22 May 2024 – Paula Vennells
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(9.45 am)
Mr Beer: Good morning, sir. May Ms Vennells be sworn, please.
Paula Vennells
PAULA ANNE VENNELLS (sworn).
Questioned by Mr Beer
Sir Wyn Williams: Before Mr Beer begins to ask you questions, Ms Vennells, I think it appropriate to give you a direction about self-incrimination. You may know or may have heard that I’ve given this direction on a number of occasions and, although I’m sure with the legal advice you’ve had it’s been explained to you, it’s only right that should do it publicly, all right?
So under our law, a witness at a public inquiry has the right to decline to answer a question put to her by Counsel to the Inquiry, by any legal representative or by me, if there’s a risk that the answer to that question would incriminate the witness.
In shorthand form, this legal principle is known as the privilege against self-incrimination. I consider that fairness demands that I remind you of that principle before you begin your evidence. I should tell you that it is for you to make it clear to me, in respect of any question put to you, that it is your wish to rely upon the privilege against self-incrimination. If, therefore, questions are put to you by any of the lawyers or by me which you do not wish to answer, you must tell me immediately after such question is put. At that point, I will consider your objection and, thereafter, rule upon whether your objection should be upheld.
I know that you are represented by experienced lawyers here today. No doubt, if the issue relating to self-incrimination arises, they will assist you, if you need their assistance. So if at any stage during the questioning you wish to consult your lawyers about privilege against self-criminal incrimination, you must tell me so that I can consider what appropriate action to take.
Do you understand all that?
The Witness: Thank you, Sir Wyn, and I plan to answer all the questions.
Sir Wyn Williams: Right, fine, over to you, Mr Beer.
Mr Beer: Thank you.
My name is Mr Beer. Can you give us your full name, please?
Paula Vennells: Paula Anne Vennells.
Mr Beer: Thank you for providing two witness statements to the Inquiry and for attending today. Can we deal with your witness statements, please. The first of them is dated 8 March 2024 and the URN for it is WITN01020100. I wonder whether we could have that on the screen, please. It’s 775 pages long and I think there are three corrections that you wish to make to it. Can we deal with those first.
Page 15, please. It will be brought up on the screen for you.
Paula Vennells: Ah, thank you.
Mr Beer: At paragraph 34, in the second line, it says:
“If this included personal relations issues, the Marketing Director would be consulted.”
Should that read “public relations issues”?
Paula Vennells: It should.
Mr Beer: Thank you.
Secondly, page 130. Do you see in third line, where it says, “Questions 53 and 54 omitted as general questions”, should that read “Questions 53 and 54 are dealt with elsewhere in the statement”?
Paula Vennells: It should.
Mr Beer: Thank you. Then, thirdly, page 194, (b) at the top, which is part of paragraph 405, it reads, in the second line:
“… too much reliance on the recollection of the Mediation Scheme’s applicants …”
Instead of Mediation Scheme’s applicants”, should that read “of subpostmasters”?
Paula Vennells: It should.
Mr Beer: Thank you. Can we turn to page 775, please. That’s the statement of truth page. Did you sign that via Docusign or some other electronic means?
Paula Vennells: I did.
Mr Beer: Were the contents true to the best of your knowledge and belief?
Paula Vennells: Yes, they were.
Mr Beer: Thank you. Can we turn to your second witness statement, please. WITN01020200. This is your second witness statement, it’s dated 8 April 2024. It’s 23 pages long. Again, can we turn to page 23, please, and scroll down. Did you sign this witness statement using Docusign or a similar electronic means?
Paula Vennells: I did.
Mr Beer: Are the contents of that witness statement true to the best of your knowledge and belief?
Paula Vennells: They are.
Mr Beer: Thank you, they can be put to one side. Those witness statements are going to be uploaded to the Inquiry’s website. I’m not going to ask you questions about the contents of either of them in detail, in particular your first witness statement, because it’s a very long witness statement, 775 pages, and, in large measure, narrates a number of documents that we have sent to you, and I’m interested in your personal recollection, rather than what the documents show, if you understand.
Before we address the issues of substance, which I’m going to do thematically, rather than chronologically, I’d like, if I may, to address some overarching themes with you, and there are seven of them.
Paula Vennells: Mr Beer, I did want to make a short statement first, if I could; is that all right?
Mr Beer: Absolutely. You go ahead.
Paula Vennells: I would just like to say – and I’m grateful for the opportunity to do this in person – how sorry I am for all that subpostmasters and their families and others have suffered as a result of all of the matters that the Inquiry has been looking into for so long. I followed and listened to all of the Human Impact statements, and I was very affected by them. I remember listening to one postmaster, whose name I noted, who said that he would like somebody to go and stand outside his old post office with him so he could tell them exactly what he’d been through. I would do that. I am very, very sorry.
I would also like to repeat the apology which is in my witness statement to Alan Bates, to Ron Warmington and Ian Henderson from Second Sight, and to Lord Arbuthnot. I and those I worked with made their work so much harder and I’m very, very sorry for that.
My third apology is really about today because I will answer the questions truthfully and I’m very aware that they will be difficult to listen to, for you and for me, and I ask your understanding in advance of that. Thank you.
Mr Beer: Thank you. I should say there’s going to be a fire alarm at 10.00 and we’re just going to sit here all together and listen to it, and then carry on afterwards.
So some general issues, if I may.
Ms Vennells, in the light of the information that you tell us in your witness statement you weren’t given, in the light of the documents that you tell us in you witness statement that you didn’t see and in the light of the assurances that you tell us about in your witness statement that you were given by Post Office staff, do you think you’re the unluckiest CEO in the United Kingdom?
Paula Vennells: I was given much information and, as the Inquiry has heard, there was information that I wasn’t given and others didn’t receive, as well. One of my reflections on all of this is that I was too trusting. I did probe and I did ask questions and I’m disappointed where information wasn’t shared and it has been a very important time for me, as I’ve gone through all of the documentation that I’ve seen since, to plug some of those gaps and to remind me what I did see and perhaps hadn’t remembered.
Mr Beer: Can I run through with you – I don’t want to display them on the screen in the interests of time but take it from me that these are accurate short summaries of what you say in your witness statement – the things that you say that you weren’t told, and that you didn’t see.
Paragraph 104 on page 39. Nobody at the Post Office told you that there were bugs, errors or defects in Horizon or that it lacked integrity, or even that there were allegations to that effect, when you joined the Post Office in January 2007. Yes?
Paula Vennells: Yes.
Mr Beer: Paragraph 109 on page 41. When you joined, you weren’t briefed on the contract with Fujitsu. Correct?
Paula Vennells: Correct.
Mr Beer: Paragraph 114 on page 43. When Computer Weekly published its article in May 2009, you were told by Mike Young, the then Operations Director, that the magazine didn’t know what it was talking about in relation to Horizon and assured you that there was nothing wrong with the Horizon system. Correct?
Paula Vennells: Yes.
Mr Beer: Paragraph 129 on page 50. You did not know, at the time of the Computer Weekly article in May 2009, of the Callendar Square bug, you didn’t know of the remming out bug, you didn’t know about the reversals bug, the data tree failure bug the phantom transactions bug, the concurrent logins bug or the Bureau de Change bug because nobody had told you about them. Correct?
Paula Vennells: Correct.
Mr Beer: Paragraph 133 on page 52. You were not made aware of the receipts and payments mismatch bug when it was discovered in September or October 2010; the first that you knew about it was in May 2013. Correct?
Paula Vennells: Correct.
Mr Beer: Paragraph 154 on page 61. You were not aware of the remming-in bug, the local suspense account bug, the recovery bug, the withdrawn discrepancies bug or the Lyca top-up bug when you became Managing Director in October 2010 because nobody told you about them?
Paula Vennells: Correct.
Mr Beer: Paragraphs 180 and 181 on page 75. You had no understanding of how suspense accounts operated during your time as Network Director or Managing Director and, if there were issues with suspense accounts, then you weren’t made aware of them. Correct?
Paula Vennells: Correct.
Mr Beer: Paragraph 309 on page 143. You were not made aware of Richard Morgan KC’s advice that, if an independent expert examined Horizon and found faults with it, then that would open the floodgates to damages claims by convicted subpostmasters –
Paula Vennells: Correct.
Mr Beer: – you weren’t told about that.
Paragraph 388 on page 183. Your understanding until May 2013 was that no bugs had been found in Horizon because that is what you had been told by a series of senior IT managers over the years?
Paula Vennells: Correct.
Mr Beer: Paragraph 502 on page 246. Your incorrect understanding of the operation of the “settle centrally” function, in particular that it operated like a suspense account, allowing time for disputes to be resolved, came from reliance on incorrect information that you had been given by others in the Post Office?
Paula Vennells: Yes.
Mr Beer: Page 563 on page 271. You did not see Simon Clarke’s Advice of 15 July 2013 until after you left the Post Office, indeed not until it was made public until 2021?
Paula Vennells: Yes.
Mr Beer: Paragraph 564 on page 271. You did not see Simon Clarke’s Advice of 2 August 2013 about the Head of Security’s instructions to shred documents relevant to Horizon bugs until after you had left the Post Office –
Paula Vennells: That’s –
Mr Beer: – indeed, again, not until it was made public in 2021?
Paula Vennells: That’s right.
Mr Beer: Paragraph 568, page 273.
(Pause for fire alarm test)
Mr Beer: Paragraph 568, on page 273. You did not see, nor were you briefed about, Brian Altman KC’s advice of 2 August 2013.
Paula Vennells: Correct.
Mr Beer: Paragraph 686 on page 321. You did not read Brian Altman KC’s general review of 15 October 2013, until you were provided with a copy of it in the course of this Inquiry by the Inquiry?
Paula Vennells: That’s right.
Mr Beer: Paragraph 842, page 376. You were involved, only to a limited extent, in commissioning and reviewing advice from Linklaters Solicitors?
Paula Vennells: Sorry, could you say that again?
Mr Beer: Yes. You were involved, only to a limited extent, in commissioning and then reviewing advice from Linklaters Solicitors?
Paula Vennells: I think that depends on which you’re referring to. There was a report produced by Linklaters which came to the Board which was discussed and, in the preparation for that, I worked with a small group of colleagues from the ExCo and chased down a list of questions from the Board but my involvement in the formulation of the instructions – I had no involvement in the final formulation of the instructions.
Mr Beer: Thank you. Paragraph 896, page 400. You say that, although the failure to discuss the impact of Deloitte’s 2014 report seems surprising now, you trusted Chris Aujard, Rod Williams and Linklaters to have advised you about the impact on criminal convictions, and they did not.
Paula Vennells: I’m so sorry, could you say that one again, please, because that was quite an important –
Mr Beer: Yes. You say that, although the failure to discuss the impact of Deloitte’s 2014 report on criminal convictions seemed surprising to you, you trusted Chris Aujard, Rod Williams and Linklaters to have advised you about this, that it was necessary to do so –
Paula Vennells: In that respect, yes, yes.
Mr Beer: – and they did not do so?
Paula Vennells: Yes.
Mr Beer: Paragraph 1155, you say that you did not see Brian Altman KC’s advice of the 8 March 2015?
Paula Vennells: I didn’t see any advices, so I assume that’s correct. I can’t remember that one specifically.
Mr Beer: Paragraph 1251, page 533. You did not see Jonathan Swift’s written review of the 8 February 2016 –
Paula Vennells: That’s correct.
Mr Beer: – at the time.
Paragraph 1341, page 579. You were not on the steering group for the Group Litigation and Jane MacLeod was instead responsible for briefing the Board about it?
Paula Vennells: That’s correct. I was on the Board subcommittee.
Mr Beer: If all of the facts and matters that I’ve just described are true and if what you say is reliable, was there a conspiracy at the Post Office which lasted for nearly 12 years involving a wide range of people, differing over time, to deny you information and to deny you documents, and to falsely give you reassurance?
Paula Vennells: No, I don’t believe that was the case. You’ve covered a range of different issues. I have been disappointed, particularly more recently, listening to evidence at the Inquiry, where I think I have learnt that people knew more than perhaps either they remembered at the time or I knew of at the time. I have no sense that there was any conspiracy at all.
My deep sorrow in this is that I think that individuals, myself included, made mistakes, didn’t see things, didn’t hear things. I may be wrong but that wasn’t the impression that I had at the time. I have more questions now, but “conspiracy” feels too far fetched.
Mr Beer: There wouldn’t be a motive for such people to deny you information, deny you documents and falsely to give you reassurance where it wasn’t warranted, would there?
Paula Vennells: I think you conflate too many different things, if I may, because you’ve covered bugs and IT, you’ve covered legal advices, the chairman’s report by Jonathan Swift. I can’t see that over that period of time that individuals working on all of those documents could have conspired or had a reason to withhold them.
The Inquiry heard from Susan Crichton – and this is a serious governance lesson – that it was not the practice in the Post Office and the Legal team, and in Royal Mail Group previously, to share legal advices. They may have had very good reasons for that, some of which I’m sure were related to legal privilege, but they were not shared and, as Susan explained, the outcomes were discussed. So, as we go through some of those documents which we may do, I’m sure that I will recognise some of the recommendations.
I have to say, having read some of them, particularly one of the Brian Altman advices, where he was – as he was reviewing Prosecution Policy, he was hugely critical of, prior to 2012/13, the documentation, the policies in place, the approach. That advice was never shared with me, with the Group Executive, with the Board. Had we seen it, we may well have asked very, very different questions. What was shared was the outcome of that advice and different policies and procedures were put in place. But I think there is too much reliance or there was too much reliance on the lead General Counsels in that case – and I’m not particularly making a point about General Counsels – but to take a decision as to what was shared from those reports because what happened is they were then – as the Inquiry has seen, they were then reproduced into Board documents, which were shared, but the original advice would have been so much more useful.
And one of the biggest lessons for me in this is that advices should be – that Boards, Chief Executives and Group Executives should know when advices are commissioned, they should know when they are received – because some were received that were not commissioned – and they should see them.
Mr Beer: You focused on legal advice. I’ve asked you about a range of things –
Paula Vennells: Yes.
Mr Beer: – including the contract with Fujitsu, the information about bugs, errors and defects. If there isn’t a conspiracy operative to deny you this information, what’s the reason that so much of it didn’t reach you?
Paula Vennells: The contract with Fujitsu would not have been – the contract with Fujitsu – sorry, let me start again – existed over a very, very long period of time, as the Inquiry knows. I was involved with reviewing the strategy and some of the content of the contract with Fujitsu, as we prepared to re-tender the Horizon system in – up and during 2015. The original contract with Fujitsu and versions before that would not have crossed my desk as Network Director or as Managing Director.
What should have happened is the service level agreements within that contract should have been reported on differently than they were, and that also might point to some your points about bugs, errors and defects because, if I turn to those, the reporting that the Group Executive, the Chief Executive, and the Board received – and the Inquiry heard this from Lesley Sewell as well – was at different levels.
So I think we had a level 0 and a level 1 that came to my level and to the Board. Issues that cropped up below that were not reported. One of the biggest challenges, as I have been going through all of this documentation, is realising how much went on at an individual postmaster level. So when a bug affected large numbers of post offices or there was an outage which affect large number of post offices or a network failure, they were raised. But if a single subpostmaster made a call X number of times to a service centre, it wouldn’t have been picked up and I think, from a governance point of view, there is – and the point has been made previously – a very important lesson around the issue of the institution and the individual.
How does somebody, as a Chief Executive of an institution this large and complex, have sight to what happens to an individual, if they are affected by a bug?
The only thing I can think about is that it ought to be possible to have data which reports the number of times a postmaster may complain about something, the number of disputes that have not been resolved, age disputes, disputes where postmasters have challenged them –
Mr Beer: Isn’t all this really obvious?
Paula Vennells: It is and it wasn’t in place, and it should have been.
Mr Beer: If it was really obvious, why wasn’t it in place?
Paula Vennells: I think because of the way that the reporting had been planned. Management information across many areas of a business tends to be written in layers of escalation and the layers of escalation that were selected around IT and Fujitsu were such that it didn’t – and I think this probably happens in many, many other large institutions too – it didn’t give you, on a Board, a line of sight to what happened to an individual and we are seeing the terrible impact of that today.
Mr Beer: So is the overall answer to my question that you don’t believe that there was a conspiracy to deny you information and documents; the reason such information and documents didn’t reach you was the way that the company was organised and structured?
Paula Vennells: I think, in the majority of cases, yes. That is true.
Mr Beer: Who was responsible for organising and structuring the company?
Paula Vennells: Sorry, if I may just say, the other point is that I have seen documents and I have heard evidence where I think colleagues did know more information than was shared and, in those cases, either mistakes were made or they decided it wasn’t appropriate to do so.
To your first point, in terms of – sorry, could you say that again?
Mr Beer: Yes. If it was the organisation and structure of the company that prevented this information and these documents from reaching you, who was responsible for organising and structuring the company, after you became CEO?
Paula Vennells: I was responsible for – as CEO, you’re accountable for everything. You have experts who report to you. So the decision on what would have been reported on IT, for instance, would have been decided by the IT Director. When I was Chief Executive, in an attempt to get more on top of some of the issues that were reported, I asked Alisdair Cameron, for instance, to put in place an Operations Board, where it began to review some of those things that were raised. But, in terms of what you put in a report, the IT reports the Post Office had were not that different from ones I’ve seen in other big corporate companies.
The difference for the Post Office, as a result of what we’re discussing here today, is that it somehow – it was – at the time, it did not see what was happening in an individual post office, if that was – it was just at a level that didn’t reach it, and that was wrong, and there needs to be different sort of reporting that would have flagged that.
Mr Beer: In a note that Alice Perkins wrote before the departure of Susan Crichton, to you, she said:
“It’s the fact that she [that’s Susan] sees so much as beyond her control. That’s the problem. It’s her alibi.”
Do you think the same could be said of you?
Paula Vennells: No, definitely not. I asked questions, I oversaw the strategy which would have introduced changes where we felt it was appropriate to the organisation. I probed, I worked in a structured way and an informal way. I would walk around the desks in the organisation and talk to people just to find out what was going on. I was sometimes criticised in team development events for being too curious and stepping too much into people’s territory. I don’t think that’s a criticism that could have been levelled at me.
Mr Beer: You tell us that you always enjoyed a good relationship with Moya Greene, the Chief Executive of Royal Mail Group, in your witness statement.
Paula Vennells: Yeah, we had a good working relationship.
Mr Beer: You say – no need to turn it up – paragraph 259 on page 114:
“I got on very well with Moya.”
Paula Vennells: I got on very well with most of the people I work with, yeah.
Mr Beer: I’m focusing on Moya Greene at the moment?
Paula Vennells: Oh, sorry.
Mr Beer: She overlapped very extensively as Chief Executive of Royal Mail Group with your holding the most senior positions in the Post Office, yes?
Paula Vennells: Yes.
Mr Beer: She became CEO of Royal Mail Group in July 2010; you became MD of Post Office in October 2010?
Paula Vennells: Yes.
Mr Beer: She left in 2018 and you left in early 2019?
Paula Vennells: Yes.
Mr Beer: So a very substantial period of overlap. Can we look, please, at PVEN00000532. This is a new document for the Inquiry, having been properly disclosed by you recently. It’s an iMessage exchange with Moya Greene, and I think you’ll be familiar with it.
Sir Wyn Williams: What was the reference again, Mr Beer? Sorry.
Mr Beer: PVEN00000532.
Sir Wyn Williams: Thank you.
Mr Beer: Can you help us to date it, please?
Paula Vennells: I think this is January this year.
Mr Beer: You’ll see that the way you’ve screenshot it includes the words “Yesterday at [6.46]” – that doesn’t literally mean yesterday from the day that you disclosed it to us. That captures –
Paula Vennells: I think Moya had been away, she had come back to the UK. I have a sense this is around January time because I think it was at the time of the ITV drama.
Mr Beer: That would make sense because in the third paragraph it says:
“Nick was a poor witness.
“Chairman gone.”
That’s a reference to Mr Staunton, yes?
Paula Vennells: I believe so.
Mr Beer: He resigned, I think, or was required to resign, on 27 January 2024.
Paula Vennells: Yes.
Mr Beer: Let’s just read through it.
“Paula,
“Am just back in the UK.
“What I have learned from the Inquiry/Parliamentary committee questions is very damaging.
“Nick …”
That’s Nick Read, yes?
Paula Vennells: Yes.
Mr Beer: “Nick [Read] was a poor witness.
“Chairman …”
As we’ve established, that’s Mr Henry Staunton, correct, yes?
Paula Vennells: Yes.
Mr Beer: “… [has] gone. He will be next.
“When it was clear the system was at fault, the [Post Office] should have raised a red flag, stopped all proceedings, given people back their money and then tried to compensate them for the ruin this caused in their lives.
“[Moya].”
Then if we go down, please the next page. Keep going. You say in reply:
“Yes, I agree. This has/is taking too long Moya. The toll on everyone affected is dreadful. I hope you had a good break and are well.
“[Best wishes] Paula.”
Moya Greene:
“I don’t know what to say.
“I think you knew.
“[Moya].”
You reply:
“No Moya, that isn’t the case.”
She replies:
“I want to believe you.
I asked you twice. I suggested you get an independent review reporting to you. I was afraid you were being lied to. You said [the] system had already been reviewed multiple times. How could you not have known?”
Over the page, and scroll down:
“Moya, the mechanism for getting to the bottom of this is the Inquiry. I’ve made it my priority to support it fully.”
Moya Greene:
“The Post Office did not. They dragged their heels, they did not deliver [documents], they did not compensate people.
“Paula, you appealed the judge’s decision!”
“I am sorry. I can’t now support you.
“I have supported you all these years to my own detriment. I can’t support you now after what I have learned.
“[Moya].”
You’ll see, in the course of that exchange, Moya Greene accuses you of knowing.
Paula Vennells: Yes.
Mr Beer: Did you understand that to be an accusation that you knew about bugs, errors and defects in Horizon?
Paula Vennells: No, I understood this to be Moya – and there is a further series of exchanges of texts where Moya steps back a little bit from the challenges that she’s putting here. I understood that Moya had returned to the country earlier this year, that she had been listening to all of the information in the Inquiry and she was trying to square her memory with what she was hearing. I – yeah, that’s my –
Mr Beer: If we go up a page, please. She says in the second text down there:
“I think you knew.”
You say:
“… that isn’t the case.”
What did you think you were denying?
Paula Vennells: I think Moya was possibly suggesting there that there was some conspiracy, as you mentioned earlier, and, as I said, I didn’t believe that was the case. She may have been saying that I – no, I think it’s the same thing. I was going to say about a cover-up but the same thing.
Mr Beer: At the text at the foot of the page she asks you the question:
“How could you not have known?”
Your reply, if we scroll down – you don’t answer that question, do you?
Paula Vennells: No, and I didn’t not answer that question; I was very concerned, because I was aware that it is not good practice to be exchanging texts in the middle of an inquiry, and so I simply wanted to say to her that the place for resolving all of this was the Inquiry. It wasn’t that I should or shouldn’t have answered her question because this is –
Mr Beer: Ms Vennells we’ve got a lot of your text messages.
Paula Vennells: Yes.
Mr Beer: You’ve been exchanging texts messages with a lot of people, including in the currency of this Inquiry, haven’t you?
Paula Vennells: Not since the Inquiry became a public inquiry. I exchanged texts in relation to the Select Committee in 2020 and –
Mr Beer: The setting up of the Inquiry?
Paula Vennells: – and when the Inquiry was non-statutory, and then I understood – and the reason I exchanged those texts was to try to help to give good information to the Select Committee and to the Inquiry. The intention of all of those texts that were exchanged was entirely positive.
Mr Beer: You don’t answer the question, “How could you not have known?” What’s the answer to that question that the Chief Executive of Royal Mail Group is asking you: how could you not have known?
Paula Vennells: This is a situation that is so complex, it’s a question I have asked myself as well. I have learned some things that I didn’t know, as a result of the Inquiry and I imagine that we will go into some of the detail of that. I wished I had known.
Mr Beer: That’s not the issue. The question is: how come you didn’t?
Paula Vennells: I think the question then is which question am I trying to answer? The Inquiry – that there were two trials. There was the Common Issues trial and there was the Horizon Issues trial. If I take the Common Issues trial, I did know a number of aspects that came up during that trial and, where Judge Fraser found that the Post Office needed to change its practices and its contract.
