Olympus whistleblower Woodford quits board in bid to force overhaul

TOKYO/NEW YORK Thu Dec 1, 2011 7:02am IST

Former Olympus Chief Executive Michael Woodford speaks during an interview with Reuters in New York November 30, 2011. REUTERS/Brendan McDermid

Former Olympus Chief Executive Michael Woodford speaks during an interview with Reuters in New York November 30, 2011.

Credit: Reuters/Brendan McDermid

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TOKYO/NEW YORK (Reuters) - The whistleblower in the accounting scandal engulfing Japan's Olympus Corp, ex-CEO Michael Woodford, quit the firm's board of directors on Thursday and called for an urgent shareholder meeting to sweep aside its disgraced top brass.

Woodford said his exit from the board, about seven weeks after he raised the alarm over accounting tricks at the maker of cameras and medical equipment, would enable a clean-out of directors and pave the way for his own return to the top job.

"Let me make it explicitly clear: I am not walking away from Olympus," Woodford said in a statement issued in New York, where he had met Federal Bureau of Investigations officials probing the Olympus scandal, which involved some U.S. firms.

"I would like nothing more than to return to Olympus and lead it towards achieving this status (of a world-class organisation)," added the Englishman, who was a rare foreign CEO in Japan before his sacking from the top job in mid-October.

"However, in the absence of a shareholder vote enabling me to do this, I am committed to ensuring that Olympus has the best possible opportunity to succeed going forward, starting with a new and untainted board of directors, and I believe my resignation is necessary in this context."

"Following my resignation, I intent to liaise with all interested stakeholders with a view to formulating a proposal for the constitution of a new board," he added.

WOODFORD ON A MISSION

Olympus has lost more than half its market value since firing Woodford on October 14, an event that prompted him to go public with concerns he said he had been raising internally over a string of dubious acquisition payments dating back five years.

Sacked as CEO, Woodford remained a board director, however.

The company admitted last month to hiding investment losses from its investors for two decades and using some of $1.3 billion spent on questionable deals to aid in the cover-up.

The stock rose 6 percent in morning trade after Woodford's statement, though the firm still faces heavy writedowns and possible delisting from the Tokyo stock market, a humiliation that could put it under pressure to sell core assets.

Authorities in Japan, Britain and the United States are still trying to get to the bottom of the complex cover-up.

An investigative panel of experts, set up by Olympus after the scandal broke, is due to report its findings within days

Some of Olympus's big cornerstone shareholders have cut their stakes in the 92-year-old company, joining an initial rush of selling that also left Wall Street bank, Goldman Sachs, a market-maker in the stock, with a large holding.

Goldman Sachs recently emerged with nearly 7 percent of the stock, currently worth more than $200 million, and said the holding was not strategic -- a development that could further erode shareholder support for the existing Olympus board, which wants to preside over the initial clean-up.

Nippon Life Insurance Co, previously Olympus's biggest shareholder, said last week it would continue to support Olympus, though it had cut its holding to 5.11 percent from 8.18 percent, according to a regulatory filing on November 17.

Big foreign investors, by contrast, have called for Woodford to come back and lead a clean-up of the company and want the current board to leave, but they have so failed to convene an urgent shareholder meeting to force the issue.

The biggest foreign shareholder, Southeastern Asset Management, with about 5 percent, has supported Woodford's call for a board overhaul. And UK fund manager Baillie Gifford & Co, with about 4 percent, wants him reinstated as CEO.

Woodford himself is clearly on a mission, and says he is digging deep into his own savings to fund his campaign to return to the helm of the company where he had spent three decades.

He told Reuters in an interview in New York that his legal bills were the biggest drain on his resources.

"They (his law firms) are all being reasonable. They understand I am not a corporation. But nevertheless, if you don't have any income coming in, and you have school fees to pay ...it is a heavy burden," he said.

(Reporting by Tim Kelly)

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