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Fujitsu must face scrutiny following Post Office Horizon trial judgment

While the Post Office has suffered financial and reputational damage after losing its court battle with subpostmasters, the supplier of the IT system at the centre of the dispute has major PR challenges ahead

While the Post Office and its mistreatment of subpostmasters – wrongly punished for theft and false accounting – is headline news after the group litigation over the Horizon IT system drew to a close, the IT services company behind the system faces further questions.

The Post Office was in the dock in the multimillion-pound group litigation, but it was not the only organisation in the spotlight, with Fujitsu also emerging from the case tarnished.

Fujitsu’s customers and partners, as well as industry analysts, will need reassurances about the company’s staff and methods, after High Court judge Peter Fraser tore into some of the evidence given by the supplier’s staff in the latest court case and previous trial.

Fraser said some staff giving evidence were protecting Fujitsu rather than giving accurate information and he questioned whether Fujitsu had been accurate in reporting to its customer, the Post Office.

The second trial in the group litigation, Bates and Others vs Post Office, examined the Post Office’s claim that Fujitsu’s Horizon system used in branches was robust and not to blame for accounting inaccuracies. Horizon was introduced in 1999/2000, and is used by about 12,000 Post Office branches.

Following an out-of-court settlement between the two parties, the judgment for the second trial, which examined whether Horizon could have been to blame for the accounting shortfalls, was handed down by Fraser, who ruled unequivocally that the system was not robust.

The Post Office was rightly chastised by Fraser for treating subpostmasters in a way not unlike Victorian factory workers, and refusing to accept that Horizon could be at fault, to such an extent that the judge said it “amounts to the 21st century equivalent of maintaining that the Earth is flat”.

Concerns over accuracy

Fujitsu did not escape criticism. Before handing down his judgment, Fraser announced his concerns over the accuracy of evidence given in court by Fujitsu in previous trials of accused subpostmasters.

He said: “Based on the knowledge that I have gained both from conducting the trial and writing the Horizon issues judgment, I have very grave concerns regarding the veracity of evidence given by Fujitsu employees to other courts in previous proceedings about the known existence of bugs, errors and defects in the Horizon system. These previous proceedings include the High Court in at least one civil case brought by the Post Office against a subpostmaster and the Crown Court in a greater number of criminal cases, also brought by the Post Office against subpostmasters and subpostmistresses.”

Fraser sent papers from the case to the director of public prosecutions, Max Hill, to consider whether the matter should be the subject of any prosecution. This could lead to criminal prosecutions for crimes such as perjury.

The Criminal Courts Review Commission is also reviewing applications for a retrial of 34 subpostmasters who were convicted in previous trials.

Following the latest judgment, Fujitsu said in a statement: “On 16 December, Mr Justice Fraser published his judgment on the second trial of the Post Office group litigation. While Fujitsu was not a party to the litigation, we take this judgment very seriously and will now review the findings in detail.”

The IT supplier will have to analyse why its staff provided inaccurate information to the court, and revisit its communication with the Post Office.

Fraser said in his judgment: “As will be seen from my analysis of the Fujitsu evidence of fact, I have certain views about the lack of accuracy on the part of Fujitsu witnesses in their evidence. If that lack of accuracy has also been included in reporting to the Post Office by Fujitsu, then that goes some way to explaining the Post Office’s lack of grasp of so much material that is consistent with the claimants’ case.”

During the trial, Fujitsu staff who gave evidence in the Post Office’s defence included Stephen Parker, head of Fujitsu Post Office application support; Andy Dunks, Fujitsu IT security analyst; and Torstein Olav Godeseth, Fujitsu’s chief architect working with Post Office Horizon.

Former senior Fujitsu executive, Gareth Jenkins, who is now retired was not in court, but a significant amount of evidence provided by witnesses came from him.

‘Left rather exposed’

The judge said that at one point, Parker was “left rather exposed in terms of the accuracy of this evidence when it was shown that the points that he had been addressing in this part of the cross-examination – some of which he would not accept – were taken from a Fujitsu internal document, which he had himself drafted”.

