji/ Leica/ Olympus, will all be one happy family in a few years! I hope…..

    • Ben Y

      I hope not.

      • Ben, as much as I like my Olly lenses and camera, this company is making a lot of bad decisions. Consolidation is the way forward, because the market is over saturated with choice,and mobile phones are making huge inroads on camera sales. Those three companies between them have the market covered, from cheap p&s to medium format. Combine their tech and research; there would be a lot of nice toys coming our way!

        • hiplnsdrftr

          Every time I read somebody equating cameras with “toys” I just cringe.

          • DonTom

            Personally, I cringe when I hear someone cooling their camera a “tool”! Unless you happen to make your living from one. For me, and I suspect many others here, my m43 camera is part of a hobby. I doubt I would choose a M43 camera to make a living from, not yet. So mine is a toy to me!

    • Martin

      You forgot Canon, Nikon, Sony, Panasonic, Zeiss, et al.. Yeah, let’s make one big family, everyone will be happy. What a wonderful idea! :-/

  • Ahem

    This sordid affair will be a textbook case of how NOT to run a company and how NOT to communicate internally and externally – my criticism mostly pointed at Mr Kikukawa and the Board. What a miserable case.

  • > Director MCW was not satisfied unless he could control everything himself.” And the most surprising attack is that Woodford broke company management rules, and even “did not like Japan.”

    When they go ad hominem, you know they do not have a counterargument.

    Let’s just hope that would give the Oly chance to reshape themselves into something better.

    P.S. But isn’t it the point of being a CEO, controlling everything? Because CEOs, like, are responsible for everything? Boards sets the rules. C*Os control the company by the rules. Or Kikukawa’s idea of CEO is a puppet of the board? Few companies benefited from the board’s overreach.

    • Frederic Hew


      P.S. But isn’t it the point of being a CEO, controlling everything? Because CEOs, like, are responsible for everything? Boards sets the rules. C*Os control the company by the rules. Or Kikukawa’s idea of CEO is a puppet of the board? Few companies benefited from the board’s overreach.

      Well, the CEO reports to the board and in many countries can not act as the chairman of the board. His position is operative and his powers limited. Most strategic decisions require the approval of the board, some decisions require the approval of the assembly of the stock holders.

      The rules change from country to country, though, but in most it is more like a parliamentary as opposed to a presidential system.

  • fred schumacher

    The whole payout scheme sure looks like yakuza involvement. With Olympus stock price plummeting, some sharp investor is going to come in and buy up control of the company. Olympus is a viable, profitable operation, especially its medical branch, but a company can’t maintain profit if funds keep nebulously disappearing.

  • Nelson

    Man those are really juicy bit about Olympus’ past transaction, with that much money Olympus could make 4/3 and m4/3 much much better than today (like invest more into sensor stuff, more lens etc)

  • I notice that a certain Oly fanboy – who refused point blank to believe any part of the allegations – has stopped posting on the subject :)

    Funny really since some of his comments were echoed by Kikukawas schoolboy statements

  • no one is say what happened was right but the way Woodford has handled the situation hasn’t been too clever for the shareholders, Olympus or himself…

    • DonTom

      Actually, what Woodford has been doing is “proper”, not “clever”. Kikukawa was trying to be “clever”, and look where that’s going. When the shit hits the fan, the only way of emerging intact is to do the ” right thing”. Woodford suggested that path to Kikukawa and his most obvious crony, who instead tried to be clever and had Woodford sacked.
      Would you rather in be in Woodford’s or Kikukawa’s shoes right now? Kikukawa had a chance two weeks ago to fall on his sword for the company. Now he will always be known as the man who brought Olympus down.

      • Nathan

        The disgusting thing is that the board thinks this is fine. (Or, the majority shareholders are just this side of criminal, and feel like he’s their best damage control agent- and if he is, woe be to Olympus, because he’s weaksauce)

        His arguments may play well in Japan, where loyalty to structures of leadership is so strong, but will not play on the global stage, where results matter more than family name or org chart position.

        Outside of Japanese corporate loyalism, bullshit still smells. Inside it does, too, but everyone puts on their polite smile and pretends it’s lilacs and lavender.

    • Ahem

      You are blaming the wrong person. He tried to be “clever” for the shareholders, but the company and its Board ignored him. His best course of action was to go to the authorities, as they would have likely found out about the alleged wrong-doings sooner or later, and Mr Woodford would have been also to blame if he didn’t pursue the matter further.

  • bilgy_no1

    > Director MCW was not satisfied unless he could control everything himself.”

