Sunday, 30 August 2020

Trouble up North (of England) pt1

This is a tale I have been wanting to publish for some time. I've known the former Postmaster in question for a number of years. The story is written in her own words. 

Names have been removed for legal reasons, but I have verified much of what follows with source documentation. I am satisfied what I cannot verify is an honestly-held recollection of events.

Trouble up North (of England), part 1

"I already had more than my fair share of challenges prior to working at a branch post office.

Forced into an Islamic marriage at gunpoint aged 16 in Kashmir, I managed to escape my ‘husband’ and secure a divorce, even though I wasn’t legally married. I got back to Britain and when I completed my education, I started working for the Home Office. Eventually I got engaged to a man who was well-connected in the political world.

I discovered he was involved in criminal activities so I reported him to the police. The police arrested him but he was released on bail. He returned to our flat and beat me up, putting me in hospital. I managed to escape him, and moved to the north of England, hoping for a quiet life. Even my family did not know my precise location.

As I settled into my new life I took a number of part-time jobs. One I really enjoyed was working at a Crown post office as a cashier, which I did in more than one city. When a full time cashier position came up at a nearby branch post office, I applied. I had my interview with the branch manager in March 2011.

From the very beginning, I had reservations and concerns about the set-up at the branch. The interview was much less formal than I'd expected. I’d previously worked in quite structured environments, and expected the interview would be like those I’d had before. I imagined I’d be sent away after the interview, my references would be checked, and then there would be other processes that would take place before I had a result. However, it became apparent at a very early stage that I'd been successful and would be offered the job there and then. 

Throughout the interview the manager divulged a lot of detail about her personal circumstances and private life - her partner; her children and her medical issues. I thought it odd that she was so familiar during the interview, but I needed a job, and because I had the experience of working in Crown offices I thought it would be worthwhile accepting it. 

At this time the Subpostmaster was registered through a limited company which ran several branches. As well as the manager, in my branch there was a male assistant manager and two other female cashiers.

As soon as I started working at the branch I discovered it was an entirely different environment to the Crown post offices I'd worked at before. 

There was a very relaxed attitude to many of the formalised processes, and I was told on various occasions they had their own way of doing things. The manager told me that as long as the totals added up it didn’t matter how you got there. 

I was surprised at such a blasé approach to accounting, as I knew from my previous jobs that it was very important to be completely transparent about how money and transactions were processed. I knew any branch or employee’s work could be checked by external auditors, and any deviation from Post Office rules could amount to either disciplinary, or even criminal investigations. 

As a completely new employee at the branch, I needed to get used to the local policies and procedures, but I wondered if maybe the rules for sub post offices were different from Crown post offices, and I also thought maybe regulations had changed since I had last worked in a post office. 

I was confident in my own abilities concerning Post Office business and I trusted my own high levels of integrity. I was happy I was sticking to the rules, but I didn't want to cause too much fuss about other people’s working practices when I first started working at the branch, even though it was immediately clear all was not well. 

Currency fraud

I became worried about the local procedural discrepancies when I discovered the manager’s rule that anyone coming into the branch to conduct foreign currency transactions had to go exclusively to her counter, particularly when people were buying or exchanging Euros. This seemed odd because all the cashiers appeared equally competent at processing foreign transactions. But the manager wanted to process all these transactions herself. One of the other cashiers always sent currency customers to the manager’s station even if she had a queue and the cashier did not, which I thought unorthodox, and the manager explicitly forbade other cashiers from dealing with these transactions.

The Horizon computer system enabled the easy abuse of these transactions. If a customer came into the branch to buy currency, she would use the system to print a quotation which would be given to the customer. When they wanted to go ahead she would simply cancel the process on screen but do the transaction anyway. When another customer wanted to sell currency, she would do the same thing, and pocket the difference between the two transactions, using her own cash float. The system was none the wiser because customers thought the quotation slip was their receipt. This way the manager made considerable personal profits at the expense of the branch owners.

We obviously sold more Euros than we bought, and I wondered how the manager explained the need for more Euros if she wasn't putting the transactions through Horizon. I found out later.

Postage fraud

Quite early on in my new job it became evident that the manager and the other cashier were very close. They seemed to cover each other’s backs. A practice I observed which I was initially perplexed about, and subsequently very unhappy with, was that the manager would hand the cashier pre-printed postage stickers generated using the Horizon computer terminal. This was highly irregular. The accepted process for dealing with higher value postage transactions was that when a customer came in to post a package, the cashier would weigh the parcel, create a bespoke printed sticker using their terminal, then process the corresponding amount through their own till. 

On regular occasions I saw the cashier use the pre-printed labels the manager had given her (without processing the cash paid by the customer via her till), wait for the customer to leave, then hand the cash to the manager, who would keep the money on one side rather than processing it into the till. This made me very uncomfortable, as I believed the manager and cashier were stealing the money paid by the customer, and were therefore defrauding the post office. 

