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Olympus admits paying $678m in ex-CEO scandal

updated 08:05 pm EDT, Wed October 19, 2011

Questionable payout may be tied to organized crime

Imaging and camera maker Olympus has admitted that it paid two financial advisers $687 million in fees for a $1.3 acquisition the company made in 2008. That is twice the amount that Olympus chairman, Tsuyoshi Kikukawa, acknowledged paying on Tuesday. It also is the amount that former CEO Michael Woodford on Friday had publicly claimed was involved, shortly after which he was fired.

Woodford, the company's first non-Japanese CEO in its 92 year history, had been appointed to that position in April. He had worked for the company for thirty years. At the time of has appointment, it was said that one of his strengths was his understanding of the Japanese business culture. Last Friday, he was suddenly ousted by Kikukawa, who gave "differences in management direction and methods" as the reason.

Woodford, however, claimed that the real reason he was dismissed was that he had discovered the questionable fees, and had threatened to expose them, which would have been a public embarrassment for Kikukawa. A normal advisory fee should have been between one and two percent, as opposed to the 33 percent actually paid. Woodford was also suspicious because the advising organizations has suspiciously disappeared shortly after receiving their final payment. Woodford, whose concerns were substantiated by an independent audit by the accounting firm PwC, brought the matter to the attention of the Serious Fraud Office, the UK's white-collar crime agency, as well as Japan's Securities and Exchange Surveillance Commission.

On Tuesday, Kikukawa admitted that a payment was made, but only in the amount of $390 million. Today, the company issued another statement, indicating that the amount was indeed $687 million. Olympus did not explain the discrepancy between the amounts claimed between the chairman yesterday and Olympus today.

In an interview earlier this week, Woodford had said he became "scared" after a Japanese magazine published speculation about possible involvement in Olympus' acquisitions by "antisocial forces." The term is a Japanese euphemism for organized crime like the yakuza. [via Financial Times]

By Electronista Staff
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  1. chas_m




    This story is already better than most movie thrillers, and is bound to get even more remarkable as the truth comes out. Keep your eye on this one, folks, this won't be the last time we hear about Olympus wrt this scandal.

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