THE former chair of the Post Office, Alice Perkins, was alerted to possible issues in the Horizon IT system as early as 2011, an inquiry has heard.
Despite this warning, the Post Office continued to prosecute hundreds of sub-postmasters for fraud, relying on inaccurate data from the Horizon accounting software. These prosecutions persisted until 2015, the BBC reported.
During the public inquiry, Perkins said that she didn't see a direct link between the system's issues and the ongoing legal actions.
She was also informed that the Post Office had pushed for a lower price on Horizon, leading its developer, Fujitsu, to compromise on software quality. In a meeting noted by Perkins, an auditor expressed concerns about Horizon's accuracy, highlighting it as a risk for auditing Post Office accounts.
Perkins acknowledged receiving this information but didn't immediately connect it to Horizon's operations at branch level.
The inquiry was shown a handwritten note from Alice Perkins detailing a meeting on September 27, 2011, with Ernst & Young auditor Angus Grant.
In the note, Grant raised concerns about the Horizon system, labelling it "a real risk for us." He cautioned that if Horizon's data was inaccurate, EY would be unable to approve the Post Office's company accounts.
Grant's concern about the system's data accuracy was evident in Perkins' note. Lead counsel Jason Beer stressed the significance of Grant's information, noting that in 2011, around 11,900 Post Office branches relied on Horizon to handle millions of transactions worth billions of pounds annually.
Beer suggested that if the system posed a risk to independent auditors, it would also be a significant risk for the Post Office.
Perkins said that her meeting with Grant was one of her first as chair and she had understood his point to be from the auditors' perspective regarding their ability to audit the accounts.
She, however, admitted that she had not connected this concern to the operation of Horizon at the branch level.
In response, Beer questioned whether one issue logically followed from the other, to which Perkins replied that she did not remember making that connection at the time.
According to Perkins' note, Grant had discussed cases of alleged fraud by sub-postmasters, indicating that "suspects suggest it's a systems problem."
When Beer asked if the note was "deeply problematic" for her because she took no action with the provided information, Perkins disagreed.
She explained that during that period, she was meeting numerous people who were providing extensive information about the Post Office, which she was trying to process and understand. It "did not ring alarm bells," she added.
The note also mentioned Grant's comments that the Post Office had driven "a very hard bargain" on Horizon's price, but Fujitsu compromised on "quality/assurance," suggesting the Post Office was being "naive."
Perkins acknowledged to the inquiry that it was common for organisations contracting with IT companies to be at a disadvantage and expressed concerns about the unequal relationship with Fujitsu.
