Olympus gets government grilling after firing nosy Brit boss
Japanese prime minister cites multimillion dollar 'irregularities'
The Japanese prime minister has called for clarification from Olympus’ board of directors over hundreds of millions of dollars in fees paid out during recent takeovers – deals the company’s short-lived British CEO claims he was fired for investigating.
In an interview with the Financial Times, PM Yoshihiko Noda said the board must clarify why it paid such high fees in its activities - money which appears to have been paid into tax havens. Noda also said that Olympus may bring other Japanese firms into disrepute.
It's highly unusual for such a senior political figure to raise concerns about corporate life, but the Olympus case has many people nervous.
“What worries me is that it will be a problem if people take the events at this one Japanese company and generalise from that to say Japan is a country that [does not follow] the rules of capitalism,” Noda said. “Japanese society is not that kind of society.”
At issue is the $687m paid out in fees after the 2008 purchase of the Gyrus Group, a British medical device manufacturer, for approximately $2bn. The amount far exceeds the usual fees paid to consultants in such a deal, and have raised fears of financial irregularities.
In April, Olympus appointed its first non-Japanese president, Michael Woodford – a British 30-year company veteran – and then promoted him to CEO six months later. However, two weeks after being unanimously voted in, he was unanimously voted out – a decision he said stemmed from him asking too many questions about the fees paid in the deal.
“Michael C. Woodford has largely diverted from the rest of the management team in regard to the management direction and method, and it is now causing problems for decision making by the management team,” the company said at the time.
However, the questions Woodford raised have not gone away, and the company has found itself under increasing scrutiny. Last week, Woodford’s replacement as president, Tsuyoshi Kikukawa, was forced to step down as speculation over the affair grew and Olympus’ share price almost halved, wiping billions from its value.
Southeastern Asset Management, which owns about five per cent of Olympus’ stock, has now also chimed in, with a letter of concern it sent to the board on 20 October but has not made public. It said that it is very concerned by the Woodford allegations and requested the board minutes covering the transactions and details on why so much was paid in fees.