Official hearing page

15 October 2024 – Michael Young and Simon Oldnall

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(10.00 am)

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

Sir Wyn Williams: Yes, thank you very much.

Ms Hodge: Thank you. Our first witness today is Mike Young.

Sir Wyn Williams: Yes.

Ms Hodge: Please could the witness be sworn.

Michael Young

MICHAEL THOMAS YOUNG (sworn).

Questioned by Ms Hodge

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

Michael Young: Michael Thomas Young.

Ms Hodge: You should have in front of you a copy of your witness statement dated 8 August 2024.

Michael Young: I do.

Ms Hodge: That statement runs to 63 pages. Could I ask you, please, to turn to page 58.

Michael Young: Yes.

Ms Hodge: Do you see your signature there?

Michael Young: I do.

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

Michael Young: It is.

Ms Hodge: Thank you. Mr Young, I’m going to begin by asking you a few questions about your professional background, before we go on to deal with some of the substantive matters dealt with in you statement.

Firstly, on leaving school, you joined the British Army in which you served for 11 years; is that correct?

Michael Young: That is correct.

Ms Hodge: After leaving the army you served as a police officer for seven years, rising to the rise of Detective Sergeant; is that right?

Michael Young: That is correct.

Ms Hodge: Between March 1995 and February 1998 you say you worked for Orange Plc; is that the mobile network provider and Internet service provider?

Michael Young: It was at the time, yes.

Ms Hodge: Forgive me, at the time, yes. You explain that you were initially employed by Orange as an Investigations Manager, responsible for fraud and security matters; is that right?

Michael Young: Correct.

Ms Hodge: You were later promoted to the Group Head of Security Management; is that correct?

Michael Young: That’s correct.

Ms Hodge: Upon leaving Orange, you took up a role as the Chief Information Officer and Vice President of International IT for Verizon Business Solutions; is that correct?

Michael Young: That is correct.

Ms Hodge: In that role, you were responsible for IT development in the Europe, Middle East, Africa and Asia and Pacific regions; is that right?

Michael Young: IT operations and development, yes, that’s correct.

Ms Hodge: Thank you. Before taking up your role at Verizon, had you undertaken any formal training or obtained any qualifications in information technology?

Michael Young: I have a diploma in security management.

Ms Hodge: When did you obtain that?

Michael Young: I think that was whilst at Orange. I was studying for a diploma in security management and that continued after leaving Orange too.

Ms Hodge: So far as that diploma is concerned, in security management, what aspects of information technology was covered, do you recall?

Michael Young: Most parts of cyber – what we would know as cyber security today.

Ms Hodge: Thank you. You say you left Verizon in June 2006 and after spending a year running your own consultancy you joined BT in July 2007 as their Vice President of Global Services; is that right?

Michael Young: That is correct.

Ms Hodge: Dealing then with your employment at the Post Office, you joined Post Office as Operations Director in August 2008, initially reporting to the Managing Director, Alan Cook; is that right?

Michael Young: That’s correct.

Ms Hodge: You describe your responsibilities as Operations Director as being to develop and manage at an executive level the partnership and relationship with suppliers.

Michael Young: Correct.

Ms Hodge: Is that how you saw your role at the time?

Michael Young: (The witness nodded)

Ms Hodge: In your role as Operations Director you had a number of direct reports, which included the Head of Change and IS, which was responsible for overseeing technology, is that right –

Michael Young: That’s right.

Ms Hodge: – as well as the Head of Security?

Michael Young: Correct.

Ms Hodge: When you joined the Post Office, what did you understand the remit of the Post Office Security Team to be?

Michael Young: It was an all-encompassing type mandate. It was all areas of risk across the POL business. So making sure that employees were aware of their security responsibilities so, therefore, there was some form of training for employees when they were brought on board to the Post Office. That was supplied and supported by the Security Team, right the way through to acting on intelligence that may refer to security in the Cash Vehicles in Transit arena, which was a very large part of my operational remit, and right the way through to investigations.

Ms Hodge: When you say “investigations”, can you clarify what you mean by that: are you talking about criminal investigations; did you understand that the Post Office Security Team were responsible for investigating alleged offences of fraud, theft and false accounting, for example?

Michael Young: One aspect of John Scott, the Head of Security’s, roles and responsibilities was to look at criminal investigations, yes.

Ms Hodge: In your statement, you say that you were not responsible for investigations into potential criminality within the Post Office Network and that you had no involvement with prosecutions or civil litigation. Given that you had oversight of a team which conducted criminal investigations, do you think that that’s entirely accurate to say that you had no responsibility for the investigation into potential criminality within the network?

Michael Young: I do.

Ms Hodge: Who did you think was responsible at an executive level for managing and overseeing the criminal investigations carried out by the Post Office Security Team?

Michael Young: There was an overlapping responsibility managed via Royal Mail Group for all criminal prosecutions across the group and John was the – John Scott, the Head of Security for POL, was the lead into that. In my introduction, when arriving at the Post Office, it was made clear to me that that process did not need my supervision or my line management because that had been in place over a number of years, and I was told not to get involved and to leave it with both Legal and that RMG, Royal Mail Group, type framework.

Ms Hodge: Who told you that?

Michael Young: Alan Cook, my boss, the CEO.

Ms Hodge: Upon joining the Post Office, what did you understand to be the relationship between the Post Office Security Team and the Royal Mail Group Security Team and those who had responsibility for criminal prosecutions?

Michael Young: As a former policeman, I knew that Royal Mail Group had a means of prosecuting people because I’d seen them in my police career involved in certain aspects of prosecutions. What I understood from talking to John, as an introduction to John, as one of my direct reports, was how the process worked, because I asked questions, in relation to what had been described to me by Alan Cook.

So I had some sense of how it worked at Royal Mail Group via my former career as a policeman and some of the gaps in my understanding were either covered off in the intro by Alan Cook or my introduction in my first weeks of getting to know my team and, in particular, John Scott as he told me about his roles and responsibilities. And I knew that, in terms of prosecutions within – potential prosecutions within the Post Office, that it was being handled under that Royal Mail Group type mantle, with a strong emphasis coming from the Legal Team.

Ms Hodge: I wonder if we could please take a look at an email chain that took place in 2011 between John Scott, your Head of Security, you, Mr Young, and Rob Wilson, the Head of Criminal Law team, and it bears the POL00019281. Thank you. If we could scroll down, at the top we have the last email in the chain. If we could scroll down, please, to the bottom of page 2.

This is an email from, we can see, Rob Wilson. If we just scroll up to the bottom of page 1, please, it is said to be from Monica Thompson but seems to be sent on behalf of Rob Wilson, Head of Security. This is addressed to John Scott and copied to Susan Crichton. As you’ll see, you’re later copied into the email. It relates to a letter from a Member of Parliament requesting that the Post Office discontinue the prosecution of a constituent. It reads:

“Dear John

“Please find enclosed a copy of a letter dated 18 July received in today’s post. You will see from the associated summons the allegation in this case concerns the theft of over £53,000.

“My current instructions are that not all of the money has in fact been repaid. My understanding is that a total of £18,104.75 has been paid and that in any event despite the comments made in the letter that this case in the public interest to prosecute.

“Bearing in mind this letter has come from an MP and has been forwarded to the Chairman, I have copied the correspondence to you and will be grateful if my instructions could be confirmed in due course.

“If I can be of any assistance, please do not hesitate to contact me …”

So that penultimate paragraph, Mr Wilson is seeking confirmation of instructions from John Scott; do you see that?

Michael Young: Yes.

Ms Hodge: If we scroll up, please. Thank you. So the second email in the chain is from Mr Scott to you. We see various other recipients copied, including Susan Crichton, Head of Legal, and others. It reads:

“Mike.

“Please find attached a letter from the [Right Honourable MP], in regards to Post Office Security prosecuting one of his constituents … and requesting that we discontinue.

“The letter has been forwarded to the Chairman’s office [as we see below], so is likely to become a flag case.”

He says:

“I’ll ensure that the case and prosecution is reviewed and that any future action taken is appropriate and proportionate, although you can see the initial assessment from Rob Wilson below.

“We’ll arrange a holding letter in the meantime …”

My question is this: if you had no oversight of these matters, why is it that in July 2011 Mr Scott brings this to your attention and raises it with you?

Michael Young: So amongst my direct reports – and there were number, we’ve only covered two or three of them – I made it clear that anything that was likely to escalate to the Board – POL Board and the Royal Mail Group Board – and certainly anything that was coming from the shareholder, I’d like to be copied in and made aware of. And I think in part, John is making sure, on a rare occasion – a very rare occasion – that he is standing true to that instruction.

Ms Hodge: Just to be clear, from this it’s right to understand that you were aware that your Head of Security, John Scott, was giving instructions to the Criminal Law Team about the conduct of cases; is that correct?

Michael Young: Well, I’m aware clearly through the disclosure of what the Inquiry has brought forward. Having read that, I’m aware of it in terms of the content. Was I aware that John was doing something like that on a norm? The answer to that is no.

Ms Hodge: You did not know that at the time; is that correct?

Michael Young: No.

Ms Hodge: Dealing then briefly with some changes in your job title and your responsibilities during the course of your work with the Post Office, you’ve said that in and around April 2010, your job title changed to that of the Chief Technology and Operations Services Director; is that correct?

Michael Young: That is correct.

Ms Hodge: That didn’t result in any changes in your roles and responsibilities; is that right?

Michael Young: Throughout my time, I think, at the Post Office, my roles and responsibilities didn’t change.

Ms Hodge: I think you say you weren’t happy with that title though; is that right, and why is that?

Michael Young: My immediate answer to that would be I didn’t think it described quite what my job role was. My job role was a small – a small part of my job role was the IT, with a CIO or an IT director, as we’d know them today, in situ and managing that on a day-to-day basis. I had, as we briefly covered earlier, responsibility for all of the core programmes, change programmes – and I’m not talking about IT change here, I’m talking about changes to the network, changes to the property portfolio – all of the change programmes reported to me at the executive level with Neil Ennis, at the time, being my direct report for that; I had CViT, the Cash Vehicles in Transit. Post Office, I think, still remains the largest mover of physical cash in the country. It’s a very, very large enterprise with depots right the way through the UK, and some significant fleet that backs that up on a day-by-day type basis; and then I had a number of other elements that sat alongside that, so it was quite a broad – quite a broad remit.

And a small part of my time was spent on the IT, and I’ve talked about that in my statement. It did grow with Horizon Online but it still relied very heavily on my direct report chain to keep me abreast of anything that they thought I should be aware of, so that I could lend my support and supervision at POL Board, at the POL Executive Team, and across that large mandate.

Ms Hodge: Now, a few months later in October 2010, you were promoted to the job of Chief Operations Officer; is that correct?

Michael Young: It is but, by way of an explanation, at the time when Alan Cook left – and for me, Alan Cook left relatively quickly, to a point where I think most of the Executive Team that were in situ didn’t really have much of an opportunity to say cheerio. As we all know David Smith, former Parcelforce, came in as an interim Managing Director and, at that time, you know, David – he didn’t explain it to me, though I asked – had promoted or given Paula Vennells the title of Chief Operating Officer.

You can’t be an Operations Director and have a Chief Operating Officer without some people drawing conclusions and looking at how that all works together. So I had the debate with David Smith, and he said, “What title do you want because, you know, Chief Operating Officer is Paula’s and frankly that’s done”, and I chose what I thought would best get me through, if you like, in the interim. But it wasn’t truly reflective of the role, as I’ve described.

Much later on, as David Smith leaves the Post Office and then goes into group to pick up a new role in Royal Mail Group, Paula becomes the Managing Director. I wasn’t aware that that was going to happen but clearly things had moved to a point where that took place, and a little later down the road, Paula suggested that I’ve then become the Chief Operating Officer. But through that entire journey from Operations Director to Chief Technology and Services Director, and even Chief Operating Officer, my roles and responsibilities didn’t change. There was a significant programme that took the best part of my final year at Post Office to complete, which was essentially manage the negotiation on behalf of the Post Office as it related to separation from Royal Mail Group, and that was, you know, three or four days a week to bring that to fruition over a 12-month period.

And during that time, in that mainstay, that’s when I was the Chief Operating Officer.

Ms Hodge: Thank you. So just dealing briefly, then, with the circumstances of your departure. In March 2012, you were informed by Paula Vennells, then Managing Director, that you would not be sitting on the Board post-separation, you say, and that your title would no longer remain Chief Operating Officer; is that correct?

Michael Young: That is correct.

Ms Hodge: You say you decided to leave at that stage as you regarded that as a demotion?

Michael Young: It’s difficult, in career terms, to go from one title, to another title, to Chief Operations Officer, to then go back to another title, which may very well have been Operations Director. The mandate I’m going to presume was not likely to stay the same. In fairness to Paula, I had more than hinted that the separation negotiation that I was undertaking was likely to be my last big effort for the Post Office. So I think there were a number of people that knew that it wasn’t my intent to say – to stay. I think I’d given my all over four years for Post Office and wanted to move on to something different.

So when the dialogue took place in a one-to-one with Paula, we rapidly, you know, came to an agreement on how that might work. But, certainly, going from Chief Operating Officer back to Operations Director, and then some sort of restructure, which inevitably will have taken – would have taken place based on separation, it would have seen less of a remit and, candidly, I wanted to leave on a high, having delivered the Separation Agreement and having that title.

Ms Hodge: Just to bring that summary of your roles and responsibilities at Post Office to a conclusion you, ultimately left in April 2012; is that right?

Michael Young: I physically left in the second week of March but contractually left, yes, around that date.

Ms Hodge: I’d like to rewind then to when you first joined the Post Office in 2008 and your knowledge and understanding of the Horizon system that was in place at the time. So the version of Horizon which was running in the Post Office at the time you joined was Legacy Horizon; is that correct?

Michael Young: That is correct.

Ms Hodge: In your statement you make some general comments about your attitude to Legacy Horizon. I wonder if we could bring that up, please, at WITN11130100, at page 10, paragraph 30, please. You say this:

“During my first three years I spent a lot of my time visiting Post Office branches, getting a feel for everyone’s morale, and trying to see whether there were strategies we could implement to help. Nothing in the branches was reported to me that indicated that there was something fundamentally wrong with Legacy Horizon or Horizon Online. Still, to this day, I am unaware of an identified part of the Horizon code that someone can point to [to] show that Horizon is fundamentally flawed. I believe an effective IT system requires not only good technology, but that technology needs to be wrapped in good processes and training for all users. Like any IT system, they all have …”

You’ve used the term “BEDs”, that’s bugs, errors and defects; is that right?

Michael Young: (No audible answer)

Ms Hodge: “… requiring fixes or updates.”

Now, I just want to clarify, if I can, what it is exactly that you’re seeking to convey here. The first comment you make, in effect, is that nothing was brought to your attention in those early years that suggested Legacy Horizon was fundamentally flawed; is that fair?

Michael Young: That’s correct.

Ms Hodge: But you knew from your previous roles that all systems have bugs, errors and defects; is that right?

Michael Young: That stands true today with any system.

Ms Hodge: Therefore, like any other system, you would have expected Legacy Horizon to have some bugs that required fixing; is that fair?

Michael Young: It’s difficult to comment over something you’re not aware of. So if we just take a step back for a moment, so on arriving at POL, I was taken through – I think my statement makes it clear – about an hour’s worth of training and overview of Horizon and I was given a fairly thorough brief by the then IT Director, Mr Smith, or Dave Smith, on, you know, how it was operating across The Branch Network, and, for those people that know Horizon, an hour is not a great deal of time.

So no one in the course of that introduction in the model office, within what was then the headquarters of Post Office, indicated any flaws with the system. Operating issues, I want to be clear of what I mean by that. So no one mentioned any BEDs but they did mention blue screens and network-related issues in branch which caused particular problems. But, as part of that dialogue, I was also briefed on the fact that Horizon Online, HNG-X, in other terms, had already been planned for and was already contractualised with Fujitsu, so it’s replacement was already in swing with Fujitsu already undertaking to write the code for that new system.

So I arrive, I’m given a brief overview of Horizon and an hour’s worth of training in the model office via the IT Director. I’m told how the contract works to a degree, in very short measure, and I’m told that the future of Horizon has already been embedded into a contract that lasts until 2015. But Horizon Online sought to deal with the operating issues that were felt across a number of branches in the network.

But at no time in that dialogue was there any mention – I mean, the one that I think the Inquiry has picked up on and I’ve seen since the Inquiry has come about is the Callendar Square issue, as an example. No one took me through that or made any indication that we were suffering with any type of BED that was core to the code of Horizon. And the fact that the network was very expansive – at that time, it isn’t the size it is now, it was 12,000/13,000 branches – you know, if there were significant issues in the Horizon code, they would have aired themselves in some form or other in a more expansive way across the entire network, and that clearly wasn’t the case when I arrived.

Ms Hodge: You have mentioned, Mr Young, the Callendar Square bug, which you say wasn’t brought to your attention during your early briefings on Horizon; is that right?

Michael Young: In the introduction, yes.

Ms Hodge: Do you think you should have been told that there was a known software bug in Legacy Horizon which was capable of causing receipts and payments mismatches, of which the Post Office was aware?

Michael Young: I’m hesitating only from the point of view that, clearly in the eyes of the Post Office, certainly David Smith – it was in his rearview mirror and had long gone by the time I arrived two years later.

Would I have expected to have been told? Had I been in his shoes, I would have said that there was a significant bug, it was addressed, this was the form of it but, to date, since then, it’s clean running.

I would have expected it but it didn’t come.

Ms Hodge: Dealing with what Mr Smith did say to you, you addressed this at paragraph 41, please, if we could turn to that on page 14. Thank you. You refer at the top to two issues, those are the hardware issues to which you’ve just referred – the blue screen freezes and the ISDN Internet connection – and you say that the two issues described were not linked to criminal prosecutions.

You go on to say:

“However, I was aware of complaints about the integrity of Legacy Horizon by some of the [subpostmasters]. I recall speaking to Smith …”

That’s David Smith, Head of Change and IS; is that right? There are, of course, two David Smiths, so we want to be clear that – is that correct, you’re talking about him?

Michael Young: Yes, that is correct. It was confusing for me at the time.

Ms Hodge: You recall speaking to him about to him about the allegations when you joined the Post Office. You say:

“From memory, I believe he assured me verbally that there was nothing wrong with … Horizon and nothing to worry about (or words to that effect).”

I just want to explore with you briefly what you understood Mr Smith to be saying about Legacy Horizon, and I think there are two – well, there may be more, but two possible readings of this: one is that he was telling you that there were no faults in Legacy Horizon, which might explain the accounting errors about which subpostmasters were complaining; another possibility is he was saying that, like all systems, Legacy Horizon had some faults but that these were being appropriately managed.

What did you understand him to be saying to you at the time: was it the first or second of these, or indeed something else entirely?

Michael Young: So something slightly different. There wasn’t an in-depth discussion about some subpostmasters complaining about Horizon. So, you know, it wasn’t a ten-minute/five-minute discussion around that, I remember him saying that some subpostmasters have historically complained about the system and I didn’t draw too much of a conclusion from that, other than I thought it was related to both the ISDN issue the network in branch, as well as the blue screen type problems that occurred as part of that process.

So I asked – I asked, “Are we talking about the operational type issues that sometimes occur in branch?” He said “Yes and no, some people blame the system when they’re caught out”. And I asked, “What do you know what you mean by caught out?”

“When they may be stealing from the branch”, was where the conversation – I think where the conversation went. But it didn’t – I didn’t hang on that and, candidly, neither did he.

Ms Hodge: What you said here was that he gave you a verbal assurance that there was nothing wrong with Legacy Horizon. But does not follow that that’s not entirely consistent with what you yourself understood about IT systems at the time, which is that they’re all liable to have some bugs, errors and defects and, in your words, the issue is how you deal with that?

Michael Young: So at the time that Dave Smith was taking me through that process in the model office, there were no issues with the system from a code point of view. So there was nothing suggested that a coding error was causing problems in branches. I want to be clear about that. So we didn’t go down that route. I’ve made already clear that he didn’t mention the Callendar Square issue. He largely emphasised the operational frailties of the Legacy Horizon system, and talked to some postmasters suggesting the system was at fault when they were prosecuted for theft.

Ms Hodge: Did you make any enquiries of Mr Smith about the end-to-end processes which were in place to manage any bugs, errors and defects that were detected in Legacy Horizon?

Michael Young: We did that much later on in the practicalities. This – in my first weeks at the Post Office, there were a number of people I had to see and be introduced to, including at Royal Mail Group. So as I became more familiar with the architecture, as I got to grips with some of the contractual arrangements with Fujitsu, they were pieces of work that were done over a number of months, as you start to get a sense of your whole mandate and what that means. It was a very, very big mandate and there were lots of calls on my time. So invariably some of this homework, for want of better words, was as I’ve suggested: homework. You took it home and ran through it with a fine-toothed comb.

Did I understand the way the Helpdesk and other functionality worked around Horizon? In broad terms, the answer to that is yes.

Ms Hodge: So you say that that’s a topic you dealt with a little later, when you were dealing with practicalities. What do you recall being told about the end-to-end processes that were in place, within Fujitsu but also as between Fujitsu and Post Office to investigate accounting discrepancies?

Michael Young: To investigate what, sorry?

Ms Hodge: Accounting discrepancies.

Michael Young: I don’t think I ever, in those early days – in fact I’m trying to think across the stretch of the 4 years – did we – I’m sure we’re going to come to the Horizon Online early pilot issues – but I don’t think I ever went in to a conversation with Dave Smith, looking at the end-to-end process, or with Fujitsu, where the start of the conversation was about accountancy or data mismatches because it had been made clear to me by both entities, both Fujitsu, Dave Smith and the support teams, that Fujitsu/Horizon, were all working within the limits of the contract, and within the limits of the SLAs.

And so no one was raising their hand to suggest we had a – I’ll call it a code issue on Horizon, or an anomaly that might relate to code, that might be causing a mismatch in some form or other.

Ms Hodge: You’ve just said that you were given assurances by Fujitsu that there were no significant issues, coding problems, that might lead to accounting discrepancies. Who within Fujitsu gave you those assurances?

Michael Young: In order to answer that question, I think it’s probably best to frame how I elected to run the relationship with Fujitsu, and I think my statement makes it clear but I’ll spell it out. I didn’t have the time, candidly – the time it deserved, certainly – to run down everything in IT, that’s largely why we had an IT Director/CIO and a big team, a fairly sizeable team for what essentially is an outsourced solution. It’s a service. The contract made it clear that we didn’t own the IP to the code and some of the conversations I had with a Gavin Bounds or a Duncan Tait at Fujitsu made that quite clear, “The code is ours. You own the service because you pay for that but you don’t pay the code”. I had a particular view on that but I can’t argue that the contract supported their stance.

So I found it, you know – I managed the relationship on the basis that I would deal with the top tier management when there was an escalation and I would clearly get closer to Fujitsu as it related to Horizon Online, which was coming down the road, and build a relationship on that basis. But I wanted the IT Director/CIO to have responsibility for running the day to day and the day-to-day end to end.

So, you know, the CIO and IT Director didn’t have responsibility for training; that largely settled with our network branch colleagues. But they did have responsibility for some of the Helpdesk and technical type aspects of the service. And I wanted the IT Director and the CEO to manage that because, candidly, if I’d been in their shoes, that’s the way I would have wanted to run it.

So the way we had it framed very early on was that I would basically ring the top echelon of Fujitsu if leverage was required, to get things resolved, or to talk through strategic type themes that the IT Director and I were aligned to, but they were there to run the relationship on a day-to-day basis, including any operational impediments that may occur along the journey. And I think the disclosure documents provided as part of the Inquiry support that framework.

