24 September 2024 – Sarfaraz Ismail and Elliot Jacobs
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(10.00 am)
Sarfaraz Ismail
SARFARAZ GULAM ISMAIL (continued).
Questioned by Mr Blake (continued)
Mr Blake: Good morning, sir. Can you see and hear me?
Sir Wyn Williams: Yes, thank you very much.
Mr Blake: Thank you very much.
Mr Ismail, we’re going to stick to the topic of culture and I’m going to ask you to begin with about two different branches and your experiences in respect of those, starting with Wibsey Bank branch. At paragraph 51 of your witness statement, you told the Inquiry that, after your election, you visited branches to get feedback, and one of those branches was a postmaster from Wibsey Bank, and they gave you some feedback. Can you expand upon that, please?
Sarfaraz Ismail: Yes. So once I had been elected, for me to understand feedback from a wide range of postmasters, it was very important that I could relate and ensure I understood what rural postmasters wanted, high street postmasters, and town centre, different types of branches, strategic partners also. Hence, I organised a visit with my own initiative to Bradford, and I was accompanied by the Area Manager, Mel Shepherd, and we visited a postmaster at Wibsey Bank. We had an interesting conversation and what he advised me was, “If I ask you to do something, will you do this for me?”
I said, “Depends what it is. What are you thinking?”
And he said, “When you go back to Board, when you speak to the wider Executive, when you speak to the powers that be within this organisation, tell them we’re not animals, we’re postmasters. Please treat us fairly”, and that was a comment and a quotation that I ensured I mentioned at several Board meetings and to individuals on the wider Executive.
And what was very disappointing was I didn’t see any urgency, any interest, unfortunately, in addressing the specific postmaster or the issues that may be affecting them or concerning them and, for me – and I’ve mentioned this in my statement – in 2018, I lost a close friend, who was also a postmaster at the main town centre office in Preston, and he was one of the few individuals who practically held my hand when I first became a postmaster, and the business did nothing.
The business wasn’t even interested, to a point at which, on the day of his funeral, nobody from the Post Office attended. He was an active postmaster and there was – at one point, one of the staff members I spoke to actually said to me “Well, I can’t attend, it’s my day off. I’ve got annual leave”.
And from seeing that in 2018, that was one of my motivations to try to make a difference. Hence, why I wanted to see – have things actually changed, do postmasters feel differently? And then to hear what did at Wibsey Bank, it was tough, but I knew what my starting point was to try and ensure I can make some – make a difference to this organisation.
Mr Blake: Moving on to another branch, the Yateley branch. You described at paragraph 207 onwards in your witness statement an issue with that particular branch. Can you tell us about that?
Sarfaraz Ismail: This – I was in shock, I was stunned to learn about the situation that occurred in this branch. And the Voice of the Postmaster group, an individual called Brent, who forwarded an email to me that had been raised by this postmistress, and she’s again an active postmistress who was working at the Yateley branch with her husband, and he died all of a sudden overnight. And in trying – this business should be helping postmasters. What they put her through, the conversations that I had with her, she was in tears while she was talking to me.
Mr Blake: What was the specific problem that she faced when her husband passed away?
Sarfaraz Ismail: So her husband was the postmaster and, as a business, we cancelled the contract within ten days and we gave her no justification for that. Instead, we provided data that was very difficult for her to understand. She was grieving, and the Post Office cancelled her contract, made her life more difficult. And what was really upsetting – and this is a cultural test within the organisation at that point for me, this was a really important cultural test – this case passed at least ten individuals within the organisation, none of them took accountability and the only point at which something started to happen was when it came to me, and I then had conversations with Tracy Marshall.
I also had conversations with Nick Read and, to be fair to Nick Read and credit to him, I said, “Nick, you need to have a conversation because she’s not happy this is what we’ve done”, and Nick made time that very day and called her.
So moving forward, in order to help her be in a position to still be able to operate, I then had to reach out to Martin Edwards and Paul Liddiard, who were fantastic, in assisting this postmaster so she could still stay open. Her business should have been the least of her worries. The funeral of her husband hadn’t even happened yet and the Post Office was creating another major issue and obstacle for her to go through, unfortunately.
Mr Blake: I’d like to look at some correspondence. Can we please turn to POL00448379, please. This is an email of 4 July 2023. Was this before or after it had been raised internally with – we see Nick Read is copied into this email?
Sarfaraz Ismail: This is after that has happened. So once she’s – her world has been torn apart – and she felt very vulnerable, this postmistress, may I add, and what the business then did – and this was part of a strategy called Drop and Collect, and what happened was – and this wasn’t specifically just for this postmistress. The Post Office, in order to comply with the 11,500 requirement that Government has set for branches, has a Drop and Collect strategy which came to the strategy day in ‘21 and ‘22.
Now, there was challenge by myself and Elliot because the radius wanted to be reduced and we also put other conditions down, and the other conditions were ignored, and the 0.5 radius was used in order to ensure we hit 11,500. So what’s happened in this scenario, hence the email, was the Yateley postmistress has had a customer coming in, informing her, “Why is the Post Office opening other branch down the road? I thought, after what you’ve been through, I thought you were struggling”. That’s the conversation they that, and she didn’t know.
She then contacted her Area Manager who also said they didn’t know and, unfortunately, with the Drop and Collect strategy, this was very, very common: postmasters finding out by surprise that they wouldn’t necessarily be informed, unfortunately, and, like I said, neither would the Area Managers.
Mr Blake: So that’s the opening up of branches near existing branches?
Sarfaraz Ismail: Yes, to meet the 11,500 criteria the Government –
Mr Blake: So that’s 11,500 branches?
Sarfaraz Ismail: Yes.
Mr Blake: You say here:
“I’m extremely disappointed after everything this [postmistress] has been through, we have put this communication out without informing her.
“This is unacceptable and she’s fuming as it was shown to her by a customer.
“The number of issues this [postmistress] has been through shows we still have a very long way to go as a business. We need to ask some serious questions about our organisation and our people, are we really changing the culture within our organisation? Are we trying to be postmaster centric?”
I’d like to take you to the attachment, so that’s the announcement or the communication. We can find that at POL00448788. I’ll just read couple of passages. It says:
“Dear Customer …
“We are writing to inform you that, for reasons beyond our control, Yateley Post Office had to close on Thursday, 8 June 2023, and it reopened on Tuesday, 13 June 2023. The Post Office is temporarily operating on reduced hours from Monday to Friday …”
Then the next paragraph says:
“Additionally, the Outreach services at Datchet, Crowthorne and Tudor Drive Outreach, operated by the postmaster from Yateley Post Office, ceased from Wednesday, 21 June 2023. Please accept my apologies for the late notification on this occasion. We have completed a review of the service provision in Datchet, Crowthorne and Tudor Drive, and currently we are not looking to open a replacement service at this time.”
Is this the correspondence that was being referred to?
Sarfaraz Ismail: No.
Mr Blake: This is a separate communication?
Sarfaraz Ismail: This correspondence was, once the postmaster had passed away, in order to meet customer expectations, this was the correspondence to inform day-to-day customers about what’s been going on.
Mr Blake: So there are two issues there –
Sarfaraz Ismail: Yes.
Mr Blake: – the one that you’ve referred, which was the opening up of the branch –
Sarfaraz Ismail: Yes.
Mr Blake: – and this was the original correspondence –
Sarfaraz Ismail: Yes.
Mr Blake: – following the passing of her husband, which refers to her branch having to close for reasons beyond the Post Office’s control?
Sarfaraz Ismail: Yes. The other correspondence for the Drop and Collect would be different, yes.
Mr Blake: What was your view of this particular notification?
Sarfaraz Ismail: It’s what we had to do to inform customers. I think it’s fine. Maybe it’s a bit overcomplicated for customers, I would have expected it to be simpler but there’s a lot that the business needs to learn about communication.
Mr Blake: If we scroll down on this particular communication, it’s from somebody called Graham Brander. Are you aware of Mr Brander’s involvement in this matter?
Sarfaraz Ismail: No.
Mr Blake: Are you aware that Mr Brander was a witness in Phase 4 of the Inquiry and had been involved in the investigations of Jo Hamilton, Julian Wilson and Lynette Hutchings?
Sarfaraz Ismail: No. This goes back to the point – sorry, to clarify what I raised yesterday – redeployment, recycling, rejoining the gravy train; it’s just not helpful. And, again, I should have been aware but I’ve never been told until today.
Mr Blake: Mr Brander was somebody who left the Post Office and was rehired in 2019; were you aware of that or that process?
Sarfaraz Ismail: No, there’s never been any specific communication to the Board of who had left the business, what terms they have left the business on, and why they’ve been rehired. We’ve never, ever actually been given that from Legal, HR, the People team.
Mr Blake: Seeing that and knowing now what you know, does that in any way affect your views of the Yateley issue?
Sarfaraz Ismail: Highly inappropriate. He should not have been involved and, if I had known this at the time, I would have definitely raised that.
Mr Blake: Thank you. We’re going to move on now to the topic of –
Sarfaraz Ismail: Sorry, just one other point.
Mr Blake: Yes, absolutely.
Sarfaraz Ismail: I’m not sure even the postmistress at this branch is aware because, if they were, I’m sure they would have raised it with me.
Mr Blake: Yes. I’m going to move on to the topic of prosecutions and investigations. Paragraph 43 of your witness statement, you’ve said that you received minimal and cursory information regarding ongoing issues that the Post Office has been dealing with. Can you briefly assist us with that, with your views on that?
Sarfaraz Ismail: So, as part of my submission, I’ve included Board decks from the beginning of my tenure as an NED, and some of these decks were 811 pages, and they were – some of the decks included cases like Jo Hamilton, Bates, Lee Castleton, and, as an economics graduate, for me to appraise data, commercials, figures, no problem, all day long I can do that. But I’m not a lawyer and not many people on the Board are lawyers. So I don’t think the business did enough to equip NEDs, and other individuals on the wider Executive who are also not lawyers, to be able to appraise documents effectively.
Mr Blake: If we look at a slide pack, I think, from your initial training, it can be found at POL00448401. This appears to be a page from a UKGI training presentation; is that right?
Sarfaraz Ismail: Yes.
Mr Blake: We see there, there are a few bullet points at the bottom addressing the Historic Shortfall Scheme, the Post Office IT Inquiry, and convicted postmasters. Did you receive any significant training or background information on those issues when you first joined?
Sarfaraz Ismail: No, and just to give you a bit more context, I think, looking back now, from my observations at the time, that there was an understanding within the wider Executive and the Board that everybody knew about these issues, and everybody doesn’t: not many customers were even aware until the ITV drama. So in hindsight, yeah, there should have been better training but it was a very high level overview of what we were provided.
Mr Blake: Thank you. That can come down.
On investigations policy, I’d like to look at a document that relates to Project Birch. Can we please turn to POL00423697, please. This is a KPMG review of the Post Office’s current investigations process and it’s dated 13 August 2021, so shortly after your appointment as a Non-Executive Director. Do you recall being provided with a copy of this?
Sarfaraz Ismail: No. It was in the bundle that you sent me but I don’t remember seeing this.
Mr Blake: You don’t remember any significant discussion about its contents?
Sarfaraz Ismail: No.
Mr Blake: Can we please turn to page 10 and we can see some of the Executive summary and I’ll just take you to some of the key points. There’s a current state assessment, it says:
“[The Post Office’s] decentralised model provides individual business teams with the independence to develop their own investigations framework, however there is limited central oversight over these frameworks and the policies and processes that have been adopted by individual business teams.
“Whilst this model utilises the experience and expertise of staff within the business teams it means that across [the Post Office] there is no overarching consistency over:
“how investigations are undertaken;
“the experience and qualifications of the investigators;
“the application of investigation minimum standards especially in relation to high risk cases; and
“the recording and reporting of investigations data.”
The final paragraph at the bottom there says:
“Currently investigations are often undertaken within [the Post Office] from a contractual perspective and there is little consideration at the start of an investigation as to whether it could potentially result in criminal, civil or disciplinary proceedings. Early engagement with [Post Office] Legal would enable proper consideration of criminal or civil standards or consideration of when to liaise with [I think that’s law enforcement agencies].”
It then says:
“In addition, there is no overall central monitoring of the investigations process and no visibility over the overall investigations population. As a result [the Post Office] have no comprehensive analysis over the number or type of investigations it undertakes including those that are high risk.”
Then it sets out some issues with governance and process. The first:
“Investigations are not conducted consistently across [the Post Office] …”
If we turn over the page, we see some more points in bold:
“Lack of overarching governance and oversight over high-risk investigations …
“… no clear consistent triage process …
“Lack of consistent monitoring and order over all investigations …
“There is no consistent approach to quality assurance across the business teams …
“There is limited evidence of ‘lessons learnt’ and continuous improvement arising from investigations across [the Post Office].”
Over the page, please.
“Business teams often use Area Managers and Line Managers to conduct investigations …
“There is a lack of training in respect of investigations across [the Post Office] …
“There is no consistent use of an investigations case management tool across [the Post Office] …”
Were you aware or were these matters brought to your attention when you joined the Board or shortly thereafter?
Sarfaraz Ismail: No. the investigations into postmasters are treated differently, from what I’ve observed, and the investigations into the wider Executive are treated differently. In April ‘24, when I raised concerns into the investigations into the CEO, the response I got from Amanda Burton was the investigation – I asked for very, very simple parts of information, which was what’s the cost of the investigation and what were the instructions?
And until today Amanda’s never given that to me, which was really disappointing, and she confirmed in email the approach was more about protecting the CEO, which I was disappointed because, when it comes to a postmaster, as we’ve seen in the past and as we spoke about yesterday, the approach is very, very different. Postmasters can be suspended either, and when it came to this specific document, as I’ve said, I would have expected this to be brought to Board and I would have expected some kind of benchmarking in terms of where we were in our approach to try and ensure we did what the report said.
But you don’t know what you don’t know, hence why I couldn’t challenge this, because I wasn’t aware of it unfortunately.
Mr Blake: So having sat on the Board when this was produced and subsequently, are you not aware of any significant discussion in that respect, in respect of those bullet points, for example?
Sarfaraz Ismail: No. No.
Mr Blake: Can we please turn to POL00448320. This is a report to the Board of September 2022, so a year later. This is entitled “Post Office Investigations: Next Steps”, and this is addressing what’s going to happen in respect of prosecutions of individuals and the relationship with Post Office Investigations Team. If we scroll down, we can see under the “Executive Summary” it talks about how the central investigations unit will be staffed and it’s the bottom bullet point I’d like to ask you about. It says:
“Post Office has no appetite to pursue private prosecutions. However, it is proposed that Post Office Investigators conduct investigations into suspected criminality and to report what has been evidenced to law enforcement and prosecutors in all four nations of the UK. The rationale being to act as a deterrent and to seek financial restitution through the independent and external criminal justice system.”
Do you recall receiving this particular paper for the board?
Sarfaraz Ismail: Not specifically, no.
Mr Blake: Do you remember discussions about Post Office Investigators conducting investigations into suspected criminality and reporting, thereafter, to law enforcement?
Sarfaraz Ismail: No, and this is another example of there’s so much that’s brought to the Board. This should be a key issue, and it shouldn’t be for noting, as the paper says at the top. This should have been a discussion –
Mr Blake: If we scroll up, we see there “Input Sought” and it’s a noting paper.
Sarfaraz Ismail: That’s unacceptable. This should have been a discussion. And it’s, again, getting lost in the noise because of how much information is brought to Board, unfortunately.
Mr Blake: If we could turn, please, to page 4, we see the recommendation there at 2.4. If we could just scroll up slightly so we still have that table. It says:
“It is our recommendation that the minimum remit of the investigation function is option 4.”
If we look at the table above, option 4 investigations into Post Office and Post Office staff, postmasters and postmasters’ staff. So it includes postmasters’ staff:
“This would allow [the Post Office] to act in determining facts relating to situations ranging from allegations of theft or fraud by postmasters and/or their staff using/misusing [Post Office] systems or functions where either or both [Post Office] and the postmasters are victims …”
Just pausing there, in respect of the issue of victims and the Post Office and whether it is a victim or not, is that the kind of language that you’ve seen being used in Post Office documents?
Sarfaraz Ismail: I’ve seen it being used in the documents that were presented to me in the bundle for my evidence but, prior to that, I was not sighted on them documents.
Mr Blake: We’ll look at those documents shortly.
“… through to misconduct or process failings in [the Post Office] and the subsidiaries. The Horizon issue identified a failure to investigate beyond the postmaster in determining culpability. Best practice (and in some situations, law) requires that all lines of inquiry to be followed, whether they point away or towards the considered investigative hypothesis as it is the truth that is sought, not that a case is to be made against a selected individual. By investigating wider than the postmasters …”
It then says:
“… for example their staff, when relevant, we demonstrate that [the Post Office] has learned from the past and would seek to determine actual culpability, if any, which is treating the postmasters fairly.”
It’s that reference there to “for example their staff when relevant” that I wanted to ask you about. Are you aware of any discussions taking place about the extent to which the investigation should also look at the actual underlying systems, so the Horizon system?
Sarfaraz Ismail: No. When I had my discussion in October ‘23 with JB and Sarah Gray, there was no mention of the integrity of Horizon, and it was a case of trying to work – trying to see what’s actually going on, maybe trying to be a bit fairer to postmasters, and there were some prosecutions that happened due to the postmaster being responsible but it was their team or their staff members as a result, and that was the discussion that we had.
And, like I said, yesterday, I did want to follow that up to get the tonality right and that never happened. But, for me, looking at this document, if the business wanted to learn from the past, there’s a line – where’s it gone? (Pause)
So I think the starting point should have been for the entire investigation element to be external. That’s how you learn from the past. I don’t – from my observations, what I’ve seen, discussions with postmasters, I’m not sure this business can control investigations – investigations and investigators, hence why, from my perspective, the right solution would be to have an external third party deal with the all of that.
Mr Blake: If we turn, please, to page 6, we see there at the top it says:
“This paper asks the Board to note that the [Central Investigations Unit] staff are to conduct criminal investigations within the [Investigation Branch’s] remit and report these matters to police when appropriate and in accordance with the CLEP.”
As you said, it was a noting paper and you don’t recall any particular discussion about that at the Board?
Sarfaraz Ismail: No.
Mr Blake: What is your view as to whether the investigators, or even whether subpostmasters have access to sufficient information in respect of investigations?
Sarfaraz Ismail: So, again, from what I have seen and my discussions with postmasters, they are provided with data, and it’s very difficult to understand that data. Horizon is very complex and translating that data into some form to conduct an investigation is a challenge but then being a normal postmaster and having to understand the way it’s written to defend yourself, again, is equally difficult. And again, from discussions that I’ve had with individuals, there is very limited visibility in terms of investigations and material given.
Previously, and very recently, should I say, individuals were not allowed a legal representative and thanks to myself and Mr Jacobs we have pushed hard and now individuals are allowed to have a legal representative. It’s unfair, it’s unhelpful, and when the business has got a starting point of defending itself and not a neutral position, I think it’s grossly unfair.
We did challenge the investigations last year; have you got the correspondence for that?
Mr Blake: We will probably get to that in due course.
Sarfaraz Ismail: Okay, fine.
Mr Blake: This particular Board report that we just looked at was from September 2022.
Sarfaraz Ismail: Okay.
Mr Blake: You have said in your evidence and you’ve said in your witness statement that it wasn’t until after the ITV drama that a number of Board members told you that they hadn’t understood properly the impact on subpostmasters and how they had been treated. Can you give us some examples of those kinds of conversations that you had?
Sarfaraz Ismail: So the January Board meeting is something I don’t think I’ll be able to ever forget. It was a cultural awakening for some of the Board members. The ITV drama had happened and the Executive Team – some of the Executive Team, should I say – came to that Board meeting and it started with a discussion on the ITV drama. And one of the individuals who mentioned how he received threats that his children – people hoped his children would commit suicide, it was very disappointing. The CEO received death threats. There were so many things going on.
However, the Board acknowledged that they should have done more to support the wider Executive and that was a mistake on our part: hands up, no problem. However, individuals on the Board and some of the discussions that took place, some people thought it was a dramatisation, what ITV did. However, myself and Mr Jacobs at the Board meeting were pretty clear that this is the reality, this is what subpostmasters go through and the tonality, the way ITV delivered an exceptional piece, was bang on.
Mr Blake: Were your views taken on Board in that respect?
Sarfaraz Ismail: I expressed them. I’m not sure if Board members did but I definitely expressed them, and nothing’s happened for me to be able to say – or some kind of a test, in terms of okay, they definitely took it on Board. I’m sure they heard what I had to say and what Mr Jacobs had to say.
Mr Blake: Were any contrary views expressed at that meeting?
Sarfaraz Ismail: No, no. Not that I can recall, no.
Mr Blake: Sticking with investigations and criminal investigations, can we please turn to POL00448616. We’re still in the same period. We’re now on 4 January at the bottom of this page into the next page. So that’s during the time of the Bates drama, I think it may have finished perhaps that day. If we scroll down, please, thank you. The bottom of this page into the next. It’s an email from yourself to Mr Bartlett. So Mr Bartlett was the Head of the Investigation Team or the Central Investigations Unit?
Sarfaraz Ismail: Yeah, he’s an ex-police officer and he’s the individual responsible.
Mr Blake: You say:
“I was hoping to visit your team in Chesterfield …
“Does this work for you?”
Can you give us a bit of background? Why were you hopping to visit his team in Chesterfield?
