Michael Woodford starts his extraordinary story in October 2010 when he was invited by his company’s president to Tokyo for a meeting on the 15th floor. He’d been at Olympus Corp. for nearly 30 years and had worked his way up the ranks of the camera equipment and medical device company into upper-level management. Woodford, who is British, was known for his micro-management style, so he never expected to hear the words, “I would like you to be our next president.”
Woodford said yes immediately. After all, he knew the company inside and out—internationally known for its quality digital cameras and electronic equipment, controls 17 percent of the world market for endoscopes, one of the best health care equipment companies in the world. Olympus was as familiar to Woodford as his own family—or so he thought.
Within months of his official appointment in April 2011, Woodford learned about a $1.7 billion accounting fraud at the company and began questioning company executives. Barely 12 months after he was first offered the job, he was fired by the same man who had vaulted him into the presidency of their, until now, venerable company. He left the boardroom of the company headquarters in Tokyo on the morning of Oct. 14, 2011, totally shaken.
“I was petrified. This was not my world,” he said. “I had walked into a John Grisham novel and people with missing fingers and tattoos would be hurting me and my family.”
Woodford paces the stage when he tells his story, as he did on Thursday, Jan. 17, in Xavier’s Cintas Center, where he was the presenter for the Williams College of Business’ Distinguished Speaker Series. He also signed copies of his book, Exposure: Inside the Olympus Scandal: How I Went from CEO to Whistleblower, that was on sale at the door. He wanders offstage and into the audience, explaining he gets nervous if he can’t move about. He spices the story with rich details that give his listeners a taste of the culture and the tension that arose when he began questioning what appeared to be a cover-up of fraud by company executives.
The first hint of trouble arrived in an email on his laptop in July 2011 while in Hamburg for a board meeting of the company’s European group. On an afternoon break, he flipped open his computer and found an email from a friend in Japan who told him about a story that had just appeared about Olympus in a finance magazine. It reported the company had spent billions of dollars in strange and unusual activities, raising questions about corruption and fraud. He was dumbfounded.
“I couldn’t believe it. These were very straight people and businessmen,” he said. “I couldn’t believe these guys were crooked.”
When he went to a board meeting in Tokyo the next week, he expected “the atmosphere would be charged because of these odd reports” in the magazine. But the meeting was more mundane than usual. There was no mention of the report. That weekend, however, while riding a bullet train to a hot springs resort, a friend got out the magazine and translated every word of the article for Woodford, graphs, diagrams and all. The story reported that Olympus had bought three companies that were not typical companies for their product lines—one that made plastic plates, another that made face cream, and a recycling company. Also, Olympus had paid exorbitant fees for advice about a company they’d bought years earlier.
“These were ridiculous companies for us to buy,” he said.
Later that week, he confronted the former president and current chairman, Tsuyoshi Kikukawa, and Hisashi Mori, the executive vice president, over lunch they’d set up in the boardroom. Kikukawa and Mori stood on one side of the board table before a spread of “lovely” sushi. Woodford stood on the other side of the table, where lay a small sloppily made tuna fish sandwich. The Japanese businessmen knew how much Woodford liked sushi. They were sending a message, Woodford said.
“This was not innocent,” he said. “They use non-verbal communication to communicate.”
Woodford pulled out the magazine and showed them the story. He asked why no one had told him about the story or accusations. Kikukawa told him that as president, Woodford was too busy to be bothered with such matters. But he admitted some of the allegations were true.
The summer dragged on. Woodford said he couldn’t sleep because of worrying about the company’s finances. No one at the company or on the board would talk to him about it. He hoped the magazine would do another story that dug deeper and got to the truth. In September, they did. While in New York at another board meeting, unable to sleep, he got an email at 3:00 a.m. about another story that gave more details about the company, only this one tied financial activity to the Japanese mafia.
Backed by his board for the American group, Woodford went home to London and wrote lengthy letters to the company executives asking for details about the purchases, requesting board minutes from meetings going back years and additional corporate records. When he got an unsatisfactory response, he sent another letter by email saying he would resign publicly if they did not answer his questions and present all the details he had collected.
Woodford flew to Tokyo on Oct. 12, armed with a report “that was absolutely condemning” and asked for their resignations. He begged the board members to look at the facts he gave them. He spent that Thursday helping at a cleanup site after the tsunami, and later that day was informed of an extraordinary board meeting taking place the next morning. “I knew I would be fired.”
The boardroom was full when he walked in at 9:00 a.m. on Friday, Oct. 14. Kikukawa came in seven minutes later, went to the podium and read a resolution declaring the board’s dismissal of Woodford as president and CEO. He was stripped of his officerships and told he was not allowed to discuss what had happened.
“I was afraid,” he said. “I just wanted to get back to the hotel.”
They demanded his two computers, but he’d already sent them to England to be wiped clean before he would return them. They wanted his phones. He gave them the one he’d already cleaned up and kept the other that was his personal family phone. They kicked him out of his apartment and took away his driver. He caught a plane to Hong Kong and then to London, but before he left Tokyo, he met with a reporter for the Financial Times and gave him everything—the letters, the magazine articles, the audits—and told him, “I want the world to know this.”
By the time he landed at Heathrow, his wife met him with a copy of the Financial Times which already had the story and the BBC Radio was reporting, “Boss of camera company blows the whistle.”
It turns out that Olympus had used $1 billion in payments to cover up losses on investments dating back into the 1990s, according to reports in The New York Times. With the Federal Bureau of Investigation and the Securities and Exchange Commission investigating matters in the United States, and investigations underway in Japan, Kikukawa and others resigned, and Mori was fired. They have since pleaded guilty to fraud and face prison time, according to Bloomberg.com.
Woodford, the first corporate head to be a whistleblower on his own company, has been recognized for his bravery exposing the scandal, including from Britain’s top newspapers, from Time magazine and by the Association of Certified Fraud Examiners “For Choosing Truth over Self.”
His lecture, "Honesty and Leadership: Why the Best Leaders Must Possess Both Qualities," was the first in this year’s Distinguished Speakers Series, which brings top-level business, academic and political leaders to campus to discuss world issues, introduce ideas, generate discussion and further the educational mission of Xavier. Attendees have the opportunity to interact with each speaker. Previous Distinguished Speakers include: Robert Castellini of Castellini Co. and the Cincinnati Reds, E.W. Scripps’ Kenneth Lowe, Sara Mathew of Dun & Bradstreet, Procter & Gamble’s Robert McDonald, LaVaughn Henry of the Federal Reserve Bank of Cleveland, author and economic historian Amity Shlaes, and Economist editor Greg Ip.
Learn more about the Michael Woodford and the Distinguished Speaker Series at the website.