Ms Hodge: The answer you have just given suggests that you weren’t ever given any direct assurances by employees of Fujitsu as to the robustness or integrity of the code in Legacy Horizon; would that be correct?

Michael Young: Let me apologise, I should have answered your question because I went off at a slight tangent there. I think you have seen it in some of the documents but, certainly, I had a bullish relationship with Fujitsu, I demanded excellence and, if I thought there were shortcomings, I wasn’t immune from making it quite clear that I was unhappy and, again, taking the discovery document process as a whole, I think that theme comes through.

So I would regularly, where there was an operational issue, if we go to Horizon Online as a classic example, when I was made aware of the two Oracle issues, that we know to be Oracle issues now and had to wait some time to find them during the pilot, I’ll use words my mother would say: I gave Fujitsu pretty short shrift and said “These need sorting out really, really quickly”. And, in between those times where there may have been operational imperatives that we were dealing with, change that went in badly, hardware failures that may have happened in the data centre, I was constantly asking the question, you know, “Does the system work the way you would expect it to? The service seems to work for us”, et cetera, et cetera.

And, as the media played out around the integrity of Horizon, those messages back to Fujitsu got sharper and they got sharper. A lot of communication via the telephone but also some communication, as you see in the disclosure documents, by email and by letter, to ask that very question and demand some sort of discovery process over what, essentially, was two-thirds new code in Horizon Online.

Ms Hodge: With respect to you, Mr Young, I don’t think you have, in fact, answered my question which was – and we’ll come to Horizon Online shortly – but I understood your evidence a short time ago to be that, so far as you were concerned, you’d received assurances, both from David Smith but also from Fujitsu, that Legacy Horizon was operating fine. What I wanted to establish was whether you were given any direct personal assurances by Fujitsu concerning the operation of Legacy Horizon; do you recall whether that is the case or not?

Michael Young: Two names that spring to mind in terms of that dialogue: Stephen Long and Gavin Bounds. And it wasn’t one conversation; it was probably several over the tenure.

Ms Hodge: From those individuals, you understood that all was well?

Michael Young: I want to be clear. In the context of a conversation with Fujitsu around where things were, I had, as part of that conversation – whether it was in their offices visiting their sites, which I did periodically – I had a conversation as part of that process that asked about the continuing integrity of Horizon Legacy and, even after the delivery of Horizon Online, Horizon Online.

Ms Hodge: Thank you. So if we move on, please, to the pilot of Horizon Online. You explain in your statement that you became aware of several bugs, errors and defects that were identified, that is to say the fault/the problems manifested during the rollout of the pilot; is that correct?

Michael Young: Yes, that’s correct.

Ms Hodge: These faults had caused service interruptions and delays which required the rollout to be paused; is that right?

Michael Young: That is correct.

Ms Hodge: Now, you said on more than one occasion in your statement that you were not concerned about the existence of bugs, errors and defects per se, and that the key issue for you was how they were being handled; is that fair?

Michael Young: That’s correct.

Ms Hodge: I think you say that’s particularly so in a pilot period, where you might expect to experience more problems, more faults, than in live operation?

Michael Young: Correct.

Ms Hodge: Now, you explain in your statement that, for some considerable time, Fujitsu were unable to identify the underlying root cause of the problems that were being experienced during the pilot; is that fair?

Michael Young: That is fair.

Ms Hodge: You say that you were sufficiently concerned about the situation that you considered rolling back the pilot and reverting to Legacy Horizon; is that right?

Michael Young: That’s correct. I did say that. I would like to point out that a rollback would have been extremely difficult and caused any number of problems. So a part of your thinking when you’re going through that process is, “Do I cause more problems by rolling back than trying to persist and roll forward?” And you’re constantly evaluating on what you’re being told and the datasets you’ve got to work with as a consequence.

But, certainly, had Horizon Online seen a more elongated timeline around dealing with what we now know as those Oracle bugs, we would seriously have had to consider rolling back.

Ms Hodge: Do you recall when it was that the Oracle bugs – well, obviously, I think you didn’t know initially that there were Oracle bugs. We’ll come on to look at when that was discovered but, when the problems first manifested themselves in the pilot, do you recall precisely when that was brought to your attention – I say “precisely”, in terms of months?

Michael Young: I mean, through the disclosure via the Inquiry process and the documents that were provided to me, March 2010 is around the time frame, so between February and March a data mismatch was being aired and, as I understand it – and I knew it was small numbers – in comparison to the network as a whole, I think there were, at the time, 62 affected branches.

Ms Hodge: We’ll come on to some of that detail shortly but in your statement you say it was in March 2010 that you learnt that the underlying root cause of the faults/the bugs, were a fault in the Oracle database software. So that’s consistent with what you’ve just – well, that’s slightly different, in the sense that March 2010 was when the underlying root cause was identified. My question to you was: do you recall how long it took Fujitsu to identify that underlying root cause, from the point at which it was brought to your attention that these faults were manifesting to March 2010?

Michael Young: It was number of weeks, so can I be specific? No, but it was number of weeks. In my world, it was too long, and there was a lot of telephone communication from me to the CEO at Fujitsu around, you know, where his sense was on finding the issue and mitigating it. Again, as you’re evaluating the continuing rollout versus a rollback, those conversations were pretty much an imperative. There is no doubt about it that, from the point it had been identified to the point that – as in “We’ve got an issue” – to the point that we’ve got “It looks like it’s bug related” and some form of potential resolution from Fujitsu, in my mind, it took way too long, and not, in my world – you know, in my tech world, not the normal time frame for resolution around a software bug.

I had a viewpoint that suggested, as it was coded related, find the issue in the code and then someone goes into that code and fixes it almost overnight. And, as we know now today, digital systems are done that way today right down to your iPhone. So I had a viewpoint then that that should take days not weeks, and this took too long. So I can’t be specific about the date but my general take at the time and I feeling I have now is that it took way too long to address.

Ms Hodge: I would like to ask you, I just wish to clarify, please, what you say about these two bugs at paragraph 46 of your statement. So that’s at the bottom of page 15 and over the page to page 16, please. If we could bring that up.

You explain there that it was in March 2010 you learnt that the faults causing the service interruptions and delays during the pilot were two different Oracle bugs, that being faults in the Oracle database software. You then say this:

“The two Oracle [bugs, errors, defects] caused a data mismatch; therefore, I still maintained that there was nothing fundamentally wrong with the system.”

Can you just please explain what you mean by that? Why is it that there being a data mismatch meant there was nothing fundamentally wrong with the system?

Michael Young: I’ve been in the technology world for a long time. So – and I’ve rolled out probably thousands of systems. So I guess the point I’m trying to make, as part of that process, is: when you’re in a pilot, you’re going to have problems. I’ve never known a pilot in any rollout of any system not have some sort of associated issues with it. And, again, I’m going to make the point: today you can be given a new phone and within weeks it will have a software update. It’s dealing, essentially, with bugs that have come to light that weren’t seen or hadn’t come to light in a test type process.

This was no different on Horizon Online. I knew that, providing we could identify the nature of the bugs, that we could address that software. It’s still in pilot. It’s not in main rollout and, at the point the bugs were found, rollout stopped. So, you know, I’m in a place, as the executive in charge of IT, with my CIO, we’re in charge of a process that, if you like, is half pregnant and we’ve got to work out what we do next, and part of my worry was that we needed to have some assurety from Fujitsu that they could deal with the bugs once they’d identified them and that we could get back into smooth running.

I look at that process, rightly or wrongly, but certainly from my point of view and experience, I look at that process as relatively the norm in rolling out a pilot, and this was a pilot. It wasn’t a great start to a pilot, and there were lots of communications both to the POL Board and my executive colleagues, and to Royal Mail Group as a consequence. And there were ramifications around some of that communication. But I still felt relatively confident that having identified the bugs, the mitigations would address it and we’d be back to safe waters and, therefore, fundamentally, I had faith in the system.

Ms Hodge: Just to be clear, because the way it’s written perhaps could be read in a number of different ways but I think what you’re saying is that the mere fact that a bug had caused a data mismatch did not, in itself, mean that there was something fundamentally wrong with the system; is that what it is you’re saying?

Michael Young: That would be a better way of interpreting my answer, yes.

Ms Hodge: Now, I’d like, please, to look at some correspondence that you had with Duncan Tait, who was then Managing Director for the Private Sector Division at Fujitsu in May 2010. That’s FUJ00095658, please.

Thank you. This a letter from you – we’ll see when we get to the bottom – to Mr Tait, dated 10 May 2010. It reads:

“Dear Duncan

“Recently, members of the Post Office Executive Team met with some of our Group Executive colleagues to review our current standing on our Fujitsu contract. The purpose of this meeting was twofold, one to review the current situation of the HNG-X Programme and, secondly, to review the Fujitsu contract as a whole. These types of review follow best practice and are common within the Group where there is significant reliance on a partner or a supplier.”

You then say this, and this culminates in your request for what you describe as an open-book approach, you say:

“It was recognised during this review process that our relationship with Fujitsu is of long standing, has thus far proved fruitful to both parties and continues to play a pivotal role in the successful delivery of Post Office’s products and services. There were several areas where we believe there is room for improvement that would allow us to follow best practice and further reinforce confidence in delivery.”

You then say this:

“There remains a concern that with the longer running rollout of handling and the fact you are already contractually realising our savings that this may be too onerous and may be affecting the profitability of the contract.”

Just pausing there, what exactly did you mean by that, the concern that Fujitsu were realising savings, and –

Michael Young: There was a significant saving to the Post Office for rolling out Horizon Online, 50 million. It was important to our cost base in the eternal endeavour of the Post Office to get to self-supporting, and the contract in place with Fujitsu had to not only deliver Horizon Online but it had to deliver those efficiencies. What I’m trying to convey, as part of that language in there was I was worried that they had – they didn’t have enough expert resources managing this important programme. In other words, they’d leaned it out. In order to realise efficiencies, they’d cut costs themselves, and there weren’t enough expert resources to deal with the bugs or other related issues that may come out from pilot. And I’m making that point as part of that process, and I’m asking him to go open book, which is rare, but it’s – it basically means, “Show me your costs and your resource plan, so I can see what I’m paying for”. They’re not duty bound to do that but I thought it was a request worth putting to them.

I should emphasise that the issues related in the early pilot brought, you know, concerns – not significant concerns, but certainly concerns – both to my executive colleagues and the Board, and later on at Royal Mail Group Board when Alan Cook was presenting where the Post Office was with its strategy. He had to update the Board with regards to where HNG-X was in terms of its rollout and, as a consequence of that, Alan and I had a conversation around the outputs from our own Executive colleagues, some of the questions that were asked in the Royal Mail Group-type process at that Board meeting, and we agreed that I would sit down with the Group’s CIO at Royal Mail Group, and the General Counsel of Royal Mail Group, just to discuss the Fujitsu contract, where things were and what we might be able to do collectively at a group level to bring pressure to bear on Fujitsu to take us through a successful pilot and subsequent rollout.

There’s a big risk both in terms of being able to deal with customers in the branch network with this new programme and also that 50 million in inefficiencies.

Ms Hodge: Just to be clear, it was those discussions you just described that led to the sending of this letter; is that correct? We see that reference in the first paragraph –

Michael Young: I think in the three of us sitting down, I agreed that I would take the overall concerns – and we talked about what those is might look like – and write a letter to Fujitsu. I probably ought to – because it would probably be helpful to, you know, to the Inquiry to know, if they don’t already – Fujitsu – we were Fujitsu’s major client in the UK, I think their biggest client in the UK, certainly one of the top two. They had an ambition, a significant ambition, to grow the account into Royal Mail Group. If you’ll note in some of the communication between POL and – from Fujitsu to POL, it’s usually someone that signs off with “Royal Mail Group Account Executive”, or whatever the case may be, and the reality is, Royal Mail Group wasn’t taking anything in terms of a service from Fujitsu: it was POL, and it was Horizon.

But there was a drive to seek further revenues from Royal Mail Group, and my sitting down with the General Counsel and with the CIO of Royal Mail Group and then formulating this letter and making clear the type of entities that had been involved in the formulation of the letter was a way of applying pressure to them that suggested, you know, again, in the interests of keeping it short and candid, “Get your act together here because if you have got ambitions with Royal Mail Group, we as a whole are very unhappy and we need you to show us that you are manned up with the right resources to deliver what we expect you to do and we want some assurance that you’re also going to give us our efficiencies and” as the letter further states, “we want some assurance that the code around Horizon Online works as it should do”.

Ms Hodge: We see there, as you say, in addition to your request for an open book, in the third paragraph, you say you’d like access to Executive correspondence within Fujitsu relating to a recent red alert. You go on to say:

“Additionally, we would like you to consider bringing in a qualified independent party and asking them to review and audit how the current programme is run, as well as testing resource and skill levels both on the programme … and other key initiatives underway at Fujitsu.”

As you said just now, you explain in your statement that the reason why you, in particular, I think, but possibly others, felt it was necessary to request an independent review was that you had concerns about the quality of the code in Horizon Online; is that correct?

Michael Young: Yes. It’s one of the only times – there may have been one other time – where I formally wrote a letter to Fujitsu, rather than a phone call or even an email. I wanted it – you know, I wanted it to have a tone and a feeling that it was Royal Mail Group Board, POL Board and POL Executive challenging Fujitsu to step up to the plate.

Ms Hodge: Now, you don’t receive a response from Mr Tait until 29 June 2010 and that comes into you by email. We can see that at FUJ00096312, please. If we scroll down, please, to the second page, we can see at the top the date of the email, 29 June 2010, and the subject is “Response to your letter”. So that is the letter of 10 May we were just looking at a short time ago. He says to you:

“Dear Mike,

“Thank you for your letter – we have recently been having similar meetings and have come to similar conclusions in the governance area. We would like to support your initiative and formalise into contract a periodic ongoing senior level relationship review and a more operational level board at which the current governance relationships in the contract come together.”

He then says that has been taken forward. If we then look down, please, to the third paragraph, he says:

“Since your letter, I am extremely pleased with the progress that has been made. We have located the source of the troubles and taken steps to rectify the issues and we have now recommenced the pilot. Currently counters running on HNG-X stand at just under 20% of the estate. We are now rolling out at about the maximum levels originally envisaged with no further sign of the problems that initiated our discussions.”

He goes on to say:

“The cause of the issues [as you’ve already alluded to] that delayed the High Volume Pilot was deficiencies with the Oracle product code.”

He says:

“Oracle has confirmed this and that the issue has been resolved. I am sure this conclusion will have restored your confidence in Fujitsu and both our teams’ ability to deliver this programme.”

He then goes on to say this:

“As a result, I think it makes sense for our teams to maintain focus on the remainder of the pilot and the full rollout phase, as you appreciate, with all complex major programmes there will be issues to deal with. At this crucial phase, we can see no benefit and will not be pursuing a third party review.”

So, in essence, he rejects that proposal in your letter of May 2010 to carry out a review.

We can see your response to him, please, at page 1. You say this:

“Duncan

“Thank you for your response to my letter.

“It won’t surprise you to learn that I am somewhat disappointed that it took so long to formally reply to my correspondence of 10 May and with the apparent ‘sea change’ on approach to some of our concerns.”

So you effectively then go on to say:

“My understanding from our weekly calls was that you had taken advice from KPMG as to how you could go ‘open book’ with us and therefore didn’t foresee a problem in doing so. On the issue of having a qualified independent party audit to evaluate Fujitsu programme execution, along with staffing levels and skills base, I have been briefed that you had spoken to several entities to pursue this endeavour. Indeed, I was told you were close to agreeing terms with one of these. Additionally, in our calls you will recall I had asked whether there was a possibility of the Post Office ‘owning’ the Terms of Reference and again this was something you were going to strongly consider.

“As it stands now, I feel I have been led down a journey of a number of months, just so you can say ‘no’. This does not reflect well on our relationship and will not be well received in the next review.”

It’s quite clear, I think, from reading that email, that you had understood from your conversations with Mr Tait, firstly, that he was willing to undertake that third-party review that you’d requested; is that correct?

Michael Young: Yes.

Ms Hodge: And that you’d felt that you’d been rather strung along by him, to only be told many weeks later that it wouldn’t be taking place?

Michael Young: I was pretty angry at the response.

Ms Hodge: Did you take any steps to escalate this issue and to insist upon an independent review of Horizon Online at that stage?

Michael Young: So certainly the POL Board, the Executive Team and Royal Mail Group were aware of the interchange here, because all those parties had played a part in bringing it together. So what perhaps – in order to be a little bit more helpful, but perhaps what this letter and response don’t quite show is that there were two or three phone calls that went between, you know, the letter and the response.

Duncan and some of his team were of the view that we had signed up to a service, and the service was working in its given parameters within the contract – and I couldn’t argue that – and that Horizon Online was in pilot and, again, his response of around 20 per cent of the network starts to, you know, allude to that point.

I thought, candidly, that we had a better relationship than that. I had known Duncan in my job when I was at Horizon as the CIO there, and I thought he would recognise what I was having to deal with, in terms of the pressure around Horizon Online and the oversight that the whole thing was under from Royal Mail Group through to the POL Board and, therefore, I was expecting a little bit more of a collegiate attitude from Duncan than I got.

There were several calls where I make that quite clear, and Duncan made clear that he didn’t think there was anything wrong with Horizon, there wouldn’t be anything – isn’t anything wrong with Horizon Online. I was getting the line of “We run algorithms against the code, we’re looking constantly looking for anomalies, you should take assurance from that”, et cetera, et cetera, et cetera.

And my response would be, “If you went open book and demonstrated some often that, I’d be able to see it. I can’t naturally – having taken so long to deal with the two Oracle issues, I can’t take you at your word”, and they were pretty strong conversations and, ultimately, the only take away I took from those conversations and from this interchange was that, you know, “It’s our IP and we don’t want to share it. We own the intellectual property rights around the code, you’ve no right to see it, and you’ve no right, really, to insist that we review our own code”.

I didn’t agree with that. I’ve never agreed with that but it gives you a sense of where Fujitsu were in their thinking versus where I was, and several of my time, including, in fairness to Lesley Sewell, the CIO at the Post Office.

You know, if there’s one overriding message: don’t see this as a one-off letter and reply. There was a lot of communication that sat round it at all levels and, whenever the opportunity allowed, I would interject with, you know, “We need to start looking at the system”.

You’ll note, I do want to draw a conclusion in case we don’t get there, I do want to make a point. One of the last documents I provide, just before I exit Post Office, is a noting paper, I think, to the POL Board, and then there’s a POL Board – there’s two documents – where I actually ask, I think we’re set for – I’m sure we’ll get there but I think we’re set for a proper end-to-end review, and there were a lot of reasons around that, but some of this was catch-up to that.

And then there’s another point. Martin Moran, who had been brought on to run the white label telecoms product that Post Office was marketing at the time, sat down with me – it was another one of my objectives, to sit down with Fujitsu, to use Fujitsu as a means of taking their pricing power to get a great telecoms contract out of BT. They’re a big entity, so they’d get better discounts and we were trying to move away from Talk Talk.

But in the course of that dialogue, one of the things that I pushed was, “If we do this telephony contract with you, Fujitsu, I want the rights and the IP to the code for Horizon”, and I asked for that specifically to be written in so that issue around the IP of Horizon could be taken off the table. If I owned those rights, I now have a right to look at my code because I’ve got those now contractualised as a side product from agreeing a telephony contract with you.

And Martin Moran makes that clear in one of the Board papers that was in the discovery process. But the point I’m trying to make is: that was me at that negotiating table with Martin saying, “We’d like the IP”. I just needed that final segment to take away the point of, “You don’t own the IP. We own the IP, you’ve got a service”.

Ms Hodge: Just to wrap up where we are at the end of June 2010, you’ve been sufficiently concerned about the quality of the Horizon code to request an independent review of Fujitsu but Mr Tait, standing on his contractual rights, has said, “It’s not going to happen”?

Michael Young: Indeed.

Ms Hodge: So moving forward, then, please, one month later, questions are raised in the press about the integrity of Horizon, in reporting by Channel 4; do you remember that?

Michael Young: I do.

Ms Hodge: That reporting prompted David Smith – so a different David Smith, this is the Managing Director of Post Office – to request an internal investigation into complaints about Horizon; is that correct?

Michael Young: You’re referring to the Ismay Report?

Ms Hodge: Yes.

Michael Young: Yes.

Ms Hodge: I’d like to please look at some correspondence relating to that request and which ultimately flowed into what we know is the Ismay Report. It bears the reference POL00120481, please. Thank you. This is an email from Mark Burley to you and Sue Huggins. Just to clarify, what was the relationship, in terms of reporting, as between you and Mark Burley?

Michael Young: Mark reported to Lesley Sewell. You know, David Smith, the CIO or IT Director, has retired. I went out into the marketplace to recruit a CIO that had financial services experience – that’s where we were going with some of our products and services set – because I didn’t have it, and David Smith, the now retired IT Director, didn’t have it. So I went out and recruited Lesley Sewell as part of that process. She was the ex-Managing Director of IT for Northern Rock, the bank, at the time.

So Mark Burley reported to Lesley and his job was to rollout Horizon Online.

Ms Hodge: Now, he addresses his email to you and Sue Huggins, and it’s not necessary to go through the full chain but it originates with a request from David Smith essentially raising a series of questions prompted by the proposed Channel 4 report, and Mark provides some answers to those and, in this email, we see some additional points that he wished to draw to your attention and the attention of Sue Huggins. I just wanted to scroll down, please, to look at a couple of those points.

Now, he refers at point 1 to the fact that the system has been designed to retain integrity, even when it fails and he said this is important, “as we could never claim the system does not fail”.

That’s a point he makes further down in the email.

At point two, he refers to three cases of which he is aware: Cleveleys, Castleton and Alderley Edge.

These goes on to say this at point 3:

“None of the subpostmasters dismissed for discrepancies have – to my knowledge – produced any hard evidence. However in the past [Post Office Limited] hasn’t always tabled the evidence from the audit logs.”

Now, dealing with that first point, as to the fact that subpostmasters hadn’t produced hard evidence that accounting discrepancies for which they’d been held liable had been caused by faults in Horizon, with your police officer’s hat on, did you think it was right that the burden of proof would rest on subpostmasters to show that Horizon was at fault in causing these accounting discrepancies?

Michael Young: No.

Ms Hodge: Did that stand out to you at the time as an issue; do you recall?

Michael Young: Did that – can you repeat that, please?

Ms Hodge: Sorry. Did that jump out at you at the time as a problem, that subpostmasters were being required to produce evidence, that the onus was on them to do so?

Michael Young: I don’t know, to be honest, at the time. You know, I refreshed my memory, I guess like most witnesses, when the discovery documents were given to me. So when I was refreshing my memory, did that spring out to me, but did I know the Inquiry was ongoing? The answer is yes. But I’m not sure whether I did at the time or not, I just don’t recall. I suspect it probably did.

Ms Hodge: If it did, what, if anything, would you have done about that?

Michael Young: I didn’t do anything, I don’t think. I – you know, it’s just a suspicion. To your point, my previous employment as a police officer would have taken me down that road. It’s not, by no means, an excuse but when you’re inundated with 300 or 400 emails a day and you’ve got the world before you in terms of what you’ve got to deliver, you can’t pick up on every nuance in an email, if I’m being candid.

Ms Hodge: He goes on to say at point 3, we’ve looked at:

“… in the past POL hasn’t always tabled the evidence from the audit logs.”

Was that something that you were aware of at the time?

