A former Post Office boss has admitted his mistake in failing to give proper instructions when commissioning a 2010 report on the Horizon computer system, at a time when its reliability was being challenged by subpostmasters and MPs.
The exclusion of written terms of reference to guide the author resulted in a report that only focused on the positive attributes of the controversial accounting system used in branches.
Subpostmasters were blamed for unexplained accounting shortfalls, with hundreds prosecuted for theft and fraud. They said the shortfalls were caused by Horizon errors, which the Post Office denied.
The report was created after MPs began to ask questions about unexplained accounting shortfalls in Post Office branches, and a Computer Weekly investigation into problems being experienced by subpostmasters the previous year.
David Smith, Post Office managing director from April to December 2010, was the executive who commissioned the controversial Ismay report in 2010 to reassure MPs that Horizon was “robust”. The report, completed by former Post Office head of product and branch accounting Rod Ismay, gave the Horizon system a clean bill of health despite wide knowledge within the Post Office of its frailties.
Smith told the inquiry this week that he commissioned the report to quickly establish what the Post Office’s position was regarding the Horizon system’s reliability by pulling together information from across the company. He said he would have informed his team that MPs had requested a stress test report on Horizon to “review how and why we consider the Horizon system robust”.
Smith said he would have asked investigators to look across the whole organisation and consider the types of questions that might be asked about the system. “I would offer them any resources they need to pull this together,” he added. Smith also said he would tell those compiling the report that the Post Office board wanted “an honest view, not a view that is one-sided”.
But during his evidence hearing in phase three of the public inquiry in May 2023, report author Ismay said he was given the impression that he was “asked to present one side of the coin”.
Smith admitted he had failed to include written terms of reference, and when asked, said he didn’t know why. “[When] I reflect back, that was a mistake,” he told the inquiry.
The absence of written terms of reference left a lot open to interpretation for Ismay, who in phase three of the inquiry said: “I think I felt at the time that the question was quite clear: ‘Please can you list out the reasons for assurance?’”
He said the summary would be based on existing Post Office conclusions. Ismay admitted in the May 2023 hearing that he was given free rein to write what he wished, and only gave reassurances on Horizon’s reliability.
During the latest inquiry hearing, Flora Page, representing former subpostmasters, asked Smith whether the Ismay report was a cover-up of the fact that he and his team knew that Horizon’s integrity was very much in doubt. Smith said: “No, absolutely not.”
During the latest public inquiry hearing, Smith also apologised for sending a celebratory email to his legal team after the conviction of West Byfleet subpostmaster Seema Misra in 2010. In the email, he congratulated his team for their work, which led to Misra’s imprisonment while pregnant, stating it was “brilliant news”.
Misra had her wrongful conviction overturned in 2021.
Smith apologised and blamed the large number of emails he received and his haste for the “poorly thought through” email.
“I would like to place on record my apologies to Mrs Misra and her family because of the way this has been perceived,” he said.
The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to the accounting software (see timeline of Computer Weekly articles about the scandal below).
• Also read: What you need to know about the Horizon scandal •
• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story •