A big shareholder in Japan's scandal-hit Olympus Corp called for it to reinstate its sacked CEO to lead a clean up of the firm, piling more pressure on Olympus to put a broom through its current board and management.

UK fund manager Baillie Gifford & Co, which says it holds more than 4 percent of Olympus, said CEO-turned-whistleblower Michael Woodford should return to the helm of the company, which stunned investors this week by admitting to hiding substantial investment losses for decades.

What Olympus needs now is a thorough clean-up and we believe Michael Woodford is the best man for the job, Baillie Gifford partner and its head of developed Asia equities, Elaine Morrison, said in a statement.

The current management of Olympus has been discredited by its original response to Mr. Woodford's allegations and its poor communications with shareholders. We expect all directors or employees linked to this wrongdoing to be dismissed and have their ties to the company severed.

The Olympus scandal erupted last month when it sacked Woodford, who then went public saying he had been fired for internally questioning several M&A deals involving about $1.5 billion in funds that could not be properly accounted for.

After persistently denying any wrongdoing, the company reversed course on Tuesday, admitting to using the M&A deals to cover up losses on investments that had existed since the 1980s. It said the activities could have involved possible criminal action and fired a senior executive.

But Baillie Gifford and Olympus's biggest foreign shareholder, Southeastern Asset Management, have demanded a wholesale clean-out of the firm's board of directors.

Southeastern, which holds about 5 percent of Olympus, has called for an extraordinary meeting of shareholders to allow the remaining members of the board of directors and the board of corporate auditors to be replaced as soon as practical.

Olympus has lost three-quarters of its market value since the scandal broke, raising questions about its future.

(Reporting by Mark Bendeich; Editing by Richard Pullin)