    This is one of those statements that says more about the person saying it, than about the person who is mentioned…

    • Nathan

      Yeah, it basically says no lanky white dude’s gonna tell ME what to do, even if he outranks me and even if the board appoints him to the position of GENERAL MANAGER, for some reason he wants to MANAGE EVERYTHING IN GENERAL.

  • Nathan

    Doesn’t look like Yakuza at all. Yakuza don’t do this, don’t do it from the Cayman Islands, and don’t deal with this kind of thing. They deal with less glamorous things.

    • That’s not entirely true; Yakuza dealings, depending on your definition of “Yakuza” and which particular “organization” you’re talking about, can range from petty street dealings and the like up to business malfeasance like this.

      That said, this whole thing is more likely to just be rampant corporate cronyism, greed, and kickbacks–traditional shady business shenanigans, which are all too common in Japan at the higher levels of both corporate and government management (and there’s very little distinction between the two when it comes to job-hopping and mutual back-scratching).

      Point being that it could be Yakuza-influenced in one way or another, but it’s just as likely, if not more so, to be white-collar crime rather than organized crime.

  • fd

    That’s pretty pathetic, he wouldn’t be quitting if he didn’t feel guilty and throwing in a cheap and poorly veiled accusation of racism is quite frankly disgusting. I think it’s quite obvious now that something has been going on.

    • Frederic Hew

      In Japan resignation means assuming responsibility, not necessarily taking the blame.

      • And where in his statements did he assume responsibility? And by the way, responsibility for what? ;~)

        • Frederick Hew

          I was commenting on Japenese culture, not K’s statement. I think he was made to resign and that the board expect more trouble, possibly a criminal investigation. He was sacrificed in an attempt to prevent one.

          • bilgy_no1

            ‘sacrificed’ is not the same thing as ‘assuming responsibility’

            The irony is that Woodford first contacted the man himself and suggested he step down quietly, without all the fuss and personal damage. K. then tried to ‘solve’ things by expelling the CEO. Good thing that in the end, he does have to go.

            This is looking more and more like a shock experience for Japanese business culture. Two things may happen: corporate governance is honestly reviewed in order to prevent future mishaps like this, or Japan’s corporate hot shots become even more closed (i.e. the lesson would never ever again to hire one of those stupid western CEOs).

  • anonymous

    no body likes Japan. except Sushis, Hotvideos, Bikes, Cameras…

  • Brod1er

    I wasn’t convinced at first, but I would be surprised if Olympus wasn’t now sold and/or broken up. This is disastrous for the company. Ironically, the role of the Chair and Board is to ensure the company is run in the best interests of shareholders and not self seeking executives. The allegations reveal the opposite at Oly. Very sad.

    • Actually, depending on how it went down, that might not be a bad thing. I’m of the opinion that more variety in the m43 field means better cameras and lenses for me to choose from (if only Fuji had joined up!), but Olympus’ imaging division has been doing a relatively shoddy job of marketing their good stuff, and has been slow to develop better stuff in comparison to Panasonic, which seems much more aggressive at least in terms of development.

      So if Olympus were to break out its imaging division into an independent company, or to sell it to someone (other than Panasonic, which sadly is the most likely) who would more aggressively attack the market and try to expand it, it might actually bode well for the format (and brand) in the long term.

      Not saying any of those things are necessarily likely, but they’re at least possible, and it doesn’t hurt (too much) to be optimistic.

  • Nathan

    Yeah, these “defenses” are quite weak and childish. I read his report as well as the memos that he sent. He clearly was thwarted in every attempt to gain insight into the size of the payouts, the decisions in M&A leading to the acquisition of the companies, and the competence of those involved.
    Still, Olympus does not want to discuss how TWO YEARS OF PROFIT managed to go into a hole in the Carribean, for consultancy fees on businesses that were not only not a good idea, but were not in Olympus’ core business sectors.
    It’s as if Dow Corning spent a year’s profit in advisory fees, and the given advice was to buy Victor Mousetraps. It’s unfathomable.

  • tttulio

    We were prepared to give him 20% to be the fall guy. He rejected the offer.
    He did not like fraud.
    P.S. MCW loves Japan. Olympus was being “advised” by a Wall Street broker. So don’t blame Japanese culture.

    • ihateidiots

      Actually, Japanese and Asian corporate culture in general are way more screwed up than most Westerners would like to imagine…

      • I heard in corporations it is the same old feudalism and clan wars.

      • Based on comments from my Japanese wife, and the sorts of things the Japanese media (who are fairly conservative and insular) reports on, that’s all too true.

