EXCLUSIVE INTERVIEW: Olympus whistleblower to fight for camera business survival (update3)

Ousted Olympus CEO Michael Woodford will not rule out a return to the company he worked at for 30 years and cannot see himself working for another camera maker.



Woodford
Ousted Olympus CEO Michael Woodford (pictured) will not rule out a return to the company he worked at for 30 years and cannot see himself working for another camera maker.

Woodford, who last month relinquished his campaign to return as CEO – citing lack of support from large Japanese investors and the stress on his family – said: ‘I never rule out anything.’

Though a return seems unlikely, he tells Amateur Photographer (AP): ‘I’ve never stopped nurturing or caring about Olympus. I’ve never sold my shares and I will always have an interest in Olympus.’

Woodford does not regret stepping away from his comeback bid and believes he may have actually gone on to win back the top job.

But he concedes it was a ‘critical period’ for the company, which is one of the largest in Japan.

He received backing from overseas investors but, crucially, not large Japan-based Olympus shareholders. ‘If I’d gone back as president, re-elected, there would have been a hostility towards me and I don’t think that’s the right premise to lead a campaign, or for the good of the company, never mind how untenable that would make my working life.

‘People begged me to carry on but I think that would have been my own vanity… It was a very hard decision to make – I cannot change the whole mentality of Japan, that would be fanciful.’

The Brit was speaking just hours after hosting a press conference in London following the arrest of seven top officials, including former chairman Tsuyoshi Kikukawa, in connection with the £1.1 billion cover-up.

The 'net is widening'

He describes the arrests – which he had received word of in advance – as ‘a day to remember after going to hell and back’, a sign that the ‘net is widening’ and vindication for his efforts.

‘When I met the Tokyo prosecutor in November… they told me that every stone would be turned and every money flow would be followed.’

Despite Olympus owning up to the fraud last year, Woodford maintains there are still ‘large questions’ to be asked about the auditing processes, banks and the sources of funds used to disguise investment losses stretching back to the 1990s.

In addition to dubious corporate acquisitions at the centre of the scandal, Nikkei newspaper claimed that most of the ‘100-plus’ firms bought during Kikukawa’s tenure were losing money and involved non-core activities such as ‘pet care services’ and ‘DVD production’.

‘Who received money from Olympus for all these companies?, questions Woodford. 'A lot of it was hidden under “other” categories in the accounts. It’s bizarre. It’s Alice in Wonderland.’

'Toxic' Olympus must be cleansed

Yesterday, Woodford voiced his fears for the future of the camera business amid speculation that Olympus may form a partnership with another company.

It is perhaps a sign of his passion for its survival that Woodford hotfooted it to AP’s central London offices on a day he was being pursued by business journalists worldwide.

‘You know, if the corporation is managed properly, its medical business should be immensely profitable and the camera business can remain a part. It can never be particularly profitable… but the lens and sensor technology, and the name – it shouldn’t die or be shrunk.’

He doesn’t believe Olympus would be able to hive off its camera division while probes into the scandal are ongoing and many viewing the firm as ‘toxic’.

‘I don’t think they could sell it. I have said that publicly. Who would buy it? And it would be very expensive to close. It would put a further strain on the balance sheet.

‘It should live on, but it needs support. If it went to another company that makes cameras, it would mean rationalisation.’

The whistleblower plans to raise his concerns at the upcoming Extraordinary Shareholders’ Meeting on 20 April but said his ‘overwhelming priority’ will be to see that the remaining directors, who were on the board when he was fired on 14 October, are sent packing.

‘I want to be there and, obviously, I have a platform and a voice. I want to make sure it [Olympus] is purged of all of them and that the future does not damage the thousands of people, exceptional people, some of the best people [in the camera business].’

On 8 January Olympus filed lawsuits against 19 current and former directors in connection with the cover-up. Olympus is seeking a total of 3,610 million yen concerning breach of duty of care or other fiduciary duties.

Olympus has pledged that all directors named in the lawsuits 'will step down, regardless of their personal views or claims in court, in a timely manner that does not interfere with the management of Olympus'.

Olympus camera

Asked if he could ever see himself working at another camera maker, Woodford likened it to ending a happy, long-term, relationship: ‘That would be like leaving my wife and going off with an 18-year-old,’ he replied.

The scandal – which saw Olympus’s share price drop by more than 75% at the end of last year – was ‘catastrophic’ for the business in the third quarter, he asserts. But he views these losses as small compared to the billions of dollars involved in the cover-up.

‘We still don’t know the scale, or the detailed mechanics of how it [the cover-up] actually worked,’ he continued. ‘What will the Serious Fraud Office (SFO) say, the FBI...’

He warns that the full extent of the scandal may not yet be known, as investigations continue in Japan, the USA and the UK.

Although he declined to discuss the details of his meetings with SFO staff, he tells us: ‘They are clearly looking at this situation with vigour and energy and will take forward their enquiries.’

He believes Olympus will survive but, key to this, will be boosting its capital. ‘They could do this by a rights issue – people who would loan money – allowing existing shareholders not to be diluted.

‘If they go for a strategic alliance, I think you are then on the road to an almost inevitable loss of independence.’

