Private Eye - 'Reverend' Paula Vennells of the Post Office ruined the lives of 550 sub-postmasters
This damning expose of how the Post Office, led by 'The Reverend' Paula Vennells, CBE, pursued 550 sub-postmasters to financial ruin and death was published in Private Eye.
Shamefully, the Mainstream Media didn't cover this criminal abuse of State Power until it came to court.
The Eye didn't publish this on-line - they are after all, a print publication, but this deserves re-telling, so I make no apoilogies for reproducing RICHARD BROOKS and NICK WALLIS' excellent work, after the link below...
Shamefully, the Mainstream Media didn't cover this criminal abuse of State Power until it came to court.
The Eye didn't publish this on-line - they are after all, a print publication, but this deserves re-telling, so I make no apoilogies for reproducing RICHARD BROOKS and NICK WALLIS' excellent work, after the link below...
- How The Post Office burned £100m of our money dragging innocent Sub Postmasters through the courts read at The Register
On 11 November 2010, a pregnant sub-postmaster
from
Surrey was
driven out of
Guildford
crown court in a prison van to begin a
15-month
sentence
for theft.
Seema
Misra had been convicted of
stealing £74,000 in cash from the Post Office branch she ran in West Byfleet even though,
in the
trial
judge's summing-up: "There is no direct evidence of her taking any money. She adamantly denies stealing. There is
no CCTV evidence.
There are no fingerprints or marked bank notes or anything of that kind. There is no evidence of her accumulating cash anywhere
else
or
spending large sums of money or paying off debts, no evidence about her bank accounts at
all.
Nothing incriminating was
found
when
her home was searched." The only evidence was a shortfall of cash compared to what the Post Office's Horizon
computer
system
said should have been in the branch.
"Do you accept the prosecution case that there
is ample evidence before you
to establish that Horizon is a
tried
and tested system in use at thousands of post offices
for several years,
fundamentally
robust
and reliable?" the judge asked the jury.
It did and pronounced Seema Misra
guilty.
In
fact, far from being robust and reliable, the Horizon system was full of bugs and glitches. Worse still, the Post
Office knew it. A decade later, legal action by 555 sub-postmasters who were prosecuted, sacked or
financially ruined has exposed one of the most widespread miscarriages of justice on record,
appalling treatment of hundreds of working people and a web of deceit that stretched to the top of
an historic British
institution.
This is the story of how it happened.
CONCEIVED in 1996 as one of
the first private
finance initiative (PFI) contracts, between the Post Office and the Benefits Agency on the one hand and
computer company
ICL on the other, the Horizon IT system had an unpromising start. It had been
set up to create a swipe card system for payment of pensions and benefits from Post Office branch counters. But, as with most mega-IT projects of the time, it soon fell victim to over-ambition, management consultancy snake oil and the inability
of a PFI contract to deliver a complex public
service.
When, in May 1999, the plug was finally pulled on what the Commons public accounts
committee called "one of the biggest IT failures in the public
sector", taxpayers had lost around £700m.
Something had to be salvaged, however. So,
against the better judgement of its IT specialists,
the Post Office decided to use the system to transform its paper-based branch accounting into an electronic system covering the full
range of Post Office services. The new Horizon
project became the largest non-military IT contract in Europe.
This was some faith to
show in ICL, an FT company
that had originally been awarded the PFI contract despite ranking last of three
bidders technically (but being judged cheaper) and had since then only lived
down to low expectations. As the Post Office board of directors ominously noted in its minutes that
September: "Serious doubts
over the reliability of the software remained."
TROUBLE ON THE HORIZON
Alan Bates and his partner
Suzanne arrived in Craig-y-Don
on the north Wales coast in 1998 seeking a new challenge running the Wool
Post, a shop and Post Office branch. Alan, a 44-year-old project manager, had
already worked with software companies installing electronic "point of sale" systems. So,
when the Horizon system arrived
at his branch a couple of years later, he looked forward to streamlining the
business in which
he'd invested his £100,000 life savings.
Just two months after
Horizon went live in Craig-y-Don
in 2000, problems began. An unexplained "variance" of more than £6,000 showed up. Bates thought
he had identified the source of £5,000 of this: an overnight
software update that caused a duplication of some Giro deposits. He transferred this figure to a suspense account, effectively putting off dealing with that part of the problem. This still left £1,000, for which the Post Office immediately began chasing him.
Under his standard
sub-postmaster contract, Bates
was liable for any shortfall that involved "carelessness or error".
And this, said the Post Office, was the only possible cause. The lack of
training on the new system, which had led even the relatively skilled Bates to request
more, mattered
not. Nor did the fact that Bates had disclosed everything to the official helpline
and conducted
all the investigations he could into the
supposedly missing money. Even his pleas for
the necessary IT access to interrogate his own branch accounts fell on deaf ears.
By April 2003, the Post
Office had changed tack slightly, writing off the £1,000
- without explanation - but telling Bates to pay for
subsequent unexplained balances that he had been moving into the suspense account and which now ran to £1,400. He stood
his ground, replying that he would not accept losses
"until such time as I am able to access the data
that I am being asked to be responsible for". The Post Office refused him any more information and that summer, five years after he and Suzanne started their new life,
Alan Bates had his sub-postmaster contract terminated.
Bates suspected he wasn't
alone in his plight. The Post Office's correspondence with him mentioned a "consistent
approach
for all such cases". Yet the body that should have represented him, the National Federation of
Sub-postmasters, was in
the pocket of the Post Office
and showed no interest. So, Bates - who a judge would later say was "persistent
and no doubt possesses
what might be termed staying
power" - took matters into his own hands, launching the
postofficevictims.org.uk website
and emblazoning its logo on his shopfront.
