Monday, 6 July 2020

The Post Office cover up, part 2: They wanted it all to go away

For part 1 of this article, click here.

I think it is essential to know the identities of the people who took one look at the can of worms Second Sight had opened and decided the best course of action was to spend millions trying to bury it.
Chris Aujard
In between Second Sight publishing their interim report in July 2013 and a Post Office board meeting in September 2013 there appears to have been a realisation that the scale of the scandal Second Sight were methodically uncovering had the potential (at the very least) to halt the continuing trajectory of the Post Office and put an end to its aims of becoming profitable.

Up to September 2013 the Post Office General Counsel (also known as the GC - the top company in-house lawyer) was Susan Crichton, who had helped set up August 2013's Complaint and Mediation Scheme.

In September 2013, there was a Post Office board meeting. Ms Crichton left the organisation shortly after that meeting. Ms Crichton has not responded to my request for an interview over what happened.

In October 2013 a new interim general counsel appeared. On his LinkedIn page Chris Aujard describes himself as a "seasoned and commercially focussed GC... comfortable... managing major disputes and litigation."
But what was he at the Post Office to do? Perhaps we can get some kind of idea from a revealing article in General Counsel magazine in the Autumn of 2015. The article does not mention the Post Office, but it was published shortly after Mr Aujard left the organisation.
"The bigger the corporation, the more likely the crisis" hoots the article's anonymous author "what they don’t see is the general counsel busy behind the scenes with the mop and bucket."
Oh, do go on:
"There’s no hard and fast rule as to who takes the lead in a crisis, of course. The clean-up team will depend on the nature of the emergency and company protocols, not to mention the judgement of the CEO. But usually, says veteran general counsel Chris Aujard, ‘at some point, no matter where the crisis enters the organisation, the GC gets involved.’"
In the magazine piece, Aujard comes on strong as the go-to man, especially when the brains of the executives around him are falling apart like wet cake: 
"‘They tend to go down the route of denial" he says, "“This can’t be happening, you’ve got it wrong, everyone’s got it wrong”. They might go through the process of grudging acceptance: “Well, ok, maybe there is something in it.”"
So where next? Aujard again: 
"There’s a skill that general counsel typically have, which is to turn around to the C-suite and say, “look, this is not something that you should push to one side and deal with tomorrow. This is today’s issue and it’s pressingly urgent – and by the way, it could cost some of you your jobs.”
Ah yes. Self-preservation. Always a way to motivate people. But what about the public-facing response to a crisis? How does Aujard recommend addressing that?
"‘You can’t send stuff out saying, “it’s all our fault, terribly sorry, we’ll pay you any compensation you ask for!”’
Of course not. 

Given the period Aujard was at the Post Office almost exactly matches the birth and sad, quiet death of the mediation scheme (Autumn 2013 - Spring 2015), and given what we know about his experience, it seems reasonable to assume one of his jobs was making the growing Horizon scandal go away. 

This he temporarily did, infuriating MPs, prolonging the agony for people whose lives had been ruined and setting things up for a future High Court case which was to shred the Post Office's reputation and cost it more than £100m.

Mr Aujard might be pleased with what he achieved (I've asked him for a comment and have so far received nothing), and it may be that he did lead the way with his mop and bucket, but in terms of executive responsibility he was very much a monkey to the Post Office board's organ-grinder.

In her evidence to the BEIS Select Committee, former Post Office CEO Paula Vennells reveals that:
"Post Office decisions in relation to the [Complaint and Mediation] Scheme were discussed in the first instance by an ad hoc Board sub-committee, consisting of the then Chair (Alice Perkins), myself, and two non-executive directors. Meetings were attended by, among others, the General Counsel and the company secretary."

Alice Perkins, CB
We have already met Mr Aujard, and we know Ms Vennells of old. What of the other characters mentioned in the above statement?

Alice Perkins seems to have ghosted around the upper echelons of the civil service for most of her career. A former underling from the Cabinet Office who got in touch recently described her as "patronising... wooden and inarticulate", complaining she "couldn't connect with people at all... we used to see her about twice a year and she would give speeches that made you numb with boredom."

Ms Perkins was the first to become aware of the parliamentary interest in the Horizon scandal when James Arbuthnot MP buttonholed her at a function in 2011. 

He said that as the new Chair of the Post Office, she really ought to do something. 

To her credit, Ms Perkins set in chain the conversations which let to Second Sight's 2012 investigation, and by all accounts she was very keen to get to the truth. At first. Then she sort of drifted away from things, and left the Post Office in December 2015. 

When I contacted her, she replied: "Thank you for the suggestion you might interview me. I won't be taking up your offer." 

Not at all patronising.
Alwen Lyons, OBE
Alwen Lyons OBE was the company secretary between 2012 and 2018 and a Post Office lifer, starting as a graduate trainee in 1984. Ms Lyons has proved impossible to track down, though several people have left me in no doubt as to where her loyalties lay. I am told by a former Post Office senior insider, that by the summer of 2013, she was highly attuned to the concern at exec level about how much the complaint and mediation scheme could end up costing the Post Office.

Vennells, Aujard, Perkins and Lyons know everything. But it's not just them.


Short arms


The government has always distanced itself from the Post Office's handling of the Horizon scandal, repeating the tedious mantra that although the Post Office is publicly-owned, it: 
"operates as an independent, commercial business within the strategic parameters set by government.”
But that's not all the story. The mask first slipped on 23 May 2019 at the High Court when the Post Office tried to delay paying legal costs to the claimants after losing the first trial. The Post Office QC gave as a reason
"It is a question of arranging the funds...  and talking to our shareholder about it."
This contrast baldly with a government statement statement issued in January this year:
"government did not play a day-to-day role in the litigation or on the contractual and operational matters that were at the heart of it."
Talking to the government about the timing of a litigation payment is precisely a day-to-day operational matter.

