Official hearing page

10 July 2024 – Thomas Cooper and Patrick O’Sullivan

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(9.45 am)

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

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

Ms Hodge: Thank you, sir. Just to remind you, there will be a fire alarm test today at 10.00 am.

Sir Wyn Williams: Yes, I’ll just remain online as usual.

Ms Hodge: Thank you, sir. Please could the witness be sworn.

Thomas Cooper

THOMAS KNUT GLENN COOPER (affirmed).

Questioned by Ms Hodge

Ms Hodge: Please give your full name.

Thomas Cooper: It’s Thomas Knut Glenn Cooper.

Ms Hodge: Thank you, Mr Cooper. As you know my name is Ms Hodge and I ask questions on behalf of the Inquiry. Thank you for coming to the Inquiry this morning to answer those questions and for the detailed witness statement which you provided in advance. You should have a copy of that statement in front of you dated 13 June of this year; is that right?

Thomas Cooper: Yeah.

Ms Hodge: That statement runs to 150 pages. I understand you’d like to make some minor corrections to the statement; is that right?

Thomas Cooper: That’s correct.

Ms Hodge: The first of those, I understand, relates to paragraph 69(i). It’s a typographical error in the third line from the bottom of that paragraph, where it reads “making better informed contributions to the Board decisions”, should read “discussions”?

Thomas Cooper: Correct.

Ms Hodge: Thank you. The second correction you’d like to make is at paragraph 75 of your statement. You refer to an email from Rodric Williams to Richard Watson, and Joshua Fox dated 12 February 2018. Should that in fact be dated 2019?

Thomas Cooper: Yes, it should.

Ms Hodge: Thank you. Then dealing with some amendments to document references, at paragraphs 238 and 239 of your statement you refer to the minutes of a meeting of the Post Office Board on 17 September 2019. The document you cite as evidence of that meeting is POL00104327. However, the relevant part of that document has been redacted; is that right?

Thomas Cooper: That’s correct.

Ms Hodge: You would therefore like to amendment the reference to POL00103667, which contains an unredacted version of the same meeting minutes; is that right?

Thomas Cooper: Yes.

Ms Hodge: Finally, at paragraphs 253 and 254 of your statement you refer to the minutes of a further meeting of the Post Office Board on 10 December 2019. The document you cite as evidence of that meeting is UKGI00019332. Again, the same problem arises in that some relevant parts of that, those meeting minutes have been redacted; is that right?

Thomas Cooper: Yes.

Ms Hodge: You therefore would like to amend the reference to POL00290368, where we can find an unredacted version of the same minutes?

Thomas Cooper: Yes.

Ms Hodge: Thank you. Subject to those corrections, is the content of your statement true to the best of your knowledge and belief?

Thomas Cooper: It is.

Ms Hodge: Thank you. I’m going to ask you some brief questions about your professional background, before you joined UK Government Investments. You started your career in accountancy; is that right?

Thomas Cooper: Yes.

Ms Hodge: Moving then to the investment bank UBS where you worked for 21 years?

Thomas Cooper: Yes.

Ms Hodge: At UBS you were appointed as Head of European Mergers and Acquisitions; is that correct?

Thomas Cooper: Yes.

Ms Hodge: You subsequently worked as Global Co-Chairman of Mergers and Acquisitions at Deutsche Bank before joining UKGI in November 2017; is that right?

Thomas Cooper: Yes.

Ms Hodge: Upon joining UKGI, you became a member of the Shareholder Team for POL; is that right?

Thomas Cooper: Yes.

Ms Hodge: Did you immediately take up leadership of that team in November 2017?

Thomas Cooper: No, not until early 2018.

Ms Hodge: Who was leading the team at the time when you joined?

Thomas Cooper: It was Richard Callard.

Ms Hodge: In March 2018, you replaced Richard Callard as the Shareholder Non-Executive Director on the Post Office Board and remained in that role until May 2023; is that right?

Thomas Cooper: Yes.

Ms Hodge: Is it right that, whilst you were serving as the Shareholder NED on the Post Office Board, the Post Office was not the only Government asset for which you were responsible?

Thomas Cooper: That’s correct.

Ms Hodge: Of the various assets for which you had responsibility, would it be right to say that the Post Office posed, or was assessed to pose, the greatest risk to the shareholder?

Thomas Cooper: Oh, yes, easily, and it involved by far the greatest part of my time.

Ms Hodge: At paragraph 7 of your statement you say that you are responsible for UKGI’s risk reporting for its assets and projects; is that right?

Thomas Cooper: Yes. Something I took over when – basically when Mark Russell left UKGI, which I think was late 2020.

Ms Hodge: Can you please explain in general terms how UKGI records and reports on risks relating to its assets?

Thomas Cooper: Yes. So this – it’s basically a bottom-up approach. So each team involved in a project or an asset completes a risk register and that then feeds up into essentially two separate processes. The first is it forms part of the reporting to the Board, so the Board receives a summarised version of the risk registers from each of the teams, and then it also feeds into our portfolio review and project review processes, which are part of our oversight of what our teams are doing in relation to their assets and projects.

I’m speaking about how it works today, rather than how it worked previously.

Ms Hodge: My next question was: has there been any material change in the way in which UKGI reports risk during the time in which you’ve worked there?

Thomas Cooper: Fundamentally, no. I don’t think so. I mean, obviously I wasn’t responsible for this beforehand but I think what’s happened is it’s – the basic process is the same, it’s evolved and it’s more – I think it’s more mature and sophisticated probably than it was five years ago.

Ms Hodge: What do you mean by that: more mature and sophisticated?

Thomas Cooper: I think it’s more integrated than it was. So, for example, I’m not sure, historically, that risk registers were regularly part of the portfolio review and project review processes and part of the papers that came to those. Now, they are. So it’s things like that. Refinements, if you like, like that.

Ms Hodge: Thank you. On joining the Shareholder Team, you were informed that the Post Office was engaged in ongoing litigation with the group of subpostmasters; is that correct?

Thomas Cooper: Yes.

Ms Hodge: In your statement you describe receiving a high level briefing about the litigation from your predecessor, Richard Callard; is that correct?

Thomas Cooper: Yes.

Ms Hodge: This briefing was given to you orally; is that right?

Thomas Cooper: Correct.

Ms Hodge: From this briefing, would it be fair to say that you understood that Post Office had, for several years, been engaged in an intractable dispute with a group of subpostmasters concerning issues with Horizon?

Thomas Cooper: Yes.

Ms Hodge: You also understood that efforts had been made to resolve the dispute, which included an investigation by Second Sight and the establishment of a Mediation Scheme, but these had not been successful?

Thomas Cooper: Correct.

Ms Hodge: You were also told, were you not, that the Chairman of Post Office, Tim Parker, had commissioned a review and had reported back to the Minister in positive terms?

Thomas Cooper: Yes. At least what I think the team took to be reassuring terms.

Ms Hodge: Did you request to see any of the material which underpinned this briefing?

Thomas Cooper: No. I didn’t receive the material until later.

Ms Hodge: Why did you not request to see any of the material underpinning the briefing?

Thomas Cooper: I think at that stage I was learning, it was obviously the very start of my induction into Post Office and, you know, I took what I was being told at face value.

Ms Hodge: Having now read that material, do you think it would have assisted you to have read the reports prepared by Second Sight and the review commission by the Chair at that time?

Thomas Cooper: Very much so. I think the Swift Review in particular, which I read in 2020, I think was a very key document, and informed – I think, with hindsight, would have been hugely helpful with the litigation.

Ms Hodge: Can you be a little more specific as to why you say that?

Thomas Cooper: Well, I think the main – for me, the key thing were the recommendations at the end, and I think when you read the – I think four of the recommendations relate to the system, and the way I read it, when I did read it, when you take those four together, it basically is saying the company had never assured itself properly that the system actually worked, and I think that would have given me, you know – so when the management team or the lawyers were saying in the context of the litigation, “Well, the system is fine, it works, you know, there’s no systemic problem”, comparing that with the Swift Review recommendations, it begs the obvious question, “Well, how do you actually know that?” And I think that would be the obvious question I would have asked, had I had the Swift Review earlier.

Ms Hodge: At the time that you received your briefing from Mr Callard, did you understand that the Post Office had assured itself that the system worked properly, or did you not address your mind to the question at that stage?

Thomas Cooper: It was expressed in many – you know, in different ways, but the consistent message from the – I know you’re asking about Mr Callard but I think he said that – and I think his main source for this was the first Second Sight Report, in saying no systematic errors had been found. He used the term “smoking gun”; there was no smoking gun in relation to the system. But this was all reinforced very heavily by the management team in the company, who consistently said the system is fine. I mean, you know, I’m paraphrasing but there were various forms of language that amounted to that.

Ms Hodge: At this early stage in your tenure, what did you understand the nature of the concerns about Horizon to be?

Thomas Cooper: Well, that the system had caused discrepancies in the branch accounts which had caused losses for postmasters, and then there was the question of remote access as well.

Ms Hodge: So at that time, you were alive to both of those issues; is that right?

Thomas Cooper: Yes, I mean, I had watched the Panorama programme which had an impact on me. I remember watching it and feeling that there was something real there.

Ms Hodge: Did you give any consideration at this early stage to the possibility of those issues, those questions about Horizon, being resolved by means other than litigation?

Thomas Cooper: I did, and I think, you know, particularly the Horizon issues – to me, and particularly with hindsight, I think the litigation process was not a particularly good way of resolving this or getting to the facts. During the course of my introduction and learning about the litigation, I did think about what alternatives there might be and it seemed to me at that point – because it was only a matter of months before the hearings were due to begin – that any other process would be – wouldn’t produce as definitive an outcome any more quickly.

You know, the advantage at that point of the Horizon Issues hearings, it seemed to me, was that both sides were funded, they had expert witnesses, they would have the benefit of discovery and, you know, a judge overseeing it. And it seemed to me, at that point in time, that was going to be the best way of getting to the bottom of what had happened.

Ms Hodge: When you say “at that point in time”, are you referring to early in 2018 –

Thomas Cooper: ‘18 – yes, I mean, really during the first half of 2018 because during this period I was still sort of getting up to speed with – it’s about to –

(Pause for fire alarm test)

Ms Hodge: I think we are now finished.

Thomas Cooper: Okay, yes.

Ms Hodge: The question I’d asked was in relation to your perception that the litigation had become the fastest way to resolve these issues, whether that was a perception you had when you received this briefing in early 2018?

Thomas Cooper: No, not that early. It was – it evolved over time. I mean, I was learning about the litigation over the first several months of being on the Board, so it was later rather than earlier in that period.

Ms Hodge: Do you consider that there was an opportunity in that early phase to explore that option of an alternative to litigation?

Thomas Cooper: No, I think, even in March 2018 when I joined the Board, I think the conclusion would have been the same.

Ms Hodge: You’ve explained in your statement that it was apparent to you from the outset that an important part of your role would be to monitor the progress and conduct of the Group Litigation; is that right?

Thomas Cooper: Yes.

Ms Hodge: Presumably the purpose of monitoring the litigation was to enable you to identify any significant risks and to take appropriate steps to mitigate them; is that right?

Thomas Cooper: Yes.

Ms Hodge: Would it be right to say that you initially felt hampered in your role by the reluctance of the Post Office to share with you and your colleagues in UKGI information subject to legal professional privilege?

Thomas Cooper: Yes, absolutely. I think it’s worth sort of breaking the role down into a couple of parts, so the first as a Non-Executive Director, obviously the oversight of the litigation was part of my role because I was on the subcommittee. So I needed to understand it and, if you like, monitor it from that perspective. But then there was also clearly a need to inform – keep the Department informed as to what was going on, as well, through the Shareholder Team, which I led, and the key element of that was getting a protocol in place, an information-sharing protocol, that was an agreement that essentially enabled Post Office or gave them the comfort, as it were, to provide the information to the Department in a controlled way.

And that document didn’t get agreed until June 2018, you know, even though it had been agreed, I think even before I joined the Board, that there would be a protocol.

Ms Hodge: So by June 2018, an agreement had been reached, in effect, that enabled UKGI to obtain information and documents from the Post Office relating to the substance of the litigation; is that right?

Thomas Cooper: Yes.

Ms Hodge: Shortly after the agreement of the protocol, you obtained a copy of the merits opinion produced by David Cavender QC in relation to the Common Issues; is that correct?

Thomas Cooper: Yes.

Ms Hodge: You also held a meeting with the Post Office’s General Counsel, Jane MacLeod, in which you discussed the Post Office’s approach in relation to the 23 contractual issues in dispute in the litigation; is that right?

Thomas Cooper: Yes, that was around July, if I recall.

Ms Hodge: Would it be fair to say that you agreed at that stage that there was an important point of principle at stake in relation to the litigation, namely the nature of the contract between the Post Office and its agents, the subpostmasters?

Thomas Cooper: Yes, but it wasn’t just Jane’s view that I took on this. It was also Richard Watson, because we discussed the merits opinion together.

Ms Hodge: Sorry, could you just confirm his role, please?

Thomas Cooper: Oh, Richard Watson was the General Counsel at UKGI. So he was, really, apart from Post Office’s lawyers, the only source of other legal input I had and he and I worked very closely together on the litigation all the way through. But his, you know, obviously his views on the merits opinion were important for me, and the point about the relational contract and the good faith elements that flowed from it were viewed, I think, consistently, not just by Post Office’s lawyers but by all the other lawyers involved, including HSF when they were part of the team and, actually, Slaughter and May when they came in to pitch for the work. All of them said that this point was unusual and would have significant implications: effectively, an extension of the law.

And my own experience in business is that, you know, business contracts in this country are not good faith agreements and the reason for that is that the lawyers who draft them, the parties, want clarity about what the terms are, and good faith obligations create uncertainty for all the parties involved. So it was an – my own take on it was it was a very unusual thing to have in a business context.

Ms Hodge: So although you accepted or agreed that that was an important point of principle, you felt, did you not, that some of the points raised by the claimants were reasonable and ought to be conceded by the Post Office?

Thomas Cooper: Yes, absolutely. Not only – well, certainly in respect of some of them, and the liability clause I felt was the standout example of that. But I felt, you know, particularly in the context of a litigation and a dispute that had been going on for so long, that on a lot of these, the companies should be looking for compromise, rather than disputing everything, just for the sake of it, effectively.

So one of the 23 clauses was, for example, that Post Office should agree to provide a computer system that worked. Well, a working computer system was fundamental to the whole relationship, so it didn’t seem at all unreasonable to me that Post Office should agree to provide that. And I couldn’t under – Jane MacLeod’s initial response to this, when we had our first meeting on it, was to say – I did ask her, you know, “If Post Office loses on these points, what’s your response going to be?”, and she said, “Oh, we’ll appeal everything”.

So that didn’t really make sense to me. It seemed completely, you know, inappropriate for a situation that the company found itself in.

Ms Hodge: You’ve mentioned the liability clause. What was the nature of your concerns about that clause?

Thomas Cooper: Well, I thought it was completely unfair. I mean, that the postmasters should be responsible for all the losses whether they were responsible or not seemed, you know, unfair, unethical and I think actually undermined the basis of the partnership between postmasters and the company because, in effect, it let the company off the hook of doing what it should do in supporting the relationship. So it just seemed completely at odds with what the contract should be trying to do.

Ms Hodge: In your discussions with the Post Office’s General Counsel and its lawyers, you described the position on the liability clause as defending the indefensible; is that right?

Thomas Cooper: Yes.

Ms Hodge: In your statement, you expressed a strong sense of frustration by this stage about the Post Office’s conduct of the litigation.

Thomas Cooper: Mm.