Fraser added: “This refusal by Mr Parker to accept his own previously drafted points in what I consider to be an important contemporaneous document also paints him in a very poor light as a credible witness.”

One senior corporate lawyer, specialising in IT outsourcing, questioned why Fujitsu staff might provide misleading evidence, saying: “For a staff member at an IT supplier to mislead a court could be that it was protecting the customer, but more likely itself.”

Fraser said: “Even making allowance for the natural reaction of an employee to wish to protect his employer’s interests, which many people may have subconsciously, I find that Mr Parker’s evidence to the court was inaccurate to a significant degree.”

Fraser also said Dunks had sought to mislead him by stating that there was no Fujitsu “party line” when it came to the contents of drafting witness statements about audit records for legal proceedings. “There plainly is,” said the judge. “It was used in the Fujitsu statements in 2010 and it was used by him in his statement for the Horizon issues trial.”

He added: “I found Mr Dunks very unsatisfactory as a witness. He was both plainly aware of the Fujitsu party line, or corporate position, regarding the words asserting accuracy of audit data, and he was very anxious to keep to it, while initially denying that there was one.”

This raises questions and could even see the Post Office, as the customer, seek answers from Fujitsu. Peer James Arbuthnot, a staunch critic of the Post Office over the Horizon scandal, said: “It may well be that the Post Office may feel let down by Fujitsu, but it is certain that the subpostmasters will. Might they have a cause of action against Fujitsu for a breach of Fujitsu’s duty of care?”

Fujitsu has long been a major IT supplier to the UK government, including in its previous incarnation as ICL. The company provided IT systems to collect taxes and pay benefits for many years, and today it still works with a number of government departments. Back in 2012, Fujitsu was one of two IT companies labelled as high-risk by the UK government to alert all departments if a supplier has performed poorly.

Other questions about Fujitsu’s service levels could be put forward by customers. Evidence in court from Richard Roll, a former Fujitsu employee turned whistleblower appearing as a witness for claimant subpostmasters, revealed that teams at the company were under pressure to keep costs down.

Budget pressures

Roll worked in the software service centre (SCC) serving the Post Office for Fujitsu. He said during his time at Fujitsu, there were budget pressures and redundancies that affected system development and testing.

“The test team felt they were under enormous pressure to complete the testing within certain timescales, which negatively affected the test regime,” he said. “Meanwhile, the development team had to balance time spent on fixes with time spent on developing new features for legacy Horizon and time spent developing a new system, which I believe later became Horizon Online.

“In my first statement, I refer to the pressure that the SSC team and Fujitsu were under generally due to an awareness of the financial penalties imposed by the service level agreements between the Post Office and Fujitsu. I believe that although individual penalties were quite modest, when applied across multiple counters/post offices, the cumulative figures involved were very high, potentially amounting to tens of millions or more.”

In his witness statement, Fujitsu’s Parker said the potential financial penalties were not a factor for the SSC. But Roll said: “We were aware of them and often commented on them, for example, ‘That’s saved Fujitsu another £25m’.”

The Post Office settled the group litigation out of court with about 550 subpostmasters who had suffered financial losses and even loss of liberty after being blamed for accounting shortfalls caused by the Horizon retail and accounting system, from Fujitsu, that they use to run their branches. The Post Office was forced to apologise to the subpostmasters and pay £58m in damages, among other concessions. The Post Office’s costs for fighting the case have amounted to tens of millions of pounds.

Computer Weekly first reported the problems with Horizon in 2009, when it made public the stories of a group of subpostmasters. Soon after this, as more subpostmasters came forward, Alan Bates formed the Justice for Subpostmasters Alliance and began campaigning. Bates had first contacted Computer Weekly in 2004 and had first alerted the Post Office to the problems in 2000.

After years of campaigning, Bates and others forced a group litigation against the Post Office and, after the second trial of four that were planned, claimed victory when the Post Office settled with claimants.

Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009

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