The MT Interview: Michael Woodford

On the day that the Olympus board names banker Yasuyuki Kimoto as its new chairman, here's MT's interview with whistleblower and former Olympus CEO Michael Woodford.

by Matthew Gwyther and Elizabeth Anderson
Last Updated: 09 Oct 2013

Shad Thames, the enclave to the south-east of Tower Bridge (known as Jacob's Island in Victorian times), has witnessed many crimes over the centuries. Dickens loved strolling through the squalor - in the company of the river police - to make notes. Arch-villain Bill Sykes from Oliver Twist lived here and Our Mutual Friend begins in the mist and murk of its creeks, as a lighterman tries to fish corpses out of the river and relieve them of their valuables before handing them over to the authorities.

Now it's all tastefully Conranised into a design museum, florists selling Bird of Paradise blooms at £10 a stem and Le Pont de la Tour restaurant, where Tony Blair dined with Bill Clinton when it was London's most crucial eaterie. The warehouses that stored cinnamon, cardamom, coffee and caraway seeds are now hip office suits and smart apartments. It is in one of these, a £2m duplex, that Michael Woodford awaits MT. Up we go in the lift. He asks us to remove our shoes.

The 51-year-old from Southend-on-Sea is the most celebrated international whistleblower of recent times. On reaching the top seat of the Olympus organisation, he exposed a fraud within the Japanese conglomerate that ran to $1.5bn. His story is filled with mystery, suspense, duplicity and betrayal. When he challenged the board, Woodford was humiliated, fired and run out of Tokyo. It was speculated that he was a stooge of the Chinese government. He was even subjected to psychological intimidation with a tunafish sandwich (more of which later). For the past year, Woodford says, he has been 'living in a John Grisham novel'.

In this austere and suspicious era, with confidence low, whistleblowers tend to attract even more attention and approval. Moral indignation directed at business - especially banking - is so intense that there is huge admiration for those who take a principled stand against wrongdoing. Not that Woodford should be confused with the tented mob outside St Paul's. He remains a thorough-going capitalist, but one with a highly developed sense of right and wrong.

In Japan, where the economy has stagnated for two decades, held back by antiquated business practice and dodgy dealings, the 'Southend Samurai' is now a legendary figure, mobbed by camera crews when he arrives at Narita airport. His relentlessness is exactly what some Japanese believe is needed to overcome the cosy, consensus-seeking approach to running businesses that has dogged their economy. Over here, he has been voted business person of the year by newspapers from the Sun to the Sunday Times, and even picked up the Corporate Sentinel award from the Association of Certified Fraud Examiners for 'choosing truth over self'.

Woodford cuts a large and impressive figure in his well-fitting suit. At first, he is slightly stiff - wired and wary as he goes through his story yet again to fresh pairs of ears. But after a while he warms up and reveals himself as a driven, amusing, bruised and extremely impassioned individual. His striking face with small brown eyes and dark freckles gives a hint of the exotic (there is Tamil blood from a few generations back). The accent has mid-Atlantic elements but retains the odd flat vowel from the Merseyside of his youth.

What makes a whistleblower's character? His wasn't that happy an upbringing. He adored his father, an electrical engineer, but his parents separated when Woodford was seven and he moved with his mother from Staffordshire to Liverpool. In his modest new home the lavatory was outside, and he took a shower once a week at the municipal baths. The boy went from a home with classical music, books and security to free school meals and a second-hand blazer.

He didn't take to his mother's new partner. 'I've always had a simplistic view about wrong or right and that goes back to my childhood,' he says. 'I remember once taking a packet of chewing gum from Woolworth's and bringing it back again because I felt so bad about it. And once I took some money out of my mother's purse and she stopped me. I thought she'd go mad, as she had quite a temper. But she said: 'If my own son steals from me, who else can I trust?'

