Forensic insight into the Horizon scandal

The Horizon/Post Office scandal was the focus of a recent ICAEW seminar held at Chartered Accountants’ Hall, and led by Phil Southall, Chair of the Forensic & Expert Witness Community advisory group.

The event featured a keynote presentation by Dr. Kay Linnell, building on the hugely popular session she delivered at the 2024 Forensic & Expert Witness Conference. In this follow-up, Dr. Linnell offered a detailed and direct analysis of the case, highlighting its legal and technical complexities as well as the missed opportunities for forensic accountants to intervene earlier.

Dr. Linnell began by explaining how she became involved in the Horizon case. A colleague Mrs Barbara Jeremiah JP, who recognised Jo Hamilton’s situation, one of the wrongly accused sub-postmasters (SPMs), urged her to take a closer look. What she read was deeply troubling: a flawed IT system that the Post Office knew to be unreliable. Shocked by the scale of the injustice and the systemic failures, Dr. Linnell felt compelled to act and lend her expertise to support those affected.

“If forensic accountants had been included from the start, then the scandal would have been unlikely to happen” she said.

The Horizon system, introduced in 1999/2000, was developed and owned by Fujitsu and was implemented across thousands of Post Office branches nationwide. Designed to manage transactions and accounting, it quickly became central to branch operations. Dr. Linnell explained that the Post Office was aware of its unreliability from the outset because monthly meetings were held between the Post Office and Fujitsu to discuss correcting errors in the live system causing losses at various branches.  The system generated frequent error logs, which their staff were expected to manually “fix” without the knowledge of the SPMs and without proper training or oversight.

In 2013, independent investigators Second Sight identified 23 systemic issues, later reduced to five – the least serious.  Only the least serious issues were allowed to be referred to in the first Second Sight report while the remaining issues were covered up. Dr. Linnell questioned whether Horizon was ever fit for purpose, citing failures in software maintenance, hardware oversight, and user training.

Dr. Linnell described the legal structure underpinning the scandal, mentioning that they were fortunate enough to have Rt. Hon Lord Justice Peter Fraser KC preside over the group litigation. Five trials were planned, with three having now taken place. The key questions asked were: what was the nature of the contract between the Post Office and SPMs? Was it commercial or relational? The answers would ultimately determine the duty of care owed by the Post Office to its SPMs.

“They broke every duty of care but one” she said.

In the years that followed, vast sums of money were taken from SPMs and many SPMs’ roles were terminated, losing their livelihoods, and a few SPMs were prosecuted for offences such as false accounting. Dr. Linnell explained that numerous individuals were persuaded or pressured into accepting these lesser charges to avoid the threat of more serious allegations. For many, it felt like the only way to bring a deeply distressing legal ordeal to an end, even if it meant accepting a criminal record for offences they had not committed.

The consequences were devastating. Some SPMs tragically took their own lives, while others experienced mental breakdowns and long-term trauma and health issues. When efforts were later made to overturn these convictions, the Post Office objected, despite mounting evidence that many of the prosecutions had been fundamentally flawed.

A mediation scheme was proposed, with 88 of 136 cases submitted, but the Post Office ultimately withdrew from the initiative. Of the 492 claimants seeking redress, 73 have since died.

Dr. Linnell highlighted the pivotal role played by Richard Roll, a former Fujitsu engineer, whose testimony was instrumental in exposing the technical vulnerabilities of the Horizon system. Roll revealed that figures within the Horizon live system were accessed remotely and altered, undermining the integrity of the data used to take money from and also prosecute SPMs. His evidence directly challenged the Post Office’s long-standing claims about the system’s reliability and was a turning point in the legal proceedings. Over 4.5 million documents were submitted to the High Court, many of which supported the assertion that Horizon was not secure, transparent, or fit for purpose.

Dr. Linnell discussed “Project Sparrow,” a Post Office committee that seems to have spent in excess of £130 million in trying to defend the High Court action and allegedly designed to suppress dissent and protect the Post Office brand. “Silencing the little birds” she said, quoting internal language. Paula Vennells, then CEO, was reportedly aware of the project’s scope, and Angela van den Bogerd, a senior Post Office executive, was also mentioned in connection with internal decision-making and the handling of SPM complaints.

