Olympus Chairman Stepping Down Amid Scrutiny

President Tsuyoshi Kikukawa is stepping down after he questioned a $687 million payment to financial advisers by CEO Michael Woodford.

TOKYO (AP) -- Olympus Corp. said Wednesday that Chairman and President Tsuyoshi Kikukawa is stepping down amid widening scrutiny into acquisitions after the company's British ex-CEO alleged financial wrongdoing.

The Japanese camera and medical device maker said the move was to take responsibility for the troubles caused to customers, business partners and investors over recent media reports that have sent Olympus stock plunging.

Olympus shares, which have lost half their value in the last two weeks, fell 7.6 percent Wednesday.

The drop followed Kikukawa's firing of Chief Executive Michael Woodford after he questioned a $687 million payment to financial advisers as part of Olympus' purchase of the U.K.'s Gyrus Group Plc. as too high.

The payment represented more than a third of the $2 billion purchase. Fees for advisers are normally 1 to 2 percent of the deal value.

Shuichi Takayama, who was tapped president, apologized for the latest woes, including the sliding stock price, and promised to do his utmost to investigate what had happened.

"We will work day by day with sincerity and with all our hearts to resolve the problem, regain social trust and allay the worries of our customers, business partners and investors as soon as possible," he said in a statement.

Last week, the company said it would establish an independent task force to review past acquisitions, seeking to ease mounting shareholder pressure.

Kikukawa was a no-show at a hastily called news conference at a Tokyo hotel, baffling reporters who had expected him to address Woodford's allegations. Typically, when a corporate leadership change takes place in Japan, the outgoing executive meets the press to introduce his successor.

Instead, the company released a seven-sentence statement from Kikukawa that was read out loud.

"The past acquisitions that have been reported in the media were made after proper assessment and procedures," Kikukawa said. "There was absolutely no wrongdoing, but we are setting up an independent committee and are preparing once again for an impartial investigation."

Takayama then appeared alone and evaded the bulk of intense questioning from journalists. He confirmed the independent task force would be established "as soon as possible" but did not give a specific time frame. He defended the advisory payments as "proper," but declined to go into any details, deferring to the task force.

He expressed confidence that Olympus shares would bounce back.

"It's not as if the value of our business has been damaged," he said. "Our operations have been progressing smoothly."

He said Woodford had been dismissed because of his unilateral decision-making and intimidating managerial style. The Briton also spent much of his time outside of Japan, Takayama said.

The clash between Kikukawa and Woodford, a Briton and one of a handful of foreigners to ever head a major Japanese company, was widely viewed here as raising questions about whether old-style Japanese management was up-to-date on global standards.

Woodford had also questioned the lofty prices Olympus paid for three other money-losing Japanese companies that appear to have little strategic value.

He commissioned Pricewaterhouse Coopers to analyze the deals and distributed the results to the board of directors.

The findings compelled Woodford to call for Olympus executives to resign.

"In putting the company first, the honourable way forward would be for you and Mori-san to face the consequences of what has taken place, which is a shameful saga by any stretch of the imagination," he said in an Oct. 11 letter to Kikukawa, referring to Hisashi Mori, a group president at Olympus.

"It is clear that the current situation is now untenable and to move forward positively the necessary course of action is for you both to tender your resignations from the Board."


Associated Press writers Bob Barr in London, Malcolm Foster and Yuri Kageyama in Tokyo contributed to this report.

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