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Fujitsu commits to cooperation in Post Office scandal, compensation calls intensify

Written by Wed 10 Jan 2024

Calls for Japanese IT services company, Fujitsu, to provide compensation for its role in the Post Office scandal have intensified. Fujitsu has committed to full cooperation with the ongoing investigation in response to the allegations.

The BBC reported politicians have called on Fujitsu to clarify its role in the Post Office scandal, which resulted in the prosecution of over 700 branch managers spanning two decades.

Executives at Fujitsu will testify in front of a parliamentary committee and will be questioned in an independent public inquiry, expected to conclude later this year.

A spokesperson for Prime Minister Rishi Sunak said those found responsible in a legal or financial capacity will be held accountable. However, the facts need to be established first.

“We would not look to act before we have established the full facts regarding Fujitsu’s culpability or otherwise,” said the Government spokesperson.

Fujitsu has also been asked to compensate the victims of its Horizon system, a request that has not yet been put to the firm.

South China Morning Post reported compensation could reach figures of around £1 billion ($1.27 billion). The Government-owned Post Office has put aside £244 million ($310 million) in funding.

“Our efforts to rectify the wrongs of the past include paying full and fair compensation supported by our shareholder, the UK Government. To date, we have paid over £120 million ($152 million) in compensation,” said Nick Read, Chief Executive at the Post Office.

Fujitsu Fully Commits to Cooperate With Post Office Investigation

Fujitsu apologised for its role in the sub-postmasters suffering and that it was ‘fully committed’ to supporting the inquiry into the Horizon IT system.

“The inquiry has reinforced the devastating impact on postmasters’ lives and that of their families … Out of respect for the inquiry process, it would be inappropriate for Fujitsu to comment further at this time,” said a Fujitsu spokesperson.

The spokesperson added the inquiry’s objective is to gain insights into who possessed specific information, when they were aware of it, and the actions they took based on that knowledge. 

Government Contracts Questioned

Prime Minister Rishi Sunak is under pressure to stop new public contracts with Fujitsu. 

The BBC reported since 2013, the Government has awarded Fujitsu 191 contracts worth more than £6.5 billion ($8.2 billion). Of those contracts, Fujitsu was awarded £1.1 billion ($1.3 billion) by HMRC, £581 million ($739 million) with the Ministry of Defence, and £476 million ($605 million) with the Home Office.

Fujitsu also secured contracts for the development of the new UK emergency alert system for mobile devices. In December, the Environment Agency extended its flood alerts contract with Fujitsu until the end of 2025.

In 2022, the Government removed Fujitsu from its list of preferred suppliers. The IT services company can still win Government contracts through the standard procurement process.

What is Fujitsu’s Horizon System?

Horizon is software that was first created by UK software company ICL. ICL was later acquired by Fujitsu in 1998.

First launched in 1999, Horizon was the largest non-military IT project in Europe at the time.

The Fujitsu Horizon system contains an electronic point of sale service (EPOSS) that allows sub-postmasters and Post Office branch workers to input sales on a touchscreen with automated background accounting. It aimed to computerise the payment of benefits at post offices. The system was intended to replace Girocheques and paper benefit books with swipe cards.

Through the new implementation of the Horizon system, benefit fraud was anticipated to be reduced by £150 million ($190 million) per year. The system also aimed to improve efficiency at post office counters, increase footfall at small branches, and enable post offices to offer new services.

The £1.5 billion ($1.9 billion) project was funded through the private finance initiative. In this arrangement, the winning bidder is responsible for developing the system and providing training to approximately 70,000 Post Office staff. The costs incurred by the bidder will be recuperated through charges based on transactions using the developed system.

Issues with the Horizon System

Shortly after implementing Horizon at Post Office branches, a surge in unexplained accounting shortfalls was observed among sub-postmasters. 

Computer Weekly reported many sub-postmasters had never encountered such problems before. Unlike the previous paper-based system that allowed them to trace the causes, the new technology posed challenges to identifying the origin of the issues.

Sub-postmasters were held responsible for accounting shortfalls unless they could provide evidence to dispute the claims. However, the absence of a paper trail made it difficult for many to prove that the losses were not their fault.

For years the Post Office insisted on the reliability of data from the Horizon computer accounting system whilst accusing branch managers of theft. Since then, there have been several versions of Fujitsu’s Horizon system.

“The current version of the system, introduced from 2017, was found in the group litigation to be robust, relative to comparable systems,” said the Post Office.

The Post Office said it will be moving away from Horizon to a new IT cloud-based system that will be more user-friendly and easier to adapt to new products and services. This is currently being developed with the involvement of postmasters.

Consequences for Sub-Postmasters

Following the introduction of Horizon, the Post Office independently pursued legal action against over 700 sub-postmasters. Accusations ranged from theft to false accounting.

Convicted sub-postmasters had to reimburse the Post Office for the alleged stolen funds, sometimes leading to bankruptcy. These allegations resulted in penalties like imprisonment, community service, and electronic tagging, leaving sub-postmasters with criminal records.

In May 2009, Computer Weekly broke the story about problems with Horizon software. In September 2009, sub-postmaster Alan Bates created the Justice for Sub-postmasters Alliance (JFSA). 

Following pressure from campaigners, the Post Office appointed forensic accountants Second Sight to investigate Horizon. Second Sight found faults with the system that could result in accounting discrepancies. However, the Post Office still maintained that the system was sound.

In 2019, 555 sub-postmasters won a group action case against the Post Office in court. The group was led by Alan Bates. The Post Office opted for an out-of-court settlement, agreeing to pay £58 million ($73.7 million).

In December 2020, convictions were overturned for six sub-postmasters. In April 2021, the Court of Appeal judges overturned the convictions of 39 sub-postmasters. 

On 10 January, Reuters reported Prime Minister Sunak said his Government was considering a move to exonerate wrongfully convicted postmasters. He called the scandal an ‘appalling miscarriage of justice’.

Why Has the Post Office Scandal Resurfaced?

The Post Office scandal has re-entered the public sphere as a four-part ITV drama titled ‘Mr Bates vs The Post Office’. The series centred on the story of Alan Bates who helped bring the scandal to light. Since the series was broadcast, over 100 new potential victims of the scandal have come forward.

The Criminal Cases Review Commission dubbed the incident the ‘biggest single series of wrongful convictions in British legal history’.

“Every single one of these convictions has clearly had a profound and life-changing impact for those involved,” said Helen Pitcher, Chairman of The Criminal Cases Review Commission.

Former Post Office leaders have not yet faced direct reprimand. The Chief Executive of the Post Office from 2012 to 2019, Paula Vennells, was awarded a CBE. After leaving the Post Office in the same year, she became Chair of the NHS trust. On 9 January, Vennells handed back her CBE.

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Written by Wed 10 Jan 2024

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