In terms of the onerous nature of the contract, I was in the Board meeting where the Board reviewed that contract, as a result of the Linklaters advice which we touched on previously and we were given very straightforward advice that the contract was an acceptable contract.
One of my regrets, and it’s in my statement, is that during that meeting a relational contract was mentioned and I remember thinking: that is the nature of the way I would like the Post Office to work with its subpostmasters and I believed that that was what we were doing and, therefore, the legal advice, with continuing with the agency contract, could be followed.
In terms of the IT side, that I think is much more difficult. I wish I had known more on that. I did not know until 2018, when Mr Coyne submitted his evidence on the numbers of bugs in the system, and the serious numbers of bugs in the system and the interventions going on, and I should have known about that.
Mr Beer: But why didn’t you? That’s what I’m asking, not whether you wish you had known; it’s why didn’t you?
Paula Vennells: That goes back to my earlier point, I believe, around management information, around possibly Fujitsu not sharing as much as it could or should have done, around possibly people knowing that the system itself lacked integrity, around corporate memory. One of the biggest lessons for governance in this was, when I joined the Post Office in 2007, there was absolutely no corporate memory, alive, at least, of the inception of the Horizon system. I had no idea that it was a system that had been designed for a completely different purpose, that the Post Office had had to struggle to take it on, that the decisions –
Mr Beer: How come we’ve been able to find it out, just by asking for the documents? Thousands of documents about the birth of Horizon, the involvement of the DWP and the Benefits Agency, the splitting off, the contract, the Acceptance Incidents. You say that corporate memory didn’t exist: all of the documents are there, we’ve got them, we’ve looked at them, we spent five months looking at them?
Paula Vennells: You’re right and I didn’t. There is an issue of unknown unknowns. If you don’t know something exists, it’s difficult to ask questions about it. That is why the importance of governance, particularly around corporate memory on bad things, rather than good things – there was plenty of good corporate memory in the Post Office – is important to have. I simply didn’t have that information.
Mr Beer: Cutting through this, this exchange reveals that, even the Chief Executive of the Royal Mail Group, who supported you over all those years, doesn’t believe you, does she?
Paula Vennells: That’s what this particular text says. Whether Moya still feels the same, I’m not sure, and you would have to ask her.
Mr Beer: You point in this exchange to the importance of the Inquiry, and can I turn to that now as the second general topic. Can we look at pages 2 and 3 of your witness statement, please, paragraph 5, which is at the bottom. You say:
“I would like to offer my genuine and unreserved apologies to all of those affected by the matters giving rise to this Inquiry. I apologise that I and those working for me and with me failed the subpostmasters and their families. I am deeply sorry they have suffered in such a distressing way. I watched the Inquiry’s Human Impact evidence and heard the subpostmasters describe what they had been through, how isolated they felt, and how they had been unsupported by [the Post Office]. They described the life changing experiences they and their families have endured for so many years. I am so very sorry that so much of this happened while I was a member of the senior management team and then CEO.
“I also offer my apologies to Alan Bates, Ian Henderson, Ron Warmington, Lord Arbuthnot and all those who worked with them to secure justice for the subpostmasters. They had the right insights. They were right to persevere and I am sorry for where I made their task harder.”
Some of which you said first thing this morning.
Then can we go forward, please, to page 774 and paragraph 1800. You say:
“I have been asked to reflect on my time at [the Post Office] and to set out whether there is anything I would have handled differently, with hindsight.”
Then 1801:
“As a result of my commitment to this statement and to the work of the Inquiry, which has been my priority, I have had much to consider. With the benefit of hindsight, there are many things I and the Post Office should have done differently. I am now reflecting with care on these matters and I will expand upon them and answer them as fully as possible when I give my evidence to the Inquiry … Those reflections will demonstrate my deep remorse.”
So our request, which was made in August 2023, so seven months before you provided this witness statement, was for you to “reflect on your time at the Post Office” and set out whether there was anything you would have handled differently, with hindsight, yes.
Paula Vennells: Yes.
Mr Beer: You explain in paragraph 1801 that there are many things that you should have had done differently and the Post Office should have done differently, and you will expand upon them and answer them fully when you give your evidence in May, ie today.
Given you provided a 775-page witness statement that took seven months to write, could you not have reflected on what you should have done fully and differently within the witness statement?
Paula Vennells: Yes, I could have put more into it and I’m sorry if that isn’t – wasn’t helpful. I read so many documents and worked a long time to try and prepare this and disclosures – disclosures are coming out all the time –
Mr Beer: I’m sure that’s true –
Paula Vennells: I would be very happy to tell the Inquiry, now I have a list of things in my head and I hoped that I would be able to bring them out as we went through this statement. Equally, I will be more than happy to submit a further statement to set that out.
Mr Beer: Given that you took 775 pages and seven months to write this, why didn’t you do so then, given that we’d asked you that direct question? Were you adopting a ‘wait and see’ approach: let’s see what comes out in evidence, see what I’ve got to admit and then I’ll admit that?
Paula Vennells: No, not at all, Mr Beer. That’s not the way I work.
Mr Beer: So why didn’t you assist us by setting out in this document what your reflections were?
Paula Vennells: It was simply a matter of time. The Inquiry asked me, I think, over 600 questions, 200 or 300 with subquestions in each. I went through probably hundreds of thousands of documents and my memory was not very good at the beginning of this process. It has improved as I’ve gone through the documentation and that was important. And, by the time I got to December last year when the draft went in, I had simply run out of time to answer these questions properly. They are very serious questions. I can – questions 189 and 190, in the list that the Inquiry sent to me. I would be happy to write them up in much more detail or I would be happy to share with you now, or as we go through, those reflections.
It was absolute not a ‘wait and see’.
Mr Beer: Can I turn to the third topic, please, which is what you think went wrong.
Can we go back to paragraph 4 of your witness statement, please, which I think is on page 2. If we scroll down, please, you say you have been shown and read thousands of documents from the Inquiry’s disclosure when you were writing this witness statement, yes?
Paula Vennells: Yes.
Mr Beer: You’ve done your best to refer to all relevant documents and answer all questions fully.
Paula Vennells: Yes.
Mr Beer: But you’re sure you may have missed some or overlooked some inadvertently.
Paula Vennells: Yes.
Mr Beer: Then can we go forwards, please, to page 774 and paragraph 1802. Thank you. In the second line, you say:
“I am genuinely sorry … I finish this statement by repeating my apologies to the subpostmasters and their families and to all who have suffered so much from this terrible miscarriage of justice.”
Then this:
“Their lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system.”
I just want to focus on the words “as a result of the Horizon system”. Even after all the Inquiry has revealed and after all of the documents, thousands, that you’ve read, do you continue to think that the issue was with the computer system, the Horizon system, as opposed to the conduct, competence and ethics of those within the Post Office?
Paula Vennells: No, not at all and apologies that that’s not clear. There were numbers of debates about what the Horizon system meant. No, what I meant to say or what I should have said is “as a result of all of the matters relating to Horizon and all of the issues that were discussed that the Inquiry is looking at”.
Mr Beer: This suggests that you think that the issue was with the system not the people: the people that were responsible for the conduct of prosecutions, the people that were responsible for the conduct of investigations and, indeed, those responsible for their supervision, oversight and governance, doesn’t it?
Paula Vennells: That was not what I intended to convey at all.
Mr Beer: Is this a perpetuation, what we see in this simple sentence here, of a culture that ran through the Post Office of failing to take responsibility for the use of powers that it elected to use and, indeed, use robustly and, instead, blame the IT?
Paula Vennells: No, it isn’t that at all and I completely agree with what is contained in your question. The tragedy that we’re dealing with today is the result of something much, much broader than an IT system. Yes, that underpinned some of it but the issues were much, much broader.
Mr Beer: The words that you finished the statement with here, these last two sentences, are exactly the same words that you used – they’re a cut and paste – when you were announcing that you were returning your CBE to the King, correct?
Paula Vennells: I don’t recall that but, if you say so, yes.
Mr Beer: Yes, they’re a cut and paste.
Paula Vennells: Right.
Mr Beer: I’ve looked online to see the words that you delivered when apologising and explaining the return of the CBE. Is that how you thought then: that it’s the computer system that was the problem, not the people?
Paula Vennells: No, Mr Beer, I didn’t. I’ve just explained. It was a poor use of words. This was far more complicated than just the Horizon system.
Mr Beer: Does it reflect a fundamental failure to understand how profound a power the Post Office chose to exercise when it prosecuted people at scale, and how serious and broad the use of that power was?
Paula Vennells: No, because I wrote this in hindsight. I think, at the time, your question is valid. The Post Office didn’t realise all of that.
Mr Beer: Can I turn to the fourth topic, please, which is whether your priority in your time at the Post Office was to protect the business. Can we turn up, please, POL00102438. Can you see an email exchange between you and Jane MacLeod, Mark Davies and Alisdair Cameron, with other people copied in –
Paula Vennells: Yes.
Mr Beer: – of 3 August 2015. You say:
“I’ve listed below some questions and requests.”
Then, in the second paragraph, you say this:
“As [presumably ‘per’] my earlier note our priority is to protect the business and the thousands who operated under the same rules and didn’t get into difficulties …”
Can you see that?
Paula Vennells: Yes, I can.
Mr Beer: By this stage, as I think we’re going to see, August 2015, the Post Office and you personally were aware of at least three bugs that had impacted on subpostmaster balances in different ways, correct?
Paula Vennells: Yes.
Mr Beer: Why were you still happy to identify as a priority, to wheel out the message again, that, because many branches had not complained, that supported the Post Office position that those who were complaining, their complaints shouldn’t really be attributed to Horizon?
Paula Vennells: I’m sorry, first of all, because this reads badly today. At this is point in time, my recollection is that the Post Office team working on the cases of the subpostmasters – there were 136, I think, that went into the scheme and were being investigated – I had – and the Board had been given the information that no issue had been found that had caused the problems for those subpostmasters, either as a result of the Horizon system or – and I’m sure in some cases they had found something that the Post Office itself had not done correctly but, in my mind, I was of the understanding that the cases we were looking at were a minority, and the vast majority of those operating in the business had not encountered the same issues, I wasn’t –
Mr Beer: Can I just – I’m sorry – test to you on your logic there?
Paula Vennells: Yes.
Mr Beer: Why does that logic follow: “There are lots of subpostmasters for whom Horizon is working, we should concentrate on them, they’re our priority, not the people for whom it’s not working, who complain about a bug, error or defect”?
Paula Vennells: Two responses to that, if I may. The latter one is we were concentrating on those who had raised issues individually and that was part of the scheme and the –
Mr Beer: That’s not your priority, according to this.
Paula Vennells: Then this is badly worded because the –
Mr Beer: Why is it badly worded?
Paula Vennells: I’m juggling two priorities and I’m only talking about one here.
Mr Beer: You don’t say that here. That would be a more acceptable way to say –
Paula Vennells: It would have been a more acceptable thing to say –
Mr Beer: No doubt you wish you had but you didn’t?
Paula Vennells: No, I didn’t –
Mr Beer: You said our priority is to protect the people that aren’t complaining?
Paula Vennells: That wasn’t how I intended it to be read. We had just spent three years investigating with Second Sight, and I accept all of the things that went wrong through that process which I’m sure we will come to, but we had prioritised more than any other time in the Post Office, looking into issues raised by individuals. I had been told, and the Inquiry has heard other people say the same, that nothing had been found and so my understanding at this time was that the way the business was operating was an acceptable way, and what I was trying to say here is that we needed to make sure that the business, as it was operating, remained a priority for us. I wasn’t excluding the other but it can be read that way, and I accept it.
Mr Beer: Was this a message that was also disseminated within the business and, in particular, to those who worked the Helpdesks, when they responded to calls from distressed subpostmasters: the system works for everyone else, it’s just you that’s the problem, not the system?
Paula Vennells: Oh, no. There’s no way that the organisation would have disseminated something like that. The people who worked in the call centres – and I visited on a number of occasions and listened in to calls – were very keen to make sure they gave the help to the people who phoned in. But I’m very sorry because I’m very aware that so many subpostmasters phoned in so many times and didn’t – and we’re talking over a 20-year period – but phoned in so many times and were not given the help they needed.
Mr Beer: Or worse than that, they were told that “You’re the problem, subpostmaster”?
Paula Vennells: Yes, I’ve heard that.
Mr Beer: “You’re the only person that’s complaining about this.”
Paula Vennells: I have heard that. I can’t comment on individual cases and I’m very sorry that was the case.
Mr Beer: Separately, by this time, August ‘15, you hadn’t seen the Clarke Advice of 15 July –
Paula Vennells: No.
Mr Beer: – about Gareth Jenkins, 2013, but you had, I think, been made aware that there was a problem with the Fujitsu expert, which problem could create a duty of further disclosure that might undermine past criminal convictions. I’m summarising what you say in your statement.
Paula Vennells: Yes, yes.
Mr Beer: Was that not a cause for concern, when there were repeated complaints in respect of Horizon, ie I’ve been told that there has been an issue raised about the evidence given by the Fujitsu expert which may create a duty of further disclosure? Why would your priority still be on protecting the business, in the light of that?
Paula Vennells: My priority – I had a number of priorities as Chief Executive. To your question about the Simon Clarke Advice and Gareth Jenkins, the way that had been explained to me was that Gareth Jenkins had not disclosed – and I can’t remember whether it was one or two – bugs, which were not relevant to the case that he had been giving evidence on, and I can remember a conversation with Lesley Sewell very clearly because she was incredibly frustrated that he was now going to be stood down as what we understood at the time to be an expert witness, having shared – having not shared information which was not relevant to a case, and the logic didn’t seem to be – didn’t seem to stand scrutiny, but what was explained by the lawyers is that, because he had done that, he then had to be stood down.
I don’t think that had any –
Mr Beer: Sorry, we’re just going to come back to that in detail whilst you’re on it.
Paula Vennells: Right, okay.
Mr Beer: Is that your memory of it –
Paula Vennells: Yes.
Mr Beer: – of what you were told –
Paula Vennells: Yes.
Mr Beer: – that this was completely illogical: why are we standing down this Fujitsu man?
Paula Vennells: Yes, I had two conversations. I don’t know if you want to cover that now or later.
Mr Beer: Well, just briefly now, to get your evidence. Neither of these conversations are documented, correct?
Paula Vennells: I think they’re in my statement, actually, yes, so –
Mr Beer: So what you have said now –
Paula Vennells: There’s no further documentation of them, no. So the first I learnt was I bumped into Lesley Sewell in the corridor, she was looking particularly grumpy and I said, “What’s the matter”, and she said, “I just found out that” – and I didn’t remember the name and there’s documentation that shows that I didn’t but she would probably have said that the Fujitsu expert had been stood down because he hadn’t disclosed two bugs which were not relevant in a case where he had given evidence.
Mr Beer: Okay.
Paula Vennells: I then had a further conversation with Susan Crichton to say “This doesn’t quite make sense to me, why is he being stood down?”, and she explained that there was a duty of disclosure now, that what we had to do was to go back over the cases where he had given evidence and inform them of this event.
Mr Beer: Just again capturing things, we know that there was a written advice –
Paula Vennells: Yes.
Mr Beer: – from an independent barrister?
Paula Vennells: Yes.
Mr Beer: Do you know why neither of them said, “Paula, it’s all explained here”, which would have told you a very different story?
Paula Vennells: I have no idea, I have absolutely no idea and I find it unacceptable. I should have seen it –
Mr Beer: Do you think they were trying to protect you from information that you would find difficult to hear?
Paula Vennells: No.
Mr Beer: “We best not tell the boss.”
Paula Vennells: No. No, absolutely not.
Mr Beer: Because the account that you’ve given is very different from what the documents reveal.
Paula Vennells: Yes, I agree. I should have seen and the Board should have seen them. Susan Crichton explained to the Inquiry that it was not the way of working in the Post Office to disclose legal advices. They should have been and, to your point about me – people hiding bad news from me: no.
On the contrary: I put in place a campaign at one stage which was called “Bad News Is Good News” to encourage people to come – to produce – to share difficult information because it’s very important when you’re running an organisation, particularly at the level of Chief Executive, that that sort of information is shared with you.
Mr Beer: Can I move to my fifth topic, then, please.
You knew and worked very closely with Alisdair Cameron for a number of years, didn’t you –
Paula Vennells: Yes.
Mr Beer: – and presumably you trusted him?
Paula Vennells: Yes.
Mr Beer: He told us last week, from the time that he joined the business, that’s January ‘15, until the time that you left, that’s April 2019 –
Paula Vennells: Mm-hm.
Mr Beer: – that you did not believe that there had been any miscarriages of justice. In his words you “could not get there emotionally”. Did you believe, right up until the point at which you left the business, that there had been no miscarriages of justice?
Paula Vennells: I was told multiple times – and I’m very aware of the questions that have been asked around the Select Committee in 2015 – that there had been no evidence found, the Inquiry heard from Patrick Bourke, I think, last week or the week before, where Fujitsu records had been checked to see if there was a scar and everything was golden. I was told that there had been – that nothing had been found.
Mr Beer: So is the answer that you did believe, right until you left the business in April 2019, that there had been no miscarriages of justice?
Paula Vennells: I think that’s right.
Mr Beer: Was that because you could not, at an emotional level, reach the opposite view?
Paula Vennells: No, you will see there are two or three examples in documentation where, even in 2016, I asked – I received a communication from Tim McCormack, who I did speak to or communicate with, and Tim pointed out that the – that Mrs Misra’s case had now been referred, I think – or the police had been brought in to look at whether Post Office Investigators had not operated correctly in her case. I don’t remember the detail and I don’t think there were matters of detail in his email.
I immediately reacted to that by asking Tom Wechsler to look into it and, in the email, I say “I want you to suspend any” – these may not be the right words – but “I want you to suspend any judgement around Sparrow and that we will take whatever conclusion comes from this”.
What actually happened is that Mrs Misra’s case had gone to the CCRC and so it was left with the CCRC to look through. But, no, absolutely not.
Mr Beer: So Mr Cameron is wrong to suggest that you believed there had been no miscarriages of justice because you could not reach the opposite view at an emotional level?
Paula Vennells: You can’t be a Chief Executive and rely solely on your emotions, no.
Mr Beer: Mr Cameron told us that you were clear in your conviction, from the day he joined until the day that you left, that nothing had gone wrong; is that correct, was that your belief?
Paula Vennells: I don’t think he’s right in that view.
Mr Beer: Were you clear in your convictions that nothing had gone wrong in your time at the Post Office, so far as Horizon was concerned and the prosecution of subpostmasters was concerned?
Paula Vennells: No, not at all. There were problems with Horizon all the way through my tenure.
Mr Beer: Mr Cameron told us that you never deviated from or seemed to doubt that. Is that right, that you never deviated from your path?
Paula Vennells: No, he’s completely wrong.
Mr Beer: Can we turn, please, to JARB0000001. These are the notes of a meeting between you – we can just see you at the foot of the screen there – other Post Office personnel and a group of MPs, including Lord Arbuthnot, yes?
Paula Vennells: Yes.
Mr Beer: It’s dated 18 June 2012 and can we look, please, at page 2, where you’re recorded as saying:
“Paula Vennells continued. She said that temptation is an issue, but that trust in the Post Office … brand is absolutely paramount. The Post Office needs competent, trustworthy people on staff, and its processes and systems must be transparent and must work well.
“Of the [1,800] subpostmasters and mistresses currently employed, only a tiny number are presenting … cases where there is an issue of alleged fraud involving the Horizon system. The problem therefore is relatively … small.”
Sir Wyn Williams: I think you actually said “1,800” but it’s 11,800.
Mr Beer: Thank you, sir:
“The problem is therefore relatively … small.
“The Horizon is very secure. Every keystroke used by anyone using the system is recorded and auditable. When things go wrong in a sub post office, there is a helpline which staff can call 7 days per week during office hours and back-up staff who will help further if things go wrong. It is here that issues are normally resolved.
“It appears that some subpostmasters have been borrowing money from the Post Office Account/till in the same way they might do in a retail business, but this is not how the Post Office works. Post Office cash is public money, and the Post Office must recover it if any goes missing.”
Then this:
“Every case taken to prosecution that involves the Horizon system thus far has found in favour of the Post Office.”
A similar line, if we can remember that one, to go over to page 3, just at the foot of the screen there, you are recorded as saying:
“… going back to Andrew Bridgen’s question, there had not been a case investigated where the Horizon system had been found to be at fault.”
Is what we read here, “Every case taken to prosecution … has found in favour of the Post Office”, “there has not been a case investigated where the Horizon system has been found to be at fault”, a reflection of the unwavering belief that Mr Cameron spoke about that nothing had gone wrong, there had been no miscarriages of justice and you refused to deviate from those lines?
Paula Vennells: It isn’t a representation of that. It is, though, a representation of the information that I was given. In, I think, January 2012, the General Counsel told the Board exactly this and the Inquiry has seen this statement, I think, made by other colleagues. It was a – an understanding in the organisation, which was – which I now know is completely incorrect.
Mr Beer: You know it’s incorrect because you know that, by the time you were speaking here, Nichola Arch, the branch manager at Chalford Hill Post Office in Stroud, Gloucestershire, having been accused of stealing £24,000, had been acquitted by jury in April 2012, having blamed Horizon for the alleged shortfalls at her branch, don’t you?
Paula Vennells: I didn’t know that information.
Mr Beer: You know now?
Paula Vennells: I know now, yes.
Mr Beer: You know now that Maureen McKelvey, the subpostmistress at Clanabogan in Omagh, accused of stealing £30,000, had been acquitted by a jury, having blamed Horizon for the cause of losses of money of which she was accused of stealing; you know that now?
Paula Vennells: I know that now.
Mr Beer: You know now that Suzanne Palmer, the subpostmistress at Grange Post Office in Rayleigh, had been acquitted by a jury in January 2007, Mrs Palmer having blamed Horizon at trial for the losses said to have been attributable to her?
Why were you telling these Parlimentarians that every prosecution involving the Horizon system had been successful and had found in favour of the Post Office.
Paula Vennells: I fully accept now that the Post Office – excuse me.
The Post Office knew that, I completely accepted. Personally, I didn’t know that and I’m incredibly sorry that that happened to those people and to so many others.
Mr Beer: You’d received a detailed briefing for the purposes of this meeting, hadn’t you?
Paula Vennells: Yes, I had.
Mr Beer: There had been successive drafts of a briefing pack prepared for you and it was about 20 pages long, the briefing pack?
Paula Vennells: Yes, I can remember it.
Mr Beer: Can we look, please, at POL00096640. This is the final version of the briefing pack for this very meeting. We’re familiar with it. If we go to page 2, we can see the agenda and how the meeting was chunked up, who was going to speak to which issue.
Paula Vennells: Yes.
Mr Beer: You were going to speak at point 3 to the background.
Paula Vennells: Yeah.
Mr Beer: Then if we go over the page to page 3, we can see what Alice Perkins was going to deliver as key messages. Then over the page to page 4. We can see your section, yes?
Paula Vennells: Yeah.
Mr Beer: Topic 3, “Background”, and we can see all of the bullet points in detail on that page, yes?
Paula Vennells: Yes.
Mr Beer: Where does it say there that every case taken to prosecution that involves the Horizon system has been found in favour of the Post Office?
Paula Vennells: I’m not sure that it does, does it?
Mr Beer: It doesn’t.
Paula Vennells: No.
Mr Beer: Where does it say there that there had not been a case investigated where the Horizon system had been found to be at fault?
Paula Vennells: I don’t see it.
Mr Beer: Where does it say there anything about temptation and subpostmasters having their hands in the till, treating it like a retail business?
Paula Vennells: That, I remember, was discussed in the meeting.
Mr Beer: Yes. Where does it say it here?
Paula Vennells: If it isn’t here, Mr Beer, then I take your word for it.
Mr Beer: Where does it say here that every keystroke is recorded?
Paula Vennells: I believe that was picked up by Lesley Sewell.
Mr Beer: Yes, where does it say here?
Paula Vennells: If it isn’t there, it isn’t there.
Mr Beer: No. So why are the things that “postmasters have been led into temptation”, that “every case that has been prosecuted, we’ve won” not appear in your briefing of this meeting but are the very things that you’ve said to this group of Parlimentarians?
Paula Vennells: When you’re in a meeting you take the briefing in with you and then you supplement it or raise things that you consider also appropriate in the meeting. I –
Mr Beer: Isn’t the purpose of a briefing that it’s gone through a process, that the right people have been involved in it? I mean, we’ve seen the back issues of this, the email exchanges –
Paula Vennells: Yes.
