Moving on

I started this blog 6 years ago as a former subpostmaster incensed by the devastation that the Network Transformation project was causing the Post Office network and with an eye on the developing Horizon saga. It morphed into a full blown commentary on the Post Office Scandal while the effect of NT on the network came to pass as predicted not just by me but many others.

There is of course much more to come with the scandal but I have no more to contribute. The infamous Known Errors Log could now contain details of all the cover ups and probably criminal behaviour of those past and present in POL which have been revealed so far in trials and by whistleblowers. I am glad that Seema and the others have had their convictions overturned and look forward to hearing that they all receive the compensation they deserve.

Putting the scandal to one side then, POL still need a weather eye kept on what they are up to and if they can succeed in delivering the post scandal promises they have made.

Nick Read is certainly making changes ably supported by his new appointments but one of his key deliverables – resetting the relationship with Subpostmasters – is failing and in my opinion will never be delivered now. It is the definition of the group known as Subpostmasters that he can’t seem to get to grips with. It is a collective that embraces such a diverse lot of small business operators that generalisation is impossible. I assume he is happy in conversation with the more serious entrepreneurs who embrace the Post Office franchise as a profitable opportunity but that is now a small proportion of the network and declining rapidly. The ‘them and us’ factor remains omnipresent between the remainder and POL and the only connection between the remainder and POL is the discredited and totally dysfunctional NSFP. I see in a recent letter to a subpostmaster from Amanda Jones that POL continue to believe that the NFSP are a relevant organisation to the subpostmasters the NFSP claim to represent.

That is neither a long term or short term solution and POL’s intransience to remove financial support to the NFSP and by doing so bring about their much deserved demise hinders the prospect of a new alternative representative organisation that can deliver to SPMRs the real representation that the NFSP used to provide their members.

Out with old and bring in the new

It is truly disappointing to see so many of the names associated with the PO Scandal still in positions of senior management in the organisation. Until they are removed the culture in POL Land will not change as these people have been inbred with the ‘them and us’ doctrine which they still pass on to new recruits. I recall advising Paula Vennells many times not to listen to these culprits who were so blinkered by their belief of being perfect that they could not bring themselves to question problems that were put before them. Nick Read is still surrounded by these very people and making decisions based on their incompetence. I can’t put it more bluntly than that.

There is hope though

I wasn’t going to write anymore about POL but todays announcement that POL have signed a contract with DPD to provide click and collect services is welcomed and ushers in the prospect that POL will now seek to embrace the name above the door as the new business model they so desperately need. NT was going to deliver masses of Government work just as the Government was cutting budgets and forcing the departments that POL relied on for income to seek cheaper alternatives. NT was going to put POs into retail so as my good friend Mr Daniels once observed, the man on the phone in the queue would now tell his wife that he was in Budgens, not the Post Office. A great example of losing the brand which is perhaps the only significant achievement of Paula Vennels during her time in office.

The Post Office. The name is great – it can and should embrace all things postal. When you walk through the door you should be able to select the service you want not the only one available. Competition is good for everybody and the Post Office should provide as many courier services as they can and expand on that perhaps by providing a local hub for these couriers in Urban areas.

So yes, there is hope and it will require a new type of post office that delivers to the public the service they need and not one confused by whether or not it is a convenience store first and a post office second or vice versa.

The Banner Lady

So we waved our hands as we marched along
And the people smiled as we sang our song
And the world was saved as they listened to the band
And the Banner-Man held the banner high

He was ten feet tall and he touched the sky
And I wish that I could be a Banner-Man

(The Bannerman – Blue Mink 1971)

I have often repeated that the difficulty of trying to acknowledge the contribution of so many people that ultimately led to the GLO and the overturning of so many convictions is that it is too easy to miss out some people.  That is why I usually refer to Alan Bates as the key individual while acknowledging the many others’ contribution collectively.

However, I was recently reminded of what many (including me) might have passed off as a somewhat innocuous contribution by one of the leading lights in the campaign for justice to date.   A world class investigative journalist who is currently scribing a book on the scandal (I forget his name but you can buy a pre-release copy here https://bathpublishing.com/products/the-great-post-office-scandal-first ) pointed out the obvious to me and the unbelievable importance of the banners to the media that appeared outside the courts on the various days of reckoning.    Without them, the images of the happy subpostmasters in the photographs would require an explanation in text.    A brief glimpse of a bannerless photo would not convey any message at all to the public.  

So here is a test for you all just to see how important these banners were:

Google ‘subpostmasters’ and click on the images tab

Then you will see that the majority of the images found contain the aforementioned banners.

Right click on any of those images and select ‘search google for image’ 

Only then you will see not only how relevant the banners are but how far their image has spread around the world.  They have been used thousands and thousands of times.   Their importance cannot be denied, particularly if you search for a subpostmaster image not containing the banner.

So for once let me single out one very special person for praise and such an important contribution to the spreading of the story of the scandal in the media – our very own Eleanor Shaikh who designed and paid for both banners herself (apparently even her own husband is unaware that she did this!)

An absolutely inspired and significant contribution that deserves recognition. 

The Therium Conundrum

by Lobert Rudlum

In early February 2018, the JFSA announced that they had obtained funding for their claim against Post Office Ltd from Therium Capital Management a third party litigation funder (https://news.sky.com/story/postmasters-land-funding-for-legal-clash-over-post-office-it-fiasco-11249340)  It was the realisation of a dream for Alan Bates and the JFSA and success for the solicitors Freeths who put together the case for funding and presented it to Therium.  The Group Litigation Order (GLO) had been awarded by the court in March 2017 and in order for it to proceed the JFSA needed financial backing, without it they could not have progressed to where we are today.   I can only assume that Freeths were acting pro bono up to that point with of course the option to recover historical costs once the funding had been obtained.

The first case management hearing on the GLO was in November 2017 so I think I can assume that up until that point there had been little or no disclosure to Freeths.   We cannot know what evidence Freeths used to present their case to Therium but we do know now what evidence they did not have which makes Therium’s decision to invest in the GLO all the more interesting.

They certainly did not have the contents of the Known Errors Log nor details from the PEAK database and of course the contents of the various Clarke Advices, all substantial pieces of supporting evidence that ultimately led to the Court of Appeal recently describing POL’s prosecution of so many Subpostmasters ‘an affront to the Public Conscience’.

A question that may never be answered is, of course, had no substantial additional evidence come to light during the GLO disclosure exercise, would the JFSA have been successful?  Hard to have an opinion on that one but it is almost certain that without the Clarke Advice revelations the abuse of process Category 2 claim would have failed for many of the appellants.

Moving back to funding, it is interesting to note how long Therium say it takes them to come to a decision to invest millions of pounds of their investors money into a litigation project:

What is the process for approving litigation funding and how long does it take?

Once we have the initial information, we will indicate whether we are interested in progressing the case and if so will usually agree commercial terms at an early stage. We then prepare the case for submission to our Investment Committee and prepare the funding documentation. The length of time this takes depends on the complexity of the case, and how well prepared the information is, but cases can be prepared within a few weeks. The case will then be submitted to the Investment Committee who will usually make the decision to proceed at a single meeting and confirmation of funding approval will be provided on the same day.

 While of course the Therium back office team carries out due diligence and presents a summary of their findings to the Investment Committee, no doubt with a recommendation to proceed or not, is it not amazing that a group of men and women sitting on that committee could reach an investment decision for many millions of pounds so quickly and on what, in hindsight, was a substantial lack of supporting evidence?

 I suppose a general question here might be, if all the evidence that eventually was disclosed through the GLO and Appeal Court process had been known at that time, would Freeths have even needed litigation funding?   Would they have even needed a GLO?   For instance had the Clarke Advice been heeded in 2013 and Seema Misra been given reason to believe that POL’s expert witness in her trial had lied and hid evidence of many Horizon errors, her conviction would have been long overturned and in so doing would have forced POL into conceding the JFSA claims almost immediately.  

As an aside here, just to add to the significance of the non disclosure of the Clarke Advice, at the first CMC for the GLO, POL were still arguing that many of the claims were time barred.    Suppressing evidence for 8 years and then having the temerity to suggest that claims were too old is taking the proverbial.

Freeths and Therium do not enter into large scale litigation exercises purely because they want justice for their clients.  They want and need to make money and they certainly don’t want to lose any although of course they do sometimes.   The decision to proceed is a commercial one based on the prospect of success given the supporting evidence to hand at that time.

What of POL then?  They also had a decision to make.    They not only had all the facts and evidence that the Therium Investment Committee had, they had more, much, much more, and of course we know that their decision was to fight the GLO tooth and nail.   That decision would have had to have been made at board level and based on, no doubt, a summary of the case presented to them which would have included a recommendation (or two).  A significant difference to the decision making process though was that while Therium were answerable to external investors, POL were not.  