Michael Young: No. So it’s through a number of iterations of emails that, again, were part of the disclosure, or I start to piece together, you know, since the Inquiry has been underway just how some of these things were coming to, you know – were coming into being. How some of the prosecutions were working through. I’m not trying to avoid it; candidly, I didn’t know that that’s what we were doing.

Ms Hodge: What Mr Burley appears to be conceding at this point is that, although postmasters hadn’t been able to prove that the discrepancies are caused by Horizon, Post Office hasn’t bothered to check whether that’s, in fact, the case – sorry, in every case, it isn’t the case that Post Office has checked that the audit –

Michael Young: One or the things that I – sorry.

Ms Hodge: No, sorry.

Michael Young: One of the things I’m aware of within the Fujitsu contract is the retrieval of data from Fujitsu was a cost service, it was an additional cost type service, and there was – as part of the contract that I inherited, there was a set sum put to one side to draw data from Fujitsu, as and when, and then when you exceeded that amount in a given year, you then paid more.

So I’m not sure whether that point is related to, you know, we don’t do it in every prosecution because there’s a cost associated to it and it’s not required. I didn’t – I simply, when I read that part of the email, I didn’t know we had got down to audit logs. In fact, it wasn’t until later on, and some of that through the Ismay report, that I took on board the point that some subpostmasters were being done for false accounting as opposed to theft. And, you know, from my policeman days I understand the difference between both and the proof of evidence that’s required to prove both.

So I gradually got to realise the system is playing a more integral part in the prosecution process than I perhaps originally might have known in my first year of service at the Post Office, as an example.

Ms Hodge: You attribute that understanding to reading the Ismay Report; is that right?

Michael Young: Some of it but there were – you got – the best way of describing it is you got glimpses of it perhaps in a Board meeting, in an executive meeting, where a particular prosecution was being talked about because it had raised a flag in some form or other. You’re not party to the conversation, other than you’re a set of ears around the table and you pick up a little bit of what might be going on.

As you do that, you start to see the email flow where some of this starts to eke itself out. You’re starting to get a better sense of what is happening. And then, of course, the Ismay Report is the first time for me, personally, you sit there and you start to see a large component of that talking about, in some detail, some of the prosecutions and the nature of those prosecutions, and the sensitivity, as such, was such that I didn’t, other than through – with Lesley Sewell, I didn’t pass to anyone else in my DR team because I thought it was very sensitive – very sensitive data.

But it’s through a drip-drip-drip type process that you start to get a sense of what’s being done on the prosecution side because I wasn’t being told, and I wasn’t seeking – because I’d been told not to – via John Scott or Susan Crichton or via the Royal Mail Group process, which is even further away from where I might sit.

Ms Hodge: So is it right to understand that, from reading the Ismay Report, you understood, firstly, that Horizon data was being used by the Post Office to support and to evidence, for example, an offence of false accounting in the prosecutions that were being brought against postmasters? That is to say that data from Horizon had a role in the prosecutions brought against subpostmasters –

Michael Young: Yes.

Ms Hodge: – and that you also understood that the integrity of that data was therefore essential to the safety of those prosecutions; would that have been apparent to you from reading Mr Ismay’s report?

Michael Young: Yes, and I do think my statement does say in some part that having a statement from a distinguished engineer or someone from Fujitsu that talks about data that’s under their management, even with an audit log, is, you know, in my view, not independent. I would have expected to see, in prosecutions of this nature, an independent expert commenting on Horizon data and audit logs. It felt a little – as you’re drawn into it from the edges, it felt a little like poachers turned gamekeepers, and it didn’t fit well with me as a former police officer. It wasn’t truly independent.

Ms Hodge: Just to be clear, are you saying that you understood from Mr Ismay’s report that Fujitsu were providing expert evidence in support of –

Michael Young: I understood that there was some – I can’t remember if it was directly from the Ismay Report but it’s on that drip-drip-drip type basis. One of my conclusions was that some of the evidence that was being provided around Horizon and consequent prosecutions wasn’t, in my opinion, an independent expert that knew the system and therefore could talk to it to any great degree. It was someone in Fujitsu and, for me, that’s not independent.

Ms Hodge: Having identified that as a concern, did you raise that with anybody within the Executive Team of the Post Office or indeed raise concerns with your Head of Security, who was giving instructions to the Criminal Law Team?

Michael Young: I just – I can’t recall. The likelihood is no. I was, you know, I was clearly told “Let the process be the process”.

Ms Hodge: I’d like to briefly look at what you say your reaction was on reading the Ismay Report. That’s at paragraph 92 of your statement, please. You say this:

“The Ismay Report confirmed that the system was not flawed. The report analysed some of the more high-profile prosecutions that were highlighted in the media, and his report determined that the information and evidence used in these cases were reliable. At the time, the Ismay Report solidified my view that there was not a technical problem with Horizon.”

Now, that report was sent to you in August in 2010; is that right?

Michael Young: It is.

Ms Hodge: So that’s really barely a month or less than two months after your exchanges with Mr Tait have concluded, rather unsatisfactorily, concerning a review of the code of Horizon Online. It might be thought surprising that you took such great comfort from the Ismay Report, given the extent of concerns you had about Horizon Online and its code?

Michael Young: So the reason I took comfort from the Ismay Report was I had very few levers that I could pull, contractually or otherwise, with Fujitsu. There wasn’t anything I could see, and when I talked to my direct report team, the specifics of those, candidly, that might be working in Service Delivery, Lesley, those that might be working in other aspects of IT, that have sight of some of the end-to-end Horizon-type pieces, when I talked to them, they were in a place where the system was doing what it needed to do, and prescribed – as per described by the contract.

And every time there was something new, either laid out in the media or otherwise, I would do that round – I would do that round robin. Invariably there would also be a call or an email that would go in to Fujitsu, Duncan/Gavin Bounds/whoever, usually one of those two – to ask questions.

And so I sit here, you know, despite the backwards and forwards communication with Duncan saying “This is all I can do, I can’t see anything happening on the system as we’re now going into main rollout, and actually the feedback from The Branch Network is really positive. I’m not sure what we do next, with regards to Horizon”. So I want to make that point.

Then the Ismay Report lands, and I saw the Ismay Report as a next best endeavour, if you can’t get into the code or an end-to-end investigation around the system itself. So – and I drew from it, as my statement makes clear, some comfort that, in Product Branch & Accounting, in Chesterfield and – you know, I knew Rod Ismay fairly well, as well as I knew anyone at the Post Office, I found him to be quite balanced and a fair-minded individual, I took some confidence from his analysis of the whole thing.

And it didn’t take any – it didn’t mitigate all of my concerns but it gave me a boost that, okay, we’re not seeing anything on the system, my DR is not seeing anything on the system, the challenge and response process written or otherwise with Fujitsu says that the system is fine now we’re through the Oracle type problems, okay, we’re in a better place. It also gave me a window into some of that prosecution type piece.

So I did, I drew some comfort from that. Did I have something in the back of my mind that, you know, would say, you know, are we ever going to get to a point where we can, you know, get into that code? Then the answer is, you know, it was always there. So I think it should be. But I was always keeping a close eye, via Lesley and the team, on where the system was systematically, and there was nothing in that process that would draw you to a conclusion, having dealt with the Oracle bugs, that there was a problem.

And Ismay’s report was more or less saying the same thing to a degree, but adding other parts to the process: training, the process itself and then the prosecution type – small window into the prosecution type piece.

So it gave me some measure of comfort going forward, despite the backdrop from the Duncan Tait interplay on looking at the system in detail.

Ms Hodge: Thank you, sir. That may be a good time to take our morning break, I’m conscious we’ve been going for an hour and a half now.

Sir Wyn Williams: Yes, by all means. So what time shall we resume?

Ms Hodge: Shall we resume at 11.45, please?

Sir Wyn Williams: Yes, fine.

(11.30 am)

(A short break)

(11.45 am)

Ms Hodge: Good morning, sir – yes, still the morning. Good morning, sir. Can you see and hear us?

Sir Wyn Williams: Yes, I can thank you.

Ms Hodge: Thank you.

Mr Young, I’m going to move on now, please, to another topic, concerning your knowledge of a bug we know as the receipts and payments mismatch bug. You say in your statement you first became aware of this bug in February 2011 and you attribute your discovery of it to a conversation you had with Lesley Sewell, who, by then, had taken over from David Smith as Head of Change and IS; is that right?

Michael Young: Yes.

Ms Hodge: Forgive me, you’re nodding but, for the purposes of the transcript – thank you.

Michael Young: Yes, I have been warned. I should have realised that. Yes.

Ms Hodge: You also refer to an email you received from Mr Ismay, which you describe as downplaying the issue; is that right?

Michael Young: Yes.

Ms Hodge: I wonder if we could take a quick look at that, please. It’s FUJ00081545. Thank you. If we could scroll down to the very bottom, please. It’s page 4. Thank you. This is dated 18 February 2011, the subject “Receipts & Payments Issue”, from Mr Ismay to you, reading:

“Mike – please find attached the paper from Fujitsu that I referred to.

“In particular please see the last 2 [paras] of page 1 and the trial balance on page 13.”

This suggests that there may have been a prior conversation with Mr Ismay; do you recall whether you spoke to him orally about the issue?

Michael Young: I agree, it does intimate that but I can’t recall it.

Ms Hodge: When you say in your statement that he downplayed it, is that a fair reading, do you think, of this short email exchange?

Michael Young: Well, it’s the feeling I had, so yes.

Ms Hodge: Do you recall reading the report that was attached to his email?

Michael Young: No.

Ms Hodge: Do you think that you would have read it at the time you received it?

Michael Young: Yes.

Ms Hodge: I wonder if we could pull it up, please, just to see if you recognise it. I believe it is POL00188387. Do you recognise that document as something which you read at the time?

Michael Young: I do.

Ms Hodge: Mr Ismay alerted you to the last two paragraphs on page 1. If we could scroll down to those, please. This is in relation to the cause of the problem. It reads:

“The problem occurs as part of the process of moving Discrepancies into Local Suspense.

“When Discrepancies are found when rolling an SU …”

That is presumably a stock unit, is that what you would have understood that to be a reference to, SU? Not sure?

Michael Young: I don’t know what “SU” stands for.

Ms Hodge: So:

“When Discrepancies are found when rolling an SU over into a new TP …”

Do you know what “TP” stands for?

Michael Young: I don’t know what that is either.

Ms Hodge: “… then the User is asked if they should be moved to Local Suspense. Should they Cancel at this point the Discrepancy is zeroised in the Local Cache …”

Do you know what was?

Michael Young: Yes, a cache is a data depository, so …

Ms Hodge: “Note that there is no corresponding Balancing Transaction generated in the Local Cache and so the Local Cache is in an Unbalanced state.”

So that’s obviously quite a technical report. If we go back to the email chain we can see you that some discussion with a Will Russell. If we could return to FUJ00081545, please. Thank you. That’s at the bottom of page 3. Thank you.

So, following on from Mr Ismay’s report, you write to Will Russell, later the same day, saying you want to sit down with him and possibly several others to:

“… understand these latest issues on Horizon and where we are with them. This is very important as there is a lot of media interest in Horizon at the moment.”

You say:

“What would be helpful is if you could send me a written summary on what the integrity issues are and what has been done about them.”

Why is that request being directed to Will Russell at that stage?

Michael Young: I don’t know. I can’t be sure what Will’s role is. I can’t remember what his job description was. Clearly, he was in the mix on this but, being able to describe what his actual job role was and how that related to me, I can’t.

Ms Hodge: If we just scroll up, please, we can see at the bottom he was Commercial Advisor; does that assist you?

Michael Young: (No audible answer)

Ms Hodge: So he emails then, if we go to the top of his email, I believe it’s later the same day. If we scroll up to the – no, this is two days later, so 2 February. Mr Russell emails you back to say:

“Mike,

“I will pull you together a summary on Monday.

“The issue Rod refers to, and outlined in the paper, was an issue that occurred in September 2010, post Go Live of HNG. The issue was not encountered interesting testing, model office or pilot, and came to light in live through Fujitsu alerting. As per the normal process, Fujitsu reported the issue into the SD live Service Desk once the discrepancies were identified by the HNG system. SD pulled together a team of stakeholders to assess the issue and track through to resolution, this included; Fujitsu, [Product and Branch Accounting, IT and Change], Security, Network and Legal.”

Just pausing there, what this appears to show, what Mr Russell told you at the time, was that several months before you’d been notified about the existence of this bug, it had been reported to stakeholders in IT and Change and Security for which you had oversight; would you agree?

Michael Young: Yes.

Ms Hodge: Do you know why there was an apparent delay of many months in bringing this bug to your attention?

Michael Young: I don’t, no.

Ms Hodge: Do you recall the context in which the integrity issues were raised with you by Mr Ismay and Ms Sewell in February 2011?

Michael Young: Well, I think I’ve said in previous evidence that I first became aware of them in March. So February – the February and March time frame. So why this didn’t reach me before then, I’ve no idea.

Ms Hodge: Sorry, my question was: when it did come to your attention in February, do you recall the context as to why or whether there was any background to that specific issue being raised with you at that stage?

Michael Young: No. Just that it was a bug.

Ms Hodge: So Will’s email goes on to say:

“This issue affected 62 branches and a PEAK was raised and quickly closed by Fujitsu. The issue only affected branches that followed a set sequence of button depressions, and this sequence was not a normal action that branches would have followed. The resultant error arising from the unusual events caused the receipts and payments line on the branch accounts to mismatch (eg they were not as equal as they should be). This can be seen in the reports in the attached document.”

He goes on to say:

“Letters to branches had been prepared, and signed off by Legal, and the team were looking to issue these shortly, as we need to communicate to the branches involved what has happened. However, these letters have been held back, pending Rod’s intervention.”

He then says this:

“Fujitsu are confident that they can show and prove that nothing has been lost on the system, as events have been generated to show what has happened for each individual branch. However I have escalated the concerns into Fujitsu at senior level.”

Now, in your statement you say that, to you, the receipts and payments mismatch bug echoed the complaints from JFSA about reconciliation issues; is that correct?

Michael Young: That’s correct.

Ms Hodge: Was that something that occurred to you at that time that it was brought to your attention or was this something that you’ve reflected on in hindsight?

Michael Young: In time. Not at the time.

Ms Hodge: Sorry, that didn’t occur to you at the time?

Michael Young: No.

Ms Hodge: It has since?

Michael Young: Yes.

Ms Hodge: Is that because the bug was capable of causing a discrepancy to appear in the subpostmaster’s branch accounts?

Michael Young: Yes.

Ms Hodge: Why do you think it is that that didn’t occur to you at the time?

Michael Young: It’s pilot, and I would expect bugs to occur. I took some – if you look at the second sentence down in that email:

“This issue was not encountered during testing, model office or pilot and came to light [through] live through Fujitsu alerting.”

So that algorithmic approach to looking for the data and looking for anomalies highlighted the issue, and that gave me – you know, that gave me some sense of confidence that we had the right countermeasures in, even in early pilot, to find any anomalies – let’s call them anomalies, as opposed to bugs.

So I took some confidence from that as it was aired. And, in essence, in the description given to me by Fujitsu on how they managed the day-to-day code to look for anomalies, this proved that they were capable of doing it, and that gave me some confidence.

Ms Hodge: Did you discuss the bug with your Head of Security at the time it was brought to your attention?

Michael Young: I don’t recall. What I would say is, generally, when we were firefighting some of these issues in pilot, we invariably came together as a team. So when I ran my management teams, we all came together. Was John – can I categorically say John Scott was aware of this level of detail? I can’t. But he certainly will have been aware that there were bugs in the early rollout of HNG-X and he’ll have been aware that there will have been a mismatch too.

Ms Hodge: Your response, Mr Young, was that this was a bug identified in pilot. What Mr Russell’s email suggests is that it wasn’t identified during testing, model office or pilot and that it had come to light in the live running of Horizon Online. Can you see that in the second paragraph to which I referred you?

That’s what he told you at the time; is it your evidence that that is incorrect?

Michael Young: Well, my view of that was it was the new system not the old one and you’re suggesting that it was the old system in the run-up to the new system.

Sir Wyn Williams: Well, I don’t think that’s correct, Mr Young. I was confused by your answer. What this document says to me – and please contradict me if I’ve got it wrong – that this manifested itself after Horizon Online had been rolled out and it had not manifested itself in the testing process, if I can put it in that way. Having manifested itself, Fujitsu then dealt with it because they discovered it. Now is that the proper reading of this document?

Michael Young: Well, my immediate answer to that, sir, is I’m not sure. So I’m just running that through and reading this again.

Sir Wyn Williams: Yes, if you would, please.

Michael Young: The drilling noise isn’t helpful.

It’s the 62 branches that cause me to think about it because, in my view of the original Oracle issues in Horizon rollout, it was 62 branches that were impacted. So it can’t be that we’ve got two 62 branches impacted. That’s the anomaly.

Sir Wyn Williams: I follow that point. So, on the assumption that the Oracle defect is a different problem to this, you’re pointing out that there’s a huge coincidence in two defects, I’ll call them, affecting 62 branches and, therefore, you’re querying whether, in fact, there’s just one defect; is that it?

Michael Young: That’s it, yes.

Sir Wyn Williams: Right. Okay. But I think you’d agree with counsel that the second paragraph, read as a paragraph would certainly suggest that this happened after the rollout and not in testing?

Michael Young: I agree that that second paragraph sounds like that’s the case.

Sir Wyn Williams: Yes.

Michael Young: I’d like to make a point, because it may be where counsel is coming from, if that is the case, as in we’re past pilot and Horizon Online is in play, properly online, and Legacy is condemned to history, this would be something new to me.

Sir Wyn Williams: Right. All right.

Ms Hodge: Just to be clear, when you say this would be new to you, as in at the time it was brought to your attention, you didn’t understand this to be a bug that had been detected in the live operation of Horizon Online?

Michael Young: After main rollout, yes.

Ms Hodge: That seems surprising, given what Mr Russell said to you in this email in terms, that this has been discovered in the live operation of the system?

Michael Young: I would make the point that, again, in the discovery process, looking at the documents, particularly those where I have to report some of the issues around where we are with Horizon and the subsequent rollout, and so on and so forth, including operational failures and change failures, I don’t think there’s anything in those reports that talks about a bug or a data mismatch bug, in that time frame after rollout. And I would have been obliged to notify the Board and the Executive Team that that was the case.

Ms Hodge: So what you’re saying is, by reason of the fact that you did not notify the Board of this bug, it follows, in your view, that you can’t have understood it to be a bug that was affecting the live operation or had affected the live operation of Horizon Online?

Michael Young: Past pilot, yes.

Ms Hodge: Can we look, please, at a little later in the chain. I think it must follow from what you’ve just said that you accept that you didn’t bring the bug to the attention of the Senior Executive Team of the Post Office; is that correct?

Michael Young: Well, not if this is a pilot, which I think is the way it’s being read. I agree that second paragraph suggests something in main roll – it’s done and it’s now the live system, then end-to-end and everyone’s on it. I won’t have done that if I haven’t been told that there’s a bug in the main rollout. So no, I won’t have notified anyone. That doesn’t suggest that Lesley or part of the team generally will have done that. It follows on that, usually, something of this nature also would end up very quickly from me on Duncan Tait’s radar screen. And there’s nothing in the disclosure process, and nothing I recall, that would suggest I had conversations with him about a bug after Horizon Online was delivered in full rollout.

So if I don’t know, I can’t tackle the vendor, I can’t inform, as I normally would, my executive colleagues in the POL Board and, more importantly, in main rollout, this would have been classed as a major incident. Despite the fact that it’s only 62 branches that are impacted, this would have caused a major incident report and there’s nothing I’ve seen in the disclosure process and nothing I recall that indicates a major incident process has kicked in, beyond those that I have described as part of the pilot.

Ms Hodge: Now, your evidence, as I understand it, is, because you didn’t report it, you must have understood at the time that it was a bug that had been detected in pilot. Now, an alternative hypothesis is this: that you were notified in February 2011, as evidenced by this email, that a bug had been detected in the live operation of Horizon Online and you simply failed to bring that to the attention of your more senior colleagues?

Michael Young: No, you misunderstand me. I was aware of two Oracle bugs and those Oracle bugs were eventually identified and mitigated by Fujitsu as part of the pilot, and they were part of a major incident process. They went to the both Boards: POL and Royal Mail Group, and essentially necessitated that letter to Duncan Tait that we’ve already gone through. I’m saying I didn’t know about this other bug, if indeed that is the case – I’m not suggesting you’re wrong but I’m not suggesting I’m wrong either – if indeed there was one in September, I’m not aware of it, and certainly no one escalated it to me.

This email reads to me like the catch-up on payments to subpostmasters, that they can keep the money they may have made, as about this and we’ll take the writedown in the Post Office. I thought this, the way I read this was that this was the catch-up following those two bug related issues in rollout, not anything else.

Ms Hodge: Do you accept, Mr Young, that’s not what the email says in terms?

Michael Young: Do I accept, sorry?

Ms Hodge: That that’s not what the email says. It says this was a bug detected in September, in the live operation of Horizon Online. It appears it wasn’t reported to you, as you say, in September but it is here being brought to your attention in February 2011?

Michael Young: Yes, I do accept that; post-Go Live Horizon Online.

Ms Hodge: Now, if that is correct, that is to say that in February 2011 it was brought to your attention that a bug had been detected in the live operation of Horizon Online, which caused discrepancies in the branch accounts of 62 Post Office branches, is that something which you ought to have bought to the attention of your Head of Security, who had responsibility for overseeing the investigations of suspected offences of fraud, theft and false accounting?

Michael Young: Had I known, the answer to that is, yes.

Ms Hodge: Had you known what, Mr Young?

Michael Young: I’m making the point that I didn’t associate what this says to a new bug post-rollout of Horizon Online.

Ms Hodge: Let’s go on a little bit please in –

Michael Young: So I want to make the point that that’s really clear. Had I known this was a bug, we’re past – it’s in – Horizon Online is in and it’s running and we’ve got a payment mismatch. This is in addition to the two Oracle bugs and we’re in this situation where there’s another bug that’s been, let’s call it illuminated, and it’s caused this issue miraculously across the same sized branch network, okay. Like I said, this would have caused a major incident review and it would have caused an update to the POL Board and to Royal Mail Group, as a consequence.

I would have sat down with my direct report team to talk about the input to those the various reportings, to ensure that we are all aligned and we had the right messaging in place, that it was accurate. I don’t recall going through any of that at all and I don’t see anything in the disclosure process to me, as part of the Inquiry, that indicates that other than this email.

Ms Hodge: You say, Mr Young, it would have caused a major incident review and that, because you haven’t seen one, it must follow that it wasn’t a fresh or a new bug. But what we can see, the explanation that Mr Russell gives, is that Fujitsu reported it to the Service Desk, and the Service Desk notified relevant stakeholders.

So is that not the way in which this bug was brought to the attention of the Post Office?

Michael Young: Yeah.

Ms Hodge: Could we please look at a slightly later email chain –

Sir Wyn Williams: Before we do, can I just ask you, this email begins with a reference to the writer pulling together a summary on Monday; do we have that document?

Ms Hodge: Sir, I don’t believe we do but what we do have is another email exchange about, I think, a further briefing that took place.

Sir Wyn Williams: Fine.

Ms Hodge: That’s the one to which I propose to take the witness.

Sir Wyn Williams: Yes. That’s fine, Ms Hodge, yes.

Ms Hodge: So it’s POL00029611. Thank you. If we scroll down, please, it’s an email from Will Russell, dated 4 March 2011. It’s addressed to Lesley Sewell, your direct report as Head of IS and Change.

So this is a couple of days, probably about ten days or so, after Will’s email to you. He updates Lesley:

“Quite a lot of info here but I will outline what we agreed on this issue.”

