Japan's Olympus admitted on Tuesday it hid losses on securities investments dating back two decades, bowing to weeks of pressure to explain a series of baffling transactions that have put the future of the firm in doubt.

The revelations by the 92-year-old company appear to vindicate ex-CEO Michael Woodford, who has staged a campaign since being sacked on October 14 to force the firm to come clean on nearly $1.5 billion in questionable payments.

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.

The admission after weeks of denials shocked investors, sending shares in the endoscope and camera maker skidding almost 30 percent and prompting the biggest non-Japanese shareholder to demand the replacement of the entire board.

'Ignorance is no defence,' said Josh Shores, a principal at Southeastern Asset Management, which holds 5 percent of Olympus.

'If you were there and not aware of it, then you were incompetent. If you were there, and aware of it without asking tough questions, then you were negligent. Either way, you need to leave,' Shores told Reuters in London.

Olympus said it had found that funds related to its $2.2 billion purchase of British medical equipment maker Gyrus in 2008, which involved a huge advisory fee of $687 million, as well as payment of $773 million for three tiny domestic firms, were used to hide losses on the securities investments.

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

'I was absolutely unaware of the facts I am now explaining to you,' a subdued Takayama, who had staunchly defended the deals when he took over from Kikukawa last month, told a news conference packed with some 200 journalists.

'The previous presentations were mistaken.'

The disclosure 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, founded in 1919 as a microscope maker.

'This is very serious. Olympus admitted it has made false entries to cover its losses for 20 years. All people involved in this over 20 years would be responsible,' said Ryosuke Okazaki, chief investment officer at ITC Investment Partners.

'There is a serious danger that Olympus shares will be delisted. The future of the company is extremely dark,' he added.

Olympus's shares are now at their lowest level in 16 years and the company has lost 70 percent of its value, or $6 billion, since it fired Woodford, who had questioned the deals. The Briton had been one of the few foreign CEOs of a Japanese blue chip.

Shares in Nomura Holdings tumbled more than 14 percent on market speculation it was involved in past actions by Olympus. Japan's largest investment bank said Olympus was a client but the speculation was not based on fact and it wasn't involved in any of the deals at the centre of the scandal.

Olympus said it discovered the cover-up while working with an independent panel set up last week to investigate the deals. Kikukawa and Mori confessed to their roles on Monday night, Takayama said.

Mori was sacked earlier in the day while the internal auditor offered to resign. Olympus said it would decide whether others were responsible after further investigation.-Reuters