Olympus pledges boardroom clearout over ¥132bn scandal

Hi-tech giant may also take legal action against executives in aftermath of damning inquiry

The precision equipment maker Olympus has pledged to overhaul its entire board after an independent report criticised the management "cancer" at the heart of the company.

It is also considering moves to bring legal action against those responsible for covering up ¥132.2bn (£1.09bn) losses over a 20-year period.

Shuichi Takayama, its president, faced the press a day after publication of a damning report from a panel set up to probe four controversial takeovers by the company. He said: "Our corporate governance was severely criticised. As the representative of the company, I apologise sincerely.

"We deeply regret that we have given a very negative impression to Japan and possibly the world."

One director, Makoto Nakatsuka, resigned yesterday and the company signalled others were likely to follow.

It follows the resignation of former president Tsuyoshi Kikukawa, the vice- president Hisashi Mori and auditor Hideo Yamada.

On Tuesday, the independent committee, led by a former supreme court judge, Tatsuo Kainaka, called for legal action. It said the core part of the company's management was "rotten and the parts around it were also contaminated by the rot".

It also called for an overhaul of the board and said: "Olympus should remove its malignant tumour and literally renew itself."

The company said yesterday that the whole board could go after it had filed its second-quarter earnings. The company is in a race against time to file its numbers before 14 December, otherwise it will be delisted from the Tokyo Stock Exchange after 62 years.

Michael Woodford, who was ousted as chief executive after two weeks for raising "serious governance concerns" has been campaigning to uncover the wrongdoing at the company.

Mr Takayama yesterday admitted: "With his disclosures, he did something that we could not do ourselves, and I recognise that." Mr Woodford is keen to return to the helm of the company to oversee its restructuring and has lobbied the board to call an extraordinary general meeting to appoint a new management team.

Such a meeting would not take place before the end of February, Mr Takayama said. On the plans for a new president he added: "We are still considering the plan that we will submit.

"We don't know what Mr Woodford is thinking but he has said he will pursue a proxy fight, so we think there will certainly be a proposal."

The company has bowed to other recommendations in the report and will establish independent panels to oversee its management and auditing.

Another panel will scrutinise 70 past and current executives and senior figures at the company.