16 April 2024 – David Miller and David Mills
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(10.00 am)
Mr Ward: Good morning, sir, can you see and hear us?
Sir Wyn Williams: Yes, thank you very much.
Ms Price: May we please call Mr Miller.
David Miller
DAVID WILLIAM MILLER (affirmed).
Questioned by Ms Price
Ms Price: Could you confirm your name please, Mr Miller?
David Miller: David William Miller.
Ms Price: Mr Miller, you have already given evidence in Phase 2 of the Inquiry and attended the Inquiry for that purpose in October 2022. Thank you for coming back to the Inquiry to assist it in its work in Phases 5 and 6. As you know, I will be asking questions on behalf of the Inquiry.
You should have a hard copy of the second witness statement provided by you to the Inquiry in a bundle in front of you at the second tab. It is dated 28 February this year; do you have that?
David Miller: I do.
Ms Price: If you could turn to page 16 of that, please. Do you have a copy with a visible signature?
David Miller: I do.
Ms Price: Is that your signature?
David Miller: It is.
Ms Price: I understand that you have a correction you wish to make to the statement in light of recent disclosure; would you like to tell us what that correction is?
David Miller: Yes, in paragraph 51, I make a statement about the IMPACT Programme and disclosure this week has reminded me that I was, in fact, on that Board. So I was on the IMPACT Board.
Ms Price: With that correction made, are the contents of that statement true to the best of your knowledge and belief?
David Miller: Yes.
Ms Price: For the purposes of the transcript, the reference for Mr Miller’s second statement is WITN03470200 and, for completeness, the reference for Mr Miller’s first statement provided for Phase 2, which already appears on the Inquiry’s website, is WITN03470100.
My questions today, Mr Miller, will focus on the matters covered in your second statement relating to Phases 5 and 6, although I may refer back to your Phase 2 evidence where it is relevant to those Phases 5 and 6 issues.
Starting, please, with the roles you have held with the Post Office, you helped with this when you gave evidence in Phase 2 but, given that it was some time ago, I hope you’ll forgive me for going over this ground again in brief. You joined the Post Office in 1970; is that right?
David Miller: Correct.
Ms Price: You moved to Post Office Counters Limited in 1983?
David Miller: Correct.
Ms Price: In 1995, you joined the Horizon project –
David Miller: Correct.
Ms Price: – and that was as a Deputy Director at that stage. You were appointed Horizon Programme Director in 1998; is that right?
David Miller: Correct.
Ms Price: In Phase 2 it was your evidence that you had delivered a nationwide project for the Post Office a few years before but that you did not have a technical background; is that right?
David Miller: That is right.
Ms Price: You say in your second statement at paragraph 3 that you left the Horizon Programme Director role at the turn of the year 1999. By that, do you mean 1999 into 2000?
David Miller: I do.
Ms Price: Your oral evidence in Phase 2 was that you left the role in early 2000 and it may be that a document we’re going to look at later this morning will assist with the timings of that. You went from the Horizon Programme Director role into the role of Managing Director of Post Office Network; is that right?
David Miller: That’s correct.
Ms Price: A position you held until July 2001?
David Miller: Correct.
Ms Price: Your responsibilities in this role included you having responsibility for the Operations Directorate and the Automation Directorate; is that right?
David Miller: There was some others as well but, yes, those two, certainly.
Ms Price: Is it right that Post Office Security and Investigation Operations fell under the Operations Directorate?
David Miller: Yes, at that stage, for the 18 months they did, yes.
Ms Price: Is it right that the Horizon system, among other systems, fell under the Automation Directorate?
David Miller: That’s correct.
Ms Price: Who was it who reported to you on Post Office Security and Investigations Operations when you were Managing Director of Post Office Network?
David Miller: I think it was Alan Barrie, as Operations Director, though I’m not absolutely sure.
Ms Price: Who was it who reported to you on any issues relating to the Horizon system when you were Managing Director of Post Office Network?
David Miller: David X Smith, if I can put it like that.
Ms Price: The IT David Smith?
David Miller: The IT David Smith.
Ms Price: Did you report to Stuart Sweetman in this role?
David Miller: I did.
Ms Price: Is it right that you did not sit on the board as Managing Director of Post Office Network?
David Miller: That’s quite right.
Ms Price: Although you held the role for 18 months, you say in your statement that you were on sick leave for the last six months of that time?
David Miller: That’s true.
Ms Price: At paragraph 10 of your second statement you say that you returned to work in August 2001?
David Miller: That’s correct.
Ms Price: At this point, is that when you became Operations Director of the newly reconstituted Post Office Limited?
David Miller: That’s correct.
Ms Price: In this role, you initially reported to the Managing Director of Post Office Limited; is that right?
David Miller: I think I reported to Stuart Sweetman.
Ms Price: In the Operations Director role?
David Miller: When – yes, and then I think Stuart Sweetman left and Paul Rich took over temporarily as Managing Director of Post Office Limited before David Mills arrived.
Ms Price: David Mills arrived as Chief Executive in early 2002; is that right?
David Miller: That’s correct.
Ms Price: After which point you reported to him?
David Miller: I did.
Ms Price: You say in your statement that, when you were Operations Director, you were responsible for the Retail Line, including subpostmaster relations and for cash distribution; is that right?
David Miller: That’s correct.
Ms Price: But you also had a role helping David Mills to understand the business and assisting in recruiting new directors as required?
David Miller: Yes.
Ms Price: As Operations Director, you sat on the Board, the Post Office Limited Board; is that right?
David Miller: That’s correct.
Ms Price: So you were an executive member of the Board from the point of taking up this role in 2001. Just to pin down the point at which you became a member of the Board, you say in your second statement at paragraph 8 that you were a member of the Board from November 2001. There appears to be a gap between you taking up the Operations Director role in August 2001 and that point; is that right?
David Miller: Yes, there is.
Ms Price: Why was that?
David Miller: I’m not sure, but the – it may be to do with the precise setting up of the date of Post Office Limited, when it was reconstituted.
Ms Price: You say in your second statement at paragraph 11 that, as the scope of the changes needed became apparent, David Mills changed your job title to Chief Operating Officer. Are you referring here to changes needed to the business –
David Miller: I am.
Ms Price: – to Post Office Limited? You say in that paragraph that you thought that this happened in about 2004. I would just like to look at some Board minutes, please, from 2002, which were sent to you for the purposes of preparing your second statement, which might assist with dating this change in role to the Chief Operating Officer. Could we have on screen, please, POL00021479.
These are the minutes of a meeting of the Post Office Limited Board on 24 May 2002. We can see David Mills in attendance as Chief Executive and then two people down we have your name and title, Operations Director, David Miller. So, at this point, it appears that your title was still Operations Director; would you agree?
David Miller: Yes, indeed.
Ms Price: Could we have on screen, please, POL00021480. These are the minutes of the Post Office Limited Board meeting which took place later the same year on 26 September 2002. Looking about halfway down the page, we see your name next to “Apologies” – a little further down, please – David Miller, and your role described as Chief Operating Officer. It appears from this that you held the role of Chief Operating Officer by September 2002 rather than 2004 –
David Miller: Yes, I would –
Ms Price: – would you agree with that?
David Miller: – I would go with the minutes, obviously.
Ms Price: On the face of these minutes, there is no person listed as being Operations Director. Was someone else given the role of Operations Director when you became Chief Operating Officer or was the role subsumed by the Chief Operating Officer –
David Miller: The role was subsumed.
Ms Price: The Board minutes the Inquiry has seen suggests that, by February 2005, Ric Francis had been appointed as Operations Director and was attending Board meetings as well as you as Chief Operating Officer. Can you help with the circumstances of Ric Francis’ appointment and the remit of his role?
David Miller: Yes, Ric Francis was recruited to run IT, so he was IT Director. But as David Mills reviewed responsibilities, he felt that it would be beneficial if Ric took on some of my operations responsibilities, particularly cash, and, therefore, my role was changed a little bit in order to accommodate that.
Ms Price: You say in your second witness statement at paragraph 11 that the Chief Operating Officer role focused on some of the major changes needed to stay solvent. Is that for Post Office Limited to stay solvent?
David Miller: Yes, that’s true.
Ms Price: What was the financial position of Post Office Limited when you became Chief Operating Officer?
David Miller: We were running at a loss and we were trying to put ourselves in a position where we didn’t run at a loss. The complicating factor was that to run the rural network needed a subsidy from Government and there was a lot of work on what size the rural network ought to be and how much money we would therefore require from the Government to run it.
Ms Price: What was your brief from David Mills as to the priority to be given to improving the financial position of Post Office Limited?
David Miller: My first priority was to do a project which was called Network Reinvention, which was, in fact, closing – originally 3,000, I think, in the end, it was 2,500 of the non-rural post offices. The Government had supplied a sum of money, 150 million, voted through Parliament, to compensate subpostmasters and it was a question of working out where the people were who wanted to go, where we needed post offices and trying to make a best match of the two.
Ms Price: You say that the Chief Operating Officer role focused on these major changes in relation to staying solvent. Were you briefed by Mr Mills on any other priorities for you as Chief Operating Officer when you took up the role?
David Miller: No, he focused very heavily on the need to get the company into a solvent position.
Ms Price: So that was the overriding priority at that time?
David Miller: Yes, it was.
Ms Price: You say in your statement that you reported to David Mills until he left the organisation in late 2005; is that right?
David Miller: That’s correct.
Ms Price: When he left, you became temporary Managing Director of Post Office Limited for a two to three-month period, until Alan Cook arrived as David Mills’ replacement?
David Miller: Yes, it was until Alan Cook arrived, whatever that period was.
Ms Price: You then reported to Alan Cook until you retired on 28 July 2006; is that right?
David Miller: Correct.
Ms Price: Presumably reporting to Alan Cook as Chief Operating Officer once again?
David Miller: Correct.
Ms Price: Before we come on to the detail of your involvement in the issues being explored in the current phases of the Inquiry, I’d like to address, please, the question of your understanding of your duties as an Executive Director on the Board. When you were appointed as a Board member, were you provided with any induction or training covering the nature of your duties as an executive member of the Board?
David Miller: Yes, we did a day session with our solicitors, Slaughter & May, but that focused very heavily on the issues regarding company profit and loss and on our duties as Board members, if we felt the company was not going to be able to pay its creditors in the future.
Ms Price: What was your understanding of the Board’s accountability for the oversight of operational performance?
David Miller: That we were responsible for that.
Ms Price: What did you understand your accountabilities to the Chief Executive Officer to be when you were Operations Director and then Chief Operating Officer?
David Miller: I was responsible for the areas that I had been allocated, for – I was responsible for whatever targets were agreed between me and the Chief Executive and I was responsible for – no, I think that’s it. Sorry.
Ms Price: Would you agree that the identification analysis and management of risk is central to running a company?
David Miller: I would.
Ms Price: Do you agree that it is a vital area of board oversight and of fundamental importance?
David Miller: Yes.
Ms Price: Do you agree that identifying, analysing and managing risk was a fundamental part of your executive responsibilities?
David Miller: Yes.
Ms Price: Would you accept that, in order to discharge your responsibilities in relation to risk, both as an executive and a Board member, you needed to be proactive and curious about possible risk areas?
David Miller: Yes.
Ms Price: Where you identified a risk when carrying out your executive role, what were the mechanisms in place for you to raise that risk, first with the CEO and, second, with the board?
David Miller: I had one-to-ones with the CEO, and I would expect risks that I identified to be raised there. But that we – the Board had a risk register and there was a process by which actually anybody in the company, certainly Board members, could put items on the risk register. These would then be assessed by Finance and then they would appear on a regular basis on the risk register as a risk defined and what mitigation action was required.
Ms Price: Do you consider that the culture at the Post Office was supportive of executives reporting concerns about risk to the CEO and to the Board?
David Miller: Yes.
Ms Price: Why do you say that?
David Miller: Just that it wasn’t just the CEO, it was Sir Mike, who the Inquiry has seen, set up a Risk Committee and he was keen that we should be looking across the areas, and identifying risk, as well as David Mills. So it wasn’t just at CEO level, it was at Chairman level as well.
Sir Wyn Williams: Ms Price, there’s still a document on my screen, can that come down?
Ms Price: Apologies, sir. That can come down. Thank you.
When you were in directorship roles, was your remuneration fixed or performance based?
David Miller: Largely fixed but there was a performance element in it.
Ms Price: How was your performance measured?
David Miller: There would be targets agreed at the beginning of a financial year and then those targets would be reviewed with the Chief Executive at one-to-ones throughout the year and, at the end of the year, conclusions would be made as to whether targets had been met or not.
Ms Price: Targets for what?
David Miller: Costs of running the business. Some targets for feedback from staff on what they felt about the business. I’m sorry, time is not helping me here but there were a number, is all I will say. Oh, I’m sorry, things like quality of service, in terms of – particularly at direct office counters – it was an issue that was fairly big.
Ms Price: Did you receive bonus payments whilst you were in any of your director roles?
David Miller: I did.
Ms Price: How was the level of bonus payment determined?
David Miller: That was done – I think there was a Remuneration Committee but that seemed to be taken – decisions on that seems to be taken outside the main Board.
Ms Price: I’d like to turn, please, to the knowledge of the Horizon system issues in the run-up to Legacy Horizon rollout, gained from your time as Horizon Programme Director which you brought to your subsequent roles. I don’t intend to go back over your Phase 2 evidence in any detail but I would like to draw together some key points, which I will take one at a time. If, at any point, you want to look at the transcript of your oral evidence, we can bring that up on the screen to assist you. Just say if you’d like me to do that.
First, you told the Chair you were aware of issues with the cash accounts in March 1999, arising from the end-to-end testing which had been done. In particular, there had been incorrect cash account mapping which would have caused misbalancing cash accounts in all offices, had the system been in operation. This resulted in an entry on a Known Problem Register, and your position in Phase 2 was that this was an issue which was being dealt with. Is that a fair summary of your evidence on the March 1999 end-to-end testing reports?
David Miller: That is.
Ms Price: Second, after the live trial of the Horizon system in May 1999, you were made aware that subpostmasters were having serious problems with the software, especially the balance, and this was explained to you at an NFSP meeting, attended by you on 11 June 1999, and at a meeting at around the same time, attended by a large number of subpostmasters in the Northeast. Again, is that a fair summary of your evidence on your awareness of issues being experienced by subpostmasters trialling the system?
David Miller: Yes.
Ms Price: Third, you were asked about the minutes of a Board meeting which had taken place in July 1999 and which you attended. The minutes recorded an assessment attributed to you that the Horizon system was robust and fit for purpose. You were asked about this by both Counsel to the Inquiry and by Mr Moloney on behalf of the clients he represents. Is it fair to summarise your evidence on this point in this way: you would not have told the Board that the Horizon system was robust and fit for purpose because, at that time, it was not either of those things?
David Miller: That I would not have done it?
Ms Price: Your evidence – and we can go to your responses to both Counsel to the Inquiry and to Mr Moloney but your evidence was that it was not correct that Horizon was robust and fit for purpose?
David Miller: No, that – I remember that exchange from Mr Moloney, and I should not have said that it was robust.
Ms Price: What is your position, then, on whether you did say that?
David Miller: I can’t remember the Board meeting but I make the assumption that the Board minutes are correct. So I did say it.
Sir Wyn Williams: Sorry, Mr Miller, I want to be clear about this. You don’t actually remember what you said, you are prepared to assume that the Board minutes are correct and, if they were correct, you should not have said what is recorded; is that it?
David Miller: I’m afraid so, sir, yes.
Sir Wyn Williams: Fine, thank you.
Ms Price: Fourth, in August 1999, there were ongoing concerns about transactions being completely and accurately recorded, in particular those raised by Acceptance Incident 376, which had not been resolved by the time you left the Horizon Programme Director role. Is that a fair summary on that point?
David Miller: Yes.
Ms Price: There are just two documents I would like to go to from the final months before you left the Horizon Programme Director role, given their importance. Could we have on screen, please, POL00090839. Going to the second page of that document, please, this is a letter to you dated 23 August 1999 from Ernst & Young and, scrolling down a little, please, we see here:
“Dear Mr Miller
“Horizon Acceptance Testing
“As auditors of the Post Office we have been asked by Post Office Counters Limited to provide you with our views in respect of certain accounting integrity issues arising from tests performed by POCL on Horizon data in the live trial.
“We have not performed any validation of the issues or testing of the data. Our views expressed in this letter are based on information provided to us by [Post Office Counters Limited] resulting from their tests. This letter is not intended to provide any assurance over any data in the live trial or over any results arising from tests of such data.
“The live trial is limited to 323 outlets.”
The next paragraph:
“The following issue, as described to us by [Post Office Counters Limited] gives us concern as to the ability of [Post Office Counters Limited] to produce statutory accounts to a suitable degree of integrity. We understand that [Post Office Counters Limited] has attributed a severity rating of ‘High’ to this matter.”
There is then reference to incident 376, that’s Acceptance Incident 376, and a reference to data integrity and the last sentence there:
“At present this control test is showing discrepancies in that certain transactions do not record the full set-off attributes and this results in the whole transaction being lost from the daily polling.
“We are also informed that an incident has also occurred where transactional data committed at the counter has been lost by the Pathway system during the create of the outlet cash account and has not therefore been passed to TIP in the weekly cash account subfiles.
“Both types of incident result in a lack of integrity on each of the two data streams used by [Post Office Counters Limited] to populate its central accounting systems. We understand that the cash account data stream is the primary feed for [Post Office Counters Limited’s] main ledgers and client reconciliation processes.”
Just going over the page, please. We see the second paragraph there:
“It is fundamental to any accounting system that it provides a complete and accurate record of all transactions. These discrepancies suggest that the ICL Pathway system is currently not supporting this fundamental.”
On the first page of this letter, please, going back to that first page – and scrolling up – there is some handwritten annotations from someone with the initials “DWN”; is that you?
David Miller: That is.
Ms Price: You say this:
“Please ensure that these issues are fully addressed during the remaining acceptance process. Keep me in touch.”
1 and 2: 2 appears to be Keith Baines and can you help with who the first recipient of your comments is?
David Miller: That’s right.
Ms Price: Sorry, who is the first recipient there?
David Miller: Bruce Macniven, I’m sorry, and he was a Deputy Director of the programme.
Ms Price: You accepted in Phase 2 that this assessment by Ernst & Young and the potential implications for the company accounts was very serious indeed.
David Miller: Yes, can I – could I just say, though, that we – Stuart Sweetman and I, Stuart Sweetman was my boss and on the board of Post Office. At the time, he was the sponsor of the project. We discussed what our relationship ought to be with the auditors when we ought to start informing auditors about what we were doing, and this was part of the process to get Ernst & Young, who are our auditors, onside and understanding what we were doing, so that when they came to audit things, they would have had forewarning.
Ms Price: One of the last documents that you were taken to by Counsel to the Inquiry during his questioning in Phase 2 was a document termed “The Third Supplemental Agreement”, a document which you said at the time you remembered. Could we have that on screen, please. The reference is FUJ00118186. The date of this document is 19 January 2000, which is after, I think, you say you left the Horizon Programme Director role but, if we go to the last page, please, that’s page 36, we can see that the agreement was signed by you on behalf of Post Office Counters Limited witnessed by Keith Baines. Can you help with what role you were in when you signed the document?
David Miller: Yes, I was still Horizon Programme Director and I was running that concurrently with setting up a new business unit as the Managing Director of Post Office Network.
Ms Price: How long were you running those two roles concurrently?
David Miller: Until David Smith was appointed as the Automation Director.
Ms Price: You accepted, when giving your Phase 2 evidence, that this agreement acknowledged that it was not always possible to get to the root cause of an imbalance or to make the appropriate correction; do you recall that?
David Miller: I don’t but I will accept it.
Ms Price: Could we have on screen, please, Mr Miller’s second statement again, the reference is WITN03470200, and it’s the second page of that, please. You deal at paragraph 4 here with your view of things at the point you left as Horizon Programme Director. You say at paragraph 4:
“At this stage my view of Horizon was that it was a new, very large and complex system which was under constant review and improvement by Fujitsu. I never considered Legacy Horizon perfect but thought that any problems with the system were subject to control procedures leading to resolution.”
Then going, please, to paragraph 7. Over the page, please:
“After stepping down as Horizon Programme Director I did not brief anyone from the POL or RMG Boards, Investigation Teams, Legal Teams or any other person responsible for the conduct of prosecutions or civil proceedings because (1) I thought that any problems with the system were subject to control procedures leading to resolution and (2) I was unaware of the full extent of the Horizon issues until I had read the judgments I have referred to”.
Those are the judgments you referred to on the previous page of Hamilton & Others v the Post Office.
Can you help, please, with what you mean by “control procedures leading to resolution”?
David Miller: That there was a process in place of reporting errors or problems that had helplines on both the Post Office side and particularly on Fujitsu and that they were processing as time went on. As things arose, they would be put into the system, processed, resolved. That was my view of what was going to happen.
Ms Price: So you’re not saying here that, when you left the programme, you thought there was a complete fix in the pipeline to eradicate cash account inaccuracies; you were saying that you understood that, when these occurred going forwards, there would be procedures in place to resolve them; is that right?
David Miller: Yes.
Ms Price: What was the basis for this understanding?
David Miller: Well, the basis was understanding what helplines had been set up and what the procedures were.
Ms Price: When you say at paragraph 20 of your second statement that you believed that issues were being addressed going forwards, is this another reference to your understanding there would be control procedures in place?
David Miller: It is, yes.
Ms Price: That document can come down now. Thank you.
In Phase 2, the Inquiry heard evidence from Tony Oppenheim, the Finance and Commercial Director of ICL Pathway, to the effect that the Third Supplemental Agreement and the subsequent operational processes acknowledged that there would be occasional mismatches, given the scale of the system. His assumption was that the Post Office would look at these and, certainly at the outset, give postmasters the benefit of the doubt. He said that ICL Pathway needed feedback when these things occurred in order to find errors in the system and to fix them.