Sarfaraz Ismail: For me, watching the ITV drama, obviously knowing what’s happened in the past and trying to get it right, I felt that was my duty, as a postmaster NED, for me to ensure the organisation is run properly, and this was a major, major issue that needed to be resolved. And it was, again, building on the conversation that we had, just to try to help put the business in a better place.
Mr Blake: If we scroll up, please, we can see he responded to say:
“Unfortunately my team is dispersed all over the country and is not based at Chesterfield. We do sometimes go to Chesterfield for training days, etc, so I’ll let you know when the next session will be. Alternatively, if you’re happy to speak to the team on Teams, then we can organise that very easily …
“It would be really good to speak to you and the team so thank you for offering to do this.”
If we scroll up, that’s 4 January. The top email, I know it says the “1/6” but I think that’s actually 6 January; is that right?
Sarfaraz Ismail: Yeah.
Mr Blake: It says:
“Thank you for your email, I am happy to work with your suggestions and maybe it’s better to speak to the new team members early Feb? Also I’m happy to speak to them team in person when your team are in Chesterfield, let me know the dates several weeks in advance please.”
Then you say:
“Lastly, did you have a think about our discussions regarding investigations team when we spoke at Wood Street?”
Can you assist us, what was the discussion at Wood Street?
Sarfaraz Ismail: As I said yesterday, it was trying to get the tonality right of what they are doing, getting postmasters involved to ensure the Investigation Team is in the right place, and watching the documentary and seeing how people were treated, how postmasters were treated, I felt morally it was my duty to try to get this in the right place.
Mr Blake: So you had raised it with Mr Bartlett. That was a drinks reception or something, was it?
Sarfaraz Ismail: Yeah, in October ‘23 with Mr Bartlett and with Sarah Gray.
Mr Blake: Was there a response to this request?
Sarfaraz Ismail: No.
Mr Blake: Do you know why not; was there a discussion at all?
Sarfaraz Ismail: No. No.
Mr Blake: I’m going to turn to some correspondence relating to a criminal investigation. Could we please turn to FUJ00243203. Could we please turn to page 3. This is correspondence between the Post Office and Fujitsu, relating to an ongoing police investigation. This email is sent by Simon Oldnall. Do you know Mr Oldnall at all?
Sarfaraz Ismail: Yes.
Mr Blake: He’s there as the Horizon IT Director?
Sarfaraz Ismail: Yes.
Mr Blake: So he’s not part of the Investigation Team?
Sarfaraz Ismail: No.
Mr Blake: No. He has emailed Daniel Walton, who is the Head of the Post Office Account at Fujitsu, so perhaps his counterpart at Fujitsu, and he says:
“I understand from John [that’s Mr Bartlett] that there have been some challenges with supporting an ongoing police investigation that involves a large sum of money.
“I obviously understand broader context, but wanted [to] reassure that [the Post Office] is supporting the police investigation and offering any and all assistance we can. Can I ask that you help with any conversations that City of London police need to have with Fujitsu Services Limited.”
If we scroll up, we can see a response from Mr Walton of Fujitsu. He says:
“As this is a legal matter, [Fujitsu Legal] are communicating with the City of London Police.
“I am not involved in those communications, and in any event, [Fujitsu] considers it inappropriate for Post Office and [Fujitsu] to be discussing a police investigation.”
If we scroll, please, onto the first page, the response from Mr Bartlett. Just before we get to the response, were you aware this issue at this particular time?
Sarfaraz Ismail: No.
Mr Blake: The response from Mr Bartlett is as follows:
“One of my team has gone back to City of London Police to see how the contact you referenced below was progressing as we have an open and objective engagement with the [City of London Police] on this matter.
“[City of London police] has informed us that they have not had any additional information nor contact with Fujitsu after the single, exploratory and inconclusive conversation. They left the conversation with the feeling that they were indirectly being told that the Horizon system was unreliable and so the case could not progress. We really need to explore this as this is not the nuanced impression Simon Oldnall has given me.
“As the potential victim in the case, [the Post Office] would be grateful if you can provide me with contact details for either the equivalent person in Fujitsu (in the UK) to my role (ie in charge of investigations, or perhaps the Head of Security if you do not have a dedicated investigation team) or [the] appropriate person in your UK Legal Team. I will then pass [these] details on to [the City of London Police] who are looking to have a trilateral conversation with Fujitsu, [Post Office] and [City of London Police].”
Just before we get to the next paragraph, what is your view in respect of what’s said there about Post Office being the potential victim in the case and needing to liaise with Fujitsu?
Sarfaraz Ismail: I feel it reinforces what I’ve said, which is the starting point of Post Office Limited when it comes to investigations. Hence, why I just don’t feel it’s appropriate for the business to be doing the investigations.
Again, I wasn’t aware of this until I received it in my bundle.
Mr Blake: It then continues:
“It is impossible to overstate how important this is: I need to advise both the police and [the Post Office] as to the evidentially-established reliability (or not) of data that is being used every day additional establishing outcomes with Postmasters and, potentially, to be presented to the criminal justice system by the police and the three public prosecuting agencies. The non-provision of relevant witness statements from [the Post Office] and Fujitsu will rightly be interpreted by the police and prosecutors as [the Post Office] and Fujitsu not having faith in the reliability of the data with the obvious outcome resulting.
“Look forward to hearing from you and thank you in advance.”
Would you expect this kind of an issue to come to the Board?
Sarfaraz Ismail: Yes. It’s – as I’ve said yesterday, it’s this selective and filtering of information which is given to the Board which is really disappointing.
Mr Blake: There’s then some correspondence between Mr Patterson, the CEO of Fujitsu Europe, and Mr Read, the Post Office CEO. Can we please have a look at FUJ00243199. I’m going to read from this later, 17 May 2024. So by this time had the matter reached the Board?
Sarfaraz Ismail: No.
Mr Blake: This is a month later.
“I am writing to you directly in order to raise serious concerns that have come to my attention which indicate that the Post Office continues to pursue enforcement against postmasters and it expects [Fujitsu Services Limited] to support such action.
“To be clear, [Fujitsu] will not support the Post Office to act against postmasters. We will not provide support for any enforcement actions, taken by the Post Office against postmasters, whether civil or criminal, for alleged shortfalls, fraud or false accounting.”
Then he addresses three topics, “in particular: Criminal Investigations”, and this is a reference to that particular correspondence that we’ve just been looking at:
“We have become aware of a recent investigation by the City of London Police into a Post Office branch. The approach of [Fujitsu] is to cooperate with the police and any other third party exercising independent investigative, prosecutorial, regulatory or judicial powers.
“However, we are concerned by the behaviour of the Post Office Investigation Team on this matter. That team maintains an approach of Post Office as ‘victim’ and requires [Fujitsu] to provide a witness statement as to the reliability of Horizon data stating that without such statement the case will not progress. For the investigations team to act in this matter seems to disregard the serious criticisms raised in multiple judicial findings and indeed, exhibits a lack of respect to the ongoing Inquiry.”
What’s your view about what’s written there?
Sarfaraz Ismail: I think Fujitsu are right in what they are saying and I find it disappointing that this was not discussed at Board.
Mr Blake: The second point:
“Pursuit of Shortfalls from Postmasters:
“It seems that the Post Office may be continuing to pursue postmasters for shortfalls in their accounts using Horizon data. We would have expected that the Post Office has changed its behaviour additional light of the criticisms and is appropriately circumspect in respect to any enforcement actions. It should not be relying on Horizon data as the basis for such shortfall enforcement.”
Next, “Postmaster Redress”:
“[Fujitsu] recognises that it holds Horizon related information that may assist postmasters and post office workers to appeal their convictions and/or seek appropriate redress.”
Over the page, if we look at the final paragraph, he says:
“Based on what I have seen and heard in the Inquiry, there is a significant behavioural and cultural aspect to the Horizon scandal. As leaders of our respective organisations, I believe we are both committed to learn the lessons necessary so that this appalling scandal can never be allowed to happen again.”
Now, there is a response, and we can find that at FUJ00243201; this is a response from Mr Read. Were you consulted about this response?
Sarfaraz Ismail: No.
Mr Blake: Are you aware of the Board having been consulted about the response?
Sarfaraz Ismail: No. Maybe with – as said yesterday, because the Board is tiered, maybe there was a discussion with the more important Board members but certainly not with the Board as a whole. And there were discussions with Fujitsu at this time regarding a contract extension, so those discussions definitely took place but this didn’t.
Mr Blake: The letter says as follows, 30 May 2024:
“I write further to your letter … in which you make a number of concerning statements about postmaster enforcement.”
If we scroll down, the letter says:
“I would like to reassure you that Post Office has invested significant time and resource effecting cultural and procedural change across the business, taking on board the court’s findings and ensuring that our postmasters’ interests are central to everything we do. I would be keen to talk to you further about these changes as it appears from your letter that there are some fundamental misunderstandings at [Fujitsu] about Post Office’s current day culture and activities.”
He then addresses each of the points.
“Criminal investigations”, he says:
“I can reassure you that Post Office is not now – and will not be in the future – undertaking any prosecutions against postmasters or any third parties as the prosecuting body.”
Over the page, please, thank you. He says:
“… in respect of enforcement, Post Office’s requests only relate to cases where our teams are supporting criminal investigations or prosecutions pursued by independent third parties, such as the police or the Crown Prosecution Service.”
So that’s in line with the noting paper that we saw earlier:
“In response to the specific case you raised, potential criminal activities were identified in the branch and Post Office therefore reported the matter to the police. We have assisted with the police’s investigation, including providing supporting data from the Horizon system.
“Naturally, it is vital to the police’s investigation that it can rely on the Horizon data it has received. I am happy that you have confirmed in your letter that [Fujitsu] will cooperate with the police when it is exercising its independent investigative powers as this case would require a statement from [Fujitsu]. It is a matter for the police and [Fujitsu] to determine the necessary content of the statement.”
He then addresses the other two matters. Very briefly, “Pursuit of Shortfalls”, he says:
“As you are aware, civil recovery of losses was stopped by the Post Office in 2018 so Horizon data is not currently being used for civil recoveries …”
If we go over the page, we see there the “Postmaster redress”:
“The reliability of Horizon data is also central to the compensation and redress schemes which Post Office is currently delivering, to right the wrongs of the past. I welcome your confirmations that [Fujitsu] will provide Post Office with information …”
Do you have any views on that response?
Sarfaraz Ismail: It’s disappointing this letter went out the way it did, and I think what this letter quite clearly shows is the lack of control and oversight within this organisation, where the CEO is implying a certain point, so we’re not prosecuting, but yet you’ve got investigators doing investigating, and they are basically doing what we have already seen previously on some of the other decks.
Mr Blake: I want to take you to an email that you sent to the Chair of Post Office in June, so that is POL00448398. So that correspondence from Mr Read was 30 May this year. This is then an email unconnected of 14 June this year, entitled “Postmaster Police Investigations”, and you raise a concern there that information hadn’t come to the Board relating to prosecutions; is that right?
Sarfaraz Ismail: That’s correct.
Mr Blake: You say:
“There are some additional documents on Diligent …”
Diligent is a system that you can access Board papers on; is that right?
Sarfaraz Ismail: That’s correct.
Mr Blake: “… from a Board meeting on 23 October, regarding police investigations and postmasters, which I feel need clarifying.”
Can you assist us with this email and what your concern was?
Sarfaraz Ismail: So there was an item discussed at the October ‘23 Board meeting regarding police investigations into potential wrongdoings and how the investigations team, supported by Legal, wanted to adopt a specific approach. So what myself, Mr Jacobs and also Mr Tidswell, and other Board members, all resisted saying, “No, we do not want to go down this approach”. And it was agreed for the Investigation Team, so in this case JB, to come back with what he was thinking in terms of some examples. So as a Board, we could then appraise what’s going on and check the tonality.
Now, my alarm bells were ringing when I saw this item had been closed. So for me, this created misinformation within the wider Executive, based on a decision that had not happened and, as my job as an NED, I ensured I called that out, which is why I’ve raised this with Mr Railton, and we have reopened this item but I’m not sure if there’s been any discussions with CoSec or whoever took the minutes on the day as to why such an incredibly important issue was closed when it definitely was not closed.
Mr Blake: Why was it that in June 2024 you were looking into the issue of police investigations?
Sarfaraz Ismail: There was no specific reason, as such. For me, there’s – I’m always thinking about how to make the organisation better, and just going through what I have to do as a director, looking at the action logs, just double checking things, were they closed? What’s open? Is it assigned to the right person and, when I saw the action log and I saw that closed, that’s when I thought, “Oh, hang on a minute, this is not right, I don’t remember this being closed”. I confirmed with Mr Jacobs, “Do you remember this being closed?”, and he said no, as well.
And yeah, I sent – I’m not sure if you’ve got the attachment to this – I did also send the minutes to corroborate with what I have said here and Mr Railton agreed that this is not what was agreed.
Mr Blake: By this stage, 14 June this year, had you been informed about this correspondence between the CEOs of the Post Office and Fujitsu?
Sarfaraz Ismail: No.
Mr Blake: Would it have been relevant to the issues that you’re raising here?
Sarfaraz Ismail: 100 per cent, yes. Just looking at the dates, it’s such a coincidence, but yeah.
Mr Blake: Do you know if Mr Read was aware of your concern that was being raised here?
Sarfaraz Ismail: Maybe in hindsight I should have cc’d Mr Read in. But I would have expected Mr Railton to have picked that up as chair with Mr Read.
Mr Blake: Thank you. Can we turn to FUJ00243204.
Sir Wyn Williams: Before we do that, Mr Blake can I just be clear, Mr Ismail, about what you are saying about Mr Read’s letter, all right?
As I understand it, you are certainly saying that, before Mr Read sent a letter like that to Mr Patterson, there should have been some awareness of that or a discussion of that at Board level, yes?
Sarfaraz Ismail: That’s correct, sir.
Sir Wyn Williams: I’ve got that point completely. What I’m not sure about is whether you actually have an issue with any of the contents of Mr Read’s letter and, if so, could you tell me what they are, and why you have those issues.
Sarfaraz Ismail: Yes, for me the issues are the Post Office is just still not seeing what everybody else is seeing, starting from a victim’s – starting – having a starting point as a victim is unacceptable and, for me, Mr Read’s letter shows the disconnect that exists within the organisation and how information just doesn’t seem to be passed, and the silo working mentality, unfortunately, is still rife.
Sir Wyn Williams: I’m playing devil’s advocate now, all right, so nobody should misunderstand me but, if an alleged crime has been committed, like, say, theft or fraud, then there is an alleged victim, all right, and it can only get to the police if the alleged victim makes some kind of report or investigation and then reports it to the police. I think that must be right, must it not?
So isn’t inevitable that the victim – or the alleged victim, let’s choose our words very carefully – must have a role to play at the very start of an investigation, otherwise it never gets to the police.
Sarfaraz Ismail: That’s correct, sir, but, as the Fujitsu letter stated, the – Fujitsu were happy to provide information based on an independent third party verifying. Now, once that happens, then, yes, I’m in agreement with you, but to start from a position that echoes the past, I find disappointing.
Sir Wyn Williams: All right. So am I right in thinking that your point is that, before Post Office reports an alleged crime of, say, theft or fraud to the police, it should instigate an independent investigation by someone other than the police before referring it?
Sarfaraz Ismail: Yes.
Sir Wyn Williams: Is that what you’re saying?
Sarfaraz Ismail: Yes, sir.
Sir Wyn Williams: All right. I understand. Thank you.
Mr Blake: Thank you.
There’s now further correspondence on 8 July from Fujitsu. That’s FUJ00243204. That’s another response from Mr Patterson, I’ll read to you a few passage from that. He says:
“I am glad that we both share a commitment to learn lessons from the Post Office Horizon scandal and to ensure that the appalling treatment of postmasters and the miscarriages of justice that occurred, could never happen again. That was my reason for writing to you.”
In the next paragraph, he says:
“In simple terms, the Post Office is requesting that [Fujitsu] give expert opinion evidence to be used in criminal proceedings against postmasters and post office workers.
“In your letter, you rightly note that the content of any witness statement is a matter between the police and [Fujitsu]. However, I consider it necessary to address this issue with you because the request was made by Post Office and because I consider the request to be entirely inappropriate, particularly in the light of the evidence being uncovered at the Inquiry.
“I enclose with this letter”, and it’s the email chain we’ve just been looking at.
He says:
“Mr Bartlett continues the prior narrative of seeing the Post Office as the ‘victim’ and requests a witness statement to address ‘the reliability of the Horizon system and the admissibility of evidence produced from it’. Mr Bartlett suggests that a failure to do this would ‘rightly be interpreted by the police and prosecutors as [the Post Office] and Fujitsu not having faith in the reliability of the data with the obvious outcome resulting’.
“A witness statement from [Fujitsu] attesting to the reliability of the Horizon system and of that from it in criminal proceedings would amount to expert opinion evidence. [Fujitsu] is incapable of providing expert opinion evidence as it is neither independent nor has it sufficient information to provide such an opinion.
“As the Post Office is well aware, there has been and there continue to be bugs, errors or defects in the Horizon system. Further, [Fujitsu] currently has and previously had access to branch transaction records. Your letter … also acknowledges the existence of other matters … which could have operated to create innocent discrepancies in branch accounts including ‘… miskeys, or omissions when remitting cash of stamp stock based on Horizon data …’ by end users.”
It then refers to the Horizon system being reliant on the “delivery of services by Post Office and third parties”. If we scroll over, he says:
“Based on the evidence which has been seen and heard in the Post Office Horizon IT Inquiry, [Fujitsu] considers that all of the matters mentioned above would need to be investigated carefully by the Post Office and the police, with the assistance of an independent technical IT expert, and possibly also forensic accounting expert, to ascertain proper explanations for branch account discrepancies.”
Just pausing there, we’ve seen in previous phases of this Inquiry discussion about obtaining a statement from an expert who can attest to the reliability of the Horizon system. Are you aware of any discussions at Board level about that topic?
Sarfaraz Ismail: No.
Mr Blake: “[Fujitsu] considers that only after such an investigation has been undertaken could a meaningful expert witness statement be made in subsequent criminal proceedings which addresses the reliability of the Horizon system and the relevant data produced. For the reasons I have mentioned above, [Fujitsu] cannot provide such a statement.”
Then he addresses the topic of shortfalls.
I’ll ask the same question that I’ve asked a number of times: were you made aware of this communication?
Sarfaraz Ismail: No.
Mr Blake: We then have Mr Owen Woodley, acting CEO, responding on 23 July, could we please turn to FUJ00243209. I know I’ve done a lot of reading, I’ll just read a few passages from this letter. He says:
“I write further to your letter of 8 July addressed to Nick Read, and to thank you for coming to our offices … to meet with me.”
The expert evidence point is addressed at the bottom of this page. He says:
“Your letter said that Post Office was requesting that [Fujitsu] give expert opinion evidence, to be used in criminal proceedings against postmasters and post office workers. That was not the case. As you rightly say, [Fujitsu] is not able to provide expert opinion evidence as it is not sufficiently independent for any statements that it may provide to be deemed expert evidence by the police or Crown Prosecution Service. Post Office is aware of that and has not/would not request that [Fujitsu] provides expert opinion evidence.”
He then says, about halfway down that first paragraph:
“The police have raised questions regarding the data and the Horizon system, and the AC&I Team …”
That’s what was the Central Investigations Unit, I think; is that right?
Sarfaraz Ismail: Yes.
Mr Blake: “… referred the police to [Fujitsu] – as [the Post Office’s] provider of the system – to obtain answers to those questions. The feedback they received in April 2024 was that the police had only been able to have one conversation with [Fujitsu] at the time and the investigation officer’s impression from that conversation was that they were indirectly being told by [Fujitsu] that the Horizon system was unreliable. As a result, the police told the AC&I Team that the investigation could not progress.”
He then says:
“In light of the feedback from the police”, and he discusses the discussion about the letters.
If we go over the page, one more paragraph that I’ll read. He says:
“We discussed that Post Office had used the word ‘victim’ [so he addresses this victim issue] in correspondence with [Fujitsu]. We both acknowledged that while this may be a legally and factually accurate description, it does not reflect the change in Post Office’s attitude towards postmasters.”
Does that reflect your own opinion?
Sarfaraz Ismail: Yes.
Mr Blake: Yes. Did you have a discussion with Mr Woodley about that point?
Sarfaraz Ismail: No.
Mr Blake: No.
Sarfaraz Ismail: The first time I saw this letter was last week when I received my bundle.
Mr Blake: “Naturally, there will be instances where Post Office has to use the proper legal term to describe matters [for example] in correspondence with or evidence provided to the police or the CPS. However, alternative language will be used when discussing these matters with [Fujitsu], other third parties and in internal Post Office correspondence.”
Are you aware of any kind of cultural change taking place at the Post Office in the matter that’s described here, in terms of the language used within the business? Are you aware of any policies, for example, that the Post Office shouldn’t be referred to as a victim, save for those circumstances identified here?
Sarfaraz Ismail: No.
Mr Blake: “I am very clear that our communications must reflect of the cultural change in the organisation.”
He then addresses the postmaster shortfalls point.
The very final letter on this is the response from Fujitsu of 26 July, and I’d just like to take you to that. That is FUJ00243211. This is a letter sent to Mr Woodley. Is this also a letter you hadn’t seen before receiving it from the Inquiry?
Sarfaraz Ismail: Yes, I have not seen this letter before.
Mr Blake: He says:
“It is unfortunate that Nick was not able to attend the meeting as discussed. The original purpose of writing to Nick was to escalate, CEO to CEO the concerns relating to certain behaviours within the Post Office. It seems clear that the Post Office continues to have significant cultural issues, sees itself as a ‘victim’ with the enforcement and prosecution of postmasters considered as a business as usual activity of a commercial retail company. As I stated in my correspondence to Nick and during our discussion, Fujitsu finds the language and the suggested behaviour unacceptable from Post Office investigators.
