Official hearing page

4 October 2024 – Rachel Scarrabelotti and Veronica Branton

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(9.59 am)

Ms Hodge: Good morning, sir. Can you see and hear us?

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

Ms Hodge: Thank you. Our first witness today is Rachel Scarrabelotti. Please could the witness be sworn.

Rachel Scarrabelotti

RACHEL SCARRABELOTTI (sworn).

Questioned by Ms Hodge

Ms Hodge: Please give your full name.

Rachel Scarrabelotti: Rachel Scarrabelotti.

Ms Hodge: Ms Scarrabelotti, you’ve provided six statements to the Inquiry?

Rachel Scarrabelotti: Yes.

Ms Hodge: The first five of which are corporate statements, which you’ve provided in your capacity as Company Secretary of Post Office Limited; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: In your sixth statement to the Inquiry, you’ve given responses to questions directed to you personally, concerning matters which have arisen during your employment as Company Secretary; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: My questions for you today will be focused upon your sixth witness statement but, before we begin examining your evidence, there are some formalities we need to go through to confirm that the contents of your statements are all true and whether you wish to make any corrections; is that clear?

Rachel Scarrabelotti: Yes.

Ms Hodge: Thank you. I propose to deal with your statements in date order, which takes them slightly out of sequence. Can we begin, please, with your second statement to the Inquiry that’s dated 16 February 2024.

That statement bears the reference WITN11120200. Do you have a copy of that statement?

Rachel Scarrabelotti: Yes, I do thank you.

Ms Hodge: It should run to 40 pages. Could I ask you, please, to turn to page 36; do you see your signature there?

Rachel Scarrabelotti: Yes, I do.

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

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Thank you. Turning then to what’s described as your first statement, that one is dated 20 February, so post-dates your second statement, and it bears the reference WITN11120100. Do you have a copy of that statement in front of you?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: Thank you. That statement runs to 63 pages. Can I ask you, please, to turn to page 50?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you see your signature there?

Rachel Scarrabelotti: Yes.

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

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Thank you. Your third statement then, please, bears the reference WITN11120300, it’s dated 13 March 2024. Do you have that in front of you?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: That runs to 93 pages but includes a lengthy exhibit. Can I ask you please to turn to page 15 of that statement?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you see your signature there?

Rachel Scarrabelotti: Yes, I do.

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

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Thank you. Your fourth statement, please, bears the reference WITN11120400, it’s dated 28 March this year and runs to 50 pages; do you have that in front of you?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: Can I ask you, please, to turn to page 33.

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you see your signature there?

Rachel Scarrabelotti: Yes, I do.

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

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Next your fifth statement, please, dated 19 July 2024. It bears the reference WITN11120500.

Rachel Scarrabelotti: Mm-hm.

Ms Hodge: It’s three pages in length, containing a correction to your second witness statement. At page 3, please, do you see your signature?

Rachel Scarrabelotti: Yes, I do.

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

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Thank you. Finally, then, dealing with your sixth statement to the Inquiry, dated 29 August 2024, have you got a copy of that statement in front of you?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: That runs to 85 pages. Can I ask you, please, to turn to page 83?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you see your signature there?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: I understand there are some corrections that you wish to make in relation to this statement; is that correct?

Rachel Scarrabelotti: Yes, please.

Ms Hodge: So firstly at paragraph 44(c) on page 29; do you have that before you?

Rachel Scarrabelotti: Yes, I do.

Ms Hodge: At the end of the second line, it reads:

“This is an Executive-level committee …”

So this a reference to the Historical Remediation Unit.

Rachel Scarrabelotti: Yes.

Ms Hodge: You describe it as:

“… an Executive-level committee charged with operational responsibility for the delivery of remediation matters.”

Is it correct that it is, in fact, a business unit, rather than an Executive-level committee.

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: Therefore, you would like that to be amended to reflect the correct position?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Then at paragraph 86, please, on page 56 of your statement, you date the review carried out by Ernst & Young of the Post Office’s whistleblowing policies as 1 June 2023; should that, in fact, read 26 April 2023?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Thank you. Finally, at paragraph 113 on page 68, you refer to the Post Office’s Group Legal Policy, which you say there has previously been disclosed to the Inquiry. Is it, in fact, right that the policy had not been disclosed as at the date on which you signed your statement?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: It has now been disclosed –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and it bears a reference POL00460567; is that correct?

Rachel Scarrabelotti: Yes, that’s correct.

Ms Hodge: Thank you. Subject to the corrections which you’ve just made, is the content of your sixth statement, dated 29 August this year, true to the best of your knowledge and belief?

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Thank you. You are currently employed as the Company Secretary of Post Office Limited; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: Before we examine your role as Company Secretary, I want to ask you some brief questions about your background, please. You studied law and were later admitted as a barrister to the Supreme Court of Queensland, the Federal Court of Australia and the High Court of Australia in 2002; is that correct?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: The following year, you were admitted as a solicitor to the Supreme Court of Queensland and the Australian Capital Territory; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You spent your early legal career working in corporate real estate and real estate investment management in both Brisbane, Australia, and in London; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: In 2011, you were appointed Senior Legal Counsel and Company Secretary in the investment arm of the construction and real estate business conducted by Lendlease; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You transferred to the company’s London office in early 2018 to become Legal Counsel and Company Secretary for the Europe, Middle East and Africa region; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: In that role you oversaw the corporate governance arrangements of approximately 260 subsidiary companies; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: You later qualified as a chartered secretary and governance professional with the Chartered Governance Institute UK & Ireland in 2022?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Was that before or after you joined the Post Office as Company Secretary?

Rachel Scarrabelotti: That was before.

Ms Hodge: So turning then to your role as Company Secretary of Post Office.

Rachel Scarrabelotti: Yes.

Ms Hodge: You joined the Post Office in March 2022; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: But you weren’t formerly admitted or appointed into the role of Company Secretary until April; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You explain in your statement that part of your role as Company Secretary is to provide independent advice to the Board on corporate governance matters; is that right?

Rachel Scarrabelotti: That’s correct, yes.

Ms Hodge: In your role as Company Secretary, you report to the General Counsel of the Post Office; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Do you think that reporting to the General Counsel affects your ability to provide independent advice to the Post Office Board?

Rachel Scarrabelotti: No.

Ms Hodge: Why is that?

Rachel Scarrabelotti: I suppose whilst my reporting line is through to the General Counsel, I am ultimately accountable to the Chair and to the Board, so I don’t feel that my independence is at all compromised by virtue of my reporting line.

Ms Hodge: Thank you. Could I ask you please to just speak a little louder. I think, like me, you’re quite softly spoken – I understand if you sit in between them. That’s meant to be optimal.

Rachel Scarrabelotti: Thank you.

Ms Hodge: I’d like to ask you some questions now about your training and induction into the role of Company Secretary. In your statement, you explained you had a handover meeting with your predecessor –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and that she supplied you with some handover notes; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Is it right that you did not take part in any formal induction programme and you were not provided with any specific induction materials?

Rachel Scarrabelotti: Yes, so nothing – certainly nothing specific.

Ms Hodge: You undertook some general training applicable to all new entrants; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: As well as a series of training courses addressing a range of topics, such as money laundering, data protection, bribery and whistleblowing; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: What was your perception as the time you joined as to the adequacy of your training and induction?

Rachel Scarrabelotti: I mean, it was very minimal, what I received, and it did make it more difficult to get to grips with my role in good time. Yeah, it made it harder to do the role.

Ms Hodge: Forgive me, can you elaborate a little: in what sense did it make if more difficult for you?

Rachel Scarrabelotti: Well, I think as Company Secretary you need a deep understanding of the key issues that are facing the company and I think, if you’re briefed very specifically on those issues, then that helps you to navigate those, you know, with greater ease.

Ms Hodge: So is it the case that you ended up learning on your feet –

Rachel Scarrabelotti: Yes, very much.

Ms Hodge: – of these issues in the role –

Rachel Scarrabelotti: Yes.

Ms Hodge: – that you’d taken on. Did you raise any concerns at the time about the quality and scope of the training and induction which you’d received?

Rachel Scarrabelotti: No.

Ms Hodge: What changes do you think need to be made to improve that situation?

Rachel Scarrabelotti: I think for anyone coming in to the Company Secretarial Team or the Executive Team or the company generally, I think that they need to be briefed very specifically on, you know, on the main issues that are of relevance, you know, to the company.

Ms Hodge: In your role now, what do you consider to be the main issues affecting the company?

Rachel Scarrabelotti: Well, it’s probably all of the issues that go to our core priorities. So our core priorities are transforming technology, rebuilding trust and improving branch technology, so I think if people understand the different issues sitting behind each of those priorities, and how they can align their efforts with those priorities, I think that would be very insightful.

Ms Hodge: Forgive me, I think there’s still some difficulty in hearing your –

Rachel Scarrabelotti: Sorry, I’ll try to be – sorry. Pardon me. Yeah.

Ms Hodge: Thank you. In your role as Company Secretary, you received requests for matters to be raised with and/or discussed at meetings of the Board; is that correct?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: You then decide first whether the matter is sufficiently important to warrant being considered by the Board; is that correct?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: Secondly, if the matter does justify the Board’s time, whether it should be dealt with by way of an oral presentation or simply as a noting paper; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Can you please describe the criteria you use to determine which matters go to the Board and which should be decided in other groups or committees?

Rachel Scarrabelotti: Well, it’s probably looking at the matters reserved for the Board document, which demarcates very clearly where different items need to come to the Board for decision, and then it sets out which matters are delegated to subsidiary boards or which matters are delegated to committees of the Board, and then it also sets out which matters are delegated to the Executive, so I’ll probably use that – you know, as my starting point.

Ms Hodge: From there?

Rachel Scarrabelotti: From there, I guess, if there’s, you know, there can be matters where it’s less clear. For example, where the financial delegation to the Executive – you know, a matter could be within that but, because of the risk profile associated with the item, it would still be something that you would want to come to Board. So it’s looking at it through that additional lens as well.

Ms Hodge: In your statement, you characterise your approach in this way, you say:

“While I am required to exercise a degree of judgement in relation to the strategic importance of potential matters when initially deciding on their inclusion, I generally adopt an overinclusive approach and err on the side of caution.”

Is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: One of the issues you identify in your statement concerning the governance of the Post Office relates to the length of the Board papers and their focus on operational matters; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: What do you consider to be the underlying cause or causes of that issue?

Rachel Scarrabelotti: Sorry, that the Board papers are?

Ms Hodge: Their length and their focus on operational matters?

Rachel Scarrabelotti: I think that people can treat the Board sometimes as a confessional, so thinking that, if they bring all the information that they have to Board and tell the Board everything, that it will somehow alleviate them of their responsibility.

Ms Hodge: What are the consequences, do you think, from a governance perspective, of the Board being overburdened with the detail of operational matters?

Rachel Scarrabelotti: I think that it blurs lines of accountability. I think that respect, perhaps, is lost for the Board because they’re associated with operational matters, which are for the Executive, and that the Board ultimately doesn’t get to fulfil their proper function and be the Board.

Ms Hodge: Do you think that your own approach of being overinclusive in relation to the Board agenda items might be contributing to that problem?

Rachel Scarrabelotti: Possibly but I would say that we do go through an exercise with the – it was the CEO, now it’s the Acting CEO and Chief of Staff, where we do look to whittle down, you know, the first agenda that I – you know, the draft agenda that I prepare and, you know, we need to make some tough decisions about what actually does go to the Board. And, you know, matters too can be deferred to later agendas. So yeah, I don’t think it’s – I don’t think it does contribute.

Ms Hodge: You’ve described there a process of consultation –

Rachel Scarrabelotti: Yes.

Ms Hodge: – with some of the senior executives of the company. Does it follow that decisions as to precisely what goes to the Board doesn’t rest solely on your shoulders?

Rachel Scarrabelotti: That’s right. So the – as I say, the acting CEO and Chief of Staff will have a look initially at the proposed draft agenda. They will have insights as to, you know, what’s happening in the business and whether or not certain matters are actually ready to come. So, you know, there will be some reduction to the agenda through that process and the draft agenda also goes to the Strategic Executive Group, who are given an opportunity to comment, to, you know, feed in and their comments, yeah, are taken on board, certainly not just me devising the agenda.

And then, ultimately, I send the agenda to the Chair as well, and the Chair themselves needs to be happy and content with what’s proposed – or perhaps it’s just content – with what is proposed to come to the Board.

Ms Hodge: Thank you.

What, if any, changes have been implemented to address the problem you described about the length of Board papers and their focus on operational matters?

Rachel Scarrabelotti: So since the Interim Chair joined, we’ve brought in new restrictions on paper length to try to ensure that papers are more strategically focused, so they’re more pithy, more punchy and, you know, so paper authors – you know, you don’t have a lot of opportunity, I guess. You’ve got to get in there in the paper pretty quick smart, advise, you know, what you want, why you want it, and get out.

So I think, you know, that’s helping: having a more restricted paper length. That’s – yeah, that’s probably one of the main changes.

Ms Hodge: Thank you, I’d like to move on to a new topic, please, concerning your knowledge of the Horizon IT system?

Rachel Scarrabelotti: Yes.

Ms Hodge: Prior to joining the Post Office you had some awareness, you say, of the issues relating to Horizon from information reported in the media; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: Since you joined the Post Office in March 2020, you say you’ve complete a short training session relating to the outcome of the Group Litigation; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: You’ve also reviewed materials submitted to the Board in Executive meetings relating to Horizon and, in particular, the programme to replace it; is that correct?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: In your statement you say that you’ve developed some understanding of the Horizon IT system from reading those materials; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: Please can we take a brief look at what you say on this topic at paragraph 8 of your statement. This is statement number 6, WITN11120600 at page 4, please. Thank you. If we could scroll down, please, to paragraph 8. Thank you. So five lines down you say this:

“From the materials I have reviewed, my understanding is that whilst there have been different versions of Horizon provided since it was first introduced, the Horizon IT system is considered to be aged and difficult to update in the case of new products.”

Just pausing there, from where within the Post Office do you understand this information about Horizon to originate?

Rachel Scarrabelotti: Sort of in relation to it being aged and difficult to update, well, probably from the IT function, yeah.

Ms Hodge: What have you gleaned from reading the materials submitted to the Board and the Strategic Executive Group about the reliability of the current version of Horizon?

Rachel Scarrabelotti: I understand that it is thought to be reasonably reliable.

Ms Hodge: You go on to say in your statement:

“I have also attended employee sessions introducing NBIT, which have highlighted to me the more labour-intensive nature of the Horizon IT system for postmasters, for example, in terms of the training required and transaction times, along with difficulties for postmasters in extracting transaction data from Horizon.”

The Inquiry has heard evidence about the significant challenges which have beset the New Branch IT programme. What is your view, as Company Secretary, as to the adequacy of reporting to the Board on the problems which have been experienced with that programme?

Rachel Scarrabelotti: So I understand that the problems are in relation to delays, problems in relation to costs and then also problems in relation to the numbers of defects, so bugs, errors, defects in the system. So sort of, as a pretty much a standing agenda item, pretty much since I joined Post Office, on the Board agenda would be an update on the progress of the NBIT SPM programme. So, I mean, it’s very difficult to say. I mean, you know, we sort of rely very much on the Executive to be bringing forward, you know, programme reports, but the Board, yeah, absolutely, has been periodically regularly updated on the programme by the Executive.

Ms Hodge: Do you consider that the updates the Board has received have been both accurate and timely in relation to those problems which you’ve described?

Rachel Scarrabelotti: I don’t think so, to be honest.

Ms Hodge: So I’m going to move on, please to the cultural attitudes within the Post Office to postmasters. In your statement you describe the many initiatives which have been launched to bring about cultural change within the Post Office.

Rachel Scarrabelotti: Yes.

Ms Hodge: These include the establishment of an Improvement Delivery Group –

Rachel Scarrabelotti: Yes.

Ms Hodge: – the creation of an ethos programme –

Rachel Scarrabelotti: Yes.

Ms Hodge: – the establishment of a dedicated committee and unit to deal with remediation issues –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and the creation of a new Postmaster Director role within the Executive Team of the Post Office?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: There are more but those are perhaps some of the major initiatives that have been undertaken; is that fair?

Rachel Scarrabelotti: Yes, that’s fair.

Ms Hodge: Would it be fair to say that you don’t believe these initiatives have been entirely successful in bringing about the cultural change which is needed within the Post Office?

Rachel Scarrabelotti: Yes, I think that’s fair.

Ms Hodge: You identify in your statement a number of factors which you believe have impeded the progress of cultural change. I wonder if we could look, please, at paragraph 50 of your statement, where you set out some of these factors. That’s at page 37, please.

So one of the first factors you identify is the impact of the Covid-19 pandemic and the result this had, initially requiring individuals to work from home and subsequently the less frequent attendance in the office; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: Secondly, you refer here to the large number of fixed-term contract employees within the Post Office, working both within the Remediation Unit and in the delivery of the NBIT programme?

Rachel Scarrabelotti: Yes.

Ms Hodge: Finally, you say this, please, so this is four lines up from the bottom:

“Another consideration is whether the above activities to drive cultural change have been as effective as possible, particularly having regard to the long tenure of some [Post Office] employees, who may have held certain views for an extended period of time.”

I’d like to ask you some questions about that final comment, please. The Inquiry has heard evidence from two Postmaster Non-Executive Directors that there’s a prevailing attitude within the Post Office that postmasters are guilty and “on the take”. Are those the types of views to which you are referring here?

Rachel Scarrabelotti: Yes, I think my point there was just to say that, you know, where there have been employees who have served in the business perhaps for a number of years and were previously part of the Royal Mail Group, joined Post Office, have remained with Post Office post-separation, that perhaps, culturally, they’re in a different place to others at Post Office.

