Olympus shares dive 29% as firm admits wrongdoing

8th November 2011, Comments 0 comments

Shares in scandal-hit Japanese camera maker Olympus dived 29 percent Tuesday after a panel probing past deals said 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.

Olympus said Tuesday that the panel found it had used inflated fees to advisers to cover its losses on securities investments, its first admission of wrongdoing since questions were raised about the size of the fees.

The stock plunged by its daily limit to its lowest level since 1995, and is now down 70 percent from its closing price on October 13, the day before Woodford's ouster.

Olympus will give a press conference at 0330 GMT.

It 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.

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 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.

© 2011 AFP

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