Dec 3 The corporate execution took just eight
The board of Japanese camera and endoscope maker Olympus
Corp voted unanimously on October 14, 2011 to fire
president and CEO Michael Woodford, one of the few foreigners
ever to run a major Japanese company.
There was no discussion and Woodford was not allowed to
comment. His secretary had been told to leave the building so he
could not say goodbye to her. He was ordered to leave his
apartment within a few days, and told he must take the airport
bus when leaving the country, rather than a company car. The
summary justice was almost unprecedented in Japan's corporate
In his memoir "Exposure - Inside the Olympus Scandal: My
Journey from CEO to Whistleblower," (Portfolio, $27.95),
Woodford explains how his dogged attempts to find out about a
series of suspicious deals had put him in direct confrontation
with the board and management teams that had run the company for
Woodford looked like a safe choice when he was promoted to
be president of the company six-and-a-half months earlier. He
had started with Olympus in 1991 as a medical equipment salesman
in Britain, and had steadily climbed up the corporate ladder. He
regarded Tsuyoshi Kikukawa, the chairman and the previous holder
of the president's job, as his mentor.
But any idea that Woodford would not rock the boat dissolved
after a Japanese magazine Facta published several articles
reporting on "Mickey Mouse" deals Olympus had done that had
nothing to do with its main businesses. These included its
purchase of a maker of microwavable dishes, a cosmetics mail
order firm, and a hospital waste company. There were special
purpose companies based in the Cayman Islands, and payments of
massive fees to advisors.
Woodford called in accountants PricewaterhouseCoopers, who
produced a damning report. But his attempts to get those
involved in the deals to be accountable led to his ousting.
He wasn't going to go quietly. He mounted a campaign to get
shareholders to replace the board. He was prepared to return to
run a reformed company, but it became clear that Japan Inc. was
not going to let this foreigner radically transform the way
things were done. Olympus' board, its Japanese shareholders and
bankers closed ranks.
GREW UP IN POVERTY
As Woodford launches this book -- which is likely to be
followed by a movie -- and goes on the
international lecture circuit to talk about the need for
corporate reform in Japan, he acknowledges his mission is very
difficult. The resistance to change goes very deep. Despite all
the media coverage in the past year, there is still much that
hasn't been explained about the Olympus scandal.
While much of the appeal of this book is in its
thriller-like elements -- justifiably or not, Woodford and his
wife feared for their lives -- it is also fascinating because of
the personal elements that he introduces.
We learn how Michael Woodford grew up in a harsh environment
after his mother left his father at an early age and took him to
live in poverty in Liverpool. His home didn't have a bath and he
had to wash in a public bathhouse. He faced racial taunts as a
child attending a jewish school and possessing vaguely asian
features, which he explained without providing detail came from
his father's side of family.
Most relevant, Woodford writes of developing from an early
age a distinct sense of justice and civic responsibility. After
stealing chewing gum from a store, his conscience drove him to
Witnessing as a teenager a fatal crash that killed a
motorcyclist led to a life-long commitment to road safety. He
has been involved in more than 1,000 road-safety projects. If he
sees a road danger that could be reduced he will stop to take a
picture and send a report to the relevant traffic authority.
We also learn how Woodford's insecurity at home helped to
produce the drive to build a sales career after leaving school
at the age of 16 without any major qualifications.
It is a combination of that sense of right and wrong, the
insecure man's determination, his sense of civic duty, and his
determined nature that led him to expose wrongdoing at Olympus.
Woodford also shows how his battle with Olympus impacted his
Spanish wife, Nuncy, who had not wanted him to take the job in
Tokyo in the first place. At the height of the stress on the
Woodfords from the scandal, she began to have nightmares in
which she screamed "They're going to get us." And at one stage
things get so tense between the couple that a panel gets smashed
in the front door of their home.
There are also, though, surreal moments. Such as the
Woodfords' decision not to call the police on their neighbor's
kids when they had a rowdy party for fear that armed officers -
who were on call to protect the couple - would storm the place.
And at times Woodford gets carried away with his new "rock star"
status as he is mobbed by the Japanese media at the airport.
Perhaps the most poignant moment comes at the end of the
book when Woodford has a clandestine rendezvous with the
original whistleblower, an Olympus employee who had provided
Facta with much of its information. The whistleblower apologizes
for not going straight to Woodford with the scandal - "I didn't
know you weren't one of them."
It may say a lot about the current state of corporate
governance in Japan that this whistleblower remains anonymous.
In the United States, a whistleblower in such a high-profile
case might by now be featured in the media, be writing a book,
and be claiming a big reward. In Japan, they live quietly, in