Official hearing page

27 September 2024 – Amanda Burton and Martin Donnelly

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(10.00 am)

Mr Blake: Good morning, sir.

Sir Wyn Williams: Good morning.

Mr Blake: This morning we’re going to hear from Ms Burton.

Amanda Burton

AMANDA BURTON (sworn).

Questioned by Mr Blake

Mr Blake: Thank you very much. Can you give your full name, please?

Amanda Burton: Amanda Jane Burton.

Mr Blake: Ms Burton, you should have in front of you a witness statement dated 3 September of this year; is that right?

Amanda Burton: That’s right.

Mr Blake: Could I ask you to have a look at the final substantive page, please.

Amanda Burton: Yes.

Mr Blake: Is it dated 3 September?

Amanda Burton: Yes.

Mr Blake: Is that your signature?

Amanda Burton: It is.

Mr Blake: Can you confirm that as the date of signature, that signature is true to the best of your knowledge and belief?

Amanda Burton: I can confirm that.

Mr Blake: Thank you. I think you’ve told me in advance that there may be some subsequent developments which caused you to reflect on some matters that you have addressed in your witness statement, but the statement itself is true to the best of your knowledge and belief?

Amanda Burton: It is.

Mr Blake: Thank you. That witness statement has the Unique Reference Number of WITN11330100 and will be published on the Inquiry’s website shortly.

By way of background, you are a qualified solicitor; is that right?

Amanda Burton: Yes, I am.

Mr Blake: You have a wide range of business experience in public companies and you’ve set those out in your witness statement and that includes as Global Chief Operating Officer of Clifford Chance; is that correct?

Amanda Burton: That is.

Mr Blake: And you retired from Clifford Chance in 2014?

Amanda Burton: I did.

Mr Blake: And subsequently have been developing a portfolio of Non-Executive Director positions?

Amanda Burton: Correct.

Mr Blake: And you have recently also become chair of a publicly listed distribution company?

Amanda Burton: I have.

Mr Blake: Thank you. Relevant for today’s purpose, you were appointed a Post Office Non-Executive Director in April 2023; is that right?

Amanda Burton: Yes.

Mr Blake: Thank you. I want to begin just by asking you a little bit about your appointment. Can we bring on screen, please, POL00363049, we’re going to be looking at your letter of appointment dated 27th April of 2023. If we scroll over to page 3, please, and paragraph 2.1 sets out there the time commitment as Director. And the appointment letter says:

“You will be expected to devote such time as is necessary for the proper performance of your duties as a director. Overall, we anticipate that you will spend a minimum of 24 days per year each year on work for the Company, following the induction phase.”

In practice, how much time do you spend in this role?

Amanda Burton: A great deal more than 24 days.

Mr Blake: Do you think that the minimum of 24 days as set out there was realistic?

Amanda Burton: No, although some things happened, for instance my review of the bonus scheme that nobody could have foreseen at the time I was appointed.

Mr Blake: If we put to one side work on the Inquiry, work on the fallout, so the matters relating to the Horizon issues, nevertheless, do you think that that is a correct period of time for the role?

Amanda Burton: Normally you’d anticipate as a Non-Executive Director to spend around up to 30 days a year on a particular role, and if this was a stable organisation, I would expect that to be about the right time.

Mr Blake: Are we to read into that that it’s your view that it’s not a stable organisation?

Amanda Burton: Correct.

Mr Blake: One matter that we dealt with in the previous phases was the issue of overboarding. Do you feel that you have sufficient time, and do you feel that other members of the Board have sufficient time?

Amanda Burton: I think we definitely find that Post Office is the most time-consuming one in each of our portfolios, but I think we’re all professional enough to be able to manage the workload.

Mr Blake: Do you have any concerns in respect of other board members?

Amanda Burton: No, other than the postmaster NEDs, actually, because they’re also running full time businesses and so I do think it’s a particular strain for them to also sit on the Board.

Mr Blake: Thank you. That can come down. You became chair of the Remuneration Committee on 26th May of 2023 so as good as straight away, or very soon into your time on the Board. I think you’ve said in your witness statement that you were always going to take that role but it was brought forward; is that right?

Amanda Burton: That’s correct, yes.

Mr Blake: And why was it brought forward?

Amanda Burton: It was brought forward because I was asked to undertake a review of a particular bonus scheme very shortly after I joined the Board, and as a result of that review, it was decided that I would take over the chair of the Remuneration Committee a month earlier.

Mr Blake: And the review concerned something called the Transformation Incentive Scheme. Can you assist us with what the Transformation Incentive Scheme was?

Amanda Burton: It was designed as a one-off bonus scheme and it was put in place during the time of the pandemic when it was difficult, as was the case with a lot of companies, to determine the financial health of the organisation, et cetera and therefore more difficult to put in place certain financial metrics. So this was put in place for other purposes, and replaced the normal annual bonus scheme.

Mr Blake: And why does there need to be a review of that scheme?

Amanda Burton: Because one of the submetrics had some wording in that was not actually correct, which related to this Inquiry, and it had – the wording assumed that Sir Wyn would be reviewing the out-turn of the metric.

Mr Blake: Thank you. Perhaps the best place to see that is POL00363154. This is a document we after going to come back to but if I can just take you to page 3 of this, it’s a Simmons & Simmons report, and we’ll get to that in due course but it sets out there in a table, the bonus metric. It’s page 3. Thank you. So was it concerning the table that we see, if we scroll down to paragraph 1.4?

Amanda Burton: That’s correct, yes.

Mr Blake: And the wording there, this is taken from the annual report, it stated:

“Delivery of all the required information and support for the Horizon Inquiry satisfying the requirements of Sir Wyn Williams, ensuring there is a clear measurable plan created to demonstrate action on improving the overall culture to be postmaster centric and to ensure processes for Postmasters are addressed in line with recommendations from the Inquiry. Any actions or plans must have been endorsed by the Inquiry and the Board”.

Then it says, “Inquiry support” is the metric and then it sets out there a target:

“All required evidence and information supplied on time, with confirmation from Sir Wyn Williams and team that the Post Office’s performance supported and enabled the Inquiry to finish in line with expectations.”

And it’s set out that that outcome had been achieved. In simple terms, what was the issue with this?

Amanda Burton: Well, the issue was that during the time of this plan, the Inquiry became a statutory inquiry, and clearly the onus on people to provide evidence changed considerably, and it would not have been appropriate at all to have any suggestion that Sir Wyn would be involved in a bonus scheme.

Mr Blake: Is there a broader issue, not simply that it was based on the Inquiry before it was a statutory inquiry, but irrespective of the status of the Inquiry, do you see any issue with performance being – and a bonus being based on compliance with an investigation into wrongdoing by the company?

Amanda Burton: I understand – I wasn’t in the Post Office when this was set, but I understand the rationale was to ensure that the team were fully engaged with the Inquiry, and absolutely had to deliver what was required of them. Definitely in hindsight, this would not have been appropriate, regardless of whether it was a public or statutory inquiry but I understood that to be the reason for it.

Mr Blake: Thank you. That can come down. When you were conducting your review of this, were you aware of the background to the Horizon issues?

Amanda Burton: Yes, I had been following it, just as a member of the public has been, as well, and I was obviously horrified by what had been happening, and, you know, very distressed around the issues that the postmasters and postmistresses faced. I was – so I had that element of knowledge, I literally had only just joined the Post Office so I hadn’t really started my induction by the time I was asked to do this review, so my further knowledge didn’t really happen until later on.

Mr Blake: We heard evidence later this week from Saf Ismail, one of the Non-Executive Director postmasters, and in his view there were number of people on the Board he said who didn’t really appreciate the extent of the scandal until the ITV drama. Were you one of those people?

Amanda Burton: No.

Mr Blake: Do you think that you had a sufficient grip at the time that you were investigating these issues on the seriousness of the underlying matters?

Amanda Burton: I believe so, yes.

Mr Blake: Were you, at the time that you were carrying out the review, aware of other ongoing disputes regarding the quantum of bonuses among senior executives?

Amanda Burton: I had had one meeting with the Chair of the Remuneration Committee shortly after I joined, and she informed me of some of the discussions that had taken place in the past so I did have some knowledge of some of the issues that had been happening.

Mr Blake: And can you give us an idea of some of those issues?

Amanda Burton: That there had been requests to the Shareholder for an increase in the pay of the Chief Executive.

Mr Blake: And in your view, was that relevant background to the review that you carried out?

Amanda Burton: At that stage no, because I was purely looking at the appropriateness of this metric, and how it had come about.

Mr Blake: Looking back now at the work you carried out, and the information you know now about various disputes regarding bonuses or other income, would you have carried out your review differently?

Amanda Burton: I don’t think so, no.

Mr Blake: Do you think your conclusions would have been any different?

Amanda Burton: No.

Mr Blake: Could we please turn to BEIS0000655, this is an email note of a meeting with Minister Hollinrake of 22nd May 2023 and I’m just going to read to you a few passages from it. If we scroll down we see the attendees and then it says:

“HS [so that’s Mr Staunton] the Chair of Post Office expressed how disappointed he was regarding the bonus payment issue (the submetric which referred to the Inquiry). He has confidence in Amanda Burton as the new RemCo Chair, and values her judgment. She has produced her report, which the Board have had sight of today.”

If we scroll up slightly we can see this was 22 May, can you assist us, was that a draft version of the report at that stage?

Amanda Burton: Yes, it would have been.

Mr Blake: Can you recall when you were first asked to write the report or to investigate the matters?

Amanda Burton: Right at the beginning of May.

Mr Blake: So you had been working on this for three weeks or so?

Amanda Burton: Yes.

Mr Blake: “Amanda is satisfied that the decision to introduce the submetric wasn’t an unreasonable one to take, given that the Inquiry was at this time non-statutory.”

Just pausing there, I think from your evidence today I think you take a slightly broader view on that.

Amanda Burton: Yes, I think, as I say, I was so new into the Post Office at the time that I was taking certain things at face value and in fact this is the first time I’ve been involved in an inquiry. So I was still very much learning at that point.

Mr Blake: Yes. Who in particular had briefed you?

Amanda Burton: I actually didn’t really receive any brief, as such. I just asked to see as many documents as I possibly could in order to make up my own mind. I was conscious that there were certain people who might be conflicted in the outcome, so I was careful not to talk to too many people.

Mr Blake: “The Shareholder was involved throughout and there was appropriate governance. In [Mr Staunton’s] view, the wording which said that Sir Wyn approved it was a huge mistake and he is baffled that it went through so many clearances without being picked up on.”

Do you share that bafflement?

Amanda Burton: Yes, still to this day I do not know how the wording was not picked up and particularly when it went into the report and accounts.

Mr Blake: If we scroll down, please, we see towards the bottom of the page, it says:

“DB [and that’s David Bickerton, the Director General of the Department for Business and Trade] said that the most recent issue was the third time that mistakes had been made at the Post Office related to senior management compensation. The review which DBT is commissioning will look into whether there are more deep-rooted issues here.”

Were you aware that this was the third time that mistakes had been made by the Post Office?

Amanda Burton: I had been told that there had been some mistakes, yes.

Mr Blake: Were you aware then or are you aware now of what those other two mistakes were?

Amanda Burton: I certainly recall one was in relation to the enhancement that the Chief Executive and Finance Director can get in certain circumstances, and that although the Remuneration Committee had approved the change and had requested that the Chief People Officer ensure that the appropriate approval from the Shareholder took place, that approval did not take place. So I’m certainly aware of that one.

Mr Blake: And do you have an idea of what the other one was?

Amanda Burton: I can’t recall, I’m sorry.

Mr Blake: At the bottom we see:

“[Minister Hollinrake] mentioned that [Mr Staunton] asked previously to effectively double [Nick Read’s] pay. [Minister Hollinrake] said he was not willing to agree to this as not only is the Post Office publicly owned but it is also under huge financial pressures. [Mr Hollinrake] asked [Henry Staunton] if this request came from [Mr Read] and [Mr Staunton] said that this isn’t the case.”

Again, was that something that you were aware of?

Amanda Burton: I wasn’t aware about the request to double pay but I knew there had been discussions around Mr Read’s pay.

Mr Blake: We may hear evidence next week from Mr Staunton to the effect that Mr Read was obsessed with his pay. What’s your view on that?

Amanda Burton: He certainly did take an interest in his pay. That is absolutely correct, yes.

Mr Blake: I mean, everybody takes an interest in their pay. A beyond average interest? Unusual interest?

Amanda Burton: Yes, I would have said, considering the background against which we were operating, when I would have considered it was, you know, a highly sensitive matter, and we needed to be more circumspect, I think sometimes Mr Read did ask for information about his pay and bonus opportunity et cetera which I might not have expected.

Mr Blake: Looking at the range of issues here that we’ve just seen, if we scroll back to the previous page, the reference of a third time that mistakes had been made. The underlying issues that you were investigating, do you think it is common or uncommon for a business of the Post Office’s size to have these kinds of issues?

Amanda Burton: It’s uncommon, but most organisations do not run remuneration committees in the way this one is set up.

Mr Blake: And can you assist us with what you mean by that?

Amanda Burton: In public companies, normally what happens is that your policy is reviewed every three years and approved by shareholders and you are entitled to operate within that policy and you do not need to go back to shareholders each time you want to make a pay rise, for example, provided it is within the policy.

Here we’re very restricted and have to go to the Shareholder if we want to change something.

Mr Blake: And when you say “the Shareholder” do you mean the Department for Business?

Amanda Burton: Yes.

Mr Blake: And you see that as a problem?

Amanda Burton: It makes it more complicated and as say, more unusually restrictive for the Committee. So it’s something that I’ve certainly had to get up to speed on in the way that this organisation operates, and there are a lot of rules and regulations that we have to follow, such as managing public money, et cetera and it is very complex. So in the end I had to have drafted a table showing exactly at what point we need consent for what.

Mr Blake: We may get to it, but in due course the Chair will have to be making recommendations. Is there anything that you would recommend to overcome that issue?

Amanda Burton: I think it would – well, I think first of all, one of the things we have been missing is a very clear strategy and normally strategy sets the direction for bonuses and for setting metrics and long-term bonuses, as well. With the lack of that, we have struggled somewhat to put in place appropriate metrics, and I’m really looking forward to having that resolved through the current strategic review, because I think once we have a clear direction, it’ll be much easier for the Remuneration Committee to set sensible targets.

Mr Blake: I appreciate this is a difficult question to answer but do you think the executive pay at the Post Office is sufficient?

Amanda Burton: I think it depends from whose perspective you’re looking at. I think from the postmaster’s perspective it would certainly look to be more than sufficient. If you are running a charity, for example, and obviously we have a clear social purpose, it would be more than sufficient. If you are running a public company, then it would be less sufficient. So I think it depends on the circumstances.

Mr Blake: Do you think it’s sufficient to attract somebody of good enough calibre, good enough quality, to lead the organisation?

Amanda Burton: Some people definitely would not be attracted because of the package, it would put people off. Others might be more attracted because of the social purpose of the Post Office. So just like you can get fantastic Chief Executives running charities, they don’t necessarily do it for the pay, they’re doing it for other reasons. So I think you have to look in the market in a particular way.

Mr Blake: And in your view, looking forward to the future, is it sufficient?

Amanda Burton: I would hope so. As I say, I think the constrains on what we’re able to do might put people off. So for instance, normally you would expect to be able to give a regular salary increase in line with the overall workforce. Here, we’re not able to do that. We have to keep going back for consent. So I would hope, as part of the discussions around the future of the Post Office, we might be able to come to a more sensible arrangement where we take some of the issues away from the sort of adversarial nature between ourselves and the Shareholder.

Mr Blake: Thank you. On the same topic, and still dealing with issues of the involvement of the Department for Business can we please have a look at BEIS0000656, please. This is still addressing your report, your review. We’re now on 25th May. It’s another meeting with Minister Hollinrake if we scroll down, please. We see there are a number of people in attendance including Lorna Gratton, the UKGI director and the Non-Executive Director Shareholder. There is a section at the beginning of the meeting that addresses the bonus issue.

Can we scroll, thank you.

“NR [so Mr Read] explains that the [Post Office] Board had an emergency meeting last night to review the report written by Amanda Burton, the new Chair of RemCo, into the issue. He summarised the main themes of discussion during the board meeting.”

I’d just like to take those one by one.

“LG [Lorna Gratton] pushed hard for [you] to change the tone of the report so it shows more remorse, and [you] said [you] would reflect on it.”

What do you recall of that conversation?

Amanda Burton: There was a Board meeting where I presented my draft report to the Board, and a number of comments were made, not just from Ms Gratton but from others as well. And I was very keen to ensure that this was my report and put in my words. So that’s why I said I would reflect on it. It wasn’t meaning to say that I didn’t agree that, you know, the tone was right or not right, but I just wanted to make sure that the words were mine.

Mr Blake: And did you amend the report following that discussion?

Amanda Burton: I did.

Mr Blake: Can you give us – we’ll look at the report shortly. You don’t have to give us the exact words but what kind of thing did you change?

Amanda Burton: Certainly I reviewed the actions following the comments made and I think I made one or two changes to the action plan.

Mr Blake: In terms of the overall tone, though, did you change that?

Amanda Burton: I did, yes.

Mr Blake: How?

Amanda Burton: I – well, I put in the wording that you see now in relation to that the metric was entirely inappropriate.

Mr Blake: The second bullet point:

“The Chair was keen that the report has clear actions and [Ms Gratton] put for one of them to be removing bonus metrics to do with the inquiry.”

Amanda Burton: That’s correct.

Mr Blake: And was that implemented?

Amanda Burton: Yes.

Mr Blake: Third:

“There was lively debate about handing back the bonus. [Mr Read] had spoken to everybody involved, suggesting that they return the money. From a legal perspective, the approach will be voluntary not mandatory. [Mr Read] will engage with the SMT further on this and provide an update.”

Were you aware of what the “lively debate” was?

Amanda Burton: I think it was more a discussion as to whether we could rely on clawback or not. And Mr Read did express, you know, concerns that people were being asked to hand back their bonus, but actually, everybody did so.

Mr Blake: And was it a lively debate?

Amanda Burton: I –

Mr Blake: “Lively” suggests that there was strong differences of opinions or strong views?

Amanda Burton: I can’t – no, not in my recollection. Not in that respect, no.

Mr Blake: Can we please turn to RLIT0000342. And this is your final report. Is that right?

Amanda Burton: Correct.

Mr Blake: If we scroll down slightly, we can see on that first main paragraph under “What has been reviewed?”, it says at the final sentence of that paragraph:

“Following commission of the report to Minister Hollinrake on 26th May 2023, some additional clarification has been requested and this final report reflects that clarification where I have been able to give it.”

Can you assist us with what that was addressing?

Amanda Burton: Yes. The Minister did make some comments and I’m sorry, I now can’t recall entirely what they were, but again, I reflected on them but as I say, I was very keen to make sure this was my report.

Mr Blake: On coming into the business and being new in the business, was this level of involvement from the Shareholder Non-Executive, from the Minister, did that strike you as unusual in any way?

Amanda Burton: Yes, I was quite surprised by it.

Mr Blake: Did you have any concerns in that regard?

Amanda Burton: My concern was that I am an independent Non-Executive Director and I wanted to remain so, and the reason that I’ve been asked to do this report was because I was completely new to the organisation and didn’t come with any knowledge of the personalities involved et cetera, and I wanted to retain that independence.

Mr Blake: And –

Sir Wyn Williams: You may have already mentioned this, but was it Mr Staunton personally who asked you to do it, or a number of people involved, or what?

Amanda Burton: Yes, it was Mr Staunton, yes.

Sir Wyn Williams: Yes, fine. Thanks.

Mr Blake: Thank you. From this experience can you assist us with anything to do with the culture vis-a-vis, for example, the Shareholder or the Department for Business more broadly?

Amanda Burton: It certainly seemed quite a difficult relationship. I think because of some of the mistakes that had happened in the past and now this as well, I think the Department had lost confidence in the ability of people within Post Office to manage remuneration issues.

Mr Blake: So on the one hand, as you describe, you had more involvement by Shareholder and Government than in other companies you’re used to, but at the same time, there was a feeling amongst that that Shareholder that things hadn’t been going right?

Amanda Burton: Correct.

Mr Blake: Can we please turn to page 7, the bottom of page 6 on to page 7. I’ll skip through, but there’s a whole section there that sets out the timeline and your views as to how things progressed over time and how it was that the metric became inserted and accepted.

We then move to “Findings”, I’m just going to take you paragraph by paragraph here. If we scroll down slightly, I think the first finding is essentially that it was a one-off scheme and that’s something you’ve already set out for us.

Paragraph 2 you highlight issues there with clarity; is that right?

Amanda Burton: Correct, yes.

Mr Blake: And what were those issues, briefly?

Amanda Burton: The scheme was over-complicated and there were far too many metrics. Normally remuneration committees prefer to have very clear line of sight and very short, a few number of metrics. There were too many, it was very complicated in terms of how they were going to be reviewed, it was almost like a complete industry going on in the background, which I would not normally expect to see.

Mr Blake: Was that in any way symptomatic of any other issues within the business that you’ve experienced?

Amanda Burton: I do think the business can be very bureaucratic, and things take a long time, as a result. And there are sometimes, as I say, a lack of clear line of sight as to what you’re attempting to achieve, which does cause confusion.

Mr Blake: If we scroll down to paragraph 3 I’ll just read from paragraph 3, it says:

“However, the wording of the first submetric was completely inappropriate once the Inquiry was placed on a statutory footing and the timelines moved considerably.”

Was that wording that you had added following the conversation that we have just seen or was that there before?

Amanda Burton: That was there before.

Mr Blake: “In hindsight it was clearly inaccurate to suggest that Sir Wyn would be in any way involved in determining whether any part of the bonus had been achieved. There was no deliberate intention on anyone’s part to mislead the role of Sir Wyn in this matter.”

Do you think you had a sufficient evidential basis to reach that conclusion?

Amanda Burton: As far as I could tell, there was no deliberate intention. As I say, I was doing this on my own. I had no support, and I didn’t want to particularly talk – I know it may sound very strange but I didn’t particularly want to talk to the individuals involved, because I was just concerned that people would have their own perspective, which might then cloud my judgment. So I very much relied on the documents.

Mr Blake: Because I think one of the other findings either in this report or in the Simmons & Simmons report is that there was a fundamental lack of documentation of the entire process. Given that finding and given that you didn’t speak to anybody, do you think that you had a sufficient basis to reach that conclusion?

Amanda Burton: As far as I can tell.

Mr Blake: Looking back at it now, are you content with that conclusion or would you have put it differently?

Amanda Burton: I have not come across anything that suggests to me that anybody was deliberately misleading.

Mr Blake: Thank you. It then says:

“Having said that, numerous people both inside and outside [the Post Office] saw the wording over many months, and no one questioned it. The wording was substantially the same in the letter to the Permanent Secretary, the February 2022 Remco and the DRR. I do not find the grouping of the 6 submetrics into 4 as being material …”

The next paragraph, paragraph 4, essentially finds that the Shareholder was involved in the process; is that a fair rough summary of that paragraph?

