Save content
Have you found this content useful? Use the button above to save it to your profile.
Paul Patterson, Director, Fujitsu Services Limited
UK Parliament Business and Trade Committee

Fujitsu admits ‘moral obligation’ to contribute to Post Office scandal compensation

by

Developers behind the faulty software at the heart of the Post Office scandal have apologised to its victims and agreed to contribute to the compensation of subpostmasters convicted using data from its system.

16th Jan 2024
Save content
Have you found this content useful? Use the button above to save it to your profile.

Appearing before a committee of MPs looking into the Post Office Horizon scandal, Fujitsu’s European director Paul Patterson (above) apologised to the more than 900 subpostmasters wrongly prosecuted due to fundamental errors in its software.

Patterson told the Business and Trade Committee that the Japanese software giant has a “moral obligation” to contribute to the expected £1bn compensation bill due.

“We have a part to play and to contribute to the redress fund for subpostmasters,” he said.

Patterson added that the precise amount Fujitsu would contribute could only be determined once the current statutory inquiry into the scandal has concluded.

Post Office, a limited company owned wholly by the UK government, has earmarked around a billion pounds to compensate wrongly convicted subpostmasters.

Bugs and errors from the start

Patterson told MPs that Fujitsu had known the Horizon IT system was faulty even before it was rolled out to Post Office branches in 1999.

“Fujitsu would like to apologise for our part in this appalling miscarriage of justice,” said Patterson. “We were involved from the very start. We did have bugs and errors from the start and we did help Post Office with prosecutions of subpostmasters.”

A senior developer who worked on the initial project before it went live told Computer Weekly in an interview in 2021 that in the months leading up to its launch, Horizon’s problems were well known inside Fujitsu.

Despite this, Horizon was rolled out to more than 14,000 branches. Many subpostmasters immediately began noticing discrepancies, with accounting records inexplicably altered or duplicate transactions created. When this was flagged with Post Office, it chose to pursue, and in many cases prosecute, the subpostmasters for theft, fraud and false accounting. 

At the statutory inquiry led by Sir Wyn Williams, also running today, former Fujitsu employees stated they knew that faults with the system the vendor used to extract Post Office transaction data that were subsequently used in the prosecution of hundreds of subpostmasters could lead to a legal challenge as early as 2008.

An email chain from 2010 shows that Fujitsu staff were concerned about “a very significant problem” with the Horizon IT system. This meant duplicate transactions were not corrected, while analysts also found duplicates in a third of all audit record query returns (ARQ) – data that was later used as evidence in court.

During the subpostmasters trial, Fujitsu engineers were called as witnesses by Post Office lawyers and testified that the Horizon system was robust and that the individual cases were just isolated examples. They also denied that Fujitsu had remote access to Post Office terminals – a claim that was later disproved.

A 2019 High Court ruling following a case brought by more than 500 of the affected subpostmasters concluded that the Horizon system was “not remotely robust”, and that “bugs, errors and defects” meant there was a “material risk” it was to blame for the faulty data used in the prosecutions.

‘Ongoing issues with suspense accounts’

Patterson was joined at the committee hearing by Nick Read, current chief executive of Post Office.

Read’s evidence contained several jaw-dropping remarks, including an admission that Post Office can’t locate much of the money taken from subpostmasters due to an “ongoing issue” with suspense accounts. 

“We’ve had this investigated two or three times by external agents,” said Read, “but I don’t think we got to the bottom of what was going on with those suspense accounts… because the quality of the data wasn’t good enough.”

As Post Office had little control over its internal accounting systems throughout the time it was prosecuting subpostmasters, it didn’t know where money was going, nor could it properly account for where it came from.

A podcast recorded by investigative journalist Nick Wallis with a long-serving subpostmaster and a member of Second Sight, the forensic accountancy firm that went into Post Office in 2012, looked into where the money that disappeared from branches had gone.

