Three executives of Japan's Olympus Corp resigned on Thursday ahead of a boardroom showdown with ousted CEO Michael Woodford, as the British whistleblower said he would not be surprised if some criminality were involved in the scandal engulfing the once-venerable firm.
The camera and endoscope maker admitted this month it hid losses on securities investments for two decades, blaming former president and chairman Tsuyoshi Kikukawa, former vice-president Hisashi Mori and internal auditor Hideo Yamada for the cover-up.
But where the money trail leads remains a mystery, and speculation simmers that organised crime syndicates may somehow be involved.
Kikukawa, who quit as president and chairman on October 26, and Mori, who was fired, had tendered their resignations from the board with immediate effect, as had Yamada, who could attend board meetings but not vote, Olympus said in a statement.
And new President Shuichi Takayama said in a separate statement the current management team was ready to quit once the path to Olympus' revival became clear.
Woodford, 51, who earlier met with Japanese police, prosecutors and regulators in Tokyo, expressed confidence that the authorities would fully investigate the scandal.
The talks (with authorities) have passed all my expectations ... and it's very evident to me they are going to investigate this whole issue without bias and thoroughly, and that will include following the money flows in relation to all the transactions, he told reporters.
I'm immensely encouraged. I've been treated with great courtesy and I'm much more confident than I thought I would be with what I've been told.
Woodford returned to the Japanese capital on Wednesday for the first time since he fled the country after being fired as CEO on October 14, having lifted the lid on some large and dubious payments related to acquisitions by the company.
LOOK THEM IN THE EYE
On Friday, he will attend a board meeting.
I want to take the opportunity to look the directors in the eye and tell them what I think is best for the company, he said. I just hope they understand the game is up and do the decent thing, stop damaging the company. Don't look for self-interest, look for the 45,000 people.
Have some shame, have some dignity, that's what I want to tell them.
Woodford later welcomed the resignations of Kikukawa and the other two executives, but told an audience of business people that the entire current board should resign.
If they have an iota of care for the company then they should realise what they have done and give assurances they will resign in the near future, said an animated Woodford, who also criticised Japanese shareholders for their relative silence and Japanese media for their slow start to covering the scandal.
Olympus fired Woodford as CEO, asserting he did not understand Japanese culture or the firm's management style.
His return to Tokyo caps a remarkable turnaround for a rare foreign senior executive in Japan. After being sacked, he was told his driver would no longer be available and he should vacate his apartment. Someone Woodford trusted suggested he leave Japan immediately for his own safety, which he did.
Woodford, who said he was axed for questioning the M&A deals, fled to England and has campaigned for Olympus to come clean. Big foreign shareholders have called for his return to run the company, which Woodford has said he was willing to do.
On Thursday, he said he had a dream team in mind to run the company, but declined to give details.
Woodford says the Tokyo police, who have mobilised an organised crime unit to take part in the probe, have a big role to play in uncovering the truth. The U.S. Federal Bureau of Investigation and Britain's Serious Fraud Office are also investigating.
Woodford had refused to return to Japan because of safety concerns, but says now he is confident police will protect him.
Olympus said on Monday a third-party panel it set up to investigate the matter had found no evidence that organised crime gangs were involved in the M&A payments -- which included a massive $687 million (441 million pounds) advisory fee paid mostly to an obscure Cayman Islands firm.
Echoing calls by major foreign shareholders, Woodford said Olympus shares should not be delisted, in part to help ensure full disclosure of information. Delisting could cut Olympus off from capital markets and put it under pressure to sell core businesses.
Nippon Life Insurance Co, one of Olympus' biggest shareholders, repeated on Thursday it would back the firm. The insurer and its subsidiaries recently cut their stake to 5.11 percent from 8.18 percent.
Nippon Life Senior Managing Executive Officer Yasuomi Matsuyama told a news conference the affair was regrettable, but appeared to be the work of a small number of executives.
Olympus, with a 70 percent global share of endoscopes, is an important company that represents Japan and has technological prowess, he said.
Shares in the 92-year-old camera and medical device maker, which lost more than 80 percent of their value as the scandal unfolded, jumped more than 17 percent on Thursday.
There's no basis for the stock to be up at this level, said Masayoshi Okamoto, head of dealing at Jujiya Securities.
What's going on in the market right now is just traders playing with fire until the company's announcement.
Olympus is due to announce its revised results by December 14.
(Additional reporting by Rie Ishiguro, Taiga Uranaka and Mari Saito; Writing by Linda Sieg; Editing by Dean Yates and Ian Geoghegan)