Olympus sues for US$50m in damages
Source: Agencies |
January 11, 2012, Wednesday
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Print Edition
Print Edition
JAPAN'S disgraced Olympus Corp is suing 19 current and former executives, including its current president, for up to almost US$50 million in compensation, as it struggles to recover from one of the nation's worst accounting scandals.
The maker of cameras and medical equipment said yesterday all board members subject to the lawsuit would quit in March or April, leaving it in the extraordinary position for now of continuing with its most senior executive, Shuichi Takayama, and several other directors it is suing for mismanagement.
One analyst likened the current board to condemned men, resigned to their fate, and said they would have difficulty over the next few months making any strategic decisions, leaving Olympus more vulnerable to an eventual takeover.
"Essentially, everyone feels they are on death row. It does seem extremely strange to have the death-row cell inside the company," said Nicholas Smith, head of Japanese equity strategy at CLSA in Tokyo.
"Having nobody at the helm makes it easier for a takeover," he added.
Olympus shares surged nearly 30 percent on the news, with investors betting the company's clean-up efforts would help it to avoid a humiliating delisting from the Tokyo Stock Exchange, in turn helping to ensure it stayed on bidders' radars.
They also looked forward to the eventual renewal of the board and to Olympus finally drawing a line under a US$1.7 billion accounting fraud which has thrown a spotlight on Japan's reputation for weak corporate governance.
Olympus has lost almost half its market value since the scandal first erupted in October, when it fired its British boss Michael Woodford, a rare foreign CEO in Japan, for questioning dodgy acquisition deals at the heart of the scandal.
"The plan is for the current board members who were found responsible and are subject to lawsuits to complete passing on their roles to avoid any impact on business implementation, and all resign at an extraordinary shareholders' meeting that is set to be held in March or April 2012," Olympus said in a statement.
Five of Olympus' eight internal directors and one of its three external directors are subject to the legal action.
Woodford, who went public with his concerns after his sacking, said last week he was abandoning a bid to be reinstated to his old job.
The maker of cameras and medical equipment said yesterday all board members subject to the lawsuit would quit in March or April, leaving it in the extraordinary position for now of continuing with its most senior executive, Shuichi Takayama, and several other directors it is suing for mismanagement.
One analyst likened the current board to condemned men, resigned to their fate, and said they would have difficulty over the next few months making any strategic decisions, leaving Olympus more vulnerable to an eventual takeover.
"Essentially, everyone feels they are on death row. It does seem extremely strange to have the death-row cell inside the company," said Nicholas Smith, head of Japanese equity strategy at CLSA in Tokyo.
"Having nobody at the helm makes it easier for a takeover," he added.
Olympus shares surged nearly 30 percent on the news, with investors betting the company's clean-up efforts would help it to avoid a humiliating delisting from the Tokyo Stock Exchange, in turn helping to ensure it stayed on bidders' radars.
They also looked forward to the eventual renewal of the board and to Olympus finally drawing a line under a US$1.7 billion accounting fraud which has thrown a spotlight on Japan's reputation for weak corporate governance.
Olympus has lost almost half its market value since the scandal first erupted in October, when it fired its British boss Michael Woodford, a rare foreign CEO in Japan, for questioning dodgy acquisition deals at the heart of the scandal.
"The plan is for the current board members who were found responsible and are subject to lawsuits to complete passing on their roles to avoid any impact on business implementation, and all resign at an extraordinary shareholders' meeting that is set to be held in March or April 2012," Olympus said in a statement.
Five of Olympus' eight internal directors and one of its three external directors are subject to the legal action.
Woodford, who went public with his concerns after his sacking, said last week he was abandoning a bid to be reinstated to his old job.
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