Foreign shareholders in Japan's scandal-hit Olympus have called for a re-think of new board appointments, saying creditor banks have exerted "undue influence" on the lineup.
In an open letter to the company, nine institutional investors, who collectively hold up to a 30 percent stake, said an independent chairman should be selected to head a board that would represent broad interests.
"To accept a bank-led rehabilitation would be a setback, in our view, to the interests of shareholders, as well as to the earnest efforts of the Japanese Financial Services Agency and the Tokyo Stock Exchange to improve corporate governance standards in Japan," the institutions said.
"While shareholders and employees both have as their prime objective the growth and development of the company as an independent entity, creditors' first concern is likely to be Olympus's current balance sheet status," they said.
The letter came as Olympus attempts to rebuild its reputation following a $1.7 billion cover-up scandal by present and former top executives.
The losses stem from bad investments made since the 1990s, which were brought starkly into focus by ousted president Michael Woodford.
The Briton went public with the matter to the international media after being sacked in October when he raised concerns over the losses, which were moved off the company's balance sheet.
Olympus eventually admitted wrongdoing after commissioning a probe by a panel of outside lawyers and several implicated executives were forced out.
However, despite support from foreign stakeholders, Woodford abandoned his campaign to get his job back, citing a lack of enthusiasm among Japanese institutional shareholders, who are traditionally unwilling to rock the corporate boat.
Wednesday's open letter came a month after the company nominated former Sumitomo Mitsui Banking Corp. senior managing director Yasuyuki Kimoto as its next chairman of the board and former executive officer of the Bank of Tokyo-Mitsubishi UFJ Hideaki Fujizuka as a director.
The medical equipment and camera maker has nominated an 11-member board for approval at an extraordinary shareholders meeting on April 20.
The investors' group said they "urge the company to find a genuinely independent board chairman and to better align key management appointments" with the recommendations from the lawyers' panel that probed the scandal.
"Under a strong and untainted CEO, Olympus could rapidly strengthen its balance sheet through retained earnings," the letter said.
The letter was sent jointly by APG Asset Management, Harris Associates, the Co-operative Asset Management, Indus Capital Partners, F&C Management, MN Services NV, Florida State Board of Administration, Southeastern Asset Management and RPMI Railpen Investments.
Olympus declined to comment on the letter, saying it was yet to receive it.
Source: AFP Asian Edition