The manager was able to produce these surplus prepaid postage stickers by exploiting a glitch in the Horizon system. The process allowed the cashier to print further labels, by asking if the postage label had printed properly. By simply pressing ‘no’ the system would print another one. They would therefore print multiple labels when they had the opportunity, keep them to use later on, and pocket the money. This happened on an almost daily basis. 

I initially considered the possibility that the manager had inadvertently printed a few extra labels, and was just trying to balance their till with the corresponding money, but I then saw her, on a number of occasions, put the money into a gold-coloured travel sweet tin next to her till. It was clear the money wasn't being paid through the post office system. 

Because I had my own strong code of ethics and was unhappy about what I’d seen, I raised my concerns with the manager. I tried to be as diplomatic as I could, stating that what they were doing didn't conform to proper Crown post office procedures, but the manager and the cashier just laughed at me and the manager said “but we're not working in a Crown post office”. Their reaction reinforced my feeling that things were not right at my branch.

I became so concerned that I was nervous about leaving my own counter till unattended, even just to go to the toilet. I was worried I couldn’t trust my colleagues who might take money from my till, thus leaving me in a position where I’d have to explain why my till totals didn't stack up.

Skiving

Around June 2011 the manager was away for several weeks, apparently having a serious medical operation. The manager’s cashier friend told everyone that the manager was “skiving” and didn’t have a proper reason to be away for so long. The cashier told us we shouldn’t tell anyone we knew that the manager was fit for work. During this period, the assistant manager was in charge, but the manager was still in regular contact with the branch to find out what was going on. 

Things at work began to deteriorate further whilst I was reporting to the assistant manager in the manager’s absence. The other cashiers started to tease me that the assistant manager ‘liked me’. I became increasingly uncomfortable around him because he made lots of inappropriate flirty comments, and constantly invaded my personal space. 

On one occasion he tried to force me into a large walk-in fridge in the rear store room. On another he restrained my arms using a roll of tape. Whilst he considered these incidents to be harmless jokes, I told him to stop and made it very clear I didn't view his behaviour that way and that I was really uncomfortable with his manner.

In late July 2011 there was an occasion when the total in my till exceeded the amount that should have been there by approximately £200. I couldn’t understand why the till was 'over' because I was so diligent about my processes. The manager telephoned the branch and I spoke to her about the discrepancy. I was worried about making sure the issue was properly documented for auditing purposes, especially if it transpired later on that a customer needed some money reimbursing to them. The manager was unconcerned about the discrepancy and told me to put the extra cash “on one side”. The assistant manager then became aware of the issue and told me to keep it, stating “everyone is doing it” and “with what they're paying us, what do they expect?” 

It was clear the assistant manager was telling me to keep, and therefore steal, the money. I was insistent the money should stay in the branch so it could be accounted for, but the assistant manager took the money and refused to give it back, saying “if you're not going to take it then I will.” 

I was incensed by his actions so I spoke to the manager on the telephone, outlining what had happened. She told me not to worry, that the assistant manager was just being childish, and she would speak to him about what had happened. She also said the assistant manager was leaving soon because the branch was getting a new Postmaster and he didn’t want to work for this new person. 

I soon discovered the manager did speak to the assistant manager about my complaint, but didn’t deal with it in a professional way. Following this the assistant manager became hostile towards me, and swore at me, even in front of customers, which was highly embarrassing. He also ignored me and refused to assist me when I was dealing with customers. His behaviour amounted to bullying in the workplace. The assistant manager later disclosed he'd spent the £200 he took out of my till.

Because of my protestations, I understood that the manager, still away from work, instructed her cashier friend to tell the assistant manager to put the money back. On returning from a lunch break, the cashier told me the surplus money had been returned to my till, but then she took the money back out, and placed it in the manager’s tin. It was clear she and the manager were complicit and the manager was taking the cash for herself. 

Subsequently the manager maintained the police would have been called if the assistant manager hadn't put the money back, and that Post Office Ltd’s area sales manager had been informed about the incident. Meanwhile the assistant manager continued to be hostile towards me and on a couple of occasions he said he was angry with me, stating I should support a fellow Muslim.

During this time, the area sales manager came to the branch. As he seemed approachable I seized an opportunity to discuss my concerns. I was shocked by his response. He simply told me not to “rock the boat”, and that it was the manager’s job to run the post office. He inferred that I should let the manager do whatever she wanted.

I began to feel like I was not going to get anywhere with trying to put a stop to the problems I'd encountered. I was completely comfortable with my own work practices and decided I didn't want to cause myself any further issues, so I didn't officially pursue my complaints with anyone else at that time. I was also very worried about the manager’s references to her husband's connections to the police, and I thought perhaps I should just leave things as they were. I talked to close friends and family about the difficulties I'd had at work.

