"But how can you live and have no story to tell?" Fyodor Dostoevsky
"Imposter scams, whether online or by telephone, cost Hong Kongers billions of dollars"
Last month, the police announced an annual 41 per cent increase in deception cases. Listening to the press conference took me back to Janice's story.
Some years ago - never mind how long precisely, Janice, a high-flying executive with a bank, wanted my advice. She deals with multi-million dollar projects and is well-recognised for her business acumen.
In her mid-40s, with Chanel handbags and matching shoes, Janice's natural terrain is Central's upper-end dining joints. You'd probably assume she's hard to deceive.
Janice sought help to locate her missing "friend", an Englishman named Peter Holden. Over several weeks, as I gained her confidence, a story emerged that Janice had handed over HK$2 million to Peter.
I'll cut to the chase because you can see where this is going. Janice is single and met Peter online. He purported to be an IT professional with businesses across Asia, although he claimed to operate from London.
A relationship developed, and yet the two never met. Nor did they have verbal conversations; all their chats went through emails or WhatsApp. Alarms bells should be ringing.
Peter had a WhatsApp number registered in the Philippines. Warning lights are also now blinking. After several weeks of chit-chat, Peter claimed to have trouble moving money for his various businesses. Hence, he requested Janice help him by sending money to a bank account overseas.
At first, these remittances were small. He assured her he'd return the payments. Over time, the amount of cash he requested grew. Nonetheless, Janice continued to transfer the money.
The noise of alarms and lights flashing is now overwhelming.
Then Peter contacted Janice with an urgent request for cash. He asked that she have money delivered by hand to his assistant in Hong Kong. Janice dispatched an office runner to a Kwun Tong coffee shop with the cash collected by a black male. After this, Peter broke off contact. In his last message, he'd told Janice of threats over his debts.
Fearing something untoward had happened, Janice contacted me through a mutual friend. After some reluctance, she agreed to share her WhatsApp messages. A quick look revealed that Peter struggled with English, while his story about his business location changed at least three times.
Moreover, Janice had only one picture of Peter. A search found no IT companies owned by "Peter Holden" in the UK or elsewhere. In short, Janice was the victim of a classic online romance deception.
After some discussion, Janice agreed to report the matter to the police. By means I won't discuss, an arrest of a 32-year-old African male took place. Searching his computer revealed he'd played the role of Peter with the help of conspirators overseas.
Horrified, Janice declined to pursue the case. Initially, she feared the embarrassment of a court appearance and the attendant publicity. She didn't recover her lost money. In a process of "layering", it had disappeared.
But what happened next shocked me. Janice became preoccupied with justifying her actions. I witnessed the process unfold as she rewrote the narrative of events to soften the cognitive dissonance rattling around in her mind.
Janice concluded the African chap had indeed loved her. She held that she'd entered the whole charade to help the "poor guy". She flatly declined to recognise the deception.
So here is a forceful example of the power of self-justification that allows people to avoid acknowledging their mistakes— such dissonance partly results from the belief that mistakes are evidence of incompetence and stupidity.
People who hold these ideas to be accurate are often afraid to admit errors because that undermines their self-respect. In the end, I found it hard to have much sympathy for Janice. Did she learn a lesson? Hard to say.
Imposter scams, whether online or by telephone, cost Hong Kongers billions of dollars, prompting attempts to understand the greed and gullibility that fuel this trend.
The psychological drivers exploited in these scams need recognition. Yet, despite years of publicity, people still fall for one of the hooks dangled to entice them.
There are many forms, but they share a basic premise: Criminals pretend to be someone you trust, such as a romantic interest, government agent, relative or well-known business, to persuade you to send them money.
The hooks in Janice's case were love and loneliness. That hook proved appealing because the fictional Peter offered her romance and companionship. Other hooks take in greed and the thought of missing out on a good deal. Then you have the exploitation of fears.
