In a nutshell what happened?

When individuals are prosecuted for theft and some go to prison, it is not unreasonable for the public to assume that those individuals were corrupt and dishonest. Never in your wildest dreams would you think that the prosecuting authority was the one who is corrupt and dishonest. Yet that appears to be the conclusion reached by the Court of Appeal in the ‘Great Post Office Scandal’. We may need to wait for any future prosecutions of Post Office and/or Fujitsu staff to understand the full extent of the wrongdoing by the Post Office. This wrongdoing by the Post Office seems to have occurred on an industrial scale.

Over a period of years, the Post Office prosecuted over 700 (yes, seven hundred) of its subpostmasters. Some went to prison for thefts they did not commit, others were bankrupted by the Post Office. It is said this is the probably the largest miscarriage of justice in UK legal history.

The great scandal of this matter is that the Post Office apparently knew there were problems with the Horizon IT system but denied the problem existed as they did not want negative publicity. The reputation of the Post Office now lies in tatters – how utterly misguided could senior Post Office managers and directors have been, to think that the truth would one day not emerge.

There are individuals at the Post Office and Fujitsu (the maker of the error prone Horizon IT system) whose actions and sworn witness statements are now being reviewed by the CPS on the orders of Mr Justice Fraser in a previous trial. On the evidence now available in the public domain, there is a case to explore if some Post Office or Fujitsu staff may have knowingly perverted the course of justice (Note 1 below).

Books will be written about this scandal. It is to be hoped that a blockbuster film may be produced that will lay bare the facts of this travesty to the wider public. The tragedy though is the reality that the scandal has seen lives ruined. Many have been wrongly imprisoned, some bankrupted and several have died before their good name was exonerated of crimes for which they were unjustly convicted. One subpostmaster committed suicide.

I, and many other accountants, have watched the trials of subpostmaster unfold. We have known in our guts that something was fundamentally wrong even though we did know the root cause of what was wrong. An independent report was written by forensic accountants, Second Sight, but the Post Office refused to accept its conclusions. It was clear that the Horizon system did appear faulty. As subpostmaster after subpostmaster was convicted, it was hoped that one day justice would be done and now thankfully it is being done (but proper compensation is yet to be agreed).

Private Eye wrote an excellent Special Report on the scandal. The report includes a Hall of Shame of those culpable including ministers of the Crown.

The fantastic BBC Sounds podcast by Nick Wallis  BBC Sounds – The Great Post Office Trial – Available Episodes is well worth listening to in full. It gives a full understanding of the extraordinary story of a decade-long battle with the Post Office, fought by their own subpostmasters. It has been called the greatest miscarriage of justice in UK legal history.

The Computer Weekly timeline of the scandal (in Note 2 at the foot of this blog) shows just how extensive and staggering the scandal has been.

Why did the scandal happen?

When a disaster happens, it is rarely the fault of just one person; that is certainly the case here. There appear to be number of factors that caused this scandal to happen and for it to go on for so long:

