Official hearing page

1 November 2022 – Michael Coombs and Stuart Sweetman

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(10.00 am)

Ms Hodge: Good morning, Chair, we can see you and hear you. The first witness today is Mr Coombs.

Sir Wyn Williams: Can I stop you – oh, I can see you now. Jolly good.

Mr Coombs and I have made our acquaintanceship already, in the sense that he and I were on screen about 15 minutes ago so we said hello to each other, all right?

Ms Hodge: Thank you, sir. Please can the witness be sworn?

Michael Coombs

MICHAEL COOMBS (affirmed).

Questioned by Ms Hodge

Ms Hodge: Good morning Mr Coombs, I can hear you reasonably well but I wonder if you might raise your voice a little bit to ensure that –

Michael Coombs: Is that better?

Ms Hodge: Thank you, yes.

Michael Coombs: Is that better?

Ms Hodge: Thank you very much. Please give your full name?

Michael Coombs: My full name is Michael John Barton Coombs.

Ms Hodge: You should have in front of you a copy of your witness statement dated 9 September of this year; is that correct?

Michael Coombs: That is correct.

Ms Hodge: Can I ask you please to turn to page 21 of your statement?

Michael Coombs: Yes.

Ms Hodge: Do you see your signature there at the end of your statement?

Michael Coombs: There is an electronic signature at the end of the statement, the one with my – I have got another copy in a binder here which has got my actual signature.

Ms Hodge: Could I refer you to that one, please, if I may?

Michael Coombs: Yes. I have it in front of me. It has my signature on it.

Ms Hodge: I believe that statement should run to 23 pages in total; is that correct?

Michael Coombs: That is correct.

Ms Hodge: With a table of exhibits –

Michael Coombs: With a table of exhibits.

Ms Hodge: – on the last two pages, thank you. That statement is dated 9 September of this year; is that right?

Michael Coombs: 9 September of this year, yeah.

Ms Hodge: Is the content of that statement true to the best of your knowledge and belief?

Michael Coombs: It is.

Ms Hodge: Thank you. Your statement and exhibits are now in evidence before the Inquiry. I shall be asking you some questions about your involvement more generally in the Horizon project, but before I do I would like to begin with a few questions about your professional background Mr Coombs.

Michael Coombs: Yes.

Ms Hodge: You joined International Computers Limited upon graduating in 1969 with a degree in engineering; is that correct?

Michael Coombs: That is correct.

Ms Hodge: You have explained in your statement that your experience was predominantly in the field of project management, rather than in technical development; is that fair?

Michael Coombs: That is true.

Ms Hodge: Would it be right to understand that you did not have any personal experience of designing or developing software?

Michael Coombs: No personal experience of doing it.

Ms Hodge: But is it right that you had, in your earlier project management roles, overseen software development by others in ICL?

Michael Coombs: Yes, I had overseen software developments by others inside the company and also on projects working to customers.

Ms Hodge: Is that a role that you considered you were suitably qualified to do?

Michael Coombs: Yes.

Ms Hodge: Your first involvement in Horizon came during the period of procurement; is that right?

Michael Coombs: That is correct.

Ms Hodge: I understand you were brought in to provide advice to the team responsible for bidding for what was then known as the Benefits Agency and Post Office Counters Limited Automation Programme; is that right?

Michael Coombs: That is correct.

Ms Hodge: You were recruited, I think, by reason of your earlier experience on a similar project for the Inland Revenue?

Michael Coombs: Yes, and also I had, previous to there, done some work for DSS and George McCorkell, so I was known to the BA as well.

Ms Hodge: The one aspect of Pathway’s bid that you specifically recall assisting with relates to the rollout of terminals to Post Office branches; is that right?

Michael Coombs: That is correct.

Ms Hodge: Do you recall what if any challenges were identified by Pathway in implementing the rollout of terminals at this early bid phase?

Michael Coombs: At the early bid phase, what was actually identified as the biggest risk is being able to do enough Post Offices in the time available, so it was all about getting a beat rate of delivering stuff to Post Offices and keeping that going.

Ms Hodge: Did you or any members of the bid team with whom you worked undertake any site visits of Post Office branches in order to ascertain their readiness for implementation during this bid phase?

Michael Coombs: I certainly didn’t during the bid phase but there were people who went. One place that was visited was An Post in Ireland, because they were using the same software as we were proposing for Post Office.

Ms Hodge: So An Post in Ireland was where the system was already up and running; is that right?

Michael Coombs: They had a version of the system running successfully.

Ms Hodge: In terms of the Post Offices in the UK, where Pathway were intending to implement this new system, were any site visits carried out to your knowledge there?

Michael Coombs: I was not involved in any but I believe there were. I don’t know how to prove it but I believe there were site visits.

Ms Hodge: You did not remain on the project when Pathway was awarded the contract in May 1996; is that right?

Michael Coombs: That is correct.

Ms Hodge: I think you returned to other project management work being carried out by ICL Pathway at that time?

Michael Coombs: When the bid finished I went and worked for one of ICL’s development organisations in Manchester, looking at large computing. That’s where I was working.

Ms Hodge: You became involved in the Horizon programme again in the spring of 1997; is that right?

Michael Coombs: Correct.

Ms Hodge: On this occasion you were invited by John Bennett, then managing director of ICL Pathway, and Keith Todd, then managing director of ICL Group, to conduct an internal review of ICL Pathway’s management of the programme; is that right?

Michael Coombs: That is correct.

Ms Hodge: What did you understand to be the reasons for the instigation of this review?

Michael Coombs: Inability to meet delivery timescales for software.

Ms Hodge: In your statement you have referred to difficulties baselining the Horizon software. Can you please explain what you mean by that?

Michael Coombs: Yes. One thing that happened – well what happened when we started to look at developing the system, what was initially an integration project, ie taking existing projects, the amount of development in it started to increase. Therefore, the workload started to increase and there was difficulty in tying down with the other parties how certain customer requirements would be met and there was, well, requirement creep, so things were defined and sent out for agreement and then it came back “Ah, yes, but”. And so there was a creeping in the requirements that were being put forward.

Ms Hodge: You have explained in your statement that you don’t recall the specific details of the findings you made in your review; is that right?

Michael Coombs: At the time, that was 100 per cent correct but with the documents I had been sent latterly, some of them refer to it, so I have had some triggered memories.

Ms Hodge: Can you explain what you now recall or how your memory has been refreshed of –

Michael Coombs: The refreshment was very much around the fact that one of the key issues that I hadn’t remembered was that the whole project programme was a PFI and the basis behind a PFI is the transfer of risk. Whilst it was happening with the design change and not baselining it, it was difficult to manage risk being transferred and it raised a number of commercial issues which needed to be addressed about how the programme could proceed, taking account of that.

Ms Hodge: Thank you. You participated in a parallel review of the programme, which was undertaken by PA Consulting in the summer of 1997; is that correct?

Michael Coombs: That is correct, and I saw that document yesterday was passed to me and that was one of the things that triggered my memory a bit about –

Ms Hodge: I believe you were interviewed in connection with that review?

Michael Coombs: Yes, I was.

Ms Hodge: You were one of the 12 persons who were named as – rather one of the 12 persons who received a copy of the confidential report produced at the end of that review; is that right?

Michael Coombs: That is correct.

Ms Hodge: What I would like to explore with you briefly is the extent to which your own findings, in the review you carried out in the spring of 1997, informed some of the conclusions reached by PA Consulting Group, at the time, concerning the resourcing and management of the project by ICL Pathway.

I think you confirmed you have seen a copy of the report. We can bring that up if it would assist. But you will have observed, I think, that one of the conclusions reached by PA Consulting in their review was that ICL Pathway had, at the outset, assumed it could deliver Horizon mostly by systems integration. That’s a point you have highlighted yourself this morning; is that correct?

Michael Coombs: That is correct.

Ms Hodge: What PA Consulting concluded was that this had led ICL Pathway, to seriously misjudge the amount of development work which was needed as well as to underestimate the time and resources required to deliver the project. Did you agree with that conclusion?

Michael Coombs: Yes. But also, given that there had been a lot of change in terms of what the nature of the project was going to end up being, and I wasn’t surprised at that when I started looking in detail.

Ms Hodge: In addition to those observations about resourcing, PA Consulting Group in their review noted that ICL Pathway had expressed major concern about the robustness of the technical architecture. Was that a concern with which you were familiar at the time?

Michael Coombs: Not really. I didn’t get involved in the technical architecture at that period of time, so that wouldn’t have informed me at all.

Ms Hodge: So if I understand you rightly, you simply weren’t aware, at the time of your review, in the spring of 1997, that there were these concerns within ICL Pathway about the robustness of the technical architecture?

Michael Coombs: No, because I do not remember, at that stage, being involved in a review on technical architecture. I don’t think it was covered in that way by the review I did. I was more interested in the volume of work, rather than the structured work and the architecture from going forward. My main focus was on what was needed to do to get the programme acceptably back on track and prepared for rollout.

Ms Hodge: You attended a meeting of the Benefits Agency and Post Office Counters Programme Delivery Authority Board on 23 September 1997. Do you have any recollection of that meeting?

Michael Coombs: I don’t specifically have any recollection but there’s so many meetings I went to. You know, if you have got a specific question on it that might trigger –

Ms Hodge: Indeed. I wonder if we can pull up POL00028310.

Thank you. We can see here from the heading that these are minutes of the board meeting of the 23 September 1997?

Michael Coombs: Yes.

Ms Hodge: Under the heading “attendees” you are named as the last but one; do you see that?

Michael Coombs: Yes, I do.

Ms Hodge: If we could please turn to the next page, at page 2. At paragraph 1.2.4.

There is reference here to you, Mr Coombs and to Mr Crahan. I believe that is Peter Crahan. Do you recall his role at this stage in the programme?

Michael Coombs: Yes, Peter Crahan was involved in the Benefits Agency automated – work they were doing on National Insurance databases, et cetera. I can’t remember the name of the project. So, yes, that’s where his role is and that’s a fundamental part of the structure for paying benefits through Post Offices.

Ms Hodge: There is a reference at AP/5. I understand that to be “action point 5”, where it records:

“Mr Crahan to discuss the findings of the internal review of security with Mr Coombs.

“The review of security had been completed and discussed with Mr Coombs. It was agreed that more openness and co-operation would be required in future. A workshop would take place on Thursday to consider a better way forward.”

Do you have any recollection of what these issues were in relation to security?

Michael Coombs: I’m just thinking. No. The problem is: (1) it is a long time ago; and (2) that was, I believe, my first meeting and in that sort of forum. So there was nothing around it that I can pull out of my mind.

Ms Hodge: If we could go on to page 3, please. Halfway down the page, we can see the heading “Updates”?

Michael Coombs: Yes.

Ms Hodge: At paragraph 2.1 it records “PDA”, Programme Delivery Authority.

Michael Coombs: Yes, that’s the organisation I was trying to remember the name of.

Ms Hodge: This states:

“In addition to the written update provided, Mr Crahan reported that Release 1c was progressing through Model Office Rehearsal and the checkpoint meetings. Model Office Testing was due to be completed by 26 October and the anticipated release date was now 3 November.”

The following paragraph 2.1.1:

“Significant numbers of category one PinICLs (ICL software difficulties) needed to be resolved. These were in the areas of security, accounting and reconciliation. A decision would be taken on 29 September whether the release was fit for purpose and if so, to how many outlets it would be delivered. Pathway pointed out that they were striving for release in 200 outlets because of the effect on Release 2 of anything less.”

We can see PinICLs there described as “ICL software difficulties”. Do you consider that to be a fair characterisation?

Michael Coombs: What they actually are are bugs in the system. So, if you consider those to be – oh, lost it.

If you consider those to be ICL difficulties then they would be ICL difficulties. Looking at a whole range of them, some of them were minor, had no impact on moving forward and others had to be solved before you could move forward.

Ms Hodge: It appears from the preceding paragraph that these bugs had been raised either in the Model Office rehearsal or during the Model Office testing of software release 1c?

Michael Coombs: Yes.

Ms Hodge: Would that be consistent with what you recall about the progress of the programme at this stage?

Michael Coombs: Yes.

Ms Hodge: In terms of their severity, how serious were category 1 PinICLs?

Michael Coombs: They would actually have a problem with the programme proceeding, either because there was some sort of bug or failure that had an unacceptable consequence, or because they required a certain amount of rework and/or implied something that needed to be sorted before you could move on to release 2.2, so release 3.

Ms Hodge: Does it follow that they were the most serious types of bugs in the system?

Michael Coombs: Yes, they were the most serious but they would have a range of seriousness because of the impact. They would be the most serious but they –

Ms Hodge: So these were problems, I think, of the highest severity. They were significant in number and they related at this stage to security accounting and reconciliation; is that a fair inference from what we can read here at paragraph 2.1.1?

Michael Coombs: That is a fair inference but there might have been ones that weren’t within those three headings.

Ms Hodge: Such were the –

Michael Coombs: So yes – in those areas were included. I can’t remember the detail at all around here because it was all so detailed and so voluminous.

Ms Hodge: I understand.

Michael Coombs: But, yes, your inferences have been perfectly correct.

Ms Hodge: Such were the number and severity of outstanding issues in release 1c, that they appear from what we have read at paragraph 2.1.1 to have called into question whether the release was, in fact, fit for purpose. Is that also a fair inference to draw?

Michael Coombs: It is fair but – yes, it is a fair inference that they needed to be resolved for the release to continue to progress.

Ms Hodge: Did you consider at the time that the number and severity of PinICLs was a reasonably accurate barometer of the quality and fitness of a software release?

Michael Coombs: Sorry, could you repeat that?

Ms Hodge: Yes, of course. Did you consider at the time that the number and severity of PinICLs being raised in software testing was a reasonably accurate barometer of the quality and fitness of a software release?

Michael Coombs: Of “a software release” or this software release?

Ms Hodge: Any software release.

Michael Coombs: Yes, it always is a barometer but it is not an easy barometer to read because it is a sort of three-dimensional issue. So you get problems that exist now, you get timeframes where they need to be cleared by, as well as the nature of the (unclear) themselves.

Ms Hodge: I quite understand that some inquiry into the root cause of a bug and how it might be fixed would need to be undertaken but, as a starting point, would their number and severity indicate to you that that further inquiry needed to be undertaken, that there was a question mark as to the fitness for purpose of the software?

Michael Coombs: It would inform me there were bugs in it but fitness for purpose, without them being resolved, then there would be certainly problems in those areas. There would be concerns whether it was fit for the purpose to put out for usage. But there might be a difference between fitness for purpose and putting it out for the wider population, compared to putting it into Model Office testing, et cetera, where that is – where the purpose is to actually check whether the software is fit for purpose, if you see what I mean.

So it depends on its usage as to whether it is fit for the purpose. It could well be fit for the purpose of testing to find out that the business functionality covered by it is accurate and works appropriately. Sorry, does that make sense?

Ms Hodge: Yes, I think so. But you said it might be fit for further testing of its functionality, that is to say of the extent to which it meets the functional requirements of it as a piece of software?

Michael Coombs: Yes, which is one part of fitness for purpose.

Ms Hodge: But would it also not raise a question mark as to the suitability of the software being rolled out?

Michael Coombs: It would raise questions on particular releases and if they are suitable for rollout, because the software was always moving forward, there are always people looking and clearing PinICLS and known errors. So, yes –

Ms Hodge: By the time PA Consulting Group had concluded its review in September 1997, you had been transferred to the Horizon project and appointed as its programme director; is that right?

Michael Coombs: That is correct.

Ms Hodge: Am I right to understand that your appointment as programme director formed part of a general restructuring of ICL’s Pathway’s organisation and management, which took place upon completion of your review?

Michael Coombs: That is true.

Ms Hodge: In your role as programme director, you were assigned overall responsibility for quality and risk management, as well as systems and customer requirements; is that right?

Michael Coombs: I was given the role, as I remember, of overseeing. There was a risk in quality group that was there but didn’t report to me directly but we did some initial work as a group to try and look at where we were with risk and quality. So, no, I wasn’t directly responsible for the function of it but I was asked to get involved in the early days and we did put some more reviews in place, like mid-stage audits on software tech development. But there was a person who reported to John Bennett who was responsible for quality and risk.

Ms Hodge: Do you recall –

Michael Coombs: It was Martyn Bennett.

Ms Hodge: Do you recall whether there existed any formal structure within ICL Pathway for conducting internal audit when you became programme director?

Michael Coombs: Yes. As far as I can remember, there were and one would expect there to be but I could not tell you exactly what they were and how they were set up, because I would not have been directly involved in this initially. So the first thing I can remember doing on quality is actually getting established with something which became an annual affair, which was mid-stage audits of releases of software.

Ms Hodge: I think, if I have understood your evidence correctly, you said, upon being appointed programme director, you did play some part in ensuring that further audits or further reviews were carried out; is that right?

Michael Coombs: Yes, it is, and part of it was that we diarised making sure that they were linked and that the programme office actually followed up and made sure they occurred. They were taking place but, if I remember correctly, I felt they were deficient in one respect initially, which was mid-life or mid-development or mid-time audit of progress and issues at that time being more formal.

Ms Hodge: You have explained in your statement that the focus of your role as programme director was on project management issues and that you weren’t required to have a detailed knowledge of the technical aspects of the Horizon system; is that right?

Michael Coombs: That is correct.

Ms Hodge: Presumably you, nonetheless, had a fairly high level understanding of the system’s components, including their purpose and function; is that right?

Michael Coombs: At the time I certainly would have had.

Ms Hodge: What did you understand at the time about the purpose and function of the Electronic Point of Sale Service?

Michael Coombs: I don’t know what I understood at the time. I know what I feel I understand now and there has been nothing happening to change it. It was effectively a system that worked in accounting in Post Offices, which allowed them to act as a normal shop, selling goods, et cetera, and it was, if you like, the element of the system for doing that – I am sure that is an inadequate answer but it is sort of the only one I have got in terms of what I can remember.

Ms Hodge: I would like briefly just to explore three aspects of the system with you at a very high level. As I understand it, EPOSS was responsible for recording and processing all of the transactions carried out within the post office branch by customers purchasing products and services of the Post Office; is that correct? Is that consistent with your understanding?

Michael Coombs: It is a far more elegant way of putting what I was trying to say.

Ms Hodge: It was also responsible for balancing receipts and payments; is that right?

Michael Coombs: I believe so.

Ms Hodge: And for producing what was known as the cash account. Do you recall what the cash account was?

Michael Coombs: I’m just thinking for a second. The cash account is only one thing it can be and that is the final documented area, in which all movements of things of value, I would think, rather than cash per se, things of value being sold off or whatever it actually recorded.

Ms Hodge: We can see it described in Pathway’s own internal documents as the definitive weekly summary of all transactions performed within the Post Office branch. Does that resonate with you at all?

Michael Coombs: Yes, that does. Because that’s back to the – everything in the Post Office being recorded and that’s obviously where everything in the Post Office that happened was being recorded. Whether all the systems did that, whether that stayed a fact, I don’t know but, yes, that does resonate with me.

Ms Hodge: I would like to ask you some questions about a report which you have been shown. It is dated 14 May 2001 and it concerns the activities what was known as the EPOSS PinICL task force.

Could the following document be shown FUJ00080690.

We can see the title of the report at the top:

“Report on the EPOSS PinICL Task Force.”

This version is version 1.0 and is dated 14 May 2001. You have explained in your statement that you don’t recall being shown a copy of this report during your time on the programme; is that right?