Amanda Burton: UKGI, yes. And the Shareholder itself also signed off the bonus. As I say, everything has to be signed off by the Shareholder, and this did go through a process and was signed off by the Shareholder.

Mr Blake: Then paragraph 5, my summary of it is that it should have been revisited once it was obvious that it no longer applied. But it wasn’t deliberate. Is that a fair summary? Is there something else that you would add in summary of paragraph 5?

Amanda Burton: No; as I say it continues to be a mystery to me as to why nobody spotted the problem but I have not discovered anything that would suggest that it was deliberate.

Mr Blake: If we turn over the page, please, we have “Conclusions and Recommendations”, if we scroll down:

“In conclusion, the rationale for TIS looks sound and the Shareholder was consulted in July 2021.”

Again, revisiting that from the evidence you gave earlier today, I think you have a slightly more nuanced position than the fact that it looked sound?

Amanda Burton: In relation to that submetric, yes.

Mr Blake: Yes.

“However, the TIS became too complex with 17 submetrics, and many people involved in the drafting and approval process over a long period of time. It is difficult to understand why the Inquiry first submetric was not questioned by anyone, and yet seen by so many people. However, having taken into account the discretion available to RemCo and the confirmation I have received that RemCo considered that there had been very good progress in supporting the Inquiry, I consider that the decision made should be taken in that light.”

In essence, the Committee exercised their discretion irrespective of the fact that it wasn’t met in any event; is that your finding?

Amanda Burton: Correct, yes.

Mr Blake: If we scroll over the page, you set out a list of recommendations. One of them, the first one:

“Variable pay schemes, whether short-term or long-term, need to be simple, transparent and clear.

2: “The timeline between the initial proposal, design and approval of variable pay schemes needs to be shortened as it does not make sense to have schemes being debated months (even a year) after the awards should have been made.

3: “When assessing whether metrics have been achieved, there needs to be a clear audit trail …

4: “The RemCo must assess whether any metrics remain valid if circumstances change …

5: “RemCo needs to be mindful of all stakeholders when putting in place new schemes, when determining the outturn and when reporting on reward due in the DRR.

6: “[Post Office] needs to reengage with the Shareholder. Just reading the RemCo minutes and background information, I can see that a large amount of time is taken in schemes being drafted at a detailed level but I think we need better engagement at the macro level …

7: “The RemCo will review the terms of the 2022/23 STIP when it meets later in June and I will be recommending that RemCo exercises its discretion not to award the element of bonus specifically relating to the Inquiry.”

Have those proposals been implemented?

Amanda Burton: Most have. I would say number 6 is the one that we need to work on, but that would make most sense once we have a clear strategy which hopefully will be agreed by the Shareholder because I think then that will put into context what we hope to achieve through bonus schemes.

Mr Blake: Thank you. In terms of an apology, I understand that there was an apology to the Inquiry. Did there need to be an apology to subpostmasters?

Amanda Burton: Yes.

Mr Blake: Why do you say that?

Amanda Burton: Because this did cause unnecessary distress. It just means that Post Office once again looks as though it’s not listening and not being sympathetic and understanding of the issues.

Mr Blake: Are you aware of an apology being issued to subpostmasters?

Amanda Burton: I do believe that on the website there was some information addressed to the postmasters, from memory.

Mr Blake: Do you think enough was done to apology to subpostmasters in respect of this particular issue?

Amanda Burton: Probably not.

Mr Blake: Can we please turn to POL00447839, please. This is a Remuneration Committee evaluation report produced on 3 July 2023, so after the production of your review. Can you give us a little bit of background as to why this was produced?

Amanda Burton: Yes, it’s perfectly normal practice every year to review the Board itself and each committee. This was an evaluation done before I joined. So this report came to this committee, but it had already taken place. And the purpose of this was to look at what the proposed actions were.

Mr Blake: If we scroll down to the recommendations, so these recommendations had already been drafted before your report, had they?

Amanda Burton: They had.

Mr Blake: And in some ways they are consistent with your report?

Amanda Burton: Correct.

Mr Blake: So if we look at paragraph 1:

“It is recommended the committee focus greater efforts to ensure that remuneration structures and packages are simplified.”

And that coincides with one of your recommendations?

Amanda Burton: That’s correct.

Mr Blake: “The quality of papers/presentations submitted to the Committee from management require improvement.”

Do you know what went wrong prior to your time, that there were such difficulties in the paper trail?

Amanda Burton: There had been a churn of Chief People Officers, and people in their teams as well. And so I think there was just a lack of memory and new people turning up all the time, it meant that things got lost. And clearly, it’s important to document things, have good minutes, and minutes that reflect the decisions. And I just think some things got rushed through and were poor quality.

Mr Blake: An issue that we’ve been looked at in previous phases is a potential failure to pass on information to people who come into the business. Is this a wider concern that you have?

Amanda Burton: Yes, I – well, the Board is very new, for example, and so we don’t have the corporate memory and therefore are having to rely on others quite a lot. And you wouldn’t expect to see the churn of staff that we are seeing, for understandable reasons. But it does make it harder, and it makes it harder to get that paper trail.

Mr Blake: And is this simply a fallout of the historic scandal or is there something wider that you’re concerned about within the business that leads to those issues?

Amanda Burton: I think the Post Office is under a lot of stress as an organisation, not just because of the Inquiry and what – the awful things that have happened in the past, but just also, it’s at a bit of a crossroads in terms of its future, and that, even in a stable organisation, would cause some issues.

Mr Blake: If we scroll down, please, to page 5. We can see at paragraph 10 or box 10:

“Please include any thoughts you have about the operation of the Committee and any ideas for its future operation.”

It says:

“More to do to get a better timetable of decision-making;

“More to go to balance, reward, fairness and affordability;

“More to go to simplify reward structures;

“Trust needs to continue to be built between the Executive and the Committee – a focus on engagement/listening/incentivisation would be helpful;

“The interplay with Shareholder approval remains a significant working issue for the Committee – in particular the level of approvals required for any executive board comp.”

Was this drafted before your report?

Amanda Burton: Yes. I think these are comments from individual members of the Remuneration Committee.

Mr Blake: And does this in some way coincide with the concerns you have already raised?

Amanda Burton: Correct.

Mr Blake: “There seems to be much merit in trying to simplify the incentive plans.”

And it’s this last paragraph I’d like to spend a bit of time on:

“The appointment of a new head of HR provides an opportunity to reset the relationship with the committee. It must be recognised that the environment in which the company is operating and pressures it is under (both internal and external) make the job of the HR team and RemCo difficult.”

What do you understand by those concerns about the environment?

Amanda Burton: It’s acknowledging that people are under stress, and how you continue to motivate them, not necessarily through pay, but in other ways, to ensure that people stay and do a good job.

Mr Blake: “Turnover in the HR team also means that corporate memory is sometimes missing. However, it has been disappointing that some decisions which should have been taken at RemCo have not (eg certain senior exec exit packages).”

Can you assist us with that, please?

Amanda Burton: I actually can’t. I don’t know what that is particularly referring to.

Mr Blake: Are you aware of any individuals amongst the former Executive Team being paid when exiting the company, and authorisations hadn’t been through the usual channels?

Amanda Burton: With the help of people in HR, I have – and actually, Mr Ismail also prompted me to have a look at some particular examples. Unfortunately a lot of these people because they’d left I obviously didn’t know them and wasn’t necessarily sure where to look. But we looked through the documents just to check whether there had been issues with whether the Remuneration Committee should have signed off or not.

The ones that I saw, I could you see that the Remuneration Committee had been consulted. Some of the decisions looked potentially a bit odd, but they had been consulted.

Mr Blake: In broad terms what was odd about the decisions?

Amanda Burton: Just in the way that some of the exit packages were proposed. But as I say, a discussion had clearly gone through the Remuneration Committee. I didn’t sit on it at that time. I assume they had good reasons for agreeing to the proposals.

Mr Blake: It says:

“In addition, the process of STIP LTIP design continues to a problem. More interaction before the end of the previous [financial year] would speed up framework design and would help with the creation and presentation of the supporting papers on the metrics themselves. As a result, the quality of RemCo papers has been poor and decisions delayed for too long.”

Again, that’s much in line with your evidence so far?

Amanda Burton: Correct.

Mr Blake: Can we please turn to POL00448606. We’re now moving to the 5 August this year and this is an email from yourself to the Postmaster Non-Executive Directors. And you say:

“Further to [your] email of 26th July I have had a look back through RemCo meetings and also got some further information from Nic Marriott. All of the below happened when Angela Williams was Chief People Officer. Most of the arrangements were signed off by RemCo although having gone through the papers I think that they sometimes lacked clarity and there wasn’t consistent sign-off.”

You say:

“As you know, Ian and I have worked hard to put in place better governance around senior pay and we are all determined to learn from the past.”

Is this the email that you were just referring to?

Amanda Burton: Correct.

Mr Blake: Can you assist us, insofar as you haven’t already covered it, what the governance concerns were regarding senior pay?

Amanda Burton: Just following the policies and procedures, so sometimes retrospective approval had to be given which wouldn’t normally happen, and I just think that some of the proposals could have been better thought through.

But as I say, I’ve found that RemCo was aware – RemCo is only responsible for very senior pay packages, so there will be people that fall below this, but as I say, I think that there clearly needs to be a tightening up of the processes, more clarity on the policies. We have been doing all that. I would hope that we are in a better place.

Mr Blake: What do you see as the cause of that issue?

Amanda Burton: I think, again, it is a sign of an organisation under some stress. And a sign of the fact that some people were interims, so Mrs Williams, for example, was an interim. I say lack of corporate memory, and I think also just a lack of understanding of the environment in which we were operating.

Mr Blake: Can we now turn to that Simmons & Simmons review, that’s at POL00363154. It’s the August 2023 review that was carried out. Can you assist us with a bit of background as to why this was carried out?

Amanda Burton: This was carried out at the request of Minister Hollinrake so this was not a Post Office report; this was done by the Government. And it was – they were instructed pretty shortly after I was also asked to do my review, but their conclusions came up later.

Mr Blake: And can you assist us with why there were the two reviews, then: your review and this review?

Amanda Burton: I’m afraid I wasn’t party to the decision on Simmons & Simmons because as I say, it was outside of Post Office. I’m guessing it would have been because of this lack of trust in relation to what was happening in the Post Office.

Mr Blake: And do you agree with the findings in this report?

Amanda Burton: We come at our conclusions in a different way, but I think we both conclude in similar fashion.

Mr Blake: Perhaps we’ll go through a few recommendations and a few findings and we can see – if we turn over the page, please, we can see the background. Over the page again, thank you.

“We have been asked by the Minister to conduct an independent review into the governance practices of, and decisions made by, the Post Office’s … Remuneration Committee in relation to the remuneration metric known as the Inquiry Support Target …”

If we scroll down, that’s the section I took you to earlier. The summary of findings can be found on page 4. They say:

“Before addressing our findings, it is important to note that the Inquiry moved on to a statutory footing on 1 June 2021 and was, from that point, anticipated to finish in the autumn of 2022. Neither RemCo nor [Post Office] Human Resources appear to have recognised the significance of this change and particularly the consequences that the performance that the Inquiry Support Target incentivised would now be compelled by law.

“Had that been considered and appropriately addressed by RemCo, then the issues that we have considered in this review would not have arisen because the target would likely not have been approved either at all, or certainly not in its final form. A number of those … we have spoken with have acknowledged that in hindsight.”

Is that a finding that you agree with?

Amanda Burton: I do.

Mr Blake: Yes. If we scroll down, thank you. At 1.13.

“Findings in relation to [the Post Office’s] governance around remuneration:

“From the evidence we have seen, we conclude that there are aspects of [the Post Office’s] governance around remuneration that would benefit from further consideration and enhancement because they do not align with best practice for a private corporation. However, those findings ought to be balanced against the facts that [the Post Office] is a public corporation and therefore has particular requirements that are different to those of a private corporation. Our recommendations are therefore focused on maximising the effectiveness of [the Post Office’s] governance around remuneration.”

Do you agree with that?

Amanda Burton: I do.

Mr Blake: Is there a tension there between the two?

Amanda Burton: There is to some extent, yes. We do try and comply with the code on corporate governance, which is designed for private corporations and public limited companies. But there are certain issues which we can’t comply with. For instance, the make-up of Remuneration Committee members and, as I say, we have to go consistently to the Shareholder for approval for any changes.

Mr Blake: And is that a problem?

Amanda Burton: I just think it does create extra work, and perhaps extra focus on pay, which, to be honest, we don’t need. I think if there was more flexibility done in a proper way, and absolutely aligned to a strategy, that would really assist.

Mr Blake: Thank you. If we scroll down, I’m just going to skip through these findings quite quickly:

“Findings in relation to the Inquiry Support Target.

“Because there is more than one way in which to interpret the target we consider there was a justifiable basis on which RemCo could decide that it had been achieved and there was therefore a justifiable basis on which to make the award.”

Do you agree with that?

Amanda Burton: Yes.

Mr Blake: “The Post Office is not able to evidence the basis on which RemCo awarded [the] bonuses including the Inquiry Support Target, because there are no written records of the rationale for its decision and the recollections of those involved are inconclusive. This means that it is practically impossible to ascertain the basis for RemCo’s decision in respect of the Inquiry Support Target. The fact that RemCo’s decision making was not better recorded is a clear governance failing, including on the part of the RemCo members who should have identified that the minutes were deficient.”

Do you agree with that?

Amanda Burton: I do.

Mr Blake: Does that concern you?

Amanda Burton: Well, it was clearly something that needed to be rectified, because I think you always have to ensure that the documents are there so that when you hand over to the next person, it’s very clear why those decisions were made.

Mr Blake: 1.17:

“We have also concluded that [the Post Office] intended the Inquiry Support Target to be validated internally and we have found that it did not intend for a confirmation specific to this target to be obtained from Sir Wyn Williams or his team.

“The language of the Inquiry Support Target was not considered or discussed in the course of RemCo preparing the Directors’ Remuneration Report which RemCo approved for inclusion in the annual report and accounts.”

Et cetera.

I think you’ve said that your conclusions are slightly different to these. What do you see as the fundamental difference between the two here?

Amanda Burton: They are broadly the same. I think they just added one or two more which we adopted as part of the Remuneration Committee, and we have also tracked now the recommendations from the Grant Thornton report as well, which came out later.

Mr Blake: Thank you. So we see below here the Summary of Recommendations. Have you taken forward those recommendations?

Amanda Burton: Yes.

Mr Blake: If we scroll over the page we can see some more. Again, do you feel that you have sufficiently implemented those recommendations?

Amanda Burton: Yes, we have.

Mr Blake: Can we please turn to POL00438390. We’re moving now to 23 April this year and this is an email that we’ve seen before with Mr Ismail. It’s an email chain where you emailed the two Non-Executive Director subpostmasters. If we scroll down. we can see you say:

“I welcome your views on the following. The Remuneration Committee is discussing what would be the most appropriate metrics for the long-term incentive scheme. We have asked management whether there is a target we could put in to improve the customer experience or improve footfall …”

If we scroll up, we can see the response from Mr Ismail. He says:

“I have received your email, and I appreciate the opportunity to provide input on the subject. In regards to the [long-term incentive plan] I suggest the following factors:

1: “Postmaster profitability; postmaster remuneration percentage increase; reduction in central overhead costs; increase in footfall that leads to profitability; commercial deals made over the period and their payback; postmaster survey results over the last three years; cultural changes from the postmasters’ perspective.

“I am disappointed with the management’s suggestion as postmasters have limited control over customer complaints and they are aware of this. I am willing to discuss this further and would like to know if it’s possible to have similar input for the [short-term incentive plan].”

Can you assist us with the background to that is email exchange?

Amanda Burton: Yes. The Remuneration Committee had been looking at the targets for the long-term incentive scheme, and felt that we ought to have one in that related to customers, because we are obviously a customer-facing business. It proved remarkably difficult to receive some sensible proposals, and eventually the retail team suggested one to do with customer complaints. The Remuneration Committee were rather surprised by this and didn’t feel that this would be an appropriate metric, and I took it upon myself to ask Mr Ismail and Mr Jacobs myself, because I really valued their input, which was why this email was sent.

So I did it as an open question because I just wanted to test whether my thoughts were correct.

Mr Blake: And what’s your view of his proposals?

Amanda Burton: Some of these are actually already in the short-term incentive scheme. So some are more appropriate for short-term schemes and some of them are in the long-term scheme. So it was good to see that broadly, even though he wasn’t aware of the details, that we were in agreement.

Mr Blake: Looking at, for example, those final two bullet points, do you think that there is a sufficient emphasis on postmasters’ feedback on cultural change?

Amanda Burton: Certainly in the metrics, there are metrics to do with the postmaster survey results, and they have been for a while, actually. It’s not just the current schemes. I think, when we determine the strategy, it will be much clearer to look at the cultural changes. I just – that’s what I talked about before. I think we’ve been a little bit hampered by the fact that we haven’t got a clear strategy.

Mr Blake: We’ve heard some evidence that a slightly rosy picture is painted of the postmaster survey results amongst the Board. Are you aware of that?

Amanda Burton: Yes.

Mr Blake: And has that happened?

Amanda Burton: Sorry?

Mr Blake: The first question was: are you aware of that complaint?

Amanda Burton: Yes.

Mr Blake: Are you aware of it actually happening?

Amanda Burton: That there’s a rosy picture?

Mr Blake: Yes.

Amanda Burton: I do think that when the last postmaster survey was presented to the Board, it was perhaps done in a light that did look a little skewed, whereas when you read the actual survey results, you could see that the views of postmasters were quite polarised and I think more should have been done to bring those out to the board meeting. Although as I say, we actually did see the results ourselves.

Mr Blake: Why do you think it is that a rosy picture is painted of those kinds of things at board level?

Amanda Burton: Well, you would probably have to ask the people who presented what was in their minds, but sometimes what can happen is that people do feel that they are expected to give a positive outlook on things, but, you know, it’s important that the Board sees the background papers, and is able to challenge.

Mr Blake: I want to move on to the topic of whistleblowing and you as the Speak-Up Champion. You have been Speak-Up Champion since August of 2023; is that right?

Amanda Burton: That’s correct.

Mr Blake: Perhaps we can just have a look at a document by way of background. It’s POL00448689. This is an email to Mr Staunton that just pre-dates your time as Speak-Up Champion. Can you just assist us with what a Speak-Up Champion is?

Amanda Burton: Yes, the Post Office decided, as part of the recommendations that came out of the judgments, that there should be a board member who is Speak-Up Champion. And the role is not to do the investigations myself – although, as I’m sure we’ll come on, there is one exception to that – but to ensure that the policies and processes are properly run, and the Board has confidence that people feel able to speak up, and they know the channels in which they can speak up, and that there will be no detriment to them if they do speak up.

Mr Blake: Thank you.

This email is from somebody calling themselves John Doe, it would be a remarkable coincidence if that is their actual name. It looks like an anonymous whistleblowing email or an email that’s entitled “Whistleblowing”. It’s Mr Staunton, and it says as follows:

“I am writing to you directly because I don’t trust the Post Office whistleblowing process and escalations into Nick Read have not been dealt with. This email will also be sent to Sir Wyn Williams and Darren Jones.

“The disaster of NBIT is well known across different levels within the business. Recently a number of people have raised concerns to Nick Read that have been ignored. More than one individual is aware and has told Nick the Board have been told untruths by the NBIT team and the [Chief Information Officer] about the extent of defects timescales for R2 rollout that now wouldn’t be delivered until August, if then.”

So this email in the first instance raises concerns about the NBIT programme. Were those concerns that you were aware of prior to seeing this document?

Amanda Burton: I knew that there were concerns as to whether the timetable would be achieved, and that the costs were increasing.

Mr Blake: If we scroll down, there are concerns raised about the governance in place for NBIT. If we scroll over the page, please, the letter says:

“Anyone who questions the CIO or Programme Director are badged as difficult and troublemakers when in reality it’s a case of having the experience to see the mistakes being made and wanting to do the right thing. These people are bullied either into staying quiet or there are campaigns to undermine them. This is exactly what happened in the past when people too scared to speak up and say what’s really going on because of the repercussions even from Nick.”

So there’s a complaint there about bullying; is that right?

Amanda Burton: Yes.

Mr Blake: If we scroll down to the final paragraph, there’s a complaint there about criticism of the Chief Information Officer again, suggesting that he’s open about misleading the Board with inaccurate dates and costs for NBIT and is incapable of making a decision or having a difficult conversation.

Could we scroll over the page, please. There’s criticism directly of Mr Read again.

“Nick Read has openly acknowledged and accepted the failings of some of his [Group Executive] team to more than one employee that’s been to him to express concerns, but has taken no action to deal with it. He is also aware of toxic behaviour from senior leaders and again does nothing to address it even when he’s witnessed it directly. He refuses to make the difficult decisions and nods along when people raise concerns, saying everything they want to hear, but then does nothing to resolve it. He is aware he has senior people in role not doing what they should like Jeff Smyth, and again does nothing to manage or deal with it even though it’s a waste of public money.”

There’s then a concern raised about the culture of the business, regarding treatment of junior and female employees.

If we scroll down, there’s another paragraph, and more criticism of Mr Read.

“Nick made comments last week to the senior team about the horrific behaviours of the people who were part of the Horizon debacle especially if they are still in the business. He doesn’t seem to see how much of this is still going on and it feels like he’s doing exactly what those people did before saying if you were here in the past you need to go regardless of the situation.”

That’s echoing some of the evidence that we heard earlier this week from the Non-Executive Director subpostmasters.

“A lot of people are also saying this is hypocritical when he doesn’t manage his own team or their behaviour. He has lost the respect and support of a lot of senior leaders in the business by failing to address known issues, allowing unacceptable behaviours and backing poor performing and inappropriate members to his own team. There is a common perception that his priority is clinging on to his job by his fingertips rather than actually leading the business in any way …”

Et cetera.

This email, I think it’s an email, is then discussed at a board meeting. Could we please turn to POL00448509 and that’s a board meeting of 5 July 2023. Am I right to say that is the email that was discussed at this board meeting?

Amanda Burton: That’s correct, yes.

Mr Blake: Thank you. We see there that you are in attendance, 5 July 2023. And the second item, after the welcome and conflicts of interests, et cetera, is entitled “Speak-Up”. And it says:

“The Chairman spoke to the above materials …”

There seems to have been an email from the Head of Investigations and an email from Mr Foat that were being discussed in this context.

Amanda Burton: Yes.

Mr Blake: “… noting the advice provided by [Mr Foat] and [Mr Bartlett] and advised that he had replied to the whistleblower. The Chairman shared his view that some of the allegations raised did not appear to be strictly whistleblowing issues and that it may be in order for the Board to consider a different approach to address allegations of this nature.”

