Welcome to this third panel of today’s Business and Trade Committee hearing, as we pursue our inquiries into how we secure justice for the sub-postmasters. Mr Patterson, thank you very much indeed for returning to the Committee once again. We first met almost two years ago, when you told the Committee that Fujitsu has a “moral obligation” to contribute to the redress payments for sub-postmasters. The bill provided by the Chancellor is now £1.8 billion, and we know that £1.4 billion has been paid out. How much of that will Fujitsu contribute?

Chair, when we last spoke, I actually agreed with you on the topic of moral contribution, and I have maintained that position for the two years since I saw you. The quantum, the number, is yet to be decided. We need to be informed by Sir Wyn’s report. Even in the last 18 months, new evidence and new information has come to light, and we want to see that report. That was also covered in my conversations with Ministers about our commitment to redress. We will make a commitment to it, but we will decide the quantum when we get to the final report.

I don’t think we know whether Sir Wyn Williams is actually going to opine on what fraction of the bill should be paid by the Government and the taxpayer, and what fraction should be paid by anybody else. But what we do know is that Fujitsu played a part in this appalling miscarriage of justice because you said, in your words, “We were involved from the very start. We did have bugs and errors in the system and we did help the Post Office in their prosecutions of the sub-postmasters.” Let me ask the question in a different way: in your accounts, and in your conversations with Fujitsu headquarters in Japan, how much have you provisioned to pay into the redress pot?

This is the same question that you asked me two years ago, about where we are in putting a provision into our report and accounts, and the answer is that we have not made a provision in our report and accounts. It would be inappropriate for us to do that yet. We have a commitment, and I have made that commitment every time for the last two years. We will contribute to redress when Sir Wyn has opined on what that quantum should be.

But you’re a publicly listed company. Surely your shareholders would expect a provision that will be, if not £1.8 billion, then in the hundreds of millions of pounds. How come you have not provisioned to make that payment now?

Because we do not know the exact number for what it should be.

Why wouldn’t you provision £1.8 billion?

Because it would be inappropriate for us to commit to £1.8 billion.

You said when we last met that you had a “gut feel”—that was your phrase—that staff in your organisation knew there were problems with the Horizon system before 2010. We now know, from your own statements to the Wyn Williams inquiry, and from the contract that was disclosed dating back to August 2006—that was four months before Lee Castleton’s trial—that Fujitsu and the Post Office not only knew that there were problems but had a contract to deal with them, under which Fujitsu would fix Horizon defects and bear liability for losses caused by system errors. We then had the testimony of Richard Roll, who said that Fujitsu employees had been accessing the Horizon system to fix problems. He dates that to his time working for Fujitsu, which was 2001 to 2004. At that point, there were reported to be 30 people working on the issue of wrong payments. So you must accept that there is now irrefutable evidence that Fujitsu knew about these system errors and was managing them long before 2010.

The document I think you are referring to is a reconciliation service description. That was disclosed in my second and fourth corporate statements. It was also reviewed by Justice Fraser in his GLO inquiry. I have always maintained—the company has always maintained, since I have been sitting in this seat—that there were bugs and errors, and that there was remote access. In fact, I agree with you that section 17 of that document talks about remote access. There was no secret about whether there was remote access. The key to that document is how you deal with the problems. I do not know whether those problems were disclosed to the sub-postmasters in their defence. That was one of your other questions last time—around disclosure. I do not know, but I am certainly not going to deny that there were bugs and errors. There continue to be. Horizon is an end-of-life product from many, many years ago. You will also recall, from the last time I spoke to you, that I did not want to renew or extend any contracts with the Post Office.

But the point is that the new evidence that has come into the public domain, and that is now widely circulating in the media, confirms that it is not merely a case of having a gut feel that Fujitsu employees knew about remote access. We now have irrefutable evidence that Fujitsu did know about remote access and the ability for Fujitsu employees to change balances remotely.

