Fujitsu says compensating Post Office victims is a ‘moral obligation”

on Jan20
by | Comments Off on Fujitsu says compensating Post Office victims is a ‘moral obligation” |

Paul Patterson, Europe co-CEO of Fujitsu Services, giving evidence to the Business and Trade Committee at the Houses of Parliament, London, on what more can be done to deliver compensation for victims of what has been labelled one of the worst miscarriages of justice in British history.

House Of Commons – Pa Images | Pa Images | Getty Images

Shares of Fujitsu sank almost 4% on Wednesday after the Japanese IT firm’s Europe co-CEO, Paul Patterson, said compensating those who suffered because of the company’s faulty software was a “moral obligation.”

The company, whose shares were the second-largest loser on the Nikkei index, signaled it would compensate hundreds of sub-postmasters wrongly prosecuted in the UK as a result of its defective software.

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Between 1999 and 2015, 736 sub-postmasters, who are self-employed branch managers under contract to the Post Office, were subjected to prosecutions and financial misconduct convictions based on inaccurate data generated by Horizon, a software program made by Fujitsu.

This case received new public attention this year when ITV broadcast a drama series, “Mr Bates vs The Post Office,” about the sub-postmasters fight for justice.

Horizon was manufactured by Fujitsu in 1999 and rolled out across Post Office branches to manage financial transactions. Complaints soon emerged that it was falsely reporting cash shortfalls.

Appearing before British MPs on the House of Commons Business and Trade Committee, Patterson said that “Fujitsu would like to apologize for our part in this appalling miscarriage of justice.”

“We did have bugs and errors in the system and we did help the Post Office in their prosecutions of the sub-postmasters,” he told the committee.

When Patterson was asked how much Fujitsu should contribute towards compensation, he did not give an exact figure, but said he expected to “sit down with the Government to determine our contribution to the redress” once the inquiry was completed.

The government has set aside 1 billion pounds in compensation for victims of the Post Office scandal.

Speaking to CNBC’s “Squawk Box Asia,” Timothy Morse, founding partner of independent Japanese equity advisory said that it was “amazing” that Fujitsu did not come up in this case until recently.

“This scandal dates back years. And the role of the post office has been well known in these court prosecutions, but Fujitsu for some reason had been rarely mentioned in the press.”

Replacing Fujitsu in UK government contracts could be 'very expensive,' says equity advisory firm

In a statement to CNBC, Fujitsu said “the current Post Office Horizon IT statutory Inquiry is examining complex events stretching back over 20 years to understand who knew what, when, and what they did with that knowledge.”

The statement also added that the inquiry has reinforced the devastating impact on postmasters’ lives and that of their families, and Fujitsu has apologized for its role in their suffering.” The company added it is “fully committed” to supporting the inquiry “in order to understand what happened and to learn from it.”

Morse expects Fujitsu will have to shoulder a “reasonable financial burden,” but the company may not have to bear the whole 1 billion pounds that the British government has set aside as compensation.

On Jan.11, the BBC reported that despite the scandal and ongoing inquiry, the Post Office paid Fujitsu over 95 million pounds to extend the Horizon IT system’s usage for two years.

Fujitsu has not made a provision for the contribution yet, but Patterson said “when we get to that position we will absolutely have to make a provision for it.”

When Morse was asked if the scandal meant that Fujitsu would be “persona non grata” for future UK government contracts, he said that it “could be a possibility.”

However, he also highlighted that Fujitsu is very close to the UK government after its purchase of British computer company ICL in 1998, which supplied computers to the British public sector.

“The name of Fujitsu has been tainted but … they’re very well embedded in UK government IT contracts. So, actually replacing Fujitsu can be very expensive.”

Fujitsu reputational costs may be more severe than cost of compensating Post Office victims: Analyst


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