Evidence of fraud ‘quite compelling’, says Post Office’s ex-managing director

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The former managing director of the Post Office has said that evidence sub-postmasters were committing fraud was “quite compelling”, despite him not knowing that the business was a prosecuting authority.

Alan Cook, who led the state-owned group between 2006 and 2010, on Friday said criminal cases it brought had featured robust evidence but that he was not aware it was leading on prosecutions.

“A lot of the evidence in these cases, on the face of it, was quite compelling,” he told the Horizon IT public inquiry. “But that’s not really the point, the point is how much independence is there in the thought process [behind prosecutions].”

More than 900 sub-postmasters were convicted in cases involving data from the faulty Horizon IT system developed by Japanese software company Fujitsu following its introduction in 1999, including 700 brought by the Post Office itself using a general right in English law.

This year, an internal review by the Post Office’s lawyers found it was legally “bound to oppose” more than 350 possible appeals based on corroborating evidence.

Cook said a majority of prosecutions during his tenure had been led by the Post Office but “it never occurred to me that the Post Office was the sole arbiter of whether or not that criminal prosecution would proceed”.

The company’s ability to bring hundreds of private prosecutions, despite having a financial interest in the outcome of cases, has been a contentious theme at the centre of the scandal.

Asked by victims’ lawyers, Cook denied claims he told a “straight-out lie” around private prosecutions designed to deflect responsibility. He said he understood Post Office customers, not sub-postmasters, were being prosecuted for scams and fraud.

Emails between Cook and colleagues published by the public inquiry showed he raised doubts around the veracity of claims made by sub-postmasters in a trade article in 2009, where they alleged the Horizon IT system was responsible for account shortfalls.

“My instincts tell that, in a recession, subbies [sub-postmasters] with their hand in the till choose to blame the technology when they are found to be short of cash,” Cook wrote in one email. On Friday, he said he would regret making the assertion “for the rest of my life”.

Adam Crozier, who ran Royal Mail, then the Post Office’s parent company, between 2003 and 2010 told the inquiry later that he lacked a “developed understanding” of the business’s approach to prosecutions. But he added that Cook’s claim that he was not aware it could launch prosecutions was “surprising”.

Cook “certainly always gave the impression of someone who was very much in control of his brief”, said Crozier, now chair of telecoms group BT.

Crozier added that he could not recall being briefed on any investigations or prosecutions brought by the Post Office against sub-postmasters during his tenure.

David Smith, who succeeded Cook as managing director in 2010, told the inquiry on Thursday that the Post Office had been preoccupied with the 2008-09 global financial crisis and the prospect of separating from Royal Mail.

Smith said “institutional bias” blocked management from probing sub-postmasters’ claims about Horizon further after Rod Ismay, formerly of audit firm EY, concluded the system was “robust” in a 2010 report.

“Looking back, there were potential opportunities missed at the time,” Smith added.