By now the facts are well-known: Michael Woodford, the Liverpool-born president and CEO of Japanese optical and camera company Olympus, worked his way up the company ladder over the course of 30 years before he became the first gaijin (foreigner) to hold the company's top position in Japan.
Within weeks of assuming the job, Woodford learned through a report in the Japanese publication FACTA that an Olympus employee had alleged questionable accounting at the highest echelons of the company.
What followed—a saga that would involve the media, lawyers in multiple countries, criminal indictments against key Olympus executives, police protection and the threat of Japanese Yakuza involvement—sounds like the stuff of fiction. It's not, as Woodford details in his soon-to-be-published book, Exposure: Inside the Olympus Scandal. My Journey from CEO to Whistleblower.
"Everything I say is substantiated and true," says Woodford. "What the book does is bring all the elements together in one place. And that's why it's so damning."
While Woodford confesses to having come through the experience “a little black about human nature”, he remains remarkably free of self-pity. In advance of his book's publication date (29 November 2012) he hit the lecture circuit, most recently appearing at CPA Congress, where he related his tale of corporate caution with a mix of righteous anger and dark humour.
While he holds little affection for corporate Japan and many of the country's institutions ("When I was dismissed, parts of the Japanese media were acting like a public relations firm for Olympus"), he remains enamoured with both the country and its people.
"I don't hate Japan,” Woodford says. "It's got a political system which is basically dysfunctional and certain cultural things which are, for me, a real albatross around the country. But I feel closer to Japan now than I did on the 13th of October last year [when he was dismissed from Olympus] because there are such lovely people [there].
"The Japanese man and woman on the street are supportive, and have been from pretty early on, once there was an ability to articulate the facts the other way. They saw me as a sort of ‘David and Goliath’ story. I walk along the street and people stop me; they often don't speak much English but they say 'thank you'.”
Whistleblowing will never be easy.– Michael Woodford
The experience changed Woodford in profound ways. “There's an emptiness about corporate life – a superficiality and a transience,” says the former corporate warrior. “Of course, you have to generate money and look after your families, and economies need successful businesses, but [this experience has] made me [want to spend the] rest of my useful life giving back.
“I'm very tortured with guilt about the people who suffer in this world with no cause. It does change you in a profound way.”
itbdigital.com recently sat down with Woodford following his CPA Congress appearance in Melbourne, Australia on 17 October. Woodford shared his thoughts on what corporations and governments can do to not only protect whistleblowers but stop Olympus-like fraud from happening in the first place.
Many whistleblowers say they were just doing what they had to do. How can corporations encourage people to do the right thing when sometimes the personal costs are so severe?
Whistleblowing will never be easy because many organisations will consider you a traitor, whatever the truth of it. I've come to believe that it comes down to [either] the sovereign state or independent companies [demonstrating] they will go beyond legislative requirements.
I believe in independent whistleblower lines. Internal whistleblower lines – Olympus had one … I'm not a great believer in them because [they] ultimately report back up to somebody along the line. Whistleblower lines need to be independent of the executive. Conglomerates work around the world in countries where corruption is endemic so you are opening up a Pandora's box. But better to open it than leave it [closed].
Some of the biggest companies, including Toyota, don’t have [even] one external director. It's a listing requirement for the Tokyo Stock Exchange, but that's fundamentally different than being a sovereign law of the land. Why is it a problem to have one external director? Why fight against that? One is wholly inadequate anyway; Olympus had three.
I also see the attraction of rotation of auditors. Maybe every 10 years ... because the most important way to stop fraud is effective, robust, vigorous external audit. Auditing firms have to be the policeman. I know they don't like that word, policeman, but that's what they have to do.
How has the experience changed you?
I really am not a bitter, twisted person but I've had an education which has, by default, taught me things I clearly didn't understand or recognise. I mean, I always worked on the premise that human nature existed in business and therefore you had to manage, accepting that human beings are human. But in a way it made me a little black about human nature.
I have seen wonderful people who stood up – I'm talking about colleagues. My friends and family's friends were wonderful without exception.
