'Justice was Done' in Olympus Fraud Case, Says Embattled SentinelBy Dick Carozza, CFE, editor in chief, Fraud Magazine"The situation in Japan is that no one gets fired," said Michael Woodford, the former chief executive officer and president of Olympus Corporation, during the Monday working lunch general session. He said a president of a Japanese paper company was fired for transmitting $147 million to a Las Vegas casino. "That's the kind of bar that you have to get to get fired in Japan!" However, the Olympus board did abruptly dismiss Woodford last year, only the fourth Westerner to be the head of a Japanese company, after he raised questions about a decades-long effort to cover up unknown investment losses with admitted false accounting of more than US$1.7 billion. Since then he tried get his old job back, successfully sued Olympus for damages, will be releasing a book and is now speaking worldwide about the need for more transparent business cultures.For "Choosing Truth Over Self," the ACFE presented Woodford Monday with the 2012 Cliff Robertson Sentinel Award.Woodford was a 30-year employee of Olympus, a "salaryman" who had come to love Japan and its people, he said.On April 1, 2011, he was appointed the first non-Japanese president and COO of the company. In July, he read about some of Olympus' suspicious acquisitions in FACTA, a small Japanese financial journal.FACTA, in its August edition published on July 20, said that Olympus had acquired from 2006 to 2008 a medical waste recycling company, a facial cream maker and a company that makes plastic plates and containers for microwaves all for US$773 million. However, Olympus wrote down most of their value within the same fiscal year. The publication said that all three companies continued to post losses.During an Aug. 2 lunch with Tsuyoshi Kikukawa, chairman of the Olympus board, Woodford confronted him about the FACTA allegations. The chairman told him the article was just simply "tabloid, sensationalist journalism," and he needn't worry about it. When Woodford asked why he hadn't been informed about the suspicious acquisitions, he said that Kikukawa told him that it was a Japanese domestic issue, and as president, he was too busy to be bothered by it.
On Oct. 1, Woodford was also appointed CEO. After FACTA followed up the story in its October issue, released Sept. 20, he wrote a letter to company officials — the first of six — expressing his concerns.He also commissioned a PricewaterhouseCoopers study to investigate the suspicious transactions. After the sixth letter, the Olympus board called a special meeting on Oct. 14, 2011, to fire Woodford. He was told to vacate his apartment and take the bus to the airport. He looked over his shoulder the whole way because of FACTA's allegations that Japanese organized crime could be involved in the fraud.Though he was unsuccessful in getting his job back, most of the Olympus participants have been indicted for the fraud. "And there's a 99 percent conviction rate in Japan," he said. "This is one case where justice was done."The Association of Certified Fraud Examiners assumes sole copyright of any article published on www.FraudConference.com or www.ACFE.com. ACFE follows a policy of exclusive publication. Permission of the publisher is required before an article can be copied or reproduced.