David Smith is also being asked about an email which detailed a meeting where concerns were raised about the Horizon system.

In the message, Smith is quoted as saying that he was keen for an independent review of the system to see whether it was "genuinely up to it".

He says under questioning that it was unlikely Fujitsu would agree to the review, admitting that "we wouldn't have done in reverse".

Smith adds that the suggestion was made by the Post Office as it was "looking for ways to get the product to where it needed to be as quickly as possible".

Smith says he was looking for ways to ensure that the Horizon system was up to the task, before the new version was set live. If not, they would have returned to the old system, he adds.

Sean Seddon
Reporting from the inquiry

Smith has confirmed he welcomed the conviction of sub-postmistress Seema Misra - which we now know to have been bogus - as "brilliant news" in an email to staff and has apologised for that comment.

She was jailed in 2010, while pregnant, after being wrongly accused of stealing £70,000.

In his witness statement, he says the comment was meant to be about the fact "Horizon had been proved to be robust following the testing of the expert evidence in the trial".

He continues: "Even if this had been a correct conviction, I would absolutely never think that it was 'brilliant news' for a pregnant woman to go to prison and I am hugely apologetic that my email can be read as such... I understand the anger and the upset that it will have caused and sincerely apologise for that."

He hasn't been asked about this episode yet in today's evidence, but I suspect he might be after the break.

Image source, Post Office inquiry

Smith is asked about a conversation he had with someone from Fujitsu about problems with the Horizon online system, which was causing accounts to freeze.

He says he remembers feeling reassured about the call because he was told they were looking into the issues and were resolving them, which would allow for the continued roll-out of Horizon.

He's asked about a report from Fujitsu which indicated a problem with a particular technical issue which affected balances. Fujitsu's report went on to say the issues affected the printed final account but not the database itself.

Smith says he does not recall seeing it, and acknowledges it is different to the screen freezing issue which he was talking to the tech company about.

Asked if he was made aware of this particular issue affecting balances, he says: "I don't believe so, no."

Smith also touches on issues with the rollout of Horizon online, saying that it was having an impact on the business.

He says that the challenge was that they were not transacting in a way they should be, and it was affecting the trade because of the freezing screens. He adds they were aware that "if we didn't fix it relatively quickly, we would have to go back to the old system".

"I had conversations with senior people from Fujitsu to get to the bottom of and to understand the problem and the fixing timetable," he says.

"At the start, Horizon online was a higher priority to sort out, but not the biggest problem," he adds.

Sean Seddon
Reporting from the inquiry

We're getting a real sense of how issues with Horizon were hanging over the Post Office boardroom in this period.

Smith says he wasn't aware of the sub-postmasters prosecutions or wider issues with Horizon when he took over in April 2010, and also says he felt it wouldn't have been unusual for a computer system to have some bugs.

Not long later, however, he was told more about these problems. He describes the thrust of one of these conversations as being "why did we think we were OK" - in other words, what evidence have we got that Horizon is working.

Not only that, but Horizon was causing day-to-day problems. A new version of the system had been rolled out to branches and wasn’t working well.

Smith says he raised questions about how Post Office officials were so confident that there were no major issues with the Horizon system.

He confesses that his questions weren't part of a "huge probing exercise to get to the bottom of every case," but says he did make enquiries.

He adds that he was told by Paula Vennells and Susan Creighton that the system was robust, with independent security and that overall it was "pretty much tamper proof".

Smith is then asked about Horizon online, which came out in 2010.

In his witness statement, Smith says the rollout of the system was not a business priority, but that he was aware of issues with it - noting that it was "a lower priority, but not a zero priority".

Now Sam Stevens is asking Smith about immaterial bugs and errors in the Horizon system when it first came in.

"There may have been," Smith answers, and adds: "But I didn't think that would have been anything significant."

Asked when he became aware of complaints about Horizon, Smiths says he cannot be certain but probably relatively early on "through the briefing processes."

He says he didn't think they were unusual and that he wasn't aware of any complaints over the legacy system when he joined.

Smith adds that at some point he did become aware of those complaints.

He's now being asked about a letter from Alan Cook, his predecessor, that was sent in 2009. Smith says he has never seen that letter and takes a moment to read it.

The chair of the inquiry, Sir Wyn Williams, intervenes to ask Smith what he means by saying that he "should" have done more with regard to the prosecutions.

Williams asks if because there were more "important" things in the business which required his attention, the foreseeable risk of issues with the Horizon system and prosecutions escaped his attention.

Smith agrees with the chair.

Sean Seddon
Reporting from the inquiry

Smith's full witness statement has just been published - you can read it here, external.

Most of the question in these public hearings are in reference to these often very lengthy statements submitted by people called to give evidence in advance.

They tend to be published not long after the witness has physically taken the stand.

We'll be going through it to pick out the most important parts, so stay with us.

Smith is asked now about his witness statement, where he says he cannot recall thinking that any risk or compliance issues arose from Post Office Ltd prosecuting cases, with the benefit of hindsight and in light of wrongful prosecutions he can see the "inherent risks in the prosecutions taking place in-house" and not by an independent body.

He says the passage of time has shown that conducting the case, gathering data, acting as the prosecution can lead to a position "where you might not think as independently as you should do".

He says the "other danger" is the "balance of probability" might be stretched too far as to whether to take a case through a legal process, and says a case should only be taken on when certain someone is guilty.

He tells the inquiry that at the time, the board and business was focused "almost entirely" around the separation of the Post Office from Royal Mail, a new government coming in and the need to refinance the business, among other issues.

He says with hindsight they might have been able to put in place better mechanisms to manage those risks if they had been identified.

Asked what extent he accepts responsibility for not accepting those risks, he says: "I think I am a part of it".

