Shady Business Scandal: Olympus Paid $687 Million to Mystery Adviser
Former Olympus CEO Michael Woodford has come forward with accusations about very shady dealings that took place at his previous employer:
He raised questions about the size of payments made by Olympus in four deals between 2006 and 2008.
Among them is the $1.92 billion acquisition of British medical-instruments company Gyrus Group and the $687 million paid to an adviser on the purchase.
The fee works out to more than a third of the total purchase price, much higher than the one or two percent normally charged.
Olympus has denied any wrongdoing and on Wednesday said its total payments to advisers included the redemption of preference shares when they became available.
It said it paid about $244 million in return for advisory work on the acquisition, including around $177 million in Gyrus preferred shares issued to the adviser. It did not release the name of the advisory firm.
But when Olympus later bought back the preferred shares, their value had risen to $620 million, the company said.
The total combined figure is almost double that quoted by chairman Tsuyoshi Kikukawa in Tuesday’s Nikkei newspaper in which he said Olympus “paid commissions of about 30 billion yen” to the advisers.
Woodford claims he was fired because he demanded that those involved with the deal explain why such a ridiculously large sum of money was paid to a mysterious fund in the Cayman Islands:
Of equal concern to Mr Woodford was the identity of the adviser, listed in the documents as Axes Americas, a US-based securities firm, and the related Axam Investments, a Cayman Islands-registered fund overseen by Axes that received the payments from Olympus.
“I felt very uncomfortable because the amount of monies paid to parties completely unknown were so huge,” said Mr Woodford in a video interview with the FT on Monday.
Neither Axes nor Axam were mentioned in public announcements related to the Gyrus deal. According to a review of the acquisition by PwC, Axam was struck from the Cayman Islands registry a few months after taking payment from Olympus, while Axes ceased operations and a man listed as its president effectively disappeared.
The FT called a telephone number for the company listed in an online business directory but found it had been disconnected.
Olympus insists that Woodford, a 30-year veteran of the company, was sacked because of a “clash of management styles.”
In a recent video interview with Bloomberg news, Woodford responded to speculation about a lawsuit from Olympus by saying that he would be “delighted” to see the issue go before a court.
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