This is where POL sadly got their decision making process fundamentally wrong.   They approached it from the very same angle as did Freeths and Therium.   First and foremost it was a commercial decision and clearly no consideration for the seeking of justice was given.   Any summary of the claim against them was being provided by the very people that got them into such a mess in the first place.    That summary would no doubt have highlighted the various defences that the legal team were preparing but at some stage legal strategy would have had to be approved and we know that one part of that was to outspend the claimants.

(there is a question that comes to mind here – part of the legal strategy was to exclude Gareth Jenkins as a witness for obvious reasons, and this may or may not have been presented to the board, but surely during the course of the GLO and particularly after Fraser.J had handed down the Horizon judgement, surely at least one board member would have wanted to know why Jenkins wasn’t called?  Or perhaps they already knew the answer?)

So here is the conundrum.   If, hypothetically, POL were financially destitute at the time the GLO action was brought against them and had no financial support from the Government or were even completely privately owned, and they went to Therium for funding to defend the Litigation (I know it doesn’t actually work that way) would the Therium Investment Committee have approved it based on the additional evidence POL had including the Clarke Advice? 

Of course they wouldn’t have.   So why the difference?   Should POL be run by the Therium Investment Committee?   It is not as if POL have stopped making such bad decisions based on legal advice.   As recently as November last year, the POL board discussed the revelations of the Clarke Advice and for some unknown and ungodly reason they approved substantial more funding to defend Abuse of Process Category 2 in the CLEAR CLEAR knowledge that they would lose.   Sir Wyn Williams’ Inquiry needs to answer this conundrum and in doing so we may be in a better place to finally see justice been done which is full compensation paid to all affected and those responsible held to account.

Addendum (to add to my line of questioning)

Sir Wyn: Considering what you know now to be the case and having read Justice Fraser’s decisions, the CCRC Statement of Reasons and the finings of the Court of Appeal, would you still have approved spending so much money on defending the GLO?

Paula: Of course not.

Sir Wyn: Please provide me with a very detailed list of what exactly you know now that you didn’t know then and a VERY detailed explanation of why you did not know that.

If Paula gave evidence ….

Back in 2016 when the prospect of the GLO was becoming closer to reality I started writing a series of emails suggesting what might be asked in court. These were my ‘Line of Questioning’ emails and to be fair the recipients of them marked me down as a bit of a nutter (probably quite rightly) but it is interesting to look back at them now given the prospect that some of the ‘witnesses’ may well appear before the Inquiry to give evidence under oath and given what has been revealed in the intervening 5 years.

This was the first one …

Q: Are you aware of any errors in the Horizon system that have ever led to losses being incurred by Subpostmasters?


A: No computer system is fault free and from time to time errors do occur and we acknowledge these do happen in Horizon occasionally but when these occur we fix them and make sure no SPMR suffers losses as a result.   So no, I am not aware of any errors that have caused losses to SPMRs


Q: But if errors do occur as you say then surely some of these do result in the accounts of the SPMR reflecting a loss payable to POL?


A: Yes but as I said we find these errors when they do occur and provide Transaction corrections to SPMRs to rectify any losses they may have incurred.


Q: Over the years there have been many updates to the Horizon system.  Do you test these thoroughly before you release them to the SPMR network?


A: Yes of course we do – rigorously.


Q: So if you test them rigorously how do you explain the errors that you admit to finding in the system afterwards that result in transaction corrections?


A:  Well as I said no system is perfect and even testing may not throw up each and every possible fault so when we find these errors we fix them.


Q: How do you find these errors once they are released into the network?   Is it as a result of ongoing testing of the system?


A: No – it is usually when a SPMR notices a problem and reports it to us and then we investigate.


Q: So do you agree that from the time the software is provided to the network to the time a SPMR notices the problem, reports it back to POL and the software is updated to fix the problem that the error exists in the software?


A: Yes


Q: So a SPMR comes across a problem with Horizon that has caused him a loss and he reports it to you.   You investigate and accept it is an error on the part of your software.  You fix the problem and reimburse the SPMR for the amount of his loss.  Is that the case?


A: More or less.


Q: What sort of time period are we talking about here from the time the SPMR reports the problem to the time he recovers his money from POL?


A: Well he may not have actually lost any physical money – we can put such query amounts into a suspense account until they are resolved – but the resolution of the problem is usually quite quick.


Q: How quick?  Days, Weeks, Months, Years?


A: Each case is different of course but we try to be as quick as we can.   


Q: Are you aware that some Transaction Corrections can take several months to resolve?


A: Yes I am aware of that but they are resolved eventually and the SPMR does not lose out.


Q: Lets go back to the problem of errors in Horizon.  You say that these come to your notice when SPMRs report them and as you say you resolve these errors to make sure no SPMR loses money as a result.  Is that the case?


A: Yes


Q: That is very interesting.   These errors – when you come across them – they are fixed as you say and then you release a software update so they can’t re-occur is that correct?


A: I think I have already said that – Yes


Q: A software update of Horizon is for every user in the network it not – you don’t just update the software for one particular branch?


A: That is correct


Q: I notice from my research that you don’t inform users when you update the Horizon software.   DO you agree that is the case?


A: No it is not – we inform the users when we make changes to the functionality of the software.


Q: But you don’t inform them of any errors you have corrected.  Is that not true?


A: No we don’t 


Q: Is there a reason why you don’t do that?


A: I don’t know why


Q: Let’s go back to how you come across these errors.   You agreed with me that prior to a SPMR reporting the problem and all the way up to the point where you release a software patch to fix the problem then the error that the SPMR has reported is in the software that all of the users of the Horizon system are using.  Is that the case?


A: Yes


Q: And you agree with me that some errors can cause losses to SPMRs that are later rectified by the provision of transaction corrections.  Is that correct?


A: Yes


Q: How long can it take to program, test presumably and release a patch to fix these problems? Days, Weeks, Months?


A: It can take weeks or in some cases months


Q: And you don’t tell the network when you have fixed these problems do you?


A: No I have said that already


Q: What happens if a SPMR doesn’t notice the result of the software error and a loss to him results?


A: Then they would have to accept the loss – they should know how to identify these problems and report them through the appropriate channels.


Q: So you don’t tell the rest of the network when a SPMR reports a software error that has resulted in a loss to him being generated?


A: Not that I know of


Q: Well here is where I get confused.  You stated at the start of your evidence that you make sure no SPMR suffers losses as a result of these errors yet now you say if they don’t spot them EVEN AFTER you already know about the existence of them they would be responsible for the loss.  So can you enlighten to me as to what exactly you mean’t when you said ‘we make sure no SPMR suffers losses as a result of such errors’?


A: The SPMR contract clearly states they are responsible for all losses that the branch incurs through their own negligence – if one SPMR can clearly identify an error then the rest should be able to do that and if they don’t then it is their liability for any losses incurred.


Q: So ALL SPMRs should be able to identify ALL software errors in Horizon otherwise they are likely to incur losses?


A: Well yes I suppose that is what I am saying


Q: Mmmm – very interesting.   One of the problems with software errors is that they are not debit or credit specific.   Errors can just as easily occur that can cause a SPMR to have a gain not a loss.  Would you agree?


A: Yes that is true.


Q: So if such an error occurred and the SPMR gained money and didn’t identify the error that caused it then he would be perfectly entitled to keep that money for his own account?


A: Yes he would theoretically


Q: There would be no financial incentive for him to report it?


A: No.


Q: And you are totally reliant on SPMRs identifying these errors and reporting them to you?


A: Yes most of the time although we do get reports from the Crown Offices too.


Q: Ah the Crown Offices.  Yes of course they would report these gains caused by errors wouldn’t they?


A: Yes


Q: So are you sitting here and telling me that from the moment a Crown Office reports an error that results in gains to the entire network that they are unlikely to report and as you say are entitled to take the money – to the time it takes to fix, test and release the patch – maybe months in the process – and you don’t inform the network of these patches as you have said – that POL will sit back and allow this to happen?  

 
A: Well probably not – I am sure they would issue transaction corrections to recover these losses.


Q: Very well – so transaction corrections would be issued until such time as the bug was fixed in Horizon?


A: I would assume so.


Q: And of course you don’t tell users about these errors or the patches that fix them so you would in theory just be taking money from their account with no apparent reason?


A: Well the transaction correction would have to explain why


Q: So these transaction corrections would be retrospective would they not?


A: Yes of course we can’t claim back money until after the event can we?


Q: I assume that once you know about the problem you will go back even further to the point it started to occur and issue transaction corrections accordingly?


A: I presume so. I don’t know


Q: So let’s go back to the losses situation.  How far back do you go to check if the error has occurred before in the branch that reported it or even all the other branches in the network?


A: ?????????????

My Submission to Williams Inquiry

This is my submission to the Williams Inquiry. I had decided not to participate (as if I had anything of importance to say anyway) until such time as it had been made statutory and the remit widened. Well the remit may not yet be as wide as many want but I hope by leading Sir Wyn into areas that need investigating he himself will ensure what needs to be covered is.

