Fuji Xerox sues former executives

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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