Ex-Olympus CEO Describes The Hostile Board Showdown That Left Him In Fear For His Life

Michael woodford olympus

Months after becoming Olympus’ first non-Japanese president in 2011, British executive Michael Woodford called for an investigation into fraud allegations. Woodford’s actions led to his own ouster, followed by the exposure of a $US1.7 billion fraud and the arrest of the Chairman Tsuyoshi Kikukawa and others with ties to the scandal. Woodford recounts his experiences in “Exposure: Inside the Olympus Scandal: How I Went from CEO to Whistleblower,” now out in paperback. His chilling account of his “corporate execution” is excerpted below:

As I entered the Monolith building I glanced at my phone: it was 8.41, Friday, 14 October. I entered the lift in silence, a deference to the etiquette in Japan, where everyone seems to keep fixed, unreadable expressions in such situations. I wondered if my Japanese colleagues around me knew what was about to happen. I got out on the fifteenth floor, walked the twenty or so yards to the electronically controlled double doors into the executive suite. Normally I would enter the secretaries’ office by the reception desk and say: ‘Ohayou gozaimasu‘ (good morning), and then, having exhausted my Japanese repertoire, would in English ask the four secretaries who shared the office how they were and spend a few minutes talking and joking. That day I went straight to my own office.

There was a knock at the door and Michiko entered. She had clearly been crying. I could see in her eyes that those wretched men had told her what was going to happen and no doubt had forbidden her from saying anything to me. In that moment I felt such warmth for her, remembering all the funny times we had together. We had laughed a lot when we had gone out shopping to buy my tailor-made shirts (which were necessary to accommodate my long limbs), my fancy Porsche-designed electronic pepper and salt grinders and my beloved Nespresso coffee machine. Every morning before I arrived she would go down to the building’s subterranean shopping arcade and in Café Croissant buy me my favourite egg croissant for breakfast. She knew how to look after me — a useless gaijin who didn’t speak Japanese — and had made my time in Tokyo go smoothly. She loyally watched my back, and now she couldn’t stop her own colleagues from stabbing me right between the shoulder blades. But she was completely professional. She didn’t say a word.

I wanted to say goodbye to her properly but subsequently found out she had been instructed to go across the road to wait in the Keio Plaza Hotel, until I had left the building. They didn’t want her to bump into me when I came out of my last board meeting as president.

The meeting was scheduled for nine o’clock, and in a culture where nobody is late for anything, ever, the boardroom was full at the appointed hour. The roll call that day was thirteen board members, two translators, four attending auditors and one secretariat member. But somebody was conspicuously absent. Having called this extraordinary meeting, Kikukawa was late. Late? How could he be late?

At 9.02 I looked to my right and caught Hisashi Mori’s eye. His gaze, as ever, offered nothing. I made an exaggerated play of checking my watch and raising my eyebrows. He leaned slightly towards me and, in a feeble attempt to humour me, asked about my visit to Tohoku [a region badly damaged by the earthquake and tsunami] the preceding day.

‘Michael, how was it? You must have been affected?’ With my mind fresh from the scenes of devastation I had witnessed the day before, I felt an overwhelming revulsion that he would use this of all subjects to try and distract me. A low-level fury rose from my stomach. In a raised voice, and deliberately omitting the honorific ‘san’, I replied: ‘Mori, stop playing games. Just get on with it.’ Realising that I knew my fate, Mori shrugged nervously and scuttled off to find his master.

Kikukawa eventually arrived, with Mori dutifully in his wake. It was 9.07. Kikukawa waddled in like a duck, wearing a shiny blue suit. He nodded at those present, and anxiously, perhaps even a touch excitedly, fiddled with his tie. I immediately recognised the tie. It was one of the three he had recently bought from the Imperial Hotel boutique, at a price of $US500 each, about which he had later boasted. A little puffed-up duck in a five-hundred-buck tie. He didn’t go to his normal chair, immediately to my right, but stood at the podium as if he were to give a routine PowerPoint presentation on the last quarter’s financial results.