If we scroll over the page, please, we then have Mr Read advising that he was of a similar view and set out his perspective on the allegations.

Now, just pausing there, do you think it’s appropriate for Mr Read to be addressing the Board in relation to those allegations when, as we’ve seen, a fair amount of that criticism was directed towards Mr Read himself?

Amanda Burton: Yes, I can see that there may be circumstances where it is inappropriate, however the whistleblowing was on a variety of topics where we did need the Chief Executive’s input because certain decisions were going to have to be made.

Mr Blake: If we scroll down, please, we have some views from yourself over the page. It says there:

“AB advised that she thought the proposed changes all sounded very sensible, however noted the significant amount of activity going on in the business and that for employees it was not always clear as to what the priorities were. AB queried who would have responsibility for this. [Mr Read] advised that whilst historically this had been T McInnes, this would be part of the Chief of Staff’s role and that the Chief of Staff would work with the business to undertake a governance and meeting cadence overview to ensure alignment with accountability and decision-making process.”

Can you assist us with what your concerns were as expressed there?

Amanda Burton: That we needed proper organisation. This was going to be a considerable amount of work to look into the whistleblowing allegations, and that we needed to make sure it was sensibly staffed up, because otherwise we would once again add additional workloads to people and they wouldn’t necessarily understand what the priorities were. And these allegations were clearly very serious, and needed proper focus.

Mr Blake: There’s suggestion there that this would be the Chief of Staff’s role. Did that happen?

Amanda Burton: I believe that she does look at the allocation of roles and responsibilities and projects within the organisation.

Mr Blake: Ah, so investigating the issues wasn’t the Chief of Staff’s role; it was –

Amanda Burton: No, no, no.

Mr Blake: – their role to decide who would take it forward?

Amanda Burton: Yeah, yeah. Well, to make sure that people had the right bandwidth. If they needed to drop things to be able to help with this investigation, then who was going to take up the work they were doing, for example?

Mr Blake: Are you aware of this investigation being undertaken?

Amanda Burton: Yes.

Mr Blake: Has it concluded?

Amanda Burton: No.

Mr Blake: Can you assist us with who is undertaking this investigation?

Amanda Burton: This particular one is being done by Grant Thornton.

Mr Blake: Thank you. If we scroll over to page 5, we see there an action point.

“SJ [that’s Simon Jeffreys] advised that the Board also needed to appoint a whistleblowing champion. The Chairman invited Board members to express their interests in this role by way of to the Chairman. SJ emphasised the need for the Board to make sure an individual with the right profile was appointed for this position.”

Now, this was the board meeting of 5 July. I think you’ve said that you became whistleblowing champion in August. Did you put yourself forward after this meeting?

Amanda Burton: I did, yes.

Mr Blake: Were you the only person that put yourself forward, as far as you’re aware?

Amanda Burton: As far as I’m aware, yes.

Mr Blake: And why did you want to take up this role?

Amanda Burton: I – well, I suspected that nobody else would volunteer and it clearly needed to be done, so I thought I would be able to do this role on top of my other roles.

Mr Blake: Why do you think others wouldn’t volunteer for that role?

Amanda Burton: Just because of the amount of time everyone was already undertaking in their various roles. I was still relatively new to the organisation, and I had been involved in whistleblowing issues for other organisations, so I did have some background in this regard.

Mr Blake: Thank you. Could we please turn to POL00447997. This is the speak-up policy and it’s version 9.0. Do you know if this is the most up-to-date version?

Amanda Burton: It is.

Mr Blake: Was it developed prior to you taking up that role?

Amanda Burton: There was a speak-up policy in place but it was revised several times, I think. I think this was May? Yes.

Mr Blake: Yes, if we scroll over the page and look at the very bottom, at the very bottom of the page it has “Group Policy Speak Up_May 24”?

Amanda Burton: Yes.

Mr Blake: So you have been involved in the drafting of this document, or the finalising of this document?

Amanda Burton: Well, just understanding what it said and whether we needed to make some changes, yes.

Mr Blake: Can we turn to page 3, please, and it sets out there the core principles. I’ll just read out the first few bullet points, it says:

“The [Post Office] will treat Speak-Up disclosures consistently, fairly, appropriately, and professionally, and afford the protections from the Public Interest Disclosure Act … reporters raising a genuine concern will be protected from reprisals, even if they turn out to be mistaken;

“Encourage the reporting of any concerns as soon as possible in the knowledge that [Post Office] will take all concerns raised seriously and investigate them fully. Concerns will be kept confidential and disclosed only on a ‘need to know’ basis.”

3: “The Speak Up team will seek to not reveal a Reporter’s identity outside of the team without the prior agreement of the Reporter. However, there may be occasions when details need to be shared where there is a risk of harm to the Reporter or others or where we need to do so for legal or regulatory reasons, or are required to disclose documents to the Post Office Horizon IT Inquiry.

“[Post Office] will promote and publicise how staff can raise these concerns;”

And:

“That [Post Office] will provide a training and awareness programme to ensure all employees are aware of the Speak Up policy and procedure.”

Is this a policy just for employees or does it extend to subpostmasters?

Amanda Burton: It does extend to postmasters as well but I agree that, actually, on reflection, we could be clearer on that. But if you look at the top, it does say that it’s the right thing for colleagues and postmasters.

Mr Blake: So with regards to actively promoting and publicising, for example, the Inquiry has carried out a survey and there were some issues with the knowledge of either the fact that you are able to report a whistleblowing concern, or how to. Do you have any future plans in this regard?

Amanda Burton: Well, obviously we’ve already reviewed the survey that was done and I’ll definitely be taking that up, yes. I mean, it is clear that some postmasters do know about the Speak Up because they are speaking up, but obviously we need to do more to make sure that everyone is aware.

Mr Blake: Thank you.

Sir, that might be an appropriate moment to take our morning break.

Sir Wyn Williams: All right.

Mr Blake: Can we come back at 11.35, please.

Sir Wyn Williams: Yes, by all means.

Mr Blake: Thank you very much.

(11.19 am)

(A short break)

(11.37 am)

Mr Blake: Thank you, sir.

I’m going to move on to the topic of the dismissal of Mr Staunton. This is the first time that we have dealt with this in any depth in the Inquiry. The allegation that we’re going to look at has been dealt with already in a Parliamentary committee and the various names that we’re going to deal with has already been dealt with publicly, and I think you set that out in your witness statement.

Who is Jane Davies?

Amanda Burton: She was the previous Chief People Officer.

Mr Blake: Thank you. And I think you’ve said in your witness statement that your paths had previously crossed?

Amanda Burton: That’s correct, yes.

Mr Blake: In June 2023 I think you’ve said that following a probationary period she wasn’t offered a permanent position at the Post Office?

Amanda Burton: That’s correct.

Mr Blake: And you’ve set out at paragraph 19 that she subsequently wrote to Mr Staunton, so far as you’re aware, and that Mr Staunton later shared with you and Mr Tidswell a copy of a draft letter from her solicitors which raised concerns regarding Mr Read; is that right?

Amanda Burton: That’s correct.

Mr Blake: Now we won’t go through the complaints one by one but can you assist us in broad terms what was the nature of the complaints?

Amanda Burton: The complaints were partly to do with potential discrimination, partly to do with bullying, and partly to do with not dealing with poor performance, amongst others.

Mr Blake: You’ve said in your statement that there was a view that it was shared in an attempt to secure more favourable terms. Can you help us with who held that view?

Amanda Burton: Mr Staunton.

Mr Blake: On 4 September of 2023 you’ve said that this became a formal whistleblowing report and that you oversaw the investigation because by that stage you were the Speak-Up Champion; is that right?

Amanda Burton: That’s correct, yes. Mr Staunton asked me to do that role.

Mr Blake: Was this entitled “Project Rose”?

Amanda Burton: Yes. Rose 2, I think it is. Sorry, we have so many projects, it’s sometimes difficult to remember, but I think it’s Rose 2.

Mr Blake: You’ve said in your statement that Lorna Gratton also asked to be involved. Can you assist us with why she wanted to be involved?

Amanda Burton: Because this related to the Chief Executive it was obviously something that was going to be of interest to the Shareholder.

Mr Blake: You’ve set out in your statement that the Post Office was advised by Pinsent Masons and a barrister, Ms Tutin; is that correct?

Amanda Burton: That’s correct, yes.

Mr Blake: You say you became aware that Henry Staunton was also the subject of one of the complaints. The original complaint that you saw hadn’t named Mr Staunton; is that correct?

Amanda Burton: No, it just referred to a board member making some inappropriate comments.

Mr Blake: There came a point at which he became subject of an investigation. Can you assist us with when, if the 4 September was the whistleblowing report, we know that there was a Teams call in January of 2024. Can you assist us with when it became known to you that Mr Staunton was part of that complaint?

Amanda Burton: From memory it was sometime in November. So it was as a result of Ms Tutin meeting with Ms Davies to go through her complaints.

Mr Blake: And how did you come to be aware of that information?

Amanda Burton: Pinsent Masons informed us.

Mr Blake: Did you have at that point in time any conversations with any members of the Board about that particular?

Amanda Burton: Well, Ms Gratton was also aware because she was also part of the overseeing process. And we spoke to Mr Tidswell as the Senior Independent Director, as we felt that we would have to investigate these further allegations, and that Mr Staunton needed to be aware.

Mr Blake: And again, in broad terms, what was the nature of those allegations?

Amanda Burton: It was to do with remarks in relation to a recruitment process for a Non-Executive Director and they concerned a potential gender matter and a racist matter.

Mr Blake: It might be suggested that those complaints about Mr Staunton were taken further than Ms Davies had intended, perhaps to get rid of the chair. What’s your view on that?

Amanda Burton: No, not at all. Clearly, if those comments had been made, they were not appropriate for a very senior person within the organisation and we felt that we absolutely could not ignore the fact that this had now been brought to our attention.

Mr Blake: It might be suggested that the complaint was principally and overwhelmingly concerning Mr Read’s conduct rather than Mr Staunton’s, and that there was undue focus on Mr Staunton because he didn’t fit a particular mould. What is your view on that?

Amanda Burton: No, that is not correct. The focus clearly was on Mr Read because most of the allegations related to him.

Mr Blake: Paragraph 26 of your witness statement, you say that Mr Staunton made repeated attempts to have the investigation stopped. Can you assist us with the sequence of events there?

Amanda Burton: Yes. Over several weeks, he spoke to myself, to Ms Gratton, to the Chief People Officer, to the General Counsel, and generally being very firm that we should stop the investigation. He did this under the guise that it was causing a great deal of stress to Mr Read, and that he felt that this was unfair and therefore the investigation should stop.

Mr Blake: Why do you say “guise”?

Amanda Burton: Because we were obviously also aware that there was an investigation into his own remarks.

Mr Blake: And is it your view that he was asking to stop the investigation because it concerned him rather than his concern regarding Mr Read?

Amanda Burton: That thought did cross my mind, yes.

Mr Blake: You’ve described it as a guise. You said it crossed your mind. Is it your belief that that is why?

Amanda Burton: Yes, it did seem coincidental that as soon as Mr Staunton had been informed that there was also an investigation into him, that these conversations took place.

Mr Blake: And can you please take us through, step by step, your understanding of what Mr Staunton is said to have done in respect of trying to stop that investigation?

Amanda Burton: As I say, he had conversations with a number of people. He also tried to delay his own interview with the barrister.

Mr Blake: How would you describe the conversations that he had, so far as you’re aware, from discussions with those individuals?

Amanda Burton: That they were quite of an aggressive nature.

Mr Blake: To who?

Amanda Burton: Particularly to the General Counsel and to the Chief People Officer.

Mr Blake: Are you aware of the content of that conversation?

Amanda Burton: That he was just adamant that the investigation had to stop, and that people were not supportive of management, and that they should follow what he recommended.

Mr Blake: Is this, for you, just an issue with an individual, or does it say something more significant about the Post Office as a business?

Amanda Burton: Bearing in mind the absolute requirement to have a good functioning speak-up facility, it would be entirely inappropriate to stop an investigation once somebody had spoken up. It’s really important that the process is followed through, no matter who that relates to. Obviously it’s difficult when more senior people are involved, just because of the nature of it but you still have to absolutely go through same process. And so this was not to do with individuals; this was to do with absolutely following the policy.

Mr Blake: Irrespective of the particular complaint on this particular occasion, does this incident itself, do you think, tell us anything about the broader business?

Amanda Burton: I think it tells me something about Mr Staunton’s view of speak-ups. I don’t think he necessarily appreciated how important it was that we followed the process.

Mr Blake: One matter you’ve highlighted in your statement is you’ve said that there’s an issue that the Board can’t get rid of the Chair. What’s that concern?

Amanda Burton: That’s to do with the governance arrangements with the Shareholder, so it is the Shareholder who decides who is appointed and if that person needs to be removed.

Mr Blake: Ordinarily, how would you have expected this matter to have been dealt with at board level?

Amanda Burton: I would have expected that there would have been an ability in the articles for the other directors to be able to agree to remove a director. That’s normally what you would see.

Mr Blake: Again, looking forward to the future in terms of recommendations, is there anything that you consider there should be changed about the position?

Amanda Burton: I think it would be more – it would be appropriate to review the articles and really consider what makes most sense to be kept within the remit of the shareholder and what makes most sense to be kept with the directors. It is quite difficult, when you’re expected to be a director of a company and be independent but then have one arm tied behind your back.

Mr Blake: Does the same situation apply to the Non-Executive Directors as it does to the Chair in terms of removal?

Amanda Burton: From memory, yes. The – well, certainly the Shareholder approves all appointments and I am pretty sure has to agree to removals.

Mr Blake: Thank you. Can we please turn to POL00448674. This is an email from Mr Tidswell of 16th January this year, to Mr Staunton, with you copied in. He says:

“As promised, I have spoken with Amanda. She agrees with my suggestion that it would be sensible in all the circumstances (and particularly bearing in mind the intense pressures on Nick) for the Board to review the allegations raised by Rose about Nick, with a view to categorising them …”

And he sets them out.

Just looking at this first paragraph it does seem – this is prior to Henry Staunton’s departure – as though there was a concern about the pressures on Nick Read?

Amanda Burton: Oh, absolutely, which I also shared. This was during the time when obviously there had been the ITV programme, Mr Read had to appear before the Select Committee. There was a lot of media scrutiny. There was a lot of stress within the organisation, and yes, Mr Read was under – and of course this investigation going on, as well – and it would be very surprising if someone didn’t feel under stress in those circumstances.

Mr Blake: In those circumstances, how can you be confident, as confident as you are, with regards to Mr Staunton’s motives?

Amanda Burton: I think he was genuinely concerned about Mr Read.

Mr Blake: Is there a “but” there?

Amanda Burton: No, no, I genuinely do think he was concerned about Mr Read, yes.

Mr Blake: I think your evidence earlier was that that wasn’t his principal motivation?

Amanda Burton: That was my opinion but I also definitely think he was concerned about Nick, yes.

Mr Blake: Number 1:

“Allegations where we think there is documentary evidence which is sufficiently unequivocal that Marianne Tutin [the barrister] can be asked to confirm her conclusions without the need to interview Nick. The most obvious applies to the two points about the bonus multiplier, which I looked at in detail for my interview and where the documents are plain in showing the allegation is wrong.”

Very briefly, what was the issue about the bonus multiplier?

Amanda Burton: That was the matter that I referred to earlier when there had been – the process hadn’t been entirely followed to get shareholder consent. But that was actually all well documented, so I think that was behind Mr Tidswell’s thinking that because there was a clear document trail, that perhaps we could narrow down some of the things that Ms Tutin was going to interview him about, because at this stage, Mr Read had not been interviewed.

Mr Blake: 2:

“Allegations where the subject matter is not of sufficient significance to warrant an investigation process. This might (without wanting to second-guess the Board) include items such as Angela Williams working for two companies for a period (which was common knowledge) and the decision to award her leave status (which may feed into (1) above). The Board may then feel comfortable in asking Marianne not to continue to investigate these matters.”

Again very briefly what were those matters?

Amanda Burton: This was Ms Williams, who was the interim CPO. She was due to leave the organisation, and was asked to stay on for a period, by which time she’d already taken on a position in another company. So I understand that Mr Read agreed she could try and juggle the two jobs for a period.

Mr Blake: Number 3:

“Allegations not falling into 1 or 2 above which may still need some degree of investigation but which ought to be relatively limited in number and scope and perhaps can be managed with Nick more easily.

“Amanda makes the point that Marianne is carrying out a dual exercise of gathering material to defend the claim which we understand has been issued. Presumably Nick would be happy to discuss items in (1) or (2) if she needed his input, as long as it was understood that they were no matters under investigation?”

Can you assist us, was it an independent investigation that was being carried out by the barrister or was it something else?

Amanda Burton: No, this was an independent investigation.

Mr Blake: And can an independent investigation be carried out whilst also gathering material to defend a claim?

Amanda Burton: This, perhaps, is slightly clumsy wording, but what was meant by this was that it was the same issues were raised for the Employment Tribunal. So rather than creating two lots of work, the purpose was to make sure that the same points were covered.

Mr Blake: Thank you. It then says:

“If you think this might be workable and valuable in reassuring Nick, I think the next step is to get Lorna involved.”

Et cetera.

This then brings us, in terms of the dates, we are also at the same time as what we know as Project Pineapple. Can we please turn to POL00448300. And it’s page 2. Over the page, please. Thank you very much.

So this is going on at a very similar time when we are back a couple of days, January 14th now.

In your view, should we read in anything to the timing of the Project Pineapple email to the issues that we’ve just been discussing?

Amanda Burton: I don’t believe so.

Mr Blake: Do you consider this Project Pineapple email to be a whistleblowing complaint?

Amanda Burton: It certainly raises grievances.

Mr Blake: And under your policy, of which you’ve been involved, would it qualify as a whistleblowing complaint?

Amanda Burton: We did not treat it as that. Instead it went through a grievance process through HR.

Mr Blake: And why is that?

Amanda Burton: Because we felt these were grievances being raised by Mr Ismail and Mr Jacobs.

Mr Blake: It says there:

“Saf said that the views expressed by Richard Taylor and previously by management and even members of the Board, still persisted – that those [postmasters] who had not come forward to be exonerated and were ‘guilty as charged’. Something needs to be done.”

He then names other individuals, Martin Roberts and certain members of his team were singled out.

“Equally, Saf and Elliot are fed up with the amount of power wielded by Ben Foat.”

Do those matters qualify as whistleblowing complaints?

Amanda Burton: Potentially they could be but as say, we considered them to be a grievance.

Mr Blake: And what do you see is the difference between a whistleblowing complaint and a grievance?

Amanda Burton: A grievance will be to do with issues like bullying or other sort of HR matters, and this seemed to us to be more to do with how people were behaving in the organisation.

Mr Blake: A fundamental cultural issue about presuming that subpostmasters are guilty as charged, do you consider that to be a grievance or a matter for the whistleblowing policy?

Amanda Burton: I think it could fall into either category, to be honest.

Mr Blake: The reason I ask is we know that this email was subsequently forwarded by Mr Read to individuals who were named in the email. Do you see that as a breach of the confidentiality obligations of your Speak-Up Policy, if not in letter, at least in theory?

Amanda Burton: Um, yes.

Mr Blake: Because I think you have raised issues of, for example, Mr Staunton’s disclosure to Parliament in relation to Ms Davies’ complaint.

Amanda Burton: (Witness nodded)

Mr Blake: Isn’t disclosure, it might be said that disclosure of this email is very much in a similar category to that?

Amanda Burton: Yes, it was immensely unfortunate.

Mr Blake: And do you think those actions, for whatever reason, might discourage others from coming forward?

Amanda Burton: Potentially, and we were also concerned about the complaints against Mr Read being made public for the same reason. So we did put out a communication to everyone to reassure them that this is not the normal process, and our expectation is to keep things confidential until the moment when there might be a reason to make something public.

Mr Blake: Were things going quite wrong in mid-January 2024?

Amanda Burton: It was certainly a very difficult period.

Mr Blake: Could we turn, please, to POL00448301. This is the email that we’ve seen before from Mr Staunton to the Non-Executive Directors. He says:

“Nick confirmed that he had sent the confidential note to the independent [Non-Executive Directors] entitled Project Pineapple to Ben and Martin amongst others. This note containing the private comments of our postmaster [Non-Executive Directors] …”

And this email also addresses the fact that Nick was under huge pressures:

“… a lot on his mind … he understands it was a serious lapse and was very apologetic.”

Were you aware of any apology being made to the Subpostmaster Non-Executive Directors?

Amanda Burton: I know that the postmaster, in line with the Executive Directors, definitely wanted an apology from Mr Read and I understand they feel they did not get one.

Mr Blake: And were you –

Amanda Burton: I think he did it more in the context of the circumstances in which he accidentally forwarded the note.

Mr Blake: Are you aware of any corrective action within the business to make sure that this kind of issue doesn’t crop up again?

Amanda Burton: Well, unfortunately it’s almost impossible to prevent someone forwarding something that they shouldn’t do. But what is important is for people to pause a moment before they press the “send” button and make sure they see what the attachments are.

Mr Blake: Does this, once again, go to some sort of an overall cultural issue within the organisation?

Amanda Burton: As I say, the organisation has been under huge stress. Mr Read himself was very stressed at this point, and I just think he just sent it without really realising what was attached. He hadn’t meant to send the embedded attachments.

Mr Blake: If that can come down. On the same day, an issue arose regarding the appointment of the Senior Independent Director. You’ve addressed that at paragraph 44 of your witness statement. Can you previously explain to us what the issue was there?

Amanda Burton: Yes. Mr Tidswell, who was the Senior Independent Director at the time, had given notice that he intended to leave the Post Office, and so it would be necessary to find a replacement.

Now, that replacement could either be someone internal or appointment of a new person. The Shareholder advised the Board that they wanted this person to be externally appointed and to have some sort of Government type background.

Mr Blake: And what was the view of the Chair?

Amanda Burton: The – well, in the initial discussions at the Board, the Chair agreed to that. But he then seemed to change his mind.

Mr Blake: And do you know why?

Amanda Burton: He said it was because there were so many issues facing the Post Office that we didn’t need yet another matter which would involve people being distracted in interviewing, et cetera and so felt it would be more appropriate to appoint somebody internally.

Mr Blake: And was your view that that view was legitimately held?

Amanda Burton: I could absolutely understand the rationale for trying to reduce the number of things that were going on in the Post Office, because there were just huge amounts. However, there had been a very, very clear steer from the Shareholder as to what they wanted, and it seemed to me that this was not the moment to – I think I said the words “pick a fight” – with the Shareholder.

Mr Blake: If we could bring on to screen your witness statement WITN11330100. It’s paragraph 45, page 13, that I’d like to ask you about. Thank you. Page 13, paragraph 45.

You say there:

“I had various discussions with Mr Tidswell and Ms Gratton as this was yet another example of Mr Staunton’s inappropriate conduct. It is well accepted that cultural change starts at the top. The Post Office was in the very unfortunate position of having a Chair of the Board who was acting contrary to best practice.”

