Official hearing page

24 May 2024 – Paula Vennells

Hide video Show video

(9.45 am)

Mr Beer: Good morning, sir, can you see and hear us?

Sir Wyn Williams: Yes, I can.

Before the questioning resumes, can I just first of all confirm with you how we intend to proceed today. My understanding is that we will begin with questioning from Mr Henry, which will last for up to one hour and then, after that questioning, there will be the first morning break.

Mr Beer: Yes.

Sir Wyn Williams: Followed by Mr Stein, again, with questioning up to one hour, followed by the second morning break, and then this morning’s session will conclude with questioning on behalf of the NFSP and on behalf of a lady called Susan Sinclair.

Mr Beer: That’s right, sir.

Sir Wyn Williams: Then we take our lunch, then Mr Moloney will ask questions for up to one hour, and then, if she wishes to do so, Ms Leek may ask questions on behalf of Ms Vennells. That will then conclude, subject, to you, as always, having the last word if necessary.

Mr Beer: Thank you, sir.

Sir Wyn Williams: Right, so that deals with the timetable for today.

Then, just to avoid any confusion, if there is any, about what is to be said about Ms MacLeod, can I make it clear that there will be, if there is not already, a reasonably lengthy statement on the Inquiry website. I don’t propose to, in effect, read it out today, that would take up unnecessary time but my reasoning is fully set out in the written statement as to how it comes to be that Ms MacLeod will not give oral evidence.

Mr Beer: Thank you very much, sir. Just for the record, for our transcript, because we’re – as people will see when they read your statement – reading her statement into the record –

Sir Wyn Williams: Yes.

Mr Beer: – her witness statement’s URN is WITN10010100. So that is, by virtue of what I’ve just done, to be treated as evidence in the Inquiry.

Sir Wyn Williams: Thank you very much, Mr Beer.

All right, over to you, Mr Henry, and since I’ve taken two or three minutes of your time, would you aim to complete your questioning, please, by 10.50.

Paula Vennells


Questioned by Mr Henry

Mr Henry: Thank you, sir.

There were so many forks in the road but you always took the wrong path, didn’t you?

Paula Vennells: It was an extraordinarily complex undertaking and the Post Office and I didn’t always take the right path. I’m very clear about that.

Mr Henry: You exercised power with no thought of the consequences of your actions, despite those consequences staring you in the face?

Paula Vennells: I’m sorry, I missed the beginning, could you say –

Mr Henry: You exercised power with no thought of the consequences of your actions, despite those consequences staring you in the face.

Paula Vennells: The scheme was set up and, for the time that I worked on that, I believed that I – and I wasn’t working alone in this, I was surrounded by colleagues as the Inquiry has seen – and I believed that we were doing the right things and clearly that was not always the case. We did –

Mr Henry: Can I take you to –

Paula Vennells: If I may, we did look at the consequences and, although that may have been misunderstood, the reason I circulated the eight cases, including Mr Castleton’s, was that I was – it was an act of compassion and I was very moved by the content of that. That was right at the start of the mediation process and I felt it was important that I and colleagues understood that. But I accept your point that there are no words I can find today that will make the sorrow and what people have gone through any better.

Mr Henry: Ms Vennells, that’s humbug. You preach compassion but you don’t practice it. For example, with Mr Castleton, he was even closed out of the mediation process; and you know why that was, don’t you?

Paula Vennells: I’m sorry, I cannot recall the detail of that. I wasn’t personally involved in which cases did or didn’t go into the Mediation Scheme. I have –

Mr Henry: It so deeply moved you, you said in your statement, it was so shocking, yet he was locked out of the Mediation Scheme because, of course, he was an illustrious scalp that could we turn used, a precedent that could be used in the GLO?

Paula Vennells: What happened to Mr Castleton is completely unacceptable. At the time, his case was not taken through the scheme – I personally wasn’t involved in the decision but the Post Office took the decision based on legal advice –

Mr Henry: Yes –

Paula Vennells: It was wrong, Mr Henry. I completely agree with that and what happened to Mr Castleton is unforgivable.

Mr Henry: You in instigated no investigation into why £321,000 of public money was used to crush him and grind him into the dirt.

Paula Vennells: I agree with what you’re saying.

Mr Henry: Thank you. Let’s – I’m talking now about things that were staring you in the face – no need to get it up on screen – but you remember, and there’s absolutely nothing wrong with talking to your husband and I don’t suggest that you should be ashamed at all about that, but you wrote that email:

“My engineer/computer literate husband sent the following reply to the question:

“‘What is a non-emotive word for computer bugs, glitches, defects that happen as a matter of course?’


“‘Exception or anomaly. You can also say conditional exception or anomaly which only manifests itself under unforeseen circumstances’.”

Unforeseen, random, difficult to predict, impossible to guard against. It was staring you in the case but you took from your husband’s text or email that which suited you, and ignored or dismissed the potent jeopardy that these bugs could arise under unforeseen circumstances. Isn’t that shocking?

Paula Vennells: I covered this yesterday with Mr Beer. I should have said “bugs”, the Post Office should have said “bugs”.

Mr Henry: I’m not talking about that; I’m talking about “manifests itself under unforeseen circumstances”. In other words, these things could crop up intermittently at any time, as Tim McCormack warned you in 2014, and here you have this from your husband on 2 July 2013 warning you about bugs that manifest themselves under unforeseen circumstances. You should have been horrified.

Paula Vennells: I was concerned by the bugs. There was –

Mr Henry: You did nothing.

Sir Wyn Williams: Mr Henry, let her finish, please.

Mr Henry: So be it, sir.

Paula Vennells: I’m sorry, could you repeat the question?

Mr Henry: You were concerned by the bugs, you say. What I’m suggesting to you is that you took what you wanted from the information your husband had supplied to you but you did not heed the warning contained in what he said, which was that these bugs could manifest themselves under unforeseen circumstances. It was staring you in the face.

Paula Vennells: The Inquiry has heard that there was information that was not known to me, and potentially to other colleagues I was working alongside. At that stage, I only had the information of those two bugs. There were, as I said in my statement, other glitches and incidents that I had come across visiting post offices. What I’ve said on this so far is all that I knew at the time, and really all that I can say, and I repeat again: we should have said “bugs”.

Mr Henry: You have no one to blame but yourself; do you agree?

Paula Vennells: Where I’m – absolutely. Where I made mistakes and where I made the wrong calls, whether or not I had – in those cases where I didn’t have information, I think that’s more difficult, but where I had information and I made the wrong calls, yes, of course.

Mr Henry: Well, you are responsible for your own downfall, aren’t you?

Paula Vennells: From when the Court of Appeal passed its judgment, I lost all the employment that I have had and, since that time, I have only worked on this Inquiry. It has been really important to me to do what I didn’t or was unable to do at the time I was Chief Executive, and I have worked for the last three years and prioritised this above anything else. For the last year it has probably been a full-time job. And it is my commitment. I have avoided talking to the press, perhaps to my own detriment, because, all the way through, I have put this first.

Mr Henry: I suggest to you that you still continue to live in a cloud of denial, and it persists, even to today, because you have given, in 750-odd pages, a craven self-serving account, haven’t you: “I didn’t know, nobody told me, I can’t remember, I wasn’t shown this, I relied on the lawyers”?

Paula Vennells: I have tried to do this to the very best of my ability. I have taken, as I hope the Inquiry has seen, all of the questions I have been asked. I have answered them honestly, no matter how difficult or how embarrassing or how wrong I was at the time. I don’t believe I could have worked harder for this.

Mr Henry: What I’m going to suggest to you is that whatever you did was deliberate, considered and calculated. No one deceived you; no one misled you. You set the agenda and the tone for the business.

Paula Vennells: I’m sorry, what’s the question?

Mr Henry: You set the agenda and the tone for the business, didn’t you?

Paula Vennells: I was the Chief Executive. I did not set the agenda for the work of the scheme and the way the legal and the IT parts of it worked. I wasn’t, as I’ve said to the Inquiry over the last two days, I’m not a lawyer, I didn’t have the expertise or the experience to lead on that, nor did I on the IT side. I had to rely on those colleagues who were experts and I had no reason not to take the advice that I was given. I accept I was Chief Executive and, as I have said, as a Chief Executive, you have ultimate accountability, and that is simply fact.

You are not responsible for everything that happens underneath you. You have to rely on the advice of internal and external experts and that is what I did and I was not working alone on this. I was surrounded by a Board, by the Group Executive Committee. I cannot think that any of the major decisions I took by myself in isolation of anybody, this was far too serious an undertaking for the Post Office, for everybody affected, for every single postmaster case, and my ambition was to get those through the scheme.

I did my very best through this, and it wasn’t good enough, and that is a regret I carry with me.

Mr Henry: I mean, you like euphemisms like “anomaly” or “exception”, so I’m going to use a euphemism called “containment”. You wanted to contain this problem; it sounds so much nicer than “suppression”, doesn’t it? You wanted to contain this escalating threat to your leadership and the image that you wanted to project to stakeholders, the Board, the Government, Whitehall and the media.

Paula Vennells: That isn’t the way I worked.

Mr Henry: You were managing up, not down. You’re very politically adept, aren’t you?

Paula Vennells: My role required me to work with various groups of stakeholders inside and outside the organisation, upwards and downwards from my role, and I tried my very best to work with all of those groups at whatever level they worked in the organisation or outside of it.

Mr Henry: Do you agree that you’re politically adept?

Paula Vennells: I would suggest that wasn’t the case. There were people in the organisation who had – this was my first job in a public sector organisation. I had no experience prior to this of working alongside politicians or the Civil Service.

Mr Henry: Well, your denial is surprising –

Paula Vennells: I wouldn’t have said –

Mr Henry: Your denial is surprising –

Sir Wyn Williams: Mr Henry, please.

Mr Henry: Sorry, sir. I do apologise.

Sir Wyn Williams: I appreciate that you have a difficult task but also the witness has a difficult task, so I’d ask you both, one to ask the question and one to complete the answer, and then we move on.

Mr Henry: I do apologise to the witness, sir, and I also apologise to you.

Sir Wyn Williams: Thank you.

The Witness: Thank you.

I think I’ve answered your question.

Mr Henry: I mean, it’s surprising, your refusal to admit your political skills because you ended up in the Cabinet Office, didn’t you?

Paula Vennells: I’m sorry, I am not sure I understand your connection.

Mr Henry: Well, your concerns were managing upwards. You were obsessed with the media, pleasing the stakeholders, the Board, the Government, Whitehall; those were your priorities, weren’t they?

Paula Vennells: They were very important stakeholders for the Post Office Board. The Post Office, as you know, was owned – it had – its single shareholder was Government. That was an important part of my role. It most certainly wasn’t the largest part of my role by any means.

Mr Henry: I’m going to go now to 2010 and the top policy goal of your 100 per cent shareholder, the Government, was to split the Post Office from Royal Mail and then privatise Royal Mail by floating it on the Stock Market; do you agree?

Paula Vennells: That was an important priority for Government, yes.

Mr Henry: Helping to fulfil that plan was therefore important to you because, of course, you had been measured point as a yardstick of your success at Royal Mail and then, subsequently, the Post Office.

Paula Vennells: It was probably more significant for Royal Mail than it was – the Post Office’s challenge was trying to cope with the separation, to make it happen.

Mr Henry: You worked closely with Dave Smith, didn’t you?

Paula Vennells: The Managing Director?

Mr Henry: Mm-hm.

Paula Vennells: Yes, he was my boss.

Mr Henry: Yes, and he commissioned the Ismay Report, which you must have read at the time?

Paula Vennells: I don’t believe I did and I have found no – the document itself, when I saw it recently in preparation for the Inquiry, seemed to be a surprise to me and I don’t – I haven’t seen any documentation to say that I received it.

Mr Henry: Yes. Not aware of the Ismay Report, you say?

Paula Vennells: I don’t think so, no.

Mr Henry: Horizon had a clean bill of health, its integrity was sound. But I digress.

Obviously, the proposed flotation of the Royal Mail Group was vitally important to Donald Brydon and Moya Greene, as well?

Paula Vennells: I’m sure it was but you’d have to ask them.

Mr Henry: Back in 2010, a week before you were appointed Managing Director, a trial took place in Guildford and an innocent woman was jailed. Her trial became the high watermark of Horizon infallibility. Her conviction became, for years, a validation of Horizon’s integrity for the Post Office. It was, as it were, a test case and, if the Post Office had failed in this prosecution, it would have opened up the floodgates to civil litigation, civil claims for damages and a defeat in that trial in Guildford would have made civil claims difficult to defend.

The Inquiry has seen documents to support what I’ve just put to you. But do I take it you knew nothing about that case at the time, in October 2010, because you were unaware of prosecutions being mounted by the Post Office until 2012?

Paula Vennells: I’ve seen some documentation this morning that showed I was aware of the case afterwards. I think – I can’t remember, I’m sorry, in my statement, but I think I say in my statement that I remember being told about the case after the court had reached its decision, and so that would have been at the time of that – of the conviction.

Mr Henry: You see, again, no need to put it up, but there’s an email chain which you’ve seen this morning, dated 21 October 2010 to Rod Ismay, Mike Moores – Mike Moores, Chief Finance Officer –

Paula Vennells: Yes.

Mr Henry: – mike Young, Head of IT –

Paula Vennells: Yes.

Mr Henry: – and you, from Dave Smith, after hearing that Seema Misra had been jailed, saying:

“Brilliant news, well done, please pass on my thanks to the team.”

Then Mr Ismay forwards that to a wider group of people, including Susan Crichton, with these words:

“Dave and the Executive Team had been aware of the significance of these challenges and had been supportive of the excellent work going on in so many teams to justify the confidence that we have in Horizon, and in our supporting processes.”

So you must have been aware at the time because you were, of course, a member of the Executive Team.

Paula Vennells: I was. I can’t recall the Executive Team discussing Mrs Misra’s case or any other cases. They, as far as I can see from documentation and my recall, they didn’t come to the Executive Committee in any detail.

Mr Henry: Mm.

Well, let’s move on. So you don’t know about the Ismay Report?

Paula Vennells: I don’t believe I did, no.

Mr Henry: Right. 26 November 2010, there’s an email to you, Mike Moores, Chief Finance; Mike Young, Head of IT; Susan Crichton; Kevin Gilliland; Sue Huggins; and Rod Ismay. If you want to see it, but I think you’ve already seen it outside of the room, it’s POL00120561, and the subject line is “Update on JFSA and Horizon issues – an urgent response needed for BIS, in strictest confidence”, and it reads as follows:

“You will be aware of the allegations that the JFSA have been making about the integrity of Horizon, the integrity of the system and the associated processes that POL uses in terminating contracts. There have also been various legal cases relating to individual subpostmasters being prosecuted for theft, false accounting …”

Mrs Misra is then mentioned:

“… the most recent being Ms Misra where the ex-subpostmaster was recently found guilty of theft.

“As you are aware, Channel 4 were also looked at the subject in the summer although nothing yet has come of this. Our approach throughout has been to robustly defend the integrity of the Horizon system.”

Then it talks about positioning because it’s very important that BIS don’t do something off their own back which could lead to more difficulties.

Then these words:

“As you have all had an involvement in this particular issue, I’m looking to see if I can gain concurrence to this particular statement”, which was a very robust statement about Horizon system’s integrity.”

Now, “As you have all had an involvement in this particular issue”, and that issue of course is Horizon issues, and Rod Ismay is on the same email as you, that email sent to you, Mike Moores, Mike Young; are you sure that you hadn’t discussed with Rod Ismay anything to do with his report?

Paula Vennells: No, I don’t believe I had, Mr Henry.

Mr Henry: Right. Anyway, we know that on 13 June 2011, the Postal Services Act was passed that set down the roadmap for the separation and the privatisation; you agree with that?

Paula Vennells: Yes.

Mr Henry: Then on 29 September 2011, three months after the Act, you received the email from Mr Brydon, Chair of RMG, which Mr Beer took you to yesterday, and that was, of course, the Private Eye article, and he was expressing concerns and giving you and Alice Perkins directions about how to deal with the subpostmaster’s complaints, wasn’t he?

Paula Vennells: Yes, I can’t remember the email in detail.

Mr Henry: Yes. He was saying that 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?”

He was worried this might disrupt the big plan to privatise the Royal Mail Group, wasn’t he?

Paula Vennells: I’m sorry, I don’t recollect that. Whether I made that association, I don’t know.

Mr Henry: If it were to be established that the Royal Mail Group had wrongly prosecuted dozens/hundreds of subpostmasters who might sue them, it would have threatened to disrupt the flotation in October 2013, wouldn’t it?

Paula Vennells: I’m sure that would have been the case.

Mr Henry: Yes, and you have accepted in your witness statement that attempts to reopen past prosecutions posed a reputational and financial risk to the Post Office?

Paula Vennells: Would you mind taking me to that? If you want –

Mr Henry: By all means, it’s paragraph 456.

Paula Vennells: Thank you.

Mr Henry: So if we could go to your first witness statement, WITN01020100, and it’s paragraph 456.

I’m so sorry, I seem to have lost the page reference for it but –

Sir Wyn Williams: It’s page 220.

Mr Henry: Thank you so much, sir.

Martin Edwards, correct?

Paula Vennells: Right, yes, thank you.

Mr Henry: Yes. So, I mean, this would also pose a reputational financial risk to the Royal Mail Group, since they were responsible for the Legacy of prosecutions because, until 2012, they were the prosecuting authority weren’t they?

Paula Vennells: Yes, that’s correct.

Mr Henry: No need to go to your reply to Mr Brydon but Mr Beer took you to it. To use his expression “POL has a 100% strike rate in court”, but the Post Office was going to have Horizon verified by an external systems auditor with results in the next month.

You say you don’t remember but this, clearly, this reference to an external systems auditor, this was clearly a reference to the work that Ernst & Young had recommended in their 2011 audit letter, wasn’t it?

Paula Vennells: No, I don’t believe it was and the Inquiry has documentation that refers to two separate external agencies. One was a company called Pen Test, I think, and the other was KPMG, and I haven’t been able to find – I haven’t recalled that, and I chased Lesley Sewell or Mike Young for progress on that work, and I haven’t seen anything that followed it through.

