Transcript of interview with Michael Woodford, former CEO of Olympus

  Michael Woodford, the former president and CEO of Olympus, was interviewed by Toshihiro Okuyama, a reporter from the Asahi Shimbun on July 26 and 27 through telephone and emails in regard to Nikkei’s acquisition of the Financial Times ("FT"). The following is an edited transcript of the interviews.

拡大マイケル・ウッドフォード元オリンパス社長。2012年4月19日、オリンパスの臨時株主総会を前に来日した際の写真(Mr. Woodford in Tokyo on April 19, 2012)
  REPORTER: What was your first reaction when you saw the news of the acquisition?

  WOODFORD: I find the news on the sale of the FT profoundly depressing as the Nikkei is known as the corporate voice piece of Japan and has a notorious reputation for apparently conveying leaked, price-sensitive company information.
  As you know, this development of the paper’s new owner is very personal to me, for in contrast to the FT, which broke the news of the Olympus scandal within a few hours of my meeting with the FT's journalist, Jonathan Soble, for many days following my dismissal, the Nikkei acted like the public relations office of Olympus! With a few notable exceptions, the media in Japan is self-serving and deferential to powerful forces, and the Nikkei is not regarded as being independent of corporate Japan. Because of this reality, if the FT had been owned by Nikkei at the time of the Olympus scandal, I would have unquestionably gone to the New York Times or the Wall Street Journal instead.

  REPORTER: I saw some articles which featured your comments, and I also saw a CNN interview with you.

  WOODFORD: Mmm. Yes.

  REPORTER: On October 14, 2011, just after you were fired as CEO of Olympus, you called a reporter, Jonathan Soble of the FT. You blew the whistle on massive accounting fraud of Olympus. That fraud had been first reported in July of that year by the small monthly magazine FACTA, run by Shigeo Abe, a former Nikkei reporter.
  On November 3, 2011, when you were interviewed by me in London, you were asked by me why you chose a reporter for the FT. You answered by saying, “I knew the Financial Times was independent. I knew it wouldn’t be deferential, it wouldn’t worry about advertising or anything else; it would look at the journalistic [aspects]. I trusted the Financial Times' journalistic integrity.”
  So, I understand why you did not choose the Nikkei to blow the whistle about Olympus.

  WOODFORD: (Laughs.)

  REPORTER: So, when you were the CEO of Olympus, you knew that the Nikkei had a “notorious reputation” at that time.


  REPORTER: What did you know?

  WOODFORD: What I knew was that the Nikkei was very, very friendly to business, was dependent on corporate Japan’s patronage, and was certainly not known to have a crusading, investigative journalistic, instinct. So, the Nikkei, along with NHK, were at the bottom of any list.

拡大オリンパスの臨時株主総会の後に日本記者クラブで記者会見するウッドフォード氏=2012年4月20日、東京・内幸町で(Mr. Woodford at a press conference in Tokyo on April 20, 2012)
  As you know, my strong view was that Western news organisations would be much more effective because of the way the Japanese mainline media had totally ignored the extraordinary claims by FACTA. So, I think it’s difficult——I believe there’s more pressure and restraints on Japanese media, per se. But, the Nikkei is the worst of the worst in this respect, in being prepared to take the active lead in criticizing a large Japanese corporation. They have no history of being prepared to do this.

  REPORTER: What do you think about the acquisition?

  WOODFORD: While I'm sure the FT will be committed to maintaining its editorial independence, I'm deeply troubled that the “subliminal effect” of being owned by Nikkei will make it less willing to publish articles critical of corporate Japan, which very much includes the Nikkei itself, as the organisation has long tentacles and powerful influence in the country.
  This is a sad moment for journalism. The FT is a unique institution, and its reporters have detailed technical knowledge. It is rightly considered to be a bastion of factual but also fearless reporting. Watching the press conference on Friday in Tokyo and listening to the English translation of the words spoken by Nikkei's chairman Tsuneo Kita and president Naotoshi Okada, brought home the disturbing reality that these individuals or their successors would be appointing the next FT editor.

拡大早稲田大学経済学研究科に経済ジャーナリズムコースが新設されるのを記念した講演会に招かれたウッドフォード氏=2012年10月29日、東京都新宿区で(Mr. Woodford at the Waseda University in Tokyo on October 29, 2012)
  Tsuneo Kita, who has led Nikkei since 2008, said the “philosophy and values of the FT are exactly the same as ours.” This statement I couldn't disagree with more. Investigative journalism seems an anathema to the Nikkei, evidenced by the fact that as the country's main business daily, its reporting of the Olympus scandal, one of the biggest frauds in the country's history, was belated and shamefully inadequate. The spirit of the FT is one of "turning the stones," questioning and probing the behavior of the powerful in the business and political worlds. In contrast, the Nikkei is seen to be very much part of the "cozy club" of corporate Japan. The test will come when there is a major controversial story about corporate Japan, and I just can't see how FT journalists, who are human, will not be affected in the way they report, knowing who their paper’s owner is. The Nikkei is immensely powerful and needs to be scrutinized itself, and in the past, the FT has published critical articles on the organisation which were informed and objective.
  In this respect, you’ve read the two articles I’ve shown you, which are both good examples of how the FT has been prepared to question the behavior of the Nikkei. The first was titled “Tokyo Stock Exchange acts on apparent media leaks,” detailing the concern of the phenomenon of “Nikkei previews,” where companies’ quarterly results are regularly trailed in advance, apparently via a combination of guesswork by reporters and guidance by company officials. The figures are normally accurate and often prompt a bigger reaction among investors than the official results.
  The second article, ironically headlined “Japan’s timid media in spotlight,” was about the weakness of the Japanese media and specifically highlighted that, at the time of the Olympus scandal, the Nikkei took nearly two weeks to publish my accusations on the front page.
  Such pointed public questioning of the Nikkei’s conduct is healthy and important. However, with the change in ownership, I believe it is an undeniable fact that in the future, a journalist in the FT bureau in Tokyo, which, according to the company's president, Mr Okada, could be housed in the same building as the Nikkei(!), will take the paper’s ownership into account and, as a result, we will see less challenging coverage by the FT in Japan.