In August 2011 the new Postmaster started at the branch. The manager hadn't yet returned to work, but the assistant manager had already left his job there, and the new Postmaster asked me to take on the role of assistant manager. I was a little reticent and explained that although I was happy to work for him at the post office I was not comfortable with some responsibilities, including counting the contents of the safe. This was a role that I knew could potentially fall to me if I was to be the assistant manager. I told the new Postmaster that the safe counting never properly added up, and there were always discrepancies. I also explained that the manager generally rebutted any questions I raised by saying that she had her “own way of doing things”. 

On speaking to the manager’s cashier friend about my fears, she replied “why do you think [the manager] and [assistant manager] always used to lock the door when they counted the safe? That's how they make their money.” 

Despite my reservations, I decided to take on the extra responsibility as assistant manager, as I felt that at least I might be able to improve the working environment at the branch by implementing more centrally compliant working practices. 

Sometime in September 2011 the manager returned to work. She seemed to be attempting a friendlier approach towards me, and started to train me in the more advanced functions required as an assistant manager. During the training I would often work from the manager’s cashier’s desk rather than using my own till, and on a couple of occasions when the manager had gone out the other cashiers told me that the manager wasn't making any money at the moment. I took their inference to be that because I was working with the manager, she wasn't able to steal any money. 

I recall another conversation with one of the other cashiers, when the cashier told me she'd be really worried if she were in my position, performing my newly-promoted role under the manager. She said the manager had worked in post offices for such a long time, since the Horizon computer system was developed, she knew all the system "loop-holes", and was able to exploit them for her own personal gain. She said she was “on the make” and that if the manager were to be found out it could reflect badly on me.

Data protection breaches

I became aware of the manager’s other irregular practices at the branch. For example, she would routinely collect the personal details of customers and submit them without their consent to the post office's marketing database. One of her favoured methods of doing this was to retain customers’ documentation, such as car tax renewal letters, when they came into the branch. Then she'd enter the details onto the computer for marketing purposes. This was a clear breach of data protection legislation, as individuals are supposed to be asked if they wish to be added to this database.

The manager did this because the post office had a Key Performance Indicator relating to marketing referrals and she knew that it would be good for the branch if we were to obtain lots of personal details of customers for sales and marketing. I saw the manager’s cashier friend do this as well, routinely adding details to the computer system. The manager wanted all the staff to do this, but being very uncomfortable with this practise, I challenged the manager about it and told her I wasn't prepared to breach data protection legislation, as did the other cashier who sided with me. 

The manager and her cashier friend continued and it began to cause quite a bad atmosphere in the branch. The manager’s cashier friend told me that she had spoken to the area sales manager about the marketing referrals. She said he confirmed the practise of signing up customers without their consent shouldn't be happening, and said if anyone asked him about it he'd deny all knowledge. At that time our branch was rated one of the highest in the country for referrals.

Other rules were routinely broken. The manager would issue car tax discs to customers without viewing the requisite supporting documents such as insurance and MOT certificates. On one occasion I refused to issue a tax disc to a man who came to my till without a valid insurance document. He got angry with me, pointed at the manager, and said “that woman has given me tax without insurance before”. 

After my refusal to serve him the man went across to the manager’s till and she illegally issued a tax disc to him. The other cashiers later told me that the manager and assistant manager always turned a blind eye and issued car tax in these circumstances. This kind of malpractice was endemic in the branch. The manager seemed to do anything within her control to maintain a high profile for the branch in terms of hitting the central Key Performance Indicator targets. 

I witnessed the manager signing people up for post office products like insurance and credit cards without their authority. Simultaneously the manager exploited every opportunity to line her own pockets, stealing or diverting post office funds for her own gain. 

In October 2011, in the post of assistant manager, amongst my regular responsibilities, I would carry out a daily check of the main safe which generally would hold quite significant amounts of cash. Indeed it wasn't unusual for it to contain hundreds of thousands of pounds. On one occasion I recall counting the contents and discovering it was approximately five hundred pounds down. I immediately raised the shortfall with the manager, who simply went to one of the grey filing cabinets close to the safe, took a corresponding amount of cash from her gold-coloured travel sweet tin, handed it to me and told me to put this money into the safe to balance the totals. Therefore the discrepancy wouldn't be discovered. 

Just a few days later, on a day when I wasn't at work, I received a text message from the manager, asking me why the safe was down. I replied that I wasn’t at work so I didn’t know. I reminded the manager that the last time this happened she corrected it from her tin. This was one of a number of pieces of evidence I had started to gather, and at this point I was worried that the manager was somehow trying to implicate me in her dubious practices.

