Japanese camera maker Olympus acknowledged wrongdoing for the first time Tuesday in a scandal over fees paid in a series of deals.
The company said that the funds had been used to cover losses on investments dating back to the 1990s.
A third-party panel was set up to probe claims of overpayments in four deals after the ousting of its British chief executive and president Michael Woodford on October 14 brought the payments into the spotlight.
After having previously defended the payments, Olympus said Tuesday that the panel found it had used inflated fees to advisers to cover its losses on securities investments.
The company said executive vice president Hisashi Mori had been dismissed over his role in the cover up, while the company's auditor Hideo Yamada intended to resign.
Former Chairman and President Tsuyoshi Kikukawa, who removed Woodford, resigned on October 26 amid investor and media scrutiny.
Olympus shares on Tuesday plunged 29 percent by their daily limit to their lowest level since 1995, with around 70 percent now wiped from the company's share value since October 13, the day before Woodford's ouster.
At a press conference, Olympus President Shuichi Takayama bowed in apology in front of TV cameras and journalists for the company's failure to book past losses.
"Vice president Mori reported to me yesterday evening that losses on securities investments have been deferred since around the 1990s," he said.
Olympus shares dived 29 percent on Tuesday after a panel probing past deals said funds had been used to cover losses on investments dating back to the 1990s
"Inappropriate accounting practices occurred, but we will wait for the finding of the committee," he said, adding that the size of the deferred losses could not be disclosed until the panel had completed its investigation.
Olympus said the committee discovered that investment losses made in the 1990s -- which had been kept off the books -- were then cancelled out through controversial advisory fees paid in the acquisition of Gyrus Group PLC and expensive purchases of three small Japanese firms.
The four deals include a $2 billion deal for British medical-instruments company Gyrus Group, in which Olympus has admitted paying $687 million to a little-known financial adviser based in the Cayman Islands.
The fee totalled more than a third of the company's purchase price, much larger than the one or two percent normally charged in acquisition deals.
Also under scrutiny are the purchases of three small Japanese companies unrelated to its core precision instruments business for a total of 73.49 billion yen ($941 million at current rates).
The company heavily wrote down their value a year later.
"The issue with Olympus is seen negatively," Hideyuki Ishiguro, supervisor at investment strategy at Okasan Securities, told Dow Jones Newswires. "This is denting Japan's reputation among overseas investors."
Woodford was dismissed only six months after being appointed president and two weeks after he was also named chief executive.
The 30-year company veteran, Olympus' first non-Japanese president and chief executive, said he was removed after he wrote to then-chairman Tsuyoshi Kikukawa and urged him to resign over the payments, citing major governance concerns.
Kikukawa assumed Woodford's roles but, under increasing pressure as media scrutiny and shareholder anxiety intensified, resigned in late October.