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News digest 09/09/16: Whistleblower Michael Woodford sued by Olympus

08 September 2016 by Henry Ker

Whistleblower Michael Woodford sued by Olympus - read more

The latest governance stories in the news

Whistleblower Michael Woodford sued by Olympus

Michael Woodford, the whistleblower who exposed the infamous scandal at Olympus, is being accused of fraud by the company.

Olympus is suing Mr Woodford and a former colleague for more than £15 million. It claims they abused their positions as executives to boost their pensions. Both men deny the allegations and Mr Woodford is countersuing for breach of an out-of-court settlement agreement after his departure.

KeyMed, a British subsidiary of Olympus of which Mr Woodford was formerly managing director, has brought the action. It alleges that he and another former director, Paul Hillman, misled board members when establishing an executive pension plan in 2005.

A joint statement from Mr Woodford and Mr Hillman states: ‘Mr Woodford and Mr Hillman acted at all times in accordance with their duties as trustees and directors ... The process of establishing the [pension] scheme took more than two years, was entirely transparent, and was carried out in consultation with the board of Olympus.’

It went on to say ‘The claims have been brought for the improper collateral purpose of seeking to besmirch Mr Woodford’s reputation.’

Michael Woodford spoke to Governance and Compliance about his experience at Olympus and the scandal – read the full interview ‘Culture starts with a capital C’.


Independent shareholder vote against Sports Direct chairman

53% of Sports Direct’s independent shareholders voted against chairman, Keith Hellawell, retaining his role at their AGM this week. However, majority shareholder and founder Mike Ashley has backed him, meaning Mr Hellawell will remain in his post.

He said he would step down at next year's AGM if he does not receive majority support from independent shareholders by then.

Investors opposed the decision, with Sacha Sadan, Director of Corporate Governance at Legal & General Investment Management, saying, ‘At absolute minimum, we believe the current chairman should step down immediately and an external, independent appointment made to oversee management and protect the interests of all stakeholders — including employees, suppliers, and shareholders’.

Mr Ashley has also insisted he will not take the company private again despite the criticism from investors.


Tesco ranked bottom of IoD Good Governance Report

Tesco was the lowest-ranked FTSE 100 company for corporate governance in the recent 2016 Good Governance Report from the Institute of Directors.

The supermarket chain’s ranking was affected by the lowest scores for accounting and audit practices – mainly as a result from the accounting scandal and profit warnings in the past two years.

Oliver Parry, Head of Corporate Governance Policy at the IoD, warned companies that: ‘[they] need to own this now. You have got to get to grips with your corporate governance because if you don’t then policymakers will regulate you more. We are saying to companies: “You have still got an opportunity to sort it out for yourselves.”’

Ken Olisa, Deputy Chairman at the Institute of Directors, wrote in his recent article for Governance and Compliance that ‘The IoD’s position is that good governance is not a matter of getting away with the minimum possible and then reporting it via an advisor-drafted boilerplate. It holds that corporate governance is about transparency, values and behaviours, which combine to deliver long-term value for the stakeholders as defined in the Companies Act.’

Read Ken’s full article, ‘A series of governance eruptions’.

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