Post Office scandal – “cock-up or cook-up”?

Controversial from the start

A surprise request for an adjournment by barristers representing victims kicked off phase two on 11 October, with accusations that the Post Office had failed to meet its obligation to provide thousands of documents requested.

To avoid delay to the inquiry, already planned to run into the autumn next year, this was turned down by the inquiry chairman, Wyn Williams, who made it clear he would use all the powers at his disposal to make sure everything that is required to be disclosed is disclosed.

Now, after years of avoiding direct scrutiny, Fujitsu/ICL would finally be questioned in public. Joining it in the spotlight were Post Office senior management and civil servants at the time, who until now have just been names on documents. It was also time for heavily criticised executives from the National Federation for Subpostmasters (NFSP) to face questions about the conduct of its leadership during the first years of the Horizon system.

For 13 years, Fujitsu has consistently given a “no comment” response to Computer Weekly when asked questions about the Horizon system’s inadequacies, but there was nowhere to hide in the inquiry.

Witnesses from ICL Pathway, a company set up by ICL/Fujitsu and the Post Office to run the Horizon project, as well as documents from about 120 Fujitsu individuals amounting to more than 30 million records going back 25 years, were part of the evidence.

Evidence was also heard from a long list of former executives at the Post Office, including the former managing director of Post Office Counters, Stuart Sweetman; a previous managing director of Post Office Group services, John Roberts; Paul Rich, once development director at the Post Office; and David Miller, previously Horizon programme director at the Post Office.

From the ICL side, former CEO Keith Todd faced questions, along with former sales and marketing director John Bennett. Terence Austin, former systems programme director for ICL Pathway, also appeared, as did the organisation’s former commercial and finance director, Anthony Oppenheim.

There was a great deal of regret from the witnesses with gaps in memories, but there were moments that turned the heads of even those most au fait with the scandal.

Concerns over Horizon system understood within the Post Office

Jeremy Folkes’ evidence was revealing. The former infrastructure assurance team leader of the Horizon programme at Post Office Counters questioned the Post Office’s practice of prosecuting subpostmasters based on Horizon evidence.

He said there was an understanding in investigation teams that there were concerns over the integrity of the accounting system, but they ignored them. He even said the audit team at the Post Office had raised concerns about this.

He told the inquiry: “Clearly, there was an understanding within the audit community that there were [Horizon] problems that were being pursued. What I don’t understand is how magically this went from a system that was getting out with things being fixed, but maybe shaky, to everybody thinking it was in the right state to go around prosecuting without doing the correct investigation in the middle.”

The Post Office prosecuted 736 people using evidence from the Horizon system over a 15-year period from 2000. Many were sent to prison and many more were wrongfully convicted for crimes they did not commit. There have so far been more than 80 wrongful convictions overturned, with many more expected.

Folkes told the inquiry that Post Office investigators were so convinced subpostmasters were cooking the books that they failed to investigate alleged IT problems.

• Read more about Jeremy Folkes’ evidence here •

The public inquiry was told, by John Simpkin, Horizon system software support centre team leader at Fujitsu, that Anne Chambers, a former Fujitsu technology expert who gave evidence during the prosecution of a subpostmaster, was unhappy after being “manoeuvred” into acting as an expert witness.

Simpkin said: “There were conversations about whether people in our team were the right people to use as witnesses. We were technical experts in one area and not expert witnesses, and we were very unhappy about that process. We did not think it was right.”

Considerable number of Horizon errors

Also facing the inquiry was John Meagher, a former project manager of the Horizon programme at the Post Office. He said that during his time on the Horizon programme, in the years leading up to 2000 before he left, “there were a considerable number of [Horizon] errors”.

He told the inquiry that some members of the team wanted to drop the Horizon project due to the number of problems. But he described the Post Office’s decision to continue with Horizon, despite its problems, as being due to a “sunk cost fallacy”, because it had invested so heavily in the project that senior executives would not abandon it even if that was the best course of action.

Continuing with the project with all its technical problems was a mistake, the inquiry was told by former commercial and finance director Anthony Oppenheim. He said the problems reported with the Post Office’s Horizon IT system before its roll-out should have been regarded as a “show-stopper”.

Asked about subpostmasters being prosecuted based on Horizon evidence, he said: “It didn’t occur to me that the Post Office would rush to prosecution without checking the facts.”

Evidence like this was troubling for the inquiry’s appointed IT expert, Charles Cipione, a managing director in the risk advisory practice at global consulting firm AlixPartners. Giving evidence to the inquiry, Cipione said he was “troubled” by the lack of integrity of data from the Horizon system that was used to send people to prison.

