Heads roll as Fuji Xerox accounting scandal spreads to Australia

Fuji Xerox may have to restate several years earnings as a result of an accounting scandal in its New Zealand and Australian subsidiaries

Inappropriate accounting practices by Fuji Xerox in Australia and New Zealand have resulted in a $472 million loss and a series of top-level executive and board resignations.

Fuji Xerox parent Fujifilm Holdings told the Tokyo Stock Exchange a loss of NZ$284 million as a result of improper accounting in New Zealand has blown out to NZ$472 million after inappropriate practices were uncovered in Australia as well.

Problems have also been revealed closer to home in Japan, forcing the company to postpone the release of its annual results. It is also expected to revise past reported earnings.

Fujifilm revealed yesterday a report from an independent committee investigating irregularities related to the overstatement of revenue from photocopier leases at Fiji Xerox NZ had found Fuji Xerox Australia conducted similar practices. 

The accumulated impact for the past few years has become a loss of 37.5 billion yen (NZ$472 million) up from a previously disclosed 22 billion yen ($284 million).

“The company expresses its deepest regrets to its shareholders, investors and other related parties for any inconvenience and concerns caused," it said.

Three executives and Fuji Xerox chairman Tadahito Yamamoto said they would resign while others will suffer a cut in pay.

Deputy president Huruhiko Yoshida and two directors, Katsuhiko Yanagawa and Jun Takagi, are also exiting. Two new corporate auditors have also been appointed.

New Zealand's National Business Review first reported the emerging scandal last September, questioning a $51 million loss reported by the local subsidiary after years of bumper results. Two local senior executives had earlier departed from the company.