Former Post Office executive says he should not have said Horizon was robust

David Miller arriving to give evidence at the inquiry on Tuesday. Photograph: Lucy North/PA

A former Post Office executive has told a public inquiry that he “should not have said” to its board that the Horizon IT system was “robust and fit for purpose” and agreed there had been a “missed opportunity” to investigate post office operators’ concerns.

David Miller, who retired in 2006 as chief operating officer of the Post Office, had been told of problems with Horizon when he held meetings with post office operators in June 1999, the inquiry into the scandal has heard.

Miller told a hearing on Tuesday that he did not remember a Post Office board meeting in July 1999 where minutes show he gave assurances to executives that the Horizon system was “robust and fit for purpose”.

“I should not have said it was robust. I make the assumption that the board minutes are correct – so I did say it,” Miller told the inquiry.

The Post Office, which is owned by the UK government, pursued hundreds of post office operators for more than a decade, alleging financial shortfalls in their branch accounts, prosecuting them and demanding they pay back thousands of pounds.

It has since emerged that discrepancies had been caused by IT bugs within the Post Office Horizon computer system.

At the inquiry, Miller was shown an internal Post Office presentation about the history of Horizon given by Dave Smith, a former Post Office IT programme manager, in 2010 – four years after Miller had retired.

In one slide, Smith wrote that Post Office officials had “felt they had been shafted” and alleged a “stitch-up” by the government and Fujitsu, the IT company that developed the Horizon system.

The slide in Smith’s presentation read: “Whilst the group board signed up to the deal (Sunday afternoon in CEO’s kitchen) they did so with a gun pointed at their head – ‘sign this or all the other things you want you can forget’.”

The slide also quoted Miller as saying that his feelings towards Fujitsu were the same “as I would have for the man who had just shoved 15 inches of bayonet up my posterior”.

Miller was asked by Emma Price, counsel to the inquiry, whether he had ever made such comments, to which he replied: “Absolutely not.”

In 2004, Miller signed off on a legal settlement paying about £180,000 to a post office operator who was suing the Post Office. Julie Wolstenholme blamed losses at her branch on IT faults in the Horizon system and backed up her legal case with a report from an independent IT expert who called Horizon “clearly defective”.

Miller agreed there had been a “missed opportunity” to investigate the problems and told the inquiry he had not read the IT expert’s report or the advice of a barrister that Post Office should settle the case.

“I should have said stop … let’s review this properly and understand what happened here,” he said, adding that inside the Post Office there had been a “lot of knocking” of the IT expert’s report by others in the Post Office and by Fujitsu and it had not been given “sufficient weight”.

David Mills, the former chief executive of Post Office, told the inquiry that when he joined the Post Office in 2002 the business was “technically insolvent”.

“It did not take me very long to realise that it was a burning ship losing £1m a day,” he said. He told the inquiry that the board was more focused on solvency than prosecutions of post office operators and did not identify risks.

“I did not have the brain power to cope with more than I was coping with … I’m sorry I didn’t,” he told the inquiry.

He said it was “unusual” that the Post Office had the ability to prosecute and investigate its own cases but said he was “not aware” the organisation could do this until late in his tenure before he left in December 2005.

The future of Nick Reed, the embattled Post Office chief executive, will be determined this week with the publication of an independent report by a barrister which had been triggered by allegations against him, including claims of bullying. Reed denies the claims.