‘Massive Salaries, Made-Up Sales, Nepotism’ Detailed at Fuji Xerox Australia and New Zealand
According to ProPrint, Fuji Xerox president and its Asia-Pacific president recently apologized to the company’s 400 Australian staff for the “sales at any cost” culture detailed in a report of Fuji Xerox New Zealand and Australia, as well as “massive accounting irregularities revealed to have taken place under Neil Whittaker’s time as CEO in Australia and New Zealand, and the subsequent damage to the company’s morale and reputation.”
Fuji Xerox President Hiroshi Kurihara and Asia-Pacific president Isamu Sekine told Australian staff and printers that Fuji Xerox “has taken all necessary steps to ensure that its corporate governance will never again allow the possibility of a similar situation from occurring again, which saw top salesmen paid huge commissions on sales improperly booked, internal checks and balances weakened, and the company racking up a $450 million internal loss.”
Kurihara says, “I have apologised. Fuji Xerox has now put all systems in place to make sure that our integrity and reputation will be restored. We have acted on all the suggestions made in the initial independent report. We will never again have a situation where sales incentives are allowed to cloud judgement. We are also in the process of appointing a chairman for Fuji Xerox Australia who will be responsible for governance.” Fuji Xerox expects the new chairman to arrive in the next couple of months.
Fuji Xerox executives told Proprint that Fuji Xerox customers, including commercial printers, weren’t and won’t be financially affected by the scandal. Kurihara said, “The issue was an internal accounting irregularity, which essentially came down to the type of leases that sales were booked under. Printers have not and will not be paying more for their hardware, software, services, or click charges. As far as they are concerned there is no impact.”
An August 12th ProPrint article detailed various unethical practices at Fuji Xerox Australia and New Zealand according to a Fuji Xerox report, including “massive salaries and humongous commissions paid to top staff, including family members, with fabricated sales, made-up monthly numbers, and a silencing of those questioning the recording of figures, compounded by a head office in Tokyo that was focused on its own issues, dazzled by the booked sales results and at best ignored repeated warnings.”
According to the report, 70 percent of contracts had inappropriate revenue accounting; $30 million of sales in 2015 were “simply made up;” and salaries, even before large commissions were added, were triple the industry average, with a top salesman earning $1.1 million a year, and the son of the CEO earning $740,000 a year, of which more than half $420,000 was incentives. Losses to shareholder equity were $230 million in New Zealand and $121 million in Australia, after revenue was overstated by $450 million.
The investigative report says the problem began with managed service agreements (MSAs) in New Zealand, which had variable pricing, but were accounted for as upfront revenue. The report alleges there followed “a litany of abuses including recording fictitious sales, recording sales twice, recording promos and giveaways as sales, and selling clients new contracts even at the beginning of existing contracts just to record extra revenue.”
Last week, according to The New Zealand Herald, Fuji Xerox reported in a statement that Fuji Xerox’s New Zealand Gavin Pollard has left the company. Pollard was managing director of Fuji New Zealand for two years and general manager of sales for three years before that.
Isamu Sekine, president and chief executive of Fuji Xerox Asia Pacific, will head the New Zealand branch of Fuji Xerox until a successor is appointed.