Japan's disgraced Olympus confirmed today that it was suing its president and 18 other executives, past and present, for up to $47m in compensation. The maker of cameras and medical equipment is struggling to recover from one of Japan's worst accounting scandals.
Olympus said all board members subject to the lawsuit would quit in March or April, leaving it in the extraordinary position for now of continuing with its most senior executive, Shuichi Takayama, and five other directors it is suing for mismanagement.
Analysts said the current board would have difficulty over the next few months making any strategic decisions, leaving Olympus more vulnerable to an eventual takeover.
Olympus shares surged as much as 28% on the news, with investors betting the company's clean-up efforts would help it avoid a humiliating delisting from the Tokyo Stock Exchange, in turn helping to ensure it stayed on bidders' radars. The stock ended up 20%.
Investors also looked forward to the eventual renewal of the board and to Olympus finally drawing a line under a $1.7 billion accounting fraud which has thrown a spotlight on Japan's reputation for weak corporate governance.
Olympus has lost almost half its market value since the scandal erupted in October, when it fired its British boss Michael Woodford, a rare foreign CEO in Japan, for questioning dodgy acquisition deals at the heart of the scandal.
"The plan is for the current board members who were found responsible and are subject to lawsuits to complete passing on their roles to avoid any impact on business implementation, and all resign at an extraordinary shareholders' meeting that is set to be held in March or April," Olympus said in a statement.
Six of Olympus' 11 directors are being sued: five of its eight internal directors and one of three external directors.
Woodford, who went public with his concerns after his sacking, said last week he was abandoning a bid to be reinstated to his old job, lashing out at big Japanese shareholders for their failure to back his bid.
Also among those being sued by Olympus are former chairman Tsuyoshi Kikukawa, former executive vice-president Hisashi Mori and former internal auditor Hideo Yamada.
An outside investigative panel found last month that this trio had played leading roles in a 13-year scheme to hide losses from Olympus investors. Former presidents Masatoshi Kishimoto and Toshiro Shimoyama were also included in the lawsuits.
