Olympus chief Kikukawa resigns amid reports of FBI probe

Woodford was purposely drafted in by Kikukawa as an ignorant stooge who would not be able to figure out what was going on. That little plan backfired spectacularly, didn't it.

Editors,

When the story changes dramatically, instead of just replacing the old story with the new one, perhaps you should start a new story? A lot of comments make no sense given Kikukawa's announcement. I mean, look at the first comment. How does it relate to anything in the story?

What comment could you make in such a situation???

That organized crime is behind this is pretty obvious. The questions begs; for what? This a serious pile of money, was it laundering, calling the fly-blown garbage otherwise name yakuza away from shareholders meetings and if so, why? More unanswered questions that will unfold in the next few months. For Olympus to try to palm this foreign CEO off as one who 'doesn't understand our culture' is a chestnut from the 80s and 90s. More indicative of hiding something than anything else ...

The actions of Kikukawa and the others cannot be explained by mere incompetence. Literally nobody in the world is that stupid. It also seems unlikely that they were stealing for their own personal gain. So the money must have been chanelled to undesirable elements who had some 'dirt' on them. That is the only possible explanation. The US/Cayman companies may well have been simply conduits and not destinations.

After demoting (firing?) Woodford, Kikawa said Woodford "was not able to understand that we needed to reflect the management style we have built up since the company was established 92 years ago, as well as Japanese culture.”

Does that mean, then, that the 'management style' and 'Japanese culture' Kikawa was referring to is one of underhanded business practices, cover-ups, and secrecy at all costs? Shameful.

The employees of Olympus and the people of Japan deserve an apology from Kikawa.

Timtak, could you please explain how paying $687 million to a Cayman Islands company, that has since disappeared. benefits shareholder value? It should be very clear that this is a case of serioius fraud, thus the FBI probe.

Japan FTW. You have got to be kidding. There is nothing 'cultural' about this at all. And that is a very good thing, because stealing money from your own company and giving it to organised crime would be a very poor culture indeed. This is highly untypical of Japanese companies actually, IMHO. Japanese business may be unique in various ways, but in this regard, it is not. Most people are honest; a few are not. Same as in other countries. At the very least, the former management team under Kikukawa need to explain exactly what happened and why, to their shareholders, regulators, customers, employees and all other important stakeholders. And by the way, what does the FTW stand for? I think I can guess.

As The 12th man used to day, 'Got 'im, yes! P!ss off you're out!'

If he were alive, Al Capone would tell you having the FBI on your tail is not much fun.

Looks like most of the board need replacing. Even the new chairman Takayama is denying any wrong, and continuing to bad mouth Woodford...

Reminds me of the old saying, birds of a feather flock together....

Fraud and kickbacks. This is classic, been done a million times. There is no defense. To state that this was done for the benefit of the country is beyond ludicrous

Glad to see this story is now in the Crime section. Good move. Meanwhile Kikukawa apologised for the collapse of the share price 'caused by the replacement of the previous president'. That is like blaming the person who called the ambulance for the resulting traffic disruption and siren noise.

I can't believe Kikukawa STILL hasn't stepped down or offered an apology. They usually do that in a week here when caught red-handed. He really is a stubborn old git!

Im actually surprised this still is in the J press. Obviously Olympus dont have the clout with the press that one would assume they have.

Im actually surprised this still is in the J press. Obviously Olympus dont have the clout with the press that one would assume they have.

Once it starts hitting the foreign press there is little if anything they can do, and if the FBI is truly interested in pushing this Olympus stands to be in some deep guano if they are found to have broken any securities laws.

Have to give credit to Wooford for knowing AND taking the necessary steps to ensure that this doesn't get shoved under the carpet. Might be a great example for other future (foreign) heads of Japanese firms to follow.

Yubaru - Not sure there will be too many of these mendokusai foreigners in charge of Japanese firms in the near future!

tmarie, he'll step down once the price of Olympus shares hit a record low.

You know the truth shall set you free. Even if these top execs don't go to jail, even if they successful hide all the evidence and make this disappear it won't matter. Olympus is losing millions of dollars every single day they don't step up and tell the truth.