The Inquiry shall:

A: Understand and acknowledge what went wrong in relation to Horizon, leading to the civil proceedings in Bates and others v Post Office Limited and the quashing of criminal convictions, by drawing from the judgments of Mr Justice Fraser in Bates and others, the judgments of the Court of Appeal (Criminal Division) in R v Hamilton and others, other judgments in which convictions have been quashed, affected postmasters’ experiences and any other relevant evidence in order to identify what key lessons must be learned for the future.

This important part of the inquiry’s remit is badly worded.   It talks of looking at the past in order to build a better future.  What needs to be done is to look at the present and understand the key and very basic principles that have never been addressed.

Discrepancies

When an error in the accounts of a Post Office branch occurs this is referred to as a discrepancy.   All the focus of the scandal has been on those discrepancies that caused Post Office Ltd to seek recovery of cash from subpostmasters.   What is so glaring in its omission from the investigation into the scandal is the fact that discrepancies work two ways.  They can either be in favour of POL or in favour of the SPMR.   The disputed term of the contracts is that the SPMR is responsible for all losses and gains in his branch however they have occurred.    Gains may be removed from the branch accounts in cash by the SPMR without any need whatsoever for the SPMR to ascertain the cause.   This leads to the inescapable conclusion that many computer system errors may have gone unnoticed because of the lack of incentive to investigate and report on gains.   It also provides an avenue for fraud within POL to go unnoticed if carried out in conjunction with SPMR associates but that is for others to investigate.   There are however known instances of Transaction Corrections being allocated to wrong offices and where these represent a gain to the SPMR then there is no incentive for the SPMR to report the mistake.

Discrepancies happen through error or criminal intent.  The default now for shortfalls is that computer error is to blame thanks to the decision of Fraser J. Then it would be by manual error.   Proving criminal intent is now impossible (and frankly it always was) because of the lack of supporting evidence to prove that either computer or manual error was to blame.   The ONLY feasible supporting evidence that could be used is that of CCTV and it is frankly beyond belief that POL have never insisted on this at all of their branches.  Imagine walking into a bank and seeing no CCTV cameras?  The reason they are not there in POL branches is precisely because of the now revealed method of investigating branch shortfalls and POLs flawed use of litigation to recover them.    The Fraser J. decisions are now nearly 2 years old and despite identifying this weakness to POL, not only from me but also others, they have refused to initiate CCTV coverage.

This suggests to me a lack of serious intent to ever bring charges against SPMRs again even in the face of almost certain evidence of fraud.   That in itself, if it became widely known, carries a major risk of incentive for fraudulent activity.

Dealing with discrepancies

By far the most common reason for a discrepancy to occur in branch accounts is by user error.   Whatever the reason though these, by in large, only become apparent at the end of the day when a value stock declaration is made i.e. when all stamps and currency are counted and compared against the record of Horizon.   Counting this at the end of the day, when you are physically tired and mentally exhausted is in itself a cause for many discrepancies.   Investigating the reason for the discrepancy is time consuming and only adds to the weariness of the SPMR.  As a result complacency sets in and decisions to investigate are based on the amount of the discrepancy and whether or not it is a gain or a loss.   POL’s historical ‘solution’ to this was to suggest an ‘overs and unders’ tin in the safe where gains removed in cash by the SPMR were placed to cover subsequent  losses.  This method remains in practice for many but in reality it removes the possibility of establishing the causes of minor handling errors or even smaller computer errors that over time may accumulate into serious losses.   The overs and unders tin has a serious impact on the ability to track timelines of faults and distinguish between what may be several different reasons.

Offering a solution to this particular problem is easy.  It is hard to imagine for instance that a High St Bank operates the same method and in acknowledging that, the ‘overs and unders’ tin becomes a good example of one part of POLs business model that is completely inadequate.

Accumulating Discrepancies

I believe all of the recently successful appellants reported rising discrepancies over lengthy time periods.   It is almost laughable if it wasn’t so serious to suggest that they were thieves in the first instance when the obvious analogy is a bank robber waiting in the bank he has just robbed for the police to show up.   All Post Offices are sold on eventually and at that stage the value stock is counted by what POL refer to as ‘Auditors’ who are in reality little more than bean counters.   It is an astonishing reflection of POL’s business model that an SPMR may only be ‘audited’ twice in the course of their association with POL which in some cases could be 10 years or more; once 6 months after taking office and as mentioned above when the business is eventually sold.  I have bought and sold 2 post offices and I can personally attest to that with the first being in my hands for 6 years.

In every financial institution I have worked in it has been a regulatory requirement that you are absent from your desk for a contiguous period of two weeks for obvious reasons whether you are suspected of fraud or not.   Throw in a mandatory maximum period between routine but random ‘bean counting’ (I hate to refer to these people as auditors) by independent appointees then the temptation to cover growing discrepancies is removed.  Again a significant weakness in the business model put down no doubt to the cost of doing so.  That cannot be a reason to exclude such checks because if the cost of doing so makes you unprofitable then you do not have a viable business.

In addition, under this heading as an addendum, there seems to be a belief among POL Staff and even many Subpostmasters that computer errors are easily spotted, will always be of significantly large amounts and, as I have mentioned previously, always in the favour of POL.   Tatford QC, prosecuting on behalf of POL in the Misra trial repeatedly presented these assumptions to the Jury and even the Judge seemed to be persuaded that computer errors would always be spotted by the operator because they were so obvious.  This is not the case.   Computer errors occur and the effects that materialise as a result are not limited by amount or allocation.  They could be for a penny or several thousand pounds, in favour of POL or in favour of the SPMR and they do not always occur only once.   

I once brought the attention of POL to a relatively minor computer error that generated penny losses and gains on a regular basis.  To their credit Fujitsu took this relatively seriously and worked with me to discover what was causing it.   I was never told how they thought they fixed it but it reappeared in discussion on social media years after I had left the business and if it remained in the system for so long then over time those pennies could have accumulated into a significant amount.   It is also interesting to note that this error was not highlighted in the GLO trial nor another computer error that I will discuss later in this document.   These are just two instances that show that POL and Fujitsu’s insistence that all known errors were exposed in the GLO is false.

Finding the cause of discrepancies

I have been too long out of the business to comment on current practice and available reporting tools but I can say what was offered to me in both legacy Horizon and HOL was totally inadequate.   Through social media I can observe the same problem occurring and the indecipherable transaction log being queried on Facebook pages as to what certain acronyms mean.   What I can suggest is that the Inquiry recommends an independent review of the adequacy of proposed data reporting tools in the new version of Horizon yet to be released.

Errors in Horizon

In subsequent submissions to the appeal court and in public statements, POL seem to be saying that the GLO resulted in the disclosure of all errors that there ever had been in Horizon (whichever version).   That is deceitful and suggests that even after the findings of the court POL are still trying to defend the reliability and robustness of the system then and now.   Levels of reliability and robustness are based on subjective comparisons and they can never be relied upon to defend the reputation of an organisation such as POL.   What POL need to rely on is the effectiveness of how they deal with system errors when they appear and probably just as importantly how they discount system errors as being the cause of problems.

The existence of the Known Errors Log was first highlighted during the Misra trial in 2010.   It is absolutely standard procedure in all computer systems to maintain such a record but it is the name that leads to a fairly obvious conclusion that all errors in that log were at one time unknown.   In the GLO the only errors that could be investigated by the plaintiffs were those recorded in that log and it is beyond reasonable doubt that at any given time there are unknown errors yet to be discovered.  That is why it is so crucial to have procedures in place, including CCTV evidence, to be able to remove the possibility of an unknown bug being the source of a discrepancy in the branch accounts.

Fixing Errors

This may not be under the right heading but it follows from the above.   The GLO, as in any trial, was time limited and there were many aspects of the litigation that were not argued before the court.   One of these was the procedures followed by Fujitsu and POL in correcting errors once they had been identified.  There is plenty of documentary evidence of attempts by POL to locate and rectify errors in other branches once the errors had been brought to their attention but I would highlight one particular example to show that in some cases no effort at all was made to do so.

The bug that was first identified at the Callender Square branch was down to a hardware problem that manifested itself as a series of multiple failures to write to a hard disk and these failures would be recorded in the NT Log file for the workstation on which they occurred.   On the first day of the Misra trial the Fujitsu expert Gareth Jenkins brought to court the NT log files of the workstations at Seema’s branch to show that the Callendar Square bug had not occurred there.  He didn’t bring a copy of a report showing that Fujitsu had checked the records of ALL workstations in the whole network to prove that the error had not occurred elsewhere before they found out about it.   The cost to Fujitsu to carry out such a task would have been horrendous but that cannot be an excuse for not attempting to do so.  As it turns out the Callendar Sq bug did occur at other branches as did the other famous bug known as the Dalmellington Bug.   In the latter case it seemed to me that POL only looked into the effect of that bug on other branches ONLY as a result of the GLO and I have proof that even after Fujitsu said they had fixed it POL were pursuing a SPMR for significant losses incurred as a result of it having occurred at the SPMRs branch.   In the former, POL were aware that it had occurred elsewhere only because of it being reported by SPMRs.

