DRAFT REBUTTALS DOCUMENT (November 2014): In strictest confidence
Background: Our public stance will be that we will not comment directly on any documents or individual cases that are confidential to
applicants because applicants are assured of confidentiality under the Scheme’s terms of reference.
Rebuttals below are primarily intended for non-attributable or off the record use against allegations that might arise and will be
reviewed against the nature of enquiries.
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Allegation
Rebuttal (all non-attributable)
comments
The Scheme is a sham - Post Office is showing
bad faith and was insincere about addressing
cases
The fact that during 2.5 years of investigations and with the
majority of individual cases now examined, there is no
evidence of fault with Horizon, is welcome reassurance for
everyone who works in or uses the Post Office network.
Post Office has gone to great lengths to establish the facts.
Following the independent review that Post Office instigated,
the scheme was designed collaboratively with JFSA and
Second Sight, with JFSA nominating the Chair of its Working
Group. Post Office provided funding for scheme applicants to
obtain professional advice in building their cases against the
company.
The scheme involves rigorous and painstaking re-investigation
of each and every case and subjecting this to external review
by Second Sight.
The remaining cases are being treated with the same rigorous
approach. Each and every one is being considered on its
facts.
Post Office continues to act in good faith responding to the
questioning of the integrity of the system which millions of
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people rely on every day. But, just as it would be wholly wrong
to fail to respond to any evidence of flaws in Horizon, Post
Office cannot be expected to ignore clear evidence that
directly contradicts accusations made.
Given that some people may have been expecting that a fault
with Horizon would be found, it is perhaps not surprising that
they may be disappointed and make accusations about the
scheme itself. But it is hard to see what more any company
could do and those making allegations have had ample time
to substantiate them.
Post Office deploys lawyers at every meeting,
which suggests hostility to mediation
Post Office’s input to the scheme sits within the
responsibilities of our General Counsel. This does not imply a
legalistic approach or any hostility to mediation. The Post
Office’s representation on the Working Group is drawn from
senior staff, some but not all of whom are lawyers.
The fact that Post Office asks for evidence to support
allegations or conclusions is reasonable, not legalistic.
Post Office is not interested in the truth and is
still blaming the subpostmasters involved
With investigations and independent reviews into Horizon now
spanning 2.5 years, Post Office has gone to great lengths to
establish the truth. It instigated an overall independent review
as well as an impartially-chaired scheme for the re-
investigation of individual cases, with Post Office providing
funding for people to obtain professional advice to help them
build cases against the company. No evidence of a fault with
Horizon has been found but there is no complacency and the
remaining cases are being treated with the same rigorous
approach. Each and every one is being considered on its
facts.
But, just as it would be wholly wrong to fail to respond to any
evidence of flaws in Horizon, Post Office cannot be expected
to ignore clear evidence that directly contradicts accusations
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made and which provides welcome reassurance for everyone
who works in or uses our network.
Post Office still ignore the fact that they failed
to correct Horizon system and its associated
issues
Post Office cannot be expected to accept responsibility where
there is no evidence of any fault.
We cannot discuss individual cases but each and every one is
being examined afresh and independently reviewed - none
have shown there to be fault with Horizon. We are also
investigating all associated issues raised, such as training and
support, and no systemic issues have been found to date.
Some applicants are withdrawing from the
Scheme - demonstrating there is no confidence
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We cannot discuss individual cases but it is inaccurate to
paint this picture. There have been mediations that have
resolved cases and there have also been some cases
resolved outside of the scheme through a meeting to discuss
the concerns raised.
Post Office is not providing all the
documentation (including from court cases) that
it should
This is a very serious and untrue allegation. Post Office
provides all the documentation that is relevant to each case
to Second Sight to review, along with its own investigation
report. This includes documentation from court cases where
we still have it in our records and are able to legally provide
this. Court documentation is also of course for applicants to
provide.
As part of the investigation and review of individual cases Post
Office has provided [hundreds of thousands] of pages of
documentation, for example transaction logs, telephone logs,
emails and other evidence for Second Sight to review. In
criminal cases we are legally obliged to disclose any new
evidence and we take our responsibilities in this regard
extremely seriously.
