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Killer App: The UK Post Office Scandal

By February 15, 2024April 2nd, 2024No Comments

In today’s digital age, jokes are often made at technology’s expense. I have multiple calls each week where someone apologizes for being late because they are a Microsoft Teams shop and we are meeting on Zoom – or vice versa. Sometimes a webinar platform insists upon seeing someone’s earbuds as a microphone rather than as a speaker.

Digital gremlins have become the tie that binds, and we are all conditioned to be patient, recognizing that nothing – least of all software – is perfect. 

But what if the problems with software go beyond minor inconvenience and actually disrupt people’s lives and livelihoods? What if we take it one step further than that – what if the software does something really bad, and the people are blamed for it, and they go to jail as a result? What if the software provider provides the courts with evidence of the wrongdoing of those people to aid in their convictions rather than owning up to the bugs in their own product?

If this sounds crazy, you’re not alone. You’re also probably based outside the UK where this exact story has been playing out in the news and in the courts.

In this episode of Art of Supply, I will tell the story of the UK Post Office scandal involving Horizon, a piece of accounting and inventory management software designed by Fujitsu, and how it led to hundreds of subpostmasters being wrongly convicted of theft.

Meet Mr. Bates

If you’re in the UK, you may recognize this story from “Mr Bates vs the Post Office,” an ITV series that aired in January and which is reportedly coming to PBS in April.

It tells the story of Alan Bates and a number of other subpostmasters as they fight a system that is seemingly set against them. The show was so effective, that within eight days of premiering, Prime Minister Rishi Sunak announced a new law to pardon the victims who had been wrongly convicted.

The UK Post Office works very differently than in the U.S. It is a state-owned private company that functions a bit like a franchise. Each post office branch has an owner-operator, known as a subpostmaster. The Post Office does not deliver mail to people’s homes – that job is done by the Royal Mail, a fully private operation. What it does do is operate branches where people can go to send packages and handle government and financial transactions.

The accounting for those transactions is handled by Horizon, a software program made by Fujitsu. Through a series of glitches, that software made it look like the subpostmasters were stealing funds from the Post Office.

Between 1999-2015 there were 983 convictions, leading to bankruptcy, jail, lost reputations, harassment, and four suicides. Some of the subpostmasters tried to pay off the ‘missing’ money personally to stay out of trouble and ended up going bankrupt in the process. Others were so harassed in their communities, or felt so much shame, that they took their own lives.

Designing Software Under Pressure

Although it is owned by Fujitsu today, Horizon – and the original Post Office accounting contract – were with a company called ICL, a company that was taken over by Fujitsu in 2000, right at the start of the contract.

Andy MacNaughton worked for ICL back then, and, as he told the BBC, “The project was already running late, and the firm would only be paid once a ‘working system’ was delivered.” 

The Post Office had to test and accept the software before it was rolled out, but right out of the gate, things went wrong. Horizon showed that money was going missing from individual Post Office branches between 2000 and 2014.

The computer system kept tabs on how much money was supposed to be collected and compared to the amount that was actually collected. The differences really added up: tens of thousands of pounds per Post Office.

According to a Fast Company article, trade magazine Computer Weekly found the glitch that led to the ‘missing’ funds. Horizon would freeze when an operator tried entering an amount. Every time someone clicked, the transaction was repeated in the system, but the money was only collected one time. In other cases, a bug led to duplicate entries.

As Chris Stokel-Walker wrote for Fast Company, “It was an unflappable faith in the infallibility of software, and an unwillingness to accept the more rational explanation—that something had gone wrong, rather than 700 or more people across the country who had previously shown no signs of criminality had simultaneously decided to defraud a company in the exact same way.”

And there is another legal tie in – the weight carried by computer evidence under English Law. As Dan McQuillan, a lecturer in creative and social computing at Goldsmiths, University of London said, “English law presumes that computer evidence is reliable.” 

Apparently the people in this case deserved more benefit of the doubt, and the software deserved less.

Moving Slowly in the Right Direction

According to the UK Department of Business and Trade, as of January11, 2024, approximately £153 million has been paid to over 2,700 claimants.

Post Office Minister Kevin Hollinrake said the government has budgeted £1bn for compensation and more than 4,000 people have been told they are eligible. Unfortunately, the Post Office has been accused of dragging its feet on court cases and compensation payments.

Consequences have also begun for the current and former leaders of the Post Office. 

  • Nick Read, CEO of the Post Office, has started returning past bonuses. He received a total bonus of £455,000 in 2022, part of which was associated with his participation in the Horizon inquiry: £54,400. That piece is being returned.
  • Paula Vennells, former Post Office chief executive (2012-2019), earned the title of “Commander of the Most Excellent Order of the British Empire,” known as a CBE. It is public recognition of someone’s merit, service, or bravery. The Post Office said the honor was awarded for her work on “diversity and inclusion” and her “commitment to the social purpose at the heart of the business and her dedication in putting the customer first,” even though legal action was already ongoing.
  • Henry Staunton, Post Office Chair, announced on January 27, 2024, that he would step down.

So the Subpostmasters have suffered, and heads have started to roll at the Post Office. What about Fujitsu?

This whole situation seems unthinkable. 

Regular people doing their jobs were put in an awful situation. They were shunned by their communities, wrongfully convicted, and bankrupted. Some of them took their own lives, and – given the pace of compensation – others may not live long enough to be made whole.

And Fujitsu’s Horizon software is still in use at the Post Office through March of 2025. With supplier relationships like that, who needs enemies?





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