Today marked an anniversary for former Olympus Corp. President and CEO Michael Woodford: the day he was fired from the camera and medical products manufacturer. What brought him to that day is a series of events that kicked off when Woodford had no choice but to blow the whistle on his own company after discovering a serious fraud.
Before being asked to assume the role of president–which he very gladly accepted–Woodford had a 30-year career at Olympus. Nevertheless, he knew that he wanted to make changes within the company, and soon into his presidency, an article in a business magazine titled Facta, ran an article about odd acquisitions Olympus had made and the high fees it paid a management consultancy.
When Woodford raised the issue with two managers in Japan about the article, he was told that CEO Tsuyoshi Kikukawa had advised them not to bring it up to Woodford. After demanding to speak to Kikukawa and Executive Vice President Hisashi Mori about the questionable acquisitions, Mori told Woodford that he worked for Kikukawa and that he was loyal to him.
Seeing no other option to raise the issue, Woodford wrote letters to the Olympus board and management and copied their auditor, Ernst & Young, on two of the letters. Instead of addressing the issue of the dubious acquisitions, the board unanimously ousted Woodford.
Woodford assumed the role of president at Olympus in February 2011, and shortly after discovered $1.7 billion in accounting fraud. After raising a red flag, he was fired. Woodford pushed his story into the public arena through the media and through filing reports with the Serious Fraud Office in London. News of the fraud caused a shake-up at the camera and medical devices manufacturer, eventually leading to guilty pleas from several executives and a new slate of corporate directors.
In his keynote address, Woodford will share experiences from his book—Exposure: Inside the Olympus Scandal: How I Went From CEO to Whistleblower—about how he confronted both the Japanese culture that prizes groupthink and shareholders who were more distressed by negative publicity surrounding the scandal than by the fraud.
Woodford’s story is also being made into a movie. The Ink Factory, with support of Film 4, has obtained film rights to Exposure. “This is a story about the frailties of human nature and at its heart, loyalty, and betrayal,” Woodford said in a press release. “I hope that it will reach out to people who will engage with it both as a human drama and as a meaningful metaphor of our time.”
Woodford’s keynote address at the NACD annual Board Leadership Conference will inform a discussion where audit, legal, and governance experts will discuss lessons learned from the Olympus scandal and actions that boards can take to identify and prevent internal fraud, the roles of internal and external auditors, and the relevance of cross-cultural differences.