Mr Henry: Okay. Well, let’s concentrate, however, on the Ernst & Young angle for a moment. Because you will accept that they recommended what was then called an SAS 70 audit; do you remember that?

Paula Vennells: I’m sorry, could you say that again, please?

Mr Henry: You do remember that Ernst & Young had recommended as a solution to what Mr Beer had called remote access 1, was an SAS 70 audit?

Paula Vennells: Yes, I do.

Mr Henry: Yes, and that that would, as it were, try to address the threat that they had identified, which was that lax controls at Fujitsu and I quote “may lead to the processing of erroneous or unauthorised transactions”; you do remember that?

Paula Vennells: I do. It wasn’t exactly that the SAS 70 – there was a new name for it after that – the issue – Ernst & Young said in their management letter that they had had to put in – and these are my words not theirs – but something like manual workarounds, to reach the conclusion they had that they could pass an unqualified audit. They said it would have been much easier if Fujitsu had in place a SAS 70, which was a – my understanding was an ongoing and automated reporting on the various controls in place, and, by the time we got to 2012/13, that had been introduced. It had taken some work with Fujitsu to get there.

Mr Henry: We know that Lesley Sewell, rather than getting an SAS 70 audit, asked the Royal Mail Group for an internal audit, were you responsible for that –

Paula Vennells: I – I beg your pardon, I’m sorry.

Mr Henry: Don’t worry. Were you responsible for that?

Paula Vennells: There were – if I may, having read through the documentation and remembered on this, I think the process is slightly different than you outline. So there was criticism in ‘10/’11 because the audit had taken too long. It had run over massively in terms of time and budget and the reason – there were two reasons for that: Ernst & Young had a new team on it and were not familiar and, secondly, Horizon Online had been put in place and there simply hadn’t been – I’m told there simply hadn’t been the time to get all of the right controls and documentation up to speed. So Ernst & Young had to spend much more time to validate what was there.

They suggested a SAS 70 report. We then worked with Fujitsu to make sure that that was put in place. They were not keen to do it because it was a huge investment for them, but they agreed to do that. And then, through – one of the check steps in that process for improving the approach to the audit was the Royal Mail internal audit process. That was not instead of; that was a check step to make sure that Lesley Sewell and her team were – an “independent” check step – “independent” in inverted commas but internal audit teams are generally seen as independent, as much as they can be, within a company – and that was a check step to make sure that Lesley and her team were doing the work that was required to achieve what eventually became ISAE 2304, I think, or 2403.

Mr Henry: Well, the internal audit review of Horizon has been seen by the Inquiry, and it’s dated 1 February 2012. It was sent to you and Moya Greene, the CEO at RMG –

Paula Vennells: Yes.

Mr Henry: – as well as to other senior people at RMG. It stated that, with regard to the poor controls, it found that, and I quote:

“It is difficult to detect and prevent inappropriate changes being made to master data.”

It also responded to the Ernst & Young March 2011 letter, and stated that the position as, at the end of January 2012, was that none of the issues raised by Ernst & Young had been resolved. The verdicts were that substantial progress had been made in respect of some of the recommendations or significant work remained and was required.

So I just ask you this: would it be right to say that that remained the position throughout the time that you were CEO? You were MD from October 2010 but CEO in 2012. Those issues were never fully resolved, were they?

Paula Vennells: Well, you’re right to raise that report because what it did was – it was a very useful report because what it did was highlight, first of all – and, of course, people took reassurance from that – the areas where progress had been made and it highlighted where further work was needed. From memory, I think substantial progress had been made on – there were ten recommendations in the Ernst & Young report, four of those were high risk – no, not high risk, high rating, and I believe the Royal Mail internal audit report said that was where substantial progress had been made. There was still more progress to be made.

In ‘12/’13, so the end of the following financial year, when I was Chief Executive, and throughout the year prior to that, there had been numbers of check steps in place. Ernst & Young found that – again, forgive me because I can’t remember the words from the report – but they were very pleased with the outcome. The audit had gone very well and there were always, as there always are in these processes, some improvements to be made. But Lesley was congratulated on the work that was done; the Chair of Post Office Audit Committee congratulated her on that. And so, you know, I and the Group Executive and the Board took some comfort from that.

As we went forwards, the audits continued to flag some improvements but, to be clear, that the accounts could be signed off unqualified and that the IT side of the audits had improved from the – I think, you know, you’re right to flag the crisis situation, which we took over on separation.

Mr Henry: I am sure that the Board took comfort and I’m sure there was a mutual congratulatory fest, but the fact is that remote access was never – unauthorised tampering was never resolved throughout the entire time of your tenure as Managing Director and as Chief Executive.

Paula Vennells: And the question is?

Mr Henry: Well, in other words, the disconnect between corporate communications, the outward face of the business and the grubby internal reality.

Paula Vennells: I am sorry, I’m still – I’m really not – I want to be able to help. I’m – you’re making statements –

Sir Wyn Williams: Let me try, Ms Vennells. I think the point that’s being put to you is that, throughout the period that you were Chief Executive – let’s keep to that, it makes it simpler – the true extent of remote access was never satisfactorily resolved by the senior people at the Post Office?

Paula Vennells: And, Sir Wyn, that is correct.

Sir Wyn Williams: Right.

Paula Vennells: The volume of interventions that were happening, as I understand it, and I can any – I’ve only understood this since in terms of what is detailed in the Horizon IT judgment and the Project Bramble report, which I’ve seen afterwards, is that it appears as though there were interventions on a fairly frequent basis, which, as Mr Beer said yesterday, was not uncovered, at least – I’m sorry, was not known to me and, I believe, the Board and the Group Executive. I don’t know how widely within Post Office that information was known but, clearly, it was happening.

Mr Henry: It is extraordinary though, isn’t it, because Cartwright King, your external lawyers, know all about it and yet you’re saying that you didn’t, the Board didn’t. I mean, this is la-la land, isn’t it?

Paula Vennells: What was the point about Cartwright King, please?

Mr Henry: Well, Cartwright King were concerned about remote access and Andy Winn having to authorise transactions, and Cartwright King were stating that, you know, they weren’t sure to what extent the Post Office actually knew about Fujitsu’s access to the system.

Paula Vennells: That – I think – I’m not sure if that’s news to me or not, today. I don’t recall that at all from the time. If our external lawyers were aware of that and that was shared within the Post Office, it is completely unacceptable. I had no knowledge that Cartwright King knew that, at the time I was Chief Executive.

Mr Henry: Well, anyway, I’m going to now fast forward to July 2013. July 2013, of course, is a momentous month because, of course, there’s going to be the announcement on the privatisation on the 10 July, correct?

It is also the month, of course, that Second Sight presents its Interim Report, which was a bit of a bombshell, correct?

Paula Vennells: Sorry, yes.

Mr Henry: Yes, and, of course, it’s also the month, although the groundwork had been laid for it the month before, where the unsafe witness emerges into clear sight: Gareth Jenkins, fatally undermined and having put the Post Office in breach of its duties as a prosecutor. So it’s a very, very momentous month and, of course, you were at the centre of all of that, weren’t you?

Paula Vennells: I was aware of some of that.

Mr Henry: Let’s go to POL00111625. So this is the internal briefing note to you and, presumably, it’s after you’ve received your text or email from your husband, because of the nomenclature that’s used in this. But could we go to paragraph 8, please, which is on page 2., in other words, the next page. Paragraph 8, please:

“We believe James Arbuthnot may feel that any interim findings which disclose any issue with Horizon should result in past criminal prosecutions by Post Office Limited being reopened and overturned.”

So that is noted. Could we now go to paragraph 30, please:

“The Falkirk Anomaly was the subject of expert evidence in the ‘Misra’ criminal prosecution, where:

“The defence expert asserted that its existence demonstrated Horizon had faults which could laws losses, and therefore that possibility could not be excluded in Misra’s case.

“The prosecution expert (Gareth Jenkins from Fujitsu)”, et cetera, et cetera.

So you knew, because you would have read this briefing and you would have read it very carefully, given the fact that it refers to anomalies and the like – which was done at your instigation, presumably – you would have been aware that Gareth Jenkins was the prosecution expert in Mrs Misra’s trial, correct?

Paula Vennells: I would think so, yes.

Mr Henry: Well, I mean, not “I would think so”. I mean, there it is, it’s a briefing to you –

Paula Vennells: I’m sorry, yes, of course. What I meant by my response was how much of this very detailed briefing I’d taken in – on board at the time. But it’s absolutely there, you’re correct.

Mr Henry: It’s the job of a CEO to read briefings and take them on board, isn’t it?

Paula Vennells: Yes, it is.

Mr Henry: Right. Now, while all of this is going on, the Inquiry has got documents, and you have been shown them, I’m sure, and I don’t go against Parliamentary privilege in any way at all, but on 9 July, the Minister, Jo Swinson, gave a short statement to Parliament, which included:

“It is important to note that the issues in the report have no impact on Royal Mail which is an entirely separate business.”

There was also a Whips briefing, that the Inquiry has seen, which talks about wide impacts, and it says this:

“Royal Mail Privatisation.

“The timing of Arbuthnot’s intended statement should be considered in the context of the Royal Mail privatisation. Vince Cable and Michael Fallon are making a statement to Parliament on Wednesday, 10 July, setting out the steps towards a Royal Mail transaction. In the eyes of many MPs, the media and the public at large, Royal Mail and Post Office are the same entity, although not related. The adverse coverage that Arbuthnot is seeking to attract is likely to have a significant diversionary impact on the messaging of the Royal Mail statement.”

That should be on record, that’s UKGI00001679. Now, you could see, couldn’t you, it must have been obvious to you, it must have been staring you in the face, that if you had a blow-up or a conflagration concerning the Second Sight Interim Report, the prospect of criminal convictions being challenged, et cetera, et cetera, this would be hugely embarrassing politically, and potentially damaging to the flotation.

Paula Vennells: I don’t believe I was involved in any of those conversations. The two organisations, with some exceptions, were now working separately. I had no conversations about any strategy around the Royal Mail privatisation.

Mr Henry: But let’s be clear. You were given the job, I suggest, or it must have been uppermost in your mind, to “keep the lid on this”, because, of course, you wanted to please stakeholders; you wanted to please the Board, Government, Whitehall. I mean, how else can we explain your intransigence throughout your tenure in relation to the concerns that were being bought to you about Horizon?

Paula Vennells: I’m sorry, Mr Henry, can you repeat the question, please?

Mr Henry: What I am suggesting to you is that you wanted to diffuse this because, of course, it was going to be immensely politically damaging, both to the Post Office itself but also to the privatisation, and you were, of course, anxious to please BIS, weren’t you?

Paula Vennells: I had no role at all in relation to the privatisation. I had no conversations with BIS about the privatisation. My concerns at this stage were only about the Post Office and, as the Inquiry has seen, there were many, many conversations, and a good deal of documentation at this time, about how we might find a way through this.

I don’t believe I made any connection between this and the Royal Mail privatisation at all and I have – my approach to my work is that I do it to the best of my ability and honestly. It was not – I don’t think it was ever my style to try to please or keep in with people, whoever they were. When you’re doing a job as difficult as this was, you make it more complicated if you try to do that.

Mr Henry: Well, then I’m going to ask you about 12 September 2013. The Government announces the IPO shares in the Royal Mail Group, and that did open up a problem for the Post Office, because what was the prospectus going to say about Horizon and Second Sight and what was it going to say about Gareth Jenkins?

You say you had absolutely nothing to do with the privatisation. Why did you get involved in bowdlerising or amending the prospectus?

Paula Vennells: This was a very last minute – I wasn’t involved in the prospectus at all. I can’t remember how it occurred but it was flagged to me that – which was complete news – that within the IT section – and I should say, this isn’t a recollection at all, this is from looking at documentation this morning.

It was flagged to me that, in the IT section of the Royal Mail prospectus, there was a reference to – I can’t remember the words now – but risks relate to the Horizon IT System and, again, I can’t recall, but I clearly arrived at a view that that seemed – it seemed the wrong place to – so the line that was put in said that no systemic issues had been found with the Horizon system. The Horizon system was no longer anything to do with the Royal Mail Group. So I got in touch with the company secretary and said this, “I don’t understand why this is here. Please can we have it removed? This prospectus is about Royal Mail, than the Post Office”, and I believe that was the case.

The other thing I learned from the documentation this morning that I did not know at the time is that the original genesis of that statement going into that IT section was from one of the Non-Executive Directors who sat on the Royal Mail Board and the Post Office Board, Les Owen. Now, whether Les Owen had wanted to put that in because, in some ways, it was reassuring about the Horizon IT system, I don’t know. But my involvement was simply to say, “I don’t understand why there is a line in an IT section in a Royal Mail prospectus about the Post Office”, and I don’t recall but I believe it was taken out.

Mr Henry: You had, on 16 July, the Board meeting where Susan Crichton is sitting outside on the naughty step. You know that at that 16th July board meeting, the Board was alarmed about potential claims against it, correct?

Paula Vennells: Yes.

Mr Henry: You know, as well, that on 22 July your insurers were notified, correct?

Paula Vennells: I don’t recall that –

Mr Henry: There was a notification –

Paula Vennells: – but I’m happy to take your word.

Mr Henry: Right. Now, how would revelations about possible prosecution failures, during the time when Royal Mail was in charge of the Post Office, have affected privatisation? It would have been devastating, wouldn’t it?

Paula Vennells: Yes, it would. I’m sure.

Mr Henry: Right. So was this discussed with the Royal Mail Board?

Paula Vennells: I don’t know if it was discussed with the Royal Mail Board. It certainly wasn’t discussed at the Post Office Board.

Mr Henry: What about your discussions with the Business Department? Because you were in regular contact with BIS. Did you discuss it with BIS?

Paula Vennells: No, I don’t believe it was discussed with BIS, not by the Post Office – sorry, not by me. Whether the Chairman – I can’t think who else, but I certainly didn’t.

Mr Henry: Well, you’ve mentioned, of course, about Les Owen because he had formerly been on the inside at the Post Office because he had formerly been a Board Director at the Post Office, hadn’t he?

Paula Vennells: Yes, he had.

Mr Henry: He was concerned enough to want something put in the prospectus but you wanted it out and you succeeded in getting it taken out, didn’t you?

Paula Vennells: I did because I felt it was an irrelevant statement in a section about the Royal Mail IT system.

Mr Henry: You sent an email to Alice Perkins, POL00146462, which stated:

“I have earned my keep on this one.”

Do you remember reading that this morning?

Paula Vennells: I do, yes.

Mr Henry: What did you mean when you wrote that to your Chairman?

Paula Vennells: I meant that it had taken some time, in a very short period of time, to remove that statement about Post Office IT from the Royal Mail prospectus because I didn’t believe that it was helpful in any way to the Post Office, because the two businesses were separate, the prospectus was about the flotation of the Royal Mail and, as I have said a couple of times over the last two days, there was always, with the Post Office – and it was the same for the Royal Mail – the challenge of managing potential misinterpretation in the media of facts that were not necessarily always understood.

And this – as Chief Executive, part of your role is to protect the reputation of the Post Office, as it is for the Board and the Chairman.

Mr Henry: There would have been no misinterpretation in the media because the media’s instincts were entirely correct. You knew of the existence of bugs, errors and defects and you’d already kept those out, hadn’t you, because they don’t appear in the prospectus.

Paula Vennells: I had no work, Mr Henry, on the prospectus at all, no involvement with it until this very last-minute intervention.

Mr Henry: You knew that there was a risk of civil claims for wrongful prosecutions and civil actions based on such bugs. You were aware of that, 16 July Board meeting, correct?

Paula Vennells: Yes, yes.

Mr Henry: You knew that the Royal Mail Group was responsible for the legacy of those prosecutions, together with the Post Office. You really had earned your keep on that one, hadn’t you, you kept the lid on it?

Paula Vennells: That was not at all what I was doing. I had no reflection in relation to that whatsoever.

Mr Henry: Contain negative press, protect the business, hide Horizon issues; that’s the truth, isn’t it?

Paula Vennells: No, Mr Henry, that isn’t the truth. I never – as I said earlier, if there were difficult issues that needed to be addressed, that was what I tried to do.

Mr Henry: Right. Now –

Sir Wyn Williams: Mr Henry, just before you go on to a slightly different topic, if it is, that line of questioning, as you appreciate, is new to me. So I’d be grateful if you or Ms Page would give Mr Beer a note of the documents you’ve been referring to so that I can read them for myself.

Mr Henry: Thank you, sir. We shall do so.

The 27 September 2013, the prospectus is released, the closing date for Royal Mail share applications is 8 October 2013, and this is around the time, a month after we can know for sure that you had been told about Gareth Jenkins, because you must accept that you’d been told about the Gareth Jenkins problem at least a month before 27 September 2013?

Paula Vennells: I believe that’s correct, yes.

Mr Henry: Right.

Paula Vennells: I explained to Mr Beer what I had been told about Gareth Jenkins and the bugs.

Mr Henry: Yes. I am just going to concentrate – because I suggest that your conversation with Lesley Sewell is a creation of yours, isn’t it?

Paula Vennells: I’m sorry?

Mr Henry: Well, you see, you want to explain how you acquired the information about Jenkins but, at the same time, being told that it wasn’t a serious legal problem. So you have an undocumented conversation with Ms Sewell in the corridor, where she says, “Oh it’s more of a practical problem, it’s all a red herring”, and so that gives you reassurance that it isn’t a serious legal problem, as you knew it to be.

Paula Vennells: I’ve told the Inquiry exactly how I found out, in the conversation with Lesley Sewell, as I explained to Mr Beer.

Mr Henry: You see, you were fully briefed by the lawyers, weren’t you?

Paula Vennells: I have spoken to the Inquiry about this with Mr Beer. I was briefed by Lesley, as I explained, I came across her in a corridor looking frustrated about something. We had a conversation, she explained that – and I don’t believe she dismissed it as an inconvenience, or however you suggested.

