Post Office's chief was warned faulty IT criminalised innocent people

Part-time priest at the heart of an unholy scandal: As chief executive of the Post Office, she was repeatedly warned a faulty IT system was criminalising hundreds of innocent Subpostmasters. Yet Paula Vennells denied them justice

  •  Horizon was a badly procured and atrociously implemented IT disaster
  • The Post Office scandal left hundreds of innocent people criminalised while Paula Vennells was chief
  • Tory MP Julian Lewis described the affair in parliament as one of the worst disasters there has been in public life since the infected blood scandal 

One of the most frustrating elements of the Post Office’s Horizon computer scandal was the institutional inertia around it.

Down the years, dozens of people, organisations and bodies knew something very serious was going wrong, because they were told it was. Yet they stayed silent for years on end.

It was not until last year that enough details had come to light for the Conservative MP Julian Lewis to describe the affair in parliament as one of the worst disasters there has been in public life since the infected blood scandal.

Government was partly to blame. It had pressed the Post Office to make more money by expanding its reach as a financial services provider — selling insurance, mortgages, issuing credit cards and installing cash machines.

The Post Office scandal left hundreds of innocent people criminalised while Paula Vennells was chief

To succeed at this, every single link of the Horizon IT chain had to be seen as bullet-proof. The pressure was on not to admit to any flaws in the system.

No alarm bells were ringing, no questions were pursued with any rigour. No one rocked the boat.

The lack of government interest in, and oversight of, the Post Office has played a significant part in this scandal.

Over the past 11 years, nine ministers have been nominally in charge of the Post Office, blithely repeating whatever assurances it handed to them.

As the scandal began to unravel, the Government was keen to do absolutely nothing to assist in finding out who was responsible, possibly because its civil servants were working cheek-by-jowl with the Post Office board, and its ministers should have known exactly what was going on.

Nor has the legal system come out of this well. The sheer number of Post Office-led prosecutions during this 15-year period — more than one a week — should have raised eyebrows. But no one in either the justice system or the Government seemed to be aware of what was going on.

Another contributor to the scandal was the very organisation set up to protect the interests of Subpostmasters — its equivalent of a trade union. Unions act like canaries down a coal mine, bringing issues to attention. But not the National Federation of Subpostmasters (NFSP), known as ‘the Fed’.

When automation of the Horizon system was proposed, the NFSP welcomed it whole-heartedly as the deal of the century, and it sold the network to its members at national and regional conferences, promising a golden future

‘It’s more like a Rotary Club than anything else,’ I was told. ‘They seem far more interested in holding annual dinners and congratulating each other than doing much else.’

Subpostmasters are technically self-employed, they run their own businesses and are entrepreneurial, self-reliant, small-‘c’ conservatives who instinctively trust officialdom and state institutions.

But they do expect their membership body to look after their interests and their relationship with the Post Office to be understood as a partnership of equals.

It is a self-image the NFSP likes to reflect and project, and one the Post Office is only too happy to take advantage of.

When automation of the Horizon system was proposed, the NFSP welcomed it whole-heartedly as the deal of the century, and it sold the network to its members at national and regional conferences, promising a golden future. It was ‘a new dawn’.

The Post Office, with the full support of the NFSP, had bet the farm on Horizon. It simply could not fail.

Protecting the credibility, integrity and operability of the system was therefore paramount. From day one of its rollout, the NFSP refused to countenance any public criticism of it.

As the Post Office went on its prosecution spree, any journalist approaching the NFSP would be told (in language strikingly similar to the Post Office’s) that Horizon was ‘robust’. Requests for off-the-record steers about potentially unsafe convictions of Subpostmasters were met with dark hints that the individuals concerned might well be spinning a yarn.

Its official line, trotted out to journalists such as me, was that ‘the NFSP has seen no evidence to suggest that Horizon has been at fault. We have full confidence in the accuracy of the system’.

Postmasters accused of theft by Post Office celebrate outside the High Court In London after they had their convictions overturned

The NFSP’s decision to avoid voicing any public concerns about Horizon made it complicit in the misery and chaos endured over the next two decades by desperate Subpostmasters, under threat of prosecution or losing their livelihoods. The NFSP publicly cut them loose, and let them drown.

When wronged Subpostmaster Alan Bates took his campaign to a regional conference and handed out leaflets, a rep walked past saying: ‘Don’t talk to him — he’s a thief.’ Mr Bates was forced to set up his own campaigning group. In 2004, it was the only source of any public criticism of the Post Office IT system.

