TOKYO — Today’s extraordinary shareholding meeting for Olympus, which is under investigation for $1.7 billion of fraudulent accounting, lasting just under three hours, was punctuated with angry shouting, protests, a motion to fire the chairman of the meeting, and one surprise. 

Michael Woodford, the former CEO of Olympus who blew the whistle on falsified accounting at the Japan's optical equipment maker, stated he might seek to invalidate the shareholder meeting in courts, after Olympus management refused to answer a question about his dismissal. At one point Shuichi Takayama, the former CEO — who chaired the meeting, even attempted to cut off Woodford’s questions, saying that because they were in English, they took longer to answer. The current board members were asked at the shareholders meeting if they still asserted that Woodford was fired for gross misconduct but declined to answer, saying legal considerations would not let them do so.  

Woodford, asserted that the company's refusal to answer contravened Japanese Company Law clause 314 (会社法314条), which states the duties of directors to answer reasonable and financially significant questions at a shareholder meeting. When pointing out how Japanese law does require corporate accountability, he referenced Mori Hamada & Matsumoto, the law firm that represents Olympus. He hammered in his point by noting, “Hundreds of billions of yen of shareholder value have already been lost through this scandal. It is obvious that the merits of providing key information on how the new board candidates view the past scandal. Please answer the question in clear, unambiguous language.” 

He did not get that answer.

A violation of the 314 clause, if recognized by the courts, could invalidate the decisions made today. It could make some or all of today’s proceeding completely moot. Since 2000, there have been two court cases where failure to answer questions resulted in the Japanese courts nullifying resolutions passed at a shareholder meeting.

Woodford is expected to announce a decision about his legal actions next week. Many Japanese shareholders while recognizing the problems also disagreed with Mr. Woodford’s approach. One shareholder, a housewife from Chiba Prefecture, said, “I understand where he is coming from but not everyone in the company is bad. If you get rid of everyone who was an executive, who will know how to run the operations?”

Last year, The Independent Investigation Committee of Olympus, headed by a former Japanese Supreme court justice concluded that the Board of Directors “was rotten to the core” and urged all of them to be purged from the company. Woodford pointed out that some board members involved in the fiscal accounting fraud would be remaining at the company and asked for all of them to be removed, but Takayama, the now former CEO, asserted that this would not be done and that there was no problem.

A motion was then made to remove Takayama as chairman of the meeting, who protested it. He asked for a vote of confidence that was followed with a weak round of approving applause that was deemed to be the majority vote. There was not a vote count.

After the Q & A was abruptly terminated shareholders passed all the resolutions proffered by Olympus management.  Hiroyuki Sasa (56), former head of development and marketing at Olympus’ medical equipment business, who was also involved with the problematic Gyrus purchase, became the company’s new president. Yasuyuki Kimoto (63) a former executive at Sumitomo Mitsui Bank became the chairman. Sumitomo Mitsui Bank is one of Olympus’s main banks.

Most Japanese shareholder meetings are like carefully performed staid Noh dramas but Woodford’s questions and the jeers from the audience made for some comic relief.

At one point, a gentleman from Kansai, reportedly shouted at the directors, “Where’s the money? Why don’t you take an endoscope and look in the company safe?”

Woodford, although raising his voice in anger at times, seemed relatively unperturbed by some catcalls when he began to speak. Yesterday, at a press conference at the Foreign Correspondent’s Club of Japan, he was asked if he feared that Olympus might hire thugs to keep him from speaking, as some Japanese companies did in the 90s, he responded with a laugh, saying, “Well, I am from Liverpool… if they want to fuck with me, tactically it would be stupid… but they have been stupid many times before.”