updated 03:55 pm EDT, Fri November 4, 2011
Revealed by former CEO in confidential letter
In 2009, Olympus announced that it had replaced its auditor, KPMG with another global acccounting firm, Ernst & Young. Reuters now reports that the camera and imaging equipment manufacturer failed to tell investors that the reason behind the firing was a disagreement over how to handle a questionable $687 million consulting fee for a $1.3 billion acquisition deal. Olympus recently fired its first non-Japanese CEO, Michael Woodward. in mid-October, allegedly in retaliation for his blowing the whistle on the inordinately large advisory fee.
Woodford, a 31-year veteran of Olympus, was ousted just two weeks after he assumed the role as president, and began questioning details of Olympus' $2.2 billion acquisition of the UK medical device firm Gyrus in 2008. It was Woodford who gave Reuters a confidential letter detailing Olympus' disagreement with KPMG and the accounting firm's subsequent removal.
On October 25, Olympus' now former chairman and president, Tsuyoshi Kikukawa, branded Woodwards' claims as "aberrent" and part of a power-grabbing scheme. The next day, however, Kikukawa suddenly resigned. Since the alleged scandal was revealed and subsequent investigations by officials in several countries began, Olympus shares have lost 55 percent of their market value.