Minister’s personal bid to persuade victims’ group to join “whitewash” inquiry into Post Office IT scandal fails

By Tony Collins

Junior business minister Paul Scully has held an online meeting to ask the victims’ group, Justice for Sub-postmasters Alliance, to join a government “inquiry” into the Post Office’s Horizon system. The meeting was said to have been “pointless”.

It’s unclear whether, from Scully’s viewpoint, the meeting was anything more than a tick-box exercise. Scully is aware that MPs, peers and victims of the Post Office IT scandal have branded his inquiry a whitewash even before it has started.   

Details of his online meeting with Alan Bates, head of the Justice for Sub-Postmasters Alliance, are in an email sent to the Alliance’s members, a copy of which has been seen by Campaign4Change.

Scully announced a “review” – which was later renamed an “inquiry” –  after litigation in the High Court established that sub-postmasters were wrongly blamed for balance “shortfalls” shown on Horizon. Fujitsu built Horizon and has run it for the Post Office since it went live in 1999.

The litigation between the 550 members of the Justice for Sub-postmasters Alliance and the Post Office confirmed that Horizon, which is installed in all 11,500 post offices, had numerous bugs, defects and errors that caused the shortfalls.

About 900 sub-postmasters were prosecuted for theft, false accounting on the basis of Horizon’s “evidence” that money was missing. But many shortfalls in branch balances were computer- generated and did not actually exist. The Post Office confiscated homes, cars and businesses on the basis of Horizon evidence.  

Lives were ruined as sub-postmasters were imprisoned or left destitute or both. The High Court case exposed the extent of the scandal but cost sub-postmasters £46m which they are seeking to recover from the government and the Post Office. Scully’s inquiry specifically excludes any consideration of repaying the £46m.

The scandal is further compounded by ministers telling victims in essence that, now they have spent £46m proving that the criminal justice system is blighted by a plethora of unfair trials, there are legal processes in place to compensate them if they go to court again and succeed in proving, at a cost that will reduce any compensation they receive, that prosecutors got it badly wrong in their particular case. All of which prolongs the scandal and adds to costs.  

Scully’s “inquiry” excludes all matters to do with the wrongful prosecutions. It is  being branded a whitewash because of its narrow terms of reference and because it is not set up to cross-examine witnesses or compel the disclosure of emails or documents. It was the rigorous cross-examination of witnesses during trials in the High Court case that brought out the truth about Horizon. The judge in the case, Mr Justice Fraser, criticised the Post Office and Fujitsu’s written and verbal evidence.

Justice for Sub-postmasters Alliance has refused to take part in the inquiry, as have forensic accountants Second Sight who have an in-depth knowledge of the scandal.

Lack week Sir Wyn Williams, whom Scully’s department BEIS found to chair the inquiry, made a personal appeal to sub-postmasters to participate. Now it’s Scully’s turn for a personal appeal.

Alan Bates, head of the Alliance, said in his email to members,

“I was recently contacted by the Minister’s office (Paul Scully) as he was ‘keen to have a short call with you [me], today or tomorrow, to discuss the announcement and Inquiry’. My response was the same as the last time a request had arrived from his office. I replied ‘I must make it clear that any discussion with the Minister would first have to be about the mechanism for repayment of the costs the 555 Post Office victims have so far had to pay to expose the truth behind the Post Office scandal’.

“I then received details for the online meeting which took place earlier this week. You won’t be surprised to hear repayment was not discussed, only a very vague reference that if we took part in his inquiry at some point it might be touched upon (however the very terms of their inquiry specifically exclude such discussion).

“Needless to say it was a pointless meeting as he only wanted to talk about the Group taking part in his inquiry, something we have told him that we would never ever do.”

Bates described the inquiry as a “Government Whitewash Review”. His email said the inquiry needed to be able to “make recommendations as to compensation which should be paid by Post Office Ltd, Fujitsu and HMG to the Group to reflect what their legal liability …”

The inquiry, said the email, also needed to pay the legal costs of the Group to enable witnesses to be cross-examined. Bates’ email said it was “only under cross-examination of POL [Post Office Ltd] and Fujitsu witnesses” in the litigation that the truth started to appear because in many cases the “written statements turned out to be highly dubious or worse”.

Historical Shortfall Scheme – “HSS Titantic”?

The email to Alliance members also raised the question of whether government is telling the truth over how the Post Office has been paying the legal costs of defending Horizon and funding the Historical Shortfall Scheme which has been set up to compensate former sub-postmasters who were unfairly required to pay for Horizon-generated shortfalls out of their own pockets. More than 2,200 former sub-postmasters have registered with the scheme.

Bates’ email said,

“It also seems that the ill-fated Post Office’s Historical Shortfall Scheme (seems it is becoming known as the HSS Titanic), now with over 2,200 applicants, is planning to pay £1,200 to each applicant in order for applicants to take legal advice over any offer POL [Post Office Ltd] makes. That could mean another £2.5m without even considering the actual compensation for 2,200 claims and paying the army of lawyers sifting the paperwork…

“My guestimate is that POL has spent at least £150m over the years through to the Settlement Agreement. Then there are all these other Schemes POL has, so when you include compensation and hiring a battalion of legal professions and all those who are heading to have their convictions overturned and compensation in their cases, POL may well have spent at least another £100m.