  • The Post Office is its own prosecuting authority. It flies in the face of justice for an organisation to be its own prosecuting authority. In this case, the Post Office itself prosecuted subpostmasters for failings of the Post Office. It must be stripped of this power.
  • Those in Government who oversee the Post Office and in particular the Department for Business, Energy & Industrial Strategy who should have held the Post Office to account, failed in their oversight. A Government inquiry into the Horizon IT issues has been set up (although many say this is inadequatre as it lacks teeth).
  • The Post Office knew of bugs and errors in the Horizon IT system but hid them from the defence when prosecuting subpostmasters. There was a cover up of Horizon errors.
  • The Post Office said that the Horizon IT system could only be accessed in the local subpostoffice. It said that there was no head office nor Fujitsu access to the Horizon system in the local post office. That is untrue and appears it was known to be untrue by the Post Office. Fujitsu IT staff at their office made numerous changes to iron our flaws. It would be appear that it was these changes that caused the discrepancies.
  • There was insufficient training of subpostmasters in the Horizon system.
  • When errors appeared and subpostmasters contacted the Post Office help desk they were advised to admit to false accounting to avoid going to prison. By admitting false accounting, they avoided prison but had a criminal record despite being innocent.
  • When subpostmasters asked the Post Office if other subpostmasters had had issues with their Horizon system, the Post Office lied and said that no other subpostmaster had problems.
  • No one (except the subpostmasters who were ignored) seemed to ask ‘Where did the money go that was stolen?’ Given the sums involved some money would have been found as unexplained wealth, foreign holidays etc in the hands of at least some subpostmasters. It appeared that every penny of the stolen money completely vanished. No one at the Post Office thought that strange.
  • Further, some subpostmasters asked the Post Office what was the subpostmasters’ motive for the theft? The subpostmasters were building successful businesses – why would they jeopardise that?
  • The subpostmasters’ own trade union failed them when the subpostmasters asked for help. The union, and in particular the then General Secretary, appeared to be ‘in cahoots’ with the Post Office to prevent future post office closures. The very body which should have supported the subpostmasters turned against them.

In October 2020, the Post Office finally admits it made mistakes. Post Office apologises in false accounting scandal climbdown | Post Office | The Guardian

What happened in the appeal process and at the Court of Appeal?

Last week, the Court of Appeal overturned the convictions of 39 former subpostmasters who the Government-owned Post Office had blamed for accounting shortfalls. Some were sent to prison and the lives of individuals and their families were ruined.

The total number of convictions overturned so far is 45, with six others overturned at Southwark Crown Court in December, and there could well be more. The Criminal Cases Review Commission (CCRC), which referred the latest cases to the Court of Appeal, is currently reviewing 22 more cases (and the Scottish CCRC is looking at five).

More than 700 people were prosecuted based on evidence from the Post Office’s Horizon IT system, which has been proved to be contain errors.

In 2019 a damaging High Court judgment slammed the Post Office’s management that blamed its own subpostmasters for mistakes made by its own Horizon computer system.

It is noteworthy that the Court of Appeal judgment criticised the Post Office by concluding that the prosecutions of its subpostmasters were not just incompetence by the Post Office. The prosecutions were carried out despite the Post Office having full knowledge that the defendants could not get a fair trial.

The appeal trials were inevitably complex. The Post Office had admitted that it wrongly prosecuted subpostmasters on the grounds that the computer evidence used in prosecutions was potentially unreliable (“Limb 1”).

However, after a successful request by the barristers for the subpostmasters, an additional limb was accepted by the court as an arguable ground for appeal. “Limb 2”, as it is known, meant the Post Office knew it was not possible for subpostmasters to have a fair trial but prosecuted them anyway, which was an “affront to the public conscience,” according to the Criminal Cases Review Commission (the “CCRC”) or, as the Court of Appeal said in its judgment, “an affront to the conscience of the court”. In effect, this is conduct that undermines the criminal justice system or public confidence in it.

The 39 convictions that were overturned were quashed on both grounds. This throws the spotlight on the Post Office leadership because it is no longer a case of mere incompetence that led to the wrongful prosecutions, but deliberate and intentional strategy by the Post Office. This is of breath-taking seriousness.

The subpostmasters argued, and the Court of Appeal eventually agreed, (despite opposition from the Post Office) that the Limb 2 argument be heard. The subpostmasters said that without that second (Limb 2) ground for appeal, Post Office directors could have argued that the prosecutions were just operational mistakes and not the fault of the CEO and the board. The Court of Appeal decision on Limb 2 appears to say that the whole set of prosecutions relating to Horizon and indeed the Post Office’s overall strategy were an abuse of the courts’ process.

The Post Office was made aware of potential computer errors over many years. Computer Weekly first revealed the scandal in 2009, with the stories of seven subpostmasters. But the Post Office, led by Paula Vennells from 2012 to 2019, consistently denied that there were any errors in the Horizon system (see timeline below of Computer Weekly articles since 2009).

