SFO to 'review' report on Fuji Xerox NZ operations

Fuji Xerox NZ says it has the full support of its parent operation. Photo / 123RF

The Serious Fraud Office says it will "review" a report just out on office products firm Fuji Xerox New Zealand (FXNZ) where losses of $355 million are revealed here and in Australia, but is not taking any immediate action.

An SFO spokeswoman said there was no active investigation into the business which was revealed in a Fujifilm report just out to have "conducted some inappropriate accounting" from 2011 to 2016, resulting in around $233m of losses.

Winston Peters, NZ First leader, said of the Fuji Xerox situation: "This will be big news internationally and drags our country's name through the mud."

This morning, the SFO spokeswoman said: "The SFO is not investigating this matter but we will review the report and any other material we might receive."

The statement follows the Japanese report which found "inappropriate accounting" at Fuji Xerox here and in Australia costing 28.1b yen (NZ$355m) in total. That was the impact on Fujifilm shareholders' equity during the past six years, that report said.

The report found FXNZ had been exaggerating its revenue for some years and it highlighted issues with the sales, signing up customers for long-term contacts that looked cheap in the short-term but were expensive to escape from.

It was in the financial interests of some New Zealand staff to continue the practices, the report indicated.

"Inappropriate accounting of early sales recognition continued because there were incentives for the MD and employees of FXNZ such as commissions and bonuses and that structure placed an emphasis on sales," the report said.

The report blamed those at the top in New Zealand.

"At FXNZ, the board of directors did not function effectively, there was a concentration of authority with the MD of FXNZ and the business management process lacked transparency," the report said.

It recommended strengthening systems and reviewing incentive schemes, better information management and better supervisory functions of the board of directors and audit areas.

Fujifilm Holdings' independent investigation committee put the impact of New Zealand issues on shareholder equity at 18.5b yen and in Australia at 9.6b yen.

Fuji Xerox NZ released a statement this morning vowing to put matters to rights.

"Fuji Xerox and its affiliates take the committee's findings very seriously and is committed to resolving past issues and ensuring that there is no recurrence," the New Zealand business said in a statement just issued.

Fuji Xerox in New Zealand said it had support from Japan.

"Fuji Xerox (Japan) will renew its management structure and discuss counter measures to ensure the group [adheres] to the highest standards of corporate governance. For Fuji Xerox and its affiliates, the top priority is on regaining trust from the stakeholders," said the statement issued by a New Zealand spokesman for the company.

"Fujifilm Holdings Corporation, the parent of Fuji Xerox Co., Ltd., today announced the finding of an independent investigation committee established in late April to review the appropriateness of accounting practices at Fuji Xerox's overseas subsidiaries," the New Zealand arm's statement said.

"The results of the investigation showed that certain accounting practices were inappropriate at Fuji Xerox New Zealand Ltd. as well as Fuji Xerox Australia Pty. Ltd," said the statement issued from Auckland.

"With continued strong shareholder support from the ultimate parent, Fujifilm Holdings, and the intermediate owner, Fuji Xerox Asia Pacific Pte Ltd, customers in New Zealand can be confident that Fuji Xerox New Zealand will continue to lead the market in the delivery of print, document management and business optimisation solutions."