Analysis: Japan's silent majority may find its voice over

Sun Dec 4, 2011 5:50pm EST
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By Linda Sieg and Isabel Reynolds

TOKYO (Reuters) - Some big Japanese shareholders in disgraced firm Olympus Corp may support ex-CEO Michael Woodford's campaign to return to the helm -- a once-unthinkable step for investors that are more usually known for their discreet, hands-off approach.

Experts say that outcome, though still uncertain, would be a rare case of activism and mark a big attitude change for domestic financial institutions which traditionally hold shares to cement business ties and prefer to avoid public battles.

"There's never been an event that has actually forced people to say something needs to change. The real question is, could Olympus be a turning point?" said senior lawyer Edward Cole, whose work advising firms on share offerings and mergers makes him well acquainted with the attitudes of Japanese institutions.

"The optimist would say yes. The pessimist would say there have been similar scandals in the past that have not led to any sort of systemic change," added Cole, a partner at law firm Freshfields Bruckhaus Deringer in Tokyo.

Woodford, who blew the whistle on accounting tricks at Olympus after his sacking from the top job in October, launched a campaign this week to oust the current board and replace it with his own team of candidates led by him as nominated CEO.

That has set up a battle between Woodford, an Englishman openly critical of aspects of Japanese management culture, and current Olympus President Shuichi Takayama, who plans to remain, at least in the short term, to get to the bottom of the scandal.

Woodford, who was a rare CEO in Japan, is talking to investors about replacing all the directors, including Takayama. Though he has yet to reveal his own slate of candidates, he wants shareholders to vote in a new board by February.

Already some major foreign shareholders have supported Woodford's bid to oust the board, but Japanese shareholders, with about 70 percent of the share register as of end-March, hold the key and are giving few public clues on their position.   Continued...