Ms Hodge: I wonder, please, if we could look at what you say at paragraph 119 of your statement, which bears the reference WITN00200100. You say:

“[Post Office] was robust in its view that it should continue to defend [the liability clause], arguing that any other approach to liability was not operationally possible. I recall feeling a significant degree of frustration about this issue and thinking that if I could not persuade [Post Office] on this straightforward point (as I saw it), I would not be able to persuade them of the need to compromise on any of the other contractual issues on which [Post Office] was vulnerable, such as training and providing a fit-for-purpose computer system.”

Were you concerned by the late summer of 2018 about the quality of the legal advice which the Post Office was receiving?

Thomas Cooper: Yes, I was. Flowing directly out of the conversations I’d had with Jane MacLeod, the very entrenched position that the company was taking, both of those, it seemed to me, were at odds with actually trying to reach a resolution to the dispute, which in the end, one way or another, would have to be solved.

Ms Hodge: Is it right that your concerns about the conduct of the litigation were heightened when Mr Justice Fraser, as he then was, dismissed the Post Office’s application to strike out substantial parts of the witness evidence adduced by the lead claimants?

Thomas Cooper: Yes. It seemed obvious from his comments that Post Office was not handling the litigation – whatever the rights and wrongs of it, it was handling the litigation in a very cack-handed way.

Ms Hodge: Could we please take a look at the update you received from the Post Office’s General Counsel, Jane MacLeod, on 16 October 2018. It is UKGI00008532.

If we could please scroll to the bottom of the page. So at the bottom there, we can see an email from Jane MacLeod addressed to Richard Watson – you’ve confirmed he was General Counsel at UKGI –

Thomas Cooper: Mm-hm.

Ms Hodge: – and Joshua Fox. What was his role, please?

Thomas Cooper: He was a member of the UKGI Shareholder Team, he wasn’t a lawyer.

Ms Hodge: Sorry, he was –

Thomas Cooper: He’s not a lawyer.

Ms Hodge: Not a lawyer?

Thomas Cooper: Mm.

Ms Hodge: The email is copied to you and Rodric Williams, a lawyer at the Post Office. It reads:

“Richard, Josh,

“Further to Rod’s emails on 9 and 10 October, the Managing Judge Mr Justice Fraser has now ruled on our application to strike out as inadmissible parts of the claimants’ evidence. We received the judgment late last night.

“We were not successful on the application:

“The application was decided on case management grounds which the Managing Judge has considerable discretion;

“Applying that discretion, the Managing Judge set a very high threshold for strikeout, and concluded that we had not established to the necessary standard that the claimants’ evidence could never be relevant to the case, given the number of Common Issues, the ‘considerable legal analysis’ each will require, and what our case on those issues is.

“However he confirmed that he will apply properly the law on admissibility when it comes to the trial, and that the November 2018 Common Issues Trial will not rule on matters which concern Horizon or whether Post Office actually ‘breached’ its obligations to the claimants (matters to which most of the disputed evidence goes and which will be dealt with in later trials).”

If we could scroll down, please, a little further, Ms MacLeod reported that:

“In deciding the application, the Managing Judge was critical of our conduct of the case, including intimating that we were not acting cooperative and constructively in trying to resolve this litigation (which criticism was levelled equally between the parties); and that we had impugned the court and its processes by making the application for improper purposes.

“This response is extremely disappointing given the approach we have been adopting, and his challenge as to the purpose for which we had applied for strikeout is at odds with comments he had made during various procedural hearings over the past year. Nevertheless, we are refining our preparation for trial – including our reactive communications plan – in the context of the judge’s remarks.”

In your statement you describe feeling surprised by the judge’s criticisms of the Post Office – is that right –

Thomas Cooper: Yes.

Ms Hodge: – and concerned by his reference to impugning the court?

Thomas Cooper: Yes.

Ms Hodge: As a result of your concerns, you sought the opinion of Richard Watson, the General Counsel at UKGI, who requested a copy of the judgment from the Post Office; is that right?

Thomas Cooper: Correct.

Ms Hodge: His response, having reviewed that judgment, can be seen at the top of the page, please. So halfway down there, from Richard Watson to you on 17 October, so the following day. So his initial reaction:

“Tom

“You will see I have asked to see the judgment.

“I am concerned that the judge felt [Post Office] had impugned the court and made the application for improper purposes but need to understand the detail.

“I infer the judge is getting a little tired of the satellite litigation and wants the parties to focus on the trial and possible resolution of this case.

“His criticism of the [Post Office’s] conduct in their litigation tactics should not influence the legal issues he has to decide but may be relevant in decisions on costs, not only of the failed application (which I assume they will have to pay) but also more widely.

“It is easy to be wise with the benefit of hindsight but on the assumption that the [Post Office] were concerned some witness evidence was not relevant to the issues in the first trial I am a little surprised [Post Office] were advised to make this application. Judges are very used to disregarding irrelevant evidence and submissions about that aspect could have been made at the start of the trial so he was on notice as to the [Post Office’s] position.”

Now, those are his initial thoughts before he has read the judgment.

Thomas Cooper: Mm.

Ms Hodge: After reading the judgment, he reports to you feeling very uncomfortable, from the Post Office’s perspective, about the comments made in it; is that right?

Thomas Cooper: Yes.

Ms Hodge: He said that it gave him very considerable cause for concern about the Post Office’s litigation tactics and handling, not to mention the merits of the case itself. You explain in your statement that you agreed with the concerns which Mr Watson expressed; is that right?

Thomas Cooper: Yes.

Ms Hodge: So his very considerable concerns about the litigation tactics handling and the merits of the case?

Thomas Cooper: Yes.

Ms Hodge: As a result of the concerns you both had, you invited the Chair of Post Office, Tim Parker, to read the judgment for himself; is that right?

Thomas Cooper: Yes.

Ms Hodge: And you raised the issue with the CEO, Paula Vennells; is that correct?

Thomas Cooper: Correct.

Ms Hodge: You were assured by Ms Vennells that a change of tack would be implemented but it was your perception that this would likely result in a change of tone, rather than substance; is that right?

Thomas Cooper: Yes, I think you need to bear in mind that this was mid-October and the hearings were due to start in early November, and so this was sort of one minute to midnight in relation to the hearings, so it didn’t seem realistic. To me, what this was signalling was that the company needed to change. It should change the substance of what it was doing – and that goes back to the discussions I’d had with Jane earlier in the summer – but I think realistically at this point, that was – it was too late. And so the best one could hope for here was a change of tone or approach or the way the hearings themselves were handled by the Legal Team. But it was clear – they needed to change what they were doing. That’s what Justice Fraser was communicating.

Ms Hodge: You’ve just said now, and you said in your statement, that you felt, really, a sense of resignation at this stage –

Thomas Cooper: Mm.

Ms Hodge: – and a concern that your advice was falling on deaf ears; is that fair?

Thomas Cooper: Correct.

Ms Hodge: Did you report your concerns about the Post Office’s conduct of the litigation to either the CEO or the Chair of UKGI at that time?

Thomas Cooper: I don’t recall. To be honest, I doubt it, actually. My main concern was that the Department should be sighted on the litigation and the team and I had spent quite a lot of effort trying to get this meeting for the Minister and the Permanent Secretary on 17 – which finally happened on 17 October. So it was right on top of the strikeout – it was just before we knew about the strikeout application.

And that was my priority – was to get the Department sort of properly involved, partly in order so they understood what was going on but also so that they could challenge the company on the issue of their contingency planning, which I felt was, you know, very inadequate, and that was, I think, the area where I felt the Department, at that stage, could be most effective in trying to get change.

Ms Hodge: Did you communicate to the Department the extent of your concerns about the Post Office’s conduct of the litigation by this stage?

Thomas Cooper: Not in those terms. I mean, the Department, I think, was kept updated as to what was going on. I mean, with hindsight, one of the things I think was missing in the preparation for the 17 October meeting was a pre-meeting with the Minister and the Permanent Secretary and that would have been my opportunity to talk about that issue and, you know, I remain – my memory is that we tried to get a pre-meeting. I haven’t been able to stand that up from the documents but that was – that is my memory.

But I think, you know, I’m still surprised that the Minister and the Permanent Secretary went into the 17 October meeting without hearing, having a pre-meeting discussion with the people handling it day-to-day, and I think, you know, these concerns would have come out then.

Ms Hodge: When it became apparent that you couldn’t have a pre-meeting, in advance of the briefing on 17 October, did you give any consideration to putting in writing your serious concerns about the conduct of the litigation so that the Department could go into that meeting informed as to the nature of your concerns?

Thomas Cooper: I didn’t because it was so late. I mean, I think the die was cast at that point, in terms of what was going to happen in the hearings. And a lot of this, I think you need to also bear in mind that the real levers for change here, I think, was, as I saw it, given the interactions we’d had with the Department, was at the company level.

The company was running the litigation, the Board was in control of it, and it was really through that mechanism that, if change was going to happen, it was going to happen in the time frame that was available. And, you know, I was actually disappointed when I did raise the liability clause issue, which I thought was completely obvious, you know, I was – it was disappointing to me that I didn’t get a lot of support from – or I didn’t feel I got much support from my colleagues on the Board.

Ms Hodge: What did you understand your responsibilities to be concerning the reporting of risk which you identified in the Post Office’s conduct of the litigation?

Thomas Cooper: Internally, within UKGI?

Ms Hodge: Internally and to the Department?

Thomas Cooper: So within UKGI there was a risk register. It identified the litigation as the top risk. And I think, if you like, that was the responsibility of the team. I mean, you know, I also had interactions, obviously, with Mark Russell and Mark actually was very good in coming to find me and asked me how things were going. So we did talk relatively frequently. I have to say, I think with – my memory is that most of those conversations really were about the relationship issues I was having with the company at the time, rather than necessarily the litigation. But I think, in terms of risk reporting, you know, the main vehicle was the risk register.

Ms Hodge: Thank you. We will come on to that a little later. You had been made aware, had you not, on joining UKGI, that it had recently been involved in a non-statutory inquiry into the award of the Magnox decommissioning contract?

Thomas Cooper: Yes.

Ms Hodge: Can you please briefly explain what you were told about the background to that inquiry?

Thomas Cooper: Yes, so I had a very good briefing from Elizabeth O’Neill who was our General Counsel at the time – she was Richard’s predecessor – and, essentially, what I was told was that there were some very significant learnings from the Magnox Inquiry that UKGI was implementing in relation to major bits of litigation, where our assets were involved.

And the core elements of that were to make sure that the Department was properly informed as to what was going on and what the litigation strategy was, that the Department would have access to the documents, even privileged material, and the vehicle by which that would happen would be the protocol, and that there was enough communication going on, there was the opportunity for the Department to have formed its own views as to how the litigation was being approached, so that they could express views where they had them.

Ms Hodge: Do you recall whether your briefing with Ms O’Neill covered the reporting of risk to the Board of UKGI?

Thomas Cooper: No, I don’t think it did.

Ms Hodge: Were you aware that UKGI had produced a written report into the lessons learned from the Magnox Inquiry?

Thomas Cooper: I don’t think I was. I had, I thought, a very comprehensive – I thought Elizabeth had communicated to me what I needed to know and what I needed to take away and actually put into action. So it was the protocol, it was contingency planning, how do you resolve this dispute, to get those things firmly on the agenda with the company and make sure those issues were covered. And then the merits opinion, as well, was I think the fourth element, so that everyone was sighted on the merits of the case.

Ms Hodge: Could we please take a look at that report that was produced by UKGI. It bears the reference UKGI00009275. Its title is “Initial review into UKGI’s role in the competition, award and challenge of the Magnox/RSRL decommissioning contract”. It’s stated to be a draft, dated 25 October 2017. The section of the report which is entitled “General lessons learned” commences at page 26. Could we take a look, please, at some of the recommendations on page 27 of the report.

Just pausing there, having seen the title to that report, do you recall whether you were shown a copy of it at around the time that you joined UKGI?

Thomas Cooper: I actually don’t think I’ve seen this report – it’s the report itself – until I received it from the Inquiry.

Ms Hodge: Thank you. Please could we scroll to the bottom of page 27, where we can see the final bullet point, which reads:

“Use the Non-Executive Director appointed by Government as a means of obtaining better quality information.”

So that’s the recommendation.

“The forthcoming appointment of a UKGI Director as an NDA NED is an opportunity for fuller feedback on board discussions (and the performance of the NDA Board members). To optimise this, specific guidance should be provided to NEDs to enable them to fully inform the shareholder in a way that remains consistent with their obligations to the NDA.”

This is obviously a recommendation specific to Magnox. Did you receive any guidance when you first joined UKGI about the sharing of information, which you would have obtained in your capacity as Shareholder NED on the Post Office Board?

Thomas Cooper: Well, as I said, I think the main vehicle, as I understood it, for providing information to the Department was through the protocols. So that the Department would get privileged material, the merits opinion, and so forth. And, you know, Richard was really my – you know, I was reliant on Richard, effectively, to – as to how that operated. So he was, if you look at the email chains, for example, usually it was the lawyers in Post Office communicating with Richard, who then passed things on to the Department.

Ms Hodge: Sorry, just to clarify, Richard Watson?

Thomas Cooper: Richard Watson, yes. Sorry.

Ms Hodge: No, no, we’ve got several Richards at UKGI.

Did you consider that there were any obstacles to you reporting risk you’d identified in the Post Office’s conduct of the Group Litigation.

Thomas Cooper: No, absolutely not. No.

Ms Hodge: Did you recognise that, in your role as Shareholder Non-Executive Director and as a member of the Litigation Subcommittee, that you would be a very important source of information for UKGI and the Department about the risks to the Post Office arising from the litigation?

Thomas Cooper: Yes, and, as I say, I felt this at the time but I feel it even more so now, that I think we would have benefited by a lot more in-person contact. So things like the –

Ms Hodge: With the Department?

Thomas Cooper: With the Department, and I’ve given one example being the pre-meeting – the lack of a pre-meeting before the October meeting with the company, and, you know, there were times in 2019 when I tried to reach out to the Department, particularly the Minister, to talk to her about it. And, you know, they – I don’t think they happened as frequently as they should have. It was quite hard to gauge, to be honest, how interested the Department was in this. You know, they’d received briefings, quite fulsome briefings, actually, on the background to the litigation, and no questions came back. Nothing came back. So, you know, from my perspective, the action was at the board level. The action wasn’t at the departmental level.

Ms Hodge: On that topic, we can digress because you’ve raised it, you suggest in your statement that, when you first joined UKGI, there was an insufficient level of engagement by the Department in matters concerning the Post Office; is that fair?

Thomas Cooper: Yes, it was partly structural because there wasn’t a policy team in the Department at that time. It’s something I raised with Alex Chisholm, I remember asking him, you know, “Who do I talk to, Alex, if it’s not you?” And I think at that point the penny dropped and he quite quickly got a policy team in place and I think they were there from August.

Ms Hodge: How did the BEIS policy team interact with the Shareholder Team in UKGI?

Thomas Cooper: It was an evolving picture because it was a small team to start with, and so, I think, like all of us with Post Office, there was quite a learning curve for them. It’s a complicated business and set-up. So – but, you know, there was clearly a much – a big step-up in activity and interest after the Common Issues judgment.

Ms Hodge: What do you think were the practical consequences of the Department not having a dedicated policy team in the first half of 2018?