This inquiry must find out what procedures are now in place to deal with errors when they are found and how POL check to see if they have occurred at other branches. 

The Dalmellington bug on its own requires separate analysis.   I have some supplementary evidence that shows the role Fujitsu, ATOS and POL played in that was alarming to say the least and I would be happy to share that your specialist IT consultants.   It would be extremely useful to obtain additional disclosure on it in relation to the ‘fix’ that was applied because I believe it would shed light on many generic system problems not least of which is cost related.

Summary of Conclusions

  • CCTV must be installed in all Post Office Branches under the control of POL.  These not only provide evidence of causes of discrepancies but also act as a deterrent to fraud.
  • An independent investigation into the back office practices of POL is required to highlight the potential for fraud
  • The practice of using an ‘overs and unders’ tin must be discontinued.   A study into an alternative must be commissioned looking at best practices in similar organisations
  • Discrepancies that result in gains to the SPMR must be identified and investigated.  Changes to contracts recognising this must be considered
  • Mandatory random audits within a set time limit (perhaps 2 per year) are required
  • ALL discrepancies are worthy of investigation and a database of common causes must be established and available to all SPMRs
  • Current methods and procedures used by POL to investigate unaccountable discrepancies should be put to the test within the timescale of this review.   A suitable Post Office branch, with or without full CCTV coverage, should be selected and a discrepancy manually created.   A monitoring team should observe the actions of POL staff as they try to determine the cause of the error.   At the very least this would serve as a baseline for future changes to processes actioned by the findings of the Inquiry
  • The Inquiry needs to investigate and report on the steps taken by Fujitsu and POL to ensure that the effects of computer errors when they become known are checked against the whole network to ensure that they have not occurred previously and not been spotted
  • The Dalmellington bug requires further investigation including full disclosure and evidence sought from SPMRs affected by it.  I would provide further detail for this item if required.

B: Build upon the findings of Mr Justice Fraser and the judgments of the criminal courts specified in A above by obtaining all available relevant evidence from Post Office Ltd, Fujitsu, BEIS and UKGI to establish a clear account of 1) the implementation and failings of Horizon over its lifecycle and 2) Post Office Ltd’s use of information from Horizon when taking action against persons alleged to be responsible for shortfalls.

I would like to redefine this form of words to encompass the most recent and hopefully final, findings of the Appeal Court.   Up until the 23rd of April 2021, Post Office Ltd were taking action against persons alleged to be responsible for shortfalls, and up until that date were still relying on construed facts linked to Horizon.

POL were taking action by appealing to the court not to find for Category 2 abuse of process against the appellants.  This despite the revelation in November and only through a remarkable disclosure request of the Clarke Advices.  If they had not fought against the G2 that was recommended to the court by the CCRC in their Statement of Reasons, then the 39 appellants would have had their appeals held and settled in November thus prolonging the suffering of the successful appellants by 5 months.

The question that needs to be answered, under oath, is why they believed that their actions in bringing Malicious Prosecutions against the appellants were not an affront to the public conscience AFTER the Clarke Advices had been disclosed.   It is surely self evident that it was the financial consequences of losing the argument in court that drove them not to concede earlier.   The barrister Paul Marshall who represented 3 appellants can provide better background to this than I but a recent FOI request to POL shows that the Clarke Advices were discussed at board level in the interim period between their public disclosure and the decision hearing in April.  This surely implicates the current board of POL in a decision making process based not on the suffering of those that POL inflicted it on but on the prospect of limiting the financial impact of their historical failings.

This also highlights the unbelievable failings of the legal teams POL have appointed over the years to provide them with advice and it may be for their regulatory bodies to open a separate inquiry into the utter shambles of their performance.

I would also recommend that your inquiry looks at recent FOI requests placed through the WhatDoTheKnow website calling for publication of communications between Paula Vennells and BEIS around the time that the Clarke Advices were provided to POL.  This also includes responses to Ministerial questions on the same subject asked by Kevan Jones MP.   If ever there was evidence of a cover up to be found it will be there.

With regard to the Dalmellington bug, which I hope I will be asked to provide supplementary evidence for, you should ask Calum Greenhow of the NFSP for details of the SPMR who he was helping because he was being chased for repayment of a discrepancy clearly related to the Dalmellington bug some 6 months AFTER Fujitsu said they had fixed it.  Despite many requests both in private and publicly on social media he has refused to provide me with those details despite asking me for assistance in the first place which is how I came to know about it.

C: Assess whether Post Office Ltd has learned the lessons from the criticisms made by Mr Justice Fraser in his judgments following the ‘Common Issues’ and ‘Horizon Issues’ trials and those identified by affected postmasters and has delivered or made good progress on the organisational and cultural changes necessary to ensure a similar case does not happen in the future.

By the time the final report from this inquiry is published in 2022 there is an opportunity for POL to progress the changes they are currently making to address some of the issues raised by Mr Justice Fraser as well as the historical issues raised by others including myself.   However the changes they have made so far and the future changes to be made that I am aware of including replacement of the current Horizon system indicate that they are wilfully ignoring the most obvious failings in a business model that is not and never has been fit for purpose.

It is not just the criticisms of Justice Fraser in his two decisions that need to be taken into account, it is also his findings of fact and one of the most important is that the contract between SPMRs and POL is a relational one, implying good faith between the parties.    I would say that it is predominantly the effect of the long standing culture in POL of ‘them and us’ that makes POL blind to making the changes necessary in the contracts to reflect the relational aspect of them and not leave it as an implied condition that would take vast legal resources from individual SPMRs to challenge POL on.  However if it came to the crunch, a group of SPMRs could certainly get together and invoke yet another High Court challenge based on the fact the POL have not adapted the terms of their contracts and are ignoring the concept of good faith.

The best example of this has been going on for 10 years now ever since the inception of the Network Transformation project and it has not changed at all since the Common Issues trial, in fact it has got decidedly worse recently.   This is what POL describe as White Space opportunities, where opportunities to open a new Post Office outlet are offered in mainly urban areas regardless of whether those areas are already being served by Post Offices.   In many respects this policy is now anachronistic as it was inspired by the conditions of the EU State Aid regulator who laid down that POL must maintain a network of 11,500 outlets in order to be allowed to receive state aid from the Government.   If you look at the ‘numbers’ in the network since 2010 you will see a very ‘stable’ size of approx 11,500 which does not reflect what actually happened over the years.

POL have gone over and beyond the call of duty to protect this number at all costs.   Opening new Post Offices regardless of the financial impact on existing offices close by.   To be fair, in 2011, before the real impact of NT started to hit, POL had a Geographical Information System in place (I forget the name) to identify areas of population growth that required additional POs.  They probably still have something similar but the underlying rationale of ensuring the USO obligations are met has long replaced any demographical need.

More recently POL announced that the 10,000 or so Payzone outlets that they recently obtained, will be given hand held devices that will allow them to offer basic postage services as well as bill payments.   That is not a surprise.    It was always the intention of Paula Vennells to do this and from a business perspective it was demanded of her by RMG.  Interestingly I think, I know this because for many years I was being provided Executive Committee Minutes of the NFSP by a whistleblower and the infamous 25,000 ‘basic’ sites was kept secret from their members until Vennells expressed the desire publicly some years later.

So the problem is that SPMRs can invest and purchase a PO, based on a business plan that they must get approval from POL for showing expected income over a number of years and a few months later POL themselves can blow this expected income out of the water by approving a new White Space opening almost next door.   This is not just a possibility it is happening now and getting worse.

I doubt you will find any Franchise offering in the World that does not include in its contract some form of demographic protection providing at the very least compensation for encroachment.     In POL’s case there never has been any written obligation to provide this in the contracts but from the date of the Common Issues decision it is now an implied term (although not tested in court and not raised specifically by Fraser J.)   

SPMRs remain oblivious to this problem until such time as a White Space outlet opens next door.   They can complain all they want but POL ignore them.   This needs to change now.  Demographic Protection must be clearly written into all contracts and not left as an implied term.   In fact a closer look at the implications of the relational contract decision should be undertaken to ensure that all implied terms whether decided by Fraser J are written into the contract when they can be defined.

It says much of the past and current NFSP Organisation that they have, and continue to, fail the SPMRs they represent by not insisting on Demographic Protection.  I certainly brought it to George Thomson’s attention at the start of NT in 2010.

This is but one example of POL completely ignoring the findings of Justice Fraser and there are more but it serves to highlight what has caused this and what still needs to be done.    It should be a finding of this inquiry that at present there remains a distinct possibility that court action could raise its ugly head again precisely because POL have failed to act on the findings of Justice Fraser.

