Horizon: The 20-year accounting software scandalby
The saga of the Post Office Ltd Horizon accounting system spans more than two decades. This chronology tracks how the Horizon scandal played out on the pages of AccountingWEB since the system was introduced in 2000.
On Friday 23 April, the Court of Appeal overturned the convictions of 39 subpostmasters on charges of theft, fraud and false accounting arising from discrepancies logged on the Post Office’s Horizon accounting system.
Hailed by The Guardian as “one of the biggest miscarriages of justice in British legal history”, the Horizon affair has rumbled on for more than 20 years, ensnaring as many as 900 subpostmasters in legal cases and claims that led to financial ruin, prison and in some cases suicide.
In their written summary of the case, the judges said the failures of investigation and disclosure were “so egregious as to make the prosecution of any of the Horizon cases an affront to the conscience of the court".
At the time, the Post Office had the power to prosecute its operators. By refusing to acknowledge known bugs in the Horizon system and treating shortfalls from an unreliable accounting system as an incontrovertible loss, Post Office Limited reversed the normal burden of proof and insisted the accused prove there had been no losses, the judges noted.
“Defendants were prosecuted, convicted and sentenced on the basis that the Horizon data must be correct, and cash must therefore be missing, when in fact there could be no confidence as to that foundation.”
Immediately after the court decision, the call went up for a full public inquiry into the case and to begin working out suitable compensation for those affected. To set the scene ahead of any such enquiry, we tracked the Horizon case as accountants experienced it in the AccountingWEB archives.
The Post Office first introduced its new Horizon computer system to its network of UK sub-post offices. The software had been developed by IT giant Fujitsu.
Commenting in the wake of the Court of Appeals decision last week, AccountingWEB member hfiddes recalled: “I remember signing a petition in support of our longstanding local postmaster in East Twickenham when he lost his job around 2002… That was when the local MP and newspaper got involved, but it puzzled me at the time how it took years for wider support to build so it got to court cases etc.”
In subsequent years, more and more cases emerged elsewhere in local media, but were rebuffed as isolated cases by the Post Office, which pursued any incidents where the takings of sub Post Offices varied from the Horizon figures as “false accounting”.
The Justice for Subpostmasters Alliance was founded in 2009 to help subpostmasters and mistresses who were afraid to go public with information or problems with Horizon for fear of prosecution.
In June 2012, the Post Office appointed external investigators, forensic accountants Second Sight to examine the allegations.
January – Working with Second Sight, JFSA issued a call for evidence to be collected in confidence to feed into the independent examination.
July – Second Sight’s interim report found no evidence of systemic problems with the core software, but it did find evidence of internal bugs. On two occasions in 2011 and 2012, “defects” in Horizon resulted in a shortfall of about £9,000 at 76 branches. The Post Office took a year to realise that the second computer defect had happened.
Frenkels Forensics partner Vivian Cohen told AccountingWEB that he had represented a sub-postmaster in court and argued that Horizon wasn’t always reliable and other people in the Post Office could enter transactions besides his client. The subpostmaster got a suspended sentence. “People can be sent to prison quite often on the basis of a computer error,” said Cohen.
The Post Office later made good the losses arising from the bugs that Second Sight identified and the sub-postmasters were not held liable. Though relatively benign in its findings, the interim report raised enough doubts to mark the turning point of the Horizon saga. [DW1]
September – After the full Second Sight report into Horizon was leaked, David Winch commented on AccountingWEB: “I have come across criminal prosecutions of postmasters/postmistresses in respect of apparent shortfalls arising from comparison of Horizon figures and actual cash & stocks… Of course it is absolutely routine for wrongdoers to deny wrongdoing – but the number of these instances in Post Offices is disturbing.”
Friction developed between Second Sight and its client after the accountants claimed the Post Office withheld relevant documents. The Post Office terminated the accountants’ contract and disbanded the working party. Second Sight nonetheless produced a confidential report.
In extracts from the Second Sight report obtained by BBC reporter Nick Wallis, the forensic accountants concluded that the design objective of producing a clear transactional audit trail allowing easy investigation of any errors “had not always been achieved”.