Thomas Cooper: Well, I think it would have been – you know, realistically, access to ministers and Permanent Secretary level is very hard to come by, they’re very busy people, and the discussions you have with them are focused. We don’t – as UKGI, we don’t have regular touchpoints with them. So when you can drop in a comment and say, “Oh have you seen that or seen the other”, the interactions we have aren’t like that because we don’t see the ministers and Permanent Secretary on a day-to-day basis. So a policy team does have those interactions and so I think it would have been an opportunity for us to talk through more of the day-to-day concerns, you know, the things that were perhaps of concern to us as a team, like some of the issues around the handling of the litigation, that one way or another the policy team could then have fed up through their day-to-day interactions, in addition to whatever they got formally.

Ms Hodge: Would it be right to say that you saw the policy team as a more effective channel of communication through to the –

Thomas Cooper: Yes.

Ms Hodge: – Minister and senior officials in the Department?

Thomas Cooper: Yes, that’s, you know, part of what they’re there for.

Ms Hodge: So leaving to one side then reporting to the Department, to whom within UKGI did you report your knowledge of risks relating to the litigation?

Thomas Cooper: That was primarily through the risk register.

Ms Hodge: But to whom – forgive me, are you saying that you inputted your knowledge into the risk register?

Thomas Cooper: Team – the team did.

Ms Hodge: So, sorry, to whom in the team did you report your concerns?

Thomas Cooper: So – well, Richard, primarily. But members of the team had signed the protocol, so Josh Scott, for example, Tom Aldred, who was my number 2, were all quite heavily involved in the litigation, so they knew what was going on, and the team, you know, drafted the risk register. I mean, I think, with – again, with hindsight, there would have been – you know, I think I could have talked more to Mark Russell about this, the fact that I thought that they were – I didn’t agree fundamentally with the way the company was approaching the common issues hearing and its unwilling – its unbending approach to the 23 issues. I really don’t think it would have made any difference at that point.

The focus, I think, was – in relation to the Department and the Government side of this, to me, the critical thing was the contingency planning. What would happen if the company lost? You know, could branches stay open, for example? I mean, these were quite critical questions, not – you know, setting aside obviously – the issues like compensation could be dealt with afterwards but, if there would be real-world impacts, potentially, on the provision of services to the public if the litigation was lost.

So the best example is, if Justice Fraser had said Horizon doesn’t work, the current version of Horizon doesn’t work, what happens? Can the company actually continue to operate? Will people be able to get money out of branches? Those kind of things.

And I think, you know, those – it was action on that that I was trying to lever, to get the Department to get the company focused on – really focused on those questions. That seemed to me the area where I could get, if you like, most bang for my buck out of the Government side.

Ms Hodge: In terms of managing risk within UKGI, could we look, please, at a further recommendation made in the Magnox Inquiry report. So it’s the second bullet point from the bottom, which reads:

“In holding the NDA [I should have clarified, the Nuclear Decommissioning Authority] Board to account, UKGI should utilise its own board and its in-house legal function on consideration of risks. To assist and develop its role in holding [I think it should be ‘an’] asset’s boards to account, UKGI could make more use of the UKGI internal risk management process to encourage discussion and debate of the major identified and Horizon risks being faced by the assets it manages, especially by drawing on the expertise of the UKGI Board and UKGI in-house legal colleagues.”

Thomas Cooper: Mm-hm.

Ms Hodge: Now, were you told, when you joined UKGI, that you should escalate any major risks which you identified in the Group Litigation to the Board?

Thomas Cooper: Not in specific terms about the litigation but, I mean, it’s obvious as a general point that, you know, whereas – where the Shareholder Team has concerns about a – big concerns about an issue, you want your seniors to be aware of it. That’s clearly true. And, on this recommendation, I think, obviously, the learning about involving legal colleagues was absolutely implemented. I mean Richard was fully involved.

Ms Hodge: On the issue of reporting to the UKGI Board, is it your evidence that, whether or not you’d seen this report, you recognised that might be necessary when dealing with a major risk?

Thomas Cooper: Yes, yes. I mean, the specific benefit that the UKGI Board brings is – I mean, obviously the expertise that the Non-Executive Directors bring and their experience and they’re very good sounding boards, and I did use – I did benefit hugely from Robert Swannell’s input and Jane Guyett’s input during 2018. But I think the other key element of the UKGI Board is, because we have Treasury and, you know, in this case, fortuitously BEIS – we had BEIS on the Board through the Permanent Secretary – it’s a very good vehicle for, if you like, escalating issues that are of concern on the Government side and, you know, I’ve used that vehicle as well, subsequently.

Ms Hodge: So you very much saw at the time that there was an open channel of communication to the UKGI Board, where you were concerned about a major risk; is that fair?

Thomas Cooper: I felt comfortable reaching out to the Chair and the Non-Executive Directors. I think I wasn’t responsible for reporting to the Board myself so, you know, the chain of command, as it were, for that were the team into the management at UKGI, obviously led by Mark Russell, and, you know, they decided what should and shouldn’t be reported to the Board. So I can’t really speak to what was in the Board papers at the time because I didn’t see them and I didn’t go to the Board meetings.

Ms Hodge: But you did on occasion reach out directly to Board members; is that right?

Thomas Cooper: Yes, and the particular issue I got the benefit of their wisdom on was the relationship issues I was having with the company. You know, I was getting complaints about how, you know, intrusive I was being.

Ms Hodge: Yes, thank you. We dealt with that in your statement, unless there’s anything you wish to add at this stage about that?

Shortly after the dismissal of the Post Office’s strikeout application, you established a possible link, did you not, between the unfairness of the liability clause and the Post Office’s conduct of past prosecutions?

Thomas Cooper: Yes.

Ms Hodge: Please could we look at UKGI00008614. This is an email from you to several colleagues in UKGI dated 6 November 2018, and it’s addressed to Richard Watson and Joshua Fox. You’ve explained already their roles. It’s also copied to Tom Aldred and Stephen Clarke. Could you please confirm their roles within the Shareholder Team?

Thomas Cooper: Yeah, so Tom, as I mentioned, was my number 2, he was an Executive Director, and Stephen was a more junior member of the team. Stephen was quite heavily involved in working with Richard on communicating with the Department about the litigation but, again, the only lawyer on this list was Richard.

Ms Hodge: Thank you. So it reads “Richard”, it’s addressed to Richard Watson:

“Is it within the scope of the judge’s remit in this case to express a view that prosecutions for fraud or false accounting were unsafe? Some of the press ([for example] the Computer Weekly article) seem to be pointing this way.

“I’m wondering about the relationship between contract law (where postmasters take on the liability for missing cash where there is a discrepancy between the Horizon system and the actual cash in the till – this is the agency principle in the contract) and criminal law (where there usually needs to be intent and evidence that cash was actually stolen). I’m wondering whether the complainants can argue that even though contractually postmasters are responsible for missing cash, prosecutions should not have been made without actual evidence of theft (ie it is [sufficient] to prosecute simply on the basis that some cash was missing without having proof that it had been stolen). I also wonder to what extent any coercive behaviour by POL ([for example] in encouraging a guilty plea as an alternative to a fraud trial) could be relevant to this argument as well – the judge in the last ruling mentioned POL’s style in previous correspondence as being dismissive.”

Just pausing there, from where had you obtained the idea that the Post Office that acted coercively in its conduct of past prosecutions?

Thomas Cooper: I’m not sure – no, I don’t think I was talking about past prosecutions here. I think I was talking about its coercive behaviour generally, in relation to its handling of postmasters.

Ms Hodge: Well, you give an example of encouraging a guilty plea as an alternative to a fraud trial?

Thomas Cooper: Oh, I see, yes, sorry. Yes. I’m sorry. Where had I got that from? I honestly can’t remember. I’d have to think about it but I can’t remember off the top of my head.

Ms Hodge: The email goes on to read:

“Is there a risk that some of the implied contractual terms being asked for by the complainants could feed this argument [for example] the implied term requiring losses to be investigated before deeming postmasters liable.”

So that’s your email to Richard on 16 October. You appear in this email to have identified not one but two possible risks. First, that the complainants, by which I think you mean the claimants in the Group Litigation, their convictions might be unsafe because, absent data from the Horizon system, there was no evidence that money had been stolen. Would you agree with that?

Thomas Cooper: Yeah, I mean in very simple terms, if you can’t establish a contractual claim, how do you establish criminal – a conviction? I mean, in very simple – much simpler language than this. That was what I was trying to understand the relationship between those two things. And it was a question – I mean, this was very much a question. I hadn’t – you know, this was me trying to understand the consequences of the litigation and adverse judgments in the absence of help on this from Post Office because, you know – and it particularly struck me with hindsight that, in all of the contingency planning conversations we had with Post Office at this time, convictions never came up.

In other words, the risks they identified, one of the risks they – they didn’t identify as a risk that, if we lose the litigation, there will be unsafe prosecutions.

Ms Hodge: You say they didn’t raise that with the Board?

Thomas Cooper: Yeah.

Ms Hodge: Does it follow that the suggestion that Post Office has encouraged a guilty plea as an alternative to a fraud trial was not something which had been suggested to you by the Post Office –

Thomas Cooper: No, it – this came from –

Ms Hodge: – that there was a risk to that effect?

Thomas Cooper: Correct, yes. This was something I’d extracted essentially from commentary, I think external commentary is my best guess as to where I got this from.

Ms Hodge: I think, in fairness to you, you’re making a connection which many others hadn’t yet made at that time?

Thomas Cooper: Well, it certainly hadn’t been made by Post Office within my hearing, that’s for sure.

Sir Wyn Williams: Had it been discussed in any Litigation Subcommittee, for example?

Thomas Cooper: Not in these terms, Sir Wyn. I think the backdrop to this on convicted postmasters was that it had very little profile in any of the discussions we had – in the Board at this time or in my discussions with the management team. There was a very strong sense, I think – two things I think I took away from it, and I can’t date when these – when I got these impressions, but the first was that the majority of people who’d been convicted – and we had no idea about numbers – but the majority had pleaded guilty to the offence concerned and, secondly, that a guilty plea would, if you like, trump anything else.

If a postmaster had pleaded guilty, they were guilty of something and, you know, it didn’t – effectively, what had happened to get you there and to get the conviction in place, sort of didn’t really matter. And that view, I have to say, persisted for a very long time. I remember, you know, when Brian Altman first came to the Board in early 2020, that was my takeaway from the first meetings we had with him.

So this was a very strong view.

Sir Wyn Williams: Sorry to cut you off, I’m sure that these issues became more and more prominent as the litigation unfolded, and after it, but Ms Hodge is rightly pressing you about your, if you like, perceptiveness in realising this problem before the Common Issues trial had even taken place and we were wondering how you were so perceptive, in effect.

Thomas Cooper: Well, to me, it was a logical question, and it was the link. As I say, to me what was an obvious question, which was, if you can’t – if the effect of the Common Issues judgment would be that – or an adverse Common Issues judgment – was that the company couldn’t establish a claim, a contractual claim, ie the money has gone but it’s not the postmaster’s responsibility for it missing, how can you prosecute them, on what basis? You don’t have the fact that the money is even missing, let alone whether they intended to steal it.

Sir Wyn Williams: Well, all right, fine. Back to you, Ms Hodge.

Thomas Cooper: I’m sorry, I’m possibly not answering your question very helpfully here but I don’t think it came from – I mean, this was just my thought process.

Sir Wyn Williams: All right.

Ms Hodge: You said, Mr Cooper, in your evidence just now that the consistent advice you received, including from Brian Altman QC was that a guilty plea really was the end of the matter.

Thomas Cooper: Yeah.

Ms Hodge: But you seem – you were raising here the possibility that that might not be right, if the Post Office had coerced a subpostmaster into submitting a guilty plea, in return for dropping a more serious charge?

Thomas Cooper: Well, even if they hadn’t, I mean, the fundamental point was, you know, if the money – if the postmaster wasn’t responsible for missing money, then how could they be guilty of a crime?

Ms Hodge: Did it occur to you at the time that, if the points you were raising in this email were correct, that a very serious miscarriage of justice might have occurred?

Thomas Cooper: I think so, but I – this discussion I don’t think developed. From memory, I don’t remember receiving an answer to this email and I think I moved on because there were other things going on. And I didn’t really come back to it until after the Common Issues judgment and when we were discussing the appeals strategy.

Ms Hodge: Does it follow that, when you first identified this risk, you didn’t therefore ask the Post Office for information about the number of prosecutions which had been brought against subpostmasters?

Thomas Cooper: No. And I – again, with hindsight, I don’t think the company would have been able to answer the question because when we did get the information, it took months to get that, the number. The number of 750, I think it was roughly, Post Office prosecutions, and 950 in total, it took the company months, and months, and months to get that data.

Ms Hodge: Did you take any steps to bring your concerns to the attention of your colleagues on the Post Office Board?

Thomas Cooper: I don’t remember. Like I say, I think this discussion sort of stopped. It didn’t progress and I don’t recollect exactly why.

Ms Hodge: Having raised your concerns with Mr Watson, the General Counsel, what, if any, action did you expect him to take to manage or mitigate the risk that you’d identified?

Thomas Cooper: Well, I think, if we’d followed this on and if he’d encouraged me, I think I would have raised it at the Board and really tried to get the company’s response to this, the Legal team’s response.

Ms Hodge: In terms of your reporting internally within UKGI, did you report your concerns about a possible miscarriage of justice to either the CEO or the chair of UKGI at the time?

Thomas Cooper: I think it was identified in, you know, obliquely at least, in the risk registers, but I didn’t raise this particular issue, as I say, because it didn’t really go anywhere at the time.

Ms Hodge: Sir, that may be a convenient point to take our first morning break. I’ve come to the end of that particular line of questions.

Sir Wyn Williams: Yes, can I just clarify with you, Mr Cooper, my understanding of your evidence up to the beginning of the Common Issues trial. Summaries can be deceptively simple, so if you think I’m being too simple, please say so.

But the impression, the strong impression, I have is that in relation to what I’ll call one of the central issues in the Common Issues trial, namely whether the contract with subpostmasters was relational, all the legal advice that you had received, both from Post Office’s lawyers acting in the litigation and from UKGI lawyers, was that the likelihood was that this was not a relational contract?

Thomas Cooper: Correct, and –

Sir Wyn Williams: But that could only be resolved by litigation because the parties were so far apart.

Thomas Cooper: Correct. I think from –

Sir Wyn Williams: Then, secondly –

Thomas Cooper: Sorry.

Sir Wyn Williams: – and then you can put your caveats, if you may, but you thought that some of the issues which were identified for resolution in the Common Issues trial ought to have been compromised, in the sense that the Post Office should have taken a different tack towards certain specific points and the one you highlighted is the liability clause?

Thomas Cooper: Yes. I mean, I didn’t take it to its logical conclusion but it seemed to me where – you could argue that where the common issues should have ended up, and I think what I was reaching for, was a scenario where the parties could have agreed that it wasn’t a relational contract, because that wasn’t necessary and was unusual, but that the 23 implied terms, a compromise could have been reached on those so that the liability clause would have been, you know, fair, and the company would have agreed to provide a computer system that worked. It seemed to me those areas were entirely open to compromise and then you wouldn’t have needed the Common Issues hearing. You could have just focused on the Horizon Issues.

Sir Wyn Williams: Yes, all right. I understand fully.

Thank you, Ms Hodge, for delaying the break so that I could clear my head. So what time shall we start again?

Ms Hodge: Shall we return at 11.15?

Sir Wyn Williams: Fine.

(11.00 am)

(A short break)

(11.15 am)

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

Sir Wyn Williams: Yes, thank you, yes.

Ms Hodge: Thank you, sir.

Mr Cooper, I’d like to ask you some questions now about the risk register which was maintained by UKGI in relation to the Post Office. You’ve said earlier this morning that the risk register was the principal method by which UKGI recorded and reported significant risks in relation to each asset; is that right?

