Post Office in mediation as postmasters' claim could hit £150m

The news came as it emerged the Post Office could face a£150 million payout over claims that a computer glitch led to false accusations.

More than 500 former post office workers, including Telford's Tracy Felstead, are fighting a High Court court action against the state-owned company. The staff, mostly former sub-postmasters, say they were falsely blamed for financial shortfalls caused by numerous faults with the Post Office's Horizon database, and a number of them were prosecuted for theft or false accounting.

Miss Felstead is fighting to clear her name after being jailed for six months in 2001 for allegedly stealing £11,500 when she was a 19-year-old counter clerk. The 37-year-old has protested her innocence ever since.

Rubbina Shaheen, 54, from Shrewsbury, is also trying to get her conviction for false accounting overturned, although she is not part of the High Court action. Mrs Shaheen, who kept Greenfields Post Office in the town, was jailed for 12 months in 2010.

The court case, which began in November last year, has been divided into four trials. The staff won the first trial, which looked at contractual arrangements in March.

Last month the Post Office was refused leave to appeal, with the judge comparing the treatment of its sub-postmasters to that of a 'mid-Victorian factory owner'.

Judgment on the second trial, which examined the reliability of the Post Office's Horizon database, is expected imminently.

The Post Office also mounted two failed attempts to have the presiding judge removed from the hearings.

Lord Arbuthnot, a former MP who took up the case of the post office workers accused of theft and false accounting, called for the Post Office board to resign.

It has been estimated that if the Post Office loses the case, it could be asked to pay out more than £100 million in compensation, as well as court costs which could rise to £50 million or more.

Lord Arbuthnot said: "The handling of this case by the Post Office has been shocking.

"It has been a dreadful waste of public money. The whole board and the senior management should be cleared out."

A statement issued by the Post Office revealed that its lawyers had held talks with the claimants with a view to resolving the dispute.

"A mediation process has begun, which provides both parties with the opportunity to seek fresh resolve and bring to a conclusion the Post Office group litigation," it said.

"Both parties have agreed that the necessary confidentiality of mediation must be respected and we will not be making public comments about its details during the process."

In addition to the High Court action, both Mrs Shaheen and Miss Felstead are seeking to have their convictions overturned through the Criminal Cases Review Commission. The body said it had completed its investigations, but would not be revealing its findings until the judgment in the second High Court trial had been published.