The Post Office rebuffed the findings and denied any suggestion it improperly withheld information from the accountants or that the Horizon system suffered serious deficiencies. In a counter-report on its website the Post Office said “an exhaustive and informative process” confirmed there were “no system-wide problems with our computer system and associated processes”.
The Parliamentary select committee for Business, Innovation & Skills investigated the affair and warned the secretary of state about a “lamentable lack of information provided to Second Sight” and urging the government to investigate these concerns.
Although numerous Horizon cases were in progress and sub-judice, the BIS select committee undertook an inquiry on the future of the Post Office network.
June – Publishing its findings, the BIS select committee chair commented, “If the government is really committed to taking action that delivers for the victims of this scandal it should bring forward a judge-led public inquiry.”
11 December - the Post Office agreed a settlement with a group of 550 claimants in which chairman Tim Parker apologised: “In the past, we got things wrong in our dealings with a number of postmasters.” The undertaking to “reset” the organisation’s relationship with postmasters was accompanied by a £57.75m payment. After allowing for the costs of fighting the case, the claimants are likely to share £10m – less than £20,000 each.
16 December – In a verdict in favour of the subpostmasters’ association (Bates v Post Office  EWHC 3408 (QB)), Mr Justice Fraser ripped into the Post Office’s evidence and concluded: “Horizon was not remotely robust. The number, extent and type of impact of the numerous bugs, errors and defects that I have found… makes this clear.”
He added that the Post Office’s continual attempts to play down the evidence from postmasters demonstrated “a simple institutional obstinacy or refusal to consider any possible alternatives to their view of Horizon, which was maintained regardless of the weight of factual evidence to the contrary… This approach by the Post Office has amounted, in reality, to bare assertions and denials that ignore what has actually occurred… It amounts to the 21st century equivalent of maintaining that the earth is flat.”
March – Following the conclusion of the Commons business committee investigation and the 2019 civil claims, the Criminal Cases Review Commission (CCRC) referred the cases of 42 convicted Post Office Ltd employees to the Court of Appeal on the grounds of abuse of process. They included subpostmasters, subpostmistresses, managers and counter assistants.
Second Sight’s Ian Henderson and Ron Warmington told the commons investigation how the Post Office had thwarted their investigation. “We identified evidence of flaws and bugs in Horizon. We also heard direct evidence of Post Office or Fujitsu altering transactions and balances without the knowledge of subpostmasters. Not only did Post Office refuse to accept that, but they refused to supply to Second Sight the documents that would enable us to investigate that issue,” said Henderson.
April – Following the Court of Appeal decision, in which the convictions of 39 of the 42 appellants were quashed, the status of any public enquiry and the compensation due to claimants (including those who had reached the 2019 settlement and are currently left out of any further legal awards) is yet to be resolved. Several AccountingWEB members took the opportunity to offer their perspective on the case in Any Answers.
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Looking back over the chronology, longstanding Horizon-watcher David Winch told AccountingWEB: “Because postmasters were contractually obliged to make good certain shortfalls pretty much immediately out of their own pocket, some of them resorted to manipulating the figures to hide the shortfall. They may well have considered that – given a bit of time – they could work out what had gone wrong and correct it.
“As things turned out they were not able to resolve the conundrum at the time and when the Post Office auditors turned up they were shown to have manipulated the figures. So they were prosecuted and convicted of ‘false accounting’ for that manipulation – not for theft of cash.
“Since these Postmasters DID manipulate the figures, they did ‘gain’ in the sense that it delayed them having to pay up to cover the system shortfall and many of them did plead guilty to ‘false accounting’ at trial. One might expect that in these cases the Court of Appeal would have concluded that the convictions should be upheld.”
As things turned out, the Court of Appeal quashed these convictions – as well as the theft convictions – because it held that Post Office Ltd knew there were bugs with Horizon, but nevertheless insisted that the Horizon data was wholly reliable and accurate, when it had a legal duty to disclose to the defence any information which might assist the defence. As a consequence, these defendants did not get a fair trial and their convictions must be overturned.
“The only convictions not overturned were three cases in which the Court of Appeal found that Horizon data had not been an essential ingredient in the prosecution case,” said Winch.
This level of criticism of a prosecutor happens only very rarely in the appeal courts, he added.
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