Thomas Cooper: Correct.

Ms Hodge: Is it right that there was a specific register maintained in relation to each asset, including the Post Office?

Thomas Cooper: Yes.

Ms Hodge: Did you have any direct input into the contents of the register?

Thomas Cooper: Yeah, as a team we were responsible for it. So I can’t say that I looked at it every word, every time but, you know, collectively we were responsible for producing the risk register.

Ms Hodge: So it was a document that was held and controlled by the Shareholder Team; is that right?

Thomas Cooper: Correct.

Ms Hodge: Therefore, circulated amongst the members of the team –

Thomas Cooper: Yes, usually.

Ms Hodge: – and from there, where did it go?

Thomas Cooper: Then it fed up into the management at UKGI – I can’t remember the individuals – but it then informed the – the purpose of it – you know, one of the main purposes, as I said earlier, was to inform the Board report that UKGI Board received, so certainly today, and I think it was true then, the – effectively, the risk registers were summarised in the Board reports, so that the key risks to the individual assets were brought out into the Board reporting to the UKGI Board.

Ms Hodge: Please can we take a look at a copy of the register dated 29 June 2018, so this is about six months into your tenure. It bears the reference UKGI00021096.

Thomas Cooper: So this is June, you said?

Ms Hodge: June 2018.

Thomas Cooper: Okay.

Ms Hodge: Thank you, that’s the covering page. If we could go to the Post Office tab, please. Thank you. We can see there, if we scroll to the top, please – I’m grateful – we have the civil litigation risk there at number 11. But if we just pause here, so there’s several columns. The risks are numbered in the left-hand column, we can see there “Summarised” in the next; a risk overview is provided; then an impact; the type of risk identified; a RAG rating; mitigation; overview; and mitigation rating; further mitigation actions; and, finally, comments on the current status. Can you see those at the top?

Thomas Cooper: Yeah.

Ms Hodge: If we scroll down then, please, to number 11. So this is described as “Possible civil litigation against the Post Office”. That’s not right, of course by this stage we’re in June 2018 so the litigation is well underway?

Thomas Cooper: Correct.

Ms Hodge: Your name is shown there. Do you know why that is?

Thomas Cooper: Probably because I was the main person on the team involved in the litigation.

Ms Hodge: So would that mean that you were the primary source of information or you, in fact, inputted the information that we see here? Can you –

Thomas Cooper: No, I didn’t input the information. I actually think some of this – a lot of this wording was inherited from the previous team and then it evolved over time as there were more developments in the litigation.

Ms Hodge: What is the significance of the red text, please, do you know?

Thomas Cooper: I’m sorry, I’ve no idea.

Ms Hodge: If we look, then, first under the column “Risk overview”, it reads:

“Civil litigation and/or Court of Appeal processes judge that POL has acted inappropriately or illegally. Even in the absence of such a finding ongoing risk that they …”

I think there’s some text missing there.

Thomas Cooper: There may – it’s in the top:

“… that they continued to be perceived to have acted in that way.”

Ms Hodge: “In that way”, thank you.

Thomas Cooper: Yeah.

Ms Hodge: So is it your understanding that text was inherited from an earlier copy of the register?

Thomas Cooper: I believe so.

Ms Hodge: It goes on then, in the next column, in terms of the impact of the risk, to say there’s:

“Potential for significant compensation claims if civil or criminal courts rule against POL. More likely however, and certainly in the short-term, is that this continues to be a significant distraction (and cost) to the business as they defend their actions.”

Now, you’ve said earlier this morning that you believe that the risk of criminal convictions being overturned had been flagged in the register. Is this entry the one to which you were referring?

Thomas Cooper: Yes, I mean, it says, “acted illegally”, and it talks about criminal courts. So, you know, it’s not stated in perhaps as clear a language as we might like, with hindsight, but I think it’s there.

Ms Hodge: In relation to the RAG rating, please, this is said to apply to the legal, reputational and financial risks. Are you able to explain how the figures shown there were calculated?

Thomas Cooper: Well, shall I – is it worth just using a stupid analogy to explain the two sets of columns in grey? So if you, for example, think about your house and the risk of why fire in your house, the left-hand column is saying, “What’s the chance of my house burning down and what’s the impact of that?”, yeah? And then on the right, it’s saying, “After I’ve taken mitigation”, in this case buying a fire extinguisher or a fire blanket, my probability is reduced. But, in this case – so essentially this is what this is saying: if there wasn’t mitigation, the probability of there being serious consequences from the litigation is high, that’s what the 4 means in probability, and that reduces to 3 as a result of the mitigation.

The impact of the event is very high, that’s 5, and it’s very high in both cases because the mitigation doesn’t – in this case, with the litigation, doesn’t reduce the impact of the – of a negative event.

Ms Hodge: So far as you were concerned, did that accurately reflect the impact risks that you perceived in relation to this litigation?

Thomas Cooper: Yes, I think it was always perceived that – and if – perhaps we could scroll up to the – would you mind scrolling up to the top and to the heatmap?

Ms Hodge: I don’t think we have a heatmap on this version of the risk register.

Thomas Cooper: Oh, okay.

Ms Hodge: I’ll take you to another version –

Thomas Cooper: But I think it’s important, if you do have another version with it, it might be helpful to look at it.

The point I was going to make is that this was the top risk. It was identified as the top risk affecting Post Office at the time. It was in the top right-hand corner, it was red, both in terms of probability and impact and so I think, you know, from a team’s perspective it was clearly identified as, you know – and there were many risks attaching to this company. I mean, as you’ve seen, there are 12 items listed but it was the – you know, it had the potential to be the most significant issue.

Ms Hodge: Now, the Inquiry has heard evidence from the chair of UKGI, Robert Swannell, to the effect that the Board was first alerted to the risks of the Group Litigation in January 2019.

Thomas Cooper: Mm.

Ms Hodge: Given that this was recognised to be one of the greatest risks relating to the Post Office why is it, do you think, that it did not reach the Board of UKGI as a significant risk until January of the following year?

Thomas Cooper: It’s very hard for me to say because I – I think I’ve explained this, there’s a link in the chain, another link in the chain between this document and what the Board sees. So what the Board sees is a summarised version of these risk registers and, obviously, my team wasn’t involved – as far as I know, I don’t think the team was involved in preparing those summaries.

So I think what may have gone wrong here is that the process of summarising these things didn’t feed through properly to the Board paper.

Ms Hodge: Thank you. Then just before we move on to the next register, just dealing then with actions taken to mitigate risk, so in the column K, that is the “Mitigation Overview”, which identifies that the Post Office have their own external legal advisers employed on the civil litigation, including a silk, and they continue to update UKGI. Now, were you – this is obviously late June. You began to have some quite significant concerns, did you not, about the quality of the legal advice that the Post Office was receiving?

Thomas Cooper: Yeah. But this was before. I mean, if it’s June, that was before I really got into this topic.

Ms Hodge: Then if we look at column P, which I think bears the heading “Further mitigation actions”, it confirms that:

“UKGI have briefed the Minister Andrew Griffiths and will keep ministers, SpAds and the Permanent Secretary update at key points through the new disclosure protocol, with POL’s legal counsel to provide an oral briefing on 10 September.”

That, in fact, occurred in October, is that right, that meeting?

Thomas Cooper: Well, the meeting with the company, as I think I said. So a few points on this. So Andrew Griffiths was the Minister at this time but, obviously, he left quite quickly, I think, and then Kelly Tolhurst arrived in July. She actually was the third Minister we’d had in a period of some months. So that changed and then the briefings we’d provided, we’d provided a briefing, I think, by this point, to the Permanent Secretary, possibly to Andrew Griffiths, as well, I don’t recall but Kelly Tolhurst received the briefing papers, I think, later on after – in advance of the October meeting.

Ms Hodge: Was the turnover of ministers an issue for UKGI in relation to its communication reporting of risk?

Thomas Cooper: It’s always an issue because you don’t have continuity and, you know, naturally it takes them time to get appraised of what’s going on. They have to do their own priorities. I mean, you know, it’s not – it really isn’t helpful to try and get good decision making.

Ms Hodge: The final column, Q, this concerns the current status, so would be the most sort of up-to-date information as at June 2018, presumably.

Thomas Cooper: Mm-hm.

Ms Hodge: It reads:

“POL preparing for the first main hearing in November to determine scope of contract between Post Office and postmasters and concurrently the second main hearing on the integrity of the Horizon IT System. UKGI has put in place a disclosure protocol with the Post Office to keep the Permanent Secretary, BEIS and the Minister updated at key stages while protecting legal privilege integral to the Post Office’s defence. Post Office’s counsel to give a briefing, as we’ve discussed, particularly to cover contingency planning.”

That’s a matter you’ve raised in you evidence this morning:

“No inherent increase in risk in this case at this stage.”

Does that reasonably fairly summarise where you were in late June 2018?

Thomas Cooper: I think so, and I think what – perhaps we’ll talk about this in the later versions of this, but I think it’s important to understand that this risk register at this stage, given the information we had, could only articulate the risks at quite a high level. If you – another word for contingency planning that we were asking the company to do is identify the risks, “Please tell us what the risks are of this going wrong and what the consequences are”; it’s another version of a risk register. And that would have – I think, had we had good contingency planning from the company, it would have informed and allowed us, enabled us to produce a much better risk register that was, you know, particularly with the benefit of hindsight well articulated.

Ms Hodge: Can we please take a look at a later copy of the register, dated 31 December 2018. So about six months later. It bears the reference UKGI00015921. So this register contains the heatmap to which you referred.

Thomas Cooper: Mm-hm.

Ms Hodge: Was there a particular point you wish to raise in relation –

Thomas Cooper: I’m hoping, given what I’ve said, that number 9, which is in the top right, is the litigation.

Ms Hodge: I believe it bears the same reference, if we scroll down, please?

Thomas Cooper: Yeah.

Ms Hodge: So you’re saying here, really it’s been flagged on the map as the most serious risk?

Thomas Cooper: Yeah.

Ms Hodge: If we look at the summary, beside the register, please – sorry, besides the heatmap, it contains an overview at point 1; at point 2, an overall delivery risk; and at point 3, a summary of the reputational risk. That’s registered to be high, and it reads:

“There is significant political risk in the Post Office Network and there are a number of clear policy objectives. Risk is mainly centred on these areas but it can also be linked to executive management and remuneration issues.”

It then deals with the ongoing litigation.

“There is an ongoing [Post Office] litigation case which could potentially generate a high level of negative coverage. The UKGI [Post Office] team are aware of the pressures and are working [collectively] with Post Office Limited to manage the risks away.”

Do you think that accurately reflected the level of risk at that time; is that a fair summary, do you think?

Thomas Cooper: No, I don’t think so. I think the sentence I would rewrite or should have rewritten at the time, was one about there is an ongoing litigation case which could potentially generate a high level of negative coverage. I mean, I don’t think I or the team were thinking about this from a coverage point of view. What we were thinking about was the consequences. As I’ve said, the primary focus, certainly with the Department, was to get the contingency planning done. It was what are the consequences of a negative judgment?

Ms Hodge: You’ve said earlier in your evidence that you’re not sure why the risks relating to the litigation didn’t penetrate up into the UKGI Board until January 2019. Do you think that the practice of pithy summaries like this might explain why it didn’t necessarily register, absent a heatmap, as a very serious risk?

Thomas Cooper: Possibly. Possibly. But I think, you know, given that it’s number 9, it’s in the top right and there’s a much better explanation below, I don’t think it’s much of a leap to identify what’s really going on from this.

Ms Hodge: If we scroll down, please, to page 4, we see the detail there in relation to risk number 9. So now described as “Civil litigation against the Post Office”. You’re no longer named underneath, it’s Stephen Clarke who’s named. Do you know why there was a change of the guard?

Thomas Cooper: I don’t.

Ms Hodge: So the first column is substantially the same as it appeared in the risk register to which we referred in June. There’s an additional entry under the impact column, where it reads:

“Even a positive legal outcome is likely to have considerable comms fallout for Post Office and UKGI. The complainants have a track record of successfully airing their grievances through the media.”

So picking up again on that interest in the press reporting, rather than the substance of the litigation; do you know why that is?

Thomas Cooper: Actually, yes, and I – again, I repeat what I said earlier. I think there’s too much focus here on communication, relative to actually what the team was doing. I also think the word “distraction” in here is inappropriate as well. I mean, the point that was trying to be made here is that the absorbed – it was absorbing a significant amount of management time, which obviously diverted them away from doing other things. But it – the implication here is that the word “distraction”, I think, has connotations, which I think again weren’t in our mind at the time.

Ms Hodge: If we go on, the RAG rating remains the same, as it did in June. We can see there the rating of 20. In the previous version, I think that wasn’t visible, but it is the same, so 4 for probability; 5 for impact; an overall rating of 20.

Under column K, the “Mitigation Overview” repeats that Post Office have external legal advisers including a silk:

“They continue to update UKGI through the Board where UKGI’s Non-Executive Director [you] sit and directly to UKGI’s legal counsel, under the disclosure protocol.”

Now, by this stage, we are now in December 2018, it’s right, is it not that you had lost confidence in the Post Office’s Legal Team?

Thomas Cooper: Yes, yes. But I don’t think that – again, I think it’s easy to conflate my personal views with what we were still hearing from the company, so in December, which obviously was after the hearing had started but before the judgment arrived, the company was still, you know, expressing great confidence in the outcome of both hearings. So I think it’s – you know, it’s important that one person’s perspective doesn’t necessarily colour what goes into these things too much because, you know, I might have been right, I might have been wrong. And I think the important thing was to – here, was to try to convey, you know, if you like, the expert, the expert view, as it then was.

Ms Hodge: Well, starting with you’ve accepted, I think, that you, as Shareholder NED, was the primary source –

Thomas Cooper: Yes.

Ms Hodge: – of reliable and accurate information about risks relating to the civil litigation?

Thomas Cooper: Yeah.

Ms Hodge: This is a register maintained by UKGI of the risks that it has identified –

Thomas Cooper: Mm-hm.

Ms Hodge: – in relation to the civil litigation and it puts forward, as positive mitigation, that the Post Office have an external Legal Team and advice from a silk –

Thomas Cooper: Mm-hm.

Ms Hodge: – in whom you had, by this stage, lost confidence. Is that not somewhat inaccurate and misleading and not reflecting your views as Shareholder Non-Executive Director about the concerns you had?

Thomas Cooper: I actually think, to bring that out, you would probably have changed the probability. I’d have – you know, we would have probably tried to stay, instead of a 3, it should be a 4 for probability of losing and, you know, we’ve put it as a 4 because Tom Cooper thinks, you know, the lawyers have got it wrong. Again, I think I – I don’t think that’s, you know, yes, that is a possible argument.

Ms Hodge: Under column P, this relates to “Further Mitigation Action” and initially repeats what was recorded in the earlier risk register in June, in that:

“UKGI is keeping ministers, SpAds and the Permanent Secretary updated at key points through the disclosure protocol and POL’s legal counsel provided an oral briefing on 17 October.”

It goes on to say:

“BEIS Legal are also up to speed and contributing to any advice to ministers, maintaining a position that Government will not comment on an ongoing legal issue and will work with POL and the Post Office and BEIS Policy/Comms to review this depending on outcome. First judgment on first trial expected in January.”

So that appears to acknowledge, does it not, that by this stage BEIS are quite closely involved, in the sense that their own Legal Team are receiving advice and input and they’re feeding that advice up to their ministers?

Thomas Cooper: Yes, and I mean that had been true for some time, at this stage.

Ms Hodge: Because you, I think you expressed earlier in your evidence a concern about a lack of engagement on the part of the Department until after the Common Issues trial. What this appears to be suggesting is that the Department was already quite actively engaged.

