Olympus Backtracks on Payments

The company said, however, that there had been no wrongdoing and that it was considering legal action against the former chief executive, Michael Woodford, on charges that he had brought confusion to the company’s management and damaged its share price.

Mr. Woodford, a British executive, was stripped of his title Friday for reasons the board described as a culture clash between him and the company’s Japanese leadership. He had been appointed president of Olympus in April and chief executive only last month.

Mr. Woodford later said that his dismissal had come after he commissioned an investigation by the accounting firm PricewaterhouseCoopers that found unusually high advisory fees paid out by Olympus between 2006 and 2010 as part of its acquisition of the medical equipment company, Gyrus.

Separately, Mr. Woodford had also questioned the acquisitions of three companies in Japan in 2008, for a total of $773 million, seemingly unrelated to Olympus’s main business, and the subsequent writing down of their value by three-quarters in the same year.

The Olympus chairman, Tsuyoshi Kikukawa, had told the business daily Nikkei on Tuesday that the advisory fees related to the Gyrus deal had totaled about ¥30 billion, or $391 million — about half the amount that the PricewaterhouseCoopers report had alleged.

But Olympus then said Wednesday that it had indeed made a total of $687 million in advisory payments. The company did not specify to whom the payments had been made. The PricewaterhouseCoopers report alleged that some of the advisory fees had gone to a company incorporated in the Cayman Islands that had been stricken off the local register for nonpayment of listing fees.

Olympus also said that the acquisitions of the Japanese companies, which operated in sectors like facial cream and cookery products, had been based on an assessment that these companies owned “promising technology in the healthcare field.” It said that its auditors had not seen any irregularities or illegal conduct in any of the transactions.

The PriceWaterhouseCoopers report was “based on speculation and guesswork” that “differed from fact” and “led to misunderstandings,” the statement said.

Olympus “truly regretted” that Mr. Woodford, who still retains a position on the company board, “has brought about confusion to management and hurt the company’s value,” the statement said. “If necessary, we will consider legal action,” it said.

A Tokyo-based spokesman for Olympus said he could not give an explanation of why Mr. Kikukawa had given a different figure for the Gyrus fees to Nikkei on Tuesday.

In a phone call from London, Mr. Woodford said that the back-and-forth showed that the Olympus management “was getting desperate.” He has said he would be happy to respond to any legal action from Olympus.

In a report Wednesday, Goldman Sachs said it had suspended its ratings on Olympus “given increased uncertainty around past acquisitions and accounting practices.” J.P. Morgan also suspended its rating on Olympus, saying the company’s share price might remain volatile for reasons other than the economy or business earnings.

Olympus shares have lost almost half their value since Mr. Woodford’s dismissal. On Wednesday, they fell 2 percent to ¥1,389 in Tokyo.

Article source: http://feeds.nytimes.com/click.phdo?i=ae0ce34472cfb8fa01c5b399dedcbc95