When I presented this "arm's length, independent" plop to the senior Post Office insider who helped inform my work on this year's File on 4, Private Eye and Radio 4 series, they nearly spat out their drink with laughter. 

The insider told me that whilst they were there, Post Office staff with varying levels of seniority were running in and out of BIS the whole time. They also told me that culturally, within the Post Office, senior management priorities revolved around what the government wanted. What the government wanted, I was told, to the exclusion of almost anything else, was for the Post Office to become profitable.

The shareholder's eyes and ears

Another thing which gives lie to the government's position is that there has been a government representative sitting on the board of the Post Office as a non-executive director since it split from Royal Mail eight years ago. 

First was Susannah Storey (April 2012 to March 2014), second was Richard Callard (March 2014 to March 2018). The third and current incumbent is Tom Cooper. I met Mr Cooper last year. He told me he was a reader of this blog. Hello Tom.
Susannah Storey and Richard Callard
Although the Business Department (formerly BIS, now BEIS) technically "owns" the Post Office - which means it is the responsibility of the Secretary of State for Business, Storey and Callard came from an outfit called ShEx or SharEx, which was short for Shareholder Executive. 

ShEx was a group of supposed industry titans who were brought in to oversee the government's interest in publicly-owned bodies (eg Highways England, Nuclear Decommissioning Authority), many of which were being run as quasi-autonomous companies.* 

In 2015 ShEx became part of UKGI - United Kingdom Government Investments. UKGI is a company wholly owned by the Treasury, and it is where Mr Cooper comes from.


They wanted it all to go away

Whilst it would be fascinating to if know Storey and/or Callard were on the "ad hoc Board sub-committee" dealing with Second Sight and the complaint and mediation scheme between 2013 to 2015, it doesn't really matter. Vennells' evidence to the BEIS select committee is that this sub-committee only took decisions "in the first instance".

This suggests everything around the mediation scheme - including the Post Office's "duplicitous" reining back on its promises to MPs and Postmasters - was approved by the board, on which sat a government representative. 

Now, thanks to Paula Vennells' evidence, we finally have confirmation of the government's closeness to the Post Office:
"UKGI directors were fully engaged in the discussions and Post Office (including myself and each subsequent Chair) had conversations with their senior line director and the Chief Executive of UKGI too from time to time. The present UKGI incumbent director [Tom Cooper] joined the Board in 2018 with a fresh pair of eyes.... He was fully engaged on the Board, sub-committee and with ministers and lawyers at BEIS."
Tom Cooper
Vennells' statement is clear. She is saying our elected Ministers knew what the Post Office was up to. Government lawyers knew what the Post Office was up to. Civil servants and business experts like Susannah Storey, Richard Callard and Tom Cooper knew what the Post Office was up to. And they, at the very least, let it happen.

Incidentally Vennells' description of Tom Cooper's effect on Post Office thinking contains the single worst sentence of lawyer-approved drivel in the history of writing:

"His questioning was challenging and because of that it was helpful; it did not lead to any different outcomes."

Ms Vennells appears to be suggesting that Mr Cooper was challenging, useful and completely ineffective all at the same time. The legal genius responsible for this leadenly transparent piece of doublethink really ought to take a good long look at themselves in the mirror. 

Vennells' shareholder-knew-everything take contrasts starkly with Business Minister Lord Callanan's recent suggestion that the government was "misled" by the Post Office. According to Ms Vennells, the government knew and knows everything. 

It is no wonder backbench MPs and campaigners are demanding a judge-led inquiry rather than the current proposed "independent review". From Vennells' letter it's obvious responsibility for the Post Office's decisions over the last ten years goes deep into the government machine. The current terms of the independent review would not begin to touch it. 

Shortly after the Panorama on 8 June 2020 I got a call from a senior person within government who wanted to talk about this proposed review. They told me:
"we are limited in what we can do - the terms of the review were kicked between BEIS and No 10 before they finally reached an agreement on what the terms should be and how it should be structured, but the officials [civil servants] weren’t happy with anything. They didn’t want a review, they didn’t want an inquiry or anything. They wanted it all to go away."
Given the scale of this scandal, that is a wholly irresponsible position for government officials to allegedly take. It'll be interesting to see if parliament is capable of doing anything about it, or if the existing proposed terms of the review win out. 

I'm off to get a tattoo of "His questioning was challenging and because of that it was helpful; it did not lead to any different outcomes". It's a good epitaph for a journalist.

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Part 1 of this article: How and when the cover-up happened


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At the time, the Post Office was officially a government-owned Arm's Length Body. Confusingly, responsibility for Arm's Length Bodies lay not at the Treasury, nor the sponsor department (in this case BIS/BEIS), but with the Cabinet Office.

Some time between 2016 and 2019, though no one has explained why, the Post Office ceased to become an official government Arms Length Body and turned into a Public Non-Financial Corporation.

If this sort of thing makes you want to cry with boredom, wait till you start digging into Accounting Officers and Framework Agreements.

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Saturday, 4 July 2020

The Post Office cover up, part 1: How and when it happened

There are, arguably, three Post Office scandals:

1) Why an organisation saw fit (and was allowed) to criminally prosecute 900 people over two decades.


2) How the UK justice system abetted this.

3) The Post Office and the government's attempt to cover it up.

I want to focus on point three. 

In July 2012, forensic accountants Second Sight were invited by the Post Office to investigate the growing number of complaints about the Post Office's Horizon IT system. 

The Post Office knew there were a number of former Subpostmasters campaigning for justice well before then (the Justice for Subpostmasters Alliance had been around since 2009), but now a number of MPs had got involved, led by James Arbuthnot.

In Sep 2013, the Post Office board and/or the government realised the information Second Sight had begun to uncover - about the Horizon IT system and the Post Office's business practices, investigation and prosecution strategy - had the power to potentially bring the organisation down and damage a lot of reputations within government. 

Somewhere, a political decision was taken that it was "better" to cover up the truth (or, technically,  make it almost impossible to uncover), than to bite the bullet and deal with the fallout. 

