Monday, November 14, 2011

Olympus urged to bring chief back

A former director of scandal-hit optical equipment maker Olympus has launched a campaign for reinstatement of its ousted British chief executive, saying Michael Woodford's return is crucial to the "painful restructuring" needed to save the group.

The call from Koji Miyata, former head of Olympus' medical systems business who served on the board from 1995 to 2006, adds to the pressure on the 92-year-old company's management amid a scandal that has shaken faith in Japanese corporate governance.

It came as Tokyo regulators struggled to decide how to handle the scandal and Singapore's sovereign wealth fund disclosed that it had sold its 2 per cent stake in Olympus.
Other large foreign Olympus shareholders have called for a return by Mr Woodford, who was fired after he raised questions about a series of acquisitions in which the company paid $1.4bn to obscure advisers and Cayman-registered funds.

After initial denials, Olympus has admitted that it used the deals to dispose of investment losses it had been hiding since the 1990s.

But the company's new president, Shuichi Takayama -- who previously defended the payments -- has continued to insist that Mr Woodford was sacked because he was a "high-handed" manager who did not understand Japanese culture.

In a statement on a campaign website set up at the weekend, Mr Miyata called for Olympus to offer an apology to Mr Woodford for "the baseless aspersions cast on his character".

Olympus should invite Mr Woodford to return as president to push reforms that would make the company a model of excellence "complying with the highest standards of corporate ethics", Mr Miyata said, asking current and former employees to sign an online petition.

By early evening in Tokyo on Sunday, the petition carried the names of almost 40 people described as former or current employees, along with others who registered anonymously.

Mr Woodford told the Financial Times last week that he was prepared to return to Olympus. However, such a return is sure to be fiercely opposed by the current management and could further strain the internal unity of the crisis-hit company. "A complete newcomer would be better," said one Olympus manager on Sunday.

The Olympus scandal has raised questions about the efficacy of Japanese regulators. On Friday, the Financial Services Agency confirmed it was examining the Olympus case, while the Tokyo Stock Exchange has put the company on watch for possible delisting and police are reportedly investigating.

It is still unclear how rigorous such examinations will be or how far they will go to make clear how Olympus suffered the losses it was trying to hide and who might have benefited in the process of concealing them.

Japanese media on Sunday quoted sources at the Securities Exchange and Surveillance Commission as saying it had already concluded that all the losses had been fully written off and that the SESC might thus recommend Olympus be subject to only an administrative levy.

Singapore's sovereign wealth fund, which manages more than $300bn of funds, said it had sold its 2 per cent shareholding in the troubled Japanese medical equipment and cameras group when indications of wrongdoing first emerged.

GIC retains an "insignificant" indirect holding, but the announcement it has sold its direct stake could further undermine confidence. GIC was Olympus' 10th biggest shareholder at the end of March, according to the company's latest annual report.

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