Dozens of other victims
began to get in touch, as incidents across the
country mirrored and often dwarfed Bates's
own tribulations. At a branch in
Dungannon, County Tyrone, a £43,000
shortfall appeared in 1999. According to internal documents later disclosed by
IT company Fujitsu (which had subsumed ICL in
1998), the cause was a "missing payments node" following a software update. An "incident of a very similar nature" threw up a £9,000 discrepancy in Appleby-in-Westmorland, Cumbria. At yet another branch, a shortfall way beyond any possibility of pilfering, amounting to £1.08m,
was described by software specialists in July
1999 as "due a known software error which has no
been resolved" (sic).
Such obvious malfunctioning
failed to prevent
Post Office investigators demanding sub-postmasters pay for the shortfalls,
terminating their
contracts and, increasingly, putting them in the dock. Invariably they were falsely told
they were
unique in experiencing any problems with Horizon. The enforcers, undeterred by the
fact that
pre-Horizon discrepancies had rarely reached triple figures, convinced themselves
the new IT system was exposing
an epidemic of fraud.
Not all the prosecuted were
convicted. A few fortunate
enough to have a bullish barrister and a sceptical judge saw the paucity of the
Post Office's
case collapse before the jury. But even those acquitted, such as Nicki Arch in
Stroud in April
2002, faced devastating personal consequences (see "They stripped my
life apart").
ROLL'S VOICE
It was already well known
inside Fujitsu and the Post Office that Horizon was littered with errors and
bugs. So why didn't this knowledge translate into greater understanding of sub-postmasters’ accounting troubles and at the very least temper
the persecution of them? The answer
was that denial suited the priorities
of both the Post Office and the IT
company.
The former, under chief
executive Adam Crozier and chairman Allan
Leighton, was desperate to turn around its
finances (and in 2003/04 it managed
to halve losses of £200m the previous year). Fujitsu's UK operations, meanwhile, were losing friends as well as money, as it fouled up not just Horizon but also a large project codenamed Libra to computerise magistrates' courts (Eyes passim).
A Fujitsu programmer from
the time, Richard Roll, who would become a key witness in the sub-post-masters'
high court case against the Post Office in 2019, told the Eye that Horizon was one the
company's few profitable contracts. Among
other private sector deals, it was also lining up a key role in the mother of all government IT splurges, New Labour's £l2bn NHS IT project (Eyes
passim ad nauseam). Fujitsu could ill-afford either bad publicity
or the penalties that came with software faults.
"We would have been fined," said Roll, who worked at the company between 2001 and 2004. "So, the incentive was to pretend it [software error] didn’t happen", while
running "a constant rolling programme of patches to fix the bugs".
Fujitsu "would
basically tell the Post Office what they wanted to hear".
So prolific did Roll's
bug-fixing team become it won
the company's President's Award for outstanding corporate contribution in 2002. And the quick-fix,
ask-no-questions approach that suited Fujitsu financially enabled the Post Office to hold the line
that blame for all branch shortfalls must lie with the sub-postmaster.
The Fujitsu insider concluded that errors leaving sub-postmasters out of pocket were
inevitable. Could that mean hundreds of them? "Given there were [about]
20,000 post offices when I was at
Fujitsu and the sort of problems, we
were dealing with all the time, yeah," he told the Eye. "Sounds reasonable."
CAUGHT IN A TRAP
In 2005, the conspiracy of
silence over Horizon's flaws
went one step further. The Post Office adjusted the system so that those like Alan
Bates who disputed discrepancies could no longer park them in a suspense
account and continue trading. Dissent became impossible.
Sub-postmasters with
inexplicable shortfalls were plunged into immediate crisis. Informing the Post Office helpline
elicited denials of any problems
or an insistence that genuine errors would be fixed through centrally issued "transaction
corrections". At a time of huge stress, the sub-postmasters' legitimate
options were
either to accept the shortfall, making it their personal liability, or to refuse to
sign off the accounts
as correct. The former could mean an imminent date in the bankruptcy court; the
latter prevented
the Horizon system rolling over to the next day, shutting their branch and putting
them in
breach of contract. For many, either choice spelt ruin.
The other possibility was to
sign off the books
by saying, incorrectly, that the funds did match the Horizon number
and hope that what they
felt sure was a computer glitch would correct itself. For people desperately worried over the loss of
their livelihoods, who knew they'd done
nothing wrong, this didn't seem like an inherently dishonest move. But it
played into the hands of a calculating
and draconian Post Office prosecution
service.
One of the first
sub-postmasters to fall into what
became a common trap was Jo Hamilton in
South Warnborough, Hampshire. In 2006, she called the Horizon helpline over a £2,000 shortfall, faithfully followed its advice but then watched as the discrepancy doubled rather than disappeared. When she complained, she was told she was still liable for the full £4,000. Already paying for previously reported discrepancies out of her sub-postmaster salary, Mrs Hamilton found herself agreeing yet more incorrect balances
in order to keep trading. When she called
the Post Office auditors in the hope of resolving her problems, she received no sympathy. Instead, she was charged with false accounting and theft - despite Post Office investigation
documents which later came to light stating:
"There is no evidence of theft."
The theft charge was in
reality a tool to leverage
a conviction for false accounting, triggering recovery powers under proceeds of crime laws.
"At first I was only
ever charged with theft
and I pleaded not guilty as I hadn't stolen any money," Mrs Hamilton told Private Eye. "As we neared the trial, the Post Office's
lawyers said that if I pleaded guilty
to false accounting and paid back the money they would drop the theft
charge. My lawyers had struggled to get any
disclosure from them so I was advised to accept the plea bargain - because they could not prove I hadn't taken
the money even though the Post Office
couldn't prove that I had. I was told I would be less likely to go to prison
for false accounting and felt I had
no choice at all. I was terrified of going to prison."
Such bargains would be
repeated dozens of times
over the next few years, illustrating the coercive power of the Post Office prosecution
service. One sub-postmaster, Noel Thomas from Anglesey, bet on taking the deal to avoid
imprisonment, but was jailed anyway. In cases like Jo Hamilton's, the tactic might even
have been unlawful. A later civil trial judge would point out that if the
accused had already raised their discrepancies with the Post Office, as she had, they "would not
be 'deliberately rendering' a false account" as required for the offence. It is
likely that an independent prosecutor, looking at the evidence, would often
have concluded that the
false accounting charge didn't stand up. But the Post Office's prosecutors were
anything but independent.