  REPORTER: Many Japanese people do not know about the independence of the FT in the UK. So, many Japanese people cannot understand the difference between the Nikkei and the FT. Can you describe the difference?

  WOODFORD: Yes. The Financial Times has been owned for 58 years by Pearson, who have left the paper to be a wholly independent entity. IPearson has respected the FT's tradition, and made no input whatsoever in its editorial direction.

拡大講演するウッドフォード氏=2012年10月29日、東京都新宿区で(Mr. Woodford at the Waseda University in Tokyo on October 29, 2012)
  The Nikkei is known to be what it is. Aside from the tarnished reputation it has at least outside of Japan for the apparent leaking by companies of market sensitive data, in essence, the Nikkei’s journalistic instinct is, at best, benign. It does not aggressively question, probe, challenge, and provide readers with critical critiques, which was gloriously demonstrated at the time of the Olympus scandal. Frankly, it doesn’t seem to have any opinions of its own. It’s tepid. It’s cautious. It’s part of the establishment itself.
  So, having a newspaper with the Nikkei’s journalist values as the FT’s owner is very different from having Pearson as the owner. Pearson is an educational group——that’s its main business——with Penguin Books. Throughout its ownership Pearson has respected the FT’s editorial independence totally and not changed the "flavour and feel" of the institution. That the FT and Nikkei bureaus may, according to President Okada, be "brought under the same roof," makes me uncomfortable in that the DNAs will slowly mix together, and the dominant "partner" is always going to be the Nikkei. So that is a totally different type of ownership from what the FT has enjoyed for the last six decades.
  That’s why I find such pronouncements so concerning. We are already starting to see the potential consequences of so-called "synergies." Can you imagine the FT’s bureau moving into the Nikkei Building? (Laughs) In these new circumstances, how can a FT journalist write a critical article about the Nikkei, without recognizing the obvious new sensitivities and that this could easily alter the way a feature is written or for that matter, whether it is written at all?

  REPORTER: So, if you were the President of Olympus and you had just found the accounting fraud and you were fired, you would not go to the FT now?

  WOODFORD: No, I wouldn’t. And I think any individual now, in a similar position to that which I found myself, wanting to expose corruption in corporate Japan, would equally not now go to the FT; they would go to the New York Times, the Wall Street Journal, Thompson-Reuters or Bloomberg, all of whom have considerable journalistic resources in Japan, but without the complication of being owned by Nikkei. The aforementioned news organisation, all have large bureaus in Tokyo and a history of publishing criticisms of Japan’s economic policies and companies——very different way from the Nikkei.

  REPORTER: I see. Jonathan Soble has moved to the New York Times.


  REPORTER: So, that is lucky for him, maybe.

  WOODFORD: (Laughs.) Exactly. It is, yes.

  REPORTER: Will it be possible for the Nikkei to be affected positively by the newsroom of the FT, to be globalized under the FT's global standard?

  WOODFORD: I think [the merger] will allow the Nikkei to share some of the Financial Times’ stories from around the world, which would be a good thing. The main positive for the Financial Times, will be if the Nikkei is prepared to invest significant sums in promoting the FT, in particular, in the US and China.
  I don’t, however, believe it will make the Nikkei more willing to make strong criticisms of Japan’s political and business elite, and worse still, as previously mentioned, will make it less likely that the FT will be prepared to do so.
  So there may be some positive influences but not relating to stories reporting on Japan. It’s not going to change that.

  REPORTER: Do you have any comments as a business man about the acquisition? Many people say that the price is too high.

  WOODFORD: I think it’s an ill-judged investment by Nikkei as in offering £844 million, they are handsomely overpaying. On Thursday, Pearson commented that the FT Group contributed £334 million of sales and £24 million of adjusted operating income to Pearson last year. Paying these multiples commercially doesn’t make sense to me. They’ve also purchased at a time of an extremely weak yen, though as we all know, money is currently very cheap in Japan because of Abenomics.

拡大日本に住む友人、ミラー和空氏の新著『アメリカ人禅僧、日本社会の構造に分け入る 13人との対話』を手にするウッドフォード氏=7月30日、妻撮影、英国で(本人提供)(Mr. Woodford on July 30, 2015 in his home in London)
  I can understand why Pearson was very happy to take the money from the highest bidder. Axel Springer, the German company, simply wasn’t prepared to pay such eye-watering amounts.
  Furthermore, a fundamental problem for the Nikkei is that the Japanese are not good at managing Westerners, not least those working in a free spirited and in some ways, an almost anarchistic journalistic environment like the FT. You only have to watch the discomfort and ill-ease, of the chairman and the president at the press conference on Friday in Tokyo in answering some of the more pointed questions. So, just imagine, how these executives will be able to handle Lionel Barber, the FT’s editor. Are these men the right individuals to choose Mr Barber’s successor?
  So, in essence, a great deal for Pearson and a lousy one for Nikkei, who has overpaid by a considerable margin and won’t be able to effectively manage the business.

  REPORTER: Mmm, I see. So, do you think that it is not better than the acquisition of Gyrus Group, a UK medical equipment company, by Olympus?

  WOODFORD: Anything is better than that. (Laughs.)