Claims against Post Office IT system approach completion
Investigation into sub-postmaster claims against the Post Office over problems with its Horizon accounting system coming to an end
An investigation into sub-postmaster claims against the Post Office over problems with its Horizon accounting system is coming to an end after years of campaigning.
Cases are reaching completion and the sub-postmasters affected are eager for news of any settlements.
In 2009, Computer Weekly revealed the stories of sub-postmasters 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.
In October 2011, 85 sub-postmasters sought legal support in claims against the Post Office computer system. Despite years of allegations that the Horizon system – which was developed by ICL/Fujitsu Services – is at fault for many accounting shortfalls, the Post Office unrelentingly defended it.
In 2013, however, following pressure from the JFSA, MPs and Press, the Post Office launched an investigation into the system, which is being conducted by forensic expert Second Sight. About 150 sub-postmasters have filed claims to the investigation.
One source told Computer Weekly that three cases have been completed, but there has been no news on the agreements reached. These cases have gone through mediation, which involves a face-to-face discussion between two parties, chaired by a neutral and independent mediator.
Computer Weekly timeline of events
May 2009: Bankruptcy, prosecution and disrupted livelihoods – Postmasters tell their story
September 2009: Post-masters 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 sub-postmasters seek legal support in claims against Post Office computer system
June 2012: Post Office launches external review of system at centre of legal disputes 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 sub-postmaster claims against Post Office's Horizon accounting system
October 2013: Former Lord Justice of Appeal Hooper joins Post Office Horizon investigation
November 2013: 150 sub-postmasters file claims over 'faulty' Horizon accounting system
September 2014: Fresh questions raised over Post Office IT system's role in fraud cases
“A few peripheral cases have been completed, but none of the big ones that involved things like sub-postmasters being jailed," the source said.
An investigation report was leaked to the BBC this week. Like the interim report in July last year, it raised concerns about the Horizon accounting system used by sub-postmasters. The investigation report said the technology was not fit for purpose in some branches. Unreliable hardware, exceptionally complex systems and a lack of proper training were all highlighted as problems.
In a statement, the Post Office said: "Although we will not comment on the contents of any confidential documents, after two years of investigation, it remains the case that there is absolutely no evidence of any systemic issues with the computer system, which is used by more than 78,000 people across our 11,500 branches and which successfully processes over six million transactions every day."
Alan Bates, a member of the Justice for Sub-postmasters Alliance (JFSA) pressure group, which was set up to campaign for the sub-postmasters affected, said it would be a slow process as there are so many cases, but “cases are starting to make their way through the scheme”.
Computer Weekly has followed the cases for five years and is in constant contact with sub-postmasters affected.
Read the case studies originally revealed by Computer Weekly in 2009
Case study 1
Lee Castleton, Bridlington, Yorkshire
Lee Castleton, 40, was postmaster at the Bridlington post office in east Yorkshire. His problems started in January 2004, and he claimed he couldn’t get help from the Post Office.
“Misbalances continued for 12 weeks. I spent hours going through accounts, trying to find out what had happened. It was baffling,” he says.
Castleton rang the Horizon helpdesk, which is run by the Post Office, and asked repeatedly for help and a system check, but says they did very little.
“The Federation didn’t help me either. It said it didn’t want to get involved and refused to let me join.”
After 12 weeks, Castleton was suspended and the Post Office told him he had to pay for the losses. “I decided to contest my obligation to pay the money in the civil court, because I hadn’t done anything wrong,” he says.
Castleton could not afford lawyers in the High Court, or pay an IT expert witness to look at the system logs for him. He argued that the discrepancy in his accounts had been created by the computer. But the judge said that the deficiencies were real, not illusory, and, as such, were evidence that the branch had not been managed properly.
“The losses must have been caused by his own error or that of his assistants,” the judgement said.
Under their contract with the Post Office, postmasters are liable for any losses that are due to carelessness, negligence or error. Castleton was also liable for the company’s legal costs.
“The Post Office really put me through the mangle,” he says. “I owed £27,000 for the deficits, and £321,000 altogether. I was in too deep – I see that now. The whole thing has been heartbreaking.”
Case study 2
Jo Hamilton, South Warnborough, Hampshire
Jo Hamilton, 51, was postmistress in South Warnborough in Hampshire between 2003 and 2005.