He clearly still misses the imaging division staff, whom he described as ‘brilliant’, and his passion for the latest Olympus compact system cameras appears undimmed.

‘You just need very good products, made super-competitively. Olympus could do that…

‘I’m not sentimental, I just believe,’ he told AP, insisting that the camera division must have a ‘slim and tight’ distribution channel.

'Misjudged' colleagues

Although he lauds praise on many former colleagues, he feels ‘betrayed’ by others to whom he had become close and ultimately ‘misjudged’.

He accepts that staff may have been scared to talk to him afterwards, for the sake of their own jobs, but the crisis taught him a lesson. ‘They encouraged me to go forward [saying] you are doing the right thing. And then when I was dismissed and Olympus [initially] denied everything, these people completely moved away…. It wasn’t a power struggle or a battle, I was reporting a massive fraud.

‘That really haunts you… That hurts more than anything.’

Concerned that his laptop would be taken away from him, shortly after his dismissal Woodford asked someone else to take the computer back to the UK on his behalf. He did this to ‘protect’ former colleagues, he says.

Woodford quickly sought police protection, fearful that the giant fraud might be linked to Japan's criminal underworld, known as Yakuza - suspicions raised after Facta, the Japanese financial journal, first exposed wrongdoing at Olympus.

Following initial reports of 'death threats', does he still feel vulnerable? ‘I don’t feel threatened because the story is out and I have nothing else to tell.’

Woodford has moved on and has other things on his mind. He has won a string of businessperson of the year awards – including the Sun newspaper’s 'Business crackers' award, on Christmas Eve, and honours from The Independent. He is now in the running for the Financial Times Boldness in Business Award.

Despite no job – though he admits he has received offers – his diary is crammed. Woodford is busy penning an autobiographical account of the drama, with a well-known business journalist.

He has just signed a publishing deal on the book, expected to be simply called Exposure, the timing of which is set to cause further ripples in Tokyo it seems.

‘The book will come out very quickly in Japan,’ adds Woodford, who expects it to go on sale ahead of the showdown shareholder meeting on 20 April. It will receive a worldwide launch later in the year.

The proceeds may come in handy for a man who says that hiring the best lawyers on three continents has cost him a small fortune.

And the story’s thriller-like twists and turns have not escaped the radar of Hollywood, which, he tells us, wasted little time in approaching his literary agent for the film rights.

Book to address corporate wrongdoing

So what will the book focus on? ‘Central to it will be the scandal at Olympus – it’s a very gripping narrative… People say to me, what was it like [exposing the fraud]?

‘I say it would be rather like walking down the street and seeing someone murdered… suddenly finding yourself having to testify, give evidence and get involved.

‘The last thing in the world you want is that you were there at that point in time. I found myself in a similar position in a corporation…’

The book will also cover Woodford’s childhood in Liverpool and ‘moral values’ – widening this out into how these translate into a modern corporate world tainted by bankers’ bonuses and stories of wrongdoing.

‘It’s at a time when you have Occupy Wall Street and, in the UK, the furore over Fred Goodwin and his [now stripped] knighthood.

‘I think a lot of people are starting to worry that capitalism is beginning to become a discredited currency, and asking how you get to a more ethical, moral capitalism.’

The book will deal with ‘corporate governance’ issues and address ways to avoid a repeat of such scandals as Enron and Madoff.

Woodford blames Japan’s corporate culture and much of the ‘self-censoring’ Japanese media for an apparent reluctance to follow-up the Facta story in the first place.

‘A lot of people will hear no evil, see no evil, talk no evil.’

Since Olympus owned up to disguising massive losses, Woodford said he has been a ‘go-to person on corporate governance’ and has been invited to give lectures and advise Japanese politicians.

If he wins his civil action against the firm for unfair dismissal, he has no plans to sit back.

His other passions are road safety and human rights.

‘I’ve already set up a family foundation. I would dedicate my efforts to Reprieve - a charity that addresses miscarriages of justice.’

Yesterday, Olympus Tokyo told AP that it has yet to confirm details of the 20 April meeting, when asked where it will take place and the agenda to be discussed.

Asked to comment on the arrests, a spokesperson for Olympus's Tokyo office added: 'We are taking the matter very seriously. We will continue to cooperate fully with the investigation authorities in order to help clarify facts.'

[Picture credit: Damien Demolder]

Olympus OM-D First Look from CP+

CLICK HERE FOR LINKS TO STORIES ABOUT OLYMPUS SCANDAL

CLICK HERE FOR ARTICLES ABOUT MICHAEL WOODFORD

MORE BACKGROUND ARTICLES

Woodford says approached by Hollywood

Top Olympus officials arrested over £1.1 billion cover-up

AP INTERVIEW WITH FIRED CEO MICHAEL WOODFORD (November 2011)

Olympus HQ raided by prosecutors

Olympus denies camera division shake-up threat

Sacked Olympus boss outlines key to future

Plot thickens as Olympus fires vice president

We have lost customers' trust, says Olympus president

Olympus is a good business, says sacked CEO

Olympus crisis: Japan PM enters fray

Olympus not aware of 'FBI' probe



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