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Olympus admits to covering up losses for years

News vindicates former British boss who was fired after raising governance concerns at Japanese camera maker

The sacked boss of Olympus, who has waged a campaign to expose the truth behind a multi-billion dollar scandal, was yesterday vindicated as the company admitted a corporate cover-up stretching back two decades.

Olympus revealed yesterday morning that it "had been engaging in deferring the posting of losses... since around the 1990s". The camera and endoscope maker admitted that the record fees of $687m paid to advisers during the $2bn takeover of Gyrus, as well as the inflated fees for three other companies, had been "used in part to resolve unrealised losses".

Michael Woodford, who was fired for raising serious governance concerns about four of the company's acquisitions, told The Independent: "It proves what I was saying is true. The weight of the evidence is overwhelming," but added the news still left "so many questions that need answering".

He said: "What were these losses and how much were they? There is no indication of the amounts involved. Who received these sums?" He added that the cover up had "gone through two company presidents. The dirty secrets were passed down."

The board also voted to fire executive vice president Hisashi Mori, who had been involved in the cover up. Corporate auditor Hideo Yamada has also offered his resignation.The shares, which have consistently fallen since Mr Woodford's dismissal, went into freefall yesterday, tumbling the maximum 30 per cent before hitting the market's stop level. Over 70 per cent of its value has been wiped off.

Olympus set up an independent committee to scrutinise Mr Woodford's accusations earlier this month. The group also requested the panel expand the scope of its investigation to include the losses cover up. The body is considering whether to seek criminal charges.

Mr Woodford reiterated he would return to the helm, adding it was "up to the shareholders" as well as assurances for his safety from the Japanese authorities. "The company is in a perilous state. There is still enormous uncertainty," he said, adding there had to be an overhaul of the board. "These people need to leave and start appointing new managers. They have destroyed massive amounts of corporate value."

He continued: "The company deserves so much better. There is a huge pressure to move on."

The precision equipment company, known in the UK for its cameras, apologised to shareholders, investors and trading partners "for all inconvenience caused". The statement said it would "continue its utmost effort to establish the truth of the case by the thorough provision of all information to the third party committee".

Southeastern Asset Management, which holds about 5 per cent of Olympus stock, "strongly urge that a full explanation of all allegations must be obtained as soon as possible".

It called for Mr Mori to, as well as former chairman Tsuyoshi Kikukawa to resign as directors as well as the departure of Mr Yamada and PR manager Akhiro Nambu.

The company also requested an extraordinary general meeting be called "to allow the remaining members of the board of directors and the board of corporate auditors to be replaced as soon as practical", adding a new and trusted management team was "vital".