PQ Presents: Lord Sikka and the Post Office Scandal

Lord Sikka explains why its time for a new inquiry.
Lord Sikka was one of the speakers at the recent ‘The Accountancy Odyssey: How do we shape the future?’ conference.
This was the 7th annual accountancy conference, held between London South Bank University & PQ magazine.

[@georgep4465]

Thank you for this brief and informative summary. Excellent. You have to laugh at one of the automated subtitles at 12.25 referring to the Enquiry headed by 'slow witted Williams' aka Sir Wyn Williams. I am a proficient accountant. I qualified as a Chartered Accountant and later pursued a career in fund managment in the course of which I have analysed hundreds of companies' accounts across all industries and across all of Europe and EMEA. It is, in my view, wrong to characterise the Post Office's problems as primarily an IT problem or an accounting problem. Obviously these systems were deficient. But why? The answer is i) chronic intellectual DISHONESTY ii) gross incompetence and negligence at the management (and the civil service) and iii) a legal team and culture that reinforced these shortcomings. The classic questions are a) what were the incentives (the Charlie Munger question) b) where did the money go (i.e. who benefitted). The answers all point to the lawyers - both the internal lawyers and the external lawyers. The Post Office's lawyers charged it £100m to defend the indefensible. Any proposition that they merely took their client's instructions would just be obfuscation. The lawyers benefitted enormously and everyone else suffered - the Post Masters most egregiously. The legal professions are at the heart of this catastrophe. This scandal highlighs the moral and professional bankruptcy of a huge number of solicitors - in private practice and working for the Post Office. The lawyers were not just clueless. They were immoral and deceitful.They weren't spineless invertebrates, in PG Wodehouse's expression. They were calculating, careless, cruel, heartless lying bastards . The SRA and HM Courts did nothing to uphold professional standards -let alone truth or justice. Every lawyer in England should be ashamed of their profession's conduct in this disaster. Of course the auditors are also culpable - as you point out. EW should have qualified its reports and/or resigned. Regulation in the UK is toothless and useless across the board.

[@johnbriggs3916]

Well, no. The "defending the indefensible" was done against the advice of the outside lawyers. It was worse on the criminal side. The PO's internal criminal solicitor hadn't had any criminal law experience before joining Royal Mail. He relied on the external lawyers, who were specialists in criminal law. Except that before getting the PO contract they had been defence lawyers and didn't have prosecution experience. It goes on: the Chief Executive was the only executive member of the PO Board, and the General Counsel didn't attend Board meetings.

[@allisonstandley2573]

This is the second time I have listened to this Lord Sikka. Thank you for this post, I have listened to a lot of the enquiry as it has gone in and it can get confusing. This has made things incredibly clear. Thank you.

[@tullochgorum6323]

A coherent and succinct overview. As Lord Sikka highlights, on the face of it this seem like an egregious failure by the internal and external auditors. Time after time with these major scandals we see that the external auditors prioritised their cosy financial relationship with the company over their broader legal obligations to the shareholders and the public interest. Arthur Andersen at Enron is the most salient example, but E&Y must surely bear some responsibility here. They have somehow managed to keep a low profile during these proceedings. As the good Lord says, time for an enquiry to examine their role! They should surely be contributing to the compensation of the SPMs, alongside Fujitsu and the POL?

[@londondisc]

It's not a failure that's the way the system works.

[@user-ip2lj3gs1o]

Brilliant insight - thank you.

[@craigmatthews4517]

"After a time, civil servants tend to become no longer servants and no longer civil." -- Winston Churchill How the hell did these people get in charge? I am always amazed how the least qualified people make it to the top. I have worked as an accountant and in IT for 30+ years. I find it mind blowing that the system was not tested in parallel. and for at least a year. Who the hell was in charge!!! With over 19000 patches (~ 1000 patches per year) and 12000 dropped connections this system was beyond fragile. It doesn't sound like there was even a paper trail to verify and validate the system. This would make it un auditable. I could have done more by accident than what the external and internal auditors did. This is a great example to the U.S. of why the administrative state agencies are such a threat to society. I think Lord Sikka brings up a good point as to not having any expertise on the audit and operational committees. Are the Brits so enamored by people's titles that they ignore subject matter expertise/meritocracy as the primary requirement to hold a position??? Sounds like all the people put in authority were put in place due to some crony fraternity.

[@londondisc]

Has anyone asked how other stores like Asda, Tesco, Sainsburys etc using Point of Sales IT and Accounting systems have no such problems.

[@c-9233]

A fair question, but those systems, although massive and complicated too, are relatively straightforward compared to the business of the Post Office (and yet I suppose fundamentally the same thing). The evidence of one of the Fujitsu whistleblowers is frightening, which hasn't fully surfaced yet (he spoke at one of the Post Office Scandal roadshows).

[@catherine7484]

Should the contact holding the sub postmasters responsible for financial shortfall not be rendered void by proof the accounting system was able to be altered without their knowledge?

[@eljay5746]

What evidence besides a computer system did the PO that the shortages were in fact real (none). The computer should have been the first thread indicating as the PO saw it as theft. The next step should have been to discover where the money went. They checked bank accounts etc but did not discover any missing money. In fact the discovered the opposite that SPMs were taking out loans, borrowing money from friends & family to make up the short falls. Why would anyone who was stealing money arrange for loans (ending in bankruptcy, suicide etc) to pay back that same amount of money, doesn't sound logical.

[@JelMain]

Given what's just started happening in the way of stamp fraud, with the Royal Mail accusing the recipients of mail of fraud, any of us can now be the target. The barcode system is entrapping the citizen.

