Fuji Xerox canned from one government contract, suspended from another

Updated: MBIE takes action after delaying decision until after the election.

Fuji Xerox New Zealand (FXNZ) has been formally suspended from one all-of-government contract and terminated from another following an independent report into the accounting scandal at the office products company.

NZ Government Procurement general manager John Ivil says Fuji Xerox has been formally suspended from the print technology and associated services (PTAS) contract and terminated from the office supplies contract.

“Effective immediately, the suspension from PTAS prevents Fuji Xerox signing up new business with agencies (including state schools),” he said in a written statement.

Mr Ivil says Fuji Xerox is required to continue to meet its commitments to public sector agencies for existing agreements under the PTAS contract. The formal suspension will only be lifted once certain requirements are met but the details of those will not be made public, he says.

Some 93 agencies are customers of Fuji Xerox through the all-of-government contracts.

The Ministry of Business (MBIE) has refused further comment on the matter.

What is unclear is why the findings of the damning independent report on the company would be bad enough to warrant axing one contract but not another.

Other industry players, who didn't want to be named, are unhappy with what they call a discrepancy in MBIE's decision. The players, obviously contendors for the work if the suspended contract was also axed, say there should be more transparency over MBIE's decision and what requirements it is demanding from Fuji Xerox in order to retain the contract. The suspended contract is said to be worth many millions of dollars while the one terminated worth much less.

One player has suggested to NBR they may take legal action over the issue though they refused to go on the record.

The delay 

Three weeks ago the ministry said it would put off making a final decision on whether Fuji Xerox meets the suitable criteria for contracted services until after the election because it needed time to consider the full implications of the independent report on the accounting scandal that has cost its Japanese parent nearly $500 million.

The Auckland-based company had secured more than $55 million of government work between 2012 and 2016 despite an NBR investigation that revealed the accounting irregularities and Fuji’s questionable sales tactics in September last year.

Fuji Xerox appointed Peter Thomas as its new managing director last week. He has been chief operating officer at the company since 2015 and before that was deputy chief executive of corporate services to MBIE.

MBIE said Mr Thomas left the government department two months after Fuji Xerox’s appointment to the all-of-government office supplies panel and had no role in the process for decision-making of that.

The two former managing directors – Gavin Pollard and Neil Whittaker – have left the company.

The company has launched a civil law suit against three former New Zealand executives without naming them publicly.

Independent accountants and lawyers appointed by Fujifilm found sales staff at Fuji Xerox NZ and Australia inflated revenue and deliberately tried to conceal the accounting irregularities of which about $350 million was connected to the New Zealand subsidiary.

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