NHS computer systems contractor agrees to pay $190m penalty
|
Version 0 of 1. A leading contractor on the ill-fated multibillion-pound programme to overhaul NHS computer systems over the last ten years has agreed to pay US regulators a $190m (£120m) penalty to settle allegations it broke stockmarket reporting laws by overstating past profits from UK health service contracts. Computer Sciences Corporation, which is listed on the New York stock exchange, confirmed in a statement to investors there had been accounting errors from 2009 to 2012 relating to assumptions made about progress on its long-term NHS contracts. Revised annual reports are expected to be filed shortly. The settlement with the US Securities & Exchange Commission’s enforcement division comes a year after CSC said it would pay $97.5m to settle a shareholder class-action claim alleging the company and former executives had “fraudulently concealed” from investors the dire performance of the firm’s work for the NHS. Four years ago CSC dismissed reports in the Guardian suggesting its work for the NHS was in crisis, bogged down in delays and budget overruns. The group’s then bosses told Wall Street analysts: “The press speculated wildly and inaccurately on the status of the NHS programme.” As early as 2006, the Guardian had been highlighting concerns about progress. One leaked report, co-authored by CSC, concluded there was “no believable plan” for releases of new software required for its UK health service contracts. But CSC was assuming an increasingly important role in the National Programme for IT, a £12.7bn 10-year project instigated in 2003 with strong support from the then-prime minister Tony Blair. As other contractors dropped out, CSC moved in, taking work over from Accenture and acquiring struggling software contractor iSoft. By 2011, however, CSC’s progress was so poor that the UK Department of Health formally held it in breach of contract. The bad news came as a shock to US investors and the shares fell more than 14%. Since then the DH has officially dismantled the National Programme, though reversing out of associated contracts has proved much harder. Despite its manifest failures, CSC remained in a strong contractual position as a dispute between it and the DH over continuing IT work dragged on for two years. Last year, revised terms were finally agreed, but not before CSC received compensation for relinquishing exclusive rights to provide computer systems to NHS trusts across much of England. The value of CSC’s long-term contracts, once worth £3.1bn, was last year put at £2.2bn by DH officials. Separately, in 2006, the Guardian reported CSC’s rival NHS IT contractor BT had been paid just £1.3m for two years’ work, suggesting it may need to revise the value of its contract. “We are confident we will make money over the length of the London contract,” BT said in response. “There is no need to write off any money.” Three years later it issued related profit warnings, revising progress assumptions on the NHS contracts. The Guardian also spotlighted aggressive accounting and progress delays at iSoft, once a £1bn independent software company listed on the London stock market. The company, which initially secured an injunction against the paper, later admitted that investors had been misled and restated accounts from past years. |