Even in 2015, after an independent report on Horizon by forensic accounting firm Second Sight found serious problems in the system, the Post Office still denied the existence of bugs and problems.

What did the Court of Appeal judges say?

In his damning written judgment, Lord Justice Holroyde, sitting with Mr Justice Picken and Mrs Justice Farbey, said the Post Office, which brought the prosecutions itself, “knew that there were serious issues about the reliability of Horizon”.

He wrote: “The failures of investigation and disclosure were in our judgment so egregious as to make the prosecution of any of the ‘Horizon cases’ an affront to the conscience of the court.

“By representing Horizon as reliable, and refusing to countenance any suggestion to the contrary, POL [Post Office Limited] effectively sought to reverse the burden of proof: it treated what was no more than a shortfall shown by an unreliable accounting system as an incontrovertible loss, and proceeded as if it were for the accused to prove that no such loss had occurred.

“Denied any disclosure of material capable of undermining the prosecution case, defendants were inevitably unable to discharge that improper burden. As each prosecution proceeded to its successful conclusion the asserted reliability of Horizon was, on the face of it, reinforced. Defendants were prosecuted, convicted and sentenced on the basis that the Horizon data must be correct, and cash must therefore be missing, when in fact there could be no confidence as to that foundation.”

Comments after the Court of Appeal judgement

Alan Bates

Alan Bates, of the Justice for Subpostmasters Alliance, said “Government departments were complicit in the 20-year scandal. At no point have officials questioned, at least publicly, why £1billion was paid for a system with known faults.”

James Arbuthnot

Former Conservative MP James Arbuthnot, now Lord Arbuthnot became actively involved in the campaign after one of his constituents was charged. He brought together many MPs whose own constituents had been prosecuted. This Hansard account of a parliamentary debate into the scandal is well worth reading.

Lord Arbuthnot said there was a “culture of denial” within the Post Office. There was a failure in the civil service and of ministers to oversee things properly. Fujitsu, the Japanese firm, which developed Horizon, should foot some of the compensation bill.”

Nick Wallis

Nick Wallis, a BBC journalist who has pursued this story with tenacity, diligence and personal sacrifice for over a decade, reacted to the ruling the Court of Appeal by saying “The Post Office over a period of two decades has almost created a situation whereby people were being prosecuted on an industrial scale. They rolled out what they described as the largest non-military IT in Europe into individual post offices around the country. It didn’t work, it was fundamentally unfit for purpose. It could not add up its own sums and in some cases created accounting discrepancies which subpostmasters were held accountable for.”

Nick went on:Due to its long legacy, the Post Office has a proximity to state power that is almost unparalleled. The Post Office was able to use its own investigation and prosecution units to bypass the CPS and the police force to prosecute its own employees to the tune of one a week for 14 years. There were 736 successful convictions just using Horizon IT evidence. When the Post Office found out its prosecutions may be unsafe, they covered it up. They went out of their way to say to campaigning MPs and the Justice for the Postmasters’ Alliance that nothing was going wrong with the IT system and there was nothing wrong with their prosecution. They then threw tens of millions of pounds trying to deny the subpostmasters justice.

“They were mendacious in the way they went about denying justice and they colluded with the Government in order to do this, because the Government is 100% shareholder of the Post Office and it has skin in this game. There is a real problem with the accountability in this story, meaning commencing a counter-prosecutions will be tough.” See also this crowdfunding website – Postofficetrial.

What next?