Michael Coombs: That is correct. On the date shown I had already ceased work.

Ms Hodge: I think you quite fairly pointed out that you are not named on the distribution list that we can see on the bottom there. That carries the names T Austin, which I believe is Terry Austin; M Bennett, Martyn Bennett, to whom you have referred; and D McDonnell, which I believe is a David McDonnell.

However, if we control down to the second page please. Under the heading “Document History” at 0.1, we can see that an initial draft of this report was produced on 18 September 1998 following completion of the task force. This is referred to as version 0-point 1. Can you see that Mr Coombs?

Michael Coombs: Yes, I can see that.

Ms Hodge: That was at a time when you were acting in the role of programme director, is that right?

Michael Coombs: ‘98, yes.

Ms Hodge: I wonder if we could turn up another report please, dated 28 October 1999. We will return to this shortly but this other report is FUJ00079782. This is an audit report into the development of CSR+?

Michael Coombs: Yes.

Ms Hodge: Do you recall what CSR+ was?

Michael Coombs: Yes, that’s the name for a particular release of software.

Ms Hodge: I think it is the Core System Release Plus?

Michael Coombs: Yes.

Ms Hodge: I don’t propose to take you through the detail of his report now but if we scroll down to the distribution list. Forgive me, perhaps if we could go back to the top. Just to confirm, this report is dated 28 October 1999?

Michael Coombs: Yes.

Ms Hodge: At a time when you remained on the programme I believe?

Michael Coombs: Yes.

Ms Hodge: We can see you named on the distribution list at the top of the right-hand column?

Michael Coombs: Yes.

Ms Hodge: Would it be fair to infer that you received a copy of this report at the time?

Michael Coombs: I have no reason to believe I didn’t.

Ms Hodge: If we could scroll down to the second page, please. Under the heading “associated documents” at 0.3 we can see a number of documents referenced. At [6] there is reference to the “Report on EPOSS PinICL Task Force” dated 29 September 1998. So this was a report that was associated with the CSR development audit distributed to you?

Michael Coombs: Can I ask a question please? The document that you have just been mentioning which was – PinICL task force report is what you are saying, isn’t it, as an associated document?

Ms Hodge: Yes, that is right.

Michael Coombs: Right, so that’s not this document. This document –

Ms Hodge: No, my apologies. What we have here is a list of documents associated with the CSR+ development report. So they may be documents that accompanied the report or documents that are referred to in the report.

Michael Coombs: Yes?

Ms Hodge: What this tends to suggest, I believe, is that the report on EPOSS PinICL task force was brought to the attention of the senior managers of ICL Pathway by October 1999 at the very latest; would you agree with that?

Michael Coombs: I don’t remember seeing that particular report, attached report. I’m trying to think. I might have done but I can’t remember it.

Ms Hodge: In your statement you confirm that you do recall there being problems with the EPOSS code; is that right?

Michael Coombs: Yes, EPOSS was an issue and there was work done which was around these time frames which were quite long and ongoing, work being done to look at whether the existing EPOSS software that was having problems was replaced by another system which went into development or whether effort was put in to make – overcome the issues that were being seen on EPOSS by further development. So the decision to spend money was made, so there was money available, but the issue was, “should it be for a new development or for an exercise to clean up the existing work development”. So yes I remember that quite distinctly, what I can’t remember is the outcome of that decision. I can’t remember what we were – what was decided to be done.

Ms Hodge: Just starting, if we can, with what you understood about problems with the EPOSS code. What did you understand at the time about the nature and the cause of these problems?

Michael Coombs: I’m still thinking a bit. So you are talking about, with the product itself, the nature and –

Ms Hodge: Problems with the underlying code that supported the application.

Michael Coombs: I know they were them because of the points I had made about the existing release versus new release. I can’t – I have no – I cannot recall what the issues were.

Ms Hodge: It might assist you – I think we will see – but if we return to the report at FUJ00080690, please. This is the report that was produced on the EPOSS PinICL task force. If we scroll down a bit a little bit. We can see the authors of the report were J Holmes – I believe, Jan Holmes –

Michael Coombs: That’s correct.

Ms Hodge: – and David McDonnell, to whom you referred earlier on in the distribution list. At page 17, we can see that one of the key concerns, raised in the report, related to the quality of code in the EPOSS product.

Michael Coombs: Is this the document from – what the date of this document I’m looking at now? I’m beginning to lose timescale.

Ms Hodge: Of course, sorry. So this is version 1.0 of the EPOSS PinICL task force, dated 14 May 2001. What we have established is an initial draft of this document was produced on 29 September 1998 and, therefore, at a time when you were still involved in the programme as its director. What I would like to establish is whether what is recorded in this report assists you at all in recollecting what you understood about problems with the EPOSS code at the time. Does that make sense?

Michael Coombs: It makes perfect sense.

Ms Hodge: Thank you. So under paragraph 7.3, please, we can see it bears the subheading “Existing Code” and in the square box at the top there is a note to the effect that:

“This section has been produced with the assistance of Dave McDonnell and Martin Smith and their combined experience of structured programming.”

It goes on to say that:

“Although parts of the EPOSS code are well written, significant sections are a combination of poor technical design, bad programming and ill thought out bug fixes. The negative impact of these factors will continue and spread as long as the PinICL fixing culture continues. This is partly due to the nature/size of the bug-fixing task and partly due to the quality and professionalism of certain individuals within the team.”

The report goes on to give a series of illustrations, of quite a technical nature, of the problems that had been discovered in the code. Do those general observations resonate with you at all in relation to what you understood at the time to be the problems with the EPOSS code?

Michael Coombs: Certainly, what I’m looking at with existing coding, it’s so much more depth than I would have looked at or needed to look at. The conclusions don’t resonate because I can’t remember this actually ever being successfully concluded. I don’t know and can’t remember anything happening in my time on the programme to say what happened to EPOSS. So I have that as a problem in fixing this, as to I can read the words there and, yes, there are undeniably problems and there were a lot of PinICL fixes and yet, at times, there were concerns about the quality and number of PinICL fixes but I couldn’t tell you how many there were, what category there were, et cetera, because I cannot remember this level of detail. It just doesn’t come back to me.

Ms Hodge: I understand. You have also confirmed in your statement that you recall there being a high number of faults in the EPOSS component of the system; is that right?

Michael Coombs: Yes. Trying to add some sense there; I mean, one of the issues with EPOSS was the number of PinICLs and the work needed to clear the PinICLs. So I think that is the core thing that I hold onto as a memory. But going below that is somewhat difficult and going to where they put in code is even more difficult.

Ms Hodge: I think your recollections of issues with EPOSS mirror another area of concern which was raised by the authors of the task force report. If we could go back, please, to page 7., under the heading “EPOSS Code (Section 7.2)”.

Michael Coombs: Yes.

Ms Hodge: What we see in the first paragraph broadly reflects what we have already covered –

Michael Coombs: Yes.

Ms Hodge: – but, for consistency, I will repeat it:

“It is clear that senior members of the Task Force are extremely concerned about the quality of code in the EPOSS product. Earlier this year the EPOSS code was reengineered by Escher and the expectation is that the work carried out in Boston was to a high standard and of good quality. Since then many hundreds of PinICL fixes have been applied to the code and the fear is that code decay will, assuming it hasn’t already, cause the product to become unstable. This [‘presents’, I think it should be, with an ‘S’] a situation where there is no guarantee that a PinICL fix or additional functionality can be made without adversely affect [I think it should be ‘affecting’] another part of the system.”

The report goes on to state:

“However, a more worrying concern from the Programme’s perspective should be the reliance on the EPOSS product in its current state as a basis for planning and delivery. During the Task Force there was relatively little testing that directly impacted EPOSS and yet [more than] 200 PinICLs, roughly 50 per week, were raised. Immediately following the conclusion of the Task Force it is intended to re-run System Test Main Pass and various other test streams. While I am confident that the fixes delivered by the Task Force will prove to be reliable I fully expect the PinICL rate to increase as further testing is carried out.

“Lack of code reviews in the development and fix process has resulted in pour workmanship and bad code.”

Reference is then made to the four examples which were cited at the end of section 7.3, to which we have referred.

Bearing in mind that you recall an issue with high volume of PinICLs, again, do these conclusions that you have read here resonate with you in terms of the seriousness and severity of the problems that Pathway were facing in September 1998?

Michael Coombs: I think people were becoming aware of it as a main issue, which is why the task force was set up, so, yes, there were issues there. If you ask me to look at that and the rest – as I say, senior members of the task force – I don’t know. It talks about people and I don’t know the people or what their role was because there are certainly different views about what to do with EPOSS, based on what we actually had or could get.

And what I can’t do is I can’t disagree with anything you have said. There were problems with it but whether it would cause – a lot of what is there is a view of a person, which may be totally accurate, but it is a view which may be disputed or not agreed to by people responsible for it. As I say, the systems or development director took a personal interest in it.

Ms Hodge: I think the point you are making is that this was the opinion of the authors of the report; is that right?

Michael Coombs: What I do remember is the fact that there was a discussion around using existing EPOSS versus a new EPOSS and part of the new EPOSS approach was doing so much stuff with Escher. That I remember. What I can’t remember is which one was used. I just can’t – I don’t know the outcome of this, it is a big problem I’m having. So not knowing the outcome I find it difficult to comment in detail on some of the position that may or may not have existed. Am I making myself clear?

Ms Hodge: Yes, you are, Mr Coombs. We will come on in due course to what appears to have been the outcome but this may be a convenient time in which to take a short break and we have been going for 50 minutes.

Sir, would you be content for us to break for 10 minutes –

Sir Wyn Williams: Yes, certainly.

Ms Hodge: Thank you very much.

(10.51 am)

(A short break)

(11.03 am)

Ms Hodge: Thank you, sir. Mr Coombs, can you hear me?

Michael Coombs: Yes, I can.

Ms Hodge: Can you see me as well?

Michael Coombs: I can hear and see you.

Ms Hodge: Thank you.

Before the break, we were discussing the findings of the EPOSS PinICL task force report, originally produced in September 1998. Before we move on from that topic, there is one further question I would like to raise with you.

One of the risks identified in that report was that the application of PinICL fixes risked causing code decay, which I understand to mean a further deterioration in the quality of the EPOSS code. Was that a risk to which you were alive at the time?

Michael Coombs: No, it wasn’t. I was alive to the fact there were PinICLs that needed to be resolved but I cannot remember any discussion about decay of the product but it must have been part of the discussion that was being had because there were two EPOSSes being discussed. One was a redevelopment and one was the existing one. I am sure, within the task force themselves, they must have had discussions as to how many PinICLs and the likely impact. But I have no knowledge of anybody making the comment that it would actually cause decay. So it is not something I was actually alive to at all, nor can I remember it and I have not seen it in a document.

One of the problems I have with going through this, on this particular topic, is the fact that there seems to be a long gap in terms of documentation between the 1998 report and the one that I had already stopped working for before it came out in May 2001 and I have no recollection of what happened in the middle. Which makes it rather difficult.

Ms Hodge: You have explained in your statement that you took a period of medical leave from work in the spring of 1999 and that you returned on lighter duties in or around June 1999; is that right?

Michael Coombs: That is correct.

Ms Hodge: You would have learned upon your return to work in June 1999 that the Benefits Agency had withdrawn from the programme –

Michael Coombs: Yes.

Ms Hodge: – and that the Horizon system had progressed into an operational live trial; is that right?

Michael Coombs: Yes.

Ms Hodge: Do you have any recollection of your involvement in the acceptance of the Horizon system after completion of the operational live trial?

Michael Coombs: So you are talking about acceptance for entering rollout.

Ms Hodge: That is right.

Michael Coombs: Right. I know there was – I have virtually no memory of it. I couldn’t say that I remember what happened at the time or where we were at the time. If you had asked me two days ago I would have said “I can’t remember anything”. I can remember more now because I got a document, which was provided by the Inquiry yesterday afternoon, which actually covered some of those aspects. I have scanned it but I haven’t actually managed to make sure it sinks in. It was a document sent to me late yesterday afternoon.

Ms Hodge: You might be assisted if we turn up the minutes of a meeting which you attended in August 1999. Please could we show POL00043681. This is a copy of an email from an Andrew Simpkins, a consultant employed by French Thornton who was working for Post Office Counters at the time. It is addressed to Peter Copping and David Rees, two employees of PA Consulting Group, who had been involved in the earlier review conducted in the summer of 1997 –

Michael Coombs: Yes.

Ms Hodge: – and it is copied to a number of recipients, including you. We can see your name after Keith Baines and Min Burdett; can you see that?

Michael Coombs: Yes, I can.

Ms Hodge: This email contained, as an attachment, the minutes of a management resolution meeting, which you attended on 12 August 1999. We can see those minutes at page 2, please. Under the heading “Attendees”, you appear to be listed as one of two representatives of ICL Pathway?

Michael Coombs: Yes, the other one is a John Dicks, who was the requirements director.

Ms Hodge: We can look at some aspects of the minute shortly but it is clear from reviewing these minutes that the purpose of the management resolution meeting on 12 August was to discuss the status of Acceptance Incidents which had been raised during the operational live trial of the Horizon system. Do you have any recollection of what those Acceptance Incidents were?

Michael Coombs: I was heavily involved in this whole area and there was a lot going on, to put it mildly, at this time, in terms of areas that were being looked at to try and work out how we proceeded. So, it is not unfamiliar but do I recognise each individual point on the minutes? Then some of them I can’t remember.

Ms Hodge: If we scroll down to the heading “Current Status of Disputed Severity Ratings on Hot List”, what I think we can see are the –

Michael Coombs: For the first time, I recognise that I have seen this document.

Ms Hodge: So we have, in the left-hand column, the number which had been attributed to the incident, a short description of the incident in the next column, and then the ratings ascribed to each incident by ICL Pathway and Post Office Counters.

Out of the incidents listed there, three had been ascribed a high severity by Post Office Counters. We can see that at AI376. I don’t know if that can be highlighted.

Michael Coombs: Yes.

Ms Hodge: That incident was described as the “Derived cash account”.

Michael Coombs: Yes, I can see it highlighted now.

Ms Hodge: Thank you. We can then see AI218 “Training”, also categorised as high by Post Office Counters. Thirdly, AI298, which is described briefly as “Counter lockup/freezes”.

Michael Coombs: Of the three that you have identified there, I remember one and the situation, which is “Training”. And the situation was a situation where their training was being prepared, piloted and run and there was a disagreement – I think is the right way of putting it – between the two parties as to how much training actually came under the contract or the PFI contract and what class of training. So there was some disagreement on training.

So I believe that is a different nature to the other two, which are probably to do with system training was not directly – and I am sure it was agreed in the end and there was a passing backwards and forwards into special contractual – what training was contracted for because it was specified, so by being specified had limits.

And if I remember correctly, Pathway were being asked to exceed what we believed was our contractual requirement. This is one of the areas where commercial bumped into programme issues with the nature of the contract. So that is a different sort and I think was actually resolved fairly easily in the end by deferring to contract.

The derived cash account, counter lockup and freezes – derived cash account, well, I wouldn’t know what that was. It doesn’t trigger – this far away, I can’t remember the technicalities in either. Counter lockup and freezes. Yeah, well …

Ms Hodge: I propose to come back to each of those AIs shortly Mr Coombs, but before I do, we can see that, whereas Post Office Counters has graded each of these incidents as high, by contrast, Pathway has ascribed to AI376 a low severity rating. It has deemed AI218 to be closed and AI298 to be low.

What do you think accounted for this difference in severity rating as between Post Office Counters on the one hand and ICL Pathway on the other.

Michael Coombs: Well, on training, I’ve explained what it was there. On the other one, I cannot explain it without having a better understanding of what they were and what the position of both parties, or just the position of ICL, was. I can’t really comment because I can’t think of any reason – apart from point proving and point scoring, which do occasionally go on on large projects, I can’t see any reason in the information we were looking at to be able to say it was because of this or because of that. I know insufficient about how the counter locked up and froze, how often did it occur, what was the impact? I don’t know those questions.

Without understanding that, I can’t, from memory, say why there was the discrepancy. One I can understand, the other two I can’t.

Ms Hodge: Do you recall what the thresholds for acceptance of the Horizon system were in the summer of 1999?

Michael Coombs: No. It is out of my brain.

Ms Hodge: From the documents obtained by the Inquiry, we know that the existence of one or more high severity faults or deficiencies would have resulted in the Horizon system failing to meet the threshold for acceptance; does that resonate with you at all?

Michael Coombs: No, it doesn’t. In my head I know it was low, the number, but I didn’t think it was that low. So, no, it is not something I would remember. It doesn’t resonate at all.

Ms Hodge: Would you have been aware at the time that a failure by Horizon to achieve contractual acceptance would have placed ICL’s Pathway’s right to payment for the design and development of the system in jeopardy; is that an issue you would have been alive to, do you think?

Michael Coombs: Yes, I would have been alive to it because commercial directors would want to know progress at a very high level as to when the actual amounts were triggered, because they were not insignificant.

Ms Hodge: Would it be fair to say or to infer that there would have been a strong imperative at this time for ICL Pathway to secure the downgrading of these high severity incidents, in order to retain – in order to obtain a return on the substantial investment, which it had made in designing and developing the Horizon system?

Michael Coombs: There would have been an imperative to make sure that they were understood by whoever was looking at them, the systems director, and that there was an agreement on the levels. So I can see this as a starting point going through and looking at the effects on acceptance.

But some of the views that Pathway had probably were optimistic in terms of low impact of things and also the other way. So one we have discussed, training: the amount of training that was trying to be got as an extension or to get us through this was actually quite high.

Sorry, could you repeat the last question, if I haven’t –

Ms Hodge: No, I don’t think there’s any need. I’m satisfied that you have given an answer to that question, Mr Coombs, thank you.

If we could turn to the issue of training, which is the one, I think, in relation to which you have better recall. We know that, shortly before this meeting which you attended on 12 August, you were copied into some correspondence between John Dicks, the director of customer inquiries at ICL Pathway, and Bruce McNiven, who was then Horizon programme director. You have referred to some of that correspondence in your statement –

Michael Coombs: Yes.

Ms Hodge: – is that right? Please could we show POL00028365. This is a letter dated 10 August 1999, addressed to John Dicks. We can see from its title that it relates to Acceptance Incident 218 and the issue of training.

If we scroll down to the second page, please. We can see there what is described earlier as an analysis of the evaluation that had been carried out in the preceding weeks against the business impacts identified in the Acceptance Incident.

Michael Coombs: Right.

Ms Hodge: Now –

Michael Coombs: It shows to me that previous document with “Training” in it, when I said it was an issue which was contractual – to do with the amount of training, that was a different issue. This is –

Ms Hodge: We can come to that letter. I think the letter to which you have referred is a response to this letter. So if we perhaps take them in their chronological order. This was the letter from Post Office Counters to Pathway. We can come onto the response. If we just look briefly at the left hand column, which bears the heading “Business Impact”.

Michael Coombs: Yes.

Ms Hodge: I don’t propose to take you through all of the detail but the first box there identifies as a business impact of this incident:

“The Office Managers ability to undertake daily balancing and produce a cash account is adversely impacted resulting in a failure to support accurate [Post Office Counters Limited] accounting. This is a high severity impact on [Post Office Counters’ Limited’s] ability to perform its normal business functions.”

Michael Coombs: Yes.

