The Post Office Scandal- Fujitsu has its contract extended

The Post Office has chosen to extend its contract with Fujitsu, the supplier of the flawed computer system, Horizon, at a cost of £16.5 million. This is incomprehensible. Catastrophic failures in this system, designed to facilitate integrated payments of social security benefits, constitutes the most widespread miscarriage of justice in British legal history.

Known as the British Post Office scandal, the errors and subsequent vindictive mismanagement by the Post Office resulted in the wrongful civil and criminal prosecutions of over 700 sub-postmasters. They were accused of theft, false accounting and/or fraud. These allegations and subsequent convictions led to years of anguish. Some were imprisoned, they lost their livelihoods and their homes. Relationships broke down, they were declared bankrupt and some attempted or even committed suicide. And there were some who died before they were cleared of wrongdoing.

Seema Misra was pregnant when she was convicted of theft and sent to jail in 2010. She has been “suffering” for over 15 years because of these serious flaws. Another case involved Lisa Brennan, a counter clerk at a post office in Huyton, Merseyside. The Horizon system detected a shortfall of £3,000, leading to her suspension and subsequent court appearance. She was found guilty on multiple counts, which had devastating consequences for her life. She attempted suicide, her marriage broke down, she went bankrupt, and her family home was sold, leaving her homeless. Her conviction was finally overturned in 2021.

Campaigners battled for over 20 years before winning a legal battle to have their cases reconsidered. In December 2019, the Post Office settled with 555 claimants, acknowledging its mistakes, and agreeing to pay £58 million in damages. This paved the way for convictions to be overturned. However, this is a slow process. Appeal courts have still only overturned convictions in 80 cases out of the estimated 700 SPMs whose lives were destroyed by the serious defects in the Horizon system. Each time, the court has recognised that the Horizon system was at fault.

As for Fujitsu, there was talk that its reputation has been tarnished by the fiasco. However, there is no evidence of any direct financial consequences, and the tarnished reputation has not prevented the company being handed another £16.5 million by the company it failed with catastrophic consequences.  The only losers are over 700 SPMs who have endured over 20 years of extreme stress and, of course the taxpayer who will pick up the bill for yet another failed contract.

KPMG fined £21 million for its failures in the auditing of Carillion

The Financial Reporting Council (FRC) has imposed a historic fine of £21 million on KPMG for its substandard auditing of Carillion, the government contractor that collapsed in 2018. KPMG was accused of negligence and of missing serious red flags as well as failing to adhere to the most basic and fundamental auditing concepts. The firm was initially fined £30 million, but the penalty was subsequently decreased by 30% due to its cooperation throughout the five-year investigation. 

Carillion, a British multinational construction and facilities management services company, went into compulsory liquidation on 15th January 2018 with liabilities of almost £7 billion. Its collapse had a catastrophic impact on a huge range of public services and highlights all that is wrong with successive governments’ obsession with privatising and contracting out key services to the private sector. Its collapse affected the education sector, among many, as Carillion provided facilities maintenance, cleaning, and catering services to hundreds of schools. The company was also responsible for maintaining about half of the UK’s prisons and young offender Institutions, as well as holding contracts with the Ministry of Defence (MOD). It was also involved in numerous large scale Private Finance Initiative (PFI) schemes.

More than 3,000 jobs were lost at the company. In addition, in excess of 75,000 people working in its supply chain were also affected. It left almost £1billion of debt, more than £500m of pension deficits and around 30,000 unpaid subcontractors.

The May 2018 report of a Parliamentary inquiry by the Work and Pensions Select Committees said Carillion’s collapse was “a story of recklessness, hubris and greed.  Its business model was a relentless dash for cash”.

The key flaw, of course, is that in the privatisation gravy train the risk continues to be held by the public sector. It is estimated that the collapse of this company cost the UK taxpayer more than £180m. An independent auditor would have been key in preventing such a catastrophic failure, but the Financial Reporting Council (FRC) found that KPMG was more concerned in pleasing one of its biggest clients than carrying out objective reporting. They described KPMG’s role as a ‘classic textbook case in failure.’ A very real example of many ‘snouts in the trough’ of public service contracts.   

Another Tory donor wins a large public service contract

The Good Law Project has revealed that, Wernick Buildings, a firm owned by another Tory donor, has won yet another public service contract, this time to supply temporary classrooms for schools built with unsafe concrete.

The company is controlled by David Wernick. He has given more than £71,000 to the Tories, either through his companies or in a personal capacity, between 2001 and 2021. More than half this amount – £42,000 – has been donated since 2019. This contract comes on top of an £18.6m Government contract Wernick Buildings landed in 2020 – just weeks after a donation of £10,000 – to supply site infrastructure, maintenance, and servicing for Covid testing sites, as well as other contracts totalling £546,000 for storing unusable PPE, we exposed earlier this week.

Ellie Mae Ohagan, Head of Engagement at the Good Law Project, said: “It’s outrageous that a Tory donor’s company is set to benefit from ministers’ scandalous failure to stop our schools from crumbling. As schoolchildren are being forced into portable cabins this winter, Tory donors are lining their pockets.”

Let’s not forget Greensill 

As David Cameron takes on the role of Foreign Secretary, despite no longer serving as an elected MP, it is perhaps opportune to revisit his involvement with Greensill Capital, a key example of a snout in a very large trough.

In 2020, David Cameron tried to persuade ministers, through private channels, to allow Greensill to join a scheme called the ‘Corporate Covid Financing Facility (CCFF).’ This would have allowed the company to issue loans, insured by the government, to help firms through the pandemic. He wasn’t successful in his attempt to influence decision making on behalf of the company’s founder, Lex Greensill.

A report by the House of Commons Treasury Select Committee said that, while no lobbying rules were broken, David Cameron’s actions showed there was a ‘good case for strengthening them.”

It is estimated that he made about £7 million from Greensill before the finance company collapsed.

This includes:

  • £3.6 million after cashing in Greensill shares in 2019
  • A salary of £720,000 a year as a part time adviser
  • A bonus of £504,000 in 2019 on top of his salary.

Nice work if you can get it.

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