What surprises me is that others in the company have not stepped up and said......hey kick this guy Kikukawa off the boat. The guy is dead weight and he's sinking us

This is a celebration for all foreigners in Japan. That racist glass ceiling not only shattered but it's sprinkling glass shards on the company that tried to fire them.

Good luck to Mr. Woodford. If they hire you, then they better respect you and your position.

It's amazing that a camera company could be so out of focus.

I bet if the J-media really went at they cud find LOTS of big J-companies that have over paid for small companies unrelated to their core industry, it seems to be the new way yaks extort $$$, before they just bought shares & threatened to show up at stock holder meetings & ask questions, we are seeing a new spin on a very old bad habit of Jpn Inc!

Kikugawa is a company man and he lived for Olympus.

Kikugawa is a criminal collaborating with organized crime and finance sector insiders to rip off shareholders.

throw the scambag in jail.

Kikukawa is out.

Takayama is in.

Press conference at 5.30 pm!

(Facta, the magazine who broke the story in July and August, are not allowed attend the conference.)

Looks like there's more than culture differences, but we'll have to wait and see.

Takayama seems to be clean, he's not mentioned by name in Woodford's letter, FBI reports or the Facta report.

But if Kikukawa is out, there are 3 or 4 others involved who should follow rapidly, if Olympus are serious about a full clean out of the rot at the top....

Bye-Bye Olympus. Used to be a reputable company making decent products back in the 80s and 90s. Now just a dodgy company with corrupt management!

Where are all the Japan fans with their rationalizations in this? On numerous occassions they have stated that these sort of corporate shenagins only occur in places like the U.S. due to too much greed on the part of the managers, supposedly due to the capitalist/free-market mechanism. Or something like that. Well this can only be attributed to greed, arrogance, or complete incompetence. And we all know Olympus is the rule, rather than the exception. Bottom line, Japan Inc has as many issues to deal with as any other country, and this should be a lesson to all those who throw stones.

As we have troubled our customers, business partners and shareholders over a series of press reports and a slump in share prices, chairman and president Tsuyoshi Kikukawa today returned his titles as well as his right to representation the Olympus statement said

So it was only because of the stock price, not because of any admission of any wrongdoing. The board is also responsible for this and they have to go as well. The Sumo standard of refuting criminal activity is not going to wash outside of Japan.

This must be the new Japan. The Japan that can say no to accountability but yes yes yes to endless corruption. Only with the FBI probe does this come down even more.

If Mr Kikukawa claims to have done nothing wrong, why is he resigning? Let's have a clear explanation of what Olympus got in return for $687 milliion in advisors fees.

This finally made the NHK evening news last night in a short item, far down the running order, but they just parroted the Olympus line of "we did nothing wrong" and only stated "the share price has fallen recently" without saying by how much. No questions were asked by their "journalists"; I wonder why they even bothered going to the press conference.

Wow - I just learned a new trick - how to legally siphon off USD 700 million into an offshore account so you don't have to pay shareholder dividends or re-invest into the company. Amazing trick.

But Woodford was quoted by the Financial Times on Tuesday as saying the plan was “a strategy to push everything into the distant future, and get the current dazzling spotlight of press scrutiny off them.”

How long will the mainstream press in Japan keep this in the spotlight will probably determine whether or not Olympus and it's board decide to take proper and prompt action, including having it's chair-oyaji step down, along with his cronies, with no retirement packages, and reinstate Woodford. (Yeah right.....)

I predict kikukawa will enter a hospital soon with a tummy ache or something

Nicky, the J-press can no longer ignore because its one of the few stories that just cant be censored & shut down, so its a shoganai thing they have to follow & maybe some will start to even report new findings if we get real lucky.

@tmaire it is becuase he doesn't have the balls to commit suicide like most other Japanese business men who have found them selves in his position. I guess he is just a double coward loser d-bag.

It is interesting to watch this scandal unfold. All of the Olympus stories up until now have been listed in JT's 'Business' category—this is the first one to be put under the 'Crime' category.