Ms Hodge: What exactly do you mean when you say that they’re in a different place?

Rachel Scarrabelotti: In terms of their attitudes towards postmasters.

Ms Hodge: As to their guilt?

Rachel Scarrabelotti: I think as to their honesty, yes.

Ms Hodge: As to their honest and their integrity?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you consider that these views remain prevalent within a particular area of the business or are widespread across the Post Office?

Rachel Scarrabelotti: I don’t think that they’re widespread or prevalent, but I think my point here was just to say, given the long serving tenure of certain employees, you know, that it can be difficult to achieve cultural change in those circumstances.

Ms Hodge: You’ve referred in your statement to an Engagement Survey which was undertaken with Post Office employees earlier this year.

Rachel Scarrabelotti: Yes.

Ms Hodge: I’d like to ask you about one of the themes which emerged from the survey please?

Rachel Scarrabelotti: Yes.

Ms Hodge: That bears a reference POL00446681. Please can that be shown on the screen. If we could turn, please, to the second page, we can see there a high level summary of the themes which emerged from the responses to that survey. Under number 3, please, it reads:

“Poor communication is driving a lack of confidence in Post Office and senior management from other colleagues.

“This is directly impacting their sense of pride and belief in Post Office. This appears to be exacerbated at present because Post Office’s communications are driven, and controlled, by the external narrative.”

What do you understand, please, by that final reference to the Post Office’s communications being driven and controlled by an external narrative?

Rachel Scarrabelotti: I think the point there is that there’s been a few unfortunate incidents where the media has reported on different circumstances arising at Post Office, and the reporting has taken place ahead of employee colleagues being advised. So I think that does make it very, very difficult.

Ms Hodge: Is the phrase “external narrative” one which is, to your knowledge, widely used within the Post Office; is it something with which you’re familiar as a term?

Rachel Scarrabelotti: No, I don’t – I’m not particularly familiar with that phase.

Ms Hodge: Could it be referring, do you think, to the external pressure to exonerate and compensate postmasters who were held liable for shortfalls shown by Horizon?

Rachel Scarrabelotti: Possibly.

Ms Hodge: Does this theme demonstrate, do you think, that there are many within the Post Office who disagree with that narrative, that is to say that pressure to exonerate and compensate postmasters?

Rachel Scarrabelotti: I don’t think that that’s true.

Ms Hodge: One of the issues on which the Inquiry has heard evidence already in this phase concerns the suitability of certain Post Office employees to hold roles within the Remediation Unit –

Rachel Scarrabelotti: Yes.

Ms Hodge: – due to their historic involvement, for example, in the conduct of audits and investigations.

Rachel Scarrabelotti: (The witness nodded)

Ms Hodge: Were you aware of the concerns expressed by the Postmaster Non-Executive Directors earlier this year about the progress being made to address the potential conflicts of interest within that unit?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you consider that the senior Executive Team has given that issue sufficient prominence and priority in light of the ongoing cultural problems which exist within the organisation?

Rachel Scarrabelotti: I think in recent times they have, yes.

Ms Hodge: By “recent times” you mean?

Rachel Scarrabelotti: Probably over the course of this year.

Ms Hodge: From a governance perspective, do you consider that this is an issue on which the Board of the Post Office should have greater oversight and input than it currently does?

Rachel Scarrabelotti: I think that they’ve had a reasonable amount of oversight. You know, the matter – Past Roles Review/Project Phoenix has come to the Board absolutely periodically. I think the Board are probably due for another comprehensive update around this time.

Ms Hodge: The Board is due an update?

Rachel Scarrabelotti: Yes.

Ms Hodge: Thank you. I’d like to move on to a new topic, please, concerning the culture and composition of the Post Office Board –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and the Senior Executive Team. You’ve explained in your statement that it’s difficult to identify a discernible culture within the Post Office Board due to the high turnover of directors in recent years; is that right?

Rachel Scarrabelotti: That’s right.

Ms Hodge: One concern you raise in your statement relates to the diversity of Board members?

Rachel Scarrabelotti: Yes.

Ms Hodge: In what respects do you consider the diversity of the Post Office Board could be improved?

Rachel Scarrabelotti: Well, definitely gender diversity. So, currently, we have two female directors which is sort of, you know, tracking sort of well below, you know, generally accepted percentages for, you know, the composition of boards as to gender. I think, in terms of ethnic diversity as well, we could improve there. You know, the Board should, you know, be reflective of our main stakeholders, so customers, postmasters. Possibly, we could have greater diversity of age as well.

Ms Hodge: In his evidence to the Inquiry, Mr Staunton, the former Chair of the Post Office Board, expressed his concern about the retention of talented women in senior roles within the Post Office; is that a concern which you share?

Rachel Scarrabelotti: Sorry, could you repeat the question?

Ms Hodge: Yes, so the statement was this initially: in his evidence to the Inquiry, Mr Staunton, the former Chair of the Post Office, expressed some concern about the retention of talented women in senior roles within the Post Office. My question to you is: is that a concern which you share?

Rachel Scarrabelotti: Yes, it is.

Ms Hodge: Why is that?

Rachel Scarrabelotti: I suppose at Board level – so, unfortunately, we had our three female directors all leave in reasonably quick succession in 2023; and, on the Senior Executive Group, unfortunately we had only one female member for quite a long period, that was the CPO; and, currently, the Strategic Executive Group is better balanced by way of gender but it is absolutely a concern having gender diversity in those top forums.

Ms Hodge: What do you understand to be the underlying causes of the problem in retaining talented women in senior roles?

Rachel Scarrabelotti: At the Post Office?

Ms Hodge: At the Post Office?

Rachel Scarrabelotti: Post Office, it’s not an easy place to work. It’s very, very stressful. I suppose at the Strategic Executive Group level, you know, previously walking into a room full of men, I mean, that can be very intimidating, but I think it’s just the general pressures of working at Post Office. That’s, you know, not attractive.

Ms Hodge: In your statement, you say that the decision to appoint two Postmaster Non-Executive Directors was part of an effort to build a culture of inclusion for postmasters at the Post Office Board level; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: You acknowledge that this change has brought certain benefits to the Board including a greater insight into the issues and concerns affecting postmasters; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: Would it, nonetheless, be fair to say that it’s brought some challenges, as well, from a governance perspective?

Rachel Scarrabelotti: Yes, I think that’s fair.

Ms Hodge: What do you consider those challenges to be?

Rachel Scarrabelotti: Probably navigating through conflicts of interest for the Postmaster Directors because, obviously, being postmasters, we have to be very careful of personal conflict matters. I think we’ve had issues in terms of – the Postmaster Directors are incredible with their operational knowledge and, you know, their know-how, their abilities, amazing, but the Board is not charged with responsibility for day-to-day operational matters. That’s with the Executive. So we have to be very careful that the Board doesn’t stray into matters for the Executive.

Ms Hodge: You referred to conflicts of interest. I think in your statement you described it as a potential lack of alignment between the needs and desires of postmasters and the wider interests of the business and its shareholders; is that fair?

Rachel Scarrabelotti: Um –

Ms Hodge: Or would you say that is yet another issue –

Rachel Scarrabelotti: Yes.

Ms Hodge: – a separate issue?

Rachel Scarrabelotti: I think what I was trying to get at there was, you know, directors’ duties. So, obviously, the Postmaster Non-Executive Directors, as directors of the company, are subject to the same duties as all of the other directors, which is to, you know, act in the best interests of the company, having regard to a number of different matters, including, you know, stakeholders, but ultimately acting for the benefit of the shareholder. So, to me, that seems – you know, it doesn’t necessarily align always with what is in the best interests of postmasters.

Ms Hodge: Where specifically do you see the areas of conflict?

Rachel Scarrabelotti: Is it conflict or non-alignment?

Ms Hodge: Well, lack of alignment.

Rachel Scarrabelotti: Lack of alignment. Well, I suppose, you know, if you just go to, you know, a basic issue such as postmaster remuneration, you know, the company is cash constrained, directors, unfortunately, have had to consider wrongful trading issues, you know, very recently and make some very, very tough decisions around how our finite funds are spent. So, you know, whilst I think, you know, yeah, everyone would love to improve postmaster remuneration, at the same time, you know, the Board are thinking of, you know, wrongful trading issues.

So it’s marrying up, you know, keeping the company alive and floating as against, you know, sort of the stark reality of postmasters’, you know, remuneration remaining, you know, very flat.

Ms Hodge: You’ve suggested in your statement that there might be better ways in which to bring the voice of the postmasters into the Post Office; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: One of the options which you mention is the appointment of more postmaster representatives within the Executive Team of the Post Office?

Rachel Scarrabelotti: Yes.

Ms Hodge: What do you consider to be the advantages of that approach?

Rachel Scarrabelotti: Well, I think, as I mentioned before, I mean, our Postmaster Non-Executive Directors have demonstrated their – you know, their operational expertise, the Executive is charged with day-to-day responsibility for operational matters. So, to my mind it’s a matter of harnessing the – you know, the best knowledge that the postmasters have and incorporating them within the most – you know, perhaps the forum where they can achieve the most, which would be, you know, potentially by having more postmasters at the Executive level.

Ms Hodge: Another possibility which you mention in your statement is the mutualisation of the Post Office.

Rachel Scarrabelotti: Yes.

Ms Hodge: What do you consider to be the potential advantages of adopting that approach to ownership and governance of the company?

Rachel Scarrabelotti: Okay, I’m not an expert in mutuals or cooperatives. But, to my mind, the benefit would be that the ultimate shareholding would be with postmasters and potentially employees of the company. So when directors are fulfilling their duties and acting in the best interests of the company, but for the benefit of the shareholder, that shareholder would be postmasters.

Ms Hodge: Is there potential, do you think, for a lack of alignment between the interests of postmasters and Post Office employees, assuming that ownership is shared between those two different groups?

Rachel Scarrabelotti: Potentially, but my experience of working at Post Office is that the people who, you know, have joined, you know, particularly recently are very much attracted and choose very, very specifically to come work for the Post Office because they believe in, you know, the Post Office as – you know, the institution of the Post Office. So they’re very, very particularly attracted to work for the company for, you know, that reason.

Ms Hodge: Does it follow that they, in your view, have a more positive attitude towards postmasters?

Rachel Scarrabelotti: Yes.

Ms Hodge: I’d like to ask you some questions now about the internal investigation into one of the Postmaster Non-Executive Directors, Mr Jacobs.

Rachel Scarrabelotti: Yes.

Ms Hodge: When did you first become aware that an internal investigation was being launched into Mr Jacobs’ branch accounting?

Rachel Scarrabelotti: I think it was in September ‘22.

Ms Hodge: Who brought the matter to your attention?

Rachel Scarrabelotti: Nick Read.

Ms Hodge: What was your reaction on being told that a member of the Post Office Board was being investigated for apparent shortfalls in his branch accounts?

Rachel Scarrabelotti: I was concerned.

Ms Hodge: Why is that?

Rachel Scarrabelotti: Well, I was concerned from probably a company secretarial perspective, thinking through to our annual report and accounts and different potential disclosures that might need to be made. I was thinking of different Board meetings where branch discrepancies and the approach to those had been discussed and whether or not there was a conflict point there that had been missed, potentially. And, you know, I was concerned for Elliot, as well.

Ms Hodge: What action did you take when you were notified that an investigation into Mr Jacobs had commenced?

Rachel Scarrabelotti: So my first action after Mr Read told me about the issue was to let my line manager know, the then – our current General Counsel, and my proposal was to check some of the data points that I had available to me to see if they could put any illumination, you know, onto the issue. The General Counsel advised me that Mr Read should, you know, take – or should look to transfer this matter potentially into an investigation, and that’s then what happened.

Ms Hodge: Sorry, just to explore with you, then, the reporting of this issue.

Rachel Scarrabelotti: Yes.

Ms Hodge: You say that the CEO, Mr Read, reported the matter to you and that you reported it on to General Counsel, Mr Foat?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Why is it, do you know, that the matter came first to Mr Read as CEO, rather than Mr Foat as General Counsel, who had overall oversight and responsibility for internal investigations?

Rachel Scarrabelotti: Well, I guess, you know, an issue of this sort, I don’t think that it would be unusual for it to be notified to the CEO.

Ms Hodge: So you brought it to the attention of Mr Foat.

Rachel Scarrabelotti: Yes, I did.

Ms Hodge: It was his direction, was it, that an internal investigation be launched?

Rachel Scarrabelotti: That was his suggestion as to the approach, yes.

Sir Wyn Williams: I’m sorry, can I just interrupt, I’m not sure I’ve got this straight. When Mr Read notified you that – I’ll use the neutral word – “something” was happening in relation to Mr Elliot (sic), was there, by that time, in your view, a formal investigation occurring or was it simply that people in the Investigation Department were in discussion with Mr Elliot?

Rachel Scarrabelotti: Sir, so at the time that Mr Read spoke to me, I understand that there was no investigation going on and that the Investigations Unit had not been advised at that time.

Sir Wyn Williams: So Mr Read was effectively notifying you that obviously someone must have alerted him to the possibility of an investigation; is that a fair way of putting it?

Rachel Scarrabelotti: (The witness nodded)

Sir Wyn Williams: What I can’t quite grasp at the moment is what was said to Mr Read. Now, I appreciate you don’t know that but, from your understanding, what was it that Mr Read was communicating to you?

Rachel Scarrabelotti: Mr Read was communicating to me that there was a potential issue.

Sir Wyn Williams: Right. Someone must have told him that.

Rachel Scarrabelotti: Yes.

Sir Wyn Williams: He wouldn’t know that without – yeah.

Rachel Scarrabelotti: Yes, absolutely.

Sir Wyn Williams: So what I’m trying to get to the bottom of: was this coming to Mr Read, so far as you can tell, from some kind of not formal investigation but something that the investigating department had been doing, or was it unrelated to the Investigating Department?

Rachel Scarrabelotti: Yes, my understanding was it was unrelated to the Investigating Department.

Sir Wyn Williams: All right, okay. Fine. Sorry. So then the steps occurred as you’ve described: Mr Read to you; you to Mr Foat; and Mr Foat deciding that there’d better be an investigation?

Rachel Scarrabelotti: Yes, that’s right, sir.

Sir Wyn Williams: Yes, all right. Fine.

Ms Hodge: Thank you. I wonder if we could pull up, please, an email which you wrote to the then Chair, Mr Staunton, in late February 2023. It’s POL00448679, please. If we scroll down, please, to the top of page 2, thank you, we can see there an email you’ve addressed to Mr Staunton on 28 February 2023, copying in Mr Read, Mr Foat, Mr Patel and Mr Tidswell, the subject being the Postmaster Non-Executive Director matter.

Forgive me, that’s the bottom of page 1. Can we go down to the top of page 2, please. Thank you. So what we saw just there was Mr Staunton’s response. This is your email of the same date, 28 February, addressed to Mr Staunton, Mr Read, Mr Foat, Mr Patel and Mr Tidswell. It reads:

“Hi Henry,

“I hope you’ve arrived back safe and sound.

“I understand you have been advised previously of the investigation into apparent shortfalls in branches held by Elliot Jacobs. By way of reminder …”

Then you provide a brief overview of the investigation. So it reads:

“[Mr Jacobs] owns a business, Universal Office Equipment, which runs seven premises containing post offices;

“Since early 2019, UOE has accumulated shortfalls in the operation of its post office business;

“Prior to [Mr Jacobs] becoming a [Non-Executive Director] he repaid some of the shortfall but since becoming a [Director], he has not engaged with the repayment process nor challenged the shortfalls;

“Each month the [Post Office] team responsible for recovering agreed shortfalls has sent [Mr Jacobs] a statement showing the outstanding amounts;

“Training has been offered but not taken up;

“The uncontested shortfall now sits around £213,000.”

I’m just pausing there. Given that shortfalls had reportedly been accumulating since early 2019, what do you understand to have been the trigger for the reporting of this issue, that is to say a shortfall in his accounts to Mr Read?

Rachel Scarrabelotti: I think perhaps it was that repayment had been made previously, however it had stopped, and it had stopped following the time when Elliot joined the Board. So I think perhaps it was that that then prompted Mr Read being advised, and I think it was that – you know, concerns that Elliot was not engaging with the support centre in respect of the alleged shortfalls.

Ms Hodge: Was there a concern, do you think, that Mr Jacobs was abusing his position as a director to avoid making repayments of accounting shortfalls?

Rachel Scarrabelotti: I don’t know.

Ms Hodge: The email goes on to say:

“[Mr Jacobs] is in the process of seeking to take on a further two post office premises …”

It then says, “CIU”. That’s a reference to the Central Investigations Unit; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: “… is investigating under Project Venus [firstly] whether [Mr Jacobs] should have declared his shortfalls in the process of becoming a [Director]; [secondly] the extent of the shortfalls; [and thirdly] whether [Mr Jacobs] declared a conflict during Board meetings where recoveries from postmasters was discussed.”

So that latter one being a concern which you have addressed already in your evidence today, the potential for a conflict to have arisen and not been declared.

Rachel Scarrabelotti: Yes.

Ms Hodge: The final bullet point reads:

“Branch assurance are to visit all seven of [Mr Jacobs’] locations to settle a full cash and stock position in mid-April 2023.”

That suggests, does it not, that no audit had yet been undertaken of Mr Jacobs’ seven branches.

Rachel Scarrabelotti: Yes, I think that’s right.

Ms Hodge: It must follow, does it not, that the estimated figure of £213,000 had, therefore, been based upon the data shown on Horizon; is that consistent with your understanding?