Over two decades ago, deceptions started targeting older people with claims about ghosts. The culprits, often working in groups, duped the victims into handing over large sums of money to exorcise the ghosts that stalked them.
Fake monks and convoluted worship gave cover for the switching of cash used to appease the ghost. Instances of victims handing over HK$ 200,000- were not unknown.
As these schemes evolved, victims received telephone calls alleging a family member was held by loan sharks or the Mainland authorities with demands for access to bank accounts for their release.
The power to convince the victims was so compelling that, in one case, an old lady paid over HK$ 300,000- to release a son allegedly held on the Mainland, even though she knew he was at college in the USA. In another case, a lady paid money to return a son she didn't have. She later explained that the culprits may have called the wrong person, and she didn't want a mother to suffer.
Despite widespread publicity, people continue to fall foul of these deceptions. Moreover, the nature of deception means the victims are reluctant to report cases, fearing public ridicule. The perpetrators know and exploit these fears.
For some instances involving the old and vulnerable, the banks and remittance companies have a role in spotting victims. In my experience, bank staff have proved adept at intervening to stop transactions and allowing time for the police to intervene.
These efforts must continue as the social costs of these crimes are terrible. Victims, including old folks, have committed suicide.
Getting back to Janice, you'll see she never met Peter face to face nor spoke with him, even online. Had she done so, you may surmise she could have avoided the scam.
Yet, the challenge is that the internet has supercharged imposter scams. Rijul Gupta, the CEO of Deep Media – a Silicon Valley company combating deepfakes, cautions, "Right now, there are consumer applications that offer real-time voice-cloning and voice-transfer technology on Zoom calls … that are available to an intelligent consumer," How intelligent? "Any 15-year-old who plays Minecraft and streams it on Twitch could use it."
With just nine minutes of sample audio, AI can attain complete vocal syntheses. Match that to life-like avatars, and bingo, "Peter Holden" is real. Imagine how many will be caught with that hook and pay for it.
All this caused me to think we have entered a form of Baudrillard's "Simulacra and Simulation"; everything we see has no relationship to any reality whatsoever. In this domain, a lover — "Peter Holden" is conjured up without reference to anything tangible or biological. Nothing is real; it is all crap.
Still, the best way to protect yourself is by pausing and verifying. Don't be rushed and always seek a second opinion. Fraudsters prey on fear and urgency, hoping to trigger a knee-jerk emotional reaction from victims.
Remember, you are the one controlling the communication.
"A simple tale of greed, corruption, conceit and a massive injustice"
Corporate Corruption & Greed
Knowing where to start documenting the unfolding Post Office/Fujitsu horror show of corporate greed and criminality is challenging. In recent weeks, so much information has landed as this bubbling brew of corruption, malfeasance, and ineptitude boils over.
It took a TV drama to give this massive injustice the attention it deserves. Indeed, that alone is an intriguing phenomenon that will occupy social scientists for decades.
Still, drilling down to the core, a few simple causes of the wrongdoing are clear. Poorly written code in the Fujitsu-supplied Horizon IT system used by the Post Office meant money looked as if it was missing from many branch accounts when, in fact, it was not.
It appears that at the highest levels, the Post Office decided the system couldn't be seen to fail. Instead, any blame for financial loss would pass to the men and women operating the system at the sharp end, the sub-postmasters.
The Post Office scapegoated these innocent people, presenting their machines as infallible. Thus, the fiction of cheating sub-postmasters soon spread, with the Post Office's private police force mounting unjustified prosecutions to reinforce the lie. A lie that has now run for 25 years. That's the cover-up story in a nutshell.
Plenty of examples exist of cover-ups that have proven worse with each evolution. The Post Office's crimes now sit close to the top of the corporate list. It isn't the crime that gets you, Mr. President. It's the cover-up. Ask anyone from the Nixon era.
The consequences of these lies were financial ruin, jail, bankruptcy, mental breakdown and suicide. Horizon was a living hell for thousands of innocent people. The Post Office and Fujitsu made this happen, aided by a legal system that didn't ask enough questions.
