Report ‘rips scab off’ Fuji accounts

An accounting firm had reason to suspect fraud had occurred at Fuji Xerox New Zealand and intended investigating the company, an independent report says.

Meanwhile, the former managing director of Fuji Xerox in New Zealand and Australia, where an accounting scandal caused losses of more than $350 million, was paid more than $1m to leave the firm.

Earlier this month, ‘‘inappropriate accounting’’ was found to have occurred between 2011 and 2016 at Fuji Xerox New Zealand (FXNZ).

Japan-based Fujifilm Holdings in April set up an independent investigation committee to review the appropriateness of accounting practices and found losses to shareholder equity at the parent company worth $230m in New Zealand, and $121m in Australia (FXA).

They had overstated revenue by about $473m, and as a result three executives, as well as Fuji Xerox chairman Tadahito Yamamoto, said they would resign, while many senior executives would take a pay cut.

The committee’s full 89-page report was only recently made available in English, and ‘‘rips the scab off fraud rife at Fuji Xerox NZ,’’ NZ First leader Winston Peters said.

The report details concerns from a culture of ‘‘sales at any cost’’, to concealment and suspected fraud. It says an accounting firm that had helped estimate the losses at FXNZ gave notice in March that it had ‘‘reason to suspect fraud had occurred at FXNZ’’.

‘‘It would be sending official notice on March 20 to FXNZ of its intent to conduct an investigation into the suspected fraud.’’

The Serious Fraud Office said last December it would not be pursuing an investigation into the company, but a spokeswoman said yesterday it was obtaining additional information.

Fujifilm’s report says one of the causes of the inappropriate accounting was the use of incentives, such as commissions and bonuses, that placed an importance on sales targets.

In particular, the managing director at the time, only referred to as ‘‘Mr A’’, was said to have extremely high sales in a culture multiple people said was ‘‘sales at any cost’’.

‘‘Commissions and bonus payments reached massive amounts at FXNZ in 2011 and onwards.’’

Peters named ‘‘Mr A’’ as Neil Whittaker, whose LinkedIn profile yesterday said he was managing director from 2012 to 2015.

NZ First has been putting pressure on the Government about FXNZ since October, and revealed the company had been paid more than $55m for all-of-government contracts since 2012.

Fujifilms’ report says a Singaporean law firm was hired to review issues at FXNZ and FXA, and found overly aggressive recording of revenue.

In April, 2016, a decision was made to relieve ‘‘Mr A’’ of his duties, who was now at FXA. He left after signing a settlement worth more (NZ$1.03m).

Fuji Xerox’s deputy president and executive president also tried to conceal information about the issues, which was part of the reason they continued until 2015.

After the issues were reported in the media, the Companies Office and SFO contacted FXNZ.

FXNZ said it would respond as soon as possible, but earlier this month said it took the findings ‘‘very seriously’’.

Economic Development Minister Simon Bridges has previously said the Government was seeking reassurances about contracts it has with the company.

than

A$1m