By Peter Campbell
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Snapshot of a scandal: Woodford's crusade has finally reached court
Seven months ago, Michael Woodford became the first British-born executive to rise to the top of a Japanese company.
But his 30-year career at Olympus came to an abrupt end two weeks later, when he was fired.
His offence? Exposing a £1.1bn accounting scandal that stretched back for two decades.
The revelations embroiled former bosses and lifted the lid on the previously clean image surrounding Japanese corporate life.
After reporting his findings to the company board, Woodford expected to see action taken to stop the rot. Instead, he was ejected and commanded to take a bus to the airport.
After disobeying these orders and handing his findings to a journalist in a nearby park, he was forced to rely on police protection, often staying in hotels under a pseudonym to avoid detection. Months of preparation came to a head yes terday when the 51-year-old went before a judge in a London court, demanding the chance to have his case for unfair dismissal heard in the UK.
His claims are believed to include £38m in compensation for ten years of lost earnings from the group. But, more importantly than the money, it is thought he wants details of the affair to be fully exposed.
With the hearing not due to start until midday, it had been widely speculated Woodford and Olympus would reach a court-steps settlement. But as the media gathered for the opening of the five-day hearing, none came.
Woodford has sacrificed his career and many of the friendships he made during three decades at the company, suggesting that exposure is more important to him than the size of any cheque. His hearing will resume today.
When, as president, he looked at the company books â€" and the acquisition of British medical equipment group Gyrus, which Olympus paid £1.4bn for in 2007 â€" he realised the numbers did not add up.
He ordered auditors PricewaterhouseCoopers to look into the £430m of payments made to financial advisers on the deal â€" the sum, paid to Axes America and Cayman Islands-based Axam Investments, was the highest recorded amount ever paid to advisers on a merger and acquisition deal.
The subsequent report described the Olympus management as ‘rotten to the core’, with the group run on the basis of iron-strong loyalty and with a financial structure designed to flatter the firm’s performance.
The UK’s Serious Fra ud Office picked up the case, and is still investigating the deal.
When Woodford was fired, Olympus blamed a disagreement over management styles. But in November the company admitted it had covered up losses of up to £1.1bn dating back to the 1990s.
Woodford was vilified, but said legal action needed to follow. It did. Prosecutors in Tokyo began gathering evidence, and in December raided the offices of the company and the home of Tsuyoshi Kikukawa, who was chairman at the time of the deal.
Kikukawa, as well as his deputy Hisashi Mori and the company’s auditor Hideo Yamada, were arrested alongside five others in February. Six of them were charged in March.
At the time of the arrests Woodford said: ‘Of the 14 members on the board at the time, nine are still there now. They have to go.’
He wants to see a total clear-out of the group that, he says, is ultimately responsible.
But his own attempts to return to th e helm on a wave of international investor anger faltered after the company’s largest shareholders â€" all Japanese â€" remained loyal to the company’s current staff.
At the group’s annual meeting the new board, which Woodford said offered no change, was welcomed into existence with acquiescent applause.
Woodford has also said he was ‘actively considering’ High Court action against Kikukawa and Olympus president Shuichi Takayama for defamation and breach of contract.
Much of the detail of the case cannot be reported because of the legal action currently taking place in the UK and Japan.
But Woodford’s own actions, which have catapulted him to international acclaim, have exposed a hitherto hidden side of Japan’s corporate culture.
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