There are Word documents attached, he says, and the Word documents attached are letters going out to branches on Monday. These have been approved by Legal, Product and Branch Accounting and SD. He says:

“I ran Mike G, Mike Y, and Andy M through the detail last week. We have agreed to write off the losses and repay the gains via subpostmaster pay. We have a document from Fujitsu on what happened. This [includes] audit trail and shows what happened for a branch, as well as events generated and logged by Fujitsu, plus what the branch saw on their reports. I am just awaiting clearance from Network (Anita Turner) re how to approach NFSP (propose to finalise that on Monday for 62 branches affected as shown on Excel spreadsheet).”

If we just scroll down, please, the penultimate paragraph reads:

“Both Mikes …”

By which presumably Mr Russell is referring to Mike Granville and you, Mr Young? Is that a fair –

Michael Young: It’s either Mike Granville or Mike Moores, the CFO, and me. I agree it’s me.

Ms Hodge: You agree that it’s you in this context?

Michael Young: Yes.

Ms Hodge: That being because he’s referred to a previous discussion with the two of you and with Andy:

“Both Mikes were keen we use this as a positive, eg Old Horizon would not have picked this up, yet the logs in Data Centre and Event alerting meant we picked this up, and we can demonstrate through reports what happened. We can generate reports for each branch if challenged.”

So what this indicates, does it not, is that you approved the decision to write off the losses and repay the gains via subpostmaster pay, that was something you discussed and approved at the time?

Michael Young: I agreed with it yeah, I did. I wouldn’t say “approved”. That would probably go through Mike Moores.

Ms Hodge: Forgive me. There’s also a reference in the paragraph beginning “Matt Hibbard”. It reads:

“Andy Mac has taken action from Mike Y to ensure we maintain closer links with [Product and Branch Accounting]/Rod.”

Do you recall why it was that you gave an action to Andy to maintain closer links with Product and Branch Accounting and Rod Ismay, as a result of what had occurred?

Michael Young: I mean Andy was in charge of Service Delivery, so trying to make sure that Andy and Rod Ismay were aligned, and continued to be aligned, in Service Management would not be an alien thing.

Ms Hodge: Were you concerned that to maintain closer links because this hadn’t been brought to your attention in September 2010?

Michael Young: I don’t know, is the answer to that. The other thing that’s thrown me, as part of this, you know, pilot versus post-Horizon Online, is the same process was applied then around the losses and the repay of gains to the 62 branches in pilot. So there were gains made and the subpostmasters were allowed to keep them, and the losses, which I think amounted to about £20,000, the Post Office took. So – and, you know, I’m not suggesting it’s wrong. All I’m pointing out is, if you’re reading it, there’s a lot of similarities to this and the exact same issue, or the bug issue that we had in pilot.

Ms Hodge: If we look a little further down at the final paragraph, Mr Russell says:

“We are writing to branches, and following up with call from to NBSC/[Product and Branch Accounting], with walkthrough of the detail as required. We have commitment from Fujitsu to visit any branches to run them through what happened … We have had receipt and payment mismatches before, so this is not something new to manage, albeit this issue was very complicated in how it was reported, and evident to the branch.”

That would tend to suggest, would it not, this was a fresh issue that was being raised?

Michael Young: I agree.

Ms Hodge: Now, you say in your statement that, so far as the reporting of this particular matter was concerned, you considered that it was the responsibility of Rod Ismay, as Head of Product and Branch Accounting, to bring this information, by which I understand you to mean the existence of the bug, to the attention of Susan Crichton?

Michael Young: To what, to Susan Crichton?

Ms Hodge: To Susan Crichton; is that correct?

Michael Young: In terms of the financial aspects and the fact that it was going to involve allowing subpostmasters to keep the upside and the Post Office to take the downside, yes. I think what you’re alluding to is: because it questions the integrity of Horizon, did I see it as Rod’s – Rod Ismay’s responsibility to keep Susan Crichton aware that there’s been an issue that now would play into that integrity? The answer to that is clearly yes.

Ms Hodge: Why did you consider it was Mr Ismay’s responsibility to bring that to the attention of Ms Crichton?

Michael Young: He has clearly been – he has clearly been dealing with it. What I don’t know from this outlay, and I’ve not seen from this outlay, is how the issue was resolved from Fujitsu, and I’ve not seen anything in the disclosure document that articulates that, and that’s my problem with the whole process.

There’s nothing in the disclosure process that’s revealed any communication to Fujitsu at a senior level. There may have been some documents that I’m not copied on or seen, and there’s nothing that’s come back the other way. So – and yet, dealing with a bug of this nature, both sides have – POL and Fujitsu will have been aware of the sensitivities, which is why it would have been raised up to the flag, and you’d expect to see something that that travels by way of communication between the two entities, and I haven’t seen that. I haven’t been copied on or seen anything in relation to that.

Ms Hodge: Now, bearing in mind that Mr Ismay, in early February, has escalated this matter to you, why did it rest on his shoulders to then take it forward and bring it to the attention of Legal?

Michael Young: I don’t know. You’d have to ask Rod that. More importantly, I would have expected a Lesley – I would have expected, in normal practice, Lesley would have raised this with me and I may very well have said to Lesley “Please go see Susan”, because of the point around the question marks it leaves around integrity. And I would have also put an action plan together to say how do we approach this from Fujitsu and what is it we’re going to do about it? Yeah.

Ms Hodge: So far as you are aware, were there any systems in place, whilst you were in your role, to ensure that information about the operation and integrity of Horizon was routinely communicated to those who had responsibility?

Michael Young: Can you repeat the question, please? Certainly the beginning part.

Ms Hodge: So far as you were aware, were there any systems in place to ensure that information about the operation and integrity of Horizon was communicated to those within Post Office who had responsibility for conducting criminal investigations?

Michael Young: Well, I’ve described it, because it went to everyone. So major incidents, if you’re really alluding to was Susan Crichton aware of any major incident like a bug on the system, as this might suggest, then the answer to that is she’s part of the Executive Team and the POL Board. She’ll have seen the major incident report. And the same with the briefs to the POL Board. If there was any, let’s call it “discontinuity” in the operation of Horizon in the branch network that may have affected footfall, may have affected revenues, whatever the case may be, that would have been reported either through noting, or in some other way, written to the Board, and Susan sat on the Board.

Ms Hodge: So is your evidence that the systems in place to disseminate this information were perfectly adequate; is that what you’re saying?

Michael Young: Yes, and there were examples of that in some of my documents.

Ms Hodge: I’d like to move on, please, Mr Young, to I think what will be our penultimate topic, that relates to your knowledge of what’s described rather loosely as “remote access”. You deal with this at paragraphs 52 to 54 of your statement. I wonder if we could bring that up, please.

Now, just before we look at what you say in those paragraphs, I think you say that, as a matter of generality, you would have expected there to be some form of remote access to a system such as Horizon from your prior experience in working in IT; is that right?

Michael Young: There is in every system but yes.

Ms Hodge: But you say that, specifically in relation to this system, you did not know that Fujitsu could insert, edit or delete transaction data or data in branch accounts without the knowledge or consent of subpostmasters, managers or assistants, nor that such action could not leave a robust audit trail.

From where had you obtained that understanding, please?

Michael Young: It’s come from a number of arenas. So having spent time around the Helpdesk, having spent time with Fujitsu in their offices, where they support the Horizon product and spent time with my own team, I’m aware of what the process was. And access into the system remotely – so remotely might be, you know, from the offices in Fujitsu through to where the system resides in a data centre, you know, you’re not – there’s not a cable, you’re doing a remote access, you’re doing that knowing that there is a full audit log, right down to the keystroke of everything that happens at that point and then there is a checksum process that goes through, that can’t be changed. It’s very, very secure, to ensure that, if anything does go wrong or if there is a disagreement over what happened, that log can be used – that audit log can be used to describe the actions that were taken, right down to the keystroke.

But my understanding of how the whole end-to-end support process worked was that, at the point a subpostmaster was having a problem in branch, and it required some form of reset, some form of change to the data, though I don’t think that happened very, very often, it was done with the permission of the – it was meant to be done with the permission of the subpostmaster, and that audit log was to stand true over that whole process. So, of course, the Second Sight investigation has proved that that wasn’t always the case.

I do want to make the point because I’ve heard the language in the Inquiry having seen some of the other evidence that’s been given: for me, backdoor access is an access that’s usually attributed to the person that has written the code and he or she uses it as a quick entrance into the data or into the code in order to change something almost on the fly, and the summary is it’s usually not an auditable process. Okay?

And I’d like to think that modern day systems – and I would include Horizon Online as part of that process – was much more robust than that. So where someone is dealing with the code that may have ramifications to a subpostmaster or The Branch Network as a whole, they’re testing it first and validating it, and when they’re accessing it through, there are a number of parties that have oversight to that process. It’s clear, through some of the evidence process that I’ve seen in the Inquiry that that level of due diligence frankly was missing.

And the basic one that subpostmasters would worry about is, if I am asking for support and someone is having to remote in and fix it, okay, they should be doing that with my authority and my purview as to what they’re doing. And, at the end of the exercise, my agreement that they’ve done it. And then the access should conclude. Okay?

Again, I think there have been examples given where that’s not been the process that’s been followed through. But that’s the process I understood from a Post Office – you know, and Fujitsu, “Let’s help the subpostmaster because there’s an issue”.

Ms Hodge: So I just want to be clear, you’ve given evidence about your understanding at the time and what you’ve learnt subsequently in the Inquiry. At the time you were in post, you understood that, firstly, remote access was possible because it had to be for a system such as Horizon, correct?

Michael Young: Yes.

Ms Hodge: Secondly, that if it was used or if changes were made to data, they would be done with the consent of the postmaster?

Michael Young: Yes.

Ms Hodge: Thirdly, that there would be a clear audit trail to evidence any such remote access?

Michael Young: An uncorruptible audit trail.

Ms Hodge: Now, it came to your attention in 2011 that there were concerns about the system controls in place in relation to privileged access rights; is that correct?

Michael Young: Following the Ernst & Young audit report, yes.

Ms Hodge: What did you understand to be the nature of Ernst & Young’s concerns about those privileged access rights?

Michael Young: There were several, so one, I think, talked about some of the change control type process which should be – you know, from an operating point of view, should be really tight. But the one I think my statement latches on to and talks about, is the user access/privilege access type process. So that identified what I thought were some fairly rudimentary issues, right? So not – and, again, my statement says the same thing, you know – not the type of issues you would expect a blue chip technology company like Fujitsu to have in play.

Now, I’m sure part of the process, from the Fujitsu point of view might be, you know, we were moving from Horizon to Horizon Online and things had to change quite quickly and we were still playing catch-up. I don’t hold to that, candidly, I think privileged access in all its various facets needs to be buttoned down throughout, and it’s clear from the Ernst & Young report that wasn’t the case. And it’s also clear that there were one or two super-users that had access to everything, and that that wasn’t supervised in the way I would expect it to be. It might have an audit log associated to it but it wasn’t supervised.

There were, as an example – and I do make this point in my statement but I’ll make it here again – in most corporates now, when you’re deploying a multiplicity of systems, you have an automated process that’s tied to the exit of an individual from a company. Even through HR, you have a process that where you may have someone suspended and suspended from your back-end systems, that there’s an automated process that takes their rights, their log-in rights, password and log-in rights, to certain systems away. Maybe forever, maybe for a set point in time.

And some of that – the sophisticated ones cover leaves of absence when people are on holiday, and so on and so forth, just to apply an additional layer of security. I was surprised, from the Ernst & Young report, that they didn’t have anything like that in play and, when I became aware of the output, via Lesley and via Ernst & Young, there were a lot of phone calls with Fujitsu as to why some of the basics on security management with privileged access were missing.

Ms Hodge: Did you consider at the time that the inadequate controls over privileged access had implications for the integrity of the data process by Horizon?

Michael Young: Yes, I considered that, yes.

Ms Hodge: Now, bearing in mind that you believed all privileged access rights were audited, did you give any consideration to requesting a full audit of privileged access rights be carried out by Fujitsu?

Michael Young: Well, we again, it’s in the disclosure process, we set up an Audit Board that was going to audit following through on the audit report from Ernst & Young, to ensure that we got those issues resolved as quickly as possible. And I deliberately made a push via Lesley, who is very competent, to get that done and marshal it under her leadership, which she did. I think, by the time we got to the end of October of that year, and it’s reflected in the Board paper, we had addressed that privileged access type issue.

Ms Hodge: I think it would be fair to say that that was a forward looking approach, that is to say that you wished to shut down or to reduce the extent of privileged access rights which Ernst & Young had raised concerns about.

What I’m asking you about now is a backward looking review, so bearing in mind you know that subpostmasters are complaining about discrepancies in their accounts, and you’re conscious that, from Ernst & Young’s audit, that privileged access rights have been granted to a much broader number of employees than they should have, and you’re also concerned this has data integrity implications. Did you consider at the time that there might be a necessity for a backward looking review of how privileged access rights had been used and what implications that might have for the complaints being made by subpostmasters?

Michael Young: The reason I’m hesitating is my sense is – and it’s upon a review with Fujitsu, you know, in a visit – that they had it reasonably buttoned down, certainly better than the E&Y type report might suggest, on Horizon, Legacy Horizon, but I believe the shift to Horizon Online and some of the dynamics associated with that may have caused some of what we saw in the Ernst & Young report. Did I look back at the time as I’m doing Horizon Online? You know, if I’m being candid, I’ve got a whole wealth of stuff I’ve got to deliver against. I’m not getting into the weeds of what would be other people’s responsibilities.

Might I have – in hindsight, and knowing where we are today, might I have taken a step back from everything else I was doing and said, “Hold on a minute here, we need to look at privileged access?”, the answer to that is yes, but hindsight is a wonderful thing.

Ms Hodge: I’m conscious of the time. What I’d like to do, Mr Young, is just seek some brief clarification on a number of points with you relating to your sort of knowledge and awareness of discussions around private prosecutions. So at paragraph 111 of your statement – I wonder if we could bring that up, please, page 36 – you say this:

“Occasionally, in [Board] meetings, discussions regarding prosecutions would be had between the Chair, the [Managing Director, Alan Cook or David Smith], [Paula] Vennells, and Susan Crichton, General Counsel. I did not have anything to contribute and did not stray into these discussions, as I had no direct knowledge of responsibility for or involvement in these cases.”

What I’d like to do is test if your recollection of that is correct. We have reviewed the minutes of the Post Office Board and we haven’t found evidence of your attendance, beyond an original meeting in 2008. Do you think you’re right in recollecting that these matters were discussed in your presence at Board level by these individuals?

Michael Young: So I want to be clear about the point I’m trying to make there because, based on the question that was poised to me in the preparation of the statement, I cannot say that I was at a Board meeting and didn’t hear a side conversation or some element of a conversation that might be associated with – let me draw an example – you know, the Legal Counsel having an issue with a particular prosecution.

And there may have been, on occasion, a passing conversation between, you know, the Legal Counsel, Alan Cook, or Paula, or whatever the case may be.

Now, if you’re there, I can’t say – I didn’t listen. They were partial conversations. They weren’t – there was never, in my view, anything done of any great note – which is an anomaly, candidly – around prosecutions in Board papers. It was never a topic of conversation that the Board or the Executive Team at the time would get their chairs round and talk to, to some degree, some familiarity that Susan, or the General Counsel, whoever it may have been at the time, may have chosen to brief the Executive on.

But I am aware, and that’s why it’s in the statement, that there were, you know, one or two occasions where something may have been said and, because you’ve got nothing to contribute, you know, you switch off in those types of conversations and they’re relatively sensitive and confidential by nature, but anything minuted – I mean, in fairness to both Alan Cook and certainly Dave Smith, anything said according to an agenda in the Post Board was minuted. If it wasn’t minuted, it wasn’t an agenda item.

Ms Hodge: On the topic of prosecutions, you say in your statement that the Post Office should have stopped prosecuting subpostmasters after they’d received Second Sight’s Report. Does that reflect your view as to the timings of this, that is to say that, once Post Office was in possession of that report, the prosecutions should have stopped? What I want to ask you is, why do you date it to the Second Sight Report and not, for example, to the discovery that you had in February 2011 of a bug which could cause accounting discrepancies?

Michael Young: So a code issue, a bug issue, can get resolved. You’ve got some aftermaths that you’ve got to resolve and some of which we’ve talked about. But the issue that I think makes the difference from the Second Sight Report is, my understanding, from what I’ve learnt, not having seen the report but certainly seen their evidence, is they’ve found that Fujitsu – Post Office, Fujitsu, largely – had an – you know, there was an – potentially an unauditable access into the system. At the point you don’t have an audit log that you can validate, you’ve lost your evidential trail, if you’re relying on the data in Horizon.

There may have been other prosecutions that didn’t, but the point I’m trying to make is, you know, where largely Horizon is featured as the evidential layer for a prosecution, at the point you’ve lost integrity around access via Fujitsu, to help the Post Office, without the subpostmaster being present to say, “Yes or no”, and without an audit log that validates what has happened, then you’ve lost integrity.

And my understanding from looking in on some of what Second Sight said – because I was deeply interested in where their investigation went because, candidly, I think I started that process off – but I was also, you know, interested in what our Distinguished Engineer at Fujitsu said around auditable logs. And there is clearly a window there where it’s not nailed down the way it should do and, therefore, you cannot categorically say that data was altered with the subpostmaster’s permission at each and every stage.

So you’ve lost integrity and, at the point you’ve got that, you can’t prosecute against it, in my view.

Ms Hodge: Now, you say in your statement that you began to question the integrity of Horizon after you received a further call from – forgive me, you’ve mentioned an earlier call but you received two calls from Computer Weekly, asking you to comment on Horizon’s integrity; is that correct?

Michael Young: That is correct.

Ms Hodge: The second of which you can date to late 2011, early 2012; is that right?

Michael Young: Yeah, it’s somewhere in a three to four-month window, yes.

Ms Hodge: Which you say coincided with significant negotiations over the separation of Royal Mail Group and Post Office?

Michael Young: Yes.

Ms Hodge: It’s to that second conversation that you date your significant concerns about Horizon’s integrity; is that fair?

Michael Young: I want to just give you a sense where I was at this point in time because I think that’s pertinent to where we are. So I’m working three or four days a week on separation. The nearer you get to separation, you’re now writing a contract between you and Royal Mail Group, and it wasn’t easy aligning, you know, your own Executive Team with Royal Mail’s Executive Team, and there was a lot of toing and froing, to be candid, and we – the team that pulled that together with a little bit of help from me, you know, did a good job because it stood the test of time for 10 years.

But I want to make the point that it was – in the last three or four months of my service at Post Office, I lived and breathed delivering that contract. It was probably every working hour that I could apply to it.

So I’m in the negotiation when my phone rings, just as we’re finishing up. I excuse myself, I go into an anteroom and it’s a journalist from Computer Weekly, right? So it’s been a bad day. So I take the call, it’s quite a courteous call and, in fairness to the journalist whose name I can’t remember, he says in summary the JFSA now has a much larger group – and it was, it was hundreds – of subpostmasters that are disputing the integrity of Horizon and, more importantly, they’re engaging with lawyers – later on it was established that it was Shoosmiths – to start pulling together a case – you know, to take a case to court.

I emphasise what I had right the way through and still believed, at that time: that Horizon, in my view worked as prescribed, I didn’t see any issues. There was maybe a chosen few words I’d used, which have been repeated in Private Eye and elsewhere.

But, nonetheless, that’s what I did. I finished the call up as courteously as I could. It couldn’t have lasted more than five minutes. And to the point I think you’re now alluding to, I was – I’d got to the point where, frankly, I’d had enough. And I rang Duncan Tait up – you know, it’s like a continuous drib drab with Fujitsu – and just said, “Look, I’ve just had this call with Computer Weekly, this is where he says things are. This is reflecting badly on all of us, your brand and our brand in POL, and we need to address it, and there’s no two ways about it, Duncan, you know, we’re going to have to investigate this system thoroughly”.

Now, I’m conscious at this point that there are – and you’ll ask me who and I won’t be able to name them – but there were one or two people saying at the point you do that you now question past prosecutions and other bits of – but I’d got to the point where, you know, the wealth of subpostmasters that appeared to have been affected and the media outlay that was now coming more and more to the fore, where I felt we needed to be much more proactive and, albeit I was dispirited by Duncan’s reply to my letter, I had continued to knock on that door and more or less got the same apply each and every time.

Every time there was a media outlay, I used it as a mechanism to say, “Are we sure about the system, are you sure you won’t have look at it”. You know, we’d had those conversations. This time around, I’d got to a point where I’d had enough and said, “We’re going to do it and, more importantly, I want your support”. And, in fairness to Duncan, he took a minute or two to think about that and calmly replied “Okay, I think you’re right”. And I said, which was an important point, rightly or wrongly – I said, “I’m expecting Fujitsu to pay for this audit but I want it to be under Post Office’s leadership”, and he agreed to that.

As soon as I’d finished that call, I rang Paula and repeated the conversation I had with Computer Weekly and the conversation I had with Duncan, and she said, “Right, okay then”. I said, “I’ve got to get you into other room with Duncan, so we can take this forward”.

She asked for his phone number, I gave her the phone number and my presumption – again, I’m still doing separation and I’m writing down the contract – is that there was some form of telephone call between the two of them, which I know took place because I think in Paula’s evidence she suggests there were phone calls that took place.

But that’s how I left it and, you know, that’s why my belief is, carrying that through to June when Second Sight are brought on Board, from when I left in March, you know, it was clearly followed through and my noting paper in March to the Board, you know, before I left, March 2012, talks about a full evaluation of the system and that it should be a shared process between ourselves and Fujitsu with execs from both companies, and it talks about what that might mean.

I expected that to expand, and the one thing I think that still hasn’t happened and should have happened, in my view – and I know this is a long-winded answer – okay, you can’t look at the system in isolation. Right, the system is one thing and certainly the code needs reviewing to see what anomalies there are and the practices they apply to keeping that code where it needs to be, but you need to look at the process mapping that sits round that system and the training that’s applied to the Branch Network and the use of that system. I see too often, even today, with digital systems, where people buy a digital system and somehow expect the digital system to make their life easier, without changing the process that they have, and that all three need to work in perfect harmony: process, training, system.

And, in my view, from an investigation point of view, it should have been a big hitter like Ernst & Young, okay, that came in and vetted everything because I still don’t think that’s happened.

Ms Hodge: Finally, Mr Young, you say that in your conversations with Mr Tait, in which you raised, I suppose, what was a further request for an independent review of Horizon, you pointed out that damage was being done to the brand of the Post Office and to Fujitsu. Was that your principal concern, damage to the brand, rather than the injustices that might have been caused to postmasters?

Michael Young: It was both. It was a conglomerate of a lot of things. I think this was hurting a lot of people: subpostmasters, clearly, former subpostmasters, and subpostmasters. But, as I think my statement alludes to, you know, I was very conscious that the one thing, I would say about the Post Office is it has a lot of long-term employees. It has people that have worked 20/30, in some cases occasionally, 40 years in the company. To have this backdrop, this Inquiry backdrop, and where we are today, you know, clearly, you know, impacts those people too that have given – you know, everything they can to the job that they’ve done day in and day out for 30/40 years, and I was conscious of that type of portfolio.

There’s some very loyal people across the Branch Network and in headquarters and, amongst the support teams, that were trying to do the best job they could and this was going on in the background and people were talking about it in the way they are today and, you know, if you go to a party and say, “Who do you work for?” And it’s the Post Office, you know, that backdrop doesn’t really reflect their time in the job, over the years they’ve been working for the Post Office, and the same for the Branch Network.