[@c-9233]

The so-called Investigators were, basically, thick. Being thick is not a crime (although Post Office needs to answer why these people were so highly promoted from the likes of desk clerks), covering up the obvious in order to chase their high undeserved salaries and lucrative bonus is a crime, with the result that lives were ruined. Your question: "Why would anyone who was stealing money arrange for loans (ending in bankruptcy, suicide etc) to pay back that same amount of money, doesn't sound logical" needs to be asked and asked and asked again.

[@JelMain]

If you're on the wrong end of a criminal gang, it doesn't make any pragmatic difference if the gang leader is Ronnie Kray or the Prime Minister.

[@davidwelch6796]

I can understand that many mistakes were made by Post Office Ltd and by Fujitsu. I can understand that the people responsible for these mistakes sought to conceal them by lies and obfuscation so as to protect themselves. What I will never understand is why they thought they should continue their deceitful ways when it became apparent that innocent sub-postmasters were being caused immense harm by these lies and deceptions. This total lack of humanity and morals, coupled with personal greed, is heinous. I have watched some of the Post Office Inquiry interview sessions. I am appalled that many of the people responsible for this scandal are still not telling the truth. It is obvious that many of their responses are untrue and in many cases ridiculous. Certainly their sworn oath to tell the truth means nothing to most of these people.

[@markgrunzweig6377]

Neil Young had foreseen this sort of "big brother" scenario in some of his songs on his album "Computer Age" 1982. "The refrain "We are in control" from one song, keeps resounding in my head, as I study this incredible scandal.

[@markgrunzweig6377]

Finally, some actual facts about what the sub postmasters actually experienced.

[@David-Saint]

Thank you, excellent insight.

[@hughbaker4997]

Well done!

[@andym.6141]

Don’t go to market with a prototype with the expectation that bugs can be addressed on a live system. Classic failure of project management no doubt caused by senior management demanding early results to get their bonuses. Bonuses drive short term thinking and really ought not to be a feature of remuneration packages on tax payer funded projects, ever.

[@robertwalker1079]

Whatever became of professional scepticism?

[@londondisc]

Auditors Management letters, Representation letters should be banned with Auditor to spell out the problems to the Shareholders on the Audit report. Companies Act should have a default Engagement Letter for Auditors spelling out their duties rather than the present practice of Auditors oreparing their Own Engagement letter and asking the Client Company to replicate it on Company Letterhead and signing it. Finally, i think Auditors should be government owned to remove the huge profit motive from a Compliance Industry.

[@doubleplusgoodthinker9434]

Thank you. Abrilliant summing up of the izxues.

[@MYCROFTonX]

4:55 at this point you should have said that the entire PO Scandal stemmed from the removal (complete) of Section 69 of PACE, it was the removal of that by the LABOUR GOVT. that has meant that systems go unquestioned and the onus of proof of failure is on the INNOCENT party not the prosecuting one. There is the answer to stopping the PO Scandal ever happening again, reinstate, in full Section 69 of PACE. Everything else is just hot air.

[@robertnewton6454]

In the Seema misra trial Judge Stewart asked the question What is pace He was told Police and criminal evidence act Says it all really

[@peterbell4662]

The subtext is hilarious

[@c-9233]

It is, and it is not helpful. (Please don't let it detract from such a serious matter).

[@steve6375]

@4:13 - every night? I thought it was originally every month/4 weeks and later every week (Wednesday night)? Also, I think some money was ring-fenced to pay compensation to 'victims' and did show in their accounts at some point even when at that time, they were saying to everyone that the Horizon system was error free.

[@JelMain]

A provision is not a recognition. This one was also insignificant.

[@kennethsimmons2029]

Told em in 1999.....even involved police. Wilful cover up fit up and bribe culture topped off with perjury of Sept 7th 1998. Silenced by entry on to list of vexatious litigants in 2003.

[@johnbriggs3916]

It is unfortunate that an AI subtitling system was used: Sir Wyn Williams became "slow-witted Williams"!

[@c-9233]

It's interesting that the subtitles are demonstrating flaws in technology. We all know it happens and to an extent we all know why. Except the Post Office of course. And that rather unpleasant piece of work Jarnail Singh (Post Office head lawyer) who likened the Horizon system to be as flawless as a pocket calculator.

[@markgrunzweig6377]

The machine is perfect is the mantra! But a computer is not a machine, when the software is created. Garbage in, garbage out! Remember Hal on "2001 space Odyssey"? The artist are the shaman's of the future. Both Neil and Stanley got the vison and it was bad! Because the technology is in control and not the other way around! That's what's wrong!

[@sivasurrey]

All what you say is well undetstood by the vast majority of the public now. Do what you have to do in the house of Lords. But you miss the point that any system must provide detail breakdiwn of how it arrived at its totals. Horizon did not peovide that. It was not provided when the defense asked for it. It is a IT problem aggreed but more than that it is A maths problem. Instead of checking the maths you accountants and lawyers were asking others to vouch for the system. That includes the judges. Mr Dobbs himself a peactical accountant couldnt get the transa tions to sum up to the total shown. If Horizon had provided that we the public or SPM like castleton do not need anyones belp to defend themself. So i say your duty is to make all accounting systems provide a breakdown than waste time in the House of lords discussing the past

[@robert-skibelo]

The subtitles are a nonsensical mess. In a video about defective technology that incompetent personnel never checked!!! Makes you look pretty silly, doesn't it?

[@c-9233]

It is hilarious but it conveniently demonstrates that technology is not perfect. (Unless of course you work for Post Office, where all technology is tickety boo apparently and easily fixed).