13 November 2024 – Dame Dawson and Katy Steward
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(9.35 am)
Dame Dawson
DAME SANDRA JUNE NOBLE DAWSON (continued).
Dr Katy Steward
DR KATY MARY STEWARD (continued).
Sir Wyn Williams: Mr Beer, I’m sorry about the delay this morning. I understand there are problems with the Internet. I won’t try and explain what they are.
The effect, I think, is this: that we can all continue as normal here, but those who watch on live feed will not be able to do so at the moment. However, what is occurring now and henceforth will be recorded so they won’t actually miss anything, and we’re hoping that the Internet problem will be solved during the course of this morning, and then they can rejoin as normal.
Mr Beer: Thank you, sir. I think that has been announced to the public by Tweets and other messages so those outside the room can understand what’s happening. I think it also afflicts the transcript, but the transcript is being made, and will be available when the IT problem has been sorted out.
Sir Wyn Williams: Yes. I think we can all do without the instantaneous facility that we’ve been enjoying and I think we’re also okay with documents, which would be a problem, if it was a problem, but I understand it not to be a problem.
Mr Beer: Yes.
Sir Wyn Williams: So we’ll see how we get along. Thank you.
Mr Beer: It’s a fire alarm day today as well.
Sir Wyn Williams: It’s a fire alarm day. Everything is happening today.
Mr Beer: The order of events, sir, just so that you know, firstly Mr Henry, on behalf of the HJA Core Participants for up to 45 minutes, then Mr Stein on behalf of the Howe+Co Core Participants for up to 45 minutes, an hour and a half, therefore, then the morning break. Then the Hudgell Core Participants represented by Mr Moloney for up to 30 minutes, the NFSP for up to 15 minutes, and then Ms Vennells’ representatives for up to 30 minutes which should take us to 12.30.
Sir Wyn Williams: I’m sorry that a longstanding engagement of mine means that we are having a half day but I don’t suppose any of you will mind, really.
Right.
Mr Beer: Thank you, sir. Mr Henry.
Questioned by Mr Henry
Mr Henry: Thank you, sir.
Dame Sandra and Dr Steward, you make it very clear that you are not arrogating the role of the Chair in reaching any verdict on people’s motivations.
Dame Sandra: That is correct.
Mr Henry: But interestingly, at the close of your evidence yesterday, you were dealing with the fact that motivations, of course, can be either driven by, let’s say, altruism or ethics, or self-interest, and it’s perfectly acceptable if the selfish reason leads to the right result. For example, from a risk management perspective, best practice would dictate that threats, particularly existential, or potentially existential threats, are clearly identified and resolved. You’d agree, obviously, with that?
Dame Sandra: We agree that it is vitally important that organisations identify the key risks to their business.
Mr Henry: Exactly. So it would be entirely understandable for a board, motivated by an ethical sense, to deal with the core problem, in this case the failings of Horizon and its impact on the risk of wrongful prosecutions, because they were driven by a moral imperative that the very idea that somebody had been wrongly imprisoned was intolerable and so, therefore, they had to get a grip on the issue, and perform a searching and fearless moral inventory, as it were, of the risk.
So that would be one motivation but, aside from that motivation, wherever the consequences lay for the organisation, a board doesn’t need to have such Olympian standards, does it, because a board might act selfishly by thinking, “Oh, my God, what does that mean for our organisation’s reputation? We’d better get to the bottom of this and sort it out”. So that would be another perfectly acceptable motivation but it’s not driven by the moral imperative: it’s driven more by the self-interest, “How are we going to, as it were, look”; do you agree with that?
Dame Sandra: I would agree that there is a duty under the Code for boards to look at the risk of their organisation.
Mr Henry: Yes, but what a board and an executive, a senior executive group, cannot do is cover things up or wilfully ignore them to protect the reputation of the organisation. I mean, that would be an infamous course of action.
Dame Sandra: We’re dealing in hypotheses, as far as we’re concerned, because, as I say, we’re not adducing motive.
Mr Henry: But dealing with that hypothesis, I suppose the answer is obvious.
Dame Sandra: The hypothesis that, if people were to cover things up seriously, if they were, then that would be against the Governance Code.
Mr Henry: Absolutely, I know we are continuing on this hypothesis, but to take that high risk strategy, it would be extremely unlikely that a senior executive group would do that off their own bat. Dealing with the hypothesis, it is more likely, is it not, that they would have positioned or obtained the acquiescence of the board or the chair?
Dame Sandra: I don’t have experience of that and therefore – well, we can hypothesise – indeed we can hypothesise – and the hypothesis may be correct.
Mr Henry: Can I just deal, please, with one paragraph in your second report, your paragraph 106, and I’m afraid I don’t have the page reference, but I’m going to read out the part that I wish verbatim, but it’s paragraph 106, I’ll wait until it gets up on the screen.
Dame Sandra: Thank you.
Sir Wyn Williams: If anybody is following the hard copy, it’s page 31.
Mr Henry: Thank you very much, sir.
“In the event, notwithstanding Brian Altman King’s Counsel’s knowledge and agreement that Gareth Jenkins was a tainted witness, and his knowledge therefore that prosecutions had in the past been unsafe, it seems neither he nor the [General Counsel] brought this matter of the tainted witness to the attention of the Board in a way which they fully understood its importance.”
What I want to explore with you is whether that is right because, of course, you are familiar with the unsafe witness email that Paula Vennells sent to Alice Perkins –
Dame Sandra: Indeed.
Mr Henry: – and who is to say whether their accepted beliefs or bias meant that the issue was not pursued?
Dame Sandra: I’m sorry, can you just repeat the question?
Mr Henry: Yes, who is to say that, rather than Mr Altman and General Counsel being at fault for not drawing the full ramifications of this to the Board in a way in which they fully understood its importance, what I’m trying to suggest is that the fault lies with Paula Vennells and Alice Perkins.
Dame Sandra: I mean, I think this is correct. It seems neither he nor the General Counsel brought this matter to the attention of the Board. That is correct. But your question is then: but did other people know and should they have brought that to the attention?
Mr Henry: Absolutely, well, to some extent of course, General Counsel would appear to have wanted to draw it to the attention of the Board but was physically siloed and not allowed to present to the Board at the July meeting, 16 July.
Dame Sandra: Indeed. That was the case: she wasn’t there, yes.
Mr Henry: Now, you wouldn’t have seen this document and we will provide a reference to the purposes of argument in due course, but on 12 December 2020, there is a record of a conversation between a Mr Rodric Williams and Mr Altman where Mr Rodric Williams was saying to Mr Altman, apparently without demur from Mr Altman, that Mr Altman’s 2013 report was “an optic piece” for the Board. Would your evidence be that the Altman Review was a major piece of work that the Board ought to have been made explicitly aware of?
Dame Sandra: I will ask Dr Steward in a minute about that. As I recall – and of course it’s quite difficult not having documents in front of one to be able to comment. As I recall, there is reference to it at the ARC meeting, in which that – one of those reports is referenced.
Do you have anything to add?
Dr Steward: I think you’re correct in saying that the 15 October Brian Altman general advice is referenced in the paper by Chris Aujard to the ARC in November 2013. So to that extent, there was references to the Board, there was the – there were some of the references from the paper to the Board.
Mr Henry: But nothing about the Gareth Jenkins issue appears to have been pursued?
Dr Steward: In that incidence, yes. I mean, as far as our frame of reference in looking at the general advice in the ARC, that’s what we observed. We, of course, don’t know what happened, the entirety of what else the Board was told.
Mr Henry: Well, I want to now try to work out why the Board was not properly seized of the unsafe witness issue and to test the assumption that that was because neither Alice Perkins or Paula Vennells were inclined to develop it or share it with the Board or apprise the Board of the serious and obvious risk it presented. So could I ask you to reflect on this document, which I think you have seen overnight. It is POL00108065, and it’s dated 27 August 2013. Could we scroll down, and you see:
“Paula your queries answered in red.
“Susan, Thanks a really clear note. Noted below some queries (IN CAPS).”
Then if we could scroll, please, “Legal and adjudication of future case”. These words:
“I am waiting for a meeting (either last week of August or first week of September) with Brian Altman QC. The QC will provide an initial steer on the process for existing cases. This session will be the first step in helping us define a process for future cases. We will need to review the current plan once we have this steer. IS THIS REF PROSECUTING AUTHORITY? Yes, a recommendation on that will be one of the outputs from this work, also important to have oversight over the process with regard to the review of our criminal prosecutions.”
Then this:
“We are urgently working with our external firms to identify an independent expert to provide evidence on the Horizon system. PREVIOUSLY THIS WAS PROVIDED BY FUJITSU? [THESE ARE IN CAPS, MS VENNELLS] WHY MOVE FROM THIS? DO WE HAVE TO VALIDATE FUJITSU?”
Then in red, although it doesn’t appear so:
“We are concerned that this needs to be independent rather than [Fujitsu] verifying its own system. Happy to explain rationale further at our steering board meeting this week.”
That steering board meeting we know took place on 29 August 2013. So there’s clear discussion here between General Counsel and the CEO about the issue, particularly the need now to find an independent expert witness.
Could I now ask you to go, please, to POL00108087. We can see it was sent on 20 August 2013 and then resent on 3 September 2013 at 21.25. Could I ask, please, to scroll down to the issues concerning Mr Altman so it will be towards the end of the document. Yes, thank you very much. “Legal and adjudication of future case”, first bullet point:
“Meeting was held with our external law firm who have been completing the criminal case review on Friday.”
Then this:
“The issues that we want Brian Altman QC to advice on were agreed, final sign off of review process; and advice on prosecutions going forward.
“Conference agreed for 9 September where the focus will be on our prosecutorial obligations of disclosure of any information which may be of assistance to the defence. After this conference we will finalise the terms of reference for Brian Altman’s review; this will include, amongst other things, a consideration of POL’s position re criminal prosecutions.”
Dame Sandra and Dr Steward, I don’t know how familiar you are with the Seema Misra case, so depending on your answer to that, will dictate whether I ask you further questions arising from this.
Dame Sandra: Before I answer that question, which I’m very happy to do, can you tell me the bold which begins “Conference agreed for 9 September”, who is speaking there?
Mr Henry: That would appear to be a note arising from the steering group meeting, which took place on 29 August 2013, so I’m afraid I can’t answer definitively but it may be that that was drafted by General Counsel.
Dame Sandra: Okay. But we don’t know. It’s quite difficult because, obviously, this is a – you might call it, a multi-layered communication where it starts and then other people comment. But as far as you can imagine, that might be from the General Counsel.
With regard to the Seema Misra case, we have not looked at that in any detail, we –
Mr Henry: Well, then I will move on to the next document, then.
Could I now ask you, please, to go to POL00381633. I’m going to start at the top but we have an email from Paula Vennells to Ms Crichton dated Tuesday, 3 September at 7.51 in the evening, so it’s about an hour before the last email that we have considered, which of course was re-sent 3 September at around 9.00 in the evening.
Just dealing then with the discussions we know that there has been an email on 27 August, which I’ve taken you to, setting things up for the 29 August steering group meeting. Then the 30 August email, which was re-sent on 3 September and, about an hour before it was resent, we have this:
“Thanks Susan.”
Then I omit words:
“Re the update – could you add a para regarding costs and timing on [Second Sight]?”
Then I omit words:
“My ambition is to reassure Alice that we are on the detail.”
But if we could scroll down, please, and it’s the second page of the document, “Legal and adjudication of future case”:
“Meeting was held with our external law firm. The issues that we want Brian Altman QC to advise on were agreed, final sign off of review process; options regarding the appointment of independent expert witness (paper to follow); advice on prosecutions going forward.
“Following this discussion, terms of reference for his review to be finalised.”
Can I ask you, please, Dame Sandra and Dr Steward, did you actually see any paper regarding the appointment of an independent expert witness?
