The Post Office rewarded staff with bonuses if they hit targets for recovering money from subpostmasters blamed for accounting shortfalls, but scrimped and saved when it came to paying for vital evidence that would have cleared those suspected of wrongdoing.
During the latest hearing in the Post Office Horizon IT Inquiry, it was revealed that former Post Office investigator David Posnett and colleagues were given bonuses based on a performance score, which was partly calculated based on how much money was recovered from subpostmasters in deficit.
He said all financial investigators had bonuses that were linked to recovering money, as were those in the Post Office security department responsible for investigating subpostmasters who had unexplained shortfalls, which often led to prosecutions for theft or false accounting.
Between 2000 and 2013, there were more than 900 subpostmaster prosecutions, which were reliant on evidence from the Horizon computer system used by branches to do their accounts. The system has since been proven to contain errors, bugs and defects that can cause these unexplained losses.
So far, nearly 100 subpostmasters have had wrongful convictions overturned. Many more subpostmasters had their lives and businesses ruined after being forced to repay losses that they were not responsible for, losses that didn’t exist beyond the Horizon system.
While the Post Office was prepared to pay staff bonuses to recover money and, according to Posnett, allow a department not seen as a profit generator to contribute to the company’s bottom line, it was reluctant, due to costs, to request underlying Horizon data during investigations of subpostmasters who claimed losses were caused by the system. This information, known as ARQ data, could have proved the subpostmasters were not to blame for the losses, but the Post Office was reluctant to use it because it had a limit on how many requests it could make for free before Fujitsu charged.
Posnett agreed that the Post Office was reluctant to request ARQ data because it would incur a cost and that the Post Office would limit the scope of requests to save money.
“If the limit was reached, we would have to pay extra. We paid for services as part of the contract, and if we went over that we got charged extra.” He could not remember the amount, but when asked by counsel to the inquiry Jason Beer KC whether the amount was seen as a sum of a level that acted as a “disincentive” to seek ARQ data beyond the limit, he said this was possible.
In 2019, hundreds of subpostmasters, as members of the Justice For Subpostmasters Alliance, took the Post Office to the High Court in a group litigation order (GLO) and proved the Horizon software was to blame for unexplained errors.
Beer quoted, GLO presiding judge Peter Fraser, who said in his judgment “…that audit data should have been sought in every case where a subpostmaster was possibly going to be suspended or have their contract terminated, that the Post Office acted unreasonably in failing to seek such data before those events occurred, and that the commercial arrangements between the Post Office and Fujitsu did not justify the failure to seek the audit data, which was the best evidence of what had occurred and whether any bugs, errors or defects were operative”.
Asked whether the cost of ARQ data was a “significant issue for the Post Office”, Posnett said: “I would say yes on the basis that costs and money spent throughout the Post Office [were] not frowned upon but we had to keep a tight rein on every penny spent.”
The focus on lowering costs was also seen internally as a reason why the Post Office signed the Horizon contract in the first place, according to Posnett. He told the inquiry that talk within the Post Office after Horizon was rolled out was that the company only agreed to acquire Fujitsu’s error-prone Horizon system in the first place based on cost.
“There was noise in the company where people said that Horizon was chosen because it was the cheapest option,” he said.
Computer Weekly first exposed the scandal in 2009, with the stories of seven subpostmasters (see timeline of all Computer Weekly articles about the scandal below).
The public inquiry continues.