The next time I was at work I asked the manager how she'd resolved the missing money problem, and was told she'd taken the money out of my stock unit, which she said was five hundred pounds up. The stock unit the manager was referring to was the till tray for my counter till. As per post office protocol, all the cashiers had their own stock unit, which was essentially their till, containing a standard cash float amount. As soon as the manager said she'd found that my stock unit was five hundred pounds up I knew she was not telling the truth because I always double checked my totals. I always knew if there was a discrepancy in my till. I was quite concerned when I reflected on what the manager had said because it highlighted her potential ability to ‘set me up’ if she chose to do so. In the position as manager she had every opportunity to tamper with my till when no one else was around to see what she was doing.

December 2011 was a particularly difficult time for me as my mother passed away. Naturally work was not my priority at that time, and I took some time off. When I returned to work the manager’s attitude towards me seemed to have softened somewhat. She demonstrated empathy with my loss and spoke of her own personal losses. When I returned to the post office I wasn't wholly focused on work, but found the manager left me alone to let me get on with my work in the way I felt most comfortable, so long as I did the same with her – i.e. letting her do things the way she wanted to. This period of better relations lasted right through spring and into the summer of 2012. 

Money laundering

I can't remember the exact date in 2012, but I can clearly recall a long conversation I had with the other two cashiers when the manager was away.  During this conversation they told me about a property the manager and her husband owned overseas. They went on to explain that all the manager’s dubious activities at work, associated with Euro transactions, concerned this property and its sale, during which they’d engaged in some kind of monetary ‘fiddle’. They alleged that the manager had brought the sale proceeds, in Euros, back into the UK, concealed in her underwear and luggage. She then brought this currency to work so she could convert it back into sterling. They told me that when any customers wanted to buy Euros, that rather than processing the transactions through the post office system, the manager would use her own Euros and keep the Sterling cash for herself. This was in addition to making profits out of currency buying and selling. I believed that the manager’s behaviour was highly suspicious in terms of being a potential avenue for laundering criminal assets.

I was shocked at what the other cashiers told me, although it explained how the manager was able to get Euros into the branch off the books. My colleagues also told me that both the area sales manager and the previous assistant manager had known about what the manager had been doing, and because of this, I knew I couldn't approach the former as he would give me the ‘brush off’ again.

I had quite a few conversations with my colleagues about the manager’s dodgy transactions, and I was keen to report it to someone, firstly because the activities were criminal, but also because the post office network is supported by public funds. I thought that if it was so easy to carry out these practices in my branch, then it must be going on elsewhere, and could be costing the taxpayer very large amounts of money.

However, my colleagues persuaded me not to take it further, partly because of what they knew about some of the manager’s personal circumstances, and partly because of her husband’s connection to the police. In May 2012 a new postmaster took over the branch. The manager left the branch to do 'relief work' at other post offices. The next time I saw the area sales manager I attempted once again to talk to him about her malpractice, but he just said “she's gone now, so it's best not to talk about it”. Later he was to tell me that she was “ransacking” other branches. 

Once the new postmaster and his wife were in charge of the branch, I assumed most of the key functions of running the branch on a day to day basis. I was now content that most things, at least those under my control, were being done correctly. In terms of the foreign currency transactions, everyone was now involved, and I was confident that at least I and one other cashier were following the correct procedures.

On Wednesday 15th August 2012 the Postmaster informed the staff by phone that he was leaving soon. I did not know how soon, but I saw a potential opportunity to take over the business, with the support of my brother.

On 17th August 2012 I went to see my brother in Nottingham. I called the branch's area sales manager with my idea and he put me in contact a Post Office representative, the late Liz Morgan. I asked Liz for some details of the branch and building lease.

Liz didn’t have the details to hand, but she asked who I was, and then asked if I might be able to start looking after the branch as soon as possible on an informal and temporary basis. She told me this was because the current Postmaster was leaving very soon. I wasn’t sure about this, but Liz suggested arranging an appointment to discuss it on my return. 

Later that day Liz sent an email telling me the rent the current Postmaster was paying to the building lease holder was £2,960.

A new Subpostmaster

On Thursday 23rd August 2012, Liz came in at 10.30am and informed everyone it was likely the branch would have to close, because there was no one to take over. 

My first manager had apparently been contacted and offered £1,500 per month on top of the existing Postmaster salary to return to act as temporary Postmaster until such time as someone suitable was secured to take over on a permanent basis, but she was unable to take over immediately. Liz told me that unless she was able to find someone else, the branch would have to close the same day, thus rendering me and the other staff (by this time there were 5 in total) redeundant. 

Liz again asked me if I could consider taking on the role on a temporary basis, as I had been carrying out most of the Postmaster tasks anyway due to the outgoing Postmaster rarely being at the branch. 

Liz said she was “desperate”, and told me I would be doing the Post Office a great favour in keeping the branch open. 

