More Arrests in £1.1bn Olympus Fraud Probe

Seven more arrests have been made in the £1.1bn Olympus accounting fraud - one of Japan's biggest corporate scandals.

Tokyo prosecutors arrested former Olympus president Tsuyoshi Kikukawa, ex executive vice president Hisashi Mori and former auditor Hideo Yamada on February 16, on suspicion of violating the Financial Instruments and Exchange Law, officials said.

Former bankers Akio Nakagawa and Nobumasa Yokoo and two others suspected of helping hide massive investment losses through complex M&A deals, were also arrested, according to Reuters.

The trio of former executives - were identified by an investigative panel, commissioned by Olympus - as the main culprits in the fraud.

The arrests come as investors focus on who will run the company when at least six of its 11-member board - including current president Shuichi Takayama - steps down at an April 20 shareholder meeting.

Last year, the investigative panel found Kikukawa, Mori and Yamada had played leading roles in a 13-year scheme to hide the losses. They are among 19 executives Olympus is suing over the scandal.

An Olympus spokesman said the company would cooperate fully with the investigative authorities. It is also under investigation by law enforcement agencies in Japan, Britain and the United States.

On Monday, it forecast a $410 million full-year loss due largely to its ailing camera operations, but its core endoscope business appeared unscathed by the scandal, and its president said the firm might not need outside capital.

Shares in Olympus, currently worth around £2.9 billion, have halved in value since the scandal unfolded.

In January this year, auditors KPMG and Ernst & Young were both cleared of responsibility for the fraud by a panel of lawyers appointed by the company.