As the cases mounted up, so
did the gremlins in the
IT system. By 2006, at least 15 separate bugs had been found, with names such as "network banking
bug", "data tree build failure discrepancies" and "phantom
transactions". The
rickety Horizon system was unable to cope with the scale of its job, and the
Post Office and Fujitsu
set about replacing the "legacy" system with what became Horizon
Online from 2010
(and which would itself
prove hardly less infested).
At least Alan Bates's
efforts, now under the Justice for Sub-Postmasters
Alliance banner, were bearing fruit. In
2009, the growing band of dispossessed
former sub-postmasters whom he'd enlisted
told their story to Computer Weekly magazine. Local papers began highlighting some of the more
controversial cases. In 2011, the BBC's Inside
Out South reported Jo Hamilton's and Seema Misra's stories (while the
latter was still behind bars) and
that year the Eye picked up the
story as the latest in a string of government IT contracts gone wrong.
The Post Office, preparing
for its separation from
the Royal Mail under the coalition government's privatisation plans, remained uncompromising. The Horizon system, it told the BBC, was "absolutely accurate and
reliable". Its chief operating
officer, Mike Young, responded to the
Eye's first report with an instant letter for publication: "We have full confidence in the Horizon
system." He was in a shrinking minority.
SECOND SIGHT IS 20/20
The publicity helped
persuade law firm Shoosmiths
to take up Alan Bates's campaign, and around 100 sub-postmasters quickly
signed up to
sue the Post Office. The level of interest could partly be explained by the pisspoor treatment they had received
from their supposed representatives
at the National Federation of Sub-postmasters.
MPs' in-trays were also
filling up with horrifying
stories from sub-postmasters in their constituencies. In May 2012, two of them,
Jo Hamilton's
MP James (now Lord) Arbuthnot and fellow Tory Oliver Letwin MP (then also a Cabinet Office minister),
went to the Post Office's Old Street HQ with a raft of concerns. New chief executive Paula Vennells - a
retail veteran looking
to protect the Post Office brand - and chairman Alice Perkins promised to be "open and transparent". They reassured Arbuthnot and Letwin that Horizon had been upgraded and had the full support of the National Federation of Sub-postmasters. In fact, even the supine federation had expressed concerns (privately of
course). As a judge later pointed out, the MPs "were entitled to expect accurate information" but "did not receive it". The promise of
transparency "was not accurate".
Misleading parliamentarians
was a measure of the arrogance in the Post Office boardroom. But the MPs did get
Vennells to commission a review
of the Horizon system from forensic IT firm Second Sight. For Arbuthnot it gave hope
of getting
some answers. For Vennells, who was preoccupied with the Post Office's financial
bottom line after it split from Royal Mail that year and its target of financial independence
from
government by 2020, the review provided a handy patch of long grass into which to kick
the matter. One Post Office insider told the Eye that "meeting the 2020
objective became the relentless
focus... Anything that could get in the way of '2020' as it became known, was logged
as a risk
to be managed and minimised carefully".
Defying Post Office
attempts to frustrate them
by blocking access to information such as error logs, Second Sight's
investigators Ron Warmington
and Ian Henderson soon found some real nasties under the stones. An interim report in
the summer of 2013 showed that they had diagnosed the two core issues: faulty IT
and the victimisation of sub-postmasters. It was now understood even at Post
Office HQ that prosecuting
entirely on IT evidence was unsafe. Although the Post Office was not going to
admit that,
it spoke volumes that the number of sub-postmaster prosecutions fell from 42 in
2012/13 to just two in 2013/14 and
zero the next year. Not that this was much
consolation for the 60 sub-postmasters
convicted on Horizon evidence, of
whom 20 were imprisoned.
There were two ways Paula
Vennells could react to Second Sight's emerging findings. One was to accept them and open
the way to justice for
the sub-postmasters. The other was to feign concern while trying to bury what could be
an expensive
problem. Vennells and her executives were now earning bumper bonuses by shaving £30m a year off the Post Office's losses in pursuit of the 2020 goal (see 'The Post Office Hall of Shame', p28).
If the commercial partners -including banks, energy companies and public bodies - on which the Post Office's commercial plan depended were to be kept onside, the illusion of Horizon's infallibility could not be shattered. The financial imperatives duly trumped fairness for sub-postmasters.
Professing a desire to get
to the bottom of the affair, Vennells initially agreed to retain Second Sight to look at individual
cases as part of a mediation scheme under the chairmanship of former appeal court judge
Sir Anthony Hooper. But
when sub-postmasters began to ask for more than just warm words from the mediation, the
tone
hardened. Out went the Post Office's relatively conciliatory general counsel (i.e.
top lawyer) Susan Crichton, replaced by the more commercial Chris Aujard from
the City via a gold-mining
company.
Aujard, the sort of lawyer
who talked about "adding
value" for his corporate employers, took responsibility for the mediation
scheme. It quickly
proved to be another trap. Within a couple of years, although 150 people had
applied to the
scheme, a mere 12 cases had bee mediated. The Post Office's lawyers quibble over anything Second Sight
found. Even those who
did get through the process received no recompense. A dispute resolution special: brought in gave the game away when he remarked
that sub-postmasters had "attended with
the expectation that they are going into compensation process rather than a facilitate dialogue..."
Finances, jobs and
reputations were never going to be restored by
"facilitated dialogue' but that was the
point. At the end of 2014, Paul fennells
was still remarkably insisting to M ames
Arbuthnot in writing that "no fault in the system has been identified..." His and other MPs' patience was wearing thin.