I hope this encourages other whistle-blowers to come forward and take a stand against executive greed in Japan and overseas.

timtak

sounds like you are trying to defend people in secret societies and the like that have devised a way to steal in the open.

and you ridicule the "squeaky clean englishman" ( a rarity these days) for simply trying to do his job on the up and up in good conscience.

you are a suspect device.

It is absolutely certain that Kikukawa stole from (or 'ripped off' if you prefer) his shareholders. The only doubt is whether he kept any of the stolen money for himself, or passed it all along to his scarfaced brethren. And of course we don't why he did any of this in the first place.

tiktak, you are either/multiple of the following:

a) incredibly naive b) inexperienced with living in Japan c) not skilled in Japanese language /culture d) an Olympus plant forced to defend his employer.

If you seriously think that the top-level managers of a company that paid 700 million dollars to a company located in the Cayman Islands (hello, tax-dodge haven) are NOT living off company largesse, you really, truly don't know how the other half (and by half, i mean tiny minority) live.

@Hide Suzuki

How many "western" corporations put a Japanese person as CEO or president ? Japanese companies are as open as (or as closed as) any country out there.

I would have to disagree with you on that Hide Suzuki. I don't know the data for CEOs, but as for top executives in general, as of 2005 90% of Europe's largest companies had at least one director from outside the home country, and 35% of the largest American companies had at least one foreign board member. I am not sure of the numbers for Japan, but I am sure it is significantly lower than 35%.

In what way does setting fire to large piles of the company's cash benefit the shareholders? Usually dividends are declared, approved and paid in a fairly transparent way. So we can be pretty sure that is not where the money went.

Construction companies with no differentiating technology or other attributes may find it necessary to resort to bribery, and the bribed party can't go far wrong in selecting any firm, since they are all the same anyway. Of course accepting, and paying, a bribe, itself is totally wrong especially where public money is involved. But for a world-beating technological giant in its field, endoscopes, like Olympus, there would be absolutely no need or justification to pay a bribe. The camera business, being mainly consumer-focused, would also not lend itself to paying bribes. So, despite Mr Timtak's interesting discourse on the subject of slush funds as they were in Japan a few years ago, I don't see any relevance to the Olympus case.

For M&A (mergers and acquisitions) the ordinary advisor fee is 1% to 5% of the cost of aquisition. But Olympus paid over 33%.

Market was down but Olympus was up yesterday. I wonder if the FIB involvement has anything to do with this.

Woodford should take caution when he goes home at night...

OK so how do you explain it then?

The Japan Sham. Next episode VERY soon, from, well, who knows where?

http://www.bbc.co.uk/news/business-15360300

Of course we can, should not and will not tar all of Japan the same BUT they have to start dispelling their own myth machine. They ARE human! Some will lie, cheat and be selfish just like the rest of some of the species.

Ah yes, that he would resign was predicted here. Now let see... after a profound apology and his disappearance, he will reappear somewhere on the sideles with a cosy retirement job.

Meanwhile, will find out more about AXAM/AXIS and where exactly the money went? That, I doubt.

T Rex. Thanks. Let's keep it real.

There you go Mr Woodford, your refusal to stand by and say nothing is getting results More whistle blowers please!

NOT ACCEPTABLE, KIKUKAWA-SAN. Even though he has given up his titles allowing him executive decisions, he will still carry influence from his relationships within the company (much like the suspended Ozawa still carries influence in politics).

This is window dressing. If investors understand the way Japanese relationships/sempai systems work they should not accept anything less than removal from the company in every respect.

Guilty... the company is distancing themselves from the former chairman. Notice it took an FBI probe for this to happen.

Now let see... after a profound apology and his disappearance, he will reappear somewhere on the sideles with a cosy retirement job.

...or more likely in a forest at the foot of Fuji-san...

I'd be most intrigued to find out a) Kikukawa's golden parachute payment and b) if he's even going to pretend to really quit. I'll bet you a pound to a penny he'll be back at "work" tomorrow morning with a slightly differently-phrased meishi.

not much different than the old Japan

Heaven forbid a new story receive a new post. This must be self moderation about highlighting the downfall of a Japanese company. Don't take it personally. Just report the news. It's a new story, so this should be a new post.