Were you aware that ICL Pathway’s understanding was that, where mismatches arose, Post Office would look into these and, certainly at the outset, give postmasters the benefit of the doubt?
David Miller: No.
Ms Price: Could we have on screen, please, FUJ00098040. This a PowerPoint presentation produced by David Smith, that’s IT David Smith. It provides a history of Horizon and Horizon Online. The date, on its face, is September 2010, some years after you retired, so you would not have seen this at the time. There are two parts of it, however, that refer to your involvement in Horizon issues so I’d like to take you to those. Starting, please, with page 21 of this document, this slide deals with Post Office Counters Limited’s views on the agreement reached with ICL Pathway. It reads:
“The leaders at POCL felt they had been shafted by a Government/Pathway stitch up
“Whilst the Group Board signed up to the deal
(Sunday afternoon in the CEO’s kitchen!)
Ms Price: “They did so with a gun pointed at their head – ‘sign this or all the other things you want you can forget’
“Policy felt stuffed by Pathway with terms that were imposed
“Dave Miller, the MD of Post Office Network, said at the time ‘I have the same feelings about Pathway as I would have for the man who had just shoved 15 inches of bayonet up my posterior’
“No statement could more adequately express the attitude of Post Office towards Pathway”?
Do you recall making the comment which is in quote marks there?
David Miller: Absolutely not.
Ms Price: Are you saying that you didn’t make that comment?
David Miller: I didn’t make that comment.
Ms Price: Does the sense of feeling described in relation to the Post Office’s feelings towards Pathway accord with your recollection?
David Miller: The – all the circumstances around the departure of the Benefits Agency and the deal that the Government had to do – felt it had to do – and pressure that was put on the Post Office were partly known to people at my level. But I think we felt, as a company, that we needed to carry on with the project and we needed to work with Pathway/ICL/Fujitsu, and the sort of negativity about it, I think there was a certain amount of resentment, perhaps understandably but, I mean, those words, a lot of that, is entirely unprofessional.
What we were trying to do was to make the thing work, to get it rolled out, to get Horizon in for the whole company, including subpostmasters, ironically.
Ms Price: Moving, please, to page 32 of this document. This slide covers the pilot and the rollout. Then, over the page, please, we have this:
“In parallel Dave Miller, PON MD and Mike Stares who headed up Pathway at this time resolved to improve the relationship …”
There are number of things listed there:
“Series of workshops with a facilitator to build better relationships between the parties
“The success of the rollout and the development of CSR+ helped to create more trust between the parties
“However the relationship was still crusty
“Post Office wanted its pound of flesh to make Pathway hit SLAs for which there was no business impact if they were missed
“But which gave POL the right to terminate if they were not met within a given time frame.”
Just looking at of the content of this slide, does this reflect you having some continuing involvement in the Horizon Programme when you were Managing Director of Post Office Network?
David Miller: Yes, in the sense that we – I wanted us to work with Pathway in a constructive way to get things done, and so that would be true. But this document that I have been shown before, it had no official position with regard to anything that was done by Post Office Network. This was written by somebody in 2010. So I’m – there are some elements of truth in this document, but there’s an awful lot of writing it up for the purpose of, if you like, the ego of the person who wrote the document.
Ms Price: Could we have on screen, please, WITN05970123. This is a document authored by Jeremy Folkes and is dated February 2000. It’s title is “BA/[Post Office Counters Limited] and Horizon, A Reflection on the past five years: Lessons, Issues and Key Points”.
Going to page 2, please, the introduction explains the purpose of the document.
“During the last five years of the various incarnations of the BA/POCL and the Horizon programmes, there has been a considerable turnover of staff within the POCL team, leading at times to a lack of continuity and certainly a loss of key knowledge and accumulated wisdom.”
In the next paragraph:
“This document is intended to help mitigate the effect of the loss of a further batch of staff. It evolved from the concept of producing a general ‘brain-dump’ document, in addition to more usual format handover for work-in-progress and the like.
“This document has been produced for Dave Miller, the Managing Director of Post Office Network Unit, the business unit which owns Horizon on behalf of the Post Office.”
Do you recall receiving this document at the time it was produced for you?
David Miller: I recall asking him to do it.
Ms Price: Section C of this document covers future risk areas. Going to page 21, please, Section C6 is titled “Some technical capability still to be proven”, and the introduction to this section says this:
“This section outlines a number of technical areas which it would be wise to ‘watch’, although they are not the subject of any outstanding Acceptance Incidents. They should not be taken as predictions of which are yet to go wrong, more as a list of possible areas of weakness which could ‘trip us up’ in the future, especially as the number of offices increases at the planned rollout rate up to the target full population.
“There is an argument, based on the same principles as used to justify, albeit not to great effect, the need for assurance during development, that states the need for ongoing assurance during the live operation of the service and associated system. We do not appear to have any contractual basis to seek such involvement, however we may wish to negotiate with Pathway at the relevant time to seek some confidence that these issues are indeed under control.”
Then a number of issues are raised. At C6.2 there is the effect of slow replication, the last paragraph on this page reading as follows:
“However, as a result of the proper handling of slow replication – ie the effect should be benign – these delays these scenarios can go unnoticed (and therefore unfixed, if there is some underlying problem) for a period of time.”
Other issues flagged – going over the page, please – were communication failures, integrity during failure conditions, scalability, performance over time, and system management. Can you help with what you did with this document and any steps which were taken based on the content of it?
David Miller: I, as far as I’m aware, I would have given it to David Smith, who was Director of Automation. What I would have done, like to have done, would have been to organise a meeting in the company with Jeremy. Jeremy was about to leave, by the way, which is why I asked and I thought he had all these years of experience and we ought to understand. Unfortunately, the changes that were taking place meant that, as far as I am aware, that meeting didn’t happen. So this was, if you like, put into our company archive and I suspect that some of the good stuff that is in here was not picked up.
Ms Price: Could we have on screen, please, Mr Miller’s second statement, paragraph 5, please, which is page 2. You say here:
“I did not have any involvement with/oversight of such issues …”
This follows on from your discussion of issues with Legacy Horizon when you were Horizon Programme Director. You say:
“I did not have any involvement with/oversight of such issues after I stepped down programme director.”
Just thinking of the documents we’ve just been to, does this remain your evidence, notwithstanding the work you asked Jeremy Folkes to do and the slide contents that we looked at, or do you consider that work different in character?
David Miller: The two things that you have just quoted to me, I would consider that were different in character. I would have liked to have taken a lot more notice of what Jeremy said and I had that, as it were, on hand early on. The other thing that you showed me, I had not become aware of until relatively recently, and that was done in 2010. So I distinguish between the two.
Ms Price: Turning then, please, to criminal investigations and prosecutions. When did you first become aware that the Post Office criminally investigated and prosecuted postmasters for criminal offences arising from alleged shortfalls in branch accounts?
David Miller: I became aware of what the Post Office did in terms of prosecutions in 1970, when I joined the company, and we had a session with the security part of the company, the Post Office Investigation Division, for management trainees, and they made it very clear that that was something the company did. They were talking primarily then, because I was in Royal Mail, about Royal Mail but they did say that this applied to subpostmasters.
Ms Price: After the rollout of Horizon, the branch accounts were generated by the Horizon system; that’s right, isn’t it?
David Miller: Yes.
Ms Price: Apparent shortfalls were identified on the basis of a mismatch between, for example, what the Horizon printout said should be in the till and what was actually in the till?
David Miller: Yes.
Ms Price: Would you agree with that?
So does it follow that once you were involved in the Horizon rollout, you were aware that prosecutions were being pursued using data generated by the Horizon IT System?
David Miller: I wish it had been as crystal clear to me as that, but I think I have to say that I would have been aware, yes.
Ms Price: Who did you understand was carrying out investigations which led to those prosecutions?
David Miller: Post Office Investigators.
Ms Price: Who did you think was responsible for the decision of whether to prosecute?
David Miller: Some – sorry, some of this is what I have learnt through my attention to this Inquiry. But there was a mix between our lawyers and the Post Office Investigation Division, in terms of who would decide about prosecutions.
Ms Price: Did you know that at the time, that it was a mix between the lawyers and the Investigation Team?
David Miller: When I say a mix, I think this varied over time. From what I’ve heard, I think this varied over time, with some – sometimes the lawyers being in charge, sometimes the Investigators being in charge, and I probably wasn’t as aware of that position at the point in time you are talking about.
Ms Price: What did you understand the role of Royal Mail Group’s Criminal Law Team to be in relation to prosecutions?
David Miller: They were – as far as I was concerned, they were the Criminal Law Team of the company. Post Office Limited did not have a law – lawyers. It used group lawyers, and they were the people who actually made the decisions, gave the advice, and so on.
Ms Price: At the time, to what extent did you consider the position of the Post Office to be unusual, being simultaneously the alleged victim, the investigator and prosecutor?
David Miller: At the time, I accepted it as part of what the company did. Subsequently, I can understand how that is a potential conflict.
Ms Price: At the time that you were part of the Executive Team and a member of the Board, did you recognise that there were risks inherent in that position?
David Miller: Not sufficiently.
Ms Price: Do you accept now that these were foreseeable risks, taking one example, that the interests of the business, in particular financial interests of the business, might improperly influence the conduct of investigations and prosecutions?
David Miller: I can see now, looking back, that that could well be the case.
Ms Price: Why do you think it was you didn’t see that at the time?
David Miller: I think – and, you know, this is hard – I think, having come through a system where the Investigation Division and the Legal Division had always acted in an autonomous way, I think it was very difficult to see through that at the time.
Ms Price: Knowing what you did about the potential for incomplete or inaccurate transactions to be recorded by the Horizon system, setting aside the control procedures which you understood would be in place, there was a further particular risk, wasn’t there, that unreliable data might be used in support of prosecutions; do you accept that?
David Miller: I would accept now with what I know, yes.
Ms Price: Did you recognise that at the time?
David Miller: I didn’t.
Ms Price: Do you think that is a risk that you should have recognised at the time?
David Miller: Looking back from here, yes.
Ms Price: Was this a risk that the board as a whole identified at any point before you retired?
David Miller: Not as far as I’m aware.
Ms Price: You refer twice in your statement to your working relationship with Tony Marsh, who was the Post Office Limited Head of Security, at paragraph 14 and at paragraph 55. Could we have paragraph 14 of Mr Miller’s second statement on screen, please. It is page 5.
Looking, please, at the last sentence in paragraph 14 – or the last two sentences:
“I have no memory of a POL/RMG ‘problem management team’ [I think that refers to the part above, apologies). POL/RMG Security worked to Group although they were described as ‘embedded’ in POL. I met Tony Marsh regularly for approximately an hour and he had access to me at any time.”
Then going, please, to page 13 of the statement, to paragraph 55, you refer to a document there and we’ll come on to that:
“… Tony Marsh worked for the Group Security Director with a dotted line to me. He was designated Head of Security in POL. I met him regularly and he had access to me at any time if I was available. I had a good working relationship with him and I trusted him.”
The document you refer to here are the minutes from the Post Office Limited Board meeting on 20 August 2003. The regular meetings you had with Tony Marsh – the ones you refer to in those paragraphs we’ve just looked at – did these start when you took up the role of Operations Director in 2001 or was it later?
David Miller: I honestly can’t remember. But there is some – there is still some confusion in my mind because Tony Utting, who was – and this – he was familiar to this Inquiry – he had a line of reporting in the Finance function, so he worked, according to his testimony, through to Rod Ismay who worked for Peter Corbett.
During the time when Tony and I worked together, he actually worked for the Group Security Director with what was known as a dotted line to me. So it was a confused situation, looking back on it.
Ms Price: It was Tony Marsh’s evidence to the Inquiry that, at least at one point, he reported to you. Would you accept that that is correct, that de facto –
David Miller: I don’t – I’m sorry, I do not recall that.
Ms Price: Could we look, please –
David Miller: Except, I’m sorry, if I may just – when I was Managing Director of Post Office Network, he was in a line working to somebody who worked to me.
Ms Price: The August 2003 board minutes that you refer to at paragraph 55 – and perhaps if we could have those up on screen. That’s POL00021483. Looking at page 8, please – scrolling down, please – we see here an item “Delivering Security Standards in the Agency Branch Network – Strategic Choices”. Under this:
“Tony Marsh presented the security paper to the Board, on behalf of David Miller.”
Can you help us with why he was presenting this security paper to the Board on your behalf, if it wasn’t that he was reporting up to the board through you?
David Miller: I can’t, I’m sorry.
Sir Wyn Williams: Ms Price, am I right in thinking that Mr Miller was present himself?
Ms Price: Yes, sir. If we can go to the first page of that document.
Sir Wyn Williams: So does that jog your memory, Mr Miller? For some reason, Mr Marsh is making a presentation on your behalf.
David Miller: It doesn’t, I’m sorry.
Sir Wyn Williams: Thank you.
Ms Price: Setting aside the strict reporting lines, the activities that were conducted under the remit of Post Office Head of Security would have fallen under Operations, would they not?
David Miller: Yes.
Ms Price: Those activities included criminal investigations and, to the extent that the Security Team had involvement in prosecutions, their involvement in prosecutions brought by the Post Office –
David Miller: Can I just question that, because Tony Utting’s evidence, when he was Head of Investigations, was that, as I said, he worked through the Finance line.
Ms Price: It may be that we can’t bottom that out through your evidence and the Chair has the evidence from Mr Utting and others who were involved in prosecutions over the years. But, taking a step back, the activities under Tony Marsh, which certainly included criminal investigations, we’ve already agreed that those fell under Operations. So was that why you had regular meetings with Tony Marsh, because the activities conducted under him fell under operations and you achieved –
David Miller: The broad area of Tony’s remit, which was pretty wide, including terrorism, and so on, he would – yes, we would discuss on a regular basis.
Ms Price: Can you help with – I think you weren’t sure when your meetings with Tony Marsh started but did they continue until your retirement –
David Miller: They did, yes.
Ms Price: – except in the period you were temporary Managing Director?
David Miller: Yes.
Ms Price: How regular were your meetings with Tony Marsh?
David Miller: I – either monthly or three-monthly.
Ms Price: Those meetings lasted around an hour?
David Miller: Yes.
Ms Price: How soon after you started meeting with Tony Marsh did you first discuss Post Office criminal investigations and prosecutions? Can you recall?
David Miller: I can’t recall.
Ms Price: Do you remember discussing those activities with him?
David Miller: I don’t remember discussing any detail of those with him.
Ms Price: Did you discuss with him your knowledge of the history of Legacy Horizon, including the issues relating to inaccurate cash accounts, which were still being addressed when you left the Programme Director role?
David Miller: I don’t recall doing that.
Ms Price: You don’t recall doing so or you didn’t; can you say?
David Miller: I don’t recall doing so.
Ms Price: Do you consider that that would have been relevant information for Tony Marsh to have had, given his role in relation to investigations and prosecutions?
David Miller: On reflection, and I have reflected on this very hard, when I finished being the Horizon Programme Director, I think it would have been very beneficial if I had notified both the lawyers and the ID that that Horizon was a new system coming in and that they should be very cautious in looking at evidence coming out of that system. I didn’t do that and I regret not doing it.
Ms Price: It was Tony Marsh’s evidence to the Inquiry in July of last year that no one ever suggested to him that there were system faults and that Investigators like him had absorbed a very strong belief from the business that the Horizon system was robust. Where do you think he and his Investigators gained this very strong belief from?
David Miller: I think it was – it depends what time frame we’re talking about.
Ms Price: If we cover just the time frame between you starting as Operations Director until your retirement.
David Miller: Yes, I was unaware of ever putting out any messages that Horizon infallible. So I’m, in the early days, I’m not clear where those messages were coming from.
Ms Price: Notwithstanding the close working relationship you had with Tony Marsh, do you maintain, as you say at paragraph 15 of your statement, that you were not involved in the oversight of investigations or prosecutions?
David Miller: I do and I go back to the evidence about Tony Utting and who he – where he worked for, and he was Head of Investigations.
Ms Price: When David Mills took up the role of Chief Executive officer in April 2002 and you were Operations Director, you had a role helping him to understand the business. Did you share with him any information about the history of Legacy Horizon?
David Miller: We discussed Horizon, how it had come about, particularly the impact that the programme had had, the departure of the Benefits Agency. So he got the history in that sense.
Ms Price: Did you raise with him any of the issues there had been relating to inaccurate cash accounts ahead of rollout?
David Miller: No, I don’t think we discussed that level of detail.
Ms Price: Did you raise with him any of the problems that subpostmasters had been experiencing in the live trial that had been raised with you?
David Miller: I can’t remember. I don’t think I did.
Ms Price: You covered in your Phase 2 evidence another Acceptance Incident relating to training. Did you raise any training issues that had arisen?
David Miller: Yes, we had discussed that and I think he picked that up in talking to subpostmasters when he was out in the field anyway, and probably took some action on that.
Ms Price: Did you not consider, at the time, the history relating to inaccurate cash accounts to be relevant information for Mr Mills coming into the business?
David Miller: Not at the time.
Ms Price: Do you recognise that to be important information he should have had now?
David Miller: I think it would have helped. It’s a question of the weight that I put on that information. I would put greater weight on it now than perhaps I did then.
Ms Price: Why is it that you would put greater weight on it now than you did then?
David Miller: Because of everything that we’ve learnt over the past two or three years.
Ms Price: Could we have on screen, please, POL00021482. These are the minutes of a Post Office Limited Board meeting which took place on 19 June 2003. You were present in your role as Chief Operating Officer. Going to page 2, please, under “Chairman’s Business”, there is a heading “(b) Horizon”, and the minutes record this:
“The Chairman expressed a particular interest in furthering his understanding of the capabilities and limitations of the Horizon system. Meetings would be arranged with the appropriate managers to provide the chairman with a detailed overview …”
The person listed to action this was Alan Barrie. What role was he holding at the time?
David Miller: He was the IT Director.
Ms Price: This was a relatively new chair of the board, wasn’t it, were Michael Hodgkinson?
David Miller: It was.
Ms Price: He was expressing an interest in the capabilities and limitations of the Horizon system. Did you offer any information on the history of the introduction of Legacy Horizon at this meeting?
David Miller: Not at this meeting, no.
Ms Price: Did you attend the meetings which were due to be arranged by Alan Barrie?
David Miller: No, I didn’t. I wasn’t invited.
Ms Price: Did you feed into the agendas for those meetings or suggest that the Chair be told about the history of Legacy Horizon?
David Miller: I don’t recall doing that, no.
Ms Price: I can’t recall who was involved in the meetings?
David Miller: I can’t, I’m sorry. It was under – Alan Barrie was at the same level of director as I was, and he was dealing with that issue.
Ms Price: Did you provide any other input on or information about the known problems in the history of Horizon’s development to the Board, either at this stage or before?
David Miller: Not that I’m aware of.
Ms Price: Was it not relevant information for the Chair and the Board to know that there had been weaknesses and faults identified in the process of getting Horizon to roll out?
David Miller: Yes, that was known within the IT Directorate.
Ms Price: Sir, I’ve reached the end of one topic. Might that be an appropriate moment for the morning break?
Sir Wyn Williams: Yes, of course. Yes. So what time shall we recommence?
Ms Price: 11.35, sir.
Sir Wyn Williams: Certainly.
Ms Price: Thank you.
(11.17 am)
(A short break)
(11.35 am)
Ms Price: Hello, sir, can you see and hear us still?
Sir Wyn Williams: Yes, I can.
Ms Price: Mr Miller, I’d like to turn, please, to reports you received, when you held director roles, of subpostmasters experiencing problems with Horizon, including unexplained shortfalls and attributing shortfalls to the Horizon system, starting, please, with POL00093084.
This is a case summary prepared by a Post Office Retail Line Manager about a subpostmaster in Ramsgate who was experiencing balancing problems. There was a shortage of almost £77,000, revealed following an audit on 13 June 2003. The subpostmaster had refused to accept responsibility for the loss and had complained that he had not been given the chance to interrogate the Horizon system to prove that the loss was caused by the system.
If we could go to page 6 of this document, please, the penultimate paragraph on this page. So at paragraph 7, just above that paragraph, we can see some explanation by the Retail Line Manager of process that had been adhered to. Then underneath those points:
“Further to this, the paperwork has been reviewed by Ria MacQueen and then by Dave Miller, (Chief Operating Officer, POL) following a flag case complaint from Mr Andrews’ constituency MP and all was found to be in order. Indeed, Mr Miller emailed a response to this effect to Mr Andrews on 10 July 2004, in which he stated: ‘the agreed processes have been followed in this case and I can find no evidence to support your allegations of unfairness’.”
Do you have any recollection of this case now?
David Miller: I have read and re-read this since I got it last week and I’m – I cannot recall this case. Sorry, genuinely, I can’t recall and I know I’m – you know, I’m referred to in here, as being part of this.
Ms Price: How regularly were you involved in responding to complaints, whether addressed directly to you or reaching you via an MP?
David Miller: Not a lot, because there would be some sort of flag case office, where people – where those would be dealt with. I don’t know why I was involved in this particularly. I’m really sorry but I just don’t know.
Ms Price: Does it follow that you can’t help with whether you had any concerns about the nature of this complaint at the time?
David Miller: Well, I have to say, having read it, I have serious concerns because I think somewhere in here there’s a – there’s the line, perhaps I’ve seen too often, which is that the subpostmaster couldn’t prove that the system was wrong, and I think that’s featured here and that’s unfortunate.
Ms Price: Do you think that you had concerns at the time? I know you can’t remember this particular case but, if you’d seen it at the time, would you have had the same concerns you have now?
David Miller: No.
Ms Price: Why not?
David Miller: Because the – there was clearly, bubbling up within the business, that there were issues with regard to Horizon. The extent to which those were being properly surfaced was really quite small and, I mean, if I – it says I have reviewed this, I have reviewed the thing, the particular thing, that says he couldn’t prove that Horizon was wrong, and accepted that, and, you know, that is clearly an error.
