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Monday, 17 October 2011


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' "Please — be serious,” Mr. Woodford said in the telephone interview. “Face cream for a company like Olympus? And paying that much for it?” '

Have you seen how expensive that stuff is? A couple of hundred million dollars doesn't buy all that much face cream. Probably not even enough for all of Olympus.

Wow. First, it was Ecce Homo! Now, it is the Olympus Memo! The TOP reading recommendations, are as thrilling as my pre-teen memories of obtaining the latest Hardy Boys novel.

Yes, and Olympus did an amazing reversal of its evaluation of Mr. Woodford in the few weeks between his becoming CEO and being fired, and has not come up with any even slightly believable explanation, except a variation of the "foreigner doesn't understand Japanese culture."

I am probably biased from personal experience, but that sort of explanation is ALWAYS to be seriously questioned. The good thing is that Woodford has turned evidence over to London Serious Fraud Office. This way, we know it will be investigated and reported on, something I'd have less faith in than if it were kept strictly in Japan. We'll see how long this "decline to comment" by Olympus lasts with that.

It will be interesting to see what, if anything, there is to this.

(The Washington Post has a video interview with Woodford here: http://wapo.st/qZwMN2 )

A pdf of an internal document (from twitter NYT reporter Hiroko Tabuchi, posted with Woodford's permission) is here: http://t.co/GgejfrCs

Have not seen much on the evolving scandal in the Japanese press as of noon 18 October, and that's why it needs to be in the foreign press and foreign agencies.

I feel like my cameras have cheated on me.

I knew something was amiss when they tried to sell me 4/3 of a camera.

Interestingly, the Japanese press are still quiet on this, according to Hiroko Tabuchi, a New York Times reporter based in Tokyo. See this tweet. Her Twitter feed has other links on this story, too.

A link to Mr Woddward's Channel 4 TV interview from last night


Did you know that Fujifilm has a cosmetics group? I'm not joking.


They make anti-aging creams. Perhaps if we rub those on the old SR sensors it might help the dynamic range ...

A lot of these companies are conglomerates which "sort of" stick with their primary competancy but they buy all sorts of stuff.

It will be interesting to see how this pans out.

Oh snap. That is definitely not good. Especially reading that the imaging division is making a loss.

One of the stated reasons for firing Woodford was that he "ignored the management structure of the company by giving orders directly to staff, rather than via the heads of the various units". (Reuters)

If I understand the accusation correctly, it is something you'd kinda do if you suspect the management structure and don't know who had their fingers in the pie.

Mind you, I'm not saying he's necessarily right, only that his behaviour seems consistent with what he claims.

If these allegations are true, then the stock market's reaction is deserved. The impact to their customers however, is probably not...


It's strange that the FT reported Olympus as 'the Japanese camera maker' when, like Pentax, that's just a small part of a much bigger organisation. Most of their revenue comes from medical imaging equipment, rather than cameras, so perhaps, like Hoya, they will spin off the camera division? That would cover a small fraction of those mysterious payments...

"Olympus might be learning a certain hard lesson: you don't solve a problem by firing the guy with the gripe . . ."

Having worked as a freelancer for several big Japanese companies over the years, I'm afraid the lesson they take away from this will more likely be "don't appoint any more gaijin top executives".

What? Corporate mis-behaviour! Say it ain't so.

This is sad news. I have always thought of the Olympus camera division as a bit of an outsider. Not bound by the constraints of being too big, like Nikon or Canon. I'm a particular fan of the Pen F and OM series of cameras. It appears that that era is over, the people responsible either retired or deceased. I hope their medical products division is doing better and they can stay alive but often it seems this type of news only presages a continued decline to company death. So sad. So bad.

Woodford was interviewed on BBC Radio 4 this morning. Apparently the UK's serious fraud office is relevant because several hundred million US$ was transferred from Olympus's UK-based financial arm, with approval of senior management, to unidentified recipients in the Cayman Islands tax haven. Woodford himself called in auditors KPMG to investigate and they couldn't find where it had gone.