The consequences of that decision were horrendous. It allowed the Post Office and specific individuals within it to behave abominably towards Subpostmasters well into 2019. 

Take a look at the cases of Chirag Sidphura or Pete Murray, or read what Mr Justice Fraser had to say about the treatment of Liz Stockdale in the Bates v Post Office first trial judgement (see par 517). For many years after the cover-up, the Post Office continued to arbitrarily remove people's livelihoods, destroying their businesses and reputations.

Paula Vennells, Post Office CEO from 2012 - 2019, may well believe she was a good Christian woman running an organisation with a community-minded purpose, but she was at best deluded, and at worst, complicit. Her organisation crushed people. And then tried to cover it up. On her watch.

Let's take it chronologically

In July 2012, Second Sight were promised unfettered access to everything. It was Second Sight's stated condition for taking the job. Director Ian Henderson said on Panorama: Scandal at the Post Office: "The phrase was 'seek the truth at all costs'". 

The Post Office agreed to this and acknowledged it in a statement to campaigning former Subpostmasters, dated Dec 2012, stating:

"Second Sight will be entitled to request information related to a concern from Post Office Limited, and if Post Office Limited holds that information, Post Office Limited will provide it to Second Sight."
An unequivocal promise made to everyone, whether they had criminal convictions or not. 

In July 2013, Second Sight produced their interim report, which made it clear there were serious problems at the Post Office. Still at that stage being helpful, the Post Office published the report and took steps to set up a truth and reconciliation programme in August 2013, known as the Complaint and Mediation Scheme.

As that scheme progressed, when Second Sight requested certain documents which could explain the criteria by which prosecution decisions were made, they were refused. The change in attitude from the Post Office began in September/October 2013.

Why would the Post Office want to withhold documents from Second Sight? As well as being forensic accountants, they were experienced fraud investigators. Having eyes on the methods, evidence and the communications between Post Office prosecutors and security team - the internal prosecution files -  would go a long way towards knowing whether the campaigning Subpostmasters had any grounds for complaint, and would have certainly helped inform the individual Subpostmasters whose cases were being investigated.

"The decision that was made... was that Second Sight would not be given access to the... files." 
The body making this decision was:

"an ad hoc Board sub-committee, consisting of the then Chair (Alice Perkins), myself, and two non- executive directors. Meetings were attended by, among others, the General Counsel and the company secretary."
As to why...

"Firstly because the documents were legally privileged and, as I understood it, it had never been agreed that Second Sight would be given access to privileged material. Secondly, it was the view of Post Office that the conduct of prosecutions was outside the scope of the Scheme. Thirdly, Second Sight, as forensic accountants, had no expertise to consider legal matters."

Firstly - so what? Just because a document is legally privileged, it doesn't mean it has a witchy spell on it. If the Post Office wanted Second Sight to see those documents all it had to do was waive legal privilege by handing them over.

Secondly - so what? You either want your independent investigators to see and report the truth or you don't. You don't start arguing about scope.

Thirdly - Second Sight were immensely experienced investigators. They were perfectly capable of making pronouncements on internal prosecution files which were within their area of expertise and either recommending or commissioning further specialist legal interpretation as required.

None of the above reasons wash, independently or collectively. Try it the other way round - if you were a powerful CEO and you did want your independent investigators to see your own internal files, because you knew getting to the truth was essential, you would simply task your General Counsel to find a way to deal with issues of privilege, expertise and scope.

The Post Office decided it did not want Second Sight to see those internal files and trotted out a number of fig-leaf justifications for its decision.

That's your cover up, now admitted by the former Chief Executive.
Rev Vennells

The smoke and mirrors act

Before we get to part 2, let's quickly look at Vennells' attempt to re-write history.

The shift in the Post Office's position from "all documents for everyone" to "no internal files will be examined and we're not dealing with anyone with a criminal conviction" has been completely unacknowledged by the Post Office and isn't touched by Vennells' letter to the BEIS Select Committee. 

MPs, the Justice for Subpostmasters' Alliance and Second Sight have all told me that at the beginning, the Complaint and Mediation Scheme was designed to try to help former Subpostmasters with criminal convictions as much as those who hadn't. Indeed it is a fact that convicted Subpostmasters were accepted onto the scheme in 2013. 

By 2014 the Post Office was trying to exclude those who had pleaded guilty and by 2015 the Post Office was refusing to mediate with any former Subpostmasters who had a conviction. 

"The Post Office agreed to a mediation scheme that was to include those who had pleaded guilty. It is almost too obvious to say this, but in view of what the Post Office has been doing I have to do so: I would never have agreed to a mediation scheme that excluded people who pleaded guilty, such as my constituent, Jo Hamilton... 
In the working group for the mediation scheme, the Post Office began this year to argue that the issues of concern that were identified by Second Sight should be excluded from mediation—for example, the absence or ignorance of contracts, and the failure of audits and investigations—despite its agreement with Members of Parliament that the scheme would cover the issues in the interim report. 
I understand that the Post Office has been arguing in recent months at the working group stage to exclude 90% of the cases coming before the working group, despite everybody’s understanding that exclusion from mediation was to be the exception, not the rule. 
Extraordinarily, the Post Office argued to exclude people who had pleaded guilty, despite its express agreement to the contrary with me and other right hon. and hon. Members, and despite the fact that it knew that we would not have agreed to a mediation scheme otherwise."
In the same debate Arbuthnot called the Post Office's behaviour "duplicitous." The same duplicity is apparent in Vennells' evidence to the BEIS Select Committee. First she says:
"We... spent a great deal of time investigating the non-criminal historical complaints relating to Horizon... and hoped that these could be resolved through the Scheme. Criminal cases were referred to the Criminal Cases Review Commission (“CCRC”)."
Not in 2013, they weren't, they were accepted onto the scheme. Later in her letter Vennells says:
"In March 2015, Post Office took the decision to end the Complaints Review... and to push all cases in the Scheme through to mediation, apart from where there had been a conviction: in those cases, Post Office took the view that the CCRC was the correct route, indeed the only possible legal route."
Again, no explanation of how or why the Post Office, so keen to get to the bottom of things in 2013, had spent 2014 trying to argue Second Sight were out of scope, applicants who pleaded guilty should be excluded from the scheme and in 2015 binned off any Subpostmaster with a conviction, whichever way they had pleaded.