Thomas Cooper: I think what this is conveying is that the Department was receiving the information. What I was trying to say earlier was that we weren’t getting a lot back. There weren’t many questions coming out of that information. So we’d provide a briefing, and there was no – it was noted or received and – but we wouldn’t get questions back or we wouldn’t say, “This is important, you know, or interesting, please can we have a meeting to discuss it?” That was the bit that was missing. So, yes, they were informed but the point I was making earlier about engagement was there wasn’t much coming back.

Ms Hodge: Under the final column Q, which is “Current Status”, a slightly lengthier entry this time, it reads:

“POL awaits judgment on the first trial to determine scope of contract [so as previously expected], which is expected mid to late January and is making contingency and Government arrangements to deal with a ‘bad judgment’ and taking a decision on whether to appeal such a judgment. At the same time POL is preparing for the second trial in March 2019 on the integrity of the Horizon IT System. UKGI has put in place a disclosure protocol with POL to keep the Permanent Secretary, BEIS, and the Minister updated at key stages whilst protecting legally privileged information.”

It goes on to confirm that:

“POL’s legal counsel briefed the Minister and the Permanent Secretary on 17 October. UKGI continues to forward legal updates from POL’s counsel to the Minister.”

Forgive me, there’s two separate – thank you:

“POL’s Group Communications Director has met BEIS, (Policy and Comms) and UKGI on 3 January [sorry, will meet, presumably] to discuss comms ahead of the judgment and will keep in regular touch. There has been considerable media interest so far, Daily Mail, Telegraph, Financial Times, Computer Weekly, in particular, while Nick Wallis, freelance journalist with crowd funding responsible for a Panorama feature in 2015 is covering the case every day through a dedicated website and regular Tweets. At the request of the Permanent Secretary, UKGI’s legal counsel briefed Her Majesty’s Treasury on the case on 13 November and discussed the settlement process should this be required. UKGI will comprehensively review both risk and mitigations once the first judgment is handed down.”

Would you agree that this was quite a process-driven factual update, which did not offer any real insight into your own thought processes as shareholder on the Post Office Board?

Thomas Cooper: Correct. Yeah.

Ms Hodge: It’s right, is it not, that your understanding of the risks relating to the Group Litigation had changed quite significantly in the period between June and December 2018?

Thomas Cooper: Yes, from a personal perspective, yes. I was quite gloomy about the way Post Office was handling it. I mean, I think – but, you know, I’m not a lawyer, and I think you need to just bear that in mind: that my own personal views were not – were never the best informed, because I’m not a lawyer, and so what this is trying to be is an objective description of what was going on, and so on. But I was – you know, effectively, I was in a minority of one, here, in terms of – you know, in relation to the Post Office. I was the only person on the pitch who was – at least it felt that way – who was questioning, you know, the litigation and how it was being handled, and so on.

So I think, you know, if you’re going to put in something that’s seeks to be reasonably objective there, it can’t – you can’t colour it too much by the opinions of one person who’s not objective – or sorry, not – I don’t mean not objective – is not an expert.

Ms Hodge: It’s right, is it not, that the very purpose of your role as a Shareholder Non-Executive Director on the Board was to provide oversight –

Thomas Cooper: Mm-hm.

Ms Hodge: – and to report back any risks you identified –

Thomas Cooper: Yes.

Ms Hodge: – to UKGI and the Department?

Thomas Cooper: Yes. That’s right. But what was the risk I’d identified? The risk I’d identified was that Post Office had was – would – had missed an opportunity to solve the Common Issues hearing in a consensual way. But the – you know, there were two parts to this litigation. One was Common Issues the other was Horizon Issues, and the Horizon Issues, at least to my way of thinking, was, in a way, more important than the contractual issues.

And no one was – I had no view, and no one was telling me that – at that stage, that Post Office was going to lose on the Horizon Issues. So the fact that I had strong views about the way the Common Issues was being handled didn’t impact on – actually, particularly strongly on the bigger issue, which was what’s the Horizon Issues judgment going to be?

So I don’t think – I mean, this picture and this scoring, I don’t think would change – even if my views had been fed in here about the way the Common Issues had been handled, I don’t think actually it would change the picture in an overall sense in a substantive way, because the big issue was, you know, whether Horizon worked or not.

Ms Hodge: You suggest that was the principal issue. But you had already established, had you not, a concern about the liability clause and its link to a potential miscarriage of justice. So the Common Issues trial itself potentially gave rise to very, very significant risks, didn’t it?

Thomas Cooper: I agree with that and I had figured that out but, as I said earlier, it kind of – it didn’t go anywhere, and again, had I – had that topic been followed up, particularly with Richard, if I’d got support and encouragement for that from Richard, it might well have appeared in here but, more importantly, it would have surfaced at the Board, I’d have raised it at the Board, which is, you know, the place where change could be affected more quickly than through the UKGI channel.

I’m not saying the UKGI channel didn’t matter but what I’m tying to say is, if you actually want stuff to change, the place that it was going to happen was at the Post Office Board.

Ms Hodge: Is that entirely right? Is it not right that UKGI, through the Department, had the power to effect change in the way in which the Post Office was conducting its litigation?

Thomas Cooper: Yeah, but it’s all – you know, it’s slower, for a start. You need to persuade lots of people. You’ve got to persuade your CEO, you’ve got to persuade your Board, you’ve got to persuade the Department, all of which takes time. It can be very effective but this is – you know, this is all happening in short – a short timescale.

Ms Hodge: Looking back, do you think that your senior colleagues in UKGI and the Board of UKGI would have benefited from knowing a bit more, or indeed at all, about the very strong subjective views you had about the conduct of the Group Litigation?

Thomas Cooper: Possibly, yes. But I – what the consequences of that would have been, it’s very hard to say. I think it’s very speculative to say that that would have made a difference. I mean, remember, this is December now. So it’s all happening. It’s all happened, you know, the hearing has started.

Ms Hodge: I mean, looking back, do you consider that the Post Office risk register was an adequate tool for recording and reporting the risks relating to the civil litigation?

Thomas Cooper: No, I don’t agree with that, I’m sorry. I think it’s – we can discuss the wording and whether it could be worded better but I think the critical thing, which is this risk was identified as the key risk, it was in the top right, it was red, on all counts, I think that conveyed the key issue. It has the key issue.

Ms Hodge: I’d like to move on to another topic, please, concerning your reaction to the Common Issues judgment. You received an update from the Post Office’s General Counsel on 8 March 2019, in which she confirmed the outcome of the Common Issues trial; is that right?

Thomas Cooper: Yes.

Ms Hodge: Please could we look at that email, which bears the reference POL00103411. If we scroll to the bottom of page 1, please. Thank you. We can see there the very start of an email from Jane MacLeod on 8 March 2019, and it reads – and just to confirm we don’t have the recipients there. To the best of your knowledge, was the email addressed to the same individuals we see copied in to your email of 8 March at 4.28 pm?

Thomas Cooper: Yeah, I think this would have been a reply all from me.

Ms Hodge: Thank you. So if that’s the case, it’s an email to the members of the Post Office Board?

Thomas Cooper: Yeah.

Ms Hodge: It says:

“All

“We received the judgment this morning in the Common Issues trial. It’s 325 pages and very detailed, and as a result, we’ve not yet read it completely or fully understood all the arguments. However a high level review indicates:

“We have lost on all material points

“The judge has criticised Post Office comprehensively – both as to our historic operations and behaviours and our conduct of the case

“The judge accepts the evidence of the lead claimants but is sceptical of our witnesses who he characterises as ‘extraordinarily partisan’

“He struck out the key contractual provisions which require postmasters to account to Post Office, and

“He has stated that the Branch Trading Statement – which is the key document on which Post Office relies for postmasters to account for cash and stock in branches – cannot be relied on as a statement of account.”

She goes on to say that the judgment will be handed down later in the week, possibly the following week, and, in the meantime, the Post Office are working on grounds for appeal.

She confirms:

“[The Post Office has] activated contingency planning in order [to have] communications and detailed plans available and ready to launch at the point the judgment is formally handed down.”

On receiving this update from the General Counsel, you requested to see a copy of the draft judgment, did you not?

Thomas Cooper: Mm-hm, yes.

Ms Hodge: In your statement, you describe feeling shocked when you learned the basis on which the Post Office had pursued certain arguments in the Common Issues trial; is that right?

Thomas Cooper: Absolutely, yes.

Ms Hodge: You also state that you agreed with the judge’s characterisation of the Post Office’s position in the litigation as being unrealistic; is that right?

Thomas Cooper: Yes, yes.

Ms Hodge: Please can we take a look at what you say at paragraph 167 of your witness statement, please. It’s at page 79. Paragraph 167, thank you. This paragraph reads:

“I was also shocked by some of the flaws pointed out by the judge in [Post Office’s] processes, including for example the inability of [subpostmasters] to effectively dispute items, the unfairness and oppressive effect of having to ‘settle centrally’ before disputing an item and the inadequacies of the branch trading statement. I thought POL’s Legal Team would have been more fully aware of these points in the run-up to the Common Issues hearing. There were major defects in [the Post Office’s] processes and therefore in [Post Office’s] case. But none of these issues had been brought to the attention of the subcommittee nor, if they were ongoing in [Post Office’s] business, the [Audit and Risk Committee] and the Board. I also reflected that these flaws did not seem to have been brought to light in the past by any of the safeguards that the company had in place, including internal and external audit. It was also shocking to learn that some of [the Post Office’s] witnesses, particularly Angela van den Bogerd, had been heavily criticised. Justice Fraser said she had not been frank and had sought to mislead the court. My view, which I believe was shared by other members of the Board, was that the Legal Team had comprehensively mismanaged the litigation.”

Does that accurately reflect your response at the time to reading the Common Issues judgment?

Thomas Cooper: Yes.

Ms Hodge: You make reference in the final sentence to mismanagement of the litigation by the Legal Team, is that intended to be a narrow reference to the Post Office’s Legal Team or are you referring more broadly to the Post Office’s wider team of external solicitors and independent counsel?

Thomas Cooper: Oh, all of them collectively.

Ms Hodge: A meeting of the Post Office Board was convened on 12 March 2019 to discuss the judgment; is that correct?

Thomas Cooper: Yes.

Ms Hodge: That meeting took place by telephone and was attended by David Cavender QC; is that right?

Thomas Cooper: Yes.

Ms Hodge: When he advised the Board that the Post Office had strong grounds of appeal, you questioned that advice; is that right?

Thomas Cooper: Well, I think, if I recall, the preamble – there was important preamble to understand what had gone wrong and I remember challenging Jane MacLeod, for example. I mean, one of the things that horrified me about the ruling was the argument that Post Office’s counsel had put forward that – in relation to contracts, that even if a subpostmaster had not signed their contract, they were somehow meant to be bound by a contract that was left in a cupboard somewhere in the branch by their predecessor. And I thought this was risible as an argument.

And I challenged Jane on this in the meeting and said, “Who advised us – who advised the company to argue this?” And she said something like, “Well, if we hadn’t done that the whole Post Office edifice would have crumbled”, and it was at that point that I thought, you know – I’d completely lost confidence in the Legal Team at that point.

So before we got to the appeal part of the discussion, you know, there was a short post mortem on the hearing itself.

Ms Hodge: So far as Mr Cavender’s advice is concerned, to the effect that there were strong grounds to appeal the judgment, you say in your statement that you considered that he was not considering the judgment sufficiently objectively; is that right?

Thomas Cooper: Yes, I mean it struck me that there were significant – on a reading of it, a lot of what Justice Fraser was saying, it seemed to me, made total sense and I thought it – personally, I thought it was premature to talk about appeal when we hadn’t actually evaluated the judgment itself and worked out which parts of it the company actually agreed with and which parts they really disagreed with and on what basis they disagreed with them.

It seemed to me that was an important exercise to go through first before you started talking about appeal.

Ms Hodge: So, in a nutshell, your concern was that there was a knee-jerk reaction –

Thomas Cooper: Yes.

Ms Hodge: – by the Legal Team that the judgment needed to be appealed in its entirety?

Thomas Cooper: Yes.

Ms Hodge: You received an update from the Post Office’s General Counsel on 15 March, so three days later, concerning further advice which the Post Office had sought on bringing an appeal against the judgment; is that correct?

Thomas Cooper: Yes.

Ms Hodge: Could we take a look at that update, please, which can be found at POL00103438. If we could scroll to the second page, please. Thank you. We see an email from Jane MacLeod to you and Tim Parker, Chair of Post Office. It reads:

“Dear Tim and Tom

“As flagged on the Board call on Tuesday, we have sought further advice on appeals and as to whether we have grounds to request the judge to recuse himself on the grounds of bias.”

Under the heading “Advice”, it reads:

“We have sought advice from Lord Neuberger who stepped down last year as the President of the Supreme Court (and as such was the highest judge in the UK). We sought his views as to whether the draft judgment demonstrated the following grounds for appeal:

“Whether the judge has correctly interpreted and applied the law …

“[Secondly] Whether there are grounds to argue that findings have been made as a result of serious procedural irregularity … and

“(Most urgently) Whether Mr Justice Fraser demonstrated grounds on which we could apply for him to recuse himself.

“The test for recusal is ‘whether the fair-minded and informed observer, having considered the facts, would conclude that there is a real possibility that the [Judge] was biased’.

“Attached is Lord Neuberger’s preliminary advice … as you will see in paragraph 5 [he] states that although he has only looked at the issues very cursorily, ‘at least some of them raise quite significant points on which the [Post Office] has a reasonable case, and at least on the face of it, some points on which the [Post Office] has a pretty strong case’.

“Further however, he suggests … that if we wish to rely on the ground of procedural unfairness at an appeal, then ‘[Post Office] has little option but to seek to get the judge to recuse himself at this stage’ and … that if we fail to act promptly during the Horizon trial we ‘risk being held to have waived [our] rights, or at least weakened our position on the recusal [application]’.”

In your statement, you describe your reaction to reading this email as being one of astonishment.

Thomas Cooper: Yes.

Ms Hodge: Why is that?

Thomas Cooper: Well, as I said just now, there hadn’t even been a proper post-mortem on the judgment itself and, you know, the company’s Legal Team were talking about taking very extreme action, in my view, without having considered it properly.

Ms Hodge: Shortly after receiving the update from Jane MacLeod, you sought advice from Alex Chisholm, the Permanent Secretary at BEIS; is that right?

Thomas Cooper: Correct.

Ms Hodge: I think your request to Mr Chisholm prompted Richard Watson, General Counsel at UKGI, to send you some advice about your involvement in the decision as to whether the Post Office should apply to recuse the judge?

Thomas Cooper: Correct.

Ms Hodge: Now, you say in your statement that Mr Watson advised you that it would be inappropriate for you, as a representative of the Government, to participate in a decision concerning the recusal of a member of the judiciary.

Thomas Cooper: Correct.

Ms Hodge: Is that how you recall?

Thomas Cooper: Yes.

Ms Hodge: Can we take a look, please, at the email to which you refer in you statement. It bears the reference UKGI00009208. If we scroll to the very bottom of that document, please. We can see your original email to Alex Chisholm, you say:

“Alex

“The judgment in the first trial is out and it is adverse to POL. You’ll get the briefing by 3.00 pm.

“There are a couple of things I need to brief you on and on which POL is asking for a quick decision. It’s a high profile decision to do with handling the case with significant implications for BEIS.

“Do you have time for a call later today or over the weekend?”