In Westminster Hall just
before Christmas 2014,
North West Leicestershire Tory MP Andrew Bridgen - whose constituent Michaf Ludkin had "lost his
business, his reputation, hi position as a magistrate... and his good name called the mediation a
"sham". Arbuthnc imented how "the Post Office has built up the hopes of sub-postmasters,
so the scheme has their support",
only to break its word. The Post Office, he said, had been
"duplicitous" Berkshire
Labour MP Mike Wood revealed that le top brass brazenly continued to mislead MPs. He had "met five
senior managers of Post Office
Ltd - the chair of the board, the chief executive, the chief technology officer and
two others..." All, he
recalled, had said that "'we cannot
conceive of there being failings in our Horizon system'".
The mediation scheme also
gave a shield to ministers
who were less than determined to help those in trouble. When Arbuthnot raised the scheme's shortcomings, the
Lib Dem with the Post
Office brief, Jo Swinson MP, bleated about the "slightly difficult territory,
because the [mediation] working group discussions are confidential... I cannot
find out what is said in them".
Her two superior wise monkeys, business secretary Vince Cable (nominally sole shareholder of the Post
Office) and prime minister
David Cameron, were equally unhelpful when Arbuthnot confronted them in the Commons.
In the face of the
parliamentary onslaught, however,
one woman could no longer lurk in the shadows.
COMMITTEE RAGE
In February 2015 Paula
Vennells was summoned by
the Commons business committee, along with Second Sight's Ian Henderson. To barely disguised derision, the
Post Office chief executive claimed to run "a business that genuinely cares about the people who work
for us". If "there had been any miscarriages of justice, it would have been really important
to me and the Post Office
that we surfaced those... so far we have no evidence of that." And so,
misleadingly, on.
Documents revealed in later legal action showed that Vennells had demanded defensive rather than informative briefing in preparation for the hearing. On the question of whether sub-postmasters' accounts could be accessed or altered away from a branch — which was crucial to
pinning all responsibility on sub-postmasters she'd instructed her underlings: "I need
to say no, it is not possible and that we are sure of this because of xxx [sic]..."
The memo gave an insight
into Post Office culture, from the top down. One insider told the Eye of
unswerving loyalty
at HQ: "If you wanted to belong and fit in, you had to put the future of the Post Office first. If that meant turning a blind eye - or
worse that's what people would do."
Denial dictated Vennells's
response to MPs exasperated by a mediation
process that had turned into trench warfare.
The Post Office was refusing to hand over crucial papers to Second Sight
investigators, including all-important prosecution
files, effectively stalling the process. When Vennells claimed to MPs that she was unaware of this, Second Sight's Henderson, also
giving evidence at the hearing, humiliatingly corrected her: "It came up at one of the working group meetings at which you and I were
present." The affair had become,
Tory committee member Nadhim Zahawi
said, "a shambles".
For an authoritarian body
whose bosses were used
to getting their own way, such opprobrium was hard to take. As any bully would,
it lashed out.
Second Sight was sacked and ordered to hand over or destroy all the material it had
accumulated. Its final
report would not be published. To those in
the know this wasn't a surprise; an
earlier leaked version revealed the investigators'
conclusion that Post Office officials "fail
to identify the underlying root cause of shortfall prior to initiating civil
recovery action or criminal
proceedings". And in words that rang
painfully true for those caught in the trap that snared Jo Hamilton,
"investigators seem to have
found that recording admissions of false accounting was the key to achieving
rapid, and inexpensive, asset
recovery". The Post Office's cynical
methods had been rumbled.
As Bridgen remarked that
summer in the Commons
chamber: "Second Sight has proven to be far too independent" for what he called a "feudal" Post Office. Yet the minister
answering for a new Tory government,
George Freeman MP, continued his
predecessors' tradition of parroting the Post Office line: there was "no evidence of systemic flaws in the system".
In the Post Office bunker,
meanwhile, there was a
creeping sense of downfall. Board minutes for July 2016 noted that its IT was "not
fit for purpose". The same month a blog post from campaigner Tim McCormack
about a Horizon-related
conviction prompted Vennells to email finance director Al Cameron and chief information officer Rob
Houghton asking for a report.
As before, her message came with the subtext that she'd like the problem to go
away. "I
want to know we've rectified all the issues raised," she wrote. Houghton
commissioned an "urgent review", but
on the same day wrote to all involved
instructing (for reasons that were blocked from disclosure): "Can you
stand down on this please?"
When a judge looked at the episode
three years later, he would remark that "the Post Office's own decision at the highest level not to investigate certain matters
as recently as 2016 [was] of great
concern".
The Post Office and the
government were determined not to face up to a now long-running injustice, and
the mediation process was dead. Alan Bates's resolve, by contrast, was not.
TRIAL AND TERROR
The farcical mediation
process had at least brought
forward so many victims that Bates was able to persuade a new firm of solicitors,
Freeths, and
litigation funders, Therium, that a blockbuster legal action was viable. In March
2017, the high court granted a "group litigation order" enabling a staggering 555 claimants gathered as the Justice for Sub-Postmasters Alliance to sue the Post Office.
The Post Office's case was
creaking from the outset. During one
procedural hearing leading up to the
opening of the class action, the critical claim that only a sub-postmaster could alter their own accounts - which underpinned the notion that all shortfalls must be their fault - was exposed as nonsense. "Fujitsu... has the capability to inject a new transaction into our
branch accounts," admitted the Post Office's counsel, adding that previous
statements to the contrary were
"a matter of enormous regret".
These were of course crocodile tears. The Post
Office took its contempt for the sub-postmasters
to new levels by doing all it could to subvert the judicial process. In
late 2018, the Hon Mr Justice Eraser
criticised the Post Office's "undoubtedly
aggressive and, literally, dismissive" approach. This was typified
by repeated applications to strike out the
claimants' evidence, sometimes before
it was even lodged (showing, Fraser
added laconically, "considerable,
if not almost supernatural foresight").
Untroubled by costs now reaching eight figures, the Post Office was
"simply attempting to restrict evidence
for public relations purposes".
When the first in a series
of scheduled trials began
in the high court that November, addressing the contracts and relationships between sub-postmasters
and their paymaster, several incriminating documents explained the obstructiveness. Almost everything the Post Office had said about the Horizon system proved to be false.