Because I knew the role reasonably well by this time and the alternative was unemployment for everyone I agreed to consider it. During a meeting to discuss the appointment and my responsibilities (witnessed by my partner), Liz confirmed several fundamental points:

The contract – which I did not see during this meeting - would be a standard contract, stating the approximate income the Post Office would pay the branch. 

That I would be responsible for paying salaries and rent outgoings from what the Post Office paid me as Subpostmaster.

That my income would vary slightly on a month-to-month basis, and be slightly less, or slightly more than that mentioned on the contract, but it would, overall, cover all outgoings. I and my partner questioned Liz further about this. She was unable at the time to give us specific figures for the outgoings, but categorically assured us the income would easily cover all outgoings, and she stated “you will not have to put a penny in yourself”.

Included in this monthly income would be what she termed an ‘overscale’ of £1,500 (the same amount offered to the previous manager) which would pay my salary. 

Liz asked if this would be enough for me personally. Although it was low for the role, it was better than unemployment so I agreed.

The situation was so urgent and rushed, Liz said she would assess the financial arrangements in the coming weeks to make sure that the branch would be able to operate, on what she termed later in an email a “stable footing”. Liz even mentioned petty cash for items such as tea/coffee etc, stating that an allowance of £50 per month was reasonable.

She said the temporary appointment could be for any length of time – one month... six months... it was impossible at that stage to know. She told me she would be available at any time to make sure that I was comfortable in what, for me, was a totally new role.

Liz impressed upon me that I had to make an immediate decision. As the information supplied and her assurances seemed reasonable, I decided to go ahead, and I was interviewed by telephone that afternoon by someone from the Post Office. It was agreed that I would be appointed and Liz arranged for the auditors to come in the next morning. 

On 24th August 2012, after the audit, the Postmastership was transferred to me and I signed for the keys. However, at this stage, I had not signed, or even been shown, a contract.

Liz had told me the contract would be sent to me and must be returned immediately. I received it on Friday 7th September 2012, even though it stated my “appointment is not effective” unless I sign and return it before 4th September 2012. 

I spoke to Liz who said “don’t worry about that” and we discussed my financial responsibilities outlined in the contract. Liz repeated her assurances that I need not worry, that I would not be personally liable for anything other than making sure that income was used to pay outgoings. I added some amendments: e.g. as the building was in a poor state, I could not be held financially responsible for this as the contract seemed to indicate. Liz agreed to this. I signed the contract, and sent it on 11th September once it had been witnessed by the area sales manager.

At this time I reminded the Post Office that, according to the contract, security checks or references were mandatory when appointing a Postmaster. These were never done.

Once I had taken over the branch I sat down with my partner and began to assess the branch outgoings. Staff costs, rent and utilities totalled around £7,200 a month. As per my arrangement, I was expecting a £1500 "overscale" to cover my own salary, bringing my total income from the Post Office to £8,700 a month.

At the end of September, after a month in the Subpostmaster's job, my first paycheck from the Post Office arrived. It was for £3,737.76."

Does our hero get a bumper paycheck the following month to square everything away and set her up for a period of successful trading? Or does everything descend into disaster? What do you think?!

Part 2 of "Trouble up North (of England)" will be published soon...

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Friday, 14 August 2020

Post Office admits it can't even do stamps properly

I'm beginning to wonder whether the Post Office is fit for purpose. Not content with criminally prosecuting 900 people over 15 years using potentially dodgy IT data as evidence, it turns out its own procedures for dealing with that complex product - stamps - didn't work.

Buried in a press release about the Historical Shortfall Scheme and the appointment of a new director, the Post Office reported:

"Following a close examination of other branch processes unrelated to the technical performance of Horizon... this additional review found that Post Office’s stamp stock procedures had the potential to produce cash surpluses or shortfalls for postmasters in certain circumstances and, in some cases involving a shortfall, that there may not have been an equivalent loss to Post Office."

We don't yet know how the failure manifested itself, how many people have been affected, how much they might be out pocket or how long long this has been going on for. I have asked for this information.

What we do know is that the Post Office is planning to launch a "redress mechanism for postmasters who believe they may have been disadvantaged by this weakness" modelled on the Historical Shortfall Scheme. More details soon, I guess.

Incidentally, the deadline for applicants to the Historical Shortfall Scheme is midnight tonight. The Post Office says "potential applicants are reminded that if they feel they have special circumstances which have delayed application beyond the closing date they should get in touch with the scheme at historicalshortfallscheme@postoffice.co.uk as soon as possible."

So far there have been 1,300 applicants to the scheme. I wonder how many Stamp-gate will get.

Tuesday, 11 August 2020

Did government officials collude in trying to remove a judge?

Alex Chisholm, former BEIS Permanent Secretary

The scale of collusion between government officials and the Post Office in the latter's appalling behaviour towards campaigning Subpostmasters is in the process of being properly and diligently exposed.