I would recommend setting up an independent panel that specifically excludes POL and NFSP to look at what changes need to be made to the current contracts based on the relational aspect and the implied conditions that that imposes.   (in a separate submission I will come back to that with respect to ‘gains and losses’)

POL Culture and Organisational Changes

From an independent viewpoint, from someone who has served as a subpostmaster and one who wants the network to flourish and survive it is so obvious how the ‘Them and Us’ relationship has developed over the years.   POL has always been and remains part of the establishment.  A bureaucracy driven by personal achievement rather than commercial incentive unchallenged by independent stakeholders seeking a return on their investment.   Directors appointed on a quango basis and staff promoted from within with little regard to ability and aptitude.   While I welcome the appointment of the 2 new SPMR directors to the board, all you need to do is look at the makeup of POL employees to see that few former SPMRs are in POL’s employ and none are in senior management positions (although it has been pointed out to me that several former NFSP Execs have been given roles and I really don’t need to comment on how that came about).

In my blog I have written many times about the unaccountability of POL over the years.   The best example is the £2 Billion given to them for the NT project which has never been audited.  I wrote to the NAO asking if they would look at it and they said it was not part of their remit despite having audited various RMG projects before POL separated from them.   I asked to see the report that POL had to lay before parliament prepared by external auditors and for all intent and purposes it could have been written on the back of a fag packet.   Over the years I have highlighted inconsistencies in their financial reports yet no one is interested.   I even went to the lengths of finding out how many copies of their glossy annual report were printed and distributed – 150 I recall for some 1000 or so parliamentarians whose duty it is is to monitor how public money is spent.   Unaccountability breeds an incestuous culture within any organisation where failure is rewarded and achievements are not required.

With such a culture still in place could POL really attract institutional investment?   I doubt they could survive if they were put in a position to rely on it.

Changing the culture I think now needs a dramatic intervention.   We have the top down changes in place and I believe Nick Read has put together a good team at executive management level but they have been in place too long without addressing this problem and the longer they are part of the culture the more they will adapt to it personally.    

Bottom up changes need to be made.   I believe one of the best ways to achieve this (and I have already suggested this to Nick Read) is that a career path for SPMRs within POL be established with the potential for each SPMR to be promoted through local and regional levels to senior management and beyond.   This needs to be backed up by a good HR policy to oversee promotion based on aptitude and ability and not an old boys club mentality.

D: Assess whether the commitments made by Post Office Ltd within the mediation settlement – including the historical shortfall scheme – have been properly delivered.

No comment

E: Assess whether the processes and information provided by Post Office Ltd to postmasters are sufficient:

i. to enable both parties to meet their contractual obligations

ii. to enable postmasters to run their businesses. This includes assessing whether Post Office Ltd’s related processes such as recording and resolving postmaster queries, dispute handling, suspension and termination are fit for purpose. In addition, determine whether the quality of the service offer for postmasters and their relationship with Post Office Ltd has materially improved since the conclusions reached by Mr Justice Fraser.

As I have been out of the business for some years I cannot comment on what is now in place.  However I can point out what is not.

There is no Service Level Agreement in place to cover SPMR losses following Horizon outages or equipment malfunction.   POL will have such agreements with their suppliers and the compensation that flows from them should roll down to branch level.   There must be an automated process for feedback to SPMRs on the status of service calls and an automatic escalation process.

POL have never provided warranty for the equipment and software they supply to the SPMRs.  It may also be a key point in examining the contract between POL and Fujitsu to identify the consequences of any Limitation of Liability clauses which have prevented POL pursuing Fujitsu on behalf of the claimants as well as themselves.

From an historic perspective, at the time I informed Paula Vennells of the label printing bug in the system, I managed to have confirmed during a call with Angela van den Bogerd that there was no system in place for call centre operators to categorise calls that would allow analysis of call reports to identify common features.    As I had personally written such a system for Texaco in the early nineties it was quite a shock to discover the lack of such a system in POL 20 years later.  I would like to see SPMRs have direct access to such a system to allow them to record errors and service calls themselves without going through a process of subjective Q&As from call centre operatives with varied ability and experience.  This would certainly ease pressure on the ‘Hell Line’ queues.  In addition by using drop down lists, interpretation of English problems would be assisted.

The Known Errors Log

At some stage after the GLO completed I was given personal assurances that the network would be provided with a regular update on known errors in the system, advice on how to handle them and information on when these would be fixed.   They seemed to start doing that then it fell away.   Of course that could be to do with the possibility that no new errors have been identified but I would like to see a monthly statement from POL informing the network of the error status even if there are none to report.

In addition access to summary reports from the call centre monitoring system should be available to all as a knowledge base of problems and how to resolve them.

Social Media

There is absolutely no doubt that the rise of Social Media during the years leading up to the GLO played a big part in assisting SPMRs to find out that they were not alone.   Observers of such channels such as myself often were able to identify similar bugs or errors in the system that went unchecked by POL.  The Label Bug was one such instance and I recall running a Poll on what is I think the largest PO Group on Facebook to find out if the error had been observed in other branches and got something like 70% positive feedback (I can’t remember the actual percentage)

It might be of interest, although of little significance now, to note how the NFSP tried to control dialogue on their own forum.   When legitimate concerns were raised over the Network Transformation project for instance, I happened to publish on that forum the proposed Transaction Rates for the new Mains Offices.   That information was not made available to SPMRs prior to asking them for approval for the NFSP to support NT and had it been it would have revealed that many of the new Mains offices would have suffered a loss in their income as a result.  Within an hour of my publishing that information the NFSP forum was closed down and I was later banned from using it.

F: Examine the historic and current governance and whistleblowing controls in place at Post Office Ltd, identify any relevant failings, and establish whether current controls are now sufficient to ensure that failing leading to the issues covered by this Inquiry do not happen again.

As it happens I recently received an email from POL whistleblowing department asking me to expand on a comment I had made to Nick Read.   The email was crudely written, rude and suggested arrogance.  With an attitude like that they are not going to entice many to step forward.

Additional Evidence

Limitations of your remit

From the outset of Alan Bate’s proposed litigation (prior to the GLO and including the mediation scheme in 2015) POL have sought, and succeeded to limit any investigation and disclosure to the Horizon computer system.   They do not fight so hard to achieve that without reasons and those reasons need to be identified.

The whole procedure surrounding the operation of ATMs has certainly led to accounting shortfalls in branches.  It is a ludicrously complicated system involving multiple third parties over the years and requires a thorough investigation.  

It is well documented that suspense accounts in POL back office systems contain amounts that can never be allocated and eventually are cleared to the P&L.   For instance in 2000/1 I have seen contemporaneous emails stating that there was approximately £6m sitting in branch suspense accounts following the introduction of Horizon and that POL were asking their regional managers to get SPMRs to repay at least half of this amount.  What may be of interest is that several years ago I looked into the audited accounts of several large county councils and saw that even they had large amounts recorded in suspense accounts which were explained mostly as being incorrect allocation of bill payments many of which would have been received by Horizon.

As recently as 2019, there were a spate of reports on Social Media with regard to errors with Cash and Stamp Deliveries to offices, something I raised at the time with Al Cameron who was acting CEO.  The sizes of some of the discrepancies were particularly alarming.  One instance I recall was a SPMR receiving £10k more than he was asked to sign for (i.e. a gain that by contract he was entitled to keep).   Errors emanating from Cash Centres have been spotted many times over the years including sealed bags of £1 coins that should have 20 but often one more or one less.   In one instance I received £100 short out of what should have been a total of £2000 in notes.   I have written about this in my blog but the long and the short of it was that I was asked to make up the difference by POL and in return POL were asked by me to come and collect their belongings.  For some strange reason they decided to cover the shortage themselves.

Counterfeit Note Handling

There are some great examples of the anachronistic methods and procedures still in use by POL today.   None more so than the handling of counterfeit notes not spotted by branch staff and returned to Cash Centres.   When this happens a Transaction correction is sent to the branch for the amount of the note and a letter informs the branch that if they want to query it then they must attend the Cash Centre to witness the CCTV footage that proves the note was counterfeit.   Given that a) Cash Centres are often hundreds of miles away (imagine Stornoway to Glasgow b) the Cash Centre often sends out counterfeit notes themselves, c) POL via the NFSP have recommended and subsidised note counting machines designed to identify counterfeits and d) this is the year of Zoom calls, it is an absurd practice.

The Labels Error

I have suggested that I provide this evidence separately to your IT consultants working on the inquiry.

Documentary Evidence

I have a multitude of email correspondence with POL, NAO, Police and politicians over the years some of which may be of interest.  I am happy to respond to any request for disclosure of these.

Abuse of Process Category 2 and why it was so important.