It’s left a litany of bad press behind that, you know, some people probably deserve but others don’t, and I was conscious of that too.

Ms Hodge: Thank you, Mr Young. I have no further questions.

Sir, there are some questions from Core Participants. I think those are likely to take us beyond 1.00, but I’m sure that Mr Young would like to finish his evidence. So it may be that if we canvas how long those are likely to take, you can take a view as to whether you’d be willing to take a slightly later lunch break.

Sir Wyn Williams: Yes, yes. So who wants to ask questions, and how long are you going to take?

Ms Patrick: Sir, for the Hudgells team we have around 25 minutes.

Ms Page: I’m afraid similar time from me as well, sir.

Mr Stein: Sir, on behalf of Howe+Co, five minutes.

Sir Wyn Williams: Right. Well, let’s use those few minutes up to lunchtime to hear Mr Stein’s questions and then I think it’s inevitable we’ll have to have a break for lunch.

So your five minutes could go to ten, Mr Stein, but not longer than that. That’s what it boils down to.

Mr Stein: Thank you very much. I will try to keep to – well, I will not just try; I will keep within the strictures.

Questioned by Mr Stein

Mr Stein: Mr Young, my name is Sam Stein, I represent a large group of subpostmasters who have all been affected by this scandal and a number of them were involved in the GLO, that’s the High Court litigation. Okay?

Now, your evidence, as far as I can understand it, has been this, and can I just summarise it: that when you came into the Post Office, you were told that, largely, the operation of the investigation and prosecution section was being dealt with by a team and that you shouldn’t really interfere. That’s a summary, a paraphrase of what you said; is that about right?

Michael Young: Yeah, I think the words used were “You don’t need to be part of it”.

Mr Stein: Yes, and, secondly, in similar lines, when you were thinking about the question of what is Fujitsu up to, regarding the operation of the system and its coherence or its integrity, you were told, well, that’s up to Fujitsu because Fujitsu owns the data, and owns the source code, and that therefore they’re in control of that; again that’s about right, is it?

Michael Young: Well, they don’t own the data. The data was always going to be the Post Office’s, if it’s generated by branch. But they certainly owned – they owned the code of the system.

Mr Stein: Right, and the sense we get from your statement is that it was only towards the end of your tenure, your years at the Post Office, did you start to gain some concerns regarding the system and, therefore, you wrote a document to the Board, which was a noting document to the Board, which was to say, “ought to be reviewed”?

Michael Young: Yes.

Mr Stein: Okay. Now, you’ve been asked a number of questions by Ms Hodge about the mismatch bug, can we call it that, just as a simple short version of it?

Michael Young: Yes.

Mr Stein: You’ve explained that, regarding the mismatch bug, and this is what you put in your statement: you thought that it had arisen in the testing environment, rather than the full rollout, yes?

Michael Young: No, the testing environment is one thing. Just to make sure we’re all talking about this in the –

Mr Stein: Remember how little time I have.

Michael Young: In the pilot, right, you’ve tested it. You think it’s fit for purpose. You’re now running a pilot over – in waves. You run a pilot and then you go to the next wave, next wave and then, before you know where you are, there’s a sitdown and “Let’s now go out into main rollout”.

Mr Stein: So let’s make matters as simple as possible: you did not think it was a bug that was operating in the live environment. That’s what you say throughout your statement, that’s as you’ve given your evidence originally to Ms Hodge, yes?

Michael Young: Yes.

Mr Stein: Right. So, by the time, in fact, in February 2011, you’re being made aware of this mismatch bug, did you realise that it was important, particularly as against the growing clamour in the public sphere, regarding the reliability of Horizon?

Michael Young: It’s the – having listened to the – you know, the evidence and, more importantly, having, you know, looked at that summary that talked about February 2011, if in – if it’s not a – because I’m a – like I said, there were certain facts that had symmetry to pilot: the 62 branches, the way the outfall was dealt with, the gains were kept by the postmasters, the debts were managed and kept by the Post Office, exactly the same process, it would appear, have been carried out on both mismatches but it’s why I thought they were one and the same.

Mr Stein: Did you think that the mismatch bug at the time, in 2011, when it was raised with you, was important as against the growing clamour regarding the integrity of the Horizon system in the public?

Michael Young: Well, clearly the answer to that would be yes.

Mr Stein: Right. Can we go then go, please, to FUJ00081545. It should come up on the screen, and if we can go to page 4, please, on the system, that would be very helpful.

If we scroll up, please. Right. Stop there, please.

Okay. So we can see here, this is from you, 18 February 2011, 7.58 in the evening, and it’s to Mr Russell and Mr McLean, and it says:

“Will

“I need to sit down with you and possibly several others just to understand these latest issues on Horizon and where we are with them. This is very important as there’s a lot of media interest in Horizon at the moment.”

Then you’re asking:

“What would be helpful is if you could send me a written summary on what the integrity issues are and what’s been done about them.”

Okay? So we can see that, at that point in time, there was no doubt in your mind that this wasn’t just important: this was very important, as against the media issues that were current at that moment; do you accept that, Mr Young?

Michael Young: Agreed.

Mr Stein: Right. Now, let’s try and work this through. There was no mention in the document where, just before leaving Post Office, you say to the Board that there needs to be a review of the system. There’s no mention of the mismatch bug in that document?

Michael Young: No, there’s not, no.

Mr Stein: There’s no reference by you to the Board of this very important issue as against a lot of media interest going on at the time. There’s no reference by you to the Board of this very important issue either, is there? You don’t take it up to the Board?

Michael Young: No, there’s not, and equally, there’s no reference to me via Fujitsu or via Lesley or via my own team with that regard.

Mr Stein: So shall we just look at your own levels of personal responsible to start off with –

Michael Young: Okay.

Mr Stein: – because you appeared to be the person that people are going to. They’re saying, “Mike, look, there’s this problem, and it’s a problem in the live environment”. Now, if we’re talking about personal responsibility, you’re someone that talks a fair bit in your statement and your evidence about your experience, both in background, in the armed forces, then the police and then in systems and operations. Now, this is being relayed to you as being an important issue in the live environment outwith the Post Office. It was your responsibility to take this to the Board, wasn’t it, Mr Young, and you didn’t carry that out?

Michael Young: Yes.

Mr Stein: You also were aware that there was an implication, you must have been aware that there was an implication with bugs in the system, the live system, that this could impact upon investigations, and police cases that were being considered, and cases that were being taken through the court. You mentioned a couple of times that, with your background police experience, things were of interest to you on occasions, and you used that experience to analyse matters. You must have been aware that this was going to go to and implicate issues that were related to police cases; it’s true, isn’t it, Mr Young?

Michael Young: Possibly, and the only reason I’m hesitating to give an affirmative to that is I probably was looking at this purely from an IT standpoint, but does it have implications around those people that have been prosecuted? The answer is yes, I understand that.

Mr Stein: You did nothing about that either?

Michael Young: Can we just take a step back?

Mr Stein: Well, did you or did you not do something about that, Mr Young?

Michael Young: I’d like to take a step back, if that’s all right?

Mr Stein: I’d prefer you to answer the question but I’ll let you have your step back.

Michael Young: I will answer your question, if I can take a step back, all right?

I thought this was tied to, and I’m wrong, clearly, having gone through this now, I thought this was tied to the original Oracle bug, which I thought had been dealt with. Clearly, that’s not the case. I’m going to come back to the point I made before because I don’t want that to get lost. Usually – and I don’t know of any other occasion, potentially, where this may have occurred – usually, when something like this happens, a major incident is generated.

That’s not by me. That’s by the people operating the system and they sit both sides of the fence, in IT and in Fujitsu, and, at the point a major incident comes out, the Executive Team and the Boards get those major incidents, along with me, at the same time. That’s missing.

Also, what’s missing is any sort of executive overlay from Duncan, Gavin Bounds or anyone in Fujitsu, out of courtesy to me. That’s missing too, okay?

So I am sat there, I think at the time, seeing this as part of the original Oracle issue. It clearly isn’t, okay? Is it a miss by me? In answer to your question, the answer is yes. Had I known that it was a new bug, managed in the same way, in all its various facets, and miraculously appearing to affect 62 branches like the original one did, I would have had phone calls both to Fujitsu and to my Board colleagues.

But there is a process that sits in IT from a Service Delivery and IT point of view, that doesn’t need me in the link. If Mike Young is away on leave or ill, it doesn’t all fall flat on its face. There are processes and procedures that kick in that allow this to get escalated with all of the backdrop of how it’s come about and what’s being done about it. I don’t see any of that in this, or in the disclosure process. That’s the only point I’m trying to make. So do I accept –

Sir Wyn Williams: Can I summarise this, otherwise it won’t be five minutes, it’ll be 15?

Mr Stein: Yes, sir.

Sir Wyn Williams: The position is that you would have expected that, one way or another, this should have got to the Board. You were one possible means of getting it to the Board but there were others, the reality is it didn’t get to the Board; is that it, in summary?

Michael Young: From the disclosure documents, yes, sir, that’s the case.

Sir Wyn Williams: Thank you.

Mr Stein: So the position is, Mr Young, you and others all failed to do your job properly as regards to this issue; is that fair?

Michael Young: No.

Mr Stein: Okay.

Michael Young: I’ve said why it’s not fair.

Sir Wyn Williams: All right, thank you.

Mr Stein: The last question on this. The document I asked to go on the screen says this:

“I need to sit down with you and possibly several others just to understand these latest issues …”

So, in fact, that reply, written by you, tells us that these were the latest issues; they weren’t the previous issues. You knew these were separate to the earlier ones, didn’t you, Mr Young?

Michael Young: I’m not disputing that when I read that now but, in the happening, in the operation, that’s what I was seeing. I was seeing something related to the original Oracle bugs –

Mr Stein: No further questions.

Michael Young: – so I don’t dispute that point.

Sir Wyn Williams: Right. Thank you. So we’ll break for lunch now.

Before we do, Ms Hodge, are you taking this afternoon’s witness as well?

Ms Hodge: I am sir, yes.

Sir Wyn Williams: So let’s just have a minute of an overview. We’re obviously going to run significantly into this afternoon still with Mr Young. So where does that leave the next witness and the length of time that that witness may take?

Ms Hodge: I don’t expect the witness to take anything like as long as we’ve taken with Mr Young, in that I have some questions for him but I can cut my cloth, and I don’t think there are a lot of questions from Core Participants.

Sir Wyn Williams: Can I ask Core Participants to confirm or contradict what Ms Hodge has just said about their questioning?

Mr Stein: From our point of view, I think that’s right, yes. Thank you, sir.

Ms Patrick: From ours too, sir. I think most of the questions we wanted to cover are going to be covered by Counsel to the Inquiry.

Sir Wyn Williams: Right. Ms Page or Mr Henry?

Ms Page: I’m just having a very quick look. Mr Henry is not in the room and was going to deal with this witness but I’ve just looked at the Rule 10 and I can confirm that we don’t have questions.

Sir Wyn Williams: Right. Fine. Well, that’s fine.

I’m prepared to sit, you know, reasonably this evening to finish the witness but, as you all know by now, by about 4.45, my powers to concentrate are waning, shall we say. So I hope everyone will bear that in mind.

So we’ll start again at 2.00, yes?

Ms Hodge: Yes. Thank you, sir.

(1.02 pm)

(The Short Adjournment)

(2.00 pm)

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

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

Ms Hodge: Thank you.

Sir Wyn Williams: Who is going first?

Ms Hodge: I believe it’s Ms Page.

Questioned by Ms Page

Ms Page: Mr Young, you were Chief Operating Officer when you left POL in April 2012 with Lesley Sewell Head of Technology, one of your direct reports, yes?

Michael Young: Yes.

Ms Page: Yet you take no responsibility for the Horizon scandal; is that right?

Michael Young: We all have a part to play in that tier around tech. If the tech doesn’t work as described and has caused the failures that it’s caused, then yes, we’ve got some responsibility, and that includes me.

Ms Page: But you said that it was really other people’s fault for not telling you of the problems with Horizon, just like Paula Vennells said that it was your fault for not telling her.

Michael Young: I highlighted – other than the last bug, which is a misnomer that I’ll have to come to terms with, I highlighted all the issues we had with Horizon. As we’ve heard, I challenged Fujitsu with regards to looking at the system. I was reminded that it was a service, we didn’t own the IP. I think some of the work I did got us to a point where we could demand it because we would own the IP. I think I did, you know, everything I could.

Paula’s response was based, as I understand it, on a conversation we had after the first Computer Weekly call. Now, I actually left in the second week of March 2012 and Paula was there seven years later. So I thought –

Ms Page: She has her own –

Michael Young: – that the construct that I put in place per my comments before the lunchtime break, allowed the business to pursue, in hand with Fujitsu, a proper investigation of the three elements I talked to: the process, the training and the system itself.

Ms Page: Well, let’s go back a little bit and what you say about the chain of command in 2010. You’ve told us in your witness statement – no need, I think, to go to it – that after David Smith moved to Royal Mail Group in October 2010, you say he continued to actually have oversight of the Post Office and, in particular, Ms Vennells continued to report to him until around April 2011, yes?

Michael Young: That’s my understanding, yes.

Ms Page: What was the degree of oversight as far as you understood; are you talking daily, weekly, monthly interventions?

Michael Young: Between?

Ms Page: Between Ms Vennells and Mr Smith.

Michael Young: I don’t know, genuinely don’t know.

Ms Page: How do you know that she was still reporting to him?

Michael Young: It’s a good question. I think some of that – I can’t remember how but some of that has some through the disclosure process and some of that has come through not talking with Paula but with other executives within POL, the suggestion being that she had some handover with Dave Smith and, as a consequence, he was a mentor/coach as she went through this process. And I think my statement talks to – and down the road, Moya Greene took on that more of that mantle.

Ms Page: Can we then just look at what Mr Smith says about your involvement in the background to the Ismay Report. If we could bring up his evidence, please. It’s INQ00001128.

When we get there it’s page 19, internal numbering, page 76. Mr Smith said that there were no terms of reference for the Ismay Report but, in effect, he said that you were one of a few people who was giving Mr Ismay instructions. So, if we look at the right-hand side of this page – sorry, yes, the right-hand of 76 – it’s an answer that he gives, a large answer in the middle of page 76:

“I think the structure at the time was that Mike Moores – actually it was Mike I had charged with writing the report, and that between Mike and myself and Mike Young and Sue, we go back to that conversation, we agreed that it would be appropriate for Rod to carry out the actual activity, and Mike, myself and Mike Young, all at various times, did have conversations with Rod to sort of set the tone of what we wanted and expected to come back and also to help and review his progress. That was more the two Mikes than myself but the three of us – it wasn’t just one conversation, it was a set of conversations.”

Then summarising that, the question is:

“So your evidence is that Mr Ismay was getting instructions from would be people at multiple times?”

Would you agree with that?

Michael Young: I don’t recall giving any instructions. I was asked questions and I responded to those questions but I didn’t give instructions to Rod or to anyone else. I actually saw the preparation of that statement going across the whole tech team, not just me, but I responded to questions as and when they came across my desk.

Ms Page: Let’s go a little bit further down, then, see what else Mr Smith says. At page 22, internal pages 87 to 88, on the left, Mr Stevens quotes from his witness statement, and it says:

“‘At the time, I do not think that we thought that there was any merit in commissioning a further report by an IT expert or forensic accountant or similar to test the reliability of Horizon as the report was clear-cut in its position. There was nothing in it which suggested we should investigate Fujitsu or Horizon further.’”

Then he asks:

“Who was the ‘we’ when you say that?”

“Answer: I’m talking about a combination of the Post Office Senior Management Team.”

Then further down:

“Paula Vennells, Mike Young, Mike Moores.”

So, again, that’s suggesting you were part of a small group of people responsible for what was going to happen both in the Ismay Report and what was going to happen as a result of the Ismay Report; do you dispute that?

Michael Young: That’s the way it reads, yes.

Ms Page: Do you agree with what he says there?

Michael Young: Yes.

Ms Page: All right. Well, let’s just look at the right-hand side, and this answer, the large-ish answer in the lower half:

“… the fundamental piece was that we believed that the system was tamper proof so the Fujitsu position that was laid out was quite clear. We had not seen in any of the recent cases any issues that would suggest a problem and, in fact, a few weeks later, as we now know wrongly, but at the time, we saw the Seema Misra case as a test of the Horizon system, and it had come through that, and so those were the fundamental reasons.”

Was the Seema Misra case part of the reasoning for not pursuing an independent report?

Michael Young: I don’t know. As I alluded to this morning, I wasn’t privy to the prosecution case, for want of better words, the case prepared against Seema Misra. What little I got in terms of prosecution data came via the Ismay Report in itself.

Ms Page: Well, this is rather different, isn’t it? What he’s suggesting, Mr Smith, is that, actually, in the aftermath of the Ismay Report, when “we”, the management team that he has set out on the left-hand side of the page, when “we” were considering whether or not to take further action, whether the Fujitsu system was tamper proof, whether it needed a forensic accountant or similar to test that, one of the reasons not to do that was that the Seema Misra trial had tested the Horizon system and the Horizon system had come through that test. So he’s suggesting you were part of those discussions.

Michael Young: So I can categorically say that’s not the case.

Ms Page: Let’s look at the email chain that we’ve already looked at, the Mark Burley email chain. POL00424359. This is a slightly different version of the same email chain, which has a little bit more in it. If we could scroll down, please, to page 4, you’ll recognise this from the version that we saw earlier today. It’s an email from Mark Burley to you and Sue Huggins with various others copied in. In Mr Burley’s paragraph 2, he refers to the three cases that he’s aware of, and I’d just like to pick up on the Castleton case, middle of the paragraph:

“Castleton where we presented a copy of the audit log to the subpostmaster’s solicitor who promptly agreed there was no substance to the SPMR’s claim and advised him to settle the debt. The solicitor was sacked by the subpostmaster who proceeded to court, lost the case and liability of £300,000 but declared himself bankrupt. The judge decided there was ‘no flaw’ in the Horizon system and ‘the logic of the system is correct’ and ‘the conclusion is inescapable that the Horizon system was working properly in all material aspects’.”

You will have known, won’t you, that what goes on between a solicitor and their client is privileged, wouldn’t you?

Michael Young: Indeed.

Ms Page: So that summary there was nonsense, wasn’t it? There was no way Post Office could know what Castleton’s solicitor said to Castleton, was there?

Michael Young: Potentially, yes.

Ms Page: Was this malign rumour part of the commonplace lazy assumptions that Post Office Management made about subpostmasters, that they were dishonest or incompetent, that sort of baseless rumour mongering?

Michael Young: Within the Post Office or within the executive? I mean, frame it.

Ms Page: Well, within your knowledge.

Michael Young: Look, I’ve seen this played out in the Inquiry before. I can honestly say not that I’m aware of. Was there a – to further just make a point, was there a view that Horizon was secure and working as it should do? Yes. And did people feel, including myself, that we should defend it because we had no other datasets to suggest otherwise? The answer to that is yes, too.

But I can’t say there was a deliberate stream of guidance, advice, however you want to term it, coming from wherever, to – you know, to do untold things to the subpostmasters that might be going through or about to go through a prosecution. That’s not something that I am aware of.

Ms Page: Let’s turn, then, to the Misra trial again, and if I could have POL00169170, please. This is the famous bandwagon email, which was sent around after the Misra trial, and what we see in this version of it is your name as one of the people copied in. Can we scroll down, please. There we are. The email from Marilyn Benjamin in the bottom half of the page is the bandwagon email, and we see here that it has been forwarded from David Smith, that’s the manager David Smith, to you, Mr Ismay, Mr Moores and Ms Vennells:

“Rod

“Brilliant news. Well done. Please pass on my thanks to the team.

“Regards

“Dave.”

This was Post Office using a criminal trial for improper collateral purposes, wasn’t it?

Michael Young: That’s not the way I see it. I actually think what Dave Smith was trying to do was thank people for their efforts to see it through. Now, we can argue about whether it was right or wrong; that’s the way I saw it. I did nothing with that email. I think the intent was – the way I read this email from Dave Smith, the intent was I was to pass my thanks on potentially to John Scott. I didn’t. I read through it and I left it as it was. But I do think – and I did see Dave Smith’s evidence – I do think, you know, it’s not a great message, personally.

Ms Page: Could we have your witness statement up, please, at page 35, paragraph 110:

“Further, I was not involved in the prosecution of Seema Misra. I only became aware of this case after seeing the Channel 4 programme and reading the Ismay Report. I was not copied on the initial email dated 21 October 2010 regarding the conviction of Seema Misra. (Email from Rod Ismay to Jarnail Singh [et cetera]). I was not aware that as a result of a successful RMG/POL prosecution a pregnant lady was imprisoned.”

That’s not correct, is it?

Michael Young: No, on reflection, having looked at that discovery document, the answer would be no. In fairness the email doesn’t talk about her personal circumstances but I take your point.

Ms Page: Do you think you’ve made any other self-serving errors of that nature in your evidence?

Michael Young: It’s not self-serving, genuinely not self-serving.

Ms Page: What about the recollection of the second Computer Weekly call and your subsequent very detailed recollection of your conversation with Duncan Tait; is that a little bit self-serving, Mr Young?

Michael Young: No, I was angry. So I remember it implicitly because I knew what it would mean and it was me almost passing – you know, passing the ability to get the system investigated onto the – what would be, after separation, the CEO of the Post Office. And I have made the point – there were a number of points to that and one of them was we didn’t own the IP and, every time you knocked on Fujitsu’s door, you know, “You bought a service, we’re in the parameters of the service”. And it wasn’t until quite late in the year that we had secured the IP through the broadband contract.

So there were a number of actions that add credibility to the action that happened after that call.

Ms Page: Well, let’s go to some communications with Parliament. I’ll just actually go to one and perhaps give some references for others in the interests of time.

POL00417094. If we could scroll down a little, please. There’s a lot of Mikes in this email chain, it gets a bit confusing but this first Mike is actually a draft directed to Mike Whitehead from Mike Granville. It says to Mike Whitehead:

“In response to you query:

“The system is based on a user log-in, and all actions have to be endorsed by the user. POL cannot remotely control a branch’s system. Any technical changes by Fujitsu that impact the system have to go through clearance processes which would prevent any amendment to existing data. The independent audit file is in place and can show all the system activity, down to a single keystroke, in a particular branch.”

So that was a draft. If we scroll up, Mike Granville wants to run it past you, Mike Young. So he sends it to you and he says:

“If it is helpful re your meeting with Paula – please see below my draft response to BIS …”

So do you know what became of that; are you aware that that then did actually go as far, as we can tell, to Mike Whitehead at BIS, that formulation about remote access?

Michael Young: I don’t know. Like you, I would presume it went to where it was meant to go.

Ms Page: As I say, I wouldn’t take you to it but in POL00120561, we see a further briefing which includes that wording. It goes again to you, it covers various issues to do with the Seema Misra trial, it talks about the very robust stance that Post Office wanted to take, did take, continued to take and that BIS took up, therefore, with Ed Davey following his meeting with Sir Alan Bates.

Now, you were obviously aware that these very robust lines were going to Parliament, weren’t you?

Michael Young: Well, I’m – clearly, I’m aware of that. So as my statement said, I didn’t sit down. The only MP I sat down with, which was an introductory meeting to the Post Office, was with Ed Davey, and a number of the execs were invited and that meeting lasted an hour and, as my statement says, it didn’t cover Horizon. Where I may be asked by someone, in this case from regulatory, or maybe from PR for a sanity check around a statement, in this particular case, audit controls on the data, you know, I’ll provide that.

I’m responding to an internal response. I never had a direct conversation with a Member of Parliament or with representatives of the Government that later on joined the Board.