Can you expand upon that, please?

Amanda Burton: Yes, well, we have already discussed the issues in relation to Mr Staunton trying to persuade people to stop the investigation into Mr Read. He had also, I had been told, shouted at the General Counsel in an open-plan situation, so other staff could see. And he’d had various conversations with the Chief People Officer, which had led her to consider that she might need to resign.

Mr Blake: Thank you.

We have heard this week from the Subpostmaster Non-Executive Directors who broadly paint a positive picture of Mr Staunton’s commitment to the involvement of subpostmasters, for example. Why do you think it is that there is this gulf of views with regards to Mr Staunton?

Amanda Burton: I think it is correct. Mr Staunton absolutely wanted the – a better future for the postmasters. He wanted resolution of the historical compensation process. I completely agree with all those comments. I don’t think we’re inconsistent in that.

Mr Blake: The suggestion might be made that he was more on the side of the postmasters than other members of the Board and that it’s effectively the establishment getting rid of him. What’s your view as to that?

Amanda Burton: No, I don’t think that’s correct. As I say, I genuinely believe he wanted to do the best for the postmasters but I think he got very frustrated with the fact that we’re a public corporation and some of the policies and processes we have to follow, and perhaps wasn’t the right person for this particular role.

Mr Blake: Thank you. I’d like to move on quickly to Past Roles and Phoenix. Can we bring up on to screen POL00448297. This is an email that we’ve seen from Mr Jacobs raising concerns that current employees who are still in the business and were involved in the Horizon scandal are still employed. There’s another number of emails along the same lines chasing up action. It seems as though action is not taken, certainly in their view, swiftly.

Were you aware of the differences between Past Roles and Phoenix?

Amanda Burton: Not initially. I think it was all a little bit confused as to what we were actually talking about, so it did take a while for the Board to understand that there were two different types of people.

Mr Blake: And in your view, was there sufficient priority given to both of those projects?

Amanda Burton: No, I think we could have been a lot quicker. I think this was a very difficult topic, but at some point decisions have to be made.

Mr Blake: And looking at the present day, do you think there has been sufficient action taken in that regard?

Amanda Burton: It is definitely improving.

Mr Blake: What’s your view of the “Suspend now” proposal that was put forward by Mr Ismail and Mr Jacobs this week?

Amanda Burton: I think, again, it depends on the individual concerned. As you know, there are a range of different employees involved in these matters, and I think it would be very unfair for some, and others it might be more appropriate.

Mr Blake: I mean, there are some names that we’ve heard mentioned where it’s certainly in the view of the Subpostmaster Non-Executive Directors they would clearly fall within a category of wrongdoers. Why do you think they haven’t been suspended?

Amanda Burton: I think because the People Team have been going through a particular process and didn’t feel that there was sufficient information to warrant a suspension.

Mr Blake: Have you heard the term “untouchables” being used by Mr Read?

Amanda Burton: I have.

Mr Blake: And what was your understanding as to that term at the time it was used?

Amanda Burton: I heard it in relation to 18th January meeting this year. From memory, the context was Mr Staunton said something like “As Nick describes, there are certain people who are untouchables”, and Mr Read agreed with that comment.

Mr Blake: So in your view, the term came from Mr Staunton rather than Mr Read?

Amanda Burton: Yes, but I think he was quoting Mr Read.

Mr Blake: Ah. Thank you. And what did you understand that to mean?

Amanda Burton: I understood that – well, there was, again, confusion as to quite what this referred to and there seemed to be different names attached to it. But it seemed to suggest that there were certain people who were above normal policies and processes, and that action wouldn’t be taken against them if action was necessary.

Mr Blake: And in your understanding, who did that relate to?

Amanda Burton: On 18 January, the reference was to Mr Bartlett.

Mr Blake: And was there another occasion when it was in reference to somebody else?

Amanda Burton: I believe it was in relation to potentially the previous investigators.

Mr Blake: Have you personally done anything to challenge that?

Amanda Burton: It’s definitely not a – I know there was concern as to whether this was a sort of word used generally in the organisation, and I have definitely not heard it anywhere else. And in my personal view, you definitely can’t have people who are untouchable. That is – just makes a very unhealthy organisation if that’s the case.

Mr Blake: And as Speak-Up Champion, have you done anything to see whether there is any substance to that allegation?

Amanda Burton: Well, the very fact that we are running multiple investigations into people and indeed investigated the allegations in relation to the Chair and the Chief Executive, I would hope would underpin confidence that there are no people who are untouchable.

Mr Blake: On a related subject, looking at the investigations and the Investigations Team, we’ve heard evidence, for example, from Mr Jacobs, who is subject to an investigation himself. Who is responsible for oversight of that Investigations Team, so far as you’re aware?

Amanda Burton: It was the General Counsel.

Mr Blake: Do you consider that the Board has sufficient oversight in respect of, for example, the recovery of apparent or alleged shortfalls?

Amanda Burton: I think it’s something we definitely need to review. We are – the Board as a whole is getting more information now and there are regular updates to the Board around the number of investigations. But I think it would really benefit us to sort of really stand back and review some of the processes.

Mr Blake: You’ll have seen in your pack in preparation for today various correspondence between Mr Read and Fujitsu, regarding the provision of witness evidence in criminal proceedings. Was that something that you were aware of before preparing for the Inquiry?

Amanda Burton: Yes. I don’t think I saw that correspondence, but I – from memory, Mr Woodley did describe the correspondence to the Board.

Mr Blake: And what is your view now, having seen that correspondence, of the approach that was taken by Post Office Investigators?

Amanda Burton: I think some of the – we should look at some of the language that’s used, and I think people just need to stand back and understand what it is they’re trying to achieve. We do need to get a balance, in terms of being confident that where there actually has been wrongdoing, the police want to look into something, that we are able to provide evidence to the police. I think we need to get that better into balance?

Mr Blake: And what in particular are your concerns relating to the particular correspondence that you’ve seen.

Amanda Burton: I think, although the term “victim” would be understood in the criminal context, I think just in the – the fact that we have got our own background to this, we just need to really review how we approach things.

Mr Blake: Thank you.

I’m just going to deal with a few small miscellaneous topics before we finish, before I move on to subpostmaster questions.

Governance issues. Grant Thornton. Were you aware of any changes being made to the Grant Thornton report before it was finalised?

Amanda Burton: As you’d expect, a draft was put before the Board, and I also saw the draft of the remuneration element, because obviously I’m very interested in that. And we were given an opportunity to comment and if we thought that some of the information was incorrect, to ask Grant Thornton to reconsider and that is entirely what you would expect in these sort of reports. So that process happened.

Mr Blake: Is there any content that was changed that you consider the Inquiry should be aware of or concerned about?

Amanda Burton: I think the first report was actually just too long, and we also wanted to focus on the actions that were going to come out of it.

Mr Blake: Are there any aspects of that report that you don’t agree with?

Amanda Burton: From memory, no. I have adopted all the proposals for the Remuneration Committee, as I mentioned before, we now have a tracker for the numerous corporate governance proposals for remuneration.

Mr Blake: Moving on to NBIT. Have you seen the results in the YouGov survey regarding technical issues still being experienced by subpostmasters?

Amanda Burton: I’ve had a very, very quick look, unfortunately I’ve had a very busy week for other companies, but yes, I did have a quick look.

Mr Blake: Have you seen or heard about the concerns raised by Mr Jacobs and Mr Ismail about the current system as well?

Amanda Burton: In their evidence?

Mr Blake: Yes.

Amanda Burton: No, I haven’t been able to watch all their evidence, I’m afraid.

Mr Blake: The kinds of issues that have been identified, ongoing issues with the Horizon system, is that something that you have been made aware of at board level?

Amanda Burton: Yes, we are aware of issues. I would also say it would be highly – in my experience, highly unusual if there weren’t issues with computer systems. That is partly the nature of the beast.

I think what’s more concerning is how those issues are dealt with.

Mr Blake: With regards to the new system, what are the key issues that you’re aware of that are of concern to the Board?

Amanda Burton: Well, there’s a broad one in terms of usability. It’s a very, very old-fashioned system. It wouldn’t help us moving to a more digital world, for example, it’s not user-friendly. We couldn’t sort of allow customers to input their own data into it, for example. So there’s lots of things from a practical, commercial point of view. It really does need changing. There are issues with, I believe, screen freezes, et cetera.

Mr Blake: Sorry, you’re talking about the Horizon system?

Amanda Burton: Yes.

Mr Blake: In terms of the NBIT system, the new system –

Amanda Burton: Oh, I’m so sorry.

Mr Blake: – what are the concerns of the board?

Amanda Burton: There are various concerns. One that it’s overrun on budget; two, that it’s taken much longer than we were expecting; and three, that some of the back end processes are not as they should be.

Mr Blake: I think the Inquiry had understood from submissions made in October 2022 that the Post Office planned on retiring Horizon by 2024. And there’s a document in your bundle, I don’t think we need to get it up on to the screen but by 21st November of 2023, the Post Office sought to extend the Horizon contract to 2030. Can you assist us with what caused that change of circumstance?

Amanda Burton: Yes. There’d been some external reports into the system as it was being developed, which made us pause for thought as to the direction on insourcing, outsourcing, et cetera. And these are quite fundamental issues which need time to be addressed, and obviously we felt we would need the further support of Fujitsu for a further period to allow us to get into a better place.

Mr Blake: Who do you consider has ultimate responsibility for on the one hand the delay, and on the second hand, the cost of the new system and how both of those are out of line with projections?

Amanda Burton: Well, the ultimate responsibility is with the Board.

Mr Blake: And is it your view that the Board failed to properly scrutinise those issues, that they were provided with incorrect information, or something else?

Amanda Burton: I think we were not given the right information in terms of the complexity of some of the issues facing NBIT, and therefore the knock-on consequences of time and money.

Mr Blake: And who didn’t provide the correct information?

Amanda Burton: People in the IT Team.

Mr Blake: Is there anybody in particular?

Amanda Burton: I’m not hugely familiar with the IT Team so I’m sorry, but I think Zdravko Mlandenov would be one name.

Mr Blake: Thank you. I think we have the full spelling of that name?

Amanda Burton: Sorry, yes, I’m sure I’ve mispronounced it.

Mr Blake: Compensation and redress. You’ve said in your statement you’re pleased that the Government has moved to exonerate all postmasters, and the speed of the compensation process. Do you know what steps have been taken by the Post Office to identify those who were prosecuted who haven’t yet come forward?

Amanda Burton: Yes, communications are going out to a broad audience to try and see if we can capture those who haven’t made a claim so far.

Mr Blake: Do you think the steps that have been taken so far are sufficient?

Amanda Burton: I’m sure there’s always more that can be done. I would hope, though, with the publicity generally around this matter, that postmasters who haven’t yet made a claim are now fully aware that they can do so.

Mr Blake: One entirely miscellaneous question. It relates to paragraph 51 of your statement, where you say that there are too many versions of the contract. What do you mean by that?

Amanda Burton: This is the franchise agreement with postmasters. You would expect there just to be one, but there seemed to be numerous ones which I don’t think is – and also potentially not entirely known who signed what. So that, obviously, is not appropriate.

Mr Blake: And has that been addressed?

Amanda Burton: Not yet, no. I would hope that following the strategic review, once we know what direction we’re going in, then we will be able to revisit what is an appropriate modern franchise agreement.

Mr Blake: Quite a lot of emphasis today has been placed on the strategic review and what it may offer. When is that going to be taking place?

Amanda Burton: We’ve had a very first high-level look at it very recently. More work is being done and then we will be consulting with the Shareholder because it’s really important that we get the Shareholder’s agreement.

Mr Blake: Are we talking months, years?

Amanda Burton: No, no, hopefully by the end of this year.

Mr Blake: Thank you.

Sir, I don’t have any further questions. I know there are questions from Mr Henry and Mr Jacobs.

Sir Wyn Williams: All right, let them ask them.

Mr Blake: Thank you.

Questioned by Mr Henry

Mr Henry: Thank you, sir.

Ms Burton, you would agree that the degradation of the subpostmasters by wrongful prosecution or fraudulent civil suit is an atrocious chapter in the Post Office’s history?

Amanda Burton: I certainly would.

Mr Henry: And so therefore this Inquiry is examining the Post Office’s turpitude, its myriad wrongdoing, and its failure over many years to treat the subpostmasters with dignity and justice. You would agree?

Amanda Burton: I agree.

Mr Henry: And knowing that, when the Inquiry’s subject matter is the raw material of human misery, and how the Post Office inflicted that, how could it ever be appropriate for very senior management to be enriched with bonuses arising from an examination into the Post Office’s own wrongdoing?

Amanda Burton: This was a new team that had been brought in, who were not there at the time that these awful events happened, and I understand it was felt important that they absolutely focused on what was required to ensure that the Inquiry could undertake the job in hand.

Mr Henry: New team or not, how could it ever be thought right that very senior management be rewarded for cooperating with the Inquiry, an inquiry into the Post Office’s historic and arguably continuing misfeasance?

Amanda Burton: As I say, I wasn’t there when the metric was set, but the Remuneration Committee felt it was an appropriate metric at that – have I just gone quiet – at that stage, this was a public inquiry, not a statutory inquiry. Definitely by the time it became a statutory inquiry, it was not appropriate.

Mr Henry: Well, irrespective of whether it was a non-statutory or statutory inquiry, nobody questioned the propriety of the scheme, did they?

Amanda Burton: As I understand it, no.

Mr Henry: And it was only until after there had been public outrage after the publication of the annual report and accounts that there was then a realisation that this was potentially misconceived; would you agree?

Amanda Burton: I would.

Mr Henry: But you were still then of the view, at the time of finalising your report, that such an incentive scheme was acceptable, weren’t you?

Amanda Burton: Not that particular submetric, but the rest of it, yes, which was not to do with the Inquiry.

Mr Henry: But the bonus metric, you accept, should never have been countenanced so far as that specific factor was concerned, regardless of whether the Inquiry was statutory or not?

Amanda Burton: I’m sorry, I don’t think I entirely followed your question. Sorry.

Mr Henry: Well, you – I thought I understood – and forgive me if I am wrong – that it is now with hindsight that you say the bonus metric for alleged cooperation with the Inquiry should not have been countenanced, and that is regardless of whether the Inquiry was on a statutory footing or not.

Amanda Burton: Correct.

Mr Henry: Right. Now, how did this happen because the predicate for the bonus that the Inquiry metric had been achieved and had been endorsed, no, less by the Chairman of the Inquiry? This was grossly inaccurate, wasn’t it?

Amanda Burton: It was.

Mr Henry: And anyone paying the slightest attention during the whole process of devising or constructing this incentive or checking the annual report and accounts ought to have realised this.

Amanda Burton: They should.

Mr Henry: Yet, and correct me if I am wrong, you never reached a conclusion on how these serious misrepresentations were made, not least, of course, that the Chairman had signed off on the metric, did you?

Amanda Burton: No.

Mr Henry: No. So there is no explanation in your report on how a multitude of very senior executives, the Board and its advisers, RemCo in particular, allowed this to happen with blatantly false information being published in the annual report and accounts?

Amanda Burton: That’s correct, and I couldn’t find any reason for it.

Mr Henry: Now I know that you were unassisted, but I mean you must have asked these questions. Did you encounter opposition, or did you encounter blank faces with people saying, “I can’t remember”? I mean, the fact that you reached no conclusion on this matter calls into question the efficacy of the study you conducted?

Amanda Burton: No one was able to explain to me why they had missed it. I did ask the question, and everyone accepted they just didn’t focus on it. I do not know why.

Mr Henry: So it looks, from the complexity and the intricacy of all of the equations, et cetera, et cetera, that an enormous amount of time was devoted to constructing this, yet nobody can explain to you why this serious error occurred?

Amanda Burton: Correct.

Mr Henry: Now, can you help me: is it not right that the Post Office retained Herbert Smith Freehills to review the transformation and incentive scheme regarding bonuses for work on the Inquiry?

Amanda Burton: I’m sorry, I don’t know.

Mr Henry: You don’t know. Well, they certainly were the Post Office’s lawyers at the time, and were the Post Office’s lawyers, and had been for some considerable time in various guises, including lawyers to the Inquiry. Do I take it from your answer that you did not consider asking who the solicitors were who reviewed and, as it were, fact-checked this scheme?

Amanda Burton: I don’t think lawyers did fact-check the scheme when it was put in place.

Mr Henry: So they didn’t, as it were, ask for it to be reviewed so that it was legally appropriate?

Amanda Burton: Not as far as I’m aware, no.

Mr Henry: I see. Now, it follows that you can offer no explanation for the serious errors, including the misrepresentation that the Inquiry had concluded and that Sir Wyn Williams had personally approved the metric?

Amanda Burton: No, I have not been able to find any explanation.

Mr Henry: Right.

Now, this all makes for, at the very least – and I use understatement – an undignified spectacle; wouldn’t you agree?

Amanda Burton: I would.

Mr Henry: Because these are very important legal documents: the annual report and accounts, and they severely misrepresented the facts.

Amanda Burton: In that particular instance, absolutely.

Mr Henry: And scrutiny, it appears, came there none, and it’s troubling on many levels; you would agree?

Amanda Burton: I would.

Mr Henry: Crass errors of judgment, propriety, and very serious errors of fact?

Amanda Burton: Correct.

Mr Henry: And you say – and it’s an answer that you have given on numerous occasions this morning to Mr Blake – that this is a sign of an organisation under some stress?

Amanda Burton: Yes, that would certainly be one factor. Absolutely.

Mr Henry: Yes. Well, of course, I ask you now to consider the other side of the equation, the postmasters: the subpostmasters need no education in stress, do they?

Amanda Burton: Absolutely not.

Mr Henry: Difficult to trust anyone again, when all you’ve ever had has been taken away from you after you’ve been falsely accused, wrongly imprisoned, or bankrupted?

Amanda Burton: I agree.

Mr Henry: And the plight of the subpostmasters, the vast majority of whom are yet to receive full and fair compensation, is both painful and financially precarious?

Amanda Burton: Agreed.

Mr Henry: So whilst such incentive schemes were being constructed and devised, the subpostmasters were living on food banks and charity, many of them. You would agree?

Amanda Burton: Yes.

Mr Henry: And I suggest that this rather than being a speedy process is an attritional process which – and I don’t suggest that you know this personally – but it’s an attritional process, these three schemes, two of which are overseen by the Post Office, which is designed to drive subpostmasters to settle at a loss. Has that ever been the subject of discussions at board level?

Amanda Burton: No.

Mr Henry: Has anybody properly considered, without of course descending into the detail of individual cases, but has anybody properly considered the nature of the process and what is being done in the Post Office’s name?

Amanda Burton: In relation to the compensation scheme?

Mr Henry: Yes.

Amanda Burton: Yes, there is a whole team looking at it.

Mr Henry: Right. So do you think it’s appropriate that in one case – and I won’t mention her name at this stage – that the Post Office’s requiring not one, not two, not three, not four, but five expert reports into a person’s medical condition?

Amanda Burton: I’m sorry, I’m not able to comment because I don’t know the detail.

Sir Wyn Williams: I don’t think that’s capable of answer, Mr Henry.

Mr Henry: So be it, sir. I’ll move on.

But let us deal with something which I hope you will be able to answer. You recognise, surely, the unfortunate perspective, the unfairness, at least in the eyes of the subpostmasters, that the Board was devising a TIS such as this while many of the Post Office’s victims have had to turn to a charitable fund to have their bills paid?

Amanda Burton: The purpose of this particular part of the scheme was to ensure that everything was done to make sure all the evidence necessary for the Inquiry was put in place and handed over. So I don’t actually see that as contradictory.

Mr Henry: Well, we know, unfortunately, given the timescale of this Inquiry and the constant disruption to its progress, that that certainly was not accomplished.

But in conclusion, this, please: you say that there has been an apology to the subpostmasters for this metric. We know that there has been an apology to the Chairman and to the Inquiry Team; but can you please point me to an apology to the subpostmaster Core Participants in relation to this TIS?

Amanda Burton: I don’t believe there will be one in those terms, no.

Mr Henry: Thank you.

Sir Wyn Williams: Mr Jacobs?

Questioned by Mr Jacobs

Mr Jacobs: Can you hear me now, Ms Burton?

Amanda Burton: I can.

Mr Jacobs: I will say that again.

Good afternoon. I represent a large number of subpostmasters. I want to ask you about the YouGov survey. Gavin Ellison gave evidence from YouGov on Monday, the 23rd. Have you read that survey or heard about it?

Amanda Burton: I have, I say, read it in broad terms, and it was discussed at a board meeting.

Mr Jacobs: Thank you. So about 100 current subpostmasters responded, so – 1,000 I ought –

Amanda Burton: Yes.

Mr Jacobs: – to say. And you’ll know, then, that in the executive summary – we don’t need to turn it up – 92 per cent of those who responded said they’d experienced some form of issue with Horizon in the last 12 months. 98 per cent of those who’d experienced discrepancies reported shortfalls, and the most common resolution of those was either for them to use branch money or the subpostmasters resolve it themselves; 70 per cent suffered from screen freezes; 68 per cent loss of connection; 57 per cent say unexplained discrepancies occurred in their branches; and, just to round off, 65 per cent of subpostmasters who responded said they experienced issues with Horizon at least once a month, and 35 per cent said it was a few times a month.

Does that sound familiar –

Amanda Burton: It does.

Mr Jacobs: – from your understanding of the report?

So the clear message, then, is that a significant, a very significant, representative sample of current subpostmasters say that the problems with the Horizon system, which Mr Justice Fraser identified, haven’t gone away. Do you agree with that?

Amanda Burton: It certainly looks like that from the feedback that was given in the survey.

Mr Jacobs: Right. And you said that this was discussed at a board meeting. Can you tell us a little it about that?

Amanda Burton: Yes. We had a board meeting that was already planned this Tuesday, and obviously this survey had just come out. So it was on the agenda to look at it and understand what we were going to do about it because obviously the results of the survey were disappointing.

Mr Jacobs: Yes, and this Tuesday, is that Tuesday, 24th September?

Amanda Burton: Yes.

Mr Jacobs: The one just gone. That was the day when Saf Ismail gave evidence.

Amanda Burton: (Witness nodded)

Mr Jacobs: And we asked him about this survey, and we said – we asked him if he knew if the Post Office board or senior executives, before the survey came out, were aware of the huge dissatisfaction amongst subpostmasters with how the Horizon system is working and how they’re being treated by the Post Office. And he said the Board is certainly not aware to the level that the YouTube – YouGov survey broke things down, and the specific points.

And he said that what the Board tends to be told in terms of current and existing bugs, for example, is there are a number of bugs, and we fixed X number of bugs, and there is no specific detail. Is that correct? Does that accord with your view of the sort of information you’re given?

Amanda Burton: Yes.

Mr Jacobs: And that’s helpful, thank you.

