Former Olympus chief executive Michael Woodford is expected to seek up to $60 million in compensation this week from his former employer, after he blew the cover on a $1.7bn accounting scandal.
The five-day hearing gets underway today at an employment tribunal in east London and will shed light on why Woodford was sacked after just two weeks.
He will try to persuade the judge that his former employer fired him after he demanded answers from the board about a number of payments linked to past acquisitions. Woodford has an independent panel report as well as a report from PwC to put his case forward.
Olympus claimed Woodford was fired because he failed to understand the company’s management style and Japanese culture. Ater his dismissal, regulators uncovered an accounting fraud going back over more than a decade.
Since Woodford’s sacking, Olympus has admitted it used improper accounting to conceal investment losses under a scheme that started back in the 1990s. Seven people were arrested, including a former chairman, and law enforcement agencies in Japan, the UK and US are currently investigating the matter.
As reported in the Financial Times, the hearing was postponed until midday, which could have allowed time for the parties to settle. If unsuccessful at the tribunal, Woodford has the option to sue for defamation in the High Court or launch proceedings against Olympus for breach of contract in Japan.
Last month, Woodford demanded answers over his sacking at a shareholder meeting in Tokyo. While investors approved a new board at the Olympus EGM, Woodford said it was a “mockery” to claim the group was making a fresh start.
Shareholders approved five years’ worth of restated financial accounts and voted in new management nominated by the current, discredited board.
At the start of the year, a panel of lawyers appointed by the company found that neither KPMG AZSA, which was the firm’s external auditor until 2009, nor the current auditor, Ernst & Young ShinNihon, had violated its legal duties.
