Woodford drops Olympus CEO bid

The ousted British CEO of Olympus Corp, who blew the whistle on a $1.7bn accounting fraud, dropped his bid to return to the medical device maker, blaming cosy ties between its scandal-tainted management and big Japanese shareholders and saying the saga had taken its toll on his family. Michael Woodford’s campaign against its management rocked the once-proud maker of endoscopes and cameras, but failed to win over Japanese institutional shareholders including Olympus’ main lenders, who support a board that has been castigated for insufficient oversight. “Despite my having done the right thing, none of the major Japanese institutional shareholders have offered one word of support to me,” Woodford said in a statement. The decision by Woodford, who was fired in October after just two weeks as chief executive, leaves foreign shareholders who want a new slate of directors, including US fund manager Southeastern Asset Management, without a champion to lead any proxy battle when the company convenes an extraordinary shareholders meeting as early as March. Woodford told a group of journalists yesterday that he would sue Olympus for unfair dismissal and had instructed his lawyers to begin legal action in Britain. Olympus said in October it was sacking Woodford because he had failed to understand the company’s management style and Japanese culture. “There are no grounds whatsoever for dismissal,” Woodford said. Woodford, who fled to England after his sacking citing unspecified safety concerns, said the trauma suffered by his wife after he went public with his campaign played a major part in his decision to drop his bid to return to Olympus. “It’s been a frightening period for my wife. I cannot put her through any more anguish,” he said in his statement explaining why he was abandoning his battle to be reinstated. Olympus is being investigated by Japanese police, prosecutors and regulators and US and British authorities over the scandal, in which the firm used dodgy M&A deals to hide investment losses stretching back over two decades. Woodford also said yesterday he would give an interview next week at the UK Serious Fraud Office.The scandal at the 92-year-old firm revived concerns about lax corporate governance at Japanese companies generally and sparked speculation that organised crime syndicates were involved in the cover-up. An external panel appointed by Olympus to investigate the scandal in December issued a scathing rebuke of core management but said it found no evidence that gangsters were involved. The company’s main lender and major shareholder Sumitomo Mitsui Financial Group (SMFG) is backing existing management led by CEO Shuichi Takayama, which is seeking a capital tie-up with a rival firm to bolster Olympus’ finances. Olympus’ net assets are dangerously thin after it corrected its accounts to include the effects of the 13-year accounting fraud. Shareholder equity was just ¥42.9bn ($556mn) at end-September, or 4.5% of total assets - less than a quarter of what is seen as a healthy cut-off. A 20% proportion of equity would imply that it needs to raise about ¥150bn in fresh equity. Japanese media have reported that Sony, Fujifilm Holdings and Panasonic Corp are among those that may ride to the rescue of Olympus.