Olympus gets government grilling after firing nosy Brit boss
Japanese prime minister cites multimillion dollar 'irregularities'
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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.
COMMENTS
Surely this IS the capitalist way?
Lie, cheat, and steal what you can when you can, then do a runner when somebody mentions the word "irregularities"...
Japan *is* that kind of society!
The Japanese PM should indeed worry, because Japan *is* that kind of society and eventually people around the world will realize.
I have lived in Japan (Tokyo) for 7 years, put up with the corporate waste there for way too long only to realize that it isn't limited to companies - it starts right at university where teachers do not need follow their own rules. In the education system - as in the corporate world - the powerful count on the omerta (a code of silence within the society) to do whatever they like, including not doing their job. Without accountability whatsoever.
Mr. Woodford should be commended for speaking up. It cost him a job, like it cost me a lot of aggravation during my MBA program (and nearly the degree itself), but this is the price to pay for staying true to one's ethics when dealing with the Japanese society.
There certainly are great individuals in Japan, but as a society I am now convinced that Japan is doomed, and so are the foreigners that decide to make dealings with it. If not in the short term for quick one-offs, in the long term at least.
Not 'doomed' so much as 'restricted'...
I've just shocked myself by finding that the single book that most reinforced my "world outlook", Tribes by Joel Kotkin, is almost 20 years old. Yet in that time I've not seen anything that contradicts the impressions I derived from that book of the nature of the various world cultures.
The impression of Japan is one of a fundamentally, even necessarily insular, inward-looking society. Fascinated by all that is gaijin, it still treasures at heart only what is Japanese. Thus while there may be adoption for appearance's sake of alien conventions, there will be reliance (comfort?) only on what stems from values internal to society.
(Already some have reached for the downvote button.)
As you say, individuals are, well, individuals and can easily be treasures in themselves. And this is a great hope for Japan and all cultures, that individuals may internalize that which is good, or should I say better, from 'outside' cultures and integrate that back into the then richer home culture. This is one of the effects noted in the book, how cultures have been enriched by the various diasporas.
I am afraid that my outlook has been only reinforced over these 20 years. _As a society_ neither Japan nor India will be able to stay at or push to the foremost rank. Individuals will be successful, to be sure. But individuals from those societies are more likely to be *individually* successful outside of those societies, due to the self-reinforcing limitations on individuals inherent in those cultures.
China has a chance to outdo many cultures if it escapes its own inherent traps. But even there many of the same pitfalls seen in India and Japan, heirarchicalism for example, are possibly too embedded to be escaped. This is after all where the people quote the saying "The nail that sticks out gets hammered down". (Hmm, people seem to disagree whether that saying came from China or Japan... hmm...)
Now lest you condemn me as some ... whatever your current demon description of choice is... I am not particularly ignorant or backward. I surprised my doctor by guessing she was named after Sonia Gandhi's daughter, given her likely age. I understand why a friend is trapped in a foreign land by its distinctly better social system, and can't return to my benighted state. And I regret not being able to speak the other language of this region, and because that ignores our local history.
Rather, please understand that what the book looks forward to, the hopeful result for "the future", is an increased and fruitful cosmopolitanism, with each of us enriched by the 'other', while still retaining our 'selves'. Whether we will be able to do that while still surrounded (contained?) by our "home culture" is an open question. Unless, of course, that home culture is able to expand and accept influences from those 'others'.
One can hope that the honorable AC can come away from the last 7 years with sufficient positives to counter-balance the trials. AC-san will surely now treasure both politeness and being forthright.
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