Kikukawa Resigns—Sort Of

In an effort to stanch what the New York Times calls a "widening scandal," Olympus capo Tsuyoshi Kikukawa has resigned as chairman and president of Olympus Corporation. He will retain a non-representative position on the Board, where the extent of his future influence and control is unknown. (Ousted president Michael Woodford, who apparently remains in London, also retains a seat on the Board.)

A few other developments in the case:

• Olympus stock continues to plummet, having lost approximately 56% of its pre-scandal value as of Wednesday. (Kikukawa's departure was accompanied by "the customary deep bow reserved for public apologies over grave missteps"—addressed to shareholders.) Electronista discusses Kikukawa's efforts at reprisal against Woodford.

• Dealbook reports on two Japanese bankers it says are "at the heart" of the shady payments.

• Further improprieties by Olympus management have been uncovered.

• The FBI has launched an investigation into the Gyrus deal in the U.S.

• Olympus has promised to conduct its own investigation into the allegations. (In unrelated news, fox pack leadership has announced it will investigate that fat fox accused of being the cause of certain missing chickens after an alleged nocturnal visit to the henhouse.)

On his departure, Kikukawa stated "There is no corruption" in past acquisitions.

(The aforementioned fat fox says no chickens got et and that he has no idea where all them feathers came from.)

• Jake Adelstein at the Japanese Subculture Research Center has posted an interesting article bearing on the rumors that organized crime might be involved. Among his observations: "In year 2008, something happened at Olympus that turned the company from an entity focussed on seven major business areas, into a company completely out of focus, blurred by a total of seventeen business areas, to include real estate, investments, consulting, waste disposal, labor dispatch, and running travel agencies. Igari Toshiro, former prosecutor turned anti-yakuza crusader, who was Japan’s greatest expert on white-collar organized crime aka the keizai yakuza (経済ヤクザ）and many veteran organized crime detectives have stated that one of the first signs that a company has been infiltrated by anti-social forces is a sudden and totally new change in company direction—especially into areas like waste disposal, labor dispatch (temporary staffing), and real estate—all areas where anti-social forces have carved out a large niche for themselves." (My apololgies—I can no longer find the identity of the person who tipped me to this article, so I can't acknowledge them as I normally do. —Ed.)

In the Silver Lining Department, the new President of Olympus is Shuichi Takayama, who used to run the Imaging Division—the bit that makes the cameras and lenses, which of course is what most of us care most about.

Rumorville
And in loosely related news, rumor has it that the announcement of Panasonic's "GFPro"—a flagship, top-level Micro 4/3 camera—is imminent. Although we don't yet know the official name (possibly "GX1") or have a picture, some of the specs seem to be pretty well leaked. The backstory: Panasonic evolved the original GF1 in a more consumer-oriented direction with updates of that camera, causing grumbling among aficionados, and the new camera will create a new tier above the GF1 level to satisfy more dedicated and advanced users. I'll leave you to your own devices in sleuthing out the rumors, if you're the impatient type. The date of the announcement is variously predicted to be October 28th or November 8th, and might of course turn out to be some other date.

Mike
(Thanks to Jeff, Vlatko, Dennis Allshouse, and others)

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Original contents copyright 2011 by Michael C. Johnston and/or the bylined author. All Rights Reserved.

Comments

[Ken White]

Goodbye Olympus. Can't wait to see who buys the imaging division assets. Regardless of what happens next, cameras are a done deal for Olympus.

[erlik]

If the last of the linked stories is true, it can mean that, as the saying here goes, beaters were driving a fox and driven out a wolf.

On the other hand, everything unearthed up to now has happened before 2008.

On the third hand, those newly discovered deals smell strongly of money laundering.

[James B]

I'm not in the market right now for anything that Olympus could possibly sell me, but if I was, I wouldn't be buying Olympus. This just has so much mafia-style stench over it. I don't believe in funding organised crime.

Good call by Jake Adelstein on that sudden "de-focusing" of corporate effort. If it looks like a duck....

[Brian Miller]

Umm, on the conspiracy font, the Japan Subcultures site seems to have disappeared, and there is a basic holding page for "Horizon Energy Associates, LLC" page. Unfortunately, it doesn't look like anything has crawled it to archive that page.

[Adam]

It appears that the Japan Subculture site has been hacked or something. It's been replaced with a bare bones site for "Horizon Energy Associates LLC", and all sub-level links such as the one you linked to, or any of the links in Japan Subculture's twitter feed, have been removed. Coincidence? Hmmm...

[Akshay Patki]

Well, they can't hack the Google cache. Just enter the URL http://www.japansubculture.com/2011/10/olympus-bringing-it-into-focus-a-special-breach-of-trust/ into Google. Then select the cached version of the webpage to read the article.

[Jim Roelofs]

As a long time Olympus OM system user, this news creates a touch of sadness.

The abundance of feathers however can be explained. They fell out of the Olympus cap.

[Eric Rose]

If it were true that organized crime has somehow got their hooks into Olympus that would be a sub plot. The real story would be who did they compromise and what did they find to use as a lever. Now that would be a juicy story I bet.

[Alex Vesey]

The Japan subculture site is up and running now (again). I saw Adelstein's book at Narita Airport during a business trip--never thought the world it depicts would overlap with the Japanese camera industry.

My first camera was an OM-1, so I have a fondness for the company. So pathetic to see an enterprise such as Olympus fall due to greed or ineptitude of this magnitude.

[David H.]

Japan Subculture is back up, or at least I can get it.

The Japan Securities and Exchange Surveillance Commission is reported to have begun "paying particular attention to Olympus in August. http://reut.rs/tp2i0v

It still seems to be primarily Woodford's fault though. He was autocratic and, according to the new chairman Takayama, frightened---sorry, "intimidated"--Takayama's staff.

A threat to go to law enforcement and the press overseas would be especially frightening, I imagine.

[Sergey Botvin]

That "GX1" bit was very good. Very good.

[Thom Hogan]

Takayama is as implicated in the problems as Kikukawa, unfortunately. He's a board member who approved all the questionable deals, and his first comments in office yesterday were virtually an exact replay of Kikukawa's diatribes: Woodford is the problem, not us. To date, there has been no sign that anyone in charge at Olympus is concerned about the US$1.3 billion in money that's been squandered, or that anything tangible will be done in response to that being discovered.

[WeeDram]

Well eff ... not for GF1, mind you. I imagine Maitani's grave is a centrifuge about now.