Dame Sandra: I don’t believe we did. We did see a paper in January –
Was it January?
Dr Steward: January 2014.
Dame Sandra: Yes, January 2014, which suggested that there were two independent witnesses from Imperial College that had been identified. That is, I believe, the only subsequent things that we have seen.
Dr Steward: Yes.
Dame Sandra: Of course, there may be other evidence but we have not seen them.
Mr Henry: But here we can see that the CEO is clearly sighted on the issues that they want Brian Altman to advise upon, a final sign-off of the review process, and terms of reference for his review to be finalised.
Dame Sandra: Indeed.
Mr Henry: Right. Could I now ask you to go, please, to POL00368926. This is 11 September. Susan Crichton to Rodric Williams and Hugh Flemington but, if we could scroll up, because this is dealing with who Brian Altman should report to. We can see Susan Crichton, 10 September 2013, in response to Gavin Matthews.
“Gavin – could you sent me the terms of reference so I can take a look at it.
“Re reporting to POL I will check with Paula – maybe Chair of Audit Committee but I will confirm [I think it is ‘now’] he is not needed for Thurs.”
That was an Audit and Risk Committee meeting, as far as I’m aware:
“I have copied Andy Holt our project manager …”
So here we are. Who should Brian Altman report to? Susan Crichton was going to check with Paula Vennells and, as far as one knows, who did Brian Altman report to in the end? There’s a gap, isn’t there?
(Pause for fire alarm test)
Mr Henry: I think I’m safe to speak now. I mean, he did not report in person to the ARC or the Board?
Dame Sandra: We would need to look at the relevant documents in order for us to give you an opinion on that.
Mr Henry: I think I’m safe on that basis. Assuming I’m right that he did not report in person to the Audit and Risk Committee or the Board, whose decision would that have been?
Dame Sandra: By in person, may I – he didn’t appear before –
Mr Henry: Yes.
Dame Sandra: – or are you saying his report didn’t go to?
Mr Henry: We know for a fact for the former that he did not appear in person.
Dame Sandra: Yes.
Mr Henry: But there is also – can you help us, how clear is it about the process of conveying what was obviously a very important piece of work, how clear is the audit trail, the paper trail, to establish the Board’s knowledge and accountability of the issues raised by Mr Altman?
Dame Sandra: I don’t believe that we can comment on that.
Sir Wyn Williams: I don’t think you can but perhaps you can help me with this: clearly, a great deal of – let’s take out the “great deal” – clearly, there was some work done to formulate and finalise Mr Altman’s terms of reference.
Dame Sandra: Evidently.
Sir Wyn Williams: Should his terms of reference – should it have gone for information and/or approval either to the Audit and Risk Committee or the Board before it was concluded, in your opinion?
Dame Sandra: My opinion is that it would have been good practice, had it gone to the Audit and Risk Committee, had there been an appropriate meeting quickly. One wouldn’t wish to delay doing it. And that it would be, again, good practice for the Chair of that committee, if it couldn’t come before the committee meeting, to be aware of what those were and then he could report at the next committee that he had seen the terms of reference and that he approved them.
Sir Wyn Williams: Yes. Subject to your point about independent Executive Directors being there to challenge, if a report is prepared for such a committee, coming from very senior lawyers who have agreed the terms of reference, to what extent, in practice, is it expected that that would be challenged?
Dame Sandra: Oh, the terms of reference, Sir Wyn?
Sir Wyn Williams: Yes.
Dame Sandra: It might be – in fact, I can think of instances where I would look at terms of reference, and they’d been agreed and I might say “Are we sure that we’re doing enough on that?”, which would then inform the nature of the work.
Sir Wyn Williams: So, in other words, there’s a practical, useful purpose in it happening?
Dame Sandra: Indeed.
Sir Wyn Williams: Right, fine.
Sorry Mr Henry, then I’ll stop.
Can I ask you the same question about the actual written advice, if that’s what we’ll call it, of Mr Altman, over the next time period. What is your opinion about whether the actual piece of writing or the substance of it, should that have been transmitted either to the Risk Committee or the Board?
Dame Sandra: With regard to the substance, then I’m sure that it should have been understood and – to the Committee and, in the report from the committee to the Board, which should happen each time, the Committee, the Chair, who would give that report, should summarise what the Committee looked at and give it to the Board. I wouldn’t necessarily expect, either at the Committee or at the Board, the actual piece of paper to come forward, but I would expect the process that I’ve described to happen.
Sir Wyn Williams: Then, without wishing to steal Mr Henry’s thunder, but I will, should a reasonable chief executive and/or should a reasonable general counsel ensure that those things happened?
Dame Sandra: Yes.
Sir Wyn Williams: Right.
Mr Henry: Steal right away, sir!
Sir Wyn Williams: No, no, back to you, now, Mr Henry.
Mr Henry: No, no, thank you.
I’m now going to deal with the concept of critical friends, and the role of non-executives on boards. Now, you have actually cited a work of scholarship by Robert Hazel, Alan Cogbill, David Owen, Howard Webber and Lucas Chebib, Critical Friends? The Role of Non-Executives on Whitehall Boards.
Dame Sandra: Mm.
Mr Henry: You reference it at page 129 of 133 of your first report. Can you expand upon the term “critical friend”, please?
Dame Sandra: I mean this, as you say, is in the context of Whitehall departments and Whitehall departments are, to an extent, different to that of –
Mr Henry: Absolutely –
Dame Sandra: – other matters.
Mr Henry: – and I was going to come to that because I wanted to know what would be the most useful track, to part from your expert report, to enable the Chair, should he wish to go further into this subject, to understand how the NED model of corporate governance could be strengthened and improved, given what we’ve seen in this saga?
Dame Sandra: I mean, that’s a huge question for me to take from you from the Chair, and I would be happy to give it considerable reflection. The role of the Non-Executive Director is described in – both in governance terms, but also in terms of nearly every board review that one looks at, and the essence is: independent, absolutely not part of the executive in any way, not responsible for running the company, responsible for bringing their specialist advice, responsible for being questioning, challenging, curious, and giving that independent pair of eyes to the – to what the board is attending to.
The idea of critical friend, I think, goes to the balance between support, which is the friend, that their role is to support the executive, but it is also to be critical, to challenge what is going on, if it’s seen not to be in the best interests of the company, which is what, as it were, motivates their appointment. So it’s that balance which I think we talk a lot about between support and challenge. And, as an independent non-executive, your responsibility is to do both.
Mr Henry: Now, would you agree that, throughout this entire saga, there has been a pitiful evidence base, so far as the NEDs acting decisively to reframe the way in which the executive group was dealing with this matter, and to ensure the swift and decisive resolution of the matter, namely Horizon failings and its impact on prosecutorial risk?
Dame Sandra: I think yesterday we dealt in some detail about the fact that, in our view, the Second Sight Report contained enough information, although not necessarily coherently brought together, to show that there should be challenge on those points.
Mr Henry: In fact, what you had instead was, rather than selflessness, integrity, objectivity and, you know, a determination for proper accountability you had, did you not, the spectacle of the NEDs being outraged about the way it had been handled by Susan Crichton, and we have seen and heard evidence that they were concerned about their own personal position and the notification to the Post Office’s insurers.
Dame Sandra: Mm.
Mr Henry: I mean, that does not strike one, does it, as a sort of courageous and independent voice saying, “We must deal with this; though the heavens fall, we must ensure that justice is done”? That indicates a somewhat craven approach by the NEDs.
Dame Sandra: As we discussed yesterday, we do think this was a missed opportunity, and the other piece in our evidence does draw a distinction: this word “challenge” which is both critical challenge and constructive challenge. And I think we did see evidence of what one might call critical challenge on the way in which, in their view, the report had been produced, and the process by which it had been produced, but we did not see the challenge into the basic assumptions, as you indicate.
Mr Henry: The challenges, really, were more to do with the amour propre of the NEDs being exposed and the fact that this looked messy optically, that the Post Office had lost control of the narrative, as it were?
Dame Sandra: I think there is that theme. There is also, as I understand it, their annoyance at them being surprised by, for example, bugs, and they were – as I understand it, they were annoyed by that. They also, as you indicate, asked questions about liability.
Mr Henry: Did you, in all of your researches, did you ever get the impression that Paula Vennells, in particular, did not want an optimal NED culture? Do you remember the document where she said that she did not want the NEDs to, as it were, have a bonding exercise?
Dame Sandra: I do recall, I recall that phase – that phrase.
Mr Henry: I may have misquoted it, but let’s have a look at POL00411940.
Dame Sandra: This is 2018?
Mr Henry: Yes, 2018. Do you see the paragraph beginning:
“I would remove entirely the NEDs as they will meet them at dinner, and at the Board, and will arrange 121s if they want to. We’re not trying to create a team of NEDs, the opposite in fact.”
What’s your view on that approach?
Dame Sandra: I cannot say what was in the mind of Ms Vennells when she wrote that. One construction would be: we don’t want a team of NEDs because we want their independent challenge. We want really good independent people who will speak their mind and their responsibility isn’t to form a team; their responsibility is to be part of the unitary board, as I explained, with the best interests of the company, and to bring their independent expertise to bear. So that would be one construction, which would be in a way a completely legitimate and positive construction.
Another construction would be – is we don’t want a close amalgam of NEDs as in this situation.
Mr Henry: Divide and rule?
Dame Sandra: It could be that but I can’t say. As I say, there are two constructions.
Have you got any view on that?
Dr Steward: I mean, I wouldn’t call it “divide and rule”, I think there is quite often the case – it can be very problematic for executives if you have a team of NEDs who refer to each other without referring to the collective, and that the ambition of every board should be for it to be as collective as possible. So I – in a sense, “We’re not trying to create a team of NEDs” can be interpreted as “We’re not trying to create a two-tier board”.
Mr Henry: Could I now in conclusion, because I know quite a lot of my time was eaten up but I want to stick to 10.15 as close as possible, but –
Sir Wyn Williams: I can’t help it, I love it when Mr Henry and Mr Stein edge themselves over the limit, with ever-increasing ingenuity.
Mr Henry: Actually, sir, I think, in deference to you, and particularly since we’re under pressure of time, I shall stop there.
Sir Wyn Williams: Thank you.
Mr Stein?
Questioned by Mr Stein
Mr Stein: Thank you, Sir Wyn, for the introduction.
My name is Sam Stein and I represent a large number of subpostmasters and also currently serving subpostmasters.
Dame Sandra and Dr Steward, thank you for your work on this matter, producing two reports, going through a considerable body of material, we’re grateful.
Governance and regulatory oversight. Now, what regulations and governance can do is it can provide a framework, is that correct, that –
Dame Sandra: That’s true.
Mr Stein: – supports hopefully good behaviour, moral behaviour; do you agree with that?
Dame Sandra: It provides a framework certainly, yes.
Mr Stein: The reason I think you may be hesitating, Dame Sandra, is a framework doesn’t necessarily dictate an outcome, so if someone wants to be immoral, someone wants to be dishonest, someone wants to work against the interests of subpostmasters they can do, no matter what the framework is: it’s a choice?
Dame Sandra: Again, human behaviour can be guided by a whole range of different things, as well as the framework in which they sit.
Mr Stein: So if individuals within what’s happened in the scandal, Ms Vennells, Ms van den Bogerd, the Investigators, Mr Bradshaw and others, Jarnail Singh, if they want to make choices that are either, I suppose, immoral or dishonest or downright criminal, then it’s up to them, when it comes down to it.
Dame Sandra: Yes, a framework cannot control behaviour. It sets the boundaries and sets the expectations.
Mr Stein: You may be aware that, in the same amount of time, the same period of time that we’re talking about for Second Sight, around 2013, where they’re conducting their investigations and making their report and they’re dealing and setting out the bugs, errors, defects that they’re finding, around that same time, the Post Office was also seeking to try and achieve further financial support from Government in – to the tune of, I think – I think the figures are 1.34 billion. It’s almost worth repeating: 1.34 billion.
