Post Office boss Paula Vennells has been accused of an 'absolutely Orwellian' rebrand of Horizon's problems after taking her husband's advice to call the system's bugs 'anomalies', the inquiry has heard.
Vennells asked her 'computer literate' husband for a 'non-emotive' way to describe issues with the Horizon IT system, the public inquiry heard yesterday.
His advice led to Post Office executives swapping the word 'bug' for the word 'exception', in a move inquiry counsel Julian Blake branded 'absolutely Orwellian'.
Giving evidence at the inquiry, Susan Crichton, the Post Office's top in-house lawyer before she quit in 2013, agreed that the shift in the language used about Horizon bugs amounted to 'smoke and mirrors' tactics.
The inquiry was shown a July 2013 email in which Mrs Vennells told communications chief Mark R Davies: 'My engineer/computer literate husband sent the following reply to the question: 'What is a non-emotive word for computer bugs, glitches, defects that happen as a matter of course?'
'Answer: 'Exception or anomaly. You can also say conditional Davies exception/anomaly which only manifests itself under unforeseen circumstances xx.'
Mrs Vennells then asked: 'Does that help?' before adding: '(The xx was for me I think!)'
Mr Davies replied: 'I like exception v much.'
Problems with post office branches were subsequently referred to as 'branch exceptions' rather than 'bugs' in a note prepared for a meeting between the Post Office and Tory MP James Arbuthnot, the inquiry heard.
Mr Blake described the language change as 'absolutely Orwellian' and quizzed Mrs Crichton on whether this demonstrated the use of 'smoke and mirrors'.
She replied: 'It certainly reads in that way, yes.'
When Mr Blake suggested there had been discussion at the 'highest levels' of the Post Office over changing the language around bugs, Mrs Crichton said she could recall no such discussion.
She was later grilled about a July 2013 email in which she wrote it 'wasn't a good idea to mention bugs'.
Asked if this revealed changing the word 'bugs' was at the 'forefront' of her mind, she replied: 'That's certainly what this email says, yes.'
Auditors Second Sight released an interim report which identified bugs that raised concerns over the reliability of Horizon data used to prosecute subpostmasters in July 2013.
The Post Office Horizon IT Inquiry heard on Tuesday that senior figures were worried about the organisation's 'national reputation' because of the report, and it also emerged that computer bugs were being described as 'exceptions'.
In a note of a meeting about the investigators, then chairwoman Alice Perkins said: 'The Second Site interim report and the timing of its publication had been potentially very serious indeed for the Post Office in terms of our national reputation and the effect it could have on our funding negotiations with Government.'
The inquiry heard there were concerns among board members that they could be held personally liable, though the organisation's head of corporate finance reassured them this was 'highly unlikely'.
Ms Crichton, giving evidence, suggested Ms Perkins may have expected her to 'manage or manipulate' Second Site's investigations.
She told the inquiry that she believed Mrs Vennells had not understood her reasons for leaving.
She said: 'I don't think she understood my point about [the Second Site interim report] has to be an independent review, we can't manage it or manipulate it in the way that possibly Alice was expecting me to do.
'This is all supposition on my part.'
In September 2013, Ms Vennells wrote in a note that Ms Crichton was 'possibly more loyal to her professional conduct requirements and put her integrity as a lawyer above the interests of the business'.
Earlier this year, Mrs Vennells, 65, handed back her CBE amid fresh public outrage over the Post Office Scandal following the broadcast of ITV drama Mr Bates vs the Post Office.
The ordained priest, who is due to give evidence to the public inquiry next month, has previously apologised 'for the devastation caused to the Sub-Postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system'.
The Vennells, who share two adult sons, live in a £2 million detached farmhouse near Bedford.