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Fuji Xerox tightens control at FX Australia

Wednesday, 09 August 2017
By Graham Osborne

(l-r) Fuji Xerox AP president Isamu Sekine, FX global president Hiroshi Kurihara, and FXA MD Sunil Gupta at Macquarie Park in Sydney

Japanese printing giant Fuji Xerox has established a new role of chairman at its Australian subsidiary and is considering legal action against those responsible for an accounting scandal that inflated its ANZ revenue by $450 million.

The new FXA chairman – selected from the company’s executive team at headquarters in Tokyo – will take up his Sydney-based role in September or October this year. He will be named after an Australian visa application been completed. It’s yet to be determined whether a separate chairman will be appointed for FXNZ.

“The new chairman of Fuji Xerox Australia has a wealth of experience, both in sales and finance, and will strengthen governance to solidify the local operation,” said FX global president Hiroshi Kurihara, who’s in Sydney this week with Asia Pacific president Isamu Sekine to introduce a range of measures designed to prevent any repeat of “accounting irregularities” that stunned the company and cost four Japanese executives their jobs.

An independent investigation ordered by parent company Fujifilm identified a “sales at any cost” culture as being the source of inflated incomes:

The circumstances discussed above with dysfunctional organizational governance allowed Mr. A’s sales-centric culture to spread. Like at FXNZ, this was due to the strong expectations to FXAU’s sales under circumstances where sales in Japan were not growing, as well as due to bonuses for achieving targets making up a large proportion of employee compensation (30% of his base pay in the case of Mr. A) as an incentive, of which the portion of sales consideration was big (30%-40% of the bonus). Under this kind of culture, it is believed that inappropriate accounting practices came to be carried out without giving consideration to whether it would contribute to FXAU’s revenue.

The “Mr. A” referred to in the report was later identified by NZ First party leader Winston Peters as the former managing director of FXNZ and then FXA, Neil Whittaker.

The independent report also revealed that Whittaker was paid more than $1 million to leave the company after the problem was first uncovered.

Kurihara, Sekine and FXA MD Sunil Gupta on Monday met with 400 staff members at FXA’s new headquarters in Khartoum Rd, Macquarie Park, to announce new ‘countermeasures’ that have been introduced at all of the company’s global affiliates.

These include: new accounting practices for all MSA contracts; strengthened finance and audit oversight; strict new rules regarding performance evaluation and incentive rules; reorganized lease requirements; compliance education for all executives/managers/staff throughout Fujifilm Holdings/Fuji Xerox; stronger risk management structures; and enhanced performance measures.

FXA’s new headquarters in Khartoum Rd, Macquarie Park

Gupta and the Australian leadership team have also created a ‘Sales University’ – an industry-first training and development program designed to “train teams in a number of core sales fundamentals.”

Kurihara apologised to staff but said the countermeasures put in place will ensure the company adheres to the highest standards of corporate governance. “We are the recognized market leader in Australia and hold the #1 position according to the latest industry benchmarking studies, and we are committed to maintaining the top spot.”

In a press briefing later in the day, Kurihara told Print 21 that he was talking to lawyers in regard to possible legal action over the “inappropriate” accounting practices.

“Nothing has been decided yet but such an option is under consideration. We’re thinking about that and talking to an attorney who is investigating the IIC report. I would refrain from talking more about that.”

Gupta told the briefing that what was more important now was moving the company forward. “We believe that these accounting irregularities are behind us. They did happen, as cited by the IIC report, and we actually started acting on a lot of those things in the report as early as the first week of July.

“The most important thing is how we are going to recover from this thing and get back to serving those communities and those customers that we are very eager to serve.

“In Australia, definitely, we are back. We are back with a strategy, we are back with a commitment that has always been in place but, as Sekine-san mentioned, we just wanted to let this thing be put to bed. We didn’t want to piecemeal this conversation, we wanted to be in front of you and talk about the future rather than the past.”

“The commercial print market has become an even more significant market for us and remains about one-third of our market position going forward in Australia.

“We are here to serve the Australian community, the Australian government, the Australian education market and Australian customers. We want to be a good citizen of Australia and that’s what our journey is all about.”

 

 

 

 

 

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4 Responses to “Fuji Xerox tightens control at FX Australia”

  1. August 09, 2017 at 1:05 pm,

    Scott
    said:

    Back eh? Lets see you being a “good citizen” with no customers.
    Most of us are just waiting for leases to expire before jumping to one of many viable competitors in this space. And I’ve been exclusively Xerox for 16+ years….

  2. August 10, 2017 at 9:59 am,

    David
    said:

    “Most of us are waiting for leases to expire..”

    Shut up! You don’t speak on behalf of “most of us”. FX are still the best of a very bad bunch, and their agreements have only hurt their business.. Not “most of” ours

  3. August 10, 2017 at 11:25 am,

    Fairgo
    said:

    Not many big corporates would act as swiftly and with such candour as FX has on this issue. All businesses are vulnerable to rogue elements – think CBA right now. Think jailed NSW former Labor ministers. Think about the RSL. FX has responded well and deserves a chance.

  4. August 10, 2017 at 12:22 pm,

    Digital print fan
    said:

    It’s good FXA has cleaned up the issues!
    Yes their clients have not been affected nor will be.
    They have though, increased the box, consumables, and parts costs on all their dealerships to pay for the 450 million, which wasn’t their fault!
    If they want to stay number one in the office and production spaces , putting extra costs and charges on dealerships makes no sense. Knee jerk, weak management from FXA .

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