additional data All tools Edit ConvertleAAssignment_OLYMPU...100kalollabolalalSignX+ CreateThe following day Woodford called a meeting with Kikukawa and Mori, and they met over lunchto discuss Woodford's concerns. On his arrival Woodford was served a tuna sandwich, whileKikukawa and Mori were served a huge platter of sushi. “A game was being played,” saidWoodford, "that was my position in things, and the sushi was a demonstration of their preeminence.But I wasn't hungry. I got out the Facta magazine" and said, “Have you seen this? Why haven't I beentold?" Kikukawa replied, “Michael, I told the staff not to tell you because you're the president. You'retoo busy to worry about these things." Woodford replied, “I'm the president, that's right, and I signthe company's accounts and letter of representation with the auditors, Ernst and Young."18 Woodfordthen asked Kikukawa if the article was true, and the chairman replied, “Some of it,” which surprisedWoodford. Kikukawa was evasive, clearly very uncomfortable.Feeling that he would not get much more information out of Kikukawa, whom he consideredegotistical and delusional, he met with Mori privately, asking him, "Mr. Mori, why did you buy thosethree companies? How did we price them? Why were we buying a face cream company, a companythat makes plastic plates for microwaves, and a recycling company? These were not publicly tradedcompanies, so where were the valuations? How did we value them?” Mori did not have a response,and then Woodford inquired about the acquisition of Gyrus and the nearly $700 million in fees paidto financial advisers two years after the acquisition. Mori responded that it was for “buying up Apreference shares." Woodford said, “It didn't make sense because we had bought the companyoutright at $2 billion, an extremely high multiple."¹⁹9 Again, Mori did not have an answer, “He juststopped talking, and I had never experienced that before but it was utterly disorienting. If you canthink about the context of this conversation, this was the President of the company speaking to theVice President and asking very reasonable and basic questions about two transactions whichaccounted for over $1.5 billion-four or so years of profits for the entire corporation. It seemedcompletely inexplicable, ludicrous." Woodford explained. Woodford became impatient about thetotal absence of a response to his legitimate questions, “I said to him, 'Mr. Mori, who do you workfor?' I anticipated he would say, I work for Olympus,' or 'I report to you, Michael.' He said to me,and I'll never forget his answer, 'Michael, I work for Mr. Kikukawa. I'm loyal to Mr. Kikukawa.' Ididn't know what to say, so I just went quiet and got profoundly depressed. I knew then that therewas something sinister, something seriously wrong, at the top of this corporation of which I waspresident, and my instinct was just to get out of there."20 "The logical part of my mind told me that itwould only be a matter of time until the mainline media in Japan picked up on the Facta revelations -surely a mainline media outlet would get ahold of the story and try to bring accountability andtransparency to exactly what was going on."2¹ However, this never happened.Woodford Reveals the Scandal and Flees TokyoWhile on holiday with his family in Majorca in the middle of August, Woodford became soprooccupied with the situation that he could not think of anything else. “I woke up every nighttv♫ I A3AUG11XFind text or tools QAWPOO&10DOCXSign in99424<с1:1Q All toolsleAAssignment OLYMPU... XEdit Convert Sign…kalollabolalal+ CreateWoodford's DiscoveryHe first learned of the financial scandal facing Olympus from the Japanese financial magazine,Facta only three months into becoming President. While at a meeting in Hamburg, Germany in July2011, he received an email from a Japanese friend directing his attention to the original article aboutthe situation. Woodford explained that “Basically, this article was reporting that Olympus had beendoing some very strange and bizarre things in relation to its M&A activity going back many years,and the amounts of money were huge,"¹0 said Woodford. "Olympus was a very conservativecompany, and I just couldn't believe it."¹¹ “At the time, I wasn't sure whether they were credible —whether this was some sort of tabloid press - and I was returning to Japan the following week and Iknew I would have an opportunity to find out what was going on.""12When Woodford returned to Japan the next week, on the last Friday in July 2011, for the monthlyboard meeting, he prepared himself to find a tense situation at the Olympus headquarters, but thiswas not the case at all. “I thought I would walk into the boardroom and there would be thisatmosphere of tension with all the reports surfacing,"¹³ said Woodford. “It would be crackling.Everyone would be apologizing and desperate to tell me what this article was about. You canimagine a large American or European corporation, if something like the Facta article had beenpublished. I went to the meeting, and it wasn't like that. It was mundane and ordinary. No-onementioned anything. They just carried on as normal, looking at the monthly figures,”"14 he recounted."I thought, gosh, something's wrong. I must have the wrong end of the stick. The magazine'srevelations can't be a problem. And at the meeting everyone was charming as ever to me anddelightful. I didn't mention the article. I needed to understand what it was about."15That weekend Woodford met with his friend, a director of another Nikkei listed company, and hetranslated the article, page by page. Woodford reflected, “It was clear that the article was wellsubstantiated, it was credible, it was specific, but I still found it hard to believe."