The Chairman of a company that sued the British government's Department of Health for almost £700 million – and won – is a major Tory donor who regularly dines with Theresa May and other senior figures from the Conservative Party.
Simon Blagden is Non-Executive Chairman of Fujitsu UK, the British arm of the Japanese IT firm. Fujitsu were a supplier on the NHS Programme for IT (NHSPfIT), a disastrous scheme that sought to digitise NHS medical information. When the scheme failed in 2011, at a cost of at least £2.7 billion to the taxpayer according to official spending watchdog the National Audit Office, Fujitsu were sacked – the NHS said their part of the programme didn't work. And that's where things get spicy: Fujitsu sued the NHS, demanding £700 million in compensation.
Thanks to provisions in the contract, Fujitsu’s case was held in a secretive, business-friendly court called the London Court of International Arbitration, who ruled in Fujitsu's favour. The Department of Health and Fujitsu reached a final settlement at the end of 2018, the amount of which remains a secret. But here's what we do know: Fujitsu were initially demanding £700 million, and their accounts say they received just £71.2 million less than they expected. So this could well mean that the already under-funded NHS had to pay them £628 million.
Even if Fujitsu only received half of their claim, it still means the government were forced to give away hundreds of millions that could have been spent on our healthcare, all for a failed computer system. The Department of Health will not say how much they were forced to pay, but there's a strong chance it could have been the biggest payout a British government has ever made to a corporation.
The kicker is this: though Blagden runs a firm that's heavily sued the government, it hasn’t stopped him from forking out his own cash to get close to the Prime Minister. Blagden and his wife run a consultancy that has given the Conservatives £215,000 since 2005. These donations haven't attracted much attention for two reasons. Firstly, he donates through his personal consultancy firm, Pietas Ltd, rather than in his own name. Secondly, he donates in small instalments. According to the latest figures from the Electoral Commission, released at the end of February, Blagden gave the Tories £8,500 in December 2018. However, he made three other payments in 2018, bringing his total donation to £49,500.
The Conservatives allow all donors who give more than £50,000 to join a “donor club” called “The Leader’s Group” whose “members are invited to join Theresa May and other senior figures from the Conservative Party at dinners”. The Tories appear to have given Blagden a concessional rate. The Tories' latest rundown of guests at Leader’s Group meals lists Blagden as a representative of the major donor, Pietas Ltd. Blagden went to at least two dinners with Theresa May in 2018, and at least one in 2017. Chancellor Philip Hammond, Defence Secretary Gavin Williamson and other top Tories also joined May and Blagden at these dinners.
This NHS debacle wasn't Fujitsu's only government contract. In 2015 they were given a £550 million contract to run Ministry of Defence telecoms, and were part of the Atlas consortium that won a £933 million military IT contract. Fujitsu are currently bidding for another £400 million MOD contract called Modnet Evolve. In 2017 the Home Office extended their £600 million 18-year Fujitsu contract, despite guidelines that government IT contracts should run no more than seven years.
But this isn't the end of this strange and expensive tale. Not satisfied with the many millions they got out of the Department of Health, Fujitsu are suing the government again. They are currently claiming compensation because the Foreign Office gave a £350 million IT outsourcing contract to their rival, Vodafone.
Fujitsu claim they have an “apolitical stance” because they give equally to Labour and Tory parties (they pay £26,000 a year to run “lounges” at the Tory and Labour conferences). However, Blagden’s donation suggests Fujitsu management are willing to pay extra to get close to the Tory government.
Ellen Lees of anti-privatisation campaign We Own It told VICE: "The cosy relationship between companies receiving state contracts and those at the top of government would be worrying enough. But its far worse given that Fujitsu has not only been making profit out of our public services, but also suing government departments when its contracts are terminated."
A Fujitsu spokesperson told VICE: “Fujitsu does have an apolitical stance however it does not prevent individuals within the company from offering their own personal support to political parties.”
SUING THE GOVERNMENT: A BEGINNER’S GUIDE
Over the past 20 years, worries about corporations suing governments have grown. Most concern has centred on corporations suing governments in the developing world, using provisions in trade treaties and secretive, business-friendly courts like the International Centre for Settlement of Investment Disputes (ICSID). Campaigners like Global Justice Now and War On Want have pointed to cases like “Anglia Water vs. Argentina”.
In that case, the Argentine government tried to stop a coalition led by the UK’s Anglian Water from raising water prices. Anglia and co. sued via ICSID and won a $405 million payout.
In 2017 attempts to negotiate a US-EU Trade Deal, the Transatlantic Trade and Investment Partnership (TTIP), stalled when European politicians and campaigners argued that TTIP would give US corporations the right to either force the privatisation of public services or sue for huge compensation payments. Their arguments halted progress in signing TTIP.
Outside the developing world, actual cases of big corporate lawsuits against the government are much less common. The UK has one of Europe’s leading privatisation programmes, which has raised the possibility of companies suing government bodies for compensation over cancelled or un-awarded contracts. Even here the Fujitsu case is by far the largest.
In 2015 the government was forced to pay arms technology firm Raytheon £150 million. Raytheon were hired to create a digital border control system called “e-Borders”. In 2010 the government sacked Raytheon arguing their system was not working. Like the Fujitsu case, the Raytheon claim was heard in the secretive London Court for International Arbitration (LCIA), which is similar to ICSID. However, the government resisted the claim, forcing it out of the LCIA into the regular High Court. As a result the settlement was reduced from a £500 million demand to the much smaller £150 million settlement.