The former sub-postmaster, who led Horizon IT scandal victims in a fight for justice and inspired ITV drama Mr Bates vs The Post Office, made the accusation in a letter to then postal affairs minister Sir Ed Davey, the public inquiry heard.
Mr Bates was incensed after Sir Ed, now the Lib Dem leader, refused to meet him in 2010, saying the government had an "arm's length relationship" with the Post Office.
He found the minister's words "disappointing and offensive" and wrote to him: "It's not that you can't get involved or cannot investigate the matter, after all you do own 100% of the shares and normally shareholders are concerned about the morality of the business they own.
Impunity
"It is because you have adopted an 'arm's length relationship' that you have allowed a once-great institution to be asset-stripped by little more than thugs in suits, and you have enabled them to carry on with impunity regardless of the human misery and suffering they inflict."
A Lib Dem party spokesman said Sir Ed was "sorry that he didn't see through the Post Office's lies, and that it took him five months to meet Mr Bates".
More than 900 sub-postmasters were prosecuted by the Post Office from 1999 to 2015 for theft, fraud and false warr accounting and handed criminal convictions, because Fujitsu's faulty Horizon system made it appear money was missing at their branches.
Hundreds of sub-postmasters are awaiting compensation despite the Government announcing that those who have had convictions quashed are eligible for £600,000 payouts.
Mr Bates had his contract terminated by the Post Office in 2003 after refusing to accept liability for shortfalls at his branch in Llandudno, North Wales.
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