Where did all the money go?

Millions of pounds wrongly paid back by subpostmasters yet to be traced

As Paula Vennells says that she will “hand back” her CBE because of the Post Office Horizon scandal, questions are being asked about how the state-owned company made millions of pounds vanish into its accounts.

Subpostmasters responsible for running the Post Office’s local branches were each forced to hand over tens – or even hundreds – of thousands of pounds that they were accused of stealing. Bosses claimed that these thefts were detected in accounting records generated by the Fujitsu-made Horizon IT system used for managing Post Office branches. Between 700 and 900 Post Office workers were prosecuted from the early 2000s to 2015, when bosses halted private prosecutions of their own staff. Experts have said that such large sums of money must have shown up in the Post Office’s accounts and come to the attention of auditors.

Kay Linnell, of the forensic accounting firm Second Sight and an adviser to the Justice for Subpostmasters Alliance, said: “I suspect the money was credited to the Post Office’s profit and loss account.

“If that is correct, it means the Post Office declared a bigger profit or a smaller loss than it should have done, which means it needed less government subsidy.

“The taxpayer has effectively benefited from money wrongly taken from subpostmasters.”

On its introduction in 1999, the Horizon system was used by the Post Office to manage the 19,000 branch offices it had around the country at the time. Horizon’s functions include bookkeeping and accounting. Sales made through tills at branch offices were recorded by the system. The system, however, was flawed. Instead of accurately recording all transactions, bugs in the Horizon software meant that it would generate false shortfalls. The software would wrongly record that a local Post Office branch had made more sales than it had in reality. Based on Horizon’s misleading records, Post Office bosses demanded that subpostmasters in charge of branch offices made up these accounting shortfalls, which many did out of their own pockets.

Some people paid tens of thousands of pounds to avoid prosecution.

Court of Appeal judges heard in 2021 that two Post Office workers, desperate to make good these computer-generated shortfalls, “had tried to repay shortages by using their own credit cards and their holiday money”. The court said: “They had eventually run out of funds.”

Others were forced to hand over similar sums after the Post Office successfully took them to court for theft, false accounting and similar offences.