Part 2 deals with the other individuals involved in this.

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Monday, 29 June 2020

Nick Read's selective awareness

Nick Read, Post Office CEO
Nick Read has had nine months to find out what on earth the Post Office has been up to over the last twenty years, or at least ask some questions about the worst of it.

His first job was to stop the litigation, which he did. His second job was to, in his words, "reset" the Post Office's relationship with Subpostmasters.

In a letter to the BEIS Select Committee, Mr Read explores that theme a little further, stating:
"As Chief Executive, ensuring that the business conducts itself with integrity is of upmost [sic] importance to me. That requires addressing the issues of the past... with energy and transparency. Bluntly, there can be no new beginning without an appropriate reckoning with the past."
So how much reckoning with the past is Mr Read prepared to do?

The appendix to the letter contains answers to questions posed to Mr Read by Darren Jones, the chair of the BEIS Select Committee inquiry. The very first answer is disingenuous by omission.

Mr Jones asks: "Do you now accept that there was a major problem with Horizon and, if so, when did Post Office Ltd identify this problem and what was the nature of that problem?"

Mr Read replies:
"Post Office accepts that there were deficiencies in previous versions of the Horizon system." However: "the judgment did not determine whether bugs, errors or defects did in fact cause shortfalls in the individual claimants’ accounts but it found that they had the potential to create apparent discrepancies in postmasters’ branch accounts."
The judgment did not determine whether bugs, errors or defects caused shortfalls in the individual claimants’ accounts because the trial was specifically set up not to look for them. It was set up to see if there was the potential for Subpostmasters' branch accounts to be affected by bugs errors and defects. This is the exact text of the judge's finding
"It was possible for bugs, errors or defects of the nature alleged by the claimants to have the potential both (a) to cause apparent or alleged discrepancies or shortfalls relating to Subpostmasters’ branch accounts or transactions, and also (b) to undermine the reliability of Horizon accurately to process and to record transactions as alleged by the claimants. Further, all the evidence in the Horizon Issues trial shows not only was there the potential for this to occur, but it actually has happened, and on numerous occasions." [my italics]
Mr Read chose to leave the information in italics out of his response to the select committee.

In 2015 the Post Office told the BBC's Panorama that remote access to Subpostmaster accounts simply could not happen without the Postmaster being aware of it. This was later revealed to be untrue.

In his letter, Mr Read says: "As I was not involved at the time, I do not wish to speculate how Post Office’s knowledge of remote access issues evolved over time."

Mr Read thinks the Post Office should be "addressing the issues of the past", but he's not going to address this one.

Nor is he going to address the issue of who at the Post Office was telling porky pies to the government about what they'd been up to. Lord Callanan told peers the government had been "misled". Mr Jones wants to know more:

"Are you investigating which advice was misleading or flawed and who gave it?" he asks, "Will there be any sanctions for those who may have given misleading or flawed advice?"

Mr Read replies: "I am not able to comment on matters before my time."

In response to Mr Jones' question on the Post Office's prosecution function, Mr Read replies:
"I believe that the last private prosecution of a postmaster or branch assistant was brought by Post Office in 2015 but there have been very few since 2013." 
That was also before Mr Read's time, but he managed to find the answer to that question.

CWU take

I am grateful to serving Subpostmaster and "redoubtable" Communications Workers Union Branch Secretary Mark Baker for running his eyes over the other answers Mr Read gave. I asked him to do this as he uses Horizon daily. The Post Office refuses to accept the CWU as a representative body for Subpostmasters and Mr Baker's answers should be seen in that context.

Mr Jones asks: "Can sub-postmasters now park significant shortfalls in suspense accounts and can they expect that Post Office Ltd’s first response will be to assist them in identifying possible errors?"

Mr Read replies: "A postmaster can put a shortfall into their suspense account, trade normally and ask for our help and investigation if they do not understand the reason for the discrepancy."

Mr Baker says:
"This is not an entirely accurate reply. The reality is that a Postmaster can only put a discrepancy into local suspense for the amount of left in his/her trading period. Trading Periods, or TPs, last for four weeks. On TP day the Postmaster is forced by the system to accept the discrepancy. This is done by pressing an option called Settle Centrally. This allows the Postmaster to complete that TP and roll over into the next TP. 
What happens next is that the PO financial HQ gets in contact with the Postmaster to ask them how they would like to pay the discrepancy... the PO open up a debtors account in the Postmasters name and the discrepancy is treated as a debt owed.  
Only if a Postmaster knows that they can dispute the discrepancy will the PO commence further investigations as alluded to by Mr Read. Currently I have several members of my Branch that have raised a dispute over discrepancies but the disputed amount seems to get parked as it would appear that the Post Office can’t prove any fault on the Postmasters part but do not know what to do next. 
Discrepancies below £150 still cannot be disputed there is no option to park these smaller shortages."
Mr Jones asks: "What mistakes did Post Office Ltd make?"

Mr Read replies with some monumental guff which doesn't answer the question, but instead talks about "significant lessons to be learnt... undertaking wholesale reform... better training and continuing dedicated support..."

Mr Baker writes:
"In our opinion the Post Office is only tinkering around the edges of trying to change its relationship with Postmasters. It is our belief this can only be achieved if Mr Read adopts a more inclusive approach to finding the solutions for a successful working relationship...
We have made several attempts to engage with Nick Read and he has rebuffed all approaches. Nick Read's approach appears to be to select small token groups of individual Postmasters to consult with and base his polices on those limited perspectives. 
This was also Paula Vennells' approach and it failed."
Mr Read tells the inquiry: "We have increased [Subpostmasters'] remuneration by £20 million a year on top of the £17 million increases secured for banking services through our new framework with the High Street banks."

