“Scandal” is a polite name for this mess which should result in a number of prosecutions and maybe jail time for the people who victimized sub-postmasters with prosecutions and jail time. Here’s what’s going on:
In 1999, the British Post Office began using software supplied by Fujitsu for sub-post offices — rural and small-town offices run by locally contracted sub-postmasters. There are thousands of these offices. Besides selling stamps, they provide various banking services, including some pension and benefit payments. Peter Lilley, then John Major’s Minister for Social Security, announced that a new computerized system would replace the old paper records methods then in use. Lilley said the PO would save £150 million by ending benefit fraud. The Conservatives are very big on eliminating underclass fraud which they like to do by creating opportunities for upperclass fraud. In this case, a British company, International Computers Ltd., was created and contracted to build the system, then sold off. As of 1998, ICL was totally owned by Fujitsu and dropped the “ICL” name in 2002, just calling itself Fujitsu. The Post Office project was called Horizon.
An Horizon precursor was rolled out in 1995 to 300 post offices. There were immediate complaints of glitches. Two sub-postmasters were accused of theft and the software was withdrawn. This pilot project was an exact preview of the Horizon system failure and the company response of blaming the postmasters. Major cost overruns followed; final cost of implementing Horizon was £1B — not including, of course, recent efforts to fix it. Tony Blair’s government considered dumping the project, but was pressured by Fujitsu (and the hope of more Japanese trade) into keeping it. Horizon was down-scaled and put into operation. By 2001, most sub-post offices operated under the new system: 11500 offices handling millions of transactions every day were totally Horizon-run. These offices began reporting problems right away, but their reports were downplayed by Horizon/Fujitsu, who said the system was working perfectly.
Sub-postoffices serve specific neighborhoods and villages with enough demand to justify postal service but not enough to fund a post office. Sub-postmasters are contracted. They collect a wage but must repay any shortfall. The Post Office Ltd., was created when the Royal Mail was modernized in 1969. Charles II created the Royal Mail in 1635. This was before organized police forces as we now know them and the Royal Mail had its own police and prosecution service. The British Post Office continued to enjoy this heritage privilege even after a series of changes shifted it to a publicly-owned company. So the Post Office investigated, charged, and prosecuted its own contractors. These were so-called “private prosecutions” and similar actions can be instituted by many organizations under the Prosecution of Offenses Act of 1985.
Private prosecutors must approach a Magistrate Court or district judge to get permission to proceed. There is no jury in Magistrates Court. Six months is the longest jail term the Magistrates Court can levy, but if the prosecution is in a Crown Court, harsher sentences may be applied. This system works fairly well for other organizations, such as the RSPCA, who do not prosecute Serious Crimes but pass them on up to a Crown Court. The reason it did not work well in the Post Office cases was because Post Office Limited lied, withheld evidence, and otherwise sabotaged the process. By 2009, hundreds of sub-postmasters had been, or were being, prosecuted.
Sub-postmasters opening their post office in the morning were visited by “auditors” who said their accounts were short, then they were questioned — or perhaps “accused” is a more accurate term. When the postmasters denied that they were stealing, they were told that the computer records proved they had. And each postmaster was told that they were the only one, the lone thief that the computer had discovered. In fact, more than 800 sub-postmasters were prosecuted. These postmasters were given choices: they could make up the shortfall, or if they couldn’t, then they could plead guilty and not go to prison.
The “auditors”, now referred to as “investigators”, were part of Horizon security, which is to say, their police. Many were ex-police officers from other forces. They acted as though the sub-postmasters were criminals to be interrogated and were blunt in their speech. “It’s not a nice interview,” explained one. There was never any question of investigating whether or not a crime had actually been committed; Horizon management would not accept that their software might be to blame. And the British legal system was pre-disposed to believe them. Since 1999, British courts have accepted computer info as reliable evidence so long as the system is functioning properly. Post Office had a witness, their tech expert, Gareth Jenkins, who testified in a number of trials that everything was just ducky. Now he is in danger of being prosecuted.
Some sub-postmasters chose to pay back the supposed shortfalls. A sub-postoffice was essentially a franchise that sub-postmasters had to buy. Many dealing with sunk costs chose to try to keep their post office by paying money they didn’t owe. Some got second jobs, some re-mortgaged their homes, some went bankrupt.