Chair, it has never been in doubt, from the very start of this procurement back in 1999—you will see it in the evidence that has been given to Sir Wyn’s inquiry—that there were bugs and errors. There will always be in any project of this scale, particularly one developed in 1990 to 2000. There were always going to be those problems. The question is what you do about them. The document that we are both referring to is about how you deal with those problems. We are not saying that there were no problems. There were absolutely problems in the system, and I have been consistent in that position since I have been giving evidence both here and to Sir Wyn.

If you are, then, admitting a level of culpability of Fujitsu systems in creating this scandal, you are accepting that there is a moral responsibility for Fujitsu to contribute to the redress bill. But you are telling us that Fujitsu has made zero provision—literally zero provision—for a financial contribution. That seems an extraordinary bit of forward planning by Fujitsu.

I don’t agree on bad forward planning. We have been consistent in the message and in the commitment to redress. The quantum for that—

You are saying that you definitely need to contribute some money, but you are provisioning literally zero in your accounts for that contribution.

I answered the question the last time I was here, and I will answer it again today: we have not made any provision, and we will not be making any provision until we have seen the report. Our commitment, and it has been discussed and speculated about, is 100%. We will make a contribution to redress to the Government when we have seen the report. We have been very consistent in that. Whether we have accounted for it in our reports and accounts is not material at this point; the commitment is there.

Can you just tell the Committee the annual profits that Fujitsu reported in its last annual report?

FSL made £15 million last year.

And Fujitsu globally?

I don’t have that number off the top of my head.

It is £1.2 billion to £1.3 billion, depending on the exchange rate, which is about £3.5 million a day. Do you want to tell us how much you have taken in revenue from the British taxpayer in contract extensions since the moratorium of May 2024?

When I appeared here last time, and in my letters to the Cabinet Office, I made a commitment that we would not bid for new Government business, and we have not bid for new Government business. We have a number of contractual obligations to Departments here in the UK, which we are very serious about. They are also critical national infrastructure. The Government have the right in all contracts, not just with Fujitsu but with everybody else, to extend those contracts. The Government have chosen to extend some of those contracts. The approximate number is about £500 million, which is the total contract value if they run to term.

That is over £1 million a day, basically, since May 2024. We have a global group making £3.5 million a day in profit, and we have Fujitsu here in the UK taking £1 million a day from British taxpayers, but there is zero provision for you to contribute to the redress bill of £1.8 billion.

You have heard my commitment, and that commitment has been consistent.

When you came here two years ago, you told us that, in your words, “we are an ethical company…quite different to the company in the early 2000s”. You have told us that the company is culpable in causing the scandal. You have told us there is £3.5 million a day in profit and £1 million a day in contracts with the British taxpayer, but you have made zero commitment on a contribution towards the redress bill. You can see why we just cannot believe the company has changed.

What is in the accounts and what we provision are immaterial as to our commitment as a company. What we have done in the past four years is we have changed our management team here in the UK and we have got an external organisation called Ethisphere to help us with culture and ethics. We have used that company to help guide us in our policies, procedures and training—not PowerPoint but actual, real work—to try to determine whether we are adhering to our own Fujitsu way, which again was one of your questions the last time we appeared. Those things have changed. The company in 1999 to 2005 or 2010 was very different from the company today. Whether we have provisioned the sum of money or not, I do not think is important. I really do not think it is. The commitment is there from us that we will contribute.

But right now we do not know whether that is going to be £1 million or £1.8 billion. You are trying to present Fujitsu as a changed and ethical company. There does not appear to be a problem with cash flow. There does not appear to be a problem with profitability. There is definitely culpability, but your refusal to tell us how much Fujitsu will pay into a £1.8 billion bill for taxpayers leads people to the conclusion that, frankly, Fujitsu is behaving like a parasite on the British state without an obligation to step up to its obligations.