So you have these pressures upon the Post Office, which are, you know, will it survive? Will it get the money, into the future? Also, at the same time you’ve got this bugs, errors and defects in its course systems that are coming along. Those drivers, those attacks upon the survival of the Post Office, it’s not going to necessarily going to be helpful to ensure good behaviour; do you agree?
Dame Sandra: You mean the – if I just play back, you’re asking the question of does the pressure from getting approval for Government of a large amount of money impact people’s behaviour in the organisation?
Mr Stein: Yes.
Dame Sandra: It may do. It may not.
Mr Stein: It goes back to the question of choice, doesn’t it?
Dame Sandra: Yes.
Mr Stein: Okay, so let’s have a quick look, if we can, please, at perhaps some of the governance principles and what exists. We’ve not heard much about the Nolan Principles as yet, so can I take you, please, to the updated report, which is EXPG0000006_R. I’ll be going to page 95 of that report and, if we can go to 95 on our screens, I’d be very grateful. What I’m going to be asking you questions about Dame Sandra, Dr Steward, is Nolan Principles and who they applied to within this complex situation.
Dame Sandra: Yes, yes.
Mr Stein: Is that page 95?
Dame Sandra: It’s the bottom of 95, yes.
Mr Stein: Bottom of 95, thank you.
So there we’ve got – and we’ve got the two sides. Now, the left-hand side, I’ll put it crudely is corporate commercial.
Dame Sandra: That’s right, yes.
Mr Stein: Right-hand side, if you like, more government. Those are the two sides, so that’s what we’ve got by way of this schedule. We see there the Nolan Principles and they’re familiar to I think, us all, 1 to 7, they set out basic standards of selflessness, integrity, openness, accountability, honesty, leadership. These are basic important principles.
Dame Sandra: They are.
Mr Stein: Now, these Nolan Principles would apply, looking at the sort of dates we’re considering here, they were in place from that period of time, 1995, and they apply, therefore, when we think about the structure applicable to the Post Office. At that time would they have applied throughout the organisation – this is pre-split – do you think?
Dame Sandra: Yeah, I think – I mean, it’s a very technical response I’m going to give. They would have applied to those people who were told they applied to them. So when one is appointed to public office, I believe from 1995 onwards you’re quite clearly given these principles, and – but with regard to people employing in the Post Office, without looking at their contracts of employment, I’m afraid I cannot say whether they were specifically required to note and to be told that they should adopt them. I can’t tell you that.
Mr Stein: So even pre-split, it’s pretty complex because, despite the fact it’s a Government organisation, you’ve got layers of different employees, Executive Directors, and the question of whether this would apply might depend on what’s in their contract?
Dame Sandra: Exactly. That’s what I’m saying. That where it’s very clear that they apply, it’s usually appended to the contract. I can’t say –
Mr Stein: Okay.
Let’s move onto the split so the Post Office becomes a private company –
Dame Sandra: Mm-hm.
Mr Stein: – owned by a single shareholder, as Ms Badenoch said the other day, herself as Secretary of State, and other Secretaries of State in their time.
Dame Sandra: Yes.
Mr Stein: Now, this is where I almost have to crack my knuckles with trying to work out the complexity. We’ve got a very odd situation. We’ve got obviously Government officials, to whom the Nolan Principles apply.
Dame Sandra: Indeed.
Mr Stein: Let’s work our way down from top level Government. We then have ShEx, that became UKGI. Now, they are essentially the controlling body or arm of state that is involved in the oversight of the Post Office. Now, it applied to them as well. So those ShEx and UKGI members on the Board, Nolan Principles should apply; do we agree?
Dame Sandra: Certainly ShEx. I would have to look and see exactly what UKGI, again, contracts would have said. So I could only speculate whether or not they would. I perhaps should say that I’m very pleased you’ve brought these Nolan Principles up because, reflecting our side, I thought, “Oh, we hadn’t discussed them”. And I think that, in terms of public life, in my personal experience, they are very well known.
Mr Stein: It is, one would have thought and one would hope frankly likely that the Nolan Principles would be applied through UKGI, it being the body carrying on, if you like, from ShEx?
Dame Sandra: As I say, the specifics. I can’t give you an answer on the fact because I don’t know the fact.
Mr Stein: Fingers crossed. Now, then if we move on through, if you like, the structure that exists at that time, the complexity then is that, at that stage when the Post Office is split into its private role, it is still, though, a body with a clear governmental social purpose. We know the requirements and directives to the Post Office is that they should provide a public service, that they’ve got to keep open post offices up and down the land, and they provide particular services, even though that might be for that particular branch not sustainable as a small business. Okay?
Dame Sandra: Yes.
Mr Stein: So we’ve got this complex picture. It’s a private company that is carrying out a social purpose on behalf of the State. But it doesn’t seem to have, buried within its ethos, the Nolan principles as a private body. Is that a fair or a bad description?
Dame Sandra: In the documents that I have seen of the Post Office of 2013, in those that I have seen, I haven’t seen reference to the Nolan Principles. However, as the appointments, particularly at the Board, had to be approved by the Secretary of State, it’s possible that in those appointments there was direction to the Nolan Principles because the appointments were made by the Secretary of State. They weren’t – well, they were approved by the Secretary of State on the recommendation of the – on the recommendation of the Board.
Mr Stein: Dame Sandra, I agree and I’m not convinced, and no doubt I’ll be corrected by voices around me, but I’m not convinced we actually know the answer to: do the Directors, Chair, and so on, at particular times have these Nolan Principles drawn to their attention on their appointment. So we may learn that at a later stage.
Dame Sandra: Mm, mm.
Mr Stein: Can I take you to page 88 of the same document, please. It’s a reference to the culture of organisations within, and your questions.
Dame Sandra: Yeah.
Mr Stein: So what we’ve been discussing is on the culture of their organisations, when, if at all, did the executives or boards have written statements on values, codes of conducts and behaviour, which are available to all employees. Our discussion has been about this, hasn’t it? It’s been about whether you’ve been able to find, whether it is available, the types of guides and protocols or codes of conduct that may have provided some support for a positive culture. Have you found documents that answered these questions?
Dame Sandra: We didn’t – when we wrote report number 1 and we were trying to assist the Inquiry by showing the frameworks of governance and expected standards, we identified a number of questions. When we came to write report number 2, we simply – we could have spent five years seeking through your evidence to answer these questions. We didn’t have five years – five years full time. So we didn’t take these as questions for us, when we sought to answer them.
With regard to the specific question about written statements of values, codes of conducts and behaviours, certainly in the – I think it’s the 2015 job description of the General Counsel, which happened – which was one of pieces we looked at, there is a statement of behaviours and there are – there is a statement of values. It’s an empirical question.
Do you want to add?
Mr Stein: You’ve turned neatly –
I’m sorry, Dr Steward.
Dame Sandra: I just wanted to check.
Dr Steward: I was just going to say that the process is exactly as Sandra described it, these questions for the Inquiry.
Mr Stein: Dame Sandra, you helpfully mentioned general counsel, which is my next topic.
From your evidence there is no actual requirement within the Post Office for general counsel to attend board meetings. They don’t have to and they’re not required to.
Dame Sandra: As I tried to explain, it is really a matter for the board to decide how they want to relate to their general counsel. Sometimes, occasionally, I think it’s about 20 per cent now, might be actually members of the board. A larger proportion would have the general counsel in attendance, and some of them would have the general counsel coming in just for specific matters.
Mr Stein: Focusing on POL as an arm’s-length body to start with, and then I’ll move on to then the general question about arm’s-length bodies, so POL to start off with, should general counsel, within the Post Office, be a Board appointment?
Dame Sandra: There is no “should” about that. It’s a matter for choice.
Mr Stein: Would you recommend?
Dame Sandra: I would recommend that the General Counsel was present. I would not recommend or not recommend – I would neither recommend nor not recommendation that they stood be a member of the Board because I think that’s a question for the Board.
Mr Stein: So the key recommendation is –
Dame Sandra: For me, my personal view is that I would like to have the General Counsel normally present in Board meetings.
Mr Stein: Dr Steward, I understand the way this works. You agree by silence. Further silence.
Dame Sandra: I think I’ve said what I – I think I’ve made clear what I think. I hope I’ve made clear what I think.
Mr Stein: You were asked a question by Mr Beer yesterday, and I think your answer was it’s outside of your knowledge. You don’t have knowledge of, if you like, the status of general counsel, whether they actually have to be a practising lawyer –
Dame Sandra: No, all I can say is that, in all my experience, all the general counsels I’ve known have been practising lawyers.
Mr Stein: Are you surprised to learn, therefore, that there is no requirement for general counsel across companies –
Dame Sandra: And they are called – I beg your pardon – they are called general counsel?
Mr Stein: Yes.
Dame Sandra: I’m surprised.
Mr Stein: The answer to this is that there are people that are capable of describing themselves as lawyers who are actually outside of the regulatory requirements by the different regulatory bodies, the Bar Standards Board, the SRA and others.
Dame Sandra: I am unfamiliar with that.
Mr Stein: The other types of lawyers that can be appointed as general counsel generally, could be a lawyer with a qualification or practising certificate abroad, in other words not applicable here.
Dame Sandra: I think that would be a special case which would be considered but, as I say, this not my area of expertise.
Mr Stein: No, and in relation to the practice of a general counsel, as a lawyer, do you know whether what they do when they are working as general counsel, whether that is governed in the same way as my practice, as a barrister is; do you know about the regulatory requirements in relation to their types of practice?
Dame Sandra: I know in principle and in general.
Mr Stein: So you’re aware that I operate and all practising barristers and solicitors with practising certificates, we operate under a code of conduct essentially which governs our work on reserved activities, in other words going to courts, addressing courts, giving legal advice. But the work of general counsel is not covered within reserved activities. Are you aware of that distinction, that they essentially occupy this oddity, as general counsel, don’t have to be lawyers, doing work that is not directly referenced by their regulators?
Dame Sandra: As I say, not my area of expertise. Does any of this apply to the Post Office?
Mr Stein: Well, it would apply in terms of the practice of general counsel, generally, yes.
Dame Sandra: I understand it would apply – well, anyway it’s not for me to ask the questions.
Mr Stein: Right.
Sir Wyn Williams: As a matter of fact, just in case I’m missing something, all the relevant general counsel were practising lawyers, were they not?
Mr Stein: We believe that’s right but the question, actually –
Sir Wyn Williams: No, I –
Mr Stein: – to their work as general counsel and whether that itself is governed by reserved –
Sir Wyn Williams: No, I follow what you’re saying but I just didn’t want to widen my area of investigation to even discover whether there was a general counsel who wasn’t a practising lawyer. I don’t think there is.
Mr Stein: Now, you’ve discussed with me and indeed yesterday with Mr Beer, and your evidence was that the normal expectation is that General Counsel would at least have an informal dotted line to the Chair, and we’ve discussed that. You also discussed how these relationships actually work, work of General Counsel actually work, it’s going to depend upon the body in which the organisation works and how that develops.
When considering the questions such as General Counsel and bringing to the attention of the Board something like the Simon Clarke Advice, is there, in general corporate practice, a reason to think that privileged documents, documents subject to legal privilege, are not brought to the attention of boards? Now, I note, Dame Sandra and, I think, Dr Steward, you both have very strong experience of working on boards.
Dame Sandra: Yes.
Mr Stein: Dame Sandra, I think I saw quite a long list of boards that you’ve been a member of. So privileged documents such as the Simon Clarke Advice, any reason why it can’t go to Board?
Dame Sandra: In my experience, I have seen quite a number of privileged documents which come to the board and which the board is taken within the circle of privilege. And so that has been my experience. I have never, in my experience, not seen a document, as far as I know. Of course it’s difficult to know what you’ve not seen, but I’ve not seen a document where I have been unable, or I’ve not known of a document, where, as a board member, I’ve not been able to access it.