Hamilton started experiencing problems in October 2003. She entered every transaction into the system via the touchscreen till, and at the end of the week the computer would tell her how much money she should have.
One time, the system said I was down £2,000, so I rang the Horizon helpdesk. The supervisor told me to do various things, and three minutes later I was £4,000 down
Jo Hamilton, South Warnborough, Hampshire
“One time, it said I was down £2,000, so I rang the Horizon helpdesk. The supervisor told me to do various things, and three minutes later I was £4,000 down. Whatever I did after that, I couldn’t get it to come up any different,” she says.
The Post Office told her she owed the money, and took repayments out of her monthly wages. “It made me reluctant to phone them, because it was just crazy – when I asked for help, it just doubled the amount and said I owed it money.”
Hamilton’s problems worsened. “Every week the system would come up telling me how much I should have in there. I knew it wasn’t the right amount, but I didn’t know what to do. I couldn’t ring them up, because I just didn’t have the money to pay it all back. So I signed the accounts each week, saying there was a certain amount in there when I knew there wasn’t. I know it was dishonest, but I didn’t steal any money. It got worse and worse.”
Post Office auditors visited the branch in March 2005 and told Hamilton she owed £36,000. They prosecuted her for theft and 14 counts of false accounting, but later dropped the theft charge.
Hamilton says the case did not deal with the issue of IT. She pleaded guilty and was given a year’s probation. Her house was remortgaged to pay the money, and the villagers in South Warnborough collected £9,000 between them to help.
“In 18 months,” Hamilton says, “I will have finished paying back the villagers, but won’t have paid off our mortgage.”
Case study 3
Noel Thomas, Gaerwen, Anglesey
Noel Thomas, 61, from Anglesey, worked for the Post Office for 42 years. His problems started in 2003, when he discovered a deficit of £6,000. He says he spent hours looking at it, trying to find out what was wrong.
He says the Post Office paid half of the deficit for him, and he paid the other half. He didn’t have any more problems until 2004.
“It started up again all of a sudden. The money was going at a rate of £2,000 a month, and it went on until October 2005. The last figure they told me I owed was £50,000.
I spent my 60th birthday in prison. It was hell on earth
Noel Thomas, Gaerwen, Anglesey
“The National Federation of Sub Postmasters didn’t want to know. It is frustrating – I would like to know where that money went to. The whole thing is a real mess,” he says.
Faced with mounting deficits and nowhere to turn for help, Thomas signed the accounts to say the money was there, when it wasn’t. “I didn’t know what else to do. It was my biggest mistake – I should have turned round and told them I was shutting up shop until they found out what was going on. But at the time I thought they would close the Post Office if I did that, and that would cause a problem for the village.”
The Post Office prosecuted Thomas for false accounting. He pleaded guilty and says the IT system didn’t come up during his hearing – his barrister told the judge about his good character.
Mark Jenner, who at the time was the director of fraud investigation at accountancy firm Baker Tilly, said in a report prepared in advance of the case that he did not propose that the Horizon system was flawed. “If the Horizon system was flawed, I would expect to see issues raised by all 14,000 branches in the UK and not only a handful,” he said.
But Jenner had been unable to examine the computer terminal used in Thomas’s branch. “To completely discount the possibility that the Gaerwen branch terminal was not responsible for creating systematic and cumulative errors, I would still wish to inspect the terminal,” he said.
Jenner’s report was produced before the court hearing, when Thomas expected to face charges of theft. It was not used in the hearing because the theft charges were dropped.
Thomas was sentenced to 12 weeks in prison. “I spent my 60th birthday in there,” he says. “It was hell on earth and it took me a long time to get over it.”
Case study 4
Amar Bajaj, Chelmsford, Essex
Former barrister Amar Bajaj, from Chelmsford, sold his post office after losing £11,203.
I am of the opinion that the Post Office is in breach of its contract to maintain the system, and therefore has wrongfully obtained our money
Amar Bajaj, Chelmsford, Essex
His problems started in 2004, and he wrote to the Post Office every time there was a misbalance in the accounts. In July 2005, he contacted a solicitor because he felt that “the Post Office would look to prosecute us due to its own mistakes”.