On 22 June, Lord (James) Arbuthnot asked the following written question:

"To ask Her Majesty's Government whether the Accounting Officer with responsibility for the Post Office has played any role in advising ministers on the Government’s policy in relation to:

(1) the faults in Horizon software; 

(2) the treatment by the Post Office of sub-postmasters in relation to allegations of alleged criminal behaviour by sub-postmasters; 

(3) the sub-postmasters’ litigation against the Post Office; and 

(4) the establishment of the review into the Horizon issues."

On 6 July, Lord Callanan, the BEIS ministry's representative in the upper house, replied:

"The Principal Accounting Officer (PAO) responsible for Post Office Ltd. (POL) is the BEIS Permanent Secretary.

Issues regarding POL’s IT system and its relationship with postmasters are operational matters in which the PAO and Ministers relied on information provided by POL senior management.

Following the Common Issues Judgment in March 2019, POL advised Ministers that it intended to change its approach to the litigation. This included changes to the POL legal team and strategy, and ultimately led to the successful mediation in December 2019.

The Independent Review into Post Office and the issues highlighted by the litigation was approved within Government at all levels, including by the BEIS Permanent Secretary."

The Common Issues trial judgment was handed down on 15 March 2019. The Post Office would have sight of it at least a week before that. On 21 March, six days after the trial judgment was made public, the Post Office applied to remove the judge from the litigation, adjourn and re-hear the Horizon Issues trial under a new judge

On 19 May (after it had failed to stop the Horizon trial or get the judge recused), the Post Office used its new legal team to try to reverse the Common Issues trial judgment at the Court of Appeal.

For Lord Callanan to say that the Post Office's decisions in the aftermath of the Common Issues judgment "ultimately led to the successful mediation in December 2019" is like saying Hitler's attempt to take Moscow ultimately led to Britain and its allies winning World War II. It did, but that wasn't quite the outcome Hitler was looking for at the time.

When Post Office execs trotted along to BEIS in the immediate aftermath of losing the Common Issues trial, a successful mediation was not on the agenda. They wanted to reverse a judgment they didn't like, stop a trial which was going badly and remove a judge using millions of pounds of taxpayers money. 

It was a spectacularly wrong-headed approach from any perspective, certainly morally, yet we see from Lord Callanan's reply above that Alex Chisholm, the Principal Accounting Officer at BEIS, nodded it through. 

Yes, ultimately, it did lead to the successful mediation in December 2019, but only because the strategy was a disaster on all fronts.

Mr Chisholm has never been held to account for his actions in monitoring or blessing the Post Office's behaviour since he was appointed BEIS Permanent Secretary in 2016.

We don't know what he advised ministers about the progress of the litigation or the post-Common Issues "changes" to "strategy". We don't know anything about the nature of his discussions with Tom Cooper, the Post Office's UKGI-appointed non-executive director, who Paula Vennells said was "was fully engaged on the Board, sub-committee and with ministers and lawyers at BEIS." 

Yesterday, Chi Onwurah, the shadow minister for Business, wrote an opinion piece in the Daily Express demanding a full inquiry into the Post Office Horizon scandal. It was echoed by several Labour high-profile Labour MPs.

A judge-led inquiry could compel Mr Chisholm, Mr Cooper et al to answer some pretty important questions. An independent review can't.

Unsurprisingly, the government has insisted there will be no judge-led inquiry. 

The current minister, Paul Scully, has said he hopes to announce who will chair his "independent review" next month. Mr Scully, is, of course, in the hands of the very government officials who have something to cover up. 

Indeed, as a senior government source told me earlier this year: "the officials weren’t happy... They didn’t want a review, they didn’t want an inquiry or anything. They wanted it all to go away."

On 7 September, Lord Arbuthnot will be in the House of Lords asking Lord Callanan "what progress has been made in the review into the Post Office Horizon scandal."

Let's see what insight the answer to that question brings.

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My thanks to Tony Collins for alerting me to Lord Callanan's reply to Lord Arbuthnot via his ever-excellent blog.

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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, 7 August 2020

Bates v Post Office settlement agreement revealed

The confidential and controversial Bates v Post Office settlement agreement, announced on 11 Dec 2019, has been made public

Responding to a persistent FOI request by Peter Bell, the Post Office decided to hand it over to him, publish it on its website and email me a copy, for which I am grateful.

The document brought to an end the epic High Court group litigation against the Post Office, and it is interesting precisely because it has been shrouded in so much secrecy. It was not sent to the claimants when the case was settled. Given the outrage expressed in some quarters at the paucity of sums paid to the claimants - it's possible the agreement might offer some insight into the dynamics at play. Let's have a look.

What's in the box?