  • The subpostmasters will now pursue proper compensation and hundreds of other Post Office convictions may be overturned. Compensation may run to £500m which the Post Office says it doesn’t have. The taxpayer therefore, as 100% owner of the Post Office, would have to pay the compensation bill.
  • A full judge-led Public Inquiry is necessary with power to summon witnesses to give evidence under oath. The current Government Inquiry lacks teeth and is inadequate. A judicial review is under way to force the Government to hold a Public Inquiry. The Public Inquiry to hold to account Post Office directors and managers, Government ministers and senior civil servants responsible for Post Office oversight, Fujitsu and the subpostmasters’ trade union. What was the extent of the cover-up?
  • Questions should be asked about the role of the accountancy profession and what help the profession might have given. It was well known outside the Post Office that Horizon produced anomalies. It was known that subpostmasters could not get the full picture of transactions as they only had their till rolls to go on. Forensic accountants (‘Second Sight’) were eventually brought in but the Post Office obfuscated their work.
  • What was the role of the auditors to the Post Office (PwC with whom I trained) who signed off their accounts? What audit work did PwC do at the subpostoffice branch level? What was their assessment of the Horizon system? The firm will be deeply saddened that the errors in one of their client’s computer systems resulted in the biggest miscarriage of justice in history. ICAEW will no doubt be investigating PwC’s role in the matter.
  • A detailed and thorough external evaluation of the Fujitsu Horizon system and its bugs and flaws needs to be undertaken.
  • The Police and Crown Prosecution Service to investigate the Post Office and Fujitsu. Charges to be brought against anyone who has committed a criminal offence. Anyone who has perverted the course of justice by giving knowingly false statements to the courts should be prosecuted.
  • The Post Office to be stripped of its power to bring its own prosecutions.
  • The Post Office board to include enhanced representation from subpostmasters.
  • Honours given to Post Office and BEIS employees should be reviewed and consideration given to public recognition of those who fought for justice.
  • The Post Office logo to be revised to take account of the injustice. Consideration be given to incorporating a reference to the subpostmasters in the logo. Whilst the Post Office and subpostmasters must in time move on, this miscarriage of justice will become a permanent historical stain. It needs permanent acknowledgement – the usual ‘Under new management’ whitewash is inadequate and would be an affront to the hundreds wrongly convicted.
  • A proper system of support to be introduced for subpostmasters which should include accounting expertise. We never want to be in this situation again.
  • Consideration be given to partial privatisation of the Post Office with shares given to subpostmasters.

Isabel Hardman in The Spectator draws cogent parallels with the Grenfell fire tragedy and also the Greensill Capital scandal. What lessons can we learn from the Post Office scandal? | The Spectator Isabel argues that when the ordinary ‘little’ people don’t have access to the ‘big’ people who hold the power and influence then grave injustices can occur. (This theme is taken up in a parliamentary debate on 19 March 2020.)

There are lessons for many people involved in this scandal. For those who are unjustly accused, the lesson is perhaps for more obvious help to be available and for the falsely accused never to give up. Subpostmasters are small businesses like thousands of other small businesses up and down the land. Sometimes they need some help. It is so sad that many subpostmasters affected had no one to whom to turn for help. It is hoped that firms like SME Strategies and many similar firms like us, would be able to provide help to small businesses in trouble.

The Great Post Office Scandal is an example of David and Goliath when the small guy fights back. With truth on your side, determination and by getting organised – even the great and powerful will tumble.

David Eaton
07841 215182

david.eaton@smestrategies.co.uk

Note 1
Perjury by a Prosecution Witness

Proceedings against a prosecution witness for perjury will depend on an assessment of the material effect of the perjured evidence. If a wrongful conviction is believed to have occurred because of the perjured evidence, a prosecution should follow, unless there are exceptional circumstances. If the witness has lied to protect his or her own interests rather than with an intent to pervert the course of justice, a prosecution may be unnecessary.

Public Justice Offences incorporating the Charging Standard | The Crown Prosecution Service (cps.gov.uk)

Note 2
Timeline of the scandal

This is the staggeringly long Computer Weekly timeline of the Post Office Horizon scandal since they first reported on it in 2009. All credit goes to Computer Weekly for their tenacity in following and reporting on the scandal as it unfolded.

 

 

 

 

 

 

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