MICHAEL Woodford, the British former boss of Japanese camera firm Olympus, has condemned its plans for a new board as “completely and utterly wrong” because of strong links to its main lender.
The troubled company has presented plans for a new leadership as it tries to recover from the scandal caused by a £1 billion accounting fraud exposed by Woodford last year.
Yesterday the entire board of the company offered its resignation and it put forward an insider, Hiroyuki Sasa, to be its next president, subject to approval at its 20 April shareholders’ meeting.
But it stirred up further controversy by nominating former banker Yasuyuki Kimoto as chairman.
Kimoto was an executive of Sumitomo Mitsui Banking, Olympus’s main lender, leading to fears that he will be used by the bank to shore up its lending to the company with an equity issue that would not necessarily be in shareholders’ interests.
Under the Japanese system, either of the two men could take the additional role of chief executive, but Olympus has not yet indicated a preference.
Woodford, who was sacked after blowing the whistle on the affair, gave up his attempt to return to the company’s helm in January after failing to win enough support from Japanese shareholders. He was favoured by Olympus’ biggest US and European investors.
He said of the proposed new board: “Looking at capital raising, to have a representative of the bank there as the chairman will only frustrate and alienate any independent foreign shareholder, and I’m sure shareholders in Japan.
“It’s completely and utterly wrong.”
Olympus’s balance sheet has been weakened by the fraud, used to hide investment losses from its shareholders for 13 years before it was uncovered in October. The company is expected to slump to a £250 million loss this year but some investors believe it can recover without a big new share issue.
The proposed board also falls short of major foreign shareholders’ demands for fresh, outside talent in the two key positions.
But the move found more favour in Japan.
Yuuki Sakurai, head of fund manager Fukoku Capital, said: “According to Japanese tradition, you must have strong support from your main bank, and I think they needed Kimoto to be able to ask for the continuous support of Mitsui Sumitomo.
“We know that some foreign investors are not in line with those ideas, but having said that, they have one man that is from Olympus and one who is from the supporting financial side, so to the Japanese point of view that is a good balance.”
Olympus noted that the new 11-person board would include six outside directors, more than the current three.
None of the existing board members has been re-nominated.
Olympus is suing for mismanagement five of its eight internal directors, including Takayama, and one of its three external directors, leaving it in a vacuum until a new board takes over.
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