The response you receive back – so forgive me, before we look at that, you’ve obviously copied this email to Richard Watson, Mark Russell and Gavin Lambert, and if we scroll up, please, we see a response from Richard Watson, he’s not copied Mr Chisholm or Mr Lambert. He says:

“Tom

“Not including Alex or Gavin in this email but copying Patrick and Gareth from BEIS Legal with whom I have raised the issue about a possible recusal application on the grounds of bias. I shared with them Jane’s email and the accompanying note from Lord Neuberger and they have engaged on this issue at a high level in the Government Legal Department.

“The particular concern here is anything that could be seen as [Her Majesty’s Government] not upholding the independence and integrity of the judiciary.

“While we think it is okay for Alex to be informed we don’t not [presumably we’ve got a double negative there] consider the shareholder should be involved in a decision whether or not to make a recusal application. That is probably a matter for the [Post Office] Board. I am, of course, happy to assist you as a Director on the Board in carrying out your role.”

Now, just pausing there, we’ll come on, because you’ve received several pieces of advice, but this first chain is not concerned with your involvement, is it, strictly speaking? The advice you’re receiving here is that it wouldn’t be appropriate for the Permanent Secretary or the Department to be involved in the decision?

Thomas Cooper: No, I didn’t read it that way and I don’t think that’s accurate. I think the bit – the bit that I think matters here is the bit that says, “We don’t consider the shareholder should be involved in a decision whether or not to make a recusal application”, and, you know, I was the shareholder representative on the Board, so anything I said in the Board meeting was likely to be interpreted as the shareholder’s view. I mean, obviously, as Board member, you have two hats, as it were: one is as the shareholder representative and then you’re there in your personal capacity as a Director. But, you know, as you’ll see from the subsequent emails – and I hope we’ll get to it – this was a case where there was – the two would – were bound to get conflated.

I think it was, in this situation, impossible for me to distinguish my personal views from those of the Department because of the significance, and you’ll see an email that addresses that later on, hopefully.

Ms Hodge: If we scroll up, please. The next email in the chain is from Mr Watson to Mr Evans and Mr Kilgarriff. You’re not copied into this email but it is forwarded to you later in the chain, so it is relevant to you. It reads:

“Gareth, Patrick,

“Would you agree that the UKGI director on [Post Office’s] Board should not be involved in any decision by the company about a recusal application?

“While I’m not convinced that there is a conflict of interest I think that given the concern, rightly, that [Her Majesty’s Government] should not be seen as questioning the independence and integrity of the judiciary it feels presentationally difficult for a Director appointed by the shareholder to be involved in the decision. Put another way it seems preferable that the UKGI Director is not involved.”

So the concern which Mr Watson articulates here is not that the application would give rise to a conflict of interest for you as a Non-Executive Director of the Board; is that fair?

Thomas Cooper: Correct, I don’t think it was ever seen as a conflict issue. It was seen as, if you like, a policy issue around relationships within the overall context of Government. At least that was the way Richard saw it and he’s articulated it here. I’m not sure whether – you know, how far that was discussed in those terms in the Department. I haven’t seen, either then or now, seen how that issue was discussed in the Department. But certainly in the Legal Team, in the Department, they seemed to share that view, and that’s what I took away from these emails.

Ms Hodge: The concern he articulates here and which he returns to in a later advice is that it feels presentationally difficult for you to be involved in that decision; what did exactly did you understand him to mean by that?

Thomas Cooper: I have no idea, to be honest. I didn’t really understand the word “presentationally”. To me, the key points I took away were, you know, the – one branch of Government, ie in this case the Department, should not be undermining the judiciary, and any action I took in the Board of supporting such a decision was wrong, from, if you like, a policy, broad policy perspective, and so I took that away as the first message. And the second message was the last sentence, which is “you shouldn’t be involved”.

Ms Hodge: So far as you were aware, had the Department ever brought a recusal application before; did you make any enquiries as to that?

Thomas Cooper: No, I mean, again, for – again, remember there was very little time here. I mean, this was 15 March and this debate was – the decision itself was taken on the 20th, I think there was a weekend in between, I’m not sure. So I – I was reliant on the legal input here. How branches of Government interact with each other was way out of my field.

Ms Hodge: If we scroll up, please, we can see the response that Mr Watson received from Patrick Kilgarriff, he says:

“Richard, Gareth

“I don’t think I would want to say Government NEVER consider a bias challenge – but inns sense of never say never.

“I would have thought the function of the UKGI Director might be to ensure the Board fully realised the seriousness of what was proposed including the impact on the shareholder (and the difficulties of distinguishing between strategic direction and the operational matters in Parliament and the media) as well as the wider litigation strategy on Horizon, that the Board had taken and properly considered legal advice – not a step to take on finely [balanced] merits, and finally had reflected properly on whether there was a bias or (painful as it is) inferences drawn ultimately properly from hearing the evidence expressed in pithy and robust language. If the UKGI Director has done that, I would agree that s/he may stand back from the decision to take the challenge or not.”

So it was not suggested by Mr Kilgarriff that you must not take part in the decision, was it?

Thomas Cooper: Not explicitly, no.

Ms Hodge: His email suggests that it’s a matter of discretion for the UKGI Director?

Thomas Cooper: Yes, but I think I mentioned earlier there was another email exchange.

Ms Hodge: I’ll come to that one. So there’s one a little later. In fairness, I think we should look at Mr Evans’ response as well. He expresses himself in slightly stronger terms.

Well, sorry, before we do that, Mr Watson forwards on that advice to you from Mr Kilgarriff, and he says:

“I think Patrick’s view is a sensible one, ie flag the things the Board need to be cognisant of but not to be part of the formal Board decision.”

So Mr Watson seems to read Mr Kilgarriff’s email as suggesting that, although you have a discretion, the sensible course to take is not to take part in the decision.

Thomas Cooper: Correct.

Ms Hodge: Now, Mr Evans’ response is at UKGI00009211. His email is dated 15 March, we can see Mr Watson forwards that to you the same day but, in the middle of the page there, Mr Evans’ email to Mr Watson and Mr Kilgarriff, following on from the email we’ve just seen, the advice from Mr Kilgarriff, who says:

“I agree. Government has to give [the Post Office] the wider context of any application. That could come from Alex [Alex Chisholm, the Permanent Secretary] or it could come from Tom. Tom would be best to deliver that view but having delivered it he should withdraw. Crucially, it would be painful if Tom was the casting vote either way. And that suggests he should not participate in the decision.”

What did you understand Mr Evans to mean when he said it would be painful if you were the casting vote either way?

Thomas Cooper: Well, it comes back to this one branch of Government undermining another, and his point is that, if the decision swung towards recusal because of my vote, there will be a clear – you know, it would be clear that it wouldn’t have happened, had it not been for the shareholder representative on the Board and, effectively, the actions of the Department, and that would create the opposite intent of what the – what was intended here, of me not participating.

Ms Hodge: What would be the problem with your vote: tipping the balance the other way, namely in stopping the Post Office from making the application?

Thomas Cooper: Well, what this exchange is saying is that I shouldn’t cast – the previous sentence, if I was casting the vote either way – I mean, to be honest, I didn’t focus on that bit. You know, I felt very strongly that this was a very rash thing to do and I think everyone’s instinct here was to try to avoid it happening.

So the idea of me voting in favour of recusal, you know, at this time, I think, was not in contemplation. I have thought about – I mean, we might come on to that, you might ask me the question: what would I have done as a Director if I had been in the meeting and heard all the arguments? But I don’t think that was relevant to this, to this email exchange.

I mean, it was clear to me, and it’s clear from this email and the subsequent one, that the right course of action was not to participate.

Ms Hodge: You make it clear in your statement that you always thought it was a bad idea for the Post Office to apply to recuse the judge –

Thomas Cooper: Yes.

Ms Hodge: – and you explain that you had a discussion about the recusal application with Alex Chisholm on 15 March – is that right –

Thomas Cooper: Yes.

Ms Hodge: – prompted by your email that we saw a short time ago. Please can we look at what you say in your statement about that discussion. It’s at paragraph 185 of page 88. So it reads:

“In addition to discussions that Richard Watson was having with BEIS Legal, I had discussed the recusal idea with Alex Chisholm on 15 March. It was clear that UKGI and BEIS were both deeply uncomfortable with the application being made. But it was considered inappropriate for me, as the Government’s representative on the Board of an arm’s-length body, to be party to a decision that sought to challenge the judiciary.”

You say:

“In essence, this was the ‘presentational’ concern referred to in Richard Watson’s email of 18 March.”

Can we take a look at that email, please, UKGI00009273.

By this stage you had canvassed the opinions of Mr Chisholm, that’s correct?

Thomas Cooper: Yes.

Ms Hodge: It was your understanding that, like you, he was opposed to application; is that right?

Thomas Cooper: Yes. I think it was clear from his email that he had reservations but I think he set out – because I’d forwarded to him Lord Neuberger’s note, which he read, and I think it was – he also knew, because I think I’d told him that Lord Grabiner’s view was even stronger at that time. We hadn’t heard his advice but it was reported that his advice was even stronger than Lord Neuberger’s. So that was part of Alex’s email.

So I think perhaps it’s worth reading it but, you know, he set out, I think, why the Board might reluctantly come to a decision to support recusal but then went on to say it was clear in his mind that the Department should – I think he used words like maintain a distance from this, which clearly supported – in my view, was totally consistent with the views of the Legal team that we’ve just looked at, that I shouldn’t participate.

Ms Hodge: So, obviously, there’s a difference between, on the one hand, the Department expressing a view, or becoming involved, and you as a member of the Board?

Thomas Cooper: Correct.

Ms Hodge: Those are distinct. In terms of your involvement, you received some further advice from Mr Watson on 18 March. Can we look, please, at the top of page 2. This is in response to a request from you for a script to explain why it is that you’re proposing not to participate in the decision. He says this:

“I have discussed this with the BEIS Legal Director. I should be clear that the [Secretary of State] does not have the power to direct you not to participate in the actual Board decision and I do not consider you have a conflict of interest. So in fulfilling your role as a Director you could properly reach the view that you should participate in the actual decision. However, the reason we are suggesting that you follow something along the lines of the above script is because of the presentational concerns that may arise if it transpired that the shareholding appointed Director participated in the actual Board decision.”

So here, Mr Watson reiterating the advice that there’s no legal barrier to your participation in the decision; do you agree?

Thomas Cooper: Correct.

Ms Hodge: He states –

Thomas Cooper: But I think the word “presentational” here actually makes, you know, makes a lot of sense because what I think he’s communicating was that it would be very hard, I think, for anyone in the outside world to understand the distinction between my role as the departmental representative on the Board and my own personal view. This is the point I was making earlier. I think the two would get conflated and, you know, if – let’s say I voted in favour of the recusal and that was criticised, and the Department then had to say publicly, “Well, you know, Tom was just expressing his personal view”. Nobody would believe that.

And I think this comes out quite clearly in a later email which talks about engineering an outcome which is where the decision effectively gets thrown back to the Department. So I don’t know if you’ve got that available but I think it’s worth looking at.

Ms Hodge: We’ll have a short break and I’ll see if we can find that one to which you’re referring.

Thomas Cooper: Yeah.

Ms Hodge: Before we do, is it not right that what’s being expressed here is a concern about style over substance, namely that you’re being advised that Mr Watson from UKGI, as UKGI General Counsel, and his colleagues in BEIS, with whom he’s consulted, they’re really concerned about how it’s going to look, rather than the actual decision that you need to make; is that fair?

Thomas Cooper: Well, I think I’ve tried to explain what I think “presentational” means in this context and I don’t think it’s just a style point or a form over substance point. I think it’s a real concern about, you know, how the decision would be interpreted and how my action on the Board would be interpreted by the outside world in this particular, very special, context.

Ms Hodge: Given the strength of feeling that you had about the merits of the recusal application, and the feelings articulated to you by BEIS, did you consider whether you had a duty to vote against it in your capacity as Shareholder Non-Executive Director?

Thomas Cooper: I did but it seemed to me that I – the proper thing to do here was to take – to follow the legal advice, and, you know, if we could come back – if we can find the engineering and outcome email, I think I can – that would help.

Ms Hodge: Is that an email from Alex Chisholm to which you’re referring?

Thomas Cooper: No, this is an exchange between Richard Watson and Gareth Evans in the Department. It’s between the lawyers in the Department.

Ms Hodge: We’ll see if we can find that.

Thomas Cooper: Thank you.

Ms Hodge: Thank you, sir. This might be a convenient time to take our second morning break.

Sir Wyn Williams: Yes, certainly.

Ms Hodge: Shall we –

Sir Wyn Williams: Yeah, what time, please?

Ms Hodge: Shall we resume at 12.35?

Sir Wyn Williams: Yes, fine.

(12.24 pm)

(A short break)

(12.35 pm)

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

Sir Wyn Williams: Yes, thank you. Yes.

Ms Hodge: Thank you.

Mr Cooper, just before the break you mentioned an email chain containing some further commentary about the recusal application.

Thomas Cooper: Yes.

Ms Hodge: We’ve managed to locate that, that bears the reference UKGI00009308. Now, this is an email chain, it originates with an update from the Post Office’s General Counsel, and you explained earlier in your evidence that you forwarded some legal advice to Alex Chisholm. So we see his email at the start of the chain. We can go to that if you wish but I think the part to which you were referring earlier in your evidence can be found at page 2, please. It’s at the middle of the page.

Thomas Cooper: Would it be possible just to look at Alex’s sort of punchline at the end?

Ms Hodge: Yes, by all means.

Thomas Cooper: That would just be helpful.

Ms Hodge: So at the middle of page 3, please, we can see Alex’s email to you of 19 March. So if we scroll down to page 4, please, I think it’s fair to say that you’ve already summarised the gist of what he said. In the final paragraph, please, nearer to the bottom of page 4 – thank you – is this the one to which you were referring:

“The Department should maintain its clearly distinct and detached position, so that it is free and credible for dealing with the consequences as they unfold. Ministers may want to show appropriate concern about the criticisms and may express a desire for [Post Office] to act appropriately but should not comment substantively in ongoing litigation in which the Department has a clear interest but no direct involvement.”

Thomas Cooper: Yes. Can I just say, this email was very important for me, and the key bit of this is the first sentence in that paragraph that says, “maintain a clearly distinct and detached position”. And I do understand what you’re going to say, you’re going to say “Yes, but this doesn’t talk about you, Tom, it talks about the Department”, and I get that but I think – and we’ll come on to that with this other email – but I think this totally reinforced the view I was getting from the Legal Team in UKGI and BEIS, in other words from everything I knew, all the bits of the Department were saying the same thing, which was “Stay out of this thing”, yeah?

Ms Hodge: In your mind, are you saying that you are unable to see any material distinction between the Department’s position and your casting a vote as a shareholder representative on the Board?

Thomas Cooper: No, I’m not saying that. I understand that distinction very well. What I’m saying is in this particular situation, it would be impossible to separate the two and this other email, I’m trying to – I’m pointing you to, is – I think highlights that quite well.

Ms Hodge: If we scroll up, please – sorry, to page 2, I think, is the email from Richard Watson. Yes.

Thomas Cooper: Yeah, okay.

Ms Hodge: Thank you. This is 20 March, two days later:

“All

“Are we agreed that we stood not try to engineer a position today whereby if the Board decides to proceed with the recusal the Minister is given a chance to object ie some sort of conditional Board approval. As shareholder I don’t consider she has the legal power to prevent this even if it was an appropriate thing for her to express a view on, which I think we agree it isn’t but instead is properly a matter for the Board.

“It is of course proper for the Minister to understand [Post Office’s] decision and why their position might have changed since her call with the Chair on the weekend. I understand that might be the subject of a call with the Minister later today.”

