The Horizon Sub-Postmaster Scandal

The Horizon Sub-Postmaster scandal saw innocent individuals wrongly convicted of theft and fraud against Post Office Limited (POL) over 14 years. A 2019 a class action suit by 555 convicted sub-postmasters (SPMs) culminated in the damning judgment of Mr Justice Fraser, advocating the group’s collective innocence in the High Court. Following on, Sir Wyn Williams was tasked by the Department for Business (BEIS) to head up the Post Office Horizon IT Inquiry. It is no coincidence that BEIS are also the current custodians of the POL, which gained independence from Royal Mail in 2012. The compensation received by the 555 was later deemed insufficient after legal fees were deducted.

In all, 736 people have been subject to ‘fundamentally unsafe’ criminal convictions for theft, fraud and false accounting between 2000 and 2014. There is another circa. 2,500 victims who avoided prosecution by covering Horizon’s shortfalls from their own pockets. In March 2022, the BEIS announced a compensation fund open to the 736 and 2,500 regardless of settlement or conviction status. In this article, we condense hundreds of riveting pages of High Court rulings and thousands of hours of testimony into a mere 1268 words!

Why was Horizon Needed?

Whilst most companies buy off the shelf software such as SAP, Sage and Oracle, the POL needed a system tailored to its unique demands. Running a local branch is not your regular franchise where you pay commission on turnover (a small minority of branches are POL owned). Branches are part of a national network offering a diverse range of services. The POL and the Department for Social Security commissioned ICL (now Fujitsu) to develop an end-to-end software package capable of streamlining multiple ledgers for sales, accounting, stock and benefits. Fujitsu’s solution was Horizon. It required each branch to have hardware and software that could connect remotely to the POL’s server. Roll out commenced in 1999.

How did Horizon work?

In bringing together the various ledgers and services onto a single system, reconciliations would be sent to head office as Branch Trading Statements (BTS). With POL aware in real-time of how their pots of cash, revenue and liabilities stacked up, the business gained visibility. Admittedly this is an oversimplification of algorithms, programming, and mathematics. Horizon was promoted as state of the art in 1999, geared to modernise historically labour-intensive processes for SPMs.

How did Horizon NOT work?

Back in the late 20th-century, dial-up modems were ‘modern’ technology. If you were born before the 1990s, then you’ll remember the infamous modem beep and squeal tune. Dial ups were easily interrupted, and once that secure connection had been lost, another one had to be established. Much like downloading a file from Napster (precursor to Spotify), an interrupted Horizon dial-up connection meant starting the whole transfer from scratch. Unlike Napster, you couldn’t see, overwrite or erase what had already been transmitted. This was a flaw in Horizon because the new connection started from scratch resulting in potential duplication – a precursor to fraud allegations. A BTS could be easily misrepresented.

The second major flaw in Horizon was its programming and coding, or in simple terms, it wasn’t always good at maths. A machine is only as accurate as its curators make it. When calculations by alternative means (paper, calculator or Microsoft Works) indicated a different set of numbers, Horizon was deemed correct beyond reproach. In short, the sun shone brightly from every orifice of Horizon! The POL appeared to capitalise on a 1997 Law Commission recommendation stating that in the absence of evidence to the contrary, the computer was deemed correct at the time. So, in effect, if the computer says 1+1=3 and no one has evidence to show the programming can’t add up, 3 is indeed the correct answer.

Judgment – Key Findings

The culpability of Fujitsu: the number of prosecutions against SPMs tripled in the first four years of Horizon going live compared with the period between 1995 and 1999. Approximately 5% of all those trained to use Horizon would eventually find themselves being threatened with private prosecution by POL if they did not repay the alleged shortfalls. Prosecutions were initiated and pursued exclusively by the POL. For that reason, the 2019 class-action suit was against POL only. The Police and CPS were not involved. The director of public prosecutions has since been tasked to take up the mantle if there is a case for Fujitsu to answer. Until decided otherwise, the culpability of Fujitsu remains at arm’s length as a supplier to POL.

Coding: the High Court found Horizon’s programming was flawed, and arguably some basic coding errors were made. The judgment also declared Horizon was not “remotely robust” at the point of rollout or for the proceeding ten years. There were different coding faults and bugs affecting different branches, causing a variety of financial irregularities. The original flaws in Horizon were deemed fixed for subsequent incarnations of the system.

Misinformation: at the time of going live, POL set up a helpline for Horizon users. The helpline and POL assumed any reconciliation discrepancies were caused solely by SPMs. POL placed an unreasonable burden of proof on SPMs to prove Horizon was at fault. Shortfalls were treated as debts to be recovered from a few pounds to hundreds of thousands of pounds. SPMs were told to repay shortfalls without having seen data to explain it. SPMs were also told that Fujitsu employees could not access or amend live data, something that was later revealed to be factually incorrect. Fujitsu and POL had the ability to amend, correct or represent figures in Horizon without SPMs ever being aware. The contract in place between POL and Fujitsu made a charge payable after a certain number of data requests had been exceeded. It could reasonably be argued this disincentivised POL to obtain data that would otherwise have proven SPMs innocent. Internal POL documents show there was initial suspicion that Horizon was at fault. Once passed the point of no return after numerous successful prosecutions, to publicly question Horizon would have put POL on the brink. The POL’s own investigators told SPMs that Horizon was incapable of being flawed. Some ‘lucky’ SPMs were able to convince POL they had found a flaw and avoid civil proceedings. Others had balances written off by POL without explanation – this raised suspicion that flaws in Horizon were known about.

Union Bubble: although most SPMs received training on Horizon, many found it inadequate. The manuals and helpline were supposed to fill in knowledge gaps. There was a lack of visibility and transparency between what was input and how it was processed. SPMs were not given the training or access to Horizon tools that could have otherwise proven their innocence. The SPM’s union, the National Federation of Sub Postmasters (NFSP), was heavily funded by POL. At risk of biting the hand that fed it, NFSP had little reason to turn on POL. An independent union would have championed calls for more training and publicised the widespread issues being experienced by its members. The POL-NFSP bubble ensured SPMs were blinded to the plight of other accused colleagues.

SPM Contract Terms: SPM contracts were heavily tilted in favour of POL. So much so that SPMs were liable for any shortfalls in stock, cash and assets identified by POL and its systems regardless of where the fault resided. Contrary to POL’s assertion, the SPM contracts were Relational. This required both sides to act in good faith rather than assume liability by default. SPM contracts also failed the test of reasonableness under the Unfair Contract Terms Act 1977. Mr Justice Fraser made clear POL should not have assumed SPMs were immediately to blame.

Moving Forwards

Sir Wyn Williams’ full findings in the Post Office Horizon IT Inquiry are not expected until December 2022 at the very earliest. His task is to consider all the issues, hear testimony from all sides, make recommendations and draw conclusions. The fundamentals of the Horizon scandal won’t change, but the way both POL and SPMs move forward will undoubtedly change forever. The importance of publicly recognising the injustice and exonerating the wrongly convicted cannot be underestimated. At the time of writing, just 72 convictions have been formally overturned. These victims will receive interim payments of up to £100K whilst full damages are assessed. Hundreds deserve their convictions to be quashed, thousands deserve damages, and most are still waiting.

The POL has publicly apologised for the Horizon scandal and the impact on both victims and their families. No matter the sums of compensation and vindication afforded to the falsely accused, much of the damage cannot be undone. Think of the bankruptcies, mental health crises, deaths, jail time, ruined careers, families broken up, and communities torn apart in the name of a fraud which never actually existed.

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