Friday’s announcement by the Post Office that they would contact 540 additional former subpostmasters and staff whom POL successfully prosecuted over the years and who may now see their convictions overturned is down to the fact that the Appeal Court decided on the 23rd of April that the convictions before them that day were an affront to the public conscience.  That means they should never have been prosecuted in the first place.

The consequences of that decision not only provide hope for these additional convicted people but also ensures that Malicious Prosecution Claims against POL cannot be challenged by them in court.   This adds millions to the eventual claims but it requires an explanation why that is so.

The application of the law is best left to the legal profession but they cannot proceed if they are not instructed to do so by their clients.   The clients rely on the advice of their legal teams to help them to decide whether or not to proceed and it is up to the legal teams to explain the consequences of their ultimate decision.   

Last year the CCRC decided to refer the convictions of 49 former subpostmasters back to the court of appeal which started a process of legal action leading to the decision handed down by the court a few weeks ago.   Each appellant was free to choose their own legal representative and three ladies, Seema Misra, Janet Skinner and Tracy Felstead chose to appoint Nick Gould from Aria Grace as their solicitor who in turn instructed barristers Flora Page and Paul Marshall to act for them.   It is worthy to point out that all three, Nick, Flora and Paul offered to assist the 3 ladies pro bono (free of charge) such was their concern about the obvious miscarriage of justice before them.

Once the CCRC had submitted their referral document to the CoA, POL stepped forward and provided their own rebuttal in which they accepted ground 1 abuse of process in all but 3 cases but they also objected to ground 2 in 42 of them.   By not challenging the CCRC referrals on ground 1 it was almost certain that those appellants would have their convictions overturned by the Appeal Court and that without any challenge to the lack of ground 2 those appellants would have their convictions overturned at the hearing of the court in November last year.

Therefore the most obvious consequence of challenging G2 was that there would be a significant delay in the Appeal Court deciding on the safety of the appellants convictions and this turned out to be the case with the decision only handed down some 4 months later.   There was also of course the risk that the court would not find for G2 and therefore the delay would have been pointless.    As Alan Bates of the JFSA pointed out to me quite rightly, I am not a claimant, I have no concept of the pain and suffering those affected by this scandal have gone through, and therefore can never be in a position to offer an opinion on what the appellants must do.    That put me in a difficult position last October when I was asked to sit in on a zoom call with Paul and Flora and the ladies to hear the discussion on whether or not to challenge Ground 2.

I apologise for telling this part of the story from my perspective, what the ladies thought at the time is far more important, but it is a firsthand account of what transpired that day.   I was invited to attend only because I had been providing support to Seema and her husband Davinder, trying hard not to make it sound like advice or an opinion.   I had some knowledge of the background to abuse of process and the two categories but I was certainly not fully aware of the consequences of having one and not both awarded.

During the meeting Paul and Flora explained everything very clearly.   The merits of fighting G2 and being successful and the consequences of the ladies losing their challenge.   I will lay these out below but the memory of my thoughts once the meeting had ended is(are?) very clear – I was confused as to whether or not Flora and Paul wanted Seema to fight the G2 case or not.   That indicates to me that they provided very unbiased advice and any suggestion that they encouraged the ladies to challenge G2 is disgraceful.

After the meeting, Seema, Davinder and I discussed the options and I must admit it was difficult not to suggest that they fought for G2 even though it meant a delay to the convictions being overturned for all not just Seema.   To wait for so long to have justice served and then being asked to wait for at least another 3 months reminded me of what Smuts Ngonyama once told me in South Africa and I wrote about in a blog post here some time ago.    How could I suggest that they should wait a little longer?  

It is testament to the hatred the ladies feel towards POL that all three independently decided to instruct Paul and Flora to proceed with challenging G2.   What happened next was not a consequence any of us had predicted, with so much bitterness among the other claimants directed at the 3 ladies and even I was contacted to try and persuade them to change their minds (which I did not attempt).   I truly hope that that bitterness can now be set aside and that the wonderful consequences of winning G2 for the original appellants as well as the 540 on Friday can be appreciated.

The difference between G1 and G2

I trust Flora will not mind if I publish an extract from the email she sent me after the meeting and I should point out that this was for my information only and I asked for it because I had not formed an opinion during the meeting and was still considering what had been said :

Things which are not pros or cons because they are not affected by category 2 abuse

– the convictions, which should be overturned anyway because of category 1 abuse

– the ability to claim against Fujitsu

– costs, because appellants will not face costs in the Court of Appeal

Pros which will come if we win on category 2 abuse

– There will be a public judgment saying not only that Seema’s conviction is overturned, but that she never should have been prosecuted, and that the Post Office’s behaviour was disgraceful 

 – This will strengthen her hand going into negotiations on a malicious prosecution claim

– The post office will not get to say that their conduct was merely mistaken or unfortunate (which they otherwise will do, both publicly and in the context of the inquiry and future malicious prosecution claims)

– They will also not get to defend a malicious prosecution claim on the basis that Seema failed to argue that the prosecution was improper when she had the chance In the Court of Appeal

– The hundreds of others who have been wrongly convicted will likely have their cases sped up, and will have a lot to thank her for!

Con which will come if we lose the category 2 abuse argument

– this will strengthen the Post Office’s hand in a malicious prosecution negotiation

Con which will happen anyway

– there will be delay while the Court of Appeal hears and decides argument. It isn’t clear how long the delay may be, but we should be given a better idea at the hearing in November. 

The pros for fighting for G2 put forward by Flora have now all come to pass.   Most significantly on Friday as clearly the process of clearing the names of hundreds of others has well and truly sped up.

But there is more to this.   We have to remember that POL defended against G2 being awarded vigorously and that requires a great deal of discussion and perhaps investigation as to why they did so.

It is worthwhile remembering that Seema, Tracy and Janet decided to proceed with the challenge to G2 based on the information provided to them, but it was the efforts and skill of Paul and Flora that produced the result.

The same goes for POL.  It was POL who made the decision to proceed with fighting G2 and it was their legal team that failed.   Why did POL decide to fight in the face of what was known to both parties at the time?   More importantly why did POL decide to fight in the face of what only they knew at the time?   It was only after the decision was made to challenge G2 that Paul and Flora, through discovery, found the now infamous Clarke Advices which nearly destroyed their careers as a result.   POL knew about these documents and had made a conscious and deliberate decision not to disclose the contents to Seema many years ago when they should have as suggested by their own council.   That is a matter for the courts and the legal professions’ regulatory bodies to investigate in due course but the fact of the matter is that POL knew if the Clarke Advices were made public then there would be no possible chance that the Appeal Court would not find for G2.

As far back as January 2019, before the Horizon trial started (but after the common issues trial had been decided in favour mostly of the JFSA), POL were preparing for the worst outcome and setting aside millions of pounds for an eventual settlement.   They entered into settlement negotiations with the JFSA before the decision of the Horizon trial was handed down and now the settlement agreement shows us that even then in late 2019 they were laying the groundwork to try and prevent massive claims for Malicious Prosecution.  Remembering of course that at that time the CCRC had not yet referred the cases back to the Appeal Court.

Clause 7.3.5 from that agreement now starts to make sense:

7.3.5 In the event the conviction is overturned ….. the Defendant will provide that convicted claimant with an apology which reflects the basis on which the conviction was overturned.

Compare that to the prescience of Flora Page when she stated:

The post office will not get to say that their conduct was merely mistaken or unfortunate (which they otherwise will do, both publicly and in the context of the inquiry and future malicious prosecution claims)

POL pretty much knew then that the convictions would be returned to the Appeal Court and that they knew they could not challenge most of them.   However they could challenge Malicious Prosecution claims.    This scandal is a set of extremely unusual legal issues that have never come before a court before but Malicious Prosecution has and these are extremely difficult claims to win.   A long time ago I researched this topic and at one point got in touch with a leading firm of solicitors just to find out what they thought.   They actually said that in the hypothetical circumstances I put forward they wouldn’t even consider taking on the claim because a) the ‘person’ had been found guilty by a jury and b) the prosecution presented a case based on what they believed to be true at the time.

Ground 2 removes these 2 burdens because it determines that the appellant should not have been prosecuted in the first place (I am straying into making legal opinion here and if I have got it wrong sorry and I stand to be corrected).   There is plenty of evidence, since the settlement agreement and even during the trials themselves, that POL were laying the groundwork to be able to show at a later stage (Malicious Prosecution claims) that they believed at the time that Horizon was robust and reliable.   The fact is that many people working in the network including POL employees and Subpostmasters alike, were persuaded that this was the case but only through disinformation spread by those in the know who knew that Horizon was far, very far, from being classed as robust.

So it seems that POL were never fighting to win, they were fighting to save money.  They weren’t/aren’t concerned about justice and proper compensation for the unfortunate hundreds whose lives they have ruined only about money and protecting the reputations and freedom of those complicit in the scandal.  

