The current Post Office Horizon IT inquiry has emphasised the importance of good governance within organisations and the relationship that corporate or institutional clients have with their solicitors. Improved governance would have reduced the impact of the Horizon problems significantly and a less risk-averse position by the lawyers could have helped as well.
About the Scandal and Post Office Investigation
The Horizon Post Office scandal has captured the attention of millions across the country. The success of the programme ‘Mr Bates vs The Post Office’ earlier this year was a testament to just how widespread and how deeply the impact of this scandal has been felt.
It’s no surprise when you consider that over 900 sub-postmasters (“SPM”) suffered wrongful prosecutions as result of the faults within the Horizon system (“Horizon”), the computer system introduced to the Post Office to track money received by individual post offices.
Since 2022, the Post Office Horizon IT Inquiry has been taking place with hundreds of hours of witness testimonies ranging from the aggrieved SPM to those who were running the Post Office at the time.
What Were the Faults?
The inquiry has been managed in phases, with Phase 6 covering governance, oversight, and responses to the scandal.
Several previous directors and Chief Executive Officers of both the Royal Mail Group (“RMG”) and Post Office Limited (“POL”) offered their suggestions as to why the issues with Horizon were not dealt with properly.
Some, including Sir Michael Hodgkinson (POL Chair between 2003 and 2007) blamed POL’s rocky financial position, which he claimed took up so much of the board’s focus that they did not look to discuss the system directly with SPM, and also paid little regard to the prosecutions arising as a result of the faults.
There appeared to be a consistent disconnect between the board and the SPM with senior figures in some cases appearing to have no consideration for their staff. This included Alan Cook (POL’s managing director between 2006 and 2010) who sent an email to colleagues in 2009 claiming the SPM chose to ‘blame the technology when they are found short of cash’.
This disconnect and breakdown in oversight continued up the chain to RMG. POL was a subsidiary of RMG at the time and, supposedly, there were systems in place to alert RMG to any problems that arose at POL. Unfortunately, due to a lack of transparency from POL management (who sat on and reported to the RMG board) the concerns about the Horizon system never reached them.
Likewise, this continued up to UK government ministers who were given repeated assurances that nothing was wrong with Horizon.
The relationship between these directors and lawyers also came into the spotlight during the inquiry. One of the notable examples came from evidence given by Tim Parker who was POL chair between 2015 and 2022. Early on in his tenure, Mr Parker commissioned a report into the concerns raised around Horizon.
The report was prepared by an independent legal advisor, Jonathan Swift QC, who raised major concerns regarding past prosecutions, in particular POL’s claim that they were unaware of remote access to the Horizon system.
POL’s own general counsel, Jane Macleod, advised Mr Parker that wider sharing of the report would result in a loss of legal privilege and therefore it could be made public due to the risk of freedom of information requests.
This along with Mr Parker’s doubts as to the scale of the problems with Horizon meant he took the decision not to share the report with the government, nor other board members. Without that report, the board and government had nothing to indicate any issues relating to Horizon.
What Can Be Learned From The Post Office Case?
There is an abundance of lessons that can be learned from the Post Office investigation.
Failures among all levels of seniority, as well as those of lawyers, led to problems escalating out of control.
The Institute of Directors’ report from October 2024, which discussed the evidence from Phase 6 of the inquiry, suggests that the actions of POL’s legal team were a ‘central issue’ in the scandal and that the advice given by them ultimately ‘fuelled the management team’s instinct to suppress key information’.
The suppression of information ultimately caused the breakdown in oversight at all levels and, without such oversight, the issues with Horizon were consistently ignored. This led to one of the largest miscarriages of justice in UK history.
However, this does not absolve those taking the advice. In fact, the same report puts the onus very much on directors to take such advice as just ‘advice’, and to see things from a holistic view. This is on top of other lessons, in particular, not being afraid to face hard and uncomfortable truths.
Ultimately, it is the directors and not the legal advisors who are legally responsible for an organisation, so they must apply their own judgement and morals to consider a situation. Advice should be used as a tool to make decisions, rather than the sole basis for a decision. This should also be communicated by those providing advice and recommendations.
The governance of and the relationship between directors and legal advisors is now understandably under the spotlight. Directors will often place legal advice as a key factor in decision-making. So, it is vital that we as legal professionals analyse a situation and ensure our advice takes into account not just a legal, but a moral and more holistic position.
One of the main ‘villains’ of the Alan Bates programme was Paula Vennells (POL Chief Executive Officer from 2012 to 2019) who was consistently portrayed as cold and unfeeling towards the circumstances of the SPM. This was backed up in the inquiry where many emails were presented showing her underlying mistrust in the SPM community.
The advice given by POL’s counsel fed into this feeling and did not consider that, by sharing these details, hundreds of innocent SPM could have avoided unnecessary prosecution.
As has now been made abundantly clear, advice that does not consider the whole picture does not just affect an organisation. It can have a disastrous effect on the lives of hundreds of individuals.
How Can We Help?
At Howells, we offer a wide range of services that can help directors deal with all kinds of issues. This includes providing services assisting directors in decision-making or managing relationships between parties and resolving contractual and other disputes that businesses may face.
If you require any assistance, please get in touch with our dispute resolution solicitors.