Mr Henry: The question I’m putting to you is that you were fully briefed about this, about risk, by Susan Crichton. What do you say to that?

Paula Vennells: I was briefed by Susan that Gareth Jenkins could no longer be used. I’m not sure what you mean by “risk”. What I know now is much more about this, that Gareth Jenkins hadn’t been properly briefed in the first place as an expert witness, and – but, at the time, I had no idea of the contents of the Simon Clarke Advice.

Mr Henry: I want to ask you, please, because I’m going to suggest to you that you must have known about this by the end of August and I want to take you to POL00108065, and could we go to the second page, please. Could we scroll up, please. Yes, right, “Legal and Adjudication of future case”:

“We are urgently working with our external firms to identify an independent expert to provide evidence on the Horizon system. PREVIOUSLY THIS WAS PROVIDED BY FUJITSU?”

These are you, in caps.

Paula Vennells: Yes.


Okay? You sent that to Susan Crichton – from memory I think it was 23 August. She responds on the 28th, I think, and she says this:

“We are concerned that that is needs to be independent rather than [Fujitsu] verifying its own system. Happy to explain rationale further at our steering board meeting this week.”

That took place on 29 August 2013. So there we have a very careful response from Susan Crichton, not putting down anything in writing, but she must have fully informed you about the problem by the steering group meeting on 29 August 2013.

Paula Vennells: The nature of this response – which, again, I’ve only seen this morning but I think I’m fairly clear in my recall on this – is that we were under significant pressure, as the Inquiry has heard, from myself and many others, in terms of cost management. And my question here was based on this, which is: well, surely, if we’ve had to stand down Mr Jenkins – I don’t know whether I remembered his name or not at this stage – why would we not get Fujitsu to provide us another witness – another – yes, another witness? Why would we move from that because the cost on that had been borne by Fujitsu? And so my last question is, “Does this mean, therefore, we can’t do that because we have to validate Fujitsu?” It was a completely open, straightforward question and Susan’s answer was, “I’ll explain that to you when we meet”.

Mr Henry: I’ve got very little time left so I’m going to have to just give you the document references without putting them up. I suggest that this knowledge changed your behaviour, because your plan was to have a Lessons Learned Review going into some considerable detail, POL00146243.

On 3 September 2013, that was run past Bond Dickinson and you decide to limit the Lessons Learned Review, and de-risk it by making it much smaller in scope and that it should only take place after Susan Crichton has gone. That, I suggest, is because you are already moving into cover-up mode concerning Gareth Jenkins.

Paula Vennells: No, and I’m sorry we haven’t got more time to go through that because I read that document this morning. The – there were two issues around the Lessons Learned Review. I was looking for, as the Inquiry has heard, a very fast review, because I was faced with how do we really make this scheme work going forwards; how do we work properly and carefully with Second Sight and the JFSA; and what were the lessons learnt in terms of the project management side? That was going to be overseen by the ARC and the Chair of ARC.

When I came back off holiday there was a different process put in place.

Susan and Simon Baker were leaving the organisation and part of that review had been to look at how, as I explained yesterday, the project management hadn’t been handled as well as it could have been. As they were leaving the organisation, the requirement was for something fairly fast and speedy, so we could move forward.

At the same time – and I was not aware of this, I guess it must have been Susan – somebody sought advice from Bond Dickinson, who came back with – and I’ve only seen it this morning – a three-page note as to why, from a legal point of view, the review shouldn’t be taken forwards and so that was what was – that is what was – that is what happened. I –

Mr Henry: Andy Parsons was telling you that it would blow open duties of proactive disclosure for criminal appeals.

Paula Vennells: It’s a very long note and there is a lot of legal information in it, and I say to the person who forwarded it to me, “Thank you, I can see what this says”, and then I say that I’m going to discuss it with Alwen. I have seen nothing more, Mr Henry. But if you are suggesting that I have suddenly changed my approach to things, that was not the case. All the –

Mr Henry: No, you said the timing was helpful, that you would follow their advice and that the timing was helpful. The timing was helpful because you knew about Gareth Jenkins; you knew about the unsafe witness and you did nothing to disclose it.

Paula Vennells: That’s not the case –

Mr Henry: Now, I’ve got one –

Paula Vennells: – and I think it’s really important. That is not the case; I did not know that. If the Post Office knew it, it should have disclosed it and those advices should have come to the Board.

Mr Henry: What legal knowledge do you need to know, Ms Vennells, that if an unsafe witness has given false witness or false evidence against somebody by not telling the whole picture about Horizon’s integrity, what legal knowledge did you need to know to say, “Oh well, we should tell her lawyers”?

Paula Vennells: I understood that we were in the process of disclosing the Second Sight Report and, I learned later, the Helen Rose Report, to – as part of the CK Sift Review.

Mr Henry: That’s separate and distinct from Gareth Jenkins’ alleged misconduct and alleged perjury.

Sir Wyn Williams: Mr Henry, I’ve got the point.

Mr Henry: You’ve got the point. Can I go to one last document, sir? I’ll deal with it very, very quickly.

Sir Wyn Williams: Yes.

Mr Henry: On 23 February 2015 there is a document called POL00116285. If we could get that up, I would be so grateful.

Could we go to the 3.4 in the document. This is you in contact with your team and can we go to 3.4, further down. Yes, thank you, “Prosecution paper (Chris [Aujard] and Mark)”. Then you write this:

“If we are likely to take forwards fewer of the stacked cases – what is the reason and what is the comms line to explain that? Presumably this is genuinely a [Post Office] view of lessons learnt and/or closer to the supportive mutual culture we want in place. If we were to explain it like that, does it then lead to a need for further disclosure re past legal cases – presumably not as they were subject to the policy at the time?”

Then Mr Aujard responds:

“Correct, and double-checked with Brian Altman QC.”

Ms Vennells, the real reason you’re not prosecuting stacked cases is because you don’t have an expert to validate Horizon. You knew that.

Paula Vennells: No, at this date, we had stopped prosecutions.

Mr Henry: Stacked cases are the cases waiting to be prosecuted.

Paula Vennells: Yes, they were the ones waiting, yes, and I say in the next point, actually, that I’m uncomfortable keeping people waiting; this will be a big deal for them and very stressful.

Mr Henry: What you’re doing here, I suggest, is what you have done in other contexts: you’re spinning it, telling your team what you want to hear. You’re spinning it so that you don’t have to provide disclosure of that, the reason why you don’t have an expert, because of the unsafe witness and the whole debacle concerning Gareth Jenkins. That’s what you’re doing.

You’ve disguised all that in this cloying, managerial ease and your counsel tells you that non-disclosure of all that has been double-checked with the QC and he is fine with it. That’s what’s happening here:

“… what is the reason and what is the comms line to explain [why we’re taking forwards fewer of the stacked cases]? Presumably this is genuinely a [Post Office] view of lessons learnt and/or closer to the supportive mutual culture we want in place. If we were to explain it like that, does it then lead to a need for further disclosure regarding legal cases – presumably not …”

“Correct, and double-checked with Brian Altman …”

This is how you led, Ms Vennells. You led through deception, manipulation and word weaving the reality you wanted in place.

Paula Vennells: That isn’t the case, Mr Henry. I worked in a very straightforward way and the Inquiry has seen so many examples of where I fired questions in a very straightforward way, usually because I don’t understand a particular issue, and that is what I’m asking here.

If you can read this, with a very neutral intent of me trying to seek information, that is what I was doing. I didn’t work under deception. I was trying to address a culture in the organisation which I had found to be command and control, where people couldn’t speak their minds and they couldn’t speak up. I was trying to encourage people to work in that way. I didn’t – I did not deal in deception.

Mr Henry: You did not –

Sir Wyn Williams: Thank you both very much.

Mr Henry: Thank you.

Sir Wyn Williams: I think that’s fine.

Mr Henry: Thank you, sir.

Sir Wyn Williams: We’ll now have our first morning break and, Mr Henry, you’ll be glad to know that there’s been great efficiency because I’ve already been sent a message to the effect that the documents you referred to are now with me.

Mr Henry: Thank you, sir. I have to thank my learned junior.

Sir Wyn Williams: Well, I’m thankful to you both.

I think by my clock it’s 10.56 so 11.10 all right with everyone?

(10.56 am)

(A short break)

(11.12 am)

Mr Beer: Good morning, sir, can you see and hear us still?

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

Mr Beer: I’ll just wait for the room to settle down because we’re about to hear some evidence.

Yes, it’s Mr Stein.

Sir Wyn Williams: Yes, thank you, Mr Beer.

Questioned by Mr Stein

Sir Wyn Williams: Is there still some chatter going on, Mr Stein, which is preventing you starting?

Mr Stein: Sir, no, there was a phone that was going off, and I was just pausing for a moment.

Sir Wyn Williams: All right, that’s fine.

Mr Stein: All right.

Ms Vennells, the situation here is that you covered up the faults in the Horizon system, didn’t you? You papered over the cracks and dragged POL, the Post Office, into financial profitability over the debris that your firm had made of the lives of the subpostmasters; that’s what happened here, isn’t it, Ms Vennells?

Paula Vennells: I said at the very beginning of giving my evidence – there are no words that can express the regret that I feel for what happened to the subpostmasters. I had an objective, it is right, as the Chief Executive of the company, to bring it to – it wasn’t profitability but a commercial sustainability so that it consumed less funding and less subsidy from the Government –

Mr Stein: What the evidence that’s shown us, Ms Vennells, is quite simply this: you didn’t actually care about subpostmasters/mistresses and their employees, did you, Ms Vennells?

Paula Vennells: When I was Chief Executive of the Post Office, and before that as Network Director, I spent many hundreds of days, met hundreds, if not thousands, of subpostmasters and their staff, and I was noted within the organisation for caring about subpostmasters, and one of my huge regrets in this is that I did not do that for the subpostmasters affected in this way and that will be with me.

Mr Stein: At the time of your appointment, Ms Vennells, the Post Office had gone through the Network Reinvention Programme in 2001, 2004. That had been an attempt to ensure the survival of the Post Office from the attack by commercial providers to the core business and, also, to cope with the fact that there was an increasing take-up of digital banking. Now, that was just before the time you joined. Do you remember being told about the Network Reinvention Programme?

Paula Vennells: The Network Reinvention Programme was six years before I joined.

Mr Stein: Yes.

Paula Vennells: I remember the name. That’s all I recall of it.

Mr Stein: Right, so the answer is yes. By 2006, the next Save the Post Office programme is Network Change. Now, that went from 2006 to 2009 or 2010; do you remember that one?

Paula Vennells: I do.

Mr Stein: Right. Now, people that worked in the Post Office may recall the fact that Post Office staff members wore lanyards, the sort of lanyards we have for this Inquiry, which had “Forward 5 to 11” on them; do you remember that?

Paula Vennells: I do.

Mr Stein: That was a way of stating that that programme, the Network Change Programme, was going to be the next attempt to return the Post Office to profit by the year 2011; do you recall that?

Paula Vennells: The Forward 5 to 11 programme was much wider than Network Change. That was one workstream of it.

Mr Stein: Yes, so the answer is, yes, this was the next attempt to try to get the Post Office back into profitability; do you agree?

Paula Vennells: Forward 5 to 11, yes, certainly.

Mr Stein: Right. So by 2010/2011, we then get to the start of the Network Transformation Programme; do you recall that one?

Paula Vennells: I do.

Mr Stein: Now, you should recall that one because, by this point, you had been appointed as Network Director and then later on as the CEO of the Post Office; is that correct?

Paula Vennells: That’s correct.

Mr Stein: Now, the Network Transformation Programme was the Post Office’s attempt to eliminate subpostmasters’ basic pay, in other words cut out a certain amount of expenditure from the balance sheet but increase slightly the percentage from Post Office transactions going to subpostmasters; do you agree that was one of the strategies?

Paula Vennells: That’s not entirely correct. It was far more complex than that.

Mr Stein: I’m not saying that was not complex, I’m saying it was one part of it; do you agree?

Paula Vennells: That misrepresents the offers and the impacts on subpostmasters. There –

Mr Stein: Do you agree, Ms Vennells, that the position –

Sir Wyn Williams: Sorry.

Mr Stein: Yes, sir, sorry.

Sir Wyn Williams: I know it’s extremely tempting and Mr Henry cured himself of it. I don’t want the witness being spoken to when she’s answering and I don’t want the witness answering when you’re asking your question, if you see what I mean.

Mr Stein: Let’s try it again, Ms Vennells. Was one part of the Network Transformation Programme an attempt to reduce the bill to the Post Office by trying to get rid of the basic pay to subpostmasters?

Paula Vennells: That wasn’t at all the way it was – the objectives were set, no. I can explain the programme to you, if you wish, but that was not the objective, to remove the basic pay from subpostmasters. There were three different aspects of the pay that was looked at and some – and subpostmasters, for many years, were able to stay on the original contract, if they so chose.

There were other subpostmasters in areas of protected postcodes where the contract was never changed and, in fact, they were given additional subsidy. There were then two models of Post Office that were put in place: the Main Post Office, which is I think the one you’re referring to, where the larger post offices, which were alongside significant retail businesses and had high footfall, had the opportunity to grow sales, and were paid on a purely – but, again, it was extremely complex – but a commissioned-based payment. The Locals model was a combination.

Mr Stein: Right. We do agree on one thing: Network Transformation was a complex programme to try and get the Post Office back into commercial reality – I’m calling it profitability; do you agree with that?

Paula Vennells: I do. It was one of number of streams, there were – as Alisdair Cameron mentioned in his evidence, there was significant job cuts and and salary freezes for those who worked for Post Office Limited too, the Crown post offices and cash centres were affected.

Mr Stein: Right, we agree on one thing: this the latest attempt to get the Post Office back on the rails.

Paula Vennells: Yes.

Mr Stein: Yes, fine. That’s all I’m trying to establish, Ms Vennells.

That also included a hard won, and no doubt complex, negotiation to ensure that there was a financial package from Government of 1.6 billion.

Paula Vennells: That’s correct.

Mr Stein: Yes. Now, as I understand the papers that relate to this, the total that was going to be achieved by way of an injection of cash into the Post Office was going to include another 400 million, taking it up to £2 billion; is that about right?

Paula Vennells: I don’t recollect the 2 billion figure and the subsidy was divided into two parts: one was an ongoing subsidy to keep the post offices going and the other was an investment to try to make the savings and to invest in, for instance, IT.

Mr Stein: Now, we know that this is ongoing because we can see, if we wish to, that there’s the Post Office transformation documents, the third report of the session of the House of Commons, Business, Innovation and Skills Committee, a committee that you may recall attending. Now, that was in 2012. By the time we get to 2013, the Network Transformation Programme was starting to work, wasn’t it? It was leading to some improvements in the business viability; do you agree?

Paula Vennells: I’m not sure I remember that. My recollection of the Network Transformation Programme was a very difficult meeting with the Minister where we were told that, instead of converting 19 post offices a week, we had to get to 50, and I believe that was around 2013. I think it was another couple of years before the impacts were made.

Mr Stein: Eventually, though, it was successful. By about 2017, the balance sheet was looking better, essentially the Post Office had come into commercial viability; do you accept that?

Paula Vennells: I think that’s probably about right –

Mr Stein: That’s largely how you got your gong, your CBE, by being able to parade the fact that this was your work as a CEO of the Post Office that led the Post Office’s transformation into commercial viability. That’s what you got the gong for, isn’t it?

Paula Vennells: I didn’t put together the testimonial for the CBE, I never saw what it was recommended for. It was for services to the Post Office and for charity. I’m sure that was part of it. But the other part of the turnaround of the Post Office was keeping post offices in communities across the UK – when I joined, and you quite rightly point out the Network Change Programme, we were closing thousands of post offices and that was devastating communities, and one of the significant outcomes of Network Transformation and the whole turnaround programme was that post offices became sustainable and very few closed, and so the UK was better served in that sense.

Mr Stein: Thank you, Ms Vennells, for describing your view on what happened.

So we do know this. 2013, by that point, we have had all of these different programmes in place to try to rescue the Post Office. The latest one, that was the latest attempt, was Network Transformation. So let’s see how we compare that to what actually happened in relation to the Horizon system.

On your account, you had been repeatedly assured that the Horizon system was reliable; do you agree with that?

Paula Vennells: I agree.

Mr Stein: Right. By 2013, you had learned that bugs did exist within the Horizon system; is that correct?

Paula Vennells: That’s correct.

Mr Stein: You’d learned the 14 branch issue bug existed; is that correct?

Paula Vennells: Yes.

Mr Stein: The 62 branch issue bug existed, otherwise known to the Inquiry as mismatch bug?

Paula Vennells: Yes.

Mr Stein: Yes? And you accept in your statement at paragraph 390 – I’m not going to take you to it – that those two bugs were significant, do you agree?

Paula Vennells: Yes.

Mr Stein: Okay. Later on in 2013, the Falkirk bug was learnt by you, in July 2013, paragraph 421 of your statement – again, I’m not going to take you to it; do you agree?

Paula Vennells: I do.

Mr Stein: So by that point, July 2013, you’d learnt, contrary to what you’d been told, that three bugs existed in the Horizon system; is that right?

Paula Vennells: Yes.

Mr Stein: Now, without getting into any detail, you’d also learnt, in the midst of 2013, that the expert used to support prosecution had failed to mention bugs in the system and that thereby disqualified himself in acting in future cases; is that correct?

Paula Vennells: Yes, could you say that again?

Mr Stein: Yes. You had learned by mid-2013, that the expert used to support prosecutions had failed to mention bugs in the system?

Paula Vennells: Yes, I had learned that he had failed to mention those two bugs, I think was my understanding, and, as I said, that when it was explained to me, that the explanation was that he had not identified the impact of those two bugs on the case that it was applicable to.

Mr Stein: And had thereby disqualified himself to act in further cases; you knew that, as well, yes?

Paula Vennells: Yes.

Mr Stein: You knew, as well, in mid-2013, that questions were being asked about remote access to branch accounts; do you agree?

Paula Vennells: Yes, yes.

Mr Stein: You had the Second Sight Report that again came along mid-2013, correct?