Some pled Guilty and then had to face their family and neighbours who considered them to be thieves. One woman refused to plead Guilty. The Post Office filed her case in a Crown Court where she could request trial by jury. The jury voted “Not Guilty”, but the personal and legal costs to the sub-postmaster were substantial. Even a Guilty plea failed to keep some people out of jail, including one woman who was two months pregnant and did not want to be in prison when she went into labor. She was horrified when the judge sentenced her to fifteen months. Her lawyers got her out after four months of prison.
Shamed and shunned, sub-postmasters went bankrupt, marriages broke up, and at least four people are known to have committed suicide. Meanwhile, Post Office Ltd. was operating at an ever-growing deficit. This probably served as more incentive to squeeze the sub-postmasters for cash. A later, independent auditor said, “…the Post Office has improperly enriched itself, through the decades, with funds that have passed through its own suspense accounts…” and asked when the sub-postmasters would be repaid. (That still hasn’t happened.)
As word of the problem spread, the Post Office investigated itself. Its final report completely exonerated it. The 2009 Ismay Report said: “We remain satisfied that this money was missing because of theft in the branch — we do not believe the account balances against which the audits were conducted were corrupt.” The Report defended the system, “Horizon is robust…”, it said, and its robustness was due to the integrity of the system: “The integrity of Horizon is founded on its tamper proof logs, its real time backup and the absence of “backdoors” so that all data entry or acceptance is at branch level and is tagged against the log on ID of the user. This means that ownership of the accounting is truly at branch level.” Integrity, my ass! Every word is a lie. The Report also says that it has worked out a way to investigate these thefts and it is operating very smoothly, with a “balance of firmness and compassion”. And it lays out a legal strategy to handle cases where Horizon was thought to be faulty: keep talking about the transaction logs and how secure they are.
Some of the sub-postmasters were very knowledgeable about computers and IT. They knew that the problems lay with the Horizon system, not the sub-postoffices. By 2004 they had managed to attract the interest of Computer Weekly. In 2009, the magazine published an account of the problem and blamed Horizon, not the sub-postmasters. “…we were more aware, perhaps than other newsrooms might be, that technology is fallible. And there could be something in what these subpostmasters were saying.” This took some courage since Computer Weekly is not a wealthy publication and the Post Office could marshal a massive attack on the magazine. But the Weekly ignored the company’s “bullying letters”. By then, most sub-postmasters had learned that they were not the only one being accused and they began to organize, creating the Justice for Subpostmasters Alliance.
Leader of the JFSA was a sub-postmaster, Allan Bates, who was tech savvy and knew he was being screwed. He got sub-postmasters into conversation with each other and uncovered some evidence that might persuade a judge not to blindly trust a computer. For example, a sub-postmaster was discussing a £2000 shortfall with a company investigator. No one else was in the store, yet, when they looked at the screen again, it had gone up to £4000.
Besides computer magazines, journalist Nick Wallis listened to a taxi driver who said his pregnant wife had been jailed for a crime she didn’t commit. Wallis began looking into the case and a few stories appeared in the British press. Accountancy Age, in 2009, reported worries with the Horizon system and auditors Ernst & Young refused to do a 2010 audit without “significant caveats” (i.e., they didn’t want to have to testify), so Post Office went without an audit that year. A new Post Office CEO, Paula Vennells, called for an independent audit. Some MPs, led by Lord Arbuthnot, became involved.
In 2012, forensic auditors Second Sight were hired to examine the case. Their interim reports were quashed by Post Office as they appeared. Post Office did not allow Second Sight to look into documents about the Horizon prosecutions. Meanwhile, Post Office continued to claim that the system was viable. In 2014, Second Sight had prepared a report that said the software was to blame, that Fujitsu had created a bad system — “not fit for purpose”, it said, with 12000 communication failures a year and software failures at more than 70 POs that were examined. The evening before the report was to be released, Post Office shut it down and issued a statement saying everything was just fine: “no evidence” of systemic problems, they said. But the report had leaked to the BBC, who prepared a program for Panorama which interviewed sub-postmasters about the problem. Post Office threatened BBC, but they ran the program anyway in 2015. [Panorama, “Trouble At Post Office, part 1” here; Part 2 was aired in 2020, here.] Also in 2015, Paula Vennells was awarded Companion of the British Empire for her services at the Post Office.
