The Corporation as Psychopath

In October 2011, Michael Woodford received what should have been the best news of his career. After thirty years working at Olympus, the Japanese optics and medical equipment company, he had been made chief executive: the first non-Japanese person to run the company in its history. Six months later, he was fired. Woodford had found something wrong with a series of acquisitions the company had made. The amounts paid were enormous, the assets were nearly worthless, and the accounting explanations made no sense. He hired KPMG to look into it and took the resulting report to the chairman, Tsuyoshi Kikukawa. Kikukawa’s response was to call an emergency board meeting and vote Woodford out. Woodford went public. The Olympus board denied everything for a few weeks, but then the numbers collapsed, Kikukawa resigned, and criminal charges followed. The fraud—a sustained effort to conceal $1.7 billion in losses—had been running for nearly twenty years, through the tenure of multiple CEOs. What is…