I arrived at the venue about fifteen minutes before the designated start time of 2pm, and already in the front row sat Michael Woodford, former CEO of Olympus, the subject of the day’s 2-hour talk. Used to VIPs making grand entrances a tad behind schedule (later this day, Justin Bieber famously went on stage two hours later than scheduled much to the annoyance of the parents of his waiting tween fans) I should not have been surprised at Woodford’s excellent timekeeping. This was, after all, the first non-Japanese salaryman to have scaled the height of the corporation having started as nothing more than a salesman thirty years ago.
His appearance at our sister campus in Southend was part of the 2013 Essex Book Festival, and there was a book to promote at the bottom of it all: entitled ‘Exposure’, the book charts Woodford’s story of corporate fraud and poor governance in a culture underlined by hierarchy and respect for superiors. I was initally curious as to why the Southend Essex Business School campus was chosen over ours in Colchester for no other reason than the fact that accounting and corporate governance colleagues were based in Colchester; but the reason became quickly apparent – despite hailing from Liverpool originally, Woodford’s family planted their roots near Southend: his wife a teacher at the local high school, and his children growing up nearby.
As if to underline how unique an experience we were having, Woodford intimated that a similar talk he gave in the US a week earlier was attended by top corporate leaders paying at least $1,000 a ticket. In contrast, the tickets for this event went for seven quid. This was a man very much in the news, and of international stature whether there was to be an accounting scandal or otherwise at Olympus.
Unluckily for Woodford there was indeed an accounting scandal; a concerted effort over the years to hide accounting losses through the careful structuring of subsidiaries bought and sold at prices that did not reflect the entities’ true values. At least, that was what was on the surface. Beneath it lies an unproven hunch of the involvement of the Yakuza (the Japanese mafia) and money laundering activities.

How did a salaryman – that is, a company man through-and-through – rise up the ranks of a corporate giant? He started off at Olympus KeyMed – a manufacturer of medical devices. Olympus may say digital cameras to you and me, but for those in the medical profession, it refers to the company’s main cash cow: electro-optical products such as microscopes and endoscopes. He worked his way up the company, at one point heading operations in the Americas and Europe.
In his talk, Woodford never shied away from the fact that he could be a difficult person to work with, possessing a tendency to micromanage and having a work ethic that may not endear him to many. His guiding compass was simple: doing what felt right. In the first few weeks of him becoming the President of Olympus in February 2011, he proved his worth as a leader to the Japanese corporation by flying into earthquake stricken Tokyo amidst global fears over the Fukushima nuclear plants at a time when other foreigners were clamouring over each other to leave the country.
It was this sense of doing what was right that prodded him to continue to uncover the fraud first brought to light by news magazine FACTA. Unhappy that he was helming a corporation without really knowing what was going on, he demanded answers from key executives of the firm, only to be given the silent treatment. The more answers he demanded, the more bricks were placed in the stone wall the Japanese executives were building.
To complicate matters, the cultural nuances of Japanese society were very much at play within the corporation, and one was to always know one’s place in the overall grand scheme of things. His tenacity at getting answers backfired at him: requesting a meeting with the company’s then-chairman, Tsuyoshi Kikukawa resulted in a gentle but firm rebuke – he recounted how his request for a meeting was met, but at the lunch meeting, he was only served a tuna sandwich while Kikukawa enjoyed a plate of fine sushi. The twist in the knife at this gesture was the widespread knowledge of how much Woodford loved sushi – and so the actions served as a reminder that as one lower in the hierarchy, one does not simply request a meeting…

Undeterred, Woodford demanded answers not only from the Olympus board but the company’s auditors who interestingly failed to spot the glaring attempts at accounting fraud which, later investigations revealed, had been perpetrated over a period of over two decades. Amassing evidence from various sources, Woodford presented this information through a series of letters that he wrote over the period of a few weeks. This did not go down well with the board, and ultimately he was fired from his post as CEO only after two weeks of being appointed (he became President in Feb 2011 while Kikukawa retained the role of CEO, but he was then made CEO by Kikukawa in August 2011).
There was much pomp and ceremony in his ousting, but even more worrying for Woodford was his safety: if rumours of Yakuza involvement were true, his personal and family wellbeing was on the line. He spoke of his request to obtain security detail: initially met with disbelief from the Belgravia police officer who thought he was quite mad, only to then made to realise by a superior that this was the face of someone much featured in the Financial Times.
Since Woodford’s sacking as CEO, Kikukawa has resigned from the Olympus board having admitted to perpetrating fraud, and the Olympus scandal has pretty much been laid bare. Limited time (and the need to not give away the whole story in the book) saw to a stop to his story there, but all things considered, Woodford’s whisteblowing amounted to something in the end: the fraud was exposed, and corrective action is being taken (to an extent). Subsequent arrests have been made in both Japan and the US as investigators attempt to get to the bottom of it all.
I sometimes wonder why Woodford was appointed by Kikukawa, going against convention to personally appoint a gaijin who managerial acumen was known to him. Did he think that Woodford would show deference and do as he was told? Or did he really want someone from the outside to uncover the mess that was already there, for the love of a corporation that was effectively his lifeblood. Woodford speaks of the real whistleblower, a person inside the corporation who lifted the lid to FACTA, a person who can never be named or identified in the interest of his own personal safety. One wonders..
But that aside, there are other fish here that need to be fried. The intricacy of the fraud. The ‘oversight’ of the auditors. The stonewalling. And most of all, the implicit cooperation at so many levels, inside and peripheral to the firm, which allowed this – and other fraud in other corporations – to be perpetrated, making reform a toothless tiger in the world of rampant capitalism where cash is indeed king.