Paula Vennells: Yes.

Mr Stein: You had learned something about the fact that Mr Scott, Head of Security, ex-police officer, who was the person with control over whether people should be prosecuted, had been said to have interfered with the proper recordkeeping of meetings, designed as a hub for Horizon related issues; do you agree you’d learned that as well?

Paula Vennells: Yes, yes.

Mr Stein: Right. By this point, you’d had serial complainants from the JFSA about investigations, civil actions and prosecutions; do you agree?

Paula Vennells: Yes.

Mr Stein: You had letters that were gone through by Mr Beer yesterday from subpostmasters coming to your own office, complaining about the way they’d been treated.

Paula Vennells: Yes.

Mr Stein: You had articles in the press, from the Computer Weekly magazine and Private Eye and other press outlets; you had that as well –

Paula Vennells: I did.

Mr Stein: – mid-2013?

Paula Vennells: Yes.

Mr Stein: You also said in evidence this week on Wednesday, in reply to Mr Beer, that, by 2012, you had learned for the first time that the Post Office actually took their own people to court, against what you said was your assumption that those matters were prosecuted by the police.

Paula Vennells: Yes.

Mr Stein: So you’d learned that in 2012; is that right?

Paula Vennells: Yes.

Mr Stein: So if we tie two points together: by 2012, you had learnt about the fact that the Post Office actually prosecuted people, by 2013, you had learnt that the fact was that Post Office actually prosecuted its own people and the expert being used to support those prosecutions was no longer regard as reliable; is that right?

Paula Vennells: Yes.

Mr Stein: You also knew that there was a reputational and potentially financial risk to the Post Office that had to be discussed with the Board, arising from possible attempts to reopen past convictions; you’d learned about that as well, hadn’t you?

Paula Vennells: Yes.

Mr Stein: Do you agree, when considering this entire collection of information, that your world belief in the Horizon system had been shaken to the core?

Paula Vennells: As I have explained over the last couple of days and in my statement, I– if – I’m sure you don’t want to go back through those different points but, as I’ve explained previously, my understanding around the bugs is that they had been fixed, that they affected a small number of post offices, that Mr Jenkins had had to be stood down because of that, and that the Post Office was no longer bringing prosecutions, and that it would look for an expert witness at a future stage.

I was not aware, as I’ve said a number of times now, that the elements around Mr Jenkins had caused the Post Office to breach its duties as a prosecutor, and I accept the other matters that you’ve explained.

Mr Stein: This was an entire collection of Horizon belief shattering facts that were a direct attack upon the very basic system that supported the Post Office; all of these coming one after another – bang, bang, bang – attacking the Horizon system. By the end of 2013, you could have been in no doubt, Ms Vennells, that the Horizon system needed investigation, needed inquiry, needed a deep investigation and review; do you agree, Ms Vennells?

Paula Vennells: Mr Stein, I wish we had done that. I absolutely wish we had done that. I still had confidence in the Horizon system from, as the Inquiry has heard, the fact that it was working for the majority of people. I had not understood, I did not have the detail that I have today and, had I had that, my view would have been very, very different.

Mr Stein: You’ve said today that your style was to – it was not your style to keep in with people, in terms of asking questions. You said to Mr Henry, “I fired questions in a very straightforward way”.

What we don’t see, Ms Vennells, is evidence that you fired questions in any way at all at those people that you would expect to be asking questions of. We don’t see emails saying, “I demand answers, I need them now. What on earth has been going on with this system?” We don’t see those emails, Ms Vennells. Why not?

Paula Vennells: I had conversations, as the Inquiry has seen, with the Chief Executive of Fujitsu. I spoke frequently with the CIO. She and her predecessor were involved whenever issues came up with the Horizon system. When the letters came in from MPs and members of the public raising issues around the Horizon system, the experts were consulted, and the answers were taken from them. Questions were asked all of the time. Whether I asked the right questions, whether I was given the right answers, I think is now a matter for the Inquiry to look at and I –

Mr Stein: So which is it, Ms Vennells? I agree with the Chair, and I apologise if I’ve interrupted you, but which is it, Ms Vennells?

Paula Vennells: I’m sorry, which is –

Mr Stein: Which is it, Ms Vennells? You either didn’t want to look under the rocks because you didn’t dare see what was under there or you didn’t ask the right, deep-rooted questions; which is it, Ms Vennells? Go for one or the other, because it’s got to be one.

Paula Vennells: I believed that I was asking the right questions. I wasn’t an IT expert, I may not have asked the right questions but I never once held back from asking if I was unsure about something. Perhaps, if I didn’t have the technical expertise, I wasn’t asking the correct questions – but I – and I’ve said this a number of times: I trusted individuals with whom I worked. I trusted that the audits that we’ve talked about seem to confirm that the system was working as it should, that there were risks around privileged access, that I accept. But at no point did I have any information that would have pointed me to something I knew nothing about.

Mr Stein: Ms Vennells, you’re not stupid. You studied French, Russian, business, as a degree. You then worked for well-known companies in the UK: Whitbread, Argos, others. You rose through the ranks of the Post Office to become its CEO. You were pushing forward under Network Transformation. You’ve been quoted as saying that you want and you see a future of the Post Office opening up more branches, 30,000 branches in the future.

That was you, Ms Vennells, at the time. A vision you were expressing to everyone that asked about what you could see for the future. Yet, here, all of these facts were adding up there being a real problem, a really difficult problem to chew over, right the way through 2013, and you failed, didn’t you? You failed to get into this, on your account. You failed to ask the right questions. You couldn’t be bothered, could you, Ms Vennells? The risk was too great.

Looking under that rock, you’re going to find a problem: it’s going to devastate the Post Office, ruin it and you couldn’t let that happen, could you, Ms Vennells?

Paula Vennells: I loved the Post Office. I gave it – I –

(Interruption from public gallery)


Paula Vennells: I worked as hard as I possibly could to deliver the best Post Office for the UK. It would have been wonderful to have 30,000 post offices branches. That would have been the best outcome ever, to have that more post offices in more communities.

What I failed to do, and I have made this clear previously, is I did not recognise the – and it’s been discussed within – across the Inquiry – the imbalance of power between the institution and the individual. And I let these people down, I am very aware of that. And we should have had better governance in place. We should have had better data reporting in place that meant we could see what was happening to individual postmasters and to the system. That was not the case.

At no time did I put the Post Office over the cases that were brought forwards. I worked as hard as I could and to the best of my ability, and I am very sorry that I was not able to find out what the Inquiry has found out. I don’t know today how much wasn’t told to me. I do know information that I didn’t get and I don’t know, in some cases, why it didn’t reach me. But my only motivation was for the best for the Post Office, and for the hundreds of postmasters that I met, and I regret deeply that I let these people down.

Mr Stein: Ms Vennells, that’s absolute rubbish, isn’t it. Under your leadership, with your sidekick, Ms van den Bogerd, you took on the GLO litigants in the High Court, fighting tooth and nail, allowing counsel on behalf of the Post Office to cross-examine the litigants on the basis that the losses were their fault due to their incompetence or dishonesty. That’s what happened under your leadership. Ms Vennells, that’s what you allowed to happen under your leadership.

This wasn’t thinking, “Hang on, there might just be a problem with the system, I’d better be careful”. This was tooth and nail, fight for the Post Office, wasn’t it, Ms Vennells?

Paula Vennells: Mr Stein, my ambition was that every case in that scheme was looked at and the Inquiry has heard – and I was disappointed when Angela van den Bogerd gave her evidence that she didn’t talk more about that because one of the consistent pieces of feedback we had on the investigations in these cases is – and the Inquiry heard it from Patrick Bourke as well – is that they were looked at in every detail. They were re-examined. The system was apparently considered.

I don’t know why it was the case that the issues that were there were not found in those cases. But that was the ambition at the time.

Mr Stein: Well, let’s have a look at what you said to Mr Beer in your evidence on the first day, when you said that you feel that there was a lack of governance and that you were too trusting.

As we have already discussed, your statement says that you were first aware of the bugs, suspense and mismatch, in 2013 but you also explain in your statement, and you refer to a speaking note – and sir, for your notes it is paragraphs 363, 364 – that you knew that those bugs were from the period 2010 to 2012; do you accept that?

Paula Vennells: Yes, I think so.

Mr Stein: Right. Well, I’ll take you to the relevant paragraph.

Paula Vennells: I’ll take your word for it, it’s fine.

Mr Stein: Plain and simply there, you’re told in a speaking note that these are old bugs, okay, or old bugs in terms of going back before 2013. You say in your statement you’d never been told about bugs, errors or defects in the system, and you say in your evidence that what you’d been told about the Horizon system’s robustness was wrong; that’s what you’re saying, do you agree?

Paula Vennells: Yes.

Mr Stein: Okay. Now, help us understand, from your work within the Post Office, why was it that the knowledge of the mismatch bug and the way it was dealt with was known to key Post Office figures, yet that information had not been supplied to either Ms van den Bogerd or yourself until 2013? How’d it happen, Ms Vennells?

Paula Vennells: I understand there were managers in the meeting looking at the bug, they took a decision on the best approach to it and it stayed within –

Mr Stein: No. No. No, no, Ms Vennells. That’s not the question, is it? How come you weren’t told about this until 2013, instead of being told, “No problem with the system, Ms Vennells, it’s robust. No bugs in the system”. How come you hadn’t been told until 2013 that that actually was a lie? It’s not true, there were bugs in the system. You did ask that question, didn’t you? Are you saying that you didn’t ask that question?

Mr Beer: Sir, you’re on mute.

Sir Wyn Williams: I simply intervene to say that you asked her a question but then asked her a second question before she had answered the first question.

Mr Stein: All right, I’ll recap.

Ms Vennells, 2013, you’re told that there’s bugs in the system. Previous to that, you’d been told no bugs in the system.

Paula Vennells: Yes.

Mr Stein: Simple as that.

Paula Vennells: Yes.

Mr Stein: Help us understand, you did ask the question, didn’t you, Ms Vennells, “Why haven’t I been told this before”?

Paula Vennells: I asked the question – so I cannot remember today what I – what question I asked but I’m sure you’re right that I would have asked that question, and I imagine the answer that came back was, “This is a bug that happened in 2010, it was fixed”. At the time the bug happened, I don’t know where my responsibilities lay. One imagines that the issues around the IT were raised to the IT Director.

My – what I did when I was told about the bug was to accept, too readily, probably – that it had been fixed and the right thing had been done.

Mr Stein: I’m going to take you to your statement. These are two paragraphs. I have asked if possible that they be lined upside by side on our screen, and these are examples, I’m very grateful. These two paragraphs, paragraph 129 and paragraph 388, they say roughly the same thing – and there are other paragraphs, I’ll deal with those in a moment.

Paragraph 129:

“I did not know about any of these BEDs because no one told me about them. As I have mentioned, it was the responsibility of Mike Young, Operations Director at this time. As Network Director and a member of the Executive Team, it is difficult to see how I would have come to know about a BED unless it was communicated to me by the IT function.”

Paragraph 388:

“I do not think I ever turned my mind to whether there were any bugs in Horizon (which could include entirely harmless glitches). My understanding until May 2013 was that no bugs had been found in Horizon which could affect branch accounts. I believed that because it was what I had been told by a series of senior IT managers over many years.”

Now, by July 2013, you had learned of two bugs. You had then learned –

Paula Vennells: Yes.

Mr Stein: – about a third bug, the Falkirk bug. So what you’d been told by the series of IT managers over the many years of your employment at the Post Office was not true. Now, in the simplest of possible terms, you must have decided, “Well, I need to find out why have I not been told about these bugs?” Did you do that, Ms Vennells?

Paula Vennells: I’m not sure that I understand – sorry, ask the question again, please.

Mr Stein: Yes. By 2013, you’d learned of two bugs, and –

Paula Vennells: Yes.

Mr Stein: – then a third, the Falkirk bug –

Paula Vennells: Yes.

Mr Stein: – being the third one, yes?

Paula Vennells: Yes.

Mr Stein: We can see on the screen that you’re saying in your statement that you’ve been told repeatedly by IT staff members that there were no bugs in the system. So my question is the simple one: you must have asked “Why have I not been told about these bugs before? What’s going on?”, did you?

Paula Vennells: I was – when I learned about them in 2013, my priority was to understand – was to the post offices, to understand that no post offices had suffered any detriment as a result of those bugs. I worked personally on the local suspense bug to make sure that all of the issues related to that were seen through and I accepted, in terms of the payments and mismatch bug, and later the Falkirk bug, the explanations that I was given, that the bugs had been raised, they had been dealt with, and I accepted those explanations that were given.

Mr Stein: Did you ask the question?

Paula Vennells: Mr Stein, I cannot –

Mr Stein: Why didn’t you –

Paula Vennells: I cannot remember if I asked that question or not.

Mr Stein: Well, the only way to understand your evidence is, if you’re saying you care about subpostmasters, if you say that you cared deeply about the system, a sensible, intelligent CEO would say, “What’s been going on? Why did not get told that there were bugs in the system, that they existed and that they were the mismatch bug, suspense bug, Callendar Square, all of that”?

Paula Vennells: In terms of the bug that arose when I was CEO, the local suspense bug, as I said yesterday, I had a conversation with Alwen Lyons where I said I want to take leadership on this and I want to demonstrate that we will handle these things properly. However, the two previous bugs had been handled was not something for me to deal with. I was reassured that they had been sorted out as they needed to be and I was now working on the one that was still extant, the local suspense bug, and that was what I was doing.

Mr Stein: You’ve said –

Paula Vennells: One of them went back to 2006, and I accepted the explanation that that had applied to the Legacy Horizon system, that it had been fixed, and I don’t – the trouble is I don’t know if I remember now from the documentation I’ve read in preparation for the Inquiry, or whether I can remember it from then, but that that hadn’t had impact on the cases. I think Mr Castleton’s case was mentioned in respect of that.

And the payments and mismatch bug, I accepted that the work had been done on that and I was concentrating on what needed to happen to the current one and, as I’ve also said, that these bugs had no impact on the cases which we were concentrating on or about to move into the Complaints and Mediation Scheme. That is what I remember doing.

Mr Stein: You’ve said repeatedly that you’ve been too trusting, that you accepted what people told you. One of the things that you say that you were told was that there were no bugs in the system. So let’s turn to the other side of this: who do you blame; who did you trust too much? Name them, please.

Paula Vennells: I’ve mentioned the names previously I –

Mr Stein: No, tell us again. Who do you think you shouldn’t have trusted because they let you down? Give us the names, please?

Paula Vennells: I will do that but I’d also like to say that, at the time, I trusted the people who gave me the information, so on the IT side, Lesley Sewell and Mike Young, and there were two other IT directors but, at the times we were talking about it was Mike Young and Lesley Sewell, and, on the legal side, the General Counsels, Susan Crichton and Chris Aujard and, later, Jane MacLeod, and those people I had worked with on numbers of other, very seriously important projects. They had never let me down, and I – I’m not sure at what stage you start to not trust individuals with whom you have previously.

And I think one of the big mistakes, which I mentioned on day 1 here, is that we did not have sufficient oversight, particularly around two very technical functions, because there is a risk, if you rely on, as I did and my Board colleagues did and my Group Executive colleagues – so this isn’t just me – we relied on one or two key individuals, and that puts a burden on those individuals, and an organisation shouldn’t do that.

We should have had better scrutiny around the Board table, in terms of IT and Legal, and I thought that I had – particularly on Legal, I thought I had the scrutiny from the external legal advisers we were using, and what I’ve heard through recent evidence to the Inquiry may suggest that that wasn’t perhaps as good as it should have been.

Mr Stein: Let’s stay with bugs, errors and defects. You mentioned Mike Young.

Paula Vennells: Yes.

Mr Stein: Now, Mike Young is referred to in your statement as someone that had told you that there was no difficulty with the system, there are no bugs in the system. By mid-2013, you knew that not to be true. He was someone that hadn’t told you the truth; do you agree?

Paula Vennells: I don’t know – in terms of the question put in that very black and white way, yes. I don’t know what Mike Young did or didn’t know. I can only go on what he told me at the time.

Sir Wyn Williams: As of July or the summer of 2013, was Mr Young still working at the Post Office?

Paula Vennells: Thank you, Sir Wyn, I was going to mention that. I think he had left by then.

Sir Wyn Williams: Have you had any contact with him since, at all?

Paula Vennells: No, in terms of complete transparency, I think once – he was an officer in the Para Regiment, and I contacted once on 11 November.

Sir Wyn Williams: Have you had any recent contact with him?

Paula Vennells: No, I don’t know what he’s doing now.

Sir Wyn Williams: Thank you. I don’t want to elliptical about this, Mr Stein, it’s just that the Inquiry to date has been unable to trace Mr Young and so I was seeing if Ms Vennells could help us.

The Witness: No, I’m sorry.

Mr Stein: I understand that, sir –

The Witness: I had wondered why he hadn’t been here.

Mr Stein: Let’s turn to another matter, the contract with subpostmasters.

Now, you know, because you have read the judgments from Mr Justice Fraser, now Lord Justice Fraser, in the High Court. You know that the contract was discussed in detail in the judgments that he gave, yes?

Paula Vennells: Yes.

Mr Stein: You know that the original contract stated that the subpostmaster is responsible for “all losses caused through his or her own negligence, carelessness or error”; that’s what it said originally, yes?

Paula Vennells: Yes.

Mr Stein: Okay. But you’re also aware, no doubt from your own work in the Post Office and the evidence we have heard from – this is an example – Ms Harding, an accountant who was called in relation to the IMPACT Programme and a Post Office employee, that the interpretation that had been placed upon that contractual terms was that they, the subpostmasters, were liable, contractually, for any shortfalls which had to be made good; you were aware of that?

Paula Vennells: I don’t remember that but I’m happy to accept it, yes.

Mr Stein: Well, Mr Cameron gave evidence about that. He explained that, traditionally, it had been because it was because the Post Office didn’t have visibility on what was going on within a Post Office branch, okay?

