After British whistleblower Michael Woodford was sacked as CEO of Olympus and revealed the Japanese firm had covered up losses of $US1.7 billion, he mounted a campaign to get his job back.

His effort though went nowhere, with Japanese financial institutions preferring to stick with the remaining board and several disgraced directors, some of them being sued by Olympus itself.

Now a group of 26 activist lawyers is looking to change Japan's closed corporate society as the scandal rocks global confidence in the business governance standards of the world's third-largest economy.

Woodford, the first non-Japanese to lead the camera and medical equipment maker, was disgusted at the lack of response to his campaign for re-instatement.

Institutional shareholders "are the reason why these directors are still there, without their support they shouldn't be," he said. "Despite one of the biggest scandals in history (they) have not spoken one single word of criticism."

But shareholder activism is rare in Japan. Instead institutions tend to have cosy ties with board members and cross-shareholdings are commonplace, creating a network of interests that militates against rocking the boat - on Friday the Tokyo Stock Exchange said it would let the firm stay listed.

Lawyers for Shareholders' Rights (LSR) is backing an individual Olympus shareholder whose stake is worth only around 2.8 million yen ($US36,000) but who - unlike the institutions - has stood up against the board. The anonymous man from western Japan is suing the directors who sacked Woodford, demanding they pay Olympus 1.34 billion yen in compensation for the firm's costs.

Takuro Maekawa, one of LSR's leading members, said his team - who do not charge for such cases - want to change a culture which "has compromised corporate responsibility and compliance".

Olympus has admitted that it used over-priced acquisitions and consultancy fees to hide losses it had made on earlier investments dating back to the 1990s.

In one element of the scheme it paid a Cayman Islands financial adviser $US687 million when it bought British medical instruments company Gyrus for $US2 billion in 2008.

Legal action

Olympus itself has launched legal action against 19 top current and former executives, including six present board members, among them president Shuichi Takayama, after an independent panel found them responsible for the cover-up.

But Takayama has not been sacked in disgrace or resigned, instead saying in the past week he would step down only after an extraordinary general meeting in April.

"I want to fulfil my responsibility for the benefit of stakeholders until handing the company over to new directors," he said.

None of Olympus' major Japanese shareholders have publicly called for him to go.

Instead they have quietly reduced their stakes as the share price plunged, with the biggest shareholder Nippon Life Insurance only citing unspecified "risks" and "economic rationality" when it said in November it had sold almost two-fifths of its holding.

Maekawa condemned the institutions' silence as "extremely abnormal".

LSR is looking at joining Olympus' own case, he said, to ensure it is properly pursued and "to bring all of the scandal into the light of day".

The LSR lawyers first started mounting actions on such issues in the early 2000s.

They sued four executive directors of Hitachi Zosen, a leading machinery and infrastructure firm, demanding they reimburse the fines the company had been ordered to pay for bid-rigging, eventually settling for 205 million yen.

They have also taken action against the president of Daiichi Life Insurance, demanding he pay back the expenses he claimed for wining and dining a number of politicians.

But the Olympus case is by far their most internationally high-profile so far.

"Our objective is not necessarily to help short-term investors make money by demanding a company make profit in every quarter," Maekawa said. "Individual investors have long been left at a great disadvantage to institutional holders."

Michikazu Aoi, professor of global management at Meiji University, said the Olympus scandal could have long-term consequences for both the company and the country.

"The Olympus board may be thinking, since the company has the world's top-notch endoscope technology, that they can withstand the scandal, smoothly handing over the company to the next board, and that the share price will eventually recover," he said.

"But I don't think things will be so easy."

The spectacle would appear "bizarre" to foreign investors, but Japanese financiers had different priorities and standards, he said.

"Japanese businessmen try to smooth over issues slowly. They seem to believe it is the way not to hurt anyone's interests. But they don't necessarily think about the interests of shareholders."

AFP