So they named him President & CEO but attempted to withhold that information from the Japanese press etc, while they knew that this situation was likely going to unfold. It's telling that he learned about this from articles discussing the transactions that appeared in a magazine. Sounds to me that he not only did the right thing but did the only thing that he could do to avoid prison time.

Perhaps we as camera buyers and "influencers" can start a petition stating that we won't do business with Olympus until the responsible parties are brought to justice (and possibly that the Mr. Woodford be reinstated if for some reason he wishes to carry on).

Ah, Michael,

Maybe they wanted some vaseline for a new Oly softfocus lens :-).

Greetings, Ed

P.S. Maybe Japan could do with a Japanese version of OWS. And of course kudows to Mr. Woodford for the disclosure and the brave but futile attemp to investigate if this is true.

Maybe the face tattoos and missing pinkies should have been a clue at the first board meeting....

Japanese corporate culture and how these companies are intertwined is very confusing to most of us. For the board members to "lose face" was probably a greater disaster for them than losing billions of dollars. Their reaction is entirely predictable. I suspect any investigations will be stonewalled by both Olympus and the Japanese government.

Very sad news ... Here I was full of respect and trust for Japanese camera firms, Olympus not least, and then it turns out they are total fools! Just kidding, though, it is still sad. In big firms like that anything is possible, even perfect production of M4/3 cameras - and bad economy ...

Looks like Olympus is about to become another victim of the relentless 'financialization' of the world economy.

There once was a time when companies developed and manufactured something tangible—you know, products—to sell for profit. The financial side of the business was simply an adjunct; a way to obtain enough capital to fund further development or manufacturing capacity, while the core business involved a real product.

Over the last 30 years or so, all that has changed. Now physical products seem almost tangential to the business of moving piles of money around via computer-driven millisecond 'trades' to exploit fractional price differences. Increasingly corporations serve as mere vehicles for such trading, while any nominal 'product' is regarded as quaint or irrelevant. Near as I can tell, that's what happened to Polaroid. As its core business of instant chemical photography collapsed, a succession of owners tried squeezing out the odd billion here & there by shuffling electrons and 're-branding', without ever creating any actual product. The end result speaks for itself.

Here's hoping this doesn't happen to Olympus, whose actual products display some real imagination.

"delivered a dossier of what he called 'condemning' evidence on Olympus to Britain's Serious Fraud Office in London."

The "Serious Fraud Office"? Put the Not-So-Serious Fraud Office across the street and you've got yourself a great Monty Python skit.

It's not that often that the public gets to see how a company president crafts a letter accusing his boss and senior managers of gross negligence (at best) and corporate theft (at worst) and asks them to resign.
Unfortunately, the public too often gets to see red-faced perps (assuming for the moment that Woodford has his facts right) think quite wrongly that the problem will go away if they just fire the accuser. I doubt that the board believed Woodford's suggestion that it could all be handled discreetly if the chairman and others resigned, but they should have been able to predict the obverse. Then again, if these charges are accurate, maybe this board really did think that firing him was the right move.
For photography's sake, I hope the Olympus board doesn't involve itself closely in camera design.

"Having worked as a freelancer for several big Japanese companies over the years, I'm afraid the lesson they take away from this will more likely be 'don't appoint any more gaijin top executives'."

Except that, as you probably know, Woodford was to be a cost-cutter. Isn't it fairly well known that when lots of people need to be downsized, it's not acceptable for a Japanese to do it to other Japanese, and that's the reason for the gaijin CEOs? I know I've read articles asserting that, at least.


"that memo is actually a thoroughly engrossing read"

I agree. You can really read a lot between the lines, can't you?


