A former managing director of the Post Office has told an inquiry that “institutional bias” prevented further investigation of complaints made by subpostmasters about the Horizon IT system.
David Smith said the organisation’s board members were “not as focused as we could and should have been on the Horizon issues” due to a banking crisis and “concern” over the separation of the business.
Mr Smith told the Post Office inquiry he felt a “huge sense of regret and remorse” about the scandal, and said if he knew the system could have been “tampered with” he would have approached things differently.
He admitted potential opportunities were missed to “consider an external investigation” after the Post Office commissioned a report, known as the “Ismay Report”, which the inquiry previously heard was designed to give assurances about the faulty IT system.
The report was prepared by former head of product and branch accounting Rod Ismay, who denied he was engaged in a “whitewash” when he authored it in 2010 during his evidence to the probe in May last year.
Mr Smith denied the report was intended as a “counter-argument” to allegations made against Horizon.
He was given a warning against self-incrimination by inquiry chairman Sir Wyn Williams before he strenuously denied attempting to cover up that Horizon’s integrity.
The former managing director said he was “shocked and frankly appalled” if the Post Office’s legal team became aware of software faults but continued to prosecute pregnant subpostmistress Seema Misra regardless.
Flora Page, on behalf of a number of subpostmasters, asked Mr Smith: “In the aftermath of the Ismay report, this trial of Seema Misra was being actively used by Post Office as part of your campaign to claim that Horizon was robust, wasn’t it?”
The witness replied: “I don’t believe so, no.”
Ms Page continued: “You were deliberately closing your eyes to problems with integrity of Horizon, weren’t you?”
Mr Smith said: “No.”
Ms Page then asked: “And you were encouraging your staff to pursue a trial as another method of shoring up a problem system which you knew had serious question marks over it.”
Mr Smith responded: “Absolutely not, as I said to you before the Seema Misra case started long before I joined the business.”
Addressing the Ismay report in his witness statement to the inquiry, Mr Smith said: “Looking back, I think that there was an institutional bias to not interrogate further what was being said by SPMs and the public about Horizon.
“At the time, the board took comfort from knowing that there were systems and processes in place for the management of cash and stock.
“Looking back, there were potential opportunities missed at the time of the (Rod) Ismay report to dig deeper, or to consider an external investigation.”
An internal Post Office email from the head of information security Sue Lowther in March 2010 showed that the organisation wanted a review of the Horizon system to “confirm our belief in the robustness of the system and thus rebut any challenges”.
Counsel to the inquiry Sam Stevens asked Mr Smith: “Do you accept that this is effectively asking for a document or an investigation that would, rather than investigate integrity issues, would look to confirm the belief and provide assurance for Post Office’s position on the robustness of the system?”
The witness replied: “Yeah, as I said before, I wasn’t here when this came, but on the face of what I see here, yes.”
Mr Stevens continued: “Do you think that is consistent with what Rod Ismay was asked to do?”
Mr Smith said: “It does look like it, yes.”
The former managing director told the inquiry on Thursday he had been “made aware of some of the challenges that Horizon had encountered through my briefing into the business”.
When asked what he had been told about the issues, he said: “I think it was along the lines of what eventually comes out in the Ismay report, in other words the system’s pretty much tamper-proof.
“We’ve got strong records. We’ve got independent security going round checking and balancing, and the court cases that we’ve have had been largely successful. So it was that kind of level, rather than anything more detailed.”
Conceding the Post Office board was not as focused as they could have been on Horizon issues, Mr Smith said in his statement: “In the period I was there, it was a time when there was growing concern around the separation of the business, coupled with a banking crisis which had the potential to bring down the group.
“These were incredibly weighty matters and my priorities at the time were on the survival of the business.
“Because of this, maybe the board were not as focused as we could and should have been on the Horizon issues.”
Mr Smith said he was “always reassured of the opposite” to the suggestion that the Horizon system could be tampered with.
He told the inquiry: “Although my time within the Post Office was brief, I have spent a lot of time reflecting on it and whether there is anything that I would have handled differently.
“I think that this is something that everybody has thought about and it is impossible not to feel a huge sense of regret and remorse, regardless of one’s own involvement.
“When concerns were brought to light around the Horizon IT System, I requested a review which was carried out by Rod Ismay which was unequivocal in its answer.
“We were never provided with any suggestion that the Horizon IT System could be tampered with and always reassured of the opposite.
“Had we known that this was not true, we would have approached things differently.”
The Post Office has come under fire since the broadcast of ITV drama Mr Bates vs The Post Office, which put the Horizon scandal under the spotlight.
More than 700 subpostmasters were prosecuted by the Government-owned organisation and handed criminal convictions between 1999 and 2015 as Fujitsu’s faulty Horizon system made it appear as though money was missing at their branches.
Hundreds of subpostmasters are awaiting compensation despite the Government announcing that those who have had convictions quashed are eligible for £600,000 payouts.