Sir Wyn Williams: Before you go any further, the expression “a flag case complaint” in that paragraph that Ms Price took you to, it may be my fault, but I don’t think I recall that precise phraseology previously. Can you explain what a –
David Miller: Yeah, normally, sir, it’s from an MP or somebody – but normally an MP, and there is a process for dealing with those. There would be a person whose responsibility it was within the business to deal with those, to deal with the process, to make sure the paperwork was done. It would get priority.
Sir Wyn Williams: So, in other words, a complaint which is taken pretty seriously –
David Miller: Yes.
Sir Wyn Williams: – or should be?
David Miller: Yes.
Sir Wyn Williams: Right.
Sorry, Ms Price.
Ms Price: Not at all, sir.
Could we have on screen, please, NFSP00000298. This larger document contains a series of correspondence involving a subpostmaster at the Crianlarich branch, the NFSP and you. The subpostmaster’s letter appears on page 8 of this document. Can we go to that, please.
This letter – scrolling down a little, please – scrolling back up again, please.
This letter is dated 24 August 2004 and it raises issues accessing online services on Horizon due to failure in the ISDN line. It also raises some unhelpful responses which were received after contact with the Horizon Helpdesk and the Network Business Support Centre.
The issue was raised with David Mills by the NFSP and you responded on his behalf on 15 September 2004. That’s on page 4, please. We can see here:
“Thank you for your letter of 2 September addressed to David Mills.
“Overall Horizon systems availability is good, there are nevertheless issues which we have under active review and I will update you on these as we make progress.
“Our online systems continue to perform within expected parameters and these parameters have been set in line with industry standards. For example the service availability that we have planned and deliver for banking and e-top ups is in line with that provided by the banks and other retail outlets.
“Understandably there is a perception that the problems are on the increase. This is because over time the number of branches that have experienced a problem has, as you would expect, increased and as the volume of online business has increased the impact of failures has increased. I repeat that overall system available is very high and within the parameters to which the system was built.
“When a system goes down in a branch a process of investigation is initiated in order to identify where the problem has occurred. The problem could be with the equipment within the branch, within the telecommunications network, within Horizon or within a number of back end systems provided by banks, mobile phone operators and our debit card service provider. Once the point of failure is identified the appropriate supplier can investigate the problem and having diagnosed it provide an appropriate fix.
“It is not possible when an incident occurs to give precise information about time to fix ahead of understanding where the problem lies. Of course in some instances the source of the problem is obvious and it’s possible quite quickly to indicate time to fix but in other instances diagnosis can be protracted.”
Going back to the first paragraph, can you help with what the issues which were under active review were at this time?
David Miller: I think the issues – this is, as I recall, about the ISDN lines, which were the basis of the network at that time and there was variable performance. If people were at the outer reaches of the ISDN network or in a particular difficult location, problems could occur and fixing those problems could take longer than it ought to, and subpostmasters rightly got very fed up when they couldn’t connect, they couldn’t do online business, and there was a queue out the door of people who were customers who were very unhappy.
So I think that would be my view of what, primarily, this was about. Certainly, it was strongly represented by the NFSP at the time.
Ms Price: You will recall from the document which Jeremy Folkes authored in February 2000 the section relating to unproven technology when it came to integrity during failure conditions. Did you recognise at the time any risk that there might be an impact of system failures on SPMs in terms of the integrity of accounts data when these issues were raised?
David Miller: I don’t think that was front of my mind at all.
Ms Price: Would you have expected a root cause analysis to have been done by Fujitsu in these circumstances?
David Miller: I think that would have been very helpful.
Ms Price: As far as you’re aware, was there any investigation, whether by the Post Office or Fujitsu, as to any impact on the integrity of the data, the accounts data?
David Miller: I’m not aware.
Ms Price: Did the issues raised in this correspondence or indeed in the report we’ve just looked at from the Retail Line Manager, have any impact on your view of what data would need to be obtained from Fujitsu, from Post Office’s internal IT teams, or anyone else, to support actions against subpostmasters?
David Miller: No.
Ms Price: Turning, please, to the civil proceedings brought by the Post Office against Julie Wolstenholme and the settlement of those proceedings, you deal with this at paragraphs 57 to 61 of your second statement. Is it right that this case first came to your attention when Ms Wolstenholme was challenging her employment status in 2001?
David Miller: That’s correct.
Ms Price: But, at that stage, you say you were not made aware that Ms Wolstenholme was challenging the Horizon system; is that right?
David Miller: That is right, just what she was doing was – would be considered by me and others to be a threat to the whole – if she was wanting to change the subpostmaster’s contract and challenged that, that would be a significant challenge to the business model. So that would have been – when I say that, I mean that it would have changed the economics of how we ran the business, if she had won her case.
Ms Price: Could we have, please, page 14 of Mr Miller’s second statement on screen, paragraph 59. That’s page 14. You say:
“My first formal involvement with the case was that I was asked to sign off the compensation payment to Ms Wolstenholme in 2004, in the absence of Peter Corbett, who was on holiday. Rod Ismay’s note to Donna Parker (my PA at the time) secured a slot in my diary for Tony Marsh”?
Rod Ismay’s note, to which you refer here, is at POL00142503. Could we have that on screen, please. This is the email from Rod Ismay, dated 26 July 2004. What role did Rod Ismay hold at this time?
David Miller: I think he was head of some part of accounting. He was a direct report to Peter Corbett, so he’s one step below the Board.
Ms Price: The Donna Parker here, that’s your PA; is that right?
David Miller: That was my PA, yes. She was my PA, I’m sorry.
Ms Price: Presumably she would have forwarded on to you the email she received, along with any attachment; is that right?
David Miller: Yes, I think she would.
Ms Price: We can see the email was also sent to Mandy Talbot, Tony Marsh and Carol King; do you remember Mandy Talbot?
David Miller: I am aware of Mandy Talbot from this Inquiry, not previously.
Ms Price: Does it follow that you did not have much contact with Mandy Talbot?
David Miller: I didn’t, no.
Ms Price: And Carol King?
David Miller: Sorry.
Ms Price: Before we come on to the detail of this email, I’d like to look at one further document, please. Could we have on screen, please, POL00158493. This is an email dated 19 May 2004 from Keith Baines to David Mills, the Chief Executive Officer, copied to Clare Wardle, Carol King, and Ian O’Driscoll. Can you recall Clare Wardle or Ian O’Driscoll at all?
David Miller: Don’t recall Clare Wardle. I recall Ian O’Driscoll’s name but that’s about as far as it goes.
Ms Price: The title of the email is “Action from your visit to the IT Commercial Team meeting”, and the email reads as follows:
“David,
“You asked who in Post Office was instructing the lawyers in the case referred to in the following risk on the IT … register:
“‘Damage to reputation of Post Office and potential future financial losses if PO loses court case relating to reliability of Horizon accounting data at Cleveleys Branch Office.’
“The instructions have been provided by Carol King (in Transaction Processing). The case was being handled by Jim Cruise in Legal Services. Jim has now left Royal Mail and the work is outsourced to Weightman Vizards, who handle such cases for us in the North West. The case is scheduled for the week commencing 16 August. We have offered settlement and paid money into court based on what the subpostmistresses would have received for 3 months notice.
“Regards,
“Keith.”
It would appear from this email that the case with Ms Wolstenholme had been recorded on the IT risk register. To the extent that you can assist, which risk register was this: a Post Office Limited risk register or a Royal Mail Group risk register?
David Miller: I don’t know. I would think, given the people involved in here, it was a Post Office IT Department risk register.
Ms Price: Were you aware that the case was on the IT risk register when you became involved?
David Miller: No.
Ms Price: Did you have access to the IT risk register?
David Miller: No.
Ms Price: How was the Board kept updated about what was on the IT risk register?
David Miller: The IT risk register should have fed up – upwards to the Board risk register, as felt appropriate by the IT Director.
Ms Price: To your knowledge, did that happen?
David Miller: I don’t know, I’m sorry.
Ms Price: Okay.
David Miller: I certainly had not seen this posed in this way as a risk.
Ms Price: This email pre-dates the email from Rod Ismay to your PA. Do you recall David Mills discussing this case with you, once he had noticed it was on the IT risk register?
David Miller: I don’t.
Ms Price: But it would appear that this was a case of which the Post Office Limited Chief Executive was aware?
David Miller: It does appear to be, yes.
Ms Price: This was quite significant, was it not, the entry onto the risk register of a case which had the potential to damage the reputation of the Post Office because it related to the reliability of Horizon accounting data at the branch?
David Miller: Yes.
Ms Price: This is something that the Board should have been made aware of, wasn’t it?
David Miller: Yes.
Ms Price: It appears that the instructions were being given to the lawyers on behalf of the Post Office by Carol King in Transaction Processing. You don’t recall Carol King, but does that fit with your understanding of who would give instructions in a debt recovery case, in essence?
David Miller: I think that’s probably right but I can’t say definitively.
Ms Price: Going back, please, to Rod Ismay’s email, POL00142503, the email to your PA reads as follows:
“Donna – as discussed, here is the correspondence re the legal case.
“The first arrow below contains a note from Group Legal today (Mandy Talbot is acting on this case). This is Counsels Opinion.
“The other arrow sections below contain some more background from Carol King in Chesterfield Debt Recovery Team.
“In summary we suspended Mrs Wolstenholme in 2001 after apparent discrepancies in her cash accounts. We claimed for the value of these losses and she counterclaimed for loss of earnings. Within her claim was an ‘experts opinion’ which was unfavourable concerning Horizon and Fujitsu.
“We have lodged 25K pounds in court but Mrs W has no legal representation and is pursuing the full amount of her claim (£188k). It goes to court next month.
“Mandy – Peter Corbett is on holiday now. I am therefore escalating this to Dave Miller.”
Presumably he was doing that by sending this email to your PA; is that right?
David Miller: Can I just make a point?
Ms Price: Yes.
David Miller: Peter Corbett and I were on the same level, we were both Directors of Post Office Limited. So, in my mind, escalation would have been to the level above but it wasn’t and, at the time, I should have asked that question.
Ms Price: So you think it should have been escalated to the level above?
David Miller: Well, as far as I’m concerned, yes.
Ms Price: Why didn’t you escalate it to the layer above?
David Miller: Because I was dealing with it at speed and I signed it off.
Ms Price: In this email, the part to Mandy then goes on:
“Do you have a copy of the IT ‘expert’s opinion’?”
Then there is a question for Tony Marsh:
“Tony – can you please advise who in your team is leading in this case?
“Carol – thanks for your correspondence this afternoon.”
Then at the bottom:
“All – please do not circulate this any further than is necessary to support Dave and Group Legal with this case.”
Would you have read this email when you received it?
David Miller: No, because it would have gone to Donna. But I have subsequently read it and noted that bottom line.
Ms Price: I asked earlier whether Donna would have forwarded the email and any attachment to you when she received it and you thought that was probably right.
David Miller: I did.
Ms Price: If she did forward it to you, would you have read it?
David Miller: Yes.
Ms Price: The summary given in the top of the email was that the case arose out of apparent cash account discrepancies and that, within her claim, was an expert’s opinion which was unfavourable concerning Horizon and Fujitsu. Your attention was being directed, through your PA, to two things: first, counsel’s opinion on the case, which was attached, we can see, to the email; and, second, the background to the case from Carol King from the email chain below.
Starting, please, with the background to the case, this, in fact, appears to have been sent by Jim Cruise. If we can scroll down to page 3 in his email, dated 17 March 2004, the background is quite lengthy but it contains this in relation to the expert’s report. Going over the page, please, to page 4, the third paragraph on this page:
“POL then agreed to offer her up to £5,000 to settle. This sum was paid into court in July 2003 but has not been accepted. Since then, the report of the computer expert, Best Practice Plc, based on the available call logs has been received and as you are aware is unfavourable and unflattering to Fujitsu if not actually hostile. In light of the report, which cannot really be challenged, I do not think that POL will be able to prove, even on the balance of probabilities, that the losses were the fault of the SPM and our agents are still concerned about the lack of evidence for the losses. They want to obtain counsel’s opinion on liability and quantum and the question of mediation has now been raised at the recent CMC.”
The next paragraph says this:
“At court Mrs W said that she would settle for two and a half times her annual remuneration, a total figure in the region of £187,500, as this is the figure being paid to subpostmasters when offices are closed. POL clearly cannot settle on the basis of such a sum but the question of further questions to the expert has been raised and I can only see further costs being run up in this case with very little chance of POL getting its money even if it proves the case. I intend therefore to advise that POL should pay Mrs W or pay into a court the figure of 3 months remuneration plus interest on the basis of that although it is unlikely that POL can now prove the losses were her fault alone, as per the contract for services, POL can give 3 months notice without giving reasons and this all she will be able to obtain by way of damages in any event if she takes the matter to trial. The payment-in should be of another £20,000 to take account of interest since November 2000. If it is not accepted the case will have to be fought to resist the counterclaim which cannot be accepted but costs should be cut by accepting the expert’s report and not seeking to challenge it further and effectively not pursuing the losses and paying her full remuneration for the 3-month notice period on the basis that this is all she will obtain by way of damages after a full trial.”
This was part of the email chain to which you were referred in the top email, via your PA. Would you have read this at the time?
David Miller: I can’t remember. But – I can’t, sorry. I cannot remember.
Ms Price: Okay. Do you remember having concerns at the time that there was a computer expert report which was unfavourable and unflattering to Fujitsu?
David Miller: I – there was conflicting information about this report and I have read it thoroughly in the papers that you have given me and the descriptions from various angles that were given to me of it seemed to me to be unfair.
Ms Price: In what way do you consider –
David Miller: That Mr Coyne actually did, within the information available to him, a good job and that didn’t suit various parties, including Fujitsu, and I think the Inquiry has heard about that from Mr Jan Holmes, previously. But, certainly, it wasn’t given sufficient weight.
Ms Price: Going back to the last line of Rod Ismay’s email – and there is no need to turn it up – but Rod Ismay was asking recipients not to circulate this any further than necessary to support you and Group Legal with the case. Can you help with why he would have asked recipients not to do that?
David Miller: No.
Ms Price: Coming, then, to counsel’s advice. Could we have paragraph 60 of Mr Miller’s second statement up on screen, please, that’s page 14. In the first sentence of this you say:
“As far as I recall I was not given a copy of the expert report or counsel’s advice nor did I request it – I definitely did not read it at the relevant time.”
We’ve seen from the email we’ve just looked at that counsel’s advice was attached to the email sent to your PA. Does it remain your position that you didn’t open it and read it at the time?
David Miller: It does, I’m afraid, yes.
Ms Price: Why would you not have read it, given the summary of the case given to you and the background set out in the email chain?
David Miller: Because the way this was channelled through to me was such that it came from a very senior finance officer and the Head of Security and I – I mean I have drawn this case to your attention because I should have said, “Stop, let’s review this properly and let’s understand what this actually says”. But I didn’t and I signed off a sum of money, and it was paid. We had agreed to pay this lady and we then paid her. That was kind of my view. But there were other views in this, as we can see from the paperwork, that people wanted to keep it quiet.
Ms Price: Looking, please, to counsel’s advice, if we can have that on screen, please. It’s POL00118229. Going first, please, to page 18 towards the bottom of the page. We can see this is dated – towards the bottom, please – 26 July 2004 and it’s been provided by a barrister from 9 St John Street. Going straight to the key paragraphs, starting, please, with paragraph 10 on page 3, counsel says this:
“Mrs Wolstenholme has defended the proceedings, claiming that the computer system installed by the Post Office was defective and this was, in fact, the cause of the losses recorded within her accounts. Further, Mrs Wolstenholme puts the Post Office to strict proof of the losses it claims. Finally, Mrs Wolstenholme counterclaims for damages in respect of: wrongful termination of her contract; breach of her human rights, a claim under the Commercial Agents … Regulations; a claim for breach of the implied term to provide a computer system fit for its purpose.”
At 11:
“The trial of this matter is now about one month away. A joint computer expert’s report has been obtained. This report concludes, from the limited records available, that the computer system installed by the Post Office did appear defective. There is a very limited amount of documentation available in respect of the detail of calls made by Mrs Wolstenholme and problems with her computer at the relevant time as well as in relation to the errors and losses which built up in her Post Office records. This is because these records were destroyed about 18 months after events occurred.”
Going down, please:
“Recognising the weakness of its position, the Post Office has made a payment into court of £25,000.”
At 13:
“I am asked to advise in relation to quantum and evidence. I am asked to take into particular account that the Post Office is anxious for the negative computer expert’s report to be given as little publicity as possible.”
Pausing there, can you help at all with where the message that the Post Office was anxious for the negative computer expert’s report to be given as little publicity as possible came from?
David Miller: No, I can’t. Well, sorry, just to say it didn’t come from me.
Ms Price: Does this reflect a sensitivity, even at this relatively early stage in 2004, about the integrity of the Horizon system?
David Miller: And particularly any publicity being given to that, yes.
Ms Price: Going, then, to paragraph 17, page 5, please.
“In view of the negative expert’s report in this case regarding the computer system in place, Mrs Wolstenholme’s suggestion that the errors that arose were the result of defects in the computer system must be taken seriously. It is sufficient to place genuine and significant doubt on the evidence relied upon by the Post Office. In my opinion, to dispel that doubt and to persuade a Court that its claim was justified, the Post Office would need to be able to produce to the Court sufficient original evidence in support of its claim. It is unable to do so. I therefore conclude that the Post Office’s claim against Mrs Wolstenholme in respect of losses on her account would be likely to fail.”
This opinion is extremely significant, isn’t it, that because of the negative expert’s report, Mrs Wolstenholme’s suggestion that the errors that arose were as the result of defects in the computer system must be taken seriously?
David Miller: Yes.
Ms Price: Had you read this at the time, what would you have done?
David Miller: Well, I’d have had to say, “Hang on a minute, can we just understand exactly what is going on here?” So I’d have had to have a meeting of senior people to review everything that was down here. There was a lot of knocking of the computer expert’s opinion at the time by both Fujitsu and Post Office and, subsequently, I’ve read what Justice Fraser had to say about it and that was entirely wrong. Justice Fraser said he was right and, if you read the report, which I’ve done now, it’s believable.
Ms Price: Could we have back on screen, please, paragraph 59 of Mr Miller’s statement, that’s page 14. Starting at the second sentence, you refer to the email securing a slot in your diary for Tony Marsh. Can you recall how long after Rod Ismay’s email you met with Tony Marsh to discuss this?
David Miller: I can’t but I remember that I learnt about it on the day.
Ms Price: You learnt about it on the day of the email you mean?
David Miller: No, on the day that Tony came to see me.
Ms Price: I see. So how did you become aware?
David Miller: Donna said, “Tony Marsh needs to see you urgently”, or words to that effect. I’m sorry, I can’t remember. But I do remember – the whole thing I remember about this is that it kind of just happened. It wasn’t a “There’s a process here to review something”. It was “Need to get this done and Tony Marsh wants to get into your diary, it won’t be for long”, and I have to say I went along with that.
Ms Price: Did you read anything before you met Tony Marsh?
David Miller: I can’t remember what I read. I’m sorry, I can’t.
Ms Price: You say:
“We met for approximately 10-15 minutes. To the best of my memory, he told me there was an issue with the expert advice which had led our counsel to say that the case was unlikely to succeed. It was clear that he did not think much of the expert. The view was that we should cut our losses and pay up. He said something about Horizon – I cannot recall specifically what he head but I remember checking with him whether there were issues with Horizon (I said something like: ‘you are not saying there are issues with Horizon are you, Tony?’) He said that there were no issues and I got the impression it was a one-off case. During the meeting, he produced some paperwork to authorise payment which I signed.”
So your recollection is that you signed off the authorisation of settlement at the meeting; is that right?
David Miller: Yes, it is.
Ms Price: You did so without having read counsel’s advice or requesting the expert’s opinion?
David Miller: I did.
Ms Price: Why didn’t you ask to see the expert advice when Tony Marsh discussed it with you in the meeting?
David Miller: This came to me, as I say, as a on-the-day issue. It came from a very senior Finance person and from the Head of Security, who I trusted, and I regret, obviously, very much not having said, “Stop, let’s actually review what’s going on here”, but I didn’t.
Ms Price: It may be that you can’t assist at this remove but what, exactly, did Tony say about the issues with Horizon or lack thereof?
David Miller: I can’t – I mean, for this distance, I can remember quite a lot about this because, clearly, I must have been uneasy but I can’t remember the detailed – the really detailed conversation. In fact, this was so quickly done, that I doubt if there was a lot of detailed discussion.
Sir Wyn Williams: You do say, Mr Miller, that you asked him, in effect, a direct question – whether there were issues with Horizon – and then you say what you might have said in the brackets that follow, and you appear to be saying that he confirmed to you that there were no issues with Horizon. Yes? So I am a little bit mystified how that could sit with the terms of the email which Mr Ismay had sent. Because the whole case was about whether there was an issue with Horizon.
David Miller: Yeah, I’m, sorry, sir, I’m not going to be able to help you.
Sir Wyn Williams: Well, one interpretation – and I’m simply putting forward possibilities, not expressing conclusions – one interpretation is that, knowing that you hadn’t read the relevant documents yourselves, in effect, Mr Marsh misled you. Does that sit with your understanding of Mr Marsh?
David Miller: The way I’m looking back now and seeing how this was done does not sit with my opinion or previous opinion of Mr Marsh, which is that I trusted him implicitly.
Sir Wyn Williams: The other alternative, which perhaps does sit with what you’re trying to articulate, is that, despite Mr Coyne being a jointly instructed expert approved by the court, there were those in Fujitsu and the Post Office who just weren’t prepared to accept his opinion and, therefore, decided that what they’d do was to get rid of this case, for as cheaply as they could and then pretend it never happened; is that more likely?
David Miller: I think there was clearly a desire within the business to get this – to get rid of this case.
Sir Wyn Williams: Yes, whereas, in fact, if responsible people within the business had treated Mr Coyne’s opinion seriously and carried out some investigations of their own, it might have prevented many of the things which followed; is that fair?
David Miller: I’m afraid that is correct, sir.