We are not a parasite. The Government have an option as to whether they wish to extend those contracts or not. If you wish us to walk away from those contracts, we will walk away from those contracts. I think that would be detrimental to society, and I think it would be detrimental to the UK Government. The Government and the Post Office have asked us to extend the Post Office contract. We do not want to do that. We are doing it because the Government have asked us to do it, so we are not parasitical at all. We have been trading in this country for 40-plus years. Our company is proud of our investment as a Japanese investor in the UK and of the 5,000 people who we employ and the hundreds of subcontractors we use in this country. We are an organisation that is very serious about what we do. However, we need to be informed by Sir Wyn. Even in the two years since I last appeared before you, I did not know about the Capture system. I did not know that, before the Horizon system, there was the Capture system. I did not know that there were victims of that. I did not know there was legal advice in 2013 telling the Post Office what to do or not do. That is why Sir Wyn’s advice is really important to us, and it will inform the commitment I am giving to you again today and I have given to the Committee before that we will contribute to redress.

How much have Ministers asked you for?

No number has ever been given to me by a Minister.

No Minister has asked you to contribute or to begin provisioning for a particular share of your company’s cash flows to pay into the redress bill?

My conversation with Government Ministers has covered three topics, and it is a regular conversation I have with DBT. The first one is on where we are with the restorative justice programme, which was in volume 1 of Sir Wyn’s report, and where we are in dealing with that action. The second is about where we are on the Post Office and the transition from Fujitsu to its new supplier. The third one is about where we are on compensation or contribution to compensation. We have not agreed a number, again, for exactly the same reason: we do not know the answer yet from Sir Wyn.

When do you expect that answer to come from Sir Wyn?

I have no knowledge.

Thank you for being here today, Mr Patterson. It is a difficult position to be in. I take the point about Wyn Williams, and I think deferring to that is reasonable. The Chair’s point about the scale of Fujitsu—it is £49 billion of market cap. This company can afford to pay a very substantial chunk. This whole problem would not have happened without Fujitsu’s failures—that is obvious. There are many failures here, but Fujitsu’s technology is the root cause. With the Chair’s permission, I ask you to send a message back to Chairman Furuta and CEO Tokita that we look to them personally to take responsibility. It is great having you here—thank you—but we are looking to them to take responsibility for what their company has done to all these people. When they come to the redress, we would like them to be here in front of us, alongside you, to explain, if they are not paying £1.8 billion in full, why not.

Thank you. I understand your question. The previous Secretary of State for Business and Trade met Tokita-san in Tokyo several months ago. He made the same commitment I have just given to the Chair in terms of our contribution to redress, and to await the outcome of Sir Wyn’s inquiry. That commitment was made in the room at that point in time. I cannot speak to whether they would be in the room with us, of course, but I can certainly commit to that commitment, because I was in the room when the conversation was had. In terms of the core problem here, and why this miscarriage of justice occurred, Sir Wyn is taking as long as he is to investigate it because it is super-complex. It was over two decades ago. Any system of any type—particularly one designed in previous decades—will have had problems, errors, bugs and remote access. I do not know what was given to sub-postmasters in evidence, but I know that those problems were there.

Thank you. Let’s get to that settlement as quickly as we can.

On the situation with the money, you talk about the ethics around it, and you say that you are committed to paying something. Why not make an interim payment then? Why would you not demonstrate your new ethical approach by making an interim payment? Are you waiting for Sir Wyn to give you a specific figure?

I believe that if we started talking about an interim number, it would create a whole bunch of questions, which would be unnecessary in a vacuum with regards to Sir Wyn. Secondly, the police are currently investigating 54 people. They have investigated four people under caution. All of those things are in play. For me to start talking about an interim payment would be inappropriate in that context. The company is not walking away from the UK. We are here. We have been here for 40 years. We intend to be here for the next, and our commitment to making that contribution is there, but an interim payment would be inappropriate, in my view.

You touched on Sir Wyn’s recommendation that you embark on a process of restorative justice with the victims. What steps have you taken to action that thus far?