Mr Beer: – between the relevant people –
Paula Vennells: Yeah.
Mr Beer: – IT and Legal, to get the key messages recorded right. Are you saying that you put this to one side and you freestyled in the meeting?
Paula Vennells: No, not at all. I would have used the briefing and I would have added in, as anybody does, I think, giving a briefing, to further information that I thought was relevant. What I did want to say, because I can see Mrs Hamilton sitting there, is that I did not realise at the time, when the details of her case were presented in this meeting, that the Post Office had more detail on the prosecution file than was shared with us at the time, and I’m very sorry about that.
Sir Wyn Williams: Very slowly I’m being attacked by drips, and I mean drips in the proper sense of the word.
Mr Beer: Yes.
Sir Wyn Williams: I notice that something landed on my face, then my hand, now my book. But please carry on until the break add then we’ll see if I can avoid the drips.
Mr Beer: Sir, I don’t think that’s tolerable for you, a form of Chinese water torture.
Sir Wyn Williams: How far away are we –
Mr Beer: Let’s take a break now, sir, and we’ll see whether we can get that sorted. Can we say until 11.15, please?
Sir Wyn Williams: Fine. You go with the usher, Ms Vennells, and I’ll follow you.
(11.03 am)
(A short break)
(11.20 am)
Sir Wyn Williams: Yes, Mr Beer.
Mr Beer: I hope that –
Sir Wyn Williams: We’re about to start now. Thank you, Mr Beer.
Mr Beer: I hope that issue has resolved itself, sir, or somebody has resolved it for you.
Sir Wyn Williams: I’m drip free, apparently.
Mr Beer: Ms Vennells can we return to where we were, which was what you told a group of Parlimentarians on 18 June 2012 about postmasters and mistresses having been tempted to put their hands in the till and treat it like a lending facility, as some retail businesses did, that the Post Office had never lost a case and that, whenever Horizon had been investigated, it was found not to have been at fault. We established that none of those three things were in the briefing prepared specifically for the purposes of this meeting, and I think you said that you drew these things from other sources; is that right?
Paula Vennells: Yes, that’s right, yes.
Mr Beer: One of them, I think you said that you drew from a Board meeting in January of that year, January 2012.
Paula Vennells: I believe that’s right, yes.
Mr Beer: Can we look at that, please. POL00021503. This is a Board meeting of 12 January that year. We can see that you’re present, as is, amongst other people, Susan Crichton.
Paula Vennells: Yes.
Mr Beer: Can we go forward, please, to page 6, and the foot of the page, “Significant Litigation Report”. In the second paragraph, it is recorded that:
“Susan Crichton explained that the subpostmasters were challenging the integrity of the Horizon system. However the system had been audited by [Royal Mail Group] Internal Audit for the reports reviewed by Deloittes. The audit report was very positive.”
I’m not going to examine at the moment whether any of that is true but then this:
“The Business had also won every criminal prosecution in which it had used evidence based on the Horizon system’s integrity.”
Is that the occasion that you’re referring to?
Paula Vennells: It is, as I said earlier, and that view was understood in the Post Office generally.
Mr Beer: What do you mean: that view was understood in the Post Office generally?
Paula Vennells: That Susan had – well, my recollection was that, from seeing the documentation, it wasn’t a memory, that Susan had said that in that Board meeting, and I don’t think it was a surprise when she said it because it was an assumption – it was an understanding in the organisation that this was the case –
Mr Beer: That –
Paula Vennells: – and, clearly –
Mr Beer: – Post Office had a 100 per cent hit rate?
Paula Vennells: I don’t think it was mentioned in that way but, yes, in terms of the way that it’s described here and, clearly, that was completely inaccurate in many different ways, as you drew attention before the break.
Mr Beer: When she was asked about this paragraph, Susan Crichton said that she had relied on what Jarnail Singh had told her?
Paula Vennells: Yes, I heard her say that.
Mr Beer: From your perspective, however, you would say that you’re entitled to rely on what the General Counsel said in the formal surroundings of a Board meeting?
Paula Vennells: Absolutely.
Mr Beer: Were you aware of any system in place for cases, which did not result in a conviction or, in civil cases, did not result in the subpostmaster being found liable, to be reported back to the Board or a subcommittee of the Board?
Paula Vennells: No.
Mr Beer: That there was a system in place for a report to be written – I suspect in the business it would have been called a lessons learned report – which it found out what had gone wrong?
Paula Vennells: Are you telling me there was or are you asking me if I – right.
Mr Beer: Some people have told us that there was, that, in every case that we didn’t succeed in, counsel was asked to write, essentially –
Paula Vennells: Ah, I remember, yes.
Mr Beer: – a report about what went wrong. We found none of them.
Paula Vennells: No, that never came to Board level or to Group Executive level.
Mr Beer: Was there a system in place that you’re aware of where that would have happened if the Post Office had lost any of its cases?
Paula Vennells: I don’t believe there was and there should have been.
Mr Beer: Do you know how it is that you were being given false information at the Board meeting and you’d, on your account, deployed that six months later to Parlimentarians?
Paula Vennells: Sorry, can you repeat of the question?
Mr Beer: Yes, how did it come about, in your view, that false information was perpetuated, regurgitated, deployed in this way?
Paula Vennells: It’s important to state, first of all, that I didn’t believe it was false information and I don’t suppose any board colleague did either. If you’re given information – and this is another governance lesson – but if you’re given information by the highest lawyer in the organisation, you take it completely as the truth because you assume that lawyers – and I must be clear I’m not implying anything here at all in terms of Susan Crichton – but one assumes that lawyers work to a professional code and one – and the Post Office didn’t, I think with hindsight, have sufficient oversight to check whether that was or wasn’t the case.
So if that statement was made at a Board meeting – if any statement was made at a Board meeting – the Board would take it as fact and truth.
Mr Beer: When you got to the meeting of the 18 June, you were essentially deploying your memory, were you, of what had been said at this Board meeting six months earlier?
Paula Vennells: I’m sure that was the case.
Mr Beer: What about “the postmasters had been led into temptation”?
Paula Vennells: That’s a more difficult one to talk about. The first thing I would say on that is to apologise because I’m very aware that that was not the case and it was an assumption that I made. That assumption was based on two things: examples of cases where I was told – and the Inquiry has seen this in documentation – that, in theory at least, that took place.
But my second evidence base for that was, during the rollout of the Horizon Online pilot, every branch had to be audited in terms of its cash position and we were dealing with 11,000 post offices. The audit process would not normally be announced because to do audits – the premise was that you went to audit a branch at a particular moment in time and you found it as it was. As we went into the Horizon Online rollout, I was in a meeting with George Thomson from the NFSP and assumed we would be doing audits in the same way, which is that Auditors would turn up to the branches, do an audit unannounced, as they normally were.
He suggested that would be a very foolish thing to do because there may be any number of branches where the cash might be short. George explained that it wasn’t a frequent practice but, infrequently, a postmaster may need to nip down to the wholesaler and may borrow cash from the Post Office Account and put it back the next day. There was no suggestion by George that that was done in terms of theft or fraud, or anything like that, but that there was an understanding, he led me to believe, that that was a possibility and so what the Post Office should do would be to let – and I thought it was sensible, I was shocked when he explained why but I thought it was sensible that we should at least let people know that Auditors were going.
So I had that also as an evidence base, that there was – perhaps “temptation” is too strong a word in some of the cases he was describing – but there might occasionally be circumstances where postmasters had borrowed cash with the very honest intention of putting it back and it might not have been there.
Mr Beer: Is there a written record of what you’ve just said?
Paula Vennells: I don’t believe so but it was in a meeting with George Thomson and Kevin Gilliland at the time.
Mr Beer: Can we turn to the related topic of this theme of whether your intention was to protect – whether your priority was to protect the business. You were involved in correspondence and decision making following the death of Martin Griffiths, weren’t you?
Paula Vennells: Yes, I was.
Mr Beer: By way of background, Mr Griffiths, is this right, had worked for the Post Office in Ellesmere Port in Cheshire for about 20 years, and he was accused of taking/ misappropriating/losing some £61,000 after the Horizon system had shown a shortfall; do you remember?
Paula Vennells: I understand that’s right.
Mr Beer: Separately, some £50,000 was stolen from his Post Office in the course of an armed robbery, yes?
Paula Vennells: Yes.
Mr Beer: You remember that?
Paula Vennells: I should say I wasn’t aware of that at the time but there was an email which detailed some of that, that I was copied into.
Mr Beer: He was alleged by the Post Office to be responsible for that loss, sustained in the course of the armed robbery –
Paula Vennells: Yeah.
Mr Beer: – and was required to repay some of it to the Post Office?
Paula Vennells: I understand and he shouldn’t have been.
Mr Beer: And shortly afterwards he took his own life.
Paula Vennells: (The witness nodded)
Mr Beer: Can we look, please, at POL00301440. Look at the last page, please. If we just scroll to the foot of the page. In fact, it’s not signed off. If we scroll up a little bit, please, a little bit more, we can see the beginning of this chain from Alan Bates, at 4.02 on Monday, 23 September, and it’s to you and others.
Paula Vennells: Yes.
Mr Beer: Mr Bates says:
“This afternoon I received the following email, it is a prime example of the thuggery being exerted on defenceless subpostmasters (as [the Post Office] deny legal representation) by arrogant and uncontrolled Post Office personnel. Despite assurances from on high that this type of thing is in the past, it is clear from [the Post Office’s] actions, it is still alive and active through the ranks.”
Then there’s the email:
“Hello Alan
“I am writing on behalf of my son-in-law Martin Griffiths who has recently been in touch with you about the treatment doled out to him by the hierarchy at the Crown Office in Chester. He had an armed raid in May, and the faceless wonders at the Crown Office have intimated he was culpable. Had him at the kangaroo court where he was not allowed any representation of his own, he was a broken man then.
“However, he was sent for last Friday to attend a meeting with the Crown Post Office personnel again, and all weekend he has clearly not been himself.
“This morning he drove off to work, got out of his car and walked in front of a bus.
“He is dangerously ill in hospital in Liverpool, the Post Office had driven him to suicide.
“All the family are at the hospital, I am alone waiting by the phone for further news of him.
“I would urge you to publicise this, another incident that has been caused by the Bully Boys at the Crown Office.
“May god forgive them.”
Mr Bates continued:
“I am aware of Martin’s case, and I know he was terrified to raise his shortages with [the Post Office] because of just this type of thing happening to him, but [the Post Office] got him in the end. Regardless of what may or may not have occurred with him, why did [the Post Office] have to hound him to the point of trying to take his own life? Why?
“Despite numerous warnings of never to attend any discussion with [the Post Office] without legal representation, Martin, trying to be helpful, didn’t take anyone with him as per the conditions [the Post Office] demand. If [the Post Office] cannot control their personnel then the very least they can do is authorise and insist on a subpostmaster taking legal representation with them to any meeting with [the Post Office].
“I am very, very angry about this, and as per the misses of the family I will be contacting many of the media contacts we have built up over the years.”
Can we look, please, at POL00116133, please. This is an email chain between you and Susan Crichton that begins on that evening, the evening of 23 September. Can we look at the bottom of page 1, please. Susan Crichton at 9.38 says:
“… confirm I have spoken to Alan Bates, explained that the family have been in touch today and asked for help in branch as the subpostmaster had been involved in a car accident. I explained Angela is looking into this and we will catch up with him tomorrow.
“Alan has … rung back to say the message re car accident was a miscommunication from a family member and that it was definitely a suicide attempt.
“Angela and I will agree how to handle this tomorrow, as the facts re the subpostmaster are not as represented by the email.”
Then if we scroll up please we see your reply at 10.12 that night:
“[Thank you]. Two points for me tonight:
“Firstly, but most importantly, in the exchanges, I haven’t seen anything re how Martin Griffiths is? Do we know/are we in the loop?”
Then:
“And if it is an attempted suicide, as we sadly know, there are usually several contributory factors. Are the police involved? And are we in direct contact with the family?”
At this stage, why were you raising the fact that there were usually several contributory factors involved?
Paula Vennells: The first thing to say is, as I say in my statement, I am very sorry about this and that just sounds too shallow. Every email you will see from me about Mr Griffiths I start with him and how he was or how his family are. The Post Office took far too long to deal with it and, to answer your question about contributory factors, one of the other things that I had to do as Chief Executive was to understand, if there were details to understand, how this – I would have to communicate something so serious as this to the Board and I think I was trying to find out whether there was anything else behind it.
I had a personal experience of a previous Post Office colleague who had – took their own lives, and I phoned … I phoned the family and I spoke to the father, who explained to me that there were other issues involved and I imagine that – I’m sorry. I imagine that I was probably –
Mr Beer: Ms Vennells, just rather than trying to talk through your –
Paula Vennells: I beg your pardon.
Mr Beer: Just pause.
Paula Vennells: Yes, okay.
Mr Beer: Try to compose yourself, if you can, and then continue your evidence, please.
Paula Vennells: Thank you.
In this particular case, I had spoken to the subpostmaster’s father, who had said to me that there were other contributory factors in his son’s death and they were very grateful for the call that I had made.
In Mr Griffiths’ case, I also offered to do the same and I was told by the General Manager of the Crown Offices that that wasn’t needed and other people were in the loop. I imagine that what I was doing here in this email was recalling that previous incident but what you will see is that in every email that I wrote on this, my first concern was for Mr Griffiths and his family and, as I’ve said in my statement, I am – sorry is an inadequate word. I’m just so sorry that Mr Griffiths isn’t here today and –
Mr Beer: You say:
“Secondly, and very definitely in that order, Alan Bates’ email is worrying; especially as we hoped we had a working relationship. He clearly doesn’t (or doesn’t want to) trust us. Who is closest to him do you think?
“It would be unfortunate if we ‘lost’ him at this stage but equally we need to be straight about how unhelpful this kind of exchange is …”
Paula Vennells: What I was trying to say there is that Alan was rightly very, very angry about this. His language about Post Office colleagues was extreme, as we’ve seen. I knew those Post Office colleagues, or at least some of them, and didn’t believe they were capable of the behaviours that he was suggesting and so, as Chief Executive, secondly, and very differently – definitely in that order, I wanted to both understand about care for Post Office colleagues but also the relationship with Alan because we had – we were in the process of trying to work with Alan and Second Sight on some of the issues, and so what I was trying to do here was to balance a number of things.
But, as I say, in every single case, the most important focus was on Mr Griffiths and his family.
Mr Beer: You say in your statement – no need to turn it up – that:
“This was a time of great distress for Mr Griffiths’ family and I felt that accusations of blame were unhelpful”, in explaining these lines here.
Is that right? That you felt that Mr Bates’ accusations of blame were unhelpful?
Paula Vennells: I think at this stage and something as tragic as this, accusations of blame were unhelpful, yes, because the Post Office needed to respond to this properly and, at that stage, I didn’t – I had no understanding as to what had gone on.
Mr Beer: Were you, in that third paragraph there, “there are usually several contributory factors”, trying to sow a seed that there may be factors other than those identified by Mr Bates, ie the Post Office being to blame, that require to be investigated?
Paula Vennells: No, I don’t think I was making that connection at all.
Mr Beer: Can we have POL00027757 on the screen, please. Look at page 2 at the bottom, please. Thank you.
There’s an email from Mr Breeden to Angela van den Bogerd and Mr Chester. We’ll see later that you get copied in on this chain; you’re not at the moment. This is 11 October now, at 7.31 in the evening:
“To confirm our conversation, Glenn [he was the local manager] has spoken to Mr Griffiths’ sister to offer condolences following the very sad news of Mr Griffiths having passed away this afternoon.
“Glenn received notification of Mr Griffiths’ death by text earlier this evening from his sister Jane …
“The text was worded – Sadly my brother Martin passed away this afternoon after being in a coma for 18 days. The family is devastated as such a waste of life and feel the Post Office has ruined yet another life. Thought you should know as you liked my brother.”
If we scroll up, please, we see that’s passed on to you at 8.43:
“Sadly Martin Griffiths has passed away this afternoon.”
Yes?
Paula Vennells: Yes.
Mr Beer: Then scroll up, please, to your reply, if we keep going, please. At 9.28 that night, you say:
“… thank you for sending over this news. I am so sorry. Martin’s family must be devastated.
“I know (sadly from experience in business and personally) that there is rarely a simple explanation for such deaths; even though it is often easier for those so closely affected to look for one.
“Three requests: firstly if I can help in any way, that you or the team dealing with it ask me. I would be happy to speak to or to meet the family if we thought that would help.”
I think that’s what you were referring to a moment ago.
Paula Vennells: Yes.
Mr Beer: “Secondly, that we look after them as much as we can and as they will allow; thirdly, that we look after Glenn: he will be feeling very bad because he knew Martin and was the person closest to him from the [Post Office].”
Then scrolling down:
“And then, we need to look to the business: to help me brief this properly to the Board, can you let me know what background we have on Martin and how/why this might have happened.”
Then you say this:
“I had heard but have yet to see a formal report, that there were previous mental health issues and potential family issues.”
Can you see that?
Paula Vennells: Yes.
Mr Beer: Were you asking your team here to dig into Mr Griffiths’ records to look for information or evidence that he took his life because of mental health issues or family issues?
Paula Vennells: I had – so, first of all, I’m so sorry, because … I had, as Chief Executive, to pass this information on to Group Executive and to Board colleagues. If – and what I would have expected were the questions that I think I was trying to anticipate here, that Mr Bates had said that the Post Office was to blame and I did know, from previous examples and other information, that –
It doesn’t matter. I simply should not have said it. I shouldn’t have used these words.
Mr Beer: Who did you hear? You say, “I have heard” or “I had heard”; from whom did you hear that there were previous mental health issues and potential family issues?
Paula Vennells: I don’t recall. I believed I had also seen something in an email somewhere but I don’t recall.
Mr Beer: Was it rumour at this stage, if you hadn’t seen a formal report?
Paula Vennells: No, I don’t believe so.
Mr Beer: Can you help us any more?
Paula Vennells: No, I can’t. The only clear memory I have about this is that the people I was dealing with at the Post Office were very, very sad about this and one of my roles as their boss was to try to help them through it as well. But I can’t – “rumour” would be a very inappropriate word.
Mr Beer: Can we look, please, bearing that sentence in mind there, at POL00393535. This is the next day, Saturday, the 12th, and it’s 9.01 in the morning and you are emailing a group of people. I’m not going to read the chain but, in the third bullet point under “some questions”, you say:
“I possibly heard (but may be confusing with a previous case) that Martin had some mental health issues?”
How do you “possibly” hear something?
Paula Vennells: I think I’m simply stating an uncertainty.
Mr Beer: You say you might be confusing it with a previous case. Why were you saying this at all, if you might be confusing Mr Griffiths’ case with another case?
Paula Vennells: I’m trying to make sure, I believe, that there isn’t confusion. I shared with you earlier that I spoke to the father of a previous colleague and it may be that I was recalling that.
Mr Beer: In your witness statement – there’s no need to turn it up, it’s paragraph 675 on page 317 – you say:
“I was very aware of the background to suicide. It can be complex and is sometimes not apparent until long after the fact, and there’s often a desire by those closely affected by such a death to look for an explanation.”
By telling us that, is your evidence that you were looking to explain Mr Griffiths’ death for the benefit of his family and that’s why you were asking these questions?
Paula Vennells: No, I was simply trying to get to understand whether what Mr Bates had suggested, which is that the Post Office, ie colleagues in the Post Office, had been responsible for Mr Griffiths’ death –
Mr Beer: And his sister –
Paula Vennells: – and –
Mr Beer: – had said the same?
Paula Vennells: And his sister had said the same, yes.
Mr Beer: You knew it was the family’s view that Mr Griffiths had taken his own life because it had been ruined by the Post Office, didn’t you?
Paula Vennells: I did see that, yes.
Mr Beer: You had just been told about his death and you were trying to get on the front foot here, weren’t you?
Paula Vennells: No. No, Mr Beer, that was not the case.
Mr Beer: You were trying to find out information, you were tasking the team with finding out information to counter any narrative that the Post Office was to blame, weren’t you?
Paula Vennells: No, Mr Beer. I have said that – and you’ve seen that I asked about the family and as – there are other emails which go through trying to find some payment for Mrs Griffiths as well. What I was trying to do, quite simply, was to get the wider picture and not to be – and to understand particularly the very difficult challenges that Mr Bates had levelled at some Post Office colleagues.
Mr Beer: Thank you. That can come down.
Lastly, by way of general questions, I just want to ask you briefly about recollection and failures in recollection. Without turning them up, you say, at paragraph 358 of your witness statement, in relation to correspondence with Simon Baker and Alwen Lyons, I’m just picking some examples here:
“If the conversation was told about the bugs, I do not know if I was told about them on that date or later.”
Paragraph 424, you say you cannot recall what steps were taken to ensure that Second Sight had been informed what Post Office knew about the bug.
Paragraph 773, you say:
“I do not recall the Simon Clarke Advices being discussed or provided to the Board.”
They’re examples where you say, throughout your statement, that you lack recollection in relation to facts that might be damaging to the Post Office, yes?
Paula Vennells: (No audible answer)
Mr Beer: In your witness statement, however, would this be right: you have no problem remembering things that put responsibility or attribute blame to others? So in paragraph 192, you say:
“There was a further conversation [that isn’t noted] I remember that this reassured me that [the issue had been resolved].”
Paragraph 566:
“I recall telling Susan this was a stupid thing for John Scott to have done.”
This was in relation to the statement that weekly meetings should not be recorded or that the minutes should be shredded.
Paragraph 571:
“I asked Susan a number of questions about the removal of the Fujitsu expert witness.”
Why is it that you can remember things that are exculpatory of you, that tend to diminish your blameworthiness?
Paula Vennells: No, I don’t believe that’s the way I approached my statement at all or any of the work to the Inquiry. I have approached it with the intention of integrity and truth and honesty.
Mr Beer: Why is it that in your witness statement, when you refer to a recollection of a conversation that’s unminuted, undocumented, not referred to in any email, there are always things that exculpate you, that reduce your blameworthiness?
Paula Vennells: That isn’t the approach I’ve taken.
Mr Beer: Some might say that that has been an approach by others who have given evidence in the Inquiry: they have great difficulty in remembering things unless it paints them in a favourable light. Was there an issue, a systemic issue, in the Post Office that people only looked to the good and forgot the bad?
Paula Vennells: No, I’ve – I can’t comment on other people, and I give you my word, as I’ve said earlier today, that I will respond in complete truth to this Inquiry and have done in my statement. So my approach to this is, I hope, with integrity. Within the Post Office itself, I don’t recollect that and you’ve already mentioned that there was a positive culture in the organisation of lessons learned. We – I introduced something –
Mr Beer: I don’t think I’ve said that.
Paula Vennells: No, no, sorry, you didn’t say “positive culture”; you mentioned lessons learned.
Mr Beer: Yes?
Paula Vennells: I’m explaining that that was a culture in the Post Office and there was a positive intention behind that, which was to learn lessons all of the time. I mentioned that I encouraged “Bad News Is Good News” and you will see in Inquiry documentation that the word “pre-mortem” is used very often, and that was an attempt to both – from lessons learned, to read into actions going forwards where things might go wrong. So there was an intention, from my leadership certainly, and I believe the people I worked with, to look for and learn from mistakes.
Mr Beer: Thank you.
Can I turn, then, to your background and general knowledge of issues at the Post Office. I think you worked for the Post Office for 12 years in total; is that right?
Paula Vennells: That’s right.
Mr Beer: You joined in January 2007?
Paula Vennells: Yes.
Mr Beer: You were made Managing Director in October 2010?
Paula Vennells: Yes.
Mr Beer: And you left as CEO in April 2019?
Paula Vennells: I did.
Mr Beer: On a point of detail, whilst we’re dealing with that chronologically, when Alan Cook gave evidence last month, he suggested that you may have signed off on the Post Office spending some £300,000 in costs pursuing a £26,000 debt said to be owed by Lee Castleton. The main hearing in Mr Castleton’s case took place between 6 and 13 January 2006, with the judgment being handed down on 13 January 2007. I think you joined the Post Office in the same month, January 2007 –
Paula Vennells: I did and so I couldn’t possibly – I wasn’t there to sign off that money, I hadn’t joined the organisation. His recollection is incorrect.
