The ex-CEO of Japan's Olympus Corp signaled his willingness on Wednesday to meet investigators appointed to probe a scandal engulfing the firm, but he said he would not meet them in Japan due to safety concerns.

British-based Michael Woodford, whose sacking and revelations about irregular deals and payments triggered the scandal last month, said he would meet the company-appointed panel of investigators in London, New York or Singapore.

I think there are security issues in relation to Japan, Woodford told Reuters in a phone interview.

He did not explain his concerns but the scandal has raised fears -- denied by Olympus -- that the deals could be linked to anti-social forces, a euphemism in Japan for organised crime.

Olympus this week set up a panel of six men to probe M&A deals that have rattled confidence in the 92-year old company and wiped out half of its market value. The deals include the world's most generous advisory fee of $687 million, mostly paid to an obscure Cayman Islands firm.

The panel's chief said earlier on Wednesday that it would need at least a month to report its findings and focus on the advisory fee, which was paid as part of Olympus's $2 billion purchase of British medical equipment maker Gyrus in 2008.

It would also scrutinize the acquisition of three companies in Japan that Olympus, under chairman Tsuyoshi Kikukawa's decade-long reign at the company, later largely wrote off.

Tatsuo Kainaka, a former supreme court justice who earlier this year headed a probe of Japan's No.2 bank, Mizuho Financial Group, told Reuters in an interview the panel had a wealth of experience to help it conduct the investigation.

In a sign of growing alarm that the scandal may hurt investor confidence in Japan as a marketplace, the ruling Democrats plan to set up their own panel to debate improving corporate governance and disclosure, a senior party official said on Wednesday.

Woodford, who says he was sacked for asking too many questions about the deals, is wanted for questioning by the panel, Kainaka said.

We will seek the cooperation of Woodford, he said.

Olympus says it did nothing wrong and insists the Briton had to go because he was a poor manager.

A review in 2009 commissioned by Olympus' auditing board cleared management of misconduct in the now-controversial acquisition of the three Japanese firms.

POLITICAL HEAT

But since Woodford's ouster Olympus has been under growing pressure to reveal the details behind the acquisitions, even after Kikukawa resigned. The third-party panel aims to stem an exodus of irate investors.

While politicians and Japanese media were slow at first to react to the scandal, they later weighed in. A senior Democrat lawmaker called on financial watchdogs to investigate the matter and Prime Minister Yoshihiko Noda asked for clarification of the matter.

Seeking to assure skeptical investors, Olympus has said no one on the all-Japanese panel had any previous association with the company.

Still, the company will need to go further to provide reassurance about the integrity of the panel's role.

What exactly is the brief of the committee - this should be painted crystal clear on the website of Olympus. I don't see that here, said corporate governance expert Nicholas Benes, head of the Board Director Training Institute of Japan.

If the committee does what needs to be done it is not going to look good for half or more of the board - there is no way it can.

The group, besides Kainaka, includes lawyers and an accountant with experience investigating governance at a bank, power company and consumer electronics maker.

Among its members is Hideki Nakagome, a retired judge who served on a panel investigating Tokyo Electric Power's nuclear accident at its Fukushima plant.

Also named was ex-prosecutor Tomoyoshi Arita and two lawyers from private practice, Eiji Katayama and Osamu Sudo. The latter chaired a group investigating JVC Kenwood Corp, which last year was forced to issue a warning about its status as a going concern. Katsuaki Takiguchi, an accountant, rounds off the panel.

Katayama, Sudo, Kainaka and Nakagome have not handled cases involving mergers and acquisitions, legal filings from legal publisher Westlaw Japan's database show.

The head of the Tokyo Stock Exchange on Friday criticised Olympus management for its handling of the crisis and warned that it risked legal action from shareholders unless the probe was truly independent.

(Writing by Tim Kelly and Tomasz Janowski; Editing by Mathew Veedon)

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