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Last updated: October 14, 2011 9:40 pm
Michael Woodford, the British chief executive of Olympus who was sacked on Friday, has raised questions about more than $1bn in payments made by the Japanese camera maker in acquisitions between 2006 and 2008.
Mr Woodford’s dismissal came just eight months after he was named president and chief operating officer of the Japanese electronics brand and barely a fortnight after he became chief executive. He was one of the few foreigners to run a major Japanese company, and his elevation in February had been seen a sign of a more open and global corporate Japan.
In an interview with the Financial Times, Mr Woodford said he believed that he had been sacked over his inquiries into the acquisitions, which took place before he joined the board. He was not allowed to speak at Friday’s board meeting that voted unanimously to dismiss him. “They told me to catch a bus to the airport,” he said.
According to documents shown to the FT, Mr Woodford – who spent 30 years at Olympus – had been pressing other directors since July to explain payments related to the 2008 purchase of Gyrus, a UK medical equipment company, and three earlier acquisitions in Japan.
Olympus’ own auditors had privately identified problems with the Gyrus transaction, the documents show. KPMG, Olympus’ auditor until 2009, said in an internal report dated March that year: “In our opinion proper accounting records have not been maintained.”
Olympus replaced KPMG as its auditor when its contract ended two months later. KMPG declined to comment.
In a statement announcing his dismissal, Olympus said Mr Woodford had diverged “from the rest of the management team” and this was ”causing problems for decision making”.
The dismissal represented an abrupt reversal. When promoting Mr Woodford to chief executive two weeks ago, Tsuyoshi Kikukawa, chairman, said he was “extremely pleased” with the Briton’s leadership, which had “exceeded my expectations”.
Shares in the group plunged 18 per cent on Friday. Mr Woodford had been pushing through a restructuring plan at the group.
Mr Woodford stressed that he had seen no evidence that Olympus executives benefited improperly from the acquisitions. But he said large amounts of money seemed to have “disappeared” into the hands of poorly vetted outside financial advisers and investment vehicles.
In a letter to Mr Kikukawa dated October 11, he described “a catalogue of calamitous errors and exceptionally poor judgment which … has resulted in the destruction of shareholder value of $1.3bn.”
In the Gyrus case, the documents show that Olympus paid $687m to a Cayman Islands-registered company, AXAM, that had been named as a financial adviser but whose ultimate owners were never ascertained by Olympus. The company disappeared from the trade register three months after receiving its final payment from Olympus, Mr Woodford said. The amount paid represented about a third of the $2.2bn acquisition price.
Olympus declined to comment on payments made to financial advisers. A report commissioned in 2009 by Olympus’ audit committee found no illegality in the payments. It also declined to discuss any other aspects of Mr Woodford’s claims. “We have disclosed everything we are required to disclose,” the company said.
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