Thomas Cooper: Okay. So the key bit of this is “are we agreed that we should not try to engineer a position today whereby”, et cetera, “ie some sort of conditional Board approval”, and I say “I have no intention of engineering such an outcome”.

And what this is saying is that, if I had to express comments here in the Board of saying I really don’t think we should be doing this or, in the opposite direction, I really think we should be, there would have been a very high chance – whatever I’d said about this being my personal opinion, nothing to do with the Department, I think other members of the Board would interpret it as informed by the views of the Department and that would increase the risk that Board would say, “Well, we’ve received legal advice that says we should go for recusal, we think reluctantly that’s what we should do but we’ll only do it if the Department agrees that that’s what we should do”, and that’s the conditional approval, yeah?

And so my concern, which I believe is totally valid, is that any view I expressed to the Board was likely to increase the chance for the conditional approval or rejection which was exactly what the Department didn’t want. The Department did not want this decision to come back to them. That’s, I think, very clear, from all the emails and also the subsequent actions of the Minister because you’ll see, in the second paragraph of this, it says it’s proper for the Minister to understand and – since her call at the weekend, and she might have a call later today. She did want to have a call, there’s an email chain to that effect, but then decided against it.

So I think everything in these exchanges was telling me that I should not take any action that would increase the chance of this decision coming back to the Department.

Ms Hodge: What you appear to be saying, is it right, is that, so far as you were concerned, the Department didn’t want to make this difficult decision?

Thomas Cooper: Correct.

Ms Hodge: You didn’t want to make this difficult decision?

Thomas Cooper: I don’t think it was – I think in this situation, my personal views, I think, were overridden by my principal, by the Department. I didn’t feel – I don’t feel I could have explained afterwards, if I – let’s say I had spoken at the meeting and the result of that would have been that it came back to the Department, I think I would have had a very difficult job to explain why I’d done what I’d done.

Ms Hodge: Are you saying, therefore, you felt constrained by the position that the Department took, in expressing your own personal views to the Board about the merits of the application?

Thomas Cooper: Absolutely. I felt I had very clear – the sum of all of this is I felt I had instructions not to participate.

Ms Hodge: I’d like to address one final topic with you, please, Mr Cooper, before I hand over to the recognised legal representatives of the Core Participants. This relates to the Department’s oversight of Post Office in the litigation. Now we covered that a little earlier in your evidence this morning when we discussed the policy team, the late establishment of the policy team, and communications between UKGI and BEIS. You said in your evidence that you felt there was a lack of engagement on the part of the Department and ministers. I think you explained that, so far as you were concerned, UKGI were feeding information to the ministers but you weren’t getting much back. Is that a fair summary of your evidence?

Thomas Cooper: Correct, yeah.

Ms Hodge: Now, you also referred to a meeting you attended with the Minister, Kelly Tolhurst, on 17 October 2018; that’s correct, isn’t it?

Thomas Cooper: Yes.

Ms Hodge: Do you recall, as part of the outputs of that meeting, the Minister requesting access to more information and the advice that the Post Office was receiving in relation to the litigation?

Thomas Cooper: I actually don’t recall that. I think the first time I recall that was in the immediate aftermath of the Common Issues judgment, and there was a phone call on 16 March, in the afternoon, with Tim Parker and others from the Post Office, which Kelly Tolhurst was on, and I recall her asking for more information then. And it may be in the record, I don’t know, but I don’t remember it in the aftermath of the 17 October.

Ms Hodge: It might refresh your memory, if we could take a look at UKGI00008608.

Sir, we unfortunately don’t have those documents to hand at the moment. It may be that we can take the time that I believe the recognised legal representatives would like to use to ask questions to see if we’re able to upload them for Mr Cooper to consider them.

In terms of timings, sir, I think the indication is that there may be about half an hour, possibly slightly more, of questions, cumulatively from Core Participants. If you’re content for those questions to be placed now, we can take a slightly later lunch break and hopefully enable Mr Cooper to finish his evidence this morning –

Sir Wyn Williams: By all means, yes.

Ms Hodge: – in this session.

Sir Wyn Williams: Yes, let’s do that.

Ms Hodge: So I think we’re hearing first from Hudgells.

Questioned by Mr Moloney

Mr Moloney: Thank you, sir, and thank you Ms Hodge.

Mr Cooper, in your witness statement – and if we could please go to it, it’s page 112 and paragraph 242, if possible. Just whilst that’s coming up, you addressed the late disclosure of KELs before judgment in the Horizon Issues trial, at a time when POL was considering settlement.

Thomas Cooper: Yes.

Mr Moloney: You explain in paragraph 242 – and it’s magically there now – that:

“The Board was advised of the steps that were being taken to address the disclosure failure, including work to assess the evidential significance of the new material and whether the errors by Fujitsu might give rise to a cause of action against Fujitsu in relation to this specific incident.”

Then you carry on to discuss about whether or not there might be further evidence.

You return to the topic when dealing with post-settlement events at paragraph 256, which is page 117, if we may. So we can see there, it’s under “Post-settlement”, and if we scroll down to paragraph 256, it reads – if we could just go perhaps a few more lines so we can see the top of 118:

“The subcommittee had previously requested advice about whether POL had an action against Fujitsu so that it could recover at least part of the settlement cost from Fujitsu. Ben Foat reported that initial advice had been received but a final advice was awaited. My recollection is that POL was ultimately advised that any claim it wanted to make against Fujitsu would almost certainly be time-barred.”

So just, as it were, considering both of those paragraphs together, at paragraph 242, you talk about, as it were, the origins of the advice, or the request for the advice and, in respect of that advice, on whether any errors by Fujitsu might give rise to a cause of action. Was that advice sought following encouragement by the Board and/or the subcommittee or was it initially sought simply on the initiative of POL’s lawyers?

Thomas Cooper: My recollection is that Ken McCall asked this question in the subcommittee or in the Board, I’m not sure which. Ken was, I think, rightly interested to know whether Post Office could recover anything against Fujitsu. And I think there were actually two – twice it came up during my tenure that the Board asked about this and wanted it reconfirmed, and the answer basically came back the same both times that – and I am probably expressing this in too simplistic a term for the lawyers – but, essentially, it’s that Post Office knew or should have known, more than six years before, that there were problems with the system and that, therefore, you know, any claim would be time-barred.

Mr Moloney: Right, okay. Just to move away from the terms of the advice but you sought the advice in order to see whether POL, and ultimately the public purse, could recover at least part of the settlement cost?

Thomas Cooper: Correct.

Mr Moloney: It would clearly be important because it would help in working at what would be a reasonable settlement and when to make the settlement during the negotiations?

Thomas Cooper: Yes, and I don’t think it – yes, it wasn’t totally financially driven. I think there was a real sense of culpability here, that both – I mean, obviously, Post Office itself was culpable but I think there was also a very strong feeling that Fujitsu was culpable here and that they should be, you know, part of the resolution and remediation process.

Mr Moloney: There was initial advice reported by Ben Foat, you say, at paragraph 256, and then you refer to, as it were, POL being ultimately advised on any claim it wanted to make. So two stages to this, as you’ve just outlined to the Chair.

Thomas Cooper: Yes.

Mr Moloney: The initial advice reported by Ben Foat, did you actually see any documents relating to that advice or was it just reported by Ben Foat?

Thomas Cooper: I think there was a document that we were shown, that we received, yes, but I can’t pin – I couldn’t pin down for you when or in what forum.

Mr Moloney: Then in terms of the final advice, did you, as a member of the Board, then see that final advice?

Thomas Cooper: It was probably in that context that we got the final advice.

Mr Moloney: Yes.

Thomas Cooper: It was not – I – well, just a bit more context for you. I think one of the things that hampered – it was HSF who were giving the advice here and I think one of the things that hampered them – and this issue also fed into the whole discussion about malicious prosecution that happened later, and Limb 2 abuse, is that their visibility – Post Office’s visibility on events pre-2010 particularly was very limited, and so the advice they were giving here was very – was hampered by that or constrained by their lack of knowledge of the history – complete knowledge of the history.

So I think HSF’s advice was always – on this topic of what could be recovered from Fujitsu was always caveated by “Well, we don’t have the whole story but this is what we think you can’t claim”.

Mr Moloney: All right. Thank you very much, Mr Cooper.

Questioned by Mr Henry

Mr Henry: Mr Cooper, I ask questions on behalf of number of subpostmasters, including Mrs Seema Misra who sits beside me.

Common Issues judgment, 15 March 2019. Obviously a watershed for you personally.

Thomas Cooper: Yes.

Mr Henry: By 15 November 2019, the Horizon Issues trial had been and gone and you were awaiting a judgment, weren’t you?

Thomas Cooper: 15 November?

Mr Henry: 2019, you were awaiting a judgment?

Thomas Cooper: Awaiting the Horizon Issues judgment?

Mr Henry: Yes.

Thomas Cooper: Yes.

Mr Henry: By this time, again, you must have been thoroughly disenchanted by the brief you’d been given? I mean, the Common Issues judgment was a disaster and, so far as the Horizon issues, the prospects looked grim, didn’t they?

Thomas Cooper: Well, the advice we were receiving then from Tony de Garr Robinson had changed a lot. It had moved from great confidence to gloom about the prospects. So I think at that time the expectation was that the Horizon Issues judgment would be negative as well, and I think, yes, I think that’s clear from the minutes too.

Mr Henry: So I’m going to be probing how you personally responded to that and I’m going to take you now to UKGI00010737. Could we just scroll further down, it’s from Joshua Scott, “Hi Toms”, that’s to you and Tom Aldred:

“You both tasked me with doing some research on the convicted claimants in the GLO so I have decided to lump them together in one document.

“Tom A in relation to how they were treated in the last mediation and Tom C in how their stories are portrayed in the public domain.

“Please see attached an initial draft of what I’ve done so far. Let me know if this ticks the boxes or not.

“I’ve looked specifically at 5 of the convicted claimants, 2 of whom (Jo Hamilton and Seema Misra) feature quite prominently in multiple media releases and the [Nick Wallis] blog.”

That must be a reference to Nick Wallis, “NW”:

“I have to say it has been a little harrowing reading up on the stories but I think a useful exercise to understand some of the convict claimants’ positions.”

Now, Mr Cooper, I suggest there that Josh Scott is going a little off piste, over emotional or seeking to distance himself from what was your ulterior purpose, because I suggest you wanted to know how, there, the convicted claimants’ stories were portrayed in the public domain, to see if you could undermine them, didn’t you?

Thomas Cooper: Um, with respect, that is completely the opposite of what I was trying to do. So if I could give you a bit of background.

Mr Henry: Of course.

Thomas Cooper: You’ll see from my witness statement that I spent quite a lot of time talking about my attempts to get an understanding of the lead cases and the understanding, a real – a proper understanding of the facts in the lead cases, and I was frustrated in that. I actually tried to Google the lead cases in the Common Issues judgment and found very little in the public domain. I’d made at least two attempts to try and get an understanding and the claimants’ perspective and Post Office’s response to individual cases, the lead cases, in the Common Issues judgment, and didn’t get satisfactory – I got fobbed off both times.

So by the time we reached this point, I was expecting the same thing to happen again and what I wanted – what I was asking the team to do here was to – let’s see what’s in the public domain. I can’t trust the Post Office to give me a proper description of what the claimants are saying because of the history here, and so let’s research what we can and if the Post Office don’t address them in the information we get, we can cross-check against the two. And I think there’s an email I sent Josh Scott, actually, that says it in pretty much those terms.

Mr Henry: We’ll come to that in due course but I want to go now to POL00337435.

Now, this is a consultation with Mr Altman, Rodric Williams, Nick Vamos of Peters & Peters, and others. You are not present but want to ask you about some matters that refer to you within this note. We know that this note was composed, because we can see from the first line, on 24 January 2020 and, in the course of this note you are reported, together with Tim Parker, wanting to know if you can take pot shots at Seema Misra, who sits beside me, whilst telling the lawyers not to consider safety. So I want to go, please, to page 3 of this document.

Now, do you see there:

“Horizon training – [Rodric Williams] – leave that with me.”

I’m going to assume, because there doesn’t appear to be any further initial before “CCRC agenda”, that it is Rodric Williams speaking:

“CCRC agenda – want to make sure got [documents], got right people, bow around it to give to counsel. Need to start reading CCRC files now. Feel from Board that they will go with wide review. We have material for 34 [applications] to CCRC [including] Misra/ Hamilton/Thomas/McDonald. Board’s concern is that there is a narrative and we’re just letting it go. Board desperate to decide whether to take pot shots at Misra.”

What do you say to that, Mr Cooper?

Thomas Cooper: First of all, I’d like to say sorry to Mrs Misra that she would have read this. I’m sure it’s one of many things she’d have found very insulting in this whole saga.

All I can say to you is that I have no idea where this came from. At this point in time, I was actually – as you’ll see, my attempts to look at the press coverage of Mrs Misra’s case and others was to actually challenge Post Office’s description of events, and I was – I hadn’t – I was not in a position at this point in time to decide – I mean, if I was ever going to take pot shots at anyone, whatever that means –

Mr Henry: Well, you know what pot shots means?

Thomas Cooper: Well, yes, but I mean the key meeting here was 28 February, which was our first meeting with Brian Altman on the convictions. So my research on the history of these cases was in the run-up to that. I had no view about Mrs Misra’s case at that point in time.

Mr Henry: I’m going to put it to you straight. What do you say, “Board is desperate to decide whether to take pot shots at Misra”; are you saying that Williams just invented that?

Thomas Cooper: As far as I’m concerned, yes.

Mr Henry: Let’s go to the next immediate paragraph below. Brian Altman, Queen’s Counsel:

“… did Board suggest about whether we should review safety or just disclosure? [Rodric Williams] – no just on disclosure. Not opining on safety.”

Did the Board fetter the lawyers, “Don’t advise on safety, just advise on disclosure”?

Thomas Cooper: No, absolutely not. I mean, the Board’s perspective on this was that, clearly, as far as the company could possibly do so, this situation of the postmasters concerned, who had been convicted/terminated/harmed in any way, needed to be compensated/resolved/apologised for in every way – you know, in every way possible and this was the opposite of what the Board was trying to do.

Mr Henry: Can we go to the last two lines on this page, please. Here you are mentioned in the same breath as Tim Parker. It’s unattributed who is speaking. But it says:

“Tom Cooper/Tim Parker – need to say ‘Misra has been saying x in the press, what our actual review of her case is x’.”

Thomas Cooper: Yeah.

Mr Henry: Then Mr Altman says, “Know Misra well”, in other words, the case.

It suggests, doesn’t it, that you wanted to impugn the credibility of the claimants, including, amongst them, Seema Misra, that you were asking Mr Scott to trawl for inconsistencies in their account.

Thomas Cooper: That is what it suggests. What I was trying to do was the opposite, which was find inconsistencies in Post Office’s account. As I say, there’s an email I sent Josh Scott to that effect.

Mr Henry: Well, let’s go to that email because I apprehend we’re going to be thinking about 11 February 2020, and it’s UKGI00011190. But before it’s put up on the screen, you appear to be suggesting that you are saying, “Stop”, but Williams is saying, “Go”. In other words, you are saying, “Black” and he is saying, “White”; you were saying “Night”, he is saying “Day”; in other words, the instructions that the Board are giving are, as it were, totally reversed –

Thomas Cooper: Correct.

Mr Henry: Well, I suggest –

Thomas Cooper: Does that surprise you?

Mr Henry: I suggest that’s not credible.

Thomas Cooper: Well, I’m sorry, in that case but I am being entirely truthful when I’m talking about this.