Rachel Scarrabelotti: I mean, I’m not sure how that figure was built up.

Ms Hodge: Did you give any thought at the time as to whether it was appropriate for the Post Office to launch a formal investigation in a one of its Board members, based on accounting data shown by Horizon?

Rachel Scarrabelotti: I mean, I think it was very difficult but I think the Board were very concerned to ensure that, you know, the postmaster policies were applied equally to our Postmaster Non-Executive Directors. Sorry, could you repeat the question again?

Ms Hodge: Yes, sorry. My question was whether you gave any thought at the time as to whether it was appropriate for the Post Office to launch an investigation into one of its Board members, based – and this is an assumption – but assuming it was based solely on evidence – on data shown on Horizon, rather than actual audit itself of the branch accounts?

Rachel Scarrabelotti: I don’t think I can say.

Ms Hodge: The email goes on to say this:

“Nick Read, Ben Foat and I would like to see you, tomorrow if possible, to request that you consider meeting with Elliot to discuss this matter, particularly ahead of the next Board meeting. In terms of your meeting with Elliot, we suggest the following points are covered …”

You go on to identify there potential areas of conflict arising from this outstanding shortfall and the Board’s treatment of recoveries of accounting shortfalls, and you make number of proposals to Mr Staunton as to how to manage those conflicts. If we could scroll down, please, to the top of page 3 – thank you – we see a further list of bullet points and it’s here that you explain really how the process is going to proceed. You say this:

“As with other shortfall matters, Branch Assurance visits will take place, scheduled for April, to determine a stock and cash position.

“After that, the team will then seek to discuss with [Mr Jacobs] this position.

“Once the investigation [presumably ‘is completed’ it should say] the Chair and [Mr Jacobs] can discuss a way forward …”

You say this:

“It would be a positive step for [Mr Jacobs] to re-engage with the Postmaster Account Support Team …”

Can you explain what the role and function of that team is, please?

Rachel Scarrabelotti: So I think that team is responsible for liaising with postmasters where there are branch discrepancies reported.

Ms Hodge: When you say “liaising” it’s described as a support team. What’s the nature of their role and function in that process?

Rachel Scarrabelotti: I think it’s to – you know, to work through, you know, whatever the issue is. So to, if there is an alleged, you know, shortfall, to work with them, you know, to break it down, you know, to understand, you know, the nature of the shortfall, to test it, and to, you know, try to determine if there was actually a shortfall.

Ms Hodge: So would it be right to say that the role of that team is part of the investigative function; it’s not there to provide what might be thought as some form of support to the postmaster, pastoral or otherwise, in the investigation?

Rachel Scarrabelotti: They’re not – my understanding is that team is not part of the investigation – investigative unit.

Ms Hodge: So what role then does it play in the investigation? What you’ve described is it’s there to get to look into and get to the bottom of the cause of the discrepancy?

Rachel Scarrabelotti: Yes.

Ms Hodge: Is that on behalf of the postmaster, rather than on behalf of the Post Office?

Rachel Scarrabelotti: I think it’s both.

Ms Hodge: Your email goes on to say:

“It would be really helpful to have [Mr Jacobs’] view as to why the shortfalls have spiked recently – (either now if he has a view and freely offers it, ordering the investigative meeting post-branch visits) …”

You say:

“If Elliot asks about the post-Branch Visit investigative meeting, the CIU team will write to Elliot in advance, explaining what they propose to discuss, what the purpose is, and to advise that he can bring a friend to that meeting or an NFSP rep or even a legal rep if he would like. It is not an under-caution interview and we are not conducting a criminal investigation. We are looking to understand why these shortfalls occurred and what can be done to rectify the position in terms of understanding and perhaps provision of training to his staff …”

If we control back up to the top of the document, please – thank you – we can see there was a plan for you, Mr Read and Mr Foat to meet with Mr Staunton the following day.

Rachel Scarrabelotti: Yes.

Ms Hodge: Did that meeting take place?

Rachel Scarrabelotti: Yes, it did.

Ms Hodge: How did Mr Staunton react when you told him that Mr Elliot (sic) was being investigated for accounting shortfalls?

Rachel Scarrabelotti: I think he was concerned but I think he was also – I wouldn’t say relaxed but, you know, he appreciated that a process would be gone through.

Ms Hodge: Did Mr Staunton ask you for any advice about the propriety of the Post Office carrying out such an investigation into one of its Board members?

Rachel Scarrabelotti: No.

Ms Hodge: Did you offer any advice or support to Mr Jacobs in your capacity as Company Secretary?

Rachel Scarrabelotti: I don’t recall that I did, no.

Ms Hodge: Do you think that you should have?

Rachel Scarrabelotti: Potentially, yes.

Ms Hodge: The Inquiry has heard evidence from Mr Jacobs about the considerable distress which this investigation caused him.

Rachel Scarrabelotti: Yes.

Ms Hodge: Did you listen to Mr Jacobs’ evidence to the Inquiry last week?

Rachel Scarrabelotti: Yes, I did.

Ms Hodge: You offer some reflections in your statement as to what might have gone wrong in the conduct of this particular investigation.

Rachel Scarrabelotti: Yes.

Ms Hodge: Can we take a brief look at what you say, please, at paragraph 118 of your statement on page 71. That’s your sixth statement, please, WITN11120600. Thank you. You say this:

“In hindsight, while it was certainly important to ensure that there was no appearance of bias or special treatment, in my view perhaps further thought could have been given as to whether sufficient support was extended to Mr Jacobs during the investigation process.”

Who, in your view, was responsible for ensuring that Mr Jacobs was suitably supported through that process?

Rachel Scarrabelotti: Probably – as we’ve just said, probably myself; perhaps the Senior Independent Director as well.

Ms Hodge: You go on to say this:

“This is especially given the events that have occurred in [Post Office’s] recent past regarding its investigation processes.”

You then say:

“Moreover, the fact that Mr Jacobs did not necessarily come from a professional services background, and therefore may not have had the same degree of experience as other [Post Office] Board members in dealing with some of the matters which I understand were raised during the investigation, could also have been taken into consideration.”

You make reference there to some of the matters that were raised during the investigation. What specifically are you referring to here, please?

Rachel Scarrabelotti: So referring to the allegations that I understand were put to Elliot in respect of failure to declare a conflict at the Board meetings where branch discrepancies were being – and the approach to branch discrepancies were being considered by the Board; and the other allegation that Mr Jacobs, Elliot, hadn’t properly completed a directors’ emoluments form.

Ms Hodge: Why do you think his experience might have been different, had he had a professional services background, as you say?

Rachel Scarrabelotti: Well, something like a directors’ emoluments form, if you’re a portfolio director or you’re a senior lawyer or a senior accountant, you know, you would probably approach that form on a very different knowledge basis, as opposed to, you know, to Elliot, so, you know, a businessman, a retailer, an entrepreneur.

Ms Hodge: In your statement, you suggest this may be a learning issue in terms of the quality of the induction and training that Mr Jacobs received upon his appointment; is that fair?

Rachel Scarrabelotti: Yes, that’s fair.

Ms Hodge: Do you think there’s any merit in the suggestion that the CIU was heavy handed in its conduct and handling of this investigation?

Rachel Scarrabelotti: I mean, I’m not sure, to be honest but, given the reflections that Elliot shared with Board, he had found it a – you know, a very, very unpleasant experience.

Ms Hodge: Thank you, sir.

That brings me to the end of that topic rather than launching into my next topic, which is likely to take a bit longer, I wonder if now would be a convenient time to take our morning break?

Sir Wyn Williams: It would be but can I just ask one or two further questions about this issue.

When he gave evidence, if my recollection is correct, Mr Elliot (sic) was obviously upset about the process involving the – I’ll call it an interview. There’s some debate about how it was to be described, but the interview which took place between the investigators and himself, all right?

Rachel Scarrabelotti: Yes.

Sir Wyn Williams: But he also went on to say that, following that interview, he then dealt with a different team and the whole issue was dealt much more as a business issue, as opposed to an investigation issue, all right?

Am I right in thinking that, if we go back to the email that you wrote, that the unit – I’ve forgotten the name, sorry, without the email in front of me, but Mr Elliot did begin to engage, however it came about, not with investigators but with the branch support people that you had mentioned in your email. Have I got that right?

Rachel Scarrabelotti: Yes, I think Mr – Elliot had engaged initially with the branch support people, sir.

Sir Wyn Williams: Yes. Well, anyway, I’m giving you that by way of background. I wanted to ask you simply: do you know why Mr Foat thought it appropriate to –

Oh, it’s up now. Next page, I think. Never mind, forget that.

Do you know why Mr Foat thought it appropriate to have an investigation, as opposed to treating it, as Mr Elliot thought was appropriate, as a business issue to be discussed? I’m not here talking about the conflict part of this; I’m talking about the apparent shortfall part of this, all right?

Rachel Scarrabelotti: No, sir, I’m not sure as to why this was tipped in to being an investigation, as opposed to being dealt with by – you know, with the Branch Support Team, for example.

Sir Wyn Williams: As between Mr Foat and yourself, it was simply you reporting Mr Read’s report to you, and Mr Foat himself deciding it should be an investigation?

Rachel Scarrabelotti: Yes.

Sir Wyn Williams: Right. Thanks.

Now we can have our break, Ms Hodge. What time shall we start again?

Ms Hodge: Thank you, sir. If we perhaps resume at 11.25, please.

Sir Wyn Williams: Fine.

(11.07 am)

(A short break)

(11.25 pm)

Ms Hodge: Good morning, sir. Can you see and hear us?

Sir Wyn Williams: Yes, thank you.

Ms Hodge: Thank you.

I’d like to move now, Ms Scarrabelotti, to a new topic, please, concerning the Board’s oversight of the Post Office’s policy of passing information to the police to assist in the conduct of criminal investigations and any subsequent prosecutions.

What were you told, upon joining the Post Office in March 2022, about the company’s approach to the conduct of criminal investigations and prosecutions?

Rachel Scarrabelotti: In respect of prosecutions, that the company was, and had not for a number of years, carried out any prosecutions, and, in relation to the conduct of criminal investigations, I understand, at the time that I joined, the Central Investigations Unit, was being sort of, you know, recruited for and brought together to set up a new business unit internally to deal with investigations.

Ms Hodge: Do you recall when it was first proposed that a change be made to the company’s policy governing the provision of evidence to the police in the support of a criminal investigation?

Rachel Scarrabelotti: I think this was in October 2023, when a paper came to the Board, and I think the paper was more sounding out the potential views of the Board in relation to making, you know, changes to the policy specifically in relation to how evidence could be passed to the police.

Ms Hodge: Can we please take a brief look at the minutes of that meeting of the Post Office Board, dated 31 October 2023. They bear the reference POL00458017.

So the relevant item is at number 9, on page 15, please. So item 9.1 bears the title “Disclosure of Evidence to Support Police Investigations”. It makes reference to three documents that were tabled and noted at the meeting: firstly, a request for evidence released to Police Scotland and discussion of broader policy change, that’s the title of the report; and then two appendices, one, a draft of the witness statement for Police Scotland; and, secondly, a summary of the Portree case.

As you can see the details of the Board discussion have been redacted and so too have the relevant documents in the Board pack which has been disclosed to the Inquiry. Without going into the details or the specifics of that particular case, can you please explain the background to the inclusion of this agenda item, so far as you recall?

Rachel Scarrabelotti: Yes, so I think that the – there were two matters brought before the Board, so the first one which we’ve spoken about, just briefly, being proposed changes – or not proposed changes but to understand the attitude of the Board in relation to potential changes to the policy, specifically which would alter the way in which – and the decision making for providing evidence to the police. And then the second aspect of the matter was seeking approval from the Board in order to be able to share evidence with the police. So that would be, you know, operating in line with the current, you know, policy and the approval required in order to pass evidence to the police.

Ms Hodge: Can you assist, as best you recollect, as to what the nature of the proposed change was at this stage in October 2023?

Rachel Scarrabelotti: Yes. So the proposal was that the decision making in relation to the passing of evidence to the police would no longer sit with the Board, as was currently set out in the policy, and that the decision making for that, I understand, would sit with the Director for the Central Investigations Unit.

Ms Hodge: You’ve indicated that what occurred at this meeting was a sounding out of the Board as to their views on that proposed change; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Do you recall whether, at this meeting, the members of the Board were in agreement with the proposal to delegate responsibility for that decision making?

Rachel Scarrabelotti: They were not.

Ms Hodge: They were not. The subject was raised again at a meeting of the Board in June 2024; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: Please can the minutes of the Board meeting on 4 June be shown on the screen. Those are POL00448648, please. Thank you. So these are minutes of 4 June. If we could please turn to the middle of the second page, we can see item 2 on the agenda, which bears the heading “Minutes and Matters Arising”. Under “Matters Arising”, it states that:

“The Board NOTED the action log and status of the actions shown.”

There, at the second bullet point, in respect of items which had been proposed for closure, it states that “Key discussion points were as follows”, so the second bullet point, please:

“[Mr Ismail] questioned whether item 3 ought to be disclosed. [Mr Jacobs] shared his view that if the Company was proposing to provide evidence to support police investigations, then this should come to the Board first.”

Just pausing there, who had proposed the closure of this item?

Rachel Scarrabelotti: So I think it would have been the director of what is now called A&CI, so Assurance & Complex Investigations, which was previously known as the CIU.

Ms Hodge: What were the reasons, do you know, for proposing that this matter be closed at this stage?

Rachel Scarrabelotti: I think it was proposed to be closed on the basis of the expectation that would be brought to the next periodic scheduled Board meeting, which was in the diary for the 8 July.

Ms Hodge: What did you understand the nature of Mr Ismail’s concerns to be about the proposal to close down this agenda item?

Rachel Scarrabelotti: Well, that it was proposed to be closed but the original action item that had arisen in the Board meeting from the 23 October ‘23, as far as the Board knew, that original action had not been attended to. So, you know, why was it proposed, then, to close it?

Ms Hodge: Forgive me, what specifically was the action which had been raised at the end of the last Board meeting in relation to this agenda item?

Rachel Scarrabelotti: So the Board had asked, in relation to the policy, that there would be some simulation testing, I suppose, for a lack of a more appropriate group of words, where postmasters would be taken through the policy and the proposed changes and to have those changes, you know, bounced off postmasters to see their – you know, their response, and that there would be, you know, sort of basic testing, testing for tonality, before the policy came back to the Board.

Ms Hodge: So the Board had requested that a consultation exercise be undertaken, in effect, with postmasters on the proposed changes; is that –

Rachel Scarrabelotti: Yes, I think so. They wanted postmaster input on – you know, on the policy and, you know, collaboration on – with postmasters on the policy.

Ms Hodge: That action, to your knowledge, hadn’t been undertaken; is that right?

Rachel Scarrabelotti: That’s right, that’s to my knowledge, yes.

Ms Hodge: The proposal was to close down that particular action without further input and oversight from the Board; is that right?

Rachel Scarrabelotti: Well, to close the action on the basis that the matter was due to come to the next periodic board meeting.

Ms Hodge: So the intention being that the Executive Team would report again to the Board on that particular action but at the next meeting in July?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Do you know whether the consultation which the Board asked to be undertaken, was that ever carried out?

Rachel Scarrabelotti: Not to my knowledge.

Ms Hodge: So we can see Mr Ismail questioning whether the item ought to be closed, his views are shared by Mr Jacobs, in that he says that, if the company are proposing to provide evidence to support police investigations, that should come to the Board first. That’s the views they are expressing.

The new Interim Chair, it says:

“… noted that if there appeared to be criminal activity this generally needed to be reported through to the police and there were issues in some instances of requiring pre-reporting to the Board, for example in relation to suspicions of money laundering. In addition, the Chair noted that the proposed process would allow investigations to be conducted by the police rather than the Company.”

Then a further action is raised: the Chair requested that you – is that correct, “RS”?

Rachel Scarrabelotti: Yes.

Ms Hodge: “… circulate the paper that was provided to the Board and the minute extract from the meeting of 31 October, and that [Mr Bartlett] attend the July Board meeting to clarify the proposed position …”

So that’s where matters stood at the end of the June Board meeting; is that right?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: Was the matter, in fact, remitted to the Board the following month?

Rachel Scarrabelotti: No, it was not.

Ms Hodge: Can we please look at a paper which was prepared for consideration by the Strategic Executive Group at its meeting in late June 2024. It is POL00448345. Did this report come to you in your capacity as Company Secretary, ahead of the meeting of the Strategic Executive Group in late June?

Rachel Scarrabelotti: It may have. It may have.

Ms Hodge: Do you recall reading the report at or around the time it was produced?

Rachel Scarrabelotti: Not at the time it was produced, no.

Ms Hodge: When did you first read it?

Rachel Scarrabelotti: When it was disclosed to me in the last few days.

Ms Hodge: So we can see the title of the report is “Passing of material to law enforcement”. The report is intended for a meeting date of 26 June 2024 and the author of the report, John Bartlett, Director of Assurance & Complex Investigations, under the sponsorship of Sarah Gray the Interim Group General Counsel.

I should say at the outset, I recognise you don’t have operational responsible for these matters; my questions are directed at the oversight of this issue, just to be clear.

So under the heading “Input Sought”, it states, “Discussion and Approval for Board Consideration”:

“[The approval of the Strategic Executive Group] is sought regarding the proposed change in process in governing the passing of information to law enforcement to assist them in criminal investigations and any subsequent prosecutions prior to this matter being discussed at Board in July 2024.”