Kikukawa will become a director without executive rights

ie a slap on the wrist, but he still continues to get a large salary from the company. Why am I not surprised?

AWESOME to kow a) this news is in crime section instead of business. b) know the shortie stepped down. Its never too late. Now question is where is that money gone and how to bring it back to company?

Takayama san - its time for you to chnage way things are working below your nose. Be a hero and not imitate Kikuwa. Before defending anyone in company think twice. Micahel is sitting on more evidence that can prove you wrong and even you may have to resign in few weeks

Kikuwa san yoroshiku oengaitashimasu. You bow your head or ass in front of media but spit out the money instead of highly polite apology.

I will buy the Olympus products only when Michael is on board.

Kikukawa will become a director without executive rights, the company said in a statement, adding that director Shuichi Takayama, 61, will replace him as president. Isnt that a promotion for Kikuwa. Now he dont have to work and still make same money. I smell a rat. I was hoping to see him next to Horie sacho in jail discussing plans for next life.

Do anyone know if the investors and shareholders in Olympus dumb? Will be happy to know the names of majority shareholders so that I can keep away from them.

Rob

Rob

Well said Ninja! Though aren't they at a low now?? Japan needed for this to happen. I hope other companies are watching this and wondering if it is worth it all.

Though yes, I don't expect too many new foreigners to be put in such jobs now!!

We as consumers need to take oath that we will never buy any OLYMPUS products till Kikuwa and his gang step down. Thats how I can personally contribute. Its just not about Michael and Olympus. Its about awareness and to discourage other companies to not to do something like Olympus.

After all "consumers are king" and internet and open forums like Japan Today give a chance to consumers to unite and voice the concerns.

I will remember Olympus brand as company which was run by notorious guys for all these years. If the brand value goes down no matter what Olymous wont be able to recover anytime ever in future,

Rob

The sad part is that when Kikukawa eventually is forced to step down he'll be offered a high-paying job doing nothing for Olympus in some other capacity (ironically, it'll likely be as a 'consultant'). That and he'll likely get a big, fat severance package for resigning.

woohoo.... I hope they uncover the truth.... smells like a rat and possible yakuza involvement

Just pull a Ronald Reagan: "I can't recall."

The part of the link to the economist magazine above gets converted to itallics so here it is via a url forwarder. http://tinyurl.com/slushfundrevealedjapan in that article a Japanese natioal secret bank account is described as being 'money is necessary to gather information “for the benefit of the nation”.' The Economist article the Japanese secret bank account still exists, although almost no one talks about it.

Well said theeastisred.

A lot of commentators on this thread doesn't make sense. I guess you are one of the few that does.

Lol. the Shortie finally agree to quit his job. but he's still a Director of Olympus. So once the case close, he stays on as 'Sodan Yaku' I guess....and still have the strong power behind the scene.

----"a new trick - how to legally siphon off USD 700 million"

an easy trick if you can bar some British or American guys from entering your turf.

@cactusJack

Yaeh.. but he didn't.... an "i did not inhale" would be more approprate.

Timtak, mate???? You claim experience with J-culture? Maybe a few more years might enlighten you. Or your playing Devils advocate? Whatever keep it up it's amusing and someone probably should defend him/them.

Looks like this dude really played his position well through the decades getting a lot of $$$$ MMM! out of Olympus through all these shady deals.

And i hear people tell me everyday there is no corruption in Japan like overseas. Everything is clean here and this type of thing can never happen in any business or government establishment.

Funny thing is the people that tell me that are the closest people to me. Oh well :)

This is getting good.

Yubaru - Not sure there will be too many of these mendokusai foreigners in charge of Japanese firms in the near future!

Soldave: I think so too. I doubt they'll trust gaijins to run their business anymore. My former employer wants to rehire me...but as an Advisor/Komon....lol. An advisor at my age..lol.

ubikwit Who do you think was trying to steal from whom? Kikugawa from his shareholders? I think you would be wrong.

Are you saying that Kikugawa does not have a good conscience? Is secrecy a bad thing? (C.f. the discussion on secret bank accounts held by salaried workers). I would say that in Japan a certain amoung of secrecy, or a certain amount of secret banking, is often seen as being a necessary thing.

