Fuji Xerox sues former executives

(Photo: Jerry Yelich-O'Connor)

Office products company Fuji Xerox is taking civil action against former senior executives in New Zealand in relation to a $480 million accounting scandal.

Fuji Xerox revealed the civil suit in a statement this afternoon without naming the senior executives involved.

“The proceedings follow investigations into the financial position of Fuji Xerox New Zealand, which identified inappropriate accounting treatment of its revenue and net profit position over an extended period of time.”

The issues were first exposed by NBR in an investigation last September.

Since then, Fuji’s Japanese parent company, Fujifilm, has completed its own investigation highlighting a culture of concealment and “sales at any cost” attitude driven by senior management.

Two Fuji Xerox New Zealand former managing directors – Gavin Pollard and Neil Whittaker – have left the company.

Mr Pollard headed the local office for more than two years after taking over from Mr Whittaker when he transferred to Australia. Before that Mr Pollard was general manager of sales for Fuji Xerox NZ for three years.

Mr Whittaker left the company last year, receiving a $1 million payout, according to an independent report.

Fujifilm said in June that it was considering taking action against individuals involved in the “inappropriate accounting” of the local subsidiary.

“Fujifilm will consider taking actions against the individuals involved if we find any clear illegality,” the company said in an emailed response to questions from NBR in early June.

Independent accountants and lawyers appointed by Fujifilm found sales staff at Fuji Xerox NZ and Australia inflated revenue, and deliberately tried to conceal the inappropriate accounting treatment.

The investigation report cited financial incentives for the managing director and other top-level employees as one of the reasons for the inflated sales figures.

Fujifilm owns 75% of Fuji Xerox.

Last week the New Zealand government put off making a final decision on whether Fuji Xerox New Zealand meets the suitable criteria for contracted services until after the election.

NBR understands a key meeting between ministry officials and industry participants will be held next Wednesday to discuss Fuji Xerox’s “voluntary suspension” from accepting more work from the government.

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12 Comments & Questions

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Ummm didn't Japan notice the mega increase in profit or where they too busy cashing in bonuses?
Who were the auditors??????

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EY

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Maybe Simon Bridges could advise where the government stands on their contracts and that no government officials were on the gravy train?

Or will we only find that out post election like all the other government enquiries

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$480 million, where has this figure come from? Everywhere it states around $350 million. In any case, this means Canon won't have a Salesforce anymore as all the ones getting sued are now working there.

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Hi Mac, $480m is the total revenue figure accross NZ and Australia. Of that, FXNZ accounted for about $350m. Whether Fuji launches similar action in Australia remains to be seen but if you read the investigative report it's clear that the sales tactics and accounting treatment originated in NZ and were exported to Australia. At the end of the day, $480m was overstated.

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The contracts were legitimized from a sales perspective by management.
Top down the techniques used were promoted and sales were rewarded.
Who checks the systems used? Where were the critical eyes internally?

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Critical eyes got pushed out, whistle blowers were ignored

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This would go some way to explaining all the exotic sports cars in the FujiXerox carpark during this this period.

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If that's true, then maybe this sort of thing is a symptom of a problem, not just with this company, but with big business as a whole. The chasing of the billion dollar lifestyle at any cost.

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Just for the record this is no reflection on those that work for the company in a current sales and technical role for whom i have nothing but respect.

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Dude... its time to leave

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My understanding is the sales director was earning $1m+ a year in commission and saw him driving a number of sports cars including a Lamborgini.

A number of the sales staff went to Australia when the NZ well dried up including the MD and Sales Director.

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