Although a gentile, he attended King David's High, a Jewish school. 'So people assumed I was Jewish. "Are you a yid, lad?" they used to say as I walked home. And then, because I've got Asian features, others would taunt "You a chink, lad?" or "Two number 29s". So I experienced racism, and that's why when Tsuyoshi Kikukawa (the Olympus chairman) went off on his diatribes like an absolute lunatic to say I didn't like Japan or the Japanese, I found it profoundly offensive.' Kikukawa, whom he challenged and fell out with in grand fashion, had been Woodford's mentor and champion over many years. 'Some of my Japanese friends and colleagues would've literally died for me. I've met some very unpleasant Japanese on this board, but I met others who are just inspirational and are very giving of themselves. I love Japan,' he says.

But this is to charge ahead. He left school at 16, keen to find his way in the world and make some money. An early job selling at Cadbury Schweppes did not satisfy him, but he found something more to his taste - medical sales to doctors. KeyMed, the firm he joined, spotted him as a bright spark: driven, a great team worker with fine attention to detail.

Woodford quickly did well. KeyMed's founder, Albert Reddihough, was impressed. 'Mike's a tough, demanding sort of guy. He made an impact from the moment I met him. He was always going to go far.'

By the mid-1980s, Olympus was diversifying away from cameras and it took full ownership of KeyMed in 1987. At just 29, Woodford was the UK managing director. He continued his rise within the mother company and became the boss of Olympus's operations across Europe. Olympus cornered the market in endoscopy, the use of instruments that can look inside the human body without the need for invasive surgery. It now has 70% of the global market.

'The truth is, Olympus was a poorly managed conglomerate living on the fruits of the endoscope business,' says Woodford. 'Its endoscopes are like Windows or the Apple iPhone: protected by intellectual property, unique and incredibly good. These factors help generate lots of cash.'

Along the way, he found time to pursue an obsession with road safety, which he'd harboured since witnessing a traffic accident as a teenager. His home town of Southend is covered with KeyMed-sponsored road safety initiatives and he was awarded the MBE in 2002 for this public service. He has also been a loyal financial supporter of Reprieve, the legal charity founded by campaigning lawyer Clive Stafford-Smith to fight for the rights of prisoners on death row in the US and to free Guantanamo prisoners.

With his side of the Olympus business going so well and the camera division limping along, he was asked by Kikukawa to take over the president and COO's role in Tokyo. This was the apogee of his career. He had achieved what very few foreigners succeed in doing - Sir Howard Stringer of Sony and Carlos Ghosn of Nissan being exceptions - breaking through the bamboo ceiling to the top job in a Japanese conglomerate.

On April Fools' Day last year, just over two weeks after the tsunami that killed more than 19,000, he sat in the Olympus hot seat. Initially, all went well. The stock price rose in anticipation that a hard-driving gaijin would kick some life into the sleeping corporate giant. He found himself a flat in Tokyo and rolled his sleeves up. At the company AGM in June, Woodford received more votes of endorsement than any other director.

Then, in late July, while attending a board meeting in Hamburg, he received an email from friends in Tokyo. Had he seen the article in a Japanese business magazine called Facta, making grave and detailed allegations of wrongdoing at Olympus? The accusations were wide-ranging. The first was that Olympus had paid way over the odds for three minor companies - a mail-order face cream operation, a microwave dish producer and a recycling outfit, all with modest turnovers. The bill had come to an eye-watering $900m. It looked like an instance of tobashi (making something fly away) - in this case to mask securities losses.

Worse, the article also referred to the acquisition of Gyrus, a British maker of hysterectomy equipment that had been bought for $2bn in 2008, a figure that had raised many eyebrows. (Gyrus was making only £10m in pre-tax profits.) The magazine alleged that a $700m consultancy fee was associated with this deal - a huge sum for advice. Moreover, the cash had been transferred into an account in the Cayman Islands that was closed shortly afterwards.