Mr Beer: So it follows, I think, that you were not responsible for signing off the very substantial legal spend in that case?
Paula Vennells: No.
Mr Beer: Thank you. In terms of your previous career before joining the Post Office, is it right that noticeable features of it are that you had no experience of managing a large IT Team –
Paula Vennells: That’s correct.
Mr Beer: – and you had no experience of an organisation which investigated or prosecuted its staff?
Paula Vennells: That’s correct.
Mr Beer: You say in your witness statement, on a number of occasions, that you put to the fore the suffering of the subpostmasters, and you say, by comparison, the Post Office’s own reputation was of small import or importance compared to protecting the trust built up daily by colleagues working in post offices across the country?
Paula Vennells: That’s correct –
Mr Beer: That’s –
Paula Vennells: – the two were connected.
Mr Beer: That’s paragraph 47. In your statement, you refer numerous times to the importance of protecting public money?
Paula Vennells: Yes.
Mr Beer: That’s paragraph 40, 48(b), 265(b), 270, 383 and 736.
Were you preoccupied with the notion of protecting public money?
Paula Vennells: Not preoccupied with it no but, as part of the governance of working for a public sector organisation, there is a document called Managing Public Money and, when I joined the Royal Mail in 2007, I remember being surprised at how often that misspoken about but, of course, it’s because it was important because all public organisations are funded through public money.
Mr Beer: In your statement you refer on numerous occasions to the importance of the Post Office’s reputation and brand, paragraphs 47, 270, 293, 416(b), 437, 454, 455, 456, 458, 460(d), 467(c) and 470(d).
Were you preoccupied with the need to protect the Post Office’s reputation and brand?
Paula Vennells: Yes, but not to the extent of putting that over and above the suffering of the subpostmasters and I –
Mr Beer: Did you know they were suffering?
Paula Vennells: I understood – that’s a difficult question to answer, because the answer is yes and no. I understood from – clearly, if people were being prosecuted, that was a very difficult thing and the reason that we put in place the review with Second Sight and the Complaint and Mediation Scheme was to look into that. I wasn’t personally aware at the time because wasn’t involved in the prosecutions, but I would like to say that – and I do say this in my statement – whenever I spoke about the Post Office brand, it was a brand that was only ever built up through post offices, and it was a very strong belief of mine, which I mentioned at conferences and meetings, that Post Office Limited, as a corporate entity, there was no reason to build that as a brand.
The reason customers came to the Post Office and people chose to work for it was because of the wonderful work that was done in post offices across the country and still is, every day, and that was the brand I was talking about. In fact, when I became Chief Executive people used to call the corporate entity they worked for “POL”, and I said “No, we work for the Post Office. The post offices are why we are here”. So brand was absolutely important but in the sense of the local post offices.
Mr Beer: You just said that you did not put brand and reputation above the postmasters’ suffering. What suffering were they undergoing?
Paula Vennells: We have heard through the Inquiry – I sat through the Human Impact statements –
Mr Beer: No, no, no, no.
Paula Vennells: I’m sorry?
Mr Beer: You were telling us that, at the time, you did not put the Post Office’s brand or reputation above the postmasters’ suffering.
Paula Vennells: In terms of a personal approach, I don’t ever recall that being a motivation. I can see, with hindsight, that there will be many examples of where that is clearly the case because the Post Office got this very wrong.
Mr Beer: You tell us in paragraph 49 of your witness statement that, when you joined the Post Office, you had no understanding of the Board’s responsibility for the oversight of criminal investigations or prosecutions.
Paula Vennells: I’m sorry, say the beginning of that again?
Mr Beer: Yes. When you joined the Post Office in 2007, you had no understanding of the Board’s responsibility for the oversight of criminal investigations or prosecutions?
Paula Vennells: That’s correct.
Mr Beer: And nor did, in fact, you appreciate, you say, even that it brought its on prosecutions –
Paula Vennells: That’s right.
Mr Beer: – is that right?
Paula Vennells: Yes.
Mr Beer: What was your understanding when you joined of the Post Office’s geographical remit in respect of investigations and criminal cases involving subpostmasters?
Paula Vennells: When I joined the Post Office, I was not aware that there were differences in terms of the different nations in the UK having different approaches to that. So my – my assumption would have been that the investigations and the prosecutions, which I now know were conducted – sorry, which were conducted through Royal Mail Group, would have been across the UK.
Mr Beer: When you became Managing Director in October 2010, did you know by then that the Post Office conducted its own criminal investigations and pursued its own prosecutions?
Paula Vennells: No, I say in my statement I don’t believe I became aware of that until 2012.
Mr Beer: Can we look, please, at POL00021422. This is an RCC, a Risk and Compliance Committee meeting of 28 March 2008, so four or so years before the date that you’ve given us and we can see that you’re present, yes?
Paula Vennells: Yes.
Mr Beer: You were, I think, a member of the Risk and Compliance Committee at this time –
Paula Vennells: I was.
Mr Beer: – as Network Director?
Paula Vennells: Yes.
Mr Beer: Can we look, please, at page 9, halfway down the page. Thank you. “Crime Risk”, at paragraph 2.5:
“John Scott presented the Crime Risk elements of the revised back. An overview of Supply Chain and Network burglary and robbery incidences were presented and John explained that Supply Chain losses were just in excess of the 2006/07 performance. This was indicative of losing more money per attack and work was ongoing to establish if this ‘spike’ was indicative of pre-funding over the IA period or whether ATM location was a factor. Turning to Network, then year on year performance continued to improve with 2007/08 figures some 22.7% below the same time the previous year.
“John went on to comment over investment programmes introduced by competitors … and their apparent successes in reducing attacks. However, as [Post Office] continued to invest in a variety of initiatives, then it was unlikely that we would be unduly hit by way of displacement.
“A fraud update was detailed which showed [year to date] fraud figures of £4.6 million captured within 292 raised cases. John advised the Committee that a Fraud Strand restructure had seen greater focus placed on the identification and drive of proactive fraud initiatives, as opposed to simply delivering investigative case work.”
What would you have understood to have been traditional investigative casework?
Paula Vennells: I don’t recall, I’m afraid. I imagine – I don’t recall. I may well have asked in the meeting but I don’t recall.
Mr Beer: Would that not tend to suggest that, at this meeting, there was a discussion about investigative casework conducted by the Post Office?
Paula Vennells: There could have been. I was – are there any minutes of the meeting? I’m sorry, I don’t –
Mr Beer: That’s what we’re looking at.
Paula Vennells: Oh, that’s what the – no, in which case, I don’t recall, I’m sorry.
Mr Beer: Can we go over to page 10, please. Sorry, we’re on page 10, if we scroll down:
“John Scott then outlined the asset recovery position [year to date]; in summary, £1.6 million had been recovered against closed cases and the two trainee Financial Investigators were performing solidly.”
Moving on:
“The 2008/09 Crown loss initiative would see Security Team personnel target Crown estate losses with a view to reducing by at least 25%.”
Isn’t this indicative of a discussion about the Post Office investigating itself, its own fraud?
Paula Vennells: Yes, it looks as though it is. I’m not sure that I would have taken anything untoward from that. That would be a sensible thing to do across the size of the Post Office estate.
Mr Beer: So by at least March 2008, you would have appreciated that Post Office conducted criminal investigations in its own name?
Paula Vennells: I don’t know that I took that from this but –
Mr Beer: Who did you think was doing the investigating: two trainee Financial Investigators, for example?
Paula Vennells: Yes, I can see that. I don’t think I would have read anything more into – I can’t recall the conversation, I’m very sorry, but two Financial Investigators would seem to be – or however many – a sensible resource for an organisation to have, if it is managing money and it’s looking into whether there are examples of fraud. But I –
Mr Beer: But isn’t the whole context of this discussion that the Post Office is investigating; it has its own Investigators?
Paula Vennells: It is, yes. I –
Mr Beer: So you would have known by March 2008 at least that the Post Office investigated crime itself?
Paula Vennells: No, I don’t believe I would have taken that from this at all.
Mr Beer: Why not?
Paula Vennells: Because, as I read it, it doesn’t say that.
Mr Beer: Who would the trainee Investigators work for?
Paula Vennells: I imagine they worked for John Scott, for Head of Security.
Mr Beer: And he works for the Post Office?
Paula Vennells: At the time he worked for Tony Marsh and Royal Mail Group, yes.
Mr Beer: They worked for him and he works for the Post Office?
Paula Vennells: Yes, yes.
Mr Beer: So they would be investigating fraud, yes; post Office people would be investigating fraud?
Paula Vennells: Yes, that’s how it reads.
Mr Beer: Therefore, you would have been aware, listening to this discussion, that the Post Office itself investigated criminal offences?
Paula Vennells: No, I didn’t take that. I’m very sorry if I should have understood that from this conversation but I didn’t take that. My understanding would be – I did not know and – certainly not at this stage, and the Inquiry has heard Alan Cook and David Smith, as well, both predecessors, didn’t either. I didn’t understand that the Post Office was bringing its own criminal investigations. I don’t think I would have thought anything unusual of the fact – because investigation can be taken at all sorts of different levels.
I certainly didn’t read into this that Post Office was conducting criminal investigations to the level that I later understood, where these colleagues were then producing evidence to a particular standard in terms of – I think it was called the Police and Criminal Evidence Act or the Code for Crown Prosecutors. I didn’t understand that, I didn’t make that association at the time.
Mr Beer: Mr Scott is recorded as saying that the asset recovery position in the year to date was that £1.6 million had been recovered against closed cases. Doesn’t that presume that the Post Office is doing the recovering?
Paula Vennells: Not necessarily.
Mr Beer: Who did you think would be doing the recovering?
Paula Vennells: I don’t recall the meeting from 2008. It’s very difficult – and I am not trying to be disingenuous in any way on this. I simply don’t recall the meeting. I don’t know whether more information was discussed in the meeting. I could speculate that I might have thought that it – if I didn’t ask questions – that it was a combination of internal or external recovery. I’m very sorry but I simply don’t remember, and don’t know.
Mr Beer: I wouldn’t expect you to remember what was discussed at a meeting so long ago but would you agree that, from this record of the meeting, it’s reasonable to infer that the position was that it was openly discussed that the Post Office was conducting investigations of its own staff and recovering money from them?
Paula Vennells: Yes, I think that’s a reasonable inference to draw.
Mr Beer: So why is it that you say that it was not until 2012 that you appreciated that?
Paula Vennells: Because the inference that I may have drawn in that meeting is not the same as that which I learned in 2012, which is we were doing a very different level of investigation in terms of professional codes and criminal investigations. The only acceptable answer to the questions you’re giving me on this is that I should have known and I should have asked more questions, and I and others who also didn’t know should have dug much more deeply into this.
When I joined Royal Mail in 2007 – and this is a year later – there was a – it was an organisation in which postmen and women, subpostmasters, were investigated and, I now know, prosecuted by the organisation. It was – it had been going on for many years, it was a historic reality and it became a continuing reality, and I simply joined that. And it was a serious mistake that I didn’t understand before 2012 the extent of what this meant, and I didn’t – and I am really sorry.
Mr Beer: You’re telling us that for five years, as Network Director and then as MD, so between 2007 and 2012, you did not know that there was a department called POID, the Post Office Investigation Division, that it employed up to 100 people and that their job was to conduct criminal investigations around the country into your staff.
Paula Vennells: I certainly didn’t know the size of the team, that’s for sure. I understood that there were Investigators and that John Scott led a Security Team but I did not understand the extent of what it was until 2012, and I’m very sorry for that.
Mr Beer: When and in what circumstances did you become aware that the Post Office conducted its own criminal investigations? That document can come down, thank you.
Paula Vennells: I understood that – well, as I say, postmen, postwomen and postmasters were prosecuted. My understanding was that that was done through external authorities. It was in 2012 when I believe that we started to look in much more detail, when the challenges were raised by Lord Arbuthnot and Sir Oliver Letwin, and I think it was in the time before that meeting with both those MPs that, either before or during a Board discussion, I and others were made aware that this was the case.
Mr Beer: When did you first become aware that the Post Office brought its own private prosecutions?
Paula Vennells: I believe in 2012, around about that time.
Mr Beer: At the same time?
Paula Vennells: Yes, yes.
Mr Beer: And again in the same circumstances?
Paula Vennells: Yes.
Mr Beer: Were you surprised, “I’ve been working for this company for five years, I didn’t know we, rather unusually, prosecute our own staff”?
Paula Vennells: Yes, I think a number of us were surprised.
Mr Beer: Was there any discussion of that in all of the years that you served on the Risk and Compliance Committee?
Paula Vennells: Not that I can recall.
Mr Beer: Was there any discussion, so far as you can recall, before 2012, amongst the Post Office Board or the Executive Team, concerning the discharge of the Post Office’s prosecutorial function?
Paula Vennells: No.
Mr Beer: Do you know how that is, that this backwater of activity was going on –
Paula Vennells: My –
Mr Beer: – without anyone at a senior level seemingly knowing about it?
Paula Vennells: That’s the point I was trying to explain earlier: is that it – my – so it’s completely unacceptable that that was the case and that people did, including myself – that I didn’t know. And my only explanation for that it is that it had been going on for so long, that it was an accepted reality. It was a status quo that I joined and accepted – I shouldn’t have done.
Sir Wyn Williams: Isn’t accepting in the reality an acknowledgement of an awareness of the reality? Mr Beer is pressing you on how it could possibly be that you weren’t aware of the use of a function which was highly unusual for a private company. When I say “private”, you know what I mean –
Paula Vennells: Yes, yes I do.
Sir Wyn Williams: – not the CPS.
Paula Vennells: I agree, Sir Wyn. The way Mr Beer describes it is that it was a function that one didn’t hear about. We knew about cases being prosecuted and I believe – I can’t remember – the Post Office Board met infrequently – whether there were Significant Litigation Reports that came to the Post Office Board before I came Chief Executive, I can’t remember. But I think everybody’s understanding, mine included, was that where prosecutions were conducted, they were conducted by external authorities.
Sir Wyn Williams: Well, that’s what I’ve been told repeatedly. Just two other stepping stones to this and then I’ll let Mr Beer carry on, but there was at least one case two years before 2012, Mrs Misra’s case, which attracted a great deal of publicity. I mean, it does seem extremely surprising that it didn’t filter through at that point, that it was actually the Post Office who was prosecuting, not the CPS.
Paula Vennells: I agree. I haven’t seen anything in the documentation that points to the fact that one would have known that and –
Sir Wyn Williams: Well, if I may interrupt –
Paula Vennells: And, actually, if I may –
Sir Wyn Williams: I don’t think I need documentation to infer –
Paula Vennells: No, I’m sorry I was –
Sir Wyn Williams: – that this might be a point of discussion amongst senior people.
Paula Vennells: I apologise. My point about documentation was whether there was anything that would have prompted my memory. I have no recollection of – well, I have no recollection of being involved in conversations about Mrs Misra’s case, which we may come on to. I do have two separate recollections on that. There were not, as far as I know, discussions about the fact that it was Post Office who had investigated and had brought the prosecution. The assumption was that it was brought – it’s – yeah. The assumption is that it was brought by external authorities.
Sir Wyn Williams: What about – sorry, Mr Beer, and then I’ll be quiet – but what about the discussions relating to separation? The Royal Mail and the Post Office were separating but virtually all the lawyers were Royal Mail employees, weren’t they?
Paula Vennells: Yes, that’s right. Yes, they were.
Sir Wyn Williams: So there had to surely be some discussion about what was going to happen when the prosecutorial function was going to be conducted not by Royal Mail employees but by Post Office employees.
Paula Vennells: There was no discussion at Board level about that. There was a huge programme of change. The IT separation stream itself had over 200 different projects in it. So this was a massive, massive undertaking and I know that Susan Crichton had asked Hugh Flemington to look into this but I can only – I only know that from what I’ve read in disclosure. There was clearly discussion going on, the project itself was led by Mike Young, who was the Chief Operating Officer at the time. But I don’t believe there was any discussion about the fact that it was Post Office bringing prosecutions.
For all of the separation projects, and some carried on into 2014, actually, but for all of the projects, we almost lifted and shifted, because the timescale was so tight. So the investigation, the Security Team the Legal, the IT, et cetera, anything HR, anything – Company Secretary – anything that was done within Royal Mail Group was moved almost unchanged into Post Office and then, in some cases, was reviewed later. Where they could make changes, if they did it, that was taken – that took place, but my understanding on the legal side is that it was literally – that the service was taken into Post Office, in the same way that it ran in the Royal Mail Group.
Sir Wyn Williams: Sorry, Mr Beer.
Mr Beer: Did you know of the fearsome reputation of the Post Office Investigation Division amongst subpostmasters?
Paula Vennells: Not at the time. There were – when we got into the feedback from Second Sight and the Complaint and Mediation Scheme, yes, there were complaints made by postmasters and those were picked up straightaway. Part of the Branch Support Programme, but also Susan Crichton, commissioned a piece of work which I don’t know what happened to it but looked into the Investigation Team. I, at the time, was sponsoring a culture change programme in the post office and so, when I heard about that feedback, I personally spoke to John Scott and was involved with him in a couple of workshops on the culture change. The response I got back, as the Inquiry has heard, is that he was surprised at the feedback but –
Mr Beer: When you spoke to John Scott about this, did you say, “John, I’ve been in the organisation five or six years now. I didn’t know you had a team of 100 people that were investigating up and down the country subpostmasters and sending them to prison. How come I didn’t know?”
Paula Vennells: I spoke to John Scott about this, I think, in 2014, I don’t know his team was that size at the time and I spoke to him very seriously about the culture and the behaviours and the fact that subpostmasters and colleagues that worked in post offices were really important to us. John understood that, I thought –
Mr Beer: I’m concentrating – sorry, to speak over you – I’m concentrating on how this thing was going on that dozens of prosecutions occurred when you were Network Director, dozens of prosecutions occurred when you were Managing Director, collectively, hundreds of prosecutions went on conducted by the Post Office, having been investigated by the Post Office, and you didn’t know about it until 2012.
So when you spoke to John Scott, did you not say, “How has this all been going on? Who is managing you? Why doesn’t the Board know about this?”
Paula Vennells: At the time I spoke to John Scott all that had changed. We had stop prosecutions, his team had been substantially reduced in number and we were looking into the complaints made by the subpostmasters.
Mr Beer: Sir, thank you. Can we take our second break. It means we’re going to go into the traditional lunch hour a bit and I hope that’s –
Sir Wyn Williams: I think we’ll manage that, Mr Beer.
Mr Beer: Thank you, sir. So until 12.40, I think.
Sir Wyn Williams: Can I just say that when I come back in we’ll be starting whether you’re here or not all right?
(12.25 pm)
(A short break)
(12.43 pm)
Mr Beer: Ms Vennells, can I ask one further set of questions about the issue that I was focusing on before the break, namely whether this backwater activity of investigating and prosecuting hundreds of subpostmasters was something that everyone senior in Post Office didn’t know was going on.
Can we look at POL00158368, please, and look at page 22, please. Over the page, please, at the bottom of the page, please. Thank you. Just for context, if we scroll up a little bit, thank you, an email from Michael Rudkin to Alan Cook of 15 October 2009. By this time, there had been the Computer Weekly article of May 2009, the JFSA had been formed and complaints had started to come in from the JFSA, and Mr Rudkin is saying to Mr Cook:
“I presume you have already seen the article in the convenience store magazine …
“Is this article likely to have any impact on the contracts we already have with our existing banking partners”, et cetera.
Next paragraph:
“… a Horizon pressure group has formed and they are to meet … at Fenny Compton Hall in the Midlands.”
If we scroll up, please, we see Mr Cook’s reply. Mr Cook’s reply, 15 October. This to Mary Fagan, do you remember who she was?
Paula Vennells: I do.
Mr Beer: What function did she perform at this time, October 2009?
Paula Vennells: She was the Group Communications Director for Royal Mail.
Mr Beer: “I know you are busy right now but in Richard’s absence can you get someone to see what we can about this developing situation outlined below?
“… there is a steadily building nervousness about the accuracy of the Horizon system and the press are on it as well now.
“It is the more strange in that the system has been stable and reliable for many years now in and there is absolutely no logical reason why these fears should develop now.
“My instincts tell that in a recession, subbies with their hand in till choose to blame the technology when they are found to be short of cash.”
Then:
“Bizarrely the author of the email below was a very senior postmaster in the Fed who I know well but whose wife was found to be defrauding us and we have prosecuted.”
Do you see that?
Paula Vennells: Yes.
Mr Beer: If we scroll up the page, please. We can see that this email chain was sent to you, yes?
Paula Vennells: Yes.
Mr Beer: What would you have understood in reading an email which said, “We have prosecuted the subpostmaster’s wife”?
Paula Vennells: The same as I mentioned before, which – I beg your pardon, which was that a subpostmaster was prosecuted by external authorities and the case was made by the Post Office. I wouldn’t have read into that that the Post Office was a prosecuting authority.
Mr Beer: Wasn’t it the case that it was commonly understood by the senior management that the Post Office investigated its own cases and prosecuted its own cases and that’s why this is being spoken about openly here, “we prosecuted her”?
Paula Vennells: No, that isn’t the understanding I would have had about that at all.
Mr Beer: If we scroll back down to Mr Cook’s email, he says that his instincts are that, “in a recession, subbies with their hands in the till blame the technology when they are found to be short of cash”. Was that a sentiment that you agreed with?
Paula Vennells: No, I never used the word “subbies”. I thought it was completely the wrong word.
Mr Beer: What about the more important thing about them having their hands in the till?
Paula Vennells: I beg your pardon. I wasn’t avoiding that question. Neither, either calling them subbies or people with their hands in the till. As I explained earlier, the only understanding I had had was from that conversation with George Thomson in 2010.
Mr Beer: Okay, that can come down, thank you.
Can I turn to the issue of complaints about bugs, errors and defects. In your witness statement – there’s no need to turn it up – you say at paragraph 104, page 39:
“I had no knowledge of the Horizon system when I joined the Post Office. I had not heard of any problems with the system before I joined nor was I briefed of any during my induction. No one at the Post Office told me that there were bugs, errors or defects or that the system lacked integrity, or that there had been allegations or concerns about bugs, errors or defects in the system.”
Can we look, please, at – and we have this on the screen, please – your first witness statement, page 300, paragraph 634.
Page 300, 634. Then, if we go over the page, please. Yes, just at the foot of the previous page. Thank you.
You’re talking here about Second Sight and, in the second line from the bottom on the page, you say:
“Reflecting on this now, if they [that’s Second Sight] had completed those individual cases then we might have got closer to the real problem – the large numbers (600+) of unknown bugs and defects being corrected by Fujitsu without [the Post Office’s] (as I believed at the time) or my knowledge.”
Can you explain, please, where the figure of 600 plus bugs and defects comes from.
Paula Vennells: I thought – I may have misremembered that. I thought that was raised in the Horizon Issues trial and the – I can’t remember where I have that figure from there, but it was, I think, from the Horizon Issues trial or work that was done right at the very end, in terms of numbers of interventions in the system.
Mr Beer: That’s essentially what I’m asking you: where you got the number of 600 plus bugs and defects in Horizon from?
Paula Vennells: I can’t remember now. I’m very sorry but it’s a recent understanding of a number, not one that I had at the time.
Mr Beer: When did you get the understanding, then?
Paula Vennells: I think, after – either from reading something in the Horizon Issues judgment or in documentation very late on, before that trial took place.
Mr Beer: So you think it’s whilst you were still in the Post Office?
Paula Vennells: I can’t remember. I’m really sorry, I can’t remember that.
Mr Beer: There’s a briefing note prepared by Womble Bond Dickinson for the litigation steering group in November 2018, which says that statistical analysis conducted by Robert Worden, the defence expert, calculates that at the absolute worst there had been 672 bugs in Horizon over the last 18 years. Do you think that’s what you’re referring to?
Paula Vennells: Possibly, and not from the time because I didn’t see steering group papers. I don’t believe so, anyway.
Mr Beer: Are you aware of any documents produced in, for example, 2013 or in the years that followed, which demonstrate or suggest that there were 600 plus bugs and defects in Horizon?
Paula Vennells: I don’t believe so, no.
Mr Beer: When you refer to 600 plus bugs here, are you referring to bugs of any and all types –
Paula Vennells: Yes.
Mr Beer: – or just bugs that have caused or could have caused balanced shortfalls in sub post offices?
