Whistleblower is accused of £15m pension cover-up

He is the British boss who revealed Japan’s biggest corporate fraud. Now in a new twist...

A BRITISH whistleblower who exposed one of the biggest frauds in Japanese corporate history is being sued for £15m by his former employer over claims he manipulated the pension scheme.

Michael Woodford uncovered a multibillion-pound scandal with links to organised crime at camera firm Olympus Group when he became the company’s first foreign chief executive.

It led to an outcry in Japan, wiped 80pc off the firm’s value and saw three board members handed suspended prison sentences.

Now, five years after going public, Woodford and a former colleague are being sued for more than £15m over claims they conspired to maximise the pension scheme by unlawful means for their own benefit. The pair both deny the allegation, which Woodford said was an attempt to ‘besmirch’ his reputation while investigations into Olympus continued. He is counter-suing for a multi-million-pound sum.

Woodford, 56, joined Olympus in 1981 and progressed rapidly. He won a seat on the board in 2008 and was awarded the top job three years later.

But he came into conflict with his colleagues after querying some of Olympus’s acquisitions – particularly the £1.5bn takeover of British medical equipment maker Gyrus Group.

He asked accountant PwC to look into the issue, which uncovered a £517m fee for sealing the deal, paid to two small firms in the US and Cayman Islands. Woodford was then fired by chairman Tsuyoshi Kikukawa, who described the Briton as someone who became ‘nervous when he doesn’t know where each and every yen goes’.

Woodford fled Japan fearing for his safety and handed a dossier to the Serious Fraud Office and Japan’s Securities and Exchange Surveillance Commission.

Then, under police protection, Woodford alleged there were ‘forces behind’ the Olympus board – a reference some took to mean connections to Japan’s Yakuza crime clans. Investigators probed the claims but nothing was ever proven.

Olympus was fined £5.3m. Kikukawa and Hideo Yamada, the auditor who had been party to the fraud, were sentenced to three years in prison, suspended for five years. Executive vicepresident Hisashi Mori was sentenced to two-and-a-half years in prison, suspended for four years.

Woodford reportedly received £10m in damages from the company in 2012 and won a string of awards for his bravery.

But in a twist, the scandal has once again burst into public view following a High Court claim against Woodford – now a consultant and speaker on human rights and whistleblowing – and fellow Olympus employee Paul Hillman, 64.

Olympus’s KeyMed unit, a surgical products maker in England, claims the pair breached their duties as directors and trustees of the defined benefit pension plan.

It is alleged the pair obtained board approval to set up an executive pension scheme in 2005 by concealing the fact the true purpose was ‘to increase the security of their pension’.

This went against a board agreement that no executive benefits would be enhanced by the scheme, according to High Court documents. Olympus said the scheme provided overly generous 5pc increases in payments each year once a pension was activated.

Both men say that they acted in accordance with the rules and ‘consider the claims against them to be completely baseless’.