CFA Institute: Lessons from a Whistleblower: Putting Integrity into Practice

May 23rd, 2013

CFA Institute
By Rebecca Fender, CFA
May 23, 2013


As Michael Woodford boarded a plane from London to Tokyo in March 2011, just days after the devastating earthquake in Japan, he found himself sitting alone in the first-class cabin that was typically full of busy executives. Why was he going to Japan, despite travel warnings, panic, and fears of environmental contamination? As CEO designate of Tokyo-based Olympus Corporation, he felt it was the right thing to do. Woodford went on to tell the audience at the 66th CFA Institute Annual Conference in Singapore the story about his brief time as the CEO of Olympus and his discovery of a $1.7 billion accounting fraud. Just as on that empty plane, Woodford had to stand alone in a culture in which speaking out was not rewarded.

He had attained the role of CEO as the culmination of a 30-year career at Olympus, where he had built business lines and developed relationships with people, such as company chairman Tsuyoshi Kikukawa, who, Woodford said, “was like my favorite uncle.” Initially, everything seemed idyllic. The stock price went up when he was announced as the CEO, and it continued to climb. “I realized how easy it was because in Japan, everyone does what you tell them to do, which is a problem, but it can be a power to get a lot done quickly.”

It didn’t last long, though. As Woodford began to ask questions and inquire about a FACTA magazine exposé, he was stonewalled by Kikukawa and the board and then fired. Meanwhile, he learned that the fraud was linked to organized crime in Japan, and he realized that not only his career was at stake but also that his personal safety was in peril. When he made his first visit back to Tokyo after these events, he was accompanied by no fewer than 30 bodyguards — more than Michael Jackson had on his Japan tour.

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