Investors fear banks may hijack Olympus board

LONDON: Western investors in Japan’s disgraced Olympus have accused its banks of trying to take control of the boardroom by stealth, amid media reports that the firm’s major creditors are set to install their own appointees in the top jobs.

Foreign investors in the maker of cameras and medical equipment, engulfed last year by a Us$1.7bil accounting fraud, have been arguing for a complete renewal of the board, which would include outside talent unconnected to Olympus, its creditors or major owners.

But they say they have been thwarted by Olympus’ main banks which, in their powerful roles as both major creditors and shareholders, appear to be lining up a company veteran and a senior banker to take over the reins.

The new chairman is expected to be from main lender Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group Inc, the Nikkei newspaper said on Tuesday, adding that executive officer Hiroyuki Sasa would be promoted to president, traditionally the most senior executive role at Olympus.

“We’ve heard from multiple sources that the banks are trying to push forward with the appointment of a nominally independent board, staffed with affiliated individuals. As far as we’re concerned, the Olympus board would then be defacto creditor-controlled,” Josh Shores, principal of Southeastern Asset Management, said.

“I suspect most non-japanese investors would reject the idea of a board heavily influenced by olympus creditors,” Shores said, adding that “all options” were being explored to secure the best outcome for his clients and the company.

Separately, Japanese business magazine Facta, which had been first to publicly question Olympus’ bookkeeping last year, said that a former SMBC deputy president, Mitsuaki Yahagi, now on the board of Sony Corp, was rumoured to be a candidate for CEO.

SMBC, which is also listed as a major Olympus shareholder alongside a unit of Mitsubishi UFJ Financial Group Inc, said the bank had no immediate comment.

The CEO’S role is usually held as a second title by either the president or chairman. – Reuters