And, of course, there were the inept and dodgy politicians of all hues who played their role. Few, if any, public institutions have emerged well from this saga.
No more heroes anymore? Yes, there are. The ordinary man fought back. Mr. Alan Bates, a sub-postmaster victim, led the charge. Then there are the journalists from a niche monthly magazine, Computer Weekly, who first brought the matter to light in 2008 and have pursued The Post Office ever since.
And from 2011, Private Eye magazine took up the challenge and has continued to unearth revelations ever since. Other media outlets, including the BBC's Panorama in 2015, had a crack at getting public attention.
In preparing this blog, I'm most grateful to Ian Barlow, a well-known Hong Kong-based fraud investigator and former police officer. Ian followed the case for years. He kindly provided his insights. Ian lectures on the sorry saga, sharing how investigation teams and corporate managers can avoid falling for the distorted mindset that drove the Post Office's mismanagement.
"Computer says "No"
In The Beginning
So, let's go back to the beginning.
In 1996, the government of the day (Conservative) decided that social welfare benefit payments could be "streamlined" and made more "efficient" through the computerisation of payments handled through post offices. This was the beginning and early example of an unhealthy nexus between government and big business. An ill-fated private finance initiative involving computer company ICL kicked off.
The project soon faltered as over-ambitious, and the idea was killed off in May 1999. The House of Commons Public Accounts Committee called this project "one of biggest IT failures that cost taxpayers £700 million."
Labour Prime Minister Tony Blair was elected in 1997, promising a revitalised Britain. Unfortunately, that message hid a monster that would tear through the NHS, immigration policy, and the foundations of the nation-state, as "modernisation" and "reform" were the mantras of New Labour.
From the vantage point of 2024, we now know that Blair's multitude of broken vows led to the illegal invasion of Iraq, with all its attendant savagery. His lying also eroded the pillars of the social contract between the people and politicians. Often forgotten is that Blair was busy spinning the truth long before Boris Johnson.
In 1997, the Royal Mail, a business that had existed since 1635, was split into two separate entities: Royal Mail (sent into the world to stand or fail alone) and the Post Office. The British Government retained sole ownership of the Post Office.
The aim was to operate a profitable business that leveraged a centrally managed IT system to replace paper-based operations across 20,000 post office branches. Paper-based records systems that made reconciling profit and loss cumbersome and inefficient were to go. Each branch office, even the smallest rural shop, would accept the brave new world of IT. Accounts could then be reconciled instantly. Perhaps.
Besides their primary postal services of selling stamps and paying pensions, many small rural sub-post offices were a hub for local communities. The owners were often long-serving local people who enjoyed the trust and respect of their customers. This was Miss Marple country; tidy, trustworthy, comforting.
Yet, in the new world of IT and the drive for financial gain, the rather quaint idea of "service" was about to get trashed. Having run aground with the original ICL initiative, the Post Office recycled a failed idea using ICL's new owner, the Japanese computing giant Fujitsu as consultant and administrator. The Horizon IT system was born.
At the genesis of the Post Office scandal, Lord "Petie" Mandelson (remember him? - dodgy mortgages and friend of Jeffrey Epstein) is reported to have assured Blair that Horizon was fit for purpose.
Blair then gave the go-ahead and started signing cheques. Fujitsu installed some 40,000 Horizon terminals nationwide. The digital world penetrated Britain's quiet rural corners and sub-urban backwaters. Now, though, after the ICL debacle, Horizon couldn't be seen to fail because too many careers and reputations rested on its successful implementation.
Horizon went live in October 1999 with accounting efficiency and profitability as priorities for the updated Post Office.
Horizon had 19,482 coding errors
The Computer Is Right, Even When It’s Wrong
Then something odd happened. Alan Bates, in early 2000, a new sub-postmaster in Wales, noted errors in the balances given by Horizon. Mr. Bates has an IT background. Based on his IT knowledge, he attributed the errors to an overnight software update.
