Post Office scheme was a ‘charade’ that never intended for large compensation pay-outs

The Post Office never intended to pay large sums of money as financial redress to former subpostmasters blighted by problems with its accounting software.

During the latest Post Office scandal public inquiry hearing, featuring evidence from former senior Post Office executive Angela van den Bogerd, it was revealed that former CEO Paula Vennells expected subpostmaster compensation to amount to token “payments and apologies”. This was despite the lives of branch managers being ruined after being blamed and punished for Horizon errors.

The mediation scheme was set up in July 2013 after forensic accounting firm, Second Sights, had investigated and identified concerns that the Horizon system contained bugs and errors.

In a February 2014 meeting, between then Post Office CEO Paula Vennells and interim general council Chris Aujard, with Second Sight’s Ron Warmington and Ian Henderson, Vennells requested an update on the mediation scheme.

The latest hearing looked over the 2014 meeting notes taken by Aujard, which revealed the Post Office’s surprise at the high level of compensation claims.

“It was noted by Paula Vennells that the projected level of claims was currently around £100m, in response to which Second Sight noted that their ‘back of the envelope’ calculation was of the order of £25m to £50m,” the notes read.

The notes continued: “Paula Vennells observed that these were a long way from the figures in mind when the scheme was established, which were much smaller and more in the way of a token or an apology. It was the case that neither the board or the shareholder executive would countenance the payment of large scale amounts by way of compensation.”

Asked about this during the hearing, Van den Bogerd said that there was always the feeling there would not be a massive compensation liability for Post Office and a lot less than that being talked about here.

Van den Bogerd disagreed with the inquiry barrister’s assertion that the mediation scheme, which sought to settle claims with subpostmasters, was “a charade”.

She said she believed the Post Office was genuine about the mediation scheme at the start, but that as it progressed the organisation was surprised by the level of compensation claims.

Pressed by inquiry chair Wyn Williams, she admitted that, from the Post Office’s view, large payments were never going to happen, and she conceded that this was never conveyed to subpostmaster applicants to the mediation scheme.

The total costs of the Horizon scandal, including its three financial redress scheme, is now more than £1.2bn.

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to accounting software (see timeline of Computer Weekly articles about the scandal below).

Also read: What you need to know about the Horizon scandal. 

Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story.