There are many questions to be asked and answered but a key one is “who are POL?”.  We use the collective to describe an organisation full of employees who knew for certain that they were in the wrong about Horizon from day one and the collective also describes the myriad of legal representatives they have instructed over the years who have followed their instructions apparently motivated by the bottomless pit of money POL were prepared to spend rather than moral and ethical responsibility to those who suffered most. Not to forget the Civil Servants who have been behind this all and approving it each step of the way.

What is worrying is that that collective, despite changes in the top management and removal of those that will be offered up as scapegoats in due course, is still operating as they have always done, motivated by money to defend the indefensible.

Just why did POL defend G2??

Tracy, Janet, Seema, Paul, Flora and Nick Gould all deserve enormous amounts of credit for seeing this through.   The stresses and strains over the last few months for all concerned have been incredible and the further vindication of their decision to challenge ground 2 on Friday is I hope some small reward for all they have done .  It would be particularly pleasant for them to receive some acknowledgement from the legal teams that were totally against the route they chose to take and now seem to be taking the spotlight for doing so themselves.

Why we need a full Judicial Inquiry

First of all I am confident that I will miss out some of the many valid reasons why we need a full judicial inquiry into the Post Office Scandal and I would appreciate these omissions being pointed out so they can be added to this list.  

Secondly, and this is purely my own opinion based on recent events and statements from officials, I think that the Government is intent on privatising the company.    I think that this will be done by way of an IPO, whether in private or public, and that steps to ensure this happen must be in place by 31st March next year.   I believe it will incorporate a form of mutualisation that will offer to subpostmasters an equity stake in the business.   The majority of shares though will be sold to institutional investors that would provide a) a substantial equity investment into the company and b) provide for independent scrutiny at board level by these same institutions.   I may of course be completely wrong but it seems to me if they were to do this then it would be a very good idea for the two reasons given above.

If I am right in my assumption then it would lend credence to the rationale for a review rather than an inquiry from the government especially when they are so keen to justify the review by reminding constantly that it is going to come to its conclusion this summer.   I doubt an IPO may be possible should a full judicial inquiry still be on the cards by next March.   Trouble is it probably will be as calls for it are not going away, only growing stronger.   Perhaps Boris is considering some sort of acceptable alternative?

A full judicial inquiry

In broad terms the main differences to a full judicial inquiry as opposed to the current review being undertaken by Sir Wyn Williams are:

  • An unlimited remit to discover the truth
  • Who knew what and when
  • Power to subpoena witnesses and cross examine them under oath
  • Full powers of disclosure including search and seize
  • Allocation of blame and perhaps instigation of criminal proceedings against suspects
  • Disassociation with Government and Civil Service

In addition a full judicial inquiry will see those parties such as Second Sight and JFSA who have refused to co-operate with Sir Wyn’s review become involved.

Unlimited Remit

Crucially, a Judicial Inquiry (JI),  will not be limited to looking at the Horizon Computer system.   There are many satellite systems involved and not all are computerised.  Probably most relevant is the paper based system used by POL to investigate discrepancies that result in transaction corrections which is run out of their financial services centre (FSC) in Chesterfield.    There are many reasons why the procedures in place at the FSC should be scrutinised not least of which is the steadfast refusal of POL over the years to allow access to investigators (often those appointed by defendants).    POL fought tooth and nail to limit the scope of the Group Litigation (GLO) to the Horizon system and we need to find out why.

We also know that in general terms nearly all of the discrepancies in branch accounts are classed as Payment and Receipt Mismatches (P&R) and there is clear evidence that these ‘mistakes’ are still happening regularly.  Hats off though to Nick Read who seems to be working on that particular problem as it relates to SPMR accounts but P&R mistakes also occur between POL and Third Parties and how these have been resolved over the years needs to be looked at too.

The GLO

Given the many millions of public money spent on defending the GLO, the inquiry needs to look at the strategy that POL and the Government adopted.   There are so any sub issues under this one heading.  The strange meeting between Tim Parker and Second Sight, the recusal application, the settlement offer, the non appearance of Gareth Jenkins of Fujitsu and of course most recently the publication of the Clarke Reviews.    The many legal firms that represented POL over the years cannot be allowed to hide behind client privelage and some should be pretty worried should a judicial review come about.

Fujitsu

I think it is self evident that Fujitsu played a major role in all of this and of course that needs to be investigated further but what I would particularly like to find out is why the Government and POL have not pursued them ‘yet’.  I appreciate it may be too early for this and that they fully intend to do so in the future but there was an opportunity in the GLO for POL to have them included as party to the action and in doing so make them responsible for some of the compensation and legal costs.

Who knew what and when

Undoubtedly the Civil Service is implicated in this scandal.   It is they who are in charge of the review and it is they who are leading the way in refusing a full judicial inquiry.   If Boris wants to set an example to them that they are not above the law then a full inquiry is what is needed.

Who in POL knew what was going on?  I think even Sir Wyn’s review will comment on that but what I want to see is a definitive statement by an independent body that states not just who knew when but more clearly who should have known and when.   Incompetence cannot be an excuse.

And again a closer examination of the morals and ethics of the legal teams advising POL needs to be scrutinised against their obligations to the Bar Standards Board.

Witnesses

The only witnesses now worth hearing are those who can be demanded to testify under oath.   Self incriminating evidence may be barred but arse saving evidence will, I am sure, become prevalent during such an inquiry.   It is remarkable also that so many people are now coming out of the woodwork to say that they knew Horizon was a ‘bag of shit’.   Wonder what took them so long?

Disclosure

Paul Marshall, the barrister looking after Seema, Janet and Tracy, alongside Nick Gould the solicitor from Aria Grace, should get the recognition they deserve for not just extracting the Clarke Advice at the very last moment in the legal process leading to the Appeal Court but for highlighting that the many of the legal teams advising POL are still untrustworthy and certain individuals can be extremely nasty and vindictive when their legal expertise is exposed as shoddy in the courts.

The exceptional performance by Freeths and Patrick Green in the GLO must be acknowledged and their in depth knowledge of the scandal must be utilised notwithstanding any NDA or settlement terms.

There is so much more to be disclosed.  I know that for a fact!

Allocation of Blame

The missing piece of the jigsaw now being highlighted in the media.   No one it seems is going to face punishment for their involvement in the scandal as things stand.   I have long called for the Police to recognise that senior management of POL are undoubtedly public officers and for them, where necessary to be investigated and prosecuted under the common law of misconduct in public office (and that needs to be done quite quickly as that law is about to be regularised and changed I believe)

Civil servants are of course public officers as well and it would be impossible to believe that individuals in Whitehall will not be investigated as well.

Fujitsu employees are being investigated already and the legal entity of Fujitsu should be investigated for corporate misfeasance.

Who should lead the Inquiry

There is only one man for the job.  To save time and probably millions of pounds, Sir Peter Fraser must be appointed.  Nuff Said!

I tried to tell her …. over 6 years ago

To: paula.vennells@postoffice.co.uk
Subject: Second Sight – Horizon Errors – Media Coverage
Date: Wed, 10 Dec 2014 00:04:28 +0000

Dear Paula

Yet again today Mark Davies, speaking on behalf of POL, relied on the defence that there are no systemic errors in Horizon and this is proved because we deal with so many customers per day in so many branches.   I think Mark and yourself might like to review the periodic Message to Branches that are sent out via Horizon.   There are a catalogue of systemic errors that arise from time to time and are fixed.   Some involving automatic transaction corrections.

Paula, as I keep saying, you are surrounded by people in your office that tell you all is well.  You have no personal knowledge of operating Horizon nor probably any in depth technical knowledge.  What if the people that are telling you all is well have the same attributes?

So forget systemic errors for the moment and consider ‘intermittent’ errors which by and large are caused by communication problems.

I know of more than one but one in particular:

It exists.   

It occurs at different times in different branches.

It is noticed.

They are reported to NBSC (I would really like to see the number of times this has been reported to NBSC)

It causes a financial loss to the SPMR.

They are not fixed BUT the wise SPMR knows how to get his money back so you don’t hear many complaints.   You would from the Audit team if they caught someone doing it though.

So why haven’t these intermittent errors been fixed.   To put it simply – because they are intermittent.  There is no known sequence of events that can cause this error to re-occur in any particular branch.  How can you fix something if you don’t know what caused it in the first place?   You have to throw the whole thing out and start all over – the only way.

On our ‘chat’ forums, there are documented reports over the years of the same error repeating itself randomly in a wide number of branches, including at Duns and my previous PO.  

I am pretty sure I can arrange for the error to be replicated though by asking a large sample of offices to repeat the process until the error occurs – and I am also sure that I can obtain transaction logs and associated CCTV coverage of the error manifesting itself.

I can show you it happening.  I can explain the financial consequences but neither I nor your best technical team will be closer to fixing the underlying problem.  You cannot make it go away.

