Fujitsu takes US$1 billion knock as Post Office scandal escalates

More than US$1 billion was wiped off the value of Fujitsu on Wednesday (Jan 17) after the company’s European chief said it had a moral responsibility to provide compensation for its role in the UK Post Office scandal.

Shares fell 4 per cent by the close of trading in Tokyo, and are now down more than 8 per cent since the start of the year.

Glitches in the Japanese technology titan’s Horizon software led to hundreds of local Post Office managers – known as sub-postmasters – being wrongly convicted for theft and false accounting between 1999 and 2015.

The scandal has been reignited in Britain following a recent televised drama. On Tuesday, UK politicians quizzed several people including Fujitsu’s Europe head Paul Patterson, who said he was “personally appalled” by the evidence surrounding the case.

The UK government has agreed to overturn the convictions of sub-postmasters, and pay hundreds of millions of pounds in compensation. Members of Parliament have argued that Fujitsu should contribute to the payments.

“I think there is a moral obligation for the company to contribute,” Patterson told the House of Commons Business and Trade Committee. He said the matter had been discussed with Fujitsu’s senior leaders in Japan.

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Any compensation is expected to be relatively small for Fujitsu, but the scandal could lead to steps such as a ban from future contracts, said Asymmetric Advisors analyst Tim Morse. Fujitsu’s UK business is the company’s most profitable in Europe, he said.

Payments could be settled in time for a UK general election, expected in the second half of this year, according to Bloomberg Intelligence analyst Ian Ma. “Without proper crisis management, the ongoing saga could also hurt Fujitsu’s future IT order wins in the Europe region,” he said, adding that they contributed 18 per cent of the company’s overall sales in its last fiscal year. BLOOMBERG