What’s happened?
In the latest grim twist in the Post Office’s shameful scandal over its flawed Horizon IT system, the chief executive Nick Read has been forced to hand back part of his £455,000 bonus after the company made misleading claims about the public inquiry into the affair.
In the original scandal, thousands of innocent sub-postmasters and sub-postmistresses were wrongly accused between 2000 and 2013 of stealing – 736 of them faced criminal prosecution for theft – due to faults in the Post Office’s new Fujitsu-supplied computer system.
Some were jailed; four committed suicide; many lives were ruined. The Court of Appeal overturned 83 people’s criminal convictions in 2019, but many are still awaiting justice and compensation.
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The saga is often cited as one the greatest injustices in modern British history – the latest mess over the payment of bonuses merely adds insult to injury.
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What does the bonus issue involve?
Under the Post Office’s remuneration arrangements, dozens of senior executives get bonuses for fully co-operating with the ongoing public inquiry into the Horizon scandal, led by ex-judge Wyn Williams.
This in itself is strange, given that cooperating with a public inquiry into your company’s grievous past wrongdoing would appear to be a basic moral duty.
Yet part of the executives’ performance bonus is indeed paid out for providing all “evidence and information” needed to enable the Horizon IT inquiry to “finish in line with expectations”.
The company’s most recent accounts, published in March 2023, show that these bonuses were paid out in March 2022 for fulfilling those commitments, even though the inquiry wasn’t close to being finished. Indeed, it was still in its first phase of hearings.
Crucially, the published accounts falsely claimed that Wyn Williams and his team had approved the bonuses. The angry ex-judge called that “misleading and inaccurate” – and the Post Office’s Nick Read has now apologised for the “incorrect statement” and “unacceptable errors”.
How much will it cost him?
Read, who joined the Post Office in 2019, has agreed to return part of his £455,000 bonus from 2021-2022 – but exactly how much has not been made public.
In all, some 50 senior Post Office executives received a payout as a result of supposedly hitting the relevant “performance metric” (of helping the inquiry).
These included CFO Alisdair Cameron, whose total bonuses that year were £310,000. On Tuesday the chair of the Post Office’s remuneration committee announced an internal inquiry into the bonuses.
The review, which will report its findings to business secretary Kemi Badenoch, will be led by a new nonexecutive director, Amanda Burton, who joined a few weeks ago (and is due to be the next remuneration committee chair). An internal review, even one conducted by a new broom, is unlikely to satisfy critics.
What should happen?
A Tory peer who advises the government on the Horizon compensation scheme this week called for the whole board to quit.
“It does appear that nobody on the board of directors read the accounts. If that’s the level of competence or energy they put into their roles, then they really ought to go,” James Arbuthnot told the Financial Times.
Meanwhile, the chair of Parliament’s business and trade committee, Darren Jones, announced an imminent public scrutiny session over “alleged false accounting” at the Post Office.
It’s not merely an issue of governance and integrity; it’s one of basic competence, says tax lawyer Dan Neidle in The Times – and the government should be demanding resignations.
How did the first scandal happen?
Due to technological and management failures. The Post Office, far too reliant on Fujitsu’s assurances, provided an unsuitable system and inadequate training.
It then failed to enforce a rigorous data auditing regime, and chose to scapegoat the system’s users rather than fix the bugs. But this is also a cautionary tale of a company refusing, for years, to accept that it might have made a mistake.
The scandal was first reported by Computer Weekly in 2009, and from 2010, BBC local radio journalist Nick Wallis doggedly pursued the story, as did Private Eye. But rather than pause and reflect, Post Office bosses pushed for prosecutions – determined to outspend and obstruct the sub-postmasters into submission.
They spent almost £100m fighting a High Court case brought by 555 sub-postmasters before agreeing to settle for £57.75m. In an excoriating 2019 ruling, judge Peter Fraser found that computer bugs had caused the account discrepancies at branches, and he condemned management for refusing to accept that earlier.
What’s the situation now?
The next phase of the inquiry is due to start next month. It will examine the action taken against the sub-postmasters, and who had knowledge of and responsibility for the failures in investigating it.
A later phase will explore governance issues, including why whistleblowers were ignored for so long. Up to £1bn of taxpayers’ money has been put aside to settle compensation claims and legal fees, but delays and legal wrangling could mean that more victims fail to receive a settlement in their lifetime.
Already 59 wrongly accused ex-postmasters have died before the end of the public inquiry, and the way the victims have been treated continues to beggar belief, says Nick Wallis in The Times.
Of that £57.75m payout in 2019, £46m went straight to the claimants’ lawyers and litigation funders in success fees. The claimants themselves – people who had lost their homes and businesses – were left with sums that didn’t cover their outstanding debts.
Meanwhile, those at the Post Office and Fujitsu who knew about the scandal, and played a part in covering it up, have not been held to account. A Met Police investigation has been running since 2020. “In that time two people have been questioned under caution, with no arrests.”
