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Former Olympus Chairman and President Tsuyoshi Kikukawa is one of seven men arrested on fraud charges today.

Also arrested were two other former Olympus executives – former Vice President Hisashi Mori and former Auditor Hideo Yamada. The three managers are suspected to have falsified Olympus Corp’s financial reports in a 110 billion yen ($1.7billion) investment loss cover-up.

Nobumasa Yokoo and three other employees of a major securities company have also been arrested on grounds that they advised Olympus with fault accounting schemes.

The maximum penalty for the charges the executives face is 10 years in prison or a 10 million yen ($128,000) fine.

Despite being directly involved in the cover-up when a third-party investigated the allegations last year, the three Olympus executives have voluntarily admitted to Tokyo Police to the charges.

But Nobumasa Yokoo insists that he knows nothing about the charges.

Olympus allegedly under reported its securities investment losses in the late 1990s.

The company has since been clearing the losses through purchases of three Japanese companies and a British medical equipment maker, between 2007 and 2008.

The camera and medical equipment maker is facing shareholder lawsuits and may be subject to further criminal investigation after admitting to the 13-year cover-up.

Interestingly, Michael Woodford, the whistle-blower behind the cover-up has just been named “business person of the year” by numerous publications and “whistle-blower of the year” by the Association of Certified Fraud Examiners.

Woodford, who was dismissed from his position as Olympus CEO soon after lifting the lid on the cover-up, had demanded for the resignation of the entire board when the scandal first broke.