        Certainly, the longstanding cultural tendency to value seniority over talent has hurt them as the rest of the world starts pushing more aggressively, and while the higher-stress industries (say, cars, or some types of entertainment) have already been forced into a more talent-driven style, the slower-moving fields have not.

        Just look at what’s been happening to Sony as other (foreign) companies aggressively move in on its former strengths–total collapse in portable devices, and not doing a whole lot better with gaming now. And the collapse wasn’t from lack of skilled engineers, it was due to management just not getting it, and either hamstringing their own people or pushing them to work in the wrong direction out of misguided loyalty to the status quo, other divisions within the company, and formerly-easy profit.

        Cameras are a particularly glaring example, since outside of Kodak at the low end and some European companies at the extreme high end, essentially ALL the camera companies are Japanese. Hence, no external pressure, only internal fighting amongst each other, which allows companies like Olympus to sort of stroll along without really having to fight for success.

        Not trying to insult the people working in the imaging division–they’re obviously doing some good work, or I wouldn’t be buying their products–but the management isn’t where the push for new, better, and more creative things is coming from (or at least not enough of it).

  • MK

    the story and comments are great and all but im wondering, is Kikukawa 3 feet tall? i think he does not even like tall people? BOOM ad hominem

  • Trevor

    Wow, the NYT article sums it up well:

    “Ultimately, Olympus spent $687 million on fees, or 36 percent of the value of the Gyrus deal, according to PricewaterhouseCoopers. An adviser’s fee typically amounts to about 1 percent…’No one would have entered into this transaction if they were showing good business judgment,’ [Jeffrey Manns] added, as most countries prohibit corporate boards from ‘rubber-stamping” such large fees.”

    Kikukawa can say all he likes about Woodford, but at best this was a TERRIBLE business decision and should cost Kikukawa his job. At worst, it’s criminal and may cost Olympus their status as a company.

  • safaridon

    Please haven’t we heard enough about this episode already? I thought 43rumors was supposed to be a discussion of rumors of m4/3 products? These discussions of he said he said certainly do not help Oly and not directly related to discussion of their camera products so why publish them?

    • hiplnsdrftr

      I think the point is that this event and it’s outcome can greatly effect future MFT products.

      Three months from now when there are no new products announced you will wonder about the reason… Well this is the reason.

    • Esa Tuunanen

      Do you think any investors will trust Olympus if this thing isn’t investigated and cleared thoroughly?
      It starts to looks like that 687 million was just top of the iceberg of either management’s horrible level of incompetence causing Olympus major losses at best or managements criminal actions at worst.

      And neither are these meaningless for us buyers of m4/3 products:
      Now we know why Olympus’ much louded mirrorless replacement for E-system is still in poor very narrow footing state all the while Olympus should have been using last years to utilise m4/3’s head start again competition for establishing healthier wider product range. (now both Sony and Samsung have more variety in their mirrorless bodies)
      It’s now essentially up to Panasonic to keep m4/3 up against competition until damage caused by this management is corrected… and let’s hope it doesn’t take more than year or two from camera division of Olympus.

      • > Do you think any investors will trust Olympus if this thing isn’t investigated and cleared thoroughly?

        No. They’re already stating that after the resignation announcement. They want a full disclosure, and they want to know what the board actually saw and acted on. In other words, the resignation changed almost nothing.

        > It starts to looks like that 687 million was just top of the iceberg of either management’s horrible level of incompetence.

        It’s always looked like that ;~). This whole thing has been brewing for quite some time. I get the impression that the big shareholders are actually happy that it’s boiled over, even as they’re unhappy at losing money. Under Kikukawa’s reign, he’s almost doubled sales and hasn’t moved the profit bar one bit. He was very aggressive on acquisitions, but it’s unclear if those have really provided any real benefit. For almost five years now I’ve been receiving comments about how Olympus’ results weren’t what investors were expecting. At this point, we have some real numbers to put on some of those problems, but no explanation of why.

        > Now we know why Olympus’ much louded mirrorless replacement for E-system is still in poor very narrow footing state

        No, I don’t agree with that statement. It’s clear that Olympus has been badly mismanaged at the very top. I’ve been saying for some time that Olympus’ camera group has been bad at marketing and execution. But there’s no DIRECT connection between those two things that has been revealed. There certainly could be a connection, as in “Olympus was just poorly managed all across the board,” but we have no evidence of linkage to the current scandal.

        • > I get the impression that the big shareholders are actually happy that it’s boiled over

          It sounds as if you know who are the largest owners of the Olympus stock. Care to elaborate?