“Where is all this money coming from? The official position seems to be that POL is paying for it from its revenue. Yet according to POL’s annual accounts, up until 2017 it had never returned a profit, and even totalling its profits for 2017, 2018 and 2019 it only comes to around £100m (its 2020 accounts probably won’t be published until 2021). Don’t forget these 3 years of profits come after many years of losses of hundreds of millions of pounds, which there is no sign that it has ever paid back.

“With bills of £250m and POL’s profits totalling around £100m, where has all the rest of the money come from?

“Throughout this year, the MP Kevan Jones has submitted a number of Written Parliamentary Questions to BEIS and some of those related to costs, for example:-

“Question – To ask the Secretary of State for Business, Energy and Industrial Strategy, whether a Ministerial Direction was ever sought by his Department’s Accounting Officer on the regularity, propriety, value for money or feasibility in respect of spending incurred by Post Office Limited during its Horizon IT system litigation case.

“Question – To ask the Secretary of State for Business, Energy and Industrial Strategy, what conditions were attached to the decision of HM Treasury to allow UKGI [UK Government Investments] to use public funds to be used to contest the case Bates v the Post Office.

“Minister’s Answer – Post Office Ltd. (POL) handled the defence of the Group Litigation. All costs in doing so, including legal costs and the settlement in December 2019, were paid using funds from POL’s commercial revenue. BEIS sought and received assurance throughout the process that no public funding was used to contest the litigation.

“Question – To ask the Secretary of State for Business, Energy and Industrial Strategy, how much has been paid from the public purse to individual sub-postmasters since the group litigation settlement on the Horizon IT system on 12 December 2019.

Minister’s Answer  – On 11 December 2019, Post Office Ltd reached a settlement of £57.75m to conclude the Horizon litigation claim. No government money was used to fund the settlement or the related litigation. These were fully funded by Post Office Ltd from its commercial revenues.”

Bates’ email added,

“According to the Minister, the government is not paying for anything, and we know POL hasn’t made enough profits to afford to pay the bills, so where is the money coming from?”

The email says that the Post Office receives hundreds of millions of pounds from government to subsidise the running of the post office network – a subsidy that is separate from any major grants for capital programmes.

It asks whether the Post Office has been using any of this subsidy to fund Horizon-related spending. It says, “Somebody needs to find the real answers about how POL is financing everything and what the true costs are, and have been over the years.”

Comment

Scully has a difficult job. Ministers are temporary appointees who are nominally in charge of complex organisations. That complexity delivers them helplessly into the hands of their civil servants who, for 20 years, have sided with the Post Office against sub-postmasters who’ve challenged Horizon.  

At least Whitehall officials have a sense of humour. In upgrading their much-criticised “review” into an “inquiry”, they have added a list of specific exclusions – things that are outside its scope. That wrongful prosecutions are outside the inquiry’s scope is, arguably, a little like excluding questions about cladding from the Grenfell inquiry.

The Horizon scandal, among other deficiencies, draws attention to two things in particular: the first is an evaporation of the right to a fair trial which is a foundation stone for any civilised society and the second is a lack of fair compensation for the scandal’s victims.  Ministers and their officials have set up an inquiry that excludes both.

What, then, is the purpose of the inquiry? Perhaps it has been set up to help close down a national scandal gradually while those who were involved move on.

The Justice for Sub-postmasters Alliance and Second Sight are to be applauded for not dignifying it by participating. Indeed, if future students of public affairs look back on the Horizon scandal, they may take a bemused view of the government’s undisguised indifference to the widest miscarriage of justice in this country’s legal history.

Those students would be entitled to ask how it was possible, given the need for any self-respecting democracy to protect the right of every citizen to a fair trial, that hundreds of people were wrongly convicted on the basis of misplaced confidence in a flawed computer system and the victims were then asked to participate in a government inquiry into the flawed computer system provided they didn’t mention their wrongful prosecutions.

Sub-postmasters have reached this stage in their campaign for justice because they by-passed civil servants, ministers and the Post Office and went to the High Court for redress.

Their only chance of justice now is, again, to avoid civil servants, business ministers and the Post Office and look to Parliament, the Parliamentary Ombudsman and those at the top of government for redress. Why would any sub-postmaster want to help an inquiry whose narrow terms of reference, list of exclusions and non-public hearings are the very repudiation of an open and unfettered search for the truth?

Government minister’s plea for sub-postmasters to take part in review of IT scandal rejected – Karl Flinders, Computer Weekly

The Great Post Office Trial – Nick Wallis presents 10-part BBC R4 series

Closure – the real reason for the Post Office IT scandal review – campaigner Tim McCormack’s blog