¹6 It revealed thatOlympus had acquired three companies, with only nominal returns, for about $1 billion at currentexchange rates. The three companies were a mail order face cream company, a company that madeplastic plates for microwaves, and a recycling company. Olympus had also paid in 2010 nearly $700million in transaction fees to Axam and Axes, relating to the 2008, $2 billion acquisition of Gyrus, aUK health care company, which had only earned about $20 million in post profits annually - amultiple of a hundred.When Woodford went into the office on the following Monday morning, August 1, 2011, he heardnothing from either Chairman Kikukawa or Vice President Hisashi Mori about the Facta article.Feeling frustrated and confused about this, he asked two of his colleagues whom he trusted if theyhad heard of the article. They had, but Kikukawa had advised them not to discuss it with Woodford."Alarm bells started ringing-why would the Chairman be telling people not to discuss an issue –particularly such a significant issue with me? I was the president of the company: "explainedtv♫ I A3Find text or tools QAAUG11XWPо&10DOCXSign inប99324<с1:1Q

The Olympus scandal of 2011 stands as a strong sign of the unbalance between corporate power,…

Woodford's Discovery He first learned of the financial scandal facing Olympus from the Japanese financial magazine, Facta only three months into becoming President. While at a meeting in Hamburg, Germany in July 2011, he received an email from a Japanese friend directing his attention to the original article about the situation. Woodford explained that "Basically, this article was reporting that Olympus had been doing some very strange and bizarre things in relation to its M&A activity going back many years, and the amounts of money were huge,"10 said Woodford. "Olympus was a very conservative company, and I just couldn't believe it."11 "At the time, I wasn't sure whether they were credible- whether this was some sort of tabloid press-and I was returning to Japan the following week and I knew I would have an opportunity to find out what was going on."12 When Woodford returned to Japan the next week, on the last Friday in July 2011, for the monthly board meeting, he prepared himself to find a tense situation at the Olympus headquarters, but this was not the case at all. "I thought I would walk into the boardroom and there would be this atmosphere of tension with all the reports surfacing,"13 said Woodford. "It would be crackling. Everyone would be apologizing and desperate to tell me what this article was about. You can imagine a large American or European corporation, if something like the Facta article had been published. I went to the meeting, and it wasn't like that. It was mundane and ordinary. No-one mentioned anything. They just carried on as normal, looking at the monthly figures,"14 he recounted. "I thought, gosh, something's wrong. I must have the wrong end of the stick. The magazine's revelations can't be a problem. And at the meeting everyone was charming as ever to me and delightful. I didn't mention the article. I needed to understand what it was about."15 That weekend Woodford met with his friend, a director of another Nikkei listed company, and he translated the article, page by page. Woodford reflected, "It was clear that the article was well substantiated, it was credible, it was specific, but I still found it hard to believe."16 It revealed that Olympus had acquired three companies, with only nominal returns, for about $1 billion at current exchange rates. The three companies were a mail order face cream company, a company that made plastic plates for microwaves, and a recycling company. Olympus had also paid in 2010 nearly $700 million in transaction fees to Axam and Axes, relating to the 2008, $2 billion acquisition of Gyrus, a UK health care company, which had only earned about $20 million in post profits annually - a multiple of a hundred. When Woodford went into the office on the following Monday morning, August 1, 2011, he heard nothing from either Chairman Kikukawa or Vice President Hisashi Mori about the Facta article. Feeling frustrated and confused about this, he asked two of his colleagues whom he trusted if they had heard of the article. They had, but Kikukawa had advised them not to discuss it with Woodford. "Alarm hells started ringing. why would the Chairman he telling people not to discuss an issue.