Japanese MP urges Olympus payments inquiry

A SENIOR figure in Japan’s ruling Democratic party has added to pressure on regulators to investigate allegations of improper payments made by Olympus.

Tsutomu Okubo, a legislator and head of the party’s financial affairs committee, said he was concerned about corporate governance. “When a Japanese company’s reputation is severely damaged, the authorities must look into it,” said the former banker.

The optical equipment maker has struggled to explain a $687 million payment to Axes Securities, a financial advisory firm, as part of a 2008 acquisition in the UK, as well as high prices it paid in several deals in Japan. The payments came to light only after Olympus fired Michael Woodford, its chief executive, this month.

Mr Woodford, a Briton, says he was fired because he confronted other executives over the deals, which were carried out under his predecessor. On Tuesday, he said he had been in contact with the US Federal Bureau of Investigation, which is looking into aspects of the 2008 deal.

Axes was registered in New York but has since disappeared and the man listed as its president is believed to live in Florida.

Mr Okubo, who also heads an auditing panel, said he had been given a briefing covering publicly available facts from the Financial Services Agency. If other lawmakers take an interest, FSA officials may also be called on to answer questions in parliament.

Tsuyoshi Kikukawa, the chairman, told staff in an internal memo on Monday that Mr Woodford, his successor as president, had queried the acquisitions as part of a power grab.

The 30-year Olympus veteran, who was elevated to president this spring, had been organising a “gang” of managers to force Mr Kikukawa and other senior executives off the board. His actions had been “aberrant” and “unforgivable”.

Mr Woodford had called on Mr Kikukawa to resign over the payments in the days leading up to his firing. The company, which denies any wrongdoing, says he was fired because of his management style. In the memo, Mr Kikukawa said he had “nothing whatsoever to be guilty about”.

Mr Kikukawa also said Mr Woodford “did not like Japan”. “At a time when he was imposing strict cost cuts on frontline employees, [he] travelled around Europe and to his home [in the UK] by private jet,” he said.

Mr Woodford said the memo was a “desperate” ploy. – (Copyright 2011 The Financial Times Limited)