When one member of the NFSP executive committee voiced his concerns about Horizon to his Fed colleagues, he recalls: ‘They all just laughed . . .

‘They just wouldn’t believe that balancing problems could be caused by technical issues. Because they believed what the Post Office told them.’

Any errors had to be the Subpostmaster’s fault.

Scandalously, though, there was a major chink in the Fed’s case. It turned out from evidence given in a court case that the NFSP was wholly funded by . . . the Post Office! What’s more, it had accepted this funding arrangement in return for agreeing to a Post Office cost-saving transformation which would cut most Subpostmasters’ salaries to the bone.

In this signed (and secret) commitment, the Fed expressly agreed not to engage in ‘any public activity which may prevent Post Office Ltd from implementing any of its initiatives, policies or strategies’.

The judge’s comments were damning. He concluded: ‘The NFSP is not an organisation independent of the Post Office, in the sense that word is usually understood. The Post Office effectively controls the NFSP. There is also evidence the NFSP . . . has put its own interests and the funding of its future above the interests of its members.’ In other words, the Subpostmasters had been catastrophically let down by those who were supposed to protect their interests.

But it is on the people running the Post Office that the greatest blame for this long-running scandal must be laid. It created the problem in the first place, with its over-ambitious and flawed IT project, and then washed its collective hands of it.

Martin Griffiths tragically took his own life after being wrongly accused in the Post Office Horizon scandal. He ran Hope Farm Road Subpost Office in Great Sutton, Cheshire for 13 years

Worse still, when the Post Office realised it may have been responsible for unsafe prosecutions of its Subpostmasters, it failed to provide crucial information to MPs and campaigners.

As the truth emerged in court, judges were scathing about the organisation’s credibility.

In one High Court judgment, Mr Justice Fraser said he had heard evidence from two senior Post Office executives — Angela van den Bogerd and Nick Beal — and in future would accept what they said only if it was ‘clearly and incontrovertibly corroborated by contemporaneous documents’.

That, said a leading QC, ‘is the judicial equivalent of not trusting them to tell him if the sky is blue, without going outside to check’.

What was the Horizon computer system and how did it go wrong?

Between 1999 and 2015, hundreds of postmasters were sacked or prosecuted after money appeared to go missing from their branch accounts (file image) 

Horizon, an IT system developed by the Japanese company Fujitsu, was rolled out by the Post Office from 1999.

The system was used for tasks such as transactions, accounting and stocktaking. However, subpostmasters complained about defects after it reported shortfalls – some of which amounted to thousands of pounds.  

Some subpostmasters attempted to plug the gap with their own money, even remortgaging their homes, in an attempt to correct an error.

Between 1999 and 2015, hundreds of subpostmasters were sacked or prosecuted due to the glitches. The ex-workers blamed flaws in the IT system, Horizon, but the Post Office denied there was a problem.

In case after case the Post Office bullied postmasters into pleading guilty to crimes they knew they had not committed.

Many others who were not convicted were hounded out of their jobs or forced to pay back thousands of pounds of ‘missing’ money.

The Post Office spent £32million to deny any fault in their IT system, before capitulating. 

However, the postmasters and postmistresses said the scandal ruined their lives as they had to cope with the impact of a conviction and imprisonment, some while they had been pregnant or had young children.

Marriages broke down, and courts have heard how some families believe the stress led to health conditions, addiction and premature deaths.

But denial and evasion were in the Post Office’s DNA. When, in 2015, former Subpostmaster Parmod Kalia realised from Panorama reports he’d seen — 14 years too late for him — that he had been wrongly jailed, he wrote to Paula Vennells, who was the Post Office chief executive from 2012 to 2019. He told her that what had happened to him when the figures on his computer terminal didn’t add up must have been as a result of a Horizon error.

It is typical of Parmod’s decency that he did not demand that she re-open or review his case. He just asked for an apology for what the Post Office had done to him.

It was Angela van den Bogerd who replied.

She told him that the Post Office had ‘exhaustively investigated’ Horizon and had not identified ‘any transaction caused by a technical fault with Horizon which resulted in a postmaster wrongly being held responsible for a loss of money’.

She added that there was no evidence of transactions recorded by branches ‘being altered through “remote access” to the system. Horizon does not have functionality that allows the Post Office or Fujitsu [the manufacturer of the system] to edit or delete the transactions recorded by branches.’

