Who will bury the corpses over at Olympus?

I read this extraordinary story in today’s Wall Street Journal:

Michael Woodford, who was fired as CEO of Olympus after asking questions about the company’s accounting, is now working against the existing board and management of the company to put together a new board.

“Mr. Woodford said Olympus’s current board isn’t qualified to select the directors or assemble a reform plan for the company, after effectively admitting last month that Mr. Woodford’s concerns about company acquisitions were justified and that the company had hidden losses dating back to the 1990’s.”

“The moves put Mr. Woodford on a collision course with Olympus’s top executives, most of them directors as well, who said they plan to propose their own slate.”

This makes absolutely no sense.  How could Japanese shareholders allow the very top executives and directors who messed up Olympus continue to run the company?

“Such proxy battles are rare in Japan, where big shareholders historically have had close ties with the companies they invested in and outright activism is frowned upon.”

Amelia Dyer, England’s
“Baby Butcher” (photo
Wikipedia) 

Huh?  But what if existing management perpetrated what appears to have been one of the largest and longest accounting frauds ever?  Letting these people continue to run the company would be like hiring Amelia Dyer as your kids’ babysitter.

I have more questions.  I’d like to know who died and made Mr. Woodford king.  Like it or not, the company fired him.  He has little more association with the company than you or me (or Amelia Dyer).  Who hired him to clean up Olympus?

Many writers have scoffed over the 10-year anniversary of the Enron mess (see Grumpy Old Accountants and re: the auditors).  But imagine if Ken Lay, Jeff Skilling and company kept their jobs and then selected a new Board of Directors?  What am I missing here?

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About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

One comment

  1. For Japanese shareholders to allow the top executives and directors who have messed up Olympus to continue running the company is irrational. Although such actions of activism are frowned upon in Japan, I believe that countries should pressure Japanese government to impose stricter regulation against such matters. There should be an investigation heldat Olympus to identify the issues going on to see if these executives and directors should continue to run Olympus.

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