“I do not intend to engage further with the Post Office on the matters I raised. We completely trust in Sir Wyn and the Inquiry process which will examine the extent of the Post Office change in Phase 7.”
Aren’t we back again to the school playground a little bit here, with Fujitsu refusing to engage further with the Post Office, and as seen in this exchange of letters?
Sarfaraz Ismail: Yes, it does feel like that, yes.
Mr Blake: I mean, how would you describe the relationship between the Post Office and Fujitsu, insofar as you’re aware?
Sarfaraz Ismail: From the updates that we received as NEDs at Board level, the relationship wasn’t the best, and I can understand that, and we both need to work together, for the short-term, at least. And until we have our New Branch IT System ready, there’s no way of exiting the relationship with Fujitsu. So it was a case of get on with it and make it work for the postmasters up and down the country.
Mr Blake: The impression that’s given by this correspondence is a real breakdown in the relationship between the two of you; would you agree with that?
Sarfaraz Ismail: Yeah, I can see – I can see why it does look like that, yes.
Mr Blake: Would you expect a letter of this sort or the correspondence that we’ve just been seeing to have been addressed at Board level, in light of the relationship between the two companies?
Sarfaraz Ismail: Yes. As Fujitsu is one of our biggest partners, I would have expected that, yes.
Mr Blake: And has that seeming breakdown in the relationship been addressed at board level to the best of your knowledge?
Sarfaraz Ismail: No, because it’s not been raised.
Mr Blake: I’d like to ask you a few more issues on cultural issues before we take our morning break. We’re only taking one morning break today but it will be 15 minutes long.
Equality and diversity issues you’ve raised in your statement. You say at paragraph 25 that you’ve only been invite to one equality, diversity and inclusion meeting on 3 March 2022, despite being the EDI lead on the board. Can you give us a little bit more detail on that, please?
Sarfaraz Ismail: It’s – as I said in my statement, there’s – I was appointed by Angela Williams as the lead when she was the Chief People Officer, and I was only invited once, and I’m not sure why. Some of the conversations I’ve had – so last month, for example, I had a conversation with an individual of an ethnic minority, and just a polite, “Hi, who are you”, kind of conversation, introductory conversation, and when I introduced myself, he said to me, “Oh, I didn’t know that you were on the Board”.
This organisation has a certain point where individuals with diversity can get to and then, beyond that, there is nobody, unfortunately.
Mr Blake: I’d like to take you to some emailed correspondence from last summer. Can we please turn to POL00448378.
If we start on page 2, please. You have written there to Jane Davies. So what was Jane Davies’ position?
Sarfaraz Ismail: She was the Chief Retail Officer – no, she was the Chief People Officer, sorry.
Mr Blake: Subject “Racism and employment practices”. You are writing to express your deep concerns about recent issues regarding racism and employment practices at the company:
“First, I was deeply troubled to learn from recent articles that racism has been identified within our business. As the D&I Board member, I am particularly concerned that I was not informed of these issues until a [postmaster] brought them to my attention. I believe that we must address these issues head-on and ensure that our company is a welcoming and inclusive environment for all employees.”
Sticking to that first point, what was the background to that?
Sarfaraz Ismail: There was – it’s there on the article from the Computer Weekly. So there was an article on the Computer Weekly website regarding – was it regarding a document?
Mr Blake: If we scroll down below the link, that might assist you.
Sarfaraz Ismail: Ah. So this was when individuals rang in to the call centre in their time of need to report losses, and people on the other side answering – POL employees answering calls were using the term “I’ve got another Patel”.
Mr Blake: You have also mentioned here an issue with the rehiring of staff members. How does that tie into the equality, diversity and inclusion issues that you’re raising?
Sarfaraz Ismail: I think it reinforces what I have already said.
Mr Blake: What do you mean by that?
Sarfaraz Ismail: In terms of there’s a specific make-up of individuals this organisation hires and, by rehiring, we are never deviating from that and, for me, what was clearly evident, and I’ve raised on numerous occasions when I started as an NED in early ‘21, throughout the strategy days, to various individuals who joined the organisation, the Post Office has to relate as an organisation to the demographic of its postmasters.
There’s got to be some kind of connection, so the hierarchy, the middle management, the Board, everybody understands what postmasters are going through, and an example of this was – and it’s in my witness statement – in April ‘24, when there was three events organised during the month of Ramadan, and I received an email. Firstly, I wasn’t invited, neither was Mr Jacobs, to postmaster listening events, and we were both shocked because we had postmasters saying to us “What’s the point of you two being on the Board? We don’t hear from you, we don’t know what you’re doing”.
So on the not hearing from us, in November ‘21 Richard Taylor advised both of us not to communicate on social media or with any other postmasters, which was – the way I certainly saw it was a lack of confidence in our independence and what we’re doing, and in trust.
Going back to the April ‘24, when these events were organised, I raised the point that why we’ve not been invited by the senior management. That was never responded to. And my specific conversations at the time with Tracy Marshall was “Okay, Tracy, if you want to do these events throughout this period, just ensure that you cater for individuals who are fasting. So please have proper meals ready, ablution facilities, and mass prayer facilities”, and the response I got was “We don’t provide that.”
And I challenged back and I said, “Well, that’s – so then you’re excluding postmasters”.
And with my conversations with Mr Jacobs, he confirmed to me as well, “Saf, I’ve got staff members who will be fasting also, so I wouldn’t be able to attend”.
So I don’t think the business quite understood. Now, common sense did prevail and Mr Woodley rightly, once I have raised this with him, changed the dates to afterwards. Now, the business was very keen to get them events done before Phase 5 and 6 and – rightly or wrongly, but the timing just was not right.
Mr Blake: If we scroll up on this email, we can see Mr Jacobs also responds. He says he had had recent reports from an Asian colleague who complained to him that he was talked down to by a team member on the Helpdesk that handles transaction correction queries. When he challenged and claimed it was inaccurate and asked to organise a visit to visit the Cash Centre to see the evidence, he claims he was repeatedly obstructed and told to accept the transaction correction.
He would add:
“… having visited the Cash Centre and watched the CCTV he was 100% correct – despite the claim by [the Post Office] that the matter had been reviewed by a supervisor.”
If we scroll up, we can see a response from Mr Tidswell, who says he thinks there are a number of strands here. First:
“There is highly disturbing evidence from the Inquiry about historical racism.”
That was the identification codes issue; do you recall that?
Sarfaraz Ismail: Yes.
Mr Blake: Then there is a question about hiring practices:
“… to ensure that [the Post Office] is alert to rehiring people who have a history at [the Post Office] …”
That’s a matter we have already discussed today:
“There is the important need to ensure we have a business today in which racism is not tolerated at any level.”
He says the report from Elliot about incidents is very concerning.
Ms Davies, on the first page, at the top of the first page, also says that:
“We have all been disturbed by this feedback … and it needs to be appropriately investigated and dealt with. We are taking [steps], we should all get on a call so we can update and agree appropriate steps.”
Do you think that sufficient steps have been taken in this regard?
Sarfaraz Ismail: No.
Mr Blake: Was there a conversation here where steps were agreed?
Sarfaraz Ismail: Not that I can recall, no. But I’m not sure how long Ms Davies was in the business after this, but I would have expected this to have been something – an issue that the People Team would have been taking seriously, and I would have expected more than one individual to take ownership of this.
Mr Blake: Thank you. Very finally before the break, the topic of bonuses. Within your statement, at paragraph 68 to 75, you address what you refer to as an “unhealthy and unjustified obsession with bonuses and remuneration”. Can you assist us with what you mean by that?
Sarfaraz Ismail: So, from my observations throughout being on the Board, there was clearly – there is clearly a culture which is bonus led. So, firstly, between January ‘23 and March ‘23, there was an obfuscation of RemCo papers by the wider Executive, which resulted in Bonus Gate in May ‘23. Then we had recently discovered – I had, should I say – that there was a RemCo pay grade over the last six months. Being a Board member, I wasn’t even aware of this, so I challenged Amanda Burton, regarding this specific RemCo pay grade, and in April ‘24, Amanda responded saying how, since 2019, certain individuals had received pay increases up to 30 per cent since 2019, whereas the reality is postmasters on the frontline have not had a real increase since 2015. My own businesses, my income is a couple of per cent, my costs have gone up by 18 per cent in the last two years, clearly showing how the culture is driven specifically, it’s a bonus culture within this business.
Then there was some communication again in April with myself, Amanda Burton and Mr Jacobs regarding STIPs and LTIPs. So the management put forward a recommendation or their LTIPs. And, like I said, yesterday, until the bonuses are being paid and until the reassurance is given when they are paid, morale is a little low, which we’ve heard on numerous occasions at Board meetings last year also. And the recommendation put forward for the LTIP, which is long-term incentive payment, was complaints against postmasters. And when myself and Mr Jacobs saw that email, we read it a few times, thinking “What? How can that be?”
And we then went back to Amanda, and informed her “Why is the wider Executive putting forward a metric that they’re not even in control of; how does that even make sense?”
So then as part of my role and good governance, I went back to Amanda, and I’ve disclosed the email, outlining key metrics that should be used. Firstly, I don’t believe this business should have any bonuses. However, what I’ve been told is it’s part of the contracts that have been agreed. Now, if our hands are tied, then surely the metrics need to be right, which need to be connected to the realities of postmasters. So what are postmasters receiving in remuneration? What is going on in terms of the organisation, in terms of profitability? What about cutting central costs?
So these were my counterproposals, and I did that, and it was at the Board meeting in June ‘24 or July ‘24, very recently, when I challenged back to Amanda advising “When are we going to implement?” And Amanda Burton – and I was very disappointed with the response, it was again the way I perceived it, protecting the wider Executive to ensure bonuses are met.
All I was told was, “Sorry it’s been agreed. We have to stick with what we’ve got”.
Mr Blake: It might be suggested that there is a tension there between being a subpostmaster and being a member of the Board and potentially a conflict when it comes to those kinds of remuneration issues. What would you say about that?
Sarfaraz Ismail: I’m not sure it is. I can see why it looks like there’s a conflict. It’s about bringing the reality of doing my duty as a director to life. So my responsibility is, and my fiduciary duty is, to ensure the business is run correctly and to ensure the taxpayer, the shareholder, has value for money and also ensure postmasters, past, present, future, are treated well and the business is run in an effective manner.
So seeing this is culture and not calling it out, I feel, compromises my responsibilities. So I appreciate how it does look like a conflict but, for me, my role as – my moral duty in calling it out is my first responsibility and that’s what I was doing.
Mr Blake: Thank you.
Sir, that might be an appropriate moment to take our morning break?
Sir Wyn Williams: Yes, of course. 11.40?
Mr Blake: Thank you very much.
(11.26 am)
(A short break)
(11.40 am)
Mr Blake: Thank you, sir. Can you see and hear me?
Sir Wyn Williams: Yes, thank you, yes.
Mr Blake: We’re going to move on to a new topic and that is the New Branch IT System. Could we please bring onto screen your witness statement, that’s WITN11170100, at page 9, please. Thank you. If we scroll down the page you’ve set out in your witness statement a number of problems that you have faced with the current Horizon system. At 31.1 you say:
“Horizon suffers from a lack of integration with other systems …”
If we move on to 31.2, I think you say that Horizon systems are unnecessarily complex.
At 31.3, “not designing to cater for human error”.
31.4:
“The daily and weekly reports are not easy to analyse.”
31.5:
“There are issues with Horizon incorrectly reporting the sum of foreign currency being held in a branch.”
If we scroll down, 31.6:
“… issues with Horizon failing to recognise the reversal of transactions.”
31.7:
“… experience of Horizon taking payments from a customer twice …”
Then:
“… incorrectly recording ATM transactions.”
In principle, are you favour of a new IT system?
Sarfaraz Ismail: Yes.
Mr Blake: Thank you. That can come down.
The New Branch IT project was commissioned prior to you joining the Post Office; is that right?
Sarfaraz Ismail: Yes.
Mr Blake: Who is responsible for that project?
Sarfaraz Ismail: So when initially joined the business, Jeff Smyth, was responsible and, at some point, I think Zdravko Mladenov and then more recently Chris Brocklesby.
Mr Blake: At paragraph 183 of your witness statement you say when you first joined, the anticipated budget was £280 million and that that is now in excess of £1 billion; is that right?
Sarfaraz Ismail: Yes.
Mr Blake: What do you understand to be that main reason behind that significant increase in cost?
Sarfaraz Ismail: There’s a variety of different factors, firstly I remember when 280 million was discussed at the Board meeting late ‘21 and Mr Jacobs specifically questioned Zdravko, saying “280 million, does that not sound too cheap?” And her response was “Well, that’s the costings that we’ve got to for now”.
But, as the project has evolved, there’s been more to deal with. As the Inquiry’s evolved also there’s been more, for example, training and, on the first Horizon – the current system that we’re using, should I say – the lack of training, the lack of oversight/support. So, in order to address these issues, to ensure the business doesn’t make the same mistakes as it has done in the past, the budget has increased to ensure everything is incorporated for positive implementation and a better experience.
Mr Blake: In your statement, you have raised number of issues, starting with hardware being purchased and sitting in storage. Is that relating to the NBIT project or is that something else?
Sarfaraz Ismail: No, that’s in relation to NBIT so, again, we were told at Board that we had to decide on the purchase of this hardware so, as a Board, we then authorised in late ‘23 for the purchase of 30 million, because we were instructed we had to make a decision and – in order to be ready to have the goods delivered, for the implementation of the new system.
And at the time, we were told we were getting a very good deal, hence why we did it at a discount, 5 per cent, something along them lines. Then Zdravko left the business, we had Chris Brocklesby, and now we’ve got a new individual, Andy Nice, who’s heading up the new NBIT programme, and the recent Board discussions that we have had has opened a totally different conversation, and the conversation is as follows: are we actually going to be ready for NBIT in the next two to three years? It doesn’t look like it. Hence, the Fujitsu extension that we’re looking for, which I challenged in June ‘24, instead of going for a five-year extension, to give the shareholder and postmasters some reassurance that we want to get on with this new IT system, go with a two years, plus one, plus one, plus one, so we have a break.
Now, further investigating that’s happened and part of the strategic review that’s been taking place, it’s clear that we are not ready; we will not be ready for NBIT within the next maybe two/three years, hence why buying this equipment was probably the wrong decision when we did that, and this has been spoken about at Board over the last few months and, again, I’ve not seen any accountability taken for that decision yet.
Mr Blake: Who do you hold responsible for that decision?
Sarfaraz Ismail: The IT – the individuals working within IT, and obviously the wider Executive because everyone is aware of what’s been going on and what the business is trying to do, in terms of implementing a new IT system.
Mr Blake: Is there a particular individual within the IT Team that you consider should take accountability and responsibility for that?
Sarfaraz Ismail: I feel it’s a wider Executive issue because the decision wasn’t solely based on one issue. Everyone within the wider Executive would have discussed that.
Mr Blake: Without going into legal advice, do you feel the Board have taken into account matters that were raised by the Inquiry in Phase 2 of the Inquiry, concerning the original Horizon procurement and the difficulties that were experienced?
Sarfaraz Ismail: I’m not sure they’ve – the Board certainly has not been told about these specifics in terms of Phase 2. Maybe the wider Executive are probably more aware, I’m not privy to that, so I couldn’t tell you.
Mr Blake: You also raise that there are still a large number of bugs in the new system. Can you briefly summarise that for us?
Sarfaraz Ismail: Yes, so recently, since the Fujitsu conversation started in June ‘24 at Board, we had to assess the commercials in terms of a new renewal with Fujitsu and what’s the longevity, how many years tenure, et cetera. So, in order to do that, there was an assessment made by the new Chair on the current state of the NBIT programme and, basically, we were so far behind, and the Board had not been informed anywhere near to the level that it should have with regards to making decisions.
Mr Blake: Are you aware of those issues with the bugs being resolved?
Sarfaraz Ismail: Not yet, no.
Mr Blake: Do you feel that there is a sufficient grasp of the issue?
Sarfaraz Ismail: The Board is aware that there are bugs, and I feel the Board is waiting for the decisions from the strategic review in order to then produce a plan in terms of what needs to be addressed in a certain order.
Mr Blake: You’ve raised in your witness statement a number of issues with the usability of the new system. That’s paragraph 185 of your witness statement – I won’t bring it up on to screen unless you need to see it – but first you raise the issue of customer-facing screens. Very briefly, what is that issue?
Sarfaraz Ismail: So currently, if a customer visits a Post Office, the experience that a customer has is dependent on the staff member serving them, so depending on the skill level, capability, ability of the staff member. And it’s clear, so the better-trained, the better-informed staff member gives the customer a better experience.
However, having a customer facing screen helps the postmaster enormously because, firstly, it helps reduce on a training level; secondly, from a governance and compliancy level, we hit high marks; and, thirdly, the overall journey, in terms of the customer choice, is better because the customer can actually see what the clerk – the counter clerk is actually doing, and the experience is already so complex.
So, for me, I felt it’s a necessity and, again, so did Mr Jacobs. And we were continually told “There’s no money for it”, whereas – again, we said “It’s a necessity”, and maybe two or three occasions we were told “No, sorry, we can’t do this”.
Mr Blake: The second issue you raise to do with dual terminal log-ins. Very briefly, can you explain that issue?
Sarfaraz Ismail: Yes, so currently on Horizon, so a postmaster from Burnley who raised this with me, he’s just one of a number on the existing Horizon, how it’s very difficult, if you’re a – if you’re serving, you can’t afford to have an extra member of staff. So, if you’ve got account customers you want to do them on the one terminal, because you’re the manager of the branch, and then next to you you’ve asked another terminal, so you can keep serving your customers.
So the customer experience is still okay and you can still run your business and, unfortunately, on the current system, the Post Office, with their rule by exception, doesn’t allow postmasters to do that. Although they did, for a very short period of time. So this is again another one of my concerns that I’ve raised for the new NBIT system. This should allow postmasters to operate effectively.
Mr Blake: A third issue you raise is an issue with the retail sales facility.
Sarfaraz Ismail: Yes. So there’s a lack of integration, currently, and many postmasters need Horizon to provide a form of taking retail sales and, again, the business seems very reluctant to do that, and the business is very happy and very comfortable saying, “Oh, we’ve got costs to pay for card machines, if card payments are taken on our terminals.”
However, when postmasters have costs and postmasters wifi is being used, the Post Office unfortunately doesn’t consider that, which is disappointing, hence me raising that point.
Mr Blake: The fourth issue, a particular issue regarding stamps stock balancing. Is that to do with the issue we spoke about yesterday or is that a different issue?
Sarfaraz Ismail: No, this helps alleviate issues like that. So, again, as I have said on numerous occasions, myself and Mr Jacobs have been ignored on so many different issues and this is another classic. Regarding the design of NBIT, for us, as postmasters, for the wider network, we want to produce something that’s 2030 ready. We want to reduce the risk for postmasters but also the risk for Post Office and, as part of good governance, we felt that the Post Office should start to consider, like they do with the self-serving kiosks, printing postage stamps. That reduces, overnight, the liability – an approximately £200 million liability that we have in physical stamps stock.
In simple terms, a customer would come to the counter, they post a letter, parcel, whatever they want, and the Post Office clerk on the other side would print a stamp, whether that’s a first, second, it’s irrelevant. They would just print a stamp, either stick it on for a customer; if it’s a letter for tomorrow, give the sticker to the customer, they can stick it on. We currently do that and, unfortunately, there’s been no appetite to do that.
And it was late last year when the conversation started with Chris Brocklesby, again, saying, “Why have we not been informed? You’re making decisions about auto stock rem based on trying to correct stamp issues, which is fine, to make postmaster’s life easier, but why are we not thinking about this when we’re redesigning a new system?” It reduces the time a postmaster has to balance every week. So overall, controls, risk, everything comes back in line.
Mr Blake: If I could take you to some board minutes, it’s POL00448789. This a meeting of 9 March 2023. If we could turn, please, to page 5. It appears from these minutes that you did have some influence on the Board or an opportunity to feed back to the Board. If we scroll down, we see there it says:
“The Chair noted that SI had had sessions in relation to NBIT and queried what his response had been. SI replied that he and EJ [that’s Mr Jacobs] had had a short demonstration of the development version … of NBIT and although not all functionality was operational, good progress was being made and their experience was positive. [He then] spoke to the simplification of the system and the ease of training.”
If we scroll down, we can see there’s reference there to you advising that you are still heavily in favour of customer-facing screens, so that’s the issue we just spoke about.
Sarfaraz Ismail: Yeah.
Mr Blake: “… as part of NBIT and queried whether there was a way to be more targeted with customer-facing screens.”
The response was that:
“… postmasters self-funding customer-facing screens was another option. AC [AC was Mr Cameron] noted that one of the advantages of NBIT was that it was much quicker and cheaper to make changes in the future; we did not wish to invite delay and change the scope now. [You] queried whether funding for customer-facing screens could be applied as part of the next funding submission.”
Looking at that and looking at your experiences, do you feel that you have been listened to at Board level in respect of the NBIT system?
Sarfaraz Ismail: Clearly not. There’s been a certain tunnel vision approach to just get off Horizon, especially with everything that’s been going on, and that’s led, unfortunately, to the business trying to do this very quickly, which is not necessarily the right way.