          • There are no secrets there. I’ve been in contact with someone in one of those investing parties, and I’ve been following the Japanese and Tokyo foreign press as they’ve interviewed analysts and interested parties. I’ve stated my impression, and it’s just that, an impression.

    • Actually, the issues DO relate to the camera division. Kikukawa was the one who moved Olympus into digital cameras, it’s his baby. His successor, who was running imaging, is now CEO. That can mean one of many things, but it means the person who was watching out for imaging now has other distractions on his hands and there will be a new manager in his place.

      One problem with all this is that the new CEO was also on the same board. So now the taint is starting to work its way down in the management chain. If you suspect he was lax in his duties as a board member, what does that say about who he’ll promote to take his position as head of imaging? When Woodford used the word “toxic,” he actually meant it: there’s a poison in the management that’s potentially spreading, especially given the way management works in Japan.

      Investors are still saying the same thing this evening in Japan: without an explanation and a full accounting of the board’s review, nothing has changed with Kikukawa’s resignation.

    • tub33

      Until Olympus management says exactly what happened people will continue to discuss it. Everyday I see many article headlines and summaries that I don’t read because they don’t interest me. Can’t you just skip over these kinds of articles?

  • NineFace

    This is why I don’t hire an outsider

    • elleyy

      amend. why a euro? they want to dominate the euro countries better i guess.

  • Jack Leong

    Hmm, do I sense a downfall coming to the four third?

  • flash

    Shuichi Takayama is the new president, he is an electrical engineer from the imaging division! The last two presidents did not seem to like the imaging division, in their own way. I congratulate Shuichi Takayama and wish him luck. I do not know when he was put on the board or if he was involved in the Gyrus deal will find out, but he is only 61.

    Woodford once again stated he knows of no crime or fraud. He then went on to say that the whole board is toxic. As such, his real purpose is to hurt the company that fired him, their might be fraud or might not (auditor speak, damm sounding like the pricewhaterhouse report; I wonder what price did as far an audit or did they only do a review of possible ramifications this has not been reported); but it does not mean the company is fraudulent. Tsuyoshi Kikukawa did have an apology, it is hard to translate properly, but it deals with share prices and something else. As we say from where I’m from BYE and don’t let the door hit you on the way out; the door is hard to repaint.

    • We’ll see soon enough if the shareholders agree with Woodford on the board’s toxicity. But whether they’re toxic or not they share a trait with many other corporate boards: they’re not very independent and they don’t seem to have done their job. When you have boards like that, the company is only as good as the person actually running it.

      • flash

        Most boards in the US are compose of members who like to go to meetings and not use due professional care in reviewing items. Some CEO try to make sure of that, I remember once a new Director was appointed to a board, at a corporation where I was at the time, seemed to be amazed that was not the case at the corporation. The CEO, who was extremely self confident and talented, there really wanted the board members to work and lend their expertise. Indifference to the success of the company is the problem with a board that is to much outside the organization, not enough skin in the fire so to speak.

        Inside boards seem to be insestous at times, maybe Olympus was, in any case if your Boss (who has an emperor complex) shows you some numbers that he or she says is good saying otherwise is not good for your career whether you are a director or intern. It is better to have a mix, but there is no automatic piloting due to make up; so more importantly get good people in the board room or any place else, I always say “good people do good things.”

        The Olympus committee to investigate the transaction needs members who represent the major shareholders of Olympus as well as individuals who have great merit in corporate governance. At this time, I do not see any reason that Olympus will not do this, even if it members of the board are in question. After all, they reportedly being investigated by the Japanese equivalent of the US SEC, not to mention the UK Serous Fraud Unit. The FBI investigations if real are should only be on the periphery, as not much happen in the US. The unfortunately thing is these types of investigations require some time, are generally done in confidence, some times results are never released even after they are completed, and in the mean time the stock will be manipulated, reputations ruined.

        That is why a good internal investigation is crucial to build the major shareholders confidence now. They should start announcing the make up before the end of next week. I do think a shareholder more or less telegraph that they would be involved with the committee, maybe wishful thinking on my part. Large public accounting firms are not necessarily the right way to go, this type of auditing is done by individuals not financial audit practice workbooks. I’d start with a timeline that included all the “agents” of Olympus that were involved and of course the Olympus executives, then transaction forensics details going back and forth between the two till it was done, with an occasional interrogation to break up the tedium of it all; this is all much easier to say then do well. It is interesting, if fraud was involved by the Olympus executives and/or the “agents”; Olympus has a good chance to recover some of the money.

        • One of the issues in corporate governance has always been oversight. As lax as the US oversight has been, Japan’s is far more so.