Sir Wyn Williams: Yes, all right.
Ms Price: Just following on from the Chair’s question, then, at paragraph 61 of your second statement, you acknowledge that, by not reading counsel’s advice and the expert’s opinion, there was a missed opportunity.
David Miller: I do.
Ms Price: Can you recall at all the level of settlement which you approved?
David Miller: I couldn’t but I think it was about £180,000-odd.
Ms Price: Do you have an independent recollection of that now?
David Miller: No.
Ms Price: We’ve seen reference to a number of figures in the paperwork so that’s why I ask, just to be clear. Can you recall at all –
David Miller: If I had been asked, I would have said it was under 150 but, you know, I’m – I’ve now seen quite a few numbers.
Ms Price: Did you draw this case to the attention of the Post Office Limited Board at any point?
David Miller: No. Could I just say why?
Ms Price: Of course.
David Miller: Because this was in Peter Corbett’s line of command and the only reason he wasn’t – hadn’t been dealing with it was that he was on holiday and I would have expected Peter to discuss this at Board level.
Ms Price: Even based on the limited information that you say you had access to at the time, do you think you should have referred it to the attention of the Board, notwithstanding Peter Corbett’s area of responsibility?
David Miller: I probably should but, before that, I should have put a stop to it by saying, you know, “This has got to be reviewed properly”.
Ms Price: Could we have on screen, please, POL00095506. This is a Post Office Limited Board status report relating to actions from the Post Office Limited Board meeting on 13 October 2004. Looking, please, to page 4 there is an action for you, 21, “Civil Orders”. Just before we look at the detail of that, what was the purpose of these Board status reports?
David Miller: To keep people up to date with where we were and to remind people that they had actions that needed to be fulfilled by the next board, or whenever sorry.
Ms Price: Looking at the action under “Civil Orders”, the action is:
“Where fraud has been perpetrated against the company, ensure that the appropriate civil orders were being used immediately in advance of any criminal proceedings.”
The status is record on the right-hand side of the page:
“I have received a report about the way we apply Civil Orders as of now and am concerned that we are not properly exploiting the 2002 Proceeds of Crime Act. I have asked, therefore, for a speedy update of our procedures to do just that.”
It appears from this document and the Board meeting minutes to which this action relates that you were leading on this item; is that right?
David Miller: Certainly, I was asked by the Board to see what was happening in this area.
Ms Price: Were these your words, “I have received a report”; is this is an entry by you?
David Miller: I can’t remember but it’s there, isn’t it?
Ms Price: Can you tell recall at all what the basis for the conclusion that Post Office Limited should be properly exploiting the 2002 Act –
David Miller: I’m afraid I can’t.
Ms Price: – was?
Could we have on screen, please, POL00021486. These are the December 2004 POL Board meeting minutes. You are present in the list and, going to page 2, please, we can see the issue of Civil Orders here, “Action: David Miller”, under (f) and the minutes say this:
“In the event of fraud against the company, David Miller would ensure that the pensions of fraudsters were targeted to help ensure the company was reimbursed.”
Was this a proposal that you made to the Board, this particular reference to targeting the pensions of fraudsters or was this something that was proposed by someone else?
David Miller: There was something that was proposed by somebody else. I mean, I don’t recall this in any detail at all. But I certainly didn’t propose that.
Ms Price: What was your view on that?
David Miller: Well, seeing it here, it sounds horrendous. Sorry, it sounds severe, in terms of its intention.
Ms Price: At the time, did you associate fraud and the commission of it with shortfall cases involving subpostmasters?
David Miller: I don’t know. Sorry.
Ms Price: This was less than six months after you signed off on the Wolstenholme settlement and you had, earlier in that year or in the course of 2004, been made aware of other subpostmasters raising issues about the Horizon system. Did it occur to you at any time that this might be relevant to decisions about recovery in fraud cases?
David Miller: I didn’t make the direct connection, no.
Ms Price: Could we have on screen, please, paragraph 16 of Mr Miller’s second statement, that’s page 5. You say here:
“… I was aware that [Post Office Limited] would, from time to time, pursue postmasters for the recovery of alleged shortfalls branch accounts, including through civil proceedings, but again I did not know any of the detail and was not involved in the oversight of such action.”
Does the knowledge of your involvement in the actions relating to civil orders in fraud cases at Board level change your evidence at all in terms of your involvement of oversight?
David Miller: Well, I don’t think I could be so absolute in saying I did not know any of the detail.
Ms Price: Could we have on screen, please, POL00107426, and page 3 of this document, please. This is an email from Mandy Talbot to a number of recipients, including David X Smith, that is IT Director David Smith. It is dated 23 November 2005. It relates to a civil claim which had been brought by the Post Office against Lee Castleton for £27,000, which had led to a counter claim limited to £250,000, given the summary in this email. First of all, were you aware of the Castleton case at time that you were in director roles?
David Miller: I’m sorry, I’m having to think because, clearly, I’ve read and seen an awful lot about it. I’m not – I do not recall it in any detail at the time. I may have heard the name but the details of the case, I don’t think I was involved in.
Ms Price: The first paragraph of the email reads as follows:
“Proceedings have been issued … against Lee Castleton, the former postmaster at Marine Drive for [£27,000]. It was known by the business prior to issue that Lee Castleton blamed Horizon for the losses. External solicitors were asked to check with the Fujitsu liaison team and to assure themselves that the evidence in respect of for Horizon was sound before the issue of proceedings. There had been no security investigation so the data had not been requested from Fujitsu.”
Then two paragraphs down:
“As part of the claim the solicitors for [Lee Castleton] have stated in the allocation questionnaire that they intend to call evidence from other existing and former postmasters about the problems with the Horizon system. They have also asked for disclosure of data about all calls or complaints logged from postmasters about the Horizon system, presumably from the inception of the system. They have called for disclosure of all documents removed from the branch office during the investigation. There is an issue over locating all these documents.”
This email also covers Mr Bajaj’s case, towards the bottom of the page, and it explains that he was a Torquay branch office postmaster:
“… who is challenging the validity of data supplied by the Horizon system on which errors have been raised against his branch office. He has not been able to explain the losses and has been required to make good the losses by way of deduction from remuneration. No proceedings have been issued but the matter is in the hands of external solicitors.
“[He] has taken the step of writing an article in the SubPostmaster November 2005 edition, seeking [over another page, that’s blank] information from other postmasters in a similar situation. His solicitors say that they have been contacted by other postmasters and that a class action is possible unless, the reductions from remuneration are refunded. They also make a reference to what we assume is the Castleton case.”
Under that there are some issues which are set out:
“In each case the postmasters are challenging the validity of data provided by the Horizon system …
“If the challenge is not met the ability of POL to rely on Horizon for data will be compromised and the future prosperity of the network compromised.
“Fujitsu’s reputation will be affected.”
There are a number of suggestions set out beneath that, which I don’t intend to take you to in detail. You were not a recipient of this email but David Smith was. This email and the suggestions underneath appear to have led to a meeting about Horizon integrity in December 2005.
Could we have on screen, please, POL00119895. These are the minutes from that meeting, which took place on 6 December 2005. We can see Keith Baines was present along with Mandy Talbot and Graham Ward among others. The first point under “Findings” is this:
“There is no generally understood process for identifying emerging cases in which the integrity of accounting information produced by Horizon may become an issue.”
Then under “Recommendations” page 3, please, recommendation number 1 is that:
“A coordination role should be established to maintain a list of all current civil cases and potential civil cases where accuracy of Horizon accounting information may be an issue, and ensure that all relevant business functions are made aware of these cases.”
Under “Specific Action Points”, that’s page 5, please, this is the sixth of those specific actions:
“KB [Keith Baines] – to brief Dave Smith on the meeting’s recommendations.”
Were you aware of this meeting to discuss Horizon integrity in December 2005?
David Miller: No.
Ms Price: Did anyone report the findings and recommendations to the board, as far as you are aware?
David Miller: Not as far as I was aware.
Ms Price: Did David Smith – that is IT Director David Smith – ever raise this with you?
David Miller: No, but, at this time, David Smith was not IT Director; he was in the IT Department working to Ric Francis.
Ms Price: Did Ric Francis ever raise –
David Miller: No.
Ms Price: – this meeting or what was discussed at it with you?
David Miller: No. I had – in my Department, there was one representative, which was John Legg, who worked for Mike Granville, who worked for me, and nothing came up that line about this.
Ms Price: Going, please, to January 2006 and your involvement in the development of Horizon Online, you address this at paragraph 64 of your second statement. Could we have that on screen, please. It’s page 15.
You discuss in this paragraph some discussions that you were involved in, although that first document you say was sent when you were on sick leave. Then you go on at the bottom –
David Miller: That was – sorry, just if I can make a point about the dates, that was March 2001, and there was an understanding that the Horizon system would stop in 2005, and we had to do some serious thinking and planning about what we were going to do beyond that. So I had discussed that with David Smith and others. I was on sick leave at the time that went in but I would have been aware of what was in that document.
Ms Price: You, at the bottom of that page, say:
“My involvement in the development of Horizon Online was in 2006 when acting MD for a couple of months in between David Mills and Alan Cook. I also signed off the document [and the reference is there] which was prepared for me by Ric Francis the IT Director and his team who were developing Horizon Online.”
Could we have the document you signed off on screen, please. It is RMG00000041. Going to the bottom of page 2, please. We can see your name and January 2006 is the date. Going back to page 1, please. Under “Background”, there is this:
“It is essential that Post Office Limited achieves significant reductions in IT costs if it is to return the business to sustainable profitability. The major opportunity to do this resides with the Horizon system that is provided by Fujitsu Services under a contract that runs through to March 2010.
“Fujitsu Services proposed a major investment in application, branch and data centre hardware which would simplify the solution enabling significant reductions in recurring operating costs on the basis that the term of the existing contract was extended to March 2015. However, this proposition gave a gentle upward increase in operating costs once the benefits of the upfront investment had been realised.
“Post Office Limited concluded that if it was to achieve a contract that delivered year on year cost reductions then it would need to contract on a radically different basis. Post Office Limited has negotiated the basis of a deal with Fujitsu that closely mirrors what it believes would be achievable by going to open market.”
Then under “Options”, on page 2, please:
“There are a number of options which include do nothing and wait to [complete] the contract at the end of the current term. None of these options generate the savings required within the necessary timescale.
“Termination of the existing contract, at a cost of circa £80 million, would enable disaggregation of the services in order to procure from best of breed.”
Can you help with what is meant by “best of breed”?
David Miller: Just best available to the market.
Ms Price: Ie alternatives to –
David Miller: Yes.
Ms Price: – Fujitsu, potentially? Okay:
“This might deliver lower steady state costs. However, this would be at considerably increased risk and take longer to deliver.”
Then we have:
“The Gartner Group have benchmarked proposals from Fujitsu which has enabled Post Office Limited to form a view of what it might expect to achieve by going to the market. Post Office Limited firmly believe that the speculative additional savings that might be achieved through open competition do not the increased risk.”
Then under “Risk”, there is acknowledgement here that there are risks around time, cost and quality with any major IT investment:
“Post Office Limited and Fujitsu Services have now delivered ten major releases of software to time cost and quality. Cost reduction will require investment and doing this through the existing relationship presents the least risk route. Additionally a series of caps and collars are in place that limits Post Office Limited’s exposure to cost overruns.
“The risk that Post Office would achieve greater savings through open competition is mitigated through Post Office Limited’s right to market test unbundled components of the contract. This market testing could enable the Post Office to [complete] all of the existing contract over a period of time.
“Current Position
“All the major principle areas necessary for a deal have been agreed with Fujitsu and these have been endorsed at Chief Executive level. Detailed terms will be in place by March … The intention is to go to the February Post Office Limited Board and the March Royal Mail Holdings Board to seek formal approval for the contract and associated investments.”
The “Recommendation” is for the Board to note the progress.
At the time you signed off this paper, were you aware of any review or audit conducted by the Post Office or any independent contractor of the effectiveness and reliability of Legacy Horizon?
David Miller: No.
Ms Price: This was relevant, wasn’t it to whether further investment in the Fujitsu platform would be a good business decision for the Post Office?
David Miller: Yes, except that the aim, I think, of this was to move on beyond Legacy, seeking improvements on many fronts.
Ms Price: There is a focus in this paper on the saving costs in Horizon. How were you satisfied that Fujitsu could be made to produce the same or similar service more cheaply?
David Miller: I wasn’t at that stage. I mean, I think work had been done by Ric Francis particularly and there are comparisons with – by a company called Gartner who compare IT systems systematically, so a lot of work had been done in that area.
Ms Price: Given the reports to you of problems experienced by subpostmasters with Horizon that we’ve been through this morning, as well as your experience of problems with the rollout of Legacy Horizon, did you have any concerns about the proposal to stay with Fujitsu?
David Miller: I think it was discussed, not at length but discussed briefly.
I think the view was that going elsewhere could cause significant dislocation problems and I think Ric and his team looked pretty closely at what we could and couldn’t do, and the view was we needed to put Fujitsu under pressure, I think, to come forward with a better deal, based on improved technology.
Ms Price: Could we have on screen, please, POL00081928. Going to page 6, please, scrolling down a little, this is an email from Anne Chambers dated 23 February 2006. The subject is “Callendar Square”, and the second paragraph of this email – I should clarify this is to Mike Stewart; you’re not on this email chain?
David Miller: No, this is Fujitsu.
Ms Price: Yes. But it is just a question as to whether or not you were aware of something in this email. The second paragraph says:
“Haven’t looked at the recent evidence, but I know in the past this site had hit this Riposte lock problem 2 or 3 times within a few weeks. This problem has been around for years and affects a number of sites most weeks, and finally Escher say they have done something about it. I am interested in whether they really have fixed it, which is why I left the call open – to remind me to check over the whole estate once S90 is live – call me cynical but I do not just accept a 3rd party’s word that they have fixed something!”
Had you ever heard of any issues at the Callendar Square branch?
David Miller: No.
Ms Price: Going to page 5 of this document, please. The email from Gary Blackburn, dated 1 March. This is to Shaun Turner, at the Post Office.
“Shaun
“It appears that Callendar Square is not alone with its mismatch problem. It also appears that Fujitsu are expecting S90 release to resolve this quirk.
“We have opened a cross domain problem [report] …”
Ms Price: It appears from these release emails that S90 was expected to resolve the Callendar Square problem; would you agree with that?
David Miller: That’s what it says.
Ms Price: Could we have on screen, please, POL00032210. These are the Post Office Board minutes from 20 April 2006. Can we go to page 10, please. Apologies, before we go to page 10, just going back to page 1, please. We can see that you were present at that meeting and, going to page 10, please, we can see there is an operations report about halfway down the page. That covers the Horizon S90 release and it said at (b)(iv) that this would:
“provide for a plethora of change requests across a variety of existing capabilities.”
What do you understand that to be saying? Did that mean anything to you at the time?
David Miller: Well, that it was sweeping up a number of issues that should be sorted out by that release.
Ms Price: Did you have any awareness that the S90 release was intended to fix the Callendar Square problem?
David Miller: No.
Ms Price: I’d like to turn, please, briefly, to the relationship between the reliability of Horizon and the accuracy of the company accounts. The Horizon system recorded transactions for the business and the accounts for the business were compiled based on the transactions recorded by the Horizon system. We’ve seen already the Ernst & Young letter to you, way back in August 1999. Would you agree that the board had to satisfy itself that the Horizon data could be relied upon, otherwise it couldn’t be satisfied that the accounts were correct?
David Miller: It had to satisfy itself that all data – but I suspect that there was –
Ms Price: That the Horizon data produced –
David Miller: Yeah, including Horizon but I suspect, in terms of the accounts, there was some materiality here.
Ms Price: Could we have on screen, please, POL00178249. This is described as the March 2004 “Post Office Limited Horizon Electronic Cash Account Review” and, scrolling down a little, please, it’s from Ernst & Young, the external auditors and it’s sent, “For Information”, to David Mills, Peter Corbett, you, Vicky Noble, Sue Harding, Alan Barrie, Sue Lowther, Rod Ismay and Derek Foster.
Just going to page 2, please, the second paragraph. There is a background here set out:
“On an annual basis, to support Ernst & Young in their review of Post Office’s financial statements, IA&RM …”
Can you help with who that is?
David Miller: I can’t, I’m afraid.
Ms Price: “… undertake a review of the Horizon system electronic cash account and the system interfaces to CBDB. The purpose of the review is to provide assurance on the effectiveness of the controls over the Horizon electronic cash account and the integrity of the data held on the Horizon and CBDB systems. In accordance with the terms of reference, the review covered all transactions undertaken by Great Moor post office for cash account week 35, 2003/2004.”
Do you recall this work being done or being aware of it?
David Miller: No.
Ms Price: Based on that paragraph and a quick skim of the report, it appears that the analysis was done by reference only to one Post Office branch; is that right?
David Miller: So it appears, yes.
Ms Price: There is an equivalent report for March 2005. There’s no need to turn that up, but the reference for the transcript is POL00178583. I think you’ve been provided a copy of that quite recently, as well; is that right?
David Miller: Yes, that’s correct.
Ms Price: Would you agree that, likewise in that report, the analysis seems to be done by reference to one Post Office branch?
David Miller: Yes.
Ms Price: Do you recall having any awareness of any kind of monitoring work like this being done in relation to the accounts?
David Miller: I was aware that the auditors were undertaking this work. At the time, I wasn’t aware of the scale of it, I have to say. I should have been but I wasn’t.
Ms Price: Being aware of the scale of it now, do you consider it was a satisfactory way for the Board to satisfy itself of the accuracy of the company accounts?
David Miller: It was very limited.
Ms Price: Just, finally, at paragraphs 23 and 37 – perhaps if we can start with paragraph 23 of your second statement, that’s page 7, you say:
“I do not recall the POL Board having oversight of criminal prosecutions – this was dealt with by the Security and Legal Departments (who were part of Group). In hindsight, this seems to be a significant oversight by the Board.”
Then paragraph 37, please. You say:
“POL’s corporate structure seemed to me to be adequate at the time. However, in retrospect, I have concerns about the degree of autonomy enjoyed by Security and Legal and the like of POL oversight.”
What do you consider was the cause or the omission or lack in the governance structure that led to this lack of oversight?
David Miller: Well, subsequently, Post Office Limited has its own Legal Department, its own Security Department, as I understand it, and I think there was, during the years we are talking about, some reorganisation, and then very fast reorganisation after that, and I think there was some organisation issues that led to problems. And I think the Group control of Legal and parts of Security meant that Post Office Limited didn’t have sufficient oversight of matters that should have been within its remit.
Ms Price: You may be aware that Alan Cook, who gave evidence to the Inquiry last week, his position was that he did not appreciate that Post Office were conducting private prosecutions of SPMs until 2009. What do you make of that?
David Miller: I’m surprised he wasn’t told.
Ms Price: You were the temporary MD for two to three months before he took up the role and you handed over to him when he arrived. Do you think you bore any responsibility for drawing that to his attention or not?
David Miller: Probably.
Ms Price: Sir, those are my questions. It is now 1.00. I’m not sure whether Core Participants have questions or not. I think there are. There are at least two, possibly three, sets of Core Participants who have some questions. Is now a convenient time to break for lunch?
Sir Wyn Williams: Yes, it is, I think, not least because the transcriber should have a break. So we will break until 2.00?
Ms Price: Thank you, sir.
(1.00 pm)
(The Short Adjournment)
(2.00 pm)
Ms Price: Good afternoon, sir, can you still see and hear us?
Sir Wyn Williams: Yes, I can.
Ms Price: Mr Stein, Mr Moloney and Ms Page have some questions. They estimate they will be no more than 15 minutes altogether, and they are going in that order, if that’s all right, sir.
Sir Wyn Williams: Of course, and I’m smiling only because of the flexibility of these timings.
Mr Stein: Sir, thank you.
Questioned by Mr Stein
Mr Stein: Mr Miller, I have a few questions for you. My name –
Let me try that, again. My name is Sam Stein, I represent a large number of subpostmasters/mistresses and, indeed, people that are employed within Post Office branches.
Now, you’ve said at the beginning of your evidence today, Mr Miller, that you wanted to correct your statement and you wanted to correct your statement regarding paragraph 51.
Paragraph 51 of your statement, page 12, says you had no involvement with the design and implementation of the IMPACT Programme. Your correction was to say that you’ve seen documents that tell you that you are – were involved, sorry, as part of the IMPACT Programme; is that correct?
David Miller: Yes.
Mr Stein: All right. Now, the IMPACT Programme was running, in terms of design, from 2003 and implementation came along in 2006, okay?
David Miller: (The witness nodded)
Mr Stein: All right. Now, do you recall that, as part of the IMPACT Programme, the ability for subpostmasters to put monies in suspense, in other words into dispute, was removed?
David Miller: Yes, I do, sorry.
Mr Stein: Right. Now, did you understand at the time that the reason why subpostmasters would be wanting to put money into suspense, in other words into dispute, was because they were suggesting that they were not at fault for the shortfall. Did you understand that at the time?
David Miller: I understood that in some cases, Mr Stein, yes.
Mr Stein: Right. So why was it removed, Mr Miller?
David Miller: I think there was an overriding view in the business that they wanted to get an accounting system in that didn’t allow for the effect of the suspense account previously.
Mr Stein: Right. Are you trying to say that it was removed because you didn’t want subpostmasters and mistresses to dispute shortfalls?
David Miller: No.
Mr Stein: Right. Well, that’s the effect of it, Mr Miller. Try it again. Why was the suspense account removed?
David Miller: Um, right – there was a view that, previously, the suspense account had been used for all sorts of things and that, in the future, they wanted it a lot – or we wanted it, I’m sorry, a lot cleaner. But I am not sure that the precise impact of what you are asking me about was fully comprehended.
Mr Stein: Right. Was one of the all sorts of things that the suspense account was used for where the subpostmaster was disputing their fault? Was that one of the things?
David Miller: Yes.
