Six months after the biggest scandal in corporate Japan for decades, shareholders of Olympus Corp were set on Friday to vote in a new board that will cement ties with its bankers but raise questions among foreign investors over whether any lessons have been learnt.

At an extraordinary meeting, which some hope will draw a line under the scandal, Japanese institutions and Olympus' lenders, suppliers and customers were expected to approve a raft of restated financial accounts and new management put forward by the current, discredited board, all 11 of whom are standing down.

The meeting follows six turbulent months after Michael Woodford, a Briton and then Olympus CEO, queried staggeringly high advisory fees paid in past acquisitions, triggering a probe that uncovered a $1.7 billion (1.0 billion pounds) accounting fraud stretching back over more than a decade.

Woodford, who has said he feared for his life during the early days of the scandal and has since rushed to print a book Terminated about the affair, arrived ahead of the meeting by taxi in a feisty mood.

Today is the day the new Olympus is supposed to start. It's a mockery. It's why the world looks on and continues to think this world works in a completely different way, it's Alice in Wonderland, he told reporters outside the hotel where Olympus hired a large function room.

Foreign investors, who own 25-30 percent of Olympus, a camera maker and the world's biggest manufacturer of endoscopes used for internal medical examinations, had hoped the scandal would shake up a deep-rooted culture of cosy ties between banks and boardrooms.

Big lenders such as Sumitomo Mitsui Financial Group (SMFG) and Mitsubishi UFJ Financial Group (MUFG) are often key investors in Japanese companies, with major stock and debt holdings - putting them in a powerful position to influence board decisions. SMFG holds a 3.4 percent stake in Olympus, as well as $2.8 billion in outstanding loans and bonds.

Olympus may not care, institutional investors led by SMBC (a unit of SMFG), the puppet master of this situation, they may not care, but it damages Japan, Woodford said.

Over the months, seven people have been arrested, including former Olympus chairman Tsuyoshi Kikukawa, former executive vice president Hisashi Mori and former auditor Hideo Yamada. Under criminal charges, the executives could face up to 10 years in jail, or a fine of up to 10 million yen, lawyers have said. Olympus itself is suing for mismanagement five of its eight directors, including current president Shuichi Takayama.

The meeting began promptly at 10 a.m. (0100 GMT) with Takayama and the entire board standing before shareholders and bowing deeply in a traditional gesture of public apology.

Since Woodford was fired on October 14, Olympus has admitted it used improper accounting to conceal massive investment losses under a scheme that began in the 1990s. It is under investigation by law enforcement agencies in Japan, Britain and the United States.

Local shareholders pledged to stand by the company and welcomed closer ties with the banks that would provide financial comfort.

The banks are there ... they will help in terms of capital, Eiichi Suzuki, 60, told Reuters. The company already has first-class technology, so now it's a matter of management. I understand what Woodford wants to say, but he disclosed internal information. You need to be united under the president and I think he needs more experience.

Hiroshi Takahashi, 38, said he would vote for the nominated board members. There are no reasons to oppose them. I think the company should stay as it is.

It's preferable to have the banks there for the support, said Akinori Kusaba, 32, who owns 800 Olympus shares. There are some points that are difficult to change unless you're from inside the firm, so there should be a mix of external and internal people.

NEED FOR CASH

High on the new board's to-do list will be whether to seek a cash injection, possibly through a capital tie-up in the company's medical business. Sony Corp, Panasonic Corp and Fujifilm are among potential partners cited in media reports.

In December, Olympus filed five years' worth of corrected earnings statements to iron out its accounts, showing its net assets had dwindled to 46 billion yen as of end-September. By the year-end, Olympus had an equity ratio of just 4.4 percent, compared with about 30 percent for its rivals and less than a quarter of what is seen as a healthy cut-off, implying it needs to raise about 150 billion yen in fresh equity.

Olympus shares, which were up 1.7 percent on Friday, slumped around 80 percent as the fraud unfolded in October, but have since rallied and are now around half the pre-scandal level, valuing the company at $4.1 billion.

Shareholders are likely to approve Hiroyuki Sasa, 56, as the company's new president. Sasa joined Olympus in 1982 and has been head of both development and marketing at the group's medical equipment business. Olympus has around a 70 percent share of the global market for diagnostic endoscopes.

Nominated as chairman is 63-year-old Yasuyuki Kimoto, a former executive at Sumitomo Mitsui Banking Corp, Olympus's main lender and part of SMFG. For the past 6 years he has been president of Japan Research Institute, an SMFG think-tank.

Leading foreign shareholders have opposed both men, calling instead for fresh, outside talent amid concerns that Olympus' creditors will call the shots in the boardroom.

If Mr. Kimoto, coming from his background, becomes chairman, I think there'll be some strengthening of capital, said Nanako Imazu, an analyst at CLSA Asia Pacific Markets in Tokyo, adding, though, that the big decisions are likely to be held over while criminal and regulatory investigations are ongoing.

Olympus has estimated a 32 billion yen ($410 million) loss for the year just ended, blamed mainly on its camera business and tax asset writedowns - and well below its pre-scandal forecast for an 18 billion yen profit. In the previous year, it posted a 3.9 billion yen net profit.

(Reporting by Edwina Gibbs)