* Olympus Chairman Kikukawa resigns to restore confidence in
* Ex-CEO turned whistleblower Woodford, shareholder say
resignation is 'a start'
* Regulators look into Olympus disclosure over past M&A
* Watchdog started paying particular attention around August
By Taiga Uranaka
TOKYO, Oct 26 Olympus Corp head
Tsuyoshi Kikukawa resigned on Wednesday after a scandal over
hefty advisory fees wiped out half of the 92-year-old firm's
market value while his successor stuck with the company's line
that it had done nothing wrong.
Sources told Reuters that Japan's securities watchdog was
looking into past Olympus takeover deals, focusing on whether it
has properly disclosed relevant information.
Olympus fired its British chief executive Michael Woodford on
Oct. 14, just two weeks after his appointment as CEO, saying he
failed to understand the company's management style and Japanese
culture. Kikukawa then took over Woodford's role.
Woodford, who cut his teeth at the camera and endoscope maker
as a UK salesman when he joined in 1980, said he was sacked for
questioning a $687 million advisory fee linked to a $2.2 billion
takeover in 2008 as well as other deals he says have destroyed
about $1.3 billion of shareholder value.
He has called for the resignation of Olympus's whole board
while sending dossiers on odd-looking deals to Britain's Serious
Fraud Office (SFO) and Japan's Securities and Exchange
Surveillance Commission (SESC). He is also in touch with the
U.S. Federal Bureau of Investigation (FBI).
Josh Shores, a principal at Olympus's largest non-Japanese
investor Southeastern Asset Management, told Reuters the
boardroom re-shuffle was "a step in the right direction".
But he demanded the swift appointment of a "fully
independent, objective third party committee" to oversee a broad
corporate governance and accounting investigation by an external
"...That is the next critical step. It will not be credible
if the committee is appointed by the company without any input
from other stakeholders -- stakeholders and the media will not
trust it," he said.
Koichi Ogawa, chief portfolio manager at Daiwa SB
Investments, said the company's battered share price should
rebound on the resignation.
But he added: "...in reality nothing has been cleared up.
There are still many investigations left to come."
Woodford told Reuters Kikukawa's resignation was "a start"
but added that his replacement -- Shuichi Takayama, a 41-year
company veteran -- had also failed to demand explanations about
hefty fees linked to acquisitions.
"The only way you can stop the company heading for the rocks
is by answering the questions," he told Reuters in London by
Takayama sniped back, telling a news conference there was no
problem with fees paid by Olympus and that the company was
extremely angry that Woodford revealed internal information
while he was still a director.
"I was one of those who agreed to Mr Woodford's dismissal.
The reason was his autocratic actions, and these included
intimidation of my own staff."
Kikukawa said in a separate statement he had stepped down to
restore confidence in the company under the new management and
that he would continue to work as a director.
The Olympus scandal has re-ignited debate over what critics
say is a deep-seated weakness of Japanese management -- a lack
of strong independent oversight of boards, which gives
shareholders' rights short shrift.
A small Japanese monthly business magazine called Facta first
raised red flags about Olympus M&A deals in August and the SESC
started paying particular attention to the company around that
time, said two sources, who were not authorised to discuss the
SESC officials declined to comment on the probe, as did an
Olympus shares fell 7.6 percent on Wednesday and have lost
more than half their value since Woodford was sacked.
The Briton said he was fired for questioning the payment to
unidentified advisers in the $2.2 billion takeover of medical
equipment maker Gyrus. At about 30 percent of the acquisition
price, that set a record in M&A fees.
Unanswered questions about the Gyrus deal and other Olympus
acquisitions have spurred various theories, including
speculation Japan's yakuza crime syndicates, euphemistically
referred to as "anti-social forces", could be involved.
Asked whether the company's financial advisers had any
connection with organised crime, Takayama said: "You are asking
me about anti-social forces, but I am absolutely not aware of
any such thing."
Woodford has identified the advisory firms involved in the
Gyrus takeover as New York-based AXES America LLC and AXAM
Investment Ltd in the Cayman Islands.
A senior Japanese lawmaker on Tuesday called for probes by
financial and securities watchdogs and urged Olympus to explain
the fees, which risked shareholders losing confidence in Japan.
"At least the fees were outlandish. The company must explain
the whole circumstances behind the incident," said Tsutomu
Okubo, deputy policy chief of the Democratic Party of Japan.
While Okubo suggested parliament should look into the
matter, Japanese politicians' and the local media's initial
reaction to the scandal has been remarkably muted.
But in a sign of growing alarm over potential damage to
Japan's credibility, another ruling party lawmaker has asked the
upper house financial affairs committee to question Tokyo Stock
Exchange officials and regulators on Olympus.
Takayama, 61, joined Olympus straight from an engineering
high school in 1970 and has served on the company's board since
2006 after holding several senior managerial positions.
Japan Securities Finance, a stock lending brokerage, on
Tuesday put Olympus on a list of shares for which caution is
advised on margin trading due to a surge in such trading.
And in a heads-up to investors, the Tokyo Stock Exchange
also started announcing margin trading positions on a daily
basis. The exchange also said on Wednesday it would cooperate
with regulators to enforce corporate governance of listed