Meh. So some dirty linen is being aired. You'd be surprised as to what sort of bad decisions are made in the business world that in retrospect were totally idiotic. Millions get wasted every year by folks who fail to do due diligence because of one reason or another: even when due diligence is done, fraud can be executed against even the best (think Enron: there was a lot of due diligence there, but if someone lies to you, unless you can know that they're lying, you're going to get defrauded). Trust is extremely important, and there are plenty of folks who are far too trusting, even on major company boards.

Seriously, this is very bad form from Woodford. The Board was right in getting rid of him after he was told to cease and desist: they are the board and bear ultimate responsibility.

Knowing Japanese culture, he forced them to lose face. He worked there long enough to know that. If anything, I see it as a power play from him to shake up the board and gain increasing power: he probably was very, very exasperated at what had happened (and yep, it's a chunk of change!), yet it looks like Olympus - whom I dearly love as a camera manufacturer - got partially taken in a misguided and probably ill-advised expansion of their portfolio.

I can only speculate here, as no outsider will probably know the real story. But it looks like Olympus does need some significantly better corporate management. Of course, this has nothing to do with their cameras or lenses: other market players have their dirty laundry too, and are, in this case, better able to hide it (probably because they don't let 愚かな外国人 into such a position).


I've now read the document linked to ut supra, and this is major egg on the face of Olympus. Woodford was correct in confronting the Board with this (indeed, it would have been dereliction of duty otherwise), but his demand to have the Board resign over this is seriously non-Japanese.

What a mess.

But boycotting Olympus? GMAFB. Anyone remember what the machine tool division of Toshiba did back during the cold war? That's something worth boycotting a company for (who knew fully well what they were doing): calling for a boycott of Olympus products for the failings of their board is punishing all those who do the actual work for their failings of their bosses.

Sigh. What a CF. Double-plus ungood.

We still are far from the why of the matter, as in, why did they do these things. It's an interesting mystery, and maybe the answer is not what people expect.

Being a Japanese company does not excuse Olympus in any way. In fact it seriously damages the reputation of Japanese business in general as far as outside investors are concerned.

We live in a global economy, and there are rules. Being Japanese is no excuse. We have to abide by the rules, Enron had to abide by them, so does Olympus. Good for Mr Woodford. Want to compete in a global market? Play by the rules. Plenty of room for big profits.

Someone will buy Oly's assets. They are too valuable. But the current company is sunk. Expect Hoya to be sniffing around the medical devision, and Panasonic will snap up the camera division.

If even half the allegations are true, these executive have done an enormous disservice to the engineers and employees that they were responsible for and have committed a criminal act.

The movie (and book) "Freakonomics" has a very interesting study of individual and corporate Japanese behavior in the face of a major scandal. Interesting to compare and contrast.

I have a quick read of this as I am not much concern about Olympus. But after re-reading it (and the Chinese business news in Hong Kong), I understood that it is traditionally the whistleblower case. Well, as he has accounting firm audit report, he is on the right side. But his clause is probably lost as he is fighting both Japanese close circle (as an alien) and even if not, fighting chairman himself from down under. His personal result is sort of expected and I guess he fully expected that (or should). Still courage to do this in whatever culture.

Someone had a wonder about why Mr Woodford is blowing the whistle the way he has. My personal speculation is that the pricewaterhouse investigation showed a substantive link to crimes (alledgely) in the UK and didn't want to have to never go home again to avoid trial or sanction for crimes he didn't commit for illgotten gains he didnt share in.
eg: No Upside.
And... Who's to say maybe Mike Woodford isn't simply an honorable man who did the right thing simply because it was the right thing to do.
Richard in Michigan

@Kevin Purcell The case of Fujifilm and cream is different. In fact, the cream business was explained in SCMP as one that support the film production! The fuji develop film and paper and the gelatin used for these was similar to the cream. (Do not ask me the details.) Hence, they found that they can produced that with great synergy with their film/paper business (and in fact if I recalled correctly 20%+ business is now cream).

