Reuters Japanese media interest has been muted, regulators are mostly mum and many politicians seem unaware anything is amiss. A scandal over questionable deals at Japan's Olympus Corp has so far generated little domestic heat in a country where critics say corporate governance is lax, but signs are emerging that the wall of indifference might crack. Olympus fired its British chief executive Michael Woodford on Oct. 14, charging that he had failed to understand the 92-year-old firm's management style and Japanese culture. Woodford — who joined the company in 1980 — says he was sacked for questioning a massive advisory fee paid in a 2008 takeover as well as other deals. “The implications for investor confidence in corporate governance in Japan are pretty severe,” said Jamie Allen, secretary general of the Hong Kong-based Asian Corporate Governance Association. “What would be positive is if Olympus fronted up ... and the regulators actually took some tough action. I think regulators can turn it around. Whether they will is another matter.” A niche Japanese business monthly magazine broke the story of possible misdeeds at Olympus, a maker of cameras and medical equipment, but mainstream media have been slow to take it up even after Woodford was fired. Explanations of the initial laid-back response range from cozy ties between media and corporate Japan, a tendency to await official leaks rather than dig and even fears that yakuza crime syndicates are somehow involved. Signals that the tide might change, however, have begun to trickle out, following a pattern seen in the past when a domestic magazine unearths dubious deeds, foreign media pick up the tale and mainstream Japanese media finally jump in. Asahi TV and the Nikkei Business magazine ran interviews with Woodford on Wednesday, and the mass circulation Mainichi newspaper, noting the many puzzling aspects to the case, called on Olympus to clarify the facts while urging regulators to take strict steps. “This is a situation that is likely to hurt the image of Japanese firms,” the paper said, noting the high level of interest among foreign media. That followed a similar editorial in the Nikkei business daily the day before. What action authorities take will be key to whether investors' broader concerns are soothed. “Companies make mistakes and corruption occurs. It's the response that matters,” said Pelham Smithers, managing director of Pelham Smithers Associates in London. “So far the response has been measured ... there is nothing wrong with taking time for a conclusion to be reached,” Smithers said. But he added: “If the details of this continue to be covered up so that investors cannot make a rational decision about investing in Japanese companies, then we have a problem.” The Tokyo Stock Exchange (TSE) said on Monday it was urging Olympus on a daily basis to disclose more information and Financial Services Minister Shozaburo Jimi has said the watchdog would do its duty. In a heads-up to investors, the TSE said on Wednesday it had begun publishing short