Woodford flew back to Tokyo and began his own investigations. What he found immediately odd was that, first, nobody else in the Japanese media had picked up on this explosive story and, second, everyone at Olympus was behaving as if nothing had happened. Thus began his John Grisham existence, with a chapter or two of Alice in Wonderland thrown in.

By late summer and early autumn, he came to think that a game was being played with him, but he had no idea of the rules. The more questions he asked about the Gyrus money or Olympus's strange interest in face cream, the more half-truths and obfuscation he met. He wrote long letters of enquiry to his boss Kikukawa and took the step of copying one of these to the firm's accountants, Ernst & Young. That went down badly.

The tuna sandwich incident occurred during one of his many meetings with his chairman. He entered the room containing Kikukawa and his right-hand man, Hisashi Mori, a vice president. On their side of the table was a large platter of expensive sushi - a dish that Woodford was known by both to like. On Woodford's side was the kind of fish sarnie you get in a station kiosk. The meeting - during which Woodford placed a copy of the Facta article on the table - did not go well. There was no direct denial that odd things had been going on, but a marked reluctance to do anything about it.

But Woodford didn't get the message to back off. He commissioned PWC to write a report on the $700m of payments to the Cayman Islands. The accountants were not impressed. From that point, meetings degenerated into shouting matches - very un-Japanese - and Woodford was accused of disloyalty. For his part, he requested that Kikukawa resign.

The showdown came when he was invited into a board meeting on 14 October. He had just returned from a trip to inspect the efforts that his colleagues were making to aid survivors of the earthquake and tsunami. In this meeting, the board turned on him and all 15 members voted for his dismissal. He was instructed to leave the building immediately.

Before hot-footing it to the airport - he was told to take the bus - he was stripped of his company credit card and phone and told to hand back the keys to his flat. They demanded his computers too, but he'd already sent them by courier back to London. 'Brutal' is the word he uses to describe the experience.

Again, Olympus underestimated Woodford. He had no intention of going quietly. Turfed out of the building, he immediately made a call - on his personal mobile - to the FT's Tokyo correspondent and they met in a park. He spilled all the beans.

'They dismissed me on the grounds of gross misconduct,' says Woodford, 'but that's ludicrous.' Kikukawa later claimed that Woodford had 'ignored the firm's organisational structure' and had diverged from the rest of the team in his style of management. Both 'reasons' were replete with irony.

Once the FT article appeared, the story was picked up globally and the truth behind the huge losses came out. Eventually, Olympus admitted that its executives had orchestrated a 13-year scheme to hide more than $1.5bn in losses on risky investments. 'The bubble-gum had burst,' says Woodford. 'They couldn't face up to those losses, so they tried to find mechanisms for hiding them. But it was done on borrowed cash. Olympus is the sixth most indebted Japanese corporation.'

The company's shares lost 80% of their value in the weeks after the scandal broke, Olympus coming close to being de-listed on the Nikkei. It has become a by-word for panic-stricken evasion, blind rank-closing and ineptitude - a terrible indictment of Japan's highly consensual way of doing business, where everyone huddles down together as the corporation burns.

Kikukawa resigned as chairman on 26 October, although he remains a board director. Mori also stepped down. Most of the Olympus board members are being sued by shareholders, angry at the millions of dollars' worth of losses. Woodford is suing the company for unfair dismissal, and Olympus's accounts are now being combed by investigators in three continents. The Tokyo police, Britain's SFO and the FBI in the US have all spoken at length to Woodford.

'The company is in utter disarray at the moment,' says Woodford. He remains a shareholder and plans to cause more trouble at the EGM in April. 'There is a management meltdown. The company is suing existing directors. It's just a bizarre, surreal situation. How can you be suing yourself and running the company?'

An independent report by a retired Supreme Court judge in Japan, commissioned by Olympus, concluded in December that core management was 'rotten and the parts around it were also contaminated by the rot'. It was especially dismissive of the 'yes men' culture, although it found no evidence of links to the yakuza (the Japanese mafia) or of personal enrichment.

