Xerox is firing back at Fujiflim in an open letter calling its billion-dollar lawsuit a "desperate, misguided" ploy to salvage a deal that was scuttled by "ongoing accounting fraud" rather than anything Xerox did.
"No matter what you tell the Japanese media, it is abundantly clear that the bad actor here is Fujifilm, not Xerox," Xerox CEO John Visentin wrote. "Fujifilm, as 75% owner and controlling partner of Fuji Xerox, has concealed from Xerox the true extent of a massive and ongoing accounting fraud at Fuji Xerox caused by Fujifilm's own gross mismanagement. The mismanagement and resulting accounting fraud have weighed heavily on our dealings and have cost us both a significant amount of time and money."
Xerox currently owns 25 percent of Fuji Xerox. As a part of the deal proposed in January, Fujifilm would turn over 100 percent control of Fuji Xerox to Xerox. Visentin argues that due to the accounting scandal Fuji Xerox is out of compliance with US. regulations.
"You have also failed to prove to us that all of the outright corruption and fraud at Fuji Xerox have been uncovered and remediated, and reports continue to indicate that the internal controls over financial reporting at Fuji Xerox are woefully ineffective," Visentin wrote in the letter to Fujifilm Chairman Shigetaka Komori.
In addition, Visentin said Fujifilm's proposed takeover cannot move forward as it is enjoined by the New York state courts.
In the letter Visentin also announced that Xerox plans to start selling directly to the Asia-Pacific market when their agreement with Fuji expires in 2021. Fuji has been a Xerox partner in the region since 1962.
&"t;To that end, we are now moving to begin sourcing product from suppliers other than Fuji Xerox, and we intend to do so more and more in the months and years ahead," Visentin wrote.
He also disputed an article in which he said Komori sought to portray Xerox as heavily reliant on Fuji, and unable to survive the demise of their partnership.
"Nothing could be further from the truth," Visentin wrote. "In fact, it is actually Fuji Xerox, which is responsible for nearly half of Fujifilm's total revenue, that could potentially suffer ruinous consequences from the loss of over $1 billion of revenue from Xerox, its single largest customer. And legally, there is nothing Fujifilm can do to stop that from happening."
Fujifilm representatives did not immediately reply to requests for comment on the letter. As of this morning, Xerox has failed to respond the lawsuit Fujifilm filed against it in U.S. District Court in Manhattan last week. That suit seeks a$1 billion-plus in damages as well as a $183 million break up fee owing to Xerox backing out of a takeover the two companies announced in January.
That deal would have seen 50.1 percent control of the U.S. copier surrendered to Fujifilm. The deal fell apart in May after months of legal battles and fights in the media waged by two of Xerox's majority owners, Carl Icahn and Darwin Deason.