Picking up the Fuji Xerox hospital pass
Taking the reins at a scandal-ridden, loss-making business wasn’t the easiest of assignments, reports Matthew Theunissen
It’s been accused of a $350 million-plus accounting scandal, court proceedings have been filed against former senior executives, and Fuji Xerox NZ continues to haemorrhage some $1m in losses each month.
So why did its new managing director, Peter Thomas, want the job? And how does he plan to fix things?
“Last year was — and I don’t say this lightly — it was the hardest year of my life,” he tells the Herald. “There was a lot of stress internally, as you can probably appreciate. We had literally hundreds of auditors, forensic accountants, etcetera basically living with us.”
Because of the time difference between New Zealand and Fuji Xerox’s global headquarters in Japan, Thomas was taking calls from early morning until late at night. As well as dealing with the company’s own major internal investigation, the Serious Fraud Office (SFO) became involved, and Fuji Xerox faced a barrage of negative local and overseas media attention.
“There were a number of very difficult decisions we had to make in the past 12 months, whether those were around holding employees to account for past behaviour, whether it was having to downsize some of our operations to try and reduce losses, or having to go and fess up to a number of our customers face to face and apologise for what’s happened,” he says.
“Those things have been difficult. When I got to the end of last year, I was pretty buggered.”
Before joining the company in
2015 as its New Zealand general manager, Thomas worked at Westpac for 22 years, reaching senior positions. He also worked as the NZ Defence Force’s chief information officer and was involved in the merger of four government ministries to form the Ministry of Business, Innovation and Employment (MBIE).
Thomas was thrust into the top job at Fuji Xerox NZ when all its government contracts were suspended, after $355m in accounting irregularities from 2011 to
2016 were discovered in the New Zealand and Australian operations.
Fuji Xerox’s chairman, Tadahito Yamamoto, deputy president Haruhiko Yoshida and two directors resigned after the company released an independent report on the “inappropriate accounting”.
Court proceedings have also been lodged against former senior executives from the New Zealand company and the SFO investigation is ongoing.
Thomas says a great deal has already been done to make amends for past transgressions and to regain the trust of its customers.
“It’s something, to be honest, the company’s pretty embarrassed about and when I say the company, I don’t just mean us here in New Zealand, I mean the company as a whole,” he says.
“We also take what’s happened very seriously and I think the changes that have been implemented since then are certainly setting us up for the longer term future. But we also recognise that we’ve got a big job to rebuild trust and confidence.”
One key move has been changing the “sales at any cost” culture identified in the company’s report.
“When I look back into the past, we seem to have been very focused on revenue and market share and rewarding people on the basis of those types of metrics,” he says.
Thomas has the job of changing that culture and shifting it towards a simple goal: deliver a return to shareholders.
“To me that was a very welcome message,” he says.
“It’s not about doing business at any cost, it’s about doing business that adds value for us, adds value for our shareholders but also adds value for our customers. So that’s very much the mantra we’re using as we move forward.”
Another key area of change involves governance, which Thomas says has been sorely lacking in the past.
“When I think back to my Westpac days, and obviously working with the New Zealand Defence Force and MBIE, they’re very large organisations where governance was just normal,” he says.
“Coming into this organisation, one of the things that surprised me early on was the lack of some of the appropriate governance.”
A new board has been established during Thomas’ tenure and its chairman, Haruhiko Imai, also acts as a bridge between New Zealand and Japan.
“We now have quarterly board meetings that do what you’d expect a board would do: set strategy, discuss risks and issues,” Thomas says. “The public report is pretty clear that these didn’t occur to the extent they needed to — It was pretty much a once-a-year event to sign off the annual accounts.”
An audit and risk committee has also been established, a range of governance forums set up and consideration is being given to taking on an independent board member.
In addition, the company has introduced mechanisms for whistleblowers to identify any improper practices, locally and globally.
Thomas hopes the action taken in the wake of the scandal, and the work done to rebuild confidence, means the company will one day be permitted to take on new government contracts, which made up about 15-20 per cent of its business.
“I must be honest, in the last six months, not being able to bid for new government business, that’s hurt us,” he says.
The New Zealand company is losing about $1m every month, but Thomas is confident it will become profitable again in the next financial year.
The accounting scandal aside, he says it is a tough industry to be in, with print volumes generally in decline.
However, Fuji Xerox is aiming to be at the forefront of digital document management, as well as technological advances such as 3D printing. It is also seeing growing demand for label and packaging printing and is investing more in this area.
So why take on a job so fraught with difficulty, where his performance will be scrutinised not only by the Japanese parent company, but the New Zealand government, Fuji Xerox NZ’s 12,000 business customers, as well as the media?
“I won’t deny the fact that there’s been some times these past 12 months when I’ve looked myself in the mirror and gone, ‘Man, this is hard work, is it going to be worth it?’,” Thomas says.
“But I’m very proud to be given the opportunity to run the company, very proud that the Japanese shareholder had confidence in me and I intend to repay their confidence.”
There’s been some times these past 12 months when I’ve looked myself in the mirror and gone, ‘Man, this is hard work, is it going to be worth it?