November 24, 2011 5:18 pm

Three directors resign from Olympus

Olympus, the Japanese camera maker, said three directors accused of orchestrating a massive accounting deception had resigned from the company, and hinted that more executives would leave in the coming months in a broad management overhaul.

The announcement on Thursday was the latest attempt to contain damage from one of Japan’s largest accounting scandals, involving more than $1bn in diverted funds and allegedly falsified financial records stretching back two decades.

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It came on the eve of a board meeting at which Michael Woodford, the former chief executive who exposed the affair, was to face the accused directors and other board members for the first time since he was dismissed last month.

Mr Woodford, who has said the entire Olympus board was “contaminated”, called the resignations “an encouraging development”. He said he still planned to attend a scheduled board meeting on Friday morning, having returned to Japan from the UK this week to speak to Japanese authorities investigating the case.

The three men who quit – Tsuyoshi Kikukawa, Hisashi Mori and Hideo Yamada – had already given up or been stripped of their executive posts, but they remained on the Olympus board.

In a statement, Shuichi Takayama, Olympus’ president, suggested other top executives would stand aside at the company’s annual shareholder meeting next summer. “We managers are prepared to give up our jobs when the road to Olympus’ recovery is visible,” he said. “It would be intolerable for current management to engage in self-protection.”

Olympus is still at risk of delisting from the Tokyo Stock Exchange, a fate some analysts say would be standard punishment for accounting problems on such a scale. But speaking at a panel discussion in Tokyo, Mr Woodford appealed strongly to regulators to allow continued trading in the company’s shares.

“I’m totally against delisting for the following reasons: I think it would be bad for employees, I think it would be bad for shareholders and I think it would be bad for any stakeholder,” Mr Woodford said, even as he encouraged law enforcement officials and regulators to continue investigating the accounting. “Don’t delist Olympus, it won’t help.”

Japanese media have given increasing attention to the Olympus scandal in recent days, giving close coverage of Mr Woodford’s return to the country, although it is still unclear how determined Japanese authorities are to get to the bottom of the scandal.

Mr Woodford said meetings on Thursday with prosecutors, Tokyo police and senior officials at the Securities Exchange and Surveillance Commission had left him with a “sense of relief” that authorities were taking it seriously.

“They gave assurances to me – I won’t go into the details – but they will follow the money flows,” Mr Woodford said, adding that the eyes of the world’s media were on the investigations. “I do think justice will be done.”

Speaking before news of the resignations broke, Mr Woodford suggested Friday’s board meeting might be “horribly uncomfortable”.

“I’ll have to have a few gin and tonics to prepare myself for that,” he joked.

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