You are trying to force people who want to sell
their Post Offices and move on (under current
changes) out of the scheme - if they accept a
Any subpostmaster in this situation can accept a leavers
payment and remain in the scheme.
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leavers’ payment they waive their rights
Mediation
Post Office have reneged on the terms of the
Scheme and are refusing to mediate some
cases, even when this is recommended by
Second Sight / Working Group
It was never envisaged or stated that all cases would
automatically pass to mediation. Mediation is the potential
second part of the process - the first being re-investigation
and independent external review of each and every case.
Post Office never rejected any eligible case at any stage,
accepting all for investigation even when there appeared to
be little substance to the cases. We look at every case on ite
merits. Where we think a case is suitable for mediation we will
mediate.
Mediation is a consensual process and designed to get
agreement and compromise. It would be wrong for Post Office
to mediate where neither the applicant, Post Office nor
Second Sight have found evidence to suggest that the
applicant was not responsible for the loss. That is not a matter
for compromise.
You allowed criminal cases into the scheme but
you are not mediating them and are essentially
telling people they can go back to the courts -
for many that is too late
We are considering every case on its merits. However
mediation cannot overturn a conviction and if an applicant
considers their prosecution unsafe they need to appeal that.
Where an applicant has been prosecuted and convicted and
the new investigations have revealed nothing which calls that
conviction into question, it is simply not appropriate to engage
in mediation about it. Applicants can still, at all times, decide
to appeal their convictions following the normal and
established court processes.
To date we have seen nothing in the cases we have
investigated that suggests any conviction is unsafe. If we did
we would make the appropriate disclosure. We take our
responsibilities in that regard very seriously.
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It was made very clear at the start of the scheme that
convictions can only be overturned through court process and
indeed the JFSA advised that affected applicants should
“enter a parallel scheme with a firm of criminal lawyers who
will look into your case with a view to consider using the
appeals court to overturn the findings against you.”
Some people have suffered terrible as a result
of Post Office actions but you refuse to accept
that
There are some genuinely harrowing stories that have arisen
from the investigations and we know that some people have
suffered illness, accident and bereavement. However that
does not mean that Post Office was responsible for any of
these unfortunate events. However sad the case is for the
individual concerned and indeed anyone connected with it, it
is not Post Office’s responsibility to insure people it enters into
contracts with against life events, however difficult, where
Post Office has no responsibility.
But it is surely wrong to deny people a chance
to be heard and to get closure
Every case is thoroughly investigated and applicants are given
a full report. Post Office is prepared to discuss and explain
where it is possible to do so (false accounting by its nature
frustrates this process) how losses occurred. A conversation of
this nature can be more appropriate than mediation.
You are refusing to even consider
compensation and in some cases intend to
chase disputed debts
This is not and never has been a compensation scheme. The
scheme is two parts - firstly, re-investigation and independent
external review of each and every case and secondly,
mediation where it is appropriate.
Mediation is a consensual process and designed to get
agreement and compromise.
Every case is different and considered on its own merits.
It is very important that we are fair and consistent, in the
interests not only of the applicants but also the many
thousands of serving and former subpostmasters. It would be
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wholly wrong for Post Office to ignore evidence and facts in
cases put forward into the scheme and it must act in the
context of these.
You have no intention of paying consequential
losses to people who have lost their businesses
and homes
Every case is considered on its merits. We cannot comment
on individual cases but Post Office cannot be expected to take
responsibility where there is no evidence that it is at fault.
[Background re legal position: A sub-postmaster cannot
recover consequential losses where Post Office has
reasonably exercised its legal rights, and recovered branch
losses from the sub-postmaster as agreed in their contract.]
Contracts
Sub-postmasters’ contracts are unfair and
biased in POL’s favour
The investigations and reviews are about Horizon and
associated issues and it is not part of this work to look for
alternative issues to target simply because no issues have
been found with Horizon.