He went on to say, importantly, the Executive, the wider Executive, is cherrypicking what information it gives to the board, which he said is not helpful. Would you agree with that as well?

Amanda Burton: To be honest, it’s very difficult to know what you don’t know, so I think there are – there can be some instances where perhaps information is given in a certain way and at other times, actually, it’s very honest information.

Mr Jacobs: But there is a concern, Ms Burton, isn’t there, that the Board is still not receiving accurate information from the Executive in relation to subpostmaster issues?

Amanda Burton: It certainly seems there is an issue following survey results, although, to be fair, the postmaster survey we did earlier in the year that the Board looked at also raised issues around dissatisfaction with their own remuneration, for example. So we haven’t just heard it from here that there are issues generally. We are aware of them.

Mr Jacobs: Mr Ismail also said – it was part of his evidence – that the employee surveys, he didn’t feel that the Board were receiving information from the Executive that was presented in a helpful or accurate way?

Amanda Burton: Well, I think, again, the employee engagement surveys are very helpful, and we actually felt that they were properly presented to the Board.

Mr Jacobs: What can the Board do, or what should the Board do, about these very real concerns, we say, that the Executive is cherrypicking the information that gets passed on to the Board?

Amanda Burton: Definitely continue to do surveys. Also, actual visits to branches to speak to postmasters ourselves and to talk to a wider group of people.

To be absolutely honest, in any organisation there is a danger that things get filtered upwards and, as a Non-Executive Director, I think we’re always alive to that, and therefore have to find other ways to do checks and balances to assure ourselves that we are being given the right information.

Mr Jacobs: It must be important, don’t you think, that in an important where there have been deceptions and misrepresentations by senior executive members it must be important in terms of changing culture, that something is done to ensure that the Executive today is candid and transparent in its dealings with the Board; do you accept that?

Amanda Burton: I do.

Mr Jacobs: And do you have any ideas as to what can be done, in relation to the Executive in particular?

Amanda Burton: I think we need to make it very clear that we must receive the right information and it mustn’t be filtered in any way and to see sort of the next tier down, as well, so not just relying on the senior management. I think that’s good practice for a number of reasons. To have wider engagement with postmasters and mistresses as well, and I do think that the fact that we have postmaster NEDs is really critical and I really welcome their role.

Mr Jacobs: Thank you. That’s helpful.

I just have one other point arising from an answer you gave to Mr Blake at about quarter past 12 this afternoon. You were asked about subpostmasters who have been prosecuted but haven’t yet come forward and you said that communications have been sent to a broad audience. Could you just elaborate on that, please?

Amanda Burton: I understand letters are – they either have gone out or are going out to as many people as we understand were postmasters and mistresses during that period.

Mr Jacobs: And so the broad audience would be people who were postmasters during that time?

Amanda Burton: Yes.

Mr Jacobs: Thank you. That’s helpful.

I don’t have any further questions, sir.

Sir Wyn Williams: Can I ask you, Ms Burton, in relation to persons who are entitled to be exonerated under the recent legislation, if I can put it in that way, is the process of identifying and notifying them being handled solely by the Ministry of Justice or jointly with Post Office and the Ministry of Justice? Or what, if I can put it in that way, is the process for notifying these people?

Amanda Burton: I’m afraid I don’t know, Sir Wyn.

Sir Wyn Williams: Fine. All right. Thank you. No doubt I’ll find out from somewhere else.

Mr Blake: Sir, there is just a question from Ms Patrick.

Questioned by Ms Patrick

Ms Patrick: Good morning, Ms Burton. My name is Ms Patrick. I think you know I represent another group of subpostmasters who were convicted and have since been acquitted – sorry, since had their convictions quashed.

I just want to ask you about one part of your witness statement because you haven’t been asked about it before. You’ve just confirmed with Mr Jacobs your view that the addition of subpostmaster NEDs to the Board is a helpful thing.

Amanda Burton: Yes.

Ms Patrick: And I just want to look at one issue that arose. It’s been being called the two-tier approach to the Board. And in your witness statement you deal with that, and you say that when you joined the Board – it’s at paragraph 59 of your statement – you recognise that only those who could sit on particular committees could get papers; is that right?

Amanda Burton: That’s correct.

Ms Patrick: And that that meant that some were excluded from seeing all of the materials that were being circulated to some members of the Board?

Amanda Burton: That’s correct, and that included myself.

Ms Patrick: Yes. And, in fact, it came to pass that you’d discussed that with the Chair and the company secretary; is that right?

Amanda Burton: I did.

Ms Patrick: And on consulting Mr Staunton, you said:

“Mr Staunton said access could be given to independent NEDs.”

And you said that meant that Ms Gratton, although she wasn’t independent, sat on all of the committees and also got the papers. But what that meant was that the change meant that neither Mr Ismail nor Mr Jacobs were getting papers for committees they didn’t sit on?

Amanda Burton: That’s correct.

Ms Patrick: And the committee included the Remuneration Committee?

Amanda Burton: (Witness nodded)

Ms Patrick: There were never any SPM representatives on the Remuneration Committee, were there?

Amanda Burton: No.

Ms Patrick: Now, was that kind of two-tier approach indicative of the continuing possible apparent belief that there was some suspicion afforded to the role that an SPM might play in the business?

Amanda Burton: I agree it was not helpful.

Ms Patrick: And has that now changed?

Amanda Burton: It has.

Ms Patrick: And is that as part, as a result, of the recommendations made by the Grant Thornton report?

Amanda Burton: No, actually. Because I was having conversations with Mr Ismail and Mr Jacobs about some remuneration issues, I realised that they still couldn’t see the papers that I could see. So I asked again whether it was possible for them to also get those papers and that has now been agreed and, much more recently, it’s also been agreed that any of us can attend any committee meeting even if we’re not a member and we can attend as an observer, and that will also apply to the Remuneration Committee.

Ms Patrick: And the Grant Thornton, what, did recognise that this kind of two-tier approach was unhelpful, didn’t it?

Amanda Burton: Yes, it did.

Ms Patrick: And recommended changes to remedy that?

Amanda Burton: It did.

Ms Patrick: Thank you. I don’t have any other questions.

Sir Wyn Williams: Thank you, Ms Patrick.

Is that it, Mr Blake?

Mr Blake: It is, yes, sir.

Sir Wyn Williams: Well, thank you very much, Ms Burton, for your witness statement and for attending to give oral evidence. I am very grateful to you.

The Witness: Thank you.

Mr Blake: Sir, could we come back at 1.50?

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

Mr Blake: Thank you very much.

(12.47 pm)

(The Short Adjournment)

(1.50 pm)

Mr Stevens: Good afternoon, sir. Can you see and hear us?

Sir Wyn Williams: Yes, I can, thank you.

Mr Stevens: We are hearing from Sir Martin Donnelly.

Sir Martin Donnelly

SIR MARTIN DONNELLY (sworn).

Questioned by Mr Stevens

Mr Stevens: Please can you state your full name.

Sir Martin Donnelly: Martin Eugene Donnelly.

Mr Stevens: Thank you for attending the Inquiry today to give oral evidence and thank you for your detailed witness statement to which I would like to turn now. It should be in front of you. Do you have a copy of it? Do you see that?

Sir Martin Donnelly: Yes. I have my own copy.

Mr Stevens: And it runs to 33 pages, excluding the list of exhibits. Could I ask you, please, to turn to page 33.

Sir Martin Donnelly: Yes.

Mr Stevens: Is that your signature?

Sir Martin Donnelly: Yes.

Mr Stevens: Now, before I ask you whether that’s true to the best of your knowledge and belief, there’s one correction I understand we need to make. If we could have paragraph 6 on the screen, please, which is at page 3. In the middle of the third line, it says:

“I joined Boeing in July 2019 and worked as UK Managing Director until October 2023.”

I understand that should read October 2022.

Sir Martin Donnelly: Yes.

Mr Stevens: Thank you, that can come down.

Subject to that one correction, are the facts stated in that witness statement true to the best of your knowledge and belief?

Sir Martin Donnelly: They are.

Mr Stevens: Thank you. That, for the reference, is WITN11250100. Sir Martin, that statement will be uploaded to the Inquiry’s website shortly. I’m going to ask you some questions on it, not on everything, but on certain matters.

We’ll start with your career. You joined the Civil Service in 1980.

Sir Martin Donnelly: Yes.

Mr Stevens: And you held a range of positions across a number of departments, being made Acting Permanent Undersecretary to the Foreign and Commonwealth Office in 2010?

Sir Martin Donnelly: That’s right.

Mr Stevens: You were then made Permanent Secretary to the Department for Business, Innovation and Skills in October 2010?

Sir Martin Donnelly: Yes.

Mr Stevens: You remained in that post until that department closed and became the Department for Business, Energy and Industrial Strategy in July 2016?

Sir Martin Donnelly: Yes. In practice, then parts of the department were split off. The core department had the energy part joined on to it, and then I was briefly a Joint Permanent Secretary whilst setting up the separate Department of International Trade.

Mr Stevens: And you served as Permanent Secretary of the new Department for International Trade, I believe, in September 2016 to April 2017?

Sir Martin Donnelly: Yes.

Mr Stevens: And at that point you left the Civil Service?

Sir Martin Donnelly: That’s correct.

Mr Stevens: Sir Martin, you are the first Permanent Secretary we’ve heard evidence from, so I want to touch on the role of Permanent Secretary first.

You say in your statement – we don’t need to turn it up – paragraph 10 that the role of Permanent Secretary is to be the Civil Service Head of Department?

Sir Martin Donnelly: That’s correct. The senior permanent civil servant in the department.

Mr Stevens: In respect of your role as Permanent Secretary and fulfilling that role, did you have a private office or staff to assist you with that?

Sir Martin Donnelly: Yes, I did.

Mr Stevens: Can you just summarise the extent of the private office or staff you had to help.

Sir Martin Donnelly: So I had, over most of this time, a principal private secretary; usually two junior private secretaries to assist; a diary secretary, and some clerical support.

Mr Stevens: We’ll come to their roles in due course as we go through your evidence. I want to look at the Department itself as well, the Department for Business, Innovation and Skills. Please can we bring up paragraphs 7 and 8 of your statement, which is on page 3.

We see the section giving an overview of the Department. You refer to the creation of the Department in 2009. That’s before your appointment. You go on to say at paragraph 8 that the Department had:

“… had a very wide range of specific responsibilities within its central objective of promoting economic growth through investment in skills and education, trade and investment promotion, fostering innovation and helping businesses to grow.”

How did postal affairs and oversight of the Post Office fit within the Department?

Sir Martin Donnelly: The Department was probably the widest range of responsibilities I came across in my time as a civil servant. It was – the Post Office, together with Royal Mail, of course, at the start of this period, was one of about 45 partner organisations which were split up in terms of their supervision between different parts of the Department. The Post Office was one of six or so, which was supervised by the Shareholder Executive, and that arrangement remained the case throughout my time as Permanent Secretary.

Mr Stevens: I mean, you do go on to say in your statement about the range and extent of the functions being large. The extent of the functions the Department had, do you think that had a negative effect on its ability to oversee postal affairs as an individual issue or area?

Sir Martin Donnelly: It certainly had consequences for how we had to do it. Given the range of responsibilities, it was necessary to delegate considerably within the Department into the various groups and, for most of the time I was there, certainly by the end, we had six separate groups with their own responsibilities.

Whether that was better or worse than other models is difficult to say in abstract. What I would say – and you may want to come back to this separately – is we were, from the time that I joined, and increasingly over that period, under considerable resource pressure or, to put it more bluntly, we didn’t have as much funding or as many people as we would have liked to have had to do all the things that we had to do. So we had to do the best we could with what we had.

But in terms of structures, I thought at the time that the structures we had were reasonable ones.

Mr Stevens: I will come back to the point of the resourcing you refer to later.

In terms of at a Department level, I think in your statement you refer to personal involvement in the sale of Royal Mail and an accounting issue with Post Office Limited’s consolidated accounts towards the end of 2015. Is that broadly right? Those are the two areas in which you had personal involvement?

Sir Martin Donnelly: Yes, and in the first case that was because of my specific Accounting Officer responsibility for the public assets which were the Royal Mail, which were being sold, and the question of whether the taxpayer was getting value for money for them. That was my role as Accounting Officer and it was a specific one in that case.

In the second case, which was a bit different, I was actually annoyed by the fact that the Post Office had made this accounting error because, although the accounts were their responsibility, within the Business Department we tried very hard to – and I think succeeded – in achieving a high level of financial transparency. Accounts were produced on time. Our departmental accounts were not qualified and I was angry that the Post Office had messed this one up, and I had to report it in the reporting accounts for that year.

Mr Stevens: Given those were – we’ll come back to some of those later. Given those were the two issues you were involved with, is it fair to say that postal affairs or the Post Office wasn’t one of the top agenda items for the Department as a whole whilst you were Permanent Secretary?

Sir Martin Donnelly: Certainly from my perspective as Permanent Secretary, the major policy issue that took up most of my time was the Royal Mail privatisation. I was aware of other issues, but, as across the range of the partner bodies from the Student Loan Company to the Ordnance Survey and so on, my primary concern was to ensure that these were being handled within a structure which made sense. It wasn’t possible for me to follow in detail every single issue, nor would it have been desirable, in terms of the responsibilities of the people involved. I relied on them to raise issues, but from my perspective, yes, those were the two salient points when the Post Office was directly on my agenda.

Mr Stevens: We’ll come to your personal involvement shortly.

Just to put it again, I suppose, in terms of that, what you were dealing with, in terms of what the Department as a whole prioritised or had at the top of its agenda, is it fair to say that postal affairs wasn’t on, say, the top five agenda items for the Department as a whole?

Sir Martin Donnelly: Well, the top five agenda items shifted over time. So early on, we had a bit of a crisis over student funding. Later in my time, we had a crisis over steel. We had continued challenges over funding. We had issues around regional development coming thorough. We had a problem over the funding of further education colleges. So these were the issues which tended to be at the top of the political agenda and therefore affected what I was concerned with as the senior official serving the Secretary of State.

But in parallel – and I don’t want to sound too bureaucratic about this, but it was important – we were running a large and complex organisation. So issues around staffing, around funding, around appointments, these all came up and took up quite a lot of time, and so of course did reducing the funding over this period in a managed way.

So the Post Office was one of the issues being dealt with within the system during this time. That’s how I would put it.

Mr Stevens: Let’s look at your role, and I think touching on what you just said. Could we look at paragraph 15 of your statement. It’s page 5. We see you start off describing the role of the Permanent Secretary. I’m not going to go through all of that, but if we go down to 17, you say:

“Given the range of work across the core Department, the Permanent Secretary has to ensure that systems are in place to manage it effectively without personal intervention, while maintaining an overview of the Department’s work.”

And as you’ve mentioned in doing that, you had Directors General reporting to you?

Sir Martin Donnelly: Yes.

Mr Stevens: One of those was the Chief Executive of the Shareholder Executive?

Sir Martin Donnelly: Yes.

Mr Stevens: What responsibility did you have as Permanent Secretary to satisfy yourself that a Director General and their team were performing the role effectively?

Sir Martin Donnelly: I think that was one of my core responsibilities. It was to ensure that the system, as far as I was aware and could professionally judge, was equipped with the people and the resources and the motivation, the values, to do the jobs that it had to do in different settings. And that required looking at the funding; it required looking at the senior leadership; it required ensuring that I had time with those Directors General to know what was on their minds and how I could help. And it also required letting them get on with it without excessive intervention, where that was going to actually complicate their lives and make running the Department as a whole more difficult.

Mr Stevens: Is it fair to summarise your evidence in terms of that reporting line as follows: you first say that you were reliant on accurate information being communicated to and by your officials?

Sir Martin Donnelly: Yes.

Mr Stevens: And, secondly, you placed reliance in your officials’ judgment in identifying which issues needed to be raised with you?

Sir Martin Donnelly: Yes, within the context that obviously more junior officials were being managed by more senior officials and I would expect, where there was an issue that they weren’t sure about or required guidance, that they would go to the more senior officials and, where necessary, those officials would bring me in. Or the other way round, that the Secretary of State would say to me, as happened on one or two issues, you know, “Have a look at this, try and sort it out.” That didn’t happen very often but it did happen occasionally.

Mr Stevens: Can you recall – so you referred to conversations with your Director General. Let’s focus purely on Shareholder Executive at the minute. Can you recall to what extent you tested whether the Director General was providing you with the appropriate information or the most relevant information for you?

Sir Martin Donnelly: Well, I guess there are two parts to that. One was I had to personally have confidence in the people doing those jobs, that they would do it professionally and ethically, and I did have that confidence, as I built my team. And, secondly, they would use their judgment which I would then rely on to inform me of issues where I could add value or whether I should be aware, either for Accounting Officer reasons or because they would be politically important or because 10 Downing Street were involved, and so on.

Mr Stevens: My question is, how did – or did you test that judgment to see if it was being exercised properly?

Sir Martin Donnelly: So obviously it’s a judgment that I would make over time through contact with them. The other, more formal, arrangement was that we had an annual appraisal and I would collect information from others with whom they worked, including their own staff, and including, in the case of the Shareholder Executive, as a lot of its function was actually outside the business department, from others that it was working with. And I was reassured by the feedback I received.

Mr Stevens: Would one of those sources of feedback on the Director General with responsibility for Shareholder Executive have been the Chair of Post Office Limited?

Sir Martin Donnelly: Not that I recall. I did, as you know, have separate meetings, roughly once a year, with the Chair of Post Office, and the Chair could at any point have contacted me to say, “I’m not happy with what’s going on.” That would have been unusual but not completely outside normal behaviour.

The process of assessment tended to be more within Government. So from ministers, from other Permanent Secretaries, particularly the Treasury.

Mr Stevens: In your statement – we don’t need to bring it up, I’ll read it – in response to the types of issues that would be raised to your attention, you’ve referred to reviewing a large amount of briefing information, and you prioritise “issues that affect the whole Department or top of the political agenda.”

When we say “issues that affect the whole Department”, can you just say what you mean by that?

Sir Martin Donnelly: Again, this would often be questions of funding. Were we having difficulty in managing an issue which was arising which would affect the Department’s effectiveness and credibility with ministers? Were we being asked by 10 Downing Street or others for a new initiative which had to be managed? Were we dealing with a sudden crisis, for example the steel crisis, or the sort of issue that would rapidly become very political, and again affect how we were perceived as doing our job: for example, the Student Loans Company difficulties at some points with their IT in delivering loans accurately to students.

So they tended to be those sorts of issues, or points that I knew were on the Secretary of State’s mind or were likely to come forward.

But you will also understand that with 40-odd partner organisations and a very wide range of issues, there were quite a lot of problems of people resigning or questions of how we would cover emerging areas. So there was quite a lot of organisational material that would come up to me that we would be managing through the departmental board and its systems.

Mr Stevens: On reflection, the fact that there was such a broad area and issues to cover from such a wide spectrum, did that prevent, or do you think it may have prevented, issues such as the Horizon issues we’re looking at breaking through to the top level of the Civil Service?

Sir Martin Donnelly: I find that a difficult question to answer. I think I’d make two points. One was that because we’d set the Department up with this range of responsibilities, it was inevitable that a lot of responsibility would be devolved to the Directors General. That was not necessarily a bad thing. They would competent people.

It did mean, though, that there was less overall bandwidth for drilling down into individual issues. But my question to myself would be, if we had had more resource, I’m not sure it would have been best used at the most senior levels. It might have been better used, actually, at the detailed levels of how many people were engaged in working out the detail of what was going on, because the problem was, once you’ve got information coming into the system, everybody was working off the same information further up, and the challenge I see, in retrospect, is we weren’t getting access to the correct information on which to take decisions.

Mr Stevens: Going slightly out of order, because you’ve raised it there, you refer in your statement to cuts and having to cut the budget, once early in the stage of the Coalition Government, and then the second time around in 2015 onwards. To what extent did those cuts affect the resource or headcount available to oversee Post Office within the Department?

Sir Martin Donnelly: It’s hard to make a direct connection and, as I say in my statement, I was aware of the importance of the work that ShEx were doing, and indeed other parts of the Department were doing, and I sought – I think with some success – to ensure that there was an acceptable level of funding and support.

Now, it would have been good to have had more, and in the past there was more, and from 2015 onwards we had to start another process which was very painful and difficult, and involved the projected closure of some offices. So I think at the time, I’d say it was almost less the resource levels, because nobody came to me and said, “I cannot do this with the resource I have.” In some policy areas we said, “Well, we just can’t do as much work on regional policy, we’re going to have to cut this down to a minimum.”

But I did not get the impression the Shareholder Executive did not have the resources they needed.

What was true for me, and I think for my senior team, was we had to spend a lot of time trying to shrink the organisation, deal with inevitable morale issues, manage the partner organisations and, latterly, some issues about the speed with which we could renew board members, because there was a degree of involvement, some would say interference, by Special Advisers, which caused some difficulties with some partners. All of these things became very time consuming.

So keeping all the plates spinning against this complexity with limited resources didn’t, in my memory, honestly, lead us to make any particular mistakes, but it did give us less thickness of people, less bandwidth.

Mr Stevens: Before I move on, now, on reflection, having been in the Civil Service for several decades – now having left, obviously – do you have any comments to make, other comments to make, on the size of the portfolio of the Department and whether that’s appropriate?

Sir Martin Donnelly: I think it comes down again to this point of how many senior officials do you need and how do they add value? And the challenge, I think, is if you don’t get additional perspectives or additional information, then they’re unlikely to add a lot of value.

I do think there’s a question about resource levels in terms of being able to be close to, or closer to, what is going on. But then of course you have to be able to rely on the information that you are getting.

So I would say, in retrospect, the model of BIS had some advantages. You could link up different policy areas. You could make them work better together than if they were in separate departments. But it did have consequences for how we had to manage issues, and that meant it had a high level of devolving responsibilities.

Mr Stevens: Before I move on to look at the role of the Accounting Officer, just couple of points on your knowledge. You say in your statement that you don’t recall any real discussion on things like bugs and errors in the Horizon system whilst you were Permanent Secretary.

Sir Martin Donnelly: None at all.

Mr Stevens: When did you first become aware that Post Office conducted its own prosecutions?

Sir Martin Donnelly: Probably about 2019 – I think when I read the Nick Harvey (sic) book.

Mr Stevens: So during your – Nick Wallis, sorry.

Sir Martin Donnelly: Sorry, yes.

Mr Stevens: So during your period of time as Permanent Secretary, your evidence is you weren’t aware of its prosecutorial function?

Sir Martin Donnelly: Not at all.

Mr Stevens: Were you aware that it was involved in prosecutions and that subpostmasters were being prosecuted by someone?

Sir Martin Donnelly: No, that never came to my attention, because I guess it was never connected to anything that someone said, “This is important, we should be concerned about it.”

Mr Stevens: I want to look at the role of the Accounting Officer in relation to Post Office Limited. I’ll cover this in a bit of detail, because you’re, as I say, the first Permanent Secretary we have at the Inquiry.

