Fujitsu Scandal
Herminia Remmen
The British Post Office scandal, also called the Horizon IT scandal, involved the Post Office pursuing thousands of innocent subpostmasters for apparent financial shortfalls caused by faults in Horizon, an accounting software system developed by Fujitsu. Between 1999 and 2015, more than 900 subpostmasters were convicted of theft, fraud and false accounting based on faulty Horizon data, with about 700 of these prosecutions carried out by the Post Office. Other subpostmasters were prosecuted but not convicted, forced to cover shortfalls caused by Horizon with their own money, or had their contracts terminated. The court cases, criminal convictions, imprisonments, loss of livelihoods and homes, debts, and bankruptcies led to stress, illness, family breakdowns and at least four suicides. In 2024, Prime Minister Rishi Sunak described the scandal as one of the greatest miscarriages of justice in British history.
Although many subpostmasters had reported problems with the new software, and Fujitsu was aware that Horizon contained software bugs as early as 1999, the Post Office insisted that Horizon was robust and failed to disclose knowledge of the faults in the system during criminal and civil cases. In 2009, Computer Weekly broke the story about problems with Horizon, and the former subpostmaster Alan Bates launched the Justice for Subpostmasters Alliance (JFSA). In 2012, following pressure from campaigners and Members of Parliament, the Post Office appointed forensic accountants from the firm Second Sight to conduct an investigation into Horizon. With Second Sight and the JFSA, the Post Office set up a mediation scheme for subpostmasters, but terminated it after 18 months.
In 2017, 555 subpostmasters led by Bates brought a group action against the Post Office in the High Court. In 2019, the judge ruled that the subpostmasters' contracts were unfair, and that Horizon "contained bugs, errors and defects". The case was settled for 58 million, leaving the claimants with 12 million after legal costs. The judge's rulings led to subpostmasters challenging their convictions in the courts and, in 2020, the government setting up an independent inquiry. The Post Office Horizon IT Inquiry was converted into a statutory public inquiry the following year. The public inquiry is ongoing and the Metropolitan Police are investigating personnel from the Post Office and Fujitsu.
Courts began to quash the subpostmasters' convictions in December 2020. By February 2024, 100 of the convictions had been overturned. Those wrongfully convicted became eligible for compensation, as did more than 2,750 subpostmasters who had been affected by the scandal but not convicted. The final cost of compensation is expected to exceed 1 billion. In January 2024, ITV broadcast a television drama, Mr Bates vs The Post Office, which made the scandal a major news story and political issue. In May 2024, the UK Parliament passed a law overturning the convictions of subpostmasters in England, Wales and Northern Ireland. Scotland passed a similar law the same month.
Between 1999 and 2015, the Post Office and the statutory authorities of the UK, including the CPS, the PPSNI, and the COPFS, brought forward hundreds of criminal prosecutions of subpostmasters[a] when the Horizon accounting system reported that money was missing from their post offices.[1] In all, between 1999 and 2015, over 900 subpostmasters were prosecuted and 236 went to prison.[2] The Post Office itself prosecuted 700 people.[3]
Once the Post Office had secured a criminal conviction, it would attempt to secure a Proceeds of Crime Act order against convicted subpostmasters, allowing it to seize their assets.[4] In addition to those convicted, there were subpostmasters who were prosecuted but not convicted, and many more who, without being prosecuted, had their contracts terminated and lost money as they were forced to pay the Post Office for Horizon shortfalls. The actions of the Post Office caused the loss of jobs, bankruptcy, family breakdown, criminal convictions, prison sentences and at least four suicides.[5][6]
By February 2024, more than 4,000 subpostmasters had been identified as eligible for compensation.[7] In Scotland, 73 convicted subpostmasters were identified in 2020. By March 2024, 19 of those 73 had applied for their convictions to be reviewed. The BBC said it was possible that hundreds more people in Scotland were accused of stealing money but not convicted.[8] In Northern Ireland, 53 convicted subpostmasters have been identified.[9]
At the time of the prosecutions, the Post Office had the same standing in law as any other private prosecutor in the British legal system. It acted as a private prosecutor in England and Wales. In Scotland, it reported allegations of crime to a procurator fiscal, and in Northern Ireland to the Public Prosecution Service.[10]
Historically, Royal Mail and the Post Office were part of the same entity and were a public authority. They split into separate organisations in 2012.[11] The Post Office's unique position, with a history as a prosecutor going back to 1683, gave the Criminal Cases Review Commission (CCRC) concerns about its neutrality. In June 2020, the chair of the CCRC wrote to the Justice Select Committee asking if the Committee would undertake a formal review of the circumstances, and what safeguards were in place, "when an organisation is allowed to act as a prosecutor when it is also the victim and the investigator of an alleged offence".[12] The committee's report into private prosecutions and their safeguards, published in October 2020, noted that barrister Paul Marshall, who represented several subpostmasters, had argued that the private nature of the prosecutions was not a significant cause of the Horizon scandal.[13] The report stated:[13]
The Post Office is not a typical private prosecutor ... The Private Prosecutors' Association question whether the Post Office was conducting private prosecutions at all and was in fact a 'publicly-owned entity and a public prosecutor' during the relevant period... One of the CCRC's principal concerns is whether any organisation with the Post Office's combined status, as victim, investigator and prosecutor, would be able to take decisions on investigations and disclosure 'appropriately free from conflict of interest and conscious or unconscious bias'.