Just to give a bit more context to these minutes, myself and Mr Jacobs met with one of the individuals working on the Horizon Programme, and what they showed us was two very simple transactions, and this was very early on. The transactions we were shown were how to do a return and how to post an item, and we were shown what to expect from a back office perspective. It wasn’t working yet and, for us, as proactive postmasters, myself and Mr Jacobs, this was revolutionary because it would help us – it would transform the way we run our businesses and how we serve our customers. So, for us, it was definitely the right approach that we were using. However, it was a very, very simple model.
And I’m not sure people appreciate how clunky and how big Horizon currently is, and how even a simple screen is such a big upgrade. So for us to see new technology was massive, and one of the big plus points for us was the printers, which, compared to what we’ve got now, the thermal printers, saving so much time, so much money for the shareholder.
Mr Blake: Thank you. I’d like to move on now to a number of reports to the Board, recent reports to the Board, and I’m going to start with something that is called the Teneo report. Can we please turn to POL00448624. This a Board pack for a meeting on 4 June this year. Was that a meeting that you attended?
Sarfaraz Ismail: Yes.
Mr Blake: Can we please turn to page 109. There was a strategic review that was carried out, and this is an update for the Board by a company called Teneo; are you aware of the background to this report?
Sarfaraz Ismail: Yes. The – one of the conditions that Mr Railton insisted on, upon his interim appointment, was to ensure a strategic review is done, and that should be done specifically by Teneo.
Mr Blake: If we scroll over, we can see the background. It says there:
“Post Office Limited has invited Teneo to carry out a comprehensive Strategic Review of the business and develop a clear plan for the future.
“The Post Office faces a range of challenges, including”, and it sets out various challenges.
The final one of those is:
“Need for technological overhaul of core systems, with substantial delays and overspends on Horizon replacement.”
That’s in line with, I think, what we’ve just been talking about?
Sarfaraz Ismail: Yes, correct.
Mr Blake: Was this well received, this report?
Sarfaraz Ismail: Yes, it’s the beginning of a new journey, is the way the Board was looking at this, and the business, to be fair. So yeah, the starting point now, how we execute is the challenge.
Mr Blake: If we scroll over the page, it has a set of key questions. One of them is “Fit-for-Purpose Technology”, and the questions it asks is:
“How will technology support the future operations of the Post Office?
“How do we ensure new systems (eg Horizon replacement) are fit for purpose and futureproof?
“How should we partner with suppliers to achieve this?
“How can technology be leveraged to remove inefficiencies and human error?”
In your view, are those matters now being taken seriously by the business?
Sarfaraz Ismail: It depends on what the findings are once the review has been conducted, and the implementation. I think it’s a bit premature for me to give you a response for that.
Mr Blake: Could we please turn to minutes of a Board meeting from 4 June this year, that’s POL00448648. We can see there, Mr Railton is now Interim Chair by this stage, although we, if we scroll down, we can see that, given his recent appointment, it says that Mr Tidswell would act as Chair at that particular meeting.
Sarfaraz Ismail: It was Mr Railton’s first meeting, hence he asked Mr Tidswell, “If you don’t mind”.
Mr Blake: Thank you. Can we please turn to page 4, and we’re looking about halfway down page 4. So we’ve just seen that IT is going to be a big issue in the future and something that the company is currently getting to grips with. We see there:
“SJ was discussing the position on the reporting of procurement risk exceptions between ARC and the Board with LC as there seemed to be some inconsistency.
“ACTION The Chair queried whether IA or an external needed to be engaged to conduct review of procurement governance.”
Then there is a reference.
A little further down, just at the end of that bullet point, it says:
“[Mr Railton] and SJ agreed that IA needed to undertake a review of procurement governance.”
Can you assist us with what the issues are relating to procurement governance, however brief?
Sarfaraz Ismail: Procurement currently is a bit of a mess within the Post Office, so I’ve heard the Head of Procurement, as I’ve mentioned in my statement, say in May ‘24, the Board is risk averse and, at the following Board meeting I mentioned this, advising that someone needs to have a conversation with Procurement. The Board is not risk averse: if incomplete information is provided, it’s very difficult for the Board to make the right decision.
Then we had a situation earlier this year, June ‘24, where procurement basically made a mess of the spend on the new NBIT system. It went over 50 million so we had to then get retrospective approval.
Prior to this, towards the end of last year, again earlier this year, there’s been issues regarding procurement. There was one point raised brilliantly by Brian Gaunt, one of the NEDs, when he advised, with the conversations he’s had, that Procurement were trying to agree contracts for 10 years, which is outside the norm, in terms of commercial terms.
The average is five years but they were trying to go for 10 years, just to avoid doing Procurement again. Hence, why I say Procurement is a mess, within the Post Office. And it’s a procurement-led kind of approach which is not helpful, not a commercial, common sense approach, and this is creating wasted funds for the taxpayer on numerous occasions, unfortunately.
Mr Blake: Where do you say responsibility for that lies?
Sarfaraz Ismail: That’s, again, Procurement but also the wider Executive because they’re all in it together. Everyone has to be working towards the same goal. Issues like this should be dealt with way before they get to the Board and, again, it’s in my evidence, the Belfast exit programme. What a disaster that was. The business wasted just under £35 million to – again, part of the NBIT journey – to move on to a cloud-based system, being told constantly, “We’ve got to do this, we’ve got to do this”, and then being told “Oh, Amazon said we can’t do this”.
The only thing we got from the 34.8 million that we spent, which was abandoned in January ‘23, was a new air-conditioning system for our Belfast data centre. So it was extremely disappointing and, again, showing a lack of accountability on that side, on procurement, to deal with issues going forward to ensure we don’t make the same mistakes again.
Mr Blake: Thank you. Two further reports have been obtained in the last summer, two reports from Grant Thornton. The first is called a Board Effectiveness Report and the other is a Governance Review. Can you briefly tell us the background to obtaining those two reports?
Sarfaraz Ismail: So Mr Staunton, before leaving, commissioned these reports and, from my understanding, because of what the business had been through due to Bonus Gate and other issues that were arising, he wanted to have an external organisation involved and produce a framework to ensure governance and compliance is implemented in the right way, obviously looking at the issues we’ve got. So that process started in October ‘23.
Then, obviously, Mr Staunton left towards the end of January ‘24, and early February – around February, sorry, should I say, the first draft of the Grant Thornton report was produced. And, again, you’ve got the emails when myself and Mr Jacobs challenged back because the first draft was highly critical. And I remember conversations being had where certain NEDs said it was unhelpful, and the response myself and Mr Jacobs sent was, “So that’s a good starting point. Let’s just get on with what they have advised us to do”. However, the report was then, certain parts, redone. But the –
Mr Blake: Very critical of who: individuals, the company?
Sarfaraz Ismail: The way it was written was probably – the way it was written, it was more critical than how it is now.
Mr Blake: At whose request were the changes made?
Sarfaraz Ismail: I’m not sure who specifically instructed Grant Thornton to rewrite certain parts. I’m not privy to that, unfortunately.
Mr Blake: Was anybody, in particular, calling for changes to be made?
Sarfaraz Ismail: I remember the UKGI rep saying that. I also remember the interim Chair, Ben Tidswell, also saying it was unhelpful.
Mr Blake: Unhelpful for who: a public audience or an internal audience or simply that it was not well drafted?
Sarfaraz Ismail: The words used were “unhelpful”. In terms of what context, you’d have to ask them.
Mr Blake: Thank you. Can we look at the first of those, that’s POL00446476. This is the Board Effectiveness Review, dated 19 June 2024. If we turn over the page we can see the background. It says:
“The purpose of this review is to provide an independent analysis of the [Post Office] Board’s effectiveness against the requirements of the UK Corporate Governance Code”, et cetera.
Then it says:
“The Report has been collated from common themes identified during our point-in-time assessment of the Board and its Committees, through key findings and survey output taken from our Governance Review … meeting observations, interviews with Board members and additional document review with fieldwork concluded mid May 2024.”
If we look at page 43, it has, I think, your name. You were somebody who was interviewed as part of this project –
Sarfaraz Ismail: That’s correct.
Mr Blake: – is that right? Thank you. Can we turn back, then, please to page 8. It sets out there the key findings. First:
“Lack of clarity on the purpose of the Board, with the shareholder relationship inhibiting the Board’s effectiveness due to perceived interference in [the Post Office’s] work and limited visibility around the longer-term funding and objectives of the organisation.”
Is that a finding that you agree with?
Sarfaraz Ismail: Yes, it’s very difficult, being the Post Office and having your shareholder, the Government, and funding being given in limited amounts. So asking for X million and then small amounts being given, it’s very difficult to have a plan in place.
Mr Blake: Number 2:
“Low levels of trust and team identity …”
Three-quarters of the way down number 2 it says:
“Equally, there are some views expressed of a two-tier Board in operation, where decisions are taken outside of the formal Board structure without proper debate, and not all [Non-Executive Directors] have the same visibility on Committee papers and minutes …”
Is that something you agree with?
Sarfaraz Ismail: That’s correct, yes.
Mr Blake: Those are matters you have already addressed –
Sarfaraz Ismail: Yes.
Mr Blake: – in your evidence.
Number 3, “No unifying purpose and strategy”; do you agree with that?
Sarfaraz Ismail: Yes.
Mr Blake: Number 4, “Lack of succession planning”; what’s your view on that?
Sarfaraz Ismail: Yes. We’ve – we had discussions regarding succession planning and – in private NED-only sessions, and it was clear the lack of talent that existed within the Post Office to take over if senior individuals had left the business. And an example was when Martin Kearsley was about to leave the business, we were looking for somebody, and at the time the CEO advised the NEDs that the second in command, Ross Borkett was too junior.
And this was – Martin left probably last year, I can’t remember the exact dates. Now, regarding Ross, there was a discussion had earlier this year who was going to succeed Martin. He was stepping in interim, and the discussion that took place was, obviously, the CEO advised that he was too junior and wouldn’t possibly be taken seriously.
So we were thought – certainly myself and Mr Jacobs were under the impression that we were looking for someone more senior to do the banking aspect because it’s massive; it’s 50 per cent of the Post Office’s business now. And we find out a few months later that Mr Borkett has been appointed as Head of Banking so we were shocked.
Now, that again, highlights the lack of succession planning.
Mr Blake: If we move to number 5:
“Team process and meeting discipline. Rolling agendas, chairing of meetings and presentations of information from the Exec of the Board all require focus.”
Is that something you agree with?
Sarfaraz Ismail: That’s correct.
Mr Blake: Number 6, “The people agenda from culture through to reward needs ownership at Board”; is that along the lines of the evidence that you’ve been giving yesterday and today?
Sarfaraz Ismail: Yes.
Mr Blake: Can we please turn to page 16. This is priority C, “Leadership capacity, composition and succession”. I just wanted to ask you about the penultimate bullet on the left-hand side. It says:
“That [the Post Office] did not anticipate an issue with corporate memory until recently in terms of managing multiple simultaneous [Non-Executive Director] rotations points to poor succession planning processes. As such the Board should keep a line of [sight] over the output and debate with the NomCo in terms of its [terms of reference].”
Again, is that the same kind of issue about succession planning, this time relating to Non-Executive Director rotations?
Sarfaraz Ismail: Yes, and this was a point that myself and Mr Jacobs raised, and it’s also a point I raised with Amanda Burton before – sorry, it was a point that was raised with Amanda Burton, not by myself but by the – by Henry Staunton and Jane Davies, again, on corporate memory and if you’re going to be the chair of RemCo, you should be well versed on at least the last 12 to 18 months of what’s been happening in that Committee, and I was really disappointed when I raised the questions about salary increases and she wasn’t aware.
So, again, reinforcing the point of a lack of corporate memory within the organisation, unfortunately.
Mr Blake: If we could turn to page 19 please, and that’s Priority D, which addresses issues of culture. They say there, on the left-hand side, the first two bullet points:
“Trust is lacking between Board members, exacerbated by the perception that there appears to be a two-tier Board with some [Non-Executive Directors]/[Independent Non-Executive Directors] excluded from certain decision-making, which is carried out informally by a subgroup of the Board.”
Is that very much in line with the evidence you’ve been giving?
Sarfaraz Ismail: Yes.
Mr Blake: “The Postmaster [Non-Executive Directors] can, understandably, become very exercised at issues affecting the postmaster community, and can on occasion be seen as ‘activists’ rather than contributing fully as ‘part of the team’.”
What’s your response to that?
Sarfaraz Ismail: I can see why the report says that because we saw on the correspondence yesterday that individuals on the Board thought we were shop stewards and union reps.
However, for me, if we hadn’t been blocked in November ‘21 continually, regarding communication to the wider Postmaster Network, and within the business – people still don’t know we were there and still are there, within the Post Office employee circle – I think that would have helped reduce some of the frustrations massively.
Mr Blake: Can we turn to the second report, that’s POL00446477. This is the governance review. If we turn over the page we can see the background to that. It says there:
“In accordance with the Statement of Work dated 12 October 2023, we present our report … on the effectiveness of the governance practices at Post Office …”
So the work was commissioned on 12 October 2023. It’s taken quite a considerable time to produce, and are some of the reasons for that, as you’ve said, because some of the report was originally provided in draft and was subject to revision?
Sarfaraz Ismail: Yes, but also the individual, ie Mr Staunton, who commissioned the report, was exited from the business. So there was no continuity as such, following through.
Mr Blake: Thank you. If we turn to page 7 we can briefly go through the key findings. I’ll again do what I did with the previous report and we’ll just take you to those headline points.
“Key findings
“One of the most pressing areas to address to improve the impact of governance design is a purpose/cohesive strategy at the Group level, which sets direction and ambition.
“[First] The lack of a unifying purpose and group-wide strategy between [the Post Office] and the Shareholder.”
Is that something that you agree with?
Mr Blake: Second, “Conflict around the role of the shareholder versus the Board”; again, are you able to give your views on that particular point?
Sarfaraz Ismail: I agree.
Mr Blake: “Leadership capacity”, it says that:
“… POL is currently affected by ongoing and upcoming Board rotations, which … impact leadership …”
Do you agree with that?
Sarfaraz Ismail: Yes, sir.
Mr Blake: Fourth, “Decision making forums at Enterprise level pack lace and do not enable accountability”; what’s your view on that?
Sarfaraz Ismail: As I said yesterday, unfortunately, in this business, the lack of decision making and the pace at which things go through, it’s very, very difficult to do something quickly. It’s like moving ten oil tankers all chained together at the same time. It’s really hard.
Mr Blake: Number 5, “Culture – a lack of trust, accountability and performance management”; is that something you agree with?
Sarfaraz Ismail: Yes.
Mr Blake: Looking at those two reports, is there anything there that stands out in particular for you as a concern with regards to the Post Office?
Sarfaraz Ismail: I think it’s disappointing that investigations are not part of the key findings and, in hindsight, after we’ve what we’ve seen today and what was in my bundle, I would have expected there to be a specific section on investigations, being such a sensitive issue.
Mr Blake: Thank you. That can come down.
The very final topic that I’d like to ask you about is your involvement with subpostmasters. Could we please have a look at POL00448370. This is an email exchange from quite early on in your time as a Non-Executive Director. You email Mr Taylor and you say:
“Hope all is well, both myself and Elliot need some comms out [as soon as possible] as many [postmasters] think we are doing nothing.
Can we have a chat next week …”
He says:
“Of course, happy to discuss …
“I can speak on a call after the Board meeting …
“Let me know what suits …”
Can you explain the concern that you had at this point in time?
Sarfaraz Ismail: For myself and Mr Jacobs, it felt like a tokenist gesture in terms of putting us on the Board and basically stifling us in terms of communication. We wanted to talk to postmasters, we wanted to bring this business closer together. We were all going through a really tough time but, unfortunately, we were just not given the opportunity; we were not trusted to speak to the postmaster community, unfortunately.
Mr Blake: Can we turn to POL00448389. Moving on in time, this is now to April this year. If we look at the bottom of this page onto the next page, you are emailing the Non-Executive Directors, and you say:
“I would like to bring to your attention an issue regarding the postmaster events. We have recently received invites with very short notice, which is a disappointment on the part of our retail team. Once again, the team has failed to keep the Board up to date and also [needs] me and Elliot informed about these Postmaster Listening events to ensure [Postmaster Non-Executive Directors] are present.”
Can you assist us with your concern there?
Sarfaraz Ismail: This is in relation to what we discussed prior to the break: the events that were organised during the month of Ramadan.
Mr Blake: Yes.
Sarfaraz Ismail: So this all part of that conversation.
Mr Blake: Do you feel that you are being sufficiently kept in touch with events relating to postmasters?
Sarfaraz Ismail: No.
Mr Blake: If we could turn on to POL00448391, moving on to the next month, 1 May 2024. Let’s start on the bottom of the second page, please. It’s an email from Tracy Marshall to you and Mr Jacobs. She says:
“I’m writing to ask for your help please with the ongoing [Non-Executive Director] recruitment campaign. You may have seen in Martin Roberts’ email yesterday that we’ve taken the decision to extend the application window … This is as a result of … feedback from postmasters.
“The other piece of feedback received is that postmasters want to understand a bit more about the role itself from your perspective …”
So they want you to address them in respect of the recruitment drive.
If we go, please, over to the first page, there’s a response from you. At the top of the page, please, top of page 1, you say:
“Over the past three years, we have been significantly hindered from engaging with Postmasters at the desired level due to a lack of response from the Retail Engagement and Comms teams, despite repeat at the time requests. Additionally, we are firmly opposed to the way in which the replacement process is being handled which we have both been vocal about. Specifically with regards to the lack of continuity, corporate memory, and effective postmaster oversight that will be lost in the handover process.”
There seem to be two issues there, one is a general concern about the engagement you’re allowed to have with postmasters and the other is actually about the replacement process itself. Can we take each of those in terms? If we start with the first, what is the concern that’s expressed there about being able to engage with postmasters?
Sarfaraz Ismail: Sorry can you just repeat your question?
Mr Blake: Yes, sorry. It’s a little noisy. We’ll just wait for the noise to die down for a second. Thank you.
So the first issue there – oh, no, the noise is back again. We’ll just wait a moment.
Sorry, sir, there’s some building work above us and it’s slightly disruptive.
Sir Wyn Williams: It’s a continuation of what was happening yesterday, I take it.
Mr Blake: Possibly worse.
Sir Wyn Williams: Right.
Mr Blake: Let’s see if we can plough through it.
There is a first concern that you are being hindered from engaging with postmasters. Briefly, can you assist us with how you are being hindered with engaging with subpostmasters?
Sarfaraz Ismail: So, as I’ve mentioned previously in November ‘21, when Richard Taylor advised both myself and Mr Jacobs not to have any communication on social media with any postmasters, number 1; number 2, when I was out visiting postmasters on my own time, my own initiative, again, I was told that Regional Managers and individuals higher up were uncomfortable with me going out on my own and, for me, that was getting a flavour to ensure that I bring back to the Board to do a better job; regarding postmaster events, continually, myself and Mr Jacobs were not invited, and I’m not sure why.
Regarding the second part of your question, we had an initial conversation with Tracy Marshall, Martin Roberts, Shaun Kerrison – I’m not sure if Shaun Kerrison was in the room but Tracy was definitely there and Martin Roberts were there, and the discussion was how to have – what should the criteria be to bring a new – bring the new Postmaster NEDs?
And myself and Mr Jacobs put together – we recommended a certain criteria on the call to them and that was totally ignored, and then the advert went out with something totally different.
So for myself and Mr Jacobs, it was very disappointing. We will leave the Board, when our time is due, no problems with that whatsoever. However, all the corporate memory information that we’ve built, we want to give it to individuals, firstly, who are capable; secondly, who can hold the business to account with the right level of scrutiny. That’s all we wanted. But, again, we were totally ignored in what we suggested.
Mr Blake: Thank you, Mr Ismail. Those are all of my questions.
Sir, we have some questions from our own Mr Jacobs.
Sir Wyn Williams: Right.
Mr Blake: I’ll hand over to him.
Sir Wyn Williams: Fine.
Questioned by Mr Jacobs
Mr Jacobs: Thank you, Mr Ismail. I represent a large number of subpostmasters – is that better. Thank you.
I represent a large number of subpostmasters and I have a number of questions for you.
As part of the Post Office Board, have you been informed of the Government’s plans for the future of the Post Office?
Sarfaraz Ismail: Not yet. No. Sorry, can you hear me?
Mr Jacobs: Yes, I can, yes. Can you hear me?
Sarfaraz Ismail: I’m trying to. I’m –
Mr Jacobs: If I need to speak up, let me know. I know there’s some noise in the background. You say “not yet”. Are you expecting to hear?
Sarfaraz Ismail: My assumption is once the strategic review has taken place, there will be some serious discussions about the future of the Post Office. I did have a conversation with Johnny Reynolds a few weeks ago, at the opening of Banking Hub in his constituency, and the conversation was very positive, and one of the first points Johnny Reynolds made was to resolve redress for postmasters and to ensure current postmasters are treated fairly and postmaster remuneration is reflective of the efforts that are being put in.
Mr Jacobs: Normally, we would expect the owner of a very large institution such as this to have a three or a five or a ten-year plan with the direction of travel for the future of the Post Office; is that the sort of thing that you’re expecting to happen?
Sarfaraz Ismail: I am, once the strategic review has been concluded, sir. Yeah.
Mr Jacobs: Thank you.
Now, I’m going to ask you about Board awareness of survey results. Gavin Ellison gave evidence yesterday; do you recall that?
Sarfaraz Ismail: Yes.
Mr Jacobs: You might have been outside the room when he did so. Have you read the YouGov report that has been provided for the Inquiry?
Sarfaraz Ismail: I have been sighted.