Sir Wyn published volume 1 of his report in the summer last year. He asked for a response from Fujitsu, DBT and the Post Office by October. Between all three parties, we came very quickly to a conclusion that, frankly, we needed some experts on restorative justice. In my evidence to the inquiry, I did not understand restorative justice. I have been personally educated by the CEO of the Restorative Justice Council, which all three organisations have contracted with. That has produced a report that went to Sir Wyn. We are jointly funding an outreach programme for sub-postmasters, a listening service and a helpline service as well. At the end of this month, there will be a subsequent report from the Restorative Justice Council on what we do after March, which is where our current engagement between all parties finishes. My expectation and commitment—I have made this to Jim Simon, the CEO—is that we expect this to be a five-year engagement around restorative justice. We expect that, certainly from a Fujitsu perspective, to be focused on health and wellbeing and education. We think those would be the two areas where we can probably make the most impact.

So that five-year process has begun—it is under way.

It is indeed.

We have heard evidence today that you met with the Lost Chances group, who are here in the Public Gallery. Can you tell us what steps you are taking to support that group? My understanding is that the group works with families affected by all of this. What are you doing to support them?

I made reference a moment ago to the Restorative Justice Council. Some very clear advice, from its 25 years of experience around this, is that ad hoc meetings with no structure are actually detrimental. It has guided us, DBT and the Post Office around ensuring that any interactions regarding restorative justice, which I think is what is appropriate for the Lost Chances families, are the right vehicle to use. I believe that Lost Chances have been in contact with the CEO of RJC around their engagement in that process. I think 150 sub-postmasters have engaged in the process and have asked for subsequent restorative justice meetings. We are training Fujitsu people, DBT people and Post Office people to be able to engage appropriately in that process. RJC, though, is very clear that the engagement has to be managed appropriately. It cannot just be ad hoc meetings—they can be detrimental.

So your involvement with Lost Chances is through RJC rather than directly, but you have had a meeting with Lost Chances previously. Is that right?

I did meet Lost Chances; I think that Mr Hudgell made a comment about that earlier. I would agree with his description: it was a very difficult meeting for the families to talk to me about their experiences. I think I have said before that, as a citizen of this country, I found it very difficult to listen to, with the impact on them and on their families, as children. I had hoped that we would be able to do something around mental health and support for them. It turned out that we could not make that happen, but I am now hopeful that the RJC process and the direction from Sir Wyn will give us a vehicle to engage with them through that process.

I want to come back to what you mentioned earlier about ethics and about the journey that you were saying that Fujitsu is currently going through in the UK, surrounding what we might call a deficit of ethics in the scandal that we are discussing. The accounting profession has a set of standards and principles, and to be chartered you have to live up to those governance requirements, but so do engineers. Of course, there would have been a lot of engineers and IT engineers working on the Horizon software. I think it was mentioned that about 30 people were working on this who could access things remotely. I am interested in whether or not you have been engaging with institutions such as the UK Engineering Council, which has a directive from the Privy Council to look at these types of standards. Underneath it, you have the British Computer Society and the Institution of Engineering and Technology, which have the delegated authority to look at the chartership. Those who are chartered have to comply with the statement of ethical principles. I wonder: in this advice that you are receiving, or in this ethical transition, what are you doing to look at whether both the executives that are making the decisions and the workforce in its entirety—whether or not those within it hold chartership—will adhere to those responsibilities?

The first thing I would say is that what we were doing for the Post Office in the 1990s and 2000s, we do not do any more. The types of activity that are described in the document that the Chair was talking about—we do not do that type of work any more. In fact, for our current customers, where there is remote access—if I go back to the essence of your question—the standards, behaviours and quality required are documented in our contracts with customers and as part of our training. To your point about Ethisphere, it was not just a PowerPoint activity. It was a reset: what are people doing day to day? Do they feel that they can say, “I feel uncomfortable about doing something I’ve been asked to do”? It is more than a whistleblower type of process. How do we ensure that if people see something going on that makes them feel uncomfortable, there is an opportunity to engage in a way that protects them? We have worked through that training with Ethisphere. When we first did it, our scores were in the low 70s. Their international benchmark is 85. We were 83.5 when we did our last check in October. I had not thought about your point on the training with the Engineering Society—forgive me. I will take that away and check on my side.

