Fujitsu says compensating post office victims is a 'moral obligation'

shares Fujitsu The Japanese IT company's stock fell nearly 4% on Wednesday after Paul Patterson, co-CEO of the Japanese IT company in Europe, said it was a “moral obligation” to compensate those who suffered because of the company's faulty software.

The company, whose shares were the second-biggest loser on the Nikkei, has indicated it will compensate hundreds of subpostmasters who were wrongly prosecuted in the UK as a result of its flawed software.

Between 1999 and 2015, 736 subpostmasters, which are self-employed branch managers under contract with the post office, were subject to prosecutions and convictions for financial misconduct based on inaccurate data generated by Horizon, a software program made by Fujitsu.

The issue received new public attention this year when ITV aired a drama series called Mr Bates vs. the Post Office about postmasters' fight for justice.

Horizon was manufactured by Fujitsu in 1999 and was introduced across Post Office branches to manage financial transactions. Complaints quickly emerged that it had falsely reported cash shortages.

Appearing before British MPs At the House of Commons Business and Trade Committee, Patterson said that “Fujitsu would like to apologize for our role in this appalling miscarriage of justice.”

“We had errors and errors in the system and we assisted the Post Office in their prosecutions of subpostmasters,” he told the committee.

When Patterson was asked how much Fujitsu would have to contribute to compensation, he did not give a specific number, but said he expected to “sit down with the government to determine our contribution to compensation” once the investigation is completed.

The government allocated one billion pounds in compensation to victims of the post office scandal.

Speaking on CNBC's “Squawk Box Asia” program, Timothy Morse, co-founder of independent Japanese equity consultancy, said it was “surprising” that Fujitsu had not been brought up on the issue until recently.

“This scandal goes back years. The post office's role was well known in these prosecutions, but for some reason Fujitsu was rarely mentioned in the press.”

In a statement to CNBC, Fujitsu said: “Post Office Horizon's current IT legal investigation examines complex events spanning more than 20 years to understand who knew what, when, and what they did with that knowledge.”

The statement also added that the investigation reinforced the devastating impact on the lives of postmasters and the lives of their families, and Fujitsu apologized for its role in their suffering. The company added that it was “fully committed” to supporting the investigation “in order to understand and learn from what happened.”

Morse expects Fujitsu to bear a “reasonable financial burden,” but the company may not have to bear the full £1 billion the British government has set aside in compensation.

On January 11, BBC reported That despite the scandal and ongoing investigation, the Post Office paid Fujitsu more than £95 million to extend the use of the Horizon IT system by two years.

Fujitsu has not yet set a contribution provision, but Patterson said, “When we get to that position, we will certainly have to put a provision in place for it.”

When asked if the scandal meant Fujitsu would be “persona non grata” for future UK government contracts, Morse said that “could be a possibility”.

However, it has also highlighted that Fujitsu is very close to the UK government following its purchase of British computer company ICL in 1998, which supplied computers to the British public sector.

“Fujitsu's name has been tarnished but… it's an integral part of UK government IT contracts. So replacing Fujitsu could be very expensive.”