In 2019, a High Court mediation settlement was reached for the 555 SPMs in the Group Litigation Order, although the 63 with criminal convictions had an opportunity to apply for these to be overturned and then sue for wrongful prosecution and damages. The remaining 492 SPMs settlement resulted in a £50 million pay-out, which was mainly used to pay legal costs and uplifts for the funders, solicitors, insurers, and barristers, leaving less than 12 million to share between 492 SPMs. However, these 492 claimants knowingly gave up their legal right to further compensation in exchange for the two Court victories at a huge cost to themselves. The Justice For Sub-Postmasters Alliance (JFSA)  continue to fight for an ex-gratia compensation scheme to recover their true losses, which have not been published but must be estimated to be in excess of £500 million solely for the GLO scheme. There are other compensation schemes, and many SPMs who have not come forward at all, so the total figure of actual losses suffered by the SPMs is not known.

After January 2020, JFSA crowdfunded £100,000 and obtained legal advice from one of the UK’s top barristers, who assisted in pursuing a statutory public inquiry. After the Government agreed to this, JFSA used the same advice to request a conduct review and, after another 2.5 years, the Parliamentary Ombudsman agreed.

Sir Wyn Williams chaired the Statutory Public Inquiry, obtained sworn evidence and further documents and is now publishing his reports. Dr. Linnell was summoned to give oral testimony about three weeks before Paula Vennells, the former Post Office CEO.

Sir Alan Bates, founder of the Justice for Sub-postmasters Alliance, was also mentioned as a central figure in bringing the scandal to light. His persistence and leadership were instrumental in securing legal redress and public awareness.

Lord James Arbuthnot was highlighted as another key figure. His early and consistent advocacy helped elevate the issue within Parliament and contributed significantly to the establishment of the inquiry. Dr. Linnell noted his call for an expanded review of audit reports from 1999 to 2017.

Dr. Linnell challenged the forensic accounting profession to reflect on its role. “If you have a computer system which is designed to balance money and correct errors, how can there be a credit from a suspense account into profit? If there are actually no errors to be corrected then that might explain it but where has the money gone?” she asked.

When asked why no subsequent payments have been made to the GLO Compensation Scheme, she expressed concern that the government may be struggling to fund further compensation. A letter from the Financial Reporting Council (FRC) regarding the 2025 audit review was also mentioned.

Audience questions focused on professional accountability. When asked what ICAEW members could have done, Dr. Linnell responded: “ICAEW members are guilty of not working for SPMs when they needed them. I feel that if someone is in desperate need of help, but they cannot afford your fee then you do the work pro bono.”

She encouraged members to lobby MPs and ask difficult questions. Where did the money go? Why were external forensic accountants excluded?

Volume 1 of Sir Wyn Williams’ inquiry has been published, with another expected to focus on victims. The government’s 10 October deadline for the second volume has now passed, and the timing of a cabinet reshuffle may still impact the timeline moving forward. Professor Chris Hodges is expected to advise on redress, but Dr. Linnell hopes it will not be limited to financial compensation.

“The brand of the Post Office is not what it was” she said, referencing the ITV drama that brought the scandal to wider public attention. “Watch this space for the persecution of the guilty. Retribution will come and forensic accountants will make that happen.”

Throughout the evening, Dr. Linnell spoke about a support group close to her heart: Lost Chances for the Children of Sub-Postmasters. She explained that many SPMs were forced to leave their towns and villages, often in shame and fear, following threats, harassment, and social exclusion. While the injustice suffered by the SPMs themselves is now widely recognised, far less attention has been paid to the impact on their children. Many endured relentless bullying and harassment for something they neither did nor understood. Their childhoods were disrupted and, in some cases, irreparably damaged.

Lost Chances represents the adult children of former SPMs caught up in the Horizon scandal. The group’s mission is to seek redress for the opportunities lost during their formative years as a result of the actions of the Post Office and Fujitsu.

The charity was launched in March 2024, shortly after Katie Downey attended a Business and Trade Select Committee hearing at the House of Commons, where her father, a former SPM, gave evidence. Under current law, children affected by the scandal are considered “secondary victims” and are not eligible for compensation. As Dr. Linnell noted, this means that educational opportunities lost due to parental bankruptcy, such as having to leave school early, forgoing A-levels, or missing out on university, are not recognised within any existing compensation framework.

She shared one touching story of a SPM who fled to France to escape the consequences of false accusations and the impact it had on her children. Dr. Linnell concluded her presentation by advocating for Lost Chances, reaffirmed her ongoing support through the Justice for SPM Alliance and encouraged all those in attendance to help those in need when they’re able and to lobby their MPs.