Japanese camera maker Olympus has admitted to hiding losses on securities investments dating back to the 1990s, after succumbing to weeks of pressure to explain a series of baffling transactions at the firm.

The revelations appear to vindicate ex-chief executive Michael Woodford, who after being fired last month alleged the company was inflating fees to advisers to cover up its investment losses.

One adviser was a little-known firm in the Cayman Islands which was paid nearly $700 million for helping with a single acquisition.

Having previously defended the payments made in four deals between 2006 and 2008, Olympus has backtracked to say fees to advisers were used to help hide losses on investments that dated back to the 1990s.

Olympus president Shuichi Takayama blamed Tsuyoshi Kikukawa, who quit as president and chairman on October 26, vice-president Hisashi Mori and internal auditor Hideo Yamada for the cover-up, saying he would consider criminal complaints against them.

"I was absolutely unaware of the facts I am now explaining to you," said Mr Takayama, who had staunchly defended the deals when he took over from Mr Kikukawa last month.

"The previous presentations were mistaken."

Olympus said it found that funds related to its $2.1 billion purchase of British medical equipment maker Gyrus in 2008, which involved a huge advisory fee of $663 million as well as a payment of $748 million for three domestic firms, were used to hide losses on securities investments.

The investment in the three domestic firms was largely written off a few months after the deals closed.

The revelation has sent Olympus shares tumbling 29 per cent to a 16-year low. The company has lost 70 per cent of its value or $6 billion since it fired Mr Woodford, who had questioned the deals.

The disclosure also leaves Olympus, its directors and its accountants open to possible criminal charges for suspected accounting fraud and shareholder suits, lawyers and analysts said, raising questions about the future of the firm, which was founded in 1919 as a microscope maker.

Reuters/AFP