Mr Stein: Right. If you remove the suspense account, does that take away from the ability of a subpostmaster to dispute the shortfall?
David Miller: No, I don’t think it did.
Mr Stein: Right. What facility did they then have after the suspense account was removed to dispute it?
David Miller: Well, sorry, they could – there were discussions with the Retail Line and others about what was appropriate.
Mr Stein: Right. If you accept that one of the reasons for putting money into suspense is because a subpostmaster is disputing that shortfall – yes –
David Miller: Yes.
Mr Stein: – you accept that, which you do – and then you remove that ability, does that help the subpostmaster dispute the shortfalls?
David Miller: No, it doesn’t.
Mr Stein: Right. Now, think about this slightly further and I’ll move on. If a postmaster is stopped from disputing shortfalls, what does that do to the reporting of system problems? Does it help it?
David Miller: I’m not sure how it affects it, I’m sorry.
Mr Stein: Well, as an example, does it stop the person saying, “Look there’s a problem with your system, maybe do something about it”? Do you think that helps it?
David Miller: No, I would dispute that it stopped it.
Mr Stein: All right, let’s move on. You say at paragraph 55 of your statement that “Tony Marsh worked for the Group Security Director with a dotted line to me”, okay? Was there a dotted line from Tony Marsh, the Group Security Director, to anyone else on the Board?
David Miller: No.
Mr Stein: Right. So Tony Marsh reported to you; is that correct?
David Miller: Technically, he reported to the Group Security Director, who did his appraisement (sic) every year and, within Post Office Limited, he had a dotted line to me.
Mr Stein: Sort did the Group’s Security Director report to you?
David Miller: No.
Mr Stein: Right. So why do you say “There was a dotted line to me”? What was the dotted line about?
David Miller: It was an organisational effect that said, actually, Tony may work for Group but he has to have some anchorage in Post Office Limited and we’ll anchor him here.
Mr Stein: Right, you’ve spoken about the Coyne report. Do you remember the questions being asked earlier on today by Ms Price, yes?
David Miller: Yes.
Mr Stein: You’ve said about the Coyne Report – this is in your evidence today – that, in relation to the expert’s opinion, at the time there was a lot of knocking of that report, both Fujitsu and Post Office, okay? So your evidence seems to be that, regarding the Coyne Report, there was knocking it of it by Fujitsu and Post Office. So let’s take it in turn. What knocking of the Coyne Report was there by Fujitsu?
David Miller: I saw the Inquiry question Jan Holmes, who is a senior auditor. There was a considerable discussion about his view of this report and the discussion went to some lengths about what his view of it was and whether that was correct.
Mr Stein: At the time, when you were dealing with the Coyne Report and discussing it with Mr Marsh, was the knocking from Post Office via Mr Marsh about the Coyne Report?
David Miller: There was a background noise from my company, Post Office Limited, that was basically saying this is not a good report, this is not a sound report.
Mr Stein: Who did that background noise come from?
David Miller: It came from a variety of places.
Mr Stein: Well, name one?
David Miller: Well, certainly when Tony spoke to me on the day that we have talked about earlier today, he was dismissive of that report but there were, I suspect, back in the bowels, as it were, of the organisation, there was significant people saying this is no good.
Mr Stein: You suspect. Now, Mr Miller some parts of your evidence it appears as though you’re speaking from a kind of a distance, like an out-of-body experience. What do you mean you suspect that there was some talk within Post Office about it; was there or was there not?
David Miller: Yes.
Mr Stein: Right, from who?
David Miller: I know – I heard from Tony Marsh. I really don’t know who else was saying these things. I’m afraid I don’t, I’m sorry.
Mr Stein: Okay. You’ve also said this, both in your statement and in your evidence: you definitely did not read the report at the time. That’s your evidence about it?
David Miller: It is.
Mr Stein: So are we to understand that you can think back to the time when you’ve got Mr Marsh in front of you and he is referring to the report, are you saying that you can say in your own mind from your recollection, “No, thanks, Mr Marsh, I won’t read it. It’s okay, no problems”?
David Miller: No, I didn’t say that.
Mr Stein: Right, why are you saying you definitely didn’t read it? Do you remember not reading it?
David Miller: I – when I read it, when it was made available to me for the second time via this Inquiry, I had not read that.
Mr Stein: So Mr Marsh comes to you with a report that he’s knocking, that you’re hearing something going on in the background about from the Post Office knocking this report, and you decide not to read it? Is that what you’re saying, Mr Miller?
David Miller: I didn’t read it. I had made that very clear to this Inquiry, that I didn’t read it, and it’s a matter of some regret to me.
Mr Stein: Mr Miller, one of two things arise out of that, you’re either lying through your teeth or you’re a complete incompetent, which?
David Miller: I’m not lying through my teeth.
Mr Stein: Right, so incompetence?
David Miller: If you wish to say that, yes.
Mr Stein: Do you agree it is incompetent not to have read a report in these circumstances?
David Miller: I’m not happy that I didn’t read that report.
Mr Stein: Paragraph 16 of your statement, similar to paragraph 15, you refer to the fact that POL would, from time to time, pursue postmasters for the recovery of alleged shortfall branch accounts including through civil proceedings, yes? Regarding the Coyne Report, you agree, I believe, that you signed off the settlement in relation to the matter that was under discussion; is that right?
David Miller: I did.
Mr Stein: Okay. So do you agree you were the person in charge of the final decisions in relation to such matters as civil actions being taken against subpostmasters at that time?
David Miller: No.
Mr Stein: Who else was Mr Marsh going to, then, when discussing the Coyne Report –
David Miller: If Peter Corbett, the Finance Director, had not been on holiday, he would have gone to him, or – I mean, Peter – that was in Peter’s line and Peter was due to sign that off. He was on holiday.
Mr Stein: Right. Peter reported to?
David Miller: The managing Director.
Mr Stein: Right. So, on this particular occasion, on the only one occasion when Mr Marsh is coming to you because Mr Corbett is away, you decide not to read a report that Mr Marsh is referring to in disparaging terms and you just sign it off; is that correct?
David Miller: I did.
Mr Stein: Mr Miller, how much did you earn during your period of time; what was your annual wage?
David Miller: That can be made available.
Mr Stein: What was it, Mr Miller?
David Miller: I don’t know.
Mr Stein: Bonuses, did you get bonuses?
David Miller: I got bonuses.
Mr Stein: Were they significant sums?
David Miller: Some were.
Mr Stein: Thank you.
Sir Wyn Williams: Is that it, Mr Stein?
Yes, Mr Moloney.
Questioned by Mr Moloney
Mr Moloney: I’m grateful for your observation of fluidity of time estimates. It’s now 2.12 and I anticipated that Mr Stein was only going to be five minutes but I’ll try to be short and not keep too long.
Mr Miller, I’ve in fact been referred to during the course of your evidence this morning, as somebody who asked you questions on the last time you attended. My name is Moloney. It’s agreed with Ms Price that it might be useful just to clear up any uncertainty about the evidence you gave when you first appeared before the Inquiry when I asked you questions.
I’ll just take a minute on that, if I may, just to set the scene. When you gave evidence to the Board in July 1999, you had been aware of the cash account problems, yes?
David Miller: Yes.
Mr Moloney: You’d also been aware from the NFSP meeting in June 1999 of the postmasters’ serious problems with Horizon, especially around balancing, that was affecting their physical and mental wellbeing?
David Miller: I’m aware.
Mr Moloney: Yes. But at the Board, despite those difficulties of which you were aware, the minutes suggest that you said that Horizon was robust and fit for purpose?
David Miller: I said that also, subsequently, there was discussion, and this didn’t come out this morning, there was discussion of other issues related and that is minuted in those Board minutes.
Mr Moloney: After – and I asked – you said at the time that you couldn’t remember saying that, that’s what you said to Mr Blake, and I asked you if you had any reason to doubt the accuracy of those minutes and you said you didn’t and you clarified that you definitely did not say that Horizon was not fit for purpose and not robust. But you later on, after that meeting, found out about the Ernst & Young letter on audit integrity and various other matters and you said that you should have looped around to the Board, bypassing Mr Sweetman, whose responsibility you thought it was to inform the Board of those things?
David Miller: I think there was some discussion of that. I can’t recall saying precisely that, Mr Moloney.
Mr Moloney: Okay. Today, in answer to questions from Ms Price, you said that:
“On overall reflection, I should have told the lawyers and IT that Horizon was a new system coming in, and they should be very cautious about evidence coming out of that system.”
David Miller: That they should check the evidence coming out of that system.
Mr Moloney: Yes. Then, subsequent to the board meeting, we’ve seen this morning that you were involved in Mr Andrews’ case, Horizon outages, and you had some involvement in the Cleveleys case.
You were taken to the Board minutes of December 2004 and you were tasked to ensure that Post Office could recover the pensions of fraudsters, yes?
David Miller: I was tasked with that. I made some comment on that, but –
Mr Moloney: Yeah, somebody else on the Board had raised this, you say.
David Miller: Yes.
Mr Moloney: Was this is an opportunity, given that those fraudsters were subpostmasters, for you to raise your concerns that Horizon was a new system coming in and everybody should be very cautious about the evidence that came out of that system?
David Miller: Had I known what I now know, the answer would be yes.
Mr Moloney: Finally, if I may, Mr Miller, could I ask that the October Board minutes that we’ve been to before, which are POL00095506, are put up. Could we go to page 4, please. We see there, if we could just – it’s at 22, NFSP subsidy, this may be sufficient:
“Reconsider the subsidy provided to the NFSP if they continue to undermine the position of Post Office Limited.”
This a Board meeting at which you were present and the specific action was:
“… to assess competing financial services products and to communicate that these would not be covered by our compliance and AML training [that’s anti-money laundering training]. The latter has been done by focus communications and an article will be appearing in The SubPostmaster. A list of competing products is being compiled. Considering the continuation of the NFSP subsidy will be undertaken in the light of overall developments and information gathered covering (eg including travel).”
Do you remember this issue at all, Mr Miller?
David Miller: I do.
Mr Moloney: Was this that there’d been an NFSP meeting where there’d been a stall at that meeting, with, as it were, a rival firm –
David Miller: That’s correct.
Mr Moloney: – for financial services. Yes. Was Post Office conscious that its subsidy of NFSP could be taken away if the NFSP undermined it?
David Miller: Was it – did it know it could do that?
Mr Moloney: Yeah.
David Miller: I think so.
Mr Moloney: Was it conscious that this might be leverage with the NFSP?
David Miller: I’m sure it was.
Mr Moloney: Yeah, which is why the specific action was to assess competing financial services products and to communicate, presumably to the NFSP, that these would not be covered by our compliance and AML training. Did you consider that that consciousness and what’s being portrayed here was a healthy attitude from the business to an association which was supposed to represent the interests of postmasters?
David Miller: No.
Mr Moloney: Presumably, especially not those postmasters who were the subject of civil debt recovery proceedings?
David Miller: No.
Mr Moloney: Nor, indeed, those postmasters who were the subject of criminal proceedings and asset recovery to the extent of their pensions being taken?
David Miller: Yes.
Mr Moloney: Thank you, Mr Miller.
Sir Wyn Williams: Ms Page?
Questioned by Ms Page
Ms Page: Thank you sir, very briefly.
Mr Miller, on the Programme Board for IMPACT, you sat as what was called a senior user, didn’t you?
David Miller: Yes.
Ms Page: The programme was intended to “leverage and simplify the technology landscape”. That means, in effect, that it was an extension of Horizon, doesn’t it?
David Miller: Or Horizon was an extension of it. Yes, it was part of the overall infrastructure.
Ms Page: So it was built into and onto and around the existing Horizon infrastructure, yes?
David Miller: Yes.
Ms Page: Did you ever think to make sure that the people involved with it had read Jeremy Folkes’ document to you about the problems with Horizon and the things to look out for?
David Miller: I didn’t.
Ms Page: Why not?
David Miller: I just didn’t.
Ms Page: Is the –
David Miller: I’m not saying I shouldn’t have done but I didn’t.
Ms Page: Is the real issue here with some of the points that you have very fairly recognised you should have done, or you might have done differently, is the real issue here that you and Post Office Board were keen to forget or deny the problems with Horizon as soon as you could?
David Miller: No.
Ms Page: Thank you, sir. Those are my questions.
Sir Wyn Williams: Thank you, Ms Page. Is that it, Ms Price?
Ms Price: Yes, it is, sir.
Sir Wyn Williams: Right.
Ms Price: If you’re content, sir, the plan would be to move directly Mr Mills’ evidence once Mr Miller is completed, subject to any questions from you.
Sir Wyn Williams: No, I’ve asked the few questions that I have as we’ve been going along.
So thank you, Mr Miller, for making yourself available, both by writing the second witness statement, and by coming today for the second time. I’m grateful to you for participating in this way in the Inquiry.
The Witness: Thank you, sir.
Sir Wyn Williams: Right. I’ll just disappear from the screen momentarily, Ms Price, while I get my hard copy of the next witness’s evidence all right?
Ms Price: Thank you, sir.
Mr Stevens: Good afternoon, sir. Can you see and hear us?
Sir Wyn Williams: Yes.
Mr Stevens: May I call Mr Mills?
Sir Wyn Williams: Yes, of course.
David Mills
DAVID JOHN MILLS (sworn).
Questioned by Mr Stevens
Mr Stevens: Thank you, Mr Mills. Please could I ask you to state your full name.
David Mills: David John Mills.
Mr Stevens: Thank you for giving evidence to the Inquiry today. You should have in front of you a witness statement dated 8 March 2024 and running to 141 paragraphs. Do you have that?
David Mills: I do.
Mr Stevens: For the record, the witness reference number is WITN10950100. Before we turn to your signature, Mr Mills, I understand there’s one small correction you would like to make?
David Mills: Yes, please.
Mr Stevens: It’s at page 8 of the statement, paragraph 24 and it’s in respect of the second sentence:
“Thereafter the meetings occurred on a monthly basis until I left POL [Post Office Limited] in 2006.”
David Mills: Correct.
Mr Stevens: What change would you like to make?
David Mills: I would like it to read “in 2005”, please.
Mr Stevens: Thank you. As it says at paragraph 2 of your witness statement, you held the position at Post Office Limited until 31 December 2005.
David Mills: That’s correct, Mr Stevens.
Mr Stevens: Could I ask you, please, to turn to page 38 of the statement.
David Mills: I have it.
Mr Stevens: Thank you. Is that your signature?
David Mills: Yes, it is.
Mr Stevens: Subject to that one change, can you confirm that the statement is true to the best of your knowledge and belief?
David Mills: It is.
Mr Stevens: Thank you, Mr Mills. That now stands as your evidence in the Inquiry. It will be published on the website shortly. I’m going to ask you a few questions about it.
David Mills: Thank you.
Mr Stevens: You, as you’ve just said, were the Chief Executive of Post Office Limited from 15 April 2002 until 31 December 2005?
David Mills: Correct.
Mr Stevens: Before then, you had a career in banking?
David Mills: I did.
Mr Stevens: Am I right that your last role before Post Office Limited was as General Manager of Personal Banking for HSBC UK?
David Mills: Correct.
Mr Stevens: Was that a Board role?
David Mills: No.
Mr Stevens: Had you held any Board rolls before Post Office Limited?
David Mills: Many.
Mr Stevens: Had you held a Managing Director or CEO role?
David Mills: Not in those words, no.
Mr Stevens: But a role akin to?
David Mills: But in practice, yes.
Mr Stevens: Thank you. We don’t need to turn it up, I want to look at the board you came to. In paragraph 52 of your witness statement, which is page 15, you say:
“As I note above, when I joined Post Office Limited there were irregular Board meetings. On arrival at Post Office Limited, the Board was therefore not exercising proper or effective oversight of any function.”
Could you explain why the Board wasn’t exercising oversight when you arrived at Post Office Limited?
David Mills: The Board wasn’t functionally organised. It only had four directors. They met infrequently and not on a regular basis and they dealt with matters that were of importance to Royal Mail Group. They were not into the detail of running the company.
Mr Stevens: You mentioned that there were four directors?
David Mills: Yes.
Mr Stevens: The first was a Chief Executive; is that right? Or should I say when you joined, you were appointed as Chief Executive?
David Mills: Yes, but that’s not one of the four directors. That was before my time when I was trying to illustrate to you that the Board was not – I didn’t think – in control of Post Office Limited.
Mr Stevens: So what were the four directors’ roles when you joined?
David Mills: They didn’t have specific roles, in the sense that I created in the Board that I subsequently made and managed. There was the Chief Executive of Royal Mail Group; there was the Chief Executive of Royal Mail; there was David Miller, the Chief Operating Officer; and there was the Finance Director, Peter Corbett. And that was it.
Mr Stevens: That was the Board. Is there a separate executive management team that sat below that board?
David Mills: Yes, eventually. As I say, when I got there, I didn’t think there was a functioning board, so I went about establishing what I thought were the normal functions of the conventional board of a very large company and I established roles, for example, IT Director; for example Sales and Marketing Director; all of the normal functions that you would have expected existed in a normally large company. Those positions were held by members of the Executive Team. So we not only had Board meetings but we that Executive Team meetings.
For example, we had Board meetings that met bimonthly, we had Executive Team meetings that met monthly and then all of the executives met every morning at 9.00 on a Monday – sorry, not every morning: met every Monday at 9.00.
Mr Stevens: So you say in your statement that you saw building a proper Board structure as an important matter?
David Mills: Critical.
Mr Stevens: Was that something you took on yourself or was it a direction given to you by someone else?
David Mills: No, it was something that I felt was essential to running an extremely large company.
Mr Stevens: You referred to, in your evidence, making roles on the Board for IT?
David Mills: Yes.
Mr Stevens: Was that Alan Barrie who fulfilled that role at the start?
David Mills: It was, yes.
Mr Stevens: For Sales and Marketing, that was the other role you referred to?
David Mills: Gordon Steele.
Mr Stevens: In your evidence, you also refer to HR?
David Mills: Correct.
Mr Stevens: Who fulfilled that –
David Mills: John Main. And they were not appointed immediately as directors because Post Office Limited was insolvent. It was a crisis.
Mr Stevens: Yes, and is it fair to say that you saw your priority, your key priority, as bringing Post Office Limited back to solvency.
David Mills: Well, I didn’t realise that when I was appointed but it didn’t take me very long to realise that we had a burning ship it was losing £1 million every single day it operated.
Mr Stevens: Can I ask – so we’ve looked at IT, Sales, Marketing, HR, you’ve referred to Finance and Operations already, Operations being David Miller.
David Mills: Yes.
Mr Stevens: Did you give consideration as to whether there should be other roles represented at the Board?
David Mills: Yes. We had – eventually we had a Banking Director and we also had – gosh, now, what else does it – I’m sorry I can’t recall what else it was but there were two more roles.
Mr Stevens: We’ll come to this in more detail in the future but, when we’re dealing at the start, or when you arrived, did you ever consider appointing something akin to a General Counsel or Head of Legal for Post Office Limited?
David Mills: Definitely not.
Mr Stevens: Why?
David Mills: Well, those roles on the legal front were undertaken by the legal function of Royal Mail Group. We had really quite a strange arrangement in as much as a number of central functions of the Royal Mail Group were undertaken for and on behalf of Royal Mail and Post Office Limited.
So, in a sense, there was no need for a General Counsel role at Post Office Limited because there was already one in existence at Group level that one could draw upon.
Mr Stevens: Did you have any oversight of the Royal Mail Legal Department in your position as a director on the Royal Mail Board?
David Mills: No, none at all.
Mr Stevens: Did you, at the time, consider that to be problematic where the legal function was dealt with by the parent body, over which you didn’t have oversight?
David Mills: Yes, I did.
Mr Stevens: Did you communicate that concern to anyone?
David Mills: It took a little time to for it to dawn on me that I wasn’t comfortable.
Mr Stevens: When did it dawn on you?
David Mills: It probably took at least six months for it to dawn on me.
Mr Stevens: What was the concern?
David Mills: There wasn’t a concern in the sense of the strength of the concern; it was merely a fact that I didn’t have my own personal arms around these central functions and, therefore, could tell them directly what I wanted them to do and, therefore, was in control of it. Pay and rations and, if they didn’t like it, well, I could tell them what to do with it, pay and rations.
Mr Stevens: We’ll come back to that, when looking at prosecutions in due course. Before I move on I want to look at some other corporate structure issues. Michael Hodgkinson was appointed as an independent chair in 2003; is that right?
David Mills: Yes.
Mr Stevens: Were you involved in his appointment?
David Mills: No, not at all.
Mr Stevens: Were you satisfied that an independent – I’m sorry, I’ll rephrase that.
What were your views on an independent chair being brought in?
David Mills: Well, I was pleased.
Mr Stevens: Why?
David Mills: Well, I think I probably hadn’t realised quite how big Post Office Limited was when I took on the job and I certainly hadn’t realised the condition that it was in and, having someone as wise and as thoughtful and as experienced as Sir Michael on the Board was just manna from heaven.
Mr Stevens: In February 2005, Alan Cook was appointed as a Non-Executive Director?
David Mills: Yes.
Mr Stevens: Did you have any involvement in his appointment?
David Mills: To the extent that I discussed it with Allan Leighton, yes. I’d known Cook from NS&I days because I used to deal with him when I was with HSBC or Midland Bank, so I knew the man.
Mr Stevens: What were your views of his appointment?
David Mills: I was pleased.
Mr Stevens: Why?
David Mills: Well, he was another man who was experienced, he’d had a long time in the financial services industry. I wasn’t surrounded by people who knew about that industry, and that’s the direction that I thought was the solution to Post Office Limited’s problems. He’d also had good experience dealing with government departments, so he was a good choice.
Mr Stevens: I want to look at your role as Chief Executive, please. Would you accept that, as Chief Executive, you had ultimate executive accountability for the operation of Post Office Limited?
David Mills: Of course.
Mr Stevens: Would you agree that identifying, analysing and managing risk is an important part of running a company?
David Mills: Definitely.
Mr Stevens: Is it fair to say that that goes to the heart of the role of the company executive?