Ms Hodge: What this appears to suggest is that issues in relation to training were not simply a question of how much training was being provided but whether or not it was equipping office managers adequately to carry out their daily balancing and produce a cash account. Does that resonate at all with you in relation to what you understood about training issues at the time?

Michael Coombs: I’m trying to think. It doesn’t resonate at this level. Was I copied on this? I was, wasn’t I?

Ms Hodge: Forgive me, yes. If we scroll up to the bottom of the first page. Thank you, we can see~…

Michael Coombs: I think I was. I think I saw it at the time but – it looks familiar but …

Ms Hodge: My question really is, were you aware that Post Office Counters’ concerns about training were focused particularly upon the cash account module and the adequacy of that module to prepare office managers for balancing on Horizon?

Michael Coombs: Not in the way that you say. What I was aware of on training was that we were trying to get into a situation where we had training which enabled a rollout. A lot was to do with resourcing standards, approaches etc. I certainly didn’t pick this up as being that way. No I certainly didn’t pick this up. I can’t remember what I did at the time, whether I did or whether I didn’t. For the moment – it is familiar but I don’t understand what – again, what resulted from it. Is it worth taking me through the next page and seeing if that triggers anything.

Ms Hodge: Thank you. If we go back to page 2. In the middle of the column we have “summary of success criteria measure” and these were essentially some criteria, as I understand it, that Post Office Counters requested be met and in the final column an evaluation confirming that at least the second two criteria had been met and albeit there is a longer explanation, the first appears also to have been met. So we know that there was a period of review of this incident and that some of the criteria against which Pathway were required to perform had been satisfied. If we could however scroll to the final page please. Under the heading “Qualitative Measures”. What it records at paragraph 3.1 is that:

“Although the small sample size of 18 responses limits the validity of the findings, some significant improvements were found in comparison to Live Trial 1”, which comprised a sample of 102 offices:

“Overall, attitudes towards Horizon are better at the LT2 …”

Which I believe is a reference to live trial 2:

“… compared to the LT1 experience. The key outstanding issues to emerge from research were as follows …”

It then follows a list of four issues. The first of which was that:

“The course is still considered to be too short and intensive.”

The second that there was a need for further stream –

“The need to further stream the training groups.”

Thirdly, it was noted that there was “variation in trainer quality” and, finally, that there were “significant problems with technical and software faults in the training sessions”.

So, as at 10 August 1999, these issues, it appears, remained outstanding?

Michael Coombs: Yes.

Ms Hodge: I think in the response to which you have referred that’s dated the 11th August 1999, if you could just bear with me a moment?

Michael Coombs: One comment on these 3.1 the qualitative – the first one, of course still considered too short and intensive, that was actually a programme commercial issue clash under the contract, I think being asked to do more, working out who can do what and who had to pay for what. I can remember that issue – an issue coming up like that in terms of training, which is what I referred to earlier in this period. There were some very hard discussions on training which you can do, train as you can really do lots and lots of training, if you can get the resource to do the training – which is always an issue – you can do lots and lots of training but somebody has to fund it and the contract says such-and-such is expected then it’s – something just needs to be resolved commercially.

I don’t think that made much sense. Sorry about that.

Ms Hodge: No, not at all. I think you make the point there were commercial discussions to be had –

Michael Coombs: Yes.

Ms Hodge: – as to who would fund the more expansive training course that Post Office Counters were seeking from ICL Pathway; is that fair?

Michael Coombs: That is fair.

Ms Hodge: Before we move on to ICL Pathway’s response to this letter, we can see at the final bullet point the reference to significant problems with technical and software faults. This appears to raise the possibility that the problems which end users were experiencing when trying to balance their accounts and produce a cash account were not necessarily caused entirely, or predominantly, by issues in relation to the quality of the training that they were receiving, but could also have been related to on going technical and software faults that were being observed during the training sessions. Do you think that’s fair inference to draw from the point that’s being raised there?

Michael Coombs: I would look at that differently. Yes, it makes a statement about significant problems with technical and software faults in training. So I see those significant faults/problems might be as a result of training code itself, rather than the product behind it because training systems were set up to do it.

The other thing I would take from that is there was an identification of something that needed to be rectified. So I would expect this to be – this round to be rectified to a level suitable and that fitted with the contract by rollout. So I would see it as an indication of further work that needs to be done and making it quite clear that it is seen as significant. So I don’t necessarily – well, I don’t disagree with you but I would just read it a different way.

Ms Hodge: The response which I think you have mentioned in your statement you discussed with John Dicks at the time and which was sent with this letter, was dated 11 August 1999. It is FUJ00079159. We don’t need to turn it up because I know you have seen it and you explain in your statement that, essentially, you reached the conclusion in discussion with Mr Dicks that ICL Pathway had delivered further training at the request of Post Office Counters and that the remaining issues, so far as you were concerned, appeared to relate to how Post Office Counters was managing change within its business. Is that a fair summary of your position as at August 1999?

Michael Coombs: It is the document you want to – yes, that would have been my position.

Ms Hodge: Bearing in mind what you knew about the problems with the EPOSS code, did you consider that some of the problems which end users were experiencing when trying to balance their accounts and produce the weekly cash account might, in fact, be attributable to bugs, errors or faults in the EPOSS product?

Michael Coombs: No, I didn’t consider that – it may have occurred to me and I might have – we’re probably aware, I’m sitting now, do you I remember it being in a position where what you were saying, does it relate to – then no, I had this problem with the EPOSS that everything disappears from my mind before the end point. I still –

Excuse me, I’m getting confused here. Could you ask me your last question again?

Ms Hodge: Yes, of course. You confirmed earlier in your evidence that you were aware of problems with the EPOSS code; that is correct, isn’t it –

Michael Coombs: Yes.

Ms Hodge: As at August 1999, it was being brought to your attention that end users, such as subpostmasters and office managers, were experiencing significant difficulties in balancing their accounts in producing a cash account, which was a function of EPOSS, was it not?

Michael Coombs: I believe it was.

Ms Hodge: My question to you was whether it occurred to you at the time that these difficulties might not be attributable principally to training or user error but rather to bugs, errors and defects in the EPOSS application.

Michael Coombs: Could you just say that last bit of what you said again?

Ms Hodge: Yes, of course. The question is whether the reported concerns about the difficulties which office managers were experiencing in attempting to balance their accounts, might be attributable, in fact, to bugs, errors and defects in the EPOSS application?

Michael Coombs: This was for software in – actually used in Post Office or are we talking about training systems or are we talking about –

Ms Hodge: As I understand it, by this time, EPOSS had been in operational live trial and rolled out to at least 200 offices.

Michael Coombs: Yes? Unless somebody raised EPOSS as an issue with me, which I don’t remember at this stage, which apart from the bits we discussed so far, I can’t remember anything else, then, no, it would not have occurred to me. Because …

Ms Hodge: We know that one of the other high severity Acceptance Incidents which was observed by Post Office Counters during the operational live trial related to the integrity of data being processed by Horizon, this was Acceptance Incident number 376.

I don’t think you have much recollection of that incident; is that correct?

Michael Coombs: That is correct.

Ms Hodge: It appears from the documents obtained by the Inquiry that this incident related to discrepancies between the daily transactions recorded on the branch counter and the cash account that was being generated by Horizon. Essentially, Horizon was not accurately accounting for all of the transactions being performed by the end user at the branch counter. Does that brief explanation assist you at all in your recollection of this incident?

Michael Coombs: No, it doesn’t. One of the problems with trying to recollect is that I didn’t have responsibility for the development of the testing and the rest, so I’m trying to remember things across 20 years that were probably in memos, letters and meetings, and there are better people that existed in the programme at the time who should be able to answer this question much better than me. But I will continue trying the questions.

Ms Hodge: Before we move on from acceptance, Mr Coombs, the final incident which was graded as high severity was AI298. This related to counter lockups and freezes. Do you recall what, if anything, you understood about that at the time?

Michael Coombs: I’m trying to think what I would have been aware of at the time or what I’m aware of now. No, I wouldn’t necessarily have picked up on that, unless it was raised in a review I attended and I cannot remember it being in a review, either internal or with a customer, that I can remember. So no …

Ms Hodge: We know that it was raised at the management resolution meeting on 12 August. I think really what I would like to establish is whether you understood counter lockups and freezes to be a hardware issue, a software issue or possibly a combination of both.

Michael Coombs: I don’t recall them enough to be able to make that statement. I don’t know how to answer that question because I didn’t have a view. I’m not aware I had a view.

Ms Hodge: Mr Coombs, I have one final topic I would like to raise with you but now may be a convenient time to take another short break before I deal with that final topic. Would that suit you?

Michael Coombs: I’m happy to continue if you wish to.

Ms Hodge: Thank you.

I would like to turn to the audit of the Core System Release Plus, which was conducted in September 1999, at the time when negotiations were on going between ICL Pathway and Post Office Counters over the resolution of the high severity Acceptance Incidents which we have just discussed.

We have pulled up this report before. It is FUJ00079782. When we looked at this document earlier this morning you agreed, I believe, that you were named as one of the senior managers to whom this report was distributed.

Michael Coombs: Yes.

Ms Hodge: What if anything do you recall about the findings which were made in this report, in this audit report, about the quality of the EPOSS product?

Michael Coombs: I cannot remember but I am sure it is in the document.

Ms Hodge: Please could we turn to page 17. Can we go to the following page, please. Sorry, that must be my reference. The paragraph I’m looking for is paragraph 4.2.1 under the heading “[Post Office Counters] Infrastructure”. I think it must be possibly page 19.

Mr Coombs, you should be able to see there at the top a heading “[Post Office Counters Limited] Infrastructure” –

Michael Coombs: Yes.

Ms Hodge: – followed by a subheading “Electronic Point of Sale Service”.

Michael Coombs: Yes.

Ms Hodge: Under the title “Commentary”, we have, essentially, the findings of the audit report, relating to the EPOSS product. The first paragraph reads:

“From the CSR+ perspective the development of the EPOSS product has been successful with software drops being made according to planned schedules and confidence in the team that future drops will also be achieved on time.”

Can you see that?

Michael Coombs: Yes, I can see that. What’s the date of this document again?

Ms Hodge: Forgive me, this was produced in October 1999. I believe it was on or around 18 October. If we go back to the top, we should be able to see – forgive me, 28 October 1999.

The second paragraph reads:

“Unfortunately EPOSS continues to be resource hungry in dealing with live problems associated with CSR [the Core System Release] and in ensuring that these fixes are broad forward and incorporated into the CSR+ product.”

Michael Coombs: Yes.

Ms Hodge: Do you have that?

Michael Coombs: Yes.

Ms Hodge: The third paragraph really gets to the substance of the concerns that were raised and it refers back to the EPOSS task force report that we discussed earlier in your evidence. That was the report produced in September 1998?

Michael Coombs: That was the ‘98 one. This is ‘99.

Ms Hodge: That is correct, October 1999. It confirms that:

“The EPOSS Task Force Report raised the question of the maintainability and resilience of the EPOSS code following the 6 week PinICL blitz where some 550 PinICLs were processed. Since then a further [approximately] 996 PinICLs have been raised – using the ‘Product …’”

Then this is a search criteria, which is:

“EPOSS and Target Release = IR-CSR or PDR-CSR…”

That appears to be a search criteria used by the auditors to identify which of the PinICLs related to the EPOSS product.

Michael Coombs: Yes.

Ms Hodge: It goes on to say that:

“In particular the maintainability, resilience and potential for change aspects must be subject to doubt. The report also identified many instances of poor programming technique and application of coding standards and while CSR+ changes have been reviewed by the Team Leader no attempts have been made to address the significant body of code not affected.”

So, if we go on, please, a little further down.

Michael Coombs: Yes.

Ms Hodge: Above the table there are two paragraphs. The first reads:

“To … support the recommendations statistics on EPOSS & Desktop PinICLs raised since 1st October 1998 were obtained.”

It then describes the selection criteria used. Again, I understand these to be a reference to the search terms used to identify which PinICLs related to EPOSS. We see in a table below the months, starting October 1998. Can you see that in the left-hand column?

Michael Coombs: Yes, I can.

Ms Hodge: Then, in the two other columns, the number of PinICLs which match the criteria “EPOSS & DT”, Desktop, or simply “EPOSS”.

If we could carry on, please, to the following page. This takes us all the way through to October 1999, which is when the audit report was produced.

I’m sorry, could you finish by scrolling down.

The report records:

“The figures [those that we can see in the table above] indicate that the problems facing EPOSS during the Task Force period have not diminished. Of greater concern are the non-EPOSS PinICLs within the group suggesting that there are still serious quality problems in this vital, customer facing element of the system.”

In terms of the recommendations that arose from this, do you recall specifically what was recommended, in light of the high volume of PinICLs that were still being raised against the EPOSS product in October 1999?

Michael Coombs: I was copied on this document, was I?

Ms Hodge: You are named on the distribution list.

Michael Coombs: When was it – the first version, when did it come out because I’m not recognising a lot of this and I should.

Ms Hodge: The date of the document is 28 October 1999.

Michael Coombs: Version 1?

Ms Hodge: If we scroll to the top. Yes, Version 1.0.

Michael Coombs: Right, I scanned it.

Ms Hodge: If it assists, if we could highlight the box, please, with the text in italics. This records that “The EPOSS Solutions Report”, which is a document we don’t have but which was produced in September 1999, had:

“… made specific recommendations to consider the redesign and rewrite of EPOSS, in part or in whole, to address the then known shortcomings.”

It goes on to say that:

“In light of the continued evidence of poor product quality these recommendations should be reconsidered.”

Michael Coombs: Right.

Ms Hodge: Do you have any recollection of –

Michael Coombs: I have recollection of a lot of discussions and lots of meetings about EPOSS and, reading the highlighted ones again, I recognise those, having seen it. The big problem I have got, as I said before with EPOSS, is I don’t know what’s happened. I’m looking at two options and I cannot remember, for the life of me, which option was followed. If I look at some of the documents, I would think it is probably going to be that but it might be the other and nowhere in the documentation have I seen anything which said what decision was actually made. I can’t understand why not.

Ms Hodge: Sorry, Mr Coombs. If we reflect for a minute on the chronology of these reports, what we know – or what appears to be shown by this audit report is that a recommendation to consider redesigning and re-writing EPOSS was first made in September 1999?

Michael Coombs: Yes.

Ms Hodge: That was at a time when Post Office Counters was in negotiation with ICL Pathway over the granting of conditional acceptance to the Horizon systems. Is that something that you are familiar with, that resonates in terms of timings?

Michael Coombs: Yes. It fits with the timing but, you know –

Ms Hodge: So we have a first recommendation in September 1999. It would appear that –

Michael Coombs: Which was a recommendation to consider –

Ms Hodge: To consider redesigning and rewriting EPOSS?

Michael Coombs: Right, so I am sure it was considered but what I don’t know is what the result of that consideration was.

Ms Hodge: We then have a further recommendation in late October 1999 to reconsider the recommendation to redesign and rewrite EPOSS. Could it reasonably be inferred then that the decision, if it was taken in September, was not to redesign and rewrite EPOSS?

Michael Coombs: I would be guessing or making an inference which is a bit too strong, I feel. I don’t know what to infer from that. The only thing I get out of that is the fact that they were going to consider it. It was going to be looked at and I am sure it would have been looked at because it was so visible at the time but what I can’t – what I don’t know is what actually happened. So it was a long-term issue that was running, and me developing or even doing an exercise on – well of course, it takes time and it can take a lot of time. So it would have been a visible thing. It wouldn’t have disappeared but I just do not know how to find out which approach to EPOSS was adopted. I just don’t know.

Sir Wyn Williams: Mr Coombs, can I ask you, do you have any memory about whether you were consulted about which choice should be made?

Michael Coombs: No, I don’t.

Sir Wyn Williams: Would you have expected to have been consulted about it?

Michael Coombs: “Consulted” might be a strong word. I would have expected it to go to one of the change control places, which I might or might not have been invited – change control, because it was somebody sponsoring it, to do whatever was the outcoming, and I may not have been told of it at the time.

Sir Wyn Williams: Can I just summarise, you can’t remember whether you were consulted but it is not necessarily the case that you would have been; is that right?

Michael Coombs: That is right.

Sir Wyn Williams: Okay, thank you.

Ms Hodge: Thank you, sir. Mr Coombs, one of the final documents I propose to take you to is the schedule of corrective actions which accompanied this report. Before I do I would like to ask you whether you recall the findings and recommendations to redesign and rewrite EPOSS, whether you recall these ever being reported to Post Office Counters at the time.

Michael Coombs: Could I interrupt? Sorry to interrupt. I have got some noise coming off left, I will shut the door otherwise I’m not going to hear you. I will be a minute or two. Is that okay?

Ms Hodge: Of course.

Sir Wyn Williams: Of course, please do. (Pause)

Michael Coombs: Sorry about that.

Ms Hodge: Thank you, Mr Coombs. My question was whether or not the findings and recommend – whether you recall the findings and recommendations made in this audit report were brought to the attention of Post Office Counters Limited at the time.

Michael Coombs: That’s the audit. You mean this audit document here?

Ms Hodge: Yes, sorry, the findings made in this audit report. The recommendation to the effect that EPOSS should be redesigned and rewritten. To your recollection was that brought to the attention of Post Office Counters Limited at the time?

Michael Coombs: I’m thinking because – I will probably talk as I think because it helps – look at that, just seeing it, it depends where – no. No, I do not have recollection of that.

Ms Hodge: Do you consider that the findings and recommendations should have been brought to the attention of Post Office Counters Limited?

Michael Coombs: They may well have been brought but it depends whether – it depends on how they entered being passed over, whether it led to a change in requirements or a clarification of requirements which means that it could have happened via requirements directorate which I would not have necessarily seen unless there was any outcome. Or if it was handing over another release, that would be done through the development systems group and their interfaces with it. So I can see that people could be brought in, not just using the development audit, which was there basically to serve a different purpose than to communicate to the Post Office. So I have no recollection but it doesn’t mean that there wasn’t.

Ms Hodge: My second question, Mr Coombs, is whether you think ICL Pathway ought to have brought these findings and recommendations to the attention of Post Office Counters Limited at a time when Post Office Counters was considering conditional acceptance of the system and the implementation of its rollout.

Michael Coombs: Yes, it should have done, what I’m saying is I don’t know that it didn’t do so. Because there are other routes and communications, the way it could have come through. Can you put up your circulation list of the development audit itself again, just so I can look at that, and that might help me try and remember.

Ms Hodge: Yes, of course. It is on the first page. But, Mr Coombs, my question isn’t really whether it was as a matter of fact – that’s something we can explore in other avenues – but whether you consider it should have been. I think your answer is that you do consider that the findings and recommendations ought to have been brought to their attention?

Michael Coombs: I would consider that the content of the development audit, not necessarily the development audit itself, should have been communicated and taken to the customer and specifically anywhere that mentioned specific products or processes or things which they had an interest in. So they should specifically have been brought, yes.

Ms Hodge: Before we leave, I think you can see there the distribution list –

Michael Coombs: Yes.

Ms Hodge: – if that assists you at all.

Michael Coombs: No, it doesn’t. (Unclear).

It might have been one of those that was done with library exchanges. Certain things that would go to their library would automatically come to us and vice versa. But I do not think that is necessarily that helpful, so no. But, yes, it should – the contents, specifically to do with anything that can affect major problems, should have been brought forwards.

But all the individual problems, I am sure, were logged via the known problem register, via the PinICL list. So I think the information would flow. It’s whether it flows in a way that is useful.

