Michael Woodford, former chief executive officer of Japanese camera makers Olympus, has expressed his skepticism over notions that corporate governance in Japan has made great strides. Woodford, who was terminated from his job after questioning several suspicious transactions, said at the 66th CFA Institute Annual Conference on Monday that said that the corporate environment in Japan is not transparent, and that will just scare away foreign investors.
“I will believe Mr. Abe’s reform, monetary and fiscal stimulus. That is the easy part,” Woodford acknowledged, referring to the aggressive big-spending monetary strategy that Japanese Prime Minister Shinzo Abe has taken to ultimately beat years of Japan’s economy being mired in economic deflation. “(But) large parts of Japan have companies that are run by mediocre boards at best. A lot of them are zombie companies. Japan does not allow takeover of the weak by the strong,” he pointed out. “It doesn’t allow that so unless there is liberalization to allow capitalism to work as it is intended. I have very cynical and skeptical views about Japan. We will see where we are in 12 months’ time,” he concluded. These views stem from the fact that Woodford took to public a 1.7-billion-US-dollar fraud which he said that the Olympus’ board turned a blind eye to.
This incident started in 2011, when the British national – who was then the top man at the Japanese company – raised his concerns to Olympus executives about past acquisitions and transactions, not to mention bloated consultant fees. The company then fired him, and Tsuyoshi Kikukawa took over leadership as Olympus denied all allegations brought to it by Woodford. After a time later, Olympus backtracked on its public statement and admitted its wrongdoing, sacking all executives involved in the scandal as Japanese authorities launched an investigation into the firm. The scandal ran deep, and what was revealed was a scheme that used complex accounting methods to hide losses that certain bad investments made by the board caused in the 1990s. Woodford was subsequently given a 15-million-US-dollar payout to settle a wrongful dismissal lawsuit.
[via Channel News Asia]