Paula Vennells: I imagine that I’m referring to any and all sorts. I think the two experts agreed on a list of – I can’t remember whether it was 21 or 29 that could potentially have affected branch accounts.
Mr Beer: Thank you. So this, essentially, is referring to after acquired knowledge –
Paula Vennells: Yes.
Mr Beer: – essentially something that you’re saying, “I’ve read a document now” –
Paula Vennells: Yes.
Mr Beer: – “that I didn’t know about at the time” –
Paula Vennells: Absolutely.
Mr Beer: – “if Second Sight had carried on with its work, it may have established this”?
Paula Vennells: Very possibly. Yes.
Mr Beer: Thank you. That can come down. Can I turn to a series of issues raised with you by subpostmasters by Detica and by Second Sight, about the existence of bugs, errors and defects in Horizon. Can I start with the Detica report. You know that on 1 October 2013 Detica produced a report on fraud and non-conformance in the Post Office?
Paula Vennells: I don’t have any recall of this document or the report.
Mr Beer: That’s what I’m going to ask about: why it didn’t make its way to you.
Paula Vennells: Yes.
Mr Beer: Can we start by looking at the report, please, the Detica report. POL00004408. Can you see that it’s dated 1 October 2013.
Paula Vennells: Yes.
Mr Beer: It’s 51 pages long and it’s produced by Detica. Now, this report – I’m not going to turn up the email, in the interests of time – was widely disseminated in the upper echelons of the Post Office, including to Lesley Sewell, Chris Aujard and Angela van den Bogerd. The cross-reference for that is POL00342987.
Now, the report is very familiar to the Inquiry. It highlighted a wide range of deficiencies across the IT estate of the Post Office and its systems and processes. I just want to highlight a couple of parts to you. Page 11, please, and paragraph 3.2.3. Detica record:
“The initial findings of Second Sight were published during the Pilot.”
The “Pilot” refers to an initial exercise conducted by Detica:
“The review was prompted by a public campaign by [subpostmasters] who felt they had been wrongly traduced by the Post Office following losses at their branches. Several of Second Sight’s observations resonate strongly, notably the disjointed response by the Post Office and the habitual desire to assign responsibility to an individual rather than to conduct root cause analysis to close gaps persisting across the branch network. In order to have a consistent approach across the [subpostmaster] estate, it is vital that the Post Office has the ability to robustly identify and monitor anomalous behave, so that the appropriate corrective action can be taken (whether this is tactical education, enhanced training, process or system redesign or audit/investigation).”
The sentence that, “Several of Second Sight’s observations resonate strongly, [namely] a disjointed response by the Post Office and [a] habitual desire to assign responsibility to an individual rather than to conduct root cause analysis”, is that something that was drawn to your attention?
Paula Vennells: No.
Mr Beer: Ought it to have been?
Paula Vennells: Yes.
Mr Beer: If this was distributed to Lesley Sewell, Chris Aujard and Angela van den Bogerd, which one or more of them ought to have drawn it to your attention?
Paula Vennells: I would have said all three.
Mr Beer: This is essentially marking some of Second Sight’s homework and agreeing with it, isn’t it?
Paula Vennells: It is, yes.
Mr Beer: That’s an important fact for you, isn’t it: that independent consultants, Detica, have been brought in, and they essentially agree with Second Sight on the points identified there?
Paula Vennells: Yes.
Mr Beer: Do you know why Lesley Sewell, Chris Aujard or Angela van den Bogerd would keep this kind of information from you?
Paula Vennells: I don’t know. I’ve since read the Detica report and some of the recommendations in it were picked up through other work. Whether they thought – I don’t know, I can’t speak for them. I was not under the impression that people were intentionally withholding information from me but this is a –
Mr Beer: I’m so sorry –
Paula Vennells: This is a report that should have gone, not just to me – because the Chief Executive doesn’t take every decision in the business – it should have gone to the Group Executive and discussions had about it as to what could have been implemented or not.
Mr Beer: Would it have affected your approach to Second Sight, that, rather than them being slow, not sticking to their brief, producing unevidenced conclusions and taking the side of subpostmasters, which is what we are going to see was the view ascribed by you to them, that, instead, the Post Office’s own consultants believed that their observations were correct?
Paula Vennells: Yes, and it would have drawn my attention to the fact that other consultants are saying that the Post Office did not conduct root cause analysis and I didn’t believe that to be the case. I assumed that Post Office was conducting root cause analysis.
Mr Beer: So that would be an independent red flag as well, apart from marking some of Second Sight’s homework rather well –
Paula Vennells: Yes, it would, yes.
Mr Beer: – it would be a second red flag?
Paula Vennells: Yes.
Mr Beer: Can we go forward to page 37, please, at the foot of the page. Sorry, if we just look at the top of the page to get the context, “Conclusions and recommendations”. Then at the foot of the page, 7.2.2 under “Complex and fragmented systems”, Detica concluded:
“Post Office systems are not fit for purpose in a modern retail and financial environment.”
Was that conclusion drawn to your attention?
Paula Vennells: No, I mean, none of the conclusions from this report were drawn to my attention because I didn’t see the report. That wouldn’t have surprised me, as a conclusion, that Post Office – what was the date of this report, please?
Mr Beer: 1 October 2013?
Paula Vennells: Yes, we were beginning to look at restructuring a lot of the IT provision because one of the additional challenges, as well as the points that are raised in this, was the IT needed to be much more fit for purpose in terms of a digital world. Many of the products and services we were selling were digital, or trying to sell.
Mr Beer: Thank you, that document can come down.
So you didn’t read Detica’s report at the time, because it wasn’t passed to you?
Paula Vennells: Yeah.
Mr Beer: You knew they were conducting a study?
Paula Vennells: I don’t know that I did.
Mr Beer: Were you informed of either the fact of the pilot study or any of the findings?
Paula Vennells: I don’t believe so.
Mr Beer: Looking at it now, this is a detailed report by independent third party contractors, expressing serious concerns about Horizon, Post Office IT systems, more broadly, and the Post Office’s processes and procedures –
Paula Vennells: (The witness nodded)
Mr Beer: – ought that to have been drawn to your attention?
Paula Vennells: Yes.
Mr Beer: Was that a serious failing of Ms Sewell, Mr Aujard and Angela van den Bogerd?
Paula Vennells: I find it strange that it wasn’t brought to – and it isn’t just to my attention, it’s the attention of everybody else who had responsibilities in terms of the running of the Post Office. There’s information in here that would have been incredibly useful to the Network Director, for instance, in terms of conformance.
Mr Beer: Have you any clue why they would want to keep you and the Executive and the Board out of this information.
Paula Vennells: No, and – no, I don’t. I don’t recall either that they were colleagues that I would have suspected were withholding something from the Board, or myself, or the Group Executive. I don’t understand why the report didn’t progress.
Mr Beer: Can I turn more broadly to concerns raised by subpostmasters, as opposed to contractors.
Would this be a fair summary: from at least February 2012 you received a series of correspondence directly from subpostmasters raising concerns about problems they were experiencing at their branches with Horizon?
Paula Vennells: Yes.
Mr Beer: Can we look at some of them, please, and I’m going to try to deal with these at some speed, POL00140629.
Page 3, please, the foot of the page, an email from Pervez Nakvi, dated 4 February 2012 directly to you:
“I am sure you were expecting my email but I have been quite busy in court hence did not get time.
“On Wednesday before I left for court I turned down 7 customers who wanted to withdraw the £600 limit and then … I was informed by my wife that she and the staff also turned down another 8 during besides the other usual withdrawals during the period when the Horizon went on its usual mood swings.
“I am sure there should be a clause in the contract to penalise Horizon for these constant breakdowns, as such these can be passed on to the subpostmasters to offset their losses and frustration when this happens.
“by the law of probability, I am sure it will happen again at peak periods especially at Christmas.”
If we go to the top of the page and scroll a little further down, that’s it, we can see this is your reply the next day, directly in response, copying in Mike Young, George Thomson and Lesley Sewell. You say:
“Mike/Lesley, [Pervez] is a respected subpostmaster (who also happens to be a Magistrate I think – hence the court references).
“I’d be grateful if you would reply. It is very frustrating to receive mails like this. [He] is right to raise it. It is my understanding that Horizon is reliable and we are within the tolerances. But if trusted individuals like Pervez are now not feeling that is the case, are we monitoring the right metrics? And if we think we are, might it be possible for you to get a direct link to Pervez so that we can monitor accurately what is happening in his branch. (Pervez – it may be that perception is worse than reality, as any outage is not acceptable to staff and customers; but it is possible that it is within accepted tolerances.”
Was it relevant to you that the person raising the complaint was a trusted individual?
Paula Vennells: I responded to all complaints in exactly the same way. I happened to know Pervez well, so that was an additional piece of information but it wouldn’t have made any difference whether I knew the subpostmaster or not.
Mr Beer: So all complaints raised by subpostmasters and mistresses, whether they were Magistrates or not, or held other trusted positions, should have caused you to investigate or caused to be investigated potential Horizon issues?
Paula Vennells: I would hope so. I’m sure there are cases where that was not the case but I would have tried to have approached them in the same way.
Mr Beer: You personally responded to this complaint and, as we’ll see, not to a series of others?
Paula Vennells: I responded when I could. There’s another example the Inquiry has, a postmaster I didn’t know, who – gosh, the name has just gone –
Mr Beer: We might come to it later.
Paula Vennells: Okay, okay. But when I could, I would. This had come in an email. Sometimes when – when complaints came in letters, they went through a particular process. So – but when I got an email, if I could, I would reply personally.
Mr Beer: So the fact that you personally responded to this one is not due to the fact that Pervez was respected?
Paula Vennells: Not at all.
Mr Beer: Can we look, please, at POL00117090. Moving forward to the next year, to September 2013. You can see the date there. It’s a handwritten letter from a subpostmaster, William Banville; can you see that?
Paula Vennells: Yes.
Mr Beer: I’m going to cut through it by going to page 2. He has complained on page 1 about losses incurred due to Horizon and he says, third paragraph in, if we just scroll down a little bit, that’s it:
“Can I ask if management at the [Post Office] is now aware of the unexplained problems which we have suffered. It’s not just the money which I have repaid for these ‘losses’ which in my opinion were not of this office’s doing but the personal attack on me and my staff, plus the ongoing thousands in costs incurred to cross and double check our tills since 2008.”
Then, at the foot of the page, just above his signature:
“I am not a thief or fraudster, but like a terrier I’ll never let go until it’s sorted.”
This letter would have come directly to you, would it?
Paula Vennells: No, I imagine it would have gone through to the Executive Correspondence Team.
Mr Beer: If we look at page 1 and see the stamp at the top of the page, can you see “Chief Executive’s Office”?
Paula Vennells: Yes, so the process is that it would have come into my office, my PA would have sent it to the Executive Correspondence Team, there would then have been – they would have gone out to different specialists across the organisation, depending on the content of the letter, and I would then have had a reply back to me with a file behind that reply, that might detail the issues that were raised in the letter.
Mr Beer: So would you just get the draft reply or would you get some primary evidence of the investigative steps that had been taken to substantiate what was said in the reply?
Paula Vennells: I am sure there were cases where it didn’t happen but I remember – I remember when I first took on the role and had letters like this, about many different things, and I was given a draft or a reply to sign, and I refused to sign it until I was given some of the primary evidence. So, after that, I was then presented with a letter to sign and a file behind it that carried the details from the people within the organisation as to how the answer had – the reply had been compiled.
Mr Beer: So you wouldn’t just sign off draft letters?
Paula Vennells: No – I’m sure –
Mr Beer: You –
Paula Vennells: – you will find something where I did. I mean, I had hundreds to do and other priorities as well as these to deal with but I remember asking to see files. I wouldn’t just take something and sign it –
Mr Beer: Thank you.
Paula Vennells: – and I would always read the letter.
Mr Beer: Can we move on, please, to POL00116166. I’m dealing with these chronologically, as you will have seen. We started in February 2012 and we’re now in October 2013. Can we look at page 2, please, and an email to you from Mr Warmington of 2 October 2013, and he says:
“Paula:
“As promised in today’s call, here are eight examples of the incoming applications.”
Just to put this in context, Second Sight has produced its Interim Report on 8 July 2013 and now the mediation and complaint scheme was starting up –
Paula Vennells: Yes.
Mr Beer: – and he is saying:
“… here are eight examples of incoming applications. I’ve selected those that are more clearly expressed than most of the others that we’ve been receiving …
“I’m also enclosing a spreadsheet which shows which ‘Thematic Issues’ each applicant has reported to us. It’s probably not worth you looking at that before your meeting with Angela and her team tomorrow …”
Then:
“In some cases the mediation applicants are already on the spreadsheet so are cross-referenced …”
We needn’t read the rest. If we go up, please – if we just look, before we do that, yes, it doesn’t show the attachments there but, if we go to the very first page, it says, “Example Applications”, and I think we know that there were eight attachments to this email.
Paula Vennells: Yes.
Mr Beer: They were the initial complaints of subpostmasters or former subpostmasters and they included – I’m just going to list them for the transcript and for future reference, there’s no need to display any of these – Lee Castleton, POL00099683; Keith Jones, POL00099684; Jane Brewer(?) POL00099685; Alan Lloyd Jones(?), POL00099686; Pamela Stubbs, POL00099687; Noel Thomas, POL00099688; Jacqueline McDonald, POL00099689; and Caroline Jack(?), POL00099690.
If we scroll back down, please. He says – thank you:
“As promised … here are eight examples …”
So those eight examples were attached.
If we scroll back up, please – keep going – you say:
“Dear Ron,
“It was good to talk to you earlier. Thank you for being available.
“I have just read through the attachments. Apart from finding them very disturbing (I defy anyone not to), I am now even better informed.”
Then there’s some administrative detail.
Why did you find the attachments very disturbing?
Paula Vennells: They explained in clear detail what the subpostmasters were asking the Post Office and Second Sight to look into. So some of them referred to, as we discussed earlier, the approach and the style of Investigators. Some of them referred to issues with the Horizon system and, in a number of cases, they spoke about the impacts on them and their families that – financially, the dreadful impacts on some people and, as I think I said here, the clarity of the form, really, it was very disturbing and upsetting reading.
And what I wanted to do, having read these, was to share them with colleagues, just so that everybody knew the seriousness of what we were dealing with. This was at the very beginning stage of the Mediation Scheme, so these were the applications before any of the reviews had taken place but I just wanted people to understand the impact on people’s lives.
Mr Beer: They referred to a very wide range of issues, including a series of faults with Horizon, didn’t they –
Paula Vennells: Yes, I can’t remember the detail now but, yes.
Mr Beer: – problems with misbalancing and shortfalls being wrongly attributed to subpostmasters; civil proceedings being taken against subpostmasters, including Lee Castleton, resulting in his bankruptcy; consequent impacts upon family and children –
Paula Vennells: Yes.
Mr Beer: – some complaining, in particular Noel Thomas, about his wrongful conviction and the impact that had had on him add his family; complaints about training; complaints about the helpline; essentially, all of the things that were subsequently established by the two judgments of Mr Justice Fraser.
Paula Vennells: Yes, and all of the things that the Complaint and Mediation Scheme was going to look into. And the other thing, if I may, that I would like to say, because I’ve heard very recently that subpostmasters saw the use of numbers – so these cases were anonymised, because of the sensitivity of all of that information. The Post Office was very concerned that it didn’t share it and there were – I think there was a team of 20 or so – an investigation team looking into this as part of the scheme, and so names were removed. But I am really sorry, there was no intention at all for subpostmasters to become numbers in this case, it was actually the opposite but I appreciate the points that have been made recently on that.
Mr Beer: You said that you found these very disturbing and that you defied anyone not to.
Paula Vennells: Yes.
Mr Beer: What happened between you finding these eight cases very disturbing and you shutting down the Mediation Scheme? When did they cease to become very disturbing?
Paula Vennells: All the cases that came into the Mediation Scheme were, by their nature, disturbing. My purpose in circulating these was from a … it was from a point of view of compassion –
Mr Beer: What systems –
Paula Vennells: – that the –
Mr Beer: Sorry.
Paula Vennells: – sorry, that the colleagues working on them and those who – there were many questions in the – sorry, not many. There were questions in the organisation, at a Board and Group Executive level, about whether – and this is in documentation – this was a distraction of management time. When I read these reports, it seemed to me that this was an important distraction of management time and that any colleague who might think that this was not a good use of money to be invested by Post Office and time invested in investigating it was clearly wrong, and I wanted to make sure that there was no misunderstanding about that.
To your question about what happened between then and standing down Second Sight, this was the ambition: was to look at all of these cases in as much detail as possible, and my understanding is this is what the team were doing. Second Sight and the Post Office team went through – my understanding was they went through the details of these cases, this is right at the very beginning, where we’re simply dealing with application forms – and, by the time Second Sight was stood down in 2015, I think, the view was that nothing had been found, that where the Post Office had looked at each case, there were explanations and we were still waiting, I think, when Second Sight were initially stood down, for them to finish some of the reports.
They then finished the reports and the responses that I and the Board and other senior management had back was that, in every case, there was an explanation for what had happened and we would then go into mediation, and where we were dealing with cases that had been through the courts, they were going through the Criminal Cases Review Commission and could then go through a form of appeal, if postmasters felt that that was an appropriate next step to do.
Mr Beer: Did the Post Office use a series of tactics and systems to iron away these very disturbing complaints over the next 18 months?
Paula Vennells: That was not my understanding.
Mr Beer: How was it that what struck you as very disturbing complaints ended up as being without substance?
Paula Vennells: My understanding was that every complaint was looked at in detail – they were reinvestigated. Information from Fujitsu was sought, data was looked at, Second Sight, I know, on one or two occasions – and this sounds very hollow now, I am very, very sorry – but complimented the Post Office on the standard of the detail of the investigation.
And it’s completely unacceptable and deeply sad, and I am very sorry that we didn’t reach the right conclusion on these cases.
Mr Beer: Thank you. Sir, that might be an appropriate moment. Might we break, please, until 2.15?
Sir Wyn Williams: Yes.
Mr Beer: Thank you, sir.
(1.23 pm)
(The Short Adjournment)
(2.15 pm)
Sir Wyn Williams: Yes, Mr Beer.
Mr Beer: Thank you. Good afternoon, sir.
Good afternoon, Ms Vennells.
Paula Vennells: Mr Beer.
Mr Beer: Can we pick up where we left off, which was looking at that series of subpostmaster complaints about bugs, errors and defects, by turning to POL00196815, please. This is from a Mr Pennington, it’s dated as having been received on 13 September 2013 in your office. In the second paragraph, having said, “Dear Paula”, he says:
“First though may I explain my background. I worked conscientiously and loyally for the Post Office for over 20 years. In this time it was very stressful due to the economic environment. However at the same time customer service was very satisfying.”
Next paragraph:
“My ‘complaint’ is from when the Horizon system was implemented. There was a loss from the system due to incorrect procedures on the staff side, lack of training? That resulted in a shown loss of over £18,000. I was assured that it would all return. However only £13,500 returned and I had to as the expression was ‘make good’ the shortfall. At the time I took my grievance to the Area Manager level, only to be told that the contract stipulated all shortages must be ‘made good’, and there was no appeal procedure.”
Looking at that complaint, is this the kind of letter that you describe before the break as one that would have been sent down the Chief Executive Office ‘correspondence to be dealt with’ route.
Paula Vennells: Yes, it would. The route wasn’t just for the Chief Executive, it was for all executive correspondents, and I imagine this would have gone through that particular process.
Mr Beer: The thing that Mr Pennington complains about that he was told that the contract stipulated that all shortages must be made good, was that your understanding of the contract at this time, September 2013?
Paula Vennells: Yes, it was my understanding of the contract. Once a postmaster had gone through the various stages of – and I realise now, from all that we know, that this was done in some cases very inadequately – but the complaint and the dispute would go through a particular process and, if it wasn’t resolved, then the contract was to make good. My assumption, through this time, was that that resolution process worked and, clearly, for many cases, it didn’t do that.
Mr Beer: Where did you get the understanding from that the contract said that all losses must be made good, irrespective of cause?
Paula Vennells: My understanding – hmm. It was a fact within the organisation. So Contract Managers would say that, Area Managers, as we see here, would say that. It was known that that was the requirement to the contract.
Mr Beer: You say it was known that it was the requirement of the contract?
Paula Vennells: Yes.
Mr Beer: In fact, the contract didn’t say that at all.
Paula Vennells: Oh, I’m sorry. No, I’m sure it didn’t. In fact, I’ve read the contract. The contract doesn’t use the words “make good” but that was the –
Mr Beer: Nor does it say “all losses”?
Paula Vennells: Sorry?
Mr Beer: Nor does it say “all losses”?
Paula Vennells: No, I’m sorry, could you ask me the question again?
Mr Beer: Yes.
Paula Vennells: Thank you.
Mr Beer: Where did you get the understanding from that the contract said that subpostmasters had to make good all losses, ie irrespective of the cause of them?
Paula Vennells: I’m not sure that I had that understanding.
Mr Beer: What was your understanding by September 2013 of the operation of the contract, so far as subpostmaster losses was concerned?
Paula Vennells: I’m sorry, I don’t know that I could recall – I’m not sure that I can recall now what I knew the contract said at that time. I have read the contract a number of times. What I can recall from that time is colleagues saying that the Post Office could not, in all cases, determine what had happened and so the contract held the subpostmaster liable for losses in the office. My understanding was that that was following a detailed dispute resolution process but I can’t recall the details of that contract.
Mr Beer: If the contract said that the subpostmaster was responsible for all losses, what was the point of an investigation?
Paula Vennells: The point of the investigation would be to make sure that – would be to find the cause of the loss because –
Mr Beer: Why was the cause of the loss relevant if the subpostmaster had to make good all losses?
Paula Vennells: Because it would be highly irresponsible for an organisation to be – as we will come on to discuss, I’m sure – to be prosecuting and finding people guilty of things that they were not guilty of, and vice versa.
Mr Beer: For the moment –
Paula Vennells: And any – it’s a – there’s a requirement to investigate anything that is unsatisfactory and shortfalls either way, where they’re disputed, would need to go through a proper process.
Mr Beer: At the moment, I’m not talking about prosecution at all; I’m exploring at the moment your understanding of the contract and the extent to which it permitted recovery against the subpostmaster and in what circumstances.
Was it your understanding that it permitted recovery of all losses, irrespective of cause, from a subpostmaster?
Paula Vennells: I honestly can’t remember what it was at the time. I would have completely relied on the people whose job it was to determine what the contract did or didn’t say and how it was applied.
Mr Beer: When you were Network Director, were you the ultimate line manager of such people?
Paula Vennells: Yes, they reported through a general manager – they were Contract Managers and they reported through three or four different levels through to me.
Mr Beer: You can’t say now what your understanding of the operation of the contract was; is that right?
Paula Vennells: I can’t say now. What I’m saying is that I cannot recall now what I understood the wording to be in the contract, in the clause that applied to this.
Mr Beer: We’ve seen –
Paula Vennells: But I trusted – this was a process that had been in place for many years and it was run by an experienced team. The Inquiry has a witness statement from Lynn Hobbs, who was the General Manager in charge of that team, and she was – I knew Lynn, she reported to me, she was a very responsible and very assiduous General Manager, so I had a number of different areas of responsibility and I had to rely on the experts in those different areas.
I wouldn’t have trusted my own interpretation or memory of a contract in an individual case.
Mr Beer: Thank you –
Paula Vennells: I wasn’t involved in that level.
Mr Beer: Can we move on. POL00101783, please. An email to you, we’re in late 2014 now, from Tim McCormack. If we scroll down, please, thank you.
“Dear Paula …”
So it’s directly to you.
“Yet again today Mark Davies, speaking on behalf of [the Post Office], relied on the dense that there are no systemic errors in Horizon and this is proved because we deal with so many customers per day in so many branches.”
Just stopping there, that was a frequent refrain of the Post Office at this time, wasn’t it?
Paula Vennells: It was and it was one that I used, and it was true and it was completely unfair in these cases.
Mr Beer: “I think Mark and yourself might like to review the periodic Message to Branches that are sent out via Horizon. There are a catalogue of systemic errors that arise from time to time and are fixed. Some involving automatic transaction corrections.
“Paula, as I keep saying, you are surrounded by people in your office that tell you all is well. You have no personal knowledge of operating Horizon nor probably any in-depth technical knowledge. What if the people that are telling you all is well have the same attributes?