The idea that it was
"robust" was exploded within days, when
emails emerged from 2012 showing the angst
over the software at senior levels.
Managers had discussed problems thrown up by Horizon in 2010 that were
"impacting circa 40 branches". They'd fretted that admitting as much would have a "potential impact on
the ongoing legal cases". And -
in words that betrayed the Post Office's true priorities — the information could
"provide branches with ammunition to blame Horizon
for future discrepancies". Another memo,
from 2009, discussed a branch with balances
"in a mess" and concluded in bold: "It
is Horizon-related."
The Post Office's QC, David
Cavender, sought
to stymie any argument on the central issue in the trial: whether the Post Office's
dealings with sub-postmasters were unfair. Finding that they were, he claimed, would
harm "its
ability to control its network throughout the UK". This in turn "would represent
an existential threat to Post Office's ability to continue to carry on its business throughout
the UK in the way it presently does". The point seemed merely to reinforce the view of the
Post Office as a "feudal" institution and would later be slapped down
by the
judge as "an attempt to put the court in terrorem". (It was a bit rich, too, since in employment
tribunals the Post Office was distancing
itself from the idea that it controlled sub-postmasters, in order to avoid national insurance contributions and employment obligations like sick pay).
Judge Fraser, a former
Royal Marine, was not someone
who could be easily put in terrorem — i.e. be cowed from doing his
duty by threats of exaggerated consequences. He watched as the sub-postmasters'
counsel Patrick Green QC took apart the Post Office's witnesses, most of whom
arrived programmed with
their employer's false narrative
and conspicuous ignorance of the issues.
Particularly alarming was
the testimony of director
Angela Van den Bogerd, a Post Office veteran of 33 years who had been handling complaints about Horizon since 2010 and had sat on a working group created to deal with the scandal
from 2014. Confronted with one sub-postmaster's
shortfall, connected to lottery ticket sales, she claimed to have
"seen this cold". In fact, she had
signed a detailed witness statement about
the matter just two days before.
In a serious indictment of
the Post Office's culture, when he delivered his judgment on 15 March 2019, Mr Justice
Fraser criticised half of its 14 witnesses for being less than honest (under oath). Van den Bogerd had
"sought to obfuscate matters, and mislead me" and, although "a very clever person", had an
unfortunate "disregard for factual accuracy". A senior criminal investigator had given
evidence that was "incapable
of belief", while a more junior official had been "nervous about giving evidence
before me
that he thought might be unhelpful to the Post Office". Dishonesty at the
top and fear further down appeared to
characterise the Post Office. When it came
to an "obdurate" refusal to produce
"plainly important documents", Fraser concluded that the Post Office's
stance "would be a worrying
position were it to be adopted by any litigant; the Post Office is an
organisation responsible for
providing a public service, which in
my judgment makes it even worse".
With the Post Office's
credibility in tatters, the
ordinary sub-postmasters - who had painstakingly set out their stories of
sudden shortfalls
and subsequent persecution - won a resounding victory. The Post Office, said
Fraser, was
guilty of "oppressive behaviour". The contractual relationship was so unfair, for example in holding
sub-postmasters responsible for shortfalls no matter what the cause and peremptorily suspending
them without pay, as to be unenforceable. Thus did 555 men and women glimpse justice for the
first time in many years.
HORIZON PANNING
A week after the judgment
in the first trial, courtroom
26 in the high court's Rolls Building was already hosting the early skirmishes
in the second,
examining the Horizon system in detail. With more of the IT flaws emerging almost hourly, on 21 March Judge
Fraser returned from lunch
to announce a show-stopper.
The Post Office had applied
for Fraser to "recuse"
himself from the case, i.e. drop out, on the ground that he was biased - citing 109 paragraphs of his first trial judgment (which were certainly a measure of how damning it had been).
It was a clear attempt to
derail litigation that
was going from bad to worse. Fraser didn't take long to decide that he wasn't biased, at
which point the Post Office
took the matter to the appeal court. Now it
was the turn of another judge, Lord
Justice Coulson, to scour his thesaurus
for uncomplimentary adjectives. Arguments
advanced by the expensive QC retained
by the Post Office for the exercise, Lord (Anthony) Grabiner, were
"misconceived", "fatally
flawed", "untenable", "demonstrably wrong" and
"without substance". The score line was a 109-nil defeat for the Post
Office.
When the main event resumed
in the high court, the performance of
the Fujitsu staff responsible for running
the Horizon IT system made the Post
Office's arse-covering and mendacity
in the first trial look open and honest. QC Patrick Green dragged Fujitsu witnesses through reams of obvious computer errors and glitches going back nearly 20 years and featuring a "bug table" listing 23 serious
software faults. But still, almost
all of them refused to face the plain
truth that the IT was flawed.
It didn't help that, in
line with its strategy of evasion, the Post Office didn't call key Fujitsu personnel for fear of what
they might be forced to reveal. One absentee was a central figure on the Horizon contract,
recently-retired lead engineer
Gareth Jenkins. He had nevertheless provided vast amounts of information for the written statements of the witnesses who did appear. He'd also, it turned out, been the company's witness at criminal trials including Seema Misra's nine years earlier. This meant that when the misleading words he had fed more junior
staff were scrutinised in the courtroom, the cover-up began to look dark indeed.
Fujitsu IT security
analyst Andy Dunks was questioned on a particularly tortuous part of his written evidence. He'd
claimed that "at all material times the system was operating properly, or if not, any respect in
which it was not operating
properly, or was out of operation was not such as to effect [sic] the
information held within
it". Was this mangled syntax the party line? No, said Dunks; there was no
party line. Green
then presented him with Gareth Jenkins's evidence in Seema Misra's trial all those
years before,
which read word-for-word the same as Dunks's statement.
Plainly there was a
party line, right down to the misspelling of "affect". It was also
clearly an untrue
line. Emails revealed in the trial showed that a senior Fujitsu specialist had said as far back as 2006 about one glitch causing accounting errors, "this bug has been around for years
and affects a number of sites most
weeks".