Sean Seddon
Reporting from the inquiry

"I'm sad to say at the time that I didn't really reflect on it in the way I should have done," says Smith.

That's in response to a question about the Post Office's unusual power to be able to launch prosecutions against people it suspects of committing crimes to which the Post Office is the victim.

Stevens also asks him what steps he took "to make sure prosecutions were conducted appropriately and lawfully".

Smith says that he looked at monthly reports that came in to review the general cases but he didn't go beyond that.

Whether or not the Post Office abused its powers to take people to court is a key focus of this process, and an issue where some legal observers believe reform is needed.

Most crimes in the UK are prosecuted by the Crown Prosecution Service (or its equivalents in Scotland and Northern Ireland), but there are a number of other bodies which have that power too.

For example, local transport authorities can take people to court over skipping fares, and the RSPCA takes people to court over allegations of animal cruelty.

As we now know, many of the people the Post Office took to court were innocent.

Image source, Post Office inquiry

Sam Stevens proceeds to ask Smith about his awareness of the prosecution of sub-postmasters during his time as managing director.

Smith says he was, and accepts that the "legal department would have laid out that these are the current case that we are working on".

Pushed on whether he was aware that the prosecutions were based on data from the Horizon system, Smith also admits he was, though he adds he cannot recall when exactly he became aware of this point.

But he emphasises that the decision to prosecute was taken by Post Office Ltd's legal team, not him.

Sean Seddon
Reporting from the inquiry

You might feel that so far we've learned more about David Smith's CV than the Post Office scandal so far, but this background is important.

Smith was CEO at Parcelforce before stepping up to a more senior role at the Post Office and is being asked about the wider functioning of the company in that period. At the time, that structure also included Royal Mail.

This was a fairly momentous period in the company's history because the coalition government elected in 2010 had plans to separate the Post Office and Royal Mail so they could privatise the latter.

The later years of the Horizon scandal take place against this backdrop of big structural change behind the scenes.

Sam Stevens, counsel to the inquiry, begins by asking Smith about his role as managing director of Post Office Ltd.

Asked if he saw his role as being akin to the chief executive of any of other company, Smith says yes, saying it was about setting the strategy, direction and resources for the business.

He confirms he held the post April to October 2010, and says he had expected the appointment to be a long-term one.

In that time he says he was well aware of the general requirements of corporate governance having managed other companies, and says he was aware of differences in the expectations between publicly-owned and publicly-listed companies.

Sean Seddon
Reporting from the inquiry

The number of lawyers and officials in the room at this inquiry gives an indication of the amount of manpower that goes into these processes.

For even a pretty high-profile criminal court case, you might only have a few lawyers on either side.

But in the room today, there are at least 25 lawyers and other staff visible from where I'm sitting.

That's not surprising given this process is dealing with high-stakes, technical matters - and also helps to explain why inquiries like this are slow and expensive.

Image source, Post Office inquiry

David Smith, managing director of the Post Office between April and October 2010, is being sworn in and will begin giving evidence shortly.

Smith has already come under scrutiny at the inquiry, with questions raised over the integrity of a report he commissioned into the Horizon system, which ultimately found the software was “robust”.

Stay with us for more.

This morning's session of the Post Office inquiry is just about to get started.

We will hear first from David Smith, who was briefly managing director of the Post Office from April to October 2010.

You can watch all the latest from Aldwych House by pressing Play at the top of the page.

More than 900 sub-postmasters were prosecuted for stealing because of incorrect information from a computer system called Horizon, in what has been described as the UK's most widespread miscarriage of justice.

The Post Office itself took many cases to court, prosecuting 700 people between 1999 and 2015.Another 283 cases were brought by other bodies, including the Crown Prosecution Service (CPS).

Many went to prison for false accounting and theft. Many were financially ruined.

In 2017, a group of 555 sub-postmasters took legal action against the Post Office.

In 2019, it agreed to pay them £58m in compensation, but much of the money went on legal fees.

A draft report uncovered by the BBC shows the Post Office spent £100m fighting the group in court despite knowing its defence was untrue.

The Post Office has said it would be "inappropriate" to comment.

Although campaigners won the right for cases to be reconsidered, only 95 convictions had been overturned by mid-January 2024.

Read more about the scandal here.

Image source, EPA

Earlier this week, the inquiry heard from Alan Bates - the former sub-postmaster who led the campaign to expose the Horizon IT scandal. Here’s a recap of what he said on Tuesday:

• Bates told the inquiry he first warned the Post Office about issues with the Horizon accounting system in 2000
• Letters between Bates and senior figures from the post office and government showed he made several attempts to get help with the issues cropping up at his branch and others
• Bates said sub-postmasters told him of serious losses in the tens of thousands but they were too "terrified" to tell the Post Office
• The Post Office's helpline was “unhelpful” when Bates called about the unexplained shortfalls at his branch

• He branded the Post Office an "atrocious organisation" which needs “disbanding and needs building up again from the ground floor"
• Bates said the Post Office was being run by "little more than thugs in suits" in 2010 and had spent 23 years trying to "discredit and silence" him
• Bates also said he was concerned former chief executive Paula Vennells was "not being told the full story" about investigations by forensic accountants

Sean Seddon
Reporting from the inquiry

Good morning from central London. I'm at the inquiry at Aldwych House this morning and will be bringing you updates from inside the room.

I gather David Smith, whose evidence we'll hear first this morning, is already here having arrived bright and early.

The two names on the witness list for today won't be as well known to many of you as some of the others we've heard of recently - and certainly didn't get a starring bill in the ITV drama that introduced so many to this story.

But for the journalists covering this, that's what makes it intriguing and why this inquiry is so interesting: it is making people who have stayed relatively out of the public gaze answer important questions.

Stay tuned.