If we scroll down, please, to the Executive Summary. It states:

“The current Group Investigations Policy, Cooperation with Law Enforcement Policy [known as ‘the CLEP’], and Legal Play Book (collectively ‘the old Policies’) are considered too unwieldy and unnecessarily complex as well as being drafted before the existence of the Assurance & Complex Investigations. The CLEP has result in slower than needed provision of information to law enforcement and the unnecessary involvement of the Board in the authorisation process.”

Just pausing there, what was your view at the time as to the appropriateness of the Board’s involvement, to date, in the approval of provision of information to the police?

Rachel Scarrabelotti: I think the view of the Board at the – probably the point in time, the October 2023 meeting, was that they still wished to see all cases where the provision of evidence to the police were proposed before that evidence was passed on.

Ms Hodge: You’ve answered with reference to the view of the Board. What I’d like to know is, in your capacity as Company Secretary and from a governance perspective, what is your view, as to the necessity or otherwise, of the Board to be giving its express approval to the provision of information to the police by an executive arm of Post Office?

Rachel Scarrabelotti: I think it’s something that, given our history and where we’ve been, that it is that significant that, for the time being, it would seem appropriate to still, in I think the majority of cases, still come to the Board.

Ms Hodge: Forgive me, sorry. You consider that it was appropriate for the matter still to come to the Board; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: So what the “Executive Summary” says is this:

“The old Policies have been consolidated into a draft single Investigation and Cooperation with law Enforcement Policy … The draft new Policy, amongst other investigative operational policy changes, proposes a streamlining of the governance of providing law enforcement with information: the Director of A&CI and the inhouse criminal counsel would have to agree to providing the information and, depending on the age of the information, a caveat would also be provided.”

So what’s being proposed, in essence, is a relaxation of that previous criteria, which required board approval, and a delegation of that decision to both the Director of Assurance & Complex Investigations, and inhouse criminal counsel; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: The report goes on to provide some context to this request. At paragraph 1, it refers to the current policy and states this:

“This policy was drafted at a time when [Post Office] did not have an experienced investigative function and had not carried out complex investigations for several years. In February 2022, the Central Investigations Unit, now [Assurance & Complex Investigations], started to be formed. Experienced, professional investigators were recruited, and operational practices began to go through a test-and-learn process.”

Consistent with your evidence, in effect, that CIU had been established or was in the process of being established at or around the time of your appointment as Company Secretary.

At paragraph 2, it says this:

“… the Investigations Policy was implemented in respect of possible criminal matters relied upon its interaction with the CLEP and Legal [policy] Book. These were focused on limiting in a high risk perception environment how [Post Office] reported matters to, and shared data with, law enforcement.”

Now, that reference to high-risk perception environment, you’ve said elsewhere in your statement that you consider that there is an issue within the Post Office in relation to there being a fear of decision making, a fear of being held accountable for decision making, and that that is contributing to some of the governance issues in relation to what the Board is required to deal with; is that right?

Rachel Scarrabelotti: Yes.

Ms Hodge: This appears to reflect a perception that that needs to change – is that fair –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and that the previous policy was reflective of perhaps an excessive concern about the governance of this issue; is that –

Rachel Scarrabelotti: Yes.

Ms Hodge: – your reading of –

Rachel Scarrabelotti: (The witness nodded)

Ms Hodge: So it goes on to say at paragraph 3:

“[Assurance & Complex Investigations has taken over] responsibility for being the only conduit for witness statements to be provided to police, including relieving the Security team of this activity.”

It then states:

“This has given [the unit] the first pan-POL picture of the scale of these requests and what is required to service them objectively and in an evidence-based way. There are currently 22 police forces requesting or awaiting Horizon-based evidence across 33 police investigations. To provide this information, [Assurance & Complex Investigations] will need to draw on Horizon data and often provide transaction analysis. The current approach is that the Board will need to be approached in the majority of these matters as and when the data is able to be shared.”

So the concern here appears to be that the policy, which requires prior approval of the Board, has created something of a bottleneck in the process of providing information to the police; is that consistent with your understanding?

Rachel Scarrabelotti: I mean the Board meets periodically, and the Board can also take decisions by way of written resolution or can call an ad hoc Board meeting if required. So I don’t think that I agree with a potential bottleneck issue, you know. If the Board needs to take a decision quickly and be nimble, they can do it.

Ms Hodge: But this is seeking a more streamlined process that would avoid that oversight and scrutiny by the Board?

Rachel Scarrabelotti: Yes.

Ms Hodge: At paragraph 4 it refers to:

“A draft policy is attached for the proposed replacement for the old Policies [which it said would] reflect the enhanced capabilities of the [Assurance & Complex Investigations] and the improved governance approach to investigations generally.”

What do you understand to be the basis of the insertion that there’s an improved governance approach to investigations?

Rachel Scarrabelotti: Well, perhaps it is the point around speed of decision making, you know, but, as I’ve just said, I think – you know, when the Board needs to be nimble, they can be.

Ms Hodge: This appears to be a reference to the governance of the investigations themselves. Is that internal governance, do you think, or Board oversight that’s being referenced here? I’m conscious that you’re not the author of the report, so if you don’t know then you can simply say so?

Rachel Scarrabelotti: I’m not sure, to be honest.

Ms Hodge: It then contains an extract from the new proposed policy, and that’s in relation to section 9 entitled “Categories of data, material and evidence”. It states this:

“Proactively and reactively supplied information will have differing profiles due to historic technology issues. The version of Horizon that was considered at fault in the Horizon IT scandal was replaced in October 2019. In 2020, known errors and bugs identified in the Horizon Issues judgment formed part of a review by KPMG of the system and found to not be prevalent in the system. From 2021, a new and collaborative approach was taken to resolving reported Horizon issues in a dispute resolution process. Due to the effect of these developments, the following approach to data sharing with [law enforcement agencies] is …”

Then it sets out the policy. Before we go there, that first paragraph identifies three factors which is said to justify the proposed change in approach to oversight of this issue: the first being the adoption of a new Horizon in 2019, which we know is HNG-A; the second a review by KPMG, which reportedly concluded that known bugs and errors were not prevalent in the current version of the system; and, thirdly, the establishment in 2021 of a new collaborative approach to the resolution of Horizon issues.

Now, two of those matters pre-date your appointment as Company Secretary but I’d like to ask you about the third one, and that relates to this more collaborative approach to investigating shortfalls. Why do you think it is that the adoption of that more collaborative approach is then seen to justify a change in the oversight arrangements for the provision of evidence to the police?

Rachel Scarrabelotti: I’m not sure.

Ms Hodge: Do you think that that’s right: that that new approach being taken to resolving Horizon issues with postmasters in this context justified a relaxation of the Board’s oversight?

Rachel Scarrabelotti: No, I don’t think so. I think the Board were very clear, in October 2023, as to their expectations in respect of the policy.

Ms Hodge: So going on, then, please to what the new policy would provide, that is to say what proposal was, it states at paragraph 2:

“It is the policy that:

“Any information originating from Horizon after 1 January 2022 may be passed as either intelligence or evidence to [law enforcement authorities or agents] only after the [Director of Assurance & Complex Investigations] (or their nominated deputy) and inhouse criminal lawyer both give approval.”

So that’s consistent with what we’re saying about the delegation of authority to those two individuals. It states:

“A record of both [their] rationale and decision must be recorded on the relevant case file.

“Where information is requested by [law enforcement authorities] that is Horizon data originating from pre-1 January 2022, the same process must be followed. In addition, the wording included in the relevant section of the Investigator’s Manual covering the passing of information … must be included in any witness statement for evidence or in an accompanying email or letter … requesting the information in a non-evidential format.”

So the policy envisaged drawing a line as at January 2022 and, in effect, treating evidence that post-dates January 2022 essentially as being capable of being relied upon without caveat, and data pre-dating January 2022 as not qualifying in that sense; is that your reading of this proposal?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you know why it is that that date was chosen as the point at which it could be said confidently that Horizon data could be relied upon in support of police investigations?

Rachel Scarrabelotti: No, I don’t.

Ms Hodge: If we could go on, please; if we could scroll down, please, to page 3. So it says this:

“There are significant differences between the environment that existed at the time the old Policies were formed and the current and future environment. The current approach to dispute resolution and the underlying technology could be seen as supporting a more BAU …”

Is that “business as usual”?

Rachel Scarrabelotti: Yes.

Ms Hodge: “… approach to passing information to law enforcement. However, the most significant difference between 2019 when the old Policies were first drafted and now is that [Assurance & Complex Investigations] exists and brings significant criminal investigation experience to bear, but more importantly, also considerably more objective rigour to assessing evidence. Project Panther within [Assurance & Complex Investigations] is solely focused on testing the reliability of data that [Post Office] investigators and law enforcement will rely upon.”

Then at paragraph 8:

“A further check and balance to the material provided to law enforcement which enables a more proportionate governance of this is that law enforcement agencies do not just take [Post Office’s] word that evidence is reliable. [Post Office] can only provide the information to law enforcement; it is for them to decide its admissibility and weight. Given this reality, it is our view that a more agile and devolved (albeit to senior staff with significant relevant experience outside of POL) approach may be taken to better serve law enforcement, postmasters and [Post Office].”

That explains then both the context and justification put forward to the Strategic Executive Group for this proposed change in policy; is that fair?

Rachel Scarrabelotti: Yes.

Ms Hodge: That Group was asked to discuss the approach in advance of the proposal to admit the matter to the Board in July; is that right?

Rachel Scarrabelotti: That’s right yes.

Ms Hodge: I don’t think you were in attendance at the meeting of the Strategic Executive Group in late June; is that right?

Rachel Scarrabelotti: That’s right.

Ms Hodge: That was attended by your deputy. Did she report back to you on the outcome of that meeting?

Rachel Scarrabelotti: Um, I don’t recall specifically. We probably would have had a general discussion.

Ms Hodge: Were you aware that the Group had declined to approve the submission of the paper to the Board?

Rachel Scarrabelotti: I think I was aware of it on the basis that I had this as a matter on the draft agenda for the July Board meeting and it came off, so – off that draft agenda, so I think that I deduced that the matter hadn’t cleared the Executive.

Ms Hodge: Were you aware that the reason why Executive had refused to approve the paper was that it believed further assurance was required in relation to Horizon data?

Rachel Scarrabelotti: No, I don’t think I knew the reasoning.

Ms Hodge: Has this matter come back to the Board since June 2024, to your knowledge?

Rachel Scarrabelotti: Not to my knowledge, no.

Ms Hodge: Does it remain the case that Board approval is required before any witness evidence about Horizon data is supplied to the police?

Rachel Scarrabelotti: Well, yes, in line with the current policy.

Ms Hodge: I think you said that you consider that that is an appropriate safeguard, owing to the history of Horizon prosecutions and the ongoing questions, I suppose, about Horizon’s integrity; is that fair?

Rachel Scarrabelotti: Yes.

Ms Hodge: Thank you. I have one final topic I’d like to discuss with you –

Sir Wyn Williams: Before that, Ms Hodge, this may be me being unduly legalistic, all right, but I would just like to get a point clear in my head.

Before the police become involved in any suspected crime, of the type we are now talking about – a financial crime related to an organisation – there has, in effect, to be a report of an alleged crime to the police, yes?

Rachel Scarrabelotti: Yes.

Sir Wyn Williams: So to use, just by way of an example, the suspicion that a postmaster has stolen Post Office money, before that gets to the police, someone must have formed the suspicion that the postmaster has done that, yes?

Rachel Scarrabelotti: Yes, sir.

Sir Wyn Williams: Right. Am I right in thinking that, before a report to the police is made about that notional postmaster, the Board has to approve it?

Rachel Scarrabelotti: Yes, that’s right.

Sir Wyn Williams: That’s under the existing policy?

Rachel Scarrabelotti: Under the existing policy, yes.

Sir Wyn Williams: So, essentially, what that means, as I would think, as both a citizen and a lawyer, is that the Board has satisfied itself that there is sufficient evidential basis to justify a report to the police, yes?

Rachel Scarrabelotti: Yes, sir.

Sir Wyn Williams: Right. That I follow entirely.

What I am struggling more with is the next step: the police now begin to investigate, yes?

Rachel Scarrabelotti: Yes.

Sir Wyn Williams: In their investigation, they ask for various witness statements or information or intelligence, whatever you want to call it, in order to further their investigation so that they can decide whether or not a charge is justified, yes?

Rachel Scarrabelotti: Yes, sir.

Sir Wyn Williams: What’s the need for the Board to authorise that because the request for this information is coming from the police; what’s wrong with just complying with their request, so far as you know? I’m not asking you to be the arbiter of all this: I just want to understand what’s behind all these various procedures, if you see what I mean.

Rachel Scarrabelotti: I think it’s just, given sort of historical sensitivities, that the Board has wished to stay very close to these matters.

Sir Wyn Williams: But, in the real world, are you saying that there could be instances where a police force would say, “Right, we’d now like you to provide X, Y and Z to further our investigations” but the Post Office would then say “No”?

Rachel Scarrabelotti: I mean, I can’t envisage that happening, sir. Yeah.

Sir Wyn Williams: Yes, so that’s why I am asking why there is the need for, as I might see it, let’s say, an excessive degree of caution over this, once the police – and I stress that – once the police are the persons asking for the information?

Rachel Scarrabelotti: Yeah, I mean, I don’t think I can say much further as – you know, just that the Board have –

Sir Wyn Williams: Because of the past and people are being very cautious; that’s what it boils down to, is it?

Rachel Scarrabelotti: Yes, in my view, yes, sir.

Sir Wyn Williams: Sorry, Ms Hodge.

Ms Hodge: No. Thank you, sir.

Ms Scarrabelotti, my final topic concerns your involvement in the events which culminated in the removal of Mr Staunton as Chair of Post Office earlier this year. The first issue concerns Mr Staunton’s annual performance appraisal.

Rachel Scarrabelotti: Yes.

Ms Hodge: That was due to take place in January 2024; is that right?

Rachel Scarrabelotti: That’s right yes.

Ms Hodge: That was one year after he’d taken up the role, or approximately one year after he’d taken up the role of Chair of the Post Office Board?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: You say in your statement that you had prepared the necessary documents to support that process – is that right –

Rachel Scarrabelotti: That’s right.

Ms Hodge: – and you’d been liaising with the Senior Independent Director, Mr Tidswell, and the team at UKGI, including the Shareholder Non-Executive Director?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You explained that UKGI had requested that the appraisal proceed?

Rachel Scarrabelotti: Yes.

Ms Hodge: Why was it that their view as to whether it ought to proceed was canvassed at that stage?

Rachel Scarrabelotti: So I had been working with the UKGI Shareholder Team on the materials for Henry’s appraisal, you know, probably for a good few weeks ahead of, actually, the, you know, proposed appraisal to take place. I think, as shareholder – obviously Henry was accountable ultimately to the shareholder, so it was very important to – you know, to be sure that they were happy with the materials and also to the timing and just – well, yeah, were happy for the process to be initiated.

Ms Hodge: So more procedural than a substantive matter – is that fair –

Rachel Scarrabelotti: I think so.

Ms Hodge: – in terms of seeking their –

Rachel Scarrabelotti: Yes, certainly, just an informal, courteous, yes.

Ms Hodge: You say you were preparing to issue the relevant documents to the Directors of the Post Office Board, when Mr Staunton instructed you to stop the appraisal process; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: What was the reason which he gave you for that instruction?

Rachel Scarrabelotti: Just, given the other pressures that the business was going through at that particular time, so I was asked to pause, yeah, for the present.

Ms Hodge: Did you consider that there was any merit in that suggestion that the pressures the business was facing warranted pausing the appraisal process?

Rachel Scarrabelotti: I mean, January 2024 was a very turbulent time for the business but we’re all subject to periodic performance reviews and, even though the business was in a difficult state and a difficult time, January 2024, I don’t think that there was any – you know, I don’t think that that would be alleviated, you know, by waiting a few months.

Ms Hodge: Does it follow that you didn’t think that that was an appropriate instruction for him to give you?

Rachel Scarrabelotti: No, I didn’t and, like I say, everyone has to go through a performance appraisal and I can’t defer mine, no one can defer theirs. So yeah, I didn’t think it was appropriate.

Ms Hodge: What did you do on receiving that instruction?

Rachel Scarrabelotti: I went to the Senior Independent Director and shared my concern.

Ms Hodge: The second issue I’d like to explore with you concerns the decision to appoint Mr Tidswell’s replacement as Senior Independent Director. You explain in your statement that the appointment of the Senior Independent Director is a matter for the Board under the 2018 UK Corporate Governance Code?

Rachel Scarrabelotti: Yes, that’s right.

Ms Hodge: You explain that the matter arose first in August 2013 when Mr Tidswell announced his intention to step down at the end of his current term?

Rachel Scarrabelotti: Yes, so 2023.

Ms Hodge: Forgive me, 2023. Sorry.

Rachel Scarrabelotti: Yes.

Ms Hodge: I said 2018 (sic) again, did I?

Rachel Scarrabelotti: Yes.

Ms Hodge: 2023, I apologise.

As a result of Mr Tidswell giving that indication to the Chair, he requested that the subject matter of his replacement be placed on the agendas of the Nominations Committee and the POL Board in September of that year; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You say that, following those meetings of both the Nominations Committee and the POL Board, that meetings were arranged in October with each of the Post Office Directors, which were attended both by you and by Mr Staunton; is that right?

Rachel Scarrabelotti: So it wasn’t all of the Post Office Directors.

Ms Hodge: Forgive me, the Board Directors?

Rachel Scarrabelotti: Yes, but not all of the Post Office Board Directors; meetings were not held with all of those. So, obviously, Al Cameron was out of the business unwell, and then Ben Tidswell, there wasn’t a consultation meeting held with him either.