Paula Vennells: (The witness nodded)

Mr Stein: So we get the Horizon system that comes in and we know that shortfalls are being identified and that subpostmasters and mistresses are being told to pay up thousands and tens of thousands of pounds from their own money; you’re aware of all of that?

Paula Vennells: I am, yes.

Mr Stein: Okay.

When, before the High Court judgments, do you become aware that the Post Office treated subpostmasters and mistresses as liable for all and any shortfalls?

Paula Vennells: Is that the change from – to the Network Transformation contract?

Mr Stein: I’ll move on to Network Transformation in a moment and what happened to the contract.

So my question is: before the High Court judgment, when did you become aware that the situation within the Post Office was that subpostmasters were being told to pay up for shortfalls?

Paula Vennells: I believed that was the way the contract was in place from when I joined as Network Director.

Mr Stein: Right, okay, all right. So you accepted, is this correct, that there are was effectively automatic liability for a subpostmaster for an apparent shortfall identified on the Horizon system of, for example, £20,000? That’s what you believed was the situation, and you thought it was fair; is that right, Ms Vennells?

Paula Vennells: I understood – I’m not – I’m not entirely sure what you’re asking. I understood the contract that was in place and I relied on the expertise of those dealing with it – dealing with investigations, to come to whatever the correct interpretation was. I never personally had any close involvement with the contract or how that was interpreted or how postmasters were held accountable for it.

Mr Stein: You turn to this all the time, don’t you, Ms Vennells? You always keep a distance between any knowledge you’ve got and application of that knowledge, and you say there were all these other people around, this entire group of people within POL, they keep an eye on this, that’s their thing. It’s their fault for not bringing stuff to you, it’s their fault for not telling you the truth. That’s what you do repeatedly, Ms Vennells, isn’t it?

My question is a simple one –

Paula Vennells: Mr Stein –

Mr Stein: – you were aware that subpostmasters had to pay up when there was an alleged shortfall on the Horizon system, as an example, for £20,000, sums like that? You were aware of that, weren’t you, Ms Vennells?

Paula Vennells: Mr Stein, I was the Chief Executive and I was tying to run an organisation of 60,000 –

Mr Stein: Answer my question.

Paula Vennells: I will come to your question but you made a statement about why I didn’t know things. At the level I was working at, I did not have sight of those sorts of decisions and nor would I – nor could it have ever happened. I was running an organisation, 60,000 people. You have to have various layers of management to do that. I regret deeply that some of that information didn’t reach me and I accept what you say that the Post Office interpreted the contract and held people accountable, as you’ve just suggested.

Mr Stein: When did it come to your attention that people were being asked to pay up for very large sums of money that were identified as so-called shortfalls: when, Ms Vennells?

Paula Vennells: (Pause)

I imagine, when we were starting to – or when the team working on the Complaint and Mediation Scheme were looking at the detail of some of those cases. And I knew about Mrs Misra’s case, which was a huge amount of money. I can’t remember other examples but I’m sure there were some.

Mr Stein: Right. So we’ve identified that this came to your attention in the way that I’ve described. This, again, is around 2013; is that fair?

Paula Vennells: Yes, I would think so.

Mr Stein: Okay. Right. Now, what enquiry did you make, having this been brought to your attention, that the Horizon system blames all shortfalls upon subpostmasters for large sums of money? What did you do about that? What enquiry did you make about it, Ms Vennells?

Paula Vennells: I set up the Complaint and Mediation Scheme to look into every single one of those enquiries.

Mr Stein: You see a reasonable, caring CEO would have said, “I want answers. I want to know what’s going on. I want to find out about what’s happening to these people, the subpostmasters, who are the lifeblood of the system and I want to know that answer with me now”, not set up some distant review. Ms Vennells, you didn’t do that, did you?

Paula Vennells: I think you will find cases where I asked those sorts of questions but, where we were dealing with historic cases, they needed to go through a proper review process. You can’t, just as a Chief Executive, ask somebody for their opinion on something; you have to go into it in a huge amount of detail, which is what I understood was happening, and I regret that we did not deal with those cases as we should have done.

Mr Stein: Now, we’ve mentioned the Network Transformation Programme and we’re going to just have a brief look at the 2013 version of the contract, which is at POL00003872. Can we go, please, to page 12.

Sir Wyn Williams: What were the last three numbers, again, Mr Stein?

Mr Stein: The last three numbers – well, four numbers are 3872.

Sir Wyn Williams: 3872.

Mr Stein: POL00003872.

Sir Wyn Williams: Thanks very much.

Mr Stein: If we can scroll down slightly, we’ll see paragraph 4.1 – and if you can just highlight the 4.1, I’d be, very grateful. Right.

So we’ve discussed what the original contract said, the original contract, which said that the subpostmaster is responsible for all losses caused through his own negligence, carelessness or error, okay?

So Network Transformation Programme coming in, in relation to the new contract being put in place, we think the new contract, by 2013, and this contractual term that we’re about to look at is repeated in 2014, okay?

So it says this –

Paula Vennells: I’m sorry, could you just say the last point about again about the relevance of the two dates?

Mr Stein: Right, 2013 is the version of the Network Transformation contract, the new one that came in at that time –

Paula Vennells: Thank you.

Mr Stein: – and this is repeated in the 2014 version of it. So 2013, 2014, we’ve now got this contractual term, paragraph 4.1:

“The Operator shall be fully liable for any loss of or damage to, any Post Office Cash and Stock (however this occurs, and whether it occurs as a result of any negligence by the Operator, its Personnel or otherwise, or as a result of any breach of the Agreement by the Operator) except for losses arising from the criminal act of a third party (other than Personnel) which the Operator could not have prevented or mitigated by following Post Office Limited’s security procedures or by taking reasonable care.”


So chopping out the legalese, basically, this time it says “You pay up”, fully liable for any loss or damage, no caveat at all, nothing being said this time about subpostmasters being responsible for all losses caused through his own negligence or carelessness. This time it’s straight “pay up”; do you accept that?

Paula Vennells: Yes.

Mr Stein: Okay. So, again, by 2013, what you’ve known about and we’ve gone through, the collection of problems in the Horizon system, which tell you that there are bugs in the system, tell you that there’s a problem with the expert that was called in cases in relation to the system. What the Post Office does, in the teeth of all of that evidence and those issues, is it actually tightens the contractual screw, doesn’t it, on subpostmasters? That’s what the Post Office was about, even in the face of what must have been doubts about the system, the Post Office decides “Let’s make damn sure that the subpostmasters and mistresses pay up”.

You knew about that, didn’t you, Ms Vennells?

Paula Vennells: I was aware that the Network Transformation – so when we went into Network Transformation, the contract that had been in place for many, many years had had numerous iterations to it and the organisation took the opportunity – this was led by the then Network Director Kevin Gilliland and the Legal Team, and they took the opportunity to, as I understood it, simplify the contract and put something in place that would be more manageable for subpostmasters.

When the Network Transformation – sorry, for manageable in terms of what they had had previously was a contract with many, many, addendums added to it – addenda added to it. This was an opportunity to restate the contract. The contract was signed by, I think, 4,000 new subpostmasters. Because of the issues that had been raised by Second Sight, we made sure that they had copies of the contract and that they had legal advisors to assist them as they went through it.

As far as I am aware, we had no feedback whatsoever about – well, to be fair, the new people coming in wouldn’t have known this was a change but there were also existing subpostmasters who signed for the new contract. I understand the point you’re making about this tightening it up. I didn’t know that at the time. But it was accepted by the new and the existing subpostmasters who had changed to this contract, with legal advice. But I completely understand the point you’re making. I don’t –

Mr Stein: It’s under your leadership, Ms Vennells. It’s under your leadership. You were meant to be setting a tone, a tone that should have gone through this organisation, a tone of caring, you’ve explained. No one could have cared more for subpostmasters and, under your leadership and your tone, they tightened the contractual screw. That’s right, isn’t it, Ms Vennells?

Paula Vennells: The contract was – this clause was changed. I was not involved in that conversation at all, and it was never presented to me in the way you have. I completely accept that, with the issues that there were with the Horizon system and the things that we have since understood, that this absolutely, where things went wrong for postmasters, was a more difficult contract than the one that had been there previously. Although, as you said before, I believe the interpretation of the previous one was more along the lines of what this amendment said.

Mr Stein: I will take you to another document, it’s FUJ00002037.

Sir Wyn Williams: While that’s coming up – and sorry to take a minute of your time, Mr Stein – but you said that this contract was the contract which newcomers to the Post Office, as subpostmasters, would conclude but you also said that existing postmasters, so already contractually bound, signed this contract. Now, the question I want to ask is: was that optional? Were they, in effect, cajoled into signing it or what, what happened? The existing postmasters –

Paula Vennells: Yes, I understand Sir Wyn. It was optional, and those – so this –

(Interruption from public gallery)

Mr Beer: No, people should not shout out from the public gallery, otherwise they will be removed. The witness should give her evidence without interruption.

Sir Wyn Williams: Thank you, Mr Beer.

Paula Vennells: Thank you. I tried to explain earlier, this was quite a complex programme, Network Transformation. There were a number of different options for subpostmasters. Some chose to stay on the existing contract. Some, in a sense, had no option other than to stay on the existing contract because they were within what we’ll call protected areas. Some chose to leave the organisation and they took with them compensation, which was funded – had been negotiated by the NFSP and was funded by the Government from this investment subsidy, and others chose to take an investment, which the Post Office made with them – for them and with them, to convert their existing post offices to what was called a Mains or a Locals post office, and that was when they changed to the Mains contract.

So I don’t know, Sir Wyn, the number of post offices in the new Mains contract which were existing or new postmasters but there was a mix of the two.

Sir Wyn Williams: That’s fine. I just wanted to get a flavour of what occurred.

Paula Vennells: Thank you.

Sir Wyn Williams: You can add two minutes to your time, Mr Stein.

Mr Stein: Thank you, sir. I will try and use them wisely. FUJ00002037.

Paula Vennells: I should have been brief briefer. Thank you.

Mr Stein: This document is an “Application Support Service (Fourth Line): Service Description”. Now, that rather entertaining title is a document that’s dated 24 August 2006, so this pre-dates your employment, okay?

Paula Vennells: Right.

Mr Stein: If we go to the bottom of the first page, please. You’ll see that this document has got –

Paula Vennells: I’m sorry, Mr Stein, what was this document? Could you just tell me the title again, please.

Mr Stein: Yes, go to the top again, please. Right. What this application is “Application Support Service (Fourth Line): Service Description”, okay?

Paula Vennells: All right, thank you.

Mr Stein: Just to make sure, it says “Fujitsu Services” at the top left-hand corner. Just to make sure this is also known to the Post Office, we’ll also go to the bottom of the first page. Thank you. You’ll see there approval authorities, name Dave Hulbert, Post Office Head of Systems Operations and Richard Brunskill, Fujitsu Services, okay?

Paula Vennells: Yes.

Mr Stein: So it’s a joint document, Fujitsu and Post Office, 2006. All right? Now, I’m going to go to page 9, paragraph 2.7.1 at the bottom of the page. Okay. Now, you’ve been asked a number of questions by Mr Beer which was that the Inquiry has been able to find out documents that demonstrate that there were issues within the system and the Inquiry has been able to ask the right questions and receive documents describing the issues within the system, okay?

Now, all you needed to do was ask, “What do we do about these bugs?” Look at the bottom of the page. 2.7.1:

“Third Line Support Service:

“The Third Line Support Service works closely with the Applications Support Service (Fourth Line) to provide bug fixes to enable the resolution of Software Incidents.”

2006, Ms Vennells. An entire system that is devoted, four lines of support that are operated by the Fujitsu system, paid for by POL, trying to get to resolve bug issues, and you didn’t ask the question, “How do we fix these things? What’s the system?”, or did you?

Paula Vennells: I asked the question in relation to – as I mentioned earlier, my answer is the same. I asked the question on the local suspense bug because it was still in place and I accepted what was explained to me, which is that these were – I don’t think we even had a conversation about the Callendar Square bug because it was so long ago. The one in 2010, I was told that all the work had been done and it had been fixed.

I completely understand the point you’re making: that there must have been u people in the Post Office who knew that this – one of the questions I have asked is that there must have been IT Managers, whether as senior as Dave Hulbert, I don’t know, but who knew that this was happening. I heard Mr Cipione’s evidence where I heard that there was fix upon fix and documentation wasn’t in place. I don’t understand why the Post Office – or who in the Post Office knew this. I don’t believe any Chief Executive, let alone Network Director in a different stream, would understand about the third or fourth line support of an IT system. But I’m very disappointed that I didn’t and that somehow that information wasn’t explained in some way.

Mr Stein: You’re doing it again, Ms Vennells, aren’t you? It wasn’t explained. You’re doing it again, aren’t you? You’re saying that other people might – it might have been quite nice if they’d explained this to me. You do that as a way of avoiding the problem, which is that, at best, you didn’t ask the question; at worst, you knew that the answer would not help the Post Office.

It’s what you do, isn’t it, Ms Vennells? You distance yourself, time and time again, and you blame these mysterious “other people” for not telling you the truth.

Paula Vennells: Mr Stein the Inquiry has seen the number of questions I asked. If I asked questions of senior people in IT or Legal around issues that I don’t understand or issues I don’t know about, if I don’t know there is a third line support service providing bug fixes from 2006, I can’t ask the question about it.

Mr Stein: I’m going to turn briefly to whistleblowing policies and how that was dealt with by the Post Office in 2018. Document POL00030969. This is “Group Policies, Whistleblowing Policy”, POL document, as I’ve described. It’s a Post Office document and the date of this, I hope you’ll take it from me, is 2018, so it’s within the period of time when by you’re still at the Post Office, okay?

Paula Vennells: Yes.

Mr Stein: All right. Can we go, please, to page 3 of 15, and paragraph 1.4, bottom of the page. Now, Ms Vennells, you know the importance to a business of whistleblowing policies, don’t you?

Paula Vennells: Yes, I do.

Mr Stein: It’s important for the culture to have an open and honest discussion between staff members, leadership, and with one another, to have a strong whistleblowing policy; do you agree?

Paula Vennells: I do.

Mr Stein: Right. It’s important that people are able to find someone within an organisation that they can speak to properly and without fear, so that they can bring matters to the attention of the leadership; do you agree?

Paula Vennells: Yes.

Mr Stein: Right. So, again, let’s have a think about how that’s applied to the subpostmasters. In 2018, there’s something like 11,000 branches still open, okay? All right.

1.4, “Application”:

“This policy is applicable to all employees within the Group and outlines the protections provided for whistleblowers by law. In order to encourage reporting of wrongdoing, Post Office will, where appropriate, extend equivalent protection to postmasters, agent assistants and members of the public.”

To your knowledge, first of all, was even this tentative extension of the whistleblowing policy in 2018 the first time that it had been extended to subpostmasters?

Paula Vennells: I don’t recall, I’m afraid.

Mr Stein: Why does this policy at 1.4 extend only that protection, where appropriate, to subpostmasters, rather than saying, “Of course, we care about subpostmasters. They need to have someone that they can speak to. It’s an important part of the culture that they’re able to identify issues and problems within the system”; why doesn’t it just simply say that?

Paula Vennells: I don’t know. It’s a good question. I’ve no idea why those words were necessary.

Mr Stein: Lastly, let’s turned to what happened at the High Court again. You’re aware, aren’t you, that the High Court judge, Mr Justice Fraser, stated in his Horizon Issues judgment in December 2019 that he’d gained the distinct impression that the Post Office is less committed to the speedy resolution of the entire Group Litigation than are the claimants. Mr Justice Fraser then went on to refer to the extreme nature of costs, which were, even by the experience of a High Court judge, very high, even by the standards of commercial litigation.

Do you remember him saying that?

Paula Vennells: I think I may have left the organisation by then but I will have read it in the judgment.

Mr Stein: Yes. You see, he wasn’t to know that there had been a discussion about the approach to the litigation in September 2017, POL document POL00006380. Thank you. Paragraph 4 of the document, bottom half of page 2. If we can go to paragraph 4.3, actually. Thank you. Right.

So this is a Bond Dickinson strategy advice document being considered by the Post Office under your leadership as CEO. What it says there is:

“We believe the better solution is to try to focus the Claimants in a collective position where they will either abandon the claims or seek a reasonable settlement. It should be remembered that the claims are financially supported by Freeths (whose fees are at least partially conditional on winning), a third party funder and insurers. Without this support these proceedings would not have been possible. All three entities will likely have the power to pull their support if the merits of the case drop below a certain level. Our target audience is therefore Freeths, the funder and insurers, who will adopt a cold, logical assessment of whether they will get a payout, rather than the Claimants who may wish to fight on principle regardless of merits.”

2017, the Post Office set about its strategy of fighting tooth and claw for its own reputational interests over those claimants at the High Court, and adopted this strategy, as the High Court judge identified. That happened under your leadership, Ms Vennells: all of this did. You set the tone, didn’t you, Ms Vennells, and the tone was “Let’s eliminate them. Let’s get rid of these bugs in the system, the subpostmasters”. That’s what you set in place, wasn’t it, Ms Vennells?

Paula Vennells: Is that a question, because I’d like to answer it, if it was.

Mr Stein: Yes, the “wasn’t it, Ms Vennells” was the question, I think you may have noticed.

Paula Vennells: I did not set a culture like that. I did not lead the litigation. I remember reading this – well, actually, I don’t know if I saw this particular document because I was not personally involved in the litigation steering committee. There was a Board subcommittee of which I was one member. I had two conversations with Jane MacLeod, and I’m disappointed – I don’t know the reason and I’m making no other point then – I’m disappointed that she can’t come and give evidence to the Inquiry because I think it is important that the Inquiry understand more around the approach to the Group Litigation.

But I had two conversations with Jane that I remember clearly. They weren’t documented because a lot of the – the way that you work as a Chief Executive is you have conversations as you’re going between meetings and things but, specifically, I sat down with Jane twice on this to say that I was very uncomfortable that the Post Office was going through this. The Post Office didn’t call the Group Litigation. It was set in place by the postmasters – and I understand why and I’m very pleased that it was, so that we’ve got to where we are today – but it wasn’t a policy that I put in place, and the questions I asked of Jane on those two occasions were, “This feels completely wrong to me, what can we do? We should not be in the process where we are fighting in court with subpostmasters”.