Ms Page: Did you not feel that, as Chief Operating Officer with technology in your remit, it was your responsibility to make sure that what was said to Parliament was absolutely accurate?

Michael Young: Yes.

Ms Page: Yet you didn’t, did you?

Michael Young: Why?

Ms Page: This was not accurate, was it? The EY findings are not mentioned here, are they?

Michael Young: No.

Sir Wyn Williams: Well, to be fair –

Ms Page: To be fair, actually –

Sir Wyn Williams: – (unclear).

Ms Page: Quite, I withdraw. Thank you, sir, and I apologise.

But you didn’t bother to find out did you?

Michael Young: Bother to find out what specifically?

Ms Page: Whether this was accurate.

Michael Young: I thought it was accurate.

Ms Page: On the basis of what you’d be told by Fujitsu?

Michael Young: Yes, and what my own team thought was in place.

Ms Page: Well, let’s look at what happened further on down the line because in November 2011 you were still giving the same sort of robust lines to Parliament. POL00295067. If we scroll down a little, please. As we can see, this is from 18 November 2011. If we stay on the email from Rod Ismay to you, if you’re willing to take it from the subject line “Parliamentary Questions about Horizon”, that’s what we’re dealing with. In the middle of the first paragraph:

“It remains consistent with our robust stance but is a more concise set of words.”

Then if we scroll up to your reply:

“Sorry not to have got back to you sooner, been stuck in MDA negotiations all day.”

So that confirms that at this point in time you’re very strongly tied up with that:

“I’m okay with the approach and the wording.”

So, by this time, you are aware of the EY reports, you are aware of issues growing and yet you’re still content with this robust stance to go to Parliament.

Michael Young: I’m trying to work out the point. So are you pointing to the fact that E&Y had raised some issues associated with user and privilege access because I didn’t see anything in the EY report that. Talked about audit logs, checksum datas and keystrokes. So I’m trying to – I want to answer your question but I’m trying to see what bent there is to it.

Ms Page: Well, at this point you’ve told us this morning that you’re starting to have some concerns about Horizon and yet you’re content for the robust position, the same kind of robust language that’s been going back now since the previous year and you don’t see any need to revisit that approach?

Michael Young: So maybe your interpretation and mine are slightly different but there was always a nagging doubt, okay, at the point that you’ve got more and more subpostmasters, you know, it grew, as we all know, in the JFSA, saying the system was wrong.

If you didn’t have that nagging doubt, okay, then, you know, you’ve got a bit of a problem. So it acts almost as a conscience check. I’m going to go back to what I said and maintained, right. I saw nothing in the Horizon system beyond what was in rollout, and then some of the change activities and the hardware failures that suggested Horizon was doing anything but what it was prescribed to do, and it certainly was within its SLAs, and where there were failings, okay, they were highlighted.

The issue associated with privileged access worried me, right? I’ve no doubt about that because I thought that might be better policed, but it was addressed in a relatively short timescale. It’s only with the hindsight of this Inquiry and some of what I’ve learnt from the Second Sight Report that, you know, I now know, through that benefit, that some of the audit logging, as I might have perceived it, okay, isn’t – wasn’t as locked down as best practice would indicate and it was open to abuse.

Ms Page: But you tell us that, by the time you had that second call with Computer Weekly, you were getting concerned and, thereafter, you were determined to make sure that there was a review of Horizon?

Michael Young: So one of the reasons why I was getting concerned is there was more of this. There was more a push from, you know, executives and from the Government Shareholder to respond to letters they had had from some of their parishioners, in which case must have been subpostmasters, okay, and I was having to underwrite some of that. And I did that quite deliberately because I wanted to take the pressure off Lesley, so she could do her job, which was the day-to-day management of the system.

At the point that you’re having the conversation with Computer Weekly, towards the end of 2011, you’re at a point where you’re being told: litigators have been appointed and there’s now hundreds of subpostmasters. Right? Did my mindset change at that point? The answer is yes. Did my mindset significantly before then? The answer is no because I couldn’t point to anything on the system. I still wanted something from Fujitsu that told me the system, right down to a code level, was working properly, and the response I got was, “It’s a service, our algorithms aren’t bringing up any anomalies”.

I mean, I’m not sure where else you’d like me to go because the heat, if we can call it heat, is coming from Parliament through parishioners and it’s coming through, you know, the media.

Ms Page: Let’s just go to one last document, please. It’s POL00338400 and this relates to the letter that you signed off on to go to Private Eye, following their article.

Michael Young: Yeah.

Ms Page: If we start, please, at page 2.

If we scroll down a little bit we can see the content of your letter, and it’s the bit that starts:

“Sir, the Post Office takes meticulous care to ensure the Horizon computer system in branches nationwide is fully accurate at all times.”

We probably don’t need to go through it all because it’s very much the line that was being taken by Post Office at that time but, if we scroll up, we can see that it’s a debate about whether or not to send that letter. It goes to Paula Vennells from David Simpson, it goes to Susan Crichton, it goes to Mike Granville and someone called Rebekah Mantle. Various other people are copied in, including obviously you, Kevin Gilliland, Sue Huggins, Rod Ismay.

Now, if we then go a little further up we see that Paula Vennells responds to everyone and then you say in the email above that that you’re happy with the letter. You and Susan have spoken about it and you’re both comfortable with it.

If we then go further up again, we see that Rod Ismay has forwarded it to Angela van den Bogerd, and he says:

“… thanks for our time this afternoon. [This is the] response to Private Eye …”

He attaches a pdf. If we scroll all the way up, just for completeness, we can see that he also sends the Private Eye pdf.

Now, what’s interesting about the various people copied in on that is that an email – which I won’t bring up for the benefit of time but which is a well-known email now – the Lynn Hobbs email, in which she talks about the fact that Fujitsu does have the capacity to go into branch accounts and amend the data, that email from Lynn Hobbs went to pretty much all of those people who I’ve just read out. They all therefore knew that the claim that Horizon had no backdoors was not correct, and they were all in on this email chain in which it’s proposed that you write a letter to Private Eye saying there’s absolutely nothing wrong with Horizon, it’s all perfect.

Do you feel that you were being set up here?

Michael Young: No. I do want to – I don’t. So I had been asked I think, once or twice before to put my name to a statement that said the system is secure, in a set of words, so I wasn’t surprised when the Private Eye article came up that I was being asked to do the same.

So I want to make sure, because I said this earlier on in my evidence this morning, a backdoor – we have to be careful about how we use our language – a backdoor is for me and it is for most people in tech –

Ms Page: We all heard your explanation.

Michael Young: Right, well, then there was no backdoor, okay, and everything, as far as I was concerned, at this point, and even when I left, was an auditable checksum log, okay, that was uncorruptible and no one could get into it. So that was the case up until the day I left and the only time that that changed in my viewpoint was when I was seeing some of the outputs from the Inquiry and particularly the comments from Second Sight.

Ms Page: But you also told us that, when you had that second call with Computer Weekly, that was when your concerns started to really mount –

Michael Young: And I’ve explained why.

Ms Page: – and you’ve explained why. You also explained that one of the reasons that your concerns mounted was that the firm Shoosmiths had hundreds of people that they were now acting for, yes?

Michael Young: Yes.

Ms Page: If we could scroll down to the bottom of page 3, please –

Michael Young: Can I just – on the Shoosmiths issue, it wasn’t the fact that I was worried about the lawyers finding something. I want to be clear about that. It was the – these were hundreds of subpostmasters that had grouped together and now were bringing in lawyers, presumably at their own expense, to pursue this. So it brought real – for me, it brought real – it suggested there was a real dynamic around having had system issues. Okay? So the numbers growing and the postmasters themselves bringing in a high-end law firm to fight their fight suggested, you know, this wasn’t a group of disgruntled subpostmasters that just wanted to blame the system as an out, potentially, this was –

Ms Page: They were taking it seriously?

Michael Young: – something very different and, on the basis of that notable difference, that’s why, you know, I went back to – I didn’t ask for permission, I went back to Duncan and said, “No, we’re going to have to do this”.

Ms Page: Let’s just look at the email at the bottom half of the page from David Simpson to the same addressees I read out earlier, you’re copied in, and this is about the letter that you’re about to write to Private Eye.

If we pick it up:

“The names of the subpostmasters featured are very familiar and the claims made against Horizon are the same ones we’ve seen many times before. The article also mentions Shoosmiths and a possible legal action the firm may bring – but Shoosmiths have been saying the same thing since the early part of the year. Disappointingly – but perhaps not surprisingly – Private Eye has not run in full the very short statement we sent to them.”

So at this point, Mr Young, you are on notice that Shoosmiths have taken up the cause of the subpostmasters and yet you are willing to have your name put to the letter to Private Eye. You have just explained to us at length why it is –

Michael Young: Yeah.

Ms Page: – that Shoosmiths made your concerns more heightened. Are you sure you are not suffering from more self-serving memories here, Mr Young?

Michael Young: (The witness laughed) I just recall the phone call and I recall that feeling that this thing had moved to another level and we needed to change our – you know, we needed to change our perspective on having the system looked at.

Ms Page: Thank you.

Michael Young: So, you know, putting the two together, that’s just where my head was at.

Ms Page: Thank you.

Sir Wyn Williams: Ms Patrick?

Questioned by Ms Patrick

Ms Price: Thank you, sir.

Mr Young, my name is Angela Patrick. I act for a number of subpostmasters who were convicted and have since had their convictions quashed. You might be glad to hear I only want to look at two topics and, if we can start with the Ismay Report. You’ve gone over that at length this morning with Ms Hodge, and again just now with Ms Page.

There’s only one section I really want us to look at but I just want to clarify what you’ve said. Now, in early summer 2010, you’d been chasing Fujitsu, without success, to ask for an independent third-party review of Horizon Online, hadn’t you?

Michael Young: Yes.

Ms Price: By the summer, Ms Page took you to the email thread again, you knew that the then Managing Director, David Smith, had been asking questions following the Channel 4 journalism reporting, and that you had been looped into that process.

Michael Young: Yes.

Ms Price: You’ve told us that you were particularly assured on reading the Ismay Report?

Michael Young: Sorry?

Ms Price: You were particularly assured on reading the Ismay Report?

Michael Young: I was. It gave me some confidence around the system.

Ms Price: Indeed. Now, you would have read that about I presume August 2010, I think it was finished?

Michael Young: I wouldn’t be able to tell you, but I would imagine as soon as it was circulated I was reading it.

Ms Price: Indeed, and that would have informed your approach, going forward, having been assured, having read the Ismay Report, I assume that would have informed the tack you were taking going forward?

Michael Young: Yes.

Ms Price: Now, the Inquiry has looked at the detail of the report with Mr Ismay and lots of other witnesses. I don’t want to go into the nitty-gritty, I want to look at one part, and if we could bring it up it’s at POL00026572. The part I want to look at is on page 19 and, if we could scroll to the bottom of the page, I’d be very grateful.

We see there is a part there on media. This part deals with the “Independent Review and Audit Angles”. I don’t want to look at all the detail but you can see that there in front of you but you can see in the first paragraph there:

POL has actively considered the merits of an independent review. This has been purely from the perspective that we believe in Horizon but that a review could help give others the same confidence that we have.”

Now, the bit that I really want to look at is on the next page, so if we could scroll over, I’d be very grateful. If we could stop, it’s that first paragraph at the top which the Inquiry has seen a number of times before. Can you see that there, Mr Young?

Michael Young: I can.

Ms Price: Yes:

“It is also important to be crystal clear about any review if one were commissioned – any investigation would need to be disclosed in court. Although we would be doing the review to comfort others, any perception that [the Post Office] doubts its own systems would mean that all criminal prosecutions would have to be stayed. It would also beg a question for the Court of Appeal over past prosecutions and imprisonments.”

Now, we’ve heard a lot about reading things with your former policeman’s hat. Did the inclusion of that section and your reading of that section cause you any concern?

Michael Young: Let me answer it this way. So it wasn’t going to dissuade me from pushing Fujitsu to have an independent review of the system. So – and indeed, it didn’t. So it was – you know, Duncan may allude to the fact that, you know, it usually came up in our conversations, certainly when we were face to face, or it was a long conversation, or when there was a media output, you know, I would run the ground again around potentially looking at the system.

So I wanted to get to a point where I’d got Fujitsu to agree and I’ve no doubt, if I brought that ticket back to the Post Office as a request from me and them, we would have some persuading to do with those that sat doing the prosecutions. But, you know, I was tackling it one bridge at a time.

Ms Price: Just pausing there, what you’ve said this morning, we know pre-Ismay Report, you’ve given that in evidence, from the start of your role you knew that the Royal Mail Group and Post Office as part of that had been pursuing individual prosecutions?

Michael Young: Yeah.

Ms Price: When you read this, did it cause you any concern?

Michael Young: Well, I recognise, I think the point you’re trying to make – recognise – the point you’re asking me to recognise – do I recognise that this potentially shuts the door on being even handed with regards to a review on Horizon, basically saying, if you do go down that particular road, we’re going to have to go right the way back through all the prosecutions and – I recognise what that means. I am – I’m saying it wasn’t changing my approach with Fujitsu. So yes, I recognise that.

Ms Price: Okay, and you’ve given evidence, you were pushing in summer 2010. I want to look on to the second issue now, and I want to move forward to Shoosmiths, and you’ve gone over it a little bit again just now with Ms Page.

So we’re whizzing forward to back end of 2011 and the time the Post Office received number of letters of claim from a number of subpostmasters, including Julian Wilson. Mr Wilson died before his conviction could be quashed and we represent Mrs Karen Wilson, his widow, who is a Core Participant in this Inquiry.

I want to look at what your statement says – and you don’t need to turn this up, you can if you want to, it’s at page 44, for the record it’s WITN11130100, and I want to look at page 44, starting at paragraph 143. You say:

“Regarding proposed litigation, I was not aware of the proposed Shoosmiths litigation until it was mentioned via the second Computer Weekly call, where they indicated that the JFSA instructed lawyers [and there’s a little bit of a grammatical issue there]. Computer Weekly did not refer to the litigation as the Shoosmiths litigation.”

You go on:

“During my tenure, I was unaware that the Post Office took any particular approach to legal privilege, how to manage confidential communication, and the retention of documents generally and as it related to the issues raised by the JFSA about Horizon or any potential litigation … I personally did not take any legal advice.”

Then the last paragraph:

“In late 2011 [this is paragraph 145] and early 2012 I was not involved in the potential litigation against POL from [subpostmasters]. I did not have any involvement or knowledge of the issues of litigation until the second Computer Weekly call (as mentioned in paragraph 143 above). During that time, I was focused on the Separation”, and so on.

You’ve already talked about this a little with Ms Page.

Now, you’ve repeated again that the second call from Computer Weekly, that’s what changed your perspective, yes?

Michael Young: Yeah, it was a combination of a lot of things but that one call got me to a point where enough was enough, we needed to do something, yes.

Ms Price: It was after that call that you remember calling Duncan Tait?

Michael Young: Yes, immediately after.

Ms Price: Okay. Can we look at one document, please, for now. It’s POL00294928. If we can go to the bottom of the second page of that document I’d be very grateful.

Can you see that there, Mr Young? There’s an email at the very bottom. I want to look at that first. Can you see it?

You can see there’s an email there from Paula Vennells, at 13.48 on 20 October 2011. Can you see there the heading, the subject matter of the email, “Horizon independent assessment”; can you see it?

Michael Young: Yeah.

Ms Price: Yes, and she writes:

“Lesley, excuse me if I missed it – did you get back to me re confirmation as to how robust/reliable [Pinterest] …”

We think it might be Pintest.

Michael Young: It is Pintest, yes.

Ms Price: “… (is the right name) were? Ie what other type of validation work they have done on this scale/for whom?

“Also when do we expect the results?

“Kevin has heard today the BBC may be going for more coverage.”

We can see that’s copied to you, isn’t it, Mr Young?

Michael Young: It is.

Ms Price: I just want to look at another document to see where we are on this date because the Inquiry knows that, on that day, a Royal Mail Group lawyer circulated direct advice on legal privilege. So if we could look at that, it’s POL00176467, please. If we can go to page 2, and stop there.

Now, the Inquiry has seen this email a lot of times and I don’t want to spend a lot of time on it. But can you see there there’s an email from Emily Springford?

Michael Young: I can.

Ms Price: You can see the date there, 20 October, same day as the email we just saw and, shortly after that email, so it’s at 3.51; can you see that?

Michael Young: Yeah.

Ms Price: Yes. You can see it goes to Ms Sewell, she’s on the top line of the addressees, and also, if we look at the second line, it goes to you, doesn’t it, Mr Young?

Michael Young: It does.

Ms Price: You can see there what the subject matter says. It’s the JFSA claims, disclosure and evidence gathering. It’s headed “Privileged and confidential”, it says:

“Dear all,

“As you are aware”, suggesting there has been some conversation in the business before that email, doesn’t it?

Michael Young: Yeah.

Ms Price: Yes:

“… [Post Office] has received”, and it goes on to talk about the letters of claim, the substance of the claim being relative to training, to support, to their use of the Horizon system and the Horizon system itself.

I’m sure you’ve seen this document, I think it’s been provided to you, she goes on to advice on document preservation, document destruction and matters of legal privilege.

Now, do you recall this email being sent to you, and legal professional privilege being drawn to your attention for the circulation to your team?

Michael Young: I don’t recall. So you’re right, I did get this via disclosure from the Inquiry. I didn’t recall this email and I think part and parcel of that rationale was, you know, no change. Let me explain myself by that comment or those comments. I mean, essentially, I think what this is saying is, in relation to Horizon, its integrity or otherwise, nothing was to be deleted or disposed of and all matters related to that were to be kept. And that was, you know, that was normal practice anyway. But I take your point. That was my interpretation of the letter.

Ms Price: So I mean, this is – by this time, we’re in 2011, you’ve been talking about an independent review, the year before, of Horizon Online, albeit. You’ve been involved in the press coverage. Do you accept that, at least at this point, in October 2011, you would have known that there was litigation in contemplation?

Michael Young: Yeah. That said as such, yes.

Ms Price: If we can turn back to the document we were just looking at I’d be very grateful. It’s POL00294928, please.

If we go back to that last email at the bottom of page 2, we can start there. Now, if we scroll up we can see Ms Sewell replies. If we scroll up a little bit further, so we can see the header, thank you.

We can see Ms Sewell replies, and she replies later that afternoon at 5.39, and can you see that there you’re copied in, Mr Young, aren’t you?

Michael Young: Yeah.

Ms Price: But she also copies in Emily Springford and Hugh Flemington, doesn’t she?

Michael Young: She does.

Ms Price: She changes the subject matter to “Legally privileged and confidential”. Now, the Inquiry has seen the advice we just turned up. Part of the advice is, if you’re talking about these matters, can you copy in Legal and can you head it “Legally privileged and confidential”. Now, she writes to Ms Vennells, in her reply:

“Fujitsu have reviewed who they will use for the review of HNG-X and as such will not be using Pen Test Partners as they had originally intended. They have now in engaged with KPMG to complete the review, which they expect to take two months.

“There is a meeting tomorrow with Legal to discuss the scope and timing of this review.”

Now, before we go up to the answer that comes next, this is October 2011. Was there a plan at this point to have an independent assessment of Horizon commissioned by Fujitsu?

Michael Young: Well, this would suggest there was.

Ms Price: It would suggest that, given it’s an exchange involving both Ms Vennells and Ms Sewell, and copied to you, that that plan was known both to the IT Team and to the executive, wouldn’t it?

Michael Young: It suggests that. What I would say is I’m trying to correlate the call to Duncan after the Computer Weekly piece and the time frame here. They may very well be in the same time frame. But I, you know, I’m copied in and, undoubtedly, I would have read it.

Ms Price: Indeed.

Michael Young: But I’m – and the reason why it is worth making the point, the reason why Lesley has come to the fore to do this, my suspicion, she will have to speak for herself – was that I’m out finalising the MDA on separation and, therefore, she’s now taking the lead with Fujitsu. But your point, yes, it would suggest that.

Ms Price: But just looking at what Ms Vennells is saying for a moment. Ms Vennells is writing to Ms Sewell and you and she’s expressing her view she wants to know what’s going on with this Horizon independent assessment, isn’t she? You’re nodding, Mr Young. You have to say “yes” or “no” for the recording.

Michael Young: I’m – can I read it? I’m conscious that we’ve got a stenographer. So I just –

Ms Price: In that case, just to be absolutely – not this part, if we can go back to Ms Vennells’ original email, that’s what I’m talking about. Her original email at the very bottom, which she heads, “Horizon independent assessment”, and then she says she wants to know who’s doing it, doesn’t she, how robust and reliable they are –

Michael Young: I can read that, yes.

Ms Price: – and she wants to know what other kind of validation, what they’ve done, what scale and by whom, doesn’t she –

Michael Young: Indeed.

Ms Price: – and when can we expect the results, and she says, “We know the BBC is going to have some more coverage”.

So she wants to know because she knows there’s going to be more press coming up, doesn’t she, and she wants to know what the lay of the land is?

Michael Young: It would appear so. I mean, Paula will have to talk to what she meant by the email. But I take your point in the chain – in the change of – let’s call it clarification or subject, she’s put it under, later on she puts it understanding legal privilege. I take your point.

Ms Price: So if we can scroll up just to the next stage in the conversation, we can see the longer reply at, if we keep going. Thank you. Stop. We can see Ms Vennells’ replies to you the next day, Friday, 21 October – can you see that Mr Young –

Michael Young: I can.

Ms Price: – early in the morning. She says:

“This is very high profile. We have had lawyers’ advice about how mails etc are now handled … so what is happening here?

“Why do Fujitsu think they can change the test company after they have to told us who they are using? Why is there a meeting to discuss scope and timing – when it was asked for 6 months ago and the scope must have already been agreed when Pen Test were appointed?

“And re ‘timing in another two months’ – Lesley, the last comms you and I had was that we’d have it in a couple of weeks!

“This is unsatisfactory – it looks as though it is not being taken seriously and [we] don’t know where the accountability lies – in POL or in Fujitsu?”

The next part:

“A Class Action legal case against [Post Office] would be hugely negative reputationally, it could cost us a lot of money and this verification, which presumably could be of enormous help is not even off the blocks?

“I don’t understand.

“How can it be independent if Fujitsu are choosing and swapping suppliers? Is that sustainable evidence in court – independently verified by a company they choose? KPMG are a good company – are they qualified to do this? And do they have initiation with Fujitsu?

“Finally, I know everyone is working very hard but I’m a bit disappointed that I found out only by asking as a result of potential BBC coverage.

“With this going on, I could have easily sent a note in response to a Board query, saying not to worry because there’s a verification under way and the results are due any day soon! It doesn’t help our IT credibility if I am on the back foot with what’s going on.”

Now, she’s sent that to you, Mr Young. It has come from your Managing Director. Can I assume you would have read it?

Michael Young: I don’t recall it but, yes, if it was sent to me I would have read it.

Ms Price: At this point, she is plainly aware of the possibly devastating impact of litigation challenging the integrity of Horizon, isn’t she?

Michael Young: The email suggests that, yes.

Ms Price: She was treating this, her original message about an independent assessment, as significant and, in fact, she says “potentially of enormous help”, isn’t she?

Michael Young: Yes, she is. I want to make a point here because I –

Sir Wyn Williams: Well, hang on a minute. This is getting a little too long-winded. What is the endpoint of this line of questioning, Ms Patrick?

Ms Patrick: Sir, if I can just ask the next question, it might help.

Sir Wyn Williams: Fine.

