Fujitsu promises better quality control in acct'g software

Fujitsu Ltd. apologized for its role in the wrongful conviction of more than 900 sub-postmasters who used its accounting software, and said it will do its utmost to boost the quality of its products and regain public trust.

The Tokyo-based technology company is the subject of an inquiry into a glitch in its Horizon accounting software used by the U.K. Post Office that led to the wrongful accusations of theft, fraud or false accounting of sub-postmasters between 1999 and 2015. Most lost their businesses, many went bankrupt and at least four committed suicide. Media attention was scant even after a 2019 court ruling exonerated those convicted, but a recent television drama brought the UK Post Office Scandal to life, attracting more than 10 million viewers.

"Fujitsu regards this matter with the utmost seriousness and offers its deepest apologies to the sub-postmasters and their families," Chief Financial Officer Takeshi Isobe said during an earnings call on Wednesday.

"We are aware that there are many victims in different situations. We're conscious that the most important thing we are doing — and ought to do — is to fully cooperate to ensure a swift resolution and a fair outcome," he said.

Chris Ratcliffe/Bloomberg

The company plans to abstain from bidding for U.K. government contracts, he said, reiterating the company's previous stance. But the company does not at the moment plan to reduce its local staff or pull back on its overall strategy to grow in Europe.

The company will work to improve its quality control so that it can regain public trust in its systems, Isobe said.

Fujitsu, which supplies IT systems to public institutions around the world, has a moral obligation to contribute to the payouts of compensation for the victims, Fujitsu's European head said earlier this month. The U.K.'s public inquiry on the case is due to report its findings later this year.

"Fujitsu's voluntary absence from bidding on IT projects for the U.K. government until the Post Office inquiry is ended could be a wise first step in repairing its brand," Bloomberg Intelligence analyst Ian Ma wrote in a note. "Curbing a domino effect in Europe looks crucial as the region drives nearly half of its sales abroad."  

Isobe's comments came as Fujitsu cut its operating profit outlook for the year to March by 22% to ¥250 billion, after posting a bigger-than expected 95% decline in operating income in the December quarter. 

The U.K. Post Office scandal has pushed Fujitsu into the global spotlight for the first time in years. Like fellow Japanese industrial electronics groups Hitachi Ltd., Toshiba Corp. and NEC Corp. — whose fortunes have waxed and waned — Fujitsu has struggled to transform itself in the digital era.

In 2020, a computer system Fujitsu helped develop causedthe Tokyo Stock Exchange's worst outage ever, forcing trading to halt for an entire day. In 2022, multiple data breaches in Fujitsu's cloud service — used by both government agencies and companies — remained undetected for months, prompting the government to slap it with an order to improve its data security. Last year, the company further apologized for personal information leaks that occurred in connection with a system it developed to certify people's residences at municipalities across Japan.

Fujitsu, which in its heyday was one of the world's top makers of laptops and chips, is selling what it considers its non-core businesses. The company agreed last year to sell its chip-packaging subsidiary Shinko Electric Industries Co. to a group led by government-backed Japan Investment Corp. in a deal worth $2 billion.