I know you shouldn't mix business and pleasure but if you work for 30 years you do bond and you make friendships. And the way some [colleagues] went with the pack – took opportunity for their own personal aggrandisement, went and formed alliances with some of the directors who've now gone – made me very sad. You know, that bit will always haunt me.
So it's made me recognise even more strongly that life is luck. I was very lucky.
I was lucky to have an American Buddhist friend called Waku [Waku Miller]; he's fluent in Japanese, he's an intellectual, runs a corporate business but is the least corporate person you could ever meet. He translated my words, met with journalists, stayed with me night and day to get the story out in Japan.
Also Koji Miyata, previous president of the [Olympus] medical business. He retired eight years before and played golf with the [now indicted] Chairman [Tsuyoshi Kikukawa]. He stood up at the age of 70, 71 and said, "Michael is right".
Without those ... I was very lucky.
What about the process of actually writing the book. Was that painful?
Very painful. It was painful because up until the end of May I was all-consumed in the legal action. And then suddenly I found I had to deliver 90,000 words to Penguin by the end of June. I care very much for the written word and I care about this story being told in the right way. I was up every day, 4.30am, 5.00am and working till 10pm. It was the most exhausting thing I ever did.
And then once it was written, it had to go through three different firms of lawyers because it's a very candid portrayal of what corporate Japan is like. I mention a lot of names, companies and people. Three different firms of lawyers looking at different jurisdictions [ensured I could] push the envelope as far as possible.
What advice might you give to someone else who found him or herself in your shoes?
It depends on the country. In Japan I'd go to FACTA because you know their integrity. They protected the source.
I don't want to be arrogant, telling other people, because there are so many pressures and situations – and hopefully you won't be fearful of organised crime or anything like that where it gets into a completely different league – but if you're talking about white-collar crime, if you know about it and don't do anything, then you become part of the problem.
If I had not acted and somehow this had come out, I might be on trial in Tokyo. So I think it comes down to your own conscience. Bad things happen, they say, because good men stand by and do nothing. And that's true.
In the end, look in the mirror. Who are you? What are you? Even if you're appealing to selfish instincts, you can damn yourself and your family if you don't act so it's not that doing nothing is necessarily an option.
In democratically free countries with free judiciaries, my advice would be if you weigh it up, accepting that you may have dependents and family, probably the balance in most cases would be, "It's the right thing to do, not just morally, but it's the right thing to do to protect yourself".
What happened to the original whistleblower who went to FACTA?
I've met them and anything I say really could throw light on their identity. It was one of the most humbling meetings I ever had because the first thing [the person did] was to apologise, said they should have come to see me. And I said, "No, you did the right thing".
And I asked them why they didn't [come to me] and they said, “Well, surely if you've been promoted, you must be one of them".
I said, "That's a very logical conclusion and what you did to go to the media..." I mean, I found out through the media.
One thing I've learned – you ask me how I've changed – I have a huge respect for the media. The Financial Times broke the story. They did that in just the right way. The Wall Street Journal and New York Times had five or six people each in Japan alone working on this story. So the media to me are one of the heroes in this.
And it's made me [against] anything that inhibits or limits the media's ability to put its nose right into powerful people's affairs, except you don't want a Princess Diana situation.
We don't need naked photos.
If you try to legislate, and one of the consequences of that is you get naked photographs, then I'd live with the consequences if it means the press [not] being inhibited in what they can report. Parliamentarians are powerful. Businessmen are powerful.
The media itself has to be held to account, as has happened with News International's businesses, [but] media for democracy and holding powerful people to account is one of the things I feel passionate about.
I've heard rumours about a movie being made ...
I can't say anything about that but I've heard those rumours too, and I won't deny them.
Who would you like to play you?
You'll have to find a sort of pot-bellied, balding businessman character. I don't know if George Clooney would put on weight and shave his head...
Exposure: Inside the Olympus Scandal. My Journey from CEO to Whistleblower is published by Penguin.
Michael Woodford is also profiled in the October 2012 issue of INTHEBLACK magazine.