Heads roll in Fuji accounting scandal

The Government is staying silent on an accounting scandal in New Zealand and Australia which saw four international Fuji Xerox bosses, including the chairman, resign over losses of more than $350 million.

The local subsidiary would now work to regain trust and has committed to ensure it did not happen again, but NZ First leader Winston Peters said his country’s name has been dragged through the mud.

Economic Development Minister Simon Bridges has not responded to requests for comment.

In April, Japan-based Fujifilm Holdings said it had set up an independent investigation committee to review accounting practices at Fuji Xerox New Zealand (FXNZ).

These related to certain sales leasing transactions in or before 2015 at the New Zealand office products subsidiary, and were estimated to have caused losses of $285m.

On Monday, Fujifilm said the headoffice review had extended to its Australian businesses and its initial estimates of the losses had increased to nearly $500m.

The investigation committee’s report said FXNZ conducted some ‘‘inappropriate accounting’’ between 2011 and 2016.

A problem with Fuji Xerox’s ‘‘internal control’’ was found, and the system for its management by Fujifilm was ‘‘inadequate’’.

It found the issues caused losses to shareholders’ equity at the parent company of $230m in New Zealand, and $121m in Australia. They had overstated revenue by about $473m.

Three executives, as well as Fuji Xerox chairman Tadahito Yamamoto, said they would resign, and many senior executives would take a pay cut.

Five years of ‘‘inappropriate accounting’’ at Fuji Xerox continued because of incentives such as bonuses and commissions for staff and caused losses of more than $230m.

The main issue related to lease agreements called MSAS, which FXNZ wrongly recorded in its accounts and resulted in revenue being exaggerated.

The report said FXNZ’S board was not effective, there was a concentration of authority with the managing director, and its business management process lacked transparency.

A Fuji Xerox NZ spokesman said it took the findings seriously and was committed to resolving past issues to ensure it did not happen again.

He said the company still had strong shareholder support from Fujifilm.

‘‘For Fuji Xerox and its affiliates, the top priority is on regaining trust from stakeholders.’’

Peters said this was big news internationally and dragged the country’s name through the mud.

NZ First began putting pressure on the Government and former Economic Development Minister Steven Joyce about the company in October. Joyce claimed Peters misunderstood the case.

One of Joyce’s responses to Peters’ questions last year said the company had been paid more than $55m for all-ofgovernment contracts since 2012.

Peters said taxpayers had been ripped off by these contracts going to a company with such issues.

The Serious Fraud Office said in December it would not pursue an investigation into the company, but in April said it would consider any new information which might require further action.