Few people on this side of the pond (and not nearly as many on the other side as you would think) know much about a decades-long scandal that puts Enron to shame. More people will likely come to know of the scandal because of the new ITV television series “Mr. Bates vs. the Post Office” starring Toby Jones.
“The Great Post Office Scandal” began in 1996 when the British Post Office and some other government agencies chose a company, later fully acquired by Fujitsu, to create the software to automate numerous functions performed by local post office branches. By the October 1999 rollout of what was called the Horizon system, the other agencies had lost interest in the project due to perceived shortcomings and only the Post Office adopted it.
In his 500+-page book, The Great Post Office Scandal: The Fight to Expose a Multimillion Pound IT Disaster Which Put Innocent People in Jail (2022 Paperback edition), Nick Wallis describes the debacle in detail. As background, it is important to know that the Post Office was under heavy pressure from the government to have a successful rollout of this high-profile, very expensive system and, in the longer run, to stop bleeding money and actually turn a profit. Also, while the Post Office had thousands of employees, many of its branches were “owned” by businesspeople called “Subpostmasters,” whom the Post Office viewed as independent franchisees.
These offices not only sold stamps, but also handled numerous forms of government benefits and provided other services, such as ATMs. Billions of dollars of cash flowed through the system every month and, naturally, from time to time some of it disappeared due to sticky fingers of the Subpostmasters or their employees. However, immediately after Horizon’s roll-out, the number of investigations and prosecutions for theft skyrocketed.
In retrospect we know that the Horizon system had numerous flaws that could make it appear that money had disappeared when it had not, that the Post Office brass and Fujitsu were determined to take the public position that the Horizon system was “robust” and had no problems when they knew that it did, that the Post Office auditors and investigators were aggressive in investigating and prosecuting Subpostmasters for theft and seeking “reimbursement” for funds that had not actually been stolen, and that the Post Office then used those funds to fill in gaps in its own finances.
What happened, in broad outline, is this: A Horizon terminal would be installed in a Subpostmaster’s branch, often in a small town. The Subpostmaster would receive little training in use of the system. One day the system would mysteriously indicate that money was missing. Then the Subpostmaster would investigate and not be able to figure out where the money had gone. Multiple (sometimes hundreds) of calls to the Horizon help-line (also known as the “hell-line”) would ensue. The folks answering the helpline were virtually never helpful, would often promise to escalate the request for help up the chain (which typically did not lead to a call-back), and frequently would simply tell the Subpostmaster to not worry because the discrepancy would probably “sort itself out.”
But the discrepancy did not sort itself out. Rather, it mysteriously continued to grow, which was a problem because pursuant to the contract governing the Post Office’s relationship with the Subpostmaster (which often the Subpostmaster had not seen and was, in any event difficult to understand and radically one-sided in favor of the Post Office), the Subpostmaster was responsible for any losses caused by their “negligence, carelessness, or error.” The Subpostmasters would dip into their own savings or borrow money from family and/or friends to offset the discrepancy, but there were limits to how much most of them could do.
When the discrepancy had grown sufficiently large, Post Office auditors would suddenly show up at the Subpostmaster’s store, run a quick audit, and declare that a theft had occurred based solely on the discrepancy between the cash the store had and the cash the Horizon system indicated that it should have. The auditors did not seek to determine what had actually happened or if the Horizon system had failed. The Post Office took the position that the Horizon system was flawless and that if any money was missing, it had to be the fault of the Subpostmaster. In the eyes of the Post Office, the Subpostmaster had the burden of proof to show that they were not responsible for the loss, which was impossible because no one knew what had happened.
The Subpostmaster would be immediately suspended and locked out of the branch. The Post Office inspectors (who have the authority to act as criminal prosecutors in these matters) would, also without investigating what had truly happened, soon file charges against the Subpostmaster. Often these Subpostmasters–either because they had been advised to do so or because they seemed to have no other choice given that they could not determine the cause of the apparent loss–had not accurately reflected the balance on their books. The Subpostmasters were then charged with both theft and false accounting. When they protested that they had not stolen money and believed that the problem lay with the Horizon system, they were told (falsely) that the Horizon system worked perfectly and that no one else had any difficulties with it. They were often advised that their only chance to avoid prison was to plead guilty to the false accounting charge and in return the Post Office would drop the theft charge. Their solicitors, who had no practical way to investigate the Horizon system, would typically advise the Subpostmasters to take the plea deal. They mostly did, but were often sentenced to prison terms (typically 9-months) anyway. Then the Post Office would put a lien on the Subpostmaster’s home and business and would thereby recover the mythical deficit and strengthen the Post Office’s balance sheet with the proceeds.
