wellignton - stock.adobe.com

News

Fujitsu escaped huge lawsuit because Post Office behaved so badly in Horizon scandal

How Fujitsu has so far avoided a huge lawsuit in relation to its role in the Horizon scandal

Karl Flinders
By
Published: 04 Nov 2021 12:30

The behaviour of Post Office senior management during the Horizon scandal was so egregious that the supplier of the faulty software that triggered it has escaped a large financial penalty.

But the case is a warning shot to IT suppliers that they should ensure that their systems are not misused by corporate customers.

Nine times out of 10, an IT supplier would be sued by its customers if system faults caused financial and reputational damage for customers, but despite its software being central to one of the biggest miscarriages of justice in history, Fujitsu has so far escaped such action.

Faults in software from Fujitsu, known as Horizon, have been shown to have been responsible for unexplained accounting shortfalls at Post Office branches. But subpostmasters were previously blamed for these, with more than 700 of them prosecuted for crimes of theft and false accounting. In 2009, Computer Weekly told the stories of seven subpostmasters affected by the problems, which led to many more who had suffered losses coming forward. (See the timeline of Computer Weekly articles since it first broke the story.)

The scandal could cost the Post Office and its government owner as much as £1bn when it fully compensates victims. Meanwhile, Fujitsu is still winning contracts with government and businesses across the UK, including a recent extension to a contract with the Post Office, worth £42m.

James Hartley, partner at solicitors Freeths who managed a High Court group litigation in 2018/19 which saw subpostmasters sue the Post Office to prove Fujitsu’s system was faulty, said the supplier “has been very lucky”.

“Because Post Office were themselves massively to blame, Fujitsu got away with it,” he said. “It could have been very different. What would normally happen is victims would sue the Post Office and the Post Office would have sued its IT supplier, in this case Fujitsu, for developing a defective system. But this hasn’t happened. I believe the reason is partly because it knows that its management has caused a lot of this trouble and there is every chance that if it brought a claim against Fujitsu, the court would see this as the Post Office wrongly trying to pass the blame.”

Fujitsu’s role in the scandal

There is a lot shielding of Fujitsu’s role in the scandal, most notably the Post Office management’s role in the Horizon project and the problems that followed. “Whilst the Horizon system was clearly defective, I have never really seen the main issue in this case as being the defective IT system – the main problem was how the Post Office dealt with it,” said Hartley.

There were early signs that the Post Office’s top team were negligent. In 2000, Frank Field, then minister for welfare reform, warned of this when the Horizon project was at its early implementation phase. After investigating the Horizon project, which was controversial even then, he said in Parliament: “I have a tale to tell about the state of the [Horizon] project that I inherited. I did not merely talk to colleagues and read the papers, I visited the project partners. Had it been my responsibility to do so, I would have sacked the members of the Post Office board, who were appalling people. They were short-sighted and partisan.”

“They thought themselves smart; they thought themselves clever,” he said. “They doubtless accepted their fine salaries, but I doubt whether they served post offices or sub-post offices well, and I am disappointed that many of them are still in post today. Perhaps someone else will deal with them.”

Field’s comments were proved prophetic. For example, if the Post Office’s senior management had taken a step back and questioned why it was criminally prosecuting subpostmasters, despite the known existence of computer bugs, and built a detailed understanding of how the system was being used, the human suffering could have been avoided.

But, despite the proven responsibility of the Post Office for the scandal, Fujitsu can’t avoid scrutiny as its role went beyond just supplying and supporting the software. It also provided data packs to the Post Office, which were used to wrongly prosecute subpostmasters and even provided witnesses to the Post Office in trials of subpostmasters accused of theft and false accounting.

Perjury investigations

The data used in court has since been proved to be wrong and former Fujitsu members of staff are currently being investigated by the Metropolitan Police for potential perjury in the trials of subpostmasters that were blamed for unexplained losses.

Hartley said it is what could have happened that should worry suppliers. “Because Post Office was found to have been deeply culpable, Fujitsu escaped being drawn into the Court litigation.“

“In most of these cases where an IT system fails, a supplier would not be so lucky because it would not be as cut and dry how the customer’s behaviour was the main cause of the damage to end-users and customers.

“What Fujitsu arguably didn’t do sufficiently in my view, and this is a lesson for tech companies, is look at the full range of uses that the Post Office had for the system and in particular the use to which the data output was being put,” he said. “Obviously Horizon is a point-of-sale system and it’s doing all the transactions, but the Post Office was also using evidence from the system to prosecute people. At that point the alarm bells should have rung.”

Hartley said if Fujitsu’s board had looked earlier at the risk of reputational damage, lawyers may well have told them to stop handing over data packs to Post Office to use as evidence and stop allowing it to use Fujitsu witnesses to give evidence in court under oath.

Mark Lewis, senior consultant at Macfarlanes, who specialises in IT outsourcing contracts, said that suppliers must consider how they could be responsible if their software causes problems for users as a result of the actions of its corporate customer.

“Where there is a dispute about the quality or performance of an IT system, in my experience the first thing an IT supplier would do is investigate whether and how to allocate responsibility to the customer. In other words, identify the role the customer had in creating the deficiency.”

Ongoing process

Identifying responsibility for the Horizon scandal has been a long process that is ongoing.

No Post Office or Fujitsu executives, nor government ministers or civil servants, have been held responsible for the failings, and campaigners are demanding answers from former Post Office executives and civil servants. 

There is currently a statutory public inquiry into the scandal, which will have its first public hearing on 8 November. Follow it live here on the inquiry YouTube channel.

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

Read more on IT for retail and logistics