Mr Stein: Perhaps emphasising what happened within the Post Office scandal, some legal advices, such as the Simon Clarke Advices may be more important than others.
Dame Sandra: Mm-hm.
Mr Stein: Mr Clarke’s Advices, in relation to what had been discovered by Mr Clarke and his colleagues regarding what they thought was the activities of Mr Jenkins, this seems to be at the higher end of importance.
Dame Sandra: Mm, mm.
Mr Stein: So, even if there had been any sort of hesitation regarding privilege, this should have gone to the Board?
Dame Sandra: In regard to that – the Simon Clarke Advice that we looked at, that was never said to be privileged, was it, I don’t believe. So the reason, if you see what I mean – you’re asking me a question –
Mr Stein: I do agree.
Dame Sandra: – which is not directly relevant to that.
Mr Stein: I understand. Essentially, that doesn’t seem to have been expressed to be the barrier.
Dame Sandra: Exactly.
Mr Stein: Now, as a body, the Post Office has, as I think you commented briefly yesterday, it’s one of the oldest, if not the oldest, country-wide bodies in existence. It was, before separation, a Government body. We’ve got also another peculiarity about the Post Office, which is that the dependence of the working on the Horizon system is run by a third party, Fujitsu.
We seem to have a structure which is peculiar, in other words that you’ve got, first of all, a body that, in the matters that we’re often referring to, prosecutions, as an example, it prosecuted – it was a prosecuting authority; its systems that related to data that were to be used within prosecution system was run by a third party, Fujitsu; it was a body that’s a private body from the time of separation, using corporate jargon, you’ll forgive me, with some type of dotted line towards Government.
Dame Sandra: Mm.
Mr Stein: It seemed to be operating in a – is it a unique organisation in your experiences?
Dame Sandra: The relationship between the corporation and Fujitsu, as far as I’m aware is not unusual. I mean, PFIs and other forms, other – there may be a dependence upon the supplier and the maintainer of the system through contractual relationships. As we’ve seen, arm’s-length bodies, and I think you’ve heard evidence, the length of the arm can vary from inches to yards. So I think, I couldn’t say is this absolutely unique? It’s certainly complex and it’s certainly, with a long and complex history.
Mr Stein: Can we go, please, to your second report, EXPG0000010, Dame Sandra, Dr Steward, page 40, please, within the hard copy, and indeed on screen hopefully. So I’ll be looking at paragraph 140 as well. So page 40, 140.
So I’ve asked you a question about the peculiarities of the operating system and the way that it appears, then your view, from looking at the evidence, it seemed to you that the culture of POL did not encouraging listening or learning from subpostmasters.
Now, we’ve got example of that, a helpline that has been described as the “unhelpful line”, being told to pay up rather than answer people’s queries about problems within the system, so that appears to be the evidence that appears to be behind at least part of this thinking.
Paragraph 145, page 41, this was referred to yesterday, that:
“So deep were the assumptions embedded in the culture of the organisation, so corrosive was the company ethos that the Board did not call the Executive to account to face up to POL’s role in perpetuating the miscarriages of justice which were increasingly evident to others.”
Now, the miscarriages of justice that you’re referring to, we need to be careful, don’t we, because we are aware of the miscarriages of justice that went through the courts, that were looked at in the criminal courts of appeal and convictions overturned, but there’s also the miscarriages of justice that went through the civil courts –
Dame Sandra: Mm-hm.
Mr Stein: – that were referred to in the High Court. Then there’s the miscarriages of justice that also occurred as a result of audits, audits carried out by the Post Office, which would close people’s branches down without the intervention of the courts, either civil or criminal courts.
So these injustices, that you’re referring to, the miscarriages of justice, are not just about court results and behaviour in prosecution, either civil or criminal; do you agree with that?
Dame Sandra: We agree.
Do you agree?
Dr Steward: Yes.
Mr Stein: So hopefully you will agree that, in order, in fact, to try and ensure that an organisation holds true to values of honesty, trust and duty, this needs to be – these values, this culture, change that clearly has to go from a corrosive culture to something that is the opposite, there has to be significant organisational change?
Dame Sandra: We feel strongly, I think, that significant cultural change, certainly from this, is required.
Mr Stein: Now, one of the aspects of cultural change and about people finding a voice is whistleblowing. Okay.
Dame Sandra: Mm-hm.
Mr Stein: Whistleblowing is not new, it’s been discussed. I noted in your chart, it’s, in fact, going back to pre-2000, the –
Dame Sandra: Yes, the 1996 Public Interest Disclosure Act, as we talked about, which gives employment rights for whistleblowing.
Mr Stein: I’m going to quote from a footnote in Christopher Hodges book, Law and Corporate Behaviour, which is the 2015 edition, which is important for context of these matters.
Dame Sandra: Yes.
Mr Stein: For anybody that wished to look at it, it’s page 527 of that work, it’s a quote from a quote. So it’s from “Whistleblowing and Corporate Governance: the Role of Internal Audit in Whistleblowing”. It says this:
“There is a symbiotic relationship between whistleblowing and an organisation’s culture. Effective internal whistleblowing arrangements are an important part of a healthy corporate culture, but it is also crucial to have the right organisational culture, which encourages people to speak out without fear.”
Now, I’ve chosen that quote because it emphasises the importance of whistleblowing. I can take you, if you wish, to where you deal with this within I think it’s your first report, but perhaps I don’t need to go to the page. Why is whistleblowing so important? What does it do to an organisation to actually change culture?
Dame Sandra: If it works well, people don’t fear for their livelihood or their job or their prospects, if they see something which they believe is in the public interest for them to reveal. It mustn’t be a personal grievance, if I feel very aggrieved by something I must take that through a grievance procedure, as an individual, but if I feel there is a wider public interest and people should know about any element of wrongdoing or behaviour or, even nowadays, spoken harassment, which of course is against the law, that there should be a right to do that. And, increasingly, although it’s been there since 1996, that right to protection, of course, anyone could speak up since the year dot but they might not have had that protection, so the protection of the Public Interest Act is important.
And I think that, in my experience, both in terms of codes of guidance and in terms of board’s attention, there has been a greater attempt to try to make sure that one has systems in place to ensure that there is strength behind the possibility that people could speak up, so the requirement for whistleblowing champions, for example.
But it’s fundamental to hear the voices without fear, to a healthy culture.
Do you want to –
Dr Steward: I think – I mean, your quote from the book, I think it shows two sides of the coin and that whistleblowing is, if you like, that is the legal process, that is the route by which, if I have a genuine concern about something which is against the public interest, a poorly performing surgeon, or a genuine occlusion of facts, then I have the route to be able to take that without fear of losing my job or of being bullied, or whatever.
The other side of the coin is a culture in which, at every level, there is an expectation that people will be able to talk about things which are going wrong. If you like, there is an expectation of being able to speak up, but those things are – it is quite important, I think, for organisations to distinguish between the whistleblowing and the talking about grievances which are about things that happen in my team or things that happen in the workplace, and that’s a cultural and leadership issue.
They join at the top because you want to have an organisation in which speaking up is –
Mr Stein: Dr Steward, I’m very grateful for that. I’m going to just come back to that in one moment.
I’m just going to stay with, if you like, classic whistleblowing and another quote, this time from Professor Hodges himself:
“Whistleblowing has been said to involve a triangular relationship between the reporting individual, the detected organisational misconduct at a particular institutional setting, and the regulatory regime that defines the contours of legality.”
I think what the good professor is saying is that whistleblowing needs to involve someone’s ability to be able to report organisational misconduct but not necessarily directly back to the very self-same organisation that they distrust. Within the Post Office, we know that there are whistleblowing champions. Is there anything, given the background, to ensure that there is an outside route?
Dame Sandra: The point you’re making is that, if you want to report wrongdoing, then it’s clearly inappropriate you report that wrongdoing to the person who is doing the wrong. And there have always been arrangements by which you could circumvent that.
I think you’re asking is there a need for an extra organisational route –
Mr Stein: Within the Post Office, it’s about –
Dame Sandra: Within the Post Office itself because that really comes to the Post Office of today, which we haven’t paid – which, you know, is outside the scope of our report. And it’s, of course, a matter of opinion. My personal view is that the more you outsource, the less you absolutely require the board and the executive to take responsibility themselves, and so I would be cautious about having an external route. I would need to understand really why it was necessary but I would, above all, like the responsibilities for making sure that whistleblowing is effective to be really held by the Executive and the Board of the Post Office.
Mr Stein: Dame Sandra, we’re in a situation whereby we are learning today, and we will learn, it seems, next year, more details about the organisational changes. But these are matters that essentially we are asking Sir Wyn to take into account to consider when we learn more detail.
Dame Sandra: Yes, but you take – my point is clear. I want strong whistleblowing in my view, but I do feel the responsibility for that should be strongly felt by those who are running the Post Office.
Mr Stein: Dr Steward, addressing the point you made before I went to, if you like, the classic routes for whistleblowing: essentially whistleblowing provides a route for individuals to be able to make complaints, hopefully without fear, there are issues regarding the statutory regulation as apply, I think, to employees, not necessarily to contractors or individuals that are self-employed. So there are issues regarding the law at the moment.
But Dr Steward, you were talking about that whistleblowing is one aspect of matters. What is required? Again, I’ll quote from Professor Hodges:
“Accordingly, official recommendations stress the need for best practice in policies, accountability, governance, multiple routes for information, including the line management, leapfrogging Human Resources audit, audit committees, directors, external routes, feedback on publication after reporting, providing reassurance, briefing managers, checking awareness of staff.”
Unless I misunderstand what Professor Hodges is saying, that whistleblowing, yes, strong and important for any organisation and its culture, but also there must be the ability in a strong moral company for people to be able to speak up and speak to other people and find others that will listen to them.
Dr Steward: I mean, nobody would contest with that, I don’t think at all. I think the difficulty is that you can have a formal process, but people will not use it, unless they believe that there is – that it will work for them. So of the two words that come to mind when people talk about whistleblowing is “fear” and “futility”; “If I speak up, will I be penalised? If I speak up, will anything happen?”
So just having the process and just having an external body wouldn’t, I don’t think, provide the full assurance that the organisation itself had owned what it was going to take to make whistleblowing work. And I think that’s Sandra’s point, that it would need to be discussed by the Executive and the Board that this is something that we want to make happen in our organisation and make work, make real.
Mr Stein: My last topic is duty of candour. Now, this is discussed variously, Hillsborough Law, this has been discussed in other reports from other inquiries this year, Grenfell Inquiry report, the Blood Inquiry report, the duty of candour and its applicability.
Do you see that the duty of candour, which is a duty to not just tell the truth, which is not a bad idea, but also a wider duty to actually investigate, look at things in more detail – you know, instead of just giving a standard answer, actually look at what there is by way of evidence and information – do you see that that duty of candour should apply to a body such as the Post Office which is a hybrid, private/Government body?
Dame Sandra: Do you want to go?
Dr Steward: I’m going to go back a step to the conversation that you had before you got into the specifics of the General Counsel role, and, at that point, I think we were debating the Nolan Principles versus the commercial governance model. Yesterday we drew attention to a paragraph in our report which said that we felt that the governance was underdeveloped or we had heard from numerous Non-Executives that the governance of the Post Office was underdeveloped at the point. If it is underdeveloped, then all of the frameworks, the risk frameworks, the values frameworks, what sort of leadership we want, Nolan Principles or a code of ethics, those will be underdeveloped.
So in a sense, irrespective of which framework, it wasn’t yet at a stage, it felt to me, where those frameworks were really driving behaviours. And that could apply as much to the risk management as to the Nolan Principles.