He cleared his throat. ‘Today’s board meeting to discuss concerns relating to M&A activity has been cancelled.’ (I was listening in my earpiece to the translation.) ‘There is instead to be a new agenda: firstly the dismissal of Mr Woodford as president, CEO and representative director.’

I waited for a ripple of murmured astonishment, perhaps even dissent. Everyone stayed silent.

Kikukawa put the motion, as company law directed, to a vote, and almost before he had finished speaking, all fifteen members simultaneously raised their hands in approval. I was reminded of young children in a classroom who know the answer to a simple question, all stretching their arms up, desperate for the teacher to call on them. There was to be no discussion, no debate, just acquiescence.

Kikukawa was now talking again. ‘Mr Woodford,’ he said, looking into the middle distance, ‘is not permitted to make any comments here, because he has a vested interest in the outcome.’ Oddly, I had an overwhelming desire to laugh. I was in a room full of people — of colleagues, some of whom I had known for over thirty years — who were now operating beyond all the recognisable codes of conduct, not just in Japan but anywhere in the business world.

I stared at Kikukawa: at the cut of his expensive suit, at the precision of the knot in that silk tie, at the curt, pinched smile that played beneath his nose, and the reflection of the overhead lighting on the lenses of his glasses. He struck me as a ludicrous figure, and so delusional. He resembled little more than the captain of a sink- ing ship who believed that by throwing out the deadweight, his vessel would suddenly right itself and resume its calm drift into the horizon.

He read out a second motion: ‘Mr Woodford is stripped of all his directorships of Olympus’s subsidiary companies, including Olym- pus Corporation of the Americas and Olympus Europa Holding GmbH’ (the American and European organisations at both of which I was CEO and chairman of the board). Tellingly, he went on to announce, ‘Hisashi Mori will replace Mr Woodford in these roles.’ Mori, I thought. The Emperor’s trusted sidekick, a bureaucrat, a creature of the corridors — he knows nothing about the real business of customers and products.

It was no comfort to know that I was making history, for the forced removal of a company president is almost unheard of in Japan. No one is let go unless they are guilty of major malfeasance such as when, in 1997, the chairman of Japan’s then largest bank, Dai-Ichi Kangyo, was convicted of lending billions of yen to members of organised crime groups.

So why were Kikukawa and his board cronies acting this irrationally? They knew waves of publicity would be generated by my dismissal, but they were obviously scared of something far worse.

But now they were going to hold a press conference to announce their bizarre decision to the world.

Exposure: inside the olympus scandal

I checked my watch; it was 9.15 a.m. Just eight minutes had elapsed. An eight-minute corporate execution. I was now officially the ex-president. I remained a director, albeit one without portfolio, thanks to a quirk in Japanese corporate law whereby, if you don’t resign, only the shareholders can remove your directorship.
I rose quietly, left the room and, deliberately holding my head high, walked back to my office. I immediately opened the safe in the corner of the room, retrieved my bank book, about £1,000 worth of yen and, most importantly, my Japanese name stamp. If massive fraud had been taking place, the very last thing I wanted was these people getting hold of my name stamp. The red Japanese characters it leaves on a page are legally as good as my signature and are crucial for endorsing all official documents in Japan. Made out of wood and beautifully painted, the stamp was the size and width of my index finger. I kept it in a small leather box with a red ink pad. Using it always reminded me of my childhood Post Office set, but it was no plaything.

The only thing on my mind was to escape as quickly as possible. I just couldn’t understand why the board members were acting in this way. They had seemed scared, but of what? I was confused and disorientated. My thoughts turned again to the second Facta article, and its suggestion of connections to organised crime, to the Yakuza. I was both frightened and angry.

Somebody entered my office, and I turned to see Hironobu Kawamata, who in effect fulfilled the role of Olympus’s chief financial officer. He was accompanied by the recently appointed head of the secretarial division, a quiet and unassuming man who had clearly been ‘volunteered’ to make this encounter two against one. He remained silent during the exchange that followed. Kawamata was smiling broadly enough to reveal his teeth. Japanese people often smile or laugh when nervous, but this was not the case. There was too much relish in his expression.