Ms Hodge: Thank you, Mr Coombs.

I propose we take another short break now for about 10 minutes before we return to deal with the final parts of your evidence.

Sir, is that a convenient time to break?

Sir Wyn Williams: Yes. What’s the time now?

Ms Hodge: It is midday.

Sir Wyn Williams: So 12.10.

Ms Hodge: Thank you.

(12.01 pm)

(A short break)

(12.11 pm)

Ms Hodge: Good afternoon, sir, can you hear and see me?

Sir Wyn Williams: Yes, I can, sorry.

Ms Hodge: Mr Coombs, can you hear and see me?

Michael Coombs: Yes I can.

Ms Hodge: Thank you. Before the break, Mr Coombs, we were discussing what, if anything, you recalled about the findings and recommendations recorded in the audit report being brought to the attention of Post Office Counters.

In your statement you say that, whilst you do not recall whether or not Post Office Counters was informed about issues with EPOSS, you would have expected them to have been aware, and I would like to explore with you briefly what the basis of that assumption is, please.

When you refer to issues with EPOSS, are you referring specifically to the recommendation that it be redesigned and rewritten in light of the poor quality of the code or are you referring more generally to knowledge of the existence of PinICLs and bugs in the system?

Michael Coombs: Well, awareness of the PinICLs and bugs and KPRs in the system, that was visible – they were in part of the loop for actually dealing with that, in terms of impact. I know that happened. The other thing you were asking was where was my head in terms of new versus old EPOSS, was that what I was thinking?

Certainly that was in POCL’s domain. I have seen somewhere in this process a document that says that but I cannot remember the detail. So there was a link, on the information to do with maintain or redevelop and that was known to POCL and is in a document with POCL people in it but it is somewhere – I’ve seen it somewhere which means it is somewhere in the folders around me but I wouldn’t know where to pick it out.

I think there was knowledge but whether it was the right sort of knowledge, so the key issue for me is: did it include the requirements thing as well? Because that level of change you are talking about, you would need to reset the requirements’ baseline to make sure you don’t take the product off or swerve away from its intended position.

And that would have been under John Dicks’ directorship and I have no idea whether that dialogue was had because I would not necessarily have been privy to it.

Ms Hodge: The document to which you refer in your statement is the “Report on the EPOSS PinICL Task Force”, which we have looked at already. That is FUJ00080690.

At paragraph 7.1.2 of that report, if we could scroll down, please, you can see that’s on page 16, I think you rely, Mr Coombs, on the reference here to Post Office Counters Limited’s involvement. Is this the document to which you were referring just a short time ago?

Michael Coombs: Who is on the circulation list for this one?

Ms Hodge: If we go back to the top, please?

Michael Coombs: Sorry about this.

Ms Hodge: No, not at all. This is an internal ICL Pathway document.

Michael Coombs: Yes.

Ms Hodge: We can see that from its title.

Forgive me, to the first page where the distribution is recorded, please.

Michael Coombs: I’m looking for it. Yes.

Ms Hodge: So the names we have there are Terry Austin, Martyn Bennett, David McDonnell and the library?

Michael Coombs: Terry is on it – sorry. Mr Austin is on it, that’s the systems development directorate, and he had – he worked through EPOSS a lot more than I did. He would know who was told at the working level when reviewing what was issue 1. So that would come up very much at that view. This is a one-off thing which – I don’t know who asked for the task force there but I would probably say it was Martyn Bennett and Terry to try and understand – as you can see from the rest of the document. So …

Ms Hodge: Mr Coombs – sorry –

Michael Coombs: I would not necessarily have expected to see this document. I know I have but …

Ms Hodge: Mr Coombs –

Michael Coombs: – it is very difficult actually because I was probably there – that’s 14 May 2001, wasn’t it? By which time I was in a hospital bed. So anything that was immediately before this or comes after it, I would not have seen. But I am sure communication must have continued and must have occurred and I would have expected Terry to keep that up.

Ms Hodge: Mr Coombs, what I’m trying to explore with you – and I apologise, I have not posed the question very clearly – but you have made an assertion in your statement that you would have expected Post Office Counters to have been made aware of the issues with EPOSS; that is correct, isn’t it?

Michael Coombs: That is correct.

Ms Hodge: I understand by issues with EPOSS that you mean both the occurrence of bugs, errors and defects but also the specific recommendation that was made to redesign and re-write the application; is that right?

Michael Coombs: Yes, and I would have expected there to be discussion, at least not – a discussion I was involved in.

Ms Hodge: What I’m trying to establish is the basis on which you had that expectation.

Michael Coombs: A number of reasons. One of which is there would be a need to steer us through the acceptance type hurdles with that product and without some movement or change in intention or product, then I do not see how that could occur. It would become a blocker. It all gets tangled up in broader discussions. And I would have expected in review – and I don’t know what reviews were going on in development division – but there would be reviews which included then requirements and representatives in POCL, I know that occurred but I don’t know if it occurred for this. Or whether this was an isolated activity, ie not connected into mainstream but I can’t see how it could be. I would have an expectation that this was visible to the customer either via development or via requirement.

Ms Hodge: Thank you, Mr Coombs.

I understand that it was the practice for each internal audit carried out by ICL Pathway to be supported by a schedule of corrective actions, is that right?

Michael Coombs: I can’t remember specifically but I would have expected it.

Ms Hodge: We have a copy of the schedule of corrective actions, which was prepared in connection with the CSR+ development audit carried out in October 1999. Please could we show FUJ00079783. Mr Coombs, I hope you can see the title of the document “Schedule of Corrective Actions”?

Michael Coombs: Yes, I can see that.

Ms Hodge: The version is 0.1, in the top right-hand corner and the document is dated 22 November 1999.

Michael Coombs: Yes.

Ms Hodge: A little further down the page, as we have established, we can see you named on the distribution list.

Michael Coombs: Yes.

Ms Hodge: And at the top of this second page please, under the heading “Document history” we can see a reference to version 0.1 dated 22 November 1999 and it reads:

“Initial draft [of the schedule] following preliminary analysis with MJBC”, and the date, 17 November, in brackets.

Are those your initials?

Michael Coombs: Yes, they are.

Ms Hodge: So this would suggest that you had some discussion of the schedule of corrective actions with its author on 17 November; would that be fair?

Michael Coombs: Yes, that would be very fair.

Ms Hodge: On page 3 please we can see at point 3, there is a key to plan – what is described as a key to plan, and we see certain terms are there defined. The term “Owner” relates to the identified owner of the corrective action and underneath it the term “MTM”?

Michael Coombs: I’m looking at “Key to plan”.

Ms Hodge: Forgive me “Key to Plan”, in yellow highlight in the left-hand column, I hope you can see the “Owner”?

Michael Coombs: Yes.

Ms Hodge: That’s the term used in the plan. It appears to donate the identified owner of the corrective action. I understand that to be the individual who is to take primary responsibility for –

Michael Coombs: For progressing and resolving it if it is an issue.

Ms Hodge: Precisely. Underneath “owner”, “MTM”, which is the defined as the “management team member to whom the corrective action owner reports”. Bearing those in mind, if we could please proceed to page 4. The corrective actions are recorded here in a table and in the top row we see the “Report Observation or Recommendation” in the third column, at the top. Can you see that in bold?

Michael Coombs: Yes, I can.

Ms Hodge: The next column along identifies the owner of the corrective action.

Michael Coombs: Yes.

Ms Hodge: The fourth column, the management team member to whom the owner of the corrective action is to report?

Michael Coombs: Yes.

Ms Hodge: You follow that. Thank you. If we could then carry on please to page 8. (Pause)

I’m sorry for keeping you waiting, Mr Coombs.

Michael Coombs: That’s okay.

Ms Hodge: Under the heading “Report Observation/Recommendation”, we can see the commentary there. The first paragraph reads:

“The audit identified that EPOSS continues to be unstable. PinICL evidence illustrated the numbers of PinICLs raised since the 1998 Task Force and the rate of their being raised.

“The EPOSS solutions report made specific recommendations to consider the redesign and rewrite of EPOSS, in part or in whole, to address the then known shortcomings. In light of the continued evidence of poor product quality these recommendations should be reconsidered.”

Michael Coombs: That’s the same as before.

Ms Hodge: Indeed. That reflects the findings that we saw in the CSR+ development audit.

Michael Coombs: And this is, remind me?

Ms Hodge: This is called the “Schedule of Corrective Actions”. Yes.

Michael Coombs: And is the follow on from the CSR audit?

Ms Hodge: Precisely. If we look there in the fourth column along, the owner of this particular action is recorded as “TPA”. Is that a reference to Terry Austin?

Michael Coombs: That’s Terry Austin, yes.

Ms Hodge: Under the next column, the management team member, who has been identified as the individual to whom the owner should report, we have two initials, “JHB”, the first, would that be John Bennett.

Michael Coombs: That is John Bennett.

Ms Hodge: The second are your initials, MJBC?

Michael Coombs: Yes.

Ms Hodge: Thank you. In the final column, please – sorry, the penultimate column, under “Agreed Action/Commentary”, we see a number of dated entries. The first of these is dated 17 November. It provides:

“This action falls within Development but requires higher level drive. Has links with CS …”

Would that be reference to customer services?

Michael Coombs: That would be relevant to customer services.

Ms Hodge: “… and BD.”

Would that be a reference to business development?

Michael Coombs: Business development. That is, if I’m reading this correctly, because we are still on EPOSS, there was an expectation or a possibility of passing of the business development forward by offering services to other people round an EPOSS type situation. So it was seen as a potential – business development were looking at that and business development, as far as I’m concerned, do not exist.

I refuse to accept they existed because I was just focusing on the programme, not on what we do post-programme. That is not my remit. So they could put that in the action to me, as much as they like, “BD” and they would all know that they would not get a response, unless Mr Bennett wanted to enter his name on this list.

Ms Hodge: Against that entry date of 17 November we see your initials again, “MJBC to speak with TPA direct”.

Michael Coombs: Yes.

Ms Hodge: Can you see that? So it appears that you were in discussions with Mr Austin as to how to action this recommendation on or around 17 November 1999.

Michael Coombs: Yes.

Ms Hodge: I think that follows from what we can see here.

Michael Coombs: Yes.

Ms Hodge: Then, in the following entry, dated 25 November, albeit it is not entirely clear who has made this entry, what we see recorded as work on AI298, which was the Acceptance Incident relating to counter lockups and freezes, identified that –

Michael Coombs: Can you just run back through that? You lost me as to which documents –

Ms Hodge: Yes, of course, forgive me. We are looking at the column entitled “Agreed Action/Commentary”.

Michael Coombs: That is the one that has been magnified for me, so I can read it.

Ms Hodge: Exactly. That’s one of several columns in the schedule of corrective actions.

Michael Coombs: Yes.

Ms Hodge: These are agreed actions and commentaries against the recommendation to reconsider the proposal to redesign and rewrite EPOSS.

Michael Coombs: These are all the ones that come under 4.2.1?

Ms Hodge: Precisely.

Michael Coombs: I’m with you now.

Ms Hodge: Not at all. Thank you. So the entry on 25 November reads as follows:

“Work on AI298 [which we have discussed earlier in your evidence as an Acceptance Incident in relation to counter lockups and freezes] identified that majority of problems ([approximately] 80%) were to do with error and print error handling. Daily meetings had been instigated. TPA of view that while original code had not been good it would be difficult to justify the case for rewriting now.”

Michael Coombs: Yes.

Ms Hodge: Does that entry resonate at all with you in relation to your recollection of your discussions with Terry Austin at that time?

Michael Coombs: No, my discussions with Terry were much more about – I am sure, with Terry, was much more about which version, was there going to be a development or was there going to be a maintenance thing, rather than this. It is quite difficult to link some of these back to each other, isn’t it? It is quite tortuous.

Ms Hodge: I think it might help, Mr Coombs, if we go to a later version of this document. It is a version dated May 2000 and it is at WINT04600104.

We have seen in the top right-hand column this is version 2.0 –

Michael Coombs: Yes.

Ms Hodge: – produced on 10 May. It is substantially the same as the November version, save that it includes some additional commentary and agreed actions.

If we could scroll down to page 7, please. Apologies, it is at page 9, for the record. Mr Coombs, you should be able to see what is essentially the same table as we have been looking at, a short time ago, with the reports, observations and recommendations in the third column from the left, and the agreed action and commentary in the second column in from the right.

We discussed very briefly the entries of 17 November and 25 November. If we carry on, please, to page 10.

Michael Coombs: Before you do, can I just finish reading something?

Ms Hodge: Please, by all means.

Michael Coombs: Yes. Sorry about that.

Ms Hodge: I think you have said that the entry dated 25 November doesn’t assist particularly in recollecting what you discussed with Terry Austin at the time in relation to this recommendation; is that right?

Michael Coombs: Yes.

Ms Hodge: What we can see on the following page is some further entries. The first is dated 8 December. It records that:

“JH requested statistics on fixes delivered to live from RM.”

What “RM” be a reference to release management, do you think?

Michael Coombs: I don’t recognise it. It is a person so I would assume it is release management.

Ms Hodge: It says –

Michael Coombs: Is it possible just to go right a little bit? The blown up bit, I’m missing the right-hand side. That’s it. The dates weren’t showing.

Ms Hodge: It also says at the first entry, dated 8 December:

“Also informed TPA [Terry Austin] that requires agreement of MJBC before this can be closed.”

Michael Coombs: Yes.

Ms Hodge: So we had earlier a recommendation from Terry Austin that there wasn’t a proper case for redesigning and rewriting the EPOSS code and that the recommendation should accordingly be closed but it appears that that recommendation to close the action was subject to your agreement. Does that seem right?

Michael Coombs: Yes, it was, and initially I wasn’t happy. I’m trying to remember what happened.

Ms Hodge: A further entry – sorry, Mr Coombs.

Michael Coombs: No, it is okay. Carry on.

Ms Hodge: A further entry on 8 December records that your initials MJBC:

“… confirmed that unless RM statistics contradicted reports provided by PJ”, which I believe is Peter Jeram.

Michael Coombs: Yes.

Ms Hodge: “… the recommendation could be closed.”

Michael Coombs: Yes.

Ms Hodge: Do you have any recollection of that?

Michael Coombs: I have the recollection of the discussion with Terry. Yes, you can see there my view was that it needed closing – I’m trying to remember what we were talking about. We are talking about EPOSS again, aren’t we?

Ms Hodge: Yes, there appears to be some consideration as to whether or not the volume of PinICLs and fixes were such that it was right to approve closure of the report. Does that seem broadly –

Michael Coombs: It now rings a bell. The question was quite a simple one and that is: had the number of errors that had occurred reduced in volume of those coming in and had sufficiently been cleared, including in the key areas for us to close the report and continue with the product. I had forgotten this one completely.

Ms Hodge: So that appears to be the position as at 8 December, namely that inquiries needed to be made as to the volume of PinICLs and fixes in order to ascertain whether or not it was proper to close down this recommendation.

The next entry on 7 April refers to an email to you, MJBC, Terry Austin and Peter Jeram, “providing details of RM. EPOSS fixes to live”.

Michael Coombs: Provided the information.

Ms Hodge: It appears that was provided as requested, and the email:

“Asked for confirmation that matched PJ reports …”

So, asking for confirmation as to whether that matched Peter Jeram’s reports:

“If it does then will close.”

The next entry, we see, is dated 3 May.

Michael Coombs: Hold on. Yes, 3 May.

Ms Hodge: That records that a “Reminder email [has] been sent to [the] above”, I assume that means you, Terry Austin and Peter Jeram –

Michael Coombs: Yes.

Ms Hodge: – “seeking early response”?

Michael Coombs: Chased on the same day.

Ms Hodge: “Chased on same day.”

So that’s approximately one month later in early May.

Michael Coombs: Yes.

Ms Hodge: It appears that confirmation that EPOSS fixes to live were matching Peter Jeram’s reports hadn’t been provided, at least at that stage. Is that a reasonable inference?

Michael Coombs: Yes. I will hold that thought while you continue.

Ms Hodge: Thank you, Mr Coombs.

Finally, an entry dated 10 May, which records:

“Following response received from MJBC …”

The following entry is in quotation marks and, therefore, presumably reflects the content of an email or a conversation you had had with the author. It says:

“As discussed this should be closed. Effectively as a management team we have accepted the ongoing cost of maintenance rather than the cost of a rewrite. Rewrites of the product will only be considered if we need to reopen the code to introduce significant changes in functionality. We will continue to monitor the code quality (based on product defects) as we progress through the final passes of testing and the introduction of the modified [C14] codeset into live usage in the network. PJ can we make sure this is specifically covered in our reviews of the B&TC test cycles.”

It is then recorded that the recommendations and agreed actions are closed. Do you see that as the final entry?

Michael Coombs: Yes, I do. This is the missing bit of information I didn’t have in my head that made me uncertain about all the discussions on EPOSS. It didn’t lead anywhere, and it had to lead somewhere, and I’ve never seen where it leads to. I would never have amended this level of detail without prompting.

Ms Hodge: Let’s break it down a little, Mr Coombs. It appears this was a collective decision of the management team; is that correct?

Michael Coombs: I’m not certain. At this time, it may not have been because I believe, at this time, John Bennett had recently – or during this process, at some time, John Bennett moved on and Mike Stares arrives. So it might have been a partial management team agreement, because I don’t know how up to speed Mike Stares would have been at this stage. John Bennett’s name was there, obviously, because it has commercial impact, and mine because it had programme impact.

Ms Hodge: Whether or not Mr Bennett played a part in that decision, it appears that you weren’t the sole decision-maker, it was something that had been discussed amongst the management team, at the time?

Michael Coombs: Discussed amongst the management team, and so there’s myself, there’s Terry Austin, there’s Martyn Bennett, as well as people like Pete Jeram, who is a senior member. So, yes, it was a discussion based on the then view of members of PinICLs – outstanding PinICLs coming in and PinICLs going out.

So the decision was made, which I had forgotten all about completely – a decision was made to continue with the existing product. Unless it needed to be open for any future reasons but I don’t know whether that effort occurred since, so I don’t know.

Ms Hodge: What we see there is, effectively, you are recorded as saying the management team have accepted “the ongoing cost of maintenance rather than the cost of a rewrite”.

Michael Coombs: Yes.

Ms Hodge: By the “cost of maintenance” did you mean the ongoing cost of applying fixes to bugs, errors and defects as and when they were identified in the system?

Michael Coombs: That is certainly one thing and the other is also – it was the air of change. So it was – there is a reference there to – it would only be done by maintenance unless there was a need to open the product to make significant changes. If I remember correctly, there was always a possibility that that could occur as further requirements came or were clarified from Post Office.

Ms Hodge: So is it right to infer, Mr Coombs, that rather than addressing the underlying problem, namely the quality of the EPOSS code, the management team decided in May 1999 to continue in the practice of applying software fixes to the product?

Michael Coombs: Having looked at the figures produced by Pete Jeram to say whether that was a sustainable position, the view must have been that it was. Because the decisions to rewrite products are actually large ones to make because you can introduce other faults, other problems, interface issues and the rest. So that was a management decision made by group of management that the product was sufficient – sufficiently developed and cleaned to be usable by systems.

Ms Hodge: Forgive me. The CSR development audit report, to which this schedule of corrective actions related, had reported that the application of software fixes was liable itself to cause a further deterioration in the quality of the EPOSS code. Do you recall that specific concern being raised?