The terms of the contract are broadly similar to those used in
franchising arrangements across the UK and reflect the basis
on which Post Office and thousands of sub-postmasters have
successfully conducted business for decades. The terms of
the sub-postmaster contract are jointly drawn up by the Post
Office and the National Federation of Sub-postmasters, which
represents the majority - 80% - of our independent agents.
Many sub-postmasters have not signed or been
given a copy of their contract
Sub-postmasters are business people and have the
opportunity to review the contract before signing, as well as
the opportunity to take legal advice if they wish to do so.
Post Office does not provide legal advice before
sub-postmasters sign the contract or even
advise sub-postmasters they should obtain it
Sub-postmasters are independent business people, with a
similar position to franchisees and therefore obtain legal
advice as they see fit on any aspect of running their business.
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The majority of Post Offices are run on this ‘agency’ basis,
frequently within another business, such as a shop.
Crown Offices
Crown Office staff are exempt from any losses -
it is only subpostmasters who bear
responsibility
Post Office does take action against staff at Crown branches if
illegal activity is suspected. Staff at Crown branches are
directly employed by Post office. The vast majority of the
network is operated by subpostmasters who are not
employees - they are independent business people operating
under a contract with Post Office. Under this arrangement,
which is similar to franchise arrangements, subpostmasters
have responsibility for their branch accounts, for employing
and training their staff and ensuring the proper running of
their branch. They are paid and incentivised (partly) according
to the amount of business they undertake for POL. The terms
of the subpostmaster contract are broadly similar to those
used in franchising arrangements across the UK and reflect
the basis on which Post Office and thousands of
subpostmasters have successfully conducted business for
decades. The terms of the subpostmaster contract are jointly
drawn up by the Post Office and the National Federation of
Subpostmasters, which represents the majority - 80% - of
subpostmasters.
Training and Support
Subpostmasters were not trained properly
We look at the evidence on a case by case basis. To date
there is no evidence of systemic fault with Horizon or related
issues (such as training).
Thousands of subpostmasters have been successfully
operating Horizon for years having received training from Post
Office. We provide comprehensive training, which we have
continued to improve and which includes classroom and on-
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site sessions. We also offer follow-up support and visits.
Nearly half a million (456,202) subpostmasters and employee
have used the Horizon system since its introduction in 2001.
Around 2.5 billion transactions are processed every year.
We will always of course strive to continue to improve and
have undertaken further initiatives since the publication of
Second Sight’s report in 2013. Post Office created a new Branch
User Forum as a way for subpostmasters and others to raise issues
and insights around business processes, training and support,
directly feeding into the organisation's thinking at the highest level.
One of the tasks for this forum is to review support processes and
training to ensure the meet the standards expected of the Post
Office.
Your Helpline gave poor, inaccurate or
contradictory advice to subpostmasters
Horizon has been used successfully by almost half a million
(456,202) subpostmasters and employees since its
introduction in 2001. Our Helpline for subpostmasters,
alongside a service for technical enquiries, is available to
support them with any queries. If these are not quickly
resolved, further expertise is available, including visits to Post
Offices if necessary.
Audit trail/ Investigations
Post Office controls Horizon and back office
systems so subpostmasters have to pay for
‘losses’ they can’t investigate
Subpostmasters are enabled with the information they need
to run their accounts - and the overwhelming majority do this
successfully. Horizon tracks every transaction made in a Post
Office branch and logs the levels of stock and cash held.
Branches have always had access to line by line transaction
data each day.
Default to seek evidence for false accounting/
not open-mnded/ flawed approach/ does not
Post Office investigations are conducted on the facts of each
case.
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consider root causes
But false accounting, by its nature, deliberately prevents Post
Office from being able to identify and investigate transactions
that might have caused discrepancies. It hides any genuine
errors.
Subpostmasters were under pressure to falsely
account/ had to false account or not be able to
trade
There are no circumstances capable of justifying committing
the criminal offence of rendering a false account.
It is simply not true to suggest that any subpostmaster
needed to do this to continue trading. All Post Office asks is
that at the end of each month a subpostmaster physically
counts the cash in their branch and records that figure in the
branch accounts. So long as this is done the branch may
continue to trade. False accounting occurs when a false
number is entered into the branch accounts.
