More than £1m of unexplained transactions were transferred in to Post Office profit at the height of the Horizon scandal, leaked documents have shown.
The papers, seen by Sky News, show a snapshot of transfers from a Post Office “miscellaneous client” suspense account over a four-year period, up to 2014.
A suspense account is where unexplained, or disputed, transactions remain until they are able to be “reconciled”.
Unaccounted-for transactions were transferred out of the Post Office suspense account and into their profit and loss account after three years.
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Ian Henderson, director of Second Sight – the forensic accountants hired years ago by Post Office – said: “The Post Office was not printing money. It was accumulating funds in its suspense account.
“Those funds belong to somebody, either to third-party clients or to sub-postmasters, and part of the work we were doing in 2015 was drilling into that.”
Mr Henderson said they were sacked not long after asking questions about whether the Post Office profited from shortfalls paid for by sub-postmasters.
More than 900 sub-postmasters were wrongly prosecuted due to faults with Horizon accounting software.
A letter from Alisdair Cameron, the Post Office’s chief financial officer, to Second Sight in February 2015 states some “postings cannot be traced” to “underlying transactions”.
He added: “We are not always able to drill back from the combined totals to itemise all the underlying transactions.”
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Mr Henderson said the letter shows that “the Post Office was benefiting from this uncertainty due to, frankly, bad record keeping, but taking it to the benefit of their profit and loss account”.
He maintains that it’s impossible to prove for sure that sub-postmasters’ money went into Post Office profit because of a “lack of granularity”.
He says therefore that it is of “sufficient public interest” that a further independent review into the use of suspense accounts should happen.
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Mr Henderson added: “It didn’t come from thin air, where did the money come from? That’s a fundamental question the Post Office has not answered.”
Meanwhile, separately, a secret recording obtained by Sky News indicates that the Post Office was trying to gag the independent forensic accountants.
The recording is of a meeting in January 2014 between Second Sight, a lawyer and a Post Office representative.
It took place over a year before the accountants were sacked.
In the conference call, there are signs the relationship between the Post Office and Second Sight was beginning to weaken.
There is discussion about a contractual confidentiality agreement, a “letter of engagement” between the parties.
In the recording, Ian Henderson says: “Either, you know, we have unfettered discretion and authorisation to just talk to MPs or we haven’t.
“At the moment, the way the document is drafted, we are prevented from doing that. That’s the issue.”
His colleague at Second Sight, Ron Warmington is heard agreeing.
In another part of the recording, there are more concerns raised that the investigators are being blocked from talking to MPs.
Mr Henderson says: “My point is we should not be gagging either the applicant or Second Sight in being able to respond, you know, fully and frankly to MPs who frankly sort of set this whole process in motion.”
The Post Office representative replies, saying they’re not trying to gag anybody.
Mr Henderson describes “a point of principle”: “In exactly the same way that when we were doing spot reviews, we disclosed to MPs, when they asked us a specific question, the information provided to us by Fujitsu and by Post Office.
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“And that’s why it’s so important to establish this principle that there should be no gagging of Second Sight in relation to being able to discuss our investigative work with MPs.”
In the same meeting, his colleague Ron Warmington said that if it later emerges that Second Sight have been “effectively gagged” in its dealing with MPs, “it’s not going to be Second Sight they are particularly annoyed with, it’s going to be Post Office”.
The representative responds directly with: “I think that’s something that the Post Office will have to deal with if – if it arises.”
Adding that “some of the terminology in terms of gagging is probably an exaggeration of what it is that is trying to be done here, and at the moment you haven’t signed anything.”
The Post Office released a statement in response to the findings, saying: “The statutory public inquiry, chaired by a judge with the power to question witnesses under oath, is the best forum to examine the issues raised by this evidence.
“We continue to remain fully focused on supporting the inquiry to get to the truth of what happened and accountability for that.”
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