Olympus chairman resigns in wake of fee scandal
updated 07:50 am EDT, Wed October 26, 2011
Olympus chairman resigns, investigations ongoing
The growing scandal at Olympus over excessive advisory fees totaling over $1 billion has taken a new twist with the company's chairman sensationally resigning. The news comes just a day after the now former chairman and president Tsuyoshi Kikukawa issued a stinging rebuke at ex-CEO Michael Woodford for leaking details of financial mismanagement within the camera and medical components giant. Just days ago, Woodford revealed that he had been forced from the company by the board after discovering the gross over-payments and threatening to make them public if an explanation was not forthcoming.
Kikukawa resigned after a board meeting that leaves him as a director without representative rights, effective immediately. The company is reeling in the wake of Woodford’s revelations, which have sparked several investigations by financial and law-enforcement agencies in Britain, the US and Japan. Woodford himself, has met with Britain’s Serious Fraud Office over the matter.
Woodford, a 30-year veteran of Olympus, was forced from his position as CEO after discovering the payment irregularities in acquisitions that took place before he was admitted to the company’s board. In particular, Woodford uncovered a 36 percent commission paid to New York-based AXES America LLC and AXAM Investments Ltd based in the Cayman Islands totaling $687 million. The payments were made in relation to $2.2 billion acquisition and had not been disclosed to shareholders. Typically such advisory fees attract a 1 percent commission.
Just yesterday, Kikukawa had accused Woodford of acting 'unforgivably' in blowing the whistle on the matter and said that it stemmed from a failed power grab. He reiterated the company’s original position that Woodford was fired because of differences in management style.
Olympus’ shares have been in a free-fall over the past two weeks shedding 56 percent in value as the scandal threatens to completely destabilize the company. [via Wall Street Journal and Reuters]
