An investigative panel has found Japan's disgraced Olympus Corp hid up to $1.67 billion in losses from its investors, but is likely to say there is no evidence of involvement by organized crime in the cover-up, a source said Monday.

The panel will also stop short of recommending criminal charges against executives involved in the accounting scandal, presenting only the facts and leaving Olympus to pursue this aspect, said the source familiar with the panel investigation.

That is up to the company, he said.

The panel's report is due to be released as soon as Tuesday, almost two months after Olympus's sacked chief executive, Englishman Michael Woodford, went public with his concerns over its dubious accounting for a series of murky acquisitions.

The maker of cameras and medical equipment has since lost more than half its market value and risks being delisted from the Tokyo stock exchange, a sanction that would cut it off from equity markets and put it under pressure to sell core assets.

But it may be able to avoid that humiliation if there is no proof of the much-rumored link between the cover-up and Japan's yakuza gangsters -- and if Olympus can meet a December 14 deadline to iron out its books and report its second-quarter results.

Olympus shares firmed 3 percent on the news, though investors remain on tenterhooks for not only the panel's official findings but also the outcome of a separate, joint investigation by police, prosecutors and the market regulator.

The source said the panel found that former executive vice president Hisashi Mori and ex-internal auditor Hideo Yamada had led the cover-up of losses, which amounted to 130 billion yen ($1.67 billion) at its peak.

The panel has found Mori and Yamada then informed former president Tsuyoshi Kikukawa, the source added. Kikukawa at first publicly rejected the accusations of a cover-up when the scandal broke in October, but he later quit and the company conceded it had hid investment losses stretching back as far as two decades.

CRIMINAL COMPLAINTS

Current President Shuichi Takayama has said the firm is prepared to take legal steps, including filing criminal complaints, against those responsible for the cover-up.

Olympus has so far said that it used some of $1.3 billion in acquisition payments and advisory fees to aid in the cover-up of the losses on its securities investments. It has declined to give details until the panel hands down its report.

The panel was appointed by Olympus and includes a former supreme court judge.

Olympus remains under joint investigation by Tokyo police, prosecutors and the Securities and Exchange Surveillance Commission. The official investigations include a police unit dedicated to fighting organized crime.

The Tokyo Stock Exchange has placed Olympus on a watch-list as a possible prelude to delisting. Even if the firm meets the December 14 reporting deadline, the exchange can still delist the stock depending on the scale of its past misreporting or if it is found to have knowingly done business with organized crime.

Woodford, who blew the whistle on accounting tricks at the company after his sacking from the top job in October, has launched a campaign to oust the current board and replace it with his own team of candidates led by him as nominated CEO.

That has set up a battle between Woodford, who was a rare foreign CEO in Japan, and Takayama, who plans to stay on, at least in the short term, to try to get the firm back on track.

The Olympus affair has fanned doubts about corporate governance generally in Japan as well as revived concerns about ties between yakuza and companies. Yakuza have a long history of trying to extort money from companies, sometimes threatening to release information that firms would like to keep secret.

Attention will also focus on the panel's findings over the role of auditors who signed off on Olympus' books, as well as outsiders such as Akio Nakagawa, a banker with lengthy ties to Olympus and whose firm Axes received a huge advisory fee related to the 2008 takeover of UK medical equipment maker Gyrus.

(Writing by Linda Sieg; Editing by Mark Bendeich)

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