You were the Accounting Officer for the Department as Permanent Secretary?

Sir Martin Donnelly: Yes.

Mr Stevens: And that gave you certain personal responsibilities in respect of the Department’s expenditure of public money?

Sir Martin Donnelly: Yes.

Mr Stevens: Please can we look at your statement at page 14, paragraph 38. You refer to the Accounting Officer role, and about six lines down you say:

“As Accounting Officer, maintaining transparency of BIS spending was a key objective. This led to a successful consolidation of the accounts of most of the Partners for which BIS had oversight into the main BIS accounts. However, this did not include Royal Mail and the Post Office; as noted above they had a separate report and accounts produced to commercial standards given their status as a public corporation.”

I assume there when you say “a separate report and accounts” you’re referring to the accounts filed with Companies House?

Sir Martin Donnelly: Yes.

Mr Stevens: And if we look over the page, please, at paragraph 39 at the very top, you, I think, effectively make three points. First, you were not the Accounting Officer for Royal Mail or Post Office?

Sir Martin Donnelly: Except insofar as we’ve discussed on the Royal Mail share sale, when it came to the disposal of public taxpayer assets, I was the person who had to provide a judgment that that was value for money.

Mr Stevens: So that, with that into account as well.

Sir Martin Donnelly: (Witness nodded)

Mr Stevens: So that’s the other one you say you’re accountable as Accounting Officer for any transactions between the Post Office and the Department. Is that what you mean when you refer to being accountable there?

Sir Martin Donnelly: Yes, and hypothetically, if there had been some issue of having to be alone, or any financial arrangements which involved the Department with the Post Office, I can’t quite imagine what those would have been, but if they involved funding from the Department, then I would have been involved as Accounting Officer or supervising it, yes.

Mr Stevens: So that, as I understand it, derives from your role as Accounting Officer to the Department?

Sir Martin Donnelly: Yes.

Mr Stevens: But you are not Accounting Officer to the Post Office or to Royal Mail itself?

Sir Martin Donnelly: No. That and – you mentioned managing public money. That was, as far as I could see, a logical evolution of the system that you had an arm’s-length body that was a public corporation and it had a pretty high degree on its autonomy, for example, on how many salaries, on how many people it employed, which did not have to come to the Department or ultimately to me for approval, and they did have to produce accounts to commercial standards and be audited and so on.

Mr Stevens: And the third point you say is that public corporations do not have accounting officers. I want to look that in a little bit of detail now, but before I do, in summary, what, if any, responsibility did you have as an Accounting Officer in respect of Post Office’s accounts?

Sir Martin Donnelly: As Accounting Officer, I don’t think I directly had a responsibility for their accounting process. I did have a wider reputational responsibility for how they were doing it and we had the point about the non-cash error which we discussed. And ultimately, of course, they were using public funds because they were in the public sector and the public sector stood behind them.

So, had they had a financial crash or run out of money, I would have had to have been involved in that residual role, but not for their normal expenditure, no.

Mr Stevens: I want to look at each of those three points now. Some of these may be perfectly clear to you, so we’ll have to go through it stage by stage to make sure it’s clear to us.

The first point is you being the Accounting Officer – not the Accounting Officer, sorry, for Royal Mail and Post Office. Could we look, please, at UKGI00006045. It’s a document by the Treasury, Managing Public Money, July 2013. As briefly as you can, can you summarise what this document is used for?

Sir Martin Donnelly: No, I’m not sure I can now, especially at 11 years distance. Essentially, the Treasury were trying, though, to set out a framework for broadly who was responsible for where the money went, and technically I think my Accounting Officer responsibilities were delegated by the Treasury Accounting Officer and, similarly, to other Permanent Secretaries and there were practical arrangements whereby some other arm’s-length bodies had some quasi-Accounting Officer status. Now I’m not a professional accountant and I’m not sure I can take you much further into that.

I’m also aware that the precise definition of Accounting Officer in the case of a public corporation was slightly work in progress over this period.

Mr Stevens: Well, let’s pause that because we’ll come to it shortly. Could we look, please, at page 19, paragraph 3.1.1. So this is the role of the Accounting Officer and it says:

“Each organisation in central government – department, agency, trading fund, NHS body, NDPB or arm’s-length body – must have an Accounting Officer.”

We will leave aside public corporations for the time, but do I take it this supports your position that you were Accounting Officer of the Department, and then sponsor arm’s-length bodies or public corporations – well, no, sorry –

Sir Martin Donnelly: No, not public corporation –

Mr Stevens: Sorry, sponsor arm’s-length bodies would have their own accounting officers?

Sir Martin Donnelly: It did depend on the level of the autonomy of the organisation, but it is true to say that – and I don’t know offhand quite what the status of the other 44 or so were in this category, but yes, there were different levels of autonomy and with that went a different level of Accounting Officer responsibility so it wasn’t always entirely black and white, in practice, this system.

Mr Stevens: Let’s look at the public corporations role, please, and first a point on public corporations. That document can come down for the time being.

You may have listened to evidence in the Inquiry’s Phase 5 and 6 hearings where ministers and civil servants referred to the Post Office as an arm’s-length body. Did you hear that evidence?

Sir Martin Donnelly: Yes, I heard some of it, not all of it.

Mr Stevens: Now, colloquially that may be correct but I understand there’s a difference between an arm’s-length body and a public corporation for the purposes of public accounts; is that correct?

Sir Martin Donnelly: Yes, I think “arm’s-length body” is not really a technical term. It covered a range of non-departmental bodies, and there used to be trading funds, and so on. And essentially, once you had a unit with some financial autonomy outside the Department, it tended to be known as an arm’s-length body.

Mr Stevens: Can we please look at RLIT0000325. This is a Cabinet Office document from 2016 called the Classification of Public Bodies: Guidance for Departments. Is this a document you would have been familiar with when you were Permanent Secretary?

Sir Martin Donnelly: Well, I would have expected my Finance Team to be familiar with the detail and I would have expected to have understood the broad lines of what they were saying about what did and did not fall within the public sector, which was not always a straightforward issue.

Mr Stevens: Can we turn to page 4, please. We see it says:

“Public bodies are diverse, which means classification is not always a simple process. For ease of reference, and to help departments understand the different delivery models that exist, this guidance sets out the main categories of public body. This guidance covers: the ALBs that are classified [that’s the arm’s-length bodies that are classified]; other non-classified central government and Parliamentary entities, and public corporations”.

And I think your evidence before is that there are different categories of arm’s-length bodies that fall within the first group there, the ALBs that are classified; is that right?

Sir Martin Donnelly: Yes, in terms of how we worked with them and managed them. That is right. And some of those categories, I’m afraid, changed over time.

Mr Stevens: Could we look at page 29, please. This is chapter six on public corporations. And on the left column towards the bottom, it says:

“A body will be classified as a public corporation where:”

It says:

“It is classified as a market body – a body that derives more than 50 per cent of its production costs from the sale of goods or services at economically significant prices …”

There’s detail we don’t need there. It goes on to say (2):

“It is controlled by central government, local government, or other public corporations, and it has substantial day-to-day operating independence so that it should be seen as an institutional unit separate from its parent department.”

And is it your evidence that the Post Office fulfilled those requirements to be a public corporation?

Sir Martin Donnelly: Definitely.

Mr Stevens: Thank you.

Sir Martin Donnelly: I can say why if you want, but that may be too much unhelpful detail.

Mr Stevens: Please do.

Sir Martin Donnelly: Well, briefly, because this a sectoral classification issue, it’s concerned with what does the Government stand behind? So if a public corporation goes bust in some way or doesn’t fulfil its contractual obligations, the ONS want to know what’s on the Government’s balance sheet and how much they stand to lose.

If it had a slightly different level of control that meant that it was largely, but not entirely, private sector-controlled, the ONS would argue that if it went bankrupt, it was a private sector issue. So their primary concern here is to work out what assets the taxpayer is essentially responsible for, as I understand the system.

Mr Stevens: Okay, thank you.

I want to go to your evidence that public corporations do not have Accounting Officers, and you refer to the 2023 edition of Managing Public Money. Can we please bring that up. It’s UKGI00043211, and page 208, please.

So this is obviously a 2023 document. It was brought into place after you’d left the Civil Service. We see, towards the bottom of the box at the top, it says:

“This annex is intended to consolidate existing guidance in relation to their responsibilities for public money and to provide some advice on common issues that arise.”

Can we turn, please, to paragraph 7.3.13, which is over the page. Sorry, two pages over, page 210. And the last sentence says – this is a sentence you rely on:

“Public corporations do not have Accounting Officers and are not subject to managing public money as a matter of course.”

This sentence isn’t in the 2013 edition of Managing Public Money. Is it your evidence, though, that that reflects practice or reflects how Government worked whilst you were Permanent Secretary?

Sir Martin Donnelly: Yes. I think it was, and I’ve thought about this, that it was helpful, although you can argue a bit belated, to write this down in 2023, or whenever. Already when I was a Permanent Secretary, it was clear that there was not expected to be the same level of responsibility for expenditure that there was as an Accounting Officer within the Department. So for example, I would control gifts that came into the Department or hospitality. We would have registrars.

A public corporation was completely outside that arrangement. They were expected to follow commercial accounting rules, but – and this, I think, is where it gets a bit less clear – they were also expected to work within broad public sector parameters.

So, you know, in terms of behaviour, in terms of not going completely off the rails, in their spending decisions. And I think it took some time to write down the way we were all working, which was that the logical consequence of having a public corporation with all of these other disciplines, external auditors and so on, was that the Accounting Officer system couldn’t really function in the same way, nor should it have to because there were other disciplines in place. But at the same time, the public corporation was going to have to go on reporting to its shareholder, if that’s the right image, to Government for the way it behaved.

Mr Stevens: And how was that understanding as to the public corporation acting to public standards? How was that communicated to the public corporation?

Sir Martin Donnelly: Well, again, this, I think, evolved over time. I could not point you to a specific document. From my perspective, these arrangements were managed within the Shareholder Executive with full approval of the Treasury. So the fact that the Royal Mail, first of all, then the Post Office, became a public corporation. We appointed a board, and from my perspective, having the Chief Executive, the Board, the auditors, meant that insofar as I reflected on the issues that were problematic, the Post Office wasn’t, because it had these levels of effective control.

And I was not, for example, ever called to the Public Accounts Committee to discuss the Post Office because it was seen that that was a rather separate organisation.

Mr Stevens: If we can go down slightly, please, to show the next paragraph, thank you.

Again referring to public corporations, it says:

“They should instead be subject to levels of control and governance that are deemed appropriate by the sponsor department and agreed in the context of the framework document and approved by Treasury. It may be the nature of the body is such that it would be appropriate to consider if that requirement for compliance with the principles of Managing Public Money should be imposed. This should be achieved through the exercise of shareholder rights and is not the default position. If this outcome is sought, it may be appropriate to appoint the Chief Executive as an accountable person mirroring the role of the Accounting Officer for central government bodies to ensure the shareholder expectations in this regard are met.”

Again, was that idea of how you could approach public corporations and have an accountable person within them, was that practice within Government at the time you were Permanent Secretary?

Sir Martin Donnelly: Well, again, I wasn’t close to all the detail of this, given it was being handled between Treasury, Shareholder Executive, and the finance function. But from my perspective as an Accounting Officer, I can see this as a logical development of what we were doing and, seven years later, it was written down.

The important step that was taken when I was Permanent Secretary was beginning to put civil servants on the Board and, as you know, that was not uncontentious at the time. I thought it was a sensible idea, and I hoped and expected would give us an additional level of effective control without cutting across the structures that had been put in place to provide the level of operational autonomy which people wanted the Post Office to have.

Mr Stevens: That document can come down.

I’d like to go back to the 2013 version of Managing Public Money briefly, please. Page 55.

Sorry, I should say UKGI00006045. Page 55, please. Towards the bottom, we should see “Public corporations”. Thank you.

So we’re referring to public corporations here, and over the page at 7.7.2, it says:

“Sponsor Department should define any contractual relationship with a corporate in a framework document adapted to suit the corporate context while delivering public sector discipline.”

At the time, were you aware of what contractual framework documents were in place to govern the relationship between Post Office and the Department?

Sir Martin Donnelly: No, not in detail.

Mr Stevens: Why not?

Sir Martin Donnelly: Because there was an evolution in how the Shareholder Executive were working with the Post Office over this period. It came out of the Royal Mail. We set up the Board. We had someone on it, and I was aware of all of that. I didn’t know how far that had been written down in any contractual document and I wasn’t sure – insofar as I thought about it, I accepted that the Shareholder Executive were managing this relationship as it evolved. We were putting the Non-Executive Director on the Board, and the system was providing, in substance, what was required.

Mr Stevens: Do you think it would have helped to, for example, when Post Office became an independent business, to have sat down, reviewed the business as a whole, and set down a framework as to what – how Government oversight would work?

Sir Martin Donnelly: I think it’s always helpful to have as much transparency as you can in these cases, although the fundamental thing is maintaining an open relationship of trust and transparency between the people involved and, if you don’t have that, then any number of contractual documents are not going to work well in my experience.

And I think that this is a sensible way of developing the relationship, certainly when there’s an element of stability involved and I think, for quite a lot of the time that we were dealing with the Post Office, there was an evolution in the development of its Board and so on, and also, I think, some question over what the final model might be for the Post Office.

So I can understand why there wasn’t, as far as I know, any formal document on these lines. But I think, yes, I think it’s a good idea, over time, to have those in addition to the fundamental point about the relationship of trust and transparency.

Mr Stevens: Should there have been a review of the operations of Post Office Limited, including the fact it conducted prosecutions, to determine how the Department would oversee prosecutions?

Sir Martin Donnelly: I speak under control here, but my understanding was that Post Office prosecutions had stopped at some point before this period.

Mr Stevens: There were ongoing prosecutions at that – that stopped shortly after separation.

Sir Martin Donnelly: Right.

Mr Stevens: But at the – let’s look at it from the point of, say, 2011 when there’s a plan to separate the businesses. Should the Department have reviewed the operations that Post Office were carrying out, such as prosecutions, to determine how it could best oversee them?

Sir Martin Donnelly: I don’t feel competent to comment on the precise nature of decisions on prosecutions. Clearly, with what we know now, it was a very peculiar system that the Post Office had in place until they no longer ran their own prosecutions and it was not an acceptable one, and that should, therefore, have been picked up at some point.

When I joined the Department in late 2010 I wasn’t aware of that level of detail of how the Post Office performed its prosecutions. In terms of the wider relationship between the Department and the Post Office, my understanding was – and I think this is correct – that there was a lot of discussion about what the relationship should be as it moved out of the Royal Mail as we moved towards the Royal Mail privatisation.

And that seems, to me, in substance, to fill the question of well, how are we going to do this? We’ll set up this Board, and so on. At some point it was obviously sensible to codify it. I think the question as to why it wasn’t done earlier, I don’t know. But the key question was: was the system providing the information that was required by the Department as a sponsor? And I did not have any reason to think, from what I was being told, that that was not the case.

Mr Stevens: I want to look at the – there’s one more point in the Accounting Officer’s role. If we look at page 9, please, of the same document. We have “responsibilities” and it sets out there the principles for managing public money. In box 1.1 we – I think it’s the Nolan Principles there. The Accounting Officer has to follow those principles when expending public money, correct?

Sir Martin Donnelly: Yes.

Mr Stevens: If we turn to page 19, please. This the role of the Accounting Officer towards the bottom, please, the special responsibilities of Accounting Officers. In particular, the Accounting Officer must personally sign the accounts, the annual report and the governance statement. And if we look there at box 3.1:

“Standards expected of the Accounting Officer’s organisation.”

So:

“Acting within the authority of the minister(s) to whom he or she is responsible, the Accounting Officer should ensure that the organisation, and any ALBs it sponsors [arm’s-length bodies it sponsors] operates effectively and to a high standard of probity”.

And under “Governance” we can see there’s:

“Work cooperatively with partners in the public interest” and:

“Treat its customers and business counterparties fairly, honestly and with integrity.”

If Post Office was a formal arm’s-length body to which this document applied, does it follow that your role as Accounting Officer, you would have a responsibility to ensure that it treated its subpostmasters fairly, honestly, and with integrity?

Sir Martin Donnelly: If you go back to your previous box, I did not sign off the accounts for the Post Office. I did sign off the accounts for the business department and for those arm’s-length bodies that were consolidated within those accounts. So there is a significant difference here in terms of the level of control, which I just need to be clear about. However, on the wider point, yes, I think that, as the senior official in the Department, all the bodies, whatever their status, should have been doing all of this and in the case of the Post Office, it clearly did not happen.

So I have to accept some responsibility for the fact that one of the organisations which was part of our overall grouping was not meeting these standards, and I think that’s appalling and I wish we had done better.

Mr Stevens: That can come down. Thank you.

Let’s turn, then, to the system of oversight because, as I understand your evidence, it’s that as Permanent Secretary, you can’t be involved in every individual, minor decision; your responsibility is to establish systems of work that ensure that, or should ensure that, these ALBs and public corporations are run effectively?

Sir Martin Donnelly: Yes, and it’s not just minor decisions, it’s also major decisions because when you have the a level of complexity that we were dealing with, you have to be able to empower people to take decisions and follow them through in a structure, because otherwise you’re not going to get effective outcomes or value for money. So it’s really important that these structures are set up and are robust, because there’s no alternative.

Mr Stevens: If we look, please, at your statement page 12, paragraph 30. You refer to three main ways in which issues or risk could be escalated up from the various parts of the Department to your attention. The first was through morning meetings with the senior team, so Directors General. So in the case of Post Office, that would be information coming from Shareholder Executive?

Sir Martin Donnelly: Ah, yes, that’s right – if there were any.

Mr Stevens: “The second was through my regular one-to-one meetings with each individual Director General …”

So again, that’s information from Shareholder Executive?

Sir Martin Donnelly: As one of the DGs, yes.

Mr Stevens: “The third was through the Departmental top-level risk register and ‘dashboard’. Each of the Directors General contributed to this, drawing upon the risk registers held by each of their own Groups, and it was updated by the Departmental … secretariat in between meetings.”

So again, that’s information coming from Shareholder Executive?

Sir Martin Donnelly: Yes, putting together all of their information and then putting forward the most important issues that they saw for the Board as a whole.

Mr Stevens: Another way matters could be raised is through the Secretary of State or a junior minister; would you agree?

Sir Martin Donnelly: Yes, because that, if you like, is the policy line, and I did not get involved in most policy areas, again because I didn’t have time, but also because I didn’t usually have anything to add to what was going on, and it wouldn’t have been helpful and it could have actually made things less effective. But if ministers wanted me to focus on something, they could say so, and they did.

Mr Stevens: You also say – oh, another way of matters being raised with you would be through being copied into briefings?

Sir Martin Donnelly: Yes. But if I can give you a little background on that, I would get a large amount of material every evening, usually in three folders. One was “For action for you”, something I had to deal with immediately, possibly organisational, possibly a major policy issue. One would be questions of organisation, diary, and so on. And there would be a third, of papers you might just want to have a quick glance at to be aware of, which would be a subset of the several hundred pages and sometimes more of documents that would have come in to my private office during the day.

So there inevitably had to be a process of filtering and, again, I tried to stay in touch with as much information as I could, but I needed to focus on the areas that I was leading on or adding value in.

Mr Stevens: In your statement you refer to your private office – sorry, that can come down. Thank you.

You refer to your private office highlighting or identifying what were the key documents. Do you know how they went about that, how they filtered out what was important to you or what wasn’t?

Sir Martin Donnelly: It was a bit of an iterative process. I would say, you know, I know that the ministers or Number 10 are concerned about area X. I might have asked for something. If there were major issues around resourcing or the structure of the Department, they would know that I would want to see it.

But the bottom line really was I needed to be aware of issues that might produce problems for the organisational structures of the Department, like a steel crisis, how are we going to manage that? What resources were we going to have to find? Or major political issues which were causing significant difficulty, and the Royal Mail privatisation was obviously one that was politically contentious. Student loans, of course, was another. Some business crises occurred rather regularly, or another area like that.

So it was really keeping me in touch with issues where I was likely to have to engage to add value or to communicate what the Department had to do.

Mr Stevens: So is it fair to infer from what you’re saying that it’s unlikely that they would have raised Post Office issues with you or on the Horizon matters, because they obviously weren’t – well, your evidence is they weren’t taking up your time when you were Permanent Secretary?

Sir Martin Donnelly: Yes, because they were being handled in a straightforward, it seemed, way up to the relevant Minister, and there was nothing additional coming from Shareholder Executive to say, “Red flag here”.

Mr Stevens: Sir, we’re making very good progress. That’s probably a good time to take a break, though, for the afternoon. I wonder if we could come back at 3.05.

Sir Wyn Williams: Certainly, yes.

Mr Stevens: Thank you, sir.

(2.53 pm)

(A short break)

(3.05 pm)

Mr Stevens: Sir, can you see and hear me?

Sir Wyn Williams: Yes, thank you.

Mr Stevens: I’m going to move on to the timeline now starting in 2012. Following pressure from MPs, Post Office instructed Second Sight to conduct a review, which I’m sure you’re aware of now. I want to look at an email, please. UKGI00001424.

So this is from Mike Whitehead, if we just go down slightly to see the signature, please. We see within the Department, Shareholder Executive. Do you recall Mr Whitehead?

Sir Martin Donnelly: Vaguely.

Mr Stevens: He is – it’s hard to tell here because of the redactions, but he is emailing Mike Granville at Post Office and others, and he says:

“I understand through Will” – you see in the CC line that we have a Will Gibson, also Shareholder Executive – “I understand through Will that Alice has asked us to agree a defensive line if pressed on the Cabinet Office commissioning the independent review (as advocated in Andrew Bridgen quote yesterday).”

He says, “How about?

“‘This is an operational matter for Post Office Limited who have already commissioned an independent, sudden review by forensic accountants’.”

Were you told about the commissioning of the Second Sight review at the time?

Sir Martin Donnelly: No, not that I recall at all.

Mr Stevens: In this email, what’s being discussed is a member of Parliament, Andrew Bridgen, seeking an independent review commissioned by the Cabinet Office into an IT system that was used by a public corporation your department sponsored. Is that something that should have been raised with you as Permanent Secretary?

Sir Martin Donnelly: I think in these sorts of issues I would expect the senior officials involved to take a judgment as to why that might need to be the case or not.

Mr Stevens: Well, he’s taken a judgment, and my question is, looking at it, is that the type of issue that you would expect to have been raised with you?

Sir Martin Donnelly: No, given the range and complexity of the Department, I would have not expected that to be the case unless someone more senior in the Shareholder Executive felt that it raised difficult issues which were of wider concern.

Mr Stevens: So again, what we have here is the commissioning of an independent review or seeking of a review commissioned by the Cabinet Office. The software is the software that produces Post Office’s accounts on which it prosecutes people. Why is that not serious enough to be raised with you in circumstances where earlier you referred to an accounting issue on the late filing of accounts being raised with you?