Michael Coombs: No, you mentioned it before and that’s when I started saying that sometimes you need to understand who, or what organisation they are in, making these comments to understand how possible it is to go with them. It could be a subjective view rather than anything –

Ms Hodge: You have explained that you yourself were a programme manager not a technical expert. Did you not trust the opinions of those who had been entrusted with the task of producing, developing and rectifying the problem –

Michael Coombs: I trusted them and they carried on working and doing work on it but the point I’m making is that there were people who had different views on whether it should be maintained or be re-written. Those different views can come through as being fact rather than just being a view. So, given that there’s the outcome of work done from Pete Jeram and release management information that eventually came to the conclusion that it was sustainable, yes that might appear to be at odds and it might indeed be at odds with the previous statement to do with code degeneration. But that was known and with the overall view that was (unclear), and management decision, was that the interests of the programme, and hence Pathway, were best served by actually continuing with it on the maintenance basis that I have mentioned. So I think it is a valid thing to do. But it relies on – and who would I actually prefer to believe, somebody in release management or Peter Jeram? That is difficult because I know Peter very well. He is a pragmatist who gets things done.

Ms Hodge: If the – sorry, Mr Coombs, I didn’t mean to interrupt you.

Michael Coombs: No, I have finished.

Ms Hodge: If the authors of the audit report were right, that the application of software fixes – the continued application of software fixes was liable to lead to a degeneration in the EPOSS product and its code, rather than providing a solution to the problem did this decision not simply make the situation worse?

Michael Coombs: The situation of doing maintenance on a product will – one thing to remember is this a long ongoing saga with the product. So that things have changed as we go through and certainly there was a need to get down a lot of the PinICLs situation – the only was I can answer your question about the efficacy of the decision is by understanding what’s happened since.

It is one of those – you only know if you are right on the development when it has actually been done. The key thing was there was a lot of people looking at it and a lot of work had gone in to come to a conclusion. I can only – without any further information – like historic information since then, in the 20-odd years to see what actually happened – I don’t see how I can say anything other than, my memory was that it was closed and a decision was made. Whether it is right or wrong, is a different question for other people.

Ms Hodge: At the time when this decision was made, you were alive, were you not, to the risk that the application of software fixes could cause a degradation in the performance of the EPOSS code – were you not – by 10 May 1999.

Michael Coombs: I was aware of that that was a view and that that was at the heart of the question, which was the best way forward, was it – which was the best way forward for the overall reasons in terms of costs, sustainability and the rest and that was the view that we came to.

Some people might say it was the wrong decision.

Ms Hodge: We have an exchange of emails in May 2000. Please could we turn up FUJ00079333. Mr Coombs, we see the first email, or more correctly the last email, in the chain is dated 10 May 2000, sent at 6.28 pm. It is from you to Terry Austin and Stephen Muchow – I believe, is the corrected pronunciation.

The subject of the email is “The current issue on [C14] EPOSS”.

Michael Coombs: Yes.

Ms Hodge: Do you recall what “C14 EPOSS” was?

Michael Coombs: I cannot tell you how it differs from any other EPOSS.

Ms Hodge: I believe it was –

Michael Coombs: – I do not understand the “C14” bit.

Ms Hodge: I believe it was a new software release, relating to EPOSS that was due to be implemented as part of the Core System Release Plus. Does that ring any bells?

Michael Coombs: None at all.

Ms Hodge: If we look down to the body of that email, it reads:


“As a group we need to address your concerns. Can you please add these to the migration meeting you are calling for the week I return from leave.

“Mike C.”

I think, to understand those concerns, to what you are referring, we need to scroll down to the email from Stephen Muchow, which is dated 27 April – if we go down a little bit further, please.

Michael Coombs: 27 April 2000.

Ms Hodge: That is right. We can see that timed at 19.15 on 27 April, from Stephen Muchow to you and Terry Austin. It reads:


“Please see below, report from Pat Lywood on [C14] implementation.

“I am particularly concerned with the risks of degraded counter and cash account performance and of code regression between [C13] and [C14]. Also, given the dependence on [Post Office] Backfill Training but without the benefit of experience of PONU’s (which I think is Post Office Network Unit) track record on this activity – there must be significantly increased risk that HSH (the Helpdesk service) performance against SLAs will be severely impaired.

Regards Stephen.”

If we scroll up, we can see Terry Austin’s response on 10 May, shortly before your own. It reads:

“Steve, I share your concerns regarding counter performance and code regression. To that end we are focusing on those areas of functionality where we appear to be experiencing performance degradation and attempting to establish where the problem lies.”

Do you follow me, Mr Coombs?

Michael Coombs: I follow you. I know exactly where you are in the paragraph.

Ms Hodge: Thank you:

“I have been personally aware of these problems for several weeks and would not expect CS to authorise [C14] unless these issues were resolved. I have raised the issue of extra work during weekly balancing with Mike who will be discussing it with Dave Smith.”

Dave Smith was an employee of Post Office Counters, I think, at the time?

Michael Coombs: Yes, he was my equivalent in Post Office Counters.

Ms Hodge: “This has been introduced by [Post Office Counters Limited] to support LFS.”

Do you know what LFS refers to, Mr Coombs?

Michael Coombs: No, I don’t.

Ms Hodge: I think it might be the logistics feeder service:

“I cannot give you a 100% guarantee that code regression will not occur at [C14] because by its very nature it is not fully automated and never will be. However, our end to end processes are designed to reduce the possibility of this occurring to an absolute minimum and I have recently requested a reconciliation where it is possible to do so.

“I also have no faith in PO backfill training but I’m not sure how I can help mitigate the risk. PO have an obligation to understand the implications on the counter of all the changes they have requested and ensure that the staff are informed and trained appropriately.”

So the terms used repeatedly in this exchange are “counter performance” and “code regression”. What did you understand by the term code regression?

Michael Coombs: Well, I do not know what I understood at the time but what I would understand now is the worst sort of regression is where you find that problems reoccur that you got rid of in a previous release, you regress in terms of functionality and performance, or something. So that’s what it would be but it doesn’t tell me what it is.

Ms Hodge: What this appears to show, Mr Coombs, is that on 10 May 2000, the very day on which the decision was either made or recorded to close the recommendation to rewrite and redesign EPOSS, it was brought to your attention that code regression appeared to be occurring in the EPOSS application. Is that a fair reading of this?

Michael Coombs: That there was a risk of code regression, and a concern but that people were alive to it.

Ms Hodge: Did these concerns cause you to –

Michael Coombs: Sorry. I can see you now. I have lost the document.

Ms Hodge: We can bring it back up if you like?

Michael Coombs: Continue.

Ms Hodge: Did these concerns cause you to reconsider the decision not to redesign or rewrite the EPOSS product?

Michael Coombs: Anything I say is going to be, sort of, with a hindsight view 20 years on, where I’m sitting at the moment, and I would say, I will always look at reconsidering it if I felt there was a need. But what I don’t understand sufficient of is the nature.

What I would have done is had a discussion with Terry and Steve and try to understand the concerns that were coming in and whether it was deemed to be real.

Code regression happens. Sometimes it is a nightmare, sometimes it is not. I see where you are coming from in terms of what you are actually showing me is concerns about EPOSS, which is a fundamental product, and I understand why. I don’t really see what else I can add on that one. Because, yes, I would be not happy about the fact that there was regression going to be found and I would do something about it with the people there. How successful that would be, who can say.

The decision has been made and it took a long time to take a decision, so if I was given that today in front of me as an option, would I do a new product? I might, but not until I had done a lot more work in understanding whether the improvements implied by Pete Jeram and through the group have been proven to be right or not. So it would have required more work.

No, I think it would be a bit premature to imply that there was regression because somebody said there might be regression in the future.

Ms Hodge: Mr Coombs, did it –

Sorry, I apologise for interrupting.

Michael Coombs: No, I finished.

Ms Hodge: Bearing in mind the decision-making we saw recorded in the schedule of corrective actions, did it simply come down to balancing the likely cost of a full redesign and rewrite of EPOSS against the ongoing cost of software fixes? Is that what was ultimately determinative of this decision?

Michael Coombs: That was, I believe, effectively where we ended up. A decision was made that the product was sufficient after all the work that had been done looking at it and trying to improve it. We thought it was the best option, because there is always a risk when you start redesigning a product from scratch – especially in the environment which we were facing, where there were problems with requirements creep, from when I first got along, if anybody went near to open it, then another idea would come from somewhere amongst the sponsors of the development that would be useful. We also took that into account.

Ms Hodge: Finally, Mr Coombs, because we are almost at the lunch break but I think I can finish very shortly. Were you aware, during your time working as programme director, that Post Office Counters Limited were intending to place reliance upon data recorded on Horizon to support the bringing of civil and criminal proceedings against subpostmasters and office managers suspected of fraud?

Michael Coombs: I didn’t have the faintest idea they were considering using the information and I had no idea at all they were considering taking the step of prosecuting members of their own organisation. I had no knowledge of any of it at all, with respect.

Ms Hodge: Thank you, Mr Coombs, I have no further questions for you. The chair may have some before you are released.

Questioned by Sir Wyn Williams

Sir Wyn Williams: Mr Coombs, that last email chain that Ms Hodge pulled up for you to look at included, as one of the recipients, a man called Gareth Jenkins.

Michael Coombs: Yes.

Sir Wyn Williams: Did you know Mr Jenkins?

Michael Coombs: Yes, I did.

Sir Wyn Williams: Can you tell me what his position in ICL was –

Michael Coombs: Who?

Sir Wyn Williams: – or partly? What his position was as far as you are aware?

Michael Coombs: I thought he was in the development group.

Sir Wyn Williams: So he was in the development group.

Michael Coombs: Nothing to do with Pathway. If I’m thinking of the right Gareth Jenkins, he was in the development group up in Manchester. I might be thinking of the wrong Gareth Jenkins.

Sir Wyn Williams: All right. Can we just put that email chain up again because it is not just Gareth Jenkins, there are two letters after him.

So if you scroll down slightly, so we get just above the bolder type – “Steve, I share your concerns” – you see there is a list of the people to whom that email was copied and the last but one is “Jenkins Gareth, GI”. That is the person I’m asking about.

Do you know who that is, Mr Coombs?

Michael Coombs: No, I don’t. I know a Gareth Jenkins but, as I said, I thought he was up in Manchester. This one, it could be the same and end up here. But I don’t know him and I don’t understand “GI”.

Sir Wyn Williams: All right then. That’s fine. Thank you very much.

Are there any other questions for Mr Coombs by anyone?

Ms Hodge: No, sir.

Sir Wyn Williams: Then I think that completes your evidence Mr Coombs and I’m very grateful to you taking the time and trouble to give evidence to the Inquiry. Thank you very much.

So we will break now until, shall we say, 2.10 pm? Will that give sufficient time this afternoon?

Ms Hodge: Yes, thank you, sir.

Sir Wyn Williams: Fine. 2.10, then everyone.

(1.06 pm)

(The short adjournment)

(2.10 pm)

Sir Wyn Williams: Good afternoon, Mr Sweetman.

The Witness: Good afternoon, sir.

Mr Stevens: Sir, we are waiting to see Mr Sweetman.

I hope you don’t mind, sir, I took the liberty of telling Mr Sweetman he could take off his jacket to give evidence.

Sir Wyn Williams: That’s fine.

Stuart Sweetman


Questioned by Mr Stevens

Mr Stevens: Please could you state your full name?

Stuart Sweetman: Stuart John Sweetman.

Mr Stevens: Mr Sweetman you should have a witness statement in front of you running to 11 pages, could I just ask you to have that to hand?

Stuart Sweetman: Yes, I have.

Mr Stevens: It is dated 21 September 2022. Could I ask you to turn to page 11 of that statement?

Stuart Sweetman: Yes.

Mr Stevens: Is that your signature?

Stuart Sweetman: Yes, it is.

Mr Stevens: Is the content of this statement true to the best of your knowledge and belief?

Stuart Sweetman: Yes, it is.

Mr Stevens: Thank you, Mr Sweetman. Your statement now stands as evidence for the Inquiry. I want to start by asking you a few questions about your professional background. You qualified as a chartered accountant in 1973; is that right?

Stuart Sweetman: That is correct.

Mr Stevens: You joined the Post Office in 1982 –

Stuart Sweetman: Correct.

Mr Stevens: – becoming managing director of Post Office Counters on 14 May 1996?

Stuart Sweetman: Yes.

Mr Stevens: In your witness statement you say that you held various roles at the Post Office prior to your appointment as managing director. What were they?

Stuart Sweetman: Initially I was director of financial accounting, which was one of two finance positions underneath the board. I was essentially chief bookkeeper. I kept the accounting records of the whole of the then Post Office, which was the combined operations of letters, parcels and counters. I ran the large accounting function, which was principally based in Chesterfield, where all the cash accounting from branches came in and all the information from the mails businesses came in.

It was my responsibility to produce monthly accounts, which went through to the management accounting team, to produce the annual accounts, which were then audited by the external auditors.

I then moved on to a number of posts in the Group. I was business centres director, where my role was to create and run – I think it was about eight or nine business centres where we put all the overhead activities into profit centres, catering, engineering, that sort of thing. Then became assistant managing director of Royal Mail and I was, amongst other things, responsible for strategic direction of the Mail’s processes.

And then I eventually was invited to become MD of Post Office Counters.

Mr Stevens: When you became MD did you have any background in IT?

Stuart Sweetman: Yes, quite a lot as a project sponsor, one of my early roles in financial accounting. We, as a corporation, I think, at that stage, only had five accountants and no modern accounting systems. We just had the cash accounting system which was a laborious set of processes from which we pulled out financial accounting information.

I was the project sponsor for introducing a complete billing and invoicing and debtor control system across the whole of the corporation. The payroll system was mine to develop as a sponsor. This is the purchasing and bought ledger activity we computerised and I was responsible for the centre of accounting systems.

So I was never a techie but I was a finance expert who wanted better systems and I oversaw the development, the implementation and the delivery of all those systems throughout the combined Post Office.

Mr Stevens: How did those systems or projects compare in scale and complexity to that of the Horizon project?

Stuart Sweetman: Well, in that they were breaking new ground within the corporation, we were putting in new qualified accountants at the head post offices, which I think were about 120 at the time, and putting in commercial double entry bookkeeping systems was quite radical. And I had, I think, a development team, an implementation team of several hundred and, yeah, it was quite a challenge but we managed it.

Mr Stevens: Turning then to the structure of the Post Office Group. You were, as you say, MD of Post Office Counters, which was one business within the Group, and the chief executive of the Post Office Group was John Roberts.

Stuart Sweetman: Yes.

Mr Stevens: We heard from John Roberts on 20 October. Did you listen to his evidence?

Stuart Sweetman: I have seen some of it.

Mr Stevens: He said that you, as managing director, were his direct report; is that correct?

Stuart Sweetman: Yes, one of a number.

Mr Stevens: In his evidence, he said that the Post Office board, the Group board, was responsible for setting the strategy of the business and once the board had set the strategy, it was for managing directors, such as yourself, to deliver it; would you agree with that?

Stuart Sweetman: Yes, I would. I would have proposed some of those strategies which the board would have discussed, considered, amended and then decided. They would then have been turned into personal objectives by John Roberts and then it was my job to lead my team to take that strategic direction, those objectives and deliver them.

And that meant delivering what I would call business as usual, running the counters business, on a day-to-day basis, but also being responsible for change management, such as the Horizon project, where we get teams of people together to actually deliver on the changes required from one state to another state.

Mr Stevens: Horizon was of significant strategy importance to Post Office Counters, we have heard that in evidence. What was your understanding of its importance to Post Office Counters when you became managing director?

Stuart Sweetman: Well, thinking back and looking at the dates, around that April/May time, when I was appointed, Richard Dykes, who was the previous MD of Counters, and his team, and working with John Roberts, had evaluated “Tom”, “Dick” and “Harry” and, initially, those three terms didn’t mean anything to me. But, in that first few weeks after I was invited to take up the role, I then got briefed on all the work that had been done to evaluate the various proposals.

And, at that stage, it became very, very clear that, unless counters developed a modern front end delivery system of services, it was not going to survive. The marketplace was eating our lunch. Technology would eat our lunch and, unless we got in there, we would not survive as a network.

When I took over, I think there was 19,000/20,000 outlets and all the modeling which had gone on showed that if we didn’t keep our major clients, if we didn’t computerise or offer new services, we would go belly up and have to shrink the network massively, lose a lot of employees and that is not a change of management that I was in any way interested in.

Mr Stevens: Is it fair to say, when you came on as managing director and read these briefs, you took responsibility for delivering Horizon to keep the business running?

Stuart Sweetman: Absolutely. I got briefed up and I think in the very first few days of my formally taking up the role, I had to sign and initial a document with Pathway or ICL, I can’t remember which.

Mr Stevens: I will come to that in a moment. I want to just jump slightly ahead in the chronology. In 1998, you appointed a programme director, David Miller; is that right?

Stuart Sweetman: Yes.

Mr Stevens: I should have said, did you appoint him?

Stuart Sweetman: Yes, because he was part – that role was a senior role within the Post Office and we had a corporate personnel function led by Jerry Cope, and was a small team, and all significant senior appointments would have been done under their auspices. They made sure the process was fair, any interviewing that was done was done properly, that it was all done as per the sort of rule, and so I, ultimately, would have made that decision. Yes, I want Dave Miller to do that role.

Mr Stevens: Can you recall if you had any other candidates before you or why you picked Mr Miller over anyone else?

Stuart Sweetman: I can’t remember if there was a lot of choice. Dave Miller was chosen because of his strengths. I had seen, in my earlier jobs, computer systems run by techies and they normally go wrong because there is no ownership by line management. Dave had come out of – I think, it was the South West region of counties and was a very well respected line manager of the business of running Post Offices. He was also a pretty hard-nosed manager. He called a spade a spade and was quite driven and those attributes, to me, is what a programme director was all about.

Mr Stevens: You referenced programmes being run by “techies”. Mr Miller’s evidence was that he was conscious that he didn’t have a technical background, which I think you have alluded to. Where in Post Office Counters would you go for IT expertise at this time?

Stuart Sweetman: We did recruit a number of our own IT specialists to fulfil particular roles, those roles which interfaced closely with Pathway. We did have a corporate IT function. I think that was run by Duncan Hine but various people changed. But we had a IT function who ran the central big systems of the Post Office, had the resources to advise line managers and so they were available to be called upon.

Mr Stevens: You say Mr Miller reported directly to you?

Stuart Sweetman: Yes.

Mr Stevens: He was programme manager, you would have received information about the progress of the Horizon programme from him?

Stuart Sweetman: Yes, I would have.

Mr Stevens: Did you listen to Mr Miller’s evidence on 28 October?

Stuart Sweetman: Again, I have seen some of it.

Mr Stevens: His evidence was that you were his defined channel of communication to the Post Office Group board for any problems with the Horizon system; is that fair?

Stuart Sweetman: Yes, I think it is fair.

Mr Stevens: He also said in evidence that he would meet with you to discuss matters with Horizon on a regular basis; would you accept that?

Stuart Sweetman: Yes, all my direct reports, we had at least monthly meetings formally, where we went through objectives and deliverables and what we promised each other the previous month, and then a lot of ad hoc meetings. And Horizon generated – vague memory – huge numbers of ad hoc meetings.

Mr Stevens: I would like to take you to a letter that was shown to Mr Miller in evidence. The reference is POL00090839. If we could turn to page 2, please.

