Japan's Olympus said Tuesday top executives used acquisitions to hide massive losses, reversing denials of any wrongdoing as one of the largest accounting frauds in Japanese history tarnishes the nation's corporate image.
Tokyo-based Olympus , which makes cameras and medical equipment, has been battered by a scandal over a $687 million payment for financial advice and expensive acquisitions of companies unrelated to its mainstay businesses.
The company consistently denied any wrongdoing and sacked its chief executive last month after he raised concerns about the acquisitions and the payment to an obscure Wall Street firm.
Olympus did an about-face on Tuesday, issuing a statement saying an independent panel investigating the allegations had found the acquisitions were used to cover up losses on investments dating to the 1990s.
During that time in Japan known as the "Lost Decade," many Japanese companies took to making speculative investments in securities to offset sluggish sales following the bursting of Japan's economic bubble.
"We have conducted extremely improper accounting," said Shuichi Takayama, who took over as president in late October.
Olympus shares plunged 29 percent in Tokyo and have lost about two-thirds of their value since Michael Woodford was sacked as CEO on Oct. 14.
Nomura Holdings shares fell amid fears the scandal will engulf securities companies.
Business groups and analysts have said the scandal reflects weaknesses in Japan's corporate governance including too few independent directors on company boards.
Takayama blamed the company's previous leadership for the failure to ever account for the losses. The company is considering legal action against them.
Olympus dismissed Executive Vice President Hisashi Mori, saying he was involved in the cover-up along with Tsuyoshi Kikukawa, who abruptly resigned as chairman last month in an attempt to placate angry shareholders. A company auditor also tendered his resignation, it said.
"We needed a higher level of corporate governance. From now on we'll do our utmost not to make the same mistake again," Takayama said.
He said he could not disclose the size of the losses or any other detail because all data had been handed over to the independent panel.
"I have no intention to step down at this moment because my responsibility is to fix this company," Takayama said.
He acknowledged a possibility that Olympus may have to face delisting from the Tokyo Stock Exchange over the scandal.
The camera and medical equipment maker had denied wrongdoing over the $687 million payment to the Wall Street financial adviser as part of a $2 billion purchase of U.K.-based Gyrus Group.
The payment represented more than a third of the acquisition price. Fees for advisers are normally 1 percent to 2 percent of the deal value.
The company was to announce its latest earnings report Tuesday but has postponed it until later this month.
Woodford, the former Olympus CEO whose revelations triggered the scandal, has turned over documents to the U.K. Serious Fraud Office. The U.S. Federal Bureau of Investigation is also reportedly investigating.
Woodford, a British national, has said he was dismissed because he questioned the $687 million fee as well as the price Olympus paid for three small money-losing Japanese companies between 2006 and 2008.
Olympus wrote down more than three-quarters of their value in the fiscal year ended March 2009.