Sub-postmasters had records and diaries taken
from them and not returned when they were
suspended so were unable to prove innocence
Branch records are the property of Post Office and may be
taken away for investigation in the event of a sub-postmaster
being suspended.
In addition, there is no evidence that any sub-postmasters
who have been suspended have been prejudiced by POL
taking their records away for investigation.
Post Office has no incentive to investigate &
correct discrepancies because sub-postmasters
carry the risk and POL & customers benefit from
surpluses
Post Office has every incentive to make sure the system works
as efficiently and smoothly as possibly. We take discrepancies
extremely seriously, whether they result in shortages or
surpluses. Both are investigated and there is a robust
process for correcting errors.
POL deleted files for cases instead of operating
a “litigation hold” policy
Post Office normally holds information and files for 7 years
[which is normal business practice] where it is legally able to
do so. In some circumstances documents might be held
longer, again where legally possible.
Prosecutions policy
The number of prosecutions has reduced in
All cases of potentially criminal conduct are thoroughly
FOI October 2014.
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recent years - this demonstrates you are not
confident in Horizon/ do not want evidence
about Horizon tested in court
investigated and decisions about appropriate courses of
action are taken on the facts. Decisions whether or not to
prosecute are taken on a case by case basis.
[If pushed on whether we have taken Horizon investigation
into account eg dropped cases etc in recent times and
whether that reduced number of prosecutions]: Whilst
there remains no evidence of any systemic flaws in
Horizon it has been right and fair not to prejudge the
investigations and, where that is relevant to any case, it is
of course considered.
[If asked for background about prosecutions policy:]
In deciding whether a case should proceed to criminal
prosecution the Post Office must be satisfied that it meets
both of the two stages of the test set out in The Code for
Crown Prosecutors. The first is whether there is sufficient
evidence to justify a prosecution and the second is
whether the prosecution would be in the public interest. A
criminal prosecution will only be pursued by the Post
Office if both stages are satisfied.
Horizon system
Subpostmasters’ accounts can be amended in
Horizon without subpostmasters or their staff
The system is designed to prevent any access, either remote
or direct that would allow individual branch transactions to be
FJ to be consulted before
answer provided.
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knowing about it
altered.
[If pressed further:] The system has been designed to
prevent any access, either remote or direct, that would allow
individual branch transactions to be altered. Fujitsu has
controlled access to the Horizon system for software updates
and maintenance purposes. This is of course strictly
controlled with security processes in place, but could not, in
any event, be used to alter individual branch transactions -
there is no facility within the system for this.
Under discussion - to be
aligned with revised P2
[Keep aligned with FOI
from 2011]
System generated entries can be made under
subpostmaster ID
This is not true. All users of Horizon have individual IDs and
there is always a ‘digital footprint’ for every user
FJ to be consulted before
answer provided. To be
aligned with revised P2
Subpostmasters have been bearing losses that
could have been designed out of the system
This is simply not the case at all. The vast majority of
subpostmasters have been successfully using Horizon for
many years. Post Office regularly reviews and improves
Horizon and makes enhancements based on user experience
and feedback.
Horizon is not fully fit for purpose/ there is still
evidence of “bugs” in the system
This is untrue. Horizon is operated by thousands of
subpostmasters, the majority of whom have not had any issue
with the system or the effectiveness of it. There are currently
more than 78,000 users of the system and six million
transactions are processed by subpostmasters and Post
Office staff every working day. During investigations and
independent review that have now continued for 2.5 years,
the evidence remains that Horizon is working correctly.
ATMs
ATMs can easily be “out of synch” with Horizon
Post Office has more than 2,000 ATMs at branches
throughout its network, successfully operated by sub-
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postmasters and staff.
Both the ATM owner (Bank of Ireland) and POL have records
for ATM transactions and there are robust processes for
reconciliation.
It was easy for sub-postmasters to make
mistakes with ATMs and poor advice was given
by the Helpline
Post Office has more than 2,000 ATMs at branches
throughout its network, successfully operated by sub-
postmasters and staff. This supports the fact that operating
practices for ATMs are clear, understood and work in practice.
