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Post Office boss signed off hush money to cover up smoking gun

A former Post Office boss admitted the pain and suffering of subpostmasters could have been avoided had the organisation done the right thing

A former Post Office senior executive agreed the suffering of subpostmasters could have been avoided if the organisation had investigated reported IT problems rather than paying an affected subpostmaster to shut them up.

During the latest Post Office Horizon scandal statutory public inquiry, former chief operating officer David Miller admitted to signing off a payment of £180,000 to keep problems at a branch in Lancashire out of public sight.

The Post Office was bringing legal action in 2003 against Julie Wolstenholme, the subpostmaster of a branch in Cleveleys, over an unexplained accounting shortfall. She was countersuing the Post Office for loss of earnings of about £180,000. In preparation for a court case, a joint expert IT witness was commissioned, and the final report by forensic IT expert Jason Coyne concluded the Horizon system did appear defective.

He wrote that the technology installed at Cleveleys “was clearly defective in elements of its hardware, software or interfaces, and that the majority of the errors in the fault logs could not be the making of Ms Wolstenholme”. Coyne said it was “often absolutely obvious” that there had to be a technical problem that should be looked at, adding: “There consistently appears to be, within Fujitsu and/or Post Office, a reluctance to ever really grasp the analysis of the issue and to look at it.”

In light of the report, the Post Office recognised the weakness of its case against Wolstenholme and, after it failed to persuade Coyne to change his report, it paid her a settlement with a non-disclosure agreement attached, which Miller signed-off. At the time, lawyers said the Post Office was “to give the expert report as little publicity as possible”. During the latest hearing, Miller said he was standing in for a colleague when he approved the payment.

Miller agreed that had the Post Office investigated claims that Horizon was faulty, rather than using taxpayers’ money to cover them up, the suffering of subpostmasters in the Horizon scandal could have been avoided.

After the introduction of the Horizon software in 1999, to automate branch accounting, subpostmasters began to experience unexplained accounting shortfalls. The Post Office blamed them and prosecuted hundreds. Its strategy was to keep secret the problems with the Horizon system to enable it to continue to blame and prosecute subpostmasters based on evidence from the system.

Risk register

Knowledge of problems with the Horizon system would have undermined the Post Office’s claim that the system was robust and call into question its prosecutions of subpostmasters. For example, the inquiry heard the Cleveleys branch case had been put on the Post Office’s IT risk register, such was its risk to the business.

In an internal email to former Post Office CEO David Mills, in 2023, an executive spelled out the reason the Cleveleys dispute was on the IT risk register. The email said it could cause "damage to reputation of Post Office and potential future financial losses [£1m] if the Post Office loses court case relating to reliability of Horizon accounting data at Cleveleys Branch Office."

In October 2022, an earlier statutory inquiry hearing revealed that Miller was informed about problems with Horizon in 1999. During phase two of the inquiry, he was asked about a National Federation of Subpostmasters (NFSP) executive council meeting over two days in June of that year.

That meeting’s report said: “There was general discussion on the severe difficulties being experienced by subpostmasters who are already running an automated system. Seven sheets of comments from [North East-based subpostmasters] have been passed to David Miller.”

He told the old public inquiry in October 2022 that he “bitterly regretted what had happened”, but that he only became aware of the problem during the 2018/19 High Court trial, when subpostmasters sued the Post Office for their losses.

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to the accounting software (see timeline of Computer Weekly articles about the scandal below).

• Also read: What you need to know about the Horizon scandal

• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story

Read all Computer Weekly articles about the scandal since 2009

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