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Bankruptcy, prosecution and
disrupted livelihoods -
Postmasters tell their story
May 11 2009
Rebecca Thomson reports on claims
that the Post Office has failed to
recognise a potential IT problem.
Lee Castleton cannot get a mortgage or a bank account, and is
unlikely to ever own his house. He works over 100 hours a week as an
lectrician to make ends meet and suppo
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The 40-year-old former postmaster was declared bankrupt after he refused to pay
the Post Office £27,000 ~ money he owed because the accounts of his Post Office
branch in Bridlington, Yorkshire, showed deficits over a 12-week period in 2004.
Castleton insists he did not owe the money ~ although it showed as a loss on the
Post Office’s Horizon system, which is used by postmasters to do their accounting.
He is one of several postmasters to come across losses they could not explain.
Castleton was so concerned about the debt that he refused to pay if back,
and decided to go to court to contest the Post Office’s insistence that he
should pay.
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But the court ruled that the debt was real, not illusory as Castleton argued.
“The losses must have been caused by his own error or that of his
assistants,” the judge said. “It is inescapable that the Horizon system was
working properly in all material respects.”
Having lost the case, Castleton was left with costs of £321,000. In 2007, he
filed for bankruptcy. “I was in too deep ~ I see that now. The whole thing
has been heartbreaking,” he says.
After an investigation of six months, Computer Weekly has discovered that
at least seven postmasters have come into conflict with the Post Office
after the system showed losses which took them by surprise.
Jo Hamilton started signing her accounts even when she knew they were
wrong, because, she says, calls to the Horizon helpline didn’t stop the
deficits occurring and she felt backed into a corner. She was convicted of
false accounting, but was spared a prison sentence after local villagers
organised a collection to pay the debt.
Noel Thomas was convicted of the same charge, and spent his 60th
birthday in jail.
A fourth postmaster, Amar Bajaj, ended up selling his Post Office. He
resents making good the shortage and claims that the Post Office has
received £11,000 from him which he does not owe.
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A fifth, Alan Brown, had a £6,500 deficit written off by the Post Office — only
to find another £13,000 loss that he could not explain.
In a sixth case, Judy Ford had her IT equipment replaced by the Post
Office, but not before £10,000 had gone missing. The company said it was
probably down to her own errors, but she insisted she had not got anything
wrong. She couldn't afford the repayments. “I lost all confidence in my job,
and now I am going bankrupt. I have no trust in the Post Office at all,” she
says.
A seventh postmaster, Alan Bates, refused to sign his weekly accounts,
saying it would have made him liable for any losses. He has called for a
public inquiry.
All of the posimasters we spoke to sa
Federation of Sub Postmasters, has refused to help them investigate their
concerns.
The Post Office denies it received any complaints from posimasters, and
also denies that any IT-related fault could have caused the systems to
show incorrect sums of money owed by some postmasters.
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A spokesman said, “Horizon is an extremely robust system which operates
over our entire Post Office network and successfully records millions of
transactions each day. There is no evidence that points to any fault with the
technology. We would always look into and investigate any issues raised
by sub-postmasters.”
The Federation declined to comment on the postmasters’ claims.
Lack of evidence
None of the postmasters have firm evidence that IT was to blame. Jo
Hamilton did not even realise it could have been the equipment causing
problems until after her court case. She says, “I didn’t understand what was
happening, and I’m so rubbish with IT that at the time I thought it was
somehow my fault. But other postmasters contacted me after my case, and
I realised I wasn’t alone.”
One expert, Tony Sykes, a business systems specialist, says that further
investigation is needed. Sykes has studied the system print-outs which
showed that Castieton’s Post Office had run up large debts.
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A senior official at the Federation of Sub Postmasters, who asked not to be
named, said, “The Horizon system may have been hunky dory on day one,
but how does the Post Office know the system hasn't degraded over the
years?
“The problem we have is the culture of the Post Office. It's heresy to say
something can go wrong. No one can say computers cannot go wrong.”
Those affected say the Post Office did not fully investigate their claims.
They also say that their contract requires them to pay any loss at their
branch, whatever the circumstances.
Litigation solicitor Leigh Ellis, an IT specialist, says the contract between
posimasters and the Post Office is weighted in favour of the company.
“Postmasters need to be very careful that they retain evidence of
differences between what the computer system reports and what they
receive through the tll. They need to put their concerns in writing to the
Post Office explaining what the problems are.”
Chris Wise, a business systems consultant who acts as an expert witness
in court cases involving IT systems, says, “It's difficult to know what has
gone wrong from the evidence we have to date, but almost all IT systems
ever built have malfunctioned at some point. What matters is the way a
business deals with those errors and gets to the bottom of what has
actually happened.”
He says it may not have been IT glitches that caused problems for
postmasters but the way the Post Office handled them.
Case study 1
«Lee Castleton, Bridlington, Yorkshire
ee Castleton, 40, was postmaster at the
Bridlington post office in east Yorkshire. His problems started in January
2004, and he claimed he couldn't get help from the Post Office.
“Misbalances continued for 12 weeks. I spent hours going through
accounts, trying fo find out what had happened. It was baffling,” he says.
Castleton rang the Horizon helpdesk, which is run by the Post Office, and
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asked repeatedly for help and a system check, but says they did very little.
“The Federation didn’t help me either. It said it didn’t want to get involved
and refused to let me join.”
After 12 weeks, Castleton was suspended and the Post Office told him he
had to pay for the losses. “I decided to contest my obligation to pay the
money in the civil court, because I hadn’t done anything wrong,” he says.
Castleton could not afford lawyers in the High Court, or pay an IT expert
witness to look at the system logs for him. He argued that the discrepancy
in his accounts had been created by the computer. But the judge said that
the deficiencies were real, not illusory, and, as such, were evidence that
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the branch had not been managed properly. “The losses must have been
caused by his own error or that of his assistants,” the judgment said.
Under their contract with the Post Office, postmasters are liable for any
losses that are due to carelessness, negligence or error. Castleton was
also liable for the company’s legal costs.
“The Post Office really put me through the mangle,” he says. “I owed
£27,000 for the deficits, and £321,000 altogether. I was in too deep ~ I see
that now. The whole thing has been heartbreaking.”
Case study 2
«Jo Hamilton, South Warnborough, Hampshire
Jo Hamilton, 51, was postmistress in South Warnborough in Hampshire
between 2003 and 2005.
Hamilton started experiencing problems in October 2003. She entered
every transaction into the system via the touchscreen till, and at the end of
the week the computer would tell her how much money she should have.
“One time it said I was down £2,000, so I rang the Horizon helpdesk. The
supervisor told me to do various things, and three minutes later I was
£4,000 down. Whatever I did after that, I couldn't get it to come up any
different,” she says.
The Post Office told her she owed the money, and took repayments out of
her monthly wages. “It made me reluctant to phone them, because it was
just crazy ~ when I asked for help, it just doubled the amount and said I
owed it money.”
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Hamilton’s problems worsened. “Every week the system would come up
telling me how much I should have in there. I knew it wasn’t the right
amount, but I didn’t know what toe do, I couldn't ring them up, because I just
didn’t have the money to pay it all back. So I signed the accounts each
week, saying there was a certain amount in there when I knew there
wasn't. I know it was dishonest, but I didn’t steal any money. It got worse
and worse.”
Post Office auditors visited the branch in March 2005 and told Hamilton she
owed £36,000. They prosecuted her for theft and 14 counts of false
accounting, but later dropped the theft charge.
Hamilton says the case did not deal with the issue of IT. She pleaded guilty
and was given a year’s probation. Her house was remortgaged to pay the
money, and the villagers in South Warnborough collected £9,000 between
them to heip.
Hamilton says, “In 18 months, I will have finished paying back the villagers,
but won't have paid off our mortgage.”
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Case study 3
«Noel Thomas, Gaerwen, Anglesey
Noel Thomas, 61, from Anglesey, worked for the Post Office for 42 years.
His problems started in 2003, when he discovered a deficit of £6,000. He
says he spent hours looking at it, trying to find out what was wrong.
He says the Post Office paid half of the deficit for him, and he paid the
other half. He didn’t have any more problems until 2004.
“It started up again all of a sudden. The money was going at a rate of
£2,000 a month, and it went on until October 2005. The last figure they told
me I owed was £50,000.
“The National Federation of Sub Postmasters didn’t want to know. It is
frustrating — {I would like to know where that money weni to. The whole
thing is a real mess,” he says.
Faced with mounting deficits and nowhere fo turn for help, Thomas signed
the accounts to say the money was there, when if wasn’t. “I didn't know
what else to do. It was my biggest mistake — I should have turned round
and told them I was shutting up shop until they found out what was going
on. But at the time I thought they would close the Post Office if I did that,
and that would cause a problem for the village.”
The Post Office prosecuted Thomas for false accounting. He pleaded guilty
and says the IT system didn’t come up during his hearing — his barrister
told the judge about his good character.
Mark Jenner, who at the time was the director of fraud Investigation at
accountancy firm Baker Tilly, said in a report prepared in advance of the
case that he did not propose that the Horizon system was flawed. “If the
Horizon system was flawed, I would expect to see issues raised by all
14,000 branches in the UK and not only a handful,” he said.
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But Jenner had been unable to examine the computer terminal used in
Thomas’s branch. “To completely discount the possibility that the Gaerwen
branch terminal was not responsible for creating systematic and cumulative
errors, I would still wish to inspect the terminal,” he said.