Mr Henry: Let’s go to this email and, if we could scroll up a little bit, and this is from you:

“We have a meeting on [the] 28th with the lawyers to go through some of the criminal cases in detail.

“Josh has a list of the cases that have been covered publicly. I’d like to have a dossier of these cases which includes the claimants’ side of the story as a check against what POL will show us.”

Thomas Cooper: Yes. Yes, I wasn’t trying to check what the claimants were saying; I was trying to check what Post Office was saying. I mean, you have to remember, I had – Post Office’s record in providing me with accurate information about individual cases was woeful and I didn’t trust what I was hearing.

Mr Henry: Did you think that the Misra case was particularly important?

Thomas Cooper: Everything we’d been told by the Legal Team was, yes, that her case in some – many respects was a watershed case.

Mr Henry: It was the paradigm case of the Post Office’s misfeasance towards the convicted claimants, wasn’t it?

Thomas Cooper: Correct.

Mr Henry: That is why, presumably – and there’s no need to get it up – but it’s UKGI00038672, you’re writing to somebody called Tasila; do you remember?

Thomas Cooper: Yes, Tasila Banda, yes.

Mr Henry: You say:

“I think it would be worth asking HSF to take you through some of the history of the prosecutions and maybe some typical examples. There was a pattern to many of these cases which might help the team understand what the issues might be from a malicious prosecution perspective. Also the Misra case, because it’s so important.”

Because it was a quintessential malicious prosecution, was it?

Thomas Cooper: Yes, I don’t know if we knew that then. I can’t remember – what’s the timing of this – if I knew?

Mr Henry: That’s 30 March 2021?

Thomas Cooper: Oh yes, we knew by then.

Mr Henry: Right. My final question to you arises out of your answers to Ms Hodge earlier today, and could we go to UKGI00027113.

Now, this is you writing to Mr Scott again, together with Shanice Swales, Richard Watson, Carl Cresswell and it’s the debate pack. I want to concentrate on three references: page 10, page 16 and page 24:

“[Page] 10 should refer to previous management as well given that Horizon was introduced in [year] and the claims in the GLO relate to events going back to the late 1990s in some cases. The claims predate Paula Vennells’ involvement in the company – we should not mention her by name except in response to a specific question. Should also mention that POL was part of the [Royal Mail Group] when Horizon was introduced.”

Dealing with the last point first, of course that was a reference, was it not, to the fact that the Royal Mail Group, before separation was responsible for prosecutions, correct?

Thomas Cooper: Correct. Well, sorry, correction. I don’t think I knew then that Royal Mail – actually, their Legal Team did the prosecutions at that stage. So I don’t know if it was exactly the point you’re making lay behind what I was saying.

Mr Henry: But we can agree that there was an insistence – or not an insistence but a suggestion by you – that Paula Vennells is not to be referred to unless there’s no alternative?

Thomas Cooper: Well, no. Not unless there’s no alternative.

Mr Henry: Well, unless there is a specific question?

Thomas Cooper: Correct.

Mr Henry: Yes, which would leave no alternative. By that time, I suppose, she was damaged goods?

Thomas Cooper: Sorry, is that a question?

Mr Henry: Yes. Why the insistence or the suggestion, rather, don’t mention her by name?

Thomas Cooper: This isn’t specific to Paula. I think my comment would have been the same in respect of any individual that (1) you don’t need to mention people’s names. I didn’t feel that it would be appropriate to mention anyone’s name in this context. If I actually had the draft, I could probably explain it to you better.

Mr Henry: So be it.

Thomas Cooper: But I haven’t looked at that document but I think this was a general point I would have made irrespective of whether it was Paula Vennells or someone else.

Mr Henry: It’s now 2 March 2020, and you say:

“[Page] 16. References to change/culture improvement are well under way is premature (couple of similar references elsewhere). Better to use the language about Nick Read being committed to an overhaul.”

So would that reflect, essentially, that the culture, the toxic culture was deep rooted?

Thomas Cooper: Yes.

Mr Henry: Yes.

Thomas Cooper: And I think what I didn’t want anyone – I felt it would be wrong and misleading for the Minister to give the impression that everything had been fixed. Absolutely, the opposite was the case. It was still huge amounts of work to do.

Mr Henry: Then page 24, you say:

“Do we want to say this? ‘On the litigation, following the critical Common Issues judgment, UKGI challenged the Post Office Board’s strategy and approach and supported on activities to enable the successful mediation to take place in December 2019’.”

Your response to that is:

“Nothing wrong with it but it rather begs the question about what happened before.”

The answer to the question it begs is that, effectively, you were supine, weren’t you?

Thomas Cooper: Me, personally?

Mr Henry: ShEx oversight was essentially –

Thomas Cooper: Oh, I see.

Mr Henry: – supine?

Thomas Cooper: Oh, you’re talking about ShEx.

Sir Wyn Williams: I think, Mr Henry, it’s not realistic to expect a meaningful answer about things before the witness joined the organisation, which was 2017/18, wasn’t it?

Mr Henry: 2018, sir.

March, I think, was it?

Thomas Cooper: Yes.

Mr Henry: Yes, March.

Well, then, if I rephrase it in this way. Mr Swannell yesterday summed it up when he said “When in curiosity meets a toxic culture bad things happen”; do you agree with that diagnosis?

Thomas Cooper: I can understand why he said that. I wouldn’t quote it as a generalisation but I can understand why in the context of the Post Office he said it.

Mr Henry: Were you reassured by the constant mantra and refrain, “It’s not systemic, it’s not systemic”?

Thomas Cooper: I took it at face value to start with. But I think over time – you know, it became very clear, over time, and again, I can’t pin down a date of when exactly, but this case wasn’t about systemic problems.

Mr Henry: Exactly.

Thomas Cooper: This was about the system causing problems for individual postmasters –

Mr Henry: Precisely.

Thomas Cooper: – and their balances and it was – if you articulate it in that way, which is, in my view, the correct way, it’s a very different question from systemic issues.

Mr Henry: So the question was being phrased wrongly. Horizon’s failures did not have to be system-wide, the problems could be sporadic, intermittent, random but capable of causing losses as claimed by the victimised subpostmasters?

Thomas Cooper: Correct.

Mr Henry: When did you get that?

Thomas Cooper: Well, I’ve just said, I can’t pin it down to a date. But I think in the – it was after the summer of 2018. Probably before the Common Issues judgment.

Mr Henry: Well, then, if so, why didn’t you do something about it, if you saw the questions so clearly that the question or the mantra that they were espousing was wrong, why didn’t you do something about it?

Thomas Cooper: Because I think, to the earlier question, the approach I took to the Horizon issue was that that was a matter for the experts. The experts who were far better qualified than I to resolve this question were going to do so in the Horizon Issues judgment. I am not a lawyer, I’m certainly not an IT expert, and they were the people who were best qualified to do it. And I felt confident that we would get the answer to that question.

Mr Henry: But did you make your concern known, even if you felt “It’s not a matter for me but my concern at least should be relayed to the lawyers so that it can then be forwarded to the experts”?

Thomas Cooper: I don’t recall what I said, but my – dealing with the Legal Team at that point in time was dealing with a brick wall. I might be exaggerating slightly but that was how it felt. They were completely – you couldn’t get any traction with these people on anything.

Mr Henry: I’ve nothing further to ask you, Mr Cooper. Thank you.

Sir Wyn Williams: Thank you. Are there any other questions?

Mr Stein: Sir, yes, I have questions for Mr Cooper.

Sir, I will be five minutes, possibly six or seven minutes.

Sir Wyn Williams: On this occasion, I will hold you to that, Mr Stein.

Mr Stein: Sir, given the timing, I’m not surprised.

Questioned by Mr Stein

Mr Stein: Mr Cooper, my name is Sam Stein. I represent a large number of subpostmaster/mistresses, if you like, and people who worked in branches. I’m instructed by a firm of solicitors called Howe+Co, who have had a very long engagement with these issues with the Post Office.

Can I take you straightaway, please, to your statement, paragraph 118. That’s page 57.

So paragraph 118, page 57, please. Now, here Mr Cooper what you’re referring to is a clause that you felt particularly strongly about, that’s the liability clause. Now, you’ve given evidence about this in part today and you’ve said to Ms Hodge, who was asking you questions earlier today, that you felt this clause was completely unfair. That’s at 16.1 on the [draft] transcript. What you’re saying here is this:

“I understood that in 2012, the liability clause had been changed by POL to say that [subpostmasters] were liable for losses regardless of fault.”

About seven lines down from there, same paragraph, you say this:

“I considered this to be a wholly unreasonable and untenable position to maintain in general, but particularly in the litigation.”

Okay? Right, so this is a matter that you in your statement referred to very strongly; in your evidence today you’ve repeated your strong concerns about this particular issue.

Now, my questions are these: were you told that before 2012, this liability clause had been differently worded but, nevertheless, the Post Office had consistently always imposed liability regardless of fault, going right the way back to the beginning of the Horizon time?

Thomas Cooper: No, I hadn’t. I’d been told that it had changed so, in the July 2018 meeting, around about then, I had with Jane MacLeod, both versions of the liability clause were discussed. So – but I was not told about how it was applied in practice in the past.

Mr Stein: Right. So at the time we’re looking at this – we can see the bottom of that particular paragraph there’s reference to a date in October 2018. So around this sort of a time, quite close to when you joined as a NED the POL Board, you’re learning about this liability clause which you really dislike?

Thomas Cooper: Yeah.

Mr Stein: Right, okay. You don’t know that before 2012 the same interpretation had been placed upon it, going back for 12 years before that?

Thomas Cooper: Correct.

Mr Stein: Right. At this point, though, you’re learning that this is the way that matters are dealt with, with postmasters, postmistresses and people in branches. What happened? Did you say, “Hang on are we still doing this to people, right now? Forget about the litigation, is this still going on”?

Thomas Cooper: No, I think the message we received from the management team at Post Office was any bad practices that existed in the past, for example, investigations, you know, asking for money that wasn’t owed, that had been – bad training had all been remedied.

Mr Stein: Okay, so you were being reassured about that. Who told you, as you say at the beginning of that paragraph, “I understood that in 2012 the liability clause had been changed”; who told you that?

Thomas Cooper: Jane MacLeod.

Mr Stein: Right, paragraph 119 over the page, please, to page 58. Now, that says:

“However, POL was robust in its view that it should continue to defend it, arguing that any other approach to liability was not operationally possible.”

Thomas Cooper: Mm-hm.

Mr Stein: Then you talk about a feeling of a significant degree of frustration. Wasn’t that telling you that this was still going on, that this is the way POL looked at its world view regarding the Horizon system?

Thomas Cooper: I didn’t interpret it in that way. But I can understand –

Mr Stein: That’s what you appear to be saying?

Thomas Cooper: Perhaps, with hindsight, I should have interpreted it that way but that wasn’t what I was hearing from the management team.

Mr Stein: Okay. Right, now see what’s happening from the POL perspective, its response. Now, equally, you’ve got an entire team working with you in relation to your responsibilities as the NED for UKGI. Yes?

Thomas Cooper: Yes.

Mr Stein: What did you do about the other way, so going to the owners, the shareholders that own POL, the Post Office, what did you say to them? “This can’t go on, we’ve got a real problem with a liability clause I utterly disagree with”; what happened woman that perspective? POL’s no good, they’re batting you away. What did you do about going back to Government and saying, “We’ve got to stop this”?

Thomas Cooper: Yeah, I think we talked about that earlier.

Mr Stein: A bit but this is rather (unclear).

Thomas Cooper: So my – the point at which I raised this with – you know, my, if you like, most significant engagement, because there was more than one – with the Legal Team and the Board was on 30 October. It’s also important to understand that I was actually on a journey of actually understanding this stuff. I’d only got involved in March. My first meeting on the 23 implied terms was in July. So this was quite quick, I think, in – I hope you’d agree, in sort of legal time frame.

So I – you know, my, if you like, point of maximum exasperation on this was on the 30 October meeting, which was only a few days before the hearing was due to commence. And I think, in practice, the die was cast. In terms of what – the way Post Office were going to deal with this in court, was, you know, were they going to concede the liability clause –

Sir Wyn Williams: I think, if I may say so, we all know that they defended that clause in court.

Thomas Cooper: Yes.

Mr Stein: The question, actually, Mr Cooper, is not about that: it’s about what the owner did when you were saying to the owner, as part of that team, “Look, there’s a real problem here. They’re getting this utterly wrong. This is morally indefensible”. What did the owner do about it?

Thomas Cooper: Nothing, but I think, in fairness, I don’t think – to them, there was no – they didn’t – I hadn’t communicated to them how strongly I felt about it. Why? Because where I felt I could make – get the most out of the Department at that time was on the contingency planning.

Mr Stein: Right. Well, you anticipated my next question, this is therefore my very last question, you said the reason, the why you didn’t press this harder with, as I put it, the owner is because you felt you could get more on other issues.

Now my last question therefore is this: is that something that you thought of at the time? Did you sit there at your desk or at your laptop and go “Hang on, whilst I’m really frustrated about this issue I don’t think I should raise it because it’s like a seesaw, I’ll get better traction on something else”, or is that a post-event rationalisation as to what’s happened, Mr Cooper?

Thomas Cooper: No, it’s at the time. I’m not sure I thought about it exactly the way you’ve described but I – you know, you have to prioritise what you can get out of senior people and, to me, that was the one where I thought they would engage the most.

Sir Wyn Williams: Right, thank you very much.

Mr Stein: Thank you, Mr Cooper.

Sir Wyn Williams: Now, then, Ms Hodge, is there anything you want to ask in terms of having found a document or not, so to speak?

Ms Hodge: Sir, the NFSP would like five minutes to ask questions. Obviously, I’m conscious we’ve run quite –

Sir Wyn Williams: I don’t think I’m going to carry on indefinitely. We are going to stop now. We just need to decide when we start again.

Ms Hodge: If we were to return at 2.15, the NFSP could put their questions for five minutes and, if I needed to, I could put any outstanding matters for five minutes. That would take us to around 2.30. I think that would leave sufficient time in the afternoon for Mr Stevens, as I understand it, with our next witness.

Sir Wyn Williams: Well, can I take it clear to everyone that today is a day where I cannot sit beyond 4.30 because I’ve arranged a meeting relating to the next phase of this Inquiry, which I need to have promptly after 4.30. So I’m just warning people that that is the cut-off point today. All right?

Ms Hodge: Thank you, sir.

Sir Wyn Williams: So we’ll start again at 2.15.

Ms Hodge: Thank you.

(1.29 pm)

(The Short Adjournment)

(2.15 pm)

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

Sir Wyn Williams: Yes, thank you.

Ms Hodge: Sir, there will be some short questions from the NFSP.

Sir Wyn Williams: Yes.

Questioned by Ms Shah

Ms Shah: Can you see and hear me now?

Good afternoon, Mr Cooper, my name is Rohini Shah and I represent the National Federation of SubPostmasters. I’m going to refer to some sections of your witness statement. There is no need to turn it up unless you wish to review them. At paragraphs 13 to 14 of your witness statement, you refer to your role on the Nominations Committee and explain that this committee dealt with senior appointments at the Post Office. As a member of the nomination committee and given what you’ve said today about the conduct of the litigation, did you or anyone within UKGI suggest that any board member or senior management members of the Post Office resign following the judgment of Mr Justice Fraser?

Thomas Cooper: Yes. Absolutely. Yes, I mean, Jane MacLeod was asked to leave the company.

Ms Shah: Other than Jane MacLeod, was anybody else discussed?

Thomas Cooper: No. I mean, the priority then was to change the Legal Team, and get new advisers on board.

Ms Shah: