TOKYO (AP) — Olympus Corp. admitted Tuesday that it used a series of acquisitions to hide massive losses, reversing earlier denials of any wrongdoing as one of the largest accounting frauds in Japanese history rocks 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 with little or no relevance to its mainstay businesses.
Its chairman Tsuyoshi Kikukawa abruptly resigned last month in an effort to placate angry shareholders.
The company did an about-face on Tuesday, issuing a statement saying that after appointing an independent panel it had found that the payment and acquisitions were used to cover up losses on investments dating to the 1990s. Olympus shares plunged 29 percent in Tokyo.
The company also dismissed Executive Vice President Hisashi Mori, saying he had been involved in the cover-up. An auditor also tendered his resignation, it said.
"We will continue to cooperate fully with the panel and do our best to get to the bottom of this," the statement said.
Business groups and analysts have said the scandal reflects weaknesses in Japan's corporate governance including too few independent directors on company boards.
Shuichi Takayama, who took over as president late last month, blamed the company's previous leadership for the failure to ever book the losses. The company is considering legal action against them.
"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 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 a Wall Street financial adviser as part of a $2 billion purchase of U.K.-based Gyrus Group Plc. The payment represented more than a third of the acquisition price. Fees for advisers are normally 1 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.
Former Olympus CEO Michael Woodford, whose revelations triggered the scandal, turned over documents to the U.K. Serious Fraud Office. The FBI is also reportedly investigating.
Woodford, a British national, has said he was dismissed because he questioned the $687 million fee as well as the prices Olympus paid for three small money-losing Japanese companies between 2006 and 2008.
Olympus wrote down more than three quarters of their value in fiscal year ended March 2009.
Associated Press writer Mari Yamaguchi contributed to this report.
Copyright 2011 The Associated Press.