Mr Baker notes:
"Most of the £20m allocated last year as fees increases were on Banking transactions and the £17m that Nick Read alludes to was also on Banking fees and travel products. It is important to highlight that both sets of fee increases are funding allocated, not deployed. 
I mention this because the Covid crisis has wiped out all Banking and Travel related products. Therefore it is misleading for Nick Read to imply that Postmasters are in receipt of £37m worth of fee increases."
I have asked the National Federation of Subpostmasters - the only representative organisation the Post Office will recognise - for their thoughts about Mr Read's submission to the inquiry. I will publish them if they respond.

Number crunching

In terms of new information from the Post Office in Nick Read's letter, there are a few interesting numbers.

The Post Office says it has now received 560 applications to its Historical Shortfall Scheme. These are completely separate from the 555 people who took part in the Bates v Post Office group litigation and also separate from the "around" 500 people whose convictions are being independently reviewed by Peters and Peters, as convicted Subpostmasters are barred from the Historical Shortfall Scheme (their only chance of compensation is getting the Criminal Cases Review Commission to review and refer their case to the Court of Appeal, have the Court of Appeal quash their conviction and then attempt a malicious prosecution claim against the Post Office at the High Court). This means there at least 1600 people who claim to have lost money via Horizon.

The Post Office has also confirmed it has spent "approximately" £43m during the civil litigation on trying to fight the idea it had any responsibility towards its Subpostmasters, which, when you add it to the £57.75m settlement fee, just tops £100m.

This figure includes "expenditure on legal and professional consultancy fees connected with the litigation and other costs indirectly related to the litigation". It's not clear whether it includes the Peters and Peters review of the Post Office's 900 prosecutions using Horizon data, and it doesn't include any sums related to the Historical Shortfall Scheme. This by itself will cost a few million to operate and could end up making individual compensation payments running into thousands.

Responsibility

Finally, as to whether anyone has been sacked or is going to take responsibility at the Post Office for ruining so many lives, Mr Read plain refuses to answer the question, stating:
"The original Horizon system was introduced from late 1999 and there have been considerable changes, including of personnel, over subsequent decades. 
A number of the management team have left Post Office in recent years. As the Committee will appreciate, I am not at liberty to reveal the circumstances or terms of their departures."
Further reading:

My fisking of Paula Vennells' letter to the select committee inquiry. Ms Vennells is Mr Read's predecessor.
My take on Fujitsu's letter to the select committee inquiry. Fujitsu operate the Horizon system for the Post Office.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.

Friday, 26 June 2020

Fujitsu tries to dodge the blame bus

Fujitsu designed, operated and rolled out the Horizon IT system, which has ruined so many Subpostmasters' livelihoods and lives. Yet it has never had much to say about it, preferring instead to let its client, the Post Office, take all the heat. 

Since 16 Dec 2019, that position has been untenable. The judge in the Bates v Post Office litigation finished proceedings by announcing he had such "grave concerns" about the "veracity of evidence given by Fujitsu employees to other courts in previous proceedings about the known existence of bugs, errors and defects in the Horizon system" he was handing a file to the Director of Public Prosecutions.

All Fujitsu have said about this up till now is: “Fujitsu takes the judgement in the second trial of the Post Office Group Litigation very seriously. While Fujitsu was not a party to the litigation, we are conducting a thorough process to review the court’s statements in detail."

This was never going to hold, and thanks to a series of questions sent on 2 June by the chair of the BEIS Select Committee, Fujitsu have been forced to give their take on the Horizon scandal. 

Fujitsu's reply to the committee chair has been published here. It is written by someone called Rob Putland, Fujitsu's "Senior Vice President". Let's take a closer look. 

(What follows are edited highlights of the most interesting questions and answers. For the full set of questions and complete answers - go to the original letter.)

Q: The Judge in Bates v Post Office Ltd said that in giving evidence Fujitsu gave “a very one-sided picture which was to omit any reference to important contemporaneous documents that criticise or demonstrate any deficiencies with Horizon”. How do you respond to this criticism?
A: Fujitsu was not a party to the Bates v Post Office Ltd litigation. All decisions relating to the prosecution of sub-postmasters and the conduct of the Bates litigation were made by the Post Office. Whilst Fujitsu employees gave evidence, it was the Post Office who determined all aspects of its case including the choice of witnesses, the nature of their evidence and the associated documents. Nonetheless, we take Mr Justice Fraser’s criticisms extremely seriously and we have now stopped the provision of any new witness evidence to the Post Office.
Notes: This seems to be suggesting that somehow those evil ******** at the Post Office managed to manipulate sweet, innocent Fujitsu staff into the sort of folk who might wish to defend the Horizon system to the detriment of truth and justice. The solution, you will note, is neither to work with the Post Office to do things properly in future, or to ask their own staff to think about telling the truth in court, but to refuse to let their poor bambinis get involved in any more proceedings. Blaming the Post Office in this instance does not wash. More from Sir Peter Fraser's judgment:
"I consider that Mr Parker [a Fujitsu employee], and the [Fujitsu] team who assisted him, sought to portray the Horizon system – Legacy Horizon and Horizon Online – in a light as favourable as possible to Fujitsu, regardless of its own internal evidence to the contrary, and regardless of the facts."
Q: The Judge established that there were errors and bugs within Horizon and that remote access to Horizon terminals was possible and transactions could be changed without a sub-postmaster knowing. He said that some of this only came to light because of the Group Litigation. Do you accept that local Horizon terminals could be accessed and altered centrally?
A: Yes, local Horizon terminals could be accessed and altered centrally.
Q: Why did it take a highly expensive court case to establish these facts?
A: This is a matter for the Post Office; they determined the litigation strategy and their conduct towards the sub-postmasters.
Notes: Sorry, lads. You can't pin it all on the Post Office. You were responsible for the way your employees presented evidence in court, and you had ten years to pick up the phone and tell people like me and/or Panorama that the Post Office's assertions about remote access were incorrect. This is what the Honourable Mr Justice Fraser said about your organisation's attitude towards Horizon errors, and providing information to the court in the Horizon Issues trial:
"Fujitsu do not... appear to me to have properly and fully investigated these myriad problems, nor did Fujitsu categorise such incidents correctly. They also seem to have moved away, in their investigations, from concluding that there were any issues with the software wherever it was possible for them to do so, regardless of evidence to the contrary, an approach that has been carried into the Fujitsu evidence for the Horizon Issues trial."
Q: What role did Fujitsu play in investigations and prosecutions of sub-postmasters and postal workers who found shortfalls in their Horizon accounts?
A: Fujitsu played no role in the decisions to investigate, prosecute, or otherwise seek to recover shortfalls from sub- postmasters or postal workers. The Post Office devised and implemented the strategy for the recovery of shortfalls, including conducting all investigations and prosecutions of its sub-postmasters and postal workers.
Notes: The Post Office was (and is) Fujitsu's client. The decision to use Horizon data to prosecute Subpostmasters is all on the Post Office. Fujitsu was providing data (and possibly court witnesses aiming to protect Fujitsu's corporate position) where requested. The quality of the data provided, the processes for handing it over and the efficacy of the Horizon network, vital to the reputations of both the Post Office and Fujitsu, is another matter. The next few questions and answers are illuminating on those points. It's where Fujitsu starts to get very slippery.

