Report: Warning Led to Xerox Firing
STAMFORD, Conn. (AP) _ A Xerox Corp. executive says he was fired for warning that accounting irregularities are not limited to the business machines maker’s Mexico operations, The Wall Street Journal reported Tuesday.
A Xerox spokesman said the story was based on allegations from a disgruntled ex-employee who was dismissed ``for cause″ and said several investigations found no merit to his claims.
The struggling company has fired several Mexico executives and taken a $120 million, after-tax charge related to the irregularities in Mexico. Xerox said last week the problems were limited to managers who sought to ``drive growth at any cost.″
But James F. Bingham, a former assistant treasurer, says in a lawsuit filed against the company that he was fired for warning that the problem accounting practices had their roots at the company’s headquarters in Stamford, not Mexico City.
Bingham said Xerox used improper assumptions and other techniques to inflate revenue from leasing copiers and other office equipment to customers. He claimed that Xerox improperly set aside a $100 million reserve from a 1997 deal to artificially boost future profits. And he said the company had been reporting revenues and profit that it shouldn’t.
Bingham said the same practices are followed in other divisions of the company and concluded there was a ``high likelihood″ that Xerox had issued misleading financial statements, the newspaper reported, citing a copy of his Aug. 28 presentation to Xerox executives.
While saying he could not calculate an exact number, Bingham estimated ``errors″ of various kinds had boosted Xerox’s pretax income by as much as $1.2 billion in the five years through 1999, a period in which it had reported pretax income from continuing operations of $8.7 billion.
Bingham, who was fired a few days after the presentation, could not be reached for additional comment Tuesday.
Xerox spokesman Bill McKee said he could not discuss the specific reasons why Bingham was fired, but said it was not in retaliation for any activity.
Xerox Controller Greg Tayler told the newspaper the firing was ``an unfortunate situation″ but said the allegations were presented to the company’s auditors, KPMG.
``We took a look at the issues he raised,″ Tayler said. ``We believe they are factually without merit.″
McKee said outside attorneys and another accounting firm, PriceWaterhouseCoopers, looked at the Mexico situation but did not probe Bingham’s allegations.
Although the company said this week that the housecleaning in Mexico resolved the problem, a Securities and Exchange Commission investigation is continuing. Bingham’s allegations are also part of that review.
Xerox has scrambled for more than a year to cope with increased competition, a botched sales force reorganization, sluggish sales and a precipitous drop in its stock price. But chairman Paul Allaire has said he expects the company to return to profitability by the end of 2001.
Shares of Xerox were trading on the New York Stock Exchange at $7.36, down 56 cents.
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