Just over a year later, though, the Post Office would be admitting in court that remote access was perfectly possible.

From the start of Horizon, the Post Office had gone in hard when discrepancies were discovered, and rightly so, to be fair, to prevent fraud.

Horizon had given area managers, investigators and cash management teams a window into every single branch in the country. They were on the look-out for money going missing and for false accounting. Once unusual activity had been identified, auditors could arrive at a Post Office branch, demand access to a counter and assess what was happening for themselves.

Unfortunately, a lot of Post Office auditors weren’t very good at their jobs. According to expert evidence given to a Parliamentary Select Committee, ‘they simply assume the balances on Horizon are correct, compare them with those in the branch and prosecute the Subpostmasters if the balances in the branch are less than those on Horizon.

‘No vouching of transactions whatsoever is undertaken by Post Office auditors. Using the term “audit” to describe this intervention gives their actions a veneer of professionalism and depth of analysis which is entirely absent.’

When Paula Vennells was appointed Post Office chief executive in 2012, she seemed, on paper, to be the perfect choice. She’d had a slew of big corporate jobs in the private sector and had joined the Post Office five years earlier. It was time, she said, to give something back.

‘It’s about community, too,’ she said. ‘People care desperately for the Post Office. Very often it’s the Subpostmaster or mistress who notices that an elderly customer hasn’t turned up recently and finds out what’s happened to them.’

There may have been a moral and possibly even spiritual motivation behind her decision to join the Post Office.

The Reverend Vennells is a non-stipendiary Church of England minister, once telling a business conference how she took Biblical inspiration from the young King Solomon and how he had wished to rule his people with justice.

Her brief from David Cameron’s government was for the Post Office to become operationally profitable by 2020, and she embraced the challenge. Unfortunately for her, the Post Office was stuffed to the gills with plodders.

Former post office worker Wendy Buffrey (left), from Cheltenham, celebrates outside the Royal Courts of Justice, London, after having her conviction overturned by the Court of Appeal

Many had started as posties or counter clerks and worked their way up into middle-management. By keeping their heads down for 20 or 30 years, they were rewarded for their loyalty with jobs they didn’t really have the capacity for. Paula Vennells recognised this, and so hired new staff and introduced training events to try to improve the performance of people who were there.

But there were far too many old-timers whose identity was bound up in the Post Office’s own self-image. They saw it as virtuous, so they were virtuous, too. Criticism of the Post Office was therefore a direct attack on their own personal integrity.

One of the new intake was shocked by what he found, likening prevailing attitudes to ‘a lifebuoy which became a cage . . . It leads to cultural blindness.’

Furthermore, ‘anything that could get in the way of that 2020 target was logged as a risk to be managed and minimised’.

Aged 19, Tracy Felstead, 38 from Telford, found that £11,500 had ‘gone missing’ from her south London post office when she returned from holiday.

Janet Skinner (left) and Tracy Felstead outside the Royal Courts of Justice, London, ahead of their appeal against a conviction of theft, fraud and false accounting

Former Post Office worker Janet Skinner (centre) hugs family members after having her conviction relating to the Horizon IT scandal overturned in April of this year

Vennells, I was told, was not happy about this situation. She believed the systems worked well, but she was equally clear she needed to find a way through that would solve the problem to the satisfaction of everyone.

So she brought in a team of independent forensic accountants named Second Sight to have a thorough look at the IT and business processes. But its leader, Ron Warmington, was soon bemoaning ‘the smokescreen’ they faced as their investigation progressed.

He detected a culture of bureaucratic intransigence: ‘We asked for short, easy-to-understand, honest and complete answers [to our questions] and what we get are highly technical, multi-page responses that appear to have been crafted so as to avoid actually giving any answers.’

And when it looked as though, far from confirming that everything was hunky dory, Second Sight was proposing to criticise the Post Office’s training, support, investigation and basic treatment of Subpostmasters, they came under direct pressure to water down their criticisms and language.

Vijay Parekh (centre) with wife Gita (left) and daughter Bhavisha after his conviction was overturned in April, joining dozens of others, who were all blamed for disappearing funds at their respective Post Office branches, which was later found to be due to a faulty computer system

The report was particularly critical of the way the emphasis of the Post Office investigators was on ‘asset recovery solutions’ — ie, getting its money back — rather than identifying and fixing the underlying problems which were causing the losses to appear in Subpostmasters’ accounts.

