Olympus shares jumped nearly 30 percent on the announcement, as investors bet that legal action against those implicated in the $1.7 billion cover-up would head off a delisting from the Tokyo Stock Exchange. Shares in the company had lost four-fifths of their value at one point.
Still, critics warned that keeping tainted executives at the helm of Olympus threatened to undermine its turnaround effort by allowing discredited board members to name their successors and subvert meaningful reform. The company remains in dire need of fresh capital after restated accounts showed its shareholder equity at far lower levels than previously disclosed.
Olympus defended its decision. “The plan is for the current board members who were found responsible and are subject to lawsuits to complete passing on their roles to avoid any impact on business,” the company said in a statement.
Olympus, the Japanese manufacturer of cameras and the medical devices called endoscopes, has admitted to concealing losses dating to the 1990s using an elaborate scheme involving offshore funds in a case that has cast a spotlight on corporate governance lapses in Japan.
That admission came after its former president and chief executive, Michael C. Woodford, blew the whistle in October on fraudulent accounting at the company — an action for which he was fired.
Mr. Woodford, who is British, later made a bid to return to the company with a fresh slate of directors, but he abandoned that effort last week after Japanese institutional investors continued to back Olympus’s current management. On Tuesday, he blasted Olympus over its announcement, pointing out that three directors who had fired him instead of investigating his allegations should not be allowed to remain on the board.
“If these three individuals continue in office, it is completely the wrong basis to revitalize Olympus,” Mr. Woodford said. “The only way forward is an entirely new board of directors, untainted by the past scandal,” he said in an e-mailed statement.
Southeastern Asset Management, a U.S. firm that is Olympus’s biggest overseas stockholder, has also urged the company to purge its current management.
Olympus “continues to suffer under shoddy corporate governance and an utterly discredited board,” Josh Shores, a principal at Southeastern Asset, said in a statement last Friday. “We maintain that the board should be replaced and a new board should oversee the company’s revival.”
The Tokyo-based company said it was seeking up to 3.6 billion yen, or $47 million, in damages from 19 executives, including former Chairman Tsuyoshi Kikukawa, former Executive Vice President Hisashi Mori and its former internal auditor Hideo Yamada. A third-party investigative panel appointed by Olympus said last month that the trio had orchestrated the scheme to mask investment losses.
Olympus is also suing Shuichi Takayama, the current president, for as much as 500 million yen, according to the company statement Tuesday.
Olympus refused to make any of its executives available for comment.
The scandal has led to investigations in Japan, the United States and Britain.
Article source: http://feeds.nytimes.com/click.phdo?i=73b93cdec02e593ce8000defa2b98c71
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