“So forget systemic errors for the moment and consider ‘intermittent’ errors which by and large are caused by communication problems.
“I know of more than one but one in particular:
“It exists.
“It occurs at different times in different branches.
“It is noticed.
“They are reported to NBSC (I would really like to see the number of times this has been reported …)
“It causes financial loss to the [subpostmaster].
“They are not fixed BUT the wise [subpostmaster] knows how to get his money back so you don’t hear many complaints. You would hear from the Audit Team if they caught someone doing it though.
“So why haven’t these intermittent errors been fixed. To put it simply – because they are intermittent. There is no known sequence of events that can cause this error to reoccur in any particular branch. How can you fix something if you don’t know what caused it in the first place? You have to throw the whole thing out and start all over – the only way.
“On our ‘chat’ forums, there are documented reports over the years of the same error repeating itself randomly in a wide number of branches …
“I am pretty sure I can arrange for the error to be replicated”, et cetera.
What steps did you personally take in response to Mr McCormack’s email?
Paula Vennells: I can’t remember in terms of this particular email but I am aware that there are others that I responded to, to Tim personally – I responded to Tim personally and then asked for issues to be followed up.
Mr Beer: Were you advised to stay away from Mr McCormack by Mark Davies –
Paula Vennells: By Rodric Williams.
Mr Beer: – or Rod Williams?
Paula Vennells: Rod Williams in 2016.
Mr Beer: Why was that?
Paula Vennells: I had had – so, first of all, I am very sorry, because Tim McCormack had an insight into what I said earlier, which is the lesson of me being too trusting, I think. The comments he makes in this, with hindsight, ring true and are hard to see again. I had numbers of emails but, over the years, probably half a dozen. So, when you add them all together it looks to be quite a few. Over a period of time, I don’t know that I noticed it that much.
But I replied to Tim, and he said this in his statement, his emails became more extreme in their tone to me, I understand today why that’s the case –
Mr Beer: Exasperated?
Paula Vennells: Yes, yes and I understand why that’s the case.
Mr Beer: But what did you do –
Paula Vennells: But the –
Mr Beer: So sorry.
Paula Vennells: – but the tone of the emails became difficult to deal with and I was advised that the best way of responding to this was to – so, in every case, as far as I recall, we picked up the issues that Mr McCormack raised, in terms of –
Mr Beer: And properly investigated them?
Paula Vennells: I beg your pardon?
Mr Beer: And properly investigated them?
Paula Vennells: The one I can remember clearly was, I think, around 2016, where a full investigation was put in place and what I was told back was that we had found the explanation for the issue that he was raising. I can’t remember in this particular case.
Mr Beer: Do you know in this incident whether you caused to be reviewed the periodic message to branches or the catalogue of systemic errors that he is raising with you?
Paula Vennells: I can’t remember, no.
Mr Beer: Can we move on –
Paula Vennells: But, generally, I followed things through. So – but clearly, if I had, not sufficiently.
Mr Beer: Can we move on, please, to POL00150178. If we just look at page 2., please, there’s an email from Haydi O’Brien. I’m not going to read it out now, it’s long, it’s two pages long, I just want to see what you did with it on page 1, please, and scroll up, please, to the top. Your email to Kevin Gilliland and others, summarising what Haydi O’Brien had said. She said there was a shortfall of £33,000 at the Griffithstown sub post office being attributed to her.
You email Mr Gilliland add others, saying:
“This may be more complex than it sounds and I know that Angela will look into it properly.
“I want to be really sure – not just on the individual case but as much on the issues Haydi identifies in the whole process around this. And I would like you to sponsor the review of this case and see if it raises any wider issues. You will need to been in other SLT colleagues and ExCo. At this stage, I am only flagging it to Chris A, in case you do uncover more than meets the eye …”
Then skipping a paragraph:
“Hopefully, this is a one off. It sounds unusual (but we have said that before!). And hopefully, with the emphasis on risk, Rod’s team is completely up to date.”
Then, in the last sentence of the penultimate paragraph:
“… I know I don’t need to point out the sensitivity of this, as we face yet more difficult times over Sparrow.”
What were the “more difficult times over Sparrow” that you were referring to there? This is December –
Paula Vennells: The date is –
Mr Beer: – 2014.
Paula Vennells: Thank you. So we were a year into the investigation scheme. I’m not sure what I meant by “more difficult times over Sparrow” but we were clearly dealing with sensitive issues in Sparrow, Sparrow being the name of – the project name for the Complaint and Mediation Scheme, and what I’m flagging here is to make sure that we follow this through, it may be something that needs to be brought into the Sparrow scheme, and that I’m trying to, I imagine, keep a sense of proportionality around this.
But I think it’s also important to draw attention to the paragraph you didn’t read out, where I asked lots of questions about it, so why didn’t security get in touch? How do we monitor situations like that? How many other branches are in this situation? Is it monitored and controlled? What is the regular review in place? So I’m doing what I said before, is I had stepped into asking the detail, probing and asking for something to be looked at properly, and I’m also saying –
Mr Beer: Why is this sent to Mr Gilliland?
Paula Vennells: Sorry?
Mr Beer: Why was this sent to Mr Gilliland?
Paula Vennells: Because he was the Network Director so he was responsible for branches at the time.
Mr Beer: Was there an established procedure for dealing with correspondence that raised complaints about Horizon?
Paula Vennells: By this stage there was the hub meeting which collated issues relating to Horizon and, within the organisation, Angela van den Bogerd was heading up the review and complaints went in to her, and the Executive Correspondence Team – but this has come through me – would have picked it up as well.
Mr Beer: So far we have seen you reply to some direct?
Paula Vennells: Yes.
Mr Beer: Some not seemingly pass in front of you and go to the Executive Correspondence Team, and then some deal with on an ad hoc basis, like this one being sent to a collection of people?
Paula Vennells: That sounds as though they’re different, they’re not. Because the end person in all of this would, for instance, have been Kevin Gilliland and Angela van den Bogerd. When you spoke to – I beg your pardon, when Mr Blake spoke to Alisdair Cameron last week –
Mr Beer: That was me.
Paula Vennells: – Alisdair mentioned –
Mr Beer: That was me.
Paula Vennells: I’m so sorry! Alisdair mentioned that he wasn’t quite sure why things always went to Angela. They went to Angela because it was her job and so that’s why she was copied into this. Complaints and issues were raised in a number of different places across the organisation. What was important was that, in resolving them, they went back to the technical teams and this would have gone to IT, to Kevin, around the operational procedures, and Angela.
Mr Beer: You said, “This sounds unusual but we’ve said that before!” What were you referring to there?
Paula Vennells: I don’t know that it’s anything more complicated than what I’m saying, which is that I may – I presumably have raised issues previously, which have been new news to me and then found out that necessarily there wasn’t. I don’t think I’m making any deeper observation than that.
Mr Beer: Was there any system in place to collect together correspondence of this kind, so far we’ve seen quite a few letters coming to you, raising issues with Horizon, to see whether there were trends or any links between the complaints?
Paula Vennells: I don’t think there was a good enough system in place, if I’m honest.
Mr Beer: Was there any system in place?
Paula Vennells: Well, there was a system – there were two systems in place. One was the process through the Executive Correspondence Team, which would have had a factfile and they would have gone to, as part of that process, the expert in the organisation, so in terms of Horizon they would have gone to – at this time, I think it would still have been Lesley Sewell. And the other was the hub, which was set up, I didn’t realise, as a result of, but as a result of the advice from Simon Clarke, in 2013.
Mr Beer: So this should have got sent to the hub, shouldn’t it?
Paula Vennells: This should have been logged at the hub, yes.
Mr Beer: So anything from, essentially, mid-July or early July onwards, 2013, should have been logged with the hub?
Paula Vennells: It should have and it went to Angela and she had a colleague who sat on that group.
Mr Beer: So if in the Inquiry we’ve seen a series of individual responses passed through the Executive Team, quite often with Mark Davies’ input to them, which say Horizon conducts so many transactions a day, so many transactions a week, it processes so many millions of pounds a year, there isn’t a problem with the system, would that be the right process that’s been undertaken?
Paula Vennells: Mark would have only added, as he said last week, the Communications overlay to that. I wouldn’t have expected Mark to have got involved in the investigation of what had gone wrong. That was in this – that was Angela’s job.
Mr Beer: Can we move on, please, to POL00150182. Foot of this page, please, it’s the same chain of correspondence involving the Griffithstown sub post office and, by now, Kevin Gilliland has responded to you, and you say:
“Thanks …
“Just watch that Angela doesn’t jump to any defence, or even worse assume she knows the answer (she did say to me the woman’s daughter had caused the problem). If we have been negligent in following through, we should think about how to manage it. It also begs the question [of] how the business is now being run?”
Why did you ask Mr Gilliland to watch that Angela van den Bogerd doesn’t jump to a defence?
Paula Vennells: It was the right question to ask if I had a concern about it. Angela had –
Mr Beer: Did you have a concern about it?
Paula Vennells: I – Angela had worked for the organisation a long time. She had very deep understanding and had come across, I think, most things. There is a danger and a risk with that, which is people become too close to something. Whether, at the time I sent this email, I had been alerted to that in something else she had responded to but my job is to call this out and to make sure people don’t get drawn into – I hesitate to use the word “pattern” or “complacency” but that’s always a risk with people who have done a – who have worked in an organisation for a long time.
They have a huge added benefit because of their experience and their expertise but they don’t necessarily always see things afresh.
Mr Beer: Was it simply that she had worked for the organisation for a very long time that caused you to write this or was there anything more specific, which led you to think that she may be, by default, a Horizon defender?
Paula Vennells: I don’t believe so.
Mr Beer: So you would administer this warning for anyone that had worked for the company for a long time, would you?
Paula Vennells: No. As I say, I can’t place this in time and there were many other things going on at the same time. If I had bumped up against something where Angela had been particularly defensive on something and I mention here that she did say to me the woman’s daughter had caused the problem, we shouldn’t be making assumptions, we should be looking into things in detail. But I can’t remember the detail, whether there was something that prompted the comment but I think it’s a valid challenge. It would have been worse if I had said nothing.
Mr Beer: Can we move on, please, POL00119559. This a letter to you from Toby Perkins MP, the member for Chesterfield, 16 December 2014, about Mr Harjinder Singh Butoy. You’ll see in the first paragraph he says that he’s been contacted by Mr Butoy “re his conviction for theft”. In the second paragraph, it says that, following audit:
“… Mr Butoy was arrested and convicted of 10 counts of theft through false accounting totalling over £200,000. [He] has always denied the allegations and pleaded not guilty to all charges. He was … sentenced to three and a half years in prison. This [forced him] into bankruptcy and having his reputation ruined.
“Mr Butoy asserts that, like the many other subpostmasters wrongly accused of theft, if was errors caused by the Horizon transactions processing system that created the financial discrepancies that led to his conviction.”
Would you have seen this as a different angle, namely a subpostmaster’s constituency MP making the suggestion on behalf of his constituent that the Horizon system was responsible for losses that had led to a man’s wrongful conviction?
Paula Vennells: I’m sorry, I’m not sure I understand the question. Would I see it as a different angle?
Mr Beer: To the emailed and letter complaints that had come directly from subpostmasters versus a complaint on behalf of an individual by an MP?
Paula Vennells: Not personally, I don’t believe.
Mr Beer: So would this have been administered in the usual way through the Executive Correspondence Team?
Paula Vennells: Yes, it would. I believe – but I can’t recall now, that there was a – no, I think it would have been the same, actually. There was a flag process for MPs, because I think the Post Office had a commitment to copy it to bring other people into the loop, or something, but, from a personal point of view, I wouldn’t have seen this as any different.
Mr Beer: Would you have even seen this letter?
Paula Vennells: I don’t know. It wouldn’t – from memory, it wouldn’t have made a difference that it was from an MP or a subpostmaster. I worked very long days and, very often, my days were back-to-back meetings, sometimes I would see letters as they came in. Sometimes I would see something on my PA’s desk and I would ask to look at it. Other times, I wouldn’t get them until they’d come back from the Executive Correspondence Team. It would really depend on the day in the diary.
Mr Beer: Was there a way of keeping you informed, essentially, of the temperature of the business, in relation to this issue, ie how many complaints from subpostmasters you were getting about Horizon, or did it depend on you spotting something on the edge of the desk?
Paula Vennells: No, there wasn’t – this could have been done much better. There wasn’t a regular report on it but, as you’re showing, this was over such a long period of time, that I – the challenge is the organisation didn’t keep, I think, a good enough record on this type of matter. They were dealt with, they were followed through, I believe, very thoroughly, and they were looked at by the experts in the business. Fujitsu were involved where they needed to be. I don’t – I did not have a regular report on the numbers of these coming through, but there may not have been – in the context of the timescale that this spans and the numbers coming through, it may not have seemed to people that there were that many. When you put them together like this, it clearly paints a very different picture and one that we should have been looking at, which I think goes back to my earlier point about the institution versus the individual and how you get the right type of data reporting.
Mr Beer: Can we move forwards, please, to 2015, POL00102381, page 2 at the foot, please. An email from you, if we scroll down a bit further, to Angela van den Bogerd, Harry Clarke, Rod Ismay and others in March 2015. It’s about a complaint raised by the subpostmaster at the Ashton-on-Trent sub post office about scratchcards. You say:
“I would really appreciate your help. This complaint simply shouldn’t have reached me – it’s my understanding that the NBSC/Chesterfield are supposed to be on the alert for any calls that relate to missing money and especially any that relate to the Sparrow themes, of which this is clearly one and ensure they are dealt with.
“Ie, I understood there was an urgent/escalation process in place, so that we avoided any unnecessary additional noise or references to Horizon, as all the investigations have so far shown problems to be mostly branch operational issues rather than the system.”
What was the basis of your understanding that there was an urgent escalation process in place at the NBSC and/or Chesterfield?
Paula Vennells: That this was part of the Branch Support Programme that became the Business Improvement Programme, and there were some changes that had been put in place, I understood, in the NBSC, to look at or to deal with some of the issues which Second Sight had raised, in terms of training and support to subpostmasters.
One I can remember was the number of times that a subpostmaster would call through to the NBSC, that that was logged at flagged, and the NBSC – and there was a separate team in place who would then contact subpostmasters proactively to see whether they could help them find out. So this was falling out of the work that was done on Horizon and that, I think, is what I was flagging here.
I’m not very happy with my wording now about avoiding “any unnecessary additional noise or references to Horizon”.
Mr Beer: You’re not the only person that has said –
Paula Vennells: No, I’m sure.
Mr Beer: – they don’t like their use of the word “noise”. Is that, in fact, how it was seen at the top end of the Post Office; when subpostmasters complained, it’s just noise?
Paula Vennells: No, and I’m sorry, it’s not a good word, but you’ve also seen how I’ve responded personally to other – to individual matters too. No, it’s a word I regret using.
Mr Beer: But why was it used? Does it, in fact, reflect the workings of the minds of those at the top end of the Post Office, that subpostmaster complaints about Horizon are in fact just “noise”?
Paula Vennells: I think it reflects a wrong understanding, yes, that people believed that Horizon worked and this is me deploying a word that was unwise. It did not in any way mean that I didn’t personally take seriously issues when they got to me. I regret this here, but there was an understanding that the system worked and the word just shouldn’t have been used by me and other people.
Mr Beer: Can we turn forwards, please, to POL00355692, and look at the bottom of page 1, please. The MP for Ashfield, Gloria De Piero sent you an email of 28 August 2015 saying:
“I have been contacted by the above constituent …”
That’s William Banville in Eastwood, Nottinghamshire. If we go over the page, please, you’ll see that the MP attached this text here and, if you just scan the first couple of paragraphs, the first five or six lines –
Paula Vennells: Mm-hm.
Mr Beer: – and then about ten lines in, it says:
“The entire losses had to be made good, which they were. My initial questions are 1. 2007 to 2012, the Post Office Management knew of many offices in a similar position so was this a pre-arranged standard riposte from the ASM (as most subpostmasters were told this) was this to isolate us?”
You’ll see that’s a reference to, I think, the sixth line quote, that he was told “We were the only office in the country experiencing such problems”.
So he’s asking, or his MP is asking, the question: was there a line deployed that you were the only office in the country experiencing such problems? Was that a standardised riposte? Was this to isolate us?
Do you know whether any investigation was carried out as to whether that was true or not: that a standard line was deployed by the Post Office?
Paula Vennells: I don’t know that any investigation was carried out. I had never heard it as a standard line. I – ever. I can’t imagine why – well, I can imagine but I didn’t come across it. When a colleague in a call centre may have said that, when they’re dealing with hundreds of complaints, it is possible that it seemed to them that it was the only one but I have no recollection or understanding or appreciation that it was a company line at all.
Mr Beer: I think here the complaint isn’t about the call centre, it’s about the Area Sales Manager, the ASM –
Paula Vennells: Yes, you’re right.
Mr Beer: – saying “You’re the only office in the country” –
Paula Vennells: Yes.
Mr Beer: – “experiencing such problems”.
Paula Vennells: Yes.
Mr Beer: Was there a strategy, to your knowledge, deployed to divide and conquer subpostmasters in this way, to say, “You’re the only person who has got this problem, pay up, it’s in your contract”?
Paula Vennells: No, no, I never came across that at all.
Mr Beer: Can we move on please to later in 2015, POL00117614. This is Mr McCormack again. If we start at page 3, please, 14 October, Mr McCormack to you, subject, “It had to happen sooner or later”:
“This may be the last you hear from me directly.
“It is a last chance for you to accept what I have been telling you these last few years is true.
“I have now have clear and unquestionable evidence of an intermittent bug in Horizon that can and does cause thousands of pounds [of] losses to subpostmasters.”
So it goes on, and he explains in the balance of his email what the problem is. Then, if we go over the page – sorry, I should have dealt with the bottom of page 1 – sorry, the bottom of page 3:
“I have three options.
“a) this emails is the first option – appeal to your sense of decency and compassion to accept that many of the claimants in the JFSA are honest and decent citizens whose lives were destroyed by your organisation.
“b) go to press and see what happens.
“or
“c) await the inevitable judicial review where you will personally be exposed and perhaps leave useful open to criminal charges.
“We can stop this farce now. You can wake up and realise that the people you rely on to tell you the truth about what’s happening don’t have the ability to do so.”
What did you do as a result of this?
Paula Vennells: I don’t recall. Genuinely, I don’t recall what I – if you have further emails, I’m happy to be taken to them.
Mr Beer: I mean, this is quite a direct form of communication, isn’t it?
Paula Vennells: Yes, it is, yeah.
Mr Beer: Would you take from that that this is a person to be put to one side –
Paula Vennells: No.
Mr Beer: – and ignored or would you think, “The way he’s expressed himself means that I should take what he is saying seriously”?
Paula Vennells: You will find an email from me – I don’t know if it’s in response to this – where I say to my team, “We must take Mr McCormack professionally and” – I can’t remember the other word I used. No matter how rude people were, and sometimes it felt like that, because he would say other things, than are necessarily here.
First of all, in hindsight I think he was right, and I regret that that the matters he was raising took too long to address but I would always respond to people courteously and I don’t know genuinely what happened to this email whether it was picked up by the team, whether I sent it on to somebody, but I would never ignore something.
Mr Beer: So if we look at the foot of page 2, we can see that Ms O’Farrell, who I think was your PA –
Paula Vennells: Yes.
Mr Beer: – or Executive Assistant, sends that email on to Angela van den Bogerd, the Executive Correspondence Team and the “flag case advisor”. What was the flag case advisor?
Paula Vennells: That, I think, was what I was trying to remember earlier: is that there were, I think, an accelerated process around the executive Communications Team for flagged cases and MPs would have gone into that, I believe.
Mr Beer: Then, if we go to page 1, please, at the foot of the page, this gets forwarded on to Rodric Williams by Angela van den Bogerd and he says:
“Thanks Angela. I agree we should ask for the information, but recommend we write to him in the same terms that we have every other person who says they have evidence of flaws [ie] (Kay Linnell, Second Sight, Nick Wallis, Sandip Patel, Professor Button).
“I have sent those letters in the past and am happy to do so again.”
Was there a standard text letter that went back to people who raised complaints?
Paula Vennells: Well, it sounds as though there was. I wasn’t aware what Rodric Williams had.
Mr Beer: “I’m also pretty sure I know about the JR he’s referring to, and I have already sent a holding to letter to that former [postmaster] acknowledging receipt of his complaint, so my name might be known to Tim already.
“If you agree, I’ll circulate something shortly. I’ll want to sent it in hard copy rather than email, with Avene sending a short email saying a response is in the mail …
“Generally, my view is that the guy is a bluffer, who keeps expecting us to march to his tune. I don’t think we should do so but instead respond with a straight bat.”
Was it your view that Mr McCormack was a bluffer?
Paula Vennells: No, I – as I say, when I responded to Mr McCormack, I took his challenges seriously and, as I say, I can remember one particular case where Angela went to meet the – I think it was a core and outreach branch that he had raised a query on.
Mr Beer: In his email he said you, Chief Executive, are not getting the right advice from the people you have surrounded yourself with. This email gets forwarded to the people that you’ve surrounded yourself with. Can you see a problem?
Paula Vennells: I can, yes.
Mr Beer: Can we move on, please. Sorry, I should have said top of page 1. Mark Davies, the PR guy, says:
“… wise advice with which I agree.”
Can we move forwards, please, to POL00002749, and look at page 2, please, at the top. This is mid-2016 from Mr McCormack directly to you. He says:
“A typical head in the sand reply from the team you have placed too much trust in.
“Let me be very clear …
“Once the police investigation is completed it is HIGHLY likely, indeed probable, that members of your staff will be sent to prison. A custodial sentence is mandatory for this offence.
“Your role in this will not escape attention.
“This is Seema Misra’s phone number …
“Call her and apologise and ensure her suffering is ended as soon as possible.
“I do wonder what kind of God you worship.”
What happened as a result of this being sent to you?
Paula Vennells: I believe this is the one I referred to earlier where I asked – I forwarded, I think, to Tom Wechsler, and asked him to suspend any preconceptions he may have as a result of some of the Sparrow work that had been done, meaning, although we have said that we haven’t found any issues, that we should look again. And I can’t remember what happened but I’m reasonably sure that Mrs Misra’s case, by this stage, had gone to the CCRC.
Mr Beer: Can we look, please, at page 1, and scroll down. Thank you. A follow-up email from Mr McCormack:
“What I have heard today is frankly totally unbelievable.
“By now you should have acquainted yourself with the ‘Dalmellington Error’ and its consequences.
“You should know that Fujitsu said they were going to fix this earlier this year.
“You should know that I stated that it would be highly unlikely that they managed to do this as they didn’t know what caused the error in the first place.
“You now know because I am about to tell you – that the same error has just reoccurred in another branch in far more serious circumstances.
“If you want details on this I will be glad to help as soon as you call Seema Misra and put her out of her misery.
“You are a complete bunch of idiots playing havoc with the lives of people you have little interest in.”
Did you, after this time, refuse to engage with Mr McCormack?
Paula Vennells: I don’t believe so but I think at this stage – I can’t remember. I think Rod Williams had taken on the responses, which I’m very sorry about, on behalf of Post Office but, honestly, I can’t remember. This may have been the one where Angela went to look into the details of the bug.
Mr Beer: That can come down. Thank you.
Taking a step back, would you accept that you routinely received correspondence from subpostmasters and people speaking on behalf of subpostmasters raising complaints or concerns regarding the operation of Horizon at their branch?
Paula Vennells: Yes, I would.
Mr Beer: Did you see a pattern between them?
Paula Vennells: I saw the theme of Horizon coming up, yes.
Mr Beer: Was anything done by you to join the dots between them?
Paula Vennells: The dots, I believed, were being joined through the investigation work in the Complaint and Mediation Scheme and, in every case, I believed we had looked at it in some detail and I regret today that, clearly, neither of those exposed the issues that we came to find out about through the Common Issues – the Horizon Issues judgment.
Mr Beer: Thank you. Can I turn to my next topic, which is your knowledge of the facility for remote access. You describe – there’s no need to turn them up – in your witness statement – it’s paragraphs 1262 to 1307 – the state of your knowledge across time, from 2007 onwards, as to remote access, however defined. You refer to documents provided to you by the Inquiry, which show that the Post Office knew that a form of remote access was possible from at least October 2008. I want to explore some of that material, so far as it came to your attention.