Ms Patrick: We don’t see a response. We haven’t seen a response from you, Mr Young, but, if we scroll up we’ll see a message from Ms Vennells. Again:

“Mike, I’ve realised I sent this to you and it was intended for Lesley.

“But actually as her boss, would you mind looking into. (Also, watch the tone”, and she speaks about it sounding cross while she’s on holiday.

Now, we haven’t seen a response but, having perhaps in error raised this with you rather than Ms Sewell, did you pick up the phone to Ms Vennells and talk about this independent assessment and its relevance to the litigation?

Michael Young: Right, first of all, it was where I was going to go. I’m in a blind spot here. So I have no idea what this – I can see what it’s about but I have no idea about what the content has been between Fujitsu and Post Office, what Lesley may have had by way of dialogue with Paula and then what Lesley may have had with dialogue with Fujitsu and vice versa. So I’m – it was sent to me in error, I saw it in the disclosure process, okay, and I still don’t know what it’s about.

At the point I respond to Duncan and Paula after that Computer Weekly meeting, I’m straight back into finishing off the MDA on separation, which is why I suspect – I can’t confirm but it’s why I suspect Paula was using Lesley to talk to Fujitsu and air out the possibility of a full review of the system.

I had done a telephone introduction of sorts, certainly spoken to Paula and Duncan and said, “You two guys need to meet”, and Paula had as much opportunity as Lesley to reach for the phone and speak to Duncan or the management team in Fujitsu to seek the clarity. So I’m a bit bemused that I’m being asked about something I’ve not really been involved in before that, up until that initial call to Computer Weekly, and I don’t have the answers for you.

Ms Patrick: You don’t have the answers. I’m asking you if you did.

Michael Young: No.

Ms Patrick: Now, what we know is that you were pushing for an independent review the year before. We know that this ended up in your inbox, and it’s your evidence that, between this point in October 2011 and in March 2012, by the time you leave, there’s been no progress. Nothing done to push forward this independent code level review that you thought might be needed and that might have been covered in your conversation with Duncan Tait, and which ought to have been paid for by Fujitsu. Nothing had happened, had it?

Michael Young: By the looks of it, no.

Ms Patrick: Okay. Thank you very much. We don’t have any other questions, Mr Young.

Sir Wyn Williams: Is that it, Ms Hodge?

Ms Hodge: Yes, sir. That concludes the questioning of Mr Young.

Sir Wyn Williams: Right. Well, Mr Young, first of all, I owe you an apology for saying publicly that the Inquiry could not trace you when that was palpably wrong because they had traced you and you’d been in communication with them. But I appreciate that that may have caused you unnecessary distress, so I apologise for that.

Secondly, thank you for your witness statement and giving evidence today.

The Witness: Thank you.

Sir Wyn Williams: Right. What next, Ms Hodge?

Ms Hodge: Sir, I propose a short ten-minute break –

Sir Wyn Williams: Yes.

Ms Hodge: – and then we can resume with Mr Oldnall and do our very best to complete his evidence today.

Sir Wyn Williams: All right. Jolly good. Thank you.

Ms Hodge: Thank you.

(3.01 pm)

(A short break)

(3.14 pm)

Ms Hodge: Hello again, sir. Can you see and hear us?

Sir Wyn Williams: Yes, I can and I’m sorry if I kept you waiting a few minutes.

Ms Hodge: No, thank you, sir.

Our next witness is Simon Oldnall.

Sir Wyn Williams: I’ll just go out of view for a moment or two while I locate my hard copy of his statement. I’ll be with you in a second. (Pause)

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

Simon Oldnall

SIMON GEOFFREY OLDNALL (sworn).

Questioned by Ms Hodge

Ms Hodge: Please give your full name.

Simon Oldnall: Simon Geoffrey Oldnall.

Ms Hodge: Mr Oldnall, you’ve provided four statements to the Inquiry, the first of which was a corporate statement, which addressed a Teach-In session provided to the Inquiry when it was constituted in non-statutory form; is that correct?

Simon Oldnall: That’s correct.

Ms Hodge: Your second, third and fourth statements you’ve given in response to questions directed to Post Office Limited; is that right?

Simon Oldnall: That’s correct.

Ms Hodge: My questions to you today will be focused mostly on actions and events which have occurred since you joined the Post Office in December 2020 but before we turn to that, please, I’d just briefly like to go through the formality of confirming each of your statements. Do you have a copy of the statements in front of you?

Simon Oldnall: I do.

Ms Hodge: Thank you. If we deal with them in date order, can we begin with your first statement to the Inquiry dated 20 July 2022, which bears the reference WITN03680100. Do you have a copy of that in front of you?

Simon Oldnall: I do.

Ms Hodge: That statement, I believe, runs to 20 pages, including its exhibits. Could you turn to page 15, please.

Simon Oldnall: Yes.

Ms Hodge: Do you see your signature there?

Simon Oldnall: I do, yes.

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

Simon Oldnall: It is, yes.

Ms Hodge: Your second statement, please, dated 30 April 2024. That bears the reference WITN03680200.

Simon Oldnall: Yes, that’s correct.

Ms Hodge: You have that before you, thank you. That’s a long statement running to 276 pages. Could I ask you, please, to turn to page 255.

Simon Oldnall: Yes.

Ms Hodge: Do you see your signature there?

Simon Oldnall: I do, yes.

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

Simon Oldnall: It is, yes.

Ms Hodge: Thank you. The third statement, Mr Oldnall, bears the reference WITN03680300. That’s dated 2 September 2024; do you have that in front of you?

Simon Oldnall: I do, yes.

Ms Hodge: That’s 46 pages in length. At page 41, do you see your signature?

Simon Oldnall: Yes, I do.

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

Simon Oldnall: It is, yes.

Ms Hodge: Thank you. Your fourth statement, which you gave recently on 9 October 2024, it bears the reference WITN03680400. It’s seven pages long, your signature at page 6, please.

Simon Oldnall: Yes.

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

Simon Oldnall: Yes, it is.

Ms Hodge: Thank you. You are currently employed as the branch Technology Director at Post Office Limited; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Before joining the Post Office, you worked, you say, for 20 years in the private sector for consultancy and technology companies in the delivery of technology change programmes?

Simon Oldnall: Yes, that’s correct.

Ms Hodge: Prior to that, you were employed as a civil servant for 10 years in the Department for Work and Pensions, including its predecessors?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Thank you. As we’ve discussed already, you joined the Post Office in September 2022 (sic). Your original title was Horizon IT Director; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Subsequently changed to Branch Technology Director –

Simon Oldnall: In April this year, that’s correct.

Ms Hodge: – in April this year. What was the reason, please, for the change in your title?

Simon Oldnall: It was a broadening of my scope, it encompassed not only Horizon but also a number of related technology elements within the branch.

Ms Hodge: Thank you.

Sir Wyn Williams: I think you may have said, Ms Hodge, “2022”, but was it 2020 or 2022?

Simon Oldnall: 2020, sir.

Sir Wyn Williams: Yes, fine, okay. I may have misheard you but I just wanted to be clear about that, thank you.

Ms Hodge: One area of your responsibilities is the management of the Post Office Branch Technology Team; is that correct?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Now, you say in your statement the team is comprised of various subteams; is that right?

Simon Oldnall: That’s correct.

Ms Hodge: One of which is named Remediation and Change.

Simon Oldnall: The Remediation Programme was a programme within my team scope, yes.

Ms Hodge: Could you please just briefly describe the role of that team?

Simon Oldnall: That team was set up in response to driving the remediation activities that would address the findings made in the Horizon Issues Judgment.

Ms Hodge: You also describe in your statement another subteam known as Security Risks and Investigations; is that correct?

Simon Oldnall: That’s correct, yes.

Ms Hodge: What’s the role and function of that team?

Simon Oldnall: That’s effectively looking at where we need to support issues with Horizon and making sure that Horizon remains secure and reliable.

Ms Hodge: Can you describe the nature and extent of liaison between your Branch Technology Team and the Network Crime and Risk Support Team.

Simon Oldnall: We effectively provide data to that team. That’s probably about the extent, and that data is normally provisioned through what’s called the ARQ process.

Ms Hodge: That’s the principal extent of your –

Simon Oldnall: That’s the principal extent of our interaction, yes.

Ms Hodge: Would it be fair to characterise a key part of your role upon joining the Post Office as to embed and ensure changes were made in the aftermath of the Group Litigation?

Simon Oldnall: Yes, very much so. That was my initial scope.

Ms Hodge: You were appointed approximately ten months after the Horizon Issues Judgment was handed down; is that right?

Simon Oldnall: That’s correct.

Ms Hodge: What impression did you form upon joining the Post Office as to the progress which had been made in responding to the issues raised in that judgment?

Simon Oldnall: I think my initial impression was that fairly limited progress had been made by that point. I think the CIO at that time had started to put in place the mechanism to address the judgment findings but there had been probably little substantive progress at that stage.

Ms Hodge: What did you understand to be the reasons why limited progress had been made in that 10-month period?

Simon Oldnall: I don’t think those reasons were particularly made clear to me. By the time I joined, we had appointed an independent audit firm that would help us understand where we were currently but that work hadn’t really substantially started by that stage.

Ms Hodge: That firm was KPMG; is that correct?

Simon Oldnall: No, initially the firm was BDO, we later changed that to KPMG.

Ms Hodge: So that change took place during your tenure; is that right?

Simon Oldnall: Very shortly afterwards, yes.

Ms Hodge: You explain in your statement that KPMG produced a draft report in December – so a couple of months after you joined – in which they noted that, in particular, no progress had been made in relation to privileged or elevated access controls within the Horizon environment, is that correct –

Simon Oldnall: That’s correct, yes.

Ms Hodge: – and that the Post Office used limited controls around remote access.

Simon Oldnall: (The witness nodded)

Ms Hodge: I think you say you made that one of your key priorities upon –

Simon Oldnall: Absolutely yes.

Ms Hodge: – taking on responsibility for this area.

You also say in your statement that, in parallel with that audit work that was ultimately commissioned from KPMG, the Post Office was setting up a Forensic Investigation Team within the IT function –

Simon Oldnall: (The witness nodded)

Ms Hodge: – to support the response to the Common Issues Judgment and the Horizon Issues Judgment. Is that the Security Risk and Investigations Team that you –

Simon Oldnall: Yes.

Ms Hodge: Is that one and the same?

Simon Oldnall: That’s correct, yes, that’s one and the same.

Ms Hodge: I think you say it was recognised in August 2020 that capabilities were quite limited in that respect?

Simon Oldnall: They were, yes.

Ms Hodge: They’ve since been scaled up, is that –

Simon Oldnall: We have improved that capability, yes.

Ms Hodge: Now, during your tenure as Head of Branch Technology, you have been required to deal not only with historic Horizon issues but also current issues; is that fair?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Do you consider you have sufficient resources to manage both of those workstreams in parallel?

Simon Oldnall: Yes, we effectively separated looking at historical and remediation activity into a programme, whilst I created a business as usual team to deal with the ongoing and current management of Horizon.

Ms Hodge: So dealing firstly with the remediation aspect, a programme was launched in late 2020; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: That coincided, I think, broadly with the draft findings from KPMG; is that –

Simon Oldnall: Yes, it did.

Ms Hodge: – and built upon those?

Simon Oldnall: It did. They were the basis for the programme.

Ms Hodge: In your statement you say there were, in effect, three principal phases to that Remediation Programme.

Simon Oldnall: (The witness nodded)

Ms Hodge: Would it be fair to say the first constituted what might be thought often as quick fixes, which could be dealt with fairly swiftly and at limited cost?

Simon Oldnall: Yes, they were things which we should just get on with and do fairly rapidly and quickly, yes.

Ms Hodge: You say that one of those was a pilot of a new dispute mechanism for subpostmasters to improve the end-to-end investigation processes. Can you describe that please in a little more detail?

Simon Oldnall: Yes. We effectively looked at the process whereby postmasters could flag concerns to us around discrepancy. This was done in conjunction with changing a button on Horizon to make sure there was some way that postmasters could report those discrepancies to us, that then was backed off to a process, whereby we would look into that discrepancy and work with postmasters to understand what had happened.

Ms Hodge: That’s a process that sits outside the trading and balancing –

Simon Oldnall: Effectively, yes.

Ms Hodge: – function. You say that with the support of Fujitsu you resolved 62 historical defects that were present in Horizon?

Simon Oldnall: Yes, we looked at the historical defects that were highlighted in the judgment, and we went through them methodically and checked whether they could be present in the current version of Horizon and we tested and had KPMG verify that testing, to ensure that they were no longer present in the system.

Ms Hodge: I think the third example you explain that the Update Horizon Technology Team – that was part of your remediation, team, was it –

Simon Oldnall: Yes.

Ms Hodge: – designed a new process for managing current defects in the system; is that correct?

Simon Oldnall: That is correct, yes.

Ms Hodge: I would just like to ask you briefly about that process, so the processes you have in place for managing current defects. So there are two aspects to this. You’ve introduced new process and resource for capturing bugs, errors and defects during testing; is that correct?

Simon Oldnall: That is correct, yes.

Ms Hodge: Where and how is that testing of Horizon performed please?

Simon Oldnall: So that testing is Post Office led. We have created a Test Team within Post Office. This is led by test professionals and we effectively have created an overall testing approach that we don’t just accept code and put it into live. We test it, we ensure that we test it against what’s called a regression pack, and we give a level of assurance that, actually, when we make a change to Horizon, we don’t introduce new bugs, errors or defects.

Ms Hodge: So that code is provided to you by Fujitsu –

Simon Oldnall: It is, yes.

Ms Hodge: – is that correct? You’re performing testing, including regression testing, on the code –

Simon Oldnall: (The witness nodded)

Ms Hodge: – before it’s released into the live environment?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Can you please explain what systems do you now have in place to monitor and detect defects in the live running of the Horizon system?

Simon Oldnall: There are number of steps we take. Obviously, if issues are reported to us, we investigate and investigate whether that is as a result of a defect. We have a process whereby when a defect is reported to us, we very rapidly convene a process around that defect and determine what the impact might be, whether it is what we describe as poor user experience or whether in fact it’s something that might impact the branch. If it’s – all those defects are then reported out. Normally within 48 hours to the branch, we would publish the list of those defects and we engage with a broad range of stakeholders to ensure that that impact is understood and then prioritised for fixing.

Ms Hodge: In your statement, you say this about the reporting of defects:

“Where a direct is detected in the live system it will be reported to the IT Service Desk.”

That assumption being by a postmaster, is that –

Simon Oldnall: It can be by a postmaster or it can be by anybody who determines there’s a defect, yes. But, normally, we’d expect the end user potentially to find that defect but other ways do exist.

Ms Hodge: You say that analysts in the IT Service Desk are provided with knowledge-based articles about the identified defect. Who produces those, please?

Simon Oldnall: They’re produced by my team.

Ms Hodge: They can refer to those when they are dealing with issues raised with them that might relate to the bug. Do you have any systems in place to monitor the calls to the Service Desk to ensure quality assurance in relation to the application of those knowledge-based articles?

Simon Oldnall: There are number of measures around the IT Service Desk and its performance that’s reporting out. It’s a separate part of the technology team, it’s not directly part of my team, but there are number of systems in place to monitor the IT Service Desk and the performance of the IT Service Desk, yes.

Ms Hodge: I think, essentially, what you say in your statement is this is now a process which is led and owned by the Post Office, rather than by Fujitsu as it was –

Simon Oldnall: That’s correct, yes.

Ms Hodge: You’ve said that the new testing processes identify approximately four new defects every month?

Simon Oldnall: I think four might be the current number of defects we have, yes, so it is a very small number of defects currently.

Ms Hodge: In the live environment?

Simon Oldnall: Correct.

Ms Hodge: You have systems in place to notify postmasters of those?

Simon Oldnall: We too. We utilise number of communication channels, including Branch Hub and bulletins out to postmasters, yes.

Ms Hodge: Now, you discuss in some detail the third phase of the Remediation Programme, which you explain was launched in mid-2022; is that correct?

Simon Oldnall: That’s correct, yes.

Ms Hodge: This addressed some of the more tricky issues that required both greater funding on the one hand but also cooperation from third parties?

Simon Oldnall: That’s correct, yes.

Ms Hodge: You say that one key aspect of this phase related to making improvements in the provision of transaction and branch accounting data to subpostmasters –

Simon Oldnall: That’s correct.

Ms Hodge: – addressing a problem identified in the Horizon Issues Judgment concerning their access to branch accounting data on their own system?

Simon Oldnall: The direct access to branch accounting data by postmasters, yes.

Ms Hodge: You say that there was a significant initiative planned to remedy that problem but that the Post Office hasn’t been able to deliver that change into Horizon; is that correct?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Why is that?

Simon Oldnall: Ultimately, that solution was dependent on another technology programme, which was our migration away from our physical data centres in Belfast. So the technology that would have enabled us to get that data much more readily available to postmasters was dependent on that other programme, which was ultimately cancelled.

Ms Hodge: Now, I think you make quite clear in your statement that, firstly, it was regrettable that that couldn’t be taken forward, particularly because the purposes of the initiative was to give postmasters greater transparency over their own accounting data.

What I’d like to ask you now relates to the approach that is taken or has been taken in the course of the last year in relation to the recovery of Horizon shortfalls. Can you assist us, what is the Post Office’s current position in relation to the recovery of shortfalls shown by Horizon?

Simon Oldnall: I believe the current position is that we do not recover shortfall unless the postmaster agrees with the reason for that shortfall.

Ms Hodge: I wonder if we could take a look, please, at POL00448362. Is this a document with which you’re familiar?

Simon Oldnall: Not immediately, sorry.

Ms Hodge: If we scroll down, please, to page 3, so it’s called “Loss Recovery Update”. The document itself doesn’t have a date but the metadata suggests its date is 2 August 2024.

Simon Oldnall: Okay.

Ms Hodge: It provides this by way of background, it says point 1:

“Following the recommendations made in the Group Litigation Order and Common Issues Judgment, in 2018/19 [Post Office Limited] ceased action to recover Established Losses from [postmasters]. This activity has been on hold since this time, except where a postmaster both agrees to pay the established loss and proceeds to repay.”

So that’s consistent with your understanding as to the current position. However, it goes on to say:

“To support implementation of associated [Common Issue Judgment] recommendations, a new team (Network Monitoring and Support) and target operating model was set up in April 2021, its purpose being to support [postmasters] to review and resolve discrepancies mainly found during their trading period balancing process.”

It goes on at point 3:

“The process to review a discrepancy and identify the cause is formally documented and regularly assured by the Assurance and Complex [transaction] Team.”

What is your understanding as to the role and purpose of that team and your liaison, if any, with it?

Simon Oldnall: So that is the team, I believe, that’s led by John Bartlett. That team, as the title suggests, would provide assurance over a number of investigation-type activities. So, in this context, I would suggest they are probably looking at the way that the discrepancy has been looked at by the Network Support Team, as opposed to anything else.

Ms Hodge: Now, you said earlier – it may be a question of terminology – but the extent of your cooperation with what we discussed earlier as the network crime – let me get my reference correct.

Yes, the Network Crime and Risk Support Team, that you provide ARQ data to that team following a request to Fujitsu Services.

Simon Oldnall: (Unclear) – the ARQ process.

Ms Hodge: Do you provide any support to the Assurance and Complex Investigations Team in analysing that data to explain what the underlying cause of a discrepancy might be?

Simon Oldnall: I don’t recall that we provide particularly regular support. We would probably, on request, if asked about a particular defect or a particular issue with the system, we would provide that support.

Ms Hodge: Do you think that the analysis of, for example, ARQ audit data is something which would probably fall within the ambit of your team, bearing in mind their expertise and their technical knowledge?

Simon Oldnall: We can certainly support that analysis. We don’t habitually carry out that analysis though.

Ms Hodge: Do you think you should?

Simon Oldnall: We could.

Ms Hodge: So we paused there to say that the process of reviewing the discrepancy and identifying the root cause rests with John Bartlett’s team, the Assurance & Complex Investigation Team, as they’re known:

“This includes looking at Horizon transaction data to ensure Horizon acted as expected and is therefore unlikely to be the cause of the discrepancy.”

It goes on to say there are a number of possible outcomes: writing off a balance of below minimum value; writing off the cause as not being established; correcting with a transaction correction if the cause is due to a processing error; or establish that the loss has arisen, on the balance of probabilities, due to negligence, carelessness or error.

What points 5 and 6 make clear is that, as indicated above, if the postmaster, in a sense, disagrees with the analysis as the underlying root cause, then the Post Office essentially would leave the matter there.

Simon Oldnall: Correct, yes.

Ms Hodge: But it goes on to make a series of recommendations. I just want to establish with you your knowledge in relation to those, and what enquiries were made of you. If we could please scroll down to page 4. Thank you. So it lists number of options and recommendations, identifies there are risks associated with each one. So the second point:

“Each of these options give rise to risk(s) below …”

The first being that the Post Office is not adopting a consistent process for postmasters, presumably because, if someone agrees, they pay up but, if they don’t, they do –

Simon Oldnall: That’s correct, yes.

Ms Hodge: – and, therefore, you’ve got a difference in treatment, which isn’t based on the Post Office’s own analysis as to the underlying cause of the discrepancy?

Simon Oldnall: Correct.

Ms Hodge: Secondly, that the policy position is unclear; thirdly, that there’s significant reputational risk for the Post Office; fourthly financial risk; fifthly that there’s a risk to the relationship with the Post Office’s shareholders, as the approach may be non-compliant with the guidance around managing public money. What would you understand the concern there to be?

Simon Oldnall: I would be speculating but I would imagine, given the guidance around the spending of public money, given that Post Office already received a subsidy from Government and that funds a number of activities, I would imagine that that risk is being called out as potentially non-compliant but I’d be speculating.

Ms Hodge: 6, a concern that some of the options might be likely to embed improper financial behaviours and practices in the network of postmasters, if there are no sanctions or proper consequences for failing to follow the proper policies and procedures?

Finally, the Post Office might be failing in its duty of care to postmasters?

So those various risks, some to Post Office and some to postmasters. Then, please at page 5, please. Thank you. So here, under “Actions”, we see the recommendation that:

“… the Post Office begins to recover losses through civil action or deduction from remuneration (where necessary), following an agreed process and the approval of an external, independent board. All other options give rise to significant [postmaster] and [Post Office] risks across a range of factors.”

Were you aware of that recommendation?

Simon Oldnall: I believe I’m aware of some of this activity, yes.

Ms Hodge: If we scroll down to the bottom of page 6, please. So these are under the heading “Actions”, listed against various stakeholders in the business, and we see against “Technology” you are named, and the action is to:

“Confirm that as of today the data can be relied upon to commence the loss recovery process (noting that part of the process is to check Horizon).”

Do you recall being asked to confirm that –

Simon Oldnall: Yes –

Ms Hodge: – that Horizon data can be relied upon to support the loss recovery process?

Simon Oldnall: Yes, I do recall that, yes. This is part of a working group and from memory, now, this paper was sent to me I think probably around the time I was on annual leave but yes, I do recall.

Ms Hodge: Can you assist as to when that was in terms of timescale?

Simon Oldnall: It would have been somewhere around the summertime, so –

Ms Hodge: Over the course of the summer?

Simon Oldnall: (The witness nodded)

Ms Hodge: Do you recall what you said when you were asked?

Simon Oldnall: I don’t believe I actually have actioned this as yet, but what I will probably have to do is commission a piece of work to effectively meet that action.

Ms Hodge: So that one, so far as you’re concerned that’s an action that’s pending?

Simon Oldnall: Correct, yes.

Ms Hodge: I wonder if we can go on to look at an email chain concerning the support that might be provided by the Post Office and Fujitsu to a police force investigating suspected criminal conduct. That chain dates from April of this year, and it bears the reference FUJ00243203?

