Japanese police and prosecutors arrested 7 men in connection one of Japan's biggest corporate scandals.  The Olympus Corporate scandal, which began in the 1980s, continued until it was exposed in October 2011 by then-CEO Michael Woodford.  For decades, the perpetrators hid from the public's view an accounting fraud that eventually grew to $1.7 billion when it was detected in October. Mr. Woodford uncovered the scandal when he began querying about dubious merger and acquisition deals, that later were found to have been used for concealing the losses.  For his efforts to raise the curtain on these internal frauds, Mr. Woodford was 'respectfully' sacked by the Olympus board.  He since has campaigned to win back his job, but gave up on that bid last month, blaming cozy ties between management and big Japanese shareholders and citing the strain on his family. "After going to hell and back, this is a day to remember," Woodford said in an email on Thursday.  The Briton, who was a rare foreign CEO in Japan, plans to write a book about his experiences uncovering the scandal. The 4-month investigation by government prosecutors and regulators resulted in the arrests of the following individuals:

• Former Olympus Corp. President Tsuyoshi Kikukawa;
• Former EVP Hisashi Mori;
• Former Auditor Hideo Yamada;
• Four Former bankers, including Akio Nakagawa and Nobumasa Yokoo.

Last year, the investigative panel found Kikukawa, Mori and Yamada had played leading roles in a 13-year scheme to hide the losses, and they are among 19 executives Olympus is suing over the scandal.  The panel said it found no evidence of involvement by organized crime, despite speculation that "yakuza" gangsters were somehow involved in the cover-up scheme. Roles of the 7 Participants. The 3 former executives were identified by an investigative panel, commissioned by Olympus, as the main culprits in the fraud, seeking to delay the reckoning from risky investments made in the late-1980's bubble economy. Auditor Hideo Yamada is suspected of violating the Financial Instruments and Exchange Law, prosecutors said. The former bankers are suspected of helping hide huge investment losses through complex M&A deals. Olympus is banking on that April meeting marking a turning point in the scandal, with at least 6 of its 11-member board, including current President Shuichi Takayama, set to resign. His successor is likely to be 1 of 3 board members the panel said were not responsible for the cover-up -- Masataka Suzuki, Kazuhiro Watanabe and Shinichi Nishigaki -- said a source familiar with the matter, who did not want to be identified due to the sensitivity of the issue. Olympus' Future. The company is set to have a shareholder meeting in April, at which time changes will be made at the Board and Executive levels.  Olympus, the maker of medical devices and cameras, "continues to be very attractive to other companies because of its endoscope business." 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. In December, the company filed 5 years' worth of corrected financial statements plus overdue first-half results, revealing a $1.1 billion dent in its balance sheet.  That triggered talk the company would need to merge or forge a business tie-up to raise capital. 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 Since the scandal broke, shares in Olympus have lost half their value. For further details, go to:   [Reuters, 1/16/12].