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The Post Office’s refusal to believe subpostmasters were suffering losses due to computer system errors was incompetent and cruel
Published: 06 Jan 2020
When you become a village subpostmaster, you take on certain things. You often acquire the village shop, and you begin to run a business that is the heart of the village. You get to know everybody there, because everyone needs the post office. And they get to know you and usually your family as well.
There is a gradual transition from the shop being the heart of the village to you being the heart of the village. The village comes to know, respect and love you and to count on you for all sorts of little things – you will know when a pensioner hasn’t been in recently and might need someone to look in on them, and you will know who would be best for the task.
So when the Post Office introduced its new Horizon computer system, and then began to suffer losses apparently created by these pillars of the community, alarm bells should have begun to ring. The Post Office should have begun to question whether this was the first major public IT procurement that was perfect – but it did not.
It insisted that the system was robust, and that the only people who could alter the subpostmasters’ figures and accounts were the subpostmasters themselves, so the mistake must lie with them. The judge in the recent litigation, Peter Fraser, has found that the system was not remotely robust, and that Fujitsu, the system’s creator, could and did alter the subpostmasters’ figures and accounts.
In individual cases, the Post Office began to prosecute. A curious feature of this matter is that the Post Office can prosecute cases itself without any outside independent assessment of the strength of the prosecution or defence cases, such is the trust in which the Post Office is held. In at least one case – that of my former constituent, Jo Hamilton of South Warnborough – the Post Office, knowing it to be untrue, said the subpostmaster was the only one to be suffering such unexplained losses.
It was not as though Jo Hamilton had failed to seek their advice. She would regularly ring the helpline and, on those occasions when she could get through, she might be told to take certain actions with the programme. She was horrified to find that this could double the apparent loss she was suffering. Sometimes the discrepancy was in favour of the subpostmaster.
The helpline advice was to put that extra money aside for those times when it went the other way. It seems not to have occurred to the Post Office that this was advice to commit the crime of false accounting – a crime to which it eventually forced Jo Hamilton to plead guilty (in exchange for the Post Office dropping the accusation of fraud for which, it told her, she would have gone to prison, as others did).
At around this time, Parliament became aware of the issue. MPs agreed with the Post Office management that there would be a forensic accountancy examination, coupled with a mediation scheme, to look into what had gone wrong and things seemed to be improving. But then the Post Office sabotaged its own scheme, for example by excluding from its operation those who, like Jo Hamilton, had pleaded guilty to anything and by sacking the forensic accountants they had chosen, just as those accountants were about to report on the system’s failings. It seemed that the accountants’ interim report had not been to the Post Office’s liking.
So the subpostmasters had no option but to take the matter before the court. And it turned out that Jo Hamilton was not, as she had been told, alone. There were hundreds and hundreds of them. They managed to secure the backing of litigation funders. Understandably, this came at a steep price.
The backers were taking on what has been described as the most trusted brand in the country, the Post Office. They were backing a group of people who had been described as fraudsters by the Post Office, a claim which, incredibly, was supported by the subpostmasters’ own “union”, the National Federation of SubPostmasters, an unimpressive organisation which is wholly funded by the Post Office and which has kowtowed to the Post Office at every step of this awful story.
I cannot remember so one-sided a victory as that which the subpostmasters secured during the court cases. Various phrases about the behaviour of the Post Office stand out from the judgments. Angela van den Bogerd, the Post Office’s business director, “did not give me frank evidence, and sought to obfuscate matters, and mislead me”, the judge said. “The Post Office describes itself on its own website as ‘the nation’s most trusted brand’… this might be thought to be wholly wishful thinking.”
The Post Office felt entitled to treat subpostmasters in “capricious or arbitrary ways which would not be unfamiliar to a mid-Victorian factory-owner”, the judge added, and the Post Office appears to “conduct itself as though it is answerable only to itself”. He said the Post Office’s approach “amounts to the 21st century equivalent of maintaining that the earth is flat”, and added: “A theme contained within some of the internal documents is an extreme sensitivity (seeming to verge, on occasion, to institutional paranoia) concerning any information that may throw doubt on the reputation of Horizon, or expose it to further scrutiny.”