I talk to our auditors every quarter, and I will talk to them on Friday. Until there is a definitive quantum that we can quantify, we will not make a provision in our report and accounts.

I meet my auditors every quarter. We talk about all the things you would expect me to when speaking to my auditors about our report and accounts and our general business. I have talked specifically about this topic.

Correct.

Because it was not considered to be new Government business by me when I wrote that letter. Which example would you use that we have reprocured?

I determined back in January that that would not be the clause. I was very clear about it. I was clear to the Chair and I have been clear in my letter that if the example you are using is the TSS contract—the Trader Support Service contract in Northern Ireland, which was procured courtesy of the Brexit process in 2019—the Government came to tender for that service, we built it with our consortium on time and on budget and have delivered it for five years. The Government came back to reprocure that, and—exactly the point you are making, Mr Madders—we decided to bid for it. We failed. The Government have chosen a third-party company and our contract will end in November.

We have not bid for 46 tenders that were in the market from Government. I would need to check whether any of the extensions we have done are in that. I do not know off the top of my head.

First, we would not bid for anything in that category, just to be clear. The rationale for writing the letter was that we work for the Ministry of Defence both here in the UK and internationally, where we have a particular set of skills and capabilities and security clearance. That was the reason for that third bullet point.

No.

Not the reprocurement. The extension—this goes to my answer to the Chair a moment ago—is £500 million or thereabouts.

No, not at all. Not at all. You used the words “we may”. I am being very clear: we will. We will contribute, and there will not be any of those things that you have just alluded to. We will make a contribution, and that will be that.

I just have a couple of questions to round this out. When you have bid for Government contracts, you will have been asked to demonstrate some contingent liability insurance. To what extent do you think that Fujitsu’s liability insurance will cover off the redress payment that you may have to make in due course?

I don’t understand the question, Chair. Forgive me.

Very often, when you are asked to procure for public contracts, you have to demonstrate some kind of insurance for the service that you are providing, for example in case you make errors that cost the customer money. You will have insurance in place to underpin many of the public contracts that you have bid for. When you make that redress payment to the taxpayer, how much of it do you expect to be able to claim back from your insurance?

I am not sure that I am going to be able to answer your question entirely. In some of our current contracts with Government, there is a parent company guarantee. That is a self-insured process from our parent either in Europe or globally. I would not be able to comment in detail on our insurance cover; I would need to check that. Like I did the last time, I will drop you a note on that.

Thank you. Do you think that at the moment you are contributing the right level of resource—either financial resource or anything else—to the Lost Chances group?

As I said in my answer earlier, our focus, as directed by Sir Wyn, is on the restorative justice process. I think that the Government are engaging with the Postal Museum on one part of legacy. I made the comment a moment ago that we expect our contribution to be for, possibly, up to five years; that will be in the health and wellbeing area and the education area. The families, as I mentioned, should be coming through the restorative justice process, rather than direct conversations with us. We will be focusing all our attention on restorative justice.

But you are satisfied that Fujitsu is making the right level of contribution to that process?

Everything that RJC have asked us for, on our side of the table, we have committed to do. I have made a commitment, both in writing and to Sir Wyn, that we will also continue that for the next five years. The next part of their report is at the end of this month, which will tell us what we will be doing afterwards. I do not expect any issues with our commitment. We are fully committed to it.

Thank you. It feels to us, on the Committee, that Parliament has done its bit in overturning convictions, and the taxpayer has done their bit in contributing £1.8 billion to the redress scheme. It feels to us that we are still waiting for Fujitsu to do its bit, so we look forward to continuing this dialogue with you as Sir Wyn Williams finalises his report and we finalise our recommendations. But for now, that concludes this panel, with our thanks to you for coming before us to give evidence.