Woodford drops Olympus CEO bid, plans to sue

Former Olympus CEO Michael Woodford

Speaking at a press conference in Tokyo, former Olympus CEO Michael Woodford announced he is giving up his bid to be re-instated as CEO of the troubled Japanese camera and medical device manufacturer. Woodford indicated that, while he might be able to win a proxy battle to retake control of the company, without support from Olympus’s key Japanese institutional investors it would be a hollow victory that would leave Olympus significantly weakened.

“Despite my having done the right thing, none of the major Japanese institutional shareholders have offered one word of support to me,” Woodford said in a statement.

So, instead, Woodford is planning to sue Olympus for unfair dismissal, and has instructed lawyers in the United Kingdom to initiate legal action.

Woodford rocketed to attention as the first non-Japanese CEO of Olympus, one of Japan’s best-known brands dating all the way back to 1919. A scant few weeks after taking the job, Woodford drew attention again in October 2011 for being summarily sacked after questioning nearly $700 million paid to a Cayman Islands corporation in the wake of Olympus’s takeover of UK medical device company Gyrus. Woodford went public with Olympus’s financial discrepancies, triggering an investigation that has since led to the resignation of many of Olympus’s top executives, triggered a deep investigations of Olympus’s finances, forced the company to  restate its last five years of earnings, and uncovered decades of financial fraud from leadership investigators described as “rotten to the core.”

Speaking to reporters, Woodford also cited the strain the last few months have put on his family as a reason for dropping his bid to be re-instated as CEO.

Although Olympus has managed to keep its stock listed on the Tokyo Stock Exchange after restating earnings, the company is still being investigated by Japanese regulators and law enforcement agencies. Authorities in the United States and United Kingdom have also been taking a hard look at Olympus’s years of fraud. Olympus is expected to have an extraordinary shareholders meeting as soon as March to reconstitute the company’s board and try to get back on track. Olympus’s major shareholder (and principle lender) Sumitoro Mutsui Financial Group (SMFG) has thrown its support behind Olympus’s current CEO Shuichi Takayama, and is believed to be seeking capital partnerships with other Japanese companies to shore up Olympus’s finances in the wake of the scandal. Sony, Fujifilm, and Panasonic have all been mentioned as companies that might be interested in buying into Olympus—or taking over part of its operations, like its consumer digital camera business.

Woodford has compared his life since going public with malfeasance at Olympus as something out of a John Grisham novel, and indicated he may pursue a book deal once things have settled down.