The-man-who-wasn't-there,
Gareth Jenkins, also
fed Fujitsu's central technical witness in the case, its "chief architect" on the Post Office account Torstein Godeseth. By the time he took the
stand, Godeseth had twice corrected his written
evidence (later described as "wholly misleading" by the judge). He'd discovered what had really been going on from ex-Fujitsu man Richard Roll, who had earlier taken the stand as a witness for the sub-postmasters. But Godeseth was frank in the witness box, admitting what Fujitsu and the Post Office had long denied: that
the company could alter sub-postmasters' branch records remotely from
its Bracknell HQ. He also accepted,
when taken through a host of software bugs
and their consequences for branch accounts, that the system certainly was not always "operating
properly" and that the failings definitely
did affect the figures.
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As Fraser prepared to
deliver his judgment on this
farrago towards the end of last year, Lord Justice Coulson reappeared to heap
some fresh ordure
on the Post Office. He had been
considering its appeal against the first trial judgment in which the Post Office's dealings with sub-postmasters had been found
"oppressive". As with the
attempt to de-bench Fraser, he had little
difficulty dismissing it.
The appeal, he said, had been based "on
the idea that the Post Office was entitled to treat [sub-postmasters] in capricious or arbitrary
ways which would not be unfamiliar
to a mid-Victorian factory-owner..." Even the Post Office, now with new chief executive Nick Read, could
see the writing on the
wall. The hitherto little-known businessman sat down with lawyers for the 555 to hammer out a settlement. In front of them was Fraser's eviscerating judgment in the Horizon trial, to be
published once they'd shaken hands.
FINISHING POST
So it was that, two weeks
before Christmas, final victory for the
sub-postmasters was declared. The Post
Office agreed to pay £5 8m to settle their claims (plus its own costs, which could take the total bill for taxpayers towards £lOOm). Fraser's judgment, released a few days later, confirmed what they knew: Horizon was "not remotely robust" up to
2010, the period in which most shortfalls arose, and "still had a significant
number of bugs, errors and defects" thereafter. Here was confirmation that
the sub-postmasters had not
been mad or mistaken in blaming computer error for their nightmares. Rather,
two mighty
organisations - one a public body, the other a multinational company - had cheated them and lied to them for their own purposes. Both received the excoriation they deserved.
The Post Office's approach,
said Fraser, boiled
down to "bare assertions and denials that ignore what has actually occurred... [and] amounts to the 21st century
equivalent of maintaining that the earth is
flat". He even ruled that the
civil settlement should not stop sub-postmasters
pursuing the Post Office for malicious
prosecution. As for the IT company, the
trial had presented such "grave concerns regarding the veracity of
evidence given by Fujitsu employees to other
courts in previous proceedings"
that Fraser decided to send a file to the
director of public prosecutions.
Meanwhile, the Criminal
Cases Review Commission has referred 39 sub-postmasters' convictions to the appeal
courts. More will follow.
In February, prime minister Boris Johnson committed in the House of Commons to an independent inquiry.
More victories, then, will
come. But at a very heavy
price: not just the £46m of the settlement that will
go to lawyers and funders - leaving many
sub-postmasters with just a few thousand pounds to show for years of
turmoil - but also the litany of lost
livelihoods, broken relationships, ruined
reputations, damaged mental health, stolen
liberty and even deaths.
While the Post Office
stands justly disgraced, there
remains one shortfall larger than any thrown up by its IT system: that inaccountability
for
those responsible for the scandal. If the lessons of one of Britain's worst abuses of
official and
corporate power are to be learned, it must be re-balanced.
POST OFFICE HALL OF SHAME
WHO TO BLAME: THE POST OFFICE HALL OF SHAME
THERE'S standing room only in the Post Office IT Hall of
Shame, where greatest culpability lies with those who resisted attempts to get
to the bottom of the affair and blocked the sub-postmasters' pursuit of justice.
Obstructor-in-chief was Paula Vennells CBE, Post
Office chief executive from April 2012 to March 2019. An ordained Anglican priest,
Vennells joined the Post Office in 2007 as network director after a long career
in marketing with Dixons, Argos and Whitbread. She was richly rewarded in the
top job, her pay reaching £717,500 in 2018/19.
Of this, £388,000 came in performance bonuses mostly
linked to the company's strategic plan to "achieve commercial sustainability
and profitability". A mere £36,000 was deducted from a "short term"
bonus because of "the ongoing postmaster group litigation and its impact
on the business". Not long before, the 2019 new year honours list gave
Vennells a CBE for "services to the Post Office and charity".
After resigning in April 2019, Vennells acquired two
prestigious posts: nonexecutive director at the Cabinet Office (which she lost
last month); and chair of Imperial Healthcare NHS Trust, responsible for five
large London hospitals. Covering up problems is exactly what is not needed
there, which makes Vennells' failure to learn from the Horizon affair
troubling. After the court defeats, she apologised not for
getting it badly wrong but merely for being "unable to find a solution and
a resolution outside of litigation and for the distress this caused".
The man who should have been holding Vennells to account
was Tim Parker, a private equity veteran known as the Prince of
Darkness for his prolific job-cutting, who became chairman of the Post Office
in October 2015. There is no evidence of his questioning the approach to the
Horizon scandal.
With a bulging portfolio of chairmanships - now featuring
the HM Courts and Tribunals Service, the National Trust, Samsonite luggage
company plus advisory roles at CVC and Monarch Capital private equity firms -
in early 2018 Parker cut his commitment to the Post Office by 75 percent (or
around a day a week).
Going AWOL in a crisis doesn't chime with his
self-proclaimed leadership style. In an interview at the University of the West
of England in 2018, he said he acted as "guarantor of good behaviour,
transparent management..." With the guarantee evidently worthless, Parker
(who also called himself a "pro chair") may soon be spending even less
time at Post Office HQ. He declined an invitation to talk to the Eye for
this report.