Mr Jacobs: So you’ll know, won’t you, that approximately 1,000 current subpostmasters responded?
Sarfaraz Ismail: Yes.
Mr Jacobs: 70 per cent say they suffer from screen freezes; 68 per cent loss of connection; 57 per cent say they’ve experienced unexplained discrepancies; and 65 per cent of subpostmasters surveyed experienced these types of issues at least once a month. You’re aware of that?
Sarfaraz Ismail: Yes, I can relate to that, yes.
Mr Jacobs: I know that you’ve said that you have experienced similar things in your own branches, haven’t you?
Sarfaraz Ismail: That’s correct, sir.
Mr Jacobs: Do you know if the Post Office Board or senior Executives, before this survey came out, were aware of the huge dissatisfaction amongst subpostmasters with how the Horizon system is working and how they’re still being treated by the Post Office?
Sarfaraz Ismail: So what – firstly, a simple answer to your question is: I’m not sure they are aware. The Board certainly is not, to the level at which YouGov broke things down and specific points, and a survey is as useful as the questions you ask.
Mr Jacobs: Yes.
Sarfaraz Ismail: So what’s telling is the questions that are being asked in the postmaster surveys and the Post Office employee surveys, and if there’s consistency applied, then there’s specific data to cross-reference against, and to produce a plan to implement. And I feel, once the current Board has sight of the YouGov results, they will put them forward and hopefully produce a plan. In terms of current and existing bugs, we were never provided with any specific detail. All we were told at Board level is, “There’s a number of bugs, we have fixed X amount of bugs”. That’s the only detail.
Mr Jacobs: This theme in your evidence about the Board not being told what’s going on by the Executive, it feeds into previous employee survey results, doesn’t it?
Sarfaraz Ismail: Yes, sir.
Mr Jacobs: You say at paragraph 125 of your statement, in relation to 2023 employee survey results, that the poor results were not accurately reported to the Board?
Sarfaraz Ismail: That’s correct, sir.
Mr Jacobs: Do you think, then, that the Executive are deliberately downplaying the scale of problems relating to subpostmaster dissatisfaction?
Sarfaraz Ismail: I don’t think it’s just subpostmaster dissatisfaction. The Executive, wider Executive, is cherrypicking what issues they want to bring to Board, which is not helpful.
Mr Jacobs: What do you think can be done or ought to be done about this cherrypicking tendency?
Sarfaraz Ismail: There has to be more oversight within this business, and the best placed individuals to provide the right level of scrutiny are existing and previous postmasters because they understand the business.
Mr Jacobs: That brings me on to the next topic I wanted to address with you. Could we then go to POL00448394, please. This is, while we’re waiting for it to come up, an email from Elliot Jacobs to you, dated 28 May 2024, and Nigel Railton is also copied in, and it’s entitled “Discussion Document”; are you familiar with this?
Sarfaraz Ismail: Yes, this was a discussion document that I did and, for me, it was my views to set the new Chair up for success.
Mr Jacobs: It’s helpful because it follows on from what you’ve just been saying because you say that this captures your thinking and aims for the future, particularly after some of the evidence from the former – the Chief Executive that was given in the Inquiry. Just looking at the second paragraph, you say that there should be a Committee called the “PM Advisory Committee”, and this committee should have a clear mandate and terms of reference, bring together voices from across the postmaster community, meet four to six times a year and aim to educate and guide senior POL members on the impact of proposals and strategies. What members do you have in mind?
Sarfaraz Ismail: Proactive postmasters. So obviously groups who represent postmasters. This organisation it’s such a fascinating and fantastic institution. It has a wide range of stakeholders, but I don’t feel having every single stakeholder on the Postmaster Advisory or Postmaster Council, whatever we want to call it, is helpful because, as I’ve said previously, making decisions and – is very difficult.
The lack of pace within the organisation is clearly evident and we don’t want to do any more to jeopardise any further lack of pace and decision making. So producing a specific committee with individuals, where accountability can be made for specific projects, I think its really, really important and the way forward.
Mr Jacobs: Okay, thank you. Which senior Post Office officials ought to be informed or educated by this committee?
Sarfaraz Ismail: So, for me – maybe I should have been a little bit clearer. I feel it’s important for the senior individuals to be on the committee as well –
Mr Jacobs: I see.
Sarfaraz Ismail: – to connect better. There’s no point having a committee without these individuals because whatever is discussed then can’t be implemented. So for example, the Chief Finance Officer, the CEO, the Chief Retail Officer, these individuals would be on this type of committee and, currently, with the scenario that we’re in, the Transformation Officer as well, would be important.
Mr Jacobs: Your proposal is, reading through the document:
“It should have the authority to call upon senior POL members to explain and challenge what is working and what is not.”
Are you talking about senior Executive members who would be invited to come and be challenged?
Sarfaraz Ismail: Correct: held to account.
Mr Jacobs: Held to account. You also say:
“It should also provide [some] overwatch on [postmaster] investigations.”
Just on that point, you’ve told us yesterday that investigations had been rebranded “branch assurance visits” – is that right –
Sarfaraz Ismail: Yes.
Mr Jacobs: – and that there are difficulties with the postmasters that are ongoing in relation to understanding data, individuals until recently weren’t allowed representation –
Sarfaraz Ismail: Yes.
Mr Jacobs: – and you talk about the business being the victim and investigator, so it’s not neutral, and the problems with tonality. Do you think that this sort of oversight by an advisory committee would resolve these issues?
Sarfaraz Ismail: I think there’s different strands to that. Firstly, it’s got to be an external body that does investigations.
Mr Jacobs: Right.
Sarfaraz Ismail: Because I, for one, don’t have the confidence, especially after what I’ve been sighted on, within the internal Post Office Investigations and Legal Team, for a fair hearing. Number 1.
Number 2, the advantage this oversight brings is there’s certain situations that can happen in a Post Office branch. For example, a customer comes to deposit – comes to the counter to deposit £1,000, and – sorry, to withdraw £1,000, and, in error, you press the deposit button. So I’ve given the customer 1,000, and I’ve deposited 1,000. This is a very easy mistake to make. The buttons look very similar and they’re next to each other.
Now, for a postmaster or a postmaster council advisory committee, if a postmaster explains that issue and they’re an active, live-serving postmaster, they can understand that. However, an external body may not necessarily grasp that as quickly in terms of how simple and easy an error it is to make.
Mr Jacobs: Okay. So you think investigations should be conducted externally?
Sarfaraz Ismail: 100 per cent.
Mr Jacobs: There are three points that you raise at the conclusion – I think it’s Mr Jacobs who raises it – but you say that this is something that you put together?
Sarfaraz Ismail: The discussion document I put together.
Mr Jacobs: Okay.
Sarfaraz Ismail: This was an email following on from my discussion document –
Mr Jacobs: One of the points that’s made is the lack of automation is “shocking”, is what’s said. Can you explain that problem and why is it shocking?
Sarfaraz Ismail: So we joined the board in June ‘21 and, within a few months, we made it very clear to the business that we need automation, our costs are going through the roof, our customer journeys are poor, they can be better, they should be better. The self-serving kiosks that we currently have are not good enough, they are not doing what they should. In terms of the new QR codes, some of them don’t work. They were only processing old returns. And, unfortunately, this was just ignored and – until October ‘23, when a paper was brought to the Board by Martin Roberts regarding automation, and to be clear, this was done on the back of some of our strategic partners saying, “We may leave the relationship with the Post Office unless this issue is resolved.”
So the wider Executive ignored the two postmaster NEDs who have been requesting this, and information about this, and some kind of innovation to help ease customer journey. However, when it came to strategic partners, they were keen to start the conversation.
Mr Jacobs: Right. Okay. You talk about a point of candour.
Sarfaraz Ismail: Yes.
Mr Jacobs: To what extent does the Board lack candour; is that the point?
Sarfaraz Ismail: I think it – that’s more from my observations based on the testimony of Paula Vennells and what she was mentioning. And again, for me, as an NED, being proactive in trying to make this organisation better, hence why I mention that point.
Mr Jacobs: Okay. I just want just a quick query. You mentioned strategic partners. Can you just confirm what that means?
Sarfaraz Ismail: So strategic partners are organisations such as WHSmith, Morrisons, Co-Operative, ASDA, organisations who have large – a large number of branches with us and, again, it’s in my evidence where a survey was conducted of strategic partners and also of postmasters, which was brought to the July ‘24 Board meeting. And again, the like-for-like comparison was not helpful.
There were approximately just under 200 strategic partners interviewed, whereas over 1,000 postmasters interviewed, and the image and the narrative being portrayed by the retail team was “Here, look here, the strategic partners are very happy but these postmasters are not”.
And then it was only once there was some scrutiny by the Board, which is when clarity was provided, in terms of numbers and, again, just to add a point on to semi-related to automation, up until Andrew Darfoor mentioned about a digital strategy last year, the Post Office did not have a clear digital strategy, which was disappointing.
Mr Jacobs: That’s helpful. Finally, you say:
“… the lack of Corporate Memory is a major problem – sighted by [the former Chief Executive] Vennells too and still a lesson unlearned …”
It goes on to say:
“… we risk losing the learnings and experience int he desire to replace positive challenge. No NEDs other than Saf and Elliot in situ, with many not looking to do a second term.”
Are you saying that there should be an element of continuity so that this committee isn’t just for a fixed term and and then they all change?
Sarfaraz Ismail: Sorry, can you repeat the question?
Mr Jacobs: Are you saying that the committee needs to have people on it that are longstanding members, so –
Sarfaraz Ismail: The advisory committee?
Mr Jacobs: Yes.
Sarfaraz Ismail: Yes, so again, I’m not saying someone should be a permanent fixture, not at all. However, in order – it’s clear, what – the Inquiry has produced some clear issues that this organisation has, and one of them is imbalance of power, another is materiality in relation to postmasters. But the other, with regards to the Post Office, is corporate memory. And in order to move forward, move on, and as my mum would say to me, “be a better person today than you were yesterday”, in order to do that for this organisation, we have to learn from the lack of corporate memory that we have.
And for me, not having individuals in place who are aware of what’s happened in the past, even in the short term, over the last few years, not having that kind of continuity is very disappointing because I can’t see how we can learn from the past if we don’t have that.
Mr Jacobs: My final point is: I understand that you presented this proposal to the Board; is that right?
Sarfaraz Ismail: I provided this discussion document to the Chair –
Mr Jacobs: Yes.
Sarfaraz Ismail: – and then it was in the Chair’s hands, and I’m not sure whether the Chair has presented it or not but, for me, it was my duty to set the Chair up for success. Hence –
Mr Jacobs: So is it your evidence that this hasn’t been responded to yet?
Sarfaraz Ismail: We’ve had a discussion, I have had a discussion, and so did Mr Jacobs, regarding this document, and the response that I received from Mr Railton was the strategic review will be addressing these points. So again, it’s premature for me to say whether each point has been addressed yet.
Mr Jacobs: Thank you. I just need to check if I have any more questions for you. I haven’t. Thank you, that’s all I have. Thank you.
Mr Blake: Thank you, sir.
Sir Wyn Williams: Is that it, Mr Blake?
Mr Blake: Yes, unless you have any questions, sir?
Questioned by Sir Wyn Williams
Sir Wyn Williams: Well, actually, just one.
I’ve understood that there are, in round figures, 11,500 branches. That’s a goal, I think, that the Government set. When the survey was sent out, it was sent out to approximately 6,500 postmasters or subpostmasters. Can I take it that the reason for the difference is that there are some large partners, like supermarkets, et cetera, who run many branches?
Sarfaraz Ismail: Yes, sir, but there was, from what I have seen – and again, when the Post Office conducts internal surveys, they are promoted to be filled in and responded back to. Regarding your survey, the NFSP pushed your survey being filled and so did the Voice of the Postmaster. I didn’t see –
Sir Wyn Williams: No, I wasn’t asking that.
Sarfaraz Ismail: Okay.
Sir Wyn Williams: At first sight, it seemed a little –
Sarfaraz Ismail: Yes.
Sir Wyn Williams: – unusual that there was 6,500 postmasters but 11,500 branches. I was simply, I think, understanding that that’s because many of the branches are run by large organisations?
Sarfaraz Ismail: Yes, sir, but there are also postmasters with multiple branches also. So –
Sir Wyn Williams: Sure.
Sarfaraz Ismail: – again –
Sir Wyn Williams: So that’s the reason? Fine.
Sarfaraz Ismail: And, from my experience, the number of postmasters is approximately 7,000, so you weren’t that far off.
Sir Wyn Williams: Right. Thank you.
Well, we’ll end on that happy note, Mr Ismail. Thank you very much for making a very detailed witness statement and for giving evidence both yesterday and today. I’m grateful to you.
The Witness: Thank you, sir.
Mr Blake: Can we come back at 1.50, please, sir.
Sir Wyn Williams: Well, I was going to ask you, are we managing the time for Mr Elliot this afternoon? I mean, that’s still giving us an hour for lunch, isn’t it?
Mr Blake: Absolutely.
Sir Wyn Williams: Yes, that’s fine. Good.
Mr Blake: Thank you.
(12.50 pm)
(The Short Adjournment)
(1.50 pm)
Mr Blake: Good afternoon, sir, can you see and hear me?
Sir Wyn Williams: I can but only faintly, Mr Blake.
Mr Blake: This afternoon we’re going to hear from Mr Jacobs.
Sir Wyn Williams: It’s still not quite right.
Mr Blake: I think my microphone has been turned on.
Sir Wyn Williams: Now, it’s right.
Mr Blake: We’re going to hear from Mr Jacobs this afternoon.
Elliot Jacobs
ELLIOT MARC JACOBS (sworn).
Questioned by Mr Blake
Mr Blake: Can you state your full name, please?
Elliot Jacobs: Elliot Marc Jacobs.
Mr Blake: Mr Jacobs you should have in front of you a witness statement, dated 15 August this year; is that right?
Elliot Jacobs: Yes.
Mr Blake: That witness statement has the unique reference number WITN11180100. Can I ask you to turn to the final substantive page, that’s page 29. Can you confirm that that is your signature?
Elliot Jacobs: I can.
Mr Blake: Can you confirm that that statement is true to the best of your knowledge and belief?
Elliot Jacobs: It is.
Mr Blake: Thank you very much. That witness statement will be published on the Inquiry’s website shortly. Just by way of background, you’ve said in your statement that in 1998 you purchased a stationery company called Universal Office Equipment; is that right?
Elliot Jacobs: Yes.
Mr Blake: You established an online business-to-business stationery division; is that correct?
Elliot Jacobs: Yes.
Mr Blake: In 2014 you negotiated a franchise agreement with the Post Office?
Elliot Jacobs: Yes.
Mr Blake: That’s grown over time and you now have eight stores, mainly in North London?
Elliot Jacobs: North London and Hertfordshire.
Mr Blake: Thank you. When you say eight stores, is that eight branches of the Post Office?
Elliot Jacobs: Correct.
Mr Blake: You set out in your statement various other positions you’ve held but, for today’s purpose, it’s relevant that you are a Non-Executive Director of Post Office and have held that position since 2021; is that correct?
Elliot Jacobs: That is correct. I also operate a Bank Hub.
Mr Blake: Thank you. In terms of the Non-Executive Director position, you applied, having seen an advert in a Post Office circular; is that right?
Elliot Jacobs: Yes.
Mr Blake: We heard a bit about the process. I won’t go over again the basic process but you in your statement have addressed an issue upon standing again for the position. You didn’t satisfy criteria this time round. Can you assist us with what that criteria was?
Elliot Jacobs: So the important part of it was around corporate memory. I was conscious that both Mr Ismail and myself had fixed terms and we had become – although not expected when we joined, we were already the oldest standing non-execs on the Board and for us both to depart simultaneously would be a lack of corporate memory that this organisation so desperately needs. And so, having tried to express the importance of having some sort of, you know, different approach to the way we were going to be offboarded I took the decision that I wanted to stand again in order to try and keep that corporate memory going, if I wasn’t going to be able to provide a decent level of transition.
Mr Ismail and myself met with members of the Postmaster Engagement Team to discuss the approach to appointing the next round of NEDs for postmasters. They listened and then decided upon a series of criteria that don’t really provide any relevance to the role but, in fact, would favour a postmaster with less expansive business.
Mr Blake: So you have eight branches. Is it more likely that someone with a smaller number of branches would satisfy the criteria?
Elliot Jacobs: Correct.
Mr Blake: Do you know why that criteria was introduced?
Elliot Jacobs: No.
Mr Blake: Do you think it was intended to ensure a different type of subpostmaster to yourself and Mr Ismail joined the board?
Elliot Jacobs: I can’t say what they were thinking. I think, from my view, we provide a robust challenge that perhaps is more of a robust challenge than they thought they would get and perhaps the hope was that by having someone with the need to devote more time to their smaller operating business, that they might not get so much oversight.
Mr Blake: In terms of your original appointment and your training and experience, you’ve said at paragraph 35 of your statement that the Board hadn’t considered the infrastructure and training required to support Postmaster Non-Executive Directors; can you expand on that, please?
Elliot Jacobs: We were the first and, although I’ve held non-executive roles before, in significantly less complex businesses than this one, I think Post Office underestimated the need to train us properly. The training was intense, but limited, and didn’t really set us up for success, nor was there ongoing advice and guidance around managing conflicts, making certain that we had the right support going forward. I think they were learning on the job.
Mr Blake: Do you feel that the role was something that Post Office genuinely wanted to have?
Elliot Jacobs: Yes.
Mr Blake: Do you think that it is still a role that the Post Office genuinely wants to have?
Elliot Jacobs: That’s harder to answer. I would say: in part.
Mr Blake: What do you mean by that?
Elliot Jacobs: Again, I think a lot of good has come out of us being on the Board. I think the comments I’ve received from other Non-Execs, from members of the Executive and from the Chief Executive, Nick Read, was that he, both openly and in public and privately, has said to me that the rigour we bring, the challenge we bring, the real-world experience we bring, is greatly appreciated, and has made a significant difference to the way the Board operates but I do wonder whether – having read some of the comments in the bundle you’ve provided, whether everyone feels that way.
Mr Blake: Is there anyone in particular who you feel doesn’t feel that way?
Elliot Jacobs: Well, I think the readout from the meeting with Minister Hollinrake sort of implies quite a bit.
Mr Blake: What does it imply to you? We saw it yesterday, so we don’t need to bring it up onto screen.
Elliot Jacobs: I was disappointed to read how Mr Ismail and myself were perceived, certainly not how it happens in real life, and that we would be perceived in that way, I think, is disrespectful to the effort that we’ve made.
Mr Blake: Do you think it was caused by any particular incidence?
Elliot Jacobs: I think there’s a difficult balancing act, as a non-exec and as a postmaster. I’ve always sought to find the balance and Mr Ismail and myself are aligned in many ways because we are postmasters but we are from different viewpoints and we agree on much but we don’t agree on everything.
But I can understand how some people on the Board may see that, in us fighting and discussing and debating actively for postmasters, both present and past, that they may feel that we are bringing a level of postmaster interaction that they didn’t expect.
Mr Blake: We’ve seen in some documents reference to an oversight committee or the creation of some sort of other body.
Elliot Jacobs: Mm.
Mr Blake: What are your views on that?
Elliot Jacobs: I think the engagement of postmasters and all stakeholders are fundamental in making the Post Office right for the future. I don’t think the word “oversight” is necessarily right. You can get caught up in the descriptive terms, but I do think that bringing experience and knowledge to the heart of Post Office is what it’s about, but it needs to enable Post Office to move swiftly and effectively, and with knowledge from all parts of the business.
Mr Blake: You commented on the training you received. Was there, in your view, sufficient training in respect of the historic issues that the Inquiry’s investigating?
Elliot Jacobs: Not at all.
Mr Blake: What kind of training do you think should be implemented?
Elliot Jacobs: I think, for a start, to understand where we’re going, you have to understand our past and, for me, when I joined the Board, I think it’s fair to say that I did not understand the depth and scope of what had happened in the past. I, like many postmasters, had been told, “There’s a few people who were found guilty but it’s okay, they were guilty”, and what I learned after joining the Board and being prompted by some of the community of postmasters that I began to connect with was that there was an entire story I didn’t know.
I took the time to read the Nick Wallis book, which was both shocking and incredibly informative. I listened to the podcasts. I had read some of the documents from the court case and case studies, and I basically did my own groundwork to find out what we had done and how it had happened and, frankly, the ITV drama should be standard practice for everybody to read and watch, because that really sets it up absolutely right.
Mr Blake: What did you feel of the knowledge of those around you on the Board; did they have a similar state of knowledge?
Elliot Jacobs: So the Board has changed a lot whilst I’ve been there, as I say, Mr Ismail and myself were the longest standing NEDs. So there’s been quite a change on the Board. When I joined, some of the Board members had been there for quite some time and I’m sure they had some of that corporate memory. The people who are on the Board now have all been there just a matter of months or years and I don’t believe they’ve that the immersion that perhaps they should.
Mr Blake: In terms of committees, you’ve said at paragraph 55 of your witness statement that Mr Staunton wanted the Postmaster Non-Executive Directors on more committees but there was push back against that. Can you tell us a little bit more about that including where that pushback was coming from?
Elliot Jacobs: Mr Staunton was very pro-postmaster I would say, he wanted this to be very postmaster centric, he wanted to drive forward an agenda of putting the postmaster at the centre of the Post Office, which we’d talked about for quite a long time but hadn’t quite executed. He was keen to have us involved in some form of postmaster council, or whatever terminology you wish to use, and was keen to see both Saf and I extended, as well as additional postmasters brought onto the Board.