Can we start, please, with the Ernst & Young audit, and the APPSUP issue of 2011. Can we look, please, at WITN00740126. If we look at the foot of the page, please, there’s an email from Donald Brydon in September 2011. Can you remind the Inquiry the function that Mr Brydon performed at that time?
Paula Vennells: At this time, he was the Group Chairman of Royal Mail, which included Post Office.
Mr Beer: So he was Chair, RMG; would that be right?
Paula Vennells: Yeah.
Mr Beer: If you read, he says:
“I was a bit surprised to see the article in Private Eye this week about a class action by subpostmasters. It may be a bit after the horse has bolted but it may be appropriate to have an explicit litigation/legal report in the [Post Office] board papers for the future – obviously Alice’s call.”
She, amongst others, is copied in to this email:
“The article raises some questions about Horizon. I suspect the [Audit and Risk Committee] ought to take an interest. Have we ever had an independent audit of Horizon?”
If we scroll up, please, you say in reply:
“… you may remember this has reared its head before. I’ll get a brief circulated for new Board members.
“In summary, each time any cases have gone to court, [the Post Office’s] position has been upheld. And from memory, in at least 2 cases fraud was proven with subsequent imprisonment.”
Just stopping there, this is obviously before the January 2012 Board meeting, where we saw earlier on page 6 –
Paula Vennells: Yes.
Mr Beer: – of the minute Susan Crichton hard said that, or words to similar effect. Where were you getting your information at this time, that each time a case has gone to court, the Post Office’s position has been upheld?
Paula Vennells: I can only imagine it would have still be Susan Crichton because she was the either Head of Legal or – I think she was, at this time, Head of Legal. It may have been Clare Wardle, I’m not sure. But it isn’t something I would have known about without either having heard about it or spoken to someone who headed up Legal for the Post Office.
Sir Wyn Williams: I’m not sure I caught the surname of the other person.
Paula Vennells: Clare Wardle.
Sir Wyn Williams: Wardle, yes.
Mr Beer: Was this kind of thing always said in conversation: we always win or we have always won?
Paula Vennells: No, it’s obviously a fact that I had either in my head, because it had been discussed presumably in a meeting somewhere, or I had gone to somebody – I’m just looking at the time when I – yes, and it’s possible I spoke to somebody before I replied. I don’t know.
Mr Beer: There are a series of statements or facts or pieces of folklore that seem to have circulated within the Post Office, including, “Every time we go to court, we’ve won”; “Horizon has no faults in it, every time it has been investigated, no faults have been found”; “The contract with subpostmasters said they’re responsible for all losses”; “No remote access is possible for either the Post Office or Fujitsu”, each of which things turn out to be false.
How is it that, on all of these critical issues, so many false statements were circulating within the Post Office?
Paula Vennells: At the time, they were not considered to be false statements. I – and the source of those statements were – it’s unfair to say because I can’t recall clearly but, on something like this, the only possible source of this statement would have been through the Post Office Legal team. So the answer for all of them would be to look for where the expertise sat within the organisation as to the genesis of what we now know are false statements.
Mr Beer: Would you agree that it’s a serious issue, on those four points that I’ve mentioned: what the contract said, whether we win in court every time, whether Fujitsu has remote access, and whether investigations into Horizon have turned up faults?
Paula Vennells: Yes, very serious.
Mr Beer: It’s a serious issue if folklore develops which, in fact, has no foundation in fact?
Paula Vennells: I agree.
Mr Beer: Does it say something about the culture of the organisation, if such folklore developed and was perpetuated and nobody checks the real facts?
Paula Vennells: That’s a difficult question to answer because, in hindsight, it is completely valid. At the time, certainly where I was concerned, I believed that I was getting information from the people who were employed to give me the best advice because of their expertise. I didn’t believe that any of it is statements were folklore at all.
Mr Beer: You say in the last paragraph:
“However, to avoid future doubt, [the Post Office] took a decision several months ago to have Horizon and the newer [Horizon Online] independently verified by an external systems auditor. This is currently in process and we should have the results at the end of next month.”
Is that a reference to work recommended by Ernst & Young in their 2011 audit letter?
Paula Vennells: I cannot remember at the moment, when I – I’ve seen this in the bundle and I can’t remember what it’s a reference to.
Mr Beer: That can come down.
In your witness statement, it’s paragraph 1276, at page –
Paula Vennells: Excuse me, I did see there is another document in the bundle which refers to a piece of – I go back to Mike Young and Lesley Sewell and ask why a particular piece of work is late, and I think I mention KPMG. I don’t know whether this referred to that or to a piece of work by Ernst & Young.
Mr Beer: Can we look at your witness statement, page 546, paragraph 1276. You say:
“[Ernst & Young’s] management letter for the 2011 audit stated that they had reviewed privileged access to IT functions and that there were inappropriate system privileges assigned to the APPSUP role and SYSTEM_MANAGER role at the Oracle Database level on the Branch Database server supporting Horizon Online. The risk identified by [Ernst & Young] was that unrestricted access to privileged IT functions increased the risk of unauthorised/inappropriate access which could lead to the processing of unauthorised or erroneous transactions.”
Then you go forward to look at the 2012 audit.
Do you accept that what you were told in the 2011 Ernst & Young audit was that Fujitsu had an ability remotely to access and make changes to the Horizon Online live estate?
Paula Vennells: I don’t believe that I took it – that I understood that degree of detail. What I did here in my witness statement was to look at the EY document because I couldn’t remember it from the time. At the time, I had been promoted to Managing Director just a few months previously, and this was the first time I had come across an IT audit, and I think this is the time that I asked for a briefing document to explain to me the issues that were being raised in the audit. I accept fully that this is what the document said. How much of that I really understood at the time, I’m not sure.
What I did do was to make sure that Mike Young and Lesley Sewell picked up the issues that were identified and I think in my statement I go on to talk about that.
Mr Beer: “The risk identified by [Ernst & Young] was that unrestricted access to privileged IT functions increased the risk of unauthorised/inappropriate access which could lead to the processing of unauthorised or erroneous transactions.”
It’s implicit in that that a form of remote access by Fujitsu is possible, isn’t it?
Paula Vennells: Reading that today, with everything we know, yes, absolutely. I’m not sure, at the time, that I would have understood that.
Mr Beer: At the very least – and you accept that you read this Ernst & Young letter – you were aware that unauthorised or erroneous transactions could be processed on Horizon that weren’t carried out or approved by the subpostmaster?
Paula Vennells: I don’t want to challenge because I don’t want to be seen to be being defensive in any way about this. This was my first audit that I was involved in of any kind, actually, of an IT system and I fully accept what the document said. At the time, the focus was on the fact that the audit was late and that it had run dramatically over budget, and the CIO, Mike Young, was very frustrated about the challenge he had from the Board because of those things, because it had happened during the year that he had just completed the rollout of Horizon Online.
I am fairly sure that – it says this, I absolutely wouldn’t challenge that at all – that I didn’t pick this up at the time as something that I was unduly concerned about. It talks about a risk and the role of business is to manage risk.
I asked for a briefing document to help me understand the nature of the technicalities but I accept the proposition that you’re putting to me.
Mr Beer: Ie that there was a facility for unauthorised access, and, therefore, the facility to carry out unauthorised or erroneous transactions?
Paula Vennells: Yes, that’s what it says, yes.
Mr Beer: Yes, it can’t be read in any other way, can it?
Paula Vennells: I was – no, that’s right.
Sir Wyn Williams: Just so that I understand, is the gloss you’re putting on it, can I summarise it in this way: anyone with the relevant knowledge and/or expertise in Post Office, reading that Ernst & Young report, would have understood it as Mr Beer describes.
Paula Vennells: Yes, I –
Sir Wyn Williams: You are introducing, from your personal point of view, in effect, a caveat as to whether you understood it in that way at that time?
Paula Vennells: Yes, thank you. I wasn’t meaning to put a gloss on it.
Sir Wyn Williams: That’s it, isn’t it?
Paula Vennells: It’s a – it’s a regret that I didn’t understand it at the time, yes.
Mr Beer: Okay, so that’s what I’m going to call remote access 1, the Ernst & Young management letter.
Can we turn to Deloitte, Project Zebra and 2014. Can we turn to paragraph 883 of your witness statement which is on page 395. You refer us there to a Board briefing prepared by Deloitte in draft. Yes?
Paula Vennells: Yes.
Mr Beer: Just by way of background, and if I can summarise what has happened before, Deloitte’s 2014 report was the product of a request by the Board to determine if Horizon was robust, fit for purpose and operated in an appropriate control framework, agreed? That’s the genesis of the Deloitte 2013 report?
Paula Vennells: Yes, it was a desktop exercise to look at existing documentation and assurance material.
Mr Beer: It was therefore an important piece of work?
Paula Vennells: Yes.
Mr Beer: Because the Board wanted to know whether Horizon was robust, fit for purpose and operated within an appropriate control framework?
Paula Vennells: Yes.
Mr Beer: Thank you. In addition to its main –
Paula Vennells: I’m sorry but I should be clear, it wasn’t a fresh piece of work, it wasn’t asking Deloitte to give their view on those matters; it was asking Deloitte to review existing documentation so, for example, the Ernst & Young audit material, two or three other independent audits that were done for regulatory requirements plus internal documentation.
Mr Beer: Yes, we’ll come to see the complaints, essentially, that Deloitte made about the limitations of the exercise that they were asked to perform –
Paula Vennells: Yes.
Mr Beer: – in a moment. But in addition to its main report, Deloitte were asked to draft a board briefing weren’t they?
Paula Vennells: Yes.
Mr Beer: You accept in this paragraph here, 883, that you read the draft board briefing of the 4 June 2014?
Paula Vennells: Yes.
Mr Beer: Then in paragraph 884, you say:
“My first impression was that this was a critical report which raised serious concerns.”
Yes?
Paula Vennells: Yes.
Mr Beer: “I needed to understand whether the caveats …”
That’s the caveats in their report:
“… could be addressed. If they could not, it could have serious implications with whether we continued to use the system.”
That’s the Horizon system?
Paula Vennells: That’s right.
Mr Beer: “While I recognised the limitations in this thinking now, I certainly felt at the time that I had some contextual reassurance that the system was working simply from the enormous number of successful transactions which were completed each day. However, it was clear we needed to understand the gaps and caveats and whether they could be addressed.”
Then you say:
“There were also parts of the report I did not understand. For example, I do not think I understood the reference to the exceptional balancing transaction incident in 2010.”
Paula Vennells: Yes.
Mr Beer: Then in paragraph 885, you say:
“I spoke to Lesley Sewell …”
Just what follows here, this is one of those things that isn’t documented; is that correct?
Paula Vennells: Yes.
Mr Beer: This is from your recollection 10 years on?
Paula Vennells: Yes.
Mr Beer: “… my recollection is she assured me that [the Post Office] had more background documents which had not been taken into account, but which provided assurance with respect to the caveats. On the balancing transaction incident, I was told it was an emergency measure and had only been used once, it was not about remote access, and that [the Post Office] had documents showing that the [subpostmaster] was aware of the incident. I trusted what I was told and, on the basis of that reassurance, felt able to put that issue aside.”
Given that you’d received a Board briefing, which you say was so serious that it caused you to think whether you could continue to use Horizon, you then say, “But I was told this by Lesley”. Was this not documented in any way?
Paula Vennells: I’m sorry, was what not documented, the conversation –
Mr Beer: What we see in paragraph 885.
Paula Vennells: I – what is really curious about this, is I recall that I seem to be – I can recall being concerned about this report. It was a very difficult report to read. It was full of caveats and you had to work quite hard to find what conclusions there were within it. I am not an IT expert and –
Mr Beer: I’m sorry, I’m not asking you about the main report; I’m asking you only about the short, 10-page Board briefing?
Paula Vennells: Yes. No, this wasn’t about the main report, this was about the Board – the main report I think I looked at after I saw the Board briefing and that was 70-odd pages something incredibly – much more technical than this. But my recollection is that I was concerned about this and others seemed to be less concerned.
There was reassurance taken that, if you could find your way through the paragraphs in this report, it said – or perhaps it was in a covering email – that Deloitte had not found anything to show that the Horizon system was not working as it should, but it flagged two or three issues that needed to be looked at, and the balancing transaction was one that I picked up, and I spoke to Lesley Sewell about it.
And the reason I remember this clearly is because I had to go back to her twice – I spoke to her twice about it, and I can talk to you about that if that’s helpful. But to your question about why there was nothing documented on this, there isn’t, and I find it puzzling because it was discussed at a Board meeting very briefly and I can remember that the Board, essentially, were disappointed that this report could not be used in the way that they had hoped it would, which was alongside the Linklaters report, and so the business was asked to pick up the details that were in this and to progress it, which became the Project – some of it became the Project Zebra Action Report.
But I’m not sure that I would have documented my conversation with Lesley Sewell because, by the time I’d spoken to her twice on the balancing transaction, I came away quite reassured as to what it was.
Mr Beer: This is one of the incidents that I referred to earlier as exculpatory evidence for you, ie you received something in writing that’s very serious and warrants attention. You say you spoke to somebody that reassured and calmed you but there’s no record of it?
Paula Vennells: No, because I’m not sure why I would have put the record of a conversation. The reason – to your challenge earlier, about me only remembering elements that might assist what I might like to say, the reason I can recall this is because I had to go back twice, and the first time Lesley explained it to me, which was that it was similar to a transaction correction, I understood transaction corrections were about remote access but they had to be accepted by the branch.
This one was – I didn’t understand the technicality of how it happened but it was a similar process but, for whatever reason, this single incident, permission was still sought from the subpostmaster because, for whatever reason, it couldn’t – it didn’t happen through the normal process of automatic acknowledgement in branch.
I took that information, I went away and then I thought I actually want to know that what she has said is right. So I went back to Lesley and I asked her to check that this documentation was right, that we had got it documented, and the Inquiry has that document in its disclosure, which shows that the subpostmaster had approved it, and this was what had happened, and it’s because I had to go back twice that I have that quite clear recall in this example.
Mr Beer: We’ll look at the board briefing itself after the break.
Sir, I wonder if we could break until 3.40. Thank you, sir.
(3.26 pm)
(A short break)
(3.40 pm)
Sir Wyn Williams: Mr Beer.
Mr Beer: Thank you, sir. We were dealing, Ms Vennells, with the Deloitte Board briefing of June 2014.
Paula Vennells: Yes.
Mr Beer: Can we look at it, please. POL00030159. You will see it’s a Board briefing in draft, dated 4 June 2014 with the title:
“Document, further to our report ‘Horizon: Desktop review of assurances sources and key control features’ dated 23/5/14, responding to five specific matters identified by [the Post Office] as critical to [the Post Office’s] legal position.”
Then look at page 3. “Summary”, if we just look at that paragraph at the top, please, and blow that up. First paragraph:
“The work we carry out to support our full report, and thus this … Briefing document, did not constitute an audit or assurance engagement in accordance with UK or international standards. In order to deliver a formal assurance opinion, we would need to have carried out testing to address the scope limitations. Our conclusions and findings are therefore limited to the design of Horizon. They are also subject to the accuracy of the assumptions and limitations set out in Section 3.”
If we go to the foot of the page, “Limitations and Assumptions”:
“Our findings and conclusions are presented in the context of the following limitations:
“[1] As a desktop exercise we have not validated whether Horizon has been implemented or operated as described in the documentation reviewed.”
That’s quite a significant limitation, isn’t it, would you agree?
Paula Vennells: Yes.
Mr Beer: We’re just looking at pieces of paper about how the system was designed, we haven’t actually looked at whether it does the things that the pieces of paper says it does?
Paula Vennells: The issue that was faced from memory was that the – the software – forgive me, because I’m not a technical expert but my recollection is the software was essentially the same and, as the Inquiry has heard from the very beginning of the implementation, and I think this was Mr Cipione’s evidence, that fix upon fix had been applied and documentation had not been kept, and so, what Deloitte discovered – and this had also been discussed at the Board prior to this being commissioned – that it was going to be difficult to find all of the documentation that could have confirmed this.
So there was a – there was always an outstanding question as to whether one could go back and to validate the implementation of Horizon back in the 1990s/early 2000s?
Mr Beer: They didn’t, for example, look at PinICLs, PEAKs or KELs?
Paula Vennells: I don’t believe they did and they were not words that I had, I think, ever come across. I believe the word “KEL” may have been mentioned once in an email right towards my end of my time at the Post Office but they were not words that I had understood. I am sure that there were people who were involved in this piece of work and who were talking to Deloitte who did, but I wouldn’t have been able to point them to those individuals because I didn’t know.
Mr Beer: The second limitation or assumption:
“Our work was limited by significant gaps in the information available, relating to both the granularity of information and the existence of the Horizon features over the entire timeline of operation of Horizon. The effect of which is that there are gaps within what we are able to comment upon over this timeline. Our findings below are written in the context of the information available, which relates to the current system.
“An event occurred in 2010 which required the use of the exceptional balancing transaction process in Horizon to correct a subpostmaster’s position from a technical issue. Information has not been provided on the circumstances that lead to this system issue and how the issue was identified. It is assumed that verbal assertions received from Fujitsu that this was the only time this process had been used hold true.”
Paula Vennells: If I may, that was one of the comments when I spoke to Lesley Sewell that she challenged back – when she said that there was more information available, and there was, on that.
Mr Beer: So, again, what you’re telling us is that there is a conversation unrecorded outside of the written document formally produced by Deloitte, raising this as a concern, which reassured you?
Paula Vennells: Yes. What I am telling you is that, in my statement, I mention that when I spoke to Lesley, she was frustrated because she knew that there was more documentation and that would explain some of these things, and this happened to be one of those.
Mr Beer: Fourth:
“We have not had any direct contact with any third parties other than named contacts you have provided to us.”
Fifth:
“We have not validated or commented on the quality of the documentation supplied to us.”
The line in the third bullet point, last line, “It is assumed that verbal assertions received from Fujitsu that this was the only time this process has been used holds true”, is not much reassurance, is it?
Paula Vennells: It isn’t at this stage and that is precisely one of the points that Lesley was making and that I saw and that the Inquiry has in its documents, that there was documented evidence about this particular once-off use of a balancing transaction, and I understand that the Project Bramble work, which I was not involved in and did not see, also validated that up to certain date, as well, that that was the case.
Mr Beer: It refers in that fourth bullet point to the balancing transaction process being used to correct a subpostmaster’s position. Did you understand this to be a single subpostmaster?
Paula Vennells: Yes.
Mr Beer: Just one –
Paula Vennells: Apostrophe “S”, yes.
Mr Beer: If we go forward, please, to page 4, they say:
“Our work was also based on the following” –
Sorry, page 5.
It says:
“These areas were reviewed in the context of five Matters …”
They are the five specific issues, I think, raised by the Post Office as relevant to its legal position. They say:
“… noting the limitations and assumptions underpinning our work, overall findings are …”
It’s 5 that I’m interested in:
“Matter 5 – ‘Horizon provides visibility to subpostmasters of all centrally generated transactions processed to their Branch ledgers’.”
That statement in quotation marks, that’s what the Post Office wished to be assured about; is that right?
Paula Vennells: I believe that’s correct, yes.
Mr Beer: Then the answer comes back:
“From the documentation we have reviewed, it appears that Horizon is designed such that the subpostmaster that’s visibility of all centrally generated transactions to their branch ledgers in that accounting period.”
So that’s reassuring, isn’t it?
Paula Vennells: Yes.
Mr Beer: “Central transactions require subpostmaster approval to be processed …”
That’s reassuring, as well, isn’t it?
Paula Vennells: Yes.
Mr Beer: Then this:
“… except for balancing transaction postings.”
That’s saying, isn’t it, that, for balancing transaction postings, subpostmaster approval is not required.
Paula Vennells: That’s what it says and that was the conversation with Lesley, and which Deloitte confirmed at this stage and later, that there was one example where a balancing transaction had taken place, but that it was incorrect what is written here because a balancing transaction could not take place without a subpostmaster approval. It had only – the protocol was such that the subpostmaster had to approve it and that was what I went back to double test, to check that that was the case.
Mr Beer: Why did you go back to it? Why were you so concerned about it? Why this, amongst all of the pages?
Paula Vennells: There were couple of other things too in the report, so risk registers and ability to edit and delete transactions, but this was important, I think – I can’t remember how the conversation with Lesley started, whether she raised this with me or I raised it with her, but the fact I had the conversation twice was clearly something that was significant and –
Mr Beer: Why were you focusing on remote access, which is what this is about.
Paula Vennells: Because I think this is 2014. There had been in 2013 – and I understand on going, but I didn’t know at the time – the challenge raised by Mr Rudkin via Second Sight about remote access.
Mr Beer: So you’re saying that the only thing that you mention in your witness statement that you checked with Lesley was about these paragraphs –
Paula Vennells: Yes, yes.
Mr Beer: – which are concerned with the facility for remote access by Fujitsu.
Paula Vennells: Yes.
Mr Beer: You’re saying that you checked those things with Lesley in this undocumented conversation because of something that had happened the year before, ie Mr Rudkin’s allegations?
Paula Vennells: No – sorry. No, you asked me why I was talking about remote access –
Mr Beer: Yes.
Paula Vennells: – and the only – I can think the only – so remote access was raised by Mr Rudkin in relation to the basement at Bracknell and it was also a challenge in the cases that were going through Project Sparrow. So it wasn’t – remote access wasn’t a new news item; it was a very, very important item. So to focus on that would have been a sensible thing to do.
Mr Beer: You know that this issue that we’re addressing now is directly relevant to evidence that you were subsequently to give to Parliament?
Paula Vennells: Yes, I do now, and I’m sure we’ll come on to that but, as I say in my witness statement, I don’t know that I – once it had been explained to me, I accepted the explanation and moved on, and the explanation I was given remained valid, actually, for a number of years.
What I didn’t understand at this stage, and I don’t think I understood until after I left the organisation, was that the balancing transaction tool could be used partially without – and without permission of subpostmasters – to make interventions in the system, and I may have not understood this properly but to, for instance, reboot a stock unit, if it had crashed. I don’t think I ever understood that they could be used in terms of remote access in the way I think they were, but I didn’t know that at the time, I think, until I left the organisation.
Mr Beer: Would you agree that, on its face, this Board briefing from Deloitte clearly states that Fujitsu could inject or insert or make balancing transactions into a branch account, a subpostmaster’s branch account, without the approval of the subpostmaster, hence except for balancing transaction postings?
Paula Vennells: Yes, that’s exactly what it says.
Mr Beer: Yes. Never mind –
Paula Vennells: It wasn’t just the –
Mr Beer: – about whether it was just exceptional, never mind about how often it had been used, never mind whether there was some assurance that the subpostmaster, in fact, knew about it; just on the basic fact that this is written evidence to you and the Board that Fujitsu could alter branch transactions without the approval of the subpostmaster?
Paula Vennells: I accept what you’re saying; I think there’s an important distinction between what you’re saying and what I know now, to the way I – and I can’t speak for the board – understood it at the time, and I think that’s an important distinction.
Mr Beer: The distinction arises because of the conversation that you had with Lesley Sewell – conversations you had with Lesley Sewell?
Paula Vennells: Yes, and there are also documents which I think refer to that when I do go to the Select Committee in 2015, as well.
Mr Beer: Quite aside from all of that, you agree that, on the face of the Board briefing, you had no information at all on which to conclude whether and to what extent Fujitsu had used balancing transactions before 2008.
Paula Vennells: That’s correct.
Mr Beer: The Board wanted to know that, didn’t it? It wanted to know the position from the inception of Horizon?
Paula Vennells: It did, and it had a conversation – Lesley came to the Board and I recall approximately the conversation, where she explained what I stated previously, actually, that it would be very difficult, if not impossible, to get the data to look at some of the questions, for instance, about this, because it didn’t exist, either because it had been destroyed because of data retention policies but, more likely, because it simply wasn’t there any longer and there –
Mr Beer: Do you know – I’m so sorry. Do you know what investigation was carried out to find that documentation? Because we’ve got it. We’ve got the documentation which shows – one witness described it as the Wild West, the extent to which Fujitsu could inject/amend transactions pre-2010, completely before 2004, unregulated, unaudited and unauditable. We’ve got those documents that show that.
Paula Vennells: Yes, and the Post Office – I should have seen those documents. I didn’t know they existed. I don’t know whether my CIO at the time knew they existed but she was very clear in her communication to the Board that it would be very difficult. I can recall the chairman asking the question and how much it might cost us to get that data – or it wouldn’t be extracted but to recreate that data, and it may even be in one of the minutes, a six-figure sum was talked about to be able to do that, which, in hindsight, would have been an incredibly wise investment to make.