Jenner’s report was produced before the court hearing, when Thomas
expected to face charges of theft. It was not used in the hearing because
the theft charges were dropped.
Thomas was sentenced to 12 weeks in prison. “I spent my 60th birthday in
there,” he says. “It was hell on earth and it took me a long time to get over
it”
Case study 4
-Amar Bajaj, Chelmsford, Essex
Former barrister Amar Bajaj, from Chelmsford, sold his post office after
losing £11,203.
His problems started in 2004, and he wrote to the Post Office every time
there was a misbalance in the accounts. In July 2005, he contacted a
solicitor because he felt that “the Post Office would look to prosecute us
due to its own mistakes”.
Bajaj says of the problems, “Any shortage will remain on the system for
many weeks until a demand is made by the Post Office for the amount to
be made good.
“I personally made good any shortage. After we got it back down to zero,
the system would show a shortage of anywhere between £2,500 and
£3,500 within a week.
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“In spite of various letters and correspondence between myself and
solicitors, no official has visited to see or check or remedy the defects. I am
of the opinion that the Post Office is in breach of its contract to maintain the
system, and therefore has wrongfully obtained our money and is earning
interest as a result”
Bajaj contacted his MP, Simon Burns, who wrote to the Post Office on his
constituent’s behalf. In its reply, the company said, “We do accept that
individual branches may experience very occasional failures.”
Case study 5
eAlan Bates, Llandudno, Wales
lan Bates, 52, worked at the post office in
Llandudno in north Wales, from 1998 to 2003.
In 2000, he discovered a shortfall of £1,041.86 which he couldn't account
for, and wrote to the Post Office. After two further letters, the company
wrote back in 2002, saying they would write off the amount but without
giving any reason.
lt said, “Post Office Ltd has decided to take no further action in respect of
the loss at your post office which will be written off.”
Despite the loss being written off, Bates continued to have problems with
deficits. He refused to sign his weekly accounts, saying it would have made
him liable for any losses. When deficits occurred, he refused to use his own
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money to pay them.I GRO ‘but said it was not
supportive.
“Why didn’t the Post Office prosecute me? Because it knew there were
faults with my system. It did not want to take me to court. I never tried to
take it to court as I had received quite a broad range of legal advice about
doing so. I was told that it could keep me in court and keep appealing any
findings until I ran out of money.
“There should be a public inquiry into this. I am in no doubt that many sub-
postmasters have finished up breaking the law because of the Post Office
and the position it left them In,” he says.
Case study 6
Alan Brown, Callender Square, Falkirk
Alan Brown is a serving postmaster. He gave an e-mail dated January
2006 to Lee Castleton for Castleton to use in his own court case. The
e-mail says the Post Office had written off a £6,500 loss on his account
“some time” after he said it had appeared on the system.
But he says another shortage appeared that evening when he was
balancing the accounts. “I have one screen that says I have a £4 gain, and
the screen next to it says I have a £13,000 loss on the same stock unit,” he
says in the e-mail.
“One node has stopped communicating with the rest. This could be costing
sub-postmasters throughout the country a fortune and all because the
computer systems occasionally do not work.”
Case study 7
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eJulle Ford, Yeovil, Somerset
Julie Ford is from Yeovil in Somerset. She became postmistress of
Westfield Post Office in October 2007. Her problems with the company
started at the beginning of November 2007, when her branch started losing
hundreds of pounds at a time. The problems continued until February 2009,
when she was forced to file for bankruptcy.
“At one stage I was £1,300 down. I rang up the Post Office and said I think
there’s something wrong. It said one of the staff, or myself, had sticky
fingers,” she says.
By January, Ford had paid all her £2,500 savings to the Post Office, so
rang up and asked for an audit when £3,000 went missing overnight. The
audit found she was nearly £10,000 short. The Post Office took money out
of her wages, and suspended her for 18 weeks while it carried out an
investigation.
Instead of prosecuting or terminating her contract over the deficits, the
company reinstated Ford in June 2008 without further action. The problems
continued until several parts of her Horizon system were replaced, then
balancing returned to normal.
But Lynn Hobbs, general manager, network support at the Post Office, said
in an e-mail at the time, “lam sure you are aware that we have had
previous challenges in relation to the integrity of the system and I can
confirm that the system has passed all tests and been exonerated in both
the civil and criminal courts. I therefore cannot accept that the losses were
as a result of the Horizon kit”
Hobbs suggested, “I think we should also look at other factors which
coincided with this change, such as the additional training provided and the
change of personnel af the branch.”
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Ford says, “In the end I refused to work. I wasn’t taking the money and I
wasn’t making stupid mistakes. If they thought I was stealing money, why
did they reinstate me? I lost all confidence in my Job, and now I am going
bankrupt.”