And her first response, when I asked her the first time was that – I think it was that we hadn’t got enough information at this stage but it was very likely that we would try to settle. And the second time that I asked her, her view was – and the view of the leading counsel that we took – that, actually, the only way to solve this was to take it through.

So I regret hugely the Group Litigation and I’ve seen all of the paperwork behind it and, in view of the judgments that were taken and where we are today, it is unacceptable reading.

Sir Wyn Williams: Thank you, Mr Stein.

Mr Stein: No further questions, sir.

Sir Wyn Williams: That’s good. Right, fine.

So it’s now 12.18, by my clock. So we’ll start again at 12.35, and then we have a half-hour session, which, as I’ve said, encompasses questions on behalf of the NFSP and Ms Sinclair. Thank you.

Mr Stein: Thank you, sir.

(12.18 pm)

(A short break)

(12.37 am)

Mr Beer: Sir, good afternoon. Can you see and hear us?

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

Mr Beer: So we have Ms Watt on behalf of the NFSP and then Ms Christie Allen on behalf of Susan Sinclair.

Sir Wyn Williams: Ms Watt, would you be kind enough to arrange your questioning so you’re finished around about 12.55, please.

Ms Watt: Sir, around about?

Sir Wyn Williams: 12.55.

Ms Watt: Yes, thank you, I will.

Questioned by Ms Watt

Ms Watt: Ms Vennells, I appear for the NFSP. Just by way of explanation, the NFSP of today is a Core Participant at this Inquiry, has provided hundreds of documents to the Inquiry, to help understand what was being said and done during the Horizon scandal.

Yesterday you were shown what the NFSP today finds and likely many others found a shocking and deplorable email, sent by the former General Secretary at the time, George Thomson. Now, Mr Thomson will have to come to this Inquiry in a few weeks time and answer for the things he said and did but there were a couple of points in Mr Beer’s questions of yesterday which I wanted to ask you about first.

Paula Vennells: Of course.

Ms Watt: You were asked by Mr Beer who paid the NFSP’s bills; do you remember that?

Paula Vennells: Yes.

Ms Watt: You couldn’t quite recall the situation at the time of the email, which was December 2012.

Paula Vennells: Right.

Ms Watt: So, just thinking about that a bit more to see if you can help, I think you would have been aware that the NFSP was a trade union until 2014?

Paula Vennells: Thank you. I knew that it had changed status at some stage.

Ms Watt: You may have been aware the trade union status was removed by the certification officer because its members were actually self-employed, rather than employees; were you aware of that?

Paula Vennells: I don’t think so, no.

Ms Watt: I think you would have been aware that the grant funding agreement, which you and Mr Thomson were both involved in bringing about, was signed in 2016; do you recall that?

Paula Vennells: Thank you.

Ms Watt: I think you would have been aware that came after a membership vote of the NFSP members at its annual conference, when members were offered the options of a merger with the National Federation of Retail Newsagents, a merger with the CWU, or the grant funding agreement, and they voted for the grant funding agreement; do you remember that?

Paula Vennells: I don’t remember that, no, but I’ll take your word for it.

Ms Watt: Okay. In the email we saw yesterday, Mr Thomson made reference to Horizon being “robust”, and I particularly want to look at that word. Now, that’s a word this Inquiry has seen, I have to say, peddled by everyone who has arrived from the Post Office to give evidence: Horizon is robust. It was not just a line; it was a mantra and it was repeated again and again over years and years, until it became the corporate truth, and that was in a business run and overseen by you.

The NFSP, along with everyone else, were fed that line for years too and, actually, what we saw was Mr Thomson repeating that Post Office line – Post Office lie – back to you, wasn’t it?

Paula Vennells: I think, as I explained yesterday, I and many colleagues in the Post Office took comfort from the fact that senior officials in the NFSP were saying that kind of thing. We’ve seen many examples of where words are picked up across time. I don’t know where “robust” came from originally. It was certainly, you’re quite right, used very regularly within the Post Office and we saw an example yesterday by the NFSP.

But as I said yesterday, from the Post Office’s point of view, we took it as very genuine, useful experience that the NFSP, made up, as you know, of people who ran post offices on a daily basis, found the system to be robust. And I don’t know how well you know Mr Thomson or not, but he wasn’t somebody who minced his words and, if he thought that was not the case, I don’t imagine for one moment that he would have said that.

Ms Watt: But you would accept that the word “robust” has its origins in the Post Office?

Paula Vennells: I don’t know. I imagine so but I really don’t know.

Ms Watt: Just moving on, you were a Network Director and a member of the senior management team, then CEO of the Post Office during the period of the Horizon prosecutions and, wrapping up everything that’s been heard here over the last few days, I’m going to make some suggestions to you, and you can agree with me or not at the end of each one. I will ask it as a question or put it to you, and you can tell me whether you agree or not or accept it or not.

Paula Vennells: Thank you.

Ms Watt: That you took decisions not to look into things further to avoid finding out how bad things were?

Paula Vennells: I did not.

Ms Watt: That you presided over a culture where issues did not come before the Board if you did not want them to?

Paula Vennells: Absolutely not.

Ms Watt: That you presided over a culture which meant that everyone below and reporting to you across all areas of the business thought about Post Office reputation first before everything else?

Paula Vennells: No.

Ms Watt: That you presided over a culture which saw subpostmasters as subordinate to all of the business’s interests, despite their actual partnership with the Post Office, their financial stake in the business, a stake which provided profits to the Post Office?

Paula Vennells: No, and, personally, absolutely not.

Ms Watt: That you presided over a culture which had, as its priority, a requirement to ensure that the message “Nothing is wrong, everything is fine, Horizon is robust”, and that led to MPs, Government ministers, the media, the NFSP, the CWU, the courts, many others, being told for years and years that Horizon was robust when that wasn’t true?

Paula Vennells: I’m sorry, that – can you shorten the question?

Ms Watt: You presided over a culture that allowed that to happen?

Paula Vennells: I’m sorry the statement was too long for me to recall. I’m really sorry, would you mind?

Ms Watt: I’ll shorten it.

Paula Vennells: Split it into two sentences, if you can.

Ms Watt: Yes. That you presided over a culture which had as it’s priority a requirement to ensure that the message was “Nothing is wrong, everything is fine, Horizon is robust”, everyone was told that?

Paula Vennells: That’s not the case. I am sorry, but there is a qualification to that, that, clearly, for the people affected by this, that was absolutely the case. But that was not a culture.

Ms Watt: That you presided over a culture in which to maintain that aura of “nothing is wrong and everything is fine”, you needed to surround yourself with a variety of suitable people, handy defensive people who would make sure no dirty laundry landed on the Post Office’s doorstep, such as Angela van den Bogerd, and disposable professionals such as Susan Crichton, who could be blamed for anything that was going wrong; do you accept you presided over that culture?

Paula Vennells: No, absolutely not.

Ms Watt: Looking at your witness statement – I’m not going to call it up, just for speed – but at paragraphs 14 to 18 you outline the roles you held at the time – and I’ve mentioned that – but across a period from 2007 to 2019, you had those various roles, and we’ve heard evidence throughout the Inquiry that the culture within the investigation and audit branches was aggressive, that subpostmasters were guilty rather than innocent from the outset, terminology and investigations used offender reports. Do you accept that was a culture inbuilt across all levels of management which you oversaw?

Paula Vennells: No, and I think it’s important I add a clarification to that as well. The – when I became Chief Executive, we fairly soon afterwards stopped prosecutions, and the size of that team and the approach of that team was discussed and it was changed substantially. Most of those allegations that you have heard – and I’m not at all challenging them in terms of the way they came across from people who made them – were from earlier.

Ms Watt: I want to look at the franchising of Crown post offices when you were Network Director. You talk about that at paragraph 25 of your statement, just for reference.

Paula Vennells: Right.

Ms Watt: So, whereas the NFSP had a subpostmaster membership, the Crown Offices had a trade union membership. So you would have dealt with unions such as the CWU when overseeing the franchising of Crown post offices; is that correct?

Paula Vennells: Yes, that’s correct.

Ms Watt: It would have been important to you to have had union buy-in for the continuation of Horizon?

Paula Vennells: I’m sorry, I’m not sure I understand the question or the sequence.

Ms Watt: As part of the overall work that you did with the unions and the franchising, it would have been important for the unions to remain bought into Horizon as the system?

Paula Vennells: It was very difficult to get the unions to buy into anything. I don’t recall any conversations with either the CWU – or the CMA would have been the other one – about them buying into Horizon.

Ms Watt: You wouldn’t have wanted them to start a dispute about Horizon, for instance, would you?

Paula Vennells: There was no way I had any influence over whether those unions started disputes or not.

Ms Watt: I think it’s correct to say, isn’t it, that the NFSP, the CWU and also the Royal Mail Group had facilities and offices within the Post Office main building for them to conduct business with the Post Office. We’ve heard some evidence of that; is that something you remember?

Paula Vennells: I think it may have been the case with Royal Mail but not with the Post Office.

Ms Watt: Have you any idea what the value of those facilities that were offered came to?

Paula Vennells: No.

Ms Watt: Okay. Some final questions on Network Transformation. At paragraph 144(a) of your witness statement you say the Network Transformation Programme was designed to increase footfall and share costs between the sub post office and the associated retail space, and you mentioned in evidence to Mr Stein there about Network Transformation, you felt, being about sustainable businesses, I think is what you said?

Paula Vennells: Yes, yes.

Ms Watt: I just want to ask a little more about that. By sharing costs between the sub post office and the associated retail space, do you mean that the Post Office wanted the subpostmasters’ retail business to bear more of the cost of running the branch?

Paula Vennells: No, what happened is that in the Mains post offices particularly, they were shops, usually fairly successful retail outlets. The advantage of having a post office alongside those shops is that the post office brought with it a very, very high footfall, and then the retail owner, the subpostmaster, if you like, benefited from increased sales through their retail outlet from the footfall of the post office. That was primarily the model for the Mains post office.

For the Locals post office, the postmaster always paid their staff, they were their costs and, in the Locals post office, what we did to a greater extent successfully, is we put a till alongside the retail till, and it still happens today in a couple of my local post offices, you see the staff who work on the retail side working also at the post office counter, which meant that the subpostmaster was able to reduce their overall staffing bills because, if you’re in a small shop and the footfall is less, what had to happen previously is you had to pay for two separate members of staff because they were two very separate – and counters that were apart.

Ms Watt: Would you agree that the Network Transformation Programme actually had the effect of reducing the cost of the post office to the taxpayer by reducing the income to subpostmasters and passing the cost of providing Post Office services to the retailer?

Paula Vennells: No, it’s a very good question. What actually happened, and much business modelling was done, business plans were produced by subpostmasters as well before they took on either of these models.

What happened at the same time is that the Government particularly reduced its business through post offices and, over this time, Government business, which paid the sales through – sorry, let me make that clearer.

If people came to post offices to take up pensions, benefits, process passports, DVLA, that sort of thing, they were all government business and postmasters were paid in different ways per transaction for those. When that business was reduced dramatically, as it was, because Government moved to a digital-by-default policy, so it wanted everybody getting pensions and benefits to have them paid directly into a bank account – rightly, actually – and it facilitated that – what it meant was that the postmasters and the post office lost money because that income simply no longer came through the post office.

Ms Watt: Would you accept that the Network Transformation Programme actually ended up being to the detriment of subpostmasters?

Paula Vennells: I don’t believe so and the programme was done for both postmasters and communities. We did research, when the programme was put in place initially and then every year since, and I won’t have remembered these figures correctly but I think the satisfaction levels were high and a figure of around 80 per cent comes to mind.

Ms Watt: Thank you, Ms Vennells. Those are my questions, and I think the chair will be happy to find that I’m slightly early.

The Witness: Thank you.

Sir Wyn Williams: I’m very grateful for your economy of words, Ms Watt.

Right, on behalf of Ms Sinclair, then please.

Questioned by Ms Allan

Ms Allan: Good afternoon, Ms Vennells. I’ll stand up so you can see me but I’ll sit to do my questions. My name is Christie Allan and I represent Core Participant Susan Sinclair, who was a wrongfully convicted subpostmistress. She was the first to successfully appeal her conviction in Scotland, which only happened as recently as September last year.

In your witness statement, you state that you were always open to the real possibility of unsafe convictions, and as such, you always sought to be questioning in your approach. After reading accounts of subpostmasters and reconciling these with the findings of Second Sight’s Interim Report, the identification of bugs with Horizon and the revelations as to Gareth Jenkins in 2013, to what extent, therefore, did you question the safety of convictions including those in Scotland?

Paula Vennells: All of the subpostmasters who raised cases were admitted into the scheme, if their applications were considered, that there was a case to do that. There was no means – there was no intention to exclude anybody, so my understanding – and I’m very sorry because I didn’t – I wouldn’t have known the individual cases – if there were Scottish cases in those numbers. I am very sorry that it took so long for that to be resolved.

Ms Allan: Thank you. Were you reassured that there was an extra layer of protection in Scottish prosecutions due to the role of the Crown Office and Procurator Fiscal Service as the independent prosecutor?

Paula Vennells: I don’t think I – well, I had no knowledge of that and I don’t believe I asked enough questions. There is some documentation that shows that it was a matter that was covered, I think, at a Board meeting but it was not covered with any degree of frequency. I would – not I would have had to – I had to rely on the legal advisers within the Post Office and the external advisers as to how that should be dealt with.

I have seen, both from Inquiry documentation and from witness evidence, that that was not – this is difficult for me to comment on because I don’t understand the legal aspects of it, but I heard the evidence from Cartwright King and it seems to me that that was not handled as well as it could have been.

Ms Allan: To follow up, was Crown Office not, however, reliant on correct information being timeously disclosed by the Post Office and indeed by you, as CEO, including any new revelations in respect of emerging concerns with Horizon evidence?

Paula Vennells: I had no dealings at all with Crown Office, I’m sorry. I’m sorry, I had no dealings with Crown Office because I shouldn’t have had dealings with Crown Office.

Ms Allan: Understood. But would you accept that the Crown Office was reliant on Post Office in providing the relevant information timeously in the –

Paula Vennells: That I don’t know. I know that Cartwright King were involved. It may be that they were reliant on Cartwright King. There will be other people who could answer that question better than I can for you.

Ms Allan: Yes, of course, the point being that there was certain knowledge in 2013 that wasn’t disclosed timeously to the Crown Office –

Paula Vennells: At the Post Office, I accept, yes.

Ms Allan: How do you reconcile that, despite your knowledge of issues with the reliability of Horizon evidence, criminal prosecutions based on such evidence continued in Scotland up until 2015?

Paula Vennells: My understanding, and there is documentation that says this, was that all prosecutions after 2012 were only – were not continued based solely on Horizon evidence. I have also learnt that in Scotland there was a greater degree of scrutiny of that because a second area of evidence of corroboration was required as well. But I’m afraid my knowledge of the legal system in Scotland is not sufficient to be able to answer any more than that.

Ms Allan: Well, unfortunately, we have since learned from the Crown Office that they’ve identified, so far, four cases since the Crown Office meeting in 2013 with the Post Office that relied on Horizon evidence.

My final question to you, Ms Vennells, is: how have you received the statements made by the Lord Advocate to the Scottish Parliament last week that, due to this scandal, the Post Office is no longer trusted and, as such, has been stripped of its own role as a Specialist Reporting Agency in Scotland?

Paula Vennells: I’m sorry, there was a cough, I missed the beginning of your question.

Ms Allan: I’ll repeat the full question.

Paula Vennells: Thank you.

Ms Allan: How have you received the statement made by the Lord Advocate to the Scottish Parliament last week that, due to this scandal, the Post Office is no longer trusted and, as such, has been stripped of its role as a Specialist Reporting Agency in Scotland?

Paula Vennells: I think that’s a very appropriate response.

Ms Allan: Thank you, Ms Vennells, that’s all.

Sir Wyn Williams: Thank you, Ms Christie Allen.

So that concludes the morning session. We’ll, I think, begin again at 2.00, Mr Beer, unless you suggest otherwise, we have Mr Moloney and the potential, but not necessarily the actuality, of further questioning after that; is that it?

Mr Beer: Yes, sir, a full hour on Friday, very welcome. We know that Mr Moloney is punctilious with his timekeeping.

Sir Wyn Williams: Absolutely, all right then, 2.00.

(12.58 pm)

(The Short Adjournment)

(2.00 pm)

Mr Beer: Good afternoon, sir, can you see and hear us?

Sir Wyn Williams: Yes, thank you very much.

Mr Beer: Thank you over to Mr Moloney, please.

Questioned by Mr Moloney

Mr Moloney: Thank you to, Mr Beer.

Mrs Vennells, just three topics to ask you about. Firstly, the importance of legal professional privilege to post office.

Paula Vennells: Right.

Mr Moloney: Secondly, your involvement in the RMG prospectus that Mr Henry asked you about this morning.

Paula Vennells: Mm-hm.

Mr Moloney: Then, finally, some of the media coverage in 2014. So I’ll take those in turn, if I may?

Paula Vennells: Okay, thank you.

Mr Moloney: The first one is the importance of legal professional privilege to Post Office. I’d like to go back, if I may, as far as 2011, when Post Office received letters before claim from four former subpostmasters represented by Shoosmiths Solicitors; do you remember that event?

Paula Vennells: I remember from the documentation I’ve seen recently, yes.

Mr Moloney: Thank you. Just for the purposes of accuracy, the letters before claim arrived at Post Office on 26 August 2011. This was perceived by Post Office as a potential class action, wasn’t it?

Paula Vennells: Yes, that’s right.

Mr Moloney: Yeah, and it was important because it could have caused Post Office to lose a lot of money and it could have been highly damaging reputationally?

Paula Vennells: Yes, that would have been the case, certainly. I think they were just concerned, full stop. I don’t know that it was just that, but yes.

