Fuji Xerox reinstated as government provider despite ongoing fraud probe

The SFO has been investigating Fuji Xerox follwing accounting irregularities since 2017.

Fuji Xerox has been reinstated as a government contractor despite being under investigation by the Serious Fraud Office in relation to a near $500m accounting scandal.

The company was suspended as an All-of-Government (AoG) provider of printing tech services in late 2017 following allegations of accounting irregularities primarily in New Zealand.

A spokesman for Economic Development Minister David Parker declined to comment, referring the Herald to the Ministry of Business, Innovation and Employment.

A spokesman for the SFO confirmed to the Herald Fuji Xerox had been reinstated but said that decision had no impact on the fraud investigation.

Fuji Xerox New Zealand's managing director Peter Thomas said: "The reinstatement reflects the company's work to remedying past issues, and new processes put in place to ensure they don't happen again.

"We have made significant changes to the business including implementing a new governance structure, a new leadership team and stronger management practices.

"We've learnt some difficult lessons and are grateful for the opportunity to return as a supplier to Government.

"Fuji Xerox looks forward to offering all customers the high quality services and products we are known for."

Fuji Xerox's "inappropriate accounting" over a six-year period from March 2011 to March 2016 culminated in parent company Fujifilm booking losses of $473m, including about $355m from the New Zealand company.

The root of the cause, according to an independent report released last year, was a "sales first at any cost culture" to meet sales targets, and commissions that saw photocopier sales staff making more money than Cabinet ministers.

Lavish bonuses were handed out while holidays to senior executives and their wives were later costed at up to $25,000 a head.

Following media attention by the National Business Review, majority shareholder Fujifilm commissioned an independent report and in June 2017 the findings were translated into English and released publicly.

The report found Fuji Xerox NZ consistently exaggerated sales revenue, including through double recording of sales, recording fictitious sales and fictitious recording of expenses.

The SFO began looking into Fuji Xerox New Zealand (FXNZ) in October 2016, after the NBR story was published. Two months later, the office closed its inquiry saying it would take no action.

However, the investigation was relaunched a year later after Fujifilm released its report.

Fuji Xerox NZ, Fuji Xerox Finance and Fuji Xerox Asia Pacific have since filed joint civil proceedings in the Auckland High Court against three former senior executives – Neil Whittaker, former FXNZ managing director Gavin Pollard and former chief financial officer Mark Allright.

Deputy Prime Minister Winston Peters, who was an outspoken critic of Fuji Xerox when in opposition, was not immediately available for comment. His office has been approached for comment.