Losses on securities investments at the core of a scandal rocking Japan's Olympus Corp may have once exceeded $1 billion, the Nikkei newspaper said Wednesday, as the firm's share price plunged due to doubts about its future.

Olympus admitted on Tuesday it used M&A deals to hide losses dating back two decades, a revelation that appeared to vindicate ex-CEO Michael Woodford, who has publicly pressed the 92-year-old maker of endoscopes and cameras to come clean on a series of mysterious deals.

The scandal has raised questions about Japan's corporate governance and revived memories of the dark days after Japan's bubble of soaring share and land prices burst in 1990, leaving many top firms with losses on fancy financial deals and looking for ways to hide them.

If other Japanese companies are also viewed with suspicion due to the Olympus affair, they may have trouble raising funds, said a Nikkei editorial.

It said Japan's financial watchdogs and prosecutors should stay on top of the case and cooperate with overseas authorities who are also probing it.

Olympus declined to comment on the Nikkei report, which quoted sources close to the matter.

Company President Shuichi Takayama on Tuesday 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 that used funds related to M&A deals, saying he would consider criminal complaints against them.

But he declined to detail how the losses had occurred or the amounts involved before an external panel completes an investigation.

The Nikkei interviewed a former Olympus president who served from 1984 to 1993, who said he had no memory of any loss-hiding scheme and was not closely involved in finance at the time.

Olympus' share price plunged 20.4 percent to 584 yen on Wednesday, falling by its daily trading limit of 150 yen.

Meiji Yasuda Asset Management said it had sold all Olympus shares from its eight mutual funds the previous day because the outlook for the firm's profits was uncertain.

Olympus shares have lost more than three-fourths of their value, or $6 billion, since October 14, the day the company fired Woodford. Olympus said Woodford, a 30-year veteran at the firm, failed to understand its management style and Japanese culture.

Woodford says he was sacked for questioning the $687 million paid for advice on its $2.2 billion acquisition of British medical equipment maker Gyrus in 2008, the biggest fee in M&A history, as well as its buyout of three tiny domestic firms.

MEMORY LANE

The Olympus affair -- initially given little attention by most domestic media -- is the biggest corporate scandal in Japan since a series of scandals at brokerages in the 1990s including one that led to the demise in 1997 of Yamaichi Securities, then the country's fourth largest brokerage.

As a case of false financial reporting originating with deferring losses through 'tobashi', this resembles Yamaichi Securities, said lawyer Shin Ushijima, referring to an accounting shell game of moving around loss-making portfolios to hide them.

Yamaichi hid losses by shifting the unrealized securities losses to domestic and overseas paper companies and falsely reported its earnings.

Many Japanese firms, including top-name manufacturers, plunged into financial markets after 1985 when the yen soared, hitting exports and slicing profits in their core business.

When markets crashed in 1990, many turned to tobashi and other accounting tricks to avoid booking the losses. Such practices were largely stamped out in 2000, leaving many shocked to find Olympus had kept its secret so long.

I think Olympus is an outlier in terms of the extent and degree of what they did, said Darrel Whitten, managing director at Investor Networks Inc, an investor relations consultancy.

Lawyers said if Olympus had knowingly falsified its consolidated financial statements that were deemed material in nature, its representatives could face up to 10 years in prison or a fine of up to 10 million yen. Legal experts also said outside auditors might be criminally liable, while the company could face shareholder suits.

The Tokyo Stock Exchange on Tuesday said it needed more information before deciding whether to put Olympus shares under supervision -- a step toward possible delisting -- and on Wednesday said nothing had changed.

(Reporting by Isabel Reynolds, Nathan Layne, Emi Emoto and Chikafumi Hodo; Editing by Dean Yates)