Olympus whistleblower writes book about fraud scandal

By William Hollingworth, Kyodo

Posted at Nov 29 2012 03:59 PM | Updated as of Nov 29 2012 11:59 PM

LONDON - The British man who exposed a massive fraud at Olympus Corp. published a book about his experiences Thursday and hopes his story can contribute to improving the way Japanese businesses operate.

Michael Woodford was the president and chief executive officer of Olympus Corp. until he was dismissed in October 2011 after he went public about the camera and medical equipment maker's attempts to hide 117.7 billion yen in investment losses dating back to the 1990s.

Three former executives, including Tsuyoshi Kikukawa, Olympus' former chairman, have since pleaded guilty to submitting false financial reports.

The book, written by Woodford in a thriller-style interspersed with moments of humor, details how exposing the scandal took its toll on himself and his wife, Nuncy, who nearly had a mental breakdown.

It also shows how he was determined to reveal the wrongdoing despite resistance from the then board of directors and attempts to discredit him.

In an interview with Kyodo News in London, Woodford said, "I wanted people to understand the effect it had on me and other people. And it's important that these lessons have value and it wasn't in vain."

Woodford had only been president for four months when he learned via a financial magazine about the elaborate scheme to hide losses from the company's balance sheet.

After inadequate answers to his questions and a complete absence of support from fellow board members, Woodford felt he had no option but to go public about his concerns.

Following the revelation, the book describes Woodford's paranoia about being targeted by the Japanese mafia, although there has never been any evidence to link it to the coverup at Olympus.

Woodford says he has no regrets about exposing the scheme.

The 52-year-old describes Kikukawa, who initially tried to explain away the coverup, as a "weak and cowardly man."

Woodford is particularly scathing about the "shameful" domestic institutional shareholders who he claims failed to speak out against the then board when there was mounting evidence of wrongdoing.

The book tells how Woodford later tried to return as president of Olympus with an alternative board of directors, but once again came up against the resistance of Olympus' domestic backers.

He says that although he "adores" Japan he is "pessimistic" about its future given the "dysfunctional" way in which a lot of corporations operate.

Woodford said, "My suspicion is that you will find similar issues (hidden debts) in other Japanese companies."

He advocates more external directors appointed to boards, compulsory whistleblower lines run by legal firms and the rotation of auditing firms every 10 years.

Woodford would like to see more women at senior levels in corporations, promotion according to merit, the closure of unprofitable businesses and a more entrepreneurial spirit.

He also criticizes the mainstream Japanese media for failing to unearth the scandal.

"The mainstream Japanese media is self-censoring...that depresses me," Woodford commented.

He revealed that since his departure from Olympus, he has been offered the presidency of a Japanese company and the chairmanship of a British firm, but he prefers to focus now on charity work and offering advice around the world on good corporate governance.

He said, "I would never say never (to becoming a chief executive officer) but it's not something I'm seeking. After what I have been through, both emotionally and mentally, I don't want to return to that.

"However, I would be prepared to become a non-executive director of a Japanese company, part of me would enjoy that."

Woodford, who had worked his way up through the Olympus ranks for 30 years, received 10 million pounds ($16 million) from the company as compensation for his dismissal and he says a lot of that money will be spent on his two main charitable interests: road safety and human rights.

Woodford's book "Exposure: Inside the Olympus Scandal -- How I Went from CEO to Whistleblower" is published by Portfolio Penguin.