UK government should consider suing Post Office ex-directors over scandal, says Alan Bates

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Former directors of the Post Office could be sued for allegedly failing in their duties, according to former sub-postmaster Sir Alan Bates, who is calling on the government to consider litigation over the Horizon IT scandal.

The campaigner is urging the government — the Post Office’s sole shareholder — to consider legal action. He is joined by the lawyer who represented him in the landmark High Court case that concluded several “bugs, errors and defects” meant there was a major risk that Horizon was to blame for faulty data used to prosecute sub-postmasters.

More than 900 Post Office branch managers were convicted between 1999 and 2015, including 700 prosecuted by the Post Office, in a scandal deemed the biggest miscarriage of justice in modern British history.

Bates told the Financial Times: “[Former Post Office directors] failed to carry out their duties year after year. They spent more time and effort on the cover-up than actually trying to resolve the issues.”

He said he personally believed it was a matter of “when” rather than “if” the government would take legal action.

James Hartley, who acted for 555 sub-postmasters in the High Court proceedings that ended in 2019 and is currently working on one of the compensation schemes for victims, said: “Serious consideration should be given, if it isn’t already, to government instituting claims by Post Office Limited against all and any former senior management who can be shown to have failed in their duties to act competently.”

Hartley, who is national head of dispute resolution at law firm Freeths, added that the “claims would be for damages, possibly [worth] hundreds of millions of pounds, all of which would ultimately go back towards replenishing taxpayer money spent on defending and rectifying this enormous scandal”.

Hartley said any claim would be complex to bring due in part to the statute of limitations.

However, evidence disclosed in the public inquiry showed the company had raised with its insurers the risk of potential claims, including against its directors, in 2013.

Former Post Office chief financial officer Christopher Day was asked in a board meeting in July 2013 to ensure the insurers of both Royal Mail and the Post Office were given notice of the initial findings of Second Sight, the forensic accountants it commissioned to review Horizon.

In a subsequent email that month, Day said: “The subtlety here is that we need to inform existing insurers of a potential new risk (in hand) without ‘scaring the horses’ into immediately increasing future costs.”

Day described the term as an “unfortunate phrase” during his oral evidence, saying there was “a concern that if you didn’t inform the broker . . . as soon as you were aware” of a possible liability, that “you might not be covered” and “might suffer much higher premia in the future”. Day could not be reached for comment.  

Andrew Parsons, who worked as an external solicitor for the Post Office, in an email in July 2013 also warned it would “look bad” if it “ever became public knowledge” that the company had notified its insurer Chartis, part of AIG. To reduce that risk, he recommended verbally notifying the insurer, “so as to not leave a paper trail”.

Insurers were later provided with written notification, he told the inquiry.

The Post Office had up to £60mn in directors’ and officers’ cover (D&O), according to evidence disclosed in the public inquiry from 2013, a kind of insurance that is typically spread across a number of insurers and can cover legal settlements, defence costs and other related expenses.

Germany’s Allianz also has some exposure, having come on board as a D&O insurer years later, according to a person familiar with the matter. AIG and Allianz declined to comment. 

The Department for Business and Trade said it recognised “the immeasurable suffering postmasters have endured” and was “working tirelessly to bring them some relief.” It added: “Those who caused this scandal must be held accountable for their actions. It’s only right to wait for the Post Office inquiry’s report to be published before further action can be taken.”

The Post Office said: “We apologise unreservedly for the hurt and suffering that was caused to victims of the Horizon IT Scandal and their loved ones”, adding that it was “following the inquiry closely and learning from all of the evidence emerging, it would not be appropriate to comment on this process whilst it remains ongoing”.

In his witness statement to the inquiry Parsons said he and his firm “did make a few mistakes” while acting for the Post Office. He said they were “genuine errors and at all times I believe that my firm and I acted appropriately”. He added: “I apologised for them at the time and apologise for them now.”

Parsons was contacted for comment.