Prosecutors raid the HQ of Olympus in earnings probe

media captionRoland Buerk says investigators are seeking evidence in what seems to be a massive scandal

Japanese prosecutors have raided the headquarters of camera and medical equipment maker Olympus as part of an ongoing investigation.

Olympus is being probed over its accounting practices and the admission that it hid losses.

The issue came to light after former chief executive Michael Woodford claimed he was fired for questioning payments relating to mergers.

Olympus admitted it hid $1.5bn (£968m) of losses over the past two decades.

'New twist'

Last week Olympus filed its revised earning reports with the Tokyo Stock Exchange.

In its latest accounts for the six months to the end of September the company declared a loss of 32.3bn yen ($414m; £267m).

It also revised down the value of its net assets to just 46bn yen, down from the 225bn yen it stated in March 2007.

Analysts said the raid on its headquarters just days after the filing of the report was a significant development.

"I would suspect that any documents needed by the prosecutors could have been just requested for and delivered by Olympus," Martin Schulz of Fujitsu Research Institute told the BBC.

"But the fact their offices have been raided seems to indicate that there are new developments in the investigation that might add a new twist to the story," he added.

'A good thing'

The developments at Olympus had also raised concerns about corporate governance in Japan and how the affair will impact the country's image globally.

The fears were fanned further by contradictory statements by Olympus when the scandal broke out.

It first denied the allegations levelled by the Mr Woodford, but later admitted that it had been hiding losses for as long as two decades.

Analysts said the raid on Olympus was a signal by the authorities that they wanted to ensure that all corporations work within the given framework of rules and regulations.

"In a way it is a good thing that this has happened, as there were fears that this affair may be brushed under the carpet," said Gerhard Fasol of Eurotechnology Japan.

"This raid will ease any such concerns," he added.

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