So this question, which you were going to answer …
Dame Sandra: Well, I think on the duty of candour, the question of “legally, should it apply” is a matter for those who make the law. With regard to the duty of candour, as I understand it, and of course it does apply in health and social work as well –
Mr Stein: The NHS, yes.
Dame Sandra: Yes –
Mr Stein: Ministerial departments rather more complex.
Dame Sandra: Yes.
Mr Stein: In other words, the answer is no.
Dame Sandra: Sorry –
Mr Stein: At a ministerial level and departments the question of the duty of candour’s application is a little bit more debatable. There are other governance structures that arguably support better behaviour.
Dame Sandra: If I could rephrase the question, which I’ll answer, should the meaning of candour apply to the values within the Post Office? Yes, in my view it should. Whether or not that is a duty of candour and how that would be applied, I cannot say. But the candour, in the terms as you say, not simply answering the face value question, as far as boards are concerned is a requirement to delve deeper.
Mr Stein: Excuse me one moment – sorry?
Dr Steward: The duty of candour needs to be matched with a duty to listen. I mean, the candour puts an obligation duty on me to speak up if I see something wrong; there needs to be an obligation, corresponding duty.
Mr Stein: One moment, please. Thank you very much.
Sir Wyn Williams: Thank you, Mr Stein.
I just want to ask you to go back, if you would, to the Nolan Principles. Not in the context of whether, almost as a matter of process, they would apply, but how they relate to what you would expect of the behaviour of a director.
Dame Sandra: Yes, they well describe it. I mean, I would expect exactly –
Sir Wyn Williams: Well, it was striking me – I’m not a company lawyer but I’ve got a reasonable grasp of what’s involved. Effectively, those seven principles are summing-up how a director of a company should behave, are they not?
Dame Sandra: Whether they’re exhaustive, I can’t say –
Sir Wyn Williams: No, sure.
Dame Sandra: – but one could not argue that those principles should not apply. One would argue that they should apply.
Sir Wyn Williams: Fine, thank you.
Dame Sandra: In the spirit of being a director.
Sir Wyn Williams: Fine, thanks very much.
Well, we’re on our best behaviour, Mr Beer, in terms of timing, so we’ll take our morning break, I take it now.
Mr Beer: 11.10, please.
Mr Stein: Sir, I’m sorry for letting you down on that.
Sir Wyn Williams: You never cease to amaze me, Mr Stein.
(10.55 am)
(A short break)
(11.11 am)
Mr Beer: Have you got a proper line of sight to everyone you need to see there, Mr Moloney?
Questioned by Mr Moloney
Mr Moloney: (Microphone muted) and I promise to take much longer than I said I will, sir, just to …
Sir Wyn Williams: There’s been a running joke: Mr Moloney on the whole keeps to time. Now he’s defying me. That’s all.
Mr Moloney: Dame Sandra and Dr Steward, I’ve three matters to ask you about, if I may. Firstly, institutional memory; secondly, a specific aspect of the role of the company’s secretary; and, thirdly and finally, overboarding.
So taking them in turn, if I may, institutional memory first. The Inquiry has heard evidence from a number of individuals who were both involved in the development and rollout of Horizon, and then in the later operation of the business. So for example, you identified the role of Mr Miller, then the Chief Operating Officer in the Cleveleys case that you looked at.
I’d like to ask you about institutional memory, and how that should function within a business where you have people who work through a considerable time. Generally, is there a responsibility to ensure that, within any effective governance model, institutional memory concerning risk is preserved?
Dame Sandra: In principle, there is undoubtedly good practice that institutional memory with regard to risk should be maintained and should be built on. In practice, it’s often difficult in organisations. So one – I can’t say that there are many ideal examples where things are not forgotten, and the question is: how do you reduce the possibility of them being forgotten? And systematic induction and training, which is informed from the past, can be one way, and policies which – by which I mean not policies which sit on a shelf, are ticked off every year and not regarded, but policies which really are made real in the organisation are another way because those policies, which now, in good practice, should be renewed – reviewed at certain periods, maybe annually, maybe twice, every two years, maybe every three years. That very process of policy enunciation, review and implementation can help with maintaining institutional memory.
On the other hand, I think there probably is no organisation in the land where something is done and someone says, “Oh, we did that 10 years ago and we didn’t learn the lessons”, or “we did learn the lessons”. So it’s a very difficult thing to maintain but it is vitally important to try to do so.
Mr Moloney: I suppose the nature of that risk would inform the absolute necessity to ensure that that risk was monitored?
Dame Sandra: The build of risk registers, the build of understanding of where the risks are, and if – you can’t just forget risks, they’re on a register, and you should then be able to see what’s happened to them. You may decide to take them off because you may decide they’re no longer relevant, but forgetting major risks is a major problem.
Mr Moloney: So the types of processes, Dame Sandra and Dr Steward, would be risk registers, as you’ve already mentioned, that’s one way of ensuring that an important risk is not forgotten, also perhaps operational management and monitoring of those risk registers, making sure that there are proper structures in place to ensure that those risk registers are effectively monitored.
Dame Sandra: The risk management, identification, mitigation process, the risk management framework, is very important in that regard.
Do you want add to anything?
Dr Steward: No, I mean, I was going to simply make the point that stories – stories and the stories which people tell in organisations tend to become the institutional memory as much as the hardwired risk management processes, which is why you need the risk processes.
Mr Moloney: Of course and, essentially, a management of risk flow, as you describe in your report.
But, in terms of stories, we know that there was a history of problems, of bugs, errors and defects in the development of Horizon. This is why I asked you about the nature of the risk and the extent to which the nature of the risk would inform the necessity to monitor that risk. With that history of bugs, errors and defects in the development of Horizon, would you have expected that kind of information to have been brought to the attention of the Executive, and/or the Board when apparently similar problems appeared after the rollout of Horizon, when Horizon was being operated in 10,000 or so branches across the country?
Dame Sandra: We would certainly have expected that there was discussion, that there was sharing and that, particularly once we got to Second Sight in 2013, which was, as you know, a case that we’ve looked at, that there was sufficient there for it to be collectively looked at.
Dr Steward: Yes.
Mr Moloney: Are you aware that many witnesses in the Inquiry have said that they knew nothing about the problems and developments in the rollout of Horizon identified in Phase 2 of this Inquiry?
Dame Sandra: In general terms, yes.
Mr Moloney: Are you surprised about that institutional amnesia within an organisation like Post Office?
Dame Sandra: I am surprised.
Mr Moloney: In that case, can I take it one further: does it beggar belief?
Dame Sandra: I think I’ll stick at “surprised”.
Mr Moloney: Stick at surprised, thank you. Okay.
Can I ask you about the Company Secretary and you were asked by Mr Beer yesterday about the role of the Company Secretary in relation to the Board, including as regards responsibility for governance and compliance with legal obligations. You dealt with the division of responsibility between the General Counsel and the Company Secretary.
Dame Sandra: I did, within the context that the Company Secretary has duties within the Code and the General Counsel does not.
Mr Moloney: Of course, of course. The Inquiry heard evidence from a Mr Jonathan Evans, who was the Company Secretary at Royal Mail Group. I don’t know if you’ve come across his name during the course of your researches.
Dame Sandra: We haven’t looked at his evidence.
Mr Moloney: You have?
Dame Sandra: We haven’t looked at his evidence.
Mr Moloney: I don’t need to take you to his evidence, really. I don’t need to take you to his evidence, I’ll just give you a very brief summary though of what he said. Prior to his appointment as Company Secretary, he’d been Network Director at POCL, Post Office Counters Limited, during the development of Horizon and, after taking up the Company Secretary role, he remained in post at POL and RMG as Company Secretary until 2010. So that’s –
Dame Sandra: Until 2010?
Mr Moloney: Yes. So, as it were, he’s there as the Network Director at POCL, during the development of Horizon, and he stays in post until 2010, where he’s Company Secretary at POL and RMG. He gave evidence that lawyers reported to him at times during that time in post.
You’ve observed that, before separation, there was a dual accountability for prosecutions shared by RMG and POL.
Dame Sandra: Mm-hm.
Mr Moloney: Would there have been any responsibility on the Company Secretary, or anybody else, to ensure that both Boards, that’s RMG and POL, were adequately informed of the duties of POL, the duties that POL owed as a prosecutor, and the steps being taken within the business to discharge those duties and protect the reputation of the business?
Dame Sandra: As I say, we’ve not looked in detail at this, or even really in no detail. But with regard to the specifics of the duties of the POL Board versus that of RMG, POL was a subsidiary of the Royal Mail Holdings Group and, as such, the nature of the board that it had was a matter for decision by RMG. I mean, there was no requirement, as we saw, that they should have independent non-executive directors, they could have chosen to have an executive board. So the structure was within the holding company, within their thing. POL couldn’t say, “We must have X” because that was not their accountability.
Having said that, then the role of the Company Secretary is very much in terms of the administration and the running of the Board and the maintaining of account of the frameworks and codes and laws in practice.
Where an individual has knowledge about – not about the governance framework but about whether or not X has happened in the business, one would normally expect what X knew about the business to inform his or her discussion about matters in the Board, but I don’t think you can say there is the direct requirement. You might say there is an expectation.
Mr Moloney: Around prosecutions, obviously, prosecutions by a private body, private/public body –
Dame Sandra: Yes.
Mr Moloney: – as private prosecutions, not simply reporting to a public prosecutor –
Dame Sandra: Yes.
Mr Moloney: – with the central involvement of POL in those prosecutions – it’s subpostmasters or postmasters who work for POL who were being prosecuted – would you have expected, essentially, the POL Board to have been properly informed about the nature of those prosecutions going forward, prior to separation?
Dame Sandra: We have said, I believe, and I think we said or implied this yesterday, that in our view there was a lack of clarity about that responsibility and what the responsibility really entailed, with regard to being a prosecuting authority in this is hybrid way, and we remain surprised, and it appears to us to have been a very important part of Post Office operations, which we’re surprised there wasn’t clarity and there wasn’t quite clear and strong reporting.
Mr Moloney: Thank you. Can I finally ask you about overboarding and the individuals who were appointed to the Chairmanship and the Board of RMG and POL, were generally very experienced individuals, many of whom had portfolio careers towards retirement. That isn’t an unusual practice, is it, Dame Sandra?
Dame Sandra: Not unusual at all.
Mr Moloney: Essentially, experience and the name, those are attractive commodities, aren’t they, for people being recruited to boards?
Dame Sandra: Sorry, I didn’t catch that.
Mr Moloney: Having experience, having a profile, attractive commodities, as it were, for people being recruited.
Dame Sandra: Apparently.
Mr Moloney: People often develop a portfolio of such appointments?
Dame Sandra: They do.
Mr Moloney: The Inquiry has seen, in Post Office’s case, an example of accountability: the approach taken to the nuclear option of the removal of Mr Staunton. Aside from that sort of nuclear option, what checks are there on the performance of directors in role?
Dame Sandra: Of course we’re dealing with a large 20-year period and that which we would expect now probably wasn’t current at the beginning and, in the middle, it would be half and half. Now, there is very clear requirement to report one’s other directorships in the annual report and, in the recruitment of non-executive directors, the question is always asked about do you have the time? And so there is an initial – and I think the question would have been asked definitely in 2013, “Do you have the time to fulfil this role?”
So there’s an initial exchange between the institution and the person about whether or not they have the time.
Mr Moloney: Can I stop you there, Dame Sandra, just for a moment because the question I’m asking at the moment is not about at the appointment stage: it’s more a question of when in role and about what checks there are on directors when they are in role. So, for example, whether or not there is any mandatory training or continual professional development whilst in role, or any appraisal system whilst in role.
