NZ FRAUD OFFICE CEASES FX FRAUD CASE

The investigation by the New Zealand Serious Fraud Office into the accounting at Fuji Xerox between 2011 and 2016 has been closed for good, with the SFO saying it is ‘no longer in the public interest’ to continue.

The decision to halt the inquiry comes two months after the company settled its case against some of its former directors, including then managing director Neil Whittaker, and accounting giant EY.

The case focused on accusations that Fuji Xerox New Zealand had been using various accounting methods to overstate its figures during the period in question, the ensuing scandal rocking the company, resulting in a $472m loss for parent company Fujifilm, including $355m from the New Zealand operation, and the resignation of multiple top level executives.

An inquiry by the company found that a ‘sales at any cost culture’ in order to meet ever increasing targets, was the root cause of the issue. Staff enjoyed sales commissions that were ‘lucrative’, bonuses more than generous, holiday allowances lavish. The internal report found that sales revenue was consistently exaggerated, with fictitious sales, and sales being recorded twice.

Now the SFO has decided that there is nothing to be gained by continuing its own investigation, which initially began in 2016, was halted shortly afterwards, and started up again the next year.

"Having completed this work, we have now reached a stage where we are not satisfied that continuing this investigation is in the public interest," said SFO director Karen Chang.

"In making this decision we considered the high evidential standard needed for commencing criminal charges, the time and resources still required to complete the investigation, as well as the scale of potential offending that would fall within our remit.

"In assessing public interest, a key factor was the absence of any New Zealand-based or vulnerable investors.

"As the new director of the SFO, I am taking a fresh look at where we apply our specialist resources and where we can make the most impact in the current environment. It's important that we focus our time and skill on the cases that matter the most to New Zealanders and their economic wellbeing."

Fuji Xerox no longer exists, with the two parent companies Fujifilm and Xerox decoupling form their joint venture last year, with Fujifilm taking 100 per cent ownership and rebranding the business as Fujifilm Business Innovation New Zealand.