Q: How reliable is Horizon now and what steps are Fujitsu taking to ensure full disclosure of errors and bugs?
A: Horizon operates to the service standards contractually required by the Post Office. However, in our view, no complex IT system will ever be completely free of errors and bugs.
Q: How many bugs, errors and discrepancies have been logged for each year since they began to be recorded?
A: The incident management system captures incidents logged, and includes matters raised by a sub-postmaster as well as incidents raised by Fujitsu monitoring. The system has recorded thousands of incidents since the inception of Horizon, as would be expected of a system of this complexity and size. However, in respect of material incidents, Mr Justice Fraser highlights 29 bugs, errors and defects, some of which had the potential to impact a sub-postmaster local branch account.
Notes: This does not answer the question. The answer first states there have been thousands of bugs (or "incidents") since the inception of Horizon, and then (using the word "However" to suggest we are coming to the important bit), tells us when it comes to "material incidents", the recent court case found just 29 bugs which had the potential to impact branch accounts.

The Select Committee chair's question does not ask how many bugs the recent court case found. It asks how many Fujitsu have logged. During Bates v Post Office, the vast majority of Horizon error logs were simply not disclosed to the court or to either of the independent IT experts who were assigned to examine the Horizon system. Those IT experts worked with their teams through the logs they had been given to ascertain what they could. With the limited information, resources and time-span they had available, the IT experts were able to find 29 bugs which had the potential to impact branch accounts.

Fujitsu know, or could find out, the real number of bugs/errors/defects which caused material incidents over Horizon's twenty year history and present them to the inquiry, but they choose not to, and instead erect a smokescreen. That, to me, is very serious and potentially misleading.

Q: Can you provide a breakdown by error type and its implications for the integrity of a local Horizon terminal and for the system as a whole?
A: In the Appendices to his judgment in Bates v Post Office Ltd, Mr Justice Fraser provides significant detail on the history of Horizon and a summary of bugs, errors and defects since the inception of Horizon in 1999 including those that had the potential to impact a sub-postmaster local branch account.
Notes: They're at it again. The question has nothing to do with the court case. The court case was a snapshot of the system used to establish general facts. There's no point in getting on a high horse about the Post Office's presentation of evidence to the High Court when you're basically up to the same tricks with the select committee inquiry.

Q: What lessons have you learnt from Horizon and how can you reassure my Committee that the type of issues detailed in Bates v Post Office Ltd will not happen again?
A: The provision of witness evidence to support prosecutions under the direction of the Post Office should not have been allowed to happen. We have implemented the changes below, and will implement such further measures as may be appropriate following any related judicial processes or inquiries:
- Fujitsu has not provided any new witness evidence since the judgement.
- Fujitsu will not provide any witness evidence in the future to support Post Office led prosecutions of sub-postmasters.􏰀
- We will provide information if requested by the Police or an appropriate judicial authority but only after such request has been fully considered, and with the approval of a UK board director.
Notes: It's good that they're not going to let themselves be led by the nose into prosecution cases against Subpostmasters without properly thinking about it at board level, but this also smacks of a company which is going to become very unwilling to hand over information about anything to anyone. Given the judge found Fujitsu staff were continually overlooking significant Horizon errors,  either to suggest they weren't their responsibility, or were caused by individuals external to the company, or to paint a misleading picture in court, it does not bode well for anyone trying to get the truth out of the organisation in the future.