Sir Martin Donnelly: Well, the accounting point was a direct issue for the overall credibility of the Department’s accounting, for which I was personally responsible to Parliament. So I had a close concern with the quality of accounting both because of the credibility to Parliament and because I wanted to make sure the Department had the highest standards of accounting. Now, the Post Office’s accounting systems were separate because of their status. Nonetheless, there was a reputational issue there.

I hadn’t seen this. It looks as though someone outside Government is suggesting there should be a Cabinet Office review. The issue of substance for the Shareholder Executive is whether that would be justified on its merits. If they don’t think it is, and if they believe that the Post Office independent external review referred to deals suitably with the issue, I would not have expected them to raise it with me, because what wider issue are they saying it raises?

I’d only expect them to come to me if they thought that the Post Office review was not going to be effective or sufficiently independent or find out the evidence that was required. And then the question would be: well, how do you do that? But that wasn’t their view at the time.

Mr Stevens: Thank you. That document can come down.

That leads to the interim report. We don’t need to bring it up, but at paragraph 84 of your statement you refer to a number of documents that the Inquiry sent to you that you did not have sight of –

Sir Martin Donnelly: That’s right.

Mr Stevens: – at the time. You don’t mention the Interim Report within there. Were you aware of the publication of the Interim Report at the time it was published in July 2013?

Sir Martin Donnelly: No, I have no recollection of that crossing my desk in any substantive way. Probably my office would have been copied into the fact that it was coming out, but I did not spend any time focusing on it and I have no recollection of it.

Mr Stevens: Jo Swinson, the then Junior Minister, made a statement to Parliament on the Interim Report on 9 July 2013. Does that in itself show it was a matter of some significance to the Department?

Sir Martin Donnelly: It showed it was a matter of some significance to the Department but not out of the ordinary. There were statements being made several times a week by Junior Ministers. We had five rising to seven. This was a normal part of business. A whole range of statements would be made on every occasion that Parliament was sitting. Occasionally, they would involve the Secretary of State in major issues. I come back to the Royal Mail as one of those. Junior Ministers, that was part of their job and their normal responsibilities.

Mr Stevens: The Inquiry heard evidence from Jo Swinson and that she was told that Post Office Limited had commissioned external lawyers to review past prosecutions following the Interim Report. Does that not make it a level of significance where past prosecutions by the corporation are being reviewed, where it’s so significant that you should have had sight of it, or been involved in it in some way?

Sir Martin Donnelly: In retrospect, obviously these were important moments. At the time, this was a standard Junior Minister reporting on an issue. The Shareholder Executive team did not flag this up, and I am sure in good faith, on the basis that they did not see anything substantively significant out of the normal process of a review being commissioned in an area and followed up, and so on, as happened in a lot of areas across our area of Government and more widely.

So it would have required someone to say, “This is actually significant for the following reasons”, otherwise it would have been a normal bit of Government business.

Mr Stevens: You say “with retrospect”. Trying to put yourself in the position at the time with what you knew then, is it not something you think you should have been informed of?

Sir Martin Donnelly: It’s difficult, knowing what we know now, to go back to then. All I would say is I had confidence in the teams dealing with these areas, and if their judgment – and they were closer to this than I was, and this wouldn’t just have been true of the Shareholder Executive, it would have been true elsewhere – unless I had some very powerful additional information which would mean that I felt I had a legitimate role in challenging what was going on, I would not do so, both because I didn’t think it would have been professional, and because it wasn’t possible across the range of the Department.

Now, our Legal Team could have picked up on something unusual, and didn’t, and of course lawyers would have been involved. In other areas, the Finance Team might have picked up on something. But I have to say that that would not have been close to being something that I would have been concerned about without additional input.

Mr Stevens: Can we look, please, at UKGI00001834. It’s an email from Tim McInnes at Shareholder Executive, 10 July 2013, so two days after the Interim Report is published and a day after Jo Swinson’s statement in Parliament. It’s to the private offices of the Secretary of State Sir Vince Cable and Jo Swinson. And in CC we see “perm sec, BIS.” Now, is that your private office?

Sir Martin Donnelly: Yes.

Mr Stevens: It says:

“Ahead of the meeting with Post Office tomorrow at 12.00, please see attached a briefing that covers some background to the session and highlights areas that Post Office management will be keen to cove off.”

So referring to a meeting between the Post Office, Secretary of State, and Jo Swinson. Is that something – is that the type of meeting you would have assisted the Secretary of State with?

Sir Martin Donnelly: No.

Mr Stevens: Why not?

Sir Martin Donnelly: Because it was a straightforward policy meeting with the Junior Minister and the Secretary of State dealing with several issues related to a specific organisation. There was no wider engagement of the Department, and it wouldn’t have been possible or arguably helpful for me to have attended all of the meetings that the Secretary of State held dealing with policy, because I didn’t have specific additional value to add.

This is how the system was supposed to work.

Mr Stevens: If you’d had – no, let me ask one question first. At this point, how much time was spent by you on the issues relating to cuts which you referred to earlier?

Sir Martin Donnelly: I think at that summer, a very large amount, including coming in at weekends and so on, because there was a difficult negotiation with the Treasury over how much capital and current spending we were likely to get, which meant that some of our programmes could not have continued if the initial figures we were given had been the final ones. So there was a very difficult complex negotiation at official level and at ministerial level to try to ensure that we could go on to functioning to do what we’d been asked to do, and that was taking up a lot of my time, yes.

Mr Stevens: Now, is it your evidence that you wouldn’t have been involved in these sorts of issues, even if you’d had the time, for example? So you didn’t have to deal with the cuts, this just isn’t the level of priority that you’re dealing with – or was it just because you didn’t have enough time to deal with it?

Sir Martin Donnelly: Essentially, as I’ve tried to set out in my evidence statement, my job with the Department as we had it was to ensure the systems and culture were in place to be effective and supportive, to give people the time and resources to do their jobs, and also to connect with the Secretary of State, with the Prime Minister, with a range of stakeholders, and manage key critical policy issues where additional input was needed because, for example, a critical industry might require additional emergency help, and that would involve the Treasury and 10 Downing Street and so on.

So for policy issues which ministers were being briefed on, and were engaging with, I would not normally have got involved because that wasn’t how the system was designed to work, given what we were trying to do, and it wouldn’t have been efficient for me to try to jump into issues I didn’t know much about or I knew less about than the people doing it the briefing, unless – and this is an important caveat, of course – there was some question over whether the briefing was correct or whether there had been an argument with the Minister, or whether there were wider implications, or whether 10 Downing Street were involved. Only if there was something else going on, and even then, my first port of call would always have been to the senior officials to say, “Are we happy with this? What’s happening? Have we thought about these options?”, you know, “Have you got it under control?”

Mr Stevens: The Inquiry has heard evidence about the Simon Clarke Advice of 15th July 2015, and you say in your statement that you didn’t see that at the time.

Sir Martin Donnelly: I have no recollection of that, no.

Mr Stevens: Have you read his advice as part of the documents that the Inquiry sent to you?

Sir Martin Donnelly: What was it on again?

Mr Stevens: If we can bring it up.

Sir Martin Donnelly: Yes, if you could.

Mr Stevens: It’s POL00006357. So it’s an “advice on the use of expert evidence relating to the integrity of the [it should say] Fujitsu Services Limited Horizon system.” And if we turn to page 13, we see “Conclusions”?

“What does this all mean? In short, it means Dr Jennings [that should be Gareth Jenkins, the expert witness used in the trial and who provided witness evidence] has not complied with his duties to the court, the prosecution or the defence. It is pertinent to recall the test under which a prosecution expert labours …”

And it goes on.

So Mr Clarke is advising, in his view, that Gareth Jenkins had breached expert duties. Have you read or are aware now of the content of that advice?

Sir Martin Donnelly: I am now aware of it, yes. I was not then.

Mr Stevens: That can come down.

The Inquiry will in due course determine who was aware of that advice at the time. Assuming – and this is assuming – that advice had made the way into the Department and an official had it in the Department, would you have expected, as Permanent Secretary, to be briefed on the contents of that advice or the gist of it?

Sir Martin Donnelly: I would have expected to have been briefed as the consequences of this became clear, yes, that actually, a large, potentially large, number of criminal cases – and I’m not a lawyer, so I may not use the terms accurately here – were completely unsafe and that nothing had been done about this. And indeed – and I would have been most concerned about this in addition, obviously, to the human implications – that there would have appeared to have been a cover-up in a public sector organisation of this type of material? I mean, that’s absolutely nuclear. How on earth could this have happened?

Mr Stevens: Just focusing on the content of the advice, if at the time that it had been provided to you and you were aware of Mr Clarke’s advice and his view that Mr Jenkins had breached expert duties to the court, what would you have done as Permanent Secretary, if anything?

Sir Martin Donnelly: Well, I would have wanted our departmental lawyers – and presumably the Shareholder Executive lawyers in the first instance – to get to grips with this and to make sure that those of us who weren’t lawyers fully understood the implications of what was being said here and, following on from that, how many cases were involved.

And I would have wanted the legal redress system to have worked immediately. My – probably – we are in a hypothetical territory here – but my responsibility and my main concern would then have been, assuming that was all going on as rapidly as possible, how on earth did this happen? And what does this tell us about the organisation we are dealing with?

And we have all these layers of management and boards and so on, and yet this could have been overlooked, hidden, whatever. It would have suggested to me that we had a massively dysfunctional organisation, and there would have been a lot of consequences to have been discussed, obviously with ministers as well, because rightly this would become a public scandal, as it should have, and we had responsibility for an organisation which was not anywhere near to fulfilling not just the Nolan Principles but normal, commercial behaviour.

So, you know, it’s – it would have absolutely been, you know, you ring the alarm bell and you start doing stuff about the organisation as well as the miscarriages of justice that may have arisen.

Mr Stevens: I want to move on slightly in the chronology and look at the sale of Royal Mail which you were involved with. To what extent, if at all, were you involved in matters such as the content of the prospectus of the Royal Mail sale – sorry, the IPO?

Sir Martin Donnelly: Not at all. That was not my area of expertise or responsibility. It was precisely what the Shareholder Executive was set up to do and bring in expertise as necessary.

My role, very clearly, was when they had done their jobs – and I remember having them in and saying, “You know, you do your work. Your job is not to sell the Royal Mail; it’s to let me know whether you think it’s value for money and what the evidence is. And if it isn’t value for money and we don’t sell it, then you’ve done your job all the same, so don’t push it in the wrong direction. You’ve got to be objective about this”.

But that was my job.

Mr Stevens: Did anyone raise with you, during the sale, or discuss with you, anything to do with Horizon claims or the Horizon IT System at all?

Sir Martin Donnelly: No, I have no recollection of that at all coming up.

Mr Stevens: Did you have to take – as part of your assessment as to whether it was value for money, et cetera, did you have to investigate or look at any of the due diligence in respect of the sale?

Sir Martin Donnelly: No, I expected all that to have been done by the Shareholder Executive. Again, it was their core activity and I had every reason to assume they would do it efficiently and no reason to assume that there was any question about it, not least because this was a commercial document.

Mr Stevens: Could we look, please, at – well, no first I want to turn to some meetings you had with Alice Perkins. Firstly, how often did you meet Alice Perkins in your role as Permanent Secretary?

Sir Martin Donnelly: So I think we have in the papers, pretty much all of them. I think it was about once a year. And I think on the first occasion it was with Paula Vennells, and that’s the only meeting with Paula Vennells that I can recall, and after that it was just with Alice Perkins.

Mr Stevens: When you met Alice Perkins, did she raise or discuss with you the role of the Shareholder Non-Executive Director?

Sir Martin Donnelly: I have a vague recollection of this from the first meeting, and I was briefed that she was not entirely happy with that. I knew both the Shareholder Executive and our ministers thought that it was the right thing to do and I quite wanted her to think that she was happy with it. I only had limited sympathy with her concerns, to be honest. I thought it wasn’t appropriate not to have a Shareholder Executive Non-Exec Director, but I don’t recall that there was a difficult discussion on it, in the meeting.

Mr Stevens: Do you recall what her reasons were? You say you weren’t impressed with them. What were they?

Sir Martin Donnelly: I don’t have a clear recollection, and so this may be from the briefing: that she, and perhaps some of the Post Office team, were worried there would be too much intervention in their day-to-day or operational business.

Mr Stevens: Did you have any discussion about the type of information that the Shareholder Executive Non-Executive Director could pass back to the Department?

Sir Martin Donnelly: No, it wasn’t that level of discussion. I know the Shareholder Executive did look at whether there were limited issues on which there might be a case for their non-exec director recusing him or herself, but that did not come up at my level. I expected it to be an additional level of transparency and connectivity with what was going on in the Post Office.

Mr Stevens: Could we look, please, at BEIS0000010. Thank you. So it’s a briefing from Peter Batten to you. Do you recall working with Peter Batten?

Sir Martin Donnelly: Not in detail, no.

Mr Stevens: So it’s for a meeting on 8 April and the recommendations summarise the point, the lines to take, and at the bottom it says:

“Note risks [on] the Valuation Office agency and Horizon Working Group.”

And then if we turn to page 3, please, we see it says:

“All in-branch transactions performed by subpostmasters and [Post Office] staff are recorded by [Post Office’s] accounting software, known as ‘Horizon’. Shortly after joining [Post Office] and in response to persistent grumblings by a small number of former subpostmasters, Alice commissioned a review of the integrity of the Horizon system. An independent report, published in July 2013 found that there were ‘no systemic’ issues with the software, but made recommendations about [Post Office’s] training and support processes.

“Following the report, [Post Office] has worked to establish a working group under an independent chair that has set up a mediation process for former subpostmasters who feel wronged by the Horizon system.”

Then it goes on to provide details of the working group.

Can you recall what you thought when you read that?

Sir Martin Donnelly: No. I did read it, and it was not the major point for the meeting – in fact, it was some way down the briefing – and, as far as I can remember, it did not come up.

The fact that I read it and didn’t feel there was anything requiring action for me was not surprising given what is said there. And I was equally concerned about the Valuation Office Agency risks mentioned, but these were points for me to note at that stage. There was no suggestion that I should raise them with Alice or that there were wider concerns.

Mr Stevens: Knowing what you know now, do you think that is a fair and full briefing?

Sir Martin Donnelly: No.

Mr Stevens: Would you have expected the briefing to include details of the review of past prosecutions?

Sir Martin Donnelly: There is this difference between knowing what we know now and knowing what the Shareholder Executive, in good faith, knew at the time, and I want to be clear about that. I’m sure they were writing this in good faith at the time.

It is one example of when more information could have been provided and the fact that it wasn’t reflected, I think, the Shareholder Executive’s view that this was not a major issue, particularly compared with the other ones, which they already mentioned, mutualisation and the change in status of various postmasters and the finances, all of which were very live, ongoing issues.

Mr Stevens: Do you think the language there, we see “and in response to persistent grumblings by a number of former subpostmasters”, is that the sort of language you would expect in a briefing describing the types of complaints that were being made through the Mediation Scheme?

Sir Martin Donnelly: I would say that it was not a fair description of what had been happening over so many years. In the context of just mentioning it briefly at the end of a brief for a meeting which was essentially for me to listen to Alice, and just have a bit of background, you know, it’s a sort of – I wouldn’t say it was a major failing but it could certainly have been put better, yes.

Mr Stevens: Can you assist with why it may have been put in that way?

Sir Martin Donnelly: No, except I assume – as I say, I’m sure the briefers were working in good faith, but this must have reflected their views at the time.

Mr Stevens: That can come down. Thank you.

If you’d been told at that point, prior to your briefing with Alice Perkins, that there had previously been a review of criminal convictions and that the CCRC, the Criminal Cases Review Commission, was in contact with Post Office, would it have changed your approach to the meeting with Alice Perkins?

Sir Martin Donnelly: The meeting with Alice Perkins was one of an annual series of, you know, “Let’s just touch base on how it’s all going, you can tell me anything on your mind.” It wasn’t an operational meeting in that sense. So I would have expected that to have been followed up in the first instance by the Shareholder Executive with the relevant parts of the Post Office.

If they had not been satisfied with the result, then they could have briefed me for that meeting to say something like, you know, “Be aware, we have an outstanding issue with the Post Office here where we’re not happy with what has been going on, and you ought to flag up our concerns, and this is what we plan to do next.”

Without that, it’s – it isn’t the sort of material or the sort of meeting in which I would have expected that issue to have come up, as it were, at that – just on those terms.

Mr Stevens: Could we look, please, at POL00116554. If we go down to the bottom of the page, please. This not an email you would have seen at the time. It’s internal to Post Office from Belinda Crowe to Martin Edwards on 12th May 2014. It says:

“As requested, please find below a note for Paula including recent activity, a timeline of upcoming events for the Scheme, a suggestion for the date of the next Board subcommittee in light of the above, and some suggested names of people for Paula to consider with whom she might discuss the Tony Hooper meeting.”

Referring there to Sir Anthony Hooper there, the Chair of the Working Group.

If we go over the page, please. Further down. It says:

“Discussion with an external sounding board ahead of meeting Tony Hooper.”

At number 4, your name. It says:

“At some point will need to engage with this issue and getting an early perspective/understanding may be a useful side effect.”

Were you ever approached by Paula Vennells or someone else at Post Office to discuss the Working Group or Sir Anthony Hooper?

Sir Martin Donnelly: No, not that I recall. No.

Mr Stevens: What we can see here is, internally within POL, the Post Office, sorry – the view that you’ll need to be engaged at some point. Was that ever made known to you?

Sir Martin Donnelly: No.

Mr Stevens: The Mediation Scheme itself and the proposed changes to it, and closing the Working Group, are those matters that you think should have been raised with you as Permanent Secretary?

Sir Martin Donnelly: Well, I think again there’s a distinction between what we know now and what we knew at the time. On the basis that this was a process being managed by the Post Office, supervised by the Shareholder Executive, ministers being kept informed, I can understand why it wasn’t highlighted to me.

Mr Stevens: Could we look, please, at WITN00800100. This is Mark Russell’s witness statement to the Inquiry. And page 6, paragraph 16, please. It says:

“The appointment of Shareholder Executive [Non-Executive Directors] complements but does not replace the primary points of departmental contact. In the case of [Post Office Limited], the key contacts were between the Post Office CEO and (i) the Minister, and (ii) the Permanent Secretary/Accounting Officer. Such meetings provide senior members of the Department with a direct line of sight into the ALB and are a key mechanism for reinforcing departmental objectives for the ALB.”

Do you agree with that?

Sir Martin Donnelly: Not in precisely those terms, no, because we had over 40 arm’s-length bodies of very different types with different challenges, and it was clearly not practical or, I would argue, desirable for there to be key contacts between those Chief Executives and me, as the Permanent Secretary, or my successors or predecessors, because it would not be a professional way of doing business.

I would interpret this as meaning officials reporting to the Permanent Secretary and of course, in this case, those officials were within the Shareholder Executive.

I can understand it in that perspective.

Mr Stevens: I think you said in your evidence earlier you met once with Paula Vennells?

Sir Martin Donnelly: Yes.

Mr Stevens: Did you ever discuss with Mr Russell your level of contact with Post Office directly?

Sir Martin Donnelly: No, because again, apart from the meetings I had with Alice Perkins, which I did not do with most of the chairs, the Post Office was obviously a larger and more significant organisation, and I thought that that was, therefore, appropriate, I would have done so had the Shareholder Executive wanted me to do so, and at no point did they say that they did.

Mr Stevens: Could we – I want to look now at how Shareholder Executive handled matters. If we could go still in Mark Russell’s statement, please, but go to paragraph 214, page 94.

Mr Russell says:

“When I did learn that Post Office was undertaking its own prosecutions I also took some comfort that, in spite of the [Post Office] led Prosecution Policy, the courts were making criminal convictions with the strict standard of proof that is applied, and that there had been few appeals. Wrongly, I did not consider the risk of unsafe convictions as a result of failings in the Horizon system to be significant, in large part because of the repeated and categorical assurances that [Post Office] had provided to [Shareholder Executive]/UKGI and others about the Horizon system.”

And then if we could look over the page at 217, please. It says:

“The strong assertions made to Ministers in submissions around the integrity of Horizon were wrong and make for uncomfortable reading now. At the very least, the submissions should have been clearer that the views were the views of [Post Office] and that they needed to be balanced by alternative points of view. The submissions may have led to Ministers being too cautious in their engagement on Horizon but, as mentioned above, their direct involvement and clear determination to pursue their own courses may not have meant that this advice had any particular impact or consequence.”

That can come down, thank you.

We have that. We also have, in Mr Callard’s evidence to the Inquiry, he accepted that he wasn’t curious enough, and showed undue deference to what the Post Office was telling him.

With reflection, do you think there’s anything the Department could have done, in terms of oversight of Shareholder Executive, to correct these issues that they identify: a lack of curiosity and not identifying the right issues at Post Office?

Sir Martin Donnelly: Again, I find this a difficult question to answer, which I have reflected on. The challenge of adding additional layers is if you do not have additional information on which to base your challenge, it can merely add bureaucracy and actually make it more difficult to get at the facts which is why, earlier on, I mentioned that I thought if we’d had more resource, having more resource at expert level connected with the detail and following it up was perhaps one of the areas where this did not work. It also did not work through various levels of management and it did not work through the Post Office Board.

The difficulty I have is that inside the business department as it was and, you know, one of the consequences of the range of responsibilities was that I was perhaps, you know, submerged in managing all of this all the time. I wasn’t as out there in the wider world as I might have been. But it’s very difficult to see how you manage a structure which isn’t getting the information it needs if no one is challenging at the basis of the information provision, because the problem of having an extra layer or an extra set of questions is we would have received the same answers that ministers got.

The truth is that we did not, inside the Department, manage to pick up on what was going on inside the Post Office in these areas, and that is a matter of huge regret and had awful consequences over very many years.

But I– the people involved at senior levels, I have said in my statement, and I believe, were competent and professional. I do not see any lack of that in terms of the people who were making those decisions. So it’s not clear to me that adding another level would necessarily have produced a different result.

And I come back to this problem of how do you deal with a department which is not – I’m sorry, with an organisation like the Post Office, which is not following the standards of honesty and integrity, at least in these issues, which you tend to rely on and you’re not really resourced to second-guess?

Now, you know, I don’t think that’s a good enough excuse for what happened, but I think it is what happened.

Mr Stevens: The Inquiry has heard evidence from Richard Callard and he – there’s an email we can go to – he received something called the Deloitte report, which – in fact, let’s bring that up, please. It’s POL00028069. You say in your evidence that you didn’t receive this document at the time. Are you now aware of it, or its –

Sir Martin Donnelly: I’m aware of it in outline. I haven’t read it in detail.

Mr Stevens: So there were initial findings made on Fujitsu’s ability to access remotely branch account data; are you aware of that?

Sir Martin Donnelly: Yes.

Mr Stevens: And this was sent to Richard Callard by email. And if it wasn’t raised, do you think this document should have been raised with you or raised within the Department?