Ms Hodge: Because he was leaving –

Rachel Scarrabelotti: Because he was leaving.

Ms Hodge: – and it was his replacement?

Rachel Scarrabelotti: Yes.

Ms Hodge: Can you please explain, what was the purpose of those individual meetings with the other Directors of the Board?

Rachel Scarrabelotti: To get the Directors’ views on whether or not the incoming SID should be drawn from the existing Board membership, so it would be an internal appointment, or whether that appointment should be made externally and, if the appointment was made externally, what would the key skills and attributes and the technical expertise for that external recruit?

Ms Hodge: Now, you say that the shareholder had expressed a strong view or a strong preference for both an external appointment and a candidate who had Whitehall experience; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You also explained that, of those whose views that were canvassed, there was a division as to whether the appointment ought to be internal or external; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: And that Mr Staunton determined, in view of that division, to give preference to the shareholder’s view and to seek the appointment of an external candidate; is that right?

Rachel Scarrabelotti: That’s right.

Ms Hodge: I think you say that you sent an email on 25 October to advise the other Board members of that decision?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Now, that resulted in the matter going to the Nominations Committee in November; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: They gave their approval to the initiation of a recruitment process; is that correct?

Rachel Scarrabelotti: That’s right, yes. Well, it’s a – they approved a recommendation being made to the shareholder for the recruitment process.

Ms Hodge: For the recruitment to commence?

Rachel Scarrabelotti: Yes.

Ms Hodge: Now, on 17 January this year, you’ve explained in your statement that the Chair, Mr Staunton, emailed certain of the Post Office Board members to advise that there had been a change of sentiment amongst the Board about the decision to make an external appointment; is that correct?

Rachel Scarrabelotti: Yes.

Ms Hodge: Do you know from where Mr Staunton had obtained that impression?

Rachel Scarrabelotti: I mean, I don’t really know. So I guess sort of as I mentioned before, January, you know, this year was a tough month for the company. A lot was going on. So yeah, I imagine that yeah, the directors may have fed back to Mr Staunton that, you know, to appoint internally for the SID was preferable, as opposed to recruiting externally, given, you know, the circumstances of the time.

Ms Hodge: You note in your statement that the Shareholder Non-Executive Director wasn’t copied in to the email sent by Mr Staunton on 17 January, notifying the other board members of this proposed change in approach. Do you know why it is that that was the case?

Rachel Scarrabelotti: Potentially because the Shareholder Non-Executive Director had a different view as to the approach.

Ms Hodge: Did you read this as an attempt by Mr Staunton to sideline the Shareholder Non-Executive Director?

Rachel Scarrabelotti: Well, I think that’s what it was, yes.

Ms Hodge: On 18 January, so the following day, you say that the Chair asked you to review your notes of the individual meetings which you had attended between the Chair and those directors whose views were canvassed about the question of an appointment, so that was back in October of the previous year –

Rachel Scarrabelotti: Yes.

Ms Hodge: – is that right?

He asked to you to advise as to what their preferences had been as to who on the Board should take up the role of the Senior Independent Director in the event of an internal appointment; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You duly sent your record of that meeting, or a summary of the views that were canvassed at that meeting to the Chair; is that correct?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: Mr Staunton then, on 20 January, so two days later, emailed the Board to notify the members that an internal appointment had been made; is that right?

Rachel Scarrabelotti: That’s right, yes.

Ms Hodge: You say that he then went on to instruct you to halt the recruitment process for an external candidate –

Rachel Scarrabelotti: Yes.

Ms Hodge: – and that you felt unable to follow that instruction, you say, because the requisite governance procedures had not been followed, and the approach was not in line with the existing mandate from the shareholder; is that right?

Rachel Scarrabelotti: That’s right.

Ms Hodge: When it came to Mr Staunton’s attention that there had been a change of sentiment amongst the members of the Board, what processes do you think he should have followed to ensure that that matter was dealt with appropriately?

Rachel Scarrabelotti: Well, I think that we would have needed to have a formal board meeting to take all the views of all the Board members, and then a formal vote on the matter in order to change the previous decision that had been taken.

Ms Hodge: So was the nature of your concern that the matter hadn’t been properly canvassed at board level, rather than, for example, being remitted to the Nominations Committee?

Rachel Scarrabelotti: No, my concern wasn’t that the matter hadn’t been sort of – that there hadn’t been adequate consultation. My concern was that there hadn’t been – that the decision hadn’t taken place in the appropriate forum at Board. So it was a decision for Board, the employment of the Senior Independent Director. All directors need to be given an opportunity to participate in that vote and, from what I understood, not all directors were given that opportunity.

Ms Hodge: In particular, the Shareholder Non-Executive Director?

Rachel Scarrabelotti: The Shareholder Non-Executive Director, also I understand Amanda Burton was not consulted, neither was Ben Tidswell, and we’ve said that, yeah, Al Cameron was on sick leave at the time. So quite a few members of the Board not given the opportunity to vote on this matter.

Ms Hodge: You say that – so you had two concerns, essentially. One relate to the following of due process –

Rachel Scarrabelotti: Yes.

Ms Hodge: – in reaching that decision, and the other concern you identify in your statement was that the decision wasn’t consistent with the existing mandate from the shareholder?

Rachel Scarrabelotti: That’s right.

Ms Hodge: Does this episode reflect, do you think, a tension in the governance of the Post Office between the matters which are properly reserved to the Board and the involvement of the shareholder and the influence of the shareholder in those decisions?

Rachel Scarrabelotti: I don’t think so. I mean, the shareholder was very clear in providing their view, however, I think if the board had taken an alternative view to originally appoint an internal candidate, I think that would have stood.

Ms Hodge: Thank you. I’ve no further questions. If you remain there, there may be some questions from the recognised legal representatives of some of the Core Participants.

The Witness: Thank you.

Questioned by Mr Jacobs

Mr Jacobs: Good afternoon. I appear for a large number of Core Participants, subpostmasters, former subpostmasters and assistants so represented by Howe+Co.

Ms Scarrabelotti, I have a few questions to ask you, firstly about what you say in your statement about culture. At 11.45 this morning Ms Hodge said you’d made reference in your statement to an issue within Post Office of decision making, of a fear of decision making, of being held accountable; do you recall that?

Rachel Scarrabelotti: Yes.

Mr Jacobs: Could we very quickly go to where you deal with that in your statement. It’s WITN11120600, paragraph 33(g), page 19 of 85.

While we’re waiting for that to come up, you’re giving your reflections here as to the adequacy and effectiveness of the Post Office’s corporate governance arrangement; that’s right, isn’t it?

Rachel Scarrabelotti: Yes.

Mr Jacobs: Do we see that? Yes, it’s on the screen now. At (g):

“As [highlighted] elsewhere in my statement, current POL employees are acutely aware of failings of the past. This appears to have resulted in an apparent reluctance to take decisions for fear of getting it wrong and therefore being liable to future criticism.”

Is that right?

Rachel Scarrabelotti: Yes.

Mr Jacobs: You go on to says:

“This reluctance in turn results in decisions either stagnating or being pushed to more senior decision-making forums. Ultimately, more POL Board time is taken up with matters of less strategic importance, and there is diminished accountability on the part of less senior forums and individuals.”

Now, I have some questions to ask you about that. Firstly, what decisions are being stagnated as a result of this fear of accountability or paralysis affecting the Board?

Rachel Scarrabelotti: I mean, it could be – it was sort of any decision across the business, to be honest. Yeah. I don’t think I can give you a particular category or business unit.

Mr Jacobs: When you say that decisions of greater strategic importance are being pushed to more senior decision making forums, what are those forums and what are the decisions of greater strategic importance?

Rachel Scarrabelotti: So I say “matters of less strategic importance” in my witness statement, sorry.

Mr Jacobs: Okay. Our clients are concerned about the delays in the provision of redress to subpostmasters. Have these delays been affected by the paralysis in decision making in the Post Office as a result of the scandal?

Rachel Scarrabelotti: Potentially, yes.

Mr Jacobs: Can you elaborate on that at all?

Rachel Scarrabelotti: I think that there’s sort of just general nervousness around decision making. So, you know, that it would take a long time, perhaps, for a proposal to crystallise, that there’s more agonising over recommendations, perhaps in other businesses that I’ve worked on – that I’ve worked at, and that, overall, that leads to slower decision making.

Mr Jacobs: I’ve been asked to ask if you can move a little bit closer to your microphone.

Rachel Scarrabelotti: Sorry. Pardon me.

Mr Jacobs: What do you think can be done to free up this paralysis, this fear of making decisions in reasonable time?

Rachel Scarrabelotti: I think it’s empowering people and I think it’s looking at decision making from Board level down. So the Board currently has delegated authority to the Executive for £5 million but looking at whether or not that delegation needs to be increased. Also, ultimately looking at the Board and their relationship with the shareholder, and whether or not certain decisions that go to the shareholder can perhaps come back to the Board. And I think making those sorts of changes could increase, from the top down, confidence in decision making.

Mr Jacobs: Do you think having more subpostmaster representation on the Board, something that you say would be a good thing, would assist in enabling more speedy and effective decision making?

Rachel Scarrabelotti: Potentially on the Board but I think it could be more effective at – in other layers. So perhaps looking at the executive structure, where we have the Postmaster Experience Director sit as part of the wider leadership team thinking do we need, you know, more people with that title or similar titles at the leadership level, at the Executive level?

Mr Jacobs: Do you think the Government should play a more direct role in order to resolve this fear of decision making?

Rachel Scarrabelotti: Well, potentially, to have a look at our articles and the contractual arrangements between the shareholder and the company, and looking at opportunities to empower the company to take more decisions, yes.

Mr Jacobs: How would that work; how would the shareholder be brought in to assist with decision making?

Rachel Scarrabelotti: Well, the shareholder would actually be removed from certain decision making and allow the company enhanced decision making in some respects.

Sir Wyn Williams: Yes, as I understand you, you’re saying, in effect, that the Government is too involved in some decision making and that should be handed over to the POL Board?

Rachel Scarrabelotti: Yes, sir. That’s right.

Mr Jacobs: So that leads me on to my next question: is this fear a fear of the Department of Business, that it’s the Government, the shareholder, that would criticise the decisions, or is it more public opinion?

Rachel Scarrabelotti: I think more public opinion and just fear of getting it wrong, given the catastrophes of the past.

Mr Jacobs: You’ve said in your statement that having at least one Board member who’s legally qualified is vitally important?

Rachel Scarrabelotti: In my view, yes.

Mr Jacobs: You say that Ms Burton has legal experience and that has been helpful in challenging what the Executive are telling the Board. Do you think, if the Board had its own counsel or equivalent standing lawyer, that would cut through nervousness about what the Board is being told by the Executive?

Rachel Scarrabelotti: So, obviously, we have a General Counsel who is not a member of the Executive but is a standing attendee and invitee to Executive meetings. Inhouse counsel carries the same independence obligations as you would expect. The interim General Counsel, too, is attending Board meetings to provide independent advice. So I think that’s sort of an enhancement, yeah, for the Board.

Mr Jacobs: So your evidence is that having Board members who are also legally qualified is what you think there should be more of?

Rachel Scarrabelotti: No, I don’t think necessarily more of but I think having one of is very valuable.

Mr Jacobs: You go on to say that having a board member with IT technology experience is imperative?

Rachel Scarrabelotti: Well, absolutely, because we’re embarking on a major technology transformation.

Mr Jacobs: Are there directors with that experience on the Board yet?

Rachel Scarrabelotti: Not currently, no.

Mr Jacobs: What steps are there proposed?

Rachel Scarrabelotti: So we’re currently recruiting for an independent Non-Executive Director with a skillset in technology and cyber.

Mr Jacobs: I want to ask you finally about the meetings with subpostmasters that you’ve referred to at paragraph 45(a) of your statement – no need to put it up – but you say that you’re aware of the meetings that have taken place between subpostmasters and directors.

Rachel Scarrabelotti: Sorry, let me just go to it.

Mr Jacobs: 45(a) of the statement.

Sir Wyn Williams: It’s page 31.

Mr Jacobs: Thank you, sir.

“In order to demonstrate a desire for cultural change …”

Rachel Scarrabelotti: So these are meetings between postmasters and members of the Executive, as opposed to Board Directors.

Mr Jacobs: Right. Are you aware of those meetings; have you discussed those meetings with the members of the Executive who have held those meetings with subpostmasters?

Rachel Scarrabelotti: They’ve been spoken about, absolutely, at times when I have sat with the Board and when I have sat in the Executive forum as well.

Mr Jacobs: We understand that on 23 June 2023 Nick Read had a meeting with 100 senior officials and leaders in the Post Office to discuss the meetings that he’d held with subpostmasters and he said that this was part of his determination to change culture within the Post Office. Did you attend that meeting or any such meetings to discuss the experiences from these meetings?

Rachel Scarrabelotti: I mean, I don’t –

Mr Jacobs: – with subpostmasters?

Rachel Scarrabelotti: I don’t recall if I attended that meeting. It’s probably highly likely that I did.

Mr Jacobs: Can you confirm whether what’s happened in those meetings, the information that’s been provided by subpostmasters to members of the Executive, how that has been used to feed into the Post Office culture?

Rachel Scarrabelotti: (Unclear) the executives who participate in those meetings are very, very deeply moved, and find that those meetings very, very challenging, very difficult, very confronting, but I think they come back into the business with, you know, a real sense to enact change.

Mr Jacobs: On Wednesday Mr Brocklesby gave evidence and he has attended some of these meetings with subpostmasters, and we know he is leaving Post Office and we know that the current Chief Executive is leaving Post Office as well. What steps are being taken to ensure that corporate memory is maintained, despite the high turnover of Executives and Board members in recent years?

Rachel Scarrabelotti: Well, Mr Read is staying for a number of months yet, so there will be, I imagine, a handover period. At Board level, it has been difficult, obviously, to retain corporate memory with the number of step downs that we’ve had in the last few years, but we do try as much as we can to have handover periods, to have handover notes, to have full induction, you know, packs and meetings.

Mr Jacobs: Well, are the lessons from the meetings with subpostmasters being recorded, are they being transmitted throughout the business or are they just experiences that executives have for their own knowledge and their own purposes?

Rachel Scarrabelotti: I do think that they are transmitted through the business and they are –

Mr Jacobs: How are they transmitted?

Rachel Scarrabelotti: Well, they’re spoken about, as I say, at Board meetings, at Executive meetings. I think Mr Read, in different updates – CEO updates to the Board, has reflected on this experiences of those meetings. I think at different meetings of the Senior Leadership Team, as it was previously called, those meetings had been touched on, and the nature of those meetings, the tone of those meetings. So, absolutely, I think, yeah, I think those meetings are brought back into the business.

Mr Jacobs: Are you aware of any wider restorative justice initiatives that have been proposed, such as, for example, ongoing psychiatric and counselling support for subpostmasters and their families, ways of helping the children whose education was disrupted by the scandal, educational bursaries, initiatives to restore reputations of subpostmasters in their local communities and areas; has that been discussed at Board level?

Rachel Scarrabelotti: I’m pretty sure at Board level, yes, so enhanced restorative justice measures being discussed along with looking at, yeah, you know, the funding for that.

Mr Jacobs: Is that something that Post Office is actively considering?

Rachel Scarrabelotti: I’m not sure, to be honest.

Mr Jacobs: I’ll just see if I have any more questions.

I don’t have any more questions for you. I’m grateful. Thank you.

The Witness: Thank you.

Ms Hodge: Sir, I think that concludes the questions from the representatives of Core Participants.

Sir Wyn Williams: Well, thank you very much, Ms Scarrabelotti, for making a total of five detailed witness statements. I think we can say that the corrective statement wouldn’t have taken you all that long but the others must have taken a great deal of time. So thank you very much for that and thank you very much for coming to give oral evidence before me this morning.

The Witness: Thank you, sir.

Sir Wyn Williams: Where do we go now, Ms Hodge? Do we take an early lunch or do we start the next witness?

Ms Hodge: Sir, my proposal would be that we resume at 1.45 after an early lunch.

Sir Wyn Williams: Yes, fine.

Ms Hodge: Thank you.

(12.32 pm)

(The Short Adjournment)

(1.45 pm)

Ms Millar: Good afternoon, sir, can you see and hear us?

Sir Wyn Williams: Yes, yes, thank you.

Ms Millar: This afternoon we’re going to hear from Ms Branton.

Veronica Branton

VERONICA JANE BRANTON (affirmed).

Questioned by Ms Millar

Ms Millar: Thank you. Can you please confirm your full name?

Veronica Branton: Veronica Jane Branton.

Ms Millar: Ms Branton, can you just sit forward a little bit, just so the microphone picks up your voice?

Veronica Branton: Sorry.

Ms Millar: Thank you. You should have a witness statement in front of you and that’s dated 4 September 2024; is that correct?

Veronica Branton: That’s correct.

Ms Millar: Before we begin, I understand there are a couple of amendments you’d like to make to that statement.

Veronica Branton: Yes, please.

Ms Millar: So if we just go to page 22 first of all, and paragraph 69, I think the amendment should be:

“Once appointed, new NEDs received induction materials, access to [and then the amendment is] a number of past Board and committee materials.”

Is that correct?

Veronica Branton: That’s correct.

Ms Millar: Then page 25 at paragraph 78, the last sentence you want to add “for recommendation to the Board”; is that correct?

Veronica Branton: That’s correct.

Ms Millar: Thank you. Having made those amendments, can I ask you to turn to the last final substantive page of your witness statement which is page 71?

Veronica Branton: Yes, thank you.

Ms Millar: Can you confirm that is your signature?

Veronica Branton: It is, thank you.

