The increasingly bizarre case of former Olympus CEO Michael Woodford's dismissal from the Japanese camera and medical equipment maker took a further turn on Thursday, after he issued a statement saying that the current management could not be trusted to reform the company, and that he would be liaising with potential backers to propose a new board.
Since firing Woodford on 14 October, the company's shares have collapsed, losing more than half of their value. His dismissal shocked the market and led to instant speculation over what could have led the company veteran to be shown the door. Woodford, who is British, is one of only a handful of non-Japanese to lead one of the country's flagship corporates, and some in the market and media were quick to attribute it to the introspective corporate culture.
The reality was far more alarming. Woodford blew the whistle on a massive cover up operation that the company had used to hide investment losses. Accounts showed that Olympus had paid enormous fees to financial advisers on mergers and acquisitions. After initially denying wrongdoing, the company eventually admitted that the payments had been used to hide losses made over the course of the past two decades.
In a deal to buy the British medical equipment maker Gyrus, $687m out of the total $2bn that Olympus paid for the company was advisory fees. The UK's Serious Fraud Office (SFO) has opened an investigation into the deal. Woodford has been in New York this week to meet with the US' Federal Bureau of Investigation (FBI), which is considering its own in its own probe.
Olympus president Shuichi Takayama has promised that an investigation will be held and a new board appointed, while Woodford has kept up his pressure.
Takayama and his team seem likely to preside over the restructuring of the board. Woodford, who remained on the board until Thursday, despite his removal from the CEO's job, said that decision should be left to shareholders.
"I believe that the promise for reform or reconstruction by Mr Takayama and the current board carries little or no credibility and is continuing to harm Olympus and its long term future," he said in a statement on Thursday. "I am strongly of the view that it's completely inappropriate for the current management team who are tainted by its past mistakes to make choices about the identity of new board members."
Some shareholders may agree. On 9 November, Bailie Gifford & Co, an Edinburgh-based investment manager that held more than 4% of the company's stock, issued a statement calling for Woodford's reinstatement. The fund said that the deposed chief executive was "the best man for the job" of cleaning up the company.
"The current management of Olympus bas been discredited by its original response to Mr Woodford's allegations and its poor communications with shareholders," Elaine Morrison, a partner at Bailie Gifford said at the time. "We expect all directors or employees linked to this wrongdoing to be dismissed and have their ties to the company severed."
Bailie Gifford declined to comment further on Thursday's statement.
An internet campaign by the former president of Olympus' medical systems arm, Koji Miyata, has been attempting to drum up support for Woodford, with limited results.
Some analysts have suggested that Woodford could be planning to head a takeover of the company. With its shares having shed so much of their value and a forcible de-listing from the stock market still a possibility, private equity funds are said to be interested. His statement on Thursday did little to dampen these rumours.
"Let me make it explicitly clear: I am not walking away from Olympus," he said.
"I believe passionately in the Company, its employees, its products and its future. It is a wonderful and successful company which has been led down the wrong path by the actions of some of its board members. Olympus has the potential to once again become a world class organization which is the envy of its competitors demonstrating the highest standards of corporate governance. I would like nothing more than to return to Olympus and lead it towards achieving this status."