Mr Blake: Where was the pushback against that coming from?
Elliot Jacobs: I don’t know precisely, but elsewhere.
Mr Blake: You’ve said also in your statement that no Postmaster Non-Executive Directors sit on the Remediation Committee; do you know why that is?
Elliot Jacobs: I don’t know why but that is true.
Mr Blake: Could we please turn to POL00448396. This is an email we’ve already seen from today from Amanda Burton to Mr Ismail and yourself, and she says:
“Hi Saf and Elliot, I know you requested more information about the annual bonus scheme and the long-term bonus scheme. I had thought you had access to all the papers but now I have done some digging, I have covered you don’t. I have suggested that Rachael takes this up with the Nigel as I for one would be happy for you to see everything on Diligent.”
Can you assist us with what the difficulties were in obtaining information prior to this email?
Elliot Jacobs: So the Post Office Board covers a very wide remit of work, and within the work on the non-execs we are also assigned to various other committees that then report up to the Board, such as the Audit and Risk Committee, the Remuneration Committee, the Nomination Committee, there’s lots of different committees. Each of these committees has a remit and a chair, and, if you’re not on that committee, you don’t have access to the data, information or notes that are made to that committee. You just get the read-out from the Chair at the Board in a sort of two-minute update, for want of a better word.
When this came about and as a result of this communication, Nigel Railton, who is the current interim Chair, took the decision – I think excellently – that two things would happen: first, that all committee documents would be open to all members of the Board, and any Board member could attend any committee as an observer at any time. I think that’s an excellent improvement.
Mr Blake: We know that in 2021 and 2022 there was an inquiry metric in respect of the bonus scheme?
Elliot Jacobs: Yes.
Mr Blake: Were you aware of that, did you have any involvement in that?
Elliot Jacobs: No, I don’t sit on RemCo.
Mr Blake: Again, you say you’re not aware of the reason why you don’t sit on RemCo. Has anything been communicated to you as to whether it would be a good or bad idea for you to sit on that committee?
Elliot Jacobs: Well, I assume it’s potentially because being postmasters they felt there may be a conflict but you would have to take that up with someone else. I would have accepted the offer to be on RemCo, were it offered to me.
Mr Blake: You would have accepted the offer but do you think it would be a good thing or a bad thing?
Elliot Jacobs: I think it would be a ‘thing’. I think for us to be on any committee is good thing. I don’t think there should be anywhere in this organisation where a stakeholder with such an important aspect within the business shouldn’t be involved. Now, how you balance that against making certain that there is no conflict, is important but I don’t think there’s necessarily conflict when you think about the wages and bonuses that you’re paying staff members who should be delivering the quality of service to the entire business.
Mr Blake: In terms of Board papers themselves, at paragraph 45 of your witness statement, you’ve said that:
“The Post Office has a tendency to blend accurate data with inaccurate data” –
Elliot Jacobs: Yeah.
Mr Blake: – “meaning the true picture of a project is often skewed.”
Elliot Jacobs: Mm.
Mr Blake: Can you give us an example of that?
Elliot Jacobs: Some of the documentation that’s given to Board is weighty but light on information. The quality of the Board papers has been up and down, over the course of my time on the Board, and I’m quite detail orientated and conscious of making certain that information I’m given is full and accurate. And there have been times where we’ve been given information on which we are to form an opinion which latterly is seen to be not the entire picture.
Mr Blake: Where does that come from?
Elliot Jacobs: The briefings we’re given are insufficient or are lacking in complete data.
Mr Blake: Is that from a particular team, or every team, some teams?
Elliot Jacobs: It’s not unique to one team.
Mr Blake: Is there a team in particular that you have in mind?
Elliot Jacobs: Well, when I think of examples of the situation, I’d be thinking of some of the data out of the retail team, and I’d also be thinking about things like Past Roles and Phoenix.
Mr Blake: We’ll get on to those in due course.
Communicating with subpostmasters. Could we please bring up on screen our expert report from YouGov, it’s EXPG0000007. If we turn to page 39, we saw when we went through this report, if we scroll down slightly, that a large number of subpostmasters are aware what there are Non-Executive Director Subpostmasters: 72 per cent. But then if we scroll down, we see there it says:
“Despite high awareness of [subpostmasters] being appointed to the Board … a majority (57%) disagreed that the [subpostmasters] serving on the Board share in with them, while only approximately 15% agreed.”
Can you assist us with what you see as the reason for that?
Elliot Jacobs: Well, we were told specifically – we were told specifically that we were not to communicate directly with postmasters through social media or when we asked for the Communications Team to provide briefing notes that we could share or stuff that they felt was appropriate for us to put into the public domain, nothing was given.
Mr Blake: Who asked you?
Elliot Jacobs: Sorry?
Mr Blake: You said you were asked: who by?
Elliot Jacobs: That would be the former Head of Communications, Richard Taylor.
Mr Blake: Do you know why you weren’t allowed to share that information?
Elliot Jacobs: Well, obviously, we have a balancing act between the confidentiality of being a Non-Exec Director, which I absolutely respect. We also have the need to provide our postmasters with confidence that we’re there doing the job we were elected to do, and I think “elected” is an important part of this. We are the only members of the Board elected by anyone and we stand there not only as representatives of postmasters but we stand there to do the job of a non-exec, like all the others. But we also have this duality of making certain that we inform and make certain postmasters understand that we are driving the agenda forward and making certain that change happens.
Mr Blake: You’ve said that the former Head of Communications was not in favour of you communicating with subpostmasters –
Elliot Jacobs: Well, I wouldn’t say he was – I wouldn’t say – sorry to cut across you.
Mr Blake: Absolutely.
Elliot Jacobs: I wouldn’t say he was unfair; he just didn’t do anything.
Mr Blake: Has that position changed?
Elliot Jacobs: Well, we haven’t been provided with any other type of briefing note since, so I would say probably not.
Mr Blake: You’ve mentioned in your witness statement the Voice of the Postmaster, also the NFSP, Communication and Workers Union; are you encouraged to speak with any of those three organisations?
Elliot Jacobs: So, more recently, the recently appointed interim Head of Communications has engaged all of those parties, and both Mr Ismail and myself, in discussions face to face, in the same room, around tone of voice and how to communicate with postmasters. So very, very recently in the last few weeks we have seen a shift but that’s since the new appointment of this interim person.
Mr Blake: You’ve mentioned in particular the Voice of the Postmaster and you’ve said that they have more members than the NFSP?
Elliot Jacobs: They do.
Mr Blake: What is the future plan for the relationship between the Voice of the Postmaster and the Post Office, as far as you’re aware?
Elliot Jacobs: So the NFSP has a contracted relationship with the Post Office, which you’ll be aware of. The Voice of the Postmaster is a cooperative group of postmasters who have come together to create a voice for postmasters. I believe we should engage with all parties at all times and get the widest breadth of views that we can from our community. I don’t believe there’s a clear strategy for what that is right now.
Mr Blake: Do you have any views as to the effectiveness of the any of those organisations vis à vis each other?
Elliot Jacobs: Well, the Voice of the Postmaster a voluntary established business where people put in their time for the love of doing it. I always think that’s a great place to begin. I can’t say I’ve had huge experience with the NFSP. I know Calum from my work on the Covid recovery group with him but, beyond that, I haven’t had a lot of interaction with them.
Mr Blake: Thank you. I’m going to move on to a separate topic now, and that’s an investigation that was carried into you and your business, and you’ve detailed that in your witness statement, but we’ll go through a number of different documents.
You say at paragraph 19 of your statement that you received a call from the Chair, Henry Staunton, in March 2023. Can you assist us with what was said on that conversation?
Elliot Jacobs: Yes, I don’t think it was a call, I think he asked me to pop into his office after a Board meeting and he said to me, “Elliot there’s a query on your account. I don’t know what it’s about. Could you have a chat with Ben [Ben Foat, the Head of Legal], just see what it is and sort it out for me”, and I was like, “Sure, no problem”.
Mr Blake: Did you speak to Mr Foat at that point?
Elliot Jacobs: Absolutely.
Mr Blake: What did Mr Foat say?
Elliot Jacobs: He said he would get someone in his team to contact me and walk me through the query.
Mr Blake: Did he give you any detail as to what the concern might be?
Elliot Jacobs: No.
Mr Blake: Can we please turn to WITN11180101 and we’ll start at the penultimate page, page 5, at the bottom of page 5. This is an email to you from Andrew Morley who is a Senior Investigations Manager, and he says as follows, this is 14 March last year:
“I am employed by [the Post Office] as a Senior Investigations Manager within the Central Investigations Unit and I have had reason to conduct an investigation into alleged discrepancies at post offices within the Universal Office Equipment group. I would now like to arrange to interview you in connection with the alleged discrepancies and to this end please can you provide your availability”, and he sets out the dates there.
At this point, so 14 March, on receiving this email, had you received any other paperwork in relation to this investigation?
Elliot Jacobs: Not to my knowledge.
Mr Blake: Were you aware, at this stage, whether it was a criminal investigation, a civil investigation, a professional misconduct investigation or some other investigation?
Elliot Jacobs: No.
Mr Blake: We’re going to return to this email chain but perhaps we can just bring onto screen the Project Birch report, that’s POL00423697.
If we turn page 10 of that report, it’s a report we saw with Mr Ismail earlier today. In the bottom left-hand side here of this document – do you recall this document ever being discussed at the Board, this report?
Elliot Jacobs: I do not recall it, no.
Mr Blake: It’s a report by KPMG and they say as follows:
“Currently investigations are often undertaken within [the Post Office] from a contractual perspective and there is little consideration at the start of an investigation as to whether it could potentially result in criminal, civil or disciplinary proceedings. Early engagement with [Post Office] Legal would enable proper consideration of criminal or civil standards or consideration of when to liaise with [law enforcement agencies].”
So that report was dated 13 August 2021, so a couple of years before your investigation. Do you think that by the time it came to your investigation, that lesson had been learnt?
Elliot Jacobs: It wouldn’t seem so, on the basis of the emails sent.
Mr Blake: If we could return, please, to the emails. That is WITN11180101. If we could go back to page 5. In the middle of page 5 you respond to Mr Morley and you say:
“Thank you for your email.
“I assume this is related to the query raised by Ben Foat with me.
“As I explained to Ben I would be happy to assist you in your enquiry”, and you give your availability.
If we scroll up, please. Mr Morley responds:
“Thank you for your prompt response and I can confirm that the interview is in connection with the matter about which Ben spoke to you about recently. In line with your available I have arranged an interview …”
He says:
“The interview will be conducted by myself and John Bartlett who is the Head of the Post Office Investigation Branch. Please find attached a letter from John explaining in some detail the format of the interview and the areas we wish to cover.”
We will return again to this email chain but let’s have a look at that letter. It’s WITN11180102. It’s dated 15 March and this is the letter from Mr Bartlett to you. He says:
“My name is John Bartlett. I am the head of the Central Investigation Unit within Legal, Compliance and Governance at the Post Office.”
Were you aware of Mr Bartlett before receiving this letter?
Elliot Jacobs: I don’t know.
Mr Blake: It says:
“Andrew has been investigating shortfalls at Post Office branches within the Universal Office Equipment group and has invited you to a voluntary investigative meeting on 5 April 2023 at [the Post Office’s] offices …”
Did you understand this to be a meeting or something more formal?
Elliot Jacobs: Well, I’ve run my business for 26 years and, over 26 years, you get queries between a supplier and a customer, which is the relationship that one would assume I have with Post Office, in many respects, and when that sort of thing happens, normally I’d know, an accounts department might contact you, they might send you some documents to review. You’d go back to them and query some things and you’d find a resolution. Maybe you’d have a meeting to discuss it in a, you know, professional and normal business manner. This did not feel like that.
Mr Blake: “Subjects to be discussed”, the first is “Shortfalls”, and he sets out there some shortfalls that he says have been identified. He says at the bottom there:
“We would like to discuss with you this mounting shortfall, understand what you think caused them, and identify any reasons for not continuing to engage with the PAST team.”
Who are the PAST team?
Elliot Jacobs: I don’t remember what the acronym stands for, we have a lot of them in the Post Office, but they’re basically the accounting support team of some sort. I don’t remember.
Mr Blake: Had you been told by the PAST team that they were passing on the matter to the Investigation Team to carry out an investigation?
Elliot Jacobs: No. I hadn’t had any communication with them in some time. It turned out through the investigation that they’d been writing to an address that isn’t my Head Office and they never phoned me or emailed me. I also was at the Post Office Headquarters regularly for Board meetings. I have a personal assistant at the Post Office headquarters, because of my non-exec role, and I’d been in meetings with Ben Foat repeatedly. No one ever came to me and said, “Elliot, there’s a query, could you have a chat with them”.
Mr Blake: Second issue is a potential conflict of interest. Briefly, what’s the allegation there?
Elliot Jacobs: I later found out it related to the signature of a declaration to do with any connected activity between myself and Post Office Limited.
Mr Blake: Something that potentially Post Office would have been aware of when you became a Non-Executive Director?
Elliot Jacobs: As a Postmaster Non-Executive Director, I thought it was inherent in the name but, yeah.
Mr Blake: Over the page, please a further issue with Directors’ declarations; can you summarise very briefly what that issue was?
Elliot Jacobs: This was the point made, I believe, that there was a form to do with director remuneration. Obviously my company provides the services. I do not personally provide the services of my post offices and, therefore, when I completed the form, I signed it as having no other direct income. I latterly found out that the correct approach to that would have been to declare the companies for which I’m a director and have revenue, but I was given no guidance by the Company Secretary on this, I was given a form and told – and it was part completed – and I was told to sign it, and I did it in the best faith but, in hindsight, I did it wrongly.
Mr Blake: If we scroll down we can see there’s a section on “Conduct of the meeting”, so they’re providing you with certain documents and we’ll get on to the discussion between you and the investigators in respect of those documents:
“I wish to reiterate that your attendance at this investigative meeting is entirely voluntary.”
Again, is it a meeting or is it an interview?
Elliot Jacobs: I’ve never been in a meeting that looked like this one.
Mr Blake: “If you chose to attend you may, of course, leave at any time you wish, or you may choose not to answer some or all questions. This is not an ‘under caution’ interview; it is an opportunity for both you and the investigators to discuss the three areas identified above in order to increase our understanding of what has happened.
“In attendance at the meeting will be myself and Andrew. If you wish, you may be accompanied by a friend, or a National Federation of SubPostmasters representative, or a colleague, or a legal representative. However, your companion will not be able to answer questions on your behalf.”
Do you have a view on that position?
Elliot Jacobs: Yes.
Mr Blake: What is that view?
Elliot Jacobs: Again, taking my experience as a longstanding professional in the business world, I can’t imagine any other situation where a Chief Executive of one company would visit an organisation it works with, bring representatives to the room and not be allowed to let them speak on their behalf. I think that’s highly wrong.
Mr Blake: Are you aware of the reason behind it?
Elliot Jacobs: No.
Mr Blake: It then continues:
“We would like your permission to audio record the meeting. This is to ensure that we can give our full attention to the discussion rather than taking lengthy notes. An audio recording also provides the best record of a meeting which avoids mistakes or misunderstandings. We will ensure that you have a copy of the recording as soon as practicable after the meeting.”
If we can please go back to the email correspondence, that’s WITN11180101, and can we please turn to the bottom of page 3. You say as follows:
“I have begun reviewing the documents you have sent.
“To begin, can you supply the 44-page PDF statement in Excel format, broken down by branch so we can review this in a format that enables us to look at data properly. The document you have provided is not in date order, and contains no explanation or notes for each line.”
Can you assist us with the issue there?
Elliot Jacobs: Have you ever tried to analyse a 44-page pdf? It’s impossible. It’s impossible. The level of data we were given was frankly a disgrace.
Mr Blake: It continues:
“Please provide line detail including the reason for each …”
Is that transaction correction?
Elliot Jacobs: Yes.
Mr Blake: BD?
Elliot Jacobs: I’m not sure, actually. I think it might be some sort of bank deposit or something like that. I’m not sure what a BD is.
Mr Blake: And the TP? It’s not a test!
Elliot Jacobs: I’d need a bigger book than this! And the TP, that’s the trading period.
Mr Blake: Thank you:
“… (and the [trading period] in which is occurred) so that this can be properly reviewed. Please include original transaction data.”
To get an idea, can we understand how big a business is your business; how many transactions take place?
Elliot Jacobs: So to put it into scale, over the 10-year period or nine-year period that this data related through, my branches would have handled maybe somewhere in the order of £1 billion worth of transactions. I have somewhere in the order of 35 terminals/40 terminals, maybe, plus self-serve kiosks, a huge amount of data, none of which can be interrogated either locally or remotely by me, except to print out a till receipt from the terminal it’s on, which would be like getting a till receipt for your shopping and then trying to wade through it.
One afternoon of receipts for that alone could perhaps run to a length of printout that could be 25 metres long.
Mr Blake: You then say:
“Additionally, the attached file cannot be accessed – please provide access to where [the] file is stored or an actual jpg copy.”
Do you recall what that issue was?
Elliot Jacobs: There was a link to a file which was on a secure server that I couldn’t access.
Mr Blake: If we scroll up, please, to the top of page 3. The response:
“Account statements and letters were sent to [an address]. I can confirm that I have a copy of each email which I will access in a few moments and will forward on to you.
“Can I respectfully suggest that you address the rest of your requests below to the Post Master Support Team …”
So that’s what “PAST” stands for:
“… as per the letters/emails sent to you at the time of the occurrence by PAST in which they offered to work with you to understand the discrepancy.”
So am I right to understand that here the investigator has received a query from you and the investigator is directing you to contact a different team to obtain the underlying information?
Elliot Jacobs: Yes, and what concerned me here was that he decided that he wants to do an investigation without actually having the data himself to provide, which I thought was bizarre.
Mr Blake: Could we scroll up, please. I think you’ve expressed that to him. You say:
“As you must have fully reviewed and collated this data in order to form your review so far, I would assume this must be something you have to hand.
“It will surely be quicker for us both for you to provide me with your working documents (which I assume must contain the data I have requested) and not delay my investigation than me start from scratch with another department.”
If we scroll up, please, to page 1, the response from Mr Morley. He says:
“I have now had an opportunity to with the PAST. They will generate an Excel version of the 44-page Account Statement … to which you refer. The spreadsheet will be broken down by branch and in date order. [They] will provide commentary for transaction corrections, however, due to the number of outstanding [transaction corrections] since 2019 this is no small ask and will take some time to collate. I will be in touch again once I have received the document from the team.”
What’s your view about what’s said there?
Elliot Jacobs: Well, again, how do you investigate something and decide you want to call me in without having done the work before?
Mr Blake: He says:
“Earlier this afternoon I forwarded you a copy of the emails previously sent to you by PAST. Please can you acknowledge receipt.”
Were those the emails that you’ve said went to an address that wasn’t your –
Elliot Jacobs: The emails went into my junk because they come from a random server at Post Office and the server detected that they were random communications with no personalisation and it went into my junk mail, which I never saw. The letters that they sent, they sent to one of my branches and they were not addressed to the postmaster. They just looked like a statement of account.
Mr Blake: He then says:
“I have reattached the JPEG screenshot of the Partnership Portal”, and goes on to detail that issue.
If we scroll up, please, to the top of page 1, you say:
“I am surprised that you have been able to form a fully rounded opinion, sufficient to make some of the very serious accusations in your prior communications without carrying out a full and detailed review of the data?
“The amount of distress and worry and this has caused me since your email letter this week has been significant.”
Can you assist us with your feelings at that time?
Elliot Jacobs: It was incredibly stressful, and you have to put into context for this the fact that, as a Non-Exec Director and postmaster, who had immersed himself in prior – not previous – not long before this, in really understanding what we did as an organisation to postmasters before, the fear and worry this caused me in terms of it felt like the past repeating itself.
Mr Blake: You’ve said:
“I have been available on the phone … on which I regularly receive calls from all manner of departments in Post Office every single day … so what number they have been calling I have no idea! As you can see from are communications so far – when I am contacted, I deal with things – rapidly.”
Can we please turn to WITN11180103, and can we start on page 2, please. There’s continuing correspondence about disclosure. You email Mr Morley and you say:
“I will await your proper and fully disclosures and will then take the matter under advisement.”
This is 20 March:
“In addition, you have provided a highlight section of Board minutes – can you please specify the accusation being made for the avoidance of doubt and the evidence on which you are relying in this regard?”
So we saw the original accusation in that letter from Mr Bartlett. You have been provided with a highlighted section of Board minutes. Did you understand the allegation that was being made against you?
Elliot Jacobs: Not fully. It wasn’t clear. They’d highlighted a section of Board minutes, if I remember rightly, that referred to conflicts, and it basically said, “No conflicts”. What I later found out, obviously, is that my job title wasn’t sufficient for people to know that I was a postmaster.
Mr Blake: Was the expectation that every time you went to a Board meeting you would declare that you were a subpostmaster?
Elliot Jacobs: It is exactly what I do now.
Mr Blake: Yes. Then, as you say, is that not in your job description, job title?
Elliot Jacobs: It is in my job title, yes.
Mr Blake: If we go to the first page, there is a response from Mr Morley. The response is as follows:
“I do not intend to enter into pre-interview protected correspondence regarding advance disclosure which I am under no legal obligation to provide and is provided on this occasion out of courtesy in order that you can have a high level understanding of the topics we wish to cover, which are set out in the letter from Mr Bartlett. Further detail regarding [the Post Office’s] concerns will be provided during the interview.”
What do you understand by “pre-interview protected correspondence”?
Elliot Jacobs: I have no idea.