Ms Millar: Can you confirm that statement is true to the best of your knowledge and belief?

Veronica Branton: It is.

Ms Millar: Thank you. For the record, that statement is WITN11420100.

Ms Branton, is there anything you’d like to say before you start your evidence?

Veronica Branton: Yes, please. I would just like to say how sorry I am that the actions and inactions of Post Office and others has caused so much suffering to so many subpostmasters over such a long period of time and that not all of those individuals have received compensation yet.

Ms Millar: Thank you. Can I ask you to keep your voice up a little bit, you’re very softly spoken.

Veronica Branton: Sorry.

Ms Millar: Thank you very much. By anyway of introduction, you were employed by the Post Office from February 2018 to March 2022; is that correct?

Veronica Branton: That’s correct.

Ms Millar: You were Head of the Secretariat between 21 February 2018 and 31 May 2019?

Veronica Branton: That’s correct.

Ms Millar: You became interim Company Secretary on the 1 June 2019 and then Company Secretary on 26 July 2019?

Veronica Branton: That’s correct.

Ms Millar: You remained in that role until about March 2022?

Veronica Branton: That’s correct.

Ms Millar: In relation to your professional qualifications, you have to an MSc in corporate governance and a practitioners certificate in data protection?

Veronica Branton: That’s right.

Ms Millar: You’ve been an associate of the Chartered Governance Institute since December 2006?

Veronica Branton: Yes.

Ms Millar: Prior to being employed by the Post Office, you held various administrative and governance roles and that included, as a board secretary and corporation secretary; is that correct?

Veronica Branton: That’s correct.

Ms Millar: After leaving Post Office in March 2022, you became Corporation Secretary at Ofcom, where you’re still employed; is that right?

Veronica Branton: That’s right.

Ms Millar: Thank you. So when you were appointed Head of Secretariat in February 2018, your line manager was the General Counsel and Company Secretary then, Jane MacLeod?

Veronica Branton: That’s right.

Ms Millar: At that point, the role of Company Secretary and General Counsel were held by the same person?

Veronica Branton: That’s right.

Ms Millar: Is it right, then, when Ms MacLeod left the Post Office in May 2019, the roles were merged and you took on the company – sorry, the roles were separated –

Veronica Branton: (The witness nodded)

Ms Millar: – and you took on the Company Secretary role?

Veronica Branton: That’s right, yes.

Ms Millar: What is your understanding of the reason why the roles were separated at that point?

Veronica Branton: I think, to some extent, expediency because there was an immediate gap and I think, at that stage, Al Cameron had become the Interim Chief Executive and he wanted to make sure there were individuals in those roles quite quickly and the Board was of the same view.

Ms Millar: In Ms MacLeod’s witness statement, she explains that, in your previous role as Head of Secretariat, you fulfilled the day-to-day responsibilities of the Company Secretary; is that a fair description?

Veronica Branton: That’s a fair description.

Ms Millar: How did your role change when you became Company Secretary?

Veronica Branton: I think the role changed principally because I had much more direct contact with the Board members and with the Chair. So previously a lot had been done through Jane MacLeod, whereas when I moved into the role I was having more conversations directly with Board members.

Ms Millar: Thank you. When you became Company Secretary, did you manage a team, a Secretariat team?

Veronica Branton: I did.

Ms Millar: How many people were in that team?

Veronica Branton: It ranged over time, so we had some staff shortages at periods, so at one point there just two of us and at full strength there were five of us.

Ms Millar: At what period were there only two of you?

Veronica Branton: Quite soon after I started at Post Office. So there were a couple of people who left very soon after I’d started and there was already a vacancy, so we had just two of us for a few months.

Ms Millar: Thank you. So turning, then, to the training you received when you joined the Post Office, is it right that you didn’t receive any specific briefings or induction on the issues being addressed by this Inquiry when you joined the Post Office?

Veronica Branton: Not that I can recollect.

Ms Millar: Did that include issues with the Horizon system –

Veronica Branton: Yes.

Ms Millar: – and also the Group Litigation proceedings which were ongoing at the time you joined the Post Office?

Veronica Branton: Yes. I didn’t receive specific training or induction, from recollection, but I was quite soon attending Group Executive and Board meetings to minute those.

Ms Millar: And I think that’s something you touched on in your statement, that your understanding of the issues addressed by this Inquiry came from listening to Board and committee meetings; is that correct?

Veronica Branton: That’s correct.

Ms Millar: When you became Company Secretary, then is it correct you didn’t receive any further specific induction or training at that point?

Veronica Branton: I didn’t.

Ms Millar: You explain in your statement that you wouldn’t criticise the lack of special induction given the nature of your role?

Veronica Branton: (The witness nodded)

Ms Millar: Can you explain what you mean by that?

Veronica Branton: I think simply that, as you mentioned, I was carrying out a lot of the day-to-day functions as Head of Secretariat and so the main change was to have much more direct interaction with Board Directors at the stage I became Company Secretary and, obviously, had overall accountability when I moved into the Company Secretary role for running the function in the team.

Ms Millar: With hindsight, do you think it would have been helpful to have any specific briefings or induction at the time you became Company Secretary?

Veronica Branton: Ideally.

Ms Millar: What would that have involved, ideally?

Veronica Branton: I think, more than anything, it would be understanding whether there were any gaps in my knowledge about what I was expected to fulfil within the role of Company Secretary versus Head of Secretariat.

Ms Millar: Thank you. So turning, then, to your role supporting the Board specifically, at paragraph 38 of your statement, you explain that you maintained the Board forward plan, drafted the agenda and commissioned the papers that were presented to the Board?

Veronica Branton: Yes.

Ms Millar: In terms of the forward plan, can you describe very briefly what that was?

Veronica Branton: Yes. So the forward plan for board meetings set out all of the cyclical items that were due to go to the Board, so there would be a Chief Executive’s report to each Board meeting, there would be financial information to each board meeting; there would be a number of things that would come each year, such as the network report, the annual report and accounts, the business plan, and so on, and then there would be the additional items which would be principally around different areas of different business lines within Post Office, so insurance and post and telecoms.

Ms Millar: Thank you. In terms of the Board agenda, is it right that you drafted that with input from both the CEO and also members of Group Executive team?

Veronica Branton: That’s correct.

Ms Millar: The final version was approved by the Chair of the Board?

Veronica Branton: That’s right.

Ms Millar: Was that the case in terms of ordinary Board meetings and also emergency Board meetings?

Veronica Branton: Yes, certainly for ordinary Board meetings. I think for additional Board meetings, because they were additional, we wouldn’t have had a forward plan of items for those, but – so yes, I would be seeking advice from others in the business about the content of additional Board meeting agendas.

Ms Millar: Whose responsibility was it to prioritise particular items of business in the agenda?

Veronica Branton: Principally the Chairman and the Chief Executive.

Ms Millar: Did you have any input into that decision?

Veronica Branton: Not really.

Ms Millar: When you say not really, is that in respect of particular items you might have had input?

Veronica Branton: Well, there will have been some governance items that I had produced and included on agendas and, because my team and I were maintaining a forward plan, we – I wanted to make sure that there weren’t items slipping from that forward plan.

Ms Millar: But other than that, you didn’t have input into the prioritisation of those items?

Veronica Branton: No.

Ms Millar: Once the Chairman had approved the agenda, is it correct that you would then circulate that along with the papers for the Board?

Veronica Branton: That’s right.

Ms Millar: If there were further updates provided to the Board outside meetings, would you expect to have been copied in to that correspondence?

Veronica Branton: I would hope to be.

Ms Millar: Could we please have the document with the reference POL00103607 on screen and the bottom of page 2, please. Thank you. So we can see there that’s an email from Alisdair Cameron to number of members of the Board on 28 June 2019 and you’re copied in to that email. The subject line is “Three Updates”, and he starts the email by saying “Dear Board”. If we go over the page, please, to the third update, he says:

“Thirdly, we have identified an issue on cash rems which creates differences with Postmasters – we believe about 120 branches have been affected. We do not yet have a root cause and that is the IT priority. In addition to contact with affected branches, full communications are going out today research Postmasters that we are aware, are resolving individual differences and there will be no adverse consequences. The GLO team is engaged to ensure we manage this transparently and document it effectively. We have also had rumours of issues with scanning but have no [I think that should be ‘not’] identified issues so far.”

So, in respect of those kind of issues, were you expected to take any action when you were copied into emails like that?

Veronica Branton: Not if I was only copied in and there wasn’t a specific request for me to do something.

Ms Millar: Did you keep any kind of record of updates provided to the Board in this way, so outside meetings?

Veronica Branton: Not just a general email, no.

Ms Millar: In terms of progressing matters, these kind of updates, whose responsibility was it to ensure that things like this were followed up on?

Veronica Branton: I think really it would depend who the – who’d sent the email in the first place. So had there been a specific action at a Board meeting, then it would be for me to make sure that that was followed up on through completion of an action. But where it was an email from, in this instance, Al Cameron to the Board, then, as he had sent the email and copied me in and not asked me to do anything further, then I would expect him to have followed up on it.

Ms Millar: Was that a formal arrangement or was that just an informal understanding?

Veronica Branton: I think an informal understanding.

Ms Millar: Thank you. That document can come down.

So at paragraph 48 of your statement you explain that the ordinary Board packs tended to be lengthy. Was that the case throughout your time working for the Post Office?

Veronica Branton: It was the case throughout my time working at the Post Office but it became significantly more so during the period after the judgments had been handed down.

Ms Millar: Did you have a role in determining the level of detail in the papers that were presented to the Board?

Veronica Branton: We had – as the Secretariat, my team and I provided guidance on reducing papers in the template, but not in terms of any detail – sorry, my team and I would have – did and would have provided support around how to structure papers and how to structure, for example, the recommendations section of a paper, where people needed support on that. But not anything on the substance of the recommendation or the content of the paper because I wouldn’t purport, and nobody in the Secretariat would have purported, to be Subject Matter Experts.

Ms Millar: At paragraph 50 of your statement, you observe that the level of detail required might vary depending on the trust and confidence felt by individual Board members –

Veronica Branton: Yes.

Ms Millar: – which could vary over time. Can you explain a bit about what you mean by that?

Veronica Branton: Yes. So I think that some Board Directors will naturally be more interested in the detail than others and so I think quite often your Audit and Risk Committee members will be quite keen on seeing the detail. But I also think, more significantly, after the judgments had been handed down – well, sort of any time after the Common Issues judgment had been handed down, at that stage I think the Board’s confidence was undermined, and so, therefore, Board members were tending to seek more assurance about the information they received.

Ms Millar: Then did that then lead to the Board packs and the information going to the Board becoming more lengthy?

Veronica Branton: That was a contributory factor but I think just the range of issues that the Board was considering after the judgments had been handed down.

Ms Millar: Could we please have the document with the reference POL00393461 on screen, please. At the bottom of page 1, we can see there’s an email from you to the Board on 26 June 2020, and you’ve attached draft Board minutes. The email directly above that is a reply from Mr Cooper who is the shareholder representative on the Board, and he says:

“I think a number of us are very keen to understand how issues with Horizon (such as the presence of some bugs currently) and related process issues ([for example] around outstanding dispute and time to resolution) are going to be reported so that we can get comfortable that issues are being resolved in a timely way. I don’t remember the conversation exactly but I think there’s an action for Julie and the team to come back to us on this isn’t there?”

Is that an example of a member of the Board seeking further assurance from your team about particular issues?

Veronica Branton: Yes, I think that’s right.

Ms Millar: Did you understand who Mr Cooper was referring to when he said “a number of us” at the start of that email?

Veronica Branton: I don’t think I could specifically say which Board directors that meant but, certainly, I would say it was true of non-executive Board members.

Ms Millar: Thank you. That document can come down. So at paragraph 35 of your statement you explain that for ordinary Board meetings, the papers and the agenda would normally be circulated a week in advance of the meeting, but you go on to explain that, when the Board started to meet more frequently, it wasn’t always possible to send the papers a week in advance; is that correct?

Veronica Branton: That’s correct.

Ms Millar: In writing your statement, you also went back to look at the Post Office’s annual report and consolidated financial statements to see how many times the Board met each year. The report records that in 2019 to 2020 the Board met 13 times –

Veronica Branton: (The witness nodded)

Ms Millar: – the next year that increased to 52, and the year after that – so 2021 to 2022 – the Board met 33 times; is that correct?

Veronica Branton: That’s correct.

Ms Millar: Is that a mixture of ordinary and additional Board meetings?

Veronica Branton: It is but there was a fairly regular cycle in 2020/2021, looking at all of the Inquiry related matters, so those meetings tended to take place weekly, whereas the ordinary Board meetings tended to take monthly, with some additional meetings on topics such as funding as well.

Ms Millar: Do you explain when the frequency of meetings increased, sometimes papers were only going to the Board a day or two in advance; is that correct?

Veronica Branton: That’s correct.

Ms Millar: Can we have a look at UKGI00043629, please. Thank you. At the bottom of page 1, please. So we see an email from Mr Cameron to you on 18 November 2020, and that was sent at 18.51 hours. The subject line is “Board Papers on HSS Funding for tomorrow”. HSS, now is referred to as the Horizon Shortfall Scheme; is that correct?

Veronica Branton: That’s correct.

Ms Millar: He says:

“Veronica, I attach three papers for the Board tomorrow. Please could you add them … in the following order.”

How common was it for papers to be sent to the Board the evening before meetings?

Veronica Branton: I think that was relatively unusual but it was certainly the case when there were weekly Board meetings that papers would only be sent a day or two in advance, quite often.

Ms Millar: If we look further up that page, please, we see that Mr Cameron sends the papers on to a number of individuals at UKGI a few minutes after sending it to you. He says in paragraph 2 of his email:

“We have worked through all the comments, albeit in a bit of a rush, with some of the team attending the court proceedings.”

Did you notice any issue with the quality of the papers being submitted, whenever this was being done only a day or two in advance?

Veronica Branton: Not – I can’t recall specific incidents of that being the case. However, I think it unlikely that papers being produced in a rush is going to provide an optimal paper.

Ms Millar: Thank you. If we can move, then, to look at UKGI00041313, please. Halfway down that page, then, we can see an email from you on 19 May 2021 to a number of members of the Board. You say:

“Dear all,

“Given the papers for tomorrow’s meeting were only circulated this morning and there are a lot of important decisions to take the team has reviewed which decisions might wait, which are urgent and why.”

Just pausing there, is that the Secretariat team or who are you referring to there when you say “the team”?

Veronica Branton: Oh, no, the team I’m referring to is – it’s Herbert Smith Freehills and also the Historical Matters Business Unit. So they worked in conjunction when it came to looking at items going to the Board and the papers going to the Board on these matters.

Ms Millar: Thank you. You then go on to say:

“To this end item 1 … of the decision making tools has been deferred to next week.”

We can see that item 1 below is post-conviction claims. So do we understand from that that, because the Board papers were received so late, decision making in respect of this particular matter had to be deferred?

Veronica Branton: Yes. That’s how I would read it. Yes.

Ms Millar: Was that something that was common, in your experience?

Veronica Branton: I think it was common for agendas to move around quite a lot. I would say that one of the challenges, as well as the frequency of meetings at this stage, was also that there was information coming from a number of external legal firms, as well as the Historical Matters Business Unit working on things, and so the coordination between those teams and discussions inflight did mean that the decisions sought of that committee were changing quite often.

Ms Millar: Thank you. If we just go down that page slightly, we then see that item 2, again, is the Horizon Shortfall Scheme; is that correct?

Veronica Branton: It is.

Ms Millar: So that was, again, something where the papers were going to the Board relatively last minute?

Veronica Branton: Yes.

Ms Millar: Thank you. That document can come down.

Did anyone raise concerns with you about information relating to important decisions like this going to the Board at the last minute?

Veronica Branton: I certainly think it was a challenge, particularly for Non-Executive Directors, given that they very often had a portfolio of roles and were not full time at Post Office, but I suspect it began to feel much more full time than they might have wished, and it’s absolutely a challenge for somebody who is not a permanent employee at an organisation to be expected to read quite complex and detailed papers at short notice.

Ms Millar: Did anyone specifically raise concerns with you?

Veronica Branton: I think that concerns were raised periodically at those meetings and at Board meetings about the amount of information that directors were expected to process and assimilate quickly.

Ms Millar: Did you think this was inevitable, given the position that Post Office found itself in at the time, or could anything have been done to handle the situation better?

Veronica Branton: I think there was probably a tension between wanting to progress matters quickly and giving people enough time to thoroughly assess the recommendations.

Ms Millar: Do you think that anything could have been done to assist with that?

Veronica Branton: I think probably the coordination between the internal team and the external legal firms might have been better because I think sometimes the external legal teams wanted to get matters into a particular Board meeting to get a decision, and that sometimes meant that papers were later than one would have wished.

Ms Millar: When you say “external legal teams”, who are you referring to, in particular?

Veronica Branton: Principally Herbert Smith Freehills but Peters & Peters was also involved.

Ms Millar: In terms of the resulting impact on your Secretariat team, at paragraph 91 of your statement you say that:

“Time had to be spent dealing with new problems as they arose, Post Office Executives were working at full strength and the volumes of meetings and the governance support required meant that my team and I were at times struggling to keep up.”

Is that correct?

Veronica Branton: That’s correct.

Ms Millar: At what point did you start thinking that your team was struggling to keep up?

Veronica Branton: I think it took me longer than it should have done but I don’t think I was initially aware that the volume of meetings was going to be sustained over such a long period of time, and I also – having not been in any situation like it before, I didn’t recognise for some while that it was a company in complete crisis. But I think, you know, I probably should have realised earlier but I didn’t really appreciate probably until 2021 that it was really unsustainable.