Bajaj says of the problems: “Any shortage will remain on the system for many weeks until a demand is made by the Post Office for the amount to be made good.
“I personally made good any shortage. After we got it back down to zero, the system would show a shortage of anywhere between £2,500 and £3,500 within a week.
“In spite of various letters and correspondence between myself and solicitors, no official has visited to see or check or remedy the defects. I am of the opinion that the Post Office is in breach of its contract to maintain the system, and therefore has wrongfully obtained our money and is earning interest as a result.”
Bajaj contacted his MP, Simon Burns, who wrote to the Post Office on his constituent’s behalf. In its reply, the company said: “We do accept that individual branches may experience very occasional failures.”
Case study 5
Alan Bates, Llandudno, Wales
Alan Bates worked at the post office in Llandudno in north Wales from 1998 to 2003.
In 2000, he discovered a shortfall of £1,041.86 which he couldn’t account for, and wrote to the Post Office. After two further letters, the company wrote back in 2002, saying it would write off the amount but without giving any reason.
Why didn’t the Post Office prosecute me? Because it knew there were faults with my system
Alan Bates, Llandudno, Wales
It said: “Post Office Ltd has decided to take no further action in respect of the loss at your post office which will be written off.”
Despite the loss being written off, Bates continued to have problems with deficits. He refused to sign his weekly accounts, saying it would have made him liable for any losses. When deficits occurred, he refused to use his own money to pay them. He was a member of the union, but said it was not supportive.
“Why didn’t the Post Office prosecute me? Because it knew there were faults with my system. It did not want to take me to court. I never tried to take it to court as I had received quite a broad range of legal advice about doing so. I was told that it could keep me in court and keep appealing any findings until I ran out of money.
“There should be a public inquiry into this. I am in no doubt that many sub-postmasters have finished up breaking the law because of the Post Office and the position it left them in,” he says.
Case study 6
Alan Brown, Callender Square, Falkirk
Alan Brown is a serving postmaster. He gave an email dated January 2006 to Lee Castleton (see above) for Castleton to use in his own court case. The email said the Post Office had written off a £6,500 loss on his account “some time” after he said it had appeared on the system.
But another shortage appeared one evening when he was balancing the accounts. “I have one screen that says I have a £4 gain, and the screen next to it says I have a £13,000 loss on the same stock unit,” he said in the email.
“One node has stopped communicating with the rest. This could be costing sub-postmasters throughout the country a fortune, and all because the computer systems occasionally do not work.”
Case study 7
Julie Ford, Yeovil, Somerset
Julie Ford is from Yeovil in Somerset. She became postmistress of Westfield Post Office in October 2007. Her problems with the company started at the beginning of November 2007, when her branch started losing hundreds of pounds at a time. The problems continued until February 2009, when she was forced to file for bankruptcy.
“At one stage I was £1,300 down. I rang up the Post Office and said I think there’s something wrong. It said one of the staff, or myself, had sticky fingers,” she says.
If the Post Office thought I was stealing money, why did it reinstate me? I lost all confidence in my job, and now I am going bankrupt
Julie Ford, Yeovil, Somerset
By January, Ford had paid all her £2,500 savings to the Post Office, so rang up and asked for an audit when £3,000 went missing overnight. The audit found she was nearly £10,000 short. The Post Office took money out of her wages, and suspended her for 18 weeks while it carried out an investigation.
Instead of prosecuting or terminating her contract over the deficits, the company reinstated Ford in June 2008 without further action. The problems continued until several parts of her Horizon system were replaced, then balancing returned to normal.
But Lynn Hobbs, general manager, network support at the Post Office, said in an email at the time: “I am sure you are aware that we have had previous challenges in relation to the integrity of the system and I can confirm that the system has passed all tests and been exonerated in both the civil and criminal courts. I therefore cannot accept that the losses were as a result of the Horizon kit.”
Hobbs suggested: “I think we should also look at other factors which coincided with this change, such as the additional training provided and the change of personnel at the branch.”
Ford says: “In the end I refused to work. I wasn’t taking the money and I wasn’t making stupid mistakes. If they thought I was stealing money, why did they reinstate me? I lost all confidence in my job, and now I am going bankrupt.”
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