David Mills: Yes.
Mr Stevens: Do you accept that good risk management requires an executive to be proactive in identifying risks?
David Mills: Yes. You can’t just hope they come and jump up before you; you’ve got to go and find them.
Mr Stevens: That applies to the Chief Executive as well as the people who report to him or her?
David Mills: Of course.
Mr Stevens: Did Post Office Limited maintain risk registers when you joined the company?
David Mills: No.
Mr Stevens: When did Post Office Limited start to maintain risk registers?
David Mills: I’m not exactly sure but the first thing that Sir Michael Hodgkinson did was to decide that we needed a Risk Committee, and he established it and chaired it, and I thought to myself, “Well, that’s jolly good”, because we’ve got somebody now with good professional experience, chairing the committee that needed to look at these things, and that’s something that I can leave to Mike, I was very happy to do that, whilst I got on with other things.
I remember – I really would like to remind you that I was trying to deal with the biggest risk of all that this company faced. This company, without a question of doubt, faced going under. Now, that wasn’t just a risk that affected all of the people within it or with all the suppliers, or anything like that at all. Post offices were everywhere. They were – there wasn’t a village that they wasn’t in. So if Post Office had gone under that would have been seriously deleterious for this country.
Mr Stevens: Yes, Mr Mills. It’s in your witness statement, as you say, the serious risk that insolvency – well, the risk that faced Post Office Limited. Can I just clarify on the risk register point, please. Do you think that was introduced after Sir Michael Hodgkinson was appointed Chair?
David Mills: I think it would have been but, I’m sorry, I don’t know.
Mr Stevens: How was risk and the risk management handled prior to a risk register being implemented?
David Mills: I don’t know.
Mr Stevens: When you joined as Chief Executive what steps did you take to identify the risks that faced the business?
David Mills: I’m sorry, I thought I’d made it clear. I didn’t identify the risks on a one-by-one basis, as you’re discussing. My first priority was to try to set a course that stopped the company from going bankrupt. It took me at least six months to really understand what was going on. This was a very non-trivial company. I didn’t have any briefing whatsoever about it. I had no papers, no people telling me what was going on. I had to try to discover all of these things myself. So, I’m sorry, but I didn’t go around trying to build a number of what are the risks.
Mr Stevens: In effect, then, in terms of the resources you had, that was fully occupied with looking at the solvency and you didn’t have the resources to deal with, for example, the risk register; is that your evidence?
David Mills: It’s sort of my answer. I mean, you’re putting words into my mouth. I didn’t have the brainpower to cope with any more than I was coping with during those first six months. I’m very sorry but I didn’t.
Mr Stevens: Before I move on, can I ask if your remuneration was fixed or performance based?
David Mills: First of all, it was fixed and then I recall that the Secretary of State made it extremely clear to Allan Leighton that she expected the senior executive of the entire group to have remuneration that was performance based and that the targets for that performance should be stretching, and that the rewards for that stretching success were not to be miserly, they should be generous. So it –
Mr Stevens: Sorry.
David Mills: I eventually joined a thing called the LTIP, the long-term improvement plan, or something like that.
Mr Stevens: Do you recall how your performance was measured?
David Mills: I do, yes. I had quite serious meetings with Allan Leighton who wanted to know what I’d done and when I’d done it.
Mr Stevens: What specifically did he want to know you had done?
David Mills: Turned the company into profit.
Mr Stevens: So it was profit-based targets?
David Mills: No, I didn’t say that. You asked me what specifically did he want to know and I told you. He wanted to know whether I was going to get this company into profit.
Mr Stevens: Sorry, let me rephrase the question. In terms of how your performance was measured, was it measured by reference to how successful you were or your plan was to bring the company back to profit?
David Mills: Well, one of the measurements was did I create a strategic plan that held for the next three years and was approved by Government? That would have been one of the things. But I want to – I really want to try to emphasise to you that the whole thing was about can we save this place?
Mr Stevens: Mr Mills, in your evidence you’ve referred to that. You also say – we can bring this up, actually, it’s in the witness statement at page 4, paragraph 12, please.
David Mills: Yes, I have it.
Mr Stevens: I’m just waiting for it to follow on the screen, sorry.
David Mills: I’m so sorry.
Mr Stevens: No need to apologise.
You refer to:
“As well as the overriding objective to make the company profitable, I was also conscious of my other obligations as Chief Executive and as a director of Post Office Limited.”
You go on to say:
“I was throughout conscious of my duty as a director to ensure that the company was run in an honest, effective and ethical manner.”
Finally, you say:
“Further, I understood that my duties were not only owed to existing shareholders but also to the wider organisation, including Post Office Limited’s employees, and to ensure that it had a viable future.”
And that can come down, thank you.
Subpostmasters aren’t employees, are they?
David Mills: Not in the conventional sense but, for the purposes of this Inquiry, you could regard them as so.
Mr Stevens: Did you see your duty as a director to include considering how changes in management affected subpostmasters?
David Mills: Definitely. Yes, definitely.
Mr Stevens: One last question on corporate governance, before I move on. Did you apply or take into account any Codes of Practice or codes that were relevant to corporate governance and management?
David Mills: No, not in the sense that you mean. In the sense that you meant, was I following the normal corporate codes, for example, of the Companies Act 2006? What I was trying to do was follow the general ethical code that I’d learnt through 40 years being in one of the UK’s biggest banks, and the ethical codes that were employed there were very, very strict indeed, and worked, and I was doing my best to employ many of the lessons that I’d learnt in that period in Post Office Limited.
To have tried to cover them with regulatory work at the time that I was trying to do it would not have been possible. You would not have been able to change the organisation at the pace that that needed.
Mr Stevens: Please can I just clarify that. When you referred in your evidence a moment ago to ethical code that you learned or gained experience of over the years, are you referring to a specific written ethical code or general experience that you picked up in running various companies?
David Mills: Well, not just that, I was on a number of regulatory bodies, including the Personal Investment Authority, I was also on the Arbitrary (sic) Council, and so forth. So I was very familiar with the way in which regulatory bodies handled large companies, admittedly all in the banking sector.
Mr Stevens: Yes, but when you use the specific word “ethical code”, are you referring to a particular written document?
David Mills: No, I’m not.
Mr Stevens: Thank you.
We’ll turn, then, to looking at some issues relating to Horizon. Please could we bring up page 5 of the witness statement, paragraph 14. This is picking up on a theme in you mentioned earlier. You say:
“When I joined POL [Post Office Limited], I was barely briefed on anything by anyone. Even the building Security Team was not expecting me on my first day – I arrived to an empty open-plan office, and began work.”
At paragraph 15 you refer to the priority, when you started at POL:
“… after gaining an understanding of the business … to formulate a strategic plan.”
You say also in your statement, that you knew about the Horizon system and you say that it was:
“… delivered quite sometime before my arrival.”
Who gave you any information – I’ll rephrase that, sorry.
The information that you had on Horizon, who gave that to you?
David Mills: Miller.
Mr Stevens: David Miller?
David Mills: Yes, David Miller.
Mr Stevens: When did he give you that information?
David Mills: Probably on my first day.
Mr Stevens: Did he, when speaking to you, did he refer to any of the difficulties that Post Office Limited had faced during the trial and rollout of Horizon?
David Mills: No. Mainly our conversations revolved around the fact that Horizon had been started as a way of automating the transactions of – gosh, who the devil was it? I’m sorry, it’s called old age.
Mr Stevens: The Benefits Agency?
David Mills: The Benefits Agency, I’m very sorry. Do forgive me.
Mr Stevens: No need to apologise.
David Mills: No, they’d gone a long way with automating what the Benefits Agency wanted and then, eventually, the Benefits Agency said, “No, we don’t want all that, it’s all costing have too much, we can do these things differently and we’re pulling out”. So that left the Post Office with a major decision: did they take this system and try and amend it, or did they write it off? If they’d have written it off, it would have been a massive write off for the Government. Just a huge hit on the bottom line, of a company that was already insolvent. So they decided that they would refurbish this thing and try and use it to, unbelievably, automate the entire back office of the Post Office, all in one go. Well, that was what I knew about Horizon.
Mr Stevens: Please can we bring up your witness statement page 26, please, paragraph 91.
If we can have 90 and 91 together, please. Thank you.
Similar to what you said, you refer at the end of 90 to the system being repurposed in a way to automate the entire back office of the branch network. You say:
“With hindsight, Horizon should not have been repurposed in that way. It has become evident that it was not fit for purpose.”
At the time, were you given any impression or any understanding that the repurposing of the system had a negative effect on the actual end product?
David Mills: No one has specifically mentioned it. But I would easily have expected it. I had been the IT Director of Midland Bank and we had rewritten the entire retail banking system for the bank and there was only one way to do that. It was not to try to remake the elephant all in one go. It was to bite it in tiny pieces.
Mr Stevens: Were you sceptical, then, of, as you describe it, the repurposing of –
David Mills: Definitely.
Mr Stevens: Did you do anything because of your scepticism?
David Mills: Yes.
Mr Stevens: What did you do?
David Mills: Well, it was pretty obvious that Horizon was not going to be written off, nor was it going to be closed down. No one would have accepted that in Government or, indeed, in the wider surroundings. So I made it very clear, very early on, that we had to do a number of things with Horizon. The first thing was to reduce its cost because, remember, my primary activity was to try to keep this thing afloat. So we needed to reduce its cost to something like you would normally expect a company to be paying for its IT. Now we were paying well above what you could have expected and, normally, that would have been 15 per cent of non-interest expenditure. It’s sort of, you know, a rule of thumb, sort of thing. So I basically said we must reduce the costs of Horizon.
And, at the same time, we must begin to think now about how are we going to replace it within the contractual term, which was basically five years hence, and that’s the amount of time you really need to think about how you replace a system this size and scope and complexity.
Mr Stevens: Did you at any point think that you needed to investigate how robust or how adequate the system was in recording transaction data?
David Mills: No, not at the transaction data level. I thought very early on that I needed to understand what was happening to this system in the hands of the user. So it was not at all unusual for me to go out and directly visit a subpostmaster who were using the system to ask them how they were getting on with it, what were the problems with it, what were the good things about it, how were the things happening in their branch, and that was a – you know, I did that regularly.
And we also set up a model office, because, very often, even with a very well performing IT system, you can create a model environment and examine it forensically to see how it’s working, what we can do to improve it. If the glass of water is over there, that’s too far to reach. We want the glass of water here’s. So many, many tiny things can be done to make a performing system perform much better.
Mr Stevens: Why did your scepticism not include how the Horizon IT System recorded transaction data?
David Mills: I don’t know. Maybe it’s because in those days of – this is very early days for computers in the scheme of things and, in those days, most people thought that computers did work and that they produced an answer that was logical and reasonable and would do the finished job. Also, don’t forget that this thing had been run, it had been piloted, it had been acceptance tested. So it had gone through many stages before I was there. It had been live for two years before I arrived.
Mr Stevens: Did you ask anyone about how the rollout, the testing the pilot, went, and how Post Office Limited, how satisfied it was with the rollout, testing and pilot?
David Mills: Yes, of course I did. I just said I was talking to subpostmasters on a regular basis. A very regular basis.
Mr Stevens: So that was with subpostmasters?
David Mills: Yes.
Mr Stevens: What about anyone in the Post Office IT Department?
David Mills: No, I didn’t, actually, because, in a sense, we didn’t have an IT Department. We had Fujitsu. That was the IT Department, in reality.
Mr Stevens: What about Alan Barrie?
David Mills: Yes, he was the IT Director but he didn’t have a load of code writers behind him and, of course, I did ask him, obviously, you know, how things were going and what was happening.
Mr Stevens: Did you feel that you had sufficient IT expertise within Post Office Limited to properly understand whether Horizon was adequate?
David Mills: No.
Mr Stevens: Why did you not try to address that?
David Mills: I did.
Mr Stevens: How?
David Mills: Recruiting Ric Francis, for example, who was the IT Director who succeeded Alan Barrie.
Mr Stevens: In all of this, when you’re asking questions about the pilot and the testing, et cetera, you may have covered this in your evidence already but, just to be sure, did you discuss that with David Miller?
David Mills: Yes. Miller is a crucial man in this. He is very thoughtful, he worked extremely hard, he was running the network and he was running the network with aplomb, in my view, given the things that we were trying to do.
Mr Stevens: Please could we bring up your witness statement page 34, paragraph 124. You say that:
“I have been asked whether I was concerned by the nature or frequency of allegations made by subpostmasters that Horizon was directive. To be clear, whilst at [Post Office Limited] I was not made aware of complaints to the effect that Horizon was compromised.”
Can we now bring up POL00328107. This is a letter from Dave Barrett of Post Office Limited, it’s dated 29 October 2003. Dave Barrett’s job title was Head of Commercial Urban Area, Wales, The Marshes and Merseyside; did you know who Dave Barrett was?
David Mills: No.
Mr Stevens: As you’ll see, it refers to a letter about Alan Bates sent by Betty Williams MP and, in the second paragraph, it refers to Post Office terminating Mr Bates’ contract because of a loss of confidence in his willingness to conduct the job in the manner expected. Were you aware of Alan Bates at around about this time?
David Mills: No, not at all.
Mr Stevens: If you turn to page 4, please, this is a letter from Betty Williams MP to Stephen Timms MP, who was Minister of State for E-Commerce Energy and Postal Services. Do you remember Mr Timms MP?
David Mills: I remember Stephen very well indeed.
Mr Stevens: He was the Minister at the Department for Trade and Industry when you were Managing Director?
David Mills: Yes, an excellent man.
Mr Stevens: You will see in that letter Betty Williams MP, if we go down, refers to a conversation which she’d had with Mr Barrett, and says:
“His arrogant attitude was wholly unacceptable.”
Well, she asked Mr Timms to make a complaint to Allan Leighton regarding the matter. If we turn to page 7, please, this is Stephen Timms’s letter in reply to Betty Williams on 17 November 2003. At the bottom it says:
“However, in view to your concerns, I have passed your correspondence to David Mills, the Chief Executive of Post Office Limited, and have asked him to investigate the matter and respond to you direct.”
Over the page, we see Mr Timms’ letter to you. Do you recall receiving this letter.
David Mills: I don’t but I’m not at all surprised that Stephen sent it to me. I liked Stephen a lot, we got on very well. He worked extremely hard to do his job and I would have done anything I could to have helped him.
Mr Stevens: Would you have expected a letter from the Minister responsible for the Post Office to be put onto your desk?
David Mills: No, no, I’m not saying that. What I’m saying is that not at all surprised that Stephen wrote to me.
Mr Stevens: Well, I’ll ask you: would you expect a letter sent by the Minister responsible for the Post Office –
David Mills: Yes, I would have done, yes.
Mr Stevens: You say you can’t recall it, do you think on balance, it’s likely you would have received this?
David Mills: I probably did, yes, and probably I’d have taken the wrong thing out of it. I would have been, probably, incensed that one of our Area Managers, Barrett or whatever his name was, had been rude and arrogant, and so forth, to Betty Williams and, if you look at her note, she’s got a handwritten note, you can see that it does seem that this chap was not good with her. So I’d have probably progressed that, rather than Mr Bates, which I’m – you know, I’m not saying is right at all; I’m saying that’s what I think I might have done.
Mr Stevens: But it’s apparent you can’t actually remember what you did do?
David Mills: No, I’m sorry, I can’t.
Mr Stevens: Please could we turn to page 9 of the same document. This is a letter on 11 November 2003, again to Betty Williams MP, this time from Alan Bates, so 11 November just before Stephen Timms’s letter to you. In the fourth paragraph down, it says:
“The comments made in his letter about ‘lost confidence’ [that’s referring back to the termination reason] etc, is really just a smokescreen to try and justify their actions from their position. The real through behind all this are the problems with the Post Office Horizon system and the lengths that the Post Office will go to keep it covered up.”
In the next paragraph down, it says:
“With regard to the response you received from the Minister I can see that Post Office is using its ‘contractual issue’ reply with him again, but he really needs to look into the Horizon issues. It is Horizon which in one way or another is causing the problems.”
Then over the page, please. The second paragraph down says:
“Post Office Limited are terrified about the real facts with Horizon being known and it seems they will stop at nothing to keep them hidden.”
If we move on to page 11, please, it’s a letter from Betty Williams to Stephen Timms of 19 November, enclosing the letter we’ve just referred to by Mr Bates. Then, finally, please, if we can go to page 12. Mr Timms’ response on 8 January, at the bottom of the second paragraph, he says:
“However, in view of the concerns raised by Mr Bates as to the validity and reliability of [Post Office Limited’s] ‘Horizon’ computer system, which he sees as a factor in his dispute, I have had my officials contact the company to receive their response to the issues raised.”
It goes on to discuss Horizon but then says:
“I understand that the management of [Post Office Limited] do not share Mr Bates’s concerns and are fully confident as to the reliability of the Horizon system.”
It goes on to say:
“They have found no evidence to suggest that there is any fault with the Horizon system and maintain that the decision to terminate Mr Bates’ contract was legitimate.”
Do you recall being made aware of these concerns by Mr Bates?
David Mills: No.
Mr Stevens: Given the working relationship you had with Mr Timms at the time, is it likely that you would have been made aware of those concerns?
David Mills: No, I don’t see the connection with your question.
Mr Stevens: Well, earlier in your evidence, you said you worked closely with –
David Mills: Yes, but –
Mr Stevens: Well, you had a good –
David Mills: – I’m sorry, you’re trying to connect that with people giving me evidence that there was something wrong with Horizon, which I didn’t have.
Mr Stevens: Let’s take it in stages, Mr Mills. Firstly, based on your working relationship with Mr Timms, do you think you would have discussed the concerns raised by Alan Bates with him?
David Mills: No, because I wasn’t aware of those concerns.
Mr Stevens: So is your evidence, or what you think happened, Mr Timms raised it with the company but raised it with someone else?
David Mills: I think so, looking at this correspondence.
Mr Stevens: Who else in the company would be responsible for dealing with requests such as this from the Department of Trade and Industry?
David Mills: I’m not sure. It depends to where it was addressed but, if it was something of an IT type it would have been Alan Barrie.
Mr Stevens: So is it your evidence that Alan Barrie would have had a direct line of report to the Department of Trade and Industry?
David Mills: No, I didn’t say that.
Mr Stevens: So who then –
David Mills: I don’t know is the answer to your question.
Mr Stevens: How often did you meet with Mr Timms around this time?
David Mills: No, I didn’t meet with him regularly. I spoke on the telephone.
Mr Stevens: How often did you speak with him on the telephone?
David Mills: Oh, infrequently.
Mr Stevens: When you say “infrequently” …
David Mills: Three or four.
Mr Stevens: Three or four, what, is that times a month or –
David Mills: No, in total.
Mr Stevens: In total?
David Mills: Yes.
Mr Stevens: Three or four times. Over how long of a period?
David Mills: The length of the time that I was with the Post Office.
Mr Stevens: Can we move on, please.
Actually, sir, this is probably a good time to take a short break because it’s moving to a different topic.
Sir Wyn Williams: Certainly. Do you want a 10-minute break, a 15 –
Mr Stevens: I think ten minutes will be fine, sir, thank you. If we could say 3.20 past.
Sir Wyn Williams: All right, fine. Thank you.
Mr Stevens: Thank you, sir.
(3.08 pm)
(A short break)
(3.19 pm)
Mr Stevens: Good afternoon, sir, can you still see and hear us?
Sir Wyn Williams: Yes, I can, thank you.
Mr Stevens: Thank you. I’d like to move to the case of Cleveleys, please, and start with POL00158493.
This is an email from Keith Baines to David J Mills; that’s you, isn’t it?
David Mills: Yes, that’s me.
Mr Stevens: Keith Baines is noted as a Contract Manager at Post Office Limited in the IT Directorate. Do you recall working with Keith Baines?
David Mills: No, but I know who he is. He negotiated the lock with Fujitsu.
Mr Stevens: The subject is “Action from your visit to the IT commercial team meeting”.
David Mills: Yes.
Mr Stevens: What was the IT commercial team meeting?
David Mills: Well, it was just a visit to the IT, so I knew – or get a feel for the people merge there and asked them probably inane questions but helped me to learn more about the business.
Mr Stevens: It says:
“David
“You asked who within Post Office was instructing the lawyers in the case referred to in the following risk on the IT risk register …”
Pausing there, do you remember what the IT risk register was?
David Mills: Yes.
Mr Stevens: What was it?
David Mills: It was just a register of those risks that the IT thought may affect them and/or the company.
Mr Stevens: Who had access to the IT risk register?
David Mills: I’m sorry, I don’t know.
Mr Stevens: Who was responsible for putting risks on the IT risk register onto the Post Office Limited Board’s risk register?
David Mills: Well, ultimately, it would have been Alan Barrie and/or Ric Francis, subsequently.
Mr Stevens: But, if you were aware of a risk on the IT risk register, presumably you would accept responsibility for putting that onto the main board’s risk register, as well?
David Mills: Yes, I would but I wouldn’t have done in this case because I was just on a walk around and noticed this particular risk, which I asked about.
Mr Stevens: So the risk says there:
“‘Damage to reputation of Post Office and potential future financial losses if [Post Office] loses court case relating to reliability of Horizon accounting data at Cleveleys branch office’.”
What did that mean to you at the time when you read it?
David Mills: Well, actually, that meant nothing to me at the time. What did catch my eye was that the potential financial loss was £1 million.
Mr Stevens: Was £1 million?
David Mills: Yes.
Mr Stevens: Well, looking –
David Mills: So, naturally, I said to this fellow Baines, you know, “let me know about that, please. I want to know more about it”.
Mr Stevens: Taking it in stages from what that says and what it is, firstly, someone has brought a court case against Post Office Limited, yes?
David Mills: Yes.
Mr Stevens: Part of that court case concerns the reliability of the Horizon accounting data, yes?
David Mills: Yes.
Mr Stevens: The IT Department had considered that to be a risk worthy of going on the IT risk register?
David Mills: Correct.