Ms Millar: So, at that point, then, you realised the need for additional resource in your team; is that correct?

Veronica Branton: That’s correct.

Ms Millar: You also go on to explain in your statement that, by that point, it was difficult to attract and retain new governance professionals in your team?

Veronica Branton: It was.

Ms Millar: Why do you say that?

Veronica Branton: I think probably a combination of things. I think that Post Office’s reputation was obviously severely damaged. It also happened to coincide with a spike in demand for mid-level company secretaries, and I also, in good conscience, when interviewing people, I couldn’t do anything other than say that it was a difficult situation. It wouldn’t have been fair not to advise people of that and, had I not done so, I don’t think people would have stayed anyway, so that probably excluded some candidates from wanting to join as well.

Ms Millar: At paragraph 97 of your statement, you characterise it in the following way: you say that one of the reasons was that the Post Office was a pressure cooker, in your words at that point. Can you explain what you mean by that?

Veronica Branton: I think that the organisation couldn’t cope with the volume of work across a wide range of issues. I think the senior leadership of the Post Office was primarily private sector, and had skills and experience in business, but was much less well served to be able to deal with all of the matters that the Inquiry is dealing with, and also, because of the very poor image of the organisation and the need to provide additional assurance to a whole range of stakeholders, that was driving additional work through things like increases in Freedom of Information requests.

So, across the piece and needing to pivot from all of the matters that are being addressed by the Inquiry, and running the business of today, attempting to change the culture of the organisation, I don’t think there was the bandwidth or the resource, and then the organisation also had severe funding challenges, which then meant it couldn’t invest in what it needed to, to support postmasters better.

Ms Millar: Thank you. So turning, then, to a new topic, which is meeting minutes. From mid-2020, is it right that you were attending and minuting the majority of Group Executive Board and committee meetings?

Veronica Branton: That’s correct.

Ms Millar: You explain in your statement that you moved to a fuller style of minutes in general when you became Company Secretary?

Veronica Branton: That’s correct.

Ms Millar: Why was that?

Veronica Branton: I thought that, given everything that had happened with the Group Litigation, there would be far more focus on the organisation and a need for individual directors to be able to demonstrate challenge, so I thought it was important to be able to show who was saying what, and what information they were asking for.

Ms Millar: In terms of the attribution of particular points to particular people, you explain in your statement that you had raised the issue with the Chairman at the time, Mr Parker; is that correct?

Veronica Branton: That’s correct.

Ms Millar: When was that?

Veronica Branton: That was probably at some point in 2020.

Ms Millar: Can you explain the nature of the conversation that you had with him?

Veronica Branton: I think it was a fairly brief one, which was explaining, I think, what I’ve just mentioned about the importance of being able to show where individual directors had made particular points, given the situation.

Ms Millar: So was it a conversation initiated by you or by Mr Parker?

Veronica Branton: By me.

Ms Millar: I want to turn to a specific issue with meeting minutes that you address quite fully in your statement, and that concerns the bonus scheme, which is called the Transformation Incentive Scheme.

Veronica Branton: Yes.

Ms Millar: After leaving the Post Office, you became aware that this scheme was the subject of an independent review by the Department of Business and Trade; is that correct?

Veronica Branton: That’s correct.

Ms Millar: Could we please have RLIT0000337 – thank you very much – on screen. We can see that this is a review that was conducted by the law firm Simmons & Simmons, and it concerned the review of the governance relevant to Post Office Limited’s senior Executive remuneration in August 2023. If we could turn to page 3 of that document, please. Starting at paragraph 1.2, it explains that:

“The background to our Review is that, on 1 March 2023, [the Post Office] published its Annual Report and Accounts for the financial year 2021/2022 containing [the Post Office’s] Directors’ Remuneration Report.”

Going down to paragraph 1.4:

“The Annual Report and Accounts included a summary table setting out the performance assessment for the Inquiry Metric and its submetrics. The relevant submetric for the purpose of our Review is known as the Inquiry Support Target. In relevant part, this summary table reads as follows …”

The metric is set out at the bottom of that table. Under “Target”, it says:

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

It’s marked as having been “Achieved”.

So this review then focused on the decision making, which led to this metric being marked as “Achieved” in summary. So if we could move to page 23 of this report, please, about halfway down the page, thank you. The header there is:

“Was RemCo’s [the Remuneration Committee] decision that the Inquiry Metric had been achieved and that bonuses should be awarded in accordance with it justifiable?”

At paragraph 3.62 it states:

“It is important to note that because of the poor standard of RemCo minutes it is not clear precisely what decision the RemCo took at the relevant RemCo meetings held on 25 January 2022 and 22 February 2022. Further, the recollections of those involved are sufficiently different that we cannot be certain that those attending those meetings were clear about how the RemCo in fact read the Second Limb of the Inquiry Support Target, though there is evidence to support a conclusion that RemCo took the First Reading.”

Is it correct, then, that you took the minutes at the meeting on 25 January 2022 –

Veronica Branton: That’s correct.

Ms Millar: – and another member of your team took the minutes at the meeting on 22 February 2022?

Veronica Branton: That’s correct.

Ms Millar: You left the business, then, shortly thereafter –

Veronica Branton: Yes.

Ms Millar: – so you weren’t interviewed as part of this review; is that correct?

Veronica Branton: That’s correct.

Ms Millar: So going, then, to paragraph 3.64:

“In terms of our review, this governance weakness has meant that it has been extremely challenging to reach a firm conclusion about the basis for RemCo’s decisions and therefore to determine whether those decisions were justifiable.”

There’s an excerpt then from the meeting minutes, if we go to page 51 and that’s the excerpt from the meeting you minuted –

Veronica Branton: Yes.

Ms Millar: – which says:

“Tom Cooper asked how we would evidence that we were meeting the requirements of the Public Inquiry. Nick Read said that we could provide the positive feedback we’d received from the Inquiry Team on the disclosures we had made. AW …”

I think that’s Angela Williams?

Veronica Branton: Yes.

Ms Millar: “… added that the [Post Office] team could evidence that the disclosure requests had been met and the timings of these. Ben Tidswell noted that the appendix to the Inquiry paper in the Board pack provided some helpful detail about our interactions with the Inquiry Team.”

Finally, at paragraph 7.44, it says:

“It seems likely that Tom Cooper’s sensible question would have been raised in the context of a broader discussion about the Inquiry Support Target. However, this limited record of that discussion does not take us any further in understanding how the Inquiry Support Target was read by RemCo …”

So at paragraph 225 of your statement, you explain that you don’t think the committee was being asked to take a decision in this meeting.

Veronica Branton: Er – sorry.

Ms Millar: Can you explain a bit about why you think that’s the case?

Veronica Branton: Yes, of course. So this was an additional Remuneration Committee meeting and the Committee at that meeting was receiving an update rather than being asked to take any decisions.

Ms Millar: Is that then the reason why we don’t see any decision reflected in the minutes?

Veronica Branton: That’s correct.

Ms Millar: What is your response to the criticisms made earlier in that review, that the governance framework was inadequate and the meeting minutes were of a poor standard?

Veronica Branton: I think that, generally speaking, the minutes were of an adequate standard and that Remuneration Committee members had a chance to comment on those drafts.

Ms Millar: Is it the case that, after you drafted those minutes, you circulated them to the committee and they were approved by the committee?

Veronica Branton: They were.

Ms Millar: That document can come down. Thank you. So it’s your response that you think those meeting minutes are adequate?

Veronica Branton: I completely accept that the minutes of both meetings had been deemed to be inadequate and that the minutes of the meeting that discussed and approved the bonus scheme payments didn’t record the information that was required to make it clear why the decision had been taken to apply discretion and to approve the submetric on providing information to the Inquiry.

Ms Millar: Is it your view that the decision was actually reached in the February meeting, rather than in the meeting that you minuted?

Veronica Branton: Yes, because at the January meeting, the Committee wasn’t being asked to take a decision; it was receiving an update.

Ms Millar: Thank you. You go on to explain at paragraph 230 of your statement that, on occasion, decisions of the Remuneration Committee were sought and obtained outside meetings; is that correct?

Veronica Branton: That’s correct.

Ms Millar: In those circumstances, sometimes the Secretariat team weren’t aware that the decision had been taken?

Veronica Branton: That’s correct.

Ms Millar: Could we please have POL00448778 on screen, please. Halfway down page 1, please, we can see an email from Angela Williams to you on 25 June 2021, and the subject is “Remuneration Committee 1 July 2021”. She says:

“Many thanks for this.

“Please see comments below.”

So if we go over the page, please, at the paragraph starting 3(a), it says:

“Approval of the Transformation Incentive Scheme metrics – this refers to approval by email for postmaster satisfaction metric which I don’t think I’ve ever seen? The paper refers to Shareholder approval being required for the CEO but I think this should be for the CFO as well?”

Then in red is Ms Williams’ response to your question:

“I have received Tim, Lisa and Ken’s approvals but still awaiting Tom! I will chase again on Monday!! Agree it would apply to everyone and then we need to do a separate approval letter/paper for Nick and will also reference Al, but he should be included as a GE member under this approval anyway.”

If we go, then, to the top of page 1, please, which is your response, you email Ms Williams and say:

“With approvals, it would be better if they came from CoSec …”

Is that the Company Secretary?

Veronica Branton: Yes, thank you.

Ms Millar: “… so that we have a clear company record and audit trail (not being precious, it’s just that recordkeeping has been a bit of an issue and people always come back to CoSec when looking for decisions).”

Is that an example of a decision being made without your team being made aware?

Veronica Branton: It is.

Ms Millar: At paragraph 230 of your statement you say:

“I am not suggesting this was deliberate, more indicative of a lack of continuity and thereby understanding of the required governance.”

Can you help us with what you mean by that?

Veronica Branton: Yes, there had been a very high turnover of Chief People Officers. I was at Post Office for four years and, in that time, there were five Chief People Officers, and I think the absence of continuity certainly had an impact on Remuneration Committee issues.

Ms Millar: So do we take from that that you’re suggesting that the Chief People Officer maybe didn’t know that you should be looped in on all of these decisions being taken?

Veronica Branton: I think that’s right.

Ms Millar: Was this a common occurrence?

Veronica Branton: I think that it was more difficult with remuneration issues than anything else, because of the requirements for shareholder approval, and I think that that meant that there were more discussions outside of meetings and not going through formal governance than would otherwise be the case. Part of the issue was that there was an open timeline for obtaining approvals, so I think, if you’d been able to say that you could get an approval within a few weeks, that might have been one thing, but there were some instances where approvals were sought but not obtained for the best part of a year.

Ms Millar: In that email, you refer to the fact that recordkeeping has been a bit of an issue. Are you referring there today Remuneration Committee specifically or a wider issue?

Veronica Branton: I was thinking specifically about remuneration issues.

Ms Millar: Do you remember any conversation following you raising this concern with Ms Williams?

Veronica Branton: No, but I think that Angela had responded to my email and was supportive of making sure that I and my team were looped in, in the future.

Ms Millar: Did that in fact happen; did you see a change?

Veronica Branton: I wasn’t aware of formal decisions not coming through the – through myself and my team but I would say that it was still the case that there were quite a lot of conversations outside of Remuneration Committee meetings, principally because of, as I say, needing to obtain shareholder approval. And so the Chair of the Remuneration Committee, the Chairman, and the shareholder representative, would quite often have separate conversations.

Ms Millar: How did you become aware that those conversations were taking place without your knowledge?

Veronica Branton: Well, usually because when we got to a formal governance point through a Remuneration Committee meeting, the position would sometimes have moved on from the previous meeting, and it was clear from some of the papers coming through that that had been on the back of the conversations taking place outside of meetings.

Ms Millar: Did you raise that as a separate concern, that you weren’t aware of these conversations going on outside the meetings?

Veronica Branton: I didn’t because I thought it was the nature of the beast, as it were, because of requiring shareholder approval and therefore – and as I mentioned, the approval could take a long period of time. So it wasn’t going to be the case that there was a Remuneration Committee meeting convened necessarily to have a sort of subconversation to progress an existing matter.

Ms Millar: Thank you. Could we have POL00104112 on screen, please. Thank you. At page 3, please, we see an email from Mr Cooper to you – and a number of others, but it’s addressed to you – on 22 April 2020, and he says:

“I’ve got a few points on the minutes from the last meeting.”

Given the people that received this email, do we take from that that it’s a Board meeting he’s talking about?

Veronica Branton: Yes.

Ms Millar: He then goes on to say:

“In the matters resolved in paragraph 7 it mentions a route map of decisions leading to the GLO and makes specific reference to who knew about the Deloitte report.

“I’d like to clarify the ‘who knew about’ question should apply to the various pieces of work commissioned: “[1] following [the Post Office’s] response to the Second Sight Report

“[2] following termination of the Mediation Scheme

“[3] following the Jonathan Swift QC report.”

He goes on to say:

“Although not discussed explicitly last week, I hope we can agree also to look at whether recommended actions ([for example] by the QCs) were not completed or only partially completed. A good example is the Deloitte report which as I understand it only addressed the Horizon system since 2010 notwithstanding the QC’s recommendation to look at remote access over the life of the Horizon system.”

So is this Mr Cooper asking for greater clarity in the minutes of the Board meeting?

Veronica Branton: Yes, I would read it as such. I think what Tom Cooper was saying was that he was providing the Deloitte report and who knew about that, when, is an example of what information was known by the Board, by whom and when, but that actually he wanted to extend that to all of the issues that were going to the Board or not going to the Board.

Ms Millar: Thank you. So if we go to the email above, then, please, and you reply saying:

“Thanks Tom

“I’ll make those changes.”

Then the next email above, and that’s an email from Carla Stent on 23 April 2020, she says:

“2 further comments from me on reading the minutes …”

She provides two items, and then points out that there’s a typo in one of the appendices.

If we go to the email above, then, from you. You send that email on to Mr Parker on 23 April 2020 and you say:

“Please find attached the revised minutes … with track changes.”

Is this kind of a typical example of when you sent the draft Board minutes and people then coming back to you with suggestions for further input?

Veronica Branton: Yes.

Ms Millar: When you read that exchange, is that indicative of your initial draft minutes being inadequate, or is it the case that people are seeking further assurance, as you explained previously?

Veronica Branton: I would expect it in the normal course of producing minutes to ask people to – directors attending the meeting – to provide comments on those minutes. That, I would just see as a normal way to do things.

Ms Millar: Thank you.

Just finally, if we look at the email above. Thank you. And we see that that’s an email from Mr Parker and he says:

“I’m okay with the revised minute.”

So would that then be the point where that would then be approved as the formal minute of that meeting?

Veronica Branton: That would be the final draft, but the final draft would then go into the next meeting pack for approval at the subsequent meeting.

Ms Millar: Thank you. That can come down then, please. Turning, then, to the topic of governance reporting. Is it correct that the Post Office reported on its governance processes annually in the Governance Report?

Veronica Branton: That’s correct.

Ms Millar: That report addressed the findings of Board and Committee Effectiveness Reviews?

Veronica Branton: That’s correct.

Ms Millar: Can you explain briefly what those reviews entailed, please?

Veronica Branton: Yes. So Post Office would carry out a Board and Committee Effectiveness Review each year and typically there would be an externally facilitated review every third year, which is in accordance with best practice under the UK Corporate Governance Code. For the internally facilitated review I would work with the Senior Independent Director, take proposals for a questionnaire to the Nominations Committee for approval. I would then send out the questionnaire, collate the responses, draft a report, and share that initially with the Senior Independent Director for review, and then the report would be sent to the Board, and the Board would discuss that and then subsequently would discuss and agree recommendations arising from that review.

With the externally facilitated review, the Nominations Committee made a selection of – from external providers tendering, and they would conduct that review. That would be more comprehensive than an internal review because it would include interviews with all of the Board members and a number of additional senior executives.

Ms Millar: In terms of the external review, then, was your role to provide feedback from that review to the Board?

Veronica Branton: The external facilitator would provide that feedback.

Ms Millar: Did you then follow up on which recommendations from those reviews should be taken forward –

Veronica Branton: That’s right.

Ms Millar: – and keep track on of whether they’d in fact been achieved?

Veronica Branton: That’s correct.

Ms Millar: Could we please have your witness statement on screen, WITN11420100. Thank you very much. At paragraph 89, you explain:

“In my opinion the formal governance arrangements at the time I left [the Post Office] were, as a matter of general principle adequate, but were no longer effective to deal with the issues which had arisen.”

So just pausing there, some people might think that’s a contradiction in terms, that something could be adequate but ineffective; can you explain what you mean by that?

Veronica Branton: I think that the governance framework was adequate but I think that, because of the pressure that the organisation was under, and beginning to be able to – not able to be deliver across the range of issues it was having to deal with, it would have been better to step back and see whether we needed to change any of the governance arrangements and I’m thinking, in particular, about the very high volume of meetings, the pressure that put on Non-Executive Directors, and also that I think that the nature of decisions can change in a time of crisis, particularly where you’re needing to seek a lot of – well, you’re being asked to provide a lot of additional assurance because of the low level of trust that – well, the shareholder had in the Board and the Board had, to some extent, in the Executive.

Ms Millar: You go on to explain that, that:

“The volume of meetings and the range of decisions the Board was required to take to address the findings of the judgments and all that flowed from this, while trying to oversee the running of the business in precarious financial circumstances, and with some of the senior relationships starting to break down (in particular the CEO, Nick Read, and the CFO, Alisdair Cameron), meant that the demands on Board time were, in my opinion, in excess of what would generally be regarded as sustainable.”

So how long do you think the Board had been trying to operate at a level which was unsustainable by the time that you left the Post Office?