As you might imagine, this blitzkrieg of government action severely damaged the wrongly-accused Subpostmasters. They had often borrowed money from family and friends to try to fill in the holes in their ledgers created by Horizon. Now they were tarred by their new reputation as thieves and were shunned in their communities. Several became homeless. Many suffered serious mental problems. At least one committed suicide.
Overall, it appears that more than 3,500 Subpostmasters were forced to pay money that they didn’t owe to make up illusory deficits caused by Horizon’s flaws. Around 2,000 of those were fired. And more than 700 were criminally charged, many convicted, and many went to prison.
This went on for fourteen years, from 2000 to 2014, when enough pushback from wronged Subpostmasters and their local MPs derailed the railroading that was going on. Even before this, enough smoke was wafting out of the system that investigations had been launched. But the Post Office executives stonewalled, lied, hid information, refused to respond to subpoenas, destroyed documents, and did everything within their power to prevent the problems with the Horizon system from coming to light. The Post Office effectively derailed both an independent investigation and a proposed mediation with a group of Subpostmasters that Alan Bates (a wrongly accused Subpostmaster himself) had organized. It buried several studies that it had secretly commissioned that showed both that the Horizon system was unreliable and that it had led to unjust prosecutions and convictions.
The Bates Subpostmasters group filed a lawsuit in 2016, but the Post Office secretly though expressly adopted the strategy of delaying, denying, and fighting every reasonable request on grounds that its deep pockets would outlast the plaintiffs’ assets and the Post Office would win a war of attrition. Although the Post Office nearly succeeded in this endeavor, in March 2019 after a lengthy trial, a judge found that the Post Office had lied, stonewalled, and acted as if it were answerable to no one but itself.
A second trial started that focused solely on Horizon’s flaws, but it was derailed for a time as the Post Office filed a baseless motion to have the judge recuse himself. The judge eventually finished the trial and held that the Horizon system was not remotely robust, and that Post Office and Fujitsu witnesses had lied repeatedly when they defended the system, including when they denied that Fujitsu could not access Subpostmasters’ Horizon units and make changes without the Subpostmasters’ knowledge. It turns out it could and the Post Office had known for nearly two decades that its repeated denials of this fact were lies.
As this blog post is written five years later in May of 2024, some compensation has flowed to wronged Subpostmasters, some wrongful convictions have been officially overturned, and some progress has been made in isolating individual wrongdoers. But at least 33 wrongfully-convicted Subpostmasters have died without having their convictions overturned, and Post Office obstructionism has continued, though the tide has definitely turned against this bureaucracy.
For example, only this month is Paula Vennells, the head of the Post Office during much of the relevant time, finally being questions about what she knew (almost nothing, she says) and when she knew it. The British police just recently assigned 80 officers to investigate the Post Office and Fujitsu, though no one expects prosecutions, if any, to be filed before 2026. And the Scottish Parliament has joined the UK Parliament in legislatively overturning many of these wrongful convictions.
We strongly recommend Nick Wallis’s book and look forward to viewing the Toby Jones television series. In a separate blog post (“Worse than Enron: The Great Post Office Scandal (Part II)”), we will analyze this tragedy through a behavioral lens.
Sources:
Daniel Binns, “Post Office Horizon IT Scandal: 80 Detectives Across UK Set to Investigate,” Sky News, May 28, 2024, at https://news.sky.com/story/post-office-horizon-it-scandal-80-detectives-across-uk-now-investigating-13144248.
Steph Brawn, “Horizon: MSPs Pass Law to Exonerate Wrongly Convicted Sub-Postmasters,” The National Scot, May 30, 2024, at https://www.thenational.scot/news/24356531.horizon-msps-pass-law-exonorate-wrongly-convicted-sub-postmasters/.
Brian Melley, “UK Post Office Scandal: Parliamentary Committee Seeks to Speed Up Compensation for Victims,” AP, Jan. 16, 2024, at https://apnews.com/article/britain-post-office-scandal-conviction-exoneration-2fa70dd0c0b5ac1850e031e5534f7392.
Simon Murphy, “Mirror Tracks Down Former Post Office IT Chief that Horizon Inquiry Insisted Couldn’t Be Found,” The Mirror, May 30, 2024, at https://www.mirror.co.uk/news/uk-news/mirror-tracks-down-former-post-32928824#google_vignette.
Adele Robinson, “Horizon Scandal: More than £1m claimed as Post Office ‘Profit’ May Have Come from Subpostmasters,” Sky News, March 28, 2024, at https://news.sky.com/story/horizon-scandal-more-than-1m-claimed-as-post-office-profit-may-have-come-from-sub-postmasters-13103425.
Nick Wallis, The Great Post Office Scandal: The Fight to Expose a Multimillion Pound IT Disaster Which Put Innocent People in Jail (2022 Paperback edition)