In 2003, the Post Office pursued a civil claim against Julie Wolstenholme, subpostmaster at Cleveleys post office in Lancashire. The Post Office dropped its claim and settled Wolstenholme's counterclaim out of court after a jointly appointed expert, Jason Coyne, reported that discrepancies could have been caused by faults in Horizon.[14]
Richard Morgan, who had designed the strategy of the Post Office case against Castleton and represented the Post Office at trial, denied that he had been given instruction to establish a legal point. He said "he would have told Post Office he would not do it if those instructions had been given."[19] This strategy was repeatedly referred to as a "nice legal point" by counsel to the Horizon Inquiry, Jason Beer.[20] Richard Moorhead maintains "The same strategy formed a central part of the Post Office's thinking in subsequent cases and provided a legal rationale for insulating Horizon from legal challenges without proper evidence of its robustness."[21] The Castleton case was analysed and assessed by the University of Exeter School of Law in 2024.[22]
The Post Office business, along with the Royal Mail delivery service, were formerly part of the General Post Office, tracing its origins back to 1516. It became a statutory corporation after the passage of the Post Office Act 1969. A gradual business restructuring process started in 1969 and was completed in 2012, after the Postal Services Act 2011 placed Royal Mail under separate ownership.[23] Post Office Limited became and has remained a single share government-owned entity with government represented at board level.
Oversight of Post Office Limited was assigned to what later became the Department for Business, Energy and Industrial Strategy. As well as a succession of junior post office ministers, ultimate control was held by civil servants including Brian Bender, Simon Fraser, Martin Donnelly and Alex Chisholm. From 2003, Royal Mail (and thus the post office business) came under the management of the Shareholder Executive, which in 2016 was merged into UK Government Investments.[24]
Key personnel who presided over the Post Office while these events unfolded include Adam Crozier who headed Royal Mail when it owned the Post Office between 2003 and 2010; and Paula Vennells who became chief executive officer of Post Office Limited from 2012 to 2019.[25] Commenting in January 2024 on the governance arrangements and the scandal, the Institute for Government said[26]
My own suggestion is that the government should clear out the entirety of the board and senior management of the Post Office and start again, perhaps with the assistance of consultancy services from Second Sight, who know where the bodies are buried.
Subpostmasters are self-employed and run branch post offices under contract to the Post Office.[28] There were approximately 11,000 local branches.In Bates vs Post Office, the subpostmasters argued that the Post Office owed a duty of good faith because a relational contract existed. The Post Office relied entirely on the actual wording in the contracts which stated:[29]
The Operator shall be fully liable for any loss of or damage to, any Post Office Cash and Stock (however this occurs and whether it occurs as a result of any negligence by the Operator, its Personnel or otherwise, or as a result of any breach of the Agreement by the Operator)... Any deficiencies in stocks of Products and/or any resulting shortfall in the money payable to Post Office Ltd must be made good by the Operator without delay so that, in the case of any shortfall, Post Office Ltd is paid the full amount.
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