A damning report into the faulty Post Office IT system that proceeded Horizon has been unearthed after nearly 30 years – and it could help overturn criminal convictions.
The document, known about by the Post Office in 1998, is described as “hugely significant” and a “fundamental piece of evidence” and was found in a garage by a retired computer expert.
Capture was a piece of accounting software, likely to have caused errors, used in more than 2,000 branches between 1992 and 1999.
It came before the infamous faulty Horizon software scandal, which saw hundreds of sub postmasters wrongfully convicted between 1999 and 2015.
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1:49
What is the Capture scandal?
The ‘lost long’ Capture documents were discovered in a garage by a retired computer expert who came forward after a Sky News report into the case of Patricia Owen, a convicted sub postmistress who used the software.
Adrian Montagu was supposed to be a key witness for Pat’s defence at her trial in 1998 but her family always believed he had never turned up, despite his computer “just sitting there” in court.
Mr Montagu, however, insists he did attend.
He describes being in the courtroom and adds that “at some point into the trial” he was stood down by the barrister for Mrs Owen with “no reason” given.
Image: Adrian Montagu was supposed to be a key witness for Pat’s defence
Sky News has seen contemporaneous notes proving Mr Montagu did go to Canterbury Crown Court for the first one or two days of the trial in June 1998.
“I went to the court and I set up a computer with a big old screen,” he says.
“I remember being there, I remember the judge introducing everybody very properly…but the barrister in question for the defence, he went along and said ‘I am not going to need you so you don’t need to be here any more’.
“I wasn’t asked back.”
Image: The ‘lost long’ Capture documents were discovered in a garage
Sky News has reached out to the barrister in Pat Owen’s case who said he had no recollection of it.
‘An accident waiting to happen’
The report, commissioned by the defence and written by Adrian Montagu and his colleague, describes Capture as “an accident waiting to happen”, and “totally discredited”.
It concludes that “reasonable doubt exists as to whether any criminal offence has taken place”.
It also states that the software “is quite capable of producing absurd gibberish”, and describes “several insidious faults…which would not be necessarily apparent to the user”.
All of which produced “arithmetical or accounting errors”.
Sky News has also seen documents suggesting the jury in Pat Owen’s case may never have seen the report.
What is clear is that they did not hear evidence from its author including his planned “demonstration” of how Capture could produce accounting errors.
Image: But flaws were found within it
Pat Owen was convicted of stealing from her Post Office branch in 1998 and given a suspended prison sentence.
Her family describe how it “wrecked” her life, contributing towards her ill health, and she died in 2003 before the wider Post Office scandal came to light.
Her daughter Juliet said her mother fought with “everything she could”.
“To know that in the background there was Adrian with this (report) that would have changed everything, not just for mum but for every Capture victim after that, I think is shocking and really upsetting – really, really upsetting.”
Image: Pat died before the contents of the report came to light
The report itself was served on the Post Office lawyers – who continued to prosecute sub postmasters in the months and years after Pat Owen’s trial.
‘My blood is boiling’
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‘They knew software was faulty’
Steve Marston, who used the Capture software in his branch, was one of them – he was convicted of stealing nearly £80,000 in September 1998.
His prosecution took place four months after the Capture report had been served on the Post Office.
Steve says he was persuaded to plead guilty with the “threat of jail” hanging over him and received a suspended sentence.
He describes the discovery of the report as “incredible” and says his “blood is boiling” and he feels “betrayed”.
“So they knew that the software was faulty?,” he says. “It’s in black and white isn’t it? And yet they still pressed on doing what they did.
“They used Capture evidence … as the evidence to get me to plead guilty to avoid jail.
“They kept telling us it was safe…They knew the software should never have been used in 1998, didn’t they?”
Steve says his family’s lives were destroyed and the knowledge of this report could have “changed everything”.
He says he would have fought the case “instead of giving in”.
“How dare they. And no doubt I certainly wasn’t the last one…And yet they knew they were convicting people with faulty software, faulty computers.”
Image: Steve’s prosecution took place four months after the Capture report had been served on the Post Office
The report is now with the Criminal Cases Review Commission, the body investigating potential miscarriages of justice, which is currently looking into 28 Capture cases.
