CLAIMS SETTLED IN FX WHITTAKER EY CASE

The five-year saga over alleged $450m worth of accounting irregularities at Fuji Xerox in New Zealand, and later Australia is over, with the parties settling out of court.

The scandal came from the time Neil Whittaker was running first the New Zealand and then the Australian Fuji Xerox companies. Together with former NZ execs from that time, Whittaker was alleged by Fuji Xerox to be responsible for the huge losses. Fuji Xerox also sued the auditor EY, claiming that with former exec Mark Allbright, EY was responsible for $174.5m in unrecoverable intercompany advances.

The trio of execs were also being sued by Fuji Xerox for $3.7m in commissions and bonus payments which it said were made on overstated results. Former Fuji Xerox Australia director Devlin Bell and EY auditor Andy Lang have also had their cases settled.

Whittaker was paid $1m to leave his job as managing director of Fuji Xerox Australia soon after the accounting irregularities were uncovered. He had been in the role for scarcely a year, following an 11-year stint as managing director of FX NZ.

According to the judge, the losses came as revenue streams were classified as finance leases rather than operating leases, and related mainly to managed services contracts.

The alleged scandal came to light when new auditor KPMG took over five years ago, and said Fuji Xerox NZ had incurred significant trading losses, which led to retained losses of NZ$376m. The company said the loss to shareholder equity as a result was NZ$317m in New Zealand and $145m in Australia.