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British Post Office Ltd‘s Commissioned Sub-postmaster False Charge Scandal: Background


The Horizon accounting system developed by a wholly owned subsidiary of Fujitsu, a Japanese technology equipment and services company, has become a major scandal in the UK which has led to many postmasters being suspected of accounting fraud, and from 1999 to 2015, more than 700 postmasters were charged with theft and embezzlement, were convicted, and subsequently lost their property and reputation. The scandal is that they were falsely accused. The case was dramatized and televised in a four-part series called “Mr Bates vs the Post Office” in January 2024, and received considerable publicity. Then, at a January 19 hearing, Mr. Patterson, the head of Fujitsu Europe, said, “We have known since 1999 that there were 29 bugs in Horizon and we had already told the post office (POL),” and told many innocent sub-postmasters that “Fujitsu would like to pay part of the compensation” (The Guardian, January 19, 2024), making the TV drama a reality.


Peculiarities of the UK Postmaster (Sub-postmaster)
The postal service in the UK is the oldest in the world, but in 2012 it split into the Royal Mail Group, which is engaged in mail and parcel delivery and logistics, and Post Office Limited (POL), which operates a nationwide network of contact points. Then in 2015, the company was privatized by selling 90% of its Royal Mail shares, while POL remained state-owned. POL’s network of contact points is divided into Crown Post Offices, which are directly managed, and Sub-Post Offices, which are commissioned bureaus. Of the approximately 11,000 post offices, only 114 are Crown Post Offices. The Director of commissioned bureaus is an open position and is treated as a self-employed individual. They are generally poorly paid and have all the problems that private self-employed workers have, such as with respect to vacations and pensions. Here, there is one background point to this issue.
Sub-postmasters can join either the Communication Workers Union (CWU)’s Sub-Postmasters Organization Bureau which is one of the most powerful trade unions in the UK, or the National Federation of Sub Postmasters (NFSP). The CWU has made efforts to organize Sub-postmasters, but the nature of postmasters as individual self-employed workers makes them a poor fit for the union, and organizing them is extremely difficult, so they are not well represented. In contrast, communication has been carried out exclusively through the NFSP, since the NFSP is like a club and is easier to deal with as a POL. Some say that POL was also paying for the activities of the NFSP. With this scandal, the NFSP is said to have completely lost face.
Mark Baker, who spent 41 years with the post office and has been a Sub-postmaster since 1988 worked as an officer of the NFSP and as secretary of the CWU Sub-Postmasters Organization Bureau. “In NFSP there was a reluctance to challenge the Post Office. Conference motions to seek change brought by members were watered down by the exec if this meant rising up against the Post Office. I tried to change this conduct and became very unpopular with other exec members. In particular the then General Secretary made no secret of his feelings for my approach to representation… The reports of mis-balancing and Postmaster suspensions soon started. I admit I was ill-equipped to deal with a member who swore blind that they had not lost the Post Office’s money and that it must have been the Horizon system…My other exec members of NFSP just shrugged their collective shoulders and scoffed, how could it be the computer? Computers don’t make mistakes. I resigned. I approached my old union, the CWU, and asked the then General Secretary Billy Hayes if he would agree to form a section within the Union for Postmasters to join. Billy agreed and I have spent the last 8 years building up the membership of the CWU Postmasters Branch.” (January 3, 2019, “The Union man’s view”)

The key player in this case: The formation and victory of JFSA (Justice for Sub-postmaster Alliance).
JFSA was the organization called on by Alan Bates in November 2009 to bring together Sub-postmasters who had problems and were victims of Horizon. Initially, there were 30 people. As soon as it was introduced, it was clear that Horizon had a problem. There were a number of instances where the calculations inevitably did not add up. When POL was informed, they said that “Only you would say such a thing. Please just use Horizon,” was the only response. Many Sub-postmasters were told by POL to pay themselves if money didn’t match up. If they failed to pay, they were accused of theft. The number of such cases was soaring. Most Sub-postmasters felt they were in this alone. This was because the income of Sub-postmasters was low and it was hard to pay the shortfall. In 2015, Bates consulted with a law firm and finally decided to sue POL. In 2017, a class action lawsuit was initiated by 550 Sub-postmasters. “The pain in this case is great. Four Sub-postmasters committed suicide and 12 died before they could receive a verdict. In many cases, the stress brought about by this case led to divorce and illness. In some cases, it resulted in a reduction in income, and in the worst cases, bankruptcy.” (The Independent, January 8, 2024) The trial ended in a victory for the JFSA, which has so far resulted in “93 convictions being vacated and 30 settling for ‘full and final’ compensation. On the other hand, many people died without being cleared, either because their convictions were upheld, their appeals were not upheld, or they gave up on their appeals.” (JPGU Postal News, January 2024, Extra)

Where was the problem?
An editorial in the Japanese Yomiuri Shimbun on January 23, titled “Fujitsu’s Supervisory Responsibility Also Questioned,” asked, “With numerous postmasters and others being indicted on suspicion of theft and embezzlement, why was it not disclosed that the system was defective? Why did POL continue to pursue responsibility based on incorrect information? The truth should be revealed,” the article said. Fujitsu stated that “we intend to make sure that we can provide guarantees”.
As a labor union there is a need to reflect on whether overseas M&A was really the right thing to do, and whether post-acquisition governance should have been left to local entities and reliance only on figures and after-action reports.
In the UK postal system, the easy entrustment of the operation of post offices to private operators under the special system of commissioned post offices may have conversely fostered a sense of distrust, leading POL to be paranoid about Horizon.
Furthermore, this incident has exposed the dangers of having a delusional reliance in computers, even though there is no going back now.
The false accusation of British Sub-postmasters has many lessons for all of us.