The recent dismissal of the British chief executive of Olympus has once again drawn the attention of European media to peculiarities in corporate governance in Japan. Accounting practices and lack of transparency have aroused particular concern.
It seems strange that Michael Woodford should have been so summarily dismissed from his post as chief executive to which after many years service in the company he was only appointed some months ago. If, as members of the board are reported to have alleged, his style of management was incompatible with traditional Japanese practices it is odd that he was ever appointed to the top post. His qualities as a manager including his forthright attitude must have been known to the board when he was appointed.
Presumably he was chosen because he was thought to be the only person who could challenge the traditional hierarchy and shake up the company's cosy management methods. Did the board think that his attitudes would change and that he would suddenly become more flexible (and Japanese?) when faced by the serried ranks of the old guard in the company? Or did they suddenly realize that they had been rumbled and that the only way to preserve their outdated ways was to get rid of a troublesome boss? Or (and this is what some people suspect) was he dismissed because he had discovered some dirty tricks and his dismissal was thought to be the only way of burying a scandal? Mr. Woodford has reportedly questioned Japanese accounting practices and queried some peculiarly large payments (some $687 million) to two 'advisory' companies AXAM and AXES which were said to be registered in the Cayman Islands, a territory well known as a tax haven. According to an independent report by PwC, the well known and reputable firm of accountants, these companies no longer exist.