Dame Sandra: I began by talking about the appointment because that is, if you like, the initial contract, and – the initial implicit contract between the individual and the organisation. With regard to – I’ve talked already, I believe, about induction and training, which is extremely important, and then with regard to their performance of the role, it’s normal to have board evaluations every – the periodicity changes but it may be every one, every two or every three years, sometimes involving external facilitation. And in that, a good board effectiveness, you not only give your overall views on the effectiveness of the board but one is normally asked about the effectiveness of individuals, anonymously. I mean, they don’t – Dr Steward will not say, “I think Dame Sandra is” – she won’t name me but she’ll give her view on my performance.
And, again, in my experience, where it’s felt that someone really isn’t given the time or isn’t on top of the role, then the chair would have a discussion with them. But with regard to mandatory requirements, I think it is left with the board. There have, from time to time, been no chairman can be chairman of more than one FTSE 350 company at a time, but that at the moment is a bit more relaxed.
Mr Moloney: But essentially, in terms of performance management, if I can use that generic term, then it essentially comes down to the observations of executive directors and other non-executive directors as to the performance of a director?
Dame Sandra: Of board peers, yes.
Mr Moloney: Yes, and perhaps somebody raising a red flag about somebody?
Dame Sandra: More likely at the beginning, a quiet conversation, “we’re worried you don’t read the papers we’re worried you’re not doing the work, do you have the time?”
Mr Moloney: You spoke about the development of, as it were, the recruitment process and, of course, yesterday you were asked about the development of thinking on whistleblowing. So I’d like to take you back and that’s why I stopped you, because I wanted to ask you a few more questions about the development of thinking on recruitment to Boards and about how it was perhaps maybe different in the ’90s than it is now.
Dame Sandra: Yes.
Mr Moloney: So was the problem of overboarding as well understood in the early part of the period covered by this Inquiry, let’s say the late ’90s?
Dame Sandra: I don’t recall there being so much emphasis upon how one was managing one’s portfolio in the ’90s as there is now.
Mr Moloney: There are developments now and we know there is guidance, there is the Code, and so on.
Dame Sandra: Yes.
Mr Moloney: Are there any hard legal limits on overboarding?
Dame Sandra: As I say, legal limits – legal, actually, based in law – I don’t believe so, but I may be – someone may correct me.
Mr Moloney: Right.
Dame Sandra: I think, if I could say that, with regard to the recruitment now, and in financial services there is – there are some specific requirements. I have been well aware of a number of cases where someone has wanted to take a role which they’ve been offered, but the condition of their taking the role is that they will give up something in their portfolio. So, to that extent, there is a discussion at that recruitment stage, and their acceptance of a role may be conditional upon their giving up other aspects of their portfolio.
Mr Moloney: Can we look at UKGI00044277, please. Thank you. If we can just go to the bottom of this first page, please, it’s a guidance note. Have you seen this guidance note at all before?
Dame Sandra: I haven’t seen this one.
Mr Moloney: It’s a UKGI document.
Dame Sandra: It’s 2020, I see.
Mr Moloney: That’s it. 2020 is important because there’s been a consultation, a relatively recent consultation on overboarding and –
Dame Sandra: Yes.
Mr Moloney: – shall we come back to that once we’ve just looked at this document? So the Institutional Shareholders Service gives some guidance, and it reads at the bottom:
“Where directors have multiple board appointments, ISS may recommend a vote against directors who appear to hold an excessive number of board rolls at publicly-listed companies …”
Right at the bottom where the yellow mark is.
Dame Sandra: Okay.
Mr Moloney: I’ll just read it again but it’s, essentially, when people have got multiple board appointments, then the ISS can recommend a vote against directors if it appears to be excessive.
Dame Sandra: Perhaps we could scroll up or down?
Mr Moloney: We’re going to because it gives further guidance. You probably know, in fact, but onto the next page, please, at the top.
“Any person who holds more than five mandates at listed companies will be classified as overboarded. For the purposes of calculating this limit, a non-executive directorship counts as one mandate, a non-executive chairmanship counts as two mandates, and a position as executive director (or a comparable role) is counted as three mandates.
“Also, any person who holds the position of executive director (or a comparable role) at one company and a non-executive chairman at a different company will be classified as overboarded.”
That guidance is 2020. In 2023, there has been a consultation, hasn’t there, to, as it were, develop the Code.
Dame Sandra: Yes, I think if we could just possibly look at the previous page which begins, I think this is the advice from ISS, isn’t it?
Mr Moloney: It is, yes.
Dame Sandra: And ISS is an institutional shareholder proxy body. It’s not – it represents, I believe – perhaps we could go down to the bottom of the page? Yes, institution, ISS. That is not – their statement and their classification of mandate shows how they will vote at annual general meetings about the appointment of directors.
Mr Moloney: Absolutely.
Dame Sandra: So it shouldn’t be confused as guidance, in the way in which we’ve described guidance here.
Mr Moloney: Indeed. But then we see the FRC Code 2018.
Dame Sandra: That they should have sufficient time. I mean, I think that FRC code is exactly the code that I enunciated at the very beginning of our conversation about the question of do non-executives have sufficient time; are they going to provide constructive challenge and strategic guidance, offer specialist advice and hold management to account? That’s exactly – do they have enough time to do that?
Mr Moloney: Precisely, so we have the ISS with the five mandates and –
Dame Sandra: But the ISS is very different to the FRC Code.
Mr Moloney: I completely understand that, Dame Sandra, but then the FRC code is set out there, it’s Principle H and paragraph 15, essentially, the board should take into account other demands on the directors’ time.
During the consultation, in relation to this FRC Code, was it floated that there might be a maximum of posts that a director could hold?
Dame Sandra: There was a discussion, I believe, in various places around board tables, informally, about whether there was going to be a requirement.
Mr Moloney: Yes, and, in the end, there was a conclusion that there was not going to be.
Dame Sandra: That is what my understanding is, unless you tell me my understanding is misplaced.
Mr Moloney: I’m not going to say that, Dame Sandra, but should there be a statutory limit on the number of mandates or appointments which can be taken at any one time?
Dame Sandra: As someone who has, in the past, had quite a full portfolio, I would say that my personal guidance has been: do I have the time to do the job properly? And if I should choose to do that by working a week which wouldn’t be recognised by most people as a working week, then in a way that’s up to me and it’s up to my peers to decide whether or not I’m fulfilling my obligations.
I understand ISS’s point of view about counting the mandates, and they want to have a basis on whether they’re going to vote for the reappointment of directors or not. For me, that’s a rather too formulaic approach, just my personal view, but I’m passionately sure that people need to have the time, and I do think that, when boards have people who are not putting the time in, there should be very clear ways of the discussions going so that they either give up some of their portfolio or they don’t give up that particular job.
But I think that I would personally have that within the realms of the discussion of the board. But that’s a very personal view.
Mr Moloney: So you would keep the assessment of whether a person is doing their job properly as it is?
Dame Sandra: I would – and I do think boards are the best place for doing that, if they take responsibility for doing so.
Mr Moloney: Of course, that’s then dependent on the board taking responsibility in that sense, isn’t it?
Dame Sandra: It does.
Mr Moloney: Is there a case for a different and more directive approach in the public sector as opposed to the private sector?
Dame Sandra: I believe that the public sector needs and deserves directors who will do their job properly, and that requires them to give the time. I don’t see why the approach that I’ve adopted should be different for the public sector to the private sector. But others may disappear. But I think the fundamental thing is that directors have got responsibilities, and those responsibilities should be discharged.
Mr Moloney: So precisely because you are, as it were, determinant of the effectiveness of being a director relies on whether or not they are able to give sufficient time, then there should be no difference in principle between public and private on that basis?
Dame Sandra: They should give sufficient time. That, of course, isn’t sufficient. They should bring expertise, they should be good at it, and so on but, at the level of time, I don’t see that there should be a difference between the public and private.
Mr Moloney: You believe that the assessment of whether or not they are able to devote sufficient time with, of course, their expertise and other factors being, as it were, taken for granted anyway, on their appointment, but whether or not the assessment of that should be as it is now: that it’s about feedback from other directors?
Dame Sandra: I wouldn’t propose any further regulation but I must find out from my colleague what she would say.
Dr Steward: I think it’s feedback from other directors, including the executive, and the executive team will have a strong sense in the public sector as to whether they want to use non-executive directors in order to do things which might be outside the bounds of a commercial board non-executive director, like spending more time visiting services, or – but that – I do think there’s a danger of blurring the boundaries between the non-executives and the executives if you say that the non-executives in the public sector should have more time to give to the role.
I think that’s –
Mr Moloney: Dr Steward, I was focusing, rather, at that stage not on the distinction between the public and private but whether or not, in general, assuming that the acid test for whether or not a director is discharging their duties properly will be, in essence, the extent to which they can properly give time, that the assessment of that is best left as it is, which is through the review at the end of the year or at the end of the three years or at the end of the two years, whichever it is.
Dr Steward: Yes.
Mr Moloney: Thank you. That’s all I ask, sir.
Sir Wyn Williams: Thank you, Mr Moloney.
I think it’s Ms Watt next, yes?
Questioned by Ms Watt
Ms Watt: Thank you, sir.
Dame Sandra: I can’t see where I’m looking.
Sir Wyn Williams: Have we got a direct sight line?
Dame Sandra: It’s fine now, I know where I’m looking. I can see.
Ms Watt: Good afternoon – not quite, still it’s good morning, sorry.
Good morning, Dame Sandra and Dr Steward.
I ask questions for the National Federation of SubPostmasters, a Core Participant in the Inquiry, and the NFSP has 6,500 postmaster members, across 8,500 post offices in the UK. I’m going to look at your first and second reports just in brief summary and then ask a couple of questions.
In your first and second reports you highlight not just cultural failings at the Post Office but you identify the reasons for that. It seems to be embedded in the way in which the senior leadership over the years treated the employees and stakeholders, such as the postmasters. You highlight a complete failure of the Board across the years to identify risks, and a failure to be transparent, properly induct incoming Board members. You list a range of failings.
You say at section B3.3 of your second report – I’m not going to call it up, I’m just going to summarise what you say there:
“In Report 1 we described the culture as the attitudes, values and beliefs which are experienced in the company, in other words the company ethos, which is revealed in the way the company treats all its workforce and stakeholders, it’s hard to change. It is by no means unusual for strong, damaging beliefs and attitudes, a corrosive ethos, to persist unless seriously and systematically changed. Determination to effect cultural change requires that the culture is seen by the board and one hopes, at least in time, following direction by the board, the executive as seriously damaging to the company. Only then can culture be systematically addressed through changes and structures, policies, practices, as well as in addressing apparent indifference or even violations of core human values, commonly used language, and exhibited behaviour in everyday life in the organisation.”
So taking that, based on what you say in your reports, is it fair to say that it’s going to take a huge and consistent effort to effect the necessary change at the Post Office and in the Board, given what you describe?
Dame Sandra: It is a huge job. It is not to be underrated. The extent to which one can change culture has many, many, many different aspects. They need to be coordinated and, above all, there needs to be very strong commitment to sustain the work in order to change the culture.
Do you want add?
Dr Steward: I would agree that culture changes is protracted and people think it’s easy or think it’s a quick fix; there isn’t. Having said that, I think there are ways of improving governance, which can be done quite quickly, and the relationship between governance and culture is a very close one.
Ms Watt: So not necessarily instant but could be short, medium and long-term ways in which things could be dealt with?
Dr Steward: Yes.
Dame Sandra: One wants a direction of travel but the sustained emphasis and the coordinated emphasis is really important.
Ms Watt: How difficult do you think that is, or has been, when you’ve been looking back at the level of change across the Board and in the senior leadership? Does that take a difference if you’ve effectively got a revolving door?
Dame Sandra: Well, we’re dealing with a long period here. The revolving door can be a great opportunity because you get a fresh pair of eyes. The revolving door can be a very great disadvantage because people become cynical and think everyone who comes in will say they’ll do something different and won’t do anything different so I think it could be both – the revolving door could be both an advantage and disadvantage. It depends upon the commitment and the real understanding that there is the need for change.
