Investors approve new board at scandal-hit Olympus

April 20, 2012
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Olympus shareholders attend an extraordinary meeting/AFP
WASHINGTON, Apr 20 – The ousted former boss of Olympus who exposed a $1.7 billion cover-up scandal threatened court action Friday after the firm’s choices for a new board were approved at a heated shareholders meeting.

Angry investors peppered management with questions about the scandal, as one shareholder proposed that the embattled company’s whistleblowing former chief Michael Woodford be reinstated, which was later rejected.

During the tense meeting in Tokyo, executives rebuffed the Briton’s demand to know why he was sacked six months ago, shortly before exposing a scheme that saw huge losses moved off the firm’s balance sheet.

The ensuing scandal led to the arrest of former top executives, including the president, at the company and hammered Japan’s corporate governance image.

“Shame on you,” Woodford repeatedly told management, as a majority of shareholders approved the new 11-member board.

Woodford later told reporters that he would take the matter to court “to make this meeting illegitimate because they failed to answer the questions” about Olympus’ accounts.

A court hearing had already been scheduled in Britain for the first week of May, he added.

“There are still a lot of concerns about the legitimacy and integrity of Olympus’s accounts. And there is absolutely no trust with these people,” he said, referring to Olympus officials.

However the firm’s hard-hit shares jumped almost 6.36 percent to end at 1,280 yen on Friday, several months after the camera and medical equipment maker narrowly avoided a delisting from Tokyo’s bourse.

Ri Hosoda, a shareholder and former Olympus employee, said he voted against the new board “because Michael was ousted”, adding that the former boss “should be commended for what he’s done.”

“I wanted him to run the company,” Hosoda told AFP.

But Reiichi Goto, 62, said he and other shareholders care most about the firm’s share price, which has lost about half its value since the scandal broke in October.

“I want whoever becomes the Olympus board members to rebuild the company,” Goto said, adding that he had “trust” in the new management.

With the bulk of company shares held by large Japanese institutional investors, who are typically unwilling to rock the corporate boat, the board nominations had been expected to be approved.

But they sparked anger among some foreign investors who argued that their connections to major Japanese banks — which are also Olympus creditors — was clear conflict of interest, while the nominees had little experience running the company.

The vote saw among others Yasuyuki Kimoto, a former senior managing director of Sumitomo Mitsui Banking, elected chairman and Hideaki Fujizuka, a former executive officer of Bank of Tokyo-Mitsubishi UFJ, become a director.

Hiroyuki Sasa, a 30-year Olympus veteran, was elected president.

An influential investment advisory firm and a group of Olympus’ foreign shareholders had called for a re-think of new board appointments, with Woodford saying he would vote against the nominations.

Olympus had earlier rejected the criticism, saying six of 11 board members are “completely independent” of the firm and “have no relations with banks”.

In March the company and three former senior executives — including ex-president Tsuyoshi Kikukawa — were charged over their role in the huge cover-up.

If found guilty, the firm faces up to 700 million yen ($8.7 million) in fines.

At the start of the meeting Olympus President Shuichi Takayama apologised to investors, bowing deeply with other directors.

“We, the board members, deeply and sincerely apologise to shareholders for causing you great anxiety and troubles over the postponing of (reporting) the loss,” Takayama said, referring to re-stated financial statements which showed a 33.08 billion yen ($405.5 million) loss in the nine months to December.

“Our company will carry out sweeping reforms to restore confidence as early as possible,” he added.

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