Mr Stevens: So the risk related to IT and not, for example, just a general legal risk?
David Mills: No. Everyone was supposed to be identifying their own risk. This was an IT risk.
Mr Stevens: It says there’s “damage to reputation of Post Office and future financial losses”. What did you understand the future financial losses to be?
David Mills: £1 million.
Mr Stevens: They’re saying the amount is £1 million, how did you understand the Post Office risked losing £1 million?
David Mills: I didn’t know, I didn’t understand that. I saw a risk register, it was registering a figure of £1 million. Anyone with any brains would have said, “I need to know more about this”.
Mr Stevens: There’s sufficient information there, isn’t there, to see that someone was putting the reliability of Horizon into issue in court proceedings?
David Mills: Yes, there is.
Mr Stevens: Did that concern you?
David Mills: No, because I asked about it to find out about it. So just reading that wouldn’t – I wouldn’t even have taken that in when I read it. What I would have taken in is £1 million.
Mr Stevens: When you asked about it, what were you told?
David Mills: This is the response.
Mr Stevens: Ah, sorry. We’ll wait for that to come back up.
Sir Wyn Williams: While Mr Stevens is waiting for that to be put back up, the £1 million that you’ve mentioned, Mr Mills, actually, it’s the first time I think I’ve heard that figure. Was that something written on the risk register or was that something you learnt from another source?
David Mills: No, I think it was written on the risk register.
Sir Wyn Williams: Right.
Mr Stevens: Sir, we can assist with that. I’ll go to it in a moment once we’re finished on the document.
Sir Wyn Williams: Fine.
Mr Stevens: Thank you.
So I asked what question you raised about this and you say this is the response.
David Mills: Correct.
Mr Stevens: This still doesn’t tell you what the challenge to the reliability of the IT system was, does it?
David Mills: Correct, it does not. What it –
Mr Stevens: Did you ask what that was?
David Mills: No.
Mr Stevens: Why not?
David Mills: I wasn’t that clever. I’m sorry, I didn’t ask about it.
Mr Stevens: Well, let’s look – if we look to the next paragraph, it describes who is providing instructions. It says:
“The case is scheduled for the week commencing 16 August, and we have offered settlement and paid money into court based on what the subpostmistress would have received for 3 months notice.”
David Mills: Correct.
Mr Stevens: Did it not concern you that an offer of settlement had been made in a case where the reliability of the Horizon IT System was in issue?
David Mills: No. Because I hadn’t properly assimilated the fact that the reliability of Horizon was in doubt. I hadn’t got that in my mind. What I’d got in my mind was £1 million and, looking at this email, it looked pretty certain to me that we were going to settle for three months’ notice and, at the level that I was operating at, that seemed an end to that issue.
Mr Stevens: Let’s look at the risk register then, please. This is an Excel document, POL00120833. If we could open the Risk-Opps (P5) tab. Thank you.
So we see, at the top, “Directorate: IT”, Commercial and then Alan Barrie, so that’s the IT Director who reported to you. The same risk is in the first line, it’s in the description, and the risk is set at £1 million. “Action”:
“[Royal Mail] Legal Services have made an offer for out-of-court settlement of the case.
“Review with Fujitsu of their processes to protect against similar future cases.”
Did you not want to know what this review with Fujitsu entailed?
David Mills: No, because I haven’t read this risk register. This is the first time I’ve seen this, other than this may have been what I saw on my walk around.
Mr Stevens: Yes, so I was going to say –
David Mills: But I don’t know that it was because this isn’t in my mind and, looking at it, you can see why it probably wouldn’t have been. If I’d have been going round, looking at desks and looking at risk registers and looking at this, and I’d have looked at the first line and it said, “Risk £1 million”, well, I’d have probably put that in my little notebook and said, “Tell me about that”.
Mr Stevens: When it says, “Risk £1 million for potential future financial losses”, in the description, were you not concerned that the future financial losses may be connected to the criticisms of the Horizon IT System and how it stored data?
David Mills: No, because I hadn’t spotted the criticisms of the Horizon IT System. What I’d spotted was £1 million.
Mr Stevens: Do you think you should have spotted the criticisms –
David Mills: No, I don’t.
Mr Stevens: Why not?
David Mills: That’s – if I’d have concentrated on any issue at that level, I’d have never got anywhere near to turning the Post Office around. This was for Alan Barrie to deal with, not me.
Mr Stevens: Alan Barrie, as you say, is the IT Director but you accepted earlier that ultimate executive accountability for the Post Office Limited lay with you?
David Mills: Of course.
Mr Stevens: The Horizon IT System was a system that put recorded transaction data –
David Mills: Yes.
Mr Stevens: – held by branches, yes?
David Mills: Yes.
Mr Stevens: From that data, Post Office Limited used that data, sorry, to put together its management and statutory accounts, correct?
David Mills: Yes.
Mr Stevens: It was important that the data was reliable, correct?
David Mills: Yes.
Mr Stevens: You knew all of that at the time?
David Mills: Of course.
Mr Stevens: I ask again: do you think, when you saw a risk register that referred to a challenge to the integrity of Horizon, that you should have asked more questions as to what the challenge to the integrity was?
David Mills: I think I’ve said this already but I think I said to you that I hadn’t assimilated that point. The point that I had assimilated is £1 million. Now, whether I should have followed up on things that I hadn’t assimilated I think is really hypothetical.
Mr Stevens: I’ll move on from that risk register to something related. Could we go to WITN00 –
Actually, no, sorry, before we go there, please can we go POL00142503. This is an email from Rod Ismay; do you remember working with him?
David Mills: No. I know the name, I know the man to look at, especially because I’ve been reminded on the occasions that he’s reported here.
Mr Stevens: We’ve heard evidence this morning that Donna Parker was David Miller’s personal assistant?
David Mills: Correct.
Mr Stevens: Do you recognise the other names: Mandy Talbot, Carol King or Tony Marsh?
David Mills: Yes, I recognise all the names. I don’t know the people – obviously, I know Marsh. I don’t know Mandy Talbot, I don’t know Carol King but I’ve seen a lot of their work in this Inquiry.
Mr Stevens: This is, again, talking about the case of Cleveleys and Mr Ismay sends on correspondence regarding the case, including counsel’s opinion. It goes on to say:
“In summary we suspended Mrs Wolstenholme in 2001 after apparent discrepancies in her cash accounts. We claimed for the value of these losses and she counter claimed for also of earnings. Within her claim was an ‘expert’s opinion’ which was unfavourable concerning Horizon and Fujitsu.”
It goes on to say about lodging payments into court. We heard this morning evidence from David Miller about him approving the settlement. Did you ever hear that this case had settled?
David Mills: No, I didn’t.
Mr Stevens: Can you explain why a settlement of this case wasn’t discussed at the board or Executive Team level?
David Mills: Yes, Miller had delegated authority.
Mr Stevens: The email here and Mr Miller’s evidence was that this would have been dealt with by Peter Corbett, usually –
David Mills: Correct.
Mr Stevens: – and it went to Mr Miller in his absence.
David Mills: Correct.
Mr Stevens: So was it your evidence that, if either of them had any concerns, it was for them to raise at the Board?
David Mills: Probably at Risk Committee, first of all, pre-Board.
Mr Stevens: Could we please turn to WITN00210101 –
Sir Wyn Williams: Before you go there – hang on, I was just checking what it was you were putting up. Don’t worry.
I was simply going to ask Mr Mills whether he thinks that, regardless of whether either Mr Corbett or Mr Miller had delegated authority to settle, the fact that there was an adverse expert’s report about Horizon should have been taken to the Risk Committee?
David Mills: Yes, I think it should have been, Chairman.
Sir Wyn Williams: Right. Thank you.
Sorry, Mr Stevens. Carry on, please.
Mr Stevens: No, sir.
We can actually look at that report now, if I could bring that up. It’s WITN00210101. This is Mr Coyne’s report in the case of Post Office v Julie Wolstenholme. Could we please turn the page. I’m not going to read it all out but, if we could go down to the bottom half of the page, please, it refers to, penultimate paragraph:
“The majority of the system issues were screen locks, freezes and blue screen errors which are clearly not a fault of Mrs Wolstenholme’s making, but most probably due to faulty computer hardware, software, interfaces or power. In fact, on a detailed view of call 11021413, dated 2 November 2000, Ms Tagg may have witnessed firsthand the style of system problems that Mrs Wolstenholme experienced in her operation of the system.”
If we could turn to page 4, please. It says:
“In summary:
“From a computer system installation perspective it is my opinion that the technology installed at the Cleveleys sub post office was clearly defective in elements of its hardware, software or interfaces.”
I understand your evidence to be that you’ve never seen this report before – or sorry, I’ll rephrase it.
Until the Inquiry sent it to you, you’ve never seen it?
David Mills: No, I haven’t seen this report at all.
Mr Stevens: If this report had been put before the Board or on the risk register, what would you have done?
David Mills: I’m not entirely sure because I’ve only seen three paragraphs, a summary, and one paragraph that you highlighted, so I’d need to read the whole thing in detail and with some time to assimilate it in my mind before deciding what I would have done with it.
Mr Stevens: Mr Mills, this document was sent to you in advance of this hearing. Have you not had a chance to read it?
David Mills: I’m sorry, if it was, I would have read it, I can assure you of that, and I might well have forgotten the fact that I’d read it.
Mr Stevens: Well, let me ask you this as a hypothetical, if you received a report from a joint expert that raised a concern that there was a reliability issue in Horizon, what would you have done?
David Mills: I would immediately have taken it down to Alan Barrie and said let’s talk to me about this, please.
Mr Stevens: So you would have gone to your IT Director and taken his advice, effectively?
David Mills: No, not necessarily taken his advice. This is occurring in Peter Corbett’s area and Miller knows something about it, so I would have started off with Barrie.
Mr Stevens: What would you have done then?
David Mills: Well, I don’t know, it depends what Barrie had said to me about it. I just don’t know the answer to that.
Mr Stevens: One element of this I want to explore and we saw it earlier. There’s Post Office Limited – or someone from Post Office Limited giving instructions with legal advice coming from Royal Mail. In your witness statement – we don’t need to have it on the screen – but it’s page 15, paragraph 48, you say:
“With hindsight, the legal function should have been reporting to me on matters relating to [Post Office Limited] so that I could exercise oversight of it.”
When you say “with hindsight”, is this is an area where you feel you would have been better served by having legal in-house or in Post Office Limited?
David Mills: Definitely.
Mr Stevens: Why do you say that with hindsight?
David Mills: Well, because I’m now looking back at what’s occurred during the many years, even when I was there, let alone when I left. You can see that that things were dropping through the slats and I’d have hoped that I’d have helped to not let that happen.
Mr Stevens: To what extent do you think it was a failing for Post Office Limited not to have a legal function on its Board?
David Mills: I don’t think it was a failing at all?
Mr Stevens: Why.
David Mills: Well, I – perhaps I should remind you that I didn’t retire from Royal Mail, I resigned and I resigned on matters of importance.
Mr Stevens: What were those matters of importance?
David Mills: I disagreed with some of the policies that were going to be adopted by Royal Mail Group.
Mr Stevens: Was one of those policies relating to where the legal function sat, whether –
David Mills: No, it wasn’t.
Mr Stevens: So going back to what we were discussing, the issue of whether it was a failing for Post Office Limited not to have a legal function on it, why do you say it wasn’t a failing?
David Mills: Well, because you have to be in the moment. It’s very easy to look back and say, well, it’s obvious that you should have had a legal function. We did have a legal function. It was operated centrally by Royal Mail Group. Everyone had got used to the fact that Royal Mail Group provided certain functions from its centre because it seemed to be more economical to have those functions in a mass so that you could have the very best people all in together and, of course, they were in a different location, as well.
So, looking back, you could say to yourself, well, that looked all right at the time, but now I look back and I can say, no, it wasn’t all right at the time; it would have been better if it had reported within Post Office Limited.
Mr Stevens: Please can we bring up POL00072892. This is a letter dated 6 December 2004 from Lee Castleton. It’s addressed to a Mr Knight but if we can go to the bottom, please, we see that it says, “Copy to David Mills”.
Again, I won’t highlight all the letter, it has been – in fact, it’s exhibited to your statement. In the second paragraph, as part of Mr Castleton’s explanation of the problems he was facing with Horizon and his subsequent suspension and termination, he says, in the third line down:
“We explain we felt there must be something reasoning with the computer system as we had looked through our paperwork repeatedly but could not find anything wrong.”
The final paragraph, again, refers to computer failure, third line down:
“All the paperwork that is required to prove the computer failure has been removed from this office for ‘investigation’ so now having no paperwork to prove my innocence I do not know how to move forward.”
Were you aware of this letter?
David Mills: Yes.
Mr Stevens: At the time?
David Mills: No, I don’t think I was aware of it at the time. I am now.
Mr Stevens: How was correspondence such as this handled on your behalf in your office?
David Mills: I had a secretary who would normally stamp it in. So I’d got a date stamp on what was received and, if it was obvious where it was going to lie, she would pass it out to whoever was going to deal with it, so if it was Corbett, if it was whoever.
Mr Stevens: Your voice trailed off at the end.
David Mills: I’m sorry. If it was obvious where it was going to be dealt with, she would pass it out to that entity before I received it.
Mr Stevens: Would you have expected a letter like that to be raised with you?
David Mills: Yes.
Mr Stevens: But I take it from your evidence you can’t recollect any dealings with Mr Castleton’s case?
David Mills: No, I don’t.
Mr Stevens: Mr Castleton was involved in litigation brought by Post Office. Were you aware of that litigation when you were in post?
David Mills: No.
Mr Stevens: Please could we bring up POL00119895. This is a draft note of a meeting titled “Horizon integrity” on 6 December 2005. We’ve referred to Keith Baines already and Mandy Talbot, who you said you recognised the name but not necessarily what she did. Do you recognise anyone else in that list?
David Mills: No. No one.
Mr Stevens: You’ll see, if we go to 1 and “Findings”, it says:
“There is no generally understood process for identifying emerging cases in which the integrity of accounting information produced by Horizon may become an issue.”
There’s a discussion on potential processes. If we could turn to page 3, please, paragraph 14, it refers to Mr Castleton’s case.
“The Castleton (Marine Drive branch) case scheduled for 7 February is the first of the current cases that may require expert testimony; this will not be needed on 7 February, but could be needed the next time this case is in court …”
Were you aware of an internal meeting like this to consider how Post Office Limited responded to Horizon integrity cases?
David Mills: No.
Mr Stevens: Why?
David Mills: Why should I be aware of it?
Mr Stevens: Earlier in your evidence, you referred to having ultimate executive accountability for the operations of Post Office Limited, correct?
David Mills: Yes.
Mr Stevens: Do you accept that how Post Office deals with challenges to the Horizon IT System is a significant part of its executive function or its operations?
David Mills: Yes.
Mr Stevens: Do you accept that a policy such as that or a process as to how Post Office deals with those types of cases is something over which the board should have oversight?
David Mills: No.
Mr Stevens: Why not?
David Mills: Because I think it’s the return of a “Why don’t I understand and hear and know about this particular meeting?” It’s highly unlikely that I would know about every meeting of some junior managers all over the country. It’s as simple as that.
Mr Stevens: Let’s rephrase the question, then. Not this specific meeting. Were you aware that, internally, there was a – it was thought necessary to develop a process to respond to challenges to Horizon –
David Mills: No, I wasn’t and I’d have been very interested in the fact that that existed because it would have meant that we’d got problems with Horizon which I wasn’t aware of.
Mr Stevens: Can you explain why, as Chief Executive, you weren’t aware of that?
David Mills: Yes, I think I can. Despite efforts to understand and realise what was going on with Horizon, actually out in the field, issues of the nature that you’re discussing never came to the Board and, in order to come to the Board it would have had to have gone through the directors or the executives, and none of those ever raised that issue with me at all.
Mr Stevens: Mr Miller, we earlier saw a risk register which showed a challenge being made on the Horizon reliability. Why wasn’t that an alarm bell in itself?
David Mills: For the same reason as I answered to that question before. It was that I picked up the number 1 million and not Horizon.
Mr Stevens: Can we turn to look at prosecutions, please. No need to turn it up but, for the record, it’s page 19, paragraph 65(a) of your statement. You say that it was unusual for a company to be directly involved in criminal prosecutions; do you agree with that?
David Mills: Definitely.
Mr Stevens: What was your understanding of Post Office’s reasons for being involved in prosecutions?
David Mills: I’m sorry, could you repeat the question?
Mr Stevens: What did you believe was Post Office’s reasons for bringing prosecutions itself?
David Mills: There would be multiple reasons but broadly because someone had offended against the Post Office and what they did was supposed to be illegal.
Mr Stevens: So, in respect of where the Post Office pursued a case for theft, fraud or false accounting against a subpostmaster, did you believe there was a deterrent effect or it was a good deterrent to stop future alleged theft, fraud or false accounting?
David Mills: No, I don’t think it was anything like that. I think that, as with all of the whole of the United Kingdom, if someone is found nicking something, they try to prosecute them against it. I think it was as simple as that. I don’t think there was any question about let’s deter all these subpostmasters. That’s the last thing we wanted to do. We wanted to encourage them.
Sir Wyn Williams: I think you and Mr Stevens may be at cross purposes. I think you accept that it was unusual, in fact maybe in your experience unique, for a company themselves to initiate a prosecution. So I think Mr Stevens is asking you –
David Mills: I’m sorry.
Sir Wyn Williams: – why the Post Office was doing that, as opposed, say, to involving the police.
David Mills: Thank you, sir. I stand – I now understand what the question is and I’m very grateful to you for pointing it out to me.
I’d never worked for an institution that was capable of prosecuting somebody in the courts in their own right. It’s not something that was in my purview. I would never have dreamt of it. I would always have thought that, if it had been in a bank, our audit department may have found someone taking cash, we’d have taken them to the police and said to the police “Here’s a chap who’s nicking”, they’d have taken it to the Crown Prosecution Service, said “That’s okay”, and they’d have ended up in court.
So I had no experience whatsoever of a company taking somebody to court in their own right and I was not aware that the Post Office could do that.
Mr Stevens: When did you first become aware that the Post Office was involved with the prosecution of subpostmasters?
David Mills: Probably as very late as November 2005. The very last knockings of my time there.
Mr Stevens: Who told you?
David Mills: I don’t know.
Mr Stevens: Mr Mills, your evidence is that this was a very unusual matter?
David Mills: Yes.
Mr Stevens: Would it not have come as a surprise to learn that the company you’d been Chief Executive of for several years was prosecuting people without you knowing?
David Mills: No, I knew they were prosecuting – sorry, I knew they were taking people to court, I didn’t know they were doing it in their own right without some sort of external independent sign-off.
Mr Stevens: Let’s take it in stages. At an operational level, who did you think was carrying out investigations where subpostmasters were taken to court for theft, fraud or false accounting?
David Mills: The Investigation Team and the network.
Mr Stevens: Who did you think was responsible for deciding whether to prosecute?
David Mills: I actually thought that it was Royal Mail Group’s Legal Department.
Mr Stevens: Royal Mail Group Legal Department?
David Mills: Yes.
Mr Stevens: Who did you think was responsible for conducting the prosecutions?
David Mills: For conducting the prosecutions? I don’t know who I thought was responsible for conducting those prosecutions. I don’t know, I’m sorry.
Mr Stevens: When were you first aware that Post Office Limited had any involvement in the prosecution or investigation of offences?
David Mills: I don’t think I was aware in the sense that you mean. I think that I entered Post Office Limited with the automatic thought that, if somewhere had 17,500 branches and 65,000 staff, there would be an investigations department and a prosecuting department. I just would have thought that would have been natural because you can’t have that many people without criminality.
Mr Stevens: It would probably help if we looked at some of the documents, actually. Could we please look at POL00021483. So this is a Board meeting on 20 August 2003 and you’re listed in attendance –
David Mills: Yes.
Mr Stevens: – as is Tony Marsh?
David Mills: Correct.
Mr Stevens: Who was Tony Marsh?
David Mills: He was Head of Security and I think Head of Security at Royal Mail Group, or reported to Royal Mail Group.
Mr Stevens: In your evidence, you say that Tony Marsh didn’t report directly or indirectly to you. What do you mean by that?
David Mills: Exactly what I say.
Mr Stevens: Sorry?
David Mills: Exactly what I said. He didn’t report to me and I don’t think he reported indirectly to me either. I think he reported to Group.
Mr Stevens: We heard evidence this morning from Mr Miller – David Miller, sorry – that he had regular meetings with Tony Marsh. Were you aware of that?
David Mills: I wasn’t but I did know that Marsh reported on a dotted line to him.
Mr Stevens: So if Mr Marsh reported on a dotted line to David Miller, and David Miller reported to you, did he not report indirectly to you?
David Mills: Yes.
Mr Stevens: So where you say in your witness evidence that he, Tony Marsh, didn’t report directly or indirectly to you, that’s incorrect?
David Mills: No, I don’t think it is incorrect. I think there is a major difference between a dotted line reporting through a direct report, compared to a hard line report thorough a direct report.
Mr Stevens: Can you explain what that major difference is?
David Mills: Yes. It’s called pay and rations. If Mr Marsh reported somewhere else, the somewhere else could either sack him, could praise him, could give him more money, could give him a bonus, could tell him exactly what to do or not. In Miller’s case, if he reported on a dotted line basis, in my view, Miller would have to persuade Marsh what to do. He couldn’t tell him what to do.
Mr Stevens: Were you aware that Tony Marsh was responsible for Head of Security and also oversaw investigations?
David Mills: Yes.
Mr Stevens: You were aware, were you, that the investigations included investigations into subpostmasters?
David Mills: Of course.
Mr Stevens: You said earlier in your evidence that, part of your duties as a director, you would consider your obligations to subpostmasters?
David Mills: Yes.
Mr Stevens: Did you feel unable to exercise any oversight over Tony Marsh and the investigations that they were conducting into subpostmasters?