He parked the discrepancy in a pending account. He continued to refuse to reconcile the accounts (and admit error) as the Post Office chased for him £1000; it claimed that he owned them.
The Post Office employs sub-postmasters on contracts that make them liable for shortfalls, including "carelessness and errors."
Unknown to Mr. Bates, many other sub-postmasters experienced similar difficulties. He continued to dispute any wrongdoing and requested the ability to audit the records in the Horizon system. The Post Office denied this request; instead, they fired Mr. Bates.
That wasn't the end of the matter. A persistent man, Mr. Bates wouldn't be intimidated. He soon discovered that others were experiencing the same problems with Horizon. He brought together a group of former sub-postmasters and organised them to fight back.
It soon became apparent that instead of considering possible errors in Horizon, Post Office investigators held the sub-postmasters solely responsible. Pleas that the computer was producing the imbalances went unheeded. Along the way, there were threats, bullying, and evidence withheld in prosecutions.
In many instances, sub-postmasters were told, "Only you are experiencing these alleged problems with Horizon"- an outright lie. It later emerged that the Post Office police earn bonuses for the "successful recovery of funds", making a quickly solved "crime" an immediate cash incentive.
Paula Vennells, Post Office CEO (2012-2019)
The Cover Up
It is now clear why nobody in the Post Office or Fujitsu intervened to question the integrity of the Horizon system. Why? There was too much money and credibility at stake at all levels, and as time went on, the lies and cover-ups needed to become more brazen. Fujitsu and the Post Office knew about the systemic flaws and likely engaged in a vast cover-up.
In 1999, a Post Office internal IT system report identified worrying problems in the nascent Horizon system, stating that; "These gaps in data will ultimately be reflected in balance sheet accounts." By September 1999, Post Office Board minutes recorded, "Serious doubts over the reliability of the software."
Yet, Horizon went live the following month. Later, it was established that Horizon had 19,482 coding errors, leading to a flawed system supported by limited or non-existent training and held together by underhand consulting support from Fujitsu.
By 2008, journalists at Computer Weekly began investigating Horizon. In 2009, they went to print highlighting the failing system. Several MPs became involved, only for the Post Office to fob them off. Private Eye then took up the story in 2011, with the Post Office again denying any faults with Horizon.
In September 2011, Mike Young, the Post Office's Chief Operating Officer, affirmed, "The Post Office takes meticulous care to ensure the Horizon computer system in branches nationwide is fully accurate at all times."
By 2013, the Post Office was facing severe challenges about the reliability of Horizon, including from within Parliament, where members were seeing multiple similar prosecutions against their constituents. A pattern was emerging. The Post Office fought back by commissioning an independent forensic audit by a company called Second Sight.
The team from Second Sight established that Horizon was producing "mysterious shortages" in accounts. Moreover, they discovered that Post Office investigations were flawed and incomplete, with no adequate examination of accounting evidence.
Auditors were unqualified, and investigators were untrained in using Horizon. Post Office enquiries focused on branch stocktaking compared against (flawed) Horizon records. Second Sight concluded, "Post Office investigators have, in many cases, failed."
In response, the Post Office fired Second Sight and gagged them under a non-disclosure order. The Post Office now went into full defence mode, asserting internally, "We need to combat the assertion that the review is an acknowledgement that there is a problem with Horizon."
During a 2015 Parliamentary enquiry, the Post Office claimed the Horizon system was robust and that no injustices had occurred.
Mr Alan Bates - the man who led the fight back
The Fight Back Gathers Pace.
When the sub-postmaster civil claims reached the High Court, the Post Office faced exposure for its lies. After a lengthy 2019 hearing (fully contested by the Post Office's expensive and extensive team of wigs and gowns), High Court Judge Peter Fraser concluded that, "Horizon is not remotely robust." He then hammered the Post Office, commenting that to them, "the earth is flat."