Veronica Branton: I think that from probably the spring of 2020, when the CCRC had referred cases to the Court of Appeal Criminal Division, and when the Board had decided that it needed to be responsible for reviewing all of the Inquiry related matters because they were too important to be dealt with by a subcommittee of the Board alone, that was probably the point at which it began to be far, far in excess of the hours set out in people’s appointment letters.

Ms Millar: In relation to your reference there to the breakdown between Nick Read and Mr Cameron, how do you think that impacted the Board’s work?

Veronica Branton: Well, I think it’s never helpful to have strained relationships within the top team, and it diverts attention away from the matters an organisation should be focusing on, to other matters.

Ms Millar: Did you observe the breakdown of any other senior relationships in your time working for the Post Office?

Veronica Branton: Not that I would call out.

Ms Millar: Thank you. That can come down.

So at paragraph 210 of your witness statement, you also explain that the governance structure at the Post Office is made more complex by having a shareholder representative on the Board who is not in fact from the shareholder. Can you help us with what you mean by that?

Veronica Branton: Yeah. I would say that, had Post Office only been dealing with running Post Office and developing Post Office, then having a shareholder representative from UKGI would have made absolute sense because the UKGI Executive directors come from a business background, and so, arguably, they’re better placed to be able to provide oversight of the operation of the – of a commercial business. But actually, once you’ve got into the stage of post-the judgments being handed down, you were dealing with needing to obtain funding from Government and needing to understand how Government operated, and also there were lots of sensitivities around things like remuneration, which I think somebody from a purely private sector background is less attuned to than somebody who is experienced in working in the public sector. And so having a shareholder representative directly from the shareholder, in my opinion, would that have made more sense at that time.

Ms Millar: Thank you. You’ve already alluded to it but at paragraph 92 of your statement, you say that, reflecting on things, more consideration should have been given to how to manage governance arrangements during a period of crisis for the company.

Could we have a look at POL00448723, please. This is one of the Effectiveness Reviews, the externally facilitated one that you referred to earlier, and it’s from March 2021. If we could go to page 4 of that report, please, and looking at paragraph 8, it says that:

“Boards typically need actively to shift on a ‘board governance spectrum’: at times of crisis being close to the operational detail, and then moving back to a more normal position of strategic oversight. As [the Post Office] Board starts to emerge from a time of intense work on the historical litigation and looks ahead to shaping a positive future for the business, it will want to move back to a position where its focus is less operational and more on strategic oversight. This move needs to be underpinned by grounded trust – an evidence-based confidence that the organisation is fully under control. The main theme of this report could, therefore, be called ‘moving along the strategic-operational spectrum’, considering how the Board can plan and best equip itself to make this move when it becomes possible.”

So is this what you mean when you refer to reflecting on what it means to govern a company in a time of crisis?

Veronica Branton: Not specifically that point because I think that, by the time I left Post Office in March 2022, it was still very much in a period of crisis and, therefore, the non-executives were more closely involved than might normal be the case. I think the things I was thinking of were to do with looking at things like how you allocated resource, when, because of the different demands on the company, you quite often needed to pivot resource from one matter to another and you needed to be able to have flexible resource.

And I – my – I think at the time, there was a lot of activity going on, a lot of looking at, for example, how to address the findings from the judgments, a lot of activity in terms of how do we better support postmasters, how do we change our culture, how do we engage more? But I don’t think there was an overarching crisis management plan and, actually, I think that’s probably what was needed for governance, but for other matters as well.

Ms Millar: Whose responsibility would it have been to formulate and propose that overarching strategy plan?

Veronica Branton: I think principally the Chief Executive.

Ms Millar: Do you think that’s something that, from a governance perspective, you should have raised at the time?

Veronica Branton: Had I reflected at that time and understood at that time that it was a sustained period of crisis and how that might impact on decision making, yes, but unfortunately, I didn’t.

Ms Millar: So the final topic I want to address is the culture in the Post Office during your time working there. So at paragraph 215 of your statement, you explain that, when you joined Post Office, the Board’s focus was on the defence of the GLO proceedings rather than the experience of those involved in it; is that correct?

Veronica Branton: I believe so.

Ms Millar: Is that something that you thought at the time, or is that something you thought about, reflecting on?

Veronica Branton: That’s with the benefit of hindsight and understanding now what actually happened.

Ms Millar: You describe there being a period of shock following the handing down of the Common Issues judgment

Veronica Branton: (The witness nodded)

Ms Millar: – in March 2019.

Veronica Branton: Mm.

Ms Millar: How did that manifest? What did you see that led you to conclude that the business was in a period of shock?

Veronica Branton: I think that there was – I think people will be well aware that there was a period following the Common Issues judgment being handed down where Post Office sought to ask for the judge to recuse himself, and so I believe it took some while for the Board to actually fully understand and absorb the fact that the approach taken to the Group Litigation had been entirely wrong in substance and in tone.

But I think that, by the end of 2019, when the Horizon Issues judgment was handed down, the Board members that actually realised that they had followed the completely wrong approach to the litigation.

Ms Millar: At paragraph 109 of your statement you explain that, following those judgments being handed down at Board level, there seemed to you to be a desire to lead and drive cultural change; is that correct?

Veronica Branton: Yes.

Ms Millar: Did you notice that across the Board or in relation to particular members of the Board?

Veronica Branton: Across the Board.

Ms Millar: Can we have your witness statement back on screen, please, WITN11420100, at page 43, and there at paragraph 132, you say that:

“I recall that sometimes work to make [the Post Office] more postmaster centric unearth the additional problems which to me demonstrated the scale of the cultural challenge.”

So pausing there, whenever you’re talking about the desire for cultural change, was making the business more postmaster centric the driving force behind that?

Veronica Branton: I believe so.

Ms Millar: But you explain there:

“… I recall that when SPMs were asked about their experience of the branch support centre …”

That was one of the initiatives set up after the judgments?

Veronica Branton: No, it was an existing support centre but postmasters had been asked for their views about how it was operating in practice, and there was a senior leadership group session where three postmasters came to explain how they found support or lack of support from Post Office.

Ms Millar: Did you attend that meeting?

Veronica Branton: I did.

Ms Millar: You explained their responses revealed that not only was it often not easy to get queries resolved, but also that the tone and attitude of those working in the Branch Support Centre were considered an issue. Can you provide any specific examples of when tone and attitude were raised as an issue?

Veronica Branton: Well, one of the postmasters who’d attended that meeting explained where he had called the Support Centre and hadn’t been able to resolve an issue, and had had to call back again, rather than somebody saying, “Well, we’re very sorry that we haven’t managed to sort out your query first time round”; it was more of a “Oh, it’s you again” sort of response.

Ms Millar: And when did that meeting take place?

Veronica Branton: This well have been in 2020 or perhaps early ‘21.

Ms Millar: Thank you. That can come down.

So you also point to the appointment of the Subpostmaster Non-Executive Directors as another cultural shift, and why did you think that represented another shift in the business?

Veronica Branton: Because I think it was bringing postmasters into the decision – the top-tier decision making forum of the company, and able to influence the strategic direction of the company.

Ms Millar: Did you have a role in the onboarding process for Mr Ismail and Mr Jacobs?

Veronica Branton: I did.

Ms Millar: Can you explain what your role was in that process?

Veronica Branton: Yes. It was to help with the induction process. The induction process was, you know, supported by a number of people but, when it came to providing induction materials, that fell mainly to me.

Ms Millar: Was that actually drafting the induction materials or collating them?

Veronica Branton: Well, we had a standard bundle when it came to core documents, such as the Articles of Association, and so on, but when it came to producing the briefing note, I produced that with input from others.

Ms Millar: What issues were on your mind when you were drafting that that might be right particular to SPM NEDs who were joining the Board, as opposed to other Board members?

Veronica Branton: I don’t think I thought of anything particularly in terms of the briefing note because the briefing note was to set out the main topics that the Board was considering at that time and then providing papers that linked to those main topics.

I think, in thinking about subpostmasters joining the Board, the things I was thinking about was the time commitment, given the state of crisis the company was in and the very high volume of Board meetings that were being held; the fact that most of the non-executives had a portfolio of non-executive roles, whereas Saf Ismail and Elliot Jacobs were running post offices and retail businesses, so the time commitment was going to be harder for them than the other non-executives; the non-executives on the Post Office Board, I think, had said to a person that it was the most challenging non-executive role they had.

So it was things like that I was thinking about when they were joining the Board.

Ms Millar: Thank you. Can we have on screen, please, POL00448777, and page 2, please, and if we can go down that at page, please. Thank you. So at the bottom of that page is an email from you on 28 January 2021 to Mr Parker and, if we go to the second paragraph of that email, which is over the page. You explain:

“There are a number of governance issues I’ve flagged. We already breach the UK Corporate Governance Code as Tom sits on RemCo and ARC but isn’t an independent NED and if the PM NEDs [the Subpostmaster NEDs] were to join committees, we’d exacerbate that issue (we will in any case no longer have a majority of independent NEDs on the Board).”

Can you explain that issue that you’re raising there, please?

Veronica Branton: Yes, so under the UK corporate governance got the subcommittees of Boards are meant only to have a membership of Independent Non-Executive Directors, and the reason for that is that not being independent is seen as one factor that can impair the objectivity of your decision making.

Ms Millar: You go on to say:

“As you know, explaining rather than complying is always an option and to be honest it’s less the independence issue that I’m concerned about than it being overwhelming if the new appointees have no prior Board experience, are trying to do a full-time day job and have a substantial induction programme to cover …”

So there the new appointees that you’re referring to are the Subpostmaster NEDs?

Veronica Branton: That’s right.

Ms Millar: Just to break that sentence down, when you say “explaining rather than complying is always an option”, do you mean that you can explain a breach of the UK Governance Code?

Veronica Branton: Yes, the UK Governance Code allows companies to explain why they’re not following a particular provision where there’s a good reason not to do so.

Ms Millar: At that point, given that there was already a breach because Mr Cooper sat on RemCo and ARC, had the Post Office in fact explained that breach of the governance code?

Veronica Branton: In its governance report, in the Annual Report and Accounts, I believe it did.

Ms Millar: You explain that it’s less the independence issue, rather than it might be overwhelming if the SPM NEDs were to sit on Board committees. So is your primary concern it being too much information too quickly for the SPM NEDs?

Veronica Branton: Yes, given the situation the company was in at the time. But I do say elsewhere, I believe, that my suggestion was that the new Postmaster NEDs – and we didn’t know, I believe, at this time, who the Postmaster NEDs were going to be and therefore whether they had prior Board experience or not, but my subsequent suggestion was that the Postmaster NEDs attended one of each of the committee meetings to get a feel for how they operated but that there was a pause for a few months on considering whether to appoint them to committees, so that they had time, essentially, to get their feet under the table.

Ms Millar: When you say, “it’s less the independence issue that I’m concerned about”, was that because, in your view, the Post Office could just explain the situation?

Veronica Branton: Yes, and, you know, there’d been a very valid reason for the shareholder representative being on those committees. So there would equally have been an argument for the Postmaster NEDs to join those committees.

Ms Millar: Thank you. That document can come down.

Mr Jacobs gave evidence to the Inquiry last week, and he explained in his evidence that the Post Office in his view underestimated the need to train the new SPM NEDs properly and described their training as intense but limited. Did either of the SPM NEDs raise concerns with you at the time?

Veronica Branton: They didn’t at the time but then I think you have to set that in the context of Saf and Elliot having been through quite an intensive induction programme and my leaving Post Office within ten months of them starting. So they probably hadn’t, at that stage, really, if anything, recovered from the initial induction programme.

Ms Millar: You explain that, by the time you left the Post Office, your view was that they were full and valued participants at Board meetings and their contributions were valued?

Veronica Branton: That was what I felt from my observation of those meetings and the fact that they were – looking back at the minutes, they were contributing across all of the topics raised at Board.

Ms Millar: The Inquiry is familiar with The Times article dated 19 February 2024, and I think you’ve also seen a copy of that article.

Veronica Branton: I have.

Ms Millar: In that article, Mr Jacobs is reported to have said that the culture still exists that postmasters are guilty and “on the take”, and that they – him and Mr Ismail – continue to be ignored and seen by many as an annoyance; is that something you observed?

Veronica Branton: Not at Board level, and I think my primary contact with Saf and Elliot was at Board meetings and around Board meetings.

Ms Millar: When you say not at Board level, did you observe it in other areas of the business?

Veronica Branton: Not that I came into contact with, no.

Ms Millar: Did you receive any reports of that kind of feeling in different areas of the business?

Veronica Branton: No, though I think, as I’ve mentioned in my witness statement, there were clearly still cultural issues. I’ve mentioned the help centre not being helpful.

Ms Millar: Thank you.

So despite observing a desire for a cultural change at board level, you explained that there were a number of things that pointed in the opposite direction. In your witness statement you provide the example of a colleague survey in March 2022 which returned poor results.

Veronica Branton: (The witness nodded)

Ms Millar: What’s your recollection of that survey?

Veronica Branton: My recollection of that survey and the results was that the position hadn’t materially improved from when McKinsey had carried out an organisational health index and the results of that were that it placed Post Office in the lowest quartile when it came to their benchmark of results, and that one of the things that stood out particularly was low levels of trust across the organisation but including within the senior leadership group.

Ms Millar: Thank you.

Just finally, then, if we could look back to your witness statement, WITN11420100, at page 40 and at paragraph 123, you say:

“Ultimately though, by the time I left in March 2022, I thought that [the Post Office’s] reputation might have been damaged beyond the point of repair and that the huge challenges for the business going forward, as well as addressing the issues of the past, while in a precarious financial position, might have made the changes needed, culturally and otherwise, undeliverable.”

So why do you say there that you think the Post Office’s reputation might have been damaged beyond the point of repair?

Veronica Branton: Because I think those low levels of trust permeated throughout the organisation, the view of the shareholder of Post Office, and in the outside world.

Ms Millar: Thank you, Ms Branton. Those are all the questions I have for you.

Sir, can I just check, first of all, if you have any questions for Ms Branton?

Sir Wyn Williams: No thank you, no.

Ms Millar: I’ll just turn to the Core Participants.

Sir, Mr Stein has two minutes’ worth of questions, so I think that will be fine without having a break.

Yes, I think that we have agreement from the shorthand-writer.

Sir Wyn Williams: All right, Mr Stein, you’ve limited yourself very strictly. Over to you.

Questioned by Mr Stein

Mr Stein: Thank you, sir.

Ms Branton, my name is Sam Stein. I represent a large number of subpostmasters and people that worked in branches as well.

The topic I want to ask you about is about the other handover, the handover to the witness that we had earlier today, that’s Ms Scarrabelotti, okay, because she took offer from your role?

Veronica Branton: She did.

Mr Stein: You’ve just been speaking to Ms Millar about the fact of other people coming on Board at the performance –

Veronica Branton: Yes.

Mr Stein: – and about the induction process and the like, so I just want to ask you about her induction process and what she knew about it.

At paragraph 124 of your statement, which is the paragraph after the one Ms Millar looked at, you’re referring there to people who are joining, potentially, an organisation in crisis may want to because it’s a challenge, because they may want to be part of turning it around. In the paragraph Ms Millar was pointing to, you say there that there were lots of difficulties and you weren’t certain it could survive, the Post Office.

Veronica Branton: Mm.

Mr Stein: So with that rather long introduction, minute 2 now, did you tell Ms Scarrabelotti had, “Look, this place is in crisis, really not sure it’s heading for a great future”; did you give her that as a basic part of her induction?

Veronica Branton: I don’t think I would have put it as baldly as that. I think I will have explained the great pressures the organisation was under.

Mr Stein: Because there’s a ten-page note that you left her and I don’t have the time, within my self-imposed two minutes, but you’ll remember it, perhaps. It certainly doesn’t convey a sense of crisis. It does talk about the challenges in having meetings and that there were lots of meetings –

Veronica Branton: Yeah.

Mr Stein: – but it doesn’t say the word “crisis” occur anything close to that. Why not?

Veronica Branton: I’d probably be more likely to talk to somebody about that than put it in a note.

Mr Stein: And did you, though, that’s the question?

Veronica Branton: Did I? (Pause)

I think I probably talked about the pressure of work, rather than talking about – I don’t think I will have said that the organisation was in a state of crisis, and I think some of my understanding of the organisation being in a state of crisis is having stepped back from being in that pressure cooker environment and really fully understanding that.

Mr Stein: So, really, in the last dying seconds – I’ve probably trespassed over my two minutes – one of the things, you were there for about four years since 2018 –

Veronica Branton: Yes.

Mr Stein: – you lived through the High Court litigation, the Court of Appeal case, the start of this Inquiry, and so on?

Veronica Branton: Yes.

Mr Stein: So you kind of saw it all at that stage –

Veronica Branton: Yes.

Mr Stein: – and I think you recognise, trying to find people that can take on these pressures, these difficulties, it’s really problematic?

Veronica Branton: It is.

Mr Stein: Thank you, Mr Branton.

The Witness: Thank you.

Sir Wyn Williams: Thank you, Mr Stein.

That’s it, is it, Ms Miller?

Ms Millar: It is. Thank you very much, sir.

Sir Wyn Williams: Well, thank you very much, Ms Branton for coming to give evidence and for providing a witness statement. I am very grateful to you.

The Witness: Thank you.

Ms Millar: Thank you, sir. I think we’re back Tuesday next week.

Sir Wyn Williams: 10.00 on Tuesday morning, everyone.

Ms Millar: Yes, thank you.

Sir Wyn Williams: Bye.

(3.08 pm)

(The hearing adjourned until 10.00 am on Tuesday, 8 October 2024)