          It’s not unusual to have NO outside interest represented on the board–basically all upper level managers within the company, maybe a couple who’ve retired from the company. If you play the game correctly, you slowly move from salaryman to manager to executive to head of something to high-level executive to board to CEO/chair. Your mentors, buddies, and proteges all follow the same path as long as they don’t rock the boat or make any mistakes that are big enough that there has to be a public shaming (typically lateral “promotion” or “retirement”).

          It’s really hard to figure Olympus at the moment. Woodford’s appointment was a surprise, outside the usual management promotion process in Japan. He then basically attacked something that the traditional management team did wrong, and the response has been to go back to traditional Japanese patterns. When Kikukawa couldn’t survive that, we got his next in line, Takayama. But Takayama’s remarks yesterday in taking over the CEO position basically were no different than Kikukawa’s: we have no problem, Woodford is the problem. That Takayama was on the implicated board is just another example of what I mean by the incestuous corporate oversight that’s not really overseen well by government watch dogs.

          The problem here is that as long as Takayama looks like Kikukawa-light to the investment community, nothing will change. The same calls for an independent investigation will continue, the stock will continue to be under stress, and we’ll all wonder where the answers are.

          If you want a real eye-opener, check out Jake Adelstein’s take at http://www.japansubculture.com/2011/10/olympus-bringing-it-into-focus-a-special-breach-of-trust/. One interesting quote: “The Yubitoma case in 2007, the taking of Lehman Brothers Japan for 350 million by a yakuza connected firm Asclepius in 2008, and other cases bear a striking resemblance to what seems to have happened at Olympus.”

          If true, then Olympus’s high management somehow got taken by criminal elements, and now they’re in cover-up and denial mode. That means the real problems are two: (1) how does Olympus rid themselves of all vestiges of this “anti-social” problem; and (2) how far down will the blame have to go for #1 to be achieved? This explains Woodford’s “the board is toxic” comment, by the way. It explains Woodford’s attempts to disengage from those transactions and remove those that were involved. It explains why he is fearful for his safety (as would be Kikukawa at this point, though there’s little chance he’d admit that).

          An “internal investigation” will do no good at this point. The fingers are all pointing inward. There needs to be a clean “external audit” of Olympus, with full disclosure of who approved what.

  • flash

    I like the caption. “Before friends, now enemies. Kikukawa and Woodford” look at their eyes in the photo. They seem to be ready to stab each other. The saying is shake with your right stab with your left.

  • I wouldn’t like Japan either if I was working for a corrupt jerk like him.

  • Boooo!

    Don’t worry, Olympus will be reborn using nano four thirds.

    Unfortunately, your micro four thirds lenses will take three seconds to focus on nano four thirds bodies and will be too large for matchbox-size cameras. Sorry. You’ll have to sell and buy into a lesser-specced system without any buttons and dials.

  • According to NYT the new President was the head of the Olympus Imaging department…

    “Mr. Takayama, 61, a 40-year veteran of Olympus, most recently led the company’s imaging business.”

    Hope this means that they put more effort on the Camera development and advancement.

    • lnqe-M

      Yes, Olympus need concentrate more by camera and image department.

    • flash

      I understand that Mr. Takayama is a trained electrical engineer, Kikukawa was a political science major, and Woodford a marketing major. Where i’m from an EE degree is very hard to get and Political or Marketing is very easy, fluff. Now both Kikukawa and Woodford have the same position discredited “back benchers” with the company.

      Hopefully, Mr. Takayama can right this ship. He has been in a lot of positions and parts of the company, so he probably knows the company very well. He just started to run the Imaging Division last April, since then it is profitable. On page 2 is a little information about him http://www.olympus-global.com/en/corc/ir/tes/pdf/nr111026.pdf

      The question is where was he when the M&A stuff was going down. By position in the company, at the time Woodford was in a position to know more then more of the Gyrus take over then Mr. Takayama.

  • John

    Not surprising at all. Corruption is Japan is omnipresent.

  • elleyy

    Mr. Woodford needs to understand about business better. Every business, corporation does and have its own “business”. No business is straight. Business is business. or other word, business as usual. :)

  • So now there’s reports that Takayama quit? But it could just be false or a typo?
    http://www.mcall.com/news/local/allentown/mc-center-valley-olympus-scandal-local-impact-20111026,0,130556.story

    • flash

      Funny, the article is right, but the caption and headline are not, well until maybe next week :).

      • It seems that the article was corrected: it is about Kukikawa quitting, not Takayama.

        After reading few quotes from Takayama, I too think he will not last long in the chair.

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