Mr Blake: There is now a reference to it being an interview, rather than a meeting. Was that distinction clear to you at that point?
Elliot Jacobs: It felt like that was what it was going to be from the start. Again, this is not the way businesses behave typically, in my experience.
Mr Blake: He said:
“I am seeking in advance of the interview your agreement to the recording of the interview which of course will provide the most accurate record, enables a more natural conversation and is less time consuming than the alternative and therefore, has to be in the best interests of all concerned. If you agree to the recording then you will be provided with a copy of the recording post-interview … If you are not in agreement to the recording of the interview then we will have to revert to contemporaneous notes, which are very time consuming and with the best will in the world provide a less accurate record. You should be advised that if you elect to go down the contemporaneous notes route, then we will have to extent the length of the interview considerably and based upon my experience of such interviews I think it would be wise to allow 6 hours for the interview.”
What do you understand by that paragraph?
Elliot Jacobs: I thought it was a shocking way to write to anyone. There were a few things there. Firstly, I sit in Board meetings pretty much every month and we have notes taken by the CoSec. The meeting doesn’t go any slower and they are not recorded in any other way than by someone typing as we go. But the inference here was “Do it our way or it’ll be three times harder”.
Mr Blake: Thank you. That can come down. On 5 April 2023, you attended the interview. Can you describe for us that experience?
Elliot Jacobs: Well, leading up to the interview it was incredibly stressful and I have to put into context here, I am fortunate: I run a reasonable sized business, I have an amazing support team, I have people who are capable of interrogating data to a standard that I personally can’t do. I have a very good team around me and even they had to work incredibly hard to understand the information we were given.
Going into a meeting which was clearly set up, whatever they say about it being optional or advisory or whatever, it certainly didn’t feel like that and, from the tone and the stance of those communications, it definitely felt as though, if I didn’t turn up, things would be worse.
I went in there, armed as best I could with the information had gathered. I was concerned for my reputation, I was concerned for my business. I know what we’d done in the past and this felt like that. And so I was incredibly nervous going into the room. I chose to take my brother with me, as someone who could bear witness but not speak, and I’m glad I did that, because that really helped.
Mr Blake: At paragraph 24 of your statement, you said that the interview was similar in style to a formal police interview.
Elliot Jacobs: Yeah.
Mr Blake: In what way?
Elliot Jacobs: Well, again, if I compare it to a normal business meeting, you’d have a conversation, you’d discuss some documents, you’d find where the issue was, you’d take some actions to go forward with, and you’d follow up. This was not that. This was an interview that was being recorded with the dictating machine in the middle of the table; evidence was presented, and it was called “evidence” and it was numbered, much the same as your documents here, in a way that felt very much like a police interview; it was being conducted by ex-police officers; and, whilst the tonality may have had a layer of warmth and friendliness, it certainly felt very different from any other business meeting I’d ever attended.
Mr Blake: In that email from Mr Morley, he says:
“Further detail regarding the Post Office’s concerns will be provided during the interview.”
Elliot Jacobs: Mm.
Mr Blake: Were there documents that were presented to you during interview that you hadn’t seen before –
Elliot Jacobs: Absolutely. All of them.
Mr Blake: The next day, the auditors attended, I think you’ve said, your Post Office: was that every branch, some branches, the headquarters?
Elliot Jacobs: Well, they call them assurance visits now. They’re the same people.
Mr Blake: Where did they co?
Elliot Jacobs: Wherever they like.
Mr Blake: In terms of your own post offices, where did they go?
Elliot Jacobs: They go into the post office; they shut my post office branches to do the audit.
Mr Blake: Every branch?
Elliot Jacobs: All of them.
Mr Blake: I think you’ve said that there was an issue regarding stamps that arose during that audit.
Elliot Jacobs: Mr Ismail referred to this earlier. Prior to this audit, in one of my branches, I’d been contacted by a department at the Post Office who had instructed my team leader – in each branch I have someone who runs the branch on a day-to-day basis – they’d instructed them to do a series of entries onto Horizon to make adjustments to our stock, and these adjustments were unsupported by any data, and when I challenged back and said, “Could you provide the evidence to support these changes you want to make on my account because, if I make these changes I will have a loss in branch”, that never got followed up.
When they came to do the assurance visit, as it’s now called, I was instructed, though I hadn’t been told prior, that the lead person had been instructed at the end of the audit to make adjustments onto Horizon by logging on with their own log-in and making adjustments to my stock position, which would cause a far significant change in my balance and, therefore, a loss in my branch. I said to them, “That doesn’t seem like the right thing to do”, and I was basically told they were doing it anyway.
Mr Blake: So to get the sequence correct, you had an interview with investigators. The next day, the assurance visit takes place. They’re presumably checking your accounts for matters relating to the interview but, at the same time, is this a separate issue that they are making adjustments to your account in relation to stamps?
Elliot Jacobs: No, I think there’s three things here. There’s the historical discrepancy that they are claiming has occurred on the central account, some of which occurred a long time ago for various circumstances, no doubt we’ll get to that shortly; a second part, which was to do an assurance visit, which I assumed was because they wanted to make certain what I’d said I had in the branch matched what I had in the branch, which it pretty much did; and the third part was a previously uninformed adjustment that they intended to make, which they did in multiple branches. It wasn’t just done to me, either, it was done to about 30 different postmasters, I believe.
Mr Blake: Looking back at that experience, what is your view about the conduct that took place on that occasion?
Elliot Jacobs: Well, historically, we were going in the backdoor and changing stuff; here, we were walking in the front door and doing it.
Mr Blake: Did somebody talk you through those changes that were being made?
Elliot Jacobs: They told me they were going to make them but they told me at the time they were going to make them. I didn’t get a chance to challenge or see any data. I was told that I could dispute them, which I obviously did.
Mr Blake: We will look at the formal withdrawal of the allegations in a moment but, in broad terms, how was agreement ultimately reached with the Post Office?
Elliot Jacobs: So when the process shifted from them realising that I wasn’t perhaps as the guilty party that they had in their mind, because I assume that’s what the visit to my branches was to verify, things seemed to relax a little. They passed the matter over to the team based in Chesterfield led by Mel Park, and that absolutely changed the situation.
When it came out of the investigations department and was being run by Mel’s team – Mel is an accountant with commercial experience from prior – it was – I wouldn’t say a breath of fresh air but it was a proper business conversation. Myself and my Group Operations Director, we travelled up to Chesterfield and met face to face with the team up there, we met with Mel and three or four of her team. We sat down in a room like proper businesspeople, discussed matters, discussed about what could that have occurred, went through the data, and we worked together as two teams working as one for probably the next, I don’t remember, four to six weeks, and we were able to resolve the vast majority of the queries on account, which ended up not being an issue at all.
Mr Blake: Do you know why it didn’t go to that department to begin with or did it go to that department to begin with?
Elliot Jacobs: To the best of my knowledge, I was never contacted by Mel Park prior to that. I had never spoken to Mel Park prior to that.
Mr Blake: Let’s look at the correspondence when the matter is closed. Can we please turn to POL00448303. If we start on page 2, please. The interview was 5 April 2023. If we look here, we can see an email from you to Melanie Park on 16 January 2024. You say:
“I still await the finalised reporting on our account and also the written confirmation of the withdrawal of the investigation.
“You will appreciate that whilst I am keen to commence payment of any liability, I would like [the Post Office] to keep its side of the process so that we can ensure that we are all aligned around the position.”
If we scroll up, please. Ms Park says:
“Apologies I will talk to the Legal Team today to see why this hasn’t been done.”
If we scroll up there is a response from yourself to – in fact, it’s not a response. You forward the matter to the Chairman and you say:
“Henry
“Below you’ll see correspondence from between myself and Mel Park regarding the fact that [your] trading account has yet to be updated with the removal of the invalid claims of losses nor a letter of withdrawal of the investigation to be issued.
“Who is responsible. Legal. Again. How are Legal in the way of all things progress and good in this business? Proof, if proof was needed, that their fingers are in every part of the pie affecting our ability to get work done to such a level that it is frankly beyond belief.”
Now, putting aside your own investigation, because you’re referring here to legal again, what was that other concern that you had regarding the Legal Department?
Elliot Jacobs: Well, the business is incredibly hamstrung by legal in many, many ways. In all aspects, Legal get into the mix, whether it’s an HR issue, an operational issue, they run the Investigation Team. They’re everywhere.
Mr Blake: What was your concern in relation to your own investigation?
Elliot Jacobs: I wanted a letter confirming the matter was closed.
Mr Blake: If we up we can see Mr Staunton’s response. He says:
“Dear Both,
“This is completely unsatisfactory – I was under the impression after talking to one of the [Non-Executive Directors] handling this (Lorna?) that the report was wrapped up many weeks ago. I understand the tremendous upset you (and Saf in the case of his investigation) have been subjected to. This requires an investigation. I have sent a filenote of the views of our Postmaster [Non-Executive Directors with regards to] Ben Foat.”
Is that the Project Pineapple memo?
Elliot Jacobs: No. No, I don’t think it is.
Mr Blake: Is that the further memo that we’ve seen prior to a Board meeting?
Elliot Jacobs: Possibly. I’m not sure.
Mr Blake: “We should see tomorrow whether our [Non-Executive Director] colleagues should take action. I told Andrew yesterday that all of the [Group Executive] and FOUR Main Board Directors had been investigated. He was incredulous.”
What do you understand by that sentence?
Elliot Jacobs: Well, as I say, the Investigations Team and Legal are everywhere, and I’ve never sat on a Board where more than half of the Board have been investigated for something. It’s continuous and it’s very hard to get anything done without being investigated or without having Legal stop you doing it.
Mr Blake: Do you think that in some way there is some hypersensitivity or overadjustment because of what happened in the past at the Post Office, and that might listen why the Legal Department are so involved in matters within the company?
Elliot Jacobs: Possibly.
Mr Blake: Can you think of another explanation?
Elliot Jacobs: We just have a lot of lawyers.
Mr Blake: In terms of numbers, personalities, individuals; what’s the concern?
Elliot Jacobs: All of that. I mean, we have, you know, a lot of lawyers doing a lot of things, but Legal are responsible for more than just drafting contracts and compliance. They seem to be – you know, investigation sits within Legal. I would have thought investigations would sit better in HR. You know, the parameters within which Legal operate seems to be unclear and sometimes I’m not sure who’s running the business, whether it’s Legal or the business.
Mr Blake: Let’s turn to the letter that withdraws the accusations. Can we please turn to WITN11180104. It’s 8 February this year:
“As you’re aware, the Assurance & Complex Investigation Team … at [the Post Office] conducted a fact-finding investigation with your assistance.”
Did you understand that to be a fact-finding investigation?
Elliot Jacobs: No.
Mr Blake: “I am writing to you to inform you that this matter is closed from the perspective of A&CI.”
Was it open in respect of some other department, as it was closed in their respect?
Elliot Jacobs: Not that I’m aware of.
Mr Blake: “The matters centred on two main themes:
“1. Did you, in your capacity as a Non-Executive Director … make false, misleading or incomplete declarations on a ‘Remuneration form or Directors and Other Key Management Personnel’ …
“2. Did you, through your ownership of UOE, fail to address or service shortfall debt owed to [the Post Office] accrued by [your company].
“In respect of the first matter, our findings are that the training and advice you were provided in relation to the completion of this declaration was such that it was unreasonable for you to know whether your financial position with [the Post Office] should or should not have been declared.”
So it seems an acceptance there that it would have been unreasonable for you to have been aware.
Elliot Jacobs: Correct.
Mr Blake: “Therefore A&CI has recommended that this matter should not be taken further. We have also recommended to the Corporate Secretariat that the instructions, training and advice to future potential directors is improved in respect of this declaration. This has been logged with Group Assurance for them to monitor the changes in approach.”
Elliot Jacobs: That has been carried out.
Mr Blake: Thank you.
“In respect of the second matter, I understand that you have for some time now been liaising directly with Central Operations Director, Melanie Park, to address the shortfalls at your branches and to reach a mutually agreed outcome. Now that this arrangement has been agreed, A&CI can close the fact-finding investigation.
“I can, therefore, confirm that our fact-find in relation to these matters is now closed. I would like to take this opportunity to thank you for your patience and cooperation in this matter.”
What’s your view of this letter?
Elliot Jacobs: It was late coming. I was pleased to receive it.
Mr Blake: Have you discussed any crossovers between the way that you were treated in this investigation and other investigations that the Inquiry has heard about with other directors, or with anybody else within the company?
Elliot Jacobs: I spoke directly to Ben Foat, who the team reported in to, and I said to him “You’ve got to look at way this works. Having experienced it myself, we have not learnt sufficiently how to treat postmasters properly. There are horrific echoes of the past. The terminology, the approach, you’ve got to learn from this and I’m happy to sit down with anyone you like and share my experience so you get it from my side”.
Mr Blake: Taking your own case as an example, how do you think investigations should be carried out?
Elliot Jacobs: I think you start with the premise that there’s a query. Can we work together to resolve this query from an operational perspective? Investigations should deal with when that becomes obvious as more than just a query, and there’s some sort of criminality, or attempted fraud, or something, you know, significant that is out of the norm of normal business. To assume that it requires the level of investigation – sorry, “fact-finding” – that they suggest and yet not provide that documentation to the other party, immediately and fully, so that they can offer suggestions as to what the issue might be, seems at odds with a partnership relationship.
Mr Blake: To what extent do you see the issue as cultural rather than structural?
Elliot Jacobs: Yes, I think it’s a bit of both.
Mr Blake: How would you change it?
Elliot Jacobs: I think the terms of reference for the Investigations Department needs to be reviewed; the approach and style; the use of what are clearly confrontational styles of messaging need to be adapted; and it should be – there should be more parity between the two relationships. It’s a big challenge in the Post Office that there is this imbalance of power, and you can call them optional meetings, or whatever you want to call them: they are clearly not optional if you’re a postmaster.
Mr Blake: We saw the Project Birch report and those recommendations. Are you aware at all of those recommendations having been taken forward?
Elliot Jacobs: There was a document presented to Board for noting which you brought up on screen earlier today with Mr Ismail, which was the attempt by Post Office, I think, to adopt some of those. The execution is a little lacking.
Mr Blake: Are you aware any in-depth discussions of the way forward?
Elliot Jacobs: Not sufficiently. No one asked for me to share my experience with them within the Investigations Team.
Mr Blake: Has there been any discussion about looking at the Horizon system as part of the work carried out by the investigators? We saw the document with Mr Ismail before that referred to, for example, investigating those who worked for subpostmasters, but that document didn’t seem to address the issue of actually digging down to any root causes of any problems. Is that something you’ve discussed in any depth at Board level?
Elliot Jacobs: I don’t understand the question, sorry.
Mr Blake: Part of this Inquiry has been looking into a lack of investigation into the root causes of a problem that might be traced to the Horizon system itself.
Elliot Jacobs: Yeah.
Mr Blake: In fact, there has been evidence where there have been cases where the Post Office has said there has been a loss but, in fact, the loss itself has not been investigated as to whether the Post Office has in fact received a loss.
Elliot Jacobs: Mm.
Mr Blake: Has there been discussion at Board level about that aspect of the investigation process?
Elliot Jacobs: At Board level, the majority of discussions around discrepancies, as to how they’re referred to, relates to the line item in the P&L on a monthly basis. The way of handling those discrepancies has come up a few times in different guises but, currently, there is no clear strategy on the way forward for that.
Mr Blake: I’m going to take you to one more document before we take our mid-afternoon break, and that’s another document that we’ve seen today. It’s FUJ00243203. This is the correspondence with Fujitsu in relation to the use of, or provision of, evidence in a criminal prosecution. This is 19 April 2024, so soon after your own investigation.
Do you, having read this, consider it appropriate for the Post Office Investigations Team to be contacting Fujitsu in this way?
Elliot Jacobs: So I believe this relates to a matter where the City of London Police have decided there is a case that requires investigation. I think that’s wholly different from a situation where the Post Office is checking its own homework. The level of rigour that I believe and trust the City of London Police to work to is a standard I think we would all agree should be of the very highest and I trust that, if the City of London Police require information, that there is good cause for it.
In those circumstances, I think it’s only right that our Investigations Team should work to provide the information for our law enforcement people to do their job and the question here really is, I think: can we rely upon Horizon as a point of reference in those situations?
Clearly, Fujitsu do not wish to be associated in that regard and it’s clear from their letters. But I think also those letters, you have to look into context of the time, and that was the moment at which Fujitsu were either on the brink, or were just about to apologise for their part in this. But also, it’s the conversation between two CEOs trying to protect their side of their businesses.
So I think that, for me, sitting on the Board as a non-exec, the important thing that I wanted from our Investigation Team before they passed anything over to City of London Police, or any other police force, was that if we believed there was a criminal act that has happened and we’re being asked to provide evidence, that evidence should come to Board first, be approved as appropriate and then be released, because it doesn’t happen that often that it presents a problem for the Board to look at it a few times a year, and then make judgement that the data is sufficient and right that we can pass it forward.
Mr Blake: That dispute that we saw in the correspondence between Mr Patterson and Nick Read, was that something that was raised with you or in discussions with members of the Board at all?
Elliot Jacobs: So Mr Read had regular discussions with the CEO of many partner businesses of the organisations that we work with and would update the Board regularly on his discussions with them, but we wouldn’t get the minutiae or a copy of correspondence. I wasn’t aware of this matter and I wasn’t aware that Fujitsu were taking the line that they were. I believe that the tone of communication between the two organisations shifted when Owen Woodley engaged with them and seems to be less fractious now.
Mr Blake: Do you see a way forward for the two organisations to work together?
Elliot Jacobs: I think we have to. It’s essential.
Mr Blake: Do you think it’s achievable?
Elliot Jacobs: I don’t own the relationship; it would be hard for me to answer.
Mr Blake: In light of the correspondence that you’ve seen, do you think that there are issues, significant issues, that need to be overcome in that respect?
Elliot Jacobs: Well, I think you can look at two letters from two CEOs in a moment in time and draw conclusions, but it’s a moment in time. I don’t believe that Fujitsu and Post Office are unable to work together.
Mr Blake: Thank you.
Sir, that might be an appropriate moment to take our mid-afternoon break.
Sir Wyn Williams: Certainly.
Mr Blake: Can we come back at 3.15, please.
Sir Wyn Williams: Yes. Fine.
Mr Blake: Thank you very much.
(3.00 pm)
(A short break)
(3.15 pm)
Mr Blake: Thank you, Mr Jacobs, we’re going to address a few different topics now, starting with the Horizon system itself. If we could bring onto screen your witness statement, WITN11180100, and it’s paragraph 17, page 5. You set out there a number of issues that you have with Horizon. Is it right to say that you started using Horizon when your franchise first began in 2014?
Elliot Jacobs: Yes.
Mr Blake: Let’s go through briefly those issues that you’ve raised. The first is that:
“It is not a visual, user-friendly system. The system is primarily text based and there are few command prompts.
“[Second] It is difficult for postmasters to analyse data and correct potential inaccuracies on the system. It then takes significant effort and often a manual review of transactions to investigate a potential error.”
Does that tie into one of the issues you raised with your investigation and the access on information?
Elliot Jacobs: Yes, there are two parts there, firstly the investigation being as discussed, but also out the back of that, the lessons learned from my side was we now have our own manual checks that’s done in every branch on every till, every day, off Horizon to verify our balances.
Mr Blake: I think you’ve said in your witness statement that you do that because of concerns that you have with the Post Office’s tolerance for error; is that right?
Elliot Jacobs: Well, the tolerance is zero.
Mr Blake: What’s your concern in that respect?
Elliot Jacobs: There is no system that can be wrong 0 per cent of the time.
Mr Blake: Looking at (c):
“Postmasters that run multiple branches cannot obtain a global view of data and are required to be physically present at the relevant Post Office to interrogate data …”
So you run a number of different branches but there is no way of drawing all often your data together?
Elliot Jacobs: No, there is no central access that’s available in real time. You can get delayed information weeks or days later, potentially, depending on the time of the month, using a system called Branch Hub, but this has limited data, and you can’t drill individual transactions. The only way to get individual data or analysis on an error is to drive to the branch, walk in the front door, print it out and then, by hand, wade through a printed report. There is no Excel export or anything like that.
Mr Blake: Then (d):
“The Horizon IT System is effective as a functioning till, but it is not sufficiently sophisticated to manage and analyse a modern business as a professional postmaster.”
Is that along the same lines as you’ve just been describing?
Elliot Jacobs: Indeed. The rest of my business all operated on a software platform that I can drill and analyse everything, and this is nothing like that.
Mr Blake: Can we go to our expert reports, that’s EXPG0000007 at page 19. Page 19 sets out the issues experienced with Horizon in the last 12 months, the postmasters have experienced. Are these issues that are familiar to you, at all?
Elliot Jacobs: They would be familiar to every postmaster.
Mr Blake: Looking at these issues, and also the issues that you’ve highlighted in your witness statement, do you consider that they are sufficiently well known within the business?
Elliot Jacobs: Explain the question, sorry?
Mr Blake: You’re aware of them because you are a subpostmaster, and you operate branches. Those who completed the Inquiry’s survey are aware of them because they are also subpostmasters. Do you think that that information, those messages, reaches the upper levels of the company?
Elliot Jacobs: No.
Mr Blake: What’s the issue there?
Elliot Jacobs: They never touched Horizon.
Mr Blake: Does one have to personally use Horizon to understand those issues or is there a way of communicating that to the Board or to Executives that you don’t see happening?
