The Post Office commissioned an internal report on the performance of its controversial Horizon system in 2010, setting out to give the software a clean bill of health by only focusing on the positives amid claims subpostmasters were being blamed and prosecuted for the accounting shortfalls it caused.
The latest hearing in phase three of the Post Office scandal statutory public inquiry heard that the report’s author did not even investigate alleged problems with the software, but simply asked the IT team and staff from Fujitsu, the supplier of the software, who reassured him it was reliable.
The report was commissioned after questions began to be asked about unexplained accounting shortfalls in Post Office branches and Computer Weekly revealed problems being experienced by subpostmasters, which they believed were caused by computer errors.
Between Horizon’s introduction in 1999 and up until 2014, more than 700 subpostmasters and branch workers were prosecuted for theft and fraud after being blamed for the phantom losses. Hundreds were prosecuted, with some sent to prison, and thousands lost huge sums of money, with many going bankrupt.
It was later proved in the High Court that computer errors cause the shortfalls, and so far, 86 former subpostmasters have had wrongful convictions for fraud and theft overturned, with many more expected.
There were no terms of reference for the report, which was instigated by then Post Office managing director David Smith, but it was made clear to head of product and branch accounting (P&BA) Rod Ismay, who was tasked with completing the report, that he should just report on “positive reasons to be assured about Horizon” to give a clean bill of health to the software.
The Post Office had considered an external review and report, according to Ismay, but decided against that for reasons including that people would still have doubts over the system and ask questions regardless of the outcome, and that the companies that would carry out the audit would have “significant caveats” in their report, which would sow doubt about conclusions.
Merits considered
Back in 2012, when the report was published, the Post Office said it “actively considered the merits of an independent review”. “This has been purely from the perspective that we believe in Horizon, but that a review could help give others the same confidence that we have,” it said. “Our decision between IT, legal, P&BA, security and press office [departments] has continued to be that no matter what opinions we obtain, people will still ask ‘what if’ and the defence will always ask questions that require answers beyond the report.”
It added: “Ernst & Young and Deloitte are both aware of the issue from the media, and we have discussed the pros and cons of reports with them. Both would propose significant caveats and would have limits on their ability to stand in court, therefore we have not pursued this further.”
Ismay agreed that he was “asked to present one side of the coin”, as inquiry barrister Jason Beer put it.
There were no terms of reference for the report, but Ismay said: “I think I felt at the time that the question was quite clear: ‘Please can you list out the reasons for assurance?’” Ismay admitted he was given free rein to write what he wished, and only gave reassurances on Horizon’s reliability.
During the hearing at the Post Office Horizon scandal statutory public inquiry, Ismay said the Post Office stance on unexplained losses was that if there was no discernible error it was assumed to be caused by the subpostmaster, either deliberately through theft or as a result of their errors.
He admitted that when he was head of Risk and Control at the Post Office, questions were raised over an incident at a branch, but his investigation into alleged computer problems amounted to asking the IT department and staff at Fujitsu, which supplied the software, whether there was any foundation to allegations of unreliability.
“I did ask a question into the team of, ‘Well, look, if we’ve got this allegation being made, is this – you know, is there a foundation to this?’,” said Ismay. “And the very strong view coming to me from colleagues in the IT team at that time was that it was – there was no foundation to the allegation that had been made.”
When Ismay compiled his 2010 report, he used information from Fujitsu senior tech executive Gareth Jenkins. Beer asked him: “In what sense did you think that asking the person responsible for designing and maintaining the system whether the system he had designed and maintained had integrity was in any way objective?
Ismay said: “People separate to Gareth who I asked the question of were telling me that it was reliable. So people within our own IT team. Gareth is saying the same here. Short of doing an audit, I don’t know what else I could have done, other than take those assertions from individuals. Now, I think the report should have said these are untested assertions, as in untested by me during the course of collating this report, and my report doesn’t say that.”
Ismay said time pressure and his workload were to blame for this serious omission. Public inquiry chair Wyn Williams intervened. He said: “I don’t wish to be crude, but some people call that a whitewash. Do you think that’s what you were engaged in?”
Ismay said: “No, I think they – allegations had been made, but somebody like David Smith coming into the organisation wasn’t hearing – and he was finding his feet in the organisation.”
Williams replied: “But just telling him one side of the story was hardly educating him, was it?” Ismay said: “That was what [David Smith] asked for.”
The inquiry questioned an assertation in the report that it was “compiled as an objective, internal review of [the Post Office’s] processes around branch accounting”. Beer asked Ismay: “Do you understand ‘objective’ to mean based on real facts, not influenced by personal beliefs or feelings, or not constrained by a pre-determined set of criteria?”
Ismay agreed to the understanding of the word. Beer responded: “This report was none of those things, was it?”
Benefit of reflection
Williams asked Ismay: “With the benefit of reflection, do you agree that the decision not to commission a fully independent investigation and audit of the Horizon System in 2010 and, instead, for you to prepare a report that had as its object to demonstrate the robustness and reliability of Horizon, was a crass mistake?”
Ismay agreed that an independent report should have been done.
The Post Office continuously claimed there were no errors in the Horizon system that were causing unexplained branch losses and continued to prosecute subpostmasters, and demanded that any losses at any branch were covered by them.
Investigation
In 2009, Computer Weekly published an investigation into the problems experienced by seven subpostmasters who were using Horizon. The Post Office told each of them that nobody else was experiencing problems and covered up the computer errors. It’s a common complaint of subpostmasters that the helpdesk did not help them investigate unexplained accounting shortfalls.
Earlier in phase three of the public inquiry, it was revealed that senior Post Office executives told staff as part of its internal messaging not to reveal problems caused by its Horizon IT system, due to concerns the organisation would face serious business and legal difficulties.
Shaun Turner, a former executive working in the Post Office National Business Support Centre, which supported subpostmasters using the controversial accounting system, said he was aware “as a general theme” of concerns in the organisation that if the problems were known it would cause a lack of confidence in Horizon.
“From my recollection, the Computer Weekly article and the early days of the [campaign group] Justice for Subpostmasters Alliance were certainly things that were mentioned in the business, and where messaging was coming out to internal staff, like myself, around the robust nature of Horizon.”
He said he does not remember specifically where the messages were coming from, but that they were from the top of the organisation: “My impression was that messaging was coming from senior leadership. I imagine that messaging was coming from board level down.”
When an independent report into the reliability of the Horizon system was finally commissioned by the Post Office in 2012 after pressure from MPs, work done by forensic accountancy firm Second Sight revealed major problems with the software, processes and technology supporting it. When Second Sight began to get to the truth, the Post Office sacked the company.