Meanwhile, the JFSA continued to grow as more sub-postmasters heard about it. Alan Bates heard an important bit of information from a new member. She said that, during IT training, an instructor said that he could get into any of the Horizon systems. He demonstrated by going into an account and removing some Euros. “I’ll put them back tomorrow,” he said. A similar thing happened to Michael Rudkin, a Post Office employee who was an executive with the National Federation of Subpostmasters. Rudkin was shown a basement room where the “Covert Team” operated live Horizon terminals that could change any entry in the accounts. Rudkin was spotted by someone who had him removed from covert territory. The next day, he was fired. (Lord Arbuthnot compared this to Mafia methods.) When Bates asked about this, other sub-postmasters gave accounts of witnessing the same kind of thing. This was tremendous: if the post office data could be secretly re-written, then there was no way to prove the sub-postmasters had done anything wrong. Of course, Post Office firmly denied that a back door existed, they denied it publicly and they denied it in court, they denied it for years, until the day that their lawyers had to apologize for misleading the judge but that the senior managers who briefed them had been ignorant of the fact that… Oh, bullshit. And the judge thought so, too. Everyone thinks so. People hearing about the Post Office scandal for the first time tend to get angry.
Nick Wallis put it all together into a book, The Great Post Office Scandal. People read it and got angry. Some of the angry people decided to make a TV movie, Mr Bates Vs the Post Office, which got tremendous viewing in January, 2024, and that has really got people going. Suddenly Parliament decided to Do Something about all this, including exoneration and remuneration, but it hasn’t happened yet. Some effort is being made to sort out real criminals from the other sub-postmasters, though. Can’t have somebody getting away with something just because hundreds of people are having their lives destroyed.
A lot of court cases have been heard, including Bates et al, which included 555 sub-postmaster plaintiffs. The case got a partial settlement for some postmasters but most of that went to the lawyers. A important side effect of Bates, though, was that it could be used to help appeal convictions. And it destroyed an Horizon argument: lawyers would say, “This system has been working for years, handling millions of transactions. How can it be faulty?” That line of argument might work with only one defendant, but when hundreds crowded into the courtroom, then it was clear that either sub-postmasters were engaged in an unlikely criminal conspiracy or else the system was at fault.
Post Office has grudgingly squeezed out as little compensation as they can and many sub-postmasters are still owed money awarded by the courts.
Paula Vennells returned her CBE, though she still has the £2.2M she collected in bonuses. Other managers got bonuses, too, and I can’t help thinking this was money screwed out of people caught in a vicious racket. But she has apologized and tried to damp the fire pretty quickly. Likewise, Fujitsu’s spokesperson apologized, accepted responsibility, and promised material support when he testified before the parliamentary Business and Trade Committee..
And that’s where we are right now. The number of people prosecuted keeps climbing — 938 was a number I just saw — and there may be 2500 cases of reimbursing sub-postmasters, total amount unknown. The number of sub-postoffices varied over the 25 years of this scandal from 11000+ to around 14000. Sub-postoffices might be taken down, a thousand or more at a time, as austerity measures or introduced as a service, depending on the political needs of the day. I have not come across a total of all the different sub-postmasters who existed over this 25-year period, but I expect many to be added to the number of those affected.
Then there’s the question of what to do about the entire system. Right now everything from private prosecutions to internal audit rules to computer evidence is in question. One question people ask is, “Who had the role of oversight here?” And that brings us to Ed Davey, current leader of the Liberal Democrat Party. Davey was the Minister overseeing Post Office from 2010-2012. He has refused to meet with Alan Bates and has refused to apologize to the sub-postmasters, thus making himself the Parliamentary target for this scandal, even though other Ministers also seem not to have taken their oversight duties seriously. Post Office Limited was allowed to do as it wished and police itself for more than twenty years.
So, now there is a Parliamentary Inquiry and more information is coming into view. Will there be anything that comes out of this? Exoneration and repayment to the sub-postmasters? Maybe. Jail terms for those who perjured themselves, withheld evidence from judges, and extorted sub-postmasters? Don’t hold your breath.
NOTES:
A number of first person accounts are linked above. Here are more.
Panorama, “Trouble At Post Office, part 1“(2015), part 2 (2020)
Nick Wallis Post Office blog. The Great Post Office Scandal
Post Office hearings are on YouTube. Here’s Fujitsu, January 17.
YouTube has the most recent stuff. Just search UK postal scandal
Mr Bates Vs the Post Office
Timeline
Editorial note: these folks are known as “subpostmasters” or “sub-postmasters” according to the whim of the writer. I chose the hyphenated version (except in quoted print statements) because it seemed more readable. Also, “postmistress” is not a term much used in this matter, though I have come across it a few times, so I stuck with “master”.
Shrine of Dreams 