Practical analysis for investment professionals
29 May 2013

Lessons from a Whistleblower: Putting Integrity into Practice

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.

Read more on the 66th CFA Institute Annual Conference blog

About the Author(s)
Rebecca Fender, CFA

Rebecca Fender, CFA, is head of the Future of Finance initiative at CFA Institute, a long-term global effort to shape a trustworthy, forward-thinking investment profession that better serves society. Prior to joining CFA Institute, Ms. Fender was a vice president at BlackRock working with pension funds and endowments, and she also worked at Cambridge Associates, where she published research about manager selection. She earned her undergraduate degree in economics from Princeton University and holds an MBA from the Darden School at the University of Virginia. Future of Finance publications include From Trust to Loyalty: A Global Survey of What Investors Want, and Gender Diversity in Investment Management: New Research for Practitioners to Close the Gender Gap. Previously, Ms. Fender also served as the director of the flagship CFA Institute Annual Conference.

2 thoughts on “Lessons from a Whistleblower: Putting Integrity into Practice”

  1. It was one of the best sessions for Annual conference, it restored the faith in importance of integrity among professionals.

  2. JK says:

    You make it sound like a good Englishman caught up among the bad Japanese! This is about as simplistic and one sided an account as it can get.

    So Chairman was his “Favorite Uncle” (or shall I say sugar daddy) when he was busy climbing the corporate ladder. And later when they couldn’t get along, sugar daddy becomes a villain?

    And according to news reports, he didn’t win trust of shareholders of Olympus and later got 10 million pounds by suing Olympus, something you didn’t write about and he probably never mentioned. Let’s try to be more thorough with the facts and be objective in how we portray things, that is also integrity!

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