Likewise, in 2021, Lord Justice Holroyde stated in the Court Appeal that the Post Office, "… knew there were serious issues about the reliability of Horizon…"
In 2020, and bowing to the weight of evidence, a judge-led Public Inquiry started. The Inquiry, established on 29 September 2020, continues to run and is led by retired high court judge Sir Wyn Williams. Until a few weeks ago, the Inquiry hadn't grabbed many headlines.
It took a TV drama to alert Britain
The Public Awaken
Then, in the quiet times after Christmas 2023, a four-part TV drama and supporting documentary, "Mr Bates vs the Post Office," burst onto Britain's free-to-air ITV channel on 1 January 2024. In the everyday parlance, "The shit hit the fan!". The drama made ordinary, honest Post Office employees' suffering very plain and visible.
You'd think the Post Office would come clean - no such thing.
Evidence from the Inquiry shows that the Post Office hid and shredded documents and that some witnesses may have lied to the Inquiry and criminal courts. That's called Perjury. Paula Vennells, the Post Office CEO (2012-2019), is on record in 2019 as saying, "I don't accept any personal criminal conduct." Yet, the Post Office has been shown to have stolen vast amounts of money from its employees, who have now lost everything.
Well, Ms. Vennells, "criminal conduct" is a matter for others to decide. According to Private Eye, she has resorted to libel lawyers, who threaten newspapers for "belabouring" her. It's a shame she didn't instruct her staff to stop "belabouring" innocent sub-postmasters who suffered threats and harassment from her heavies.
Vennells is an ordained priest. Considered a potential Bishop of London, Archbishop Justin Welby credited Vennells with "shaping my thinking over the years."
What is there to respect in any of this? Vennells, having overseen so much harm to so many innocents, joins the grand tradition of the profoundly religious who damage society and then shelter in their piousness.
Many Post Office directors and senior managers are joining Vennells in the rogue's gallery. These folks either ignored that Horizon was failing or couldn't be bothered to check by asking questions. The same applies to Fujitsu.
Consider for a moment the role of the National Federation of Sub-postmasters (NFSP). This trade union is entirely funded by the Post Office and should have represented the interests of sub-postmasters. It didn't.
In 2015, NFSP general secretary George Thomson told MPs that Horizon "has been fantastically robust... from day one. " He characterised Mr. Bates's campaign for justice as a "cottage industry. " The Trade Unions Congress kicked the NFSP out in 2014.
And what of the politicians? New Labour gifted Britain the Horizon system, but since then, all political parties have defended it at various times. Sir Ed Davey, now leader of the Liberal Democrats and previously minister responsible for the Post Office, declined to accept claims of Horizon's failings. He received his reassurances without question from the Post Office.
Another British institution goes up in flames
The Web of Influence
Fujitsu, who Tory MP Nadhim Zahawi asserted should face "corporate manslaughter charges," is deeply connected to the British Government. The Conservative Party accepted some £50,000- from Fujitsu between 2015 and 2019. Even with Fujitsu losing to Mr Bates in a crucial 2019 judgement, the government continued to award them contracts valued at £1.4 billion.
Not to be outdone, the Labour Party accepted money from Fujitsu for the "Fujitsu Labour Business Lounge" at their 2017 conference. Further, Fujitsu sought to cover all the bases by also funding a 2011 meeting of the Liberal Democrat Party. Duncan Tait, then chief executive of Fujitsu, sat on a conference Q&A panel with Ed Davey, then minister for the Post Office.
Several Conservative ministers moved on the parliamentary merry-go-round and held the Post Office portfolio. Even in the face of judgments against the Post Office and the relentless coverage by Private Eye and Computer Weekly, ministers blindly accepted the Post Office's assurances.
At least a few politicians did the right thing and sought justice, but only after 1 January 2024 did the majority wake up to this massive wrong.
Post Office Minister Ed Davey, accepted the
Walter De Havilland was one of the last of the colonial coppers. He served 35 years in the Royal Hong Kong Police and Hong Kong Police Force. He's long retired.