Crisis continues for Olympus

The crisis at Olympus shows no sign of easing after the resignation of Chairman Tsuyoshi Kikukawa.  Japanese regulators have joined investors in calling for a full explanation of payments Olympus made in connection with acquisitions it made in recent years.

His resignation will not remove Kikukawa from the company, however.  He remains a director on the board, a situation that critics say could allow him to continue to influence a board he’s managed very closely for years.

From a communication standpoint, Olympus still has failed to offer a persuasive justification for these payments or to fully disclose who received them.  Its news conference yesterday backfired badly when it became clear that company officials were not providing any new information.

None of the events of the past two weeks – Kikukawa’s resignation, the pressure from Japanese institutional investors and the awakening of Japan’s governance activitsts – would have occurred if not for the aggressive media campaign waged by Michael Woodford, who was ousted as CEO by the Olympus board. He’s been quoted extensively in print and interviewed frequently on television, helping to keep the story alive and subtly refuting the Olympus portrayal of him.

Armed with the report he commissioned from PriceWaterhouseCoopers that provided stinging details on the disputed M&A fees, Woodford was able to bring enormous attention to the issue.  Against those facts, the Olympus position that Woodford was fired for being a poor cultural “fit” quickly fell apart.

It’s interesting to speculate on whether Olympus would be in this spot had it reached a separation agreement with Woodford barring him from speaking publicly.  That’s a common part of CEO exit packages, but perhaps there was too much acrimony between Woodford and Kikukawa to negotiate anything.   And scathing investigative reports usually find their way into the media once they’re written.





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