Mr Moloney: In due course, I’ll take you to an email where you give those two reasons for the importance of the class action.

Paula Vennells: Okay.

Mr Moloney: Presumably, as Chief Executive, you were up to speed on the issues in the case because it was so important?

Paula Vennells: I wasn’t Chief Executive at the time. We were still part of the Royal Mail Group and I was, I think, Managing Director at that stage.

Mr Moloney: I’m sorry, Managing Director.

Paula Vennells: Yes.

Mr Moloney: You were originally Chief Operating Officer and then became Managing Director?

Paula Vennells: That’s right, yes.

Mr Moloney: Yeah, entirely. But, as Managing Director – and perhaps if I could just replace Chief Executive with Managing Director – but at that time you would, of course, have been up to speed on the issues in the case?

Paula Vennells: So, just so I’m really clear too, I don’t recollect them now but I’ve seen the documentation. I’m sure that I would have been briefed on them. I believe at that time they were all still being dealt with within the Royal Mail Group.

Mr Moloney: Yes.

Paula Vennells: So I wouldn’t have been as well briefed as I might have been, had I been in a separate post office.

Mr Moloney: So you think you would have been briefed on the issues but wouldn’t have seen the documentation?

Paula Vennells: I don’t believe I saw – I think all I will have seen is what you have seen.

Mr Moloney: Okay. Okay. Well, I might take you to some –

Paula Vennells: Of course, yes.

Mr Moloney: – in due course but the main reason I ask you about this is to do with legal professional privilege –

Paula Vennells: Right, yeah.

Mr Moloney: – because, faced with this potential class action, legal advice was circulated relating to document retention and document creation, wasn’t it?

Paula Vennells: Yes, it was, yeah.

Mr Moloney: There was an email from Emily Springford on 20 October 2011 and might we look at that now, please. The reference is POL00176467. I’m grateful. If we could, it’s on the next page that the meat of the email – that’s it. It’s from Emily Springford and it’s 20 October 2011 at 15.51, and the time will become important, Ms Vennells, that’s why I point it out.

You can see it’s to Mrs van den Bogerd, Lesley Sewell, Mike Granville, Dave Pardoe, essentially lots of department heads. The Inquiry has heard that this email was cascaded down through the departments to relevant staff, and I’ll come back to the issue of whether or not it was cascaded up to you, but, first of all, I’d like to go through the contents, if I may.

Paula Vennells: Mm-hm.

Mr Moloney: If we could please omit, for the sake of time, “Document Preservation” and go down to “Document Creation”. Thank you. If we could just move the page slightly up, so we can see more of this paragraph in relation to – that’s great, thank you ever so much:

“It is very important that we control the creation of documents which relate to any of the above issues and which might be potentially damaging to POL’s defence to the claims, as these may have to be disclosed if these claims proceed to litigation. Your staff should therefore think very carefully before committing to writing anything relating to the above issues which is critical of our own processes or systems, including emails, reports or briefing notes. We appreciate that this will not always be practicable, however.

“Where it is necessary to create a document containing critical comment on these issues, it will in certain circumstances be possible to claim privilege over the document, so that POL will not have to disclose it in any proceedings. As litigation is now a distinct possibility, the document will be privileged if its dominant purpose is to give/receive legal advice about the litigation or to gather evidence for use in the litigation. This also applies to communications with third parties – ie with other organisations – provided they are confidential and their dominant purpose is as set out above. All of the following steps should be taken in order to maximise the chances of privilege attaching to the document:

“If the dominant purpose of the communication is not to obtain legal advice, try to structure the document in such a way that its dominant purpose can be said to be evidence gathering for use in the litigation;

“Mark every such communication ‘legally privileged and confidential’;

“If you are sending the document to someone, state in the covering email/memo/letter that you are not waiving privilege by doing so;

“Request that the recipient of a communication confirm that the document will be kept confidential and that he/she will not forward it to anyone else;

“Think very carefully before ‘replying to all’ on an email – do all the recipients need to see the communication?

“Where possible and appropriate, copy a member of Legal Services into the communication, and make sure that that you are doing so to enable them to advise on the content. Please note that copying a member of Legal Services into the communication alone will not necessarily suffice.

“If in doubt, call Legal Services before committing anything to writing which relates to these issues and contains critical wording.”

Ms Vennells, did you see that advice from Emily Springford?

Paula Vennells: I don’t believe I did, unless you can take me to something that shows that.

Mr Moloney: Right. I might be able to but, leaving aside for one moment whether or not you did see that email and looking, for example, at some of the contents of that email, firstly, as a person – not a lawyer – what do you think about the suggestion that people should “think very carefully before committing to writing anything relating to the above issues which is critical of our own processes or systems”, because we might have to disclose it”?

Does that seem very fair to you, Ms Vennells?

Paula Vennells: No, it doesn’t and I remember when I read this recently that, as you say, if you read it as a private individual, rather than somebody understanding perhaps the legal thinking behind it, it struck me as an odd thing to say, unless there was some common sense reason that what somebody might be criticising in relation to their job could be misread across to something. But, no, I thought it was an odd thing to say.

Mr Moloney: Yes, and, again, and because you’re not a lawyer, and so I ask you as a person –

Paula Vennells: Yes.

Mr Moloney: – with an interest in fairness, as the head of an organisation, what do you think about saying that if a document is not prepared with the dominant purpose of seeking legal advice, and you can perhaps, as it were, if the dominant purpose of the communication is not to obtain legal advice, try to structure the document in such a way that its dominant purpose can be said to be used for evidence gathering for use in a litigation?

Paula Vennells: I think the whole thing about this is odd, that if there is a good reason behind why people should do this, it should have been explained. We came into that in 2016, I think, when the Chairman’s report was subsumed into work for the Group Litigation and that was – explained clearly why that – it was suggested on legal advice that that had to happen. When I saw this, to ask a group of even Senior Managers, as they are, to do this, without even explaining why, it seemed like it was lacking something.

Mr Moloney: Okay, but lacking something or not, this approach immediately became POL orthodoxy, didn’t it? In terms of how people behaved in each department, it became the orthodoxy?

Paula Vennells: Well, that I don’t know but I certainly saw that it was passed on by one of the recipients to their team.

Mr Moloney: Yes, and I’m going to suggest to you that this orthodoxy continued all the way through POL’s engagement with Second Sight, all the way through your correspondence with Tim McCormack and all the way through subsequent prosecutions by Post Office, and it was only when Cartwright King, especially Simon Clarke and Harry Bowyer, started saying, actually, there were different disclosure rules for criminal cases, that POL was told that they couldn’t possibly do this with criminal cases. Are you able to comment upon that?

Paula Vennells: No, I don’t know that – I should have seen it but I don’t recall it.

Mr Moloney: If now we could please go to POL00294928, to look at just how quickly this did become orthodoxy within Post Office, so that’s POL00294928. Very grateful.

If we could focus in at the top, we see that this is an email from you to Mike Young, Ms Vennells, on 21 October 2011 at, looks like, 7.32 in the morning. Remember, if we can, that the email from Emily Springford was sent at 15.51 on 20 October 2011. If we can, from there, go down to the very bottom of this document, please, this is where we start. So 20 October 2011, at 15.48. So just three minutes before Emily Springford sent the email to all of the department heads?

Paula Vennells: Mm-hm.

Mr Moloney: Yeah. This is an email from you, Ms Vennells, to Lesley Sewell, copying in Mike Young and Kevin Gilliland. The subject line is “Horizon independent assessment”. Do you remember what this is about?

Paula Vennells: Yes, I think we discussed this this morning or yesterday. This is the report in response to the comment by Donald Brydon.

Mr Moloney: Yes, and it reads:

“Lesley, excuse me if I missed it – did you get back to me re confirmation as to how robust/reliable Pintest (is that the right name) were? Ie what other type of validation work they have done on this scale/for whom?

“Also when do we expect the results?

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

“[Thanks] Paula.”

Now, that was 15.48 three minutes before the Emily Springford email. Lesley Sewell replies at 17.39, just 1 hour and 48 minutes after Emily Springford sent her email, and we see Lesley Sewell’s email at 5.39 here, and Lesley Sewell replies to you, Ms Vennells, copies in Mike Young, Kevin Gilliland, Hugh Flemington and Emily Springford, immediately copying in lawyers, and she changes the title from the Horizon-related title to “Legally privileged and confidential”:


“Fujitsu have reviewed who they will use for the review of [Horizon Next Generation] and as such will not be using Pen Test Partners as they had originally intended. They have now engaged with KPMG to complete the review which they now expect to take up to two months.

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

So following some very important aspects of the advice of Emily Springford immediately – an hour and 48 minutes later – changing the subject header to “Legally privileged and confidential”, even though it’s a reply, and copying in the lawyers, in accordance with the advice of Emily Springford.

Just whilst we’re on this page, can we go up, please, to see your reply to Lesley Sewell. This is you, Ms Vennells, and you send it to Mike Young. So you copy everybody else out and you send your reply to Lesley Sewell’s reply to Mike Young, the following morning, first thing, as it were. You say to whom you thought was Lesley Sewell:

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

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

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

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

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

“I don’t understand.

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

“Finally, I know everyone is working very hard but I’m a bit disappoint that I found out only by asking as a result of potential BBC coverage. With this going on I could easily have sent a note in response to a Board query saying not to worry because there’s a verification underway and the results are due any day soon! It doesn’t help our IT credibility if I’m on the back foot with what’s going on.


Now, what you hadn’t realised was that you’d sent that email to Mike Young by mistake, who was Lesley Sewell’s boss, and so, if we go up to the top of the page, we see:

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

“But actually as her boss, would you mind looking into (Also, watch the tone – not always easy to judge in mails – on rereading it sounds ‘cross’! I’m not (I’m well chilled on holiday!) but have some specific questions that need answering.

“Appreciate your help, P.”

Once you realised you’d send that to Mike Young and not to Lesley Sewell you had to rewind quickly, didn’t you, Ms Vennells?

Paula Vennells: I didn’t operate in that way. The email to Lesley Sewell would never have been written in the tone that you have just read it. It was a list – and the Inquiry has seen many other emails which I send which are a series of questions, open questions, nothing assumed behind them, that I was looked for answers on because this was, as I said in the email, a very serious matter, it had been raised by the Royal Mail Chairman and it obviously needed to be handled carefully because of what we were dealing with. But I don’t think I ever sent emails with that – in the way that you read it.

Mr Moloney: No, and I read it in that way because I wondered if that might be your response because the reality is that you realised it sounded cross from having sent it, didn’t you?

Paula Vennells: Possibly, from what I’ve said to Mike Young, possibly, but I was never somebody that got as cross as – I’m sorry, this – my – I said what I said in the email.

Mr Moloney: Yes.

Paula Vennells: Yeah.

Mr Moloney: Absolutely, but the term – the wording, Ms Vennells, it was cross, wasn’t it?

Paula Vennells: I was clearly irritated, yes.

Mr Moloney: Yes, you were, absolutely, and you expressed – your irritation was manifest in the words that you used, wasn’t it?

Paula Vennells: But what I say, and I think this is true, is that it isn’t always easy to judge tone in emails.

Mr Moloney: Entirely.

Paula Vennells: And the questions I was asking were valid questions.

Mr Moloney: Did you rewind in that way because Mike Young wouldn’t take that sort of aggressive, arguably domineering, tone from you?

Paula Vennells: No, I don’t think so.

Mr Moloney: Was it a case of you having, as it were, let the mask slip with that particular email?

Paula Vennells: No.

Mr Moloney: Okay. One of the four former postmasters who’d submitted letters before claim was Julian Wilson, another one was Scott Darlington, who is in the room today. But, tragically, Julian Wilson died before his conviction could be quashed. He is survived today by his wife, Karen, who is a Core Participant in these proceedings on his behalf and she took a framed photograph of him to the Court of Appeal in 2021 so he could be present when the Court of Appeal quashed his conviction.

So he was really one of the trailblazers, in terms of trying to bring Post Office to account for what he thought had been done to postmasters through the unreliability of Horizon, in the first place, and then of the way that that unreliability of Horizon was used against postmasters.

He, in his interview under caution, complained of the problems that he’d experienced with discrepancies with Horizon, and what I’d like you to have a look at now, please, Ms Vennells, although you say you didn’t see the documentation, is his letter before claim. I just want to take you to this very briefly, which is POL00046944.

If we could please go to the second page – I won’t take too much time on this, it’s the second page. If we could scroll up, please, so we can have in the – that’s perfect.

Paula Vennells: I’m sorry, could I just – the date of this is when?

Mr Moloney: It’s received on 26 August 2011.

Paula Vennells: Right. Thank you.

Mr Moloney: You said you hadn’t read the documentation but you were aware of the issues. Here are the issues set out in Mr Wilson’s letter before claim.

Paula Vennells: I should be very clear because this is important, I was aware of the issues as they were set out, I think, in an email to me at the time by Mike Granville, possibly, but I didn’t see this level of detail.

Mr Moloney: Did you have discussions with the lawyers about the issues?

Paula Vennells: No.

Mr Moloney: Never?

Paula Vennells: No, never.

Mr Moloney: Because in this letter before claim, which is 2011, so before 2012, obviously, it says:

“For the avoidance of doubt, it is denied that:

“(a) [the Post Office] were entitled to or had grounds to determine the Contract either based on the matters relied upon or at all;

“(b) that Mr Wilson was in breach of the terms of the Contract either as alleged by POL or at all; and

“(c) that POL had grounds to prosecute Mr Wilson.”

So clearly a central issue was whether or not Post Office had grounds to prosecute Mr Wilson and, for the avoidance of doubt, the same denial is made in the letter before claim of Mr Darlington.

Anyway, to conclude on this and this issue of legal professional privilege, at a number of board meetings, there were simply verbal updates in relation to legal matters; do you remember that?

Paula Vennells: Yes, there were both. There are meetings where there are minutes of discussions and papers and there were oral updates as well, yes.

Mr Moloney: Yes.

Paula Vennells: As happened on many different matters, not just on legal matters.

Mr Moloney: The use of verbal updates, was that because of issues of privilege, ever?

Paula Vennells: I don’t remember that being mentioned. I maybe have not recalled it properly but I don’t recall that being mentioned.

Mr Moloney: All right. Because Jane MacLeod in her statement, which has now been read into the record, at paragraph 151, says that:

“From April 2016 when we were informed that Freeths, the claimants’ solicitors, had filed a claim in the High Court, I was more sensitive about confidentiality and privilege issues, given the risk that litigation was imminent and, therefore, some updates were verbal only.”

Did Jane MacLeod ever communicate to you, Ms Vennells, that that might be a reason for verbal-only updates?

Paula Vennells: No, Jane, as I said in my statement, was someone who was – on a sphere of risk averse to risk tolerant, she was, by nature as an individual, quite risk averse but I don’t ever remember her raising that as a reason for only oral updates.

Mr Moloney: Okay. Second topic, then, which is the RMG prospectus. This morning you were asked about your work to propose a change to the RMG prospectus.

Paula Vennells: Yes.

Mr Moloney: Yes, and you said that you came very late in the day to deal with this.

Paula Vennells: I believe so. I have absolutely no recall of being involved in it but I may be wrong. It was a long time ago. It was 2011, 2011/12? But yeah, I don’t recall being involved.

Mr Moloney: I think it was 2013.

Paula Vennells: Yes, okay, separation I thought was 2012 but the prospectus was 2013. Right, yes.

Mr Moloney: 2013. So was it because of your minimal involvement that you’ve got no great recollection of it, or for other reasons?

Paula Vennells: I simply have – there are no reasons other than I can’t recall it. If you can show me that I was involved, then I’m very happy to accept that I was but I simply don’t recall that. The two organisations were operating separately now.

Mr Moloney: Okay. You were asked by Mr Henry this morning a number of questions about this and, in particular, he asked about how, in September 2013, you wrote to the Chair that you’d earned your keep in having a particular section removed.

Paula Vennells: Yes.

Mr Moloney: When you were pressed about this by Mr Henry, he suggested that you’d earned your keep by keeping a lid of things about Horizon; do you remember that?

Paula Vennells: Yes.

Mr Moloney: Yes. You said you had no recollection of that and the real reason was that it had taken some time, in a short period, to remove that statement about Post Office IT from the Royal Mail prospectus because “I didn’t believe it was helpful in any way to the Post Office because the two businesses were separate and the prospectus was about the flotation of Royal Mail”; is that relatively accurate?

Paula Vennells: Yes, that’s how I remember it.

Mr Moloney: Can we briefly look at one document, please, which is POL00158149. That’s POL00158149. If we could just zoom in, thank you. So this is your “review of achievements against 2013/14 personal objectives”, and the way this proceeds is that each section is dealt with as – firstly, “Talent” – and that’s not about your talent, Ms Vennells, it’s about talent you’ve recruited – firstly “Key achievements”, and then, if we go down the page, please – and keep going, over to the next page, I think – so that’s achievements, and then, ultimately, we will, in due course, see the opposite of achievements. Yeah, “What could have been better?” So that’s how it’s structured.

Then, if we go over on to the next page, we see the start of the next, which is “Culture”: “Key achievements” and “What could have been better?”

Then, if we keep going we then see “External relationships” and “Key achievements”.

So this is the part I’d like to look at and, in particular, the characteristic second bullet point:

“Good progress in drive to strengthen our strategic relationship with commercial partners in a way which actively creates value for the Post Office …”

There you have the first bullet point, which is:

“… challenged the team to be vigorous in pursuing our interests and acting as confident (and equal) partner.”

If we could just go over the page, please, for the examples of the key outcomes, and the final one there, in terms of Royal Mail:

“also intervened personally with JM to change prospectus wording (in relation to Horizon investigation), with ShEx having failed to persuade them to make the change.”

So, although it wasn’t something you can’t remember, it was a key achievement for you in that year.

Paula Vennells: Yes, it’s one of a – and it’s the last point it’s an “also”, it’s one of a list of areas that I worked on.

Mr Moloney: Yeah. You remembered it well enough to cite it as a key achievement in your review of your year in 2013/14?