Interesting read. Taken from the Olympus Canada website:
Olympus strives for ethical and compliant behavior. Every Olympus Representative has a duty to report any suspected violations or inappropriate actions. To ensure that allegations of improper or illegal conduct, activities or practices are heard and addressed, Olympus provides an anonymous, confidential reporting system (the “Integrity Hotline”). The Integrity Hotline is maintained by a third-party, Ethical Advocate.
I guess Woodford should have called the 800 number and reported these serious breaches ;)

Forget the money - cherchez la femme.

He was CEO for two weeks and does this? Not saying OLY Japan is squeaky clean, but something smells funny.

Just a random thought - Woodford could also have been rapidly "promoted" specifically so that he would be the one to fall on his sword when further news of this "loss" came to light, as even a Japanese magazine(!) had murmured about it. At that point of revelation, naturally the Olympus board would have to do something to "insure this never happens again."

Mr. Woodford's busy summer as COO, and even busier two weeks as (barely publicized) CEO, seems quite eerily like a man who knew he was being set up, and sought only to avoid having his career (in business) be sacrificed.

Well, whatever! Some distracting intrigue to an otherwise boring week in the camera world. Like another commenter said, Olympus and the Japanese government will quickly try to stall and derail any investigation for fraud.

Am I the only one who finds the initials of Olympus Finance (UK) Ltd (Memo, Page 2), rather apposite?

> But boycotting Olympus? GMAFB.

John, in one of the TV interviews he gave, Woodford explicitly referenced Japan's "anti-social forces", the spectrum of criminals and fascists that plague all facets of legitimate business in Japan. This almost certainly isn't just a matter of some white collar crooks among Olympus executive. Organized crime in Japan is a very real problem. Look at the laws they just had to pass in Japan criminalizing the payment of blackmail money. As it stands, if you do business with Olympus there's every chance that you're doing business with the very worst elements in Japan. Until this is resolved we just don't know.

markB and Steve Jacob, I agree with your points completely.

And given the breach of trust on the stock market as one angle of this, I would expect this to stir Japan's FSA. They shut down the wealth management unit of one of my former employers in Tokyo just over concern of "failure to implement controls" over anti-money-laundering. Olympus isn't a financial firm but this looks like the very sort of thing that sets off every alarm at the FSA. We might see punitive actions such as Olympus being de-listed (which in itself can be paralyzing) and possibly having their business suspended.

A sad day for everyone involved. It's indefensible that we continue to see top executives looting firms.

I think Geoff Witting has hit at the heart of the problem--for the world economy, as a matter of fact.

It seems that as Geoff has pointed out, the increasing domination of finance has meant that for corporations, making a decent product is merely an adjunct, to use Geoff's word, to playing the financial system like a casino and making money by trick and tropes, as opposed to producing anything useful. As someone has said, General Electric is now more of a finance company than a producer of electric goods.

It was the domination of the American auto industry by finance/business school types, instead of production types, which nearly sank it in the 1980s (See David Halberstam's "The Reckoning" for a fuller exposition on this). And I suspect it was the same focus on "finance" that put GM, Chrysler--and, let's face it, the global economy, into the tank about three years ago...with effects we are obviously still feeling today...

It's why I sometimes think that the most beneficial thing that could happen to this country would be a low-level raid on the Harvard School of Business....

Dear Paul,

A friend of mine got his MBA from the Harvard School.

One of his favorite stories is from the intro class. The prof starts off by asking, "Does anybody here know the goal of a business?"

Every time, some poor sacrificial goat says, "To make money!"

The prof then tears them a new one, explaining in no uncertain terms that that must not be the goal of your business unless you are a mint or a bank. Otherwise the goal of your business is to satisfy a market need. If you do that, you will make money. If you think your business is to make money, you will screw yourself.

That from the HSB.

Doesn't mean everyone learns the lesson.

pax / Ctein

And now he's requesting police protection from scotland yard- this is getting stinkier:


Here is an interesting take on the situation


I just love your work, but I was wondering what the difference was between regular photography and fine art photography? Any ideas?

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