• Read more about Cipione’s closing statement here •

Disturbing software development

During his investigations, Cipione said he was also “disturbed” by some of the development team’s practices.

This was not surprising, given the evidence from software developer David McDonnell, a former senior member of the ICL team working on the Horizon system’s Electronic Point of Sale Service (EPOSS). He told the inquiry that “of eight in the development team, two were very good, another two were mediocre but we could work with them, and then there were probably three or four who just weren’t up to it and weren’t capable of producing professional code”.

McDonnell said when he arrived, the EPOSS development team was “like the Wild West” with “no standards, a lack of rules and no design”.

“It was crazy. I had never seen anything like it before or since,” he said. “I wouldn’t say it was a holiday camp, but it was free format. The EPOSS team was the joke of the building.”

McDonnell was part of a task force set up in 2001 to investigate problems with the EPOSS system, the inquiry was told. It found that hundreds of bugs in the Horizon EPOSS software existed in 2001, after the software had been rolled out to thousands of Post Office branches. Commenting on an example of code in the EPOSS software, the report produced by the task force concluded: “Whoever wrote this code clearly has no understanding of elementary mathematics or the most basic rules of programming.”

• Read more about McDonnell’s evidence here •

With this in mind, it is hardly surprising that trials of Horizon saw problems. The inquiry was told that in 1999, live trials running Horizon in 300 offices revealed serious concerns over the software.

The trials were being run in preparation for the Horizon system’s roll-out to 18,000 Post Office branches. If they were a success, the Post Office planned to start rolling the system out nationally in August that year. This, it said, would be built up slowly until Christmas, when a review of how it was working would be carried out. About 2,000 branches would have been operational with Horizon by then, before a rapid roll-out beginning in January 2000.

But the inquiry heard an NFSP executive council meeting over two days in June 1999 reported a general discussion on the “severe difficulties being experienced by subpostmasters”.

“The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional well-being. It was felt by some that a tragedy was not far away if something is not altered soon,” said the NFSP report.

• Read more about warnings of tragedy •

Trouble at the top

To fully understand what went wrong with Horizon, the inquiry has had to go back to its origins as a Public Finance Initiative (PFI) project, signed in 1996. Although signed before their time under the previous Conservative government, former Labour government ministers including Alistair Darling, a former chancellor; Ian McCartney, former minister at the Department of Trade and Industry; and Alan Johnson, also a former minister at the Department of Trade and Industry, faced the inquiry. A witness statement was also provided by former Prime Minister Tony Blair, with senior civil servants at the time also featured heavily in evidence.

During an investigation of the government’s role, evidence emerged that the British embassy in Tokyo put pressure on the UK government to sign off the deal with Fujitsu/ICL at a time when there were question marks over its future. The embassy in Tokyo wrote to the UK government warning of serious economic repercussions, including UK job losses and reductions in trade, if Fujitsu/ICL’s software contract with the Post Office was cancelled.

The inquiry also heard how the government, the Post Office and ICL played “hardball” when negotiating the roll-out of Horizon software in Post Office branches, leaving subpostmasters to pay the price for a system that was not ready.

Subpostmasters let down by federation

Perhaps the most startling evidence for people to hear is the way the federation representing subpostmasters failed them in their hour of need.

The inquiry heard evidence from two former senior executives at the NFSP, who held roles during the time when Horizon was being introduced.

During questioning, former NFSP president Colin Baker admitted that, although the NFSP knew about the Horizon problems, rather than helping subpostmasters suffering unexplained losses by publicising their struggles, the NFSP had a policy of keeping things quiet. It even created positive news about Horizon to hide the problems. This, he said, was done out of fear of bad news stories putting the Horizon project’s future at risk.

Another former NFSP senior figure from the past, John Peberdy, revealed to the inquiry that the Post Office was keen to get subpostmasters to pay to cover unexplained shortfalls before investigating what caused them so it could present its financial results without including the £10m in dispute.

The inquiry has so far completed the hearings for two of its eight phases and is expected to conclude in autumn 2023.

There will be a hearing about compensation this week (Thursday 8 December) and then the inquiry will be back on 10 January 2023 when it will look at the operation of the Horizon system, including training, assistance, resolution of disputes, knowledge and rectification of errors.

Computer Weekly first reported on problems with the Horizon project in the late 1990s, and in 2009, made public the stories of a group of subpostmasters (see timeline of articles below).