Corporate governance failings: UK Post Office scandal

By Dan Byrne, 11 March 2024

The UK Post Office Scandal is perhaps the most perfect example we can find where every crucial governance decision is wrong.

Modern governance means integrity, support, and logical decision-making; the Post Office showed none of this. Where other governance disasters have spawned from lax control, this has taken many steps further into the deliberately vindictive.

One of the biggest – perhaps the biggest failure of governance – is persistent denial when the problem stares at you in the face. When governance professionals try to teach about that issue in the future, this is the example they will use.

In this case, not only did Post Office leaders commit that failure, but they also allowed that failure to continue targeting innocent people for the better part of two decades. It’s corporate governance insanity.

Key governance failures

You can read more about the main points of the scandal in the recap at the bottom of this article, but the 16-year saga of deceit and mistreatment of honest workers raises two serious questions about the Post Office’s governing body.

First and foremost: where was the curiosity? It’s a board’s job to act on serious information such as employee malpractice or faulty systems. The fact that this case ran for so long means the board did not act, did not ask questions or try and get to the bottom of the matter, even when alarms were raised.

This leads to the next question: did the board even have the right information? Were the CEO and other executives feeding it through? A board can’t govern if its executives don’t communicate properly, which raises more governance problems.

No answer to the above questions is a good one. Whether the board knew and did nothing or didn’t know because of poor management, it only signals chaos at the top.

On the ground

Baffling information we know to be true is that executives in one of the UK’s most important organisations knew key pieces of information for years.

• The same accusation of financial mismanagement surfaced against hundreds of workers who were unconnected, showed no evidence of collusion, and similar degrees of shock at being accused of a crime.
• Thousands of them raised concerns about the system they were using. 
• There were doubts about the integrity of the Horizon system from the beginning.

It’s a simple question: How could responsible professionals know all this and continue their conviction that the people were at fault?

It makes it worse when we remember that as these workers raised their concerns in their thousands, they were told – individually – that no one else was having the same problem. That’s not lax governance; that is deliberate, cut-throat manipulation of honest people – an international shame on those who lead businesses.

It suggests the Post Office was so obsessed with its own brand integrity that it became the very thing it publicly spoke out against. Caught in the crossfire were dedicated workers with neither the knowledge nor the finances to defend themselves.

They were individuals up against an employer boasting all the powers of a civil service giant with strong values, government backing and international recognition.

Reports on Horizon

From humble beginnings to pages of official reports, red flags have been raised on Horizon since the beginning.

Alan Bates – the protagonist of the new ITV documentary Mr Bates vs the Post Office – went through his own office’s accounts, found duplicates, and raised the issue to find it would never be taken seriously. Right here is the start of an incredibly unsound corporate culture – encouraging ignorance, arrogance, and blind belief in a system that has gone on to ruin many lives.

This continued right through to the tenure of former CEO Paula Vennells, whose legacy will forever be a botched handling of important information about Horizon’s faults. Multiple reports confirmed these faults, but she and other Post Office officials ‘refused to accept to publish them’ – according to Second Sight, the firm responsible for writing them.[1]

While it’s difficult to understand how governance personnel could let this culture persist, it’s easy to see how ordinary workers would find it nearly impossible to fight against.

Even Bates himself has argued that the workers’ fortunes only began to change when the British courts – where the Post Office had no control – got involved.

It’s now becoming abundantly clear just how many lives have been damaged. How will a brand as well-known as the Post Office overcome this and rebuild trust? We don’t know. But we should expect it to take years if not decades.

UK Post Office scandal recap

• How long did the scandal last? It started in the late 1990s, and it’s still going.
• The main point: Hundreds of former post office workers were wrongly convicted of stealing money amid accounting discrepancies at branches across the UK. It has now emerged that faults with the Post Office’s computer system Horizon are to blame for most if not all of the discrepancies.
• How were the accused affected? It has varied. Some were falsely imprisoned. Others have lost their life savings to the point of bankruptcy. Some died before their names could be cleared.
• Have all the falsely accused been cleared? No.
• Has compensation been paid? In many cases, yes. But not all cases. Where compensation has been paid, it has frequently been found to have been less than the legal fees incurred by the defendants.
• Horizon’s developer – Japanese company Fujitsu – continues to win UK government contracts for service provision.

This article has been republished with permission from the Corporate Governance Institute, a global educational technology company specialising in training and certifying the next generation of company directors and board members.