Ms Watt: Would you agree that the real losers of the failures that you’ve looked at and outlined in the culture and governance at every turn are the postmasters and the public they serve?
Dame Sandra: I didn’t hear the beginning of the question?
Ms Watt: Would you agree that the real losers of the failures that you identify in culture and governance are the postmasters and the public they serve?
Dame Sandra: Well, I think that those people who work in organisations with the sort of culture that we describe are not working at their best and, mostly, are not going to be able to do the jobs that they, I’m sure, wish that they could do. So with regard to who is the loser, I think that’s for everyone to decide. I think the impact of having a poor culture is felt by everybody.
Ms Watt: Just changing topics slightly but following on, in terms of achieving oversight, challenge, curiosity, the things that you’ve identified in your report as being necessary, the NFSP has put forward to Government and the Post Office the idea of an oversight committee. It would be made up of a range of representative bodies, consumer champions, Government representation, and it would have a role in overseeing the Board.
Dame Sandra: Mm.
Ms Watt: The former head of UKGI, Sir Alex Chisholm, in his witness statement and recent evidence, and I appreciate you’re not across the whole of Phase 7, thought that something like this might unfortunately be necessary, given the history of what’s happened. As I say, I hear what you say about the longer-term aim being for the board to perhaps, if I can summarise, stand on its own two feet and do the right thing at the right time, but thinking about that reasoning of Sir Alex, it may be something for the medium term to steady the ship and build public confidence in the Post Office.
I’ll summarise some of the key aims for it and then ask you a question. This is very broad. It doesn’t have to be this oversight committee: an oversight committee or something like it. The key aims would be to challenge the strategy of the Post Office and the Board and ask questions about risk, to improve transparency and corporate accountability, to ensure the Government uses the powers it has to improve the culture at the Post Office and rebuild trust in the brand, and to demonstrate that a diverse group of people can work together for the needs of the Post Office Network.
So what I wanted to ask was: would you accept that something like an oversight committee could be established as one of the ways forward, in at least the medium term, in restoring public and postmaster confidence in the Post Office while the Board does indeed get to grips with the things that you’ve identified as being past failures?
Dame Sandra: You’ll find a theme from me about future change, which is that I don’t want to suggest anything which suggests that the Board of the Post Office themselves have to own these problems and find ways of solving them. I don’t want the possibility that an oversight board or would be – “Well, that’s for the oversight board”. I want the extent of responsibility and accountability to be felt deeply for doing all the things that we have described in our report.
And, for that reason, I’m not sure about the oversight committee. I understand its relationship, for example, to the dual board structure that one might have in Continental Europe, which I spoke about yesterday, and it’s rather similar to that.
However, I think – and the things you identified, challenge, improving transparency, ensuring Government use powers appropriately, demonstrating that people can work together, these are exactly the things the Board has got to do and, therefore, I am – I want to put the spotlight on the Board to do them.
However, the importance of consultation, the importance of listening, is so great that I do think that one could begin to look at something like the present arrangements with the FCA, with Financial Conduct Authority, which – from when it was set up. There are a number of panels – there are consumer panels, market practitioner panels, market – which are required to – they’re properly appointed, their Chair reports in to the Board, they have to be listened to. And I can speak as someone who, in the previous incarnation on the Financial Services Authority, those reports that came in from the panels were extremely important.
So my view would be something within the structure which does give confidence that there is a real voice, where the – how they work is a subject for agreement. That is important. And I would personally prefer that to the notion often an oversight board which I fear may take away from the responsibilities of the Board itself to do the right thing.
Ms Watt: So there could be an adaptation or some of the principles could be adopted and looked at how that could be introduced?
Dame Sandra: I’ve described how I think it might be done and I think there are models with other public bodies which put those into their governance.
Ms Watt: Just thinking about something you mentioned there in relation to listening, and just the final topic that I have, and looking at some examples – this is looking back a little bit – in relation to the Board and the ways in which it has, in the more recent past, tried to improve the optics, if I might put it like that, by creating the role of Postmaster NEDs. But in their Inquiry witness statements and in their oral evidence, again, Phase 7, and appreciate you haven’t seen all of that, Mr Jacobs, one of those Postmaster NEDs, in his witness statement said:
“Mr Ismail and I have raised issues in meetings and made requests that do not seem to result in action. As set out above, we had to make several requests for updates on Past Roles and Project Phoenix before we received satisfactory updates. This creates the impression that Mr Ismail and I are an annoyance to the Post Office Board. My impression is that the Board would prefer a more passive Postmaster NED not challenging decisions and Senior Executives directly.”
Now, that’s the recent past. So it would appear not very much listening, according to them, is going on. What I wanted to ask you, and you mentioned also yesterday you talked about conflicts of interest, and of course that can arise with directors’ duties, but would you agree that, having the Postmaster NEDs, the Post Office still needs to ensure they use other routes such as representative bodies for postmaster engagement and obtaining postmaster views, in other words those NEDs can’t be the only word on postmaster views to the Board?
Dame Sandra: I would agree.
Ms Watt: Thank you. Those are my questions.
Sir Wyn Williams: It’s Mr Casey now, is it?
Mr Casey: Yes, it is.
Sir Wyn Williams: Have you got a proper side to everyone, Mr Casey?
Mr Casey: I can see them both now, yes.
Sir Wyn Williams: We can hear you clearly now I think, fine.
Questioned by Mr Casey
Mr Casey: I’m going to ask some questions on behalf of Paula Vennells, the former CEO.
I’m going to ask two sets of questions. The first are questions are based on assumed facts, which I’m going to ask you to assume without asking you to accept them, on various matters. Then my second set of questions will be about the role of the general counsel.
Firstly, I’d ask you to assume that, in between Board meetings, Ms Vennells and Ms Perkins were in regular contact about the matters covered in your second report. My question is: on the assumption that that is correct, that they were in regular discussions about Second Sight Report and the prosecution case review, would that, in principle, have assisted Ms Perkins as Chairman to determine what issues should come before the Board?
Dame Sandra: As I understand the question, if we assume they were in regular contact, would we assume that that would mean that Ms Perkins was appraised of matters to been before the Board; was that the question?
Mr Casey: Well, the question is slightly more general than that, that on the assumption that they were in regular contact between Board meetings, would that contact have assisted Ms Perkins in deciding what issues should come before the Board for discussion?
Dame Sandra: I imagine it would.
Mr Casey: The next assumption I want to put to you is this: whilst Second Sight were working on the postmaster cases between 2012 and the publication of their report in July 2013, there was a core team from Post Office who were liaising with Second Sight. I want you to assume that that core team consisted of, firstly, a Senior IT Manager; secondly, a Manager from the Accounting Department of Post Office, which dealt with postmaster complaints and disputes; thirdly, a Senior Manager from Network which liaised with the Branch Network; and, fourthly, Susan Crichton, the General Counsel.
Now, you spoke yesterday of the importance of sharing knowledge horizontally across the business and my question is: on those assumed facts, would that be an example of knowledge being shared horizontally in relation to the issues covered in your second report?
Dame Sandra: If it were to exist it would be an example that there was a structure in which it was possible to share information. Whether or not that information was actually shared, I can’t say.
Mr Casey: Yes, I’m not asking you to assume that.
Dame Sandra: There is a structure there, apparently.
Mr Casey: Yes. So my next related assumption is that that same team considered the Second Sight Interim Report when it was published in July 2013, and that the information that was presented to the Executive and the Board about the Second Sight Interim Report, was derived from the work product of that team. So the question is again: would that be an example of a structure where knowledge was to be shared horizontally?
Dame Sandra: But I don’t believe we saw any evidence of that.
Mr Casey: I’m not asking you whether you source code any evidence of it; I’m asking you to assume that that was the team who, on behalf of Post Office, considered the merits of the Second Sight Interim Report.
Dame Sandra: If you’re saying to me: if it were to have been considered by people from different functions, would that have been example of multi-functional consideration –
Mr Casey: Yes.
Dame Sandra: – well, self-evidently it would.
Mr Casey: Thank you very much. I want to move on to the role of the General Counsel, please, and could we bring up WITN10010101. Is this a document you have seen?
Dame Sandra: Is this the 2015 document?
Mr Casey: Yes.
Dame Sandra: Yes, I have.
Mr Casey: Now, if we go over to the second page of this document, the first two paragraphs contain a summary of the role and responsibilities of the General Counsel. It says:
“The General Counsel is responsible for managing the Company Secretariat, Internal Audit, Legal, Risk and Compliance and Security Teams.”
Then in the second paragraph, it says:
“The Legal Team of 12 are responsibility for managing all aspects of legal risk, identifying and solving strategic and operational legal issues, and providing understandable, accurate and timely advice to the business on a very wide-ranging and changing set of complex issues, which are frequently novel and to short deadlines.”
Now, you’ve said today that you haven’t looked into the regulatory rules by which general counsel must operate.
Dame Sandra: Yes.
Mr Casey: I take it you’ve also not looked into the question of the legal duties that they will owe to Post Office as their client.
Dame Sandra: We’re – no, you’re – I have to not looked in detail at the role of the general counsel in this regard. That’s right. I should say that the first paragraph is, of course, this is the Post Office’s construction of the role of the general counsel.
Mr Casey: Yes.
Dame Sandra: Yes.
Mr Casey: What I’d just like to ask you about, though, are the expectations that the Board would have of what a General Counsel would bring to them. So, just looking at that second paragraph, it identifies three functions. The first of those is responsibility for managing all aspects of legal risk. Do you agree it would be an expectation of the POL Board that the General Counsel would collate legal risks to them?
Dame Sandra: Yes, nothing can abrogate the responsibility of the chief executive for overall responsibility. One can define the responsibility of the director of marketing, the director of strategy, the finance director, unless he or she is a member of the board, and the general counsel, one can define their responsibilities but that responsibility is held within an executive team, and the chief executive is the responsible person for that executive team. I don’t know if that’s relevant to your question but it seemed relevant to me.
Mr Casey: Thank you. My question is: would you agree that a Board of POL would have an expectation that the General Counsel would alert them to legal risks?
Dame Sandra: Absolutely.
Mr Casey: Mr Aujard, who was one of the General Counsel during Ms Vennells’ tenure, agreed with a proposition during his oral evidence that a general counsel should be proactive in identifying legal risks to the business; do you agree with that?
Dame Sandra: Indeed I do. I agree that, above all, all the executive directors, and some with special responsibility, should be proactive, creative, do their job. I completely agree with that.
Mr Casey: Would you agree that the reason for proactivity in identifying legal risks is that the GC may be aware, by nature of their profession, of risks of which a lay board and a lay executive may well be unaware?
Dame Sandra: I’m sorry, I didn’t catch that.
Mr Casey: Would you agree that the reason why a GC needs to be proactive in alerting the business to legal risks that – and my emphasis is on legal – is that the GC may well be aware, because of their profession, of risks of which a non-lawyer may be unaware?
Dame Sandra: Indeed.
Mr Casey: Now, the second role identified in this document of the GC is solving strategic and operational legal issues. Again, do you agree a board would have an expectation that that is something that a GC would do?
Dame Sandra: As I say, within the overall structure of what an executive team is, with the chief executive being ultimately responsible, I completely agree with this statement –
Mr Casey: And –
Dame Sandra: – because it’s their statement. I think it’s very important to know that this is what POL determined in 2015 that they wanted of their General Counsel and it would be reasonable for the Board to believe that what they wanted would be what they got.
Mr Casey: Obviously a general counsel may have spent their professional life in one particular area of the law. Do you think that a general counsel should, if an issue crops up that they are not familiar with, engage external counsel to assist them?
Dame Sandra: I do.
Mr Casey: Then the third role of the General Counsel set out here is to provide understandable, accurate and timely advice to the business. Can you agree that that would be an –
Dame Sandra: I do.
