A senior Japanese lawmaker demanded a probe of outlandish advisory payments at Olympus and its ousted chief executive said he was in contact with the U.S. Federal Bureau of Investigation (FBI), piling pressure on the embattled company.
Olympus Chairman Tsuyoshi Kikukawa sought to defuse the corporate governance scandal that has enraged investors and halved the venerable camera and endoscope group's share price by pledging to restore trust. He said no fraud had been committed.
But Tsutomu Okubo, deputy policy chief of the Democratic Party of Japan, called for probes by financial and securities watchdogs and urged Olympus to explain fees that could risk shareholders losing confidence in Japan.
The row hinges on fees that include a $687 million payment linked to a $2.2 billion acquisition of British medical equipment maker Gyrus in 2008. At about 30 percent of the acquisition price, it sets a record in M&A fees.
At least the fees were outlandish. The company must explain the whole circumstances behind the incident, said Okubo, who is tasked with policy-making negotiations with opposition parties.
Unless the management takes responsibility and at least makes explanations that would convince investors, confidence in Japan and its share prices would be lost. And parliament cannot overlook that.
Former CEO Michael Woodford, an Olympus veteran of three decades who says he was fired on October 14 after querying odd-looking deals in Britain and Japan, said he was now talking to the U.S. criminal investigative agency as well as Britain's Serious Fraud Office (SFO).
I'm in contact with the FBI, but I'm not prepared to elaborate further than that, he told Reuters in an interview.
Woodford also said he had made contact with the original Olympus whistleblower, whose tip-off to Japanese monthly magazine Facta originally prompted his own investigations.
I made contact at the weekend through an intermediary, he said. I don't know his name as it was blanked out. He was very scared. He expressed sadness that he didn't know me well enough to have come to me directly.
Olympus, meanwhile, said it hoped to restore trust as soon as possible by settling the confusion, which has dogged the payments as well as a string of non-core acquisitions around 2008.
The acquisitions of the past were conducted through proper valuations and procedures, and there were by no means fraudulent practices. We are preparing to be investigated fairly while launching a third-party committee, Kikukawa said in a statement on the company's website.
We will strive to conduct our daily business sincerely so as to return to normal circumstances, restore social trust and put customers, business partners and shareholders at ease.
Olympus, which has failed to name the Gyrus advisers and has said it does not know their whereabouts, says it forced Woodford out over management issues.
Woodford has identified the advisory firms involved in the Gyrus takeover as New York-based AXES America LLC and AXAM Investment Ltd in the Cayman Islands.
The 51-year-old, who has sought police advice about his security in Britain, has already sent a dossier to Japan's Securities and Exchange Surveillance Commission (SESC) as well as Britain's SFO.
Okubo added his voice to calls for regulatory action.
I have told them (regulators) that the Financial Services Agency should thoroughly look into the matter, and the Securities and Exchange Surveillance Commission should be interested as well, Okubo said.
Okubo said he was considering summoning the head of the Tokyo Stock Exchange to appear before parliament, if necessary, for a public discussion of the matter with the banking minister.
Japan also needs to re-examine its governance structures, including the Financial Services Agency, the Tokyo Stock Exchange, auditors and outside directors, he said.
There's a possibility that Japanese companies will be perceived as lacking corporate governance, so to prevent that from happening we need to re-examine our systems.
Olympus shares climbed more than 8 percent on Tuesday after falling for seven straight sessions. But the value of the company has still fallen by around $4.6 billion since Woodford was sacked.
(Reporting by Tetsushi Kajimoto and Sumio Ito in Japan, Kirstin Ridley and Alexander Smith in London; Editing by Erica Billingham)