In an article accompanying the podcast, Wallis stated that any money Post Office was credited that it couldn’t make sense of ended up in an internal suspense account – as admitted by Read in a parliamentary committee meeting in January 2021.

According to a source Wallis had spoken to familiar with the system, after three years if entries in a suspense account were not identified and/or claimed, the cash was swept into Post Office’s P&L account and counted as profit – potentially forming part of the organisation’s executive bonus scheme.

‘Culture of denial’

Speaking at today’s committee hearing, Read, who joined Post Office in 2019, said the organisation had been in a “culture of denial”.

Post Office still runs an updated version of the Horizon system and last year the government agreed to extend the contract to 2025 for an additional £36m. Read told today’s parliamentary hearing that the organisation is committed to “get off Horizon” once the current contract extension expires in 2025.

Read also confirmed that Post Office was in talks with HMRC about the tax treatment of compensation payments to subpostmasters.

Replies (22)

Please login or register to join the discussion.

avatar
By Justin Bryant
17th Jan 2024 08:48

I suppose they'll need advice from DN on how to make this CT deductible (and no PAYE/NIC) and not CTable for PO etc.

Might be better if they can set up a charity for this purpose (unless that's all dodgy tax avoidance of course).

Thanks (2)
Replying to Justin Bryant:
avatar
By listerramjet
18th Jan 2024 09:19

Fujitsu is a Japanese company, owned by the Furukawa Group. I would guess it’s UK tax obligations are small beer!

Thanks (1)
Replying to listerramjet:
avatar
By moneymanager
18th Jan 2024 10:03

Unfortunately we sold them ICL.

Thanks (1)
Replying to Justin Bryant:
Stepurhan
By stepurhan
19th Jan 2024 13:04

Justin Bryant wrote:

I suppose they'll need advice from DN on how to make this CT deductible (and no PAYE/NIC) and not CTable for PO etc.


Has he actually commented along these lines, or are you just perpetuating your vendetta against the man?
Thanks (0)
avatar
By listerramjet
18th Jan 2024 09:23

Seems like a reasoned response to the political furore as MPs scramble to get on the right side of History!

Thanks (1)
avatar
By peter morgan
18th Jan 2024 09:34

"During the subpostmasters trial, Fujitsu engineers were called as witnesses by Post Office lawyers and testified that the Horizon system was robust and that the individual cases were just isolated examples. They also denied that Fujitsu had remote access to Post Office terminals – a claim that was later disproved."
I think some of those Fujitsu engineers might be in a world of trouble.

Thanks (6)
avatar
By Ralphgab
18th Jan 2024 09:39

"During the subpostmasters trial, Fujitsu engineers were called as witnesses by Post Office lawyers and testified that the Horizon system was robust and that the individual cases were just isolated examples. They also denied that Fujitsu had remote access to Post Office terminals – a claim that was later disproved."

Surely this amounts to perjury? Why no prosecutions for this?

Thanks (3)
Replying to Ralphgab:
avatar
By johnjenkins
18th Jan 2024 09:42

Because the engineers won't give evidence unless they are given immunity to prosecution.

Thanks (0)
Replying to johnjenkins:
avatar
By moneymanager
18th Jan 2024 09:59

Order them to do so or be held in contempt?

Thanks (1)
Replying to moneymanager:
avatar
By johnjenkins
18th Jan 2024 10:33

That you can't do. You can order them to court but not to speak.

Thanks (1)
Replying to Ralphgab:
avatar
By bobsto12
18th Jan 2024 13:06

They are already being investigated for exactly that as a judge reported them to the DPP following previous proceedings.
I wonder whether conspiracy to pervert the course of justice might be investigated too. You can get life for that.

Thanks (2)
Replying to bobsto12:
avatar
By johnjenkins
18th Jan 2024 17:30

Tip of the iceberg.

Thanks (1)
avatar
By Brodders
18th Jan 2024 09:40

How big of them!!!!!!!!!!!