A fundamental piece of evidence
Neil Hudgell, the lawyer representing more than 100 victims, describes the report as “hugely significant”, “seismic” and a “fundamental piece of evidence”.
“I’m as confident as I can be that this is a good day for families like Steve Marston and Mrs Owen’s family,” he says.
“I think (the documents) could be very pivotal in delivering the exoneration that they very badly deserve.”
He also added that “there’s absolutely no doubt” that the “entire contents” of the “damning” report “was under the noses of the Post Office at a very early stage”.
Image: Pat Owen
He describes it as a “massive missed opportunity” and “early red flag” for the Post Office which went on to prosecute hundreds who used Horizon in the years that followed.
“It is a continuation of a theme that obviously has rolled out over the subsequent 20 plus years in relation to Horizon,” he says.
“…if this had seen the light of day in its proper sense, and poor Mrs Owen had not been convicted, the domino effect of what followed may not have happened.”
What the Post Office said
Sky News approached the former Chief Executive of the Post Office during the Capture years, John Roberts, who said: “I can’t recall any discussion at my level, or that of the board, about Capture at any time while I was CEO.”
A statement from the Post Office said: “We have been very concerned about the reported problems relating to the use of the Capture software and are sincerely sorry for past failings that have caused suffering to postmasters.
“We are determined that past wrongs are put right and are continuing to support the government’s work and fully co-operating with the Criminal Cases Review Commission as it investigates several cases which may be Capture related.”
A Department for Business and Trade spokesperson said: “Postmasters including Patricia Owen endured immeasurable suffering, and we continue to listen to those who have been sharing their stories on the Capture system.
“Government officials met with postmasters recently as part of our commitment to develop an effective and fair redress process for those affected by Capture, and we will continue to keep them updated.”
The security services expressed concern about the appointment of Lord Mandelson as ambassador to Washington, but No 10 went ahead anyway, Sky News understands.
Downing Street today defended the extensive vetting process which senior civil servants go through in order to get jobs, raising questions about whether or not they missed something or No 10 ignored their advice.
Sky News has been told by two sources that the security services did flag concerns as part of the process.
No 10 did not judge these concerns as enough to stop the ambassadorial appointment.
It is not known whether all of the detail was shared with Prime Minister Sir Keir Starmer personally.
Sky News has been told some members of the security services are unhappy with what has taken place in Downing Street.
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Lord Mandelson is close to Sir Keir’s chief of staff, Morgan McSweeney, who is known to have been keen on the appointment – and the pair spoke regularly.
No 10 says the security vetting process is all done at a departmental level with no No 10 involvement.
Shadow foreign secretary Priti Patel described the revelations as “extraordinary”.
“For Keir Starmer, and his Chief of Staff Morgan McSweeney, to have appointed Lord Mandelson despite concerns being raised by the security services shows a blatant disregard of all national security considerations and their determination to promote their Labour Party friends,” she said in a statement.
“Starmer leads a crisis riddled government consumed by a chaos of his own making, because he puts his Party before the needs of our country.
“The country deserves the honest truth this spineless prime minister refuses to give them.”
Image: Priti Patel described the revelations as ‘extraordinary’.
The prime minister, who selected Lord Mandelson for the role, made the decision after new emails revealed the Labour peer sent messages of support to Epstein even as he faced jail for sex offences in 2008.
In one particular message, Lord Mandelson had suggested that Epstein’s first conviction was wrongful and should be challenged.
The Foreign Office said the emails showed “the depth and extent of Peter Mandelson’s relationship with Jeffrey Epstein is materially different from that known at the time of his appointment”.
The decision to sack the diplomat was made by the prime minister and Foreign Secretary Yvette Cooper on Thursday morning, Sky News understands.
This was after Sir Keir had reviewed all the new available information last night.
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2:59
Harriet Harman, Ruth Davidson, and Beth Rigby react to the news of Lord Mandelson’s sacking.
It comes after a string of allegations around the diplomat’s relationship with Epstein, which emerged in the media this week, including a 2003 birthday message in which he called the sex offender his “best pal”.
