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UK Post Office Inquiry: A cautionary tale in internal investigations

March 13, 2024

Between 1999 and 2015, more than 4,000 UK sub-postmasters were prosecuted over allegations of cash shortfalls, facing charges of theft and false accounting. About 700 of them were convicted, and some-230 went to prison — a story that seemingly serves to reinforce the effectiveness of the UK’s criminal justice system. Except it wasn’t true. In May 2009, Computer Weekly reported that rather than sub-postmasters skimming off the top, a faulty program, Horizon, was to blame. A 2019 legal settlement awarded £58 million in compensation to more than 500 sub-postmasters, and a blanket exoneration of those convicted is expected to come soon.

While public focus is rightly on delivering justice to the victims of the UK Post Office scandal, a key learning point companies should reflect on is how the Post Office employees’ behaviour was allowed to go as far as it did. One element that must be duly considered in the organisation’s internal processes and culture is that of the Post Office’s internal investigations.  

Internal investigations are an important tool for any company committed to identifying misconduct. When conducted in good faith and good practice, they enable remediation or self-reporting before issues escalate. Evidence in the Post Office Inquiry makes clear just how important it is that companies get their investigative process and practice right.

Maintain objectivity

Internal investigators act on behalf of the corporation - not the employees. Their purpose is to determine and understand the facts so that the company can assess whether the allegations are substantiated and what further steps are required.

“When investigators judge a set of events or become tied to a certain narrative before the investigation is complete, they are unlikely to consider evidence that disputes their thinking and their findings will inevitably distort the truth"

But bias is a key risk in any internal investigation. When investigators judge a set of events or become tied to a certain narrative before the investigation is complete, they are unlikely to consider evidence that disputes their thinking and their findings will inevitably distort the truth.

The evidence in the inquiry shows that huge amounts of investigative work was carried out, but the organization and its investigators had already formed a narrative early in the investigation. This bias is most likely why the investigators stopped short of exploring the sub-postmasters contrary evidence and counter-allegations any further than they did.

For example, the Post Office could have investigated whether the personal finances or lifestyles of sub-postmasters showed any evidence of theft. Sub-postmasters would likely have been happy to cooperate with these investigations, including providing personal bank statements, to corroborate their position that they had committed no theft.

Act with fairness

Even while acting on behalf of a company, internal investigators should always treat individuals with professionalism and respect, especially when undertaking interviews. The interview is part of the fact-finding process and the interviewees’ position in respect to misconduct allegations must be considered fully and fairly. This means keeping an open mind to the possible conclusion of “no wrongdoing.”

The inquiry heard that sub-postmasters felt bullied and may have been lied to when airing their concerns about the IT systems. Those interviews were all missed opportunities to identify the real issue. If an interviewee is bullied, belittled or simply ignored by investigators, the stress and frustration make them less capable of putting forward their version of events, and the company risks significant gaps in their understanding of the facts or further investigative leads.

Companies must ensure that their investigators are well-trained and provide adequate resources and support to maintain their fairness during investigations. This might include measures like regular debriefs and upward reporting, involving a larger number of investigators to bring more perspective, or involving outside assistance who do not have close ties to anyone in the company.

Establish independent oversight

In investigations that might have a material impact on the company - reputational or financial - it is in the company’s interest to ensure some level of independent oversight. The private prosecution of hundreds of sub-postmasters for serious offenses ought to have triggered this consideration at the highest level of the Post Office's management.

A good practice is for the company to form a committee of relevant senior managers and independent board members to oversee the investigation process. This independent oversight can challenge poor investigative practices and ensure that alternative hypotheses are given proper consideration.

Companies should also have a process for identifying the investigations that warrant outside assistance from lawyers, forensic accountants or data specialists. For serious matters, this is an important step to reduce the risk of bias and future fallout for the company.

An internal investigation is only worth doing if the process is fair and objective. The Post Office debacle shows how poorly executed investigations can do more harm than good and how far-reaching that damage can be.

As featured in Corporate Compliance Insights magazine - March 2024

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