Fuji Xerox Australia officially files Federal Court proceedings against its former managing director Neil Whittaker, former chief financial officer Devlin Bell, E&Y and others, over the company’s $450 million accounting scandal, file No: NSD 380/2020.
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| Fuji Xerox Australia headquarters, Macquarie Park, Sydney |
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| Neil Whittaker, former MD FXA & FXNZ |
The move comes more than two and a half years after Fuji Xerox New Zealand filed civil action in NZ's High Court against three former senior executives including Whittaker – also a former MD of FXNZ – as well as former MD Gavin Pollard and former CFO Mark Allright. Fuji Xerox NZ last year added accountancy firm Ernst & Young (EY) as a defendant in its case.
EY and former partner E.A. Lang have also been attached to the case in Australia.
“In its statement of claim against Whittaker and the others, Fuji Xerox Australia alleges that the 2015 and 2016 statutory financial reports of the company contained numerous financial and accounting irregularities,” says a report by former print industry journalist Leon Spencer of IT news website arnnet.com.au.
“These irregularities, the claim goes on to allege, meant that the financial reports in question did not give a true and fair view of the financial position and performance of Fuji Xerox Australia. According to the claim, seen by ARN, the “numerous” financial and accounting irregularities in the 2015 and 2016 financial reports allegedly contained “special contracts”.
“These included whole volume agreements, target volume agreements, document service agreements and agility agreements that were incorrectly treated as finance leases rather than operating leases, as well as incorrectly recognising revenue, resulting in an overstatement of the company’s revenue in Australia during the relevant period.
“According to the court documents, Fuji Xerox is now seeking relief against Whittaker and Bell, claiming that its financial damage includes the A$3.6 million paid to Fuji Xerox Australia employees at the time, which would not have been paid had the “misstated” revenue not been reported. Additionally, the company claims damage in the form of the A$2.6 million it spent paying advisory firm KPMG to investigate the alleged accounting irregularities.”
At the time of writing, the court had not received a response from lawyers for those named in the case.
In September 2017, Fuji Xerox NZ, Fuji Xerox Finance and Fuji Xerox Asia Pacific filed High Court proceedings in Auckland against Whittaker, Pollard and Allright after a report commissioned by parent Fujifilm found “inappropriate accounting” at FXNZ and FXA had inflated revenue by about $A450 million between 2011 and 2016.
The independent report identified a “sales at any cost” culture at FXNZ that led to commissions being paid on contracts that included speculative estimates of future printer usage. It found that former FXNZ MD Whittaker was paid more than $1 million to leave his job as MD of FXA after the irregularities were uncovered.
Fuji Xerox’s Japan-based chairman, deputy president and two directors all resigned following the release of the report.
NZ’s Serious Fraud Office is continuing its investigation relating to Fuji Xerox.