Further allegations were then published in The Telegraph on Wednesday morning, suggesting that Lord Mandelson had emailed Epstein to set up business meetings following the latter’s conviction for child sex offences in 2008.
Additional emails were then published detailing how the diplomat wrote to Epstein the day before he went to prison in June 2008 to serve time for soliciting sex from a minor. Lord Mandelson said: “I think the world of you.”
Peter Mandelson, the UK ambassador to the US, has been sacked from his role as scrutiny builds over his relationship with disgraced financier Jeffrey Epstein.
The diplomat’s most famous quotation sums up his attraction to the rich and famous and his fondness for the trappings of wealth.
“We are intensely relaxed about people getting filthy rich,” he told tech executives when he was Sir Tony Blair’s trade and industry secretary in 1998.
“As long as they pay their taxes,” he added hurriedly, the former spin doctor known as the “Prince of Darkness” acutely aware of the risk of damaging headlines.
Now, less than nine months after his controversial appointment by Sir Keir Starmer as UK ambassador, his association with convicted sex offender Epstein suggests once again that he appears unable to avoid scandal.
Aged 71, Lord Mandelson – awarded a peerage by Gordon Brown in 2008 – had to resign from Sir Tony’s cabinet twice, first over an undeclared bank loan and then over intervening in a passport application by a top Indian businessman.
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Over four decades, nearly all on the front line of British politics, he has been a consummate political networker, but he has also been one of the most divisive figures in public life and his appointment last December was seen by critics as an act of cronyism by Sir Keir.
Acknowledging that Lord Mandelson was a controversial and divisive figure, Sir Tony declared in 1996: “My project will be complete when the Labour Party learns to love Peter Mandelson.”
The Washington role is seen as the most glittering and important diplomatic post in the UK government. The perks of the job include the luxurious ambassador’s residence in Massachusetts Avenue, a magnificent Queen Anne mansion designed by top architect Sir Edwin Lutyens.
When he appointed him as ambassador, Sir Keir saw Lord Mandelson as a skilful and persuasive link to the president, with his trade experience from his time as a cabinet minister and Brussels commissioner a vital qualification for the job.
Never one for false modesty, Lord Mandelson claims that when he first walked into the Oval Office the president said to him: “God, you’re a good-looking fellow, aren’t you?”
Lord Mandelson can be credited with several diplomatic triumphs in Washington. He played a vital role in ensuring the UK escaped the worst of Trump’s tariffs and he was instrumental in securing a much sought-after trade deal between the UK and the US.
And his silky PR skills were displayed when during Sir Keir’s first visit to the White House in February the PM theatrically pulled out of his inside pocket a letter from King Charles inviting the present to visit the UK.
It was a classic Lord Mandelson stunt and confirmed he’d lost none of the flair for presentation he’d first deployed when he was Labour leader Neil Kinnock’s spin doctor in the 1980s.
Lord Mandelson’s high-profile political career began as a TV producer until his appointment as Labour’s director of communications under Neil Kinnock in 1985.
He was seen as a brilliant if ruthless spin doctor, who masterminded the birth of New Labour but would berate newspaper editors when unfavourable stories were written by their political journalists.
Another classic Lord Mandelson attempt to kill an embarrassing story was to tell the journalist who wrote or broadcast it in a sneering voice: “That is a story that I believe will remain an exclusive.”
He became MP for Hartlepool in 1992 and helped propel Sir Tony to the leadership of the party after John Smith’s death in 1994, a move that led to a bitter feud with Mr Brown.
There’s an amusing story about Mandelson in Hartlepool, which he claims is a myth and blames Mr Kinnock for. It’s claimed he ordered “some of that delicious guacamole” in a fish and chip shop, mistaking mushy peas for avocado dip.
It was a perfect Lord Mandelson story, ridiculing his metropolitan tastes and ignorance of working-class life. But he claims the mistake was made by a young American woman student who was helping Labour’s campaign.
Image: Tony Blair and Lord Mandelson in 2000. Pic: Paul Faith/PA
His first cabinet job, trade and industry secretary in 1998, lasted only five months after he was forced to quit after failing to declare a home loan from Labour millionaire Geoffrey Robinson to his building society.