Elliot Jacobs: I think it’s hard to realise how archaic the system is unless you have the privilege of using it, and I think what Mr Ismail and myself bring to the Board is that level of real-world experience where we can share the realities of operating within this – the confines of this system and other processes that we have in the organisation, this just being part of that. But I think that more could be done to immerse senior leaders within the business, and Board members, in understanding how hard it is to run a branch.
Mr Blake: In terms of the Horizon replacement, the NBIT system, when do you realistically think that that will be implemented?
Elliot Jacobs: I would suggest you speak to the Head of Technology.
Mr Blake: Do you have any concerns about the implementation?
Elliot Jacobs: It’s late. Very late.
Mr Blake: Do you have any concerns over and above the delay?
Elliot Jacobs: Yes, I think that it’s very important we don’t just get a Horizon replacement. This business doesn’t need a replacement for Horizon; it needs a fit-for-purpose computer system that will be capable of managing the business 20 years from now, 15 years from now, because whatever we built from now, is going to have to last beyond the decade.
Mr Blake: Is that properly understood at Executive level or Board level?
Elliot Jacobs: I think it’s beginning to be but, at the moment, it’s often referred to as Horizon replacement; it’s not. New Branch IT is not a great name for it but it’s a better description of what its needs to be.
Mr Blake: I’m going to move on now to Project Phoenix and Past Roles. I’ve dealt with that in great detail with Mr Ismail so we’ll skip through a number of documents relatively quickly but, if you want to take time over any of the documents, please do say. If we start, please, with POL00448615. This is a Group Executive report on the Past Roles Review, dated 17 January 2024. Can we please turn to page 6. In your witness statement, I think you’ve said that you originally were lined up for a role in this work – sorry, it’s over the page, page 6. Can you assist us with that? We have here, for example, Mark Eldridge listed as the Postmaster Non-Executive Director?
Elliot Jacobs: Well, in the original daft that I was sent, I was assigned as the Postmaster NED to that committee.
Mr Blake: What happened to that?
Elliot Jacobs: The process went through a number of different iterations and the final constitution of the group didn’t include me.
Mr Blake: Are you aware of any reasons for that?
Elliot Jacobs: It wasn’t communicated to me directly. I was led to believe that it could be because I was a postmaster and, therefore, might be conflicted.
Mr Blake: Who is Mr Eldridge then; is he not a postmaster?
Elliot Jacobs: He is indeed a postmaster. He is the Postmaster Director.
Mr Blake: So why is it that his name is there and yours isn’t?
Elliot Jacobs: You’d have to ask the Chair of the panel, I suppose.
Mr Blake: What reason do you think it is?
Elliot Jacobs: I don’t know, if I’m honest. Mark’s role within the business is more executive. I’m non-executive. Everyone else on that committee is executive. Perhaps it was felt that it was an executive committee rather then a non-executive committee.
Mr Blake: Do you think that the concerns that you’ve raised in respect of that project has played a role in any way?
Elliot Jacobs: I don’t believe we’d have moved forward in the way we are now moving forward if myself and Mr Ismail had not been very forceful and repeated in our requests to get this sorted.
Mr Blake: Can we please turn to POL00448309. This is just one of the emails that we’ve been through. We’ve been through a great deal of correspondence on the Phoenix and Past Roles issue. This is an email from yourself sent on 10 February 2024, and you say:
“It does however seem odd that not a single one is suspended whilst this is ongoing? Why is that? We seem to suspend people on a regular basis when investigations are ongoing? Why not on this matter?”
What is your concern in relation to the suspension or lack of suspension of individuals?
Elliot Jacobs: So I’ve had the privilege to attend this Inquiry on a number of days and see other witnesses give evidence, some of whom were involved in investigations in the past, some of whom remain in the organisation today, and I don’t understand how you can change the culture of an organisation and those people still be taking a wage from the business. So it was my view that, whether or not we could deal with that now, because the Inquiry is going on, or whether we should wait until the Inquiry ended, these people had to be not within the business on a daily basis and, if the only way to deal with that now was to suspend them on full pay, I would rather they were paid and sat at home than be in the organisation creating a culture that isn’t fit.
Mr Blake: Where do you draw the line between particular named individuals, individuals who were in particular roles, et cetera?
Elliot Jacobs: So you made an example this morning of someone who had reappeared in a different role in a communication at a post office that had been closed. Part of the problem of the organisation is, up until recently, it didn’t know who or when people who were in the business currently may have been involved in the past behaviour of the organisation, and so the Phoenix/Past Roles process was about understanding who we have in the organisation, what they were doing in the past when we made such terrible decisions, and what are they doing now, and is – what’s the risk?
Now, there are some people, and Phoenix, it latterly turns out – because again we talked earlier about Board communication, Phoenix and Past Roles were only ever referred to as Phoenix at the Board, up until recently, when they were more clearly defined as two separate projects, but Phoenix is designed to identify what were known as the “reds”, the reds being people who are very high-risk category 1 people, involved in investigations who, you know, are – clearly, should not be in the organisation, as opposed to people who were perhaps employed by the organisation at the time when we were doing these things, but were not directly involved. They may have been in a completely different department. They might even have worked in one of our directly managed branches at the time and now are in a position of leadership.
That’s totally different to someone who was directly involved in investigations. So, for me, that’s the first distinction, and I don’t believe we should blanket remove everyone who was there on the date, but we need to understand who works for us and what was their role in the past, and if it was to do such wrong things, they have no place in this organisation – yesterday, today, or tomorrow.
Mr Blake: Can we please look at POL00448297. This email we’ve just seen is February, moving to 19 April. We saw this document either yesterday or today:
“Over the past couple of days, a number of [postmasters] have been in compact with Saf and I in regard to recent statements at the Inquiry by current employees who are still in the business and were involved in the Horizon scandal.”
You say:
“We are regularly told that the review is underway and must be done carefully to ensure accuracy in decision making – which I fully understand. But to date we have not received any information on a single employee who has been suspended or dismissed as a result of this ongoing review which started nearly 2 years ago but still remains incomplete.”
What’s your view as to the pace of these investigations?
Elliot Jacobs: That they weren’t moving.
Mr Blake: Are they moving now?
Elliot Jacobs: They are, but not sufficiently quickly, in my opinion.
Mr Blake: Who do you consider to be responsible for that lack of pace?
Elliot Jacobs: Well, it’s been incredibly difficult, because we’ve had – I lose count – I think it’s five or six Chief People Officers whilst I’ve been at the organisation, which is very hard to build culture, very hard to build a process. And where something like this is being managed, I believe by the People Team now – Karen McEwan, who is copied in on this email and is the current Chief People Officer, has taken up activity on this at a far better pace than previously. But I think without the push – and continuous push – from me and Mr Ismail, and others on the Board, then it would just be going at a slow pace.
Mr Blake: Why has there been such great turnover in terms of the People Officers?
Elliot Jacobs: Well, there was – one of them went on maternity leave; one was an interim cover for maternity leave, that person then did a short-term interim role and left; we had another one that joined, and she had her contract terminated for performance, I believe; and we’ve had gaps between them, as well; and now Karen has been with us – I’m not sure how long, maybe – nearly a year, perhaps.
Mr Blake: Do these signify any wider problems within the business in terms of retention, in terms of consistency and handover?
Elliot Jacobs: Well, in an organisation of any size, the People Team is fundamental in building – not only assisting the CEO to deliver the culture change that you want to deliver but also in helping to build out the skill and capability and the second-tier leadership, so that you have continuity and capability as you continue to grow and evolve your business. Not having a Chief People Officer or a People Team that was under, you know, a steady leadership, obviously has affected our ability to make change, I think.
Mr Blake: We saw yesterday a couple of documents that seemed to put a lot of emphasis on the duties owed to employees, and that was given, perhaps, as a reason for not suspending people.
Elliot Jacobs: Mm.
Mr Blake: Are you aware of the emphasis being placed on care to employees over and above wider issues?
Elliot Jacobs: I’m aware of the suggestion. It doesn’t stack, for me. You know, suspending someone and sacking someone are very different and you’re not making a judgement on their guilt by suspending them whilst you investigate.
Mr Blake: Is it your current view that there should be a move towards suspension?
Elliot Jacobs: Well, I’d like to see us move towards removing anyone who is classified as Phoenix.
Mr Blake: Moving on to Project Pineapple and, again, we’ve seen these emails quite a lot, so we’ll move through them quite rapidly. Can we first turn to POL00448302, and it’s page 4. Page 4 is the note of the conversation. I think I can actually clarify the date now. It seems to have been sent by Henry Staunton on Sunday, 14 January.
Elliot Jacobs: Mm-hm.
Mr Blake: If we scroll slightly above, we can see a further email from Mr Staunton, saying:
“Dear Both,
“Thank you for your time today.”
Elliot Jacobs: Mm.
Mr Blake: So it does seem as though the date actually of that note and that conversation is 14 January; is that your understanding?
Elliot Jacobs: It was definitely the weekend. I think it was a Sunday night, yeah.
Mr Blake: Thank you. You’ve confirmed, if we scroll up onto the second page, that it was a fair reflection of your discussion, and then you add further detail.
Elliot Jacobs: Yes. I mean, it was designed as an internal aide memoire, rather than some, you know, document that would be released for general public review.
Mr Blake: When it was provided to those beyond the Non-Executive Director teams, what was your view of that?
Elliot Jacobs: It was a mess.
Mr Blake: Were you aware that it was going to the CEO?
Elliot Jacobs: I think the intention was that Mr Staunton would share it with the non-execs first. To be clear, Henry had a conversation with the two of us, and this was off the back of Richard Taylor being shared in the press about some recording of him making comments about postmasters all being guilty. But we’d had a conversation with Henry, and Henry was very conscious of this two-tiering of the Board and said, “Look, I don’t want there to be silos of information. I want this to be a flat Board, and part of that is to make certain that the other NEDs know what we’ve talked about. Do you have any problem with me sharing it with the NEDs so that they’re on the same page as you, and get a sense of what we’ve talked about?”, and we were like, “Absolutely, no problem”.
And I think the intention was, once the NEDs were aware, we’d share it with the Chief Executive, Nick Read.
Mr Blake: Did you ever intend for it to be shared with Ben Foat or Martin Roberts?
Elliot Jacobs: Not in its format, though the content was true.
Mr Blake: If we turn, please, to POL00448383. If we start on the third page, we see the email there from Mr Staunton, confirming that it had been sent on.
There’s reference there, I think, to an apology. Was there an apology to you from Mr Read?
Elliot Jacobs: So I spoke with Mr Read after the incident occurred, and Henry had said to me, “Give Nick a call. Let’s sort this out. You know, he’s very apologetic for what’s happened”. And so I gave Mr Read a call: he didn’t apologise, in so many words, no.
Mr Blake: If we turn to the first page, please, we see there you say:
“[You] strongly echo Saf’s view on this.
“The release of the confidential briefing note to the very people we have highlighted in the document is a horrendous breach of trust.”
You then go on to say:
“Your description of these three men [that’s John Bartlett, Ben Foat and Martin Roberts] as ‘untouchable’ in our call earlier today was worrying enough …”
Just pausing there, what did you understand the term “untouchable” to be a reference to?
Elliot Jacobs: So we had had a Non-Executive Director-only meeting and Nick Read was in the meeting for the first part of it, during which we were talking about many things, and Mr Read made reference to the Investigations Team and the others who were around that – so Foat and Roberts – being “untouchable” because he couldn’t deal with anything with them; he was under investigation at the time, so was Henry, and, at this point, I don’t think I’d received my release, so I was under investigation as well, and I think there were others on the Board under investigation, as well. Jane Davies was under investigation. The list was quite lengthy.
Mr Blake: Could the Board properly function during that period?
Elliot Jacobs: It could carry out its Board functions in terms of its day-to-day Board roles, but when it came to dealing with specifics around any investigation or seeming to get in the way of any investigation, clearly that was – everyone was conflicted, so it became difficult. Therefore, they were untouchable.
Mr Blake: Can we turn to POL4448301. This is, again, a message from Mr Staunton. This is the reference there at the end to Nick being under huge pressures, and was very apologetic. Were you aware of Mr Read being under huge pressures at that point in time?
Elliot Jacobs: January was an incredibly high-pressure month for the Post Office. It was, you know, 14 days since the Mr Bates vs The Post Office broadcast, which had, I think, surprised the Post Office how strong the feeling nationally had been, and the output from that was incredibly intense on Mr Read and others, but particularly on Mr Read. I think he was called to a Select Committee around this time as well.
Mr Blake: Was it a surprise to you? You’ve said that the Bates drama was a surprise to the company.
Elliot Jacobs: Mm.
Mr Blake: As a subpostmaster, was it a surprise to you?
Elliot Jacobs: Sadly not.
Mr Blake: Were there others on the Board who it had not come as a surprise to, so far as you were aware?
Elliot Jacobs: I think seeing something portrayed in the drama brings to life what you’ve read or what you’ve heard in a way that is indescribable, and I think the reaction from the public just shows the truth of what happened. And I think everyone on the Board felt a much deeper sense of a need to get this right, and it just elevated everything in terms of making certain that things moved forwards. So I think the two things that have made a massive difference over the last few years have been the Inquiry, which has been both helpful and challenging, and the drama, which has been incredibly powerful.
Mr Blake: Can we please turn to POL00448514. This is again an email that we saw yesterday with Mr Ismail. I’ll just take you to the second page – over the page, please. It’s the email from Mr Roberts, where he says that he would now ask that you please put in writing the apology and retract all the allegations and statements presented in the email that he was copied in on.
Why, in your view, have things broken down so badly that there is this bickering at the highest levels of the Post Office?
Elliot Jacobs: When I met with Mr Roberts, which was a few days prior, I think – the day before this email, actually, it was 30 January – we’d had a very positive and collaborative conversation. Saf and I met with him together, face to face, we shook hands at the end. It was a good meeting and I think we all left thinking that we had settled the boat.
And I was surprised to receive this email, but I understood where it came from. Mr Roberts had been very stressed and concerned by the comments we’d raised. He shared that with us in the meeting, and I think, reputationally, he felt he’d been damaged and this was him requesting that restoration of reputation.
Mr Blake: I think you say on the first page that, essentially, while you would have put it differently, the substance of your complaint remained the same; is that right?
Elliot Jacobs: Yes. The filenote that Henry wrote was a rapid-fire internal document. Were it to have been shared as a performance review, I would have drafted it differently.
Mr Blake: Can we please turn to POL00448384. We went through the drafting process with Mr Ismail yesterday or this morning in relation to the points below this. If we scroll down, we can see “Key Agenda Items for Upcoming Board Meeting”. We understand, I think, that Mr Staunton was dismissed shortly after this.
Elliot Jacobs: Yes.
Mr Blake: If we scroll up to the top, we can see Mr Staunton had said:
“Elliot, I think you were going to raise a number of these issues with Nick. His responses would help Saf finalise his note.
“How would you like me to take this forward?”
Can you assist us with how that matter was taken forward?
Elliot Jacobs: I think Henry was dismissed before we could actually take this any further forward, as my memory recalls.
Mr Blake: Did you discuss it with Mr Read?
Elliot Jacobs: No.
Mr Blake: Why not?
Elliot Jacobs: In my call with Mr Read I was quite surprised by his reaction to my call. I was expecting – well, if I had made the error that he made in forwarding a confidential document to a party that shouldn’t have seen it, I would have been very humble and apologetic, offered to put it right if I could, try and broker some sort of situation with the people who had been forced to read something out of context. But Mr Read didn’t offer any of those things and, in fact, suggested it was Henry’s fault for forwarding it in a unsecured format, along with other documents, that caused it.
And it so threw me, his response, that I was – I didn’t think there was any point in discussing it further.
Mr Blake: What do you think was behind that response?
Elliot Jacobs: You would have to ask Mr Read.
Mr Blake: Is it once again bickering at the top level, is this Mr Read and Mr Staunton?
Elliot Jacobs: It’s interesting because Mr Read and Mr Staunton have a lot of like history, they’re both retailers from successful careers and, on the face of it, I thought they had a pretty good relationship, but I’m not sure that it ended up that way.
Mr Blake: The final substantive topic that I’m going to deal with, very shortly, is the Grant Thornton report that we saw earlier today. I won’t take you through those reports – we’ve already been through them – but what, for you, is the most important message from those reports?
Elliot Jacobs: The Grant Thornton report?
Mr Blake: Yes.
Elliot Jacobs: So the Grant Thornton report was produced on the request of Henry Staunton when he was Chair, and Henry was very keen to get governance back in line with where it needed to be. The Grant Thornton report, in its initial draft, was very damning of our governance capabilities, and rightly so. It was softened a little bit in the redraft, I think, because it was felt to be awkward and difficult and I think it raised very important issues, which are at the heart of what this Inquiry is trying to get to the bottom of.
Mr Blake: Who was responsible for pushing forward changes to that report?
Elliot Jacobs: Well, at the time, Mr Staunton had been dismissed. We had an interim Chair, and it fell to the interim Chair, Ben Tidswell, to lead the activity on that. I’m not sure of all of the elements but my understanding was that Ben Tidswell, and I would expect probably the CEO and Lorna Gratton were involved in those discussions. I was less involved in that.
Mr Blake: Thank you. Finally, is there any matter that we haven’t addressed or any particular recommendations that you consider are appropriate that we haven’t addressed today that you would like to raise?
Elliot Jacobs: I think the Post Office is an amazing organisation with great people within it but it isn’t living up to what it should be. It works best if it’s given a clear prescription, and it needs this Inquiry to give it its prescription. It can be a great organisation but we’re not there yet.
Mr Blake: Thank you.
Sir, there are no questions from Core Participants, so unless you have any questions, sir?
Questioned by Sir Wyn Williams
Sir Wyn Williams: It’s really out of curiosity, more than the likelihood that I need precise answers from you, but could we go back to the investigation that took place in relation to your branches, simply to fill in a gap that I think should be filled.
By my reckoning, we’ve had evidence from you of the interview – I’ll call it an interview – on 5 April and then the audit which took place on 6 April. Then we have kind of jumped to January the next year.
Elliot Jacobs: Yes.
Sir Wyn Williams: Well, I mean, I’d just like you to tell me briefly what actually happened.
Elliot Jacobs: Thank you, sir.
So between the audit – post-audit, they then passed the work over to the team at Chesterfield, who then worked with us on –
Sir Wyn Williams: Sorry to stop you. When you say “they”, you mean the two investigators who had interviewed you, yes?
Elliot Jacobs: Yes, sir.
Sir Wyn Williams: So that I can sort of trace this in the way I want to, essentially, am I right to infer that they did that because of the answers that you gave them in the interview, or did something else happen?
Elliot Jacobs: I would assume that to be the case. I was never told why, but I wasn’t asked back for a second interview, no.
Sir Wyn Williams: Okay, right, so interview is over, audit is over. Presumably you raise a dispute part about what had happened over the stamps?
Elliot Jacobs: Yes, and the other balances, yes.
Sir Wyn Williams: Yes, and then the next thing that happens is that a different team is looking at it?
Elliot Jacobs: Yes, and we went through with that team, line by line, forensically over 44 pages of what was a pdf file, and dealt with them line by line by line.
Sir Wyn Williams: That’s what you meant when you were describing what must have been a series of meetings, I guess, which were much more like business meetings rather than interviews?
Elliot Jacobs: Indeed.
Sir Wyn Williams: Okay. That took the better part of the rest of the year, yes?
Elliot Jacobs: No. I don’t recall the exact period but I think the whole thing was wrapped up probably by September, but it took until the next year for someone in Legal to issue me a letter saying that they’d closed it.
Sir Wyn Williams: Yes. So you are, I think, asking me to accept that it all having been wrapped up as between the businesspeople, if I can put it in that way, by September, whatever it was –
Elliot Jacobs: 2023.
Sir Wyn Williams: – the delay thereafter was in getting Legal to sign it off.
Elliot Jacobs: Well, it was – I think it would be fair to say that the company required it to go through a number of governance steps because they didn’t want it to be seen as, you know, a non-exec getting something signed off unfairly, or improperly. It required a number of layers of approval. Those layers of approval were achieved but the document never got written, and I think it was just it went round the loop a few too many times and got lost on the way.
Sir Wyn Williams: All right. So it’s perfectly understandable that justice was being seen to be done, as well as being done, in your particular instance, so I follow that.
So, overall, would you say that taking, what is it, seven or eight months to resolve it from the point of the audit was reasonable or unreasonable in the particular circumstances prevailing?
Elliot Jacobs: I think it was an incredibly long period of time to wrap something up. If you can come next day for an audit, it shouldn’t take seven months to write a letter.
Sir Wyn Williams: Right, okay. Thank you for filling in the gaps, Mr Jacobs.
The Witness: My pleasure, sir.
Sir Wyn Williams: That’s all I have, Mr Blake.
So in the absence of any further questions, it just remains for me to thank you very much for making your witness statement and for giving evidence this afternoon. I’m very grateful to you.
Mr Blake: Thank you, sir.
There’s one small bureaucratic matter that have to deal with and that is one witness statement from Phase 3 hasn’t yet been read into the record and I just want to, for the purposes of the transcript, confirm that a statement has been provided by Penny Thomas and that can be found at WITN00960100, and that is now in evidence in the Inquiry.
Sir Wyn Williams: Thank you very much, Mr Blake.
Ms Price: Thank you.
Sir Wyn Williams: So we won’t be sitting tomorrow but we’ll resume at 10.00 on Thursday, yes?
Mr Blake: Yes, that’s with Mr Greenhow.
Sir Wyn Williams: Yes. Thank you all very much.
Mr Blake: Thank you.
(3.53 pm)
(The hearing adjourned until 10.00 am on Thursday, 26 September 2024)