I would also be happy to stand up in court and declare that Horizon has intermittent faults, probably caused through communication errors, provide clear and undeniable evidence as well as bring along a fair number of your most trusted SPMRs to bear witness that it has happened to them too.

I hope you get my point – I can show one error occurring that you can’t fix nor can you explain – if you could explain it then you could probably fix it – so how many other intermittent errors like this are in the system that cause unexplainable financial losses to SPMRs?

I am trying to help you but the hole you are digging for yourself is getting deeper by the day.  Please stop trying to defend the indefensible.   

Cheers, Tim

Paula Vennells <paula.vennells@postoffice.co.uk>Wed 10/12/2014 13:47To:

  •  You

Cc:

  •  Gavin Lambert;
  •  Angela Van-Den-Bogerd;
  •  Rod Ismay;
  •  Lesley J Sewell;
  •  Kevin Gilliland

Tim, hi.

If there is one thing you should know about me is that I do listen.

But please be careful that you don’t over generalise or conflate different points.

We are not defending the indefensible – all systems have issues from time to time.  And they need to be (and are) fixed when they occur.  We have records of when that has happened, of alerting users and then putting in place an appropriate fix.  We operate in a dynamic market and Horizon, like all epos systems is constantly updated.

To your challenges.  I listen and I’m therefore concerned at what you say. I’m copying three people who I expect to get to the bottom of it. And who I trust to do so: Gavin Lambert who works directly for me, Angela van den Bogerd, and Rod Ismay. I am also copying Lesley Sewell (CIO) and Kevin Gilliland. I want Lesley and Kevin to be in the loop – they are the directors responsible for ensuring our branches have the appropriate service.

Angela will be in touch with you directly.

In the meantime, I wish you a happy Christmas when it comes.

Paula

Ps. If the colleague you mentioned needs support, please let Kevin know.

What Sir Wyn should do now …

Dear Sir Wyn

I trust that you have now had a chance for a first read through of the historic Appeal Court decision published this morning.

To the end Post Office Ltd, through the machinations of its legal team, prolonged the suffering of the innocent without cause.   In October last year I was involved in the decision making process of whether or not to challenge ground 2 Abuse of Process and today I feel vindicated that I advised Seema Misra to proceed with it.   We knew that there could be a delay to the appeal court process as a result, and consequently I wrote to Nick Read and suggested that he would be wise to drop the arguments against G2 in order to speed up the quashing of the convictions.

His legal team can only have advised him not to and a question to be asked is why did they persevere?   It was only then that the Clarke Advice’s made the light of day and the impact of those on the Appeal Court’s decision cannot be questioned, nor on the image of POL as a trustworthy organisation.

That leads to the bigger questions surrounding the legal advice given to POL over the years by the various firms appointed by them.   The only winners to date in this whole saga are the lawyers involved and it is absurd not to suggest that they looked upon POL as a money tree which it undoubtedly was.  It is a key factor in understanding what went wrong and more importantly, from your inquiry’s point of view, how to ensure that it does not happen again.

A legal strategy of out funding the claimants is not unprecedented but when that funding is secured from public funds and those that benefit from that funding are those providing the advice to the company and the government, it is totally unacceptable.

Surely there must now be sufficient doubt in your mind as to the purpose of the limited remit of your inquiry, the limitations placed on it by virtue of being unable to hear evidence under oath and the intentions and involvement of those who provided it to you.

You have it in your power to resign now and issue a statement encouraging the Government to do the right thing and appoint a full Judicial Inquiry and I urge you to do so.  I should add that I fully understand and agree that you had nothing to do with the remit and that you are not involved in any way with the scandal.

Please Sir Wyn, do the right thing and stand up and be counted alongside the many of us who don’t just believe, but know, that the full scale of this scandal is yet to unfold.  Your actions now can expedite the inevitable full judicial inquiry that all of us deserve.

With the greatest respect,

Tim McCormack

NB I have no concerns if you wish to publish this email as part of your inquiry submissions.  I may also publish it on my blog.

POL Annual Accounts 19/20 (part 2)

So let’s look at costs over the years in POL Land. 

As previously mentioned if you take costs away from turnover you get profit.  Gross profit if you only include direct costs of sale and nett profit if you include everything.   Costs can be subdivided; cost of sales, fixed costs, variable costs and investment costs among others.  One binary way to look at total costs though is to divide the total cost into non-discretionary and discretionary items.

Non-discretionary costs are mainly of the fixed cost type such as rates and power:  even if you sold nothing one day those costs would still be payable, you have no choice in the matter.   The item I have particular interest in though is discretionary costs.  A good example is capital expenditure and in the case of an oil company it would be their choice in times of low oil prices to limit expenditure on exploration.  However there comes a time when even those costs (of exploration) become almost non-discretionary as the company needs to invest in the future and discover more oil resources.  The same applies to POL.  Yes they need to invest in the future but in times of need they too have the option to lower if not cease investment funding.  Which leads me to a most interesting document that was passed my way recently.

But first a summary of the effect on the accounts of investing funds into ‘assets’ of the business.  If you pay out £100m into asset investments in any one year the total is not reflected in the income statement i.e. a £100m cost against turnover.   The cost of the asset is depreciated over several years and only that portion of the amortisation of the investment for that year is included in the cost.  So if the £100m is amortised over 5 years in a straight line then only £20m will be charged as a cost in any one year of the following 5.  That is how it is handled now in POL but before Al took over things were slightly different and all the assets of POL had basically been amortised down to zero and depreciation policy for items such as software was to write off that amount in the year that the cost was incurred.    It is why we use the EBITDA value to truly reflect actual costs during the year and hence profit.   A few years ago the assets were ‘revalued’ and POL reported a one off paper profit of £230+ million.  That £230m or so is now being depreciated through the books.

As you know, POL are recipients of funding from the Government in several ways and up until recently that annual funding was delivered in a lump sum on the first day of the financial year.  Now that has changed and the Government through UKGI provide it on a quarterly basis and keep an eye on how it is being spent in quarterly meetings with POL.   UKGI don’t want to reveal what exactly is in the quarterly request for funding as is seen by heavily redacted documents requested on WhatDoTheyKnow (https://www.whatdotheyknow.com/request/quarterly_requests_from_post_off#incoming-1736889) but I have been very kindly provided with unredacted versions by my source within POL and they shed light – much light! – on the investment spending by POL and the discretionary portion of that.

For example in January 2019, with only 3 months to go before the start of the period that the current annual accounts are reporting on and more to the point at the start of the calendar year in which they incurred the majority of the costs of the Horizon trial and KNEW that they were likely to lose, the request for funding document contains some remarkable information.

First that they were planning to set aside £49m for the costs of the GLO litigation.  No one considered at that time clearly that they could have settled in January for that amount and everybody bar the legal teams would have been far better off.   I may be wrong and forgive me for not checking but I don’t recall in the 18/19 POL accounts a contingency amount of £49m being mentioned.

They are asking POL for £29m being the remainder of the £168m funding they were due from UKGI and state clearly that none of it will be used to fund the litigation.     The document then lists where the £90m in total including the £29m UKGI funding will be spent and there are numerous projects in progress at that time but the most expensive seems to be “Simplifying the Retailer Proposition” at £49m.   There is no detail on any of the projects  to be able to say for sure what if any could be classed as discretionary although they do mention that in the following year spend on projects that are expected to benefit the company financially total £159m

The next bit needs a direct quote from the document:

14. It is also important to remember that we remain in control of our spend. Of the £327m forecast to be 
spent from now to March 2021, only £51m is committed contractually. We can turn the taps off as 
required
.

So there you have the discretionary element of the investment cost of running POL.  “Turning off the taps” as suggested would result in a £276m windfall to the bottom line (profit) spread over 2 and a but years through to 31/3/21 (next week as it happens)

We will have to wait and see in the annual accounts for 20/21 if any ‘taps’ were in fact turned off but the headroom they seem to have in discretionary investment spend is extraordinary.   Taking into account the number of doomed and failed projects they have invested in, if one were to get closer into the books and find out exactly what margins POL are receiving on the products that SPMRs sell on their behalf and compare them to what SPMRs actually receive I suggest even Nick Read would probably be shocked.

I once put together a business proposal to the Scottish Government and actually presented it to the Minister and followed it up with discussion with senior civil servants about the possibility of devolving postal services to Scotland and setting up a Scottish Post Office network which by my rather naive thumb sucking assumptions would be self funding.   I thought I might have been over optimistic but now I see this document I realise that my calculations were far too conservative.   If Marion or anybody else from the SNP are reading this, my suggestion is to revisit my original proposal.   Who knows (not that I am saying I am in favour one way or another and I am certainly apolitical in my views) but  in a couple of months Scotland could vote for independence and a Scottish Postal Network could well be on the cards.

That’s enough for part 2.  I still need to look at the Equity Injection and Director’s Clawback Provision.