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Why the Japanese company behind the Post Office scandal keeps getting taxpayer cash

Post office fujitsu horizon japan - Yui Mok/PA Wire
Post office fujitsu horizon japan - Yui Mok/PA Wire

It’s the scandal that shocked the nation. The Post Office, that staid and dependable feature of British life, had unjustly prosecuted more than 700 innocent people, its own staff, based on flawed financial accounts from a computer system called Horizon.

Senior judges described the Post Office’s years-long campaign as “an affront to the court’s conscience” as they began quashing wrongful criminal convictions that destroyed lives and even led to suicides.

Horizon was fatally flawed. The software would wrongly record large shortfalls in daily takings at some Post Office branches.

It is alleged that Horizon and Post Office staff had secret access to the system allowing them to alter branch offices’ accounts.

The Post Office chief executive, Paula Vennells, was eventually forced out of office over the scandal, but Fujitsu — the Japanese giant responsible for Horizon — has largely dodged public accountability.

Paula Vennells post office scandal fujitsu - Post Office
Paula Vennells post office scandal fujitsu - Post Office

Indeed, the company has bagged government contracts worth about £3.5bn while criminal prosecutions against Fujitsu staff who supported the Post Office’s warped crusade have been conspicuously absent.

Founded in 1935, Fujitsu is worth £58bn and its UK arm had sales of £1.3bn last year, about a quarter of its total outside Japan. Most of its UK revenues come from public sector contracts, mostly for big IT systems similar to Horizon.

As the Government has grown ever more dependent on Fujitsu’s expertise, its interest in pursuing its staff who testified that Horizon was effectively infallible has remained resolutely low.

Britain is a key market for Fujitsu and government ministers are equally keen on preserving the 7,000 jobs created by the company, which boasts that it is “building trust in society”.

Faced with pressure in the House of Lords on Fujitsu’s role in the scandal, government spokesman Baroness Bloomfield appeared to concede in March that the company should face at least some sanctions.

“Fujitsu is no longer a preferred supplier to the Government; in common with any other company, it can bid for contracts,” she told peers. Yet Fujitsu has won public sector contracts worth £3bn since 2013, with more than half that value awarded in the past five years, according to Karl Flinders, a Computer Weekly journalist.

Fujitsu declined to comment on its involvement in the Horizon scandal or on the billions of pounds of public contracts it has been awarded after the scandal was exposed.

Lord Arbuthnot of Edrom is not convinced by Fujitsu’s “trust” slogan. He has long campaigned to bring both Fujitsu and the Post Office to book over the Horizon scandal, dating back to the days when he was a local MP fighting to vindicate a wrongly accused subpostmaster in his constituency.

“It is conceivable that some people in the Post Office — and indeed some government ministers — did not know that Fujitsu was altering accounts, but it is obviously absurd to suggest that Fujitsu did not itself know what it was doing,” he says.

Alan Bates, chairman of the Justice For Subpostmasters Alliance, agrees. The group sued the Post Office on behalf of 550 victimised subpostmasters, forcing the state-owned company to back down after a fraught High Court battle.

“I have little doubt that as time goes on it will emerge from [Sir Wyn Williams’ statutory] inquiry, the police investigation and from elsewhere, that many senior people at Fujitsu were well aware of the problems with the system for many years,” he says.

Hopes for accountability rest with that judge-led inquiry — or, as the Justice for Subpostmasters Alliance describes it, the “Post Office is incredibly guilty Horizon IT Inquiry”. While some might excuse the Alliance for expressing strong views given what its members have endured at the Post Office’s hands, what was supposed to be an accountability exercise has been beset by controversies.

In its initial form the Williams inquiry lacked statutory powers to compel production of documents from companies including Fujitsu and to make witnesses testify. That was reversed last June, but its watery first incarnation signalled that ministers wanted the whole thing to go away quietly.

Fujitsu itself was referred to the Director of Public Prosecutions by High Court judge Mr Justice Fraser in 2019. He questioned “the evidence of Fujitsu employees” given in support of Post Office prosecutions, though Lord Arbuthnot said it seemed that “nothing” had happened since. A police investigation has reportedly begun, but with little public output to date.

The Horizon scandal first came to light in the 2000s, but its roots lie in one of the first government Private Finance Initiative contracts awarded in the mid-1990s. In its original form, Horizon was built for the Department of Work and Pensions to replace paper benefits books with a “fraud-free” swipecard system.

Although that £1bn project was cancelled, sources told The Telegraph that the Government felt obliged to carry on with the project regardless and safeguard Fujitsu’s investment.

Eleanor Shaikh, a school teacher who began researching Horizon after her local postmaster was prosecuted over accounting failures caused by the system, said the Conservative government of the day was “terrified of offending Japanese investors in the UK”.

Shaikh, who is preparing a 300-page submission to the Williams inquiry into the Horizon system’s origins, said the then-Department of Trade and Industry was “trying to make the Post Office more commercial” by digitising its paper-based processes.

According to Computer Weekly, government contracts awarded to Fujitsu include a £673m deal with HM Revenue and Customs, another worth more than £450m for the Home Office and a £572m procurement with the Ministry of Defence.

In addition to its IT contracts, Fujitsu Defence has secured deals making it responsible for maintaining some of the Royal Navy’s warships, funnelling yet more taxpayer cash into the company’s coffers. While subpostmasters struggle for justice, the Japanese company appears to be tightening its hold over the British state with official approval.

A Government spokesman said: “The impact the Horizon scandal has had on postmasters and their families is utterly horrendous, and it is crucial that something like this can never happen again.”

A weary Bates, of the Justice For Subpostmasters Alliance, sighs: “We can but hope that those in authority will bring Fujitsu to account.”

At the end of the day only ministers have the power to do so, leaving those caught up in the scandal wondering if justice will truly being served.