But the Post Office stuck to its old mantra — Horizon contained no systemic errors. Don’t blame the IT.

Meanwhile, a growing number of MPs, alerted by constituents, were so alarmed by what they were hearing about the Post Office that a meeting was arranged with a senior management team.

Then came a Select Committee of MPs quizzing the Post Office top team and pushing yet more evidence of dysfunctionality and corporate backsliding right into the open.

It developed a circular rhythm. The MPs would ask a question which Paula Vennells would answer with something irrelevant.

They would press her to give the answer to the actual question, and it would turn out she either didn’t know or decided she needed to take some offline advice before answering. The question would then be picked up by Angela van den Bogerd who would do what she could to satisfy MPs with a non-answer.

After one such encounter about the non-disclosure of legal files by the Post Office, one frustrated MP was left telling her: ‘I asked you a question and you haven’t given me a straight answer, so I will draw my own conclusions.’ Towards the end of the session, Ian Henderson of Second Sight put on public record his concerns about the Post Office’s woeful investigation function. He was ‘very concerned’ about many of the prosecution cases brought by the Post Office against Subpostmasters.

Here was an independent investigator — brought in by the Post Office itself, remember — giving evidence to a parliamentary inquiry that a publicly owned company had brought criminal prosecutions without sufficient evidence, and that miscarriages of justice had very possibly occurred.

Paula Vennells simply denied it. ‘We have no evidence of that,’ she said.

Former subpostmasters Janet Skinner, Seema Misra and Tracy Felstead outside the Royal Courts of Justice in March this year

But pressure on her was mounting. In an interview for Panorama, former Tory MP James Arbuthnot called on her to resign and said that the Post Office’s behaviour had been ‘disgusting’, an ‘abuse of power’ and ‘one of the most shocking things that I came across while I was a member of parliament’. The brother of a convicted Subpostmaster who had just died wrote to Ms Vennells telling her of his death and said that it had been due ‘in no small part to the seven years of stress he suffered as one of the Subpostmasters who have all been wronged terribly as a result of the Post Office negligence’.

Ms Vennells did not respond, leaving her ‘correspondence manager’ to send condolences on her behalf. Meanwhile, in 2018, she was awarded a CBE for her services to the Post Office.

Within weeks, Vennells had slipped further into the establishment’s warm embrace, announcing she would be leaving the Post Office to take up a board position at the Cabinet Office and chairmanship of Imperial College Healthcare NHS Trust. Neither job lasted long as questions about her time at the Post Office mounted.

But the Reverend Vennells continued to preach on moral matters throughout the Church of England’s Bromham Benefice in Bedfordshire. She was ‘deeply saddened’ by the Subpostmasters’ accounts of their suffering that were reported during the Court of Appeal proceedings.

The Communication Workers Union called for her to be stripped of her CBE and demanded a criminal investigation into those at the Post Office ‘who put these loyal postmasters in this situation’.

I wondered if Paula Vennells might now feel ready to give me an interview, in my seventh year of asking. Speaking through her lawyers, she refused, so I decided to visit her.

I drove to her house in the Bedfordshire countryside, a, rambling, old cottage, set in manicured grounds. It is the sort of house some of the sacked Subpostmasters had to clean to make ends meet.

I expected the place to be deserted, but I saw a room with lights on. It was a kitchen, and standing in it was Ms Vennells. We made eye contact. Delighted to see she was home, I jogged up to the front door and knocked, announcing who I was and why I wanted to speak to her.

No response. I knocked again, loudly. I walked back to the kitchen window. The lights had been switched off and the room was empty. Two untouched plates of what looked like pork chops and vegetables were steaming away in the semi-dark.

What was Vennells doing now? Hiding?

I went back to the front door and knocked again with my polite entreaties for an interview. Silence.

I tried once more time and then gave up. I had failed in my latest direct attempt to hold someone, anyone, to account.

In short, Horizon was a badly procured and atrociously implemented IT disaster. It was operated in an environment where a flawed system and incompetent people were able to destroy others’ lives.

But as for anyone being formally censured or punished for their role in causing, perpetuating or trying to cover-up the Great Post Office Scandal, well . . . I won’t hold my breath.

Adapted from The Great Post Office Scandal, by Nick Wallis (£25, Bath Publishing) © Nick Wallis 2021. To order for £22.50 (offer valid till 28/11/21; UK P&P free), go to or call 020 3176 2937.

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