Japan's disgraced Olympus Corp is preparing to take legal action, including possible criminal complaints, against any executives found responsible for the accounting scandal engulfing the firm, according to an internal staff email.

The memo, obtained by Reuters on Wednesday, was sent to Olympus employees the previous day by the firm's new president, Shuichi Takayama, who also vowed in the message to restore public trust in the once-proud maker of cameras and endoscopes.

Japan's securities watchdog, police and prosecutors are probing the 92-year-old company after Olympus admitted last week that it had hid investment losses for decades using funds from M&A deals. The U.S. Federal Bureau of Investigation and the U.K. Serious Fraud Office are also looking into the case.

A third-party panel appointed by Olympus to investigate the scandal is expected to report its findings in early December.

We will wait for the third party panel to report, and we are preparing to take firm legal action, including criminal complaints, against any manager it finds responsible, Olympus President Takayama told its employees on November 15 in an internal e-mail, which was obtained by Reuters on Wednesday.

The email did not name specific executives.

Investors are speculating that several Olympus officials will bear the brunt of any punishment for the scandal, hoping that the company itself will avoid the ultimate market sanction, a delisting from the Tokyo stock exchange.

As long as market participants think that Olympus will not be delisted, the stock will continue to rise. The market is buying back what they sold last week, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Olympus' share price, which had lost as much as 80 percent of its value after the scandal broke last month, closed up more than 15 percent on Wednesday at 740 yen in heavy turnover. It was untraded with a glut of buy orders on Tuesday after rising its daily limit the day before.

In a sign regulators are getting serious after a slow start, Japan's Securities Exchange and Surveillance Commission (SESC) is considering recommending criminal charges against those involved in wrongdoing at Olympus, a source familiar with the matter has told Reuters.

The source said the SESC might also urge that Olympus be fined for false financial reports, a move that could allow the company to stay listed although that outcome is not assured.

The Bank of Japan also is trying to gather information from related financial firms about Olympus' past transactions, the central bank Governor Masaaki Shirakawa said.

It is regrettable that doubts have arisen about the transparency and fairness of corporate management. It is vital that accurate information be disclosed promptly, Shirakawa said.


Olympus executives are likely to face questioning on a voluntary basis by Tokyo prosecutors as early as this week, the Nikkei business daily reported on Wednesday.

Olympus President Takayama has blamed his predecessor, Tsuyoshi Kikukawa, who quit on October 26, along with former vice-president Hisashi Mori and internal auditor Hideo Yamada for the cover-up, and has said he would consider criminal complaints against them. Mori had been fired and Yamada has offered to resign.

The Nikkei said Kikukawa, Mori and Yamada had chosen the financial advisory firm for its controversial 2008 acquisition of U.K. medical devices maker Gyrus, a decision normally taken by the entire board of directors.

The trio also made the decision to increase payments to the advisory firm -- payments that were used to conceal huge losses on securities investments by Olympus, the daily said, citing persons familiar with the company.

Takayama, who took over last month, called on employees in the internal email to unite to overcome the corporate crisis and not be deluded by an online petition led by an ex-Olympus director to reinstate ousted CEO Michael Woodford.

The Briton was fired on October 14 and then publicly pressed the firm to come clean on mysterious M&A deals which include record acquisition advisory fees in history.

I am confident that the actions of all of you, who are working for the sake of Olympus with a sense of mission, will revive trust in Olympus so that the brand will shine, the email said. Now is not the time to be wracked with fear and doubt.

After weeks of denial, Olympus admitted last week it had found that funds related to its $2.2 billion (1.3 billion pounds) purchase of Gyrus, which involved a huge advisory fee of $687 million, as well as payments totalling $773 million for three tiny domestic firms, were used to hide losses on securities investments stretching back to 1990.

Analysts say the future of Olympus' big and profitable medical equipment business may rest in an eventual buyout by a rival or a private equity fund and Fujifilm and Hoya, the second- and third-largest players in the endoscope business, are obvious potential bidders.

But Fujifilm President Shigetaka Komori told a news conference on Wednesday it was premature to comment given that there were so many uncertainties surrounding the affair.

Olympus' lenders met company executives on Wednesday but were not likely to demand changes in loan terms or take any abrupt steps that could hurt their own interests, banking sources told Reuters before the closed-door meeting at a Tokyo hotel.

(Additional reporting by Ashutosh Pandey in Bangalore, Taiga Uranaka, Edmund Klamann, Ritsuko Shimizu and Tim Kelly in Tokyo; Writing by Linda Sieg; Editing by Mark Bendeich and Miyoung Kim)