Mr Beer: So it wasn’t –
Paula Vennells: But, actually, it didn’t need to be made, did it, because, as you say, the information was there.
Mr Beer: So it wasn’t that the documentation wasn’t available; it was that it would be costly to find it?
Paula Vennells: No, no, it would be costly to recreate it.
Mr Beer: Recreate in what sense?
Paula Vennells: What was explained was that the documentation was not there in terms of whether the system – it was the point that Mr Cipione was making in his evidence statement, which is that when the system went in, there were multiple faults and fixes were applied and documentation, which I understand is a frequent issue with systems, documentation was not updated as each fix was applied, and so it would be difficult to know how well the system had been implemented.
Mr Beer: I’m talking about a different thing, Ms Vennells, I’m told about documents from Fujitsu, some of which were passed over to the Post Office, saying “We have got a team of people, team support level 3, that have privileged user rights that are unauditable and unaudited that allow them access to the live estate to insert or amend transactions”?
Paula Vennells: Yes, and that information wasn’t shared, deeply regrettably.
Mr Beer: Can we go on, please, to your evidence before the Select Committee. At paragraphs 1000 to 1307, you refer to your evidence before the Select Committee including an email that you sent to Mark Davies and Lesley Sewell on 30 January 2015 requesting help in preparing for the Committee hearing, and can we look at that now please. It’s POL00029812. Can we look at page 5, please, at the foot of the page.
So just in context, the Committee hearing was on 3 February 2015 and we’re now on 30 January 2015. To Mark Davies and Lesley Sewell, “Urgent: Accessing Horizon”, and I think this is the first email in the chain:
“Dear both, your help please in answers and in phrasing those answers, in [preparation] for the [Select Committee]:
“1) ‘is it possible to access the system remotely? We are told it is’.”
So what you’re doing there is you’re attributing to the Committee a statement or a challenge or a question; is that right?
Paula Vennells: That’s right, yes, I’m positing a question.
Mr Beer: Imagining that which they may ask you –
Paula Vennells: Yes.
Mr Beer: – and then asking for assistance with the answer?
Paula Vennells: Yes.
Mr Beer: You say:
“What is the true answer? I hope it is that we know this is not possible and that we are able to explain why that is. I need to say no it is not possible and that we are sure of this because of xxx and that we know this because we have had the system assured.”
Can you see that?
Paula Vennells: Yes, I can.
Mr Beer: Then I should also read some of the balance of this because some of it is relevant to the question that you asked there:
“2) “You have said this is such a vital system to the Post Office, what testing do you do and how often [and when]?”
Then you say:
“Lesley, I need the facts on these – I know we have discussed before but I haven’t got the answer front of mind – too many facts to hold in my head! But this is an important one and I want to be sure I do have it. And then Mark, to phrase the facts into answers, plus a line to take the conversation back up a level – ie to one of our narrative boxes/rocks.”
Why did you consider the issue of remote access to be an important issue at that time?
Paula Vennells: As I said earlier, it was an ongoing question. It was something that was raised by postmasters in the cases that were being looked at. It was a question that Mr Rudkin had raised. I may well have been reminded that Second Sight were going to ask about it or would have been asked about it. It was an important matter to know about and to be able to answer honestly and truthfully to the Select Committee.
Mr Beer: Hadn’t Mr Rudkin’s allegations been put to bed by the 30th –
Paula Vennells: I thought they had, yes.
Mr Beer: – that he was either lying or mistaken, according to the Post Office: he either hadn’t been to the building or, if he had, he’d got it all wrong when he went there?
Paula Vennells: I think the Post Office had explained to him that the – there was a test rig in the basement and that it wouldn’t have been possible to access the system at that stage.
Mr Beer: But you thought this was an obvious question you were going to be asked?
Paula Vennells: Yes.
Mr Beer: Going back to the previous page, please, at the foot of the page, you say:
“What is the true answer? I hope it is that we know that this is not possible and that we are able to explain why that is. I need to say no it is not possible …”
Why did you need to say publicly to evidence to a Select Committee that remote access was not possible?
Paula Vennells: I expected that this might be a question, as you explained before, that would come up, and my understanding was that it was not possible, and so I wanted to be able to say that but what I also wanted to be able to do was to explain why I knew that was the case, which is why I go on to say, “and that’s because of xxx”.
Mr Beer: But why did you need to say no, it’s not possible?
Paula Vennells: I phrased the – phrased this point very specifically and I can remember why I did this. Alice Perkins – not related to this particularly but I can remember Alice Perkins saying to me at some stage, “Paula, if you want to get the truth and a really clear answer from somebody you should tell them what it is you want to say very clearly and then ask for the information that backs that up”. That was why I phrased this that way.
Mr Beer: That’s an odd way of going about things, isn’t it?
Paula Vennells: I beg your pardon?
Mr Beer: That’s an odd thing of going about things, isn’t it?
Paula Vennells: It was a piece of advice –
Mr Beer: I want to know the answer to the question; here’s the answer to the question; tell me I’m wrong.
Paula Vennells: Well, yes, I hoped they would do. This was a very genuine attempt to be able to reassure the Select – I believed this was absolutely the case. I had an obligation going before the Select Committee to be able to share the information that I knew and to be able to answer their questions correctly, and this is what I was trying to ask for from the team. I was not, in any way, if you are – and forgive me, if you’re suggesting this – trying to tell them what the answer should be. It was worded –
Mr Beer: I thought you said that’s what Ms Perkins said you should do in trying to get information out of people?
Paula Vennells: Yes, but it was not done because I necessarily knew this was the answer. This was a –
Mr Beer: I thought you said a moment ago that you believed it to be the answer?
Paula Vennells: I did believe it to be the answer and so I wanted to be able to say to the Select Committee, in complete truth and sincerity, that this – that it was not possible to remotely access a branch account without the subpostmasters knowing and I wanted to be able to explain why that was the case.
Mr Beer: Wouldn’t the honest and straightforward thing to have done be to stop your reply to the question that you asked with the question mark, after the word “answer”?
Paula Vennells: I wanted to be really – I’m very sorry, I am giving you completely the truthful answer on this. I remember why I phrased this this way. Not because I was trying to tell people what the answer was at all but because I was trying to get them to phrase something in a way that said, from my understanding, this is what it should be. I had been told over all of the time that it was not possible and I wanted to be able to explain to the Select Committee that that was absolutely the case.
Mr Beer: You refer to a briefing that you received, a briefing pack, and then an addendum to the briefing pack that you received – you refer to that in your witness statement – for the Select Committee hearing, and you tell us in your witness statement that you have no memory of seeing the addendum to the briefing pack, which addresses remote access, at the time of the Select Committee, yes?
Paula Vennells: I just – I simply don’t recall. I don’t know whether I did or I didn’t.
Mr Beer: Well, in your witness statement, you say you have no memory of seeing it. By that, do you mean “I undoubtedly got it but I just can’t recall its contents now”?
Paula Vennells: Yes, I think so.
Mr Beer: Right.
Paula Vennells: Yes, I think so.
Mr Beer: Can we look at how you got it first. POL00117096. We’re now the day before the Select Committee hearing at 5.54 in the evening, so it’s 2 February 2015, an email from Jane Hill, the Head of Public Affairs, to you, with an attachment, “addendum” document and a “Scheme Key facts” document. It’s only the first I’m interested in. She says:
“Dear Paula
“Please find attached two final briefing documents:
“[1] Addendum to Friday’s briefing pack. This includes our position on claims, suspense accounts, [Second Sight’s] information requests and remote access …
“I will bring hard copies with me to breakfast tomorrow.
“See you then.”
Just looking at the distribution list on that, given that the document is significantly about IT issues, do you know why Lesley Sewell isn’t one of the people mentioned?
Paula Vennells: I don’t. I assume that Lesley Sewell was involved in the process but these are the – no, I don’t know why Lesley is not copied, actually. I hadn’t noticed that before.
Mr Beer: You – is this right – wouldn’t have known how the document itself had been created, ie what work had gone into it?
Paula Vennells: No, I do now but I didn’t at the time.
Mr Beer: Let’s look at that addendum, please. POL00117097. This is the attachment, if we can display pages 1 and 2 side by side. It looks like we can’t display the whole of page 1. It’s a two-page document.
Paula Vennells: Yes.
Mr Beer: Yes, so it’s quite a short document, quite pithy, yes –
Paula Vennells: Yes.
Mr Beer: – with bullet points, with headings “Mediation stats”; “Claims”; “Suspense Accounts”; “Second Sight request for information”; and then “Remote Tampering”, as it’s called, yes?
Paula Vennells: Yes.
Mr Beer: So if we just look at the briefing you were having before your appearance before Parliament on remote tampering. If we just look at page 2 then, please. Blow up a bit. Thank you very much.
This is essentially the answer to your email.
Paula Vennells: Yes.
Mr Beer: Just looking at way that it’s arranged, would you agree that the first four bullet points set out what you’re to say. If you’re pushed, you can then say the next three things and then, if injection of new transactions into a branch account is raised, then you can say the next things, yes?
Paula Vennells: Yes.
Mr Beer: So just looking at the scheme of the document, it contains a top line, essentially, of what you’re to volunteer, then an account of what you’re to say if you’re pushed and then what you’re to say if you’re really pushed; is that right?
Paula Vennells: It’s – that is the way it appears, yes.
Mr Beer: Yes?
Paula Vennells: Yes, I don’t suppose I would have taken it necessarily that way but yeah.
Mr Beer: Let’s look at what you’re allowed to say before you’re pushed. The first four bullet points:
“transaction data in branch accounts can’t be changed remotely.
“[There is] No evidence of malicious tampering.
“[There is] No functionality in Horizon for [the Post Office] or for Fujitsu to edit, manipulate or remove transaction data once it has been recorded in a branch’s accounts.
“There is also no evidence at all of any malicious remote tampering.
“If pushed:
“Stress again that there is no remote access that enables branch transaction data to be edited, changed or manipulated.
“As you would expect, support staff can review and monitor the system – part of standard service contract – but, as above, transaction data cannot be manipulated.
“As part of day-to-day, business as usual process, Post Office can post correcting transactions to a branch’s account – these are transaction corrections and transaction acknowledgements, visible to the postmaster, which enable accounts to be brought into balance. These have to be accepted by a user logged into the branch Horizon terminal before they are recorded in the branch accounts, so they are fully visible to the branch.”
Then:
“If injection of new transaction into a branch’s account is raised …”
That’s raised by the committee:
“There is functionality to add transactions – this the balancing transaction process and would only be used in the event of an error that cannot be corrected by a TA or a TC [transaction acknowledgement or transaction correction].
“It is good industry practice to have this functionality but the use of the process is so rare it would only take place after a full discussion with the postmaster involved.
“These would be visible and also have a unique identifier in the audit trail. It has only been used once since March 2010 (Horizon Online Go Live).
“The overall system is tightly controlled via industry standard protocols and it is assured independently in [internal] audits or ISO 27001, Ernst & Young for IAS 3402 and part of PCI audits. There are numerous tests and checks – including daily checks.”
You accept that this addendum was prepared for you and emailed to you, yes?
Paula Vennells: Yes.
Mr Beer: If we scroll up, please. It concerned an issue that you had expressly requested to be addressed in a briefing –
Paula Vennells: Yes.
Mr Beer: – and which you regard as important?
Paula Vennells: Yes.
Mr Beer: It’s a very short document, yes?
Paula Vennells: Yes.
Mr Beer: Your Public Affairs Director, Jane Hill, had said that she was going to print the document and bring it for you to read on the morning of the Select Committee hearing at breakfast?
Paula Vennells: Yes.
Mr Beer: In those circumstances, do you accept you’re very likely to have read this addendum?
Paula Vennells: I’m sure. How much I read and how much I took in, I have no idea because it was a – the Inquiry has seen there was a lot more documentation than just this but, yes, I would have tried to prepare as best as I could.
Mr Beer: As we’ve discussed, the addendum includes a strategy to hold four lines, the first four, give certain information when pushed and further information, if pushed further; did you agree with that strategy?
Paula Vennells: No, I – as I said, I’m not sure that I would necessarily have taken it this way. I didn’t ask for that strategy. I don’t suppose I even considered it on the morning of the Select Committee.
Mr Beer: Why did you think you wouldn’t consider it, having identified the topic as an important one and asked –
Paula Vennells: No, I’m sorry, I –
Mr Beer: – specifically for a briefing about it and having been given a briefing?
Paula Vennells: I meant I wouldn’t have considered the strategy in the way this is set out, in terms of three different ways of approaching it, and the reason I wouldn’t have considered that is that I would respond to the questions as they were asked and I would respond to the Select Committee openly and honestly with what I knew and could recall at the time under the pressure of the Select Committee. But I wouldn’t have gone in – you can’t do that.
It’s like sitting here today; you can’t come into these sorts of very high-pressure environments with a strategy as to how you’re going to handle it.
Mr Beer: Why would the Post Office adopt a strategy of withholding information, in the first instance, unless pushed, and, in the second instance, unless pushed or asked directly?
Paula Vennells: You would have to ask Jane Hill. I had – I don’t know that I’ve seen anything else.
Mr Beer: Would that be an appropriate strategy?
Paula Vennells: No, I’ve simply said that – I’ve just said that I would have approached the – I did approach the Select Committee with an intention to answer their questions as openly and honestly as I knew.
Mr Beer: You say in your witness statement that this document would have reinforced your belief that it was not possible to change branch accounts without the subpostmaster’s consent, yes?
Paula Vennells: Yes, if you say so, yes.
Mr Beer: Where does it say in the document that it was not possible without the subpostmaster’s consent?
Paula Vennells: I’m – the thing that I remember very clearly from this was – and I – is the point about the function – “There is no functionality in Horizon”, was a very reassuring line to have read. The point that it made further down about the balancing transaction process would have reminded me what I knew from 2014, from the conversation with Lesley from the Deloitte report.
Mr Beer: But if we just go to the top of the page, please, bullet point 3, there is “no functionality”, and if we scroll down:
“If injection of new transaction … is raised …”
First bullet point:
“There is functionality …”
What this is doing is it’s saying: come out with the clear, easy, straight denial first, say there’s no functionality, but then the more nuanced answer is only if they really push you on it.
Is that the way the Post Office operate?
Paula Vennells: I agree that’s what it’s saying. No, that is certainly not the way I operate or operated at the Select Committee in 2015. I – my retention of the branch accounts can’t be changed remotely and there is no functionality in Horizon are statements that stayed with me, and given this very short notice, either overnight or that morning, I wouldn’t have – I wouldn’t have had time to take account of some sophisticated strategy about how the message was going to be managed, and I wouldn’t do that. Whatever anybody asked me to do, I would only tell the truth.
Mr Beer: Thank you. That can come down.
Now, because of rules concerning Parliamentary privilege, I’m not permitted to ask you questions the effect of which would be to impeach or to question the evidence that you gave to Parliament on 3 February 2015; do you understand?
Paula Vennells: I do, yes.
Mr Beer: We have asked you in a witness statement to tell us what your state of mind was immediately before you gave evidence to the Committee, you know that –
Paula Vennells: Yes.
Mr Beer: – asking questions on the basis of the evidence that you subsequently gave to the committee?
Paula Vennells: Yes.
Mr Beer: Can we look, please, at WITN01020200, so second witness statement. Can we look at page 9, please, question 27, or paragraph 27. Thank you.
Just by way of context, we asked you to set out what your state of mind was, what your belief was, at 10.00 on the morning of 3 February.
Paula Vennells: Yes.
Mr Beer: The issue we asked you to address was:
“There was no functionality in Horizon for either branches, [Post Office] or Fujitsu to edit, manipulate or remove transaction data once it had been recorded in branch’s accounts.”
You say:
“At 10.00 on 3 February 2015, I believed it to be true that there was no functionality in Horizon for either branches, [the Post Office] or Fujitsu to edit, manipulate or remove transaction data once it had been recorded in a branch’s accounts. My belief was based on the material provided to me in advance of the Select Committee, set out … above.”
Paula Vennells: Yes.
Mr Beer: That includes the addendum document that we’ve just looked at.
Paula Vennells: Right.
Mr Beer: How could you believe that there was no functionality to remove transaction data once it had been recorded in the branch’s accounts, in the light of the addendum briefing that you received, which said that balancing transactions could be undertaken, which involved editing, manipulating or removing transaction data once they had been recorded in a branch’s accounts?
Paula Vennells: Because the information that I was given states exactly that, I think. That there was no functionality –
Mr Beer: Well, the top line does.
Paula Vennells: Yes.
Mr Beer: The first bullet point, the “If you’re not pushed on this issue” does?
Paula Vennells: Yes.
Mr Beer: But the bottom line says that it can be done through balancing transactions. How could you only state the former, only believe the former to be true, when you knew that balancing transactions allowed precisely that to be done by Fujitsu?
Paula Vennells: I knew that one balancing transaction – and I didn’t understand the technicality behind it, which I, as I explained earlier, I understood to be similar to a transaction correction, and did need a subpostmaster’s permission and had been sought, so I –
Mr Beer: Ms Vennells, that’s a different issue, whether in fact, on the occasion that it had been used, the permission of the subpostmaster had been sought. This is whether the facility is there and, on the basis of the briefing that you were provided, the ‘If pushed twice’, at the bottom of the page, revealed to you that the facility was there?
Paula Vennells: Then, at the time, I didn’t register that. This was – this was my understanding, that it was not possible to access a branch’s account remotely without the subpostmaster being aware of it, and that was based on my understanding of what was explained to me in 2014. I accept what you say is that there is more information in that brief further down, but I …
Mr Beer: Ms Vennells, it goes further than that, doesn’t it? We’ve seen that in 2011 you were told by Ernst & Young that unrestricted access to privileged IT functions increases the risks of unauthorised and inappropriate access, which might lead to the processing of unauthorised transactions.
We’ve seen that in 2014, you had the Deloitte Board summary, which said that subpostmaster approval is required, except for balancing transaction postings, and you’d received the addendum document that, in those final bullet points, makes that point again. How could you have believed that there was no facility for Fujitsu to edit, manipulate or remove transaction data?
Paula Vennells: Because I imagine in the timescale that I’m looking at – as I explained, in 2011, I looked for a briefing document to try to help me understand the wider issue around the technology audit, which I had never encountered before; in 2014, I was completely reassured by the CIO who was the expert on this. I had no idea at any time that a balancing transaction could have been used in the multiple ways that it was, so, by the time I get to the Select Committee and I get a brief on the morning or overnight the – and I’d been away the night before, I didn’t – I did not reach a conclusion that meant that I was giving inaccurate information to the Select Committee. That is not something that I would have done.
Mr Beer: Lastly on this topic, before we break for the evening, can we look, please, at POL00041258. This is after Parliament and it’s after the Letter of Claim has been received from Freeths, and it’s a discussion about the content of the letter of response.
If we look at the foot of the page, there’s an email from Jane MacLeod, then General Counsel, to you. She says:
“As you will recall, Post Office has committed to responding to the Letter of Claim received from Freeths, by this Friday.”
In the second paragraph:
“None of the underlying arguments set out [by Freeths] are new. However as a result of the work undertaken by Deloitte in relation to Horizon, we will be flagging that within Fujitsu there are a number of individuals who have super-user rights which can only be used in very limited and controlled circumstances. We do not believe this causes us any concerns from a legal perspective, however it is a different positioning to the public statements that we have previously made, and therefore we should be prepared for adverse comments from the usual commentators.”
Then if we scroll up, it’s on the page, you say:
“Thanks Jane. This is clear – my only query is …”
I think that’s “re”?
Paula Vennells: Re, yes.
Mr Beer: “… Fujitsu super-users. What did we say previously?”
Answer:
“We haven’t previously addressed super-users and the phrasing of some previous statements as to who can access and edit branch data is quite narrow. We are collating previous statements made, as well as referencing what we have been provided by Fujitsu historically, so we can assess the extent of the communications gap. However it is clear this is an area where we could face adverse media commentary.”
Did you understand, at this point, that the issue was about different positioning that the Post Office was taking in relation to previous statements?
Paula Vennells: Yes, I think that’s right.
Mr Beer: Was that because the existence of super-users was already known to you?
Paula Vennells: I’m sorry, just ask the other question again?
Mr Beer: Yes.
Paula Vennells: I’m not sure I picked the link up.
Mr Beer: This was about Post Office’s positioning.
Paula Vennells: Yes, this was about information Post Office was putting into response to the Letter of Claim, I think; is that right?
Mr Beer: Yes. You say:
“My only query is [re] super-users. What did we say previously?”
Paula Vennells: Yes.
Mr Beer: What you don’t say is, “What are super-users? I’ve never heard of super-users before”.
Paula Vennells: Right. I’m not sure …
Mr Beer: Were you aware of so-called super-users before this, July ‘16?
Paula Vennells: I don’t think so. I’m assuming that the reason I asked this question was that I wasn’t. There was the Deloitte – the Ernst & Young audit, which talked about privileged access and I think I’m asking here as to what super-users are. I can’t remember whether I had that in mind or not. There was certainly privileged access that had come up in the Ernst & Young reports. I think APPSUP was something that was referred to.
Mr Beer: Ms MacLeod says, at the top of the page:
“We haven’t addressed […] the phrasing of some of the previous statements as to who can access and edit branch data is quite narrow.”
Did you understand that to be a reference to the evidence that you had given to Parliament?
Paula Vennells: I don’t think I made any connection to what I’d given to Parliament.
Mr Beer: What statements had the Post Office made previously, publicly, as to who could and could not edit branch data?
Paula Vennells: The Post Office – well, I don’t know what it had done – stated previously. Presumably, there was a piece of work being produced to look at that. I can’t remember now and I clearly didn’t know at the time what the Post Office had said.
Mr Beer: But the short point is you didn’t read this as a reference back to what you had said to Parliament?
Paula Vennells: No.
Mr Beer: Thank you.
Sir, those are all my questions for today. It has just gone 4.30.
Sir Wyn Williams: Yes, just before we break, can I just go back to that additional briefing document that you got the day before or during the morning of the Select Committee hearing. Mr Beer asked you questions on the basis of it was laying out a strategy for you, all right –
Paula Vennells: Yes.
Sir Wyn Williams: – and you had that debate.
Paula Vennells: Yes.
Sir Wyn Williams: If I were to suggest to you that you were being advised to be very precise, very circumspect and very guarded about what you said, that was the effect of that document, would you agree?
Paula Vennells: I would, Sir Wyn. I’m not sure I would have noticed that on the morning of the day.
Sir Wyn Williams: But – you’ll see the point in a moment – that was the effect that was trying to be created by those who created that document?
Paula Vennells: It could have been, yes.
Sir Wyn Williams: Right.
Paula Vennells: Yes.
Sir Wyn Williams: Why?
Paula Vennells: (Pause)
With hindsight, because possibly –
Sir Wyn Williams: If you need time to think about it, you can tell me in the morning. It’s all right.
Paula Vennells: No, no, I don’t –
(Laughter from the audience)
Sir Wyn Williams: No, no. That’s enough now.
Paula Vennells: It’s –
Sir Wyn Williams: It’s a question that I have to pose for myself, so I’d like your help with the answer.
Paula Vennells: Yes. I understand the question. At the time, I didn’t answer the question – I didn’t ask the question. It didn’t cross my mind at all, and this may be back to the point I made at the beginning of the day that I could be too trusting of people: I took the information that I was given and went into a Select Committee. Why might they have set it out that way? With what I know now, it is – but I find it very difficult because I knew the people who were producing that document but, from what I know now, maybe other people knew more than I did and they were trying to direct me to answer in a certain way.
Sir Wyn Williams: All right.
So I think we’ll adjourn at that point, then, Mr Beer, until tomorrow morning. Is it 9.45?
Mr Beer: Yes, please, sir.
Sir Wyn Williams: Can I say to the members of the public and the Core Participants who are present that it would have been possible for there to have been a lot more verbal intervention than there has been from the floor, and I’m very grateful to you for your restrained behaviour during the course of the day. But that’s not to encourage you to be less restrained; that is to encourage you to be, if anything, even more restrained, during the remainder of this week. So thank you very much.
Mr Beer: Thank you, sir.
(4.36 pm)
(The hearing adjourned until 9.45 am the following day)