Paula Vennells: That was at the time. It’s now that I haven’t remembered it.

Mr Moloney: Yes, and you were proud that you’d intervened to change the prospectus wording?

Paula Vennells: Because – and I imagine the reason I’m sharing this with the Chair, because this is a report that went to the Chair – is because it was considered inappropriate for that statement on the Post Office IT system to be listed under a section in the Royal Mail prospectus, when, at this stage – I completely understand, with hindsight, in view of what we know now, that that was a wrong conclusion, because there were issues with the system.

But, at that stage, we believed there weren’t, and to flag something – and actually the wording was odd anyway, within the Royal Mail prospectus was – as I explained this morning – was not seen to be something helpful because it could have been picked up and misinterpreted.

Mr Moloney: Wasn’t the real difficulty with this that the comment on the IT problems was in the risk section of prospectus –

Paula Vennells: Yes.

Mr Moloney: – and that –

Paula Vennells: I’m sorry, I don’t remember that it was in the risk section but it was listed under IT and, if it was in the risk section, then yes, even more so.

Mr Moloney: Yes, entirely. That was why it had to go, wasn’t it, because that was very damaging to Post Office?

Paula Vennells: It would have been and, as I explained this morning, it would have been wrong for that to have been taken and misrepresented in some way because, at this time, the Post Office believed that the Horizon system was reliable.

Mr Moloney: Yes. Do you remember, in August, because this change happened in September 2013, I’m going to suggest to you –

Paula Vennells: Yes.

Mr Moloney: – but do you remember writing to the Chair, Alice Perkins, saying that the language in the risk section which refers to Post Office is very negative? Do you remember – can I ask you to try to remember that?

Paula Vennells: I don’t but, if I thought that was the case, then that would be my responsibility to either agree with it or address it and, if didn’t agree with it, to do something about that.

Mr Moloney: Did you think about escalating it to HMG, Her Majesty’s Government?

Paula Vennells: Well, this says that ShEx – so I’m assuming that somebody must have raised this with ShEx –

Mr Moloney: Yes.

Paula Vennells: – because we’ve asked ShEx to have it removed.

Mr Moloney: Exactly. Do you remember Martin Edwards writing to you to say that all efforts by ShEx had failed and you might have to intervene personally?

Paula Vennells: I’m assuming that’s why I did then.

Mr Moloney: Yes. That’s when you got involved.

Paula Vennells: Right.

Mr Moloney: It really wasn’t about hearing about it late and, in fact, not being involved with it late, was it? Because you had Martin Edwards on the case, trying to take it out and escalating it to ShEx. It wasn’t about getting involved late, was it?

Paula Vennells: I am afraid I can’t answer that because I can’t possibly remember but my sense was that, as this says, is that I was asked to step in, as we’ve seen on a couple of other issues, to see whether I could unblock something. So I don’t know who was – I wasn’t – and the Inquiry hasn’t seen anything on this – I wasn’t involved in the prospectus review. So whether Martin was doing that on behalf of Post Office or other people were doing it on behalf of Post Office, and it was then flagged to me, I genuinely don’t know.

Mr Moloney: I’m going to suggest to you, you knew it was damaging, you were across it for some considerable time, all efforts without your involvement had failed, including ShEx, and then you had to personally intervene.

Paula Vennells: I can’t remember. I’m sorry, I can’t help you with that, but I’m not – there will be presumably documentation somewhere that illustrates what the process was around the prospectus. I don’t think I was involved with it. I mean, it wouldn’t – as somebody who was now trying to run a new company that had just been stood up, that wouldn’t have been the level of detail that I could possibly work on and it may be that Martin Edwards was the individual doing that on behalf of the Post Office, or the Post Office Board on behalf of me, I don’t know.

Mr Moloney: Yes, and you were very proud that you’d managed to get it out, weren’t you?

Paula Vennells: I list it as an achievement because, yes, if I had felt at the time, and the Chair and the Board had felt at the time, that this was a something that was a risk for the Post Office, at the time, it seemed the right thing to do.

Mr Moloney: Now, finally, my final topic is some of the media coverage in 2014. Now, in 2014, a degree of damaging publicity about concerns over the reliability of Horizon began to emerge, didn’t it?

Paula Vennells: I’ll take your word for that. I’m sorry, I can’t recall the detail now.

Mr Moloney: Okay. Well, campaigning postmasters were appearing on radio and television to describe their experiences at the hands of Post Office and about how their lives had been ruined and how they felt Horizon was at the root of their problems. Mark Davies was your Comms Director at that time, wasn’t he?

Paula Vennells: He was the Comms Director at the Post Office, yes.

Mr Moloney: We saw yesterday that you worked closely with him?

Paula Vennells: Yes.

Mr Moloney: You plainly kept a close eye, as we saw yesterday, on how the Post Office message was being conveyed at this time?

Paula Vennells: Yes, yes.

Mr Moloney: You kept abreast of important broadcasts on TV and radio, for example?

Paula Vennells: I imagine I did, yes.

Mr Moloney: On the Today Programme, on 9 December 2014, Mark Davies described one of my clients, Mrs Jo Hamilton, who was on the programme and sits here, as you know, and other convicted postmasters, as having faced lifestyle difficulties and lifestyle problems. What had happened was that John Humphrys had described Jo Hamilton as:

“… representative of many people like her, and they’re in desperate trouble now, and they have a case, don’t they?”

Mark Davies said:

“I’m really sorry that people have had – have faced lifestyle difficulties, lifestyle problems as a result of their having been working in Post Office branches.”

Mark Davies addressed that remark in his witness statement, which is published on the Inquiry website, and that witness statement, if we’re able to bring it up, please, is WITN09860100. Could we please go to page 31, to paragraph 86. Mr Davies says here:

“I have also been asked where the view that people had ‘faced lifestyle difficulties’ originated from. This was a phrase I used in a live radio interview on the BBC Today Programme. I was trying to make the point that POL was sorry – genuinely – that people had faced challenges in their lives, but that it didn’t necessarily follow that POL was responsible. This was a reasonable sentiment given what we knew at the time. The word ‘lifestyle’ was obviously clumsy and unintended. For the avoidance of any doubt it was not scripted or planned. It was certainly not meant to cause offence. It was literally a slip of the tongue in a high pressure media interview and I am very sorry for any offence caused.”

Do you remember Mr Davies saying that on the Today Programme?

Paula Vennells: I do. I remember listening to it and thinking “Oh, Mark”. As he said here, I don’t think he ever intended that word to come out.

Mr Moloney: I mean, on the face of it, it was an extremely insensitive term?

Paula Vennells: It was, yes.

Mr Moloney: Many had been to prison and, just as one example, Jackie McDonald, who has subsequently had her conviction quashed, had, by the time that Mr Davies said this, served a term of imprisonment of 18 months, when she was a 47-year-old mother of two and her children were teenagers; Noel Thomas was long-serving local councillor in North Wales and had spent his 60th birthday in prison; and all the subpostmasters had been punished in one way or another. They had all been subject to public censure and humiliation.

You’ve had a taste of that now, Ms Vennells, haven’t you, in recent times, and it’s not very nice, is it? If somebody said to you, “Paula, you appear to have a bit of a lifestyle difficulty at the moment”, might you consider that that could be viewed as slightly ironic or sarcastic?

Paula Vennells: It was – as I said, I heard – I listened to the interview, and I – it was just completely the wrong word.

Mr Moloney: They had the inability to find employment, many were going bankrupt, they had real – we saw the break-up of families, there were serious mental health problems and, in at least one case, a person was driven to take his own life; it was crass and insensitive, wasn’t it?

Paula Vennells: It was, absolutely.

Mr Moloney: Did you speak to Mr Davies about it?

Paula Vennells: Yes, I did.

Mr Moloney: Obviously, from what you’ve said, it’s not something that you would have said?

Paula Vennells: No.

Mr Moloney: No, and –

Paula Vennells: And I – well, Mark has said it. I don’t believe he intended the word to come out either. He must have been searching for something else – and I know how it feels under high pressure that you don’t always find the right words. But, no, I did speak to him about it.

Mr Moloney: Can I ask you Ms Vennells, why wouldn’t you have said that, what Mark Davies said?

Paula Vennells: I’m sorry?

Mr Moloney: You wouldn’t have said that, yeah? What Mark Davies said, you would never have said that?

Paula Vennells: Mark Davies didn’t intend to say it either.

Mr Moloney: No, but you would never have used those words but just please explain why it is that you would never say that? It may be obvious that it’s too insensitive, it’s awful and that should never be said; why is it that you wouldn’t say that?

Paula Vennells: For the reason that I’m here today: because people’s lives have been absolutely devastated.

Mr Moloney: Okay. What Mr Davies said, was that not just reflective of the dismissive attitude that the Post Office had to campaigning postmasters at this time?

Paula Vennells: I don’t believe so no. I can understand why people would think that and I regret hugely that we are where we are today.

Mr Moloney: Was that not really a dismissive attitude that you fostered and encouraged, Ms Vennells?

Paula Vennells: No.

Mr Moloney: Okay, can we fast forward, please, some time and look at POL00109806. That “some time” is only eight days. If we go down, please, so if that was 9 December 2014 that Mr Davies said what he said on the Today Programme, this is 17 December, so just some eight days later.

Eight days after you’ve said, “Mark you should never have said that”, this is 9.45 in the evening and it’s an email from you, Ms Vennells, to Mark Davies, Belinda Crowe, Gavin Lambert and Patrick Bourke, cc’ing in the chair, Alice Perkins. It reads, and I’ll read all of it:

“Hi all, I managed to catch The One Show on iPlayer.

“Not denying the fact that it is unhelpful and inaccurate (especially the focus on Horizon – but see below re thoughts on that), Mark has achieved a balance of reporting beyond anything I could have hoped for. The statements stamped across the screen with the PO sign as a backdrop were really powerful. They emphasised everything we have done, and came across as … fact! Very good.

“The rest was hype and human interest. Not easy for me to be objective but I was more bored than outraged. The MP quoted (who?) was full of bluster and inaccurate. Jo Hamilton lacked passion and admitted false accounting on TV. [James Arbuthnot] was nowhere to be seen. And the bulletin was too long.

“What I thought was helpful was that it presented Horizon as the problem, which is exactly what [Second Sight] say they haven’t found. And so easier for us to refute. There was nothing about intimidation, poor coaching and the message about not knowing how to use the system, in my eyes made the [subpostmasters] look inadequate.

“Lastly (belt and braces I know – forgive me), can we find out how the [subpostmaster] in Nelson (Wales) thinks we’re about to go after him for £18,000 and why he thinks we haven’t been in touch. That sounds like a live issue, not one in the scheme? (I’m sure we have been in touch!)

“My sincere thanks to all of you. I had an email tonight from Richard C saying how much you had helped, that we could have done nothing more and he was sorry the debate had not gone better.”

“Richard C”, was that Richard Callard?

Paula Vennells: It was, yes.

Mr Moloney: He was a Non-Executive Director on the Post Office at the time, was he?

Paula Vennells: Yes, that’s right.

Mr Moloney: Why was he taking such an active interest in this?

Paula Vennells: He was the Non-Executive Director from ShEx and, as we’ve seen, they were following the work we were doing through the Complaint and Mediation Scheme.

Mr Moloney: Was ShEx and Post Office, as it were, pulling in the same direction around this?

Paula Vennells: I’m sorry, I’m not sure I understand the question. Were?

Mr Moloney: ShEx and Post Office pulling in the same direction in terms of these irritating, campaigning postmasters?

Paula Vennells: At this stage, the work that had gone on through the scheme was showing that no issues had been found on the cases –

Mr Moloney: No, that’s –

Paula Vennells: – and so –

Mr Moloney: No, rebutting what was being said by the postmasters, as it were – the word you use, actually, was “refute”.

Paula Vennells: I guess you would have to ask Richard. Presumably, if that was what he said, then his view was similar to mine at the time.

Mr Moloney: What impression did you gain of what Richard Callard’s view was at this time?

Paula Vennells: I think he was commenting on the concerns that the programme was going to present issues which the Post Office and ShEx felt were not – were not going to be represented in a particularly well-balanced way. But I don’t – I can’t recall anything more than is here in the document. What I would like to say is that I’m very sorry.

Mr Moloney: I know. Of course. Of course. And we’ll come to your apology now, if we can.

Paula Vennells: Thank you.

Mr Moloney: If we can go to Ms Vennells’ witness statement, please, which is WITN01020100, and to page 481, and paragraph 1120 – and I’m sorry to the document manager for reading out so much information – it’s page 481, and it’s paragraph 1120. Oh, it’s not 481 but it is 1120. There we go:

“One matter about which I have not been asked in the Request but which I want to address head on is an email which I sent to senior colleagues on 17 December 2014, after The One Show documentary aired that evening. I described the reporting as ‘unhelpful and inaccurate’ and thoroughly regret saying that ‘I was more bored than outraged’ at the programme. There is no excuse for what I wrote, and I am embarrassed by the words I used. Those words do not reflect the example I hoped to set for my colleagues or my attitude to the issues we were working on at the time. I was working hard to find a way through. The difficulties of dealing with what seemed such an imperative yet intractable problem to solve got the better of me that evening. I am sorry.”

So the remarks that you have expressed regret about, explicitly, the first is “I was more bored than outraged”; you regret that remark, Ms Vennells?

Paula Vennells: I regret everything I said.

Mr Moloney: That “Jo Hamilton lacked passion and admitted false accounting”, and “MP (who?) Bluster”, and so on, you regret that?

Paula Vennells: I regret everything I wrote.

Mr Moloney: Now, you regret those remarks now, just seven days before Christmas in 2014 and only eight days after Mark Davies had said that appalling thing about “lifestyle difficulties” and “lifestyle problems” that you really were very upset about, only eight days after that, you regret those remarks, but did you regret – that was on 17 December – did you regret those remarks the following day on the 18 December? Or is it, in fact, that they were triumphalist remarks and you regret them now because you’re here?

Paula Vennells: Oh, I completely agree. I completely agree. The pressure we were under at the time to try to manage what we genuinely felt was an imbalance of media coverage and representation about what was happening in the Post Office – and I think under pressure, I and other colleagues – I do genuinely think Mark Davies’ was a slip of a word. I have no excuse for what I wrote other than, as I say, I was under pressure and I think I was relieved that the programme hadn’t been perhaps as bad or hardhitting as I’d expected it to be. And I’m just hugely sorry; it was a terrible thing to write.

Mr Moloney: It was triumphalist, wasn’t it?

Paula Vennells: I was very relieved that it perhaps wasn’t as bad as it could have been and, I’m sorry, there is simply no excuse because it wouldn’t have mattered, would I, how bad it had been because we were wrong and I apologised earlier on to Mrs Hamilton about not having known about your prosecution file and the details we had of that earlier. I didn’t know about that at the time of this and I’m deeply sorry that I was so rude to you in that email.

Mr Moloney: What you went on to say is that:

“Those words do not reflect the example I hoped to set fort my colleagues or my attitude to the issues we were working on at the time.”

What words didn’t reflect the example you hoped to set for your colleagues?

Paula Vennells: I think the tone of the whole email.

Mr Moloney: What example did you wish to set for your colleagues?

Paula Vennells: The example that I was not setting in that email. The example of the culture change programme that I had put in place to – which I’ve mentioned before – the values that that had at the heart of it, and they simply weren’t there on this.

Mr Moloney: Was the example that you wished to set for your colleagues this, “Don’t say what you think in an email, only say what you’d be happy to have read out in a courtroom”?

Paula Vennells: I’m sorry?

Mr Moloney: Was the example, real example, you wished to set for your colleagues, “Don’t say what you think in an email; only say what you’d be happy to have read out in a courtroom”, and you’d let yourself down there?

Is that, in reality, the approach you took to Tim McCormack: remain calm at all times, give the appearance of politeness at all times, never give anybody the chance to say that you’ve been defensive or unreasonable; was that your approach to Tim McCormack?

Paula Vennells: No, this was – I made a mistake here. I generally tried to approach things by the values that I wanted the organisation to follow and this is a terrible example of where I didn’t do that.

Mr Moloney: Did the mask slip in this email, Ms Vennells? Did it? Did the mask slip?

Paula Vennells: I made a mistake in this email.

Mr Moloney: Is the reality that what you said here reflected the ‘behind closed doors’ attitude to these postmasters?

Paula Vennells: No.

Mr Moloney: This is how you really felt about them: they were irritants and it was important to refute what they were saying?

Paula Vennells: No, and I know it has chosen to be taken a different way but my desire to share the details of the eight cases which we talked about yesterday was completely genuine. My desire behind setting up the Mediation Scheme was completely genuine. This was a terrible mistake, which I’m deeply sorry for, when I was working under pressure, and I simply should not have done it.

Mr Moloney: Is it not that the truth just came out this time?

Paula Vennells: No, that’s not the case.

Mr Moloney: That’s all I ask. Thank you.

Sir Wyn Williams: Thank you, Mr Moloney.

Ms Leek, I know you’re the legal representative of Ms Vennells in the hearing room. Are there any questions that you’d like to ask her?

Ms Leek: No, thank you, sir.

Sir Wyn Williams: Fine.

Mr Beer, are there any questions that you wish to put in the light of what has been said today?

Mr Beer: No, sir, nothing arising. Thank you.

Sir Wyn Williams: Then that brings an end to the evidence of Ms Vennells.

I’m grateful to you, Ms Vennells, for your extremely detailed witness statement and for giving evidence to the Inquiry over three days.

So that concludes today’s proceedings. I think that everyone in the Inquiry is now, I hope, going to have a reasonable period of rest over the next week, though I doubt whether that will prevent some people working quite hard. But, if you can, have a good break, and I think we’re due to resume on Monday, is it, 2 June –

Mr Beer: 3 June.

Sir Wyn Williams: – 3 June at, unusually, 12.00 midday, when we’re going to be hearing from Mr Foat, is that it?

Mr Beer: That’s exactly right, sir.

Sir Wyn Williams: Right. Thank you all very much.

(2.57 pm)

(The hearing adjourned until 12.00 midday on Monday, 3 June 2024)