Olympus ex-CEO calls for Japan probe into fees

LONDON Wed Oct 19, 2011 11:08am EDT

LONDON (Reuters) - The sacked chief executive of Olympus Corp (7733.T) has written to Japan's securities industry watchdog calling for an investigation into an "extraordinary" $687 million fee the company paid to advisers for an acquisition.

Michael Woodford told Reuters on Wednesday he had written to Japan's Securities and Exchange Surveillance Commission (SESC) detailing his concerns over payments linked to the $2 billion purchase of UK medical equipment maker Gyrus Group.

Woodford, who was ousted by the Olympus board last week, also called on Olympus shareholders to demand the removal of the board and a forensic examination of all the company's acquisitions over the past decade, including an "impairment test," which could potentially revalue some assets.

"Shareholders have to take the initiative. They have incurred huge financial losses...The directors have to be accountable. (This) has to be investigated completely independently of the current board," Woodford said.

The 51-year-old has already spent more than an hour with Britain's Serious Fraud Office (SFO), after raising questions over that payment, as well as a series of other Olympus acquisitions made under Chairman Tsuyoshi Kikukawa.

The maker of cameras and endoscopes admitted earlier on Wednesday that it had paid $687 million to advisers, confirming earlier claims made by Woodford. This reversed an earlier denial by the company, in a deepening scandal that has wiped out almost half its market value.

Olympus paid two companies it described as advisers, U.S. incorporated Axes America and Cayman Islands incorporated AXAM Investments Limited, a fee that equated to more than 36 percent of the value of Gyrus, Woodford said.

Axes was last incorporated in New York in 2006. And a previous incorporation in Connecticut has been "canceled," according to an interim report by accountancy firm PriceWaterhouseCoopers, a copy of which was seen by Reuters.

Woodford says the ownership of these companies remains unknown. And when added to the high price paid for three small Japanese companies Altis, Humalabo and News Chef, the purchases had destroyed more than $1.3 billion in shareholder value, Woodford said.

Olympus on Wednesday refused to name the advisers and said it did not know their whereabouts.

"The simple truth is that $687 million was paid in respect of so called 'advice' to unknown parties," Woodford said.

(Editing by Chris Wickham)

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