Even the Japanese prime minister, Yoshihiko Noda, spoke in grave terms about the case.

With such skeletons in its closet, why had Olympus let Woodford into the boudoir? What was Kikukawa up to? Woodford may have been a hard-driving, cash-producing boss but he'd already exposed wrong-doing on two previous occasions: when he discovered bribes had been paid in eastern Europe, the culprits had paid with their jobs and left uncompensated.

Woodford thinks the most likely explanation is that he was to be used for a few years to increase revenues and shake things up mildly before being discarded. Others speculate that Woodford's inability to speak or read Japanese may have convinced Kikukawa that he would remain in ignorance of the book-cooking, the microwave plates and the Cayman Islands.

What lies in store for Olympus now? The scandal has severely damaged the reputation of a once proud, 92-year-old company. Gone are the days of the larky David Bailey ads: the hip early-80s era of the Olympus Trip. Market capitalisation is about half of the pre-scandal level of $4.5bn. Taking its massive debt burden into account, the enterprise value would be around $10bn. Many questions remain. Who advised Olympus? Where did the Cayman Islands millions go? Did these fees ever actually leave Olympus?

These are the sort of questions currently being posed by the Tokyo police which arrested several individuals, including Kikukawa, last month.

The current buzz surrounds a possible white knight-style takeover by Canon or Panasonic, perhaps, or Sony. If you cannot combat the iPhone and the South Koreans with their cheap TVs, why not try your hand at keyhole surgery?

And what of Woodford himself? A whistleblower's future is often a difficult and lonely one. Ejected from one pack, Woodford is now a lone wolf in his Shad Thames lair. He has been to see head-hunters, but it would be a bold gamble for a big corporation to hire him for a senior management role. It would probably worry that such a highly principled individual, however talented and cash generating, would prove a source of trouble.

The last year has put both him and his family - he has one son at Warwick University and a daughter at secondary school - under huge pressure. His Spanish-born wife Nuncy has been through the mill. 'It's traumatising, like a bereavement,' says Woodford. 'It places enormous strains on your relationships, particularly as I was so persistent in going on and on and on. My wife supports me but was worried about how far I should take this. For some weeks she was on tranquilisers, screaming in the middle of the night.' Woodford self-medicated with red wine and sleeping pills.

With lawyers on three continents to pay, his cash is running out and he has had to remortgage his house. His lawsuit for wrongful dismissal will surely yield plenty in compensation - Olympus had tried to trash his name, planting false stories and accusing him of racism - but he's not a man to accept gagging clauses, which may mean any litigation goes on for ages.

But Woodford is not one for self-pity. There are plans for a book, which might make a corker of a film. He has a little less hair than Russell Crowe but look how well tobacco whistleblower yarn The Insider did. And he could be a hit on the lecture circuit worldwide. He has a sonorous voice and a dramatic, impassioned delivery.

Admirable as he is, however, one would probably pass on the chance to be in his shoes. The path he chose is a hard one, and there is no turning back. 'All I know is that nothing is ever going to be "normal" again,' he admits. 'This has pushed my life into a completely different place than it was before.'

So, as we leave for the mean streets of Shad Thames, we ask: would he do the same thing if he had his time again? 'Yes. Others wouldn't, but I would,' he says.



  • Keep paying his lawyers while awaiting his settlement

  • Find his new path in life, whether in a different business or as a freelancer

  • Achieve some peace and stability after a year of excessive turbulence




1960 Born on 12 June in Burton upon Trent
1980 Joins Keymed as a salesman
1989 Made managing director of Keymed aged 29
2004 Becomes main board member of Olympus Medical Systems Corporation
2008 Made executive managing director and chairman of Olympus Europa Holding
April 2011 Appointed president and chief operating officer of Olympus Corporation. The trouble begins ...
October 2011 Made CEO; dismissed after two weeks.



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