The most striking characteristics of the settlement agreement to me are:

a) that the steering committee which made the decisions on behalf of 555 claimants comprised just two people - Alan Bates and Kay Linnell. 

b) the Post Office's insistence that they are not awarding a penny to any of the convicted claimants.

c) that Alan Bates has arguably done more to advance the cause of serving Subpostmasters in one single document than the National Federation of Subpostmasters has achieved in its entire existence.

Pilot and co-pilot make the decisions - the rest are passengers

I do wonder how Alan Bates and Kay Linnell allowed themselves to be solely responsible for making significant decisions about the future of the litigation and the outcomes for the claimants. 

It's certainly something Alan Bates was uncharacteristically slippery about when I approached him recently. In putting together the script for the recent Radio 4 series I asked Alan who exactly was responsible for taking the decisions on the claimants' side. He replied:

"As with other large Group Actions, a Steering Committee is contractually appointed at the outset of the case by the Claimants, to make all decisions on behalf of the Group (and in the interests of the Group as a whole) based on the legal advice of Leading Counsel and the solicitors. That is what happened in this case.   

One of the main reasons for that structure in Group Actions is to ensure that confidential strategic decisions can be made without important strategic information about the strengths and weaknesses of the case getting into the opponent’s hands, as that would likely be very damaging to the Claimant Group’s case.

The Claimants have been advised of the detailed and complex legal and economic risks, issues and matters underpinning the legal advice that was given to the Steering Committee by Leading Counsel and Freeths, and Freeths will continue to speak directly to each of the Claimants who would like further clarity on any issue. 

Beyond that, you will appreciate that as with any legal case of this type, there are legal confidentiality constraints that we should all observe."

He could have just said "me and Kay". I'm not sure why he didn't. It's certainly there in black and white in the settlement agreement:

Confidential Settlement Deed, par 1.1

Kay and Alan may consider themselves uniquely qualified to fulfil such important responsibilities. They may feel they had earned the right to do so. They may not have thought that much about it, but a steering committee of two to decide the outcome for such a diverse group of claimants is arguably unfair on the claimants. It's also arguably unfair on Kay and Alan. 

Mediation is a high pressure environment. If they didn't feel that pressure, they were doing it wrong. Kay and Alan were entirely responsible for making a series of important and difficult decisions worth millions of pounds. Were they up to it? Would any two people be?

It might be that a steering committee of two was perfect for playing out the litigation (indeed, given the trouncing the claimants were giving the Post Office, it was something of a dream team). But when it came to negotiation, mediation and decision-making on a deal to tie the whole thing up, I would have wanted the insight and experience of more than one other claimant.

When I recently asked Kay Linnell, on the record, if she had any sympathy for the claimants who were complaining about the size of the awards they were receiving, she said "No", making that point that without Alan, they wouldn't be getting anything.

Convicted claimants = £0

On, then, to the startling revelation that the Post Office was very keen to ensure it was not seen to be giving any money to convicted claimants and to ensure that the convicted claimants agreed the value of their claim against the Post Office was nil.

To spell it out:

and...

This is the Post Office's way of making it abundantly clear that whilst the settlement agreement does not for one instant accept any liability for any wrongdoing against any claimant at all, ever...

... it is keen to ensure that on top of that, everybody knows not a penny of the settlement cash takes into account any aspect of the convicted claimants' case.

The barrister Paul Marshall (who is now representing several convicted claimants) has been dwelling on this. In a note released by the All Party Parliamentary Group on Fair Business Banking (read it here), Mr Marshall says:

"it struck me as intuitively strange that the claimants who had been convicted of criminal offences should have got nothing out of this enormously expensive large-scale litigation at all - except that they retained (i.e. had preserved to them under the settlement terms) a residual possible claim for malicious prosecution, contingent upon (i) the CCRC referring their case to the Court of Appeal and (ii) the Court of Appeal quashing their conviction. A rather rocky and uncertain road that starts, if at all, after the Court of Appeal.

... Put another way, the outcome of the Post Office litigation for the convicted claimants was... That the only thing they keep as a matter of right that has any value is a prospective possible claim for malicious prosecution that they shall have to pursue on their own without the help of Freeths as their solicitors. (I understand, but am yet to have final confirmation, that Tracy Felstead was prosecuted in 2002 by the Crown Prosecution Service – in which case I don’t think there is a single instance of a claim for malicious prosecution ever succeeding.) They of course had these contingent claims entirely independently of the litigation so claims for malicious prosecution cannot be said to be something “achieved” for them as a result of the litigation... A possible claim for malicious prosecution is all that is left – it’s a residue from their original claims.

That all their other potential civil claims, such as e.g. for damages for breach of contract and breach of the Post Office’s duty of good faith owed to them (one of the main issues of the earlier “Common Issues” trial was whether the Post Office owed the sub-postmasters a duty of good faith – an issue answered by Fraser J in the affirmative) were settled for nil value.