David Mills: No. I certainly didn’t because, in practice, some of the oversight that one could exert was purely a matter of personality. However, this is another case where there is clear responsibility inter Group and it’s another case where that confusion of reporting lines was an important aspect of how one did or didn’t manage Post Office Limited.
Mr Stevens: Did that formal reporting line actually prevent you or the Board from overseeing what the Investigations Department were doing?
David Mills: No, I don’t think it did in this case.
Mr Stevens: Can we bring back up the previous document, please, POL00021483, and if we could turn to page 8, please, to the bottom, please. Here it says:
“Tony Marsh presented the security paper to the Board on behalf of David Miller.”
Can you recall why Mr Marsh presented it on behalf of David Miller?
David Mills: I don’t recall but I would guess that it was thought that Marsh would have had closer hands-on knowledge of the issue that we were going to discuss.
Mr Stevens: Was there any reason why, at any other Board meeting the board couldn’t have called Tony Marsh to present and give a paper?
David Mills: No. I’m thinking now but I’m not sure at all about this. I think that we’d started to have the idea that Marsh would report twice a year to us. But, I’m sorry, I don’t know that for a fact because it was right towards the end of my tenure.
Mr Stevens: What reason was there for Tony Marsh not to report directly to the Board?
David Mills: There wasn’t any reason for him not to report.
Mr Stevens: Why didn’t you ask Tony Marsh to report to the Board more often?
David Mills: Two reasons, I think. I think corporate governance and the way in which the Board operated was a growing thing that, remember, started from nothing and had to go to somewhere, and so perhaps we just weren’t on the subject fast enough. That could be one reason. The other reason perhaps was a simple thing, that this Board was weighed down with things that it had to deal with and it was very hard work. So putting more on the Board agenda every time would have been difficult.
Mr Stevens: Is that the case, that the Board was focused on solvency and it wasn’t focused on prosecutions of subpostmasters?
David Mills: It certainly had more focus on solvency than it did on prosecutions, that’s for sure.
Mr Stevens: What focus did it have on prosecutions?
David Mills: Not a high level.
Mr Stevens: Can you recall a time when the prosecution of subpostmasters were discussed on the Board?
David Mills: No.
Mr Stevens: Why do you think that is?
David Mills: I think I’ve just given the reasons why that is.
Mr Stevens: Do you think that’s a failing of the Board’s part?
David Mills: No, I don’t.
Mr Stevens: Why?
David Mills: Because you have to put yourself in that time. I can see why it should have done now but it didn’t then.
Mr Stevens: Can we turn to POL00166566, please. This is an email from Tony Marsh on 17 October 2003 to a large number of staff. If we go to the next page, please, the attachment is the “Security team [organisation] v4”:
“Dear Colleague
“As you will be aware from recent communications from both the Chief Executive, David Mills and the Personnel Director, Ian Anderson, Post Office Limited must make further headcount reductions to support Royal Mail Group in its drive back to sustainable profitability.”
Were you and Post Office Limited responsible for the Security Department’s headcount?
David Mills: Of course.
Mr Stevens: Why did you then feel that there wasn’t a more formal reporting line to you?
David Mills: I don’t think the two things are the same. I had the ability to instruct any executive to reduce their headcount without the question of reporting lines.
Mr Stevens: So, is your evidence, that you had the ability to give Mr Marsh instructions to reduce headcount?
David Mills: Yes, it is, but he also, of course, could always have overridden me and simply gone back to Royal Mail Group and said, “He’s asking me to do this. That’s not fair, is it?”
Mr Stevens: Could we go over the page, please. You see there’s a discussion of a “Security Team Lead and I examining a number of ways” – sorry, under “Options”:
“… came to the conclusion that the structure could be further streamlined in the following ways …”
It refers to internal and external crime functions, et cetera. Were you involved in the detail of changes to the Security Department?
David Mills: No, not at all.
Mr Stevens: Sir, I am looking at the time, I am not finished but I think we should take a five-minute break. I appreciate that might run us over slightly but, if we could do that, I’d be grateful.
Sir Wyn Williams: Right. Of course.
The Witness: I’m okay.
Mr Stevens: Sorry?
The Witness: I’m okay.
Mr Stevens: You’re okay, if we may carry on –
The Witness: Yes, please.
Mr Stevens: In which case, sir, I will continue.
Sir Wyn Williams: Yes.
Mr Stevens: Please can we turn to POL00021485. Could we turn to page 13, please. There’s an entry under “Human Resources” here. Do we take it to mean, because it’s Human Resources, this is referring to Post Office Limited’s workforce?
David Mills: Yes.
Mr Stevens: It states that:
“The Board agreed that in situations where fraud had been perpetrated against the Company …”
Pausing there, because it is in Human Resources, is that referring to fraud perpetrated by the workforce against the company?
David Mills: I’m sorry, I don’t know.
Mr Stevens: Reading the Board minutes, with your experience, acting as Chief Executive, what would your reading of them be?
David Mills: I think that it’s saying we’d better get on more quickly in making recovery against those persons within the company that have tried to defraud us.
Mr Stevens: So the workforce defrauding the company?
David Mills: Yes.
Mr Stevens: That would include subpostmasters?
David Mills: Yes.
Mr Stevens: It says:
“… the appropriate civil orders will be used immediately and in advance of any criminal proceedings.”
Is that referring to the use of freezing orders?
David Mills: I don’t know. I’m sorry.
Mr Stevens: You can’t recall the conversation on –
David Mills: No.
Mr Stevens: Do you recall if the Board there would have discussed the fact that Post Office Limited were advancing criminal proceedings?
David Mills: If they were in advance of criminal –
Mr Stevens: No, would the Board have discussed that Post Office Limited was advancing criminal proceedings?
David Mills: No, they wouldn’t have done.
Mr Stevens: Please can we turn to POL00021486. This a Board meeting on 15 December 2004, at which you’re in attendance. Could we turn, please, to page 7.
I’m terribly sorry, page 6 first, please, right at the bottom. This is referring to the Risk and Compliance Committee:
“Peter Corbett provided a short presentation to highlight the work of the newly formed Risk and Compliance Committee.”
Do you recall the discussion on this?
David Mills: Very much so, yes. Yes, I was pleased that it was being formed.
Mr Stevens: From your recollection, what was the Risk and Compliance Committee there to oversee?
David Mills: Well, initially, all aspects of risk and compliance that were identified as being – where we had a risk in the first place and where there was any likelihood of us not being compliant with regulatory directives.
Mr Stevens: As I understand it, this was the introduction of the only subcommittee of the Post Office Limited Board; is that right?
David Mills: Yes.
Mr Stevens: So this was quite a significant step in Post Office Limited’s –
David Mills: Very important. It was the step of the Board growing up into what it needed to be.
Mr Stevens: If we turn the page, please, to (c), it says:
“The scope of its activity included audit compliance and legal issues;
“Its primary aim was to ensure the service and conformance elements of the business were working together properly. Rod Ismay … Lynn Hobbs … and Tony Marsh …”
It says:
“The next quarterly meeting would be held on 5 January 2005 to discuss branch control, vital few controls, audit reports anti-money laundering measures, crime and fraud and the work of the Group Audit Committee.”
At this discussion, what was said about the Risk and Compliance Committee’s role in respect of prosecutions made against subpostmasters?
David Mills: At this Board meeting, nothing would have been said. This was a board meeting announcing the formation of this committee having – and outlining broadly what it was going to do.
Mr Stevens: At the time, did you consider yourself the risk associated with Post Office Limited’s involvement in prosecutions?
David Mills: No, I didn’t.
Mr Stevens: Why not?
David Mills: Because I was too busy doing other things but I should have done.
Mr Stevens: What do you think those risks were; with hindsight, what do you think the risks were?
David Mills: Of pursuing prosecutions?
Mr Stevens: Yes.
David Mills: Being wrong.
Mr Stevens: Do you think there were risks associated with the disclosure of documents and Post Office Limited’s failure to disclose documents?
David Mills: I’m sure that there were many, many risks associated with those prosecutions, as we’ve now discovered, of course. At the time, I personally didn’t identify those risks and I wish I had have done –
Mr Stevens: Was there anyone else – let’s start with Post Office Limited – who you think should have identified those risks.
David Mills: I’m very surprised, in a sense, that the people dealing with the investigations, especially those people in Group Legal, had not come to terms with the idea that these things that were happening could harm us.
Mr Stevens: What things that were happening?
David Mills: Well, the non-disclosure of certain facts to litigants.
Mr Stevens: Well, let’s start on the Post Office Limited Board. Was there anyone else you think should have identified the risks arising from the investigation and prosecution of offences against subpostmasters?
David Mills: I don’t know and I don’t know because I’m trying to think at that time.
Mr Stevens: In practice, who was overseeing the investigation and Security Department, if it wasn’t the Board of Post Office Limited?
David Mills: I can’t truly tell you. I think it moved around.
Mr Stevens: Do you think that it’s a failing of corporate governance that you can’t tell who was responsible for the investigation of the Security Department?
David Mills: Yes.
Mr Stevens: Who do you think is responsible for that failing?
David Mills: Well, me, obviously.
Mr Stevens: Sir, I’m conscious of time. There are, I believe, some Core Participant questions, Mr Stein and Mr Moloney.
Sir Wyn Williams: Right. Does that mean you’re going to offer the floor to them, Mr Stevens?
Mr Stevens: Yes, I should have said I’m conscious of time and will offer the floor.
Sir Wyn Williams: Right. Then I’m sure that the 15 minutes which they normally afford themselves between them, no more about 15 minutes on this occasion.
Mr Stevens: I think Mr Moloney says two or three minutes.
Mr Stein: (Microphone off)
Mr Moloney: I can finish my question in two or three minutes, sir.
Mr Stein: (Microphone off)
Sir Wyn Williams: First of all, Mr Mills, are you happy to carry on for another ten minutes?
The Witness: Yes, Chair.
Sir Wyn Williams: Fine. Off we go, then.
Questioned by Mr Moloney
Mr Moloney: Mr Mills, you said your primary aim when you took over at Post Office was to “keep this thing afloat”; is that right?
David Mills: Correct.
Mr Moloney: Yeah. If you couldn’t turn the business around, was there any danger that Government would accept that the business could not be kept afloat in its then current form?
David Mills: It seemed as if there was. There was no willingness on the part of Government to give ironclad guarantees to creditors for us.
Mr Moloney: Was everybody in senior management and on the Board aware of that potential?
David Mills: Definitely.
Mr Moloney: Horizon was utterly integral to the operation of Post Office at this time, wasn’t it?
David Mills: Crucial.
Mr Moloney: Business critical might be another description for it as well?
David Mills: Definitely.
Mr Moloney: In reality – and I don’t seek to in any way challenge what you knew and didn’t know and what you’ve said about that; do you understand me, Mr Mills?
David Mills: Yes.
Mr Moloney: In reality at that time, having spent many, many millions of pounds on the Horizon system, if Post Office had been forced to go back to the drawing board on its online accounting system, the business was in real trouble, wasn’t it?
David Mills: I’m sorry, could you repeat?
Mr Moloney: The business was in real trouble?
David Mills: Definitely. Crisis mode it would have been in.
Mr Moloney: Thank you very much, Mr Mills.
Questioned by Mr Stein
Mr Stein: Mr Mills, I’ve got just a couple of questions in relation to your knowledge at the time.
You’ve stressed to Mr Stevens in answers to his questions that you tried to work out what you knew at the time, okay?
I’m going to take you to a document which is RLIT0000195. Thank you.
Now, Mr Mills, you should be able to see that we’ve got a photograph of you; is that correct?
David Mills: Yes, dreadful, isn’t it?
Mr Stein: We can see this is an article that goes back some time, in the copy I have, which, I hope you’ll take from me, is dated March 2005. This is an article from The SubPostmaster Magazine?
David Mills: Yes, I remember it well.
Mr Stein: All right, okay. So here what we’ve got is this: we see the heading, which is “Improvements to the Post Office Horizon Network”, and you’re saying at the beginning of the article:
“In August last year, I promised to respond to issues you raised about the reliability of the Post Office Horizon banking services.”
All right? So that’s what you’re doing.
David Mills: Yes.
Mr Stein: So, putting this together, we can see at this time that you are trying to set out some reassurance to the branches regarding the operation of the Horizon system. Is that a fair description of what you’re doing in this article?
David Mills: Yes –
Mr Stein: Okay.
David Mills: – and I was also trying to prove accountability that – what I’d said I’d do.
Mr Stein: Right. So can we then look at the third column going across. You see the one that starts “In reality”, and I’ll read that out:
“In reality Horizon provides a reliable service for the majority of our branches, most of the time. About 99.7% of the time in fact. Having said that, I know that if your branch is affected by a loss of service it is still significant and, since August we’ve been working with our suppliers to find ways of improving the overall level of service, while keeping our technology costs under control.”
Okay, you see that?
David Mills: Yes.
Mr Stein: All right. So you understood at this time, in March 2005, that there had been issues raised concerning the reliability of the Horizon system; is that correct?
David Mills: I certainly did, yes.
Mr Stein: Right. Were you aware at this time, in March 2005, that Horizon data was being used to support prosecutions of subpostmasters?
David Mills: No, I was not.
Mr Stein: Right. Now, let’s go a little bit further down on the second column. I don’t want to miss out anything you find important. You’ll see there are two bullet points that refer to the faster resolution of BT faults, okay?
Now, the first one refers to Post Office owned telephone lines and then it goes on to the second bullet point – I’ll take my glasses off because my copy is very small, it’s better on the screen.
David Mills: It’s bad, isn’t it?
Mr Stein: “Working with our suppliers, we have identified number of improvements in the way we manage network faults, which combined with the improved BT service level, will result in faster problem resolution for the majority of problems. (We’ll know how much faster when we’ve finished reviewing and modifying our existing fault handling processes with our suppliers.)”
All right, so March 2005, were you aware that there was a four-line system of support for faults within the Horizon system operated by Fujitsu?
David Mills: No, I wasn’t.
Mr Stein: Okay. Now, how, therefore, when writing this article – sorry, what were you referring to as regards the management of network faults that you refer to within this article?
David Mills: An amazing number of the faults that subpostmasters were recording were, first of all, because they had bad telephone lines that didn’t stay up all the time and that hiccupped and, to get them fixed, you actually needed a man in a van and a shovel, and men in vans and shovels don’t turn up just (indicated) like that. You have to put your hand up and say to BT, “Would you please come”, and in three days time, hopefully, they turn up. So getting our hands round BT’s neck and trying to ring it was part of the problem.
Also, the kit that was put into sub – post offices, I’m sorry, was not one piece of kit, it was a connection of pieces of kit and pieces of kit don’t always work, and the connections don’t always work, and subpostmasters pull them out and they don’t know where to put them back in, and there was whole variety of things that were nothing whatsoever to do with the software.
These were real, practical day-to-day hardware problems that we weren’t getting to fast enough because we had 17,500 branches that were phoning up and we had to get round to.
So I was referring to a lot of that hardware solution and not, actually, software solutions because, very often, it was the hardware that was wrong.
Mr Stein: Right. So if we put this together, what we’ve got is you putting – you setting out in an article, improvements that are going to be considered for the Horizon network. You’re referring to difficulties with the BT line, yes?
David Mills: Yes.
Mr Stein: You’re referring to improvement with the BT service level in the second on the two bullet points?
David Mills: Yes.
Mr Stein: You are also managing network faults and, there, you think you’re referring to hardware problems?
David Mills: Potentially, yes.
Mr Stein: Yes. Now, at the time when this article is being written, where did you get the information from, so that you can write this and actually give out this reassurance?
David Mills: Well, it was just something that was so well known that it wasn’t something I had to go round and find out. Remember, I’m going round talking to subpostmasters like very, very, very regularly. We were – we talked to thousands of subpostmasters in any one year, on a regular basis. All of the Executive Team did that. We had regular, multiple meetings with subpostmasters. So they just tell us.
Mr Stein: So your system of finding out the contents for this article for The SubPostmaster Magazine is having a natter with a few people when you’re wandering around doing your job; is that about right?
David Mills: No, I certainly didn’t say that.
Mr Stein: That seems to be what you’re saying, so let’s try and pin it down?
David Mills: No, it wasn’t what I was saying.
Mr Stein: Did you speak to the IT Team, Mr Mills?
David Mills: Did I speak to the IT team?
Mr Stein: Yes.
David Mills: The man who ran the IT reported to me on a very regular basis. I had the all of the Executive Team reporting to me at 9.00 every Monday morning. We had regular conversations in the diary with the National Federation of SubPostmasters. We talked to the CWU regularly. These are not things – the tittle-tattle that we were talking – dodging in and out about. These are major presentations and conversations with them. We put all of them together in a conference.
Mr Stein: Right. Did you speak to the IT team so that you understood that what you were putting in an article reassuring branches about the network system of Horizon was correct? Did you speak to them? Did you get a report from them? Did you get advice from them in writing so that you can understand whether there were or not faults within the Horizon system?
David Mills: No, I, on a normal basis of every corporate organisation, had regular and direct conversations with my IT Director, who had delegated authority to run the IT team.
Mr Stein: I see. Now you’ve been asked a number of questions by Mr Stevens in relation to the Coyne Report and you’ve explained to the Inquiry that you don’t remember – you’re either saying you haven’t seen it or you’re saying you don’t remember having read it before giving evidence today; is that right?
David Mills: Um –
Mr Stein: Which? Don’t remember it or haven’t seen it?
David Mills: Well, I don’t remember it.
Mr Stein: All right.
David Mills: But – I am sorry but, to be correct, all of the information that the Inquiry has sent me I’ve read.
Mr Stein: Okay. Now, you know enough about the Coyne Report to know that it merited a point in a risk register to say that there were some difficulties with the Horizon system.
David Mills: Correct.
Mr Stein: What you’ve generally said is, well, £1 million was a lot of money and, therefore, that probably was the thing you put in your notebook, yeah?
David Mills: Yes, I wasn’t quite as flippant as that but, yes, that’s what I’m saying.
Mr Stein: All right. Now, when you were getting the information you needed for this particular article in the SubPostmaster Magazine, to reassurance branches about the Horizon system, did any of the regular IT chats that you had with your IT people tell you “Well, hang on, we’ve also had this Coyne Report that says there are a number of things going wrong with the system”?
David Mills: No. If I was going to put something out like this to the network, it would almost certainly have been copied to every director by the Communications Team for their comments. They would have come back, been incorporated by the Communications Team, I’d have re-looked at it and said “Yeah, that’s okay, let it go”.
Mr Stein: Had you been told by any of the people in the IT team within POL that one of the problems identified in the Coyne Report is that, when someone phones the helpline, they get told to switch off the machine and then that doesn’t really help solve software problems; had you been told that at any stage, Mr Mills?
David Mills: No.
Mr Stein: Right.
David Mills: If you mean had I been told that they were asked to reboot the machine, yes.
Mr Stein: Right, and were you told that, by doing so, that can mask problems within the software of the Horizon system?
David Mills: Definitely not.
Mr Stein: Right. Okay. So let’s pull this all together. It doesn’t seem, from your evidence, Mr Mills, that you were told about the Coyne Report and the significance of it; is that correct?
David Mills: Correct.
Mr Stein: When you come to write an article for the SubPostmaster Magazine, it doesn’t seem, from your evidence, that that therefore achieved a note in what you were then explaining to the subpostmasters; is that also correct?
David Mills: Correct.
Mr Stein: I see. Whose fault was that: yours or other people within POL?
David Mills: I don’t think it was anybody’s fault.
Mr Stein: You don’t regard problems with the helpline, where people are being told to turn it off and then turn it back on again, causing software problems, you don’t regarding that as being an issue that perhaps you should have been aware of, Mr Mills?
David Mills: I said I was aware of the helpline asking subpostmasters to reboot the machine.
Mr Stein: Let’s try and take that on, then. Did you perhaps say to anybody that, if these subpostmasters are being told to reboot, does that cause any issues; did you raise had as a query, Mr Mills?
David Mills: I raised many queries about Horizon on a daily basis. The fact that they were asking people to reboot something may – it would have been trivial in my daily life. Everyone was rebooting machines everywhere for every reason. They just used that as a solution to a problem. So, no, that wouldn’t have caused great issues in my mind. Of much more importance was how did we replace this system in five years’ time?
Mr Stein: More important than the prosecution of small businesses; more important than the people that are in branches going to prison; more important than people losing their livelihoods, Mr Mills?
David Mills: I didn’t say that; you said that.
Mr Stein: What do you say now? Which is more important, what I’ve just said, which is people’s lives being devastated and destroyed or what you’ve said, which is well, we had to keep an eye on the bottom line; which is more important to you now, Mr Mills?
David Mills: First of all, I didn’t say, well, we had to keep an eye on the bottom line and, secondly, obviously, the devastation to the lives of these poor postmasters was more important than anything else and should never ever have happened.
Sir Wyn Williams: Right, thank you, Mr Stein.
Just following on from that, really, Mr Mills. I am not for a minute going to suggest that rescuing the Royal Mail Group and/or the Post Office from insolvency was not critically important, I follow that. All right? But exercising the function of prosecuting people has various consequences and, reduced to its simplest, it means that you take people to court and that, in certain circumstances, very severe sanctions are imposed upon them and it does seem to me, I have to say, that that is something which the Board of Directors of a major company should have very much towards the forefront of its mind, regardless of what other problems it faces; is that fair?
David Mills: Yes.
Sir Wyn Williams: Right. Thank you very much. Thank you for coming to give evidence after making a witness statement. I’m grateful for your participation in the Inquiry.
We’ll adjourn now until tomorrow morning at 10.00.
Mr Stevens: Yes, sir. We have Jon Longman, who is an adjourned Phase 4 witness, and Allan Leighton.
Sir Wyn Williams: Is Mr Longman in person or remote, Mr Stevens?
Mr Stevens: I believe it’s remote, sir.
Sir Wyn Williams: Yeah, that’s what I thought.
All right then, 10.00 tomorrow morning.
(4.31 pm)
(The hearing adjourned until 10.00 am the following day)