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Post Office auditors presumed subpostmasters were ‘on the fiddle’ or ‘in a muddle’

Post Office branch auditors investigating financial discrepancies routinely presumed subpostmasters were either unable to do their accounts or were stealing money, and failed to consider the computer system could be the problem.

The latest hearing in the public inquiry into the Post Office Horizon scandal also heard that subpostmasters in small branches were persecuted due to a power imbalance. They were more likely to be suspended as a result of account shortfalls than those who ran branches within large retail chains, because the Post Office’s revenue stream was less impacted by closure of small outlets.

Hundreds of former subpostmasters were prosecuted for financial crimes based on evidence from the computer system used in branches, known as Horizon. The system has since been proved to be error prone and 93 convictions have so far been overturned. Computer Weekly first exposed the scandal in 2009, with the stories of seven subpostmasters (see timeline of Computer Weekly articles below).

During a hearing in the public inquiry investigating the scandal, former Post office auditor and contracts advisor Alan Lusher revealed the preconceived notion of auditors and investigators when they visited branches with shortfalls.

He said when problems arose in branches the first presumption was that the subpostmasters’ accounts were a mess which could be caused by a subpostmaster stealing money.

“We referred colloquially to office accounts sometimes being in a muddle and sometimes as a result of a fiddle,” he told the public inquiry.

This confirms previous perceptions that Post Office staff had preconceived and derogatory views of the people that ran Post Office branches. During an earlier phase of the public inquiry Jeremy Folkes, former senior tech lead at the Post Office, said investigators were so convinced that subpostmasters were cooking the books that they failed to investigate alleged IT problems.

In November last year, during phase two of the public inquiry, which focused on the procurement, design, pilot, roll out and modifications of the Horizon IT system, Folkes said: “There were people in the investigations and prosecutions side in the Post Office who had confirmation bias. They were convinced that subpostmasters were misbehaving and if the system came up and showed that somebody was, say, £14,000 down, rather than taking into account whether the system was right, it gave them what they wanted.”

Lusher’s evidence also revealed that the Post Office was only concerned about its own business and not the businesses or welfare of its subpostmasters.

During the hearing it emerged that when shortfalls were found that could not be explained at branches, the Post Office was more likely to suspend subpostmasters in small branches rather than those at large branches with higher revenue.

When questioned about the Post Office’s decision-making process regarding suspensions, Lusher was asked by inquiry barrister Sam Stevens why the size of branch was relevant in a suspension decision.

Lusher said: “Some of the branches of the Post Offices were major high street stores with very high level of turnover, and so on, and some of them were very, very tiny sub offices in the countryside, possibly only open for a few hours a week. So that would certainly be taken into account.”

Stevens asked if the effect on the Post Office’s turnover of suspending a subpostmaster at a large branch was taken into account.

“Yes, that would certainly be a consideration,” replied Lusher. “There would be more inconvenience to the public and, as you say, less turnover for the Post Office than a larger branch. So one would want to avoid termination of a large branch if possible.”

Lusher admitted a smaller branch would be more likely to be suspended under these guidelines.

Barrister Flora Page, representing victims of the Horizon scandal, drew Lusher’s attention to a report, the Detica NetReveal review of fraud and non-conformance in the Post Office.

The review, which was completed in 2013, found that large branches, often within retail chains, were “by far the weakest performers in terms of conformance” and more likely than small branches to fail audits.

Page said large branches within retail chains “were given really rather more latitude than single subpostmasters in terms of non-conformance.”

Lusher said the large partners in retail chains, “dealt with matters in their own way.”

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