Stuart Sweetman: That will come up on the screen, will it?

Mr Stevens: It should do, yes.

Stuart Sweetman: Nothing’s coming up yet. Ah. Yeah, that’s to Jeff Triggs who was a very clever lawyer at Slaughters.

Mr Stevens: On page 2, this is a letter from Ernst & Young to David Miller on 23 August 1999. Ernst & Young were the auditors of the Post Office at this point, weren’t they?

Stuart Sweetman: Yes.

Mr Stevens: The opening paragraph provides that this was:

“… to provide … our views in respect of certain accounting integrity issues arising from tests performed by POCL on Horizon data in live trial.”

Can you recall seeing this letter at the time?

Stuart Sweetman: I don’t recall but I have read it.

Mr Stevens: David Miller said, in his evidence, that it may have been you who requested this input from Ernst & Young. Can you recall that?

Stuart Sweetman: I’m not surprised he says that because it could well have been true. Because of my professional background, having audited the Post Office, I kept quite close with Ernst & Young and their partners and managers and I trusted their input and their independence and I could well have suggested to him – because I think this was the stage where it was getting very fraught and I think we were having very hard nosed discussions with Pathway and I think we probably would have wanted to demonstrate to Pathway that they needed to really get their act together. They needed to do the improvements that we still wanted and to have a letter like this from our auditors saying, “If you don’t get your act together you are in trouble” would have been, in our relationship with Pathway, I think, useful, because it gave us a bit of clout.

Mr Stevens: If we could scroll down a bit, to the bottom, we see it says “Incident 376”, which is an Acceptance Incident that we will come back to. But it says:

“Incident 376. Data integrity – In order to test the integrity of weekly polling of Horizon cash account transactions, POCL are reconstructing a weekly total by outlet from daily Horizon polings. At present this control test is showing discrepancies in that certain transactions do not record the full set of attributes and this results in the whole transaction being lost from the daily polling.”

So this is whole transactions being lost from the daily polling.

It goes on to say:

“We are informed that an incident has also occurred where transactional data committed at the counter has been lost by the Pathway system during the creation of the outlet cash account and has not therefore been passed to TIP [that is the Transaction Information Processing Services] in the weekly cash account sub files.”

If we turn over the page to page 3, please. Second paragraph:

“It is a fundamental of any accounting system that it provides a complete and accurate record of all transactions. These discrepancies suggest that the ICL Pathway system is currently not supporting this fundamental.”

Then below the impact the letter considers what these data integrity concerns had on the auditor’s opinion. If you could go down to:

“Given the above background, if these matters remained unresolved at the accounting year end, we would need to consider whether an unqualified opinion were appropriate. Under the present circumstances there appear to be a number of uncertainties whose financial impact cannot be quantified and which make an unqualified opinion unlikely to be available to us.

“Should this be the case, we would have to decide between including a fundamental uncertainty paragraph in our opinion or issuing a qualified audit opinion.”

Now, Mr Miller’s evidence says that this was a very significant issue. Would you agree with that?

Stuart Sweetman: Absolutely.

Mr Stevens: Now, Mr Miller also said in his evidence that this is something that should have been reported to the Post Office Group board. Would you agree with that?

Stuart Sweetman: The consequences of not having an accounting system that produced annual accounts which passed a true and fair view should have been reported. This was – the proviso here was: if these aren’t corrected.

Now, the judgment, then, is: do we have plans in place to correct these errors? I think the judgment at the time was, remedial actions had been planned, they were being executed and they were being monitored for execution and as it turned out, the accounts weren’t qualified because sufficient work was done to overcome the problems so we didn’t have a true and fair view problem. There wasn’t, at the year end and presumably some time before, a fundamental uncertainty because they had been corrected.

Mr Stevens: Do you recall if you ever raised this letter with John Roberts or the board?

Stuart Sweetman: It wouldn’t surprise me that I did. I have no recollection of it and looking at papers I don’t think I can see evidence of it. Although when we took the matter to the board, we did report that there were – whether we used the word fundamental I’m not sure, you will probably correct me – there were issues of data integrity and completeness of records still to be resolved and we kept the board informed of that.

Mr Stevens: Just so I am clear, is your evidence you can’t remember whether or not you raised this with John Roberts?

Stuart Sweetman: I can’t remember that particular action of mine. It would be the sort of thing that I would have done with him but I can’t remember. We had a very open relationship, we met formally, we ran through everything and matters of this – of this nature would get onto my agenda with him but I can’t remember if we did and one of the problems is, you’ve got hold of lots of records but none of the records of any of my meetings have been preserved or made available to you. It is a shame but I can’t say yay or nay.

Mr Stevens: I am going to jump back then. You have already referred to the MaPEC meeting, where the Tom, Dick and Harry proposals were discussed. I don’t need to take you to that document and you have referred to the fact that shortly thereafter you signed heads of agreement between Pathway and the Benefits Agency.

Stuart Sweetman: Yes.

Mr Stevens: I want to look at a few documents in May 1998, if I may. Starting with POL00069096. If we could go to the second page please. This was a meeting of the Counter Automation Steering Group on 27 March 1998 which you attended?

Stuart Sweetman: Yes.

Mr Stevens: Do you remember the purpose of this group?

Stuart Sweetman: It was a corporate wide group. Because of the importance of counter automation, not to Counters but to the corporation, it was agreed that John Roberts as MD, supported by the group finance director and group strategy director, would have regular meetings monitoring progress. So they could relate that back to the non-executives on the board.

Mr Stevens: Please could we turn to page 3 and look at paragraph 4. This concerns a report provided by David Miller and it says:

“Work on EPOSS was continuing and Pathway had indicated that whilst it could provide a system which met the contract, its lack of robustness could generate high level of errors within POCL. This was being investigated although it was difficult to quantify how the system would work until after it had been installed and was operational.”

Stuart Sweetman: Yes.

Mr Stevens: At that point, what did you understand of the lack of robustness that was referred to?

Stuart Sweetman: This is the Electronic Point of Sale System, isn’t it?

Mr Stevens: Yes.

Stuart Sweetman: To be honest, I recall none of the detail. I don’t know what was cranky about it. Sorry.

Mr Stevens: If we could then turn to a second document in November 1998. It is POL00028672.

This is a letter from David Miller to yourself and other members at the Post Office on 16 November 1998. Do you recall receiving this letter?

Stuart Sweetman: I don’t.

Mr Stevens: If we could look –

Stuart Sweetman: That’s my writing in the top. That “In Strictest Confidence” looks to be my writing.

Mr Stevens: So it is addressed to you and it looks like it has your writing on it, so you would have received it at the time?

Stuart Sweetman: Yes.

Mr Stevens: The second paragraph says:

“We are due to start the Model Office Test proper and the final pass of End to End on 14 December 1998. My present assessment is that there are some significant problems with the way Horizon passes information through to TIP [Transaction Information Processing]. These relate to the provision of balanced outlet cash accounts and the processing of the ensuing information via TIP.”

Transaction Information Processing, that was a Post Office Counters system to collect transaction records for all transactions at its branches; is that correct?

Stuart Sweetman: Yes, from memory, it was one of the big central systems in Chesterfield and, basically, everything was aggregated by it. Various tests were done on the quality of the information. Error reports were thrown out and then the information, when finally reconciled went, into the books of account.

Mr Stevens: But for Horizon and the EPOSS system to work, it was fundamental that it should be able to pass information to the TIP accurately; is that fair?

Stuart Sweetman: I think it sounds fair because, in the olden days before Horizon, big foolscap sized paper returns were sent from every suboffice, together with all the supporting information, and that was processed in Chesterfield. The cash accounts were data captured in Chesterfield and a lot of testing routines were done then and a large number of errors were thrown out.

And then we had a team of people who took all the weekly errors and chased them down until there were really none left and that could take weeks after an accounting period ended. So TIP was part of that process.

Mr Stevens: The purpose of Horizon, or one of its purposes, was to partially automate that process?

Stuart Sweetman: Yes. The old cash accounting system was hugely cumbersome, very expensive to run, fraught with difficulties and was very old-fashioned and, basically, Horizon was meant to relieve everybody of the paperwork and replace it with a reliable accounting system.

Mr Stevens: Can you recall, even in broad terms, what your thoughts were when you received this information about Mr Miller’s concerns as to Horizon’s ability to pass information via TIP?

Stuart Sweetman: I don’t remember receiving a letter but, looking at that letter and putting it into my present mind, I would have been very concerned and I would have said, “What are we doing about it?” You know, “What remedial action is being planned?” We were an organisation who was into continuous improvement and when you come across problems you then try and develop a management process which actually sits down and says, “This is the problem, this is the analysis, this is the remedial action, action that, watch it come right”, and that process of improvement was at the heart of everything we did and so this was another one of those challenges. That’s how I would have reacted.

Mr Stevens: Can I turn to another document, the following month, December 1998. The reference is POL00038829. If we could turn up page 5, please. This is a letter from Hamish Sandison at Bird & Bird to George McCorkell, Paul Rich and Pat Kelsey on 18 December 1998, it enclosed a Project Mentors report. Do you recall reading or receiving this at the time?

Stuart Sweetman: I have no memory of anything called a Project Mentors report, no idea.

Mr Stevens: Do you think it is a document you likely would have seen?

Stuart Sweetman: I really don’t know. Bird & Bird were the tame lawyers, really sponsored by the Benefits Agency. George McCorkell, I knew, he was one of the top techies in BA. Paul Kelsey (sic), yeah, I remember the name. But what the Project Mentors report was about I have no idea.

Mr Stevens: Is it something you would have expected to have been briefed on by David Miller?

Stuart Sweetman: If it was important, I would expect him to bring it to my attention. I don’t recall whether he did because I don’t remember the report at all. Sorry.

Mr Stevens: If you could turn to page 11 of it to see if this may jog your memory, and paragraph 1.3. The bottom paragraph says:

“We have to date considered only the BPS system. Further work has recently started to perform a similar assessment of the approach adopted for other elements of the system, such as EPOSS. Nevertheless our findings are, in our view, sufficiently serious to bring into question the whole of Pathway’s design process.”

Then if we could turn to page 14, please.

Stuart Sweetman: Sorry, do you know what the BPS system is?

Mr Stevens: Benefit Payment System?

Stuart Sweetman: Right, sorry.

Mr Stevens: Page 14. If we could go to the last paragraph, please:

“Of particular concern [it says] is the EPOSS system. We are informed that at a relatively early stage Pathway wanted the Authorities, principally POCL, to be involved with the design of this element. The plan was to use the Rapid Application Development or (‘RAD’) methodology to design this system. This approach was started, but discontinued after some months, when the Pathway staff member involved left the project. The suggestion to use RAD leads us to believe that more traditional methods have not been used, and since the RAD experiment was abandoned, we have doubts whether any proper requirements analysis has been performed.”

It goes on to say that:

“Our experience of systems where requirements have not been analysed satisfactorily is that the system fails to meet the users’ needs. An effective acceptance test will identify many such failings necessitating considerable rework. The result is a significant extension of the time and cost required to complete the system and roll it out. The alternative is to allow unacceptable processing in the operational environment with unpredictable and potentially damaging results.”

Having gone to those particular parts, do you recall at all being briefed on those issues by David Miller or anyone else?

Stuart Sweetman: I don’t but I suppose I agree the sentiments within there, as a firm of consultants, they would have a way of working and this RAD process, I wasn’t aware of, but what they are saying, if I say, it is all motherhood and apple pie. Those are nice generic phrases. If you don’t do it properly it won’t work.

That’s what it is really saying and my experience from other computer systems is, unless you actually sit down, the detailed requirements, when code starts being written, you will get it wrong. And so the analysis which they are talking about absolutely needs to have been done and I think under the PFI type arrangements that is what I would have thought would have been professionally done by Pathway. ICL must have had ways of working which took – this is what we want as the client; this is how we interpret it from a technology point of view; this is the code we have to write and this is what we are going to deliver.

That process is very sequential, very logical and needs to be incredibly thorough and what they are saying is, if you pull any part of that out, it ain’t gonna work. And I agree the sentiments, I don’t know whether or not that was true because I never saw within ICL.

Mr Stevens: In broad terms, can you remember in 1998, so whilst the Benefits Agency was still involved, what did you think, what was your view –

Stuart Sweetman: I seem to remember that, as a team, we did have real concerns about – I use the word “professionalism” – yes, the professionalism of the Pathway team to actually get a grip of and deliver what we wanted as part of the set up.

Now, one of our early difficulties, I seem to remember, was that the PFI sort of put the boundary between the organisations too far near the user and not near enough the supplier because they were being paid by results. In theory, you transfer a lot of the risk to them and they get rewarded if they produce a good product.

Because of that, us as sponsors really aren’t able to interfere a lot but I remember our technical people and our project team being worried about the quality of work being done by ICL. Now, that’s a very nebulous memory and I can’t think of specifics and I don’t remember seeing this report but I agree with its sentiments.

Mr Stevens: If you can’t remember just say, 1998, around this time, in your personal view, did you think that Pathway could deliver the EPOSS programme which Post Office Counters required?

Stuart Sweetman: The honest answer is I don’t remember the EPOS system. It is a blur to me, so I apologise for that. We set up under Dave Miller a group of – I regarded them as very bright energetic motivated people who were trying to get to grips with all our requirements and proving to us that what was being delivered was of top quality. If they were telling me that they’d got a handle on what ICL were doing, “There are these things are still outstanding, but we have an improvement plan to deliver them”, to me that’s what I wanted to hear as a MD: that they knew what the problems were, that there were documented improvement activities and they were confidence that those improvement activities would deliver a good result.

To me, that in place, I was happy. I then, on a regular basis, would say “How are you getting on with this, how are you getting on with that?” And the regular reporting that would have existed would have given me confidence or lack of confidence that things were being delivered.

Mr Stevens: Let’s move through the timeline a bit on that point. Obviously, throughout this time there are a number of negotiations concerning the future of the project and the dealings with the Benefits Agency, which we don’t need to go to it but, in paragraphs 30 and 31 of your witness statement, you reflect that you were involved with meetings with ministers and strategic discussions on the continuation of the project itself.

This was eventually resolved such that the benefit card system was scrapped and on 24 May Post Office Counters and ICL Pathway agreed to enter or try to enter into a future codified agreement to deliver what is now known as the Horizon system; do you agree with that?

Stuart Sweetman: Yes, I do. It was one of my most fraught periods in my management career.

Mr Stevens: From 24 May to the end of July, there was a period when the parties had to try to seek to agree terms for that codified agreement, correct?

Stuart Sweetman: Yes.

Mr Stevens: I then want to look at June 1999. I want to turn to a meeting of the NFSP executive council. The reference is NFSP00000191.

This was a presentation on 11 June, which your name is on it.

Stuart Sweetman: Yes.

Mr Stevens: Can we turn to page 12, please. This sets out what’s described as the new vision involving Post Office Counters and focused on ambitions with banking, Government Gateway and mail and communications.

Whilst the Benefits Agency had withdrawn, it is right that an automated platform, like Horizon, was still essential to realise some of these commercial ambitions; is that correct?

Stuart Sweetman: Yes, and the background to this was, in parallel with all the intense work on Horizon, it was clear that the government wanted – and the board wanted confidence that, strategically, we knew where we were going, and we set up a parallel project with Horizon to develop a new strategic direction for Counters and to make it convincing for the board and for government, as a shareholder.

We employed the assistance of McKinseys, who were an incredible bunch of people, and they really did help us clarify the opportunities of an automated network. It was a pretty unique network of Post Offices in every community in the country and they went through and made us identify all of our strengths, how those strengths played in the marketplaces and we came up with a proposal that our future relied on our ability to provide banking services.

Not to be a bank but to be the front end of many banks because we already handled a third of the cash flow of the UK, billions of pounds, we were good at that, we would have a Horizon system which would be comparable to what they had in bank branches, and so, as banks clearly wanted to get out of communities, to cut their overheads, we could replace that banking role in providing banking services, access to bank accounts, and that’s what happened. We delivered that strategy.

Government Gateway was more tentative because it was trying to pin many cats to many walls. We believed because –

Mr Stevens: Mr Sweetman, sorry to cut over you but, just leaving that there for the moment on the future of the Government Gateway. Can I just turn you to the actual meeting itself.

Stuart Sweetman: Sorry, yes. I was going off on a tangent, sorry.

Mr Stevens: No need to apologise. Could I please bring up NFSP00000539. Now this report provides the minutes of this meeting, 11 June 1999. At page 3 there is an attendance list. You are not on this but as we will see shortly you are noted to have joined it and that attendance list includes the general secretary Mr Baker and also Mr Peberdy?

Stuart Sweetman: I knew Colin Baker very well. Mr Peberdy, I do not see the name on there.

Mr Stevens: On the right column, three lines up. You remember Mr Peberdy?

Stuart Sweetman: Yes, I actually visited John Peberdy’s office, I remember.

Mr Stevens: Could we turn then to page 10 of this document. We have Mr Miller, who is David Miller, provided a brief on how the rollout was going. Then a Mr Butlin states – stopping there, Mr Miller gave evidence that Mr Butlin was a subpostmaster and a leading person for the NFSP in the southwest, does that sound right?

Stuart Sweetman: Yes.

Mr Stevens: It says:

“Mr Butlin referred to the serious problems that the South West was having with the software, especially with the balance, and asked Mr Miller whether any changes were to be made in that respect. An assurance was sought by the Committee that the balance would become more user friendly, more logical and easier for subpostmasters to use. Would it be possible for subpostmasters to have more input into the way the balance was done.”

It goes on to describe similar problems in the northeast. Then Mr Miller responds acknowledging:

“… that there was a problem and said that there would be a software change to improve the situation. If there were serious problems that could not be overcome in the timescale, the rollout would be delayed.”

Stuart Sweetman: Yes.

Mr Stevens: Do you recall this meeting?

Stuart Sweetman: Vaguely yes because we tried to keep close to the subpostmasters.

Mr Stevens: The concerns raised there by Mr Miller and the subpostmasters, do you consider those to be significant?

Stuart Sweetman: Well, they would have been because of the experiences of the subpostmasters involved in the early days of trial – we were developing and improving the installation process and they were clearly having difficulties and it was our responsibility to pick up all that input, take it away and say “how do we overcome these problems” and coming up with solutions. It is this continuous improvement process that I said earlier. We would have taken that very seriously.

Mr Stevens: The fact that Mr Miller is recorded to say here “there would be a software change”, at this point did you understand this to be a system problem or a user problem?

Stuart Sweetman: Software – there are many words which could fit in there. You could say a system change, a software change, a process change, but they have chosen to use “software”. I don’t know what language Mr Miller would have used but if you take it as a whole, that things would improve because we have taken the input and we have improved things. It could be a system, it could be software, it could be a number of things. Again it could well be training.

Mr Stevens: At this point, do you recall if you knew whether there were software problems associated with Horizon and balancing?

Stuart Sweetman: Yes. I think we were aware of it because of, you know, everything from screen freezes through to information not getting through to TIP. We knew there were some problems.

Mr Stevens: Could we turn to page 11 please and the bottom of the page in particular. You were asked about what happens if there couldn’t be an agreement. You go on to state:

“POCL had agreed with Government that if this breakdown was not the fault of Post Office Counters, Government would make money available to them. If it was decided it was Post Office Counters’ fault then they would have to find the money themselves. There was, therefore, a great deal of pressure on Mr Sweetman not to break down for whim or convenience, but only if he believed it not be viable”.