His resignation was similar in one respect to the demise of former deputy prime minister Angela Rayner last week, in that it was over irregularities in buying a property: in Hove in her case, in fashionable Notting Hill in his.
He bounced back as Northern Ireland secretary in 1999 and was said to enjoy the luxury of Hillsborough Castle, which went with the job. But he was forced to resign a second time over claims he helped businessman Srichand Hinduja with an application for UK citizenship.
When he held his seat in Hartlepool in the 2001 general election, Mandelson made a passionate and defiant victory speech at his count in which he declared: “I’m a fighter, not a quitter.”
Yet three years later he did quit as an MP, when he became a trade commissioner in Brussels, serving a four-year term during which he had a spectacular row with French president Nicolas Sarkozy, who accused him of selling out French farmers in trade talks.
There were more controversies arising from his time in Brussels. In 2006, it was reported that he received a free cruise on a yacht from an Italian mogul who was said to have benefited from tariffs on Chinese shoes when Mandelson was EU trade commissioner.
Image: Former Labour leader Neil Kinnock (L) with Peter Mandelson. Pic: PA
Reports also claimed he had been lent a private jet by banking and business tycoon Nat Rothschild. And it was later reported that he had a holiday in August 2008 on the yacht of Russian oligarch Oleg Deripaska off the Greek island of Corfu.
Mr Deripaska was said to have benefited from a cut in EU aluminium tariffs introduced by Mandelson. But prime minister Brown said Mandelson’s dealings with Mr Deripaska had been “found to be above board”.
After Brussels came perhaps his most spectacular and unexpected political comeback, when in 2008 his old foe Gordon Brown, by now prime minister but facing challenges to his leadership, brought him back as business secretary with a peerage.
A year later, Mr Brown awarded him the grand title, previously held by Michael Heseltine under John Major, of first secretary of state, a position he held until Labour’s election defeat in 2010.
To this day, Lord Mandelson remains a devoted Blairite rather than a soulmate of Mr Brown. And in the run-up to Sir Keir’s election victory last year he was back in the fold, offering advice on campaigning and policy.
He got his reward with the plum job of ambassador in Washington. But his links to a very American scandal, involving the disgraced financier and sex offender Epstein, have pushed him out of political life. Again.
Peter Mandelson’s position was completely unsustainable, but it took Sir Keir Starmer 24 hours after everybody else to realise the inevitable.
In the chaotic interim, this generated the extraordinary spectacle of No10 saying that they had full confidence in their man in Washington because – and it feels incredible to type this – No10 had been fully aware that the peer had an extended relationship with a convicted paedophile after the point he had been to jail in the US, and was content with this situation.
This is why the issue has become a matter of Starmer‘s judgement almost as much as Peter Mandelson‘s.
Indeed, there were echoes here of the Chris Pincher affair that led to Boris Johnson’s downfall – a leader stubbornly defending acts which revolted the bulk of the party, in a tone deaf act of self-harm.
And revolted, they were.
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Almost the entire Labour Party was reacting with horror at the revelation, and even more so at the defence.
Less than 24 hours before his departure, Starmer was saying: “The ambassador has repeatedly expressed his deep regret for association with him, he’s right to do so. I have confidence in him and he’s playing an important role in the UK-US relationship.”
Words of certainty – but done once again without access to full facts.
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Dangerously, the PM was also defending a vetting process which would by implication put him in possession of facts that should have ruled Mandelson out of that job.
“Full due process has gone through when the appointment was made,” he said.
Now the line from a junior foreign office minister is that Mandelson hadn’t told him. So either the vetting failed or this isn’t quite accurate.
My understanding is that no one in government knows the last time Mandelson did see Epstein – the absence of certainty on that key fact must have set off alarm bells.
Right now, No10 will be thinking and hoping that, with just six days to go until the state visit by Donald Trump, which was meant to be organised by Mandelson, people will not focus too much on this question.
However, given the current rate of one big beast in government being sacked every week, this will ultimately land at Starmer’s feet.