Receipt of an ex gratia payment (that is to say a gift) made by the ‘Claimant Steering Committee’ in their discretion out of monies paid in settlement of the non-criminal claims or the ‘Support Fund’ (i.e. out of sums paid by the Post Office other than to claimants convicted of offences)."

Mr Marshall goes on to say:

"It is, at any rate, now possible to understand why the convicted claimants such as Tracy Felstead (£17,000) and Janet Skinner (£8,400), who both were imprisoned as a result of their prosecution by the Post Office and conviction, have received such pitifully (some may think, shamefully) small payments following the settlement of their claims against the Post Office. The reason is, that it was expressly agreed that their claims had nil (strictly, were to be attributed nil) value and thus agreed that the Post Office would pay them no compensation. This appears profoundly unsatisfactory and remains troubling.

The overarching point is that, by participating in the litigation the convicted claimants have surrendered all their claims against the Post Office with the exception of a very uncertain claim for malicious prosecution and have surrendered those claims for no value. It appears to me that, on the face of it, each of the convicted claimants, but for their participation in the litigation, would now have individual claims of very considerable value – especially those who were imprisoned. Compare, for example, the compensation paid to those wrongly arrested by the police for the Gatwick drone episode – I understand Sussex Police paid out £200,000 for their wrongful arrest."

When I approached the claimants' solicitors, Freeths, about Mr Marshall's comments, they became most exercised. I received the following statement:

"Following discussions today with Patrick Green QC, we have formally written to Paul Marshall to inform him that the Note he has produced contains a number of serious inaccuracies and  omissions.  

The content of the Note is defamatory.

The “convicted claimants” have received a compensation share that has been calculated on precisely the same basis as for all other claimants (with malicious prosecution excluded, as that remains to be pursued upon convictions being quashed) and that approach was factored into the assessment of the acceptability of the global settlement sum, in the interests of the Claimant Group as a whole."

Another very well-informed source I spoke to was unequivocal that Mr Marshall had managed to get completely the wrong end of the stick. They explained that a clause in the agreement which specifically precluded any credit being apportioned to the convicted claimants was a good thing for those claimants because it staved off the possibility of the Post Office trying to use the total settlement monies to reduce any damages claim which could arise as a result of malicious prosecution. 

This isn't apparently just a matter of delaying credit - it seals off any argument the Post Office could raise as to how much of the settlement could or should have been apportioned to convicted claimants whilst ensuring that the convicted claimants did get some money from the civil settlement. As my source says:

"The fact that the settlement deed records no payment being made to [the claimants] by the Post Office simply means that the Post Office cannot argue otherwise for the purpose of any credit against damages in any - carefully preserved - malicious prosecution claim."

There are ongoing communications between Freeths and Paul Marshall. I am sure it will result in an outbreak of peace, love and understanding. If it doesn't, I have my popcorn at the ready. 

By the way, Alan Bates has not responded to any of my multiple requests for comment save to say: "my focus remains on continuing to achieve justice for all of the claimant group, which has been my focus all along."

Serving Subpostmasters

Alan Bates is, of course, the hero of this story. It was his 17 year campaign which got us here and it is his relentless pursuit of the Post Office which continues. Earlier this year he made it quite plain to me that he was absolutely determined to get proper financial compensation for the claimants, and he has spent the last eight months manoeuvring his tanks from the High Court to the lawns outside the Palace of Westminster. He has raised more than £100,000 to bring a complaint to the parliamentary ombudsman and he continues to demand a full independent inquiry.

It's also worth noting that the conclusion of the litigation produced more media and parliamentary scrutiny of this scandal than at any stage over the last ten years. 

Which brings me, finally, to point c). When you read section 9 and schedules 5 and 6 in the annex to the settlement agreement, you can make a case for Alan Bates having achieved more to improve the lot of serving Subpostmasters than any other individual in the history of the Post Office. 

As a direct result of the litigation and settlement agreement the Post Office has committed to more training, more trainers, new business support managers, a new handover process, a new branch support model including new area managers, new branch support tools, increased Subpostmaster remuneration, better quality control on transaction corrections, a new team to deal with disputed transaction corrections, dedicated case handlers to investigate discrepancies, better access to Horizon data from Fujitsu, a completely different approach to "losses" (which suggests they won't automatically be treated as Subpostmaster debts), better audits, better phone support, etc etc. It's quite a list.

Now - it doesn't mean the Post Office is actually implementing any of this, or doing it properly. Given what I have learned about Post Office managers I wouldn't want them to implement the opening of a bottle of milk, but the point stands. 

The Post Office has committed, in a legally-binding document, to rolling out all the above improvements, and I am sure the NFSP and CWU, MPs and the government will be chasing them like rottweilers to ensure they come to pass.

The day the settlement was announced I asked who the winner of the litigation actually was. The publication of the settlement agreement does not make the answer any clearer, but it makes all the questions around it more pertinent than ever.

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