Tim Parker
Vennells and Parker followed a procession of directors who
had failed to confront Horizon's failure or its consequences. As chief executive of what was called Royal Mail but included
the Post Office until 2012, Moya Greene and her chairman. City grandee Donald
Brydon, focused relentlessly on the forthcoming privatisation of mail
operations. The latter's successor from 201I. Alice Perkins, a career
civil servant turned serial non-executive, let the scandal fester in the mire
of mediation during her four-year, £100,000-a-year chairmanship.
Supposedly "senior independent" directors who have
also come and gone without making a difference include ex-M&S man Neil McCausland
(2011-2016) and former TNT executive Ken McCall (2016-present). Chair from 2016
of the audit, risk and compliance committee that should have been on to the
eight-figure legal costs racking up and evidence of bad practice, Carla Stent,
wasn't exactly on the ball either (perhaps she was too busy with her
"frequent speaking on... corporate culture").
Sharing responsibility are the directors from UK Government
Investments. In keeping with its habit of relying on bankers and bean counters,
this outfit placed ex-Deloitte man Richard Callard (2014-2018) and former
Deutsche and UBS banker Tom Cooper (2018-present)on the Post Office board. Both
placemen seem to have done little beyond watching the numbers, in tune with the
wishes of their political masters.
These were the government ministers who failed to properly
examine the unfurling public scandal while holding the postal services brief.
Under the coalition came the uninspiring trio of Ed Davey (2010-2012), Norman
Lamb (for seven months) and Jo Swinson (2012-2015). They were followed by a
succession of short-lived Tory junior ministers with other fish to fry and
careers that would not have been helped by addressing the sub-postmasters'
grievances: George Freeman, Baroness (Lucy) Neville-Rolfe, Margot James, Andrew
Griffiths and Kelly Tolhurst.
For two decades these and previous directors and ministers
presided over a policy of persecution. The instrument of this was the Post
Office's investigation branch, now the Security and Investigations Service. The
world's oldest criminal investigation force, it dates from when guards accompanied royal mail carriages to
fend off spies and highwaymen - and it still puts protecting the crown ahead of
justice. Several sub-postmasters told the Eye of bullying and underhand tactics
such as extracting "evidence" without lawyers present. Investigators
then handed cases to in-house prosecutors (unlike police investigations, which
go to the independent Crown Prosecution Service). Second Sight's forensic
auditors found prosecutors reaching "agreements whereby no mention was to
be made in court, by the defendant, of any criticism of the Horizon
system" and that "decisions to prosecute may have been contrary to
the [prosecutors'] code..."
Meanwhile, those who should have backed the
sub-postmasters, the National Federation of Sub-postmasters (NFSP), let them
swing in the wind. Entirely funded by the Post Office (and kicked out of the
TUC in 2014), the NFSP has long parroted the Post Office line. In 2015, its
then general secretary George Thomson told M Ps that Horizon "has been
fantastically robust... from day one" and characterised Alan Bates's
campaign for justice as a "cottage industry".
Questions will soon be asked of Fujitsu top brass too.
Uppermost among them are: the company's UK chief executive from 2000 to 2004
(and then chairman for three years) Richard Christou who boasts of having made
Fujitsu the government's no.2 IT supplier at the same time as the Horizon bugs
secretly proliferated; and his equally bungling successors from 2004 to 2008, David
Courtley, and from 2009-2011, Roger Gilbert (on whose watch a Fujitsu
employee gave apparently false evidence at the trial of Seema Misra). Then came
Duncan Tait, who until last July led Fujitsu across Europe while its senior
staff gave evidence in court that was so misleading police are now
investigating. Tait is now a trustee of Business in the Community.
Things could also get uncomfortable for Fujitsu's UK
chairman and UK chief executive from 2015 to 2018 (and board member before
then), Michael Keegan (husband of current junior education minister Gillian).
He is now a Crown representative at the Cabinet Office dealing with defence
suppliers on behalf of the taxpayer.
PAYING
THE PRICE FOR POLITICAL FAILURE
EVER since Charles I granted the first mail monopoly in 1635,
followed 19 years later by Oliver
Cromwell's establishment of the General Post Office, Britain's mail system has existed as both business and public service. Misjudging this uncomfortable balance has always come at
a price: for customers, communities and, now more than ever, for workers.
Sub-post offices grew with the expansion of the railways, as essential nodes of the Victorian
mail system collecting and sorting post outside town and city centres. By 1914,23,000 branches had become centres of local communities, proving especially valuable in
times of crisis such as the Second World War and remaining the
"government shop" for everything
from collecting pensions and
benefits to licences and savings
accounts. Later governments attached
less value to this service. Growing
commercialisation from the 1980s translated into cost-cutting and closures. Underinvestment and the
extraction of hundreds of millions of
pounds by the Treasury in the 1990s left the Post Office's finances precarious.
The then New Labour business secretary Stephen Byers
subjected the Post Office to the full tsunami of
management-consultancy-driven reorganisation. Under a 1999 McKinsey-inspired programme
called "Shaping for Competitive Success", the Post Office was broken into 21 separate business units operating as an internal market that nobody understood.
As author of Masters of the Post, Duncan Campbell-Smith, put it: "This was not to be confused with the 'Competitive
Overhead Strategic Structure Programme', the 'Harnessing Technology Project'
or the 'Finance Excellence Programme'. The mood climaxed
with the toe-curling re-naming of the 350-year-old institution as Consignia in 2001 (which after due ridicule became Royal Mail a year later). Such was the dysfunctional environment into which the Horizon IT system was introduced in 1999.
Under the lavishly remunerated
team of former Asda man Allan Leighton (chairman 2002-2009) and ex-Saatchi & Saatchi and Football Association boss Adam
Crazier (chief executive 2003-2010), the group's financial fortunes perked up temporarily. But a
mid-2000s triple whammy of reduced letter-sending, a huge pension
deficit and the over-hasty opening up of mail services to cherry-picking
competition, floored the business. Sub-post
offices bore the brunt, 2,500
closing while the rest were nobbled
by un-joined-up government decisions
such as reducing the payment of pensions through the Post Office.
