Fuji Xerox and all-of-government contracts

Rt Hon Winston Peters
Member of Parliament for Northland
Parliament Buildings
WELLINGTON

By email: winston.peters@parliament.govt.nz

Dear Mr Peters

FUJI XEROX AND ALL-OF-GOVERNMENT CONTRACT

Thank you for your letter dated 11 May 2017 about All-of-Government contracts and financial irregularities at Fuji Xerox.

I understand you are concerned that:

• the purported irregularities at Fuji Xerox New Zealand amount to fraud; and
• it is therefore a concern that the Crown has All-of-Government contracts with Fuji Xerox, managed by the Ministry of Business, Innovation and Employment (MBIE).

In light of those concerns, you have asked this Office to look behind the figures.

The Auditor-General’s mandate

As you will be aware, the Auditor-General’s mandate covers public entities as provided in the Public Audit Act 2001. Fuji Xerox, not being a public entity, is outside that mandate. As such, we have no mandate to audit the accounts of Fuji Xerox, or formally consider any financial irregularities in those accounts about which its parent company in Japan may be concerned. Fuji Xerox is responsible for reporting the income, profit and losses from its operations, and is accountable to its parent company for those amounts.

However, the Auditor-General can and does look at the relationships between private entities and the Crown. This includes whether contracts entered into by the Crown deliver the services as contracted and are demonstrating value for money.

All-of-Government contracts

In this particular situation, we have been considering the All-of-Government relationship between the Crown and Fuji Xerox and what action we might usefully take at this time.

As recently reported in the media, the Minister for Economic Development has asked the Chief Executive of MBIE to review the All-of-Government contracts with Fuji Xerox. We have met and had discussions with officials from MBIE about the steps it is taking to review the All-of-Government arrangements with Fuji Xerox, and the areas on which its review work might focus. We are liaising with officials about that work and have told them that we intend to actively monitor MBIE’s consideration of the arrangements. We will consider what action we intend to take once we have considered the results of the work that MBIE is doing.

Our future work programme

We can also look more broadly at how a public entity is procuring services across a sector, such as All-of-Government procurement panels established by MBIE and used by public sector organisations. As we have indicated in our Annual Plan for 2017/18, we have work such as this planned for 2018/19. As part of our on-going work, we evaluate whether it is appropriate to carry out particular work earlier than planned. Given the concerns raised about All-of-Government procurement, we are considering which parts of that planned review of procurement might be carried out in 2017/18.

General
A copy of this letter is being sent to the Acting Chief Executive of MBIE. Given the recent publicity about this issue, we intend to publish this letter on our website.

Yours sincerely

Greg Schollum
Deputy Controller and Auditor-General