Q: Have any Fujitsu staff been disciplined or dismissed as a result of the issues associated with Horizon and/or regarding the evidence they gave in Bates v Post Office Ltd?
A: In many cases key employees and decision-makers are no longer working at Fujitsu. If it emerges that any current employee intentionally misled the court or otherwise failed to meet the standards expected from Fujitsu, then they will be dismissed.
Notes: There might be something of a bloodbath coming, then. Given the only thing Fujitsu have been saying for the last six months is that they are: "conducting a thorough process to review the court’s statements in detail" they will have spotted the following comments from the Honourable Mr Justice Fraser in his judgment re:

Andy Dunks, IT Security Analyst, Fujitsu
"Mr Dunks expressly sought to mislead me by stating that there was no “Fujitsu party line” when it came to the contents of drafting witness statements about audit records for legal proceedings. There plainly is; it was used in the Fujitsu statements in 2010 and it was used by him in his statement for the Horizon Issues trial... 
"I found Mr Dunks very unsatisfactory as a witness. He was both plainly aware of the Fujitsu “party line”, or corporate position, regarding the words asserting accuracy of audit data, and he was very anxious to keep to it, whilst initially denying that there was one. He sought to mislead me."
Stephen Parker, Head of Post Office Application Support, Fujitsu
"Mr Parker chose specifically to give the impression in his 1st witness statement that Fujitsu did not have the power (the word Mr Parker expressly chose) to inject transactions into the counter at branches, even though he knew that it did. This paints him in a very poor light as a credible witness... 
"I do not consider that Mr Parker was interested in accuracy in any of his evidential exercises, and I do not consider that he was objective in the way he presented his evidence, although he sought to give the impression that he was....
"Although Mr Parker agreed, as it was put to him more than once, that accuracy is important, I do not consider his evidence in his witness statements to have been remotely accurate, even though he stoutly maintained that it was. He continued to maintain this in his re-examination, even though by then he can have been in no doubt that he had departed from Fujitsu’s own definition – which he had said he had forgot about. I found him a very unsatisfactory witness, who presented in his witness statements a misleading and one-sided sanitised version of actual problems and events that Fujitsu had experienced."
William Membury, Fujitsu Central Quality Partner
"Mr Membury’s statement... omitted some highly material matters.... I consider that Mr Membury’s evidence is of limited, if any, assistance in resolving the Horizon Issues. It does however continue the very one-sided picture presented by all the Fujitsu witness statements, which was to omit any reference to important contemporaneous documents that criticise or demonstrate any deficiencies with Horizon." [my italics]
Whilst trying to mislead a judge on oath in court is a very, very serious matter, it would be an absolute tragedy if the only people to lose their jobs in the Horizon scandal were a few company lifers at Fujitsu (and I'm not saying this glibly - it would be a tragedy for them and their families, too).

From the answers given to the chair of the select committee, Fujitsu is doing its utmost to blame the Post Office for everything that has gone wrong, and possibly throw a few of its own employees under the bus, whilst maintaining a borderline indefensible position on what did happen.

It certainly doesn't seem to be doing much corporate soul-searching over its potential culpability, which could bode very badly for the future.

A fisking of Paula Vennells' letter to the select committee inquiry. Ms Vennells is the former CEO of the Post Office.
A fisking of current CEO Nick Read's letter to the select committee inquiry.

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Thursday, 25 June 2020

Paula Vennells breaks her silence

Rev Paula Vennells, CBE
Five long years we've waited to hear something of substance from former Post Office Chief Executive, Paula Vennells, and the good reverend has returned from silent exile shooting from the hip. If she's going down, she's going down in a Bon Jovi-style blaze of glory.

But first, the headlines:

1. Nothing was her fault.
2. A lot of it was definitely Fujitsu's fault.
3. The government were completely aware of and involved with every significant decision the Post Office made during her tenure.

Ms Vennells was CEO of the Post Office from 2012 to 2019. This covers the period from the commissioning of Second Sight to investigate the Horizon IT system right through to the class action brought by 500+ disgruntled former Subpostmasters, which has so far cost the Post Office more than £100m. Throughout this period she refused every single interview request on the issue.

But now, a year after she left the Post Office, she's back, laying down her position in writing to the BEIS Select Committee, responding to questions in a letter sent by the committee chair on 2 June.

In her letter, Ms Vennells (inadvertently?) reveals she was actively trying to avoid surfacing documents which could have revealed miscarriages of justice at the same time she was telling parliament it was really important to surface them.

Her letter also informs us that the Post Office's change in prosecution policy (ie to go from prosecuting dozens of Subpostmasters every year to er, none) was on the advice of a QC, yet she fails to say what the advice was, and (rather ludicrously) tries to claim it might have been a good idea to carry on prosecuting indiscriminately even though they did stop. A legalistic attempt to have her cake and eat it.

Ms Vennells' letter also displays a striking lack of interest in the financial controls surrounding suspense accounts.


The cover-up

Second Sight were taken on by the Post Office to find out the truth of what was going on at the Post Office. Directors Ron Warmington and Ian Henderson have said on the record (most recently on Panorama) they were, at the outset, given the Post Office's blessing to find "the truth at all costs".

In a document asking Subpostmasters with grievances to help Second Sight's investigations, dated December 2012, the Post Office states:
"In order to carry out the Inquiry, Second Sight will be entitled to request information related to a concern from Post Office Limited, and if Post Office Limited holds that information, Post Office Limited will provide it to Second Sight."
I have this document, and it is absolutely unequivocal. No ifs, no buts. If the Post Office holds the information, they will provide it. And indeed, from the way Second Sight tell it, at first, they had complete, unfettered access to pretty much anything they wanted. Then, in the autumn of 2013 the shutters came down. In today's letter to the BEIS Committee, Paula Vennells picks up the story:
"As Post Office informed the Committee in follow-up written evidence in March 2015, Second Sight had been given access to everything in terms of prosecution material that the Working Group had decided they should be given access to. This was not, itself, a reason to refuse additional documentation. The decision that was made, collectively by the Board sub-committee, was that Second Sight would not be given access to the internal files. Firstly because the documents were legally privileged and, as I understood it, it had never been agreed that Second Sight would be given access to privileged material. Secondly, it was the view of Post Office that the conduct of prosecutions was outside the scope of the Scheme. Thirdly, Second Sight, as forensic accountants, had no expertise to consider legal matters."
So documents which could have been examined and which might have revealed potential miscarriages of justice were withheld from Second Sight in contravention of the Post Office's initial parameters for the investigation. Furthermore, from the evidence above, the Post Office did so for arbitrary and spurious reasons.

