Xerox chiefs face US charges

Author: By David Usborne in New York

Regulators in the United States are preparing to file civil charges against two former senior executives at Xerox Corp, including its former chairman, Paul Allaire, as part of the long-running investigation into suspected accounting fraud at the company.

Xerox, the world’s largest copier company, tried to put the scandal behind it earlier this month when it reached an agreement with the Securities and Exchange Commission to pay a fine of $10m (£7m) because of irregularities in its financial statements between 1997 and 2000.

The company also agreed to restate its financial statements for the same period. At the heart of the inquiry are allegations that Xerox prematurely added revenues onto its books.

The SEC, however, is reportedly now targeting both Mr Allaire and his former chief financial officer at Xerox, Barry Romeril. Both men retired from the company, which is based in Stamford, Connecticut, at the end of last year.

Charges are also being prepared, The Wall Street Journal reported yesterday, for a partner at KMPG, the accounting firm that audited Xerox books for decades before it was fired six months ago. The partner, Michael Conway, co-headed the team responsible for auditing Xerox.

The Xerox case sends a message to companies that the SEC will act on any suspectedmassaging of earnings numbers after the collapse of Enron.

George Ledwith, a KPMG spokesman, confirmed it has been talking with the SEC “about the possibility of a proceeding against the firm” related to Xerox. “We have told the SEC that we cannot fathom the basis for any such proceedings,” he said.

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