TOKYO - The ousted head of Olympus, Michael Woodford, said Thursday that cultural norms make Japan “vulnerable” to the kind of cover-up scandal that has enveloped the camera and medical equipment maker.
Weak leadership and complacency allowed the US$1.7 billion (S$2.13 billion) fraud to carry on for years, and have helped turn Japan into “question mark” for foreign investors as the country’s corporate governance image suffered a huge blow.
“Japan is seen to be having more and more question marks,” the Briton told the Foreign Correspondents Club of Japan.
“There are certain cultural norms here... deference, obedience... these inherent elements make Japan much more vulnerable to things being hidden,” he added.
Woodford’s comments come ahead of a shareholder vote on key board positions at a meeting in Tokyo Friday, a key part of the company’s attempt to polish its reputation after revelations that present and former top executives hid massive losses from investors.
Japanese police have arrested or charged numerous people over allegations they falsified Olympus’s balance sheet, including its former president and a pair of senior executives.
On Thursday, Woodford, who was sacked in October shortly before speaking publicly about the cover-up, said he would vote against the proposed directors.
Olympus has nominated Yasuyuki Kimoto, a former senior managing director of Sumitomo Mitsui Banking, and Hideaki Fujizuka, a former executive officer of Bank of Tokyo-Mitsubishi UFJ, as chairman and director.
An influential investment advisory firm and some of Olympus’s foreign shareholders have also called for a re-think of the new board appointments, citing their connections with creditors or their competence.
In an open letter to Olympus in late March, nine institutional investors, who collectively hold up to a 30.0 percent stake in the firm, said an independent chairman should be selected to head a board that represents broad interests.
On Thursday, Woodford questioned Kimoto’s knowledge of the company’s growing health-care business, and his “loyalty” to Sumitomo, one of Japan’s biggest banks.
“Does he understand about all the medical procedures? Does he understand about the products? Does he understand about the consumers?...No he doesn’t,” Woodford said.
“We know Japanese corporate loyalty, that’s part of the problem, the blind loyalty,” he added.
The appointments are expected to pass and Woodford has already abandoned his campaign to get his job back, citing a lack of enthusiasm among Japanese institutional shareholders, who are traditionally unwilling to rock the boat.