Thanks (2)
avatar
By Chris Burns
18th Jan 2024 09:57

I’m not sure companies can have morals so can’t have a moral obligation. They might have codes of conduct which they pursue to enhance and sustain their business. But only human beings ( at least some) have morals. The individuals involved have moral responsibilities and perhaps should bear the cost, rather than Fijitsu’s shareholders.

Fujitsu needs to be seen to be ‘doing the right thing’ to protect its reputation ( so expenses probably tax deductible) so it can continue to win business, including from UK Government.

This is all about trying to preserve shareholder value, which of course is what its Board has a responsibility to do.

Thanks (1)
Replying to Chris Burns:
Rob Swan
By Rob Swan
18th Jan 2024 13:56

Ltd. company law has long since been used to evade personal reponsibility for abuse and wrong doing - way beyond the scope of its original intent. Well overdue for new laws holding directors personally responsible for their actions methinks. (For the record, I'm a company director and very willing to be held responsible for my actions as such.)

Thanks (1)
avatar
By moneymanager
18th Jan 2024 09:57

Not Fit for Purpose.

I we take this as your starter, posit another nine such situations, it won't be difficult.

Thanks (1)
avatar
By 2TunTed
18th Jan 2024 10:06

Good of Fujitsu to 'fess up some 20+years, knowing from the start that the 'system', was flawed. Really big of them and they should be suitably rewarded at both corporate and personal officer level
for their complete lack of integrity and honesty. Realistically, there is little chance of this happening as integrity and honesty appear to be endangered species in public life and we should expect to hear the usual excuses about cost, resources and the difficulty of assigning responsibility to individuals. Not a problem that troubled them in the Post Office! You couldn't make it up!

Thanks (3)
avatar
By Mr J Andrews
18th Jan 2024 10:07

It goes further than compensation. Patterson hast made a clear admission of guilt i.e. knowledge of bugs / errors from the outset. Yet Vennells etc categorically were seen to be praising the robustness of the system. Not forgetting each victim lied to about being ''the only one''. With further lies regarding remote access. ........The unbelievable dishonesty goes on and on. Clearly fabrication or prevarication has taken place leading to false convictions and imprisonment ; not as some within POL would argue that they were ''misled''.
Whoever the liars are should also face a similar term of incarceration at HMP. Perhaps Luke 6.31 or Matthew 7.12 may be good pulpit lessons to preach to the good parishioners of Bedfordshire in this respect .
No doubt Sunak would like a speedy / hefty compensatory fix in election year rather than hold his Government held POL to face proper justice. He needs however, to broaden his horizons on this one.

Thanks (3)
Rob Swan
By Rob Swan
18th Jan 2024 12:57

Absolute disgrace and has been for far too long.
Given the effectiveness of a TV drama and the ineffectiveness of the 'official' remedies I think we may be in for considerably more leisure viewing before all the wrongs are righted and those truly guilty are found so - if ever, which I doubt. Maybe they can 'speed things up' by compensating victims with free HS2 tickets! available from a Sub-Post Office no time soon!
I'll find my own way out.

Thanks (0)
avatar
By kirstiej
18th Jan 2024 17:07

I still can’t get my head around the idea that the sub post masters weren’t given data to reconcile their Horizon balances.

Wouldn’t that mean their own accounts were compromised?

It seems to be the equivalent of just getting a balance from the bank or a supplier each month with no statement - have I missed something?

Thanks (1)
Replying to kirstiej:
avatar
By johnjenkins
19th Jan 2024 08:57

Which is why I posted about what their Accountants were doing. Perhaps they too were hoodwinked into thinking computer systems were the bee all and end all.

Thanks (1)
Replying to kirstiej:
Rob Swan
By Rob Swan
19th Jan 2024 11:19

How often does anyone (accountants/auditors) question the software?
Not so many I think.
Most know 'Garbage In, Garbage Out. Not so many think 'Correct Input, Garbage Output' - which is exactly the problem. (And Fujitsu knew it!)
Now, about all these plans for MTD....

Thanks (0)