The Whistleblower
In April 2011, Michael Woodford was named president of Olympus. A U.K. citizen, he was Olympus’ first non-Japanese president. In August 2011, Mr. Woodford expressed concern about possible inappropriate acquisitions and large payments to financial advisors with the chairman of Olympus and an executive vice president (Osawa 2011). On September 23, Mr. Woodford “sent letters to members of the Olympus board questioning the transactions and demanding explanations, especially for the ‘excess of $600 million issued to unnamed recipients in the Cayman Islands… It is inexplicable to me why Olympus would make a payment of this magnitude’ ” (Greenfeld 2012). He also sent copies of the letter to the firm’s external auditors. On October 1, Woodford was appointed CEO. One of his first actions was to commission PricewaterhouseCoopers to investigate the questionable transactions.
On October 14, 2011, the board of directors removed Michael Woodford from his executive roles at Olympus. The reason, per the corporate termination announcement, was that he had “largely diverted from the rest of the management team in regard to the management direction and method, and it is now causing problems for decision making by the management team” (Verschoor 2012, 13). But only a one month later, after lying to the public, Olympus officials admitted to the FBI and the U.K.'s Serious Fraud Office that they paid fraudulent advisory fees of $1.7 billion in a decade-long cover up (Cohn 2012). Had lesser employees attempted to blow the whistle, their attempts would have been even less effective because it was subsequently reported that the two executives who oversaw the company’s whistleblower program were at the heart of the scandal (Osawa 2012).
Accounting for Fraud
The WhistleblowerIn April 2011, Michael Woodford was named president of Olympus. A U.K. citizen, he was Olympus’ first non-Japanese president. In August 2011, Mr. Woodford expressed concern about possible inappropriate acquisitions and large payments to financial advisors with the chairman of Olympus and an executive vice president (Osawa 2011). On September 23, Mr. Woodford “sent letters to members of the Olympus board questioning the transactions and demanding explanations, especially for the ‘excess of $600 million issued to unnamed recipients in the Cayman Islands… It is inexplicable to me why Olympus would make a payment of this magnitude’ ” (Greenfeld 2012). He also sent copies of the letter to the firm’s external auditors. On October 1, Woodford was appointed CEO. One of his first actions was to commission PricewaterhouseCoopers to investigate the questionable transactions.On October 14, 2011, the board of directors removed Michael Woodford from his executive roles at Olympus. The reason, per the corporate termination announcement, was that he had “largely diverted from the rest of the management team in regard to the management direction and method, and it is now causing problems for decision making by the management team” (Verschoor 2012, 13). But only a one month later, after lying to the public, Olympus officials admitted to the FBI and the U.K.'s Serious Fraud Office that they paid fraudulent advisory fees of $1.7 billion in a decade-long cover up (Cohn 2012). Had lesser employees attempted to blow the whistle, their attempts would have been even less effective because it was subsequently reported that the two executives who oversaw the company’s whistleblower program were at the heart of the scandal (Osawa 2012).Accounting for Fraud
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