Does that fairly reflect your view at the time?

Stuart Sweetman: The honest answer to that question is: I don’t know but it looks reasonable. I think the final sentence there, where it says “The Board had decided that if the deal was not right or the best achievable, or was not in the best interest”, then we would not move on.

Mr Stevens: Could you expand on what, at this point, you thought “not viable” meant? What would the projects have to look like for you not to go ahead with it?

Stuart Sweetman: If it didn’t work, if it didn’t deliver the service improvements, the cost improvements, didn’t create the platform for our strategic ambitions. All those things would have been taken into account when we were assessing whether we wanted to continue with it.

Mr Stevens: Can I move on to another meeting please, again of the NFSP. The reference is NFSP00000471, and page 23, please. If you could go down to where it says:

“There was a general discussion.”

I should say, you weren’t at this meeting, but for context what’s being discussed here is, it says:

“There was [a] general discussion on the severe difficulties being experienced by subpostmasters who are already running an automated system.”

Then it refers to seven sheets of comments from the north east had been passed to Dave Miller:

“The difficulties and trauma being experienced by some subpostmasters were giving rise to concerns for their health and emotional well being. It was felt by some that a tragedy was not far away if something was not altered soon.”

Please can we go over the next page to the fourth paragraph. It says:

“The general secretary assured the meeting that Mr David Miller had been informed of the difficulties in no uncertain terms.”

Then over the page, at page 25, if you could go down to where it says Mr Peberdy. Thank you:

“Mr Peberdy thanked the Council for their information.”

The last paragraph:

“Referring to the Working Party, which is being set up to reorganise automation as a result of the withdrawal of the Benefits Agency payments, Mr Peberdy confirmed that the group is empowered to call in whoever they want to gather information to aid their decision on the way forward. There are three meetings before the end of July and the meeting scheduled for tomorrow may well be a prime opportunity to advise them in depth about the shortcomings of the system.”

If you could go to the bottom of that page, now, please. There was a brief report given on this meeting by Mr Peberdy and you see at the bottom, he records that:

“Stuart Sweetman had attended the meeting.”

Do you recall this meeting of the Horizon working party?

Stuart Sweetman: I don’t recall this specific meeting, no.

Mr Stevens: Over the page, if I may, and down slightly please, midway down the paragraph, in the middle, it says – this refers to various points on the scrapping but it says:

“Despite this, Ian McCartney, Minister for Trade & Industry was emphatic and rewriting the rollout programme would not be contemplated and Dave Miller confirmed that the intention of POCL/ICL was to adhere to the 2001 commitment. Automation is expected to take place within the timescale agreed and Mr McCartney was emphatic that he would not accept slippage. The Post Office delegates were told ‘you will make it work’.”

Does that ring any bells? Do you recollect that message at this meeting?

Stuart Sweetman: I mustn’t be disrespectful to ministers. Ministers say this sort of thing because that’s their role. They are running the country, they are running a broad agenda of activities and Ian McCartney, who was quite a hard-nosed individual from memory, would have been quite clear. You know, whether he would have thumped the table and said “You will deliver”, I’m not sure. But it was clear, he was our corporate shareholder and normally when shareholders tell boards of directors and managers to do things, you go away and say “Hey, this is serious”.

I would say, from his point of view, that was a totally reasonable thing to say because the government had gone through trauma in trying to get to a decision – and we had all been watching this – and he had then been landed with part of the solution within the DTI. So Ian McCartney would have said “Oh, Christ, it’s all landed on my lap, I’m going to make sure everyone knows in the Post Office that this has got to work”, and that’s what he did. It is classic management devolution.

I interpret now, looking back on it. At the time I don’t remember any of these individual meetings. I’m just reading into these words.

Mr Stevens: The next paragraph says that:

“The subject of systems faults were raised and the NFSP were given assurances that there would be software improvements to cure the present difficulties.”

I’m going to stay with this meeting but I will bring up a comparison document. It may be an appropriate time at this point to pause.

Stuart Sweetman: Okay.

Sir Wyn Williams: Just a second before you do. It is only – probably a typo but it caught my eye. In that page that’s on the screen, as I understand it, this document actually dates from June 1999. But there is reference to a 2001 commitment. Is that just a typo or is there something I should know about a commitment given?

Stuart Sweetman: I think what that might mean was, as part of the replan with the exit of Benefits Agency and us taking it all on, there was a broad timetable to say all this – the rollout of Horizon would be finished by 2001.

Sir Wyn Williams: I’m with you, sorry.

Stuart Sweetman: 2001 was the completion of the programme.

Sir Wyn Williams: I follow. Thanks very much.

Yes, lets have our break. 10 minutes, Mr Stevens?

Mr Stevens: Yes, thank you, sir.

Sir Wyn Williams: Okay fine.

(3.07 pm)

(A short break)

(3.17 pm)

Mr Stevens: Good afternoon, sir, can you see and hear me?

Sir Wyn Williams: Yes, I can, Mr Stevens. Is it correct that I disappeared from the screen for some time during the last session?

Mr Stevens: I think so, sir, yes.

Sir Wyn Williams: Obviously, I was actually listening to everything and I wasn’t aware of it at the time but could you alert me if that happens, simply so that we can try and fix it as soon as possible?

Mr Stevens: Of course, sir, yes.

Sir Wyn Williams: Thank you.

Mr Stevens: Mr Sweetman, I should check can you see and hear me?

Stuart Sweetman: Yes, I can.

Mr Stevens: We were looking at NFSP00000471. If I could keep that on the screen and also bring up NFSP00000203 and, in the 203 document, if I could turn to page 2 and, for your memory, we are looking at the meeting of the Horizon Working Group on 22 June 1999. As we said, you were there in attendance marked as “Present”?

Stuart Sweetman: Yes.

Mr Stevens: On the 203 document, if we could turn to page 3, please. What you will see is, at the end, this is a report by Mena Rego and at (c), she says:

“rollout; there were reservations about the ability of both sides to achieve the rollout plan, and this was being revised.

“Mr Baker said that it was extremely important for rollout to be absolutely right; with so many planned per week (300) there would be a risk of collapse, otherwise.

“Mr McCartney said that the rollout issue was crucial; he was emphatically not prepared to accept getting away from the commitment to 2001. Slippage would made the wider discussions of government usage of the network impossible. If there were problems with software, training etc then these should have been flagged up earlier, and must now be resolved in a way that enabled the 2001 timetable to be recovered.”

That is taken from the DTI minute. So there is two points that arise from this. The first is, as I told you before the break, in the NFSP report, it says that the subject of system faults is raised and the NFSP were given assurance that there would be software improvements to cure present difficulties.

Can you recall if someone from the NFSP, either Mr Baker or Mr Peberdy, advised the Working Group of this at this meeting?

Stuart Sweetman: I don’t recall the details of the meeting. I can only read the minutes and assume that they are a true record of what was said. It does not surprise me because Colin Baker and John Peberdy were not slow in coming forward. They would have put their pitch in on behalf of their members.

Mr Stevens: In any event, the issues which we – before the break – were looking at and what they were discussing, just the day before this meeting, you were already aware of those sorts of issues having attended the meeting on 11 June with the NFSP; is that right?

Stuart Sweetman: Yes. They, quite rightly and we encouraged them, got feedback from those people who had experienced rollout. Getting that direct feedback was important so we could improve the next round of rollout. And the issues that they had with the system within their office, whether it is the physical system, the software or how their staff were coping with it and what all their difficulties were, all those had to be documented by the team because each of those were problems which had to be solved and if we were going to go through the whole network we would have to solve them, otherwise we would have an uncontrolled system.

So these early – I hate to use the word “guinea pigs”, but these early implementers were crucial so we learned what it was like to put Horizon into a live office, with real people in real communities. So it would have been an important source of evidence.

Mr Stevens: So, in short, you were aware of those problems?

Stuart Sweetman: Yes.

Mr Stevens: The second point on this is what Mr McCartney says. He says the point that software and training problems needed to be resolved within the 2001 timetable. It is recorded that he said that “If there were problems with software [and training] then these should have been flagged up earlier”. Now, do you think that’s a fair point or do you recall him making it?

Stuart Sweetman: I do not recall him making it. It is a fair point and I don’t know what officials would have told him.

Mr Stevens: If we could remove NFSP203, the one on the left, and keep NFSP00000471 on the screen and can I turn to page 28, please. The paragraph at the bottom there states, I will read it out:

“Roll would proceed as planned starting 23/25th August, reaching 300 per week by January 2000. There were some very serious issues still to confront, including training and systems difficulties which must be ironed out, but there is no question of postponement or delay which would cost approximately [8 million] per week.”

Could we go to the next paragraph please:

“So far as termination of the automation project was concerned, the Post Office would not consider this an option. They could only exit the agreement if there are material issues which render the project totally impractical. If POCL pull out it will cost [150 million] and the Benefits Agency will start ACT anyway. Unless something very, very serious occurs the agreement will be signed …”

Again, is that a fair recollection or fair recording of your views at the time?

Stuart Sweetman: They look reasonable. I don’t recall all the detail but certainly everyone was playing hard ball with each other. The government were playing hard ball with us because we had extracted quite a good deal from them, although it cost us millions. ICL had been put on the line to deliver and it was very serious. There were issues at the front end with the rollout and they needed to be addressed and they needed to be overcome. You can see the sort of materiality we are talking about there, the size and numbers involved, and that made it very serious.

Mr Stevens: But at that point, the problems that were being reported from the subpostmasters, they weren’t sufficient to stop the project and terminate it there and then?

Stuart Sweetman: I think – I have explained earlier, when you rollout and test the rollout –

Mr Stevens: Sorry, Mr Sweetman, I have just noticed we can’t see the Chair. My apologies.

Stuart Sweetman: I can see the Chair. I can see him smiling, yes.

Sir Wyn Williams: Yes, I am chuckling at the fact that Mr Sweetman and I can see each other, I can see the document on the screen, I can’t actually see you, Mr Stevens, and you can’t see me.

Mr Stevens: No. I’m being told that you are being shown –

Mr Whittam: I hesitate to interrupt, but the Chair is on the far screen on this side of the room.

Mr Stevens: So you are in the room, I can’t see you unless I turn my back, we can all see Mr Sweetman and I think someone is moving the TV now. Are you content to proceed on that basis?

Sir Wyn Williams: Yes, I’m fine and I can see and hear everything. I just wouldn’t like anybody to think I wasn’t present, so to speak, that’s all.

Mr Stevens: I’m grateful, sir.

Stuart Sweetman: Where were we?

Mr Stevens: Sorry, Mr Sweetman, I interrupted you. What I had asked was or said was that the problems experienced by subpostmasters at that stage, which we covered, that wasn’t seen as sufficient to stop the project with ICL Pathway?

Stuart Sweetman: I think you have got to understand that the nature of project development that I have alluded to before. You identify a problem – a series of problems. You analyse them. You come up with solutions. You develop a plan to overcome them and then you action that plan and you see the improvement happening.

So what we had here were a series of problems. From my point of view, the important thing was that the problems had been analysed, analysis to be done on cause. Remedial action had been planned. That remedial action seemed to fit in with the overall timescale and did I have confidence in the people who were doing remedial action?

Now, that is a management process and, for me, knowing that the problems have been identified, plans were in place to improve them, that was important for me.

If I hadn’t seen that, then it would have potentially been at the board if I didn’t have confidence that that would be corrected. And I think there were delays in rollout as we waited for more improvements to be made. But, ultimately, those improvements were made and we achieved national rollout because that improvement process was in place and worked by the team who were working incredibly hard to get it right.

Mr Stevens: One thing I want to ask at this stage, I heard what you say regarding confidence in remedial measures, et cetera. It says here, in the minutes, that:

“They could only exit the agreement if there are material issues that render the project totally impractical.”

Stuart Sweetman: That is an incredibly high bar. “Totally impractical” means Pathway will run away with the code. That is a very, very high bar and it is almost unlikely ever to be achieved.

So it is almost a silly thing to put down in writing to be honest. “Material issues” would mean that you were going to install a less than perfect system, fine, but again what is “material”? If you are talking materiality as an accountant, I always looked at that, when producing annual accounts for the Post Office, what size of error would there need to be for the accounts of the Post Office to be misstated? That’s what an accountant thinks of materiality. Now that is probably measured at that time, “Is there a £10 million error”? If there is, that might be a problem.

If you are a subpostmaster, if you have got a £500 problem, that’s material. Because I’m a small businessman in a rural Post Office. So I was looking at the – one end of the telescope, which is the big picture, about materiality and size of things threatening the project, whereas unfortunately some of the subpostmasters that I have learnt about were at the other end where their materiality was totally different to the decisions that we were making in headquarters. And there is a separation there between parties.

And my mind was on the big picture. Unfortunately the subpostmasters – who were recording losses, or the system was recording losses – those were material items for them, they were at the other end of the telescope. I was looking at these big picture items.

Mr Stevens: Is what you are saying, I’m not trying to put words in your mouth, but essentially from your perspective, there was a level of materiality –

Stuart Sweetman: Yes. I think, at the time, my assessment would have been – because they used this traffic light system of red, green, amber type of thing on severity. If there was a red problem – assessed as a red problem, that was significant and it absolutely had to be overcome and it needed to have remedial action. Until it turned into something, “we are coping with this”, and errors in cash accounts down and subpostmasters, we had national systems in Chesterfield, error correction processes, which, in my mind, were set up there, under the old system and the new system, to pick up these errors and correct them.

Sometimes it took weeks of investigation to identify the impact of that and to put corrections into the system. And I was comforted that we had those correction processes and that we would not have a books of account true and fair view problem.

The extent to which errors went uncorrected, which were not material to the national accounts but were material to a subpostmaster, I can imagine that being an issue.

Mr Stevens: That issue, determining what is and isn’t material from your perspective, was that a matter that you discussed with the board or with John Roberts?

Stuart Sweetman: I don’t recall but it is the sort of thing we would have talked about because I know, when we reported up to the board, they expressed concerns about technical issues that were still outstanding.

When we went back to, was this project fit for purpose, I know David Miller said – he is quoted as saying it was robust but the board, in its detailed discussions, expressed concern over the outstanding technical issues, which is what the board should do and the nonexecutives on the board would have understood that and then they remitted that to John Roberts and the Chairman to manage and monitor?

Mr Stevens: Let’s turn to the board and can I ask, please, to bring up POL00028491. This is a report titled “Implication on the Post Office of the 24 May 1999 Horizon Agreement” which had been provided to the Post Office board for its meeting on 20 July 1999. Now the front page appears to be an executive summary. You are noted at the bottom as sponsor with author, Tim Brown.

Stuart Sweetman: Tim was quite a senior finance man.

Mr Stevens: Unless you would like to see it, we don’t need to turn there, but at the end of the substantive report your name is on the bottom of the paper.

Stuart Sweetman: Yes.

Mr Stevens: Would you have been responsible for its contents?

Stuart Sweetman: Yes, because I – of the management process involved. Tim, in bringing together all the facts, summarising it, he would have brought the draft to me, talked me through it, I would have assessed it for completeness, accuracy, whether I had the confidence in it for it to go forward. So yes, I would have had responsibility for it.

Mr Stevens: On page 2, heading 2 describes the purpose of the paper. It says:

“This paper outlines the impact of the new contract and seeks Board approval to the signing of the contract with ICL.”

It is fair to say this was a significant paper for the board to consider when determining whether or not to go forward with the contract?

Stuart Sweetman: Yes, it would have been.

Mr Stevens: Can we look at the bottom of the page please. It says:

“The key elements of the new deal are:

“Functionality consists of Electronic Point of Sale, automated payments, local feeder systems and the Order Book Control System …”

Now, this report doesn’t refer to problems such as balancing which had been experienced by subpostmasters. Why was that?

Stuart Sweetman: The honest answer is I don’t know. The purpose of this was principally financial and impact on the business – this was after we had done the deal, where basically we had to write off £480 million of our reserves and this was taking it forward to the next stage. It wouldn’t have been a belt and braces report and I think it is principally finance and strategic.

Mr Stevens: Sorry, if we can stop there, we appear to have lost the Chair, again.

Sir, can you see and hear us?

Sir Wyn Williams: I can, yes.

Mr Stevens: I’m grateful, thank you, sir.

At page 5, under heading 6, it says that:

“The Board is invited to note:

“the impacts of continuing or terminating Horizon;

“that continuing, while bad, is better than termination.”

The paper went on to recommend signing. Was it not important for the board to know about the programme issues we have been discussing that had been raised with Horizon to make an informed decision on whether or not to approve entry into the contract?

Stuart Sweetman: I suppose, in retrospect, it would have been helpful. But, again, looking at this document, the board – the board through to John Roberts, through to me, me through to the programme, they – if we had said “We are not in control”, then they would not have allowed it to go to board. So, in my view, we had to have a project which had in place everything to deliver the required software, et cetera.

So I would have had to have been satisfied that all the activities which were going on will overcome the problems which had been identified, that the reds had turned into ambers and the ambers had turned into greens and that activity going on to make sure those errors would have been overcome, and that’s what I would have been satisfied in and that’s why, probably, it didn’t feature in here because everything was in place to deliver and overcome the technical problems.

Mr Stevens: How did you satisfy yourself of that?

Stuart Sweetman: I think you have seen other reports. I certainly – I can’t quote them, which ones they are – but within the programme, we adopted, I believe, the best programme management processes where there were reports, nothing was allowed to drop through the cracks until it had been resolved, and so there were pages and pages and pages of activity reports, broadcast timescales, et cetera.

And I would have reviewed those with Dave Miller. Dave Miller would have brought probably high level versions of those on a few pages papers to me, and we would have gone through them and I would have understood them, although they would have got more detailed ones because we probably had three or four levels of management and, appropriate to each level of management, issues would have been resolved.

And I would have had the – this is me quoting in theory not from memory – I would have had the two-page version, Dave would have had the five-page version, other people would have had the ten-page version, all of which were summarised up fairly by the process, and we got the appropriate level of information that we could act on. And what I would have seen would have been sufficient to persuade me that it was under control and, if it wasn’t under control, I would have had a personal obligation to report it to the board.

Clearly, what was happening hadn’t managed to make that threshold where I felt an obligation to report it. Again, there is a lot of hindsight in this but I remember the way I worked and that’s how I would have worked and that’s how Dave Miller would have worked.

Mr Stevens: Could we turn up the board meeting that this report was presented to. It is POL00000352. These are minutes of 20 July. Both you and Mr Miller are in attendance.

Stuart Sweetman: Yes.

Mr Stevens: It was to discuss and determine whether to sign the codified agreement. Could we turn to page 11, please. (v), it says:

“System rollout was scheduled for 23 August … with acceptance needed by 18 August. There were three categories of acceptance each with a threshold which would determine whether or not rollout could proceed: high, medium and low.

“One incident within the high category, or more than 20 … within the medium category, would result in the system not being accepted.”

Stopping at that point. What was your understanding of an Acceptance Incident?

Stuart Sweetman: Something which wasn’t right. Something which wasn’t working as per spec.

Mr Stevens: Do you think the members of the board understood what an Acceptance Incident was?

Stuart Sweetman: There would have been broad understanding because the board was a mixture of the most senior executives in the Post Office and non-execs with good commercial experience and they, in their other business activities, would have come across this sort of thing before. I think it was a language everybody felt reasonably comfortable with.

Mr Stevens: Moving on, (vi), it says that:

“Excluding concerns over training, David Miller considered the system robust and fit for service.”