‘Michael, there are a few points I need to go through with you,’ he said, as if what had just taken place in the boardroom was routine. ‘Firstly, I want your two phones.’ His manner was so rough that I became angry again. I looked him in the eye and, passing him the Samsung Galaxy, which I had used most frequently in Japan, said, ‘You can have this one.’ I could not help but add, ‘I’ve already wiped it.’ My other phone — an iPhone — had been issued to me by the British subsidiary.

I held it up. ‘I’ll keep this one because my wife will be worried if she can’t make contact with me.’ I walked towards him and with my face just a few inches from his I said, ‘Or are you going to take it off me? Are you a policeman?’ He buckled slightly, which pumped me up all the more. I wanted to shout, Who the f— do you think you are? My fingers curled, I clenched my hands at my sides.

Kawamata took a step back, relocated his resolve and demanded my two Sony Vaio laptops. It was my turn to smile. I told him, ‘I know your games and they have already been sent back securely to London. I’ll drop them off at KeyMed [Olympus’s UK headquarters] once they have been wiped of all data.’ Numerous colleagues from around the world had assisted or written to me, expressing in the most explicit language their contempt for the Olympus board’s behaviour, so my overwhelming priority was to protect them. Next, Kawamata demanded that I relinquish my company-issued credit card. I passed it to him with no comment.

‘Your apartment,’ he said, moving through his to-do list, ‘you have to vacate it by the end of the weekend.’ This I found extraordinary: I paid more than half of the rent personally. I stayed calm, telling him that I would pack a bag and return the keys in due course. Lastly, he said, ‘And by the way, when you go to the airport, you are not allowed to use Nick. You can take the airport bus.’

His smile had returned. Over my many years visiting Japan, I had never seen or heard of anything like this. This aggressive rudeness was all so very atypical, simply not the way business was carried out here. My efforts to highlight wrongdoings had brought out a bullying mob mentality in my colleagues.

My hands turned cold. I wanted to get out.

Kawamata did not accompany me the fifteen floors down to the ground floor, and for that I was grateful. I breathed heavily through my nose as the lift descended, my hands like ice, a cold sweat breaking out across my forehead and the back of my neck. Once at the foyer I strode briskly from the lift across the gleaming marble floor and out into an unseasonably warm and sunny Tokyo morning. Rush hour was over, so I had no trouble hailing a taxi. It was a relief to be inside, amid the curious frilly white doilies that cover the seats, and being driven away. I gave the driver a laminated card with my address in Shibuya, his hands white-gloved and resting at a calm ten to two on the steering wheel, and resisted the urge to ask him to drive quickly.

We arrived at Grosvenor Place and there were two men in suits loitering downstairs in the foyer. They looked hefty and officious. One of them gave me a sidelong glance. Did they have all their fingers? I went upstairs.

My apartment, technically no longer mine, was silent. I went straight to the bedroom and packed my bags, pulling clothes from drawers and cupboards, taking photos of my wife and children and stuffing them into a case, my ears alert to any sounds outside the window or the front door. I crossed the floor to the kitchen, sud- denly feeling thirsty; I drank deep from the tap. Zipping up my bags, I hesitated by the front door. I took a very careful look through the fisheye lens spy hole which revealed an empty corridor. I opened the door, stepped out, and allowed it to close quietly behind me.

Back downstairs, the two suspicious men still loitered. I passed the reception desk where the three uniformed ladies bowed, not knowing it would be the last time they would see me. Out on the street and hurrying along the pavement, I was soon sweating as I lugged my large silver suitcase in one hand and my black leather briefcase in the other.

Reprinted from EXPOSURE: Inside the Olympus Scandal: How I Went from CEO to Whistleblower by Michael Woodford with permission of Portfolio, a member of Penguin Group (USA) LLC. Copyright (c) Michael Woodford, 2012.