Public inquiry hears how Post Office security withheld evidence from people it suspected of theft

The Post Office told investigators to include potential evidence in reports to their own lawyers, but not the subpostmasters they suspected of theft

Karl Flinders,
Chief reporter and senior editor EMEA

Published: 06 Jul 2023 9:45

The Post Office security department deliberately held back information on potential evidence that could support the cases of subpostmasters being investigated for alleged financial crimes, an official policy document has revealed during public inquiry.

During the latest hearing in the Post Office Horizon scandal public inquiry, it was revealed that reports sent to lawyers after initial investigations of subpostmasters suspected of theft and fraud included information about potential Post Office failures if relevant, but investigators were told to withhold this from the subpostmasters being investigated and potentially prosecuted.

Following the introduction of the Horizon computer system by the Post Office in 1999 to automate branch accounting, subpostmasters in large numbers began reporting unexplained accounting shortfalls. The Post Office blamed the subpostmasters and more than 700 were prosecuted, with many sent to prison. Thousands lost huge sums of money, with many going bankrupt.

Subpostmasters claimed the new computer system was causing the shortfalls, but the Post Office consistently denied this and suspected that subpostmasters did not have the computer expertise or resources to prove that errors existed. The Post Office used its power to prosecute privately and took advantage of the rule on the use of computer evidence that presumes that a computer system has operated correctly unless there is explicit evidence to the contrary.

In 1999, this rule replaced section 69 of the 1984 Police and Criminal Evidence Act (PACE), which stated that computer-based evidence should be subject to proof that the computer system was operating properly. The Post Office was a supporter of this change and, as Computer weekly wrote in 2021, had replied to a Law Commission consultation on the proposed rule change claiming the existing rule was “somewhat onerous” when prosecuting people charged with crimes, such as the subpostmasters that run and own its branches.

Since a multimillion-pound High Court case ended in December 2019, when subpostmasters proved that Horizon contained errors that could cause unexplained losses, 86 former subpostmasters have had wrongful convictions for fraud and theft overturned, with many more expected.

Phase four of a statutory public inquiry into the scandal is currently under way, it is concerned with: “Action against subpostmasters and others: policy making, audits and investigations, civil and criminal proceedings, knowledge of and responsibility for failures in investigation and disclosure.”

A question of withheld evidence

During the latest hearing, former Tony Marsh, head of security at Post Office until 2006 was asked about a Post Office policy used by teams investigating suspected theft or fraud by subpostmasters when reporting their findings.

It was revealed that two documents were created, which the investigators would complete with their findings following initial investigations.

The first was known as the Offender report, which Marsh described as a full report sent by Post Office investigators to the lawyers in the legal department. It detailed everything the investigator had established surrounding the alleged offences and alleged offender. Within this, the investigator would make comments about security weaknesses, other procedural and product integrity weaknesses, as well as the attitude of the suspect when they were interviewed, said Marsh.

“This must be a comprehensive list of all identified failures in security procedures and product integrity. It must be highlighted in bold in the report,” Post Office guidance stated. Marsh described this as a “full report” that would go to case management teams and Post Office legal services.

The other report, known as the Disciplinary report, which went to the suspect, was described as a subset of the Offender Report that would not include certain details. This report would often be given to the suspect, but would exclude certain information that was directed to the lawyer working on the potential prosecution.

It warned that the inclusion of information on “significant failures” could reduce the chances of a successful prosecution of a suspect and/or cause “significant damage” to the Post Office’s business. It said this information about “significant” failures, including in regard to product integrity, must be “confined solely” to the confidential Offender report.

It added: “Care must be exercised when including failures within the Disciplinary report as obviously this is disclosed to the suspect offender and may have ramifications on both criminal elements of the inquiry and as being potentially damaging to the reputation or security of the business. If you are in any doubt over the appropriateness of its inclusion or exclusion, you must discuss this with your team leader.”

Inquiry barrister Jason Beer KC asked Marsh whether he sees any problem with these statements. Marsh said all the information should be disclosed, but added that there were fears in the Post Office that if weaknesses were highlighted in the Disciplinary report, which went to suspects, they may be “exploited much more widely by people in the community.”

Beer said: “It is saying, ‘If there are facts and matters which undermine the prospect of [successful prosecutions], they must be confined solely to the confidential offender report’, doesn’t it?”

“So, ‘Facts which support a suspects defence, or which undermine the allegation against him, must be kept confidential’ is what this document is saying.”

Marsh disagreed and said it would go to the legal department who would have “a duty of disclosure” and there is no question that the information would not find its way, having been seen by a lawyer, to a suspect’s legal team if a decision to prosecute was made.

Beer said: “It doesn’t say that at all, it doesn’t say, ‘And then there must be consideration to release to the suspect any facts or matters that undermine the case against them’.”

Marsh admitted that he was trying to interpret a document he did not create and had no involvement in.

Beer said: “This is written into a policy, as bold as brass in black and white, ‘Don’t tell a suspect anything about the case against them that might undermine it’.”

During the hearing, Marsh was also shown a Post Office document regarding its prosecution strategy. It stated: “There is no single statement of current policy, but it can be summed up as normally to prosecute all breaches of the criminal law by employees which affect the Post Office, and which involve dishonesty. However, there are exceptions…”

One of the exceptions listed in the document was where the “Legal Services Dept advise that the prosecution is unlikely to succeed”. Evidence of computer problems would have made prosecutions difficult for the Post Office.

This is not the first-time evidence of the Post Office security department hiding evidence has emerged. During a Court of Appeal hearing in 2021, it was revealed that the Post Office instructed employees to shred documents that undermined the integrity of the Horizon computer system. The person responsible for giving instructions to shred documents was, like Marsh, a former head of security at the Post Office. This was John Scott, who is due to face questions in the public inquiry on Wednesday 12 July.

At the end of giving evidence, Marsh admitted that he did not ask the right questions about Horizon during his time at the Post Office, adding that he was guilty of “absorbing the group think within the Post Office that [Horizon] was a good robust system”.

In 2009, a Computer Weekly investigation first revealed that subpostmasters were being blamed for unexplained accounting shortfalls, which they believed to be caused by software errors (see timeline of Computer Weekly articles below.)

It has become a national scandal involving the government, the Post Office and IT supplier Fujitsu. Three phases of a statutory public inquiry into the scandal have been complete.

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