It is now apparent that the Horizon programme was only a part of the problem. The larger problem was the Post Office’s own behaviour, not least its behaviour in court. The extraordinary waste of money that was incurred by the Post Office by bringing in Lord Grabiner QC (without the knowledge of its own legal team) to try, absurdly, to get the judge to recuse himself, was rightly treated with contempt by the Court of Appeal. And in the most recent judgment, the judge expressly ordered that claimants who had been subject to criminal prosecutions should not be disbarred, by settling the civil case, from pursuing the Post Office over criminal matters, including malicious prosecution.
So what is to be done? There are many, many questions, some of which are set out below, but many of which require the sort of public inquiry already called for. I have suggested that the judge who has already done so much of the work in understanding this case would be an ideal person to conduct such an inquiry.
There are so many people in the frame for bearing some of the blame that it is hard to know where to begin – but that does not mean that nothing should happen. Clearly, Paula Vennells, the former Post Office CEO, who stepped down just before the court cases but who presided over much of the worst of the Post Office’s actions, needs to be called to account.
But she was advised by a board, management and legal counsel. The legal counsel has now, along with Vennells, gone, but not yet the board and the senior management. Their failure to do a proper risk assessment of Horizon and the possibility that it might not be perfect created, in the Post Office’s own words, “an existential threat to the Post Office’s ability to continue to carry on its business”. They should take responsibility for it and go. I exempt from this the new CEO, Nick Read, who arrived in September and who does seem to have brought in a degree of sense that was previously absent.
Cruelty and incompetence
A new board, with a new chairman, should publicly recognise the cruelty and incompetence of what has happened and begin to forge a new culture within the Post Office. That culture needs to recognise that the subpostmasters are the Post Office. They are its ambassadors and its public face. They deserve to be treated with humanity, respect and integrity.
And the new board should find a way (perhaps involving Fujitsu, which I come to below) of recompensing the subpostmasters for the real losses they have suffered over and above the small amounts they will manage to recoup from the damages the Post Office has paid. In my view, this should also begin to address those subpostmasters and their staff who were caught up in this mess but who, for whatever reason, were not or did not feel able to join in the legal action.
Now, Fujitsu. The judge said he had “grave concerns” about the evidence of the Fujitsu employees, and felt the veracity of evidence provided by Fujitsu employees in a number of Post Office prosecutions of subpostmasters needed to be properly scrutinised. To that end, he said he would be supplying a dossier to the Director of Public Prosecutions for further investigation.
It may well be that the Post Office may feel let down by Fujitsu, but it is certain that the subpostmasters will. Might they have a cause of action against Fujitsu for a breach of its duty of care? Was it Fujitsu that altered the accounts of the subpostmasters? Might there be some tripartite settlement between the Post Office, Fujitsu and the subpostmasters to create the compensation fund that is needed?
Many questions still to answer
But there may be another source of money for that fund. It is still unclear where the money that the Post Office said it had lost, and recouped in many cases from the subpostmasters, went. Did it go into the profits of the Post Office? What is the truth behind the issue of “suspense accounts” raised in the trial? There are so many questions still to be answered on this point, and the settlement of the litigation does not mean they go away.
And this brings in the shareholder – the government. It must have seemed a good idea at the time to hive off the operation of the Post Office to a quasi-commercial board at arm’s length from the government. It would mean that commercial decisions could be taken in a business-like way, and the government would be able, in due course, to sell the Post Office as a going concern.
But surely the government, as owner, had some duties of care towards those who, like the subpostmasters, were affected by the way the Post Office was behaving? The government was going to have to bear the cost of any potential adverse finding and the reputational opprobrium that went with it. So who was the senior civil servant in charge of overseeing the Post Office?
And then comes an easy question. How can the Post Office, in the light of its failings to treat the court frankly and honestly, continue to prosecute its own cases? Answer: it cannot possibly do so. That must stop immediately.
My final question is this: how does the honours system give Paula Vennells, who presided over this ghastly fiasco, a CBE, and nothing to the true hero of the story, Alan Bates – the person who, to the embarrassment of the Post Office, the civil service, the government and indeed the honours system, managed against dreadful odds to bring the Post Office to account? What is such an honours system worth?