From 2003, the government's ownership of the Post Office was managed by a new
Shareholder Executive (now part of UK Government Investments). With this outfit itself run by ex-bankers and consultants setting profit-driven
targets for Post Office executives, sub-postmasters who now reported unaccountable
financial shortfalls were never going to receive a sympathetic hearing.
The balkanization of the Post
Office was completed in 2013 when a new coalition government pulled off the privatisation previous governments hadn't managed. Lib Dem business secretary Vince
Cable sold off the profitable delivery part as Royal Mail pic and kept the
benighted Post Office Ltd in public hands.
Sub-postmasters again got the shitty end of the stick. Groovy "Big Society" aspirations to
"mutualise" the Post Office-which had sweetened the privatisation part of Cable's pill - turned into a
cost-cutting "network transformation
programme". Sub-postmasters were
asked to give up basic pay in return for a small grant to tart up their
offices; they could make up for lost income by selling more financial products (on behalf of the Bank of Ireland). Meanwhile, fees from Royal Mail for handling post were
slashed and parts of government such as the DVLA withdrew business. It soon became clear that cuts in payments to sub-postmasters
were funding the Post Office's return to pre-subsidy profitability (in 2016/17), from which its directors were
trousering large bonuses.
The
"transformation" hasn't worked for
anybody else. Last October, a parliamentary select committee found the Post Office network to
be "fragile". A rethink was "urgently required", including on "valuing the sub-postmasters and Post Office staff who deliver the services". History
gives little cause for optimism.
CASE STUDIES
NICKI
ARCH
'They stripped my life
apart'
NICKI ARCH successfully managed the Chalford Hill post office in Stroud, Gloucestershire, for three
years before Horizon arrived in 2000.
After it was installed, she found that pension payments
mysteriously kept duplicating. Post Office
auditors arrived and declared a £24,000
discrepancy.
Nicki was suspended on the spot by Post Office investigators, then sacked.
"They
stripped my life apart," she says. "I presented every single bit of financial history from the minute I
left university to them. They came to my
house to see what was in it. They didn't
even have a search warrant."
In 2001,
the Post Office charged Nicki with fraud,
theft and false accounting, but shortly
before trial offered her a deal. The theft
and fraud charges would be dropped if she
pleaded guilty to false accounting. Nicki refused. The trial was a
farce. After three days of evidence, during
which nobody from the Post Office explained how Nicki was meant to have
stolen any money, the jury took two hours to acquit her.
The
ordeal led Nicki to suffer a breakdown, for
which she was hospitalised. She was penniless for years and spent a
decade on antidepressants. Nicki blames the
Post Office for ruining her marriage and her life.
"I hate everything about it," she tells the Eye. "Even
now, I will not go into a post office, I
will not use anything to do with the Post Office. I will drive to somewhere to
deliver a letter before I'll post it.
I can't bear it."
PHIL AND FIONA COWAN
A major factor in an untimely death
PHIL COWAN ran a number of service stations in
Edinburgh. In 2001, he bought a Post Office in Parson's Green Terrace, becoming
the sub-postmaster while his wife Fiona managed the branch day-to-day.
The couple inherited an experienced member of staff
and together became a strong team, sticklers for getting the accounts right
Every discrepancy was traced and corrected in branch or by a "transaction
correction" sent by the Post Office. Until, that was, 11 February 2004,
when Phil got a phone call from the branch telling him the weekly balance was
showing a shortage of £30,000.
The branch had been experiencing growing
discrepancies for five weeks, but Fiona had expected them to be rectified
through "transaction corrections" issued by the Post Office. She had
not told her husband as she didn't want to worry him.
Phil immediately called in the area manager, who
suspended him and closed the branch. Interrogated by Post Office investigators,
Phil suggested the discrepancy might be some kind of computer glitch. He was
told this was not possible: no one else in the entire Post Office network had
problems with Horizon.
Fiona was charged with false accounting. Phil's
business was ruined. With the criminal charge hanging over her, Fiona was spat
at in the street and called a thief. Phil was told not to bother reapplying to
manage his service station franchises at the end of their leases. On 21 January
2009, Fiona overdosed on antidepressants and died aged 47.
Years later, Phil found out through a freedom of
information request that all charges against Fiona had been dropped while she
was still alive. No one had bothered to tell either of them. "The horror
of that whole Post Office fiasco was a major factor in her death," he
says.
MARTIN GRIFFITHS
From Horizon shortfalls
to suicide
BY 2009, Martin Griffiths had
been successfully running Hope Farm Road Post Office in Great Sutton, Cheshire, for 14 years.
He'd swallowed some small but unexplained shortfalls in
the past, but now four-figure discrepancies were showing up on his Horizon computer
screen.
When
Martin first declared these to the Post
Office, its response was uncompromising. Horizon was functioning perfectly; he would have to make good his
"losses" from personal savings.
Two years later, Martin was visited by Post Office
auditors, who said his balance was now £23,000 out. The Post
Office suspended him, then
reinstated him, but the losses continued to escalate. Between January 2012 and
October 2013,
more than £57,000 went "missing" from Hope Farm Road. Now
Martin, increasingly stressed, had to turn to his parents. They lent him their life savings.
To make matters worse, in May 2013 armed robbers burst into his branch, smashed his hand and told him that if he didn't hand over the
contents of the safe he would be beaten around the
head. They left with around £54,000 in cash. Two months later Martin was
told that, having failed
to manage discrepancies and security at his branch, his contract was being
terminated. He
would liable for some of the stolen cash, too.
That September, Martin stepped in front of a bus. He left a note apologising to his family. His life support was switched off three weeks later. The
coroner recorded a verdict of suicide.
The Post Office didn't tell the incoming sub-postmaster at Hope Farm Road what had happened to his predecessor. Within a few months the new
man, who had previously run a successful Post Office branch, also found
discrepancies on his Horizon terminal. He was suspended
from his job and told to pay the Post Office tens of thousands of pounds.
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