If we scroll down to the bottom of page 4, please. Apologies, if we go up, thank you. We see this is an email from you, if we scroll up a little further, please. We see it is addressed Daniel Walton. Can you confirm his role and your liaison with him?

Simon Oldnall: Yes, so Dan Walton is the Fujitsu lead for the Post Office Account.

Ms Hodge: It’s copied to John Bartlett?

Simon Oldnall: (The witness nodded)

Ms Hodge: So the title “Support to City of London Police Investigation”. It reads:

“Dan

“I understand from John that there have been some challenges with supporting an ongoing police investigation that involves a large sum of money.

“I obviously understand broader context, but wanted reassure that [Post Office Limited] is supporting the police investigation and offering any and all assistance we can. Can I ask that you help with any conversations that City of London Police need to have with Fujitsu Services Limited.”

Now, what is the nature of your involvement, if any, with investigations carried out by Post Office Limited Investigation Team, and any subsequent referral to the police?

Simon Oldnall: Yes. My role in this email chain was effectively Mr Bartlett reached out to me, as I manage the Fujitsu relationship on a day-to-day basis, and he asked me to impress onto Fujitsu the need to cooperate with City of London Police, and that was the extent of my engagement in this conversation.

Ms Hodge: Now, bearing in mind that the Post Office hasn’t, for some time, sought to recover losses from postmasters unless they agreed to repay them, did it strike you as odd; were you at all concerned to be asked to lend your support to this particular process?

Simon Oldnall: Not particularly, no. My understanding from Mr Bartlett was that this was – this wasn’t a simple case of a postmaster that we were, in some way, pursuing over a loss; that this was a much larger and very much a police matter.

Ms Hodge: So the crucial difference here being, so far as you are concerned, this is an investigation which has been managed independently by the police?

Simon Oldnall: That’s correct, yes.

Ms Hodge: Now if we could just scroll up, please, thank you. Mr Walton responds to your email?

Simon Oldnall: (The witness nodded)

Ms Hodge: Saying this:

“Hi Simon

“Thank you for your message below.

“As this is a legal matter, [Fujitsu] Legal are communicating with the City of London Police.

“I am not involved in those communications, and in any event, [Fujitsu] considers it to be inappropriate for Post Office and [Fujitsu] to be discussing a police investigation.”

What did you make of that suggestion that it was somehow inappropriate for there to be any discussions between the Post Office and Fujitsu concerning an ongoing police investigation?

Simon Oldnall: I think my immediate reaction was probably something of confusion, given that my request was simply to my counterpart in Fujitsu to ensure that Fujitsu cooperate with police. So probably slightly confused by the response but, nonetheless, that was Fujitsu’s response.

Ms Hodge: If we scroll up, please, we can see Mr Bartlett responds to Mr Walton, and copies you in. We’ll come to the point shortly but, essentially, he says to Mr Walton that one of his team has gone back to the City of London Police to see how the contact you reference below was progressing and have an open and objective engagement on this matter:

“[City of London] has informed [the Post Office] that they have not had any additional information nor contact with Fujitsu after the single, exploratory and inconclusive conversation.”

He said:

“They left that conversation with the feeling that they were indirectly being told that the Horizon system was unreliable and so the case could not progress. We really need to explore this as this is not the nuanced impression Simon Oldnall has given me.”

Now, you obviously were copied into that email. What did you understand Mr Bartlett to be saying there and what is this nuanced impression that you had as to Horizon’s reliability?

Simon Oldnall: From memory, the conversation with Mr Bartlett was very much around the fact that we obviously used Horizon data in a number of contexts, both through the ARQ process where we retrieve that data, and so I think I was again confused by Fujitsu’s position that the system was unreliable, given that, obviously, they provide that system to Post Office, it’s our core trading platform, and we rely on the data within that platform for a number of purposes.

Ms Hodge: Do you have any sense as to why Fujitsu are taking that position in this correspondence?

Simon Oldnall: I don’t have an immediate view on why they’ve taken that position. I can only speculate that it was probably the – an unwillingness to be involved in any kind of prosecution of postmasters, which I can understand.

Ms Hodge: So moving on briefly, you discussed the ongoing relationship between Fujitsu Services and Post Office in your statement and you comment that one of the concerns raised in the Horizon Issues Judgment was the extent of the Post Office’s reliance upon Fujitsu, and I think you’ve described – forgive me, you’re nodding, and I’m conscious that –

Simon Oldnall: Apologies, yes. I’ll say, yes, when –

Ms Hodge: But I didn’t ask you a question, in fairness: is that correct?

Simon Oldnall: That is correct, yes.

Ms Hodge: Thank you. You describe number of steps which the Post Office has taken to improve its oversight of Fujitsu. We’ve discussed some of those already: regression testing, for example, to check the quality of code; and then also the developing your own capability for monitoring and alerting capacity issues in relation to performance of the system; and network statistics, transaction processing, through what’s called an AppDynamics tool?

Simon Oldnall: AppDynamics, yes, that’s correct.

Ms Hodge: I think one of the areas you’ve sought to address in particular, because you’ve made it a priority, is privileged access. But you state there have been some issues in relation to that –

Simon Oldnall: (The witness nodded)

Ms Hodge: – and the extent of cooperation you’ve received. Can you explain those, please?

Simon Oldnall: Yeah, we have made significant improvements around the privileged and remote access process and I think it’s important to differentiate between privileged and remote access. So we have tightened up particularly the process whereby there’s a role that I believe was referenced in the Horizon Issues Judgment called APPSUP, where specifically that process now has very tight controls around it where it requires input by three Post Office employees, and the knowledge and consent of a postmaster before we use that role.

We’ve also improved our reporting around privileged access, so elevated or privileged access and the use of that, and that is now reported and scrutinised monthly through what’s called the Information Security Management Forum.

We have identified there’s still additional improvements we’d like to make to that reporting but it is a significantly improved position to that which KPMG found when they looked at this in 2020.

Ms Hodge: I think you sought to review Fujitsu’s management of privileged access and, indeed, to ensure there’s an ongoing audit of that?

Simon Oldnall: (The witness nodded)

Ms Hodge: Have you found that Fujitsu have been cooperative in that process?

Simon Oldnall: So in terms of – there has been number of audits we’ve carried out, a number of audit activities. We did commission an independent piece of work via Deloitte. It was commissioned thorough our internal audit process but, effectively, we had an external provider and Fujitsu’s cooperation with that particular audit didn’t go to the extent we would have liked. However, there is an annual independent audit, particularly around the controls around the Horizon system that’s carried out by Ernst & Young, EY, and Fujitsu fully cooperated with that particular audit and we are currently reviewing this year’s output from that audit.

Ms Hodge: Forgive me, when was that audit concluded?

Simon Oldnall: It was actually completed slightly late this year in September this year.

Ms Hodge: In September but you found that cooperation in that was –

Simon Oldnall: Yes, there was full cooperation with that.

Ms Hodge: I’d like to move on, please, to another topic, which you’ve mentioned already. This is ARQ or audit data in Horizon. You explain in your statement you’re not involved in the day-to-day practicalities, that is to say the raising of requests and the processing of those requests; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: You say that process is managed by the Network Crime and Risk Support Team?

Simon Oldnall: That is correct, yes.

Ms Hodge: Why does the responsibility for that process sit within that team?

Simon Oldnall: I think it’s an historic thing, effectively. They’ve been the conduit to access that process. That will change over time but I think it’s probably just an historical piece at this stage.

Ms Hodge: Where do you think that process ought to sit – you say it’s likely to change. Do you think it will better sit elsewhere in the –

Simon Oldnall: The process will change as we move away from the current Horizon audit solution, to the inhouse Post Office solution that we’re building currently, where, actually, the process will become much more self-service. So at the moment it’s very, very manual, you fill in a form, it’s transmitted, you get the data back. We’re currently building a solution whereby people who require that audit data will be able to access it much more directly.

Ms Hodge: Although you’re not involved in the day-to-day practicalities you have explained that, because you’re responsible for managing Post Office’s contractual relationship with Fujitsu, you have, on occasion, been brought in to deal with these issues relating to ARQ data; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: You explain that when a request is raised of Fujitsu, Post Office is, in effect, exercising a contractual right over which you have oversight, and that you’ve been involved in managing discussions with Fujitsu, for example, in relation to the reimbursement of the costs associated with remediation requests; is that –

Simon Oldnall: That’s correct, yes.

Ms Hodge: So under the current processes, I think a great many requests were made by the Remediation Unit; is that right?

Simon Oldnall: That’s correct, yes.

Ms Hodge: In order to investigate historic shortfalls?

Simon Oldnall: That’s correct.

Ms Hodge: Do you know which other parts of the business are currently involved in making requests for audit ARQ data, Fujitsu and for what purpose?

Simon Oldnall: I think the next sort of second biggest user is probably the Branch Support Team who investigate discrepancies in branch, and they probably consume the vast majority of other requests. Some requests come directly from my team, where we want to look at audit data as well but it is largely Remediation Unit, and the Branch Support Team.

Ms Hodge: Why would your own team be seeking audit data for an investigation?

Simon Oldnall: If a postmaster has flagged a problem with us, we will look at all sources of data, and so we will look at audit transaction data, we will look at data we’ve extracted from a particular Horizon counter. We look at number of sources to make sure there isn’t a problem with Horizon.

Ms Hodge: That would be, would it, to investigate a reported bug, error or defect?

Simon Oldnall: A bug, error or defect, effectively, yes.

Ms Hodge: When that data is extracted, whether by – presumably if it’s extracted by your team, you would analyse that data?

Simon Oldnall: We would look at that data, yes.

Ms Hodge: If it’s extracted by the Branch Support Team, they would be responsible for analysing it?

Simon Oldnall: That is correct, yes.

Ms Hodge: I’d like to ask you some very brief questions about changes which Fujitsu Services proposed to the ARQ request form; do you recall that?

Simon Oldnall: Yes, I do, yes.

Ms Hodge: So I think it was in mid-to-late May this year –

Simon Oldnall: (The witness nodded)

Ms Hodge: – that Fujitsu submitted – well, I think they instructed that ARQ requests should henceforth be made on a form which contained two new mandatory questions; is that correct?

Simon Oldnall: That is correct, yes.

Ms Hodge: Can we just bring a copy of that up, please. It’s FUJ00243223.

Thank you. So at the top, we see under the heading “Mandatory”, firstly the first question:

“Is this request related to either (i) the investigation of or (ii) action being taken or intended to be taken by the Post Office against a postmaster or Post Office worker in connection with a potential fraud, theft, breach of contract or any other potential impropriety which is suspected to have occurred at relevant Post Office branches?”

So seeking an answer yes or no to that.

Secondly:

“Will this information be used to support either a postmaster or a Post Office worker to achieve financial redress, including under the combination schemes such as the Horizon Shortfall Scheme established or administered by either the UK Government or the Post Office, for action … taken against them by the Post Office?”

Again, a yes or no answer.

Now, this came to you to deal with; is that right?

Simon Oldnall: It was escalated to me to have a discussion with Fujitsu, yes, as you say, Fujitsu effectively unilaterally imposed these questions upon Post Office.

Ms Hodge: Why was there objection on the part of Post Office to answering what, on the face of it, appeared some quite straightforward questions as to the purpose to which the information would be put?

Simon Oldnall: I think we felt particularly the first question was very, very broad; the second question, Fujitsu were well aware of why we were requesting lots and lots of data around redress. So, overall, we didn’t feel the mandatory changes were necessary.

Ms Hodge: In relation to the first question, you say that you were concerned it was unduly broad. On the face of it, it seems to be quite narrowly focused to investigations or actions to be taken in relation to specific – suspected criminal activity. Would it – why would it be difficult for Post Office to confirm whether the request had been raised for that reason?

Simon Oldnall: Well, I think the second leg of the question actually talks about action being taken or intended to be taken by the Post Office against a postmaster: Post Office doesn’t take action against postmasters. So it doesn’t really stand even as a question and then it goes on to talk about any other Post Office worker with a potential fraud, breach of contract. It felt very broadly worded, and not actually relevant to the way Post Office operates today.

Ms Hodge: As you’ve said a short time ago, the Post Office is designing its own audit store for Horizon, enabling storage of audit data for all branch transactions within the Post Office, is that correct –

Simon Oldnall: That is correct, yes.

Ms Hodge: – and that the process of retrieving data from that would henceforth be carried out by the Post Office. That’s the intention, is it?

Simon Oldnall: That’s the intention, yes.

Ms Hodge: Presumably Post Office will continue to use ARQ data once it’s brought inhouse for investigations into the cause of discrepancies, is that –

Simon Oldnall: Absolutely, yes. ARQ, effectively, is the process to retrieve audit data. So, yes, we will continue to use audit data in support of a number of activities.

Ms Hodge: What steps do you intent to take to ensure the accuracy of that data is maintained for its use in investigations and for related prosecutions, if that be the case?

Simon Oldnall: So the solution with designing it, it’s designed with a similar level of rigour around an audit solution for similar systems to Horizon. So, although it uses more modern technology to the current, very physical storage, it will maintain the same levels of integrity, effectively, in the ability to audit how that data was retrieved and found.

Ms Hodge: Thank you. Sorry, that can be brought down, thank you very much.

There’s one final topic I’d like to raise with you, Mr Oldnall, relating to the New Branch IT programme. Now, that’s not a programme over which you have direct management responsibility; is that right?

Simon Oldnall: That’s true. Yes, that’s correct.

Ms Hodge: But is it right that it’s one of the programmes you sponsor under your – you said that you have responsibility for sponsoring number of change programmes.

Simon Oldnall: I have number of change programmes. New Branch IT specifically refers to the replacement of the Horizon counter software. Within my remit, I have things like the new portable counter device and the new self-service device but not the replacement of the Horizon counter device – of the Horizon counter software, as such.

Ms Hodge: That’s not to say that you don’t have any awareness or understanding of the issues that have been encountered by the programme; is that right?

Simon Oldnall: That’s true. Yes, that’s correct.

Ms Hodge: So you say in your statement that it was initially proposed that the New Branch IT programme would be deployed in a manner that would enable Post Office to exit its contract with Fujitsu by March 2025.

Simon Oldnall: That’s correct.

Ms Hodge: Is that correct? But due to delays in the development and rollout of the system, the deployment is now not due to start until June 2026. Firstly, is it your understanding that the system is currently still on track to be deployed in June 2026?

Simon Oldnall: I believe we’re currently at a stage where we’re reviewing the current plan for the replacement of Horizon and I think as others’ evidence have given that that review is live right now, to work out what that plan might look like.

Ms Hodge: What do you understand to have been the reasons for the delay, the historic delays, in the programme, which caused the original timetable to be relapsed?

Simon Oldnall: So I’ve obviously seen a number of documents that have been shared with me. I think there’s been number of issues around probably technical complexity, wanting to ensure that the product itself is fit for purpose, and so going through quite extended levels of testing and, ultimately, I think building up an understanding of a system that is quite diverse in its product nature, has taken much longer than potentially Post Office originally anticipated.

Ms Hodge: To your knowledge, has the provision of sufficient funding been an issue in achieving a design and a solution that is fit for purpose?

Simon Oldnall: I’m aware of some of the funding discussions and have been involved in some of the funding discussions. I think, as others have talked about, the iterative nature of funding a programme of that scale probably hasn’t been particularly helpful but I also am aware that the initial estimates for how much it would cost replace Horizon have greatly increased, yes.

Ms Hodge: Now, we know from other witnesses that concerns have been raised internally within the Post Office and particularly through the Post Office’s internal Speak-Up process.

Simon Oldnall: (The witness nodded)

Ms Hodge: Are you aware of the nature of those concerns that have been raised?

Simon Oldnall: From the documentation, I think, that’s been shared with me, I’ve seen some of those, yes.

Ms Hodge: Sorry, when you say that’s been shared with you, do you mean by the Inquiry?

Simon Oldnall: By the Inquiry, yes, sorry.

Ms Hodge: But, absent that, it wasn’t something of which you were aware in your role as –

Simon Oldnall: I was broadly aware of some concerns that had been raised, particularly around the level of defect in the new system, but not very specifically.

Ms Hodge: What can you tell us about –

Simon Oldnall: I was broadly aware that there were concerns around the volume and the levels of defects that were present in the system and particularly the – I’m going to characterise it as the enthusiasm to get the new system out there, potentially. Some of those defects were not being controlled and managed in the way that I would particularly have liked.

Ms Hodge: Did that cause a personal concern to you, to learn that there was pressure to roll out a system with outstanding bugs and defects?

Simon Oldnall: At a personal level, yes. We’ve spent quite a large amount of time over the last four years trying to build confidence and making sure that Horizon doesn’t have a volume of defects in it. So yes, rolling out a system that has a higher level of defects, it would definitely cause me concern, yes.

Ms Hodge: Now, obviously, that was a concern reported to you. Did you have any knowledge as to whether there was any merit or that there was any substance to that complaint?

Simon Oldnall: Not directly, no.

Ms Hodge: From where in the organisation did you understand the pressure to be coming to get the system rolled out, even if it had outstanding defects?

Simon Oldnall: I couldn’t specifically say from where in the organisation. I know, obviously, there’s – as you’ve highlighted, the ambition was to have this rolled out by initially 2024 and then 2025.

Ms Hodge: Are you personally concerned that the Post Office might be repeating the mistakes of the past in its handling of this particular programme?

Simon Oldnall: At a personal level, yes, I would be concerned if we didn’t face into those defects. I think the opportunity that is being taken now is to take a step back and ensure that the NBIT programme does deliver to the kind of standard that our postmasters expect.

Ms Hodge: Thank you very much, Mr Oldnall. I have no further questions for you.

Simon Oldnall: Thank you.

Questioned by Mr Stein

Mr Stein: Mr Oldnall, a couple of questions. There’s a document which I’ll ask to go on the screen. I just want to ask you when you were first made aware of this document, okay?

Simon Oldnall: Yes.

Mr Stein: So that’s the question. FUJ00243199.

Simon Oldnall: Thank you.

Mr Stein: Sir, this is – can I call it the “Fujitsu/Patterson letter”, 17 May this year.

Now, I think, Mr Oldnall, you should have had this within the documents you had from the Inquiry.

Simon Oldnall: Yes.

Mr Stein: My question is not about when you got it through the Inquiry: my question is when you got this document, if you did, through your workplace?

Simon Oldnall: Yes, I did. So Mr Walton alerted me this letter was coming. I think I received a copy around about the weekend it was issued, via Mr Brocklesby.

Mr Stein: Right. Did this trigger a discussion internally about where this letter should go to? In other words, should it go to Legal, and if so, what their opinion of it was and, in relation to police investigations, whether the police should be kept informed of it and, indeed, other parts of the system?

Simon Oldnall: The discussion I was aware of internally was certainly led by Legal. I think the discussion I was involved in was more around what would be Post Office’s response to the content of the letter.

Mr Stein: Right. Did you have any dealings directly with Mr Patterson or a subordinate of Mr Patterson’s about the content of this letter –

Simon Oldnall: Not directly –

Mr Stein: – considering your Fujitsu relationship?

Simon Oldnall: Correct. Not directly, no.

Mr Stein: Does that mean one of your team did?

Simon Oldnall: No. So my interaction with this letter sort of started and ended with Mr Walton telling me the letter was coming, and that was it.

Mr Stein: Okay. The letter itself is from Fujitsu, obviously who runs the system, and it’s saying, you know, “Don’t rely upon our system”. That seems to have quite an effect upon the sorts of projects that you’re engaged in?

Simon Oldnall: It does. I think I’ve used the word “confusing”, a couple of times in my evidence so far today. I found that particular letter quite confusing because, on one hand, you’re right, it says “Don’t rely on our system”, which is an interesting position for a supplier and not one I’ve experienced in my career; but, equally, says, “Please use our data to sought redress”. So it is somewhat confusing.

Mr Stein: Have you got to the bottom of this letter yet?

Simon Oldnall: Not me personally, no.

Mr Stein: No. Has anyone?

Simon Oldnall: I believe and I’ve seen, obviously, there’s been an exchange of letters in this same thread.

Mr Stein: All right. Next question, slightly different. So can I take the framing of a Post Office branch that’s experiencing shortfall, and I’m going to deliberately use the figure of £115. I will come to the reason why I’m using £115 in a moment, all right?

So I’m a subpostmaster at a branch and I can see on my Horizon system that there is a shortfall of 115. Okay?

Simon Oldnall: Mm-hm.

Mr Stein: All right. Now, we know that the R&D button will trigger certain events within the Post Office system. That there will be, putting it shortly, an investigation, yes?

Simon Oldnall: Yes.

Mr Stein: Yes, okay. We also know that, if I’m the subpostmaster and I call up the Helpline and say, “Look, I’ve got this figure, I don’t understand it. What’s going on? It’s a shortfall, £115”, then as well, that should also trigger some type of investigation, yes?

Simon Oldnall: Yes, correct.

Mr Stein: Right. What if I pay off the shortfall without notifying the Post Office, either via the R&D button or the Helpline? Is there a way that the systems that you are aware of can identify that I in my branch, with that shortfall, have essentially identified the shortfall and then paid it off, without notifying you through the two ways I’ve just identified?

Simon Oldnall: So the system would identify – if this is being done at the trading period –

Mr Stein: Yes.

Simon Oldnall: – so somebody has settled to cash, effectively, or settled by cheque.

Mr Stein: Yes, which is why I’m using the figure of 115. You’ll probably be able to explain why in a moment.

Simon Oldnall: I assumed why. Then, yes, we would be able to identify that that settled to cash had happened. What we would not be able to identify is why. So we wouldn’t be able to understand that the postmaster went, “Actually, £115, I remember that. I did that wrong”, as opposed to “I’ve no reason why that’s happened”.

So for us to get into the £115, we would need the postmaster to press the R&D button.

Mr Stein: Right. So the sheer fact that a subpostmaster identifies 115 as being the shortfall and then pays it off using cash, which is the reason for using 115 as my example, doesn’t, in fact, of itself, trigger a Post Office investigation?

Simon Oldnall: Not an investigation as such, no. I think you’ll probably hear from Melanie Park tomorrow, where they talk about they do look for patterns –

Mr Stein: Yes.

Simon Oldnall: – and they do look to go, “Okay, that branch is regularly doing that, let’s go and talk to them and see whether they need any additional help and support”.

Mr Stein: The reason why I’ve used the figure 115 is?

Simon Oldnall: I knew you were going to ask me that, Mr Stein. Apologies, I can’t remember.

Mr Stein: Well, it’s because what the system does also is it accounts for cash in terms of the notes that’s used. I used 115, so that we’ve got 20s, 10, 5 –

Simon Oldnall: You’ve got a mixture of notes.

Mr Stein: – and that, therefore, there’s a way of actually understanding that the system has had that cash input if you wanted to do it.

Simon Oldnall: You jogged my memory, Mr Stein. Thank you. Yes.

Mr Stein: No further questions. Thank you, Mr Oldnall.

The Witness: Thank you.

Ms Hodge: Sir, I think that’s all the questions we have from Core Participants.

Sir Wyn Williams: Right.

Well, thank you very much, Mr Oldnall, for producing four witness statements, one of which is extremely detailed and two of which are quite detailed. I am very grateful to you for doing that work and I expect you’re quite glad that your time in the witness box was comparatively short. But, anyway, thank you very much.

The Witness: Thank you, sir.

Sir Wyn Williams: Right. We’ll resume again at 10.00 tomorrow morning.

Ms Hodge: Yes, sir. Thank you.

(4.12 pm)

(The hearing adjourned until 10.00 am the following day)