Olympus Corp. head Tsuyoshi Kikukawa resigned Wednesday amid an exploding scandal that has wiped out half of the 92-year-old Japanese firm's market value.
Less than two weeks ago, Olympus fired its new British chief executive, Michael Woodford, saying the self-described "loudmouth" failed to understand the company's management style and Japanese culture. Kikukawa then took over Woodford's role.
But Woodford, who cut his teeth at the camera and endoscope maker as a salesman when he joined in 1980, claims he was really sacked for questioning a $687 million advisory fee linked to a $2.2 billion acquisition in 2008, as well as other deals he says have destroyed about $1.3 billion of shareholder value in the company.
Law enforcement officials on three continents, including the
, are now reportedly looking into the matter. Unanswered questions about Olympus' questionable dealings have led to speculation of involvement by
infamous yakuza crime syndicates. Woodford has said he is seeking police protection.
The international story has special resonance in the Lehigh Valley because Olympus' U.S. headquarters is at the Stabler Corporate Center in
. Olympus Corp. of the Americas relocated from
, N.Y., to the Upper Saucon Township location in 2006 in one of the Lehigh Valley's biggest-ever corporate recruiting triumphs.
At the end of 2010, the company — whose products include digital cameras, research microscopes and minimally invasive surgical devices — had more than 900 Lehigh Valley employees and an annual local payroll of $100 million. However, an unspecified number of layoffs were announced in the summer. The work force now stands at 860 employees, according to a company spokeswoman.
Those painful cost-cutting measures followed huge losses Olympus recorded in 2009 as a result of the unusual dealings that prompted Woodford to speak out. In fact, Woodford was appointed to lead Olympus in no small part because he promised to rectify the company's bottom line through downsizing.
Olympus shares fell 7.6 percent Wednesday on the Tokyo Stock Exchange and have lost more than half their value since Woodford was fired. The price is now so low analysts have speculated the company could be vulnerable to takeover.
"Olympus dominates the global flexible endoscope market, and there are many companies that would like to enter the lucrative medical-equipment business," CLSA, a brokerage and investment firm, said in an Oct. 20 statement.
Asked Wednesday how recent developments might affect Olympus' Center Valley operations, local company officials declined to comment other than to note "our current leadership continues to be directly responsible for the business direction locally and throughout all of our offices in this region."
Meanwhile, Woodford has called for the resignation of Olympus' entire board while sending dossiers on deals he found odd to
Serious Fraud Office and Japan's Securities and Exchange Surveillance Commission. He also was in New York on Wednesday to meet with the FBI.
He demanded the swift appointment of a "fully independent, objective third party committee" to oversee an investigation by an external auditor.
"That is the next critical step. It will not be credible if the committee is appointed by the company without any input from other stakeholders — stakeholders and the media will not trust it," Woodford said. "The only way you can stop the company heading for the rocks is by answering the questions."
Shuichi Takayama, a 41-year company veteran picked to replace Kikukawa, sniped back, saying at a news conference Wednesday there was no problem with fees paid by Olympus and that the company was extremely angry that Woodford revealed internal information while he was still a director.
"I was one of those who agreed to Mr Woodford's dismissal," he said. "The reason was his autocratic actions, and these included intimidation of my own staff."
The Olympus scandal has reignited debate over what critics say is a deep-seated weakness of Japanese management — a lack of strong independent oversight of boards, which gives shareholders' rights short shrift.
A small Japanese monthly business magazine called Facta first raised red flags about Olympus deals in August and Japanese authorities started paying particular attention to the company around that time, said two sources, who were not authorized to discuss the matter publicly.
Talk has turned to suspicions of involvement by Japan's yakuza crime syndicates, euphemistically referred to as "anti-social forces."
Asked whether the company's financial advisers had any connection with organized crime, Takayama said: "You are asking me about anti-social forces, but I am absolutely not aware of any such thing."
Woodford, who says he fears for his safety, said the Serious Fraud Office (SFO), a British investigative agency similar to the FBI in this country, had suggested he go to the police.
"I returned to the SFO… because certain new information has come to light which I am not at liberty to discuss, but which I felt investigating authorities should be aware of," he said last week. "They made clear they are not the police...and if I had concerns about my safety, I should go to the police. And I will be going to Scotland Yard."
Woodford has identified the advisory firms involved in the $2.2 billion takeover of the medical company Gyrus as New York-based AXES America LLC and AXAM Investment Ltd in the Cayman Islands.
has reported that neither appears to be in business any longer.
At about 30 percent of the acquisition price, the $687 million advisory fee in question set a record in the merger and acquisition category. Such fees are normally in the range of 1 percent to 5 percent, according to the Times.