Sir Martin Donnelly: Well, knowing what we know now, it definitely should have been raised further within, first of all, the Shareholder Executive and then, I would hope, more widely. Because the question I draw from this – and it’s for you and the Inquiry to decide, of course – is that at what stage did all of these different pieces of evidence amount to, “Really, we’ve got this wrong, the scales have shifted”, and why did we not pick that up?

And I think that is the challenge which bothers me most about the professionalism of how we handled this. There were too many occasions where something else came in, but it was never connected properly, it wasn’t raised, the Post Office were of course just sticking to various positions that they held, and we didn’t ever get to the stage inside the organisation of saying, you know, “We’ve really got to not just talk about having a zero-based review or an independent review; we’ve got to get right to the bottom of this and take as much time and spend as much money as is needed.”

Mr Stevens: That can come down. Thank you.

Part of your evidence is that there is a lack of information flowing from Post Office to the Department. The point you’ve just made there is, within the Department itself, connecting the dots and acting on it, on the information it had, on reflection, having heard what you heard, can you assist us in any way by way of recommendations as to how, if it was done again, the Department could have put those things together and could have acted differently?

Sir Martin Donnelly: I wish I could come up with an easy answer to that question. It looks to me, knowing what we know now, and having read everything that I’ve read and, you know, the great work that went on to right this injustice, that one of the problems was that it had lasted so long. So there was never a moment when people went back to the beginning and said, “But hold on, you know, there’s always been issues here” and they then just got used to accepting the assurances that were being given.

And, of course, then there were a series of reviews, and so on and everyone said, “Well, we’re looking into this” or whatever. But we didn’t step back and say, “But fundamentally, you know, either the people raising all these issues over all these years are, you know, dishonest or completely deluded, or there’s something here we haven’t got to” and we relied too much on the Post Office to do it. And inside the Department, this was one of our silos and it didn’t get out of that.

So I struggle to see how we could have better picked that up. Obviously people could have performed, and should have performed, better at various times in various ways. In the overall structures? I think I’d come back to we should have had more people in detail marking the Post Office and accepting that that was against all of the movement towards arm’s-length bodies, commercial responsibility, avoiding micromanagement. And we should have said this is too important to leave it to the organisation, as long and in as many ways as has happened.

Mr Stevens: I want to look at one last topic, please. It’s late 2015 now. Could we look at UKGI00017443. Can we look at page 3, please.

So this is from Mark Russell, the Shareholder Executive, to other Shareholder Executive officials. It says:

“Some negative feedback from BNR” – I take that to be Baroness Neville-Rolfe – “on ShEx, I’m afraid, in accordance with GIB and PO [Post Office]. Came through Martin.”

Would that be you?

Sir Martin Donnelly: Yes.

Mr Stevens: Can you recall what Baroness Neville-Rolfe said to you or emailed you?

Sir Martin Donnelly: Not in detail. This was – it was not unusual for me to chat to Junior Ministers about how things were going over a cup of tea and particularly with a new group, as we had after the election. It was also not unusual for officials to come to me and say, you know, “We’re having a bit of an issue with Minister X on this”, and I would see what I could do to ensure that the system worked better, taking, you know, both sides’ legitimate concerns into account.

On this occasion, Baroness Neville-Rolfe, who was a very experienced Minister and had a lot of commercial experience, raised these issues with me and, as far as I can recall – because, you know, it was something I did as part of my normal job. I spoke, either that day or the next – probably the next morning – to Mark, and I made, I think, the points that he has accurately put down there. I passed them on and I didn’t hear any more. So, as in other such cases, I assumed that action had been taken, communication properly restored, and things were going on in a satisfactory way.

Mr Stevens: This was at the time when Baroness Neville-Rolfe had asked Tim Parker to commission or carry out an independent review, and at this point Jonathan Swift QC, as he then was, was reviewing the situation. If we go to page 2, please, at the bottom. We see Richard Callard’s email in response, it says:

“Marvellous. Yes, [we] can give you a full briefing. The problem is we cannot deliver what she wants (a green locked GIB, and a Post Office without a perceived but non-existent IT problem).”

We know, of course, that it wasn’t simply a perceived IT problem.

Sir Martin Donnelly: No.

Mr Stevens: Was it the case that Baroness Neville-Rolfe had raised with you concerns about Shareholder Executive’s handling of the Horizon issues?

Sir Martin Donnelly: I cannot recall in detail. I do think that the previous email’s account was accurate. I think she did say that there were they were too technocratic and they weren’t aware of the politics around some of these Post Office issues. I can’t remember whether she specifically mentioned Horizon or not.

Mr Stevens: You said that you – I think you said you left it after this and didn’t do anything further?

Sir Martin Donnelly: Well, I did what she asked me to and I– what I said I would do, which was to raise it with Shareholder Executive, with Mark as the head of the Shareholder Executive, pass on the concerns, and then it was up to him to follow up, and there was follow-up, and I did not hear any more from the Minister.

Mr Stevens: But in your role as Permanent Secretary, did you – was it not incumbent on you to see that the concerns had been addressed and follow up on them?

Sir Martin Donnelly: Well, insofar as I can recall, Mark said that he would follow this up, and he did. And, as with other such issues, I did not hear any more of a problem, so I assumed that it was being managed.

Mr Stevens: Could we look, please, at UKGI00006366. If we go to page 3, please. It’s an email from the then Secretary of State, Sajid Javid’s private office, regarding the restatement of accounts – so it’s the issue we discovered earlier – and reporting what the Secretary of State wanted from it.

We see your private office is in copy. So presumably this – these emails would have been raised with you, given you were hands-on, as it were, on this issue?

Sir Martin Donnelly: Yes, I’m sure I saw this, and I think I may have written something about the restatement of accounts point. I certainly followed up with our own finance people and with the Shareholder Executive, and made clear my annoyance of what had happened, and desire to ensure it wasn’t going to happen again, which was the other key point.

Mr Stevens: And so this is December 2015, so the next month on from the last email we saw. If we go to page 1, please, further up the chain. It’s an email from Baroness Neville-Rolfe’s private office. Again, we see you’re in copy or your private office is in copy but, again, it’s likely you would have seen this because you were involved with the issue? Would you agree?

Sir Martin Donnelly: Probably.

Mr Stevens: And what is reported from Baroness Neville-Rolfe to have said is:

“These are very disappointing developments on top of earlier difficulties in the Post Office with the Horizon IT system. The good news is that we have a new chairman – Tim Parker and two new non-execs – Carla Stent and Ken McCall. Carla Stent will chair the Audit, Risk and Compliance Committee and Ken McCall, the Senior Independent Director. Tim is working on these issues with their management and I have discussed the matter with Mark Russell who is engaged with this issue. I will be kept informed on matters progressing.”

So it’s evident that Baroness Neville-Rolfe is still concerned about the Horizon issues?

Sir Martin Donnelly: And she is taking it forward in a way which she finds satisfactory, and that was positive.

Mr Stevens: Why, at this stage, did you not seek to follow up on it when it had been raised by a Junior Minister as a matter of importance?

Sir Martin Donnelly: Because I had already followed up on it with Mark Russell. What we see here is what is now happening, and the fact that there was the new corporate governance level, and that Mark and team were engaged, and that the Minister notes that. So that is what the system is meant to be doing, and so now this takes place.

So from my point of view, that’s what should be happening, and it is happening.

Mr Stevens: So from your perspective, within the Department, it’s being handled by the relevant body, Shareholder Executive, and that’s the Department functioning properly?

Sir Martin Donnelly: Correct.

Mr Stevens: That can come down.

I have a couple of questions on just your reflections generally. The Inquiry has heard evidence recommending that ministers should have express powers to involve themselves in decision making in arm’s-length bodies. What do you say to that?

Sir Martin Donnelly: That’s quite a sweeping comment. I think essentially ministers always did have power. They could, for example, have said to a chief executive or a chair – and occasionally this happened across Government, I believe – you know, “You know longer have my confidence” in which case it would have been impossible for the person to carry on.

I think the point is perhaps a slightly more nuanced one. It’s how easy was it for ministers to engage on issues below that rather excessively dramatic, you know, risk to the Board, resigning, or whatever, level.

And in my experience, ministers did, as they should have been allowed to, ask probing questions, expect to get responses from the relevant organisations, not just the Post Office, but more widely, and where these issues were politically sensitive or raised other issues, they could be very forensic and concrete.

So I’m not sure myself there is an issue about a lack of power, though it perhaps would be better to be explicit about that, but in my experience, ministers did think, and did behave, as though they had access to the organisation, and could query its decisions.

Mr Stevens: The Inquiry has heard evidence about the use of risk registers, both at the corporate level with Post Office, and in Shareholder Executive, and indeed you’ve said in your witness evidence, with the Department. And my understanding from your evidence is the Department risk register didn’t refer to the Horizon issues as a risk?

Sir Martin Donnelly: No, it was much higher level. So if you look at one of the report and accounts, you can see the sort of risks, because we write them in the report. They were things like the 2020 change programme, the 30 per cent cuts, apprenticeship targets, higher education funding and accountability, Student Loans Company, capacity, partner board appointments. It was those sorts of level of issue, and those are all set out in the accounts.

Mr Stevens: On reflection, do you think there’s any changes you could – sorry, I’ll restart that.

Do you think there’s any changes or any benefit in amending or changing the way in which risks are identified and reported within the Department?

Sir Martin Donnelly: Well, the risk registers, as I think others have said, are basically a management tool, and there were plenty of risk registers at a devolved level, inside the Shareholder Executive, in other parts of the Department, so that those devolved levels of responsibility were working with the more granular risks. I don’t think that there is a particular solution to having a huge risk register. In my experience that doesn’t work well. The challenge, is, once you’ve identified risks at different levels, you know, well, how are you dealing with them and how do you use that to produce a more effective outcome?

Mr Stevens: And finally, you’ve referred in your statement to a suggestion of implementing the Nolan Principles into Post Office, or a similar public corporation. How do you think that would have helped in this situation?

Sir Martin Donnelly: Well, I put it there just as an example of perhaps being explicit, but the problem I have personally with that is it shouldn’t be necessary to say that. Public servants understand, those of us who join the public sector do so on the basis we want to work ethically and effectively. So I think it’s perhaps useful to remind people of them, but, you know, signing up shouldn’t make a difference because it ought to be implicit in everything everyone does. And obviously, you know, we’re all imperfect and we don’t manage to do it as well as we should, but it’s just a core responsibility of anybody working in public services.

Mr Stevens: Those are all the questions.

Sir, I think there are questions from Core Participants: yes, from Hudgells and from HJA as well. Do you have any questions before I hand over to the floor?

Sir Wyn Williams: Oh no, let the Core Participants go.

Questioned by Ms Page.

Ms Page: Sir Martin, I’m acting on behalf of a group of subpostmasters, and I want to talk about a very important year for the Horizon scandal, 2013. And in that summer, just for context, we have both the Second Sight Report being published and also the Clarke Advice that you’ve looked at earlier, and that you pointed out would have been nuclear, if it had come to your Department and been dealt with as it should have been.

Also important in that year was the Network Transformation Programme, and Post Office was securing 640 million over a three-year period. That’s right, isn’t it? You were kept abreast of that, weren’t you?

Sir Martin Donnelly: In broad terms, yes. I don’t recall the precise figure.

Ms Page: And it was all part of trying to keep 11,500 branches going. Again, you may not remember the figure, but that was part of the overall package, wasn’t it?

Well, in April of that year, internal documents show that the Post Office was looking at making a change in direction for the Network Transformation Programme, which is perhaps emblematic of the Post Office attitude towards subpostmasters, because they were going to move from a voluntary process to a compulsory process whereby they compelled subpostmasters to move their branches into the Network Transformation Programme. And internal documents made free use of that word “compulsion”.

This was an issue not least because ministers in your Department had already publicly committed to the process being voluntary. And in light of what came up in the Common Issues trial about the relationship between Post Office and subpostmasters, would you agree this rather goes to the heart of the way that the Post Office behaved towards subpostmasters, this attitude of compulsion?

Sir Martin Donnelly: Well, I read one of the documents just recently which referred to that, I think it was a PR document, and I found the tone distasteful, frankly. I – beyond that, I was aware that this was an important issue politically for ministers, and I didn’t know that the Post Office was talking to itself in those terms.

Ms Page: Shall we look at that document, because I suspect I know which one you’re talking about?

Sir Martin Donnelly: Yeah.

Ms Page: It’s POL00027540. And if we could go, please, to page 33. This is an annex to a document that was presented to the Board by their Communications Director called Mark Davies, and I see you’re nodding so I think we’re on the right document?

Sir Martin Donnelly: Yes.

Ms Page: And Mark Davies presented the paper to the Board saying, “Well, we want to move to compulsion and we need to know how we’re going to deal with that from a communications point of view.”

And what we see here is his annex A, the first paragraph:

“The following script seeks to set out how we could try to sell compulsion to ministers, with a view to how they might sell it on to other elements of government, Parliament, and the media.”

And so clearly that’s quite direct at the start there, isn’t it, suggesting that this is about selling compulsion?

Sir Martin Donnelly: (Witness nodded)

Ms Page: It’s a frank introduction, isn’t it, shall we say?

Sir Martin Donnelly: Well, as I say, I didn’t find the tone or frankly the content of this piece particularly impressive.

Ms Page: Well, if we just go down, we can see that there’s a contrast, isn’t there, between the language of the introduction and then if we go down to the paragraph “it means continuing”, this is the script that he wants to sell:

“It means continuing the existing network transformation plan which has so far introduced whatever number of new Post Offices with longer opening hours, modern environments, but introducing a planned approach which will mean that new models will be introduced alongside compensation for existing subpostmasters who leave the business.”

This is the way he wants to dress up the compulsion; is that fair?

Sir Martin Donnelly: Well, my concern with this was simply that ministers’ decisions were respected and that the process worked professionally and loyally to do that. So as I say, when I read this document, I was very unimpressed.

Ms Page: Yes, because in fact, in Annex D, we don’t necessarily need to go to it, page 37, Mr Davies actually sets out all those occasions when the ministers committed to a voluntary process. So in other words, this is a script that he seeks to suggest Post Office can sell to the ministers, sell to the Department, to change ministers’ policies and to change the stance that they’ve taken publicly.

It looks, doesn’t it, as if he wanted to keep the compulsion element covert?

Sir Martin Donnelly: Well, I think it’s difficult for me to comment on an internal PR Post Office document. As I say, my concern was to ensure that ministers absolutely that the information they needed and then the decisions they took on this and other key issues were respected, and, you know, I would expect the Post Office to respect them in spirit, as well as in letter.

Ms Page: When we look at page 39, we see that you’re actually named as one of the people that he seeks to engage in his delivery of this strategic plan. He says:

“In addition to regular meetings with day-to-day Shareholder Executive contacts a series of meetings with key BIS officials are taking place over the coming weeks: they include Howard Orme, Mark Russell, Anthony Odgers and Martin Donnelly.”

Do you sort of recognise this script or this mechanism that he sought to try to use to sell compulsion?

Sir Martin Donnelly: No, I do not, and I don’t recall having any such meeting. I’m also aware, as I mentioned briefly, that this was a time when there was a massive amount of engagement in how the Department’s finances were going, which was taking up a lot of my time.

Ms Page: In this effort to apparently use you and your team and your ministers to carry out this sort of rather covert move to compulsion, looking back, knowing everything that we know that the Post Office was doing covertly in 2013 around Second Sight, around Horizon, what was going on internally with the Clarke Advice, do you think that this shows the way that Post Office was operating? It was using whatever levers it had in Government to advance a covert agenda.

Sir Martin Donnelly: I’m not sure I in all honesty could go that far. And the Post Office obviously had the right to give their views to ministers, but I would reiterate that this does sound unpleasantly manipulative and it’s not how I think you deal with arguments. You put them in a straightforward way to people and let them respond.

Ms Page: Thank you. Those are my questions.

Sir Wyn Williams: Thank you Ms Page. Next?

Questioned by Ms Patrick

Ms Patrick: Thank you, sir.

Sir Martin, my name is Angela Patrick. I represent, with Mr Moloney KC, a number of subpostmasters who were convicted and have since had their convictions quashed, including Mrs Hamilton and Mr Trousdale, you can see near me. I want to ask you about one issue.

We have looked just now at 2013, I want to go back to 2014 and ask you about one document. Have you seen the slide deck that the Inquiry has been looking at with a number of witnesses which was produced by the Department and of ShEx to discuss that Mrs Vennells was thought not to be capable of remaining in post in 2014?

Sir Martin Donnelly: I did not see it at the time.

Ms Patrick: No, I appreciate that. I’m just working on a shorthand so we can save bringing the document up. Everybody is familiar with it.

Sir Martin Donnelly: Yes.

Ms Patrick: If you remember, it was a PowerPoint presentation where there was a conversation about remove, retain, or retain and review.

Now you’ve just said that wasn’t a document that was escalated up to you at the time, and you’re nodding. You have to say “yes” or “no” for the transcriber.

Sir Martin Donnelly: That is correct, in my recollection.

Ms Patrick: Thank you. And that was dated February 2014, take it from me.

Now at that point, February 2014, Post Office has separated from Royal Mail and of course that was an issue that had touched your desk.

Sir Martin Donnelly: Yes.

Ms Patrick: The flotation. And Post Office continued on, of course, with the major public subsidy, with an aim that the subsidy would be reduced and mutualisation was the goal. And again, you’re nodding, Sir Martin?

Sir Martin Donnelly: I would just say that was, I believe, Government policy at the time.

Ms Patrick: Indeed, indeed.

Sir Martin Donnelly: Yes.

Ms Patrick: Now, Ms Vennells at that time is responsible for a partner organisation, albeit a public corporation, which was politically and socially important, and dependent on a substantial Government subsidy; is that fair?

Sir Martin Donnelly: Yes.

Ms Patrick: Whether that subsidy was in safe hands and whether the Post Office would ever be in a position to operate without public support, an important policy issue with the public purse, wasn’t it?

Sir Martin Donnelly: Yes, and for the provision of service.

Ms Patrick: Now, ought that discussion, prompted by somebody under a ShEx or a Department umbrella, ought that discussion or the concern that she was simply not up to the job to have been put on your radar?

Sir Martin Donnelly: I think it was important that the Shareholder Executive did their job for the Post Office as for other organisations, which they were sponsoring –

Ms Patrick: Can I just stop you, Sir Martin. It’s a simple question. Ought it to have been put on your radar that someone under a ShEx or a departmental banner, thought that Ms Vennells might not be up to the job?

Sir Martin Donnelly: So the point I was going to make – let me start at the other end. If they had thought the answer was yes, definitely. The idea that they were reviewing, not necessarily.

Ms Patrick: Okay. So it’s a conversation that’s going on at a time when the business is newly separated from Royal Mail, with the associated political significance of that process. Ought that political significance ought to have been part of the consideration as to whether, if there was a doubt or certainty, that question mark over Ms Vennells ought to have been escalated up for your consideration?

Sir Martin Donnelly: It depends how big the question mark was, honestly –

Ms Patrick: Okay.

Sir Martin Donnelly: – and what the alternatives were. I would have been interested to have known that. I, having seen the document, I accepted that the Shareholder Executive would have thought: well this is our job, this is what we do. We review people. We decide whether they’re up to it or whether we get anybody better or what we can do in the middle. And since they decided not to pursue that, I can see why they didn’t tell me, though I would have been, as I say, interested to know, because it’s a very important job.

Ms Patrick: Okay. And of course you’ve talked about the judgment and the fact that you were leaving judgment to these officials.

Now this is a conversation that’s occurring at a time when Parliamentarians and the press are asking serious questions as to whether the Post Office have wrongly prosecuted its own people for years. It’s an issue that was being investigated by the Post Office at a significant and considerable cost to the public purse. Was that an issue that ought to have factored into the judgment as to whether that doubt over Ms Vennells’ capabilities ought to have been escalated up to you?

Sir Martin Donnelly: I find that difficult to answer, because the Shareholder Executive needed to look at, in the round, how the Post Office was being run, and how far the relatively new Chief Executive was on top of the job, and they had – or they should have had – access to all of the evidence, including the importance of the job, required to make that judgment. And they were experienced people, and would not, honestly, at the time, have second-guessed their judgment without additional information.

But the fact that they were concerned is something I would actually have liked to have known.

Ms Patrick: Okay. Now Ms Perkins, who was in the chair at the time, has been asked about this document, and she says that she wasn’t aware of this discussion.

Now, professional, senior people at ShEx who you thought could be responsible for their job, would you have expected them to have raised these concerns with the Chair?

Sir Martin Donnelly: Yes.

Ms Patrick: Okay. Ms Perkins also said at the time that, although the discussion wasn’t raised with her – that’s her evidence – that she also had doubts, including as to Ms Vennells’ personal grip on the Horizon issue. We’ve discussed some of your meetings with Ms Perkins, including that you were having a meeting in April 2014, some time after this discussion. We’ve seen the briefing note. As an aside, can you remember if Ms Perkins raised any of her personal concerns about Ms Vennells’ capabilities in that April meeting?

Sir Martin Donnelly: It was 10 years ago, but I am pretty confident that, had she done so, I would have remembered, because that is a significant issue. And in terms of the levels of control of the Post Office, the first level was the Board. And so obviously, the Chair of the Board’s view, you know, what’s communicated or not communicated, is very, very important.

Ms Patrick: But as far as you can recall, neither ShEx nor the Chair raised these concerns with you?

Sir Martin Donnelly: No.

Ms Patrick: And your view is that that really isn’t something that ought to have been on your radar?

Sir Martin Donnelly: The fact that ShEx concluded that they should stick with the Chief Executive meant that, in a sense, there wasn’t anything changing. I would have appreciated, in retrospect, knowing that they’d had that question mark. And I am surprised that they didn’t contact the Chair of the Board on that issue, given the Chair’s important role in supervising, really, the Chief Executive.

Ms Patrick: And in 2015 when a question mark is raised by the Minister, Baroness Neville-Rolfe, with you as to whether ShEx is really doing its job properly, whether it’s politically aware enough of the sensitivities around the Post Office, at no point in that conversation did anyone say, “Hang on a minute, last year we were talking about whether Paula was up to the job”?

Sir Martin Donnelly: No.

Ms Patrick: Thank you. Those are all the questions that I have.

Sir Wyn Williams: Thank you.

Mr Stevens: Thank you, sir.

I think that’s everyone, so we break until Tuesday morning.

Sir Wyn Williams: Right.

Well, Sir Martin, I am very grateful to you for fielding all those questions this afternoon, and for providing a witness statement. And as was pointed out to you, it was the first time that we’d heard from a Permanent Secretary, so thank you for that part of your witness statement which educates me about the role of a Permanent Secretary.

Right. We’ll resume again on Tuesday, as you suggest, Mr Stevens.

Mr Stevens: Thank you, sir.

(4.22 pm)

(the hearing adjourned until Tuesday, 1st October 2024)