Post Office warned of software flaw in 2006, but failed to alert subpostmaster network

Convictions

Between 2000 and 2015, 736 subpostmasters were prosecuted by the Post Office, with many convicted and sent to prison. In the years from 2005 to 2010, about 300 were prosecuted, with 51 the year Kelly reported the system bug.

In 2006, Kelly, who studied his Computer Science degree at Cardiff University, was having balancing problems in his branch, so to get to the bottom of it, he began using a system which would create a balance in parallel with the Horizon system.

The MS DOS based system, created by subpostmaster Richard Jackson, could be used to process all transactions alongside Horizon. This system had been used by some subpostmasters before Horizon’s introduction and some, unsure about the new software, continued to use it alongside it. This double entry process allowed Kelly to find differences between the two systems.

He discovered that when he sold smart stamps, non-physical stamps only created there and then, to a customer using a debit card, other items would double up on the till screen, known as “the stack”. It would show two items sold, but only one would have been sold. This would leave the cash short.

Kelly told his Post Office area manager about the bug and explained it to the helpline. He also told a couple of other subpostmasters, one of which called the helpline reporting the bug. This reported problem then went up a level to Fujitsu and the company contacted Kelly.

He told the public inquiry: “I contacted the Post Office help desk and reported it. I also contacted a couple of other [Post] Offices I know to see if they [did] the same step [it] would cause the same problem, and they have confirmed it did.

“The Post Office then later on referred it to a third level, which was Fujitsu, who called me up and said, ‘We managed to replicate the bug. We know about it’.”

No warning

At the time, he asked Fujitsu if it was going to warn the subpostmaster network. But he said they said, ‘No, we won’t do that. We’ll just let it carry on’.”

At the time, there was no widespread national report of Horizon’s problems because all subpostmasters that experienced them were told no other subpostmaster was. But Kelly wanted to share the bug with others. His contract was terminated in July 2006, when a Post Office audit alleged a £13,000 accounting shortfall.

It was 2009 when a Computer Weekly investigation revealed that subpostmasters were suffering unexplained losses, which they blamed on the Horizon system. (See timeline of Computer Weekly articles on the scandal below).

When questioned, during Computer Weekly’s investigations for over a decade, the Post Office always said that there were no Horizon errors that could lead to unexplained account shortfalls that subpostmasters were held responsible for. This changed after a High Court litigation in 2019 proved otherwise.

There are more examples of the Post Office keeping a lid on problems with the Horizon system. In 2015, when, working with the Communication Workers Union, Computer Weekly revealed a bug that could cause unexplained losses, a leaked email for the IT support team said they were aware of the bug, but a fix was not planned for another three months.

The subpostmaster network was not informed by the Post Office. In an email in November that year, an IT support worker wrote to a subpostmaster that it was a process issue that would require a code change, from Fujitsu, to stop it happening again across the network. The email said the code change was planned for March 2016.

“The ability for this to occur can be addressed by a code change that will avoid further instances of this across the estate,” said the email. “The code will be developed by Fujitsu and deployed in March 2016.”

Dalmellington

This software fault, known as the Dalmellington error, featured in the Group Litigation Order fought in the High court between 555 subpostmasters and the Post Office, which the subpostmasters won.

Kelly, who gave evidence to the public inquiry this week in Cardiff, said he suffers from extreme guilt because he fears some of the Horizon scandal victims might have suffered losses due to the bug he discovered.

“When I saw all the stories about subpostmasters being blamed and even sent to jail, I started to suffer from anxiety and depression because I started thinking it could be this bug that sent them to prison. I felt guilty that I had not warned everybody.

Also telling her story to the inquiry in Cardiff was Sarah Osolinski, the former subpostmaster at a Branch in Newport, Wales. The experienced former bank worker kept records of unexplained losses that she repaid for two years. When she told the NFSP rep, she said she was told: “Don’t say anything or they will shut you down straight away.”

The Post Office said:  “Post Office is openly and transparently assisting the Inquiry in its important work to determine what went wrong in the past and to provide, as much as possible, closure for those affected.”