Mr Casey: – would be an expectation?
Do you agree a board would have an expectation that a GC who was performing these roles, unless they knew something to the contrary, would be performing them competently?
Dame Sandra: The assumption would be that an executive director, a member of a senior team, was performing their role appropriately, and that, if they weren’t, it would be picked up through performance management matters.
Mr Casey: If a board received a paper from the GC, from which it was clear that the GC had received external advice and was providing a summary of that external advice in their paper to the board, wouldn’t the assumption of the board be that that paper contained what they needed to know?
Dame Sandra: That would be a reasonable assumption.
Mr Casey: Thank you very much, I’ve no more questions.
Dame Sandra: Maybe I – since there is that document which you have kindly brought to our attention, maybe we could have it once more up? It did strike us, when we looked at it, there didn’t seem to be any mention of prosecutions.
Sir Wyn Williams: Is your point, Dame Sandra, that, in relation to something as potentially life changing for the people involved as being prosecuted, there ought to be some mention of it?
Dame Sandra: Particularly as this is 2015. Yes.
Sir Wyn Williams: Yes.
Dame Sandra: Thank you.
Mr Beer: I don’t think we know the precise date in 2015 and, therefore, I don’t think we know whether it pre or post-dated the Post Office’s decision, effectively, to cease prosecution activities.
Sir Wyn Williams: Well, no doubt, when you and I reflect upon it, Mr Beer, if we think it important, we will send an appropriate notice to the Post Office asking them to provide the date.
Mr Beer: I think we can probably narrow it down from other evidence because, in fact, this is a job spec. It is essentially the job specification for a new General Counsel, and so I think –
Sir Wyn Williams: So that I can put this in context, it’s the job specification to which Ms MacLeod ultimately responded and got the job?
Mr Beer: I believe that to be the case.
Sir Wyn Williams: Fine okay.
Mr Beer: Sir, I haven’t any questions arising. Do you?
Sir Wyn Williams: No, thank you.
So, Dame Sandra and Dr Steward, I’m extremely grateful to you both. Anyone just looking at your written evidence will know that you must have put in a huge effort to produce it in the timescales you were asked to, so I’m extremely grateful to you, and I’m extremely grateful for your oral answers over the course of yesterday and this morning. So thank you very much.
We still have about five minutes to go, I suspect, with various announcements, so I’m very happy for you to skedaddle, so to speak, or you can sit there and listen for five minutes.
Dame Sandra: We’ll stay.
Sir Wyn Williams: You’ll stay. You remind me of the jurors who like to stay even for the sentencing process. Right.
All right then, Mr Beer, over to you.
Statement by Mr Beer
Mr Beer: Sir, that is presently all of the oral evidence that we intend to call before you in the Inquiry.
As I have explained previously, at the end of some of the previous phases, to ensure that the Inquiry has obtained as full a picture of the issues as possible, Rule 9 requests were sent to a very wide pool of individuals, a wider pool than those who have ultimately been called before you to give their oral evidence.
Where the Inquiry has decided that it is not necessary to hear oral evidence from such individuals, their statements will be admitted into evidence and treated as having been read into the record. Their witness statements will be shortly disclosed to the public on the Inquiry’s website.
I should say that the fact that the statements are to be read into the record does not mean that the accounts given within them are necessarily agreed by each or any of the Core Participants. That evidence is necessarily untested by examination in this room.
So, sir, I’m going to read into the record, if I may, a series of witness statements made across the phases. Can we have, please, on the screen INQ00002029, the PowerPoint presentation.
Thank you. Essentially, sir, this identifies in each slide that I’m going to present the statements and their URNs that are to be read into the record.
Rather than me either reading the URNs out, less still reading the witness statements out, as is sometimes done in other contexts, I’m going to read in the statements across Phases 1, 3, 4, 5, 6 and 7, and that reflects the fact that, even though the previous phases have closed, the Inquiry has continued to seek evidence about relevant matters, or has been provided without conditioning for such evidence.
Can we look at slide 2, please. May we treat as read into the record, please, the witness statements of David Farry; Julie Kay, that’s Mrs Wolstenholme; Siema Kamran; John Kenneth Macaldowie; Tracy Ann Merrit; and Robert Thompson, with those URNs. They are essentially Human Impact statements or supplemental Human Impact statements.
Sir Wyn Williams: Yes, of course, Mr Beer.
Mr Beer: Thank you, slide 3, please. In Phase 3 can we read into the record the statements of Alison Clark; John Courtley; Paul Gardner; Russell Hancock; Davyd Nash; Jane Smith; and Philippa Wright.
Sir Wyn Williams: Yes.
Mr Beer: Next slide please. Phase 4, can we read into the record, please, Malcolm Macleod’s witness statement.
Sir Wyn Williams: Yes.
Mr Beer: Phases 5 and 6, there’s a lot of these: Alan Barrie; Simon Baker; Peter Batten; Sir Donald Brydon; David Cavender KC; Catherine Churchard; Jeremy Cope; Peter Corbett; David Courtley.
Over the page: Gareth Davies first statement, Gareth Davies second statement, Gareth Davies third statement; Dr Naranker Dulay; Douglas Evans; Richard Francis; Andy Furey; Roger Gilbert; William Hayes.
Over the page, please: Darren Heilig first statement, Darren Heilig second statement; Jane Hill; Jonathan Hill first statement, Jonathan Hill second statement; Andy Holt; Gareth James; Sir Sajid Javid; The Right Honourable Alan Johnson.
Over the page, please: Professor Jeffrey Kramer; Sir Norman Lamb; John Lloyd; Baroness Neville-Rolfe, her second statement; The Right Honourable Lord Peter Mandelson; Alasdair Marnoch; Tony Marsh, that’s his second statement.
Over the page: Tim McCormack; Arthur Owen (Les Owen); Laura Thompson; Sophie Underwood; Mark Underwood; Dave Ward first statement, Dave Ward second statement); Tom Wechsler; Michael Whitehead. In Phase 5 and 6, please.
Can we move to Phase 7, please. May we read into the record the statements of: Sarah Bell; Thomas Cooper, that’s his second statement; Sir Ross Cranston; Carl Creswell, his third statement; Andrew Darfoor; Brian Gaunt; Sarah Gray; Calum Greenhow, a second statement; Lisa Harrington; Sir Gary Hickinbottom; Professor Christopher Hodges; Simon Jeffreys.
Over the page please: Christopher Leach; Dan O’Mahoney first statement, Dan O’Mahoney second statement; Zarin Patel; Martin Roberts; Rachel Scarrabelotti, her seventh statement; Carla Stent; Richard Taylor; Rod Williams, a second statement; Owen Woodley; and Paul Wood. As read into the record, please.
Sir Wyn Williams: Yes.
Mr Beer: Thank you very much. I should say that, after today, the Inquiry will continue to seek evidence in pursuit of its investigation and in discharge of its Terms of Reference. Any statements that we obtain will be disclosed to Core Participants and uploaded to the Inquiry’s website.
Finally, sir, you know that we resume for oral closing submissions from the Core Participants but not from your counsel, over two days on 16 and 17 December this year.
Sir Wyn Williams: Yes.
Mr Beer: Thank you, sir.
Sir Wyn Williams: In relation to what I might call statements which will arrive from now onwards, some, if not all of those, may also, in due course, become evidence in the Inquiry but I don’t presume to convene a hearing simply so that Mr Beer can say to me “Will you read these into the record?”
It will be read into the record by my accepting them as evidence and Core Participants will be notified when that occurs.
Mr Beer: Yes, they will be sent out to Core Participants with a note to that effect, uploaded to the website. For those that come in between now and 16 December, if you’ll permit me, I might do what I’ve just done now, on the morning of 16 December.
Sir Wyn Williams: Yes.
Mr Beer: We anticipate a smattering of statements between now and then.
Sir Wyn Williams: Yes, fine.
Mr Beer: Thank you very much, sir.
Sir Wyn Williams: Well, thank you, Mr Beer.
Mr Henry: Can I just mention one thing, please, arising from that, and I do apologise, perhaps I should have actually dealt with this administratively.
In view of the volume of extra statements and appreciating that you, sir, will have to read the closing submissions before the oral submissions are made, I was wondering if I could ask for a very modest extension from Friday, 6 to Monday, 9 December for the submission of the written submissions?
Sir Wyn Williams: You mean you want to deprive me of the opportunity of using my weekend to read your statement, Mr Henry?
Mr Henry: I’m afraid so, sir.
Sir Wyn Williams: Well, I think I’ll graciously accede to that.
Mr Henry: Thank you.
Sir Wyn Williams: I think, let’s be formal now about it.
I will say, unless Mr Beer wants to contradict me, that the time for providing the written closing statement is now extended to 2.00 pm on the Monday that follows Friday, the 6th.
Mr Beer: Thank you, sir.
Sir Wyn Williams: Is that it?
Mr Beer: It is from me, sir.
Statement by Sir Wyn Williams
Sir Wyn Williams: Well, then I suppose, as they say in court, the judge gets the last word. So what do I want to say at this stage?
Well, firstly, I want to say that I am extremely grateful to everyone who has helped to make this phase run as smoothly as every other phase has done. That is a remarkable achievement, in my opinion, because it means that every phase of this Inquiry has operated as it should have done and, for that, I can only express my considerable thanks, firstly to my magnificent team, in all its aspects, which goes from lawyers, on the one hand, to the lady who uploads the documents onto the screen, and the lady who transcribes, on the other, and everybody in between.
I’d like to thank all Core Participants for the help they have afforded to me during all these phases. Without your assistance, it could not have happened in the way that it has happened.
I’d like to pay a special tribute to everybody whose has attended this Inquiry over, now, about three years, for their exemplary behaviour. Some of the evidence that we have heard, not unnaturally, has caused a degree of tension in the room, should I say, yet, despite that, people have kept themselves well under control, and have treated the Inquiry with the respect it deserves.
I say “the Inquiry” because often, I’ve just been a figure on a screen but that has not led to anybody misbehaving. So for that, I’m extremely grateful.
I want to say one thing about the closing submissions. We’ve invited those writing the closing submissions for the 16th and 17th to confine themselves to 100 pages. There is one exception to that, which I want to explain publicly so that there is no misunderstanding about it.
Mr Gareth Jenkins’ representatives have asked to be allowed to write a longer closing statement. I have acceded to that request because you may recall that Mr Jenkins’s attempts to give evidence were thwarted for various reasons over the course of the Inquiry and so his representatives were deprived of the opportunity of making closing submissions at the end of particular phases.
So I have thought it appropriate to permit them to make a longer statement because everybody else has had the opportunity to make statements as we are going along. So that’s the reason for it, if anybody says, “Why have they got 140 pages and we’ve got 100?” They all add up to roughly the same when you put them together.
Then I have two announcements to make about publications. Well, it’s one announcement, really, but about two different issues.
I have had to determine an issue raised by the Post Office about the reports which they supplied to the Inquiry from a barrister named Jonathan Laidlaw KC. That determination will appear on the website shortly after we stop this afternoon now. I have decided to do it in that way, not read it out, because it is essentially a legal document and it is much better to be read and digested rather than me sound off and drone away here for ten minutes. So that will appear shortly.
In the same document, I will invite those who are making written closing submissions to address a specific topic which I will call post-conviction disclosure. Again, it’s number of paragraphs which deal with that issue, and I don’t seek to the summarise what I will say in the document but, again, it will be a request by me that, in closing submissions, that issue is dealt with in the way that I describe in the document.
So with those words and my repeat of the thanks to everyone, I bring this session to an end. I will see you all on the 16th and 17th and, unless I am persuaded otherwise, I won’t see you again before I produce a report.
But I’ll see you on the 16th and 17th. So thank you all very much.
Mr Beer: Thank you, sir.
(12.23 pm)
(The hearing adjourned until Monday, 16 December 2024)