Do you recall whether David Miller said that?

Stuart Sweetman: I have no recollection. But I have, actually – it’s the one bit of his evidence that I have seen and I saw he was uncomfortable with having said that. I observe that.

Mr Stevens: It is not consistent with –

Stuart Sweetman: It is not consistent with the rest of the minutes.

Mr Stevens: It is not consistent with the complaints that you were hearing from subpostmasters at the NFSP meetings, was it?

Stuart Sweetman: Those are two different things. They were reporting what was happening at individual post offices. We were looking at the overall system and did it overall work? If you scroll down the minutes, I have actually looked at this. On the next page (xii), at the board meeting, we had clearly gone in and described the technical difficulties which were being explained and “Members were concerned that a number of technical issues remained unresolved”, and the BA – there were two critical issues that needed to be progressed.

Now, we had put up that there were technical difficulties and, I think, in the meeting we would have said “And we have remedial plans”. That is what I think happened. I don’t recall it happening but I think that’s what we would have said.

Mr Stevens: Mr Roberts, when he gave evidence said that had the project team considered this more a human nature and training issue rather than a system issue. Do you accept that?

Stuart Sweetman: It was probably both. Again, my broader experience of implementing new systems, yes, you have got the hardware problems, you have got the software problems, you have got – and then you have got the people challenge. I had learned that, unless you get the training right, people will not have the confidence in themselves to operate the system and, therefore, people are very nervous at handling things new, and training has got to give them the confidence – not only the techniques and the processes, but the confidence that they can do it and, unless you get that right, you are going to have problems.

And I think some of the feedback and some of the analysis of the issues indicated to us that the subpostmasters hadn’t been trained well enough and, therefore, what we need to do is feedback into the trainers “You improve your training process”, and I think that’s what we want ICL to do, because it was part of the contract. “Unless you train these people well, we are going to get problems”, and that’s what one of the bits of analysis that was done, came up with the conclusion, as well as system freezes which has nothing to do with subpostmasters.

Mr Stevens: I want to stay with this theme but pick up another document, if it can be put on the screen at the same time. It is POL00028479. These are minutes of the “Counters Executive Committee Meeting”, on Thursday, 22 July?

Stuart Sweetman: Yes.

Sir Wyn Williams: Could they be enlarged on my screen, please, they are in a small box at the moment.

Mr Stevens: Of course, sir. In fact, if we could just have the left ones on. So it is the 22 July, so two days after that board meeting, and paragraph 2.5, this notes that the board had empowered Neville Bain and John Roberts to make the final decision on whether to sign the final decision with ICL Pathway.

Turning to 2.6:

“Stuart Sweetman advised that there were two remaining areas of concern:

“The level of incidents occurring in trial offices was still too high for technical acceptance, although improvements should be confirmed over the next few days to allow acceptance to take place.”

Stuart Sweetman: Yes.

Mr Stevens: That knowledge of the incidents being too high in trial offices hadn’t come to your attention the days following the board meeting on 20 July, had it?

Stuart Sweetman: Reading that, this is me telling my top team what my areas of concern were and I think that would have been in my mind and probably said at the main board meeting. These were technical issues of concern that were still being handled, still being managed to elimination.

Mr Stevens: Is your evidence that you did say to the board on 20 July, you said that the level of incidents in trial offices was still too high?

Stuart Sweetman: I didn’t say that and I don’t recall saying it. But I probably would have said it because it was in my mind, clearly, when I came back to my team and the board minutes, I think, did refer to errors still being managed and this is what I would have referred to and that’s what the main board heard.

Mr Stevens: Mr Roberts’ evidence that he, at this point, considered this to be more of a training issue, do you think you could have done more to set out to the board that there were still a high level of technical issues with the system itself?

Stuart Sweetman: I think in hindsight, yes. What I don’t know – if John remembers it just as training, it wasn’t solely training. There were technical issues with the system and there were training improvements needed. I think it was the two together, in my mind.

Mr Stevens: During these discussions with the board, just so we have it clear in our minds as to timings, when we discussed earlier the material errors and you talked about your perspective on what’s material and the subpostmasters’ perspective to what was – for acceptance, would you have considered that at the board meeting on 20 July?

Stuart Sweetman: It would have been in my mind, yes.

Mr Stevens: Would you have raised with the board or discussed with the board the level of errors you would be prepared to accept in the system?

Stuart Sweetman: That is very hard to quantify to a main board. I was using my professional knowledge and experience, I suppose, were these errors threatening the viability – I think, we’ve used before – of the system? Were they fundamental – I think is another word which is being used. They were clearly concerning because they were causing a lot of aggravation within my business. The postmasters were having a very troubled implementation and that is not what you want. In the first few hundred implementations, if that then happens over the next 18,000, you have got a business out of control.

Personally, I would have wanted to know that, as we rolled out at 300 offices a week, which I do not think many systems would ever have contemplated in the UK, that needed to be much slicker, much more error free, much better training and that’s what I wanted to see in place. And that’s what the team were working on and eventually delivered.

Mr Stevens: At this board meeting you were also considering the codified agreement, and do you remember that the codified agreement had a clause that required Pathway to provide data to the Post Office, that would be suitable for submission as evidence in support of prosecutions?

Stuart Sweetman: I don’t remember that bit, no.

Mr Stevens: Did that form any part of your thinking when you were considering the level of robustness of the system that you would be prepared to accept?

Stuart Sweetman: No. I would have read the agreements, all of it, before approving, signing or whatever. If I saw that para – there would have been paragraphs in that agreement that were written by lawyers. We had our own in-house lawyers, about a hundred of them I think, and they would have helped us draft agreements.

We were using Slaughter and May as a renowned firm of solicitors to help us draft these things.

And they would have inserted lots of, if I say, non-system paragraphs in there because that’s what lawyers do. They paper over all the potential cracks and that’s why you pay them.

If I saw that I would have said “that’s one of those paragraphs put in by a lawyer” but I don’t remember it.

Mr Stevens: Was it not the case that the Post Office – is your evidence, sorry, that you think the clause where Pathway is to provide evidence for use in prosecutions was put in by a lawyer rather than be a requirement of the Post Office itself.

Stuart Sweetman: They are one and the same. They could have been our own lawyers from our solicitor’s department or they could have been Jeff Triggs and his team in Slaughter’s. But that is probably – I doubt if my project team would have dreamt that up themselves. It would have been, “you need one of these in there” because I was aware that there was – and dealt with by the regional managers and retail network managers – there were isolated instances where we had legal problems with subpostmasters. Unfortunately, a very few of them did steal money in the past – and that was our history – and there had to be investigation and prosecutions and recovery of money. That was before Horizon and that, I knew, happened within the depths of the business.

Mr Stevens: Who was responsible for that?

Stuart Sweetman: This is just continuing that process.

Mr Stevens: Who was responsible for the prosecutions within the Post Office?

Stuart Sweetman: I think our solicitor departments had, under some legislation, the powers of prosecution because the police and the prosecution authorities, if I say, didn’t want to be bothered with us, they were relieved when we had the in-house capacity to investigate crime, be it on the mail side or the Counters side and to carry out the prosecutions. I think we had in-house solicitors who would have done that. I knew broadly what they did but I never got involved.

Mr Stevens: Just to clarify, did anyone on the board, the Group board, ask you any questions about prosecutions and the use of data from Horizon in support of –

Stuart Sweetman: I have no recollection of it and I would be amazingly surprised if they did.

Mr Stevens: Why would you be surprised?

Stuart Sweetman: Their eyes were on the far horizon – with a little “h” – rather than down in the depths of my business. So I very, very much doubt – because there weren’t any lawyers on the main board and they wouldn’t have seen that clause. I would not have brought it to their attention. So the board would not in any way have considered it.

Mr Stevens: It is a matter where we know that there were prosecutions pursued in 2001 and so investigations in 2000 using Horizon data. So do you accept that Horizon was used to support prosecutions –

Stuart Sweetman: If you are telling me that, I accept it. I have no knowledge of it. I think, by then I was again one removed from the detail of running the business.

Mr Stevens: Is it right – I will ask one last time – that you simply cannot tell us who, in Post Office, was thinking about how Horizon data could be used in prosecutions in 1999?

Stuart Sweetman: Again, I just reiterate what I have said. When you hand – when you have the task of producing an agreement, you have all the people who are interested in what it delivers and then you have the lawyers and the lawyers insert paragraphs and you have to trust their judgement. Well, normally you do.

Mr Stevens: It is right that you subsequently signed the codified agreement on 28 July 1999; do you remember that?

Stuart Sweetman: If there’s evidence of that, yes, I would. I don’t recall doing it.

Mr Stevens: Following the signing of the agreement there was continued operational testing, yes?

Stuart Sweetman: That would have continued yes. The whole continuous improvement process would have continued.

Mr Stevens: Do you recall being aware of a number of Acceptance Incidents that Post Office had raised as preventing acceptance?

Stuart Sweetman: I think it got to the stage where there were errors and that – I think we didn’t – didn’t we put a halt on the rollout programme? We said “Hold on, let’s get it right before we move on”. I think we slowed down things or stopped things for a period.

Mr Stevens: Sir, I can move on to this now. I’m aware – unfortunately I think we are going to run into tomorrow. Mr Sweetman has been warned. I’m happy to continue now or if you prefer, a short break and carry on?

Sir Wyn Williams: Well, I don’t think we should take a short break. Perhaps we should continue until, say, 4.15 pm and then call a complete halt at that point. Are you happy with that, Mr Sweetman?

Stuart Sweetman: I would prefer to get it done today.

Sir Wyn Williams: How far away are you from completing your questions, Mr Stevens?

Mr Stevens: I have probably got 20 minutes to, well, half an hour I would say and then we have got questions from some recognised legal representatives.

Sir Wyn Williams: Well, anyway, you continue for the moment and we will see where we get to.

Mr Stevens: I’m grateful.

I want to look in August now and I have already taken you to a document, the Ernst & Young document that referred to Acceptance Incident 376.

Before considering that in more detail, what I’m interested to know is, in August and September – so before the rollout – do you recall at all a series of acceptance workshops to resolve the various incidents that had been raised as Acceptance Incidents?

Stuart Sweetman: I don’t recall them but I can understand they would have happened because that was part of the management process of having problems, analysing them, resolving them and actioning them. So I would imagine that those workshops would have taken place.

Mr Stevens: Could we please bring up POL00028465, and over the page, please. This is from David Miller and it is addressed to you on 8 September 1999, concerning Horizon acceptance and review of progress.

Do you remember receiving this letter?

Stuart Sweetman: I don’t remember receiving it but I can see it now.

Mr Stevens: If we can move the screen down please. 1.1 is “Training”, it refers to:

“Bruce McNiven and Ruth Holleran have done excellent work squeezing a better training deal out of ICL Pathway.”

The second is “system lock-ups and screen freezing requiring reboots”.

I think in your evidence earlier you referred to this. Do you recall that as an issue needing to be resolved?

Stuart Sweetman: Yes, that was part of the feedback from the subpostmasters, wasn’t it? Yes. That was happening and clearly, if the system isn’t operating, that would not only affect the subpostmaster, but affect our service to our customers who are queuing up in their branch. So that was a serious issue.

Mr Stevens: If I can go to 1.3, it says “Derived cash account not [it should be ‘equalling’] electronic cash account”:

“Ruth Holleran has again done sterling work here and the understanding of the problem and fixes and controls are largely in hand. However the major controls cannot be implemented until Christmas with a patch available from early October.

“Ruth see this incident as being downgradable to medium with an agreed rectification plan but there are still too many important loose ends and she has doubts whether this will improve sufficiently for us to accept … by the end of September.”

Do you recall this issue?

Stuart Sweetman: I don’t recall it but I have read it.

Mr Stevens: If you can go down a bit further to the summary, please. At this point it says:

“Of our six key players (Keith Baines, Ruth Holleran, John Meagher, Bruce McNiven, David Smith, Andy Radka) the first 4 would opt (somewhat reluctantly) for conditional acceptance towards the end of September. Andy Radka and David Smith would not accept and seek to use the full period until 15 November to force improved performance from ICL Pathway.”

Do you have any recollection of this debate concerning conditional acceptance?

Stuart Sweetman: No, I don’t recall the internal debate but those were all people who were immersed in the system and they would have had their own individual views and we welcome – and we used to welcome that sort of debate within teams – as a way forward.

Mr Stevens: Would you have been involved in the decision?

Stuart Sweetman: Not directly, no.

Mr Stevens: Your evidence is you would not have been directly involved in the decision whether or not to conditionally accept –

Stuart Sweetman: At that level, yes. I would not have been involved in classifying individual things, whether red or green or whatever. But, certainly, Dave Miller would have involved me, so there were no surprises. We had a no-surprises way of working together.

Mr Stevens: Could we bring up POL00028462, again, on the second page, please. This is a memo, again, from David Miller to yourself two days later on 10 September. At point 1, it says:

“Very considerable progress has been made in the joint workshops with ICL Pathway but as of today there were still 2 high incidents (Data integrity across the TIP interface and system stability around screen freezes) which would, in the Post Office view, make it difficult to accept on 24 September.

“The two incidents have rectification plans parts of which will take up until Christmas to complete, eg the data integrity control necessary to satisfactory the auditors won’t be ready until early December and we will have to continue our checking until then.”

We discussed earlier the issue of data integrity going to the heart of the function of Horizon on which you had received advice from Ernst & Young on how it would affect your statutory accounts.

When you received this letter, do you recall what you did or would have done or what would you have done to satisfy yourself that the rectification plans were satisfactory?

Stuart Sweetman: I don’t recall but I can speculate what I would have done, based on the way I react to this sort of memo.

I would have sat down with Dave Miller and discussed it with him. Just to sort of tease out a bit of flesh on the bones of this, “What does it really mean? Are we picking up the errors in Chesterfield? Are we correcting the accounts? Are we making adjustments?” Because if he couldn’t have reassured me that all that was happening and there weren’t improvement plans in place, I would have been worried.

Mr Stevens: That’s all hypothetical.

Stuart Sweetman: It is hypothetical. I’m afraid, I don’t remember this level of detail now but I’m just saying how I would react to this type of memo. It is just the way I worked.

Mr Stevens: Please could we bring up POL00000353. This is another meeting of the Post Office board, which you attended on 14 September, and can we turn to page 3. Number (iii) says:

“When the board last met in July … POCL’s Horizon Programme Director had been confident that system acceptance would occur as planned on 18 August. Unfortunately, three high priority Acceptance Incidents around training, stability of the system (lockups and screen freezes) and quality of accounting data, remained unresolved and whilst ICL did not accept the categorisation of these incidents, they nevertheless resulted in acceptance being deferred until 24 September.”

Now –

Stuart Sweetman: I think that’s good evidence that we kept the board informed of the detail. We told the board there were problems. We told the board what we were doing about it, that we had deferred acceptance because of the problems, so the board were fully aware of it. So you have got an example of their problems, action and then what we then did about it.

Mr Stevens: John Roberts’ evidence was that these issues to the board were considered to be small enough to be handled and rectified by December; do you accept that?

Stuart Sweetman: I accept that because probably John has a better memory than me. I, probably – in looking at these things and looking at the rectification plans, there would have been an acceptable timetable. Whether that was December or not I don’t know. But, certainly, probably at the board, we would have been questioned, “Have you got a grip on this? Are you handling it? Is your programme of change in place?” And we would have said “Yes”, because that was our belief and our judgement.

Here I think we were reporting upwards, washing our dirty linen in the board. So I’m quite happy with that note. That’s exactly what we would have been doing.

Mr Stevens: I have taken you already to the Ernst & Young advice that they could not make an unqualified opinion.

Stuart Sweetman: No, they said “If these things weren’t rectified, that would give us a problem”, and they didn’t qualify the accounts. So the problem was overcome.

Mr Stevens: But, at that point, Ernst & Young had said “If the problems remained, it was unlikely they would be able to make an unqualified opinion”. As I say, John Roberts’ evidence was these issues were presented to the board and small enough to be handled and rectified in September. Realistically, do you think the data integrity issue could be described as a small one?

Stuart Sweetman: Small probably isn’t the word I would use, because we had put it as red. There were data integrity problems and they needed to be fixed and, if we didn’t fix them by the year end, Ernst & Young wouldn’t qualify the accounts. They were fixed, to the extent material to a true and fair view of the accounts. Whether they were fixed sufficiently to overcome the problems, if you were at the other end of the telescope as subpostmaster, where you had a £500 problem, that £500 problem doesn’t threaten the true and fair view of the Post Office accounts, but I recognise it is very significant when it comes to being a subpostmaster.

In these discussions, we were primarily looking at the big picture, the Post Office as a whole. That’s not to say the Horizon programme wasn’t looking at the interest of subpostmasters but, in this sort of discussion, it was the big picture looking forward with the materiality of the corporation.

So it is how you read something, it is different from where you sit. If you are on the main board, you are looking at big issues; if you are a subpostmaster you are looking at your cash. And those are two different perspectives on the same thing and you can make two different decisions, as I have explained.

Mr Stevens: Sir, I’m happy to continue. I note it is 4.15 pm. It is at this point, I would go to a new document.

Sir Wyn Williams: Who wants to ask questions, apart from you, Mr Stevens? In my list either Mr Moloney or Ms Patrick, I think, is down to ask questions. Is there anybody else?

Mr Henry: Sir, I have been permitted one question or one topic. Edward Henry, sir.

Sir Wyn Williams: I can hear your voice.

Mr Henry: Thank you.

Sir Wyn Williams: And Mr Moloney, Ms Patrick, what about you?

Mr Moloney: Sir, as you will be aware from the Rule 10 submission, there were questions that we proposed that counsel for the Inquiry said that they would ask. They have now, as it were, passed them to us and so we anticipate that we probably would be about 15 to 20 minutes and Ms Patrick will ask the questions.

Mr Whittam: Sir, I have raised one matter that’s arisen out of the evidence – Richard Whittam for Fujitsu – I would be less than five minutes.

Stuart Sweetman: Mr Chairman, I also have something I would like to read, a final statement, which will take five minutes to read.

Sir Wyn Williams: All right. At the end of the day, I have to make a judgement about whether carrying on is fair to you. I think I understand that you would prefer to finish but I also have to make a judgement about what’s fair to my levels of concentration.

Stuart Sweetman: I have the same trouble sometimes.

Sir Wyn Williams: I think on balance we had better stop. It looks as if you will be no longer than about 30 to 45 minutes tomorrow morning, and I will do my best to keep them to that but I think we will stop now.

Stuart Sweetman: Okay.

Mr Stevens: Thank you, sir.

Sir Wyn Williams: So 10 o’clock tomorrow morning.

Mr Stevens: Thank you, sir.

Mr Sweetman, just so you know, you are still giving evidence, so please don’t discuss your evidence with anyone else between now and tomorrow.

Stuart Sweetman: Okay. Can I just ask a question?

Sir Wyn Williams: Yes, please do.

Stuart Sweetman: The 12 inches of paper that I have surrounding me that I have been sent, what ultimately do I do with those?

Sir Wyn Williams: Don’t worry, someone from the Inquiry secretariat or legal team will contact you and you will have a discussion with them and resolve it with them.

Stuart Sweetman: Thank you.

Sir Wyn Williams: That’s fine. 10 o’clock tomorrow everybody.

(4.18 pm)

(The Inquiry adjourned until 10.00 am on Wednesday, 2 November 2022)