Shareholders of Olympus Corp approved a new board yesterday, hoping for a fresh start at the camera and medical device maker that hid US$1.7 billion of investment losses in Japan’s biggest corporate scandal in decades.
At a sometimes rowdy extraordinary meeting in a Tokyo hotel, local institutional investors and Olympus’ lenders and suppliers voted for a new management slate and approved five years’ worth of restated company accounts.
Former CEO Michael Woodford, whose dismissal six months ago blew the lid off the accounting scandal, said he might seek to have the vote annulled as Olympus executives refused to explain why he had been sacked for “gross misconduct.” Woodford has begun legal action against his former employer in Britain.
While Olympus hopes the vote would draw a line under a scandal that has wiped more than US$4 billion off its market value, Woodford and foreign investors, who own 25 to 30 percent of the firm, have sought a change in a deep-rooted culture of cross-shareholdings and cozy ties between banks and boardrooms.
Olympus’ new president is 30-year company veteran Hiroyuki Sasa, and its new chairman is Yasuyuki Kimoto, a 63-year-old former executive from the Sumitomo Mitsui Financial Group, owner of a 3.4 percent stake and the company’s main lender with US$2.8 billion in outstanding loans and bonds.
Big lenders such as SMFG and Mitsubishi UFJ Financial Group are often key investors in Japanese firms, giving them influence in board decisions — close ties that were welcomed by shareholders arriving for yesterday’s meeting.
“The banks are there ... they will help in terms of capital,” said Eiichi Suzuki, 60. “The company already has first-class technology, so now it’s a matter of management.”
Sasa said his mission was to “fix the damaged brand and win back trust as soon as possible.”
Woodford told reporters it was a “mockery” for Olympus to claim it was making a new start.
“It’s why the world looks on and continues to think this world works in a completely different way, it’s Alice in Wonderland,” he said.
At the start of the three-hour meeting, which drew a crowd of 1,000 shareholders, outgoing Olympus president Shuichi Takayama and his board stood and bowed deeply in a traditional gesture of public apology.
Since Woodford was fired on Oct. 14, Olympus has admitted it used improper accounting to conceal massive investment losses under a scheme that began in the 1990s. Law enforcement agencies in Japan, Britain and the US are investigating. Seven people have been arrested, including a former chairman.
High on the new board’s to-do list will be whether to seek a cash injection, possibly through a capital tie-up in its medical business. Sony, Panasonic and Fujifilm have been cited as potential partners.
Olympus’ restated earnings statements showed net assets dwindled to ￥46 billion (US$564 million) as of end-September. Its equity ratio of just 4.4 percent, compared with about 30 percent at its rivals, suggests it needs to raise about ￥150 billion in fresh equity.