ATMs could cause loss of data/ corruption if
affected by power cuts or telecommunications
failure
We are confident that no data is lost or corrupted from
communication failures. The recovery process was process
was reviewed in detail by Second Sight and found to work.
We successfully manage and operate more than 2000 ATMs
throughout our network.
[If asked about power cuts/ telecommunications causing data
loss/ corruption more generally:
After some two and a half years of investigation, including by
independent forensic accountants, there remains no evidence
of any system-wide flaws in Horizon, including that power or
telecommunications failures cause losses in branches.
The system is designed to ensure that data is protected from
such events].
Post Office has not treated the possibility of
ATM external fraud seriously enough
Sub-postmasters are not liable providing correct procedures
and accounting processes are followed. We treat fraud
extremely seriously and work with our sub-postmasters and
staff to prevent it.
MVLs
Misprinting of Motor Vehicle Licences barcodes
could have caused significant losses for some
Post Offices
This is completely incorrect. The barcode defines overall cost
(not duration) and on scanning the code, Horizon invites
payment at the level so there would be no discrepancy.
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There have been no widespread issues at all from any DVLA
misprinting of barcodes.
Lottery
POL did not finally eliminate the possibility of
synchronisation errors re Lottery scratchcards
until February 2012. There were serious and
frequent problems between 2005 and 2010
There have been no issues raised that indicate any problems
caused by the Horizon system.
We've continued to improve procedures to help sub-
postmasters, not because of any problems with the system.
The vast majority of sub-postmasters have been successfully
operating these services for years.
Recent FOIs
You are refusing under FOI to provide the
number of transaction corrections made every
year under FOI.
We abide by FOI rules.
But it is important to understand the purpose of Transaction
Corrections. They are primarily to initiate a correction where a
branch has made an error in recording a transaction. They do
not necessarily lead to a situation where a subpostmaster is
required to put money in or take money out - so long as the
branch took the correct money from the customer or paid the
correct value out, there would be no advantage or
disadvantage to the subpostmaster or Post Office.
From FOI! enquiry
You are refusing to give the total cost of the P2
report under FO! but you must hold it
Post Office does not hold the information on the total cost of
the report.
From FOI response
You are refusing to release P2 report but it has
been leaked anyway
The scheme provides an assurance of confidentiality to
applicants. A variety of documents have been produced to
assist with individual mediations. The Working Group has not
published these individual documents or passed them to
anyone other than those involved in the mediation process.
This is because the applicants are assured of confidentiality
and the Working Group has made it clear in all
Email to Huw Irranca-
Davies (also detailed FO!
response to Pat Aspinall
but only to be drawn on if
necessary)
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correspondence that all documents produced for the Scheme
are subject to strict confidentiality. It is therefore unfortunate
that a document produced for mediation appears to have
been shown to a person or organisation not involved in the
Scheme. This does not assist either individual applicants or
the Scheme itself.
[If necessary: Refer to FOI response]
Cost of Scheme
You haven't included any potential liability costs
in your Report and Accounts but you must be
facing/ at risk of significant pay-outs overall
Post Office Limited prepares its Financial Statements in
accordance with international accounting standards, which set
out a clear definition of what constitutes a liability. Any
potential liabilities for the business are discussed with
external auditors who agree whether they meet the
definition and are required to be recognised in the Financial
Statements for any particular year.
This has also been given in
FOI response
You've spent £xk on SS alone so the cost of this
must so far be into millions of £s of public
money
In circumstances where the integrity of the system which
millions of people up and down the country rely on every day
is being questioned, that requires an appropriate response.
The scheme is not completed so it would not be appropriate
to discuss costs at this time.
FOls on costs ongoing -
need to keep aligned
Post Office closures
You closed some of the Post Offices after
suspending subpostmasters to avoid paying
compensation for their office closure
This is a very serious, baseless allegation. Our priority is to
maintain services for our customers and there is a strict code
of practice involving public scrutiny and consultation for
changes to the Post Office network. The network is also
governed by criteria to ensure customers have access to Post
Office services.
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