Controversial former managing director of Fuji Xerox Australia and Fuji Xerox New Zealand Neil Whittaker was paid more than $1m to leave the business, despite presiding over a dysfunctional organisation which racked up $450m in overstated revenues and has led to fraud investigations, according to a report by parent company Fujifilm’s independent investigative committee.

Whittaker was not directly named in the report, which refers to a Mr A, however New Zealand MP Winston Peters has named Mr A as Whittaker.

The report said that accounting irregularities during the period of Whittaker’s tenure had resulted in the company’s revenue being overstated by $450m. It also said that organisational changes instigated at a local level that took place during the period 2004-2015 resulted in a weakening of the checks and balances on the sales team, leading to a culture of sales at any cost.

The report also says that some Australian Fuji Xerox sales staff were deeply unhappy that sales staff directly under Mr A were on a higher commission than they were. Sales staff transferred from New Zealand were on commissions that were too high according to the report.

A lack of transparency, a failure to fill in details on customer records, notably when they fell short of the monthly and annual print targets also characterised Mr A’s time in Australia, as did the sales team overriding credit risk assessments. Transactions were carried out on the basis of certain volumes when it was clear those volumes would be highly unlikely to be achieved.

The investigative committee’s report says the sales commissions, incentive and bonuses was one of the causes of inappropriate accounting practices at Fuji Xerox in Australia and in New Zealand.

It says that Mr A himself had a high sales target with appropriate high commissions, so pushed for high sales at any cost and rapidly expanded the sales team while taking the shackles off. It says the dysfunctional organisational structure allowed the sales-centric culture to spread.

The report says that Mr A transferred staff from the commercial and legal teams into the sales team, while the finance team had staff whose capabilities were an issue, resulting in weak performance and an inability to carry out the normal checks and balances.

The fall-out has led to four top directors of Fuji Xerox in Japan resigning, and the New Zealand serious fraud squad investigating the company’s operations over there. The report suggests that sluggish sales in Japan may have led to head office indirectly encouraging a sales centric approach in New Zealand, which gave rise to the issues revealed.

Winston Peters also accuses Fuji Xerox New Zealand of ripping off state institutions including schools, councils and government departments, he says, “It’s a massive fraud right up there with Equiticorp, Goldcorp, Securitibank, South Canterbury Finance and Bridgecorp. This corporate fraud is unravelling at FujiXerox NZ, half a billion dollars’ worth, and this National Government does not bat even an eyelid.”

Part of Peters’ beef lies with Fuji Xerox signing up what he says were naïve clients in the public sector for long term contracts on what he says were unacceptable terms, often 72 or 84 month deals.

[Related: Fuji Xerox linked to New Zealand losses]

Whittaker was recommended to resign from his role as CEO of Fuji Xerox Australia last May after just a year in the job, following an unannounced audit by regional office. He had previously been CEO of Fuji Xerox New Zealand for 11 years. His settlement agreement paid him the full salary and retirement benefits that he would have received had he stayed with the company for the entire term, a sum of $1.031m.

Ten months later on March 17 this year accounting firm known as 2-2 gave notice that it had reason to suspect that fraud had occurred at FXNZ, and that it would be sending an official notice (Fraud Letter) on March 20 to FXNZ of its intent to conduct an investigation into the suspected fraud.

Peters says, “How could a supposedly loss-making company afford to jet staff off to lush parties in New York, Aspen and Paris and put its managers into cars worth well over six-figures?”

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