|Japanese investigators have been exploring the extent of the accounting irregularities [Reuters]
Whistleblower Michael Woodford has said that he will sue Olympus over his sacking as its chief executive after a "depressing" lack of support from Japanese institutional shareholders scuppered a bid to get his old job back.
Woodford said on Friday that he was ditching his campaign to install a fresh slate of directors under his leadership and would be seeking compensation for his October firing that sparked one of Japan's biggest corporate dramas in decades.
The Briton - the first non-Japanese ever to hold the posts of president and chief executive at the 92-year-old camera maker - said his efforts to rally support for a fresh start for the company had proved fruitless.
"The major reason for the continuing uncertainty is that despite my having done the right thing, none of the major Japanese institutional shareholders have offered one word of support to me and conversely have in effect allowed the tainted and contaminated board to continue in office," he said.
Woodford, 51, said he planned to sue the company over his dismissal before the end of a four-year contract because it "had absolutely no legal basis", according to Dow Jones Newswires.
He said he has already filed a lawsuit against the company with a tribunal court in Britain and that another lawsuit in Japan may follow, adding that he would be looking for "substantial and significant" damages.
Woodford said the scandal that he had exposed, which involved the covering up of millions of dollars worth of dodgy investments, and the way it had been handled, had left a stain on corporate Japan.
"The fact that such a situation can exist despite the explicit findings of the third-party committee is depressing and totally disorientating to those looking in on Japan from the outside," he said.
Among major shareholders were Nippon Life Insurance Company and big banks such as Sumitomo Mitsui Banking Corporation, according to the latest available documents.
Neither Olympus nor its major shareholders had so far made any comments on Woodford's statement.
Shares in Olympus fell more than four per cent to $12.84 shortly after opening on Thursday but recovered later in the day to close 2.13 per cent higher at $13.72.
The figure is less than half what it was the day before Woodford was forced out in October.
The Briton has maintained he was sacked because he accused the company of overpaying in acquisition deals in recent years and raised doubts over the firm's corporate governance.
Olympus later admitted the deals had been used to cover up huge investment losses dating back to the 1990s and a report from a third-party investigation panel slammed its top management as "rotten".
In earlier visits to Japan, he had pledged a proxy battle at a general shareholders' meeting - in which like-minded shareholders join forces to remove the board.
But he faced resistance from Japan's cosy corporate culture, in which major shareholders are reluctant to go against boards and seen as unlikely to back an outsider.
Woodford said his fight also made his wife suffer.
"She finds the uncertainty and hostility of the public fight difficult to cope with and I have therefore decided for her emotional well-being that I cannot put her through any more anguish, and will today withdraw from any further action to form an alternative slate of directors," he said.
Japanese authorities have launched a criminal investigation into Olympus, raiding its headquarters in Tokyo last month and questioning its former executives in the alleged fraud.
The third-party panel of lawyers and accountants appointed by the firm said last month that former president Tsuyoshi Kikukawa and his predecessor Masatoshi Kishimoto were instrumental in the cover-up.
The panel said a small group of top executives hid at least $1.75bn in losses from bad investments in the 1990s.