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Post Office made to repay public money it allocated to fund Horizon litigation

A senior civil servant asked the Post Office to repay public money it had wrongly allocated to paying legal costs

The Post Office was told by a civil servant to pay back government funds which had been wrongly allocated to cover its costs in the ongoing legal battle with subpostmasters.

The funds from the Department for Business, Energy and Industrial Strategy (DBEIS) were meant to be for transforming subpostmaster branches, but a letter from the government to then Post Office CEO Paula Vennells revealed the Post Office had other plans.

According to website Better Retailing, DBEIS permanent secretary Alex Chisholm wrote to Vennells about the matter. “In your recent funding request, you indicated that you intended to use DBEIS funds for non-transformation-related spend specifically in relation to the ongoing Horizon litigation,” read the letter. 

The letter went on to say this was not allowed.

In January 2019, Vennells responded and agreed to pay back £2.3m that had been allocated to the trial defence and cancelled a request for a further £2.4m in funding for the trial. 

Vennells said “change funding” comes from Post Office revenue and government money. “The group litigation order (GLO) work draws on shared (scarce) resources from this change budget; we have been transparent about these costs,” said Vennells in her response.

The GLO, through which more than 500 subpostmasters are suing the Post Office, is being heard in the High Court. These subpostmasters, who run local Post Offices, claim they have been made to repay losses they are not responsible for. They blame errors in the accounting and retail system they use, known as Horizon.

The plight of some subpostmasters was first reported in 2009 (see timeline below), when Computer Weekly revealed that the lives of some subpostmasters had been turned upside-down as a result of being fined, sacked, made bankrupt and even imprisoned because of unexplained accounting shortfalls. They blame the accounting and retail system they use, known as Horizon, for the problems. The Post Office denies this.

Horizon, which was introduced in 1999/2000, is used by nearly 12,000 Post Office branches. Subpostmasters are held liable for any unexplained losses.

The case has four planned trials. The first, held in November 2018, focused on the contractual relationship between subpostmasters and the Post Office. The second trial, which looks closely at the Horizon system, was dramatically suspended at the end of its second week as the Post Office legal team made an application for the judge to recuse himself and be replaced because of alleged bias.

This followed the announcement of the judgment from the first trial, which was a huge victory for the subpostmasters. The judge’s criticisms of the Post Office included “oppressive behaviour” when demanding sums of money that could not be accounted for by subpostmasters.

“The Post Office describes itself on its own website as ‘the nation’s most trusted brand’. So far as these claimants, and the subject matter of this group litigation, are concerned, this might be thought to be wholly wishful thinking,” Fraser said in the ruling.

The judge also accused the Post Office’s most senior witness, director Angela van den Bogerd, of deliberately misleading him, saying there were two specific matters where she “did not give me frank evidence, and sought to obfuscate matters, and mislead me”.

During the second trial, multiple bugs in Horizon have been revealed, which could lead to losses at branches that subpostmasters would be responsible for.

There will be a hearing on 3 April about the Post Office’s application for the judge to be changed.

A Post Office spokesperson told Better Retailing: “The Post Office is funding its defence, not the government.”

The subpostmaster claimants are being funded by Therium through third-party litigation funding. This involves a number of investors funding the litigation, paying fees and other costs. If the case succeeds, they make a profit, but their investment is at risk if the case is lost.

The case continues.

Timeline of the Post Office Horizon case since Computer Weekly first reported on it in 2009

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 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.

January 2015: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 will 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.

April 2015:Post Office failed to investigate account shortfalls before legal action, report claims.

April 2015:Criminal Courts Review Commission set to review subpostmasters’ claims of wrongful prosecution.

May 2015:IT system related to subpostmaster prosecutions under review by CCRC.

June 2015:Post Office looking to replace controversial Horizon system with IBM, says MP.

July 2015:Campaigners call for independent inquiry into Post Office Horizon IT system dispute.

October 2015:James Arbuthnot takes Post Office IT fight to House of Lords.

November 2015:The union that represents Post Office subpostmasters has warned of a problem with the Horizon accounting system.

November 2015:An email from Post Office IT support reveals a problem with the Horizon system and supporting processes that could lead to accounting errors.

November 2015:Group litigation against Post Office being prepared in Horizon dispute.

February 2016:Post Office faces group litigation over Horizon IT as subpostmasters fund class action.

June 2016:Post Office chairman Tim Parker says there would be “considerable risk” associated with changing its Horizon computer system.

November 2016:The legal team hired by a group of subpostmasters will take their case to the next stage.

January 2017:The group action against the Post Office that alleges subpostmasters have been wrongly punished for accounting errors gets a green light from the High Court of Justice.

March 2017:1,000 subpostmasters apply to join IT-related group litigation against Post Office.

April 2017:Investigation into claims of miscarriages of justice in relation to a Post Office accounting system has appointed a forensic accountant firm.

May 2017:Hundreds of subpostmasters have applied to join IT-related legal action since March.

July 2017:Post Office defence in computer system legal case due this week.

August 2017:Campaigners submit initial evidence in group litigation against Post Office over controversial Horizon IT system.

October 2017:Subpostmasters’ group action against the Post Office reaches an important milestone.

November 2017:An end is in sight for subpostmasters’ campaign against alleged wrongful prosecution, which they blame on a faulty computer system.

November 2017:The high court judge managing the subpostmasters versus Post Office legal case over an allegedly faulty computer system tells legal teams to cooperate.

January 2018:Forensic investigation into Post Office IT system at centre of legal case nears completion.

April 2018:Criminal Cases Review Commission forensic examination of the IT system at the centre of a legal case against the Post Office has raised further questions.

May 2018:Post Office branches unable to connect to Horizon computer system for several hours after morning opening time.

October 2018:After over a decade of controversy, next week marks the beginning of a court battle between subpostmasters and the Post Office.

November 2018Case against Post Office in relation to allegedly faulty computer system begins in High Court.

November 2018:High Court case in which subpostmasters are suing the Post Office has revealed a known problem with a computer system at the core of the dispute.

November 2018:A High Court trial, where subpostmasters are suing the Post Office for damages caused by an allegedly faulty IT system, ends second week.

November 2018: Post Office director admits to Horizon errors and not sharing details with subpostmaster network.

November 2018: The High Court trial in which subpostmasters are suing the Post Office has reached an important stage.

December 2018: CCRC may hold off subpostmaster decision until after Post Office Horizon trial.

December 2018: Court case where subpostmasters are suing the Post Office set to span at least four trials and extend into 2020.

January 2019: Subpostmasters’ campaign group attacks Post Office CEO Paula Vennells’ New Year honour amid ongoing court case.

January 2019:Thousands of known errors on controversial Post Office computer system to be revealed.

March 2019:Tech under spotlight at High Court in second subpostmasters versus Post Office trial.

March 2019:Post Office considered Horizon IT system “high risk”, court told.

March 2019: Post Office ‘lacked humanity’ in the treatment of subpostmasters, says peer

March 2019: CCRC watching Post Office Horizon trial closely

March 2019:Judge rules that Post Office showed “oppressive behaviour” in response to claimants accused of accounting errors they blamed on Horizon IT system.

March 2019:A high court judge heard that the Post Office did not investigate a computer system error that could cause losses, despite being offered evidence.

March 2019: Horizon IT system trial suspended after Post Office accuses judge of bias

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