Post Office failed to investigate account shortfalls before legal action, report claims

Post Office too quick to take legal action against subpostmasters, finds independent report

An independent report into alleged problems with the Post Office's Horizon accounting system said the organisation had been too quick to take legal action against subpostmasters.

The much-anticipated independent report, carried out by Second Sight, said the Post Office had failed to find out why large cash shortfalls occurred before starting legal proceedings against subpostmasters.

In 2009, Computer Weekly revealed the stories of several subpostmasters who had received heavy fines and even jail terms for alleged false accounting, which they blamed on the Horizon accounting system provided by the Post Office. Years of investigation has followed (see timeline beliow).

The report said: “As a result of our investigations we have established that Post Office's investigators have, in many cases, failed to identify the underlying root cause of shortfalls prior to the initiation of civil recovery action or criminal proceedings. This includes cases where applicants brought to the auditors' or investigators' attention their own suspicions as to the underlying root causes of their branches' losses.”

But the Post Office said: “In none of Post Office’s own work, nor through any of Second Sight’s work, has any information emerged to suggest that a conviction is unsafe. Post Office as a prosecutor has a continuing duty to disclose immediately any information that subsequently comes to light which might undermine its prosecution case or support the case of the defendant. We have to satisfy both stages of the code for crown prosecutors to start a prosecution – the evidential stage that there is sufficient evidence to provide a realistic prospect of conviction and the public interest stage.”

A number of subpostmasters who were prosecuted have submitted applications to the criminal courts review commission to have their cases reviewed.

No evidence of systemic failure

The Second Sight report said there was “little incentive” for the Post Office to “improve the error repellency of its business systems”.

Human error has been found to be the primary cause of cash and stock losses in the cases investigated

Post Office

But in its 83-page response to Second Sight’s 96-page report, the Post Office said this was incorrect. “As recognised by Second Sight, human error has been found to be the primary cause of cash and stock losses in the cases investigated. Such errors are not only detrimental to subpostmasters but also to Post Office. For this reason [and others], Post Office does regularly improve its systems.”

The Post Office denies system-wide problems with Horizon. It has defended the accounting software after “exhaustive investigations” that “have not found any evidence of systemic problems with the Horizon system”. Over 100 cases have been investigated by Second Sight.

The Post Office also said it was concerned that the investigation, which it commissioned itself, “repeats complaints made by a very small number of former postmasters, as well as a number of assertions and opinions”. It also said Second Sight has been unable to demonstrate any evidence to support these.

Calls for further investigation

During a Department for Business, Innovation & Skills select committee evidence-gathering session on 3 February, Second Sight representative Ian Henderson was critical of the Post Office's approach. He said important data requested by the investigation team, including prosecution files, had not been delivered, months after they were requested. The Post Office denies that it has failed to provide any information requested.

The obstructive behaviour of the Post Office towards MPs and independent investigators underlines how badly it behaved towards subpostmasters

James Arbuthnot, former MP

In reaction to the latest report, former MP James Arbuthnot, who was the most vocal of the 140 MPs campaigning on behalf of subpostmasters, said the report confirmed there may have been serious miscarriages of justice perpetrated by the Post Office.  

“The Post Office is now trying to cover up these miscarriages of justice, by suggesting that the report contains no evidence. It is packed with evidence, despite the shameful determination of the Post Office to refuse to give the independent investigators the documents they needed – and which the Post Office had promised to provide,” he said.

“The obstructive behaviour of the Post Office towards MPs and, as we now know, the independent investigators tends to underline how badly the Post Office behaved towards subpostmasters. It is no longer enough for the government to leave to the Post Office the further investigation that needs to be carried out now. We now have to have a judicial inquiry that can properly get to the bottom of what has actually happened,” added Arbuthnot.

Alan Bates, a member of the Justice for Sub-postmasters Alliance (JFSA) pressure group, which was set up to campaign for the subpostmasters affected, insisted the Post Office should be independently investigated, adding that the JFSA would be asking MPs for support to do this.

Cases considered individually

A Post Office spokesman said: “Over the past three years there have been exhaustive investigations which have not found any evidence of systemic problems with the Horizon system. The mediation scheme was set up to address individual complaints and that is what we have gone to great lengths to do – a number are now resolved. The complaints are considered on their facts and substance.”

Following the completion of its investigations, the Post Office announced in March that it would put forward all remaining cases to mediation, with the exception of those which have been subject to a previous court ruling. Those cases will continue to be considered on a case-by-case individual basis.”


Computer Weekly timeline of events 

May 2009: Bankruptcy, prosecution and disrupted livelihoods – postmasters tell their story

September 2009: Postmasters form action group after accounts shortfall

November 2009: Post Office theft case deferred over IT questions

February 2011: Post Office faces legal action over alleged accounting system failures

October 2011: 85 subpostmasters seek legal support in claims against Post Office computer system

June 2012: Post Office launches external review of system at centre of legal disputes

January 2013: Post Office admits that Horizon system needs more investigation

January 2013: Post Office announces amnesty for Horizon evidence 

January 2013: Post Office wants to get to bottom of IT system allegations

June 2013: Investigation into Post Office accounting system to drill down on strongest cases

July 2013: Post Office Horizon system investigation reveals concerns

October 2013: End in sight for subpostmaster claims against Post Office's Horizon accounting system

October 2013: Former Lord Justice of Appeal Hooper joins Post Office Horizon investigation

November 2013: 150 subpostmasters file claims over 'faulty' Horizon accounting system

September 2014: Fresh questions raised over Post Office IT system's role in fraud cases

December 2014: MPs blast Post Office over IT system investigation and remove backing

December 2014: Why MPs lost faith in the Post Office's IT investigation, but vowed to fight on

December 2014: MPs to debate subpostmaster IT injustice claims

December 2014: MP accuses Post Office of acting "duplicitously" in IT investigation

December 2014: MPs force inquiry into Post Office subpostmaster mediation scheme

January 2015: Post Office faces grilling by MPs over Horizon accounting system

February 2015: Post Office CIO would talk to any subpostmaster about IT problems, promises CEO

March 2015: Post Office ends working group for IT system investigation day before potentially damaging report

March 2015: MPs seek reassurance over Post Office mediation scheme

March 2015: Retiring MP aims to uncover truth of alleged Post Office computer system problems

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