I am not sure why people think that Kikugawa is trying to rip off his shareholders. I think that on the contrary he may be all too concerned with his company and the shareholders and is prepared to go further that Woodford in order to ensure increasing profits. My guess is that Kikugawa's conscience, placing a high emphasis on the well being of his company may be clear.

I hope that Mr. Woodford is squeaky clean, and assuming he is, I do not see that as disparaging but different.

I think that there is a case to be made that this scandal may be linked to Japanese business practices if not culture, if the following practices/events are found to be linked to the current scandal: http://www.economist.com/blogs/banyan/2010/05/slush_fund_revealed_japan http://www.japantimes.co.jp/text/nn20090219f1.html http://www.japantimes.co.jp/text/nn20090716a5.html

The creation of secret bank accounts and the uses put to them reduce competition. This reduction in competition can result in losses to consumers. In an ideal world they would not exist. Faced with the necessity of living in this imperfect world, I choose to live in Japan and to purchase Japanese products.

@theeastisred How can you be sure that all the funds were not used to increase shareholder dividends? A lot of funds have been siphoned off the books for with the objective of benefitting the company and shareholders in the past.

katamari_on_da_sea When other Japanese companies (or indeed the Japanese nation) have moved funds off the books was that for the purpose allowing the top level managers to live off company largess? Read the links that I supplied and tell me that I am inexperienced with Japanese culture again.

the-east-is-red Thank you for the good point about the lack of differentiating technology in the construction industry. I think that we will find however, the relative importance of "differentiating technology" in damns and endoscopes does not result in such a difference in business practices, but I may be wrong.

Both markets are non-consumer, often high-value large contract, bureaucratic, made by decision makers who are not end users. Fujinon (the other main competitor is Pentax) manages to summarise its gastroscopes on one page.

The alternative is what? Some people think that the Olympus board ("the other half") are spending company billions on fast cars, swimming pools and women?! Others think they are paying criminals not to leak their dirty secrets. Come on, this is Japan, what secrets could they have, worth 1.5 billion USD?

Have you met the sort of people you are talking about? They are company guys through and through. Here is a video of Kikugawa, the gentleman who walks in and sits down first. http://www.youtube.com/watch?v=FfQOuBE3JKs Swimming pools? Dirty secrets? Come on...He'd die before ripping off Olympus for millions. And that in a sense may be the issue: Chairman Kikugawa may put his company before everything else.

Just on NHK folks. Pay your subscriptions.

This has become a very large news story, but there are surely more important issues for the Japanese media to focus on. Here we have a situation where different cultural customs come into a collision. Japanese business culture is very unique, possibly the most unique in the world. Large money transactions such as this are not reported to shareholders or anyone else. The board of course has the best interest of the investors and employees in mind at all times. Some people are accusing the board of doing something illegal, but there is simply no proof of this. No court has issued a judgement finding anyone guilty, so I think we should assume they are not and give them the benefit of the doubt.

Funny how everyone says Japanese companies are closed or have glass ceiling. How many "western" corporations put a Japanese person as CEO or president ? Japanese companies are as open as (or as closed as) any country out there.

I don't think that Kikugawa would do badly for Olympus. Kikugawa is a company man and he lived for Olympus. He and his board are not the sort of men to want to rake off a few hundred million for personal use, at the expense of the company they have lived for.

Neither are they incompetant (except in their choice of CEO perhaps) either.

Due to the nature of Olympus' main business, selling very expensive endoscope equipement to hospitals and health procurement officials all over the world, including recently increasingly China, Olympus may have been asked to provide sales and marketing expenses that would not look good on the books.

Mr. Squeaky Clean Englishman (we hope) comes along and demands that all expesnse be detailed publicly on the books. The board fires him for a conflict of management style, and the shares tumble.

Sad story?

There may be a silver lining. The ensuing scandal - which looks set to continue for a while - may result in increased free competition in the endoscope market so that people like me who are prone to stomach ulcers, get to have a higher tech endoscope. Having said that, I hope it is made in Japan and does not break down. (Go on Panasonic or Casio, buy them out.)