Not only that, whilst the Post Office Board sub-committee was deciding to keep buried documentation which could reveal miscarriages of justice, Paula Vennells was telling a BIS select committee inquiry on 3 Feb 2015: 
"If there had been any miscarriages of justice, it would have been really important to me and the Post Office that we surfaced those."
That, right there, is your cover-up. Well, that and the public rubbishing of Second Sight and continuing dismissal of MPs and journalists' concerns for more than ten years.

Rampant prosecution was a brilliant idea and no rampant prosecution was a brilliant idea too

This load of old legalistic cobblers is perhaps the low point in the letter. We all know the Post Office stopped prosecuting people in 2014, but Ms Vennells is not going to tell us why, and once more hides behind lawyers to do so. As she says:
"Although it seemed there were good reasons in principle for Post Office to continue the practice of bringing private prosecutions, the Board adopted a new prosecutions policy in February 2014... Prosecutions effectively ceased during my tenure as CEO... in July 2014, Post Office engaged a senior criminal QC... to advise on prosecution related issues. In referring to this advice I do not and do not intend to waive any privilege of Post Office or myself, if any, over the advice the criminal QC gave."
What on earth were the "good reasons" for continuing to bring private prosecutions - to get the number up to 1000? Because it worked? Because it was fun? There might have been good reasons in principle to do it (ie to punish and deter criminal activity), but in practice all the evidence suggests that the security team and in-house prosecutors weren't capable of doing it properly. Note Ms Vennells can't bring herself to say it was a good thing they stopped prosecuting.

Incidentally, in her letter, Ms Vennells also says it wouldn't have been her job to get too involved in the prosecutions while they were happening "unless of course I became aware of a systemic problem, which I did not."

From when she joined the Post Office in 2007 to 2014, the Post Office prosecuted 335 people! What did she think was happening if it wasn't a systemic issue? A run of bad apples? Demographics? That it was perfectly normal to go about criminalising staff like this?

Even if every single one of those 335 people were guilty of criminal dishonesty, wouldn't a responsible CEO be wondering how her company had created a business model which made blameless, hard-working people with spotless reputations suddenly turn to crime.

Really - none of it was her fault

Whilst Ms Vennells is most certainly sorry for what happened to Subpostmasters, she isn't responsible for it one iota. 

According to Ms Vennells, a lot of it was Fujitsu's fault. Particularly over the issue of remote access. In her letter, Ms Vennells says:
"The issue of whether Post Office or Fujitsu had the ability to access and alter branch information remotely had been raised during my evidence to the Committee in February 2015. I wanted to give an answer that was direct and factually accurate. I raised this question repeatedly, both internally and with Fujitsu, and was always given the same answer: that it was not possible for branch records to be altered remotely without the sub-postmaster’s knowledge. Indeed, I remember being told by Fujitsu’s then CEO when I raised it with him that the system was “like Fort Knox”. He had been a trusted outsource partner and had the reputation of a highly competent technology sector CEO. His word was important to me."
So, according to Ms Vennells, the Fujitsu CEO was either lying or so incompetent, he didn't know what he was talking about. Big accusation.

The government were party to every significant Post Office decision on Horizon

I've spent years reading and listening to frankly mendacious statements from successive ministers and mandarins about their dealings with the Post Office over the Horizon scandal. Endless, endless bollocks about it being an "arm's length" organisation with complete autonomy to make its own decisions.

Funnily enough a year ago today, I felt I had enough information to call this out as bollocks, but it's nice to have it confirmed by the woman who was supposedly running the show. In her letter today Vennells makes it quite clear that (as any 100% shareholder should be) the BEIS ministry and UKGI (UK Government Investments) were all over the Post Office:
"The UKGI directors were fully engaged in the discussions and Post Office (including myself and each subsequent Chair) had conversations with their senior line director and the Chief Executive of UKGI too from time to time. The present UKGI incumbent director joined the Board in 2018 with a fresh pair of eyes. His questioning was challenging and because of that it was helpful; it did not lead to any different outcomes. He was fully engaged on the Board, sub-committee and with ministers and lawyers at BEIS."
This will add a huge amount of fuel to backbench MPs calls for a full, independent judge-led inquiry. Incidentally, the government is still sticking to its "review", which the minister confirmed today won't have statutory powers.

Where Has All The Money Gone?

This is the multimillion dollar suspense account question, apparently raised by Sir Anthony Hooper at the beginning of many working group meetings whilst the mediation scheme was still alive. It has also been repeatedly raised by Second Sight's Ron Warmington (see his first public statement since the investigation here) and many MPs, Subpostmasters and members of the public. 

In his letter to Ms Vennells of 2 June, the chair of the BEIS Select Committee states:
"Second Sight... told us they suspected that money paid in by sub-postmasters to cover shortfalls may have ended up in Post Office Ltd’s central suspense accounts and ultimately its profit and loss account. Did Post Office Ltd, as they contend, frustrate them in investigating this possibility and did you as CEO look into this. Do you think this could have been a possibility?"
Ms Vennells replies:
"I have very little recollection of this issue and I can only tell the Committee what I now recall. I believe that Second Sight raised it with me in conversation. Since it was a technical financial control issue, I asked the CFO to look into it, and I can see from the transcript of the evidence to the Committee on 2 February 2015 that Second Sight had already met with the CFO to discuss the further information they said they required. I cannot remember how this was resolved, but I do not recall any further communication from Second Sight to me on this issue."
It's all suddenly a bit vague, isn't it? Yet suspense accounts remains the scandal's biggest unanswered question. Has the Post Office erroneously taken thousands, tens of thousands, millions of pounds from its own Subpostmasters? Ms Vennells has no idea now, and from the admission above, whilst she was CEO, she never bothered to try to find out.

If this letter is the best she can do, I suspect Paula Vennells is in trouble.

If you would like to see what Paula Vennells' successor at the Post Office thinks about the Horizon scandal, click here.
If you would like to read a similar fisking of Fujitsu's letter to the select committee inquiry, please click here.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.