Tsuyoshi Kikukawa had taken charge of Olympus on Oct. 14 after he abruptly fired the former head of the company, the Briton Michael C. Woodford, citing cultural differences in management styles.
But Mr. Woodford later said he had been fired after raising questions over a series of acquisitions made by Olympus at what he said were inexplicably high prices or involving disproportionately pricey advisory fees.
Mr. Woodford said exorbitant fees to the tune of $687 million
were paid to now defunct advisory companies for Olympus’s 2008 acquisition of Gyrus, a British medical equipment maker.
Other deals
have also come under scrutiny. Documents show that Nobumasa Yokoo, who runs a consulting firm that Olympus hired to advise it on acquisitions, directed hundreds of millions of Olympus’s dollars into buying three unprofitable start-up companies — with which he himself had been involved as an investor or executive — only to have Olympus quickly write off most of their value.
In the turmoil since Mr. Woodford’s departure, Olympus shares have lost over half their value. The shares dropped a further 7.6 percent in Tokyo on Wednesday, closing at ¥1,099, or $14.48.
Some of its largest shareholders have demanded more disclosure over the acquisitions, including who the payments were made out to and whether there were any conflicts of interest in any of the dealings.
The Federal Bureau of Investigation has also started to look into the payments related to the Gyrus deal. Olympus has promised a third-party investigation into the matter.
Shuichi Takayama, a managing director of the company, will replace Mr. Kikukawa as president, Olympus said. Mr. Kikukawa will become a director without representative rights, effective immediately, the company said.
“Recognizing the seriousness of the situation, I have decided to spearhead our efforts to restore confidence” in the company, Mr. Takayama told a press conference in Tokyo, after giving the customary deep bow reserved for public apologies over grave missteps. Mr. Takayama, 61, a 40-year veteran of the company, most recently led Olympus’s imaging business.
He directed his apologies, however, toward the “inconvenience and concern” the recent turmoil had caused to Olympus shareholders. He said he could not discuss the two deals questioned by Mr. Woodford because the company intended to wait for the findings of the third-party investigation. Olympus has not yet said who will lead the investigation.
Mr, Takayama denied the possibility of any company ties to organized crime, suggested by some tabloids in Japan. “I am not aware of that at all,” he said. He also denied that Mr. Kikukawa, known to be a powerful presence on the Olympus board, would continue to wield his influence. Mr. Takayama said that he would act based on his own thinking.
Mr. Woodford has likened the Olympus board to an “Emperor system” run by Mr. Kikukawa. Mr. Kikukawa was not present at the news conference Wednesday.
Mr. Woodford, in New York to meet with F.B.I. officials, said that Mr. Kikukawa’s resignation was not enough to win back investor confidence in Olympus. The Briton had demanded that the entire board — who had been aware of his allegations, he said, yet voted to fire him instead of investigating the claims — should go.
“They haven’t answered any of the questions” over the acquisitions, Mr. Woodford said by telephone. Without a more sweeping change at the top of the company, the management “will continue to take the company to the rocks,” he said.
“They need someone who has not been contaminated by this issue,” he said. “They need someone who will then be able to explain, in substantive and definitive terms, what this has been all about.”
Article source: http://www.nytimes.com/2011/10/27/business/global/olympus-chairman-resigns-amid-widening-scandal.html?partner=rss&emc=rss