Industry News

Feb. 5, 2024

Fujitsu pledges to cooperate in the British postal workers' scandal as compensation claims mount.

Fujitsu pledges to cooperate in the British postal workers' scandal as compensation claims mount.

Claims for compensation against the Japanese IT services company Fujitsu on behalf of victims of the postal agency scandal have intensified. Fujitsu has pledged full cooperation in the wake of the scandal in the United Kingdom.

According to the BBC, politicians have called on Fujitsu to clarify its role in the British Post Office scandal. Over the course of two decades, nearly 700 branch managers at the British Post Office, a public company, were prosecuted on charges of theft based on data from Fujitsu’s Horizon software.

Fujitsu executives will testify before a parliamentary committee and be questioned as part of an independent public inquiry, which is expected to conclude later this year.

A spokesperson for Prime Minister Rishi Sunak said that those involved legally or financially will be held accountable. However, the facts must first be established.

"We will not take any action until we have established all the facts regarding whether or not Fujitsu is at fault," said the government spokesperson.

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

The South China Morning Post reported that the compensation could total approximately 1 billion pounds (1.27 billion dollars). The British government-owned postal service has set aside 244 million pounds (310 million dollars) in funding.

"Our efforts to rectify past mistakes include the payment of full and fair compensation, supported by our shareholder, the British government. To date, we have paid more than 120 million pounds ($152 million) in compensation," said Nick Read, CEO of La Poste.

Fujitsu is fully committed to cooperating with the investigation into the postal service, and the company has apologized for its role in the scandal. In fact, nearly a thousand postal workers were prosecuted on charges of theft, and some were imprisoned. Fujitsu has stated that it is "fully committed" to supporting the investigation into the Horizon accounting software.

"The investigation has highlighted the devastating impact on the lives of postal workers and their families... Out of respect for the investigative process, it would be inappropriate for Fujitsu to make any further comments at this time," said a company spokesperson.

He also added that the purpose of the investigation is to determine who had specific information, whether those individuals were aware of the software's errors, and what actions were taken based on that knowledge.

Prime Minister Rishi Sunak is under pressure to halt new government contracts with Fujitsu.

The BBC reported that since 2013, the government has awarded Fujitsu 191 contracts worth more than 6.5 billion pounds ($8.2 billion). Of these contracts, Fujitsu received 1.1 billion pounds ($1.3 billion) from HMRC, 581 million pounds ($739 million) from the Ministry of Defense, and 476 million pounds ($605 million) from the Home Office.

Fujitsu also won bids to develop the United Kingdom's new emergency alert system for mobile devices. In December, the Environment Agency extended its flood warning contract with Fujitsu through 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 Horizon? Horizon is software originally developed by the British software company ICL. ICL was subsequently acquired by Fujitsu in 1998.

Launched for the first time in 1999, Horizon was the largest IT project in Europe outside the military sector at the time.

Fujitsu's Horizon system includes an electronic point-of-sale (EPOSS) service that allows postal agents and post office employees to enter sales on a touchscreen, with automated accounting in the background. It was designed to computerize the payment of social benefits at post offices. The system was intended to replace Girocheques and paper benefit books with smart cards.

Thanks to the new implementation of the Horizon system, benefit fraud was expected to decrease by 150 million pounds (190 million dollars) per year. The system was also designed to improve efficiency at post office counters, increase foot traffic at small branches, and enable post offices to offer new services.

The project, valued at 1.5 billion pounds sterling ($1.9 billion), was funded through a private financing initiative. Under this arrangement, the selected bidder is responsible for developing the system and training approximately 70,000 Postal Service employees. The costs incurred by the contractor will be recouped through fees based on transactions using the developed system.

Problems with the Horizon system: Shortly after Horizon was implemented in post offices, an increase in unexplained accounting discrepancies was observed among postal workers.

Computer Weekly reported that many postal workers had never encountered such problems before. Unlike the previous paper-based system, which allowed them to trace the causes, the new technology made it difficult to identify the source of the problems.

 

 

 

 

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