Mr Bates v The Post Office shone a light on how the Post Office was run, and the flaws in management that allowed the scandal to happen. But it also highlights a wider issue of how the government buys goods and services.
We now learn that the government knew in 2016 that the Post Office had pulled a covert investigation that could have allowed sub-postmasters accused of theft or fraud to prove their innocence. The BBC reports:
“The 2016 investigation trawled 17 years of records to find out how often, and why, cash accounts on the Horizon IT system had been tampered with remotely. Ministers were told an investigation was happening. But after postmasters began legal action, it was suddenly stopped.
“The secret investigation adds to evidence that the Post Office knew Horizon’s creator, Fujitsu, could remotely fiddle with sub-postmaster’s cash accounts – even as it argued in court, two years later, that it was impossible.
“The revelations have prompted an accusation that the Post Office may have broken the law – and the government did nothing to prevent it. Paul Marshall, a barrister who represented some sub-postmasters, said: ‘On the face of it, it discloses a conspiracy by the Post Office to pervert the course of justice’.”
How the law helped the Post Office prosecute the sub-postmasters
Journalists covered the problems with Horizon over many years, but the Post Office denied there were any issues. Following an in-depth investigation by Mr Justice Fraser in late 2019 a crucial legal problem was surmounted. The Police and Criminal Evidence Act 1984 placed the onus on prosecutors to prove that the computer evidence was correct. In 1999, the Youth Justice and Criminal Evidence Act reversed this, and the defendant had to prove the evidence was wrong. The judge decided that he had heard enough to look deeper, and in a landmark ruling found the Post Office to be at fault.
Compensation delay ‘deliberate’
As the public inquiry was launched, the Post Office continued to contest compensation claims. In a new revelation published in the Sunday Times on 18 February, the Post Office chair Henry Staunton, sacked by the business secretary, Kemi Badenoch, in January, claims he was urged to delay compensation cases until after the election.
He described the management culture as toxic, with many managers still convinced sub-postmasters were guilty. He said the Post Office still employs over 40 investigators pursuing wrongfully accused sub-postmasters.
Fujitsu’s relationship with the UK government
Paul Patterson of Fujitsu said the company had a moral obligation to contribute to victims of the Horizon scandal. In a meeting with MPs on 31 January, Takeshi Isobe, the chief financial officer, offered the company’s deepest apologies to sub-postmasters and their families. He said the company would monitor the public inquiry and seek to arrive at appropriate compensation. The company had issued a statement stating that it would not bid for government contracts while the inquiry was ongoing.
Fujitsu has a long history with government contracts, and not without controversy. A £12bn NHS IT system contract was abandoned after failure which is estimated to have cost taxpayers £2.7bn. Fujitsu sued for compensation and was awarded £700mn.
The history of Fujitsu’s IT supply relationship continued undiminished, with the company receiving £4.4bn worth of contracts since the 2019 high court ruling against Horizon. It took a TV programme to stop the conveyor belt.
Procurement and preferred suppliers pitfalls
Normally in public procurement, tenders are awarded following a competitive tender process. With some major projects, this can be impractical, and so a list of ‘preferred suppliers’ is used. The potential pitfalls are obvious. There is evidence of personnel moving jobs between supplier and procurement positions, given their shared skill set, and effective scrutiny can be difficult.
Cost overruns are common, particularly with defence projects. If the client is at all unclear about exactly what is required, the supplier will make ongoing modifications, but at a high cost, and the full cost can burgeon very quickly. There are often faults on both sides.
The importance of due diligence
While the bypassing of competitive tendering is allowed in some circumstances (long running and very complex projects and where there is great urgency) there is, nevertheless, a need for due diligence. This includes checking the worthiness and business history of suppliers and monitoring the performance of existing suppliers.
There may well be questions to answer regarding the Horizon case concerning how well performance was monitored. Due diligence seems to have been rather lacking with much procurement of late; PPE supply being a glaring example, with huge contracts being awarded to companies with no history of supply, or in some cases no history at all, being merely days old.
The so-called VIP lane used to procure PPE and some other supplies was found to be unlawful by the high court. The House of Commons Public Accounts Committee also concluded that it was ineffective, highly expensive and flawed. Part of its report conclusion states:
“We highlighted that the need to operate at speed was not a justification for rushing into contracts without adequate due diligence or regard for public money and that the approach adopted had opened up significant procurement risks.
“We found that the Department had already wasted hundreds of millions of pounds on poor quality and unusable PPE by the time of our February 2021 report on PPE and that the High Priority Lane had not been effective in sorting good from bad offers or identifying credible leads.”
While this comment applies to the Department of Health and Social Care, the committee pointed to wider lessons for government procurement.
