March 11, 2019
By Kirstin Ridley
LONDON (Reuters) – The former CEO of Olympus, who blew the whistle on a $1.7 billion accounting scandal at the Japanese medical equipment maker in 2011, has won a London court battle over alleged wrongdoing linked to his 64-million-pound ($85-million) pension.
Olympus’s British subsidiary KeyMed sued Michael Woodford and former company director Paul Hillman in 2016, alleging they breached their duties as directors and trustees of a defined benefit pension plan and conspired to maximize their pension benefits by unlawful means.
London High Court Judge Marcus Smith said on Monday he saw no evidence of dishonest or improper conduct by the company veterans and said any failings identified by KeyMed could be attributable to “an innocent failure of process” in a busy company.
“In these circumstances, I find that the defendants acted honestly and did not breach the duties … dishonestly or at all,” he said in a judgment.
Woodford, who joined KeyMed as a 20-year-old salesman in 1981 and rose through the ranks to become Olympus’s first foreign chief executive in 2011, was fired two weeks into the top job after persistently querying unexplained payments. He then alerted global authorities and the media.
Olympus initially said Woodford was fired for failing to understand its management style and Japanese culture. But the company later admitted it had used improper accounting to conceal investment losses and restated years of financial results. In September 2012, the company and three former executives pleaded guilty in Japan to cover-up charges.
Woodford and Hillman, described in the judgment as Woodford’s “right-hand man” who also left the company in 2011 after a 33-year career, said in a joint statement that they felt completely vindicated.
KeyMed, a surgical products maker in southern England, said it was disappointed and considering its legal options.
“When KeyMed discovered that Mr Woodford was entitled to a pension transfer of over 64 million pounds, we had a duty to our stakeholders to investigate the circumstances in which such a large entitlement had arisen,” it said in a statement.
Woodford has said his annual pension benefit rose to 993,000 pounds at the end of his 30-year Olympus career. This was converted into a capital sum of 64.5 million pounds and transferred to a Self Invested Personal Pension (SIPP), a UK government-approved scheme, with Olympus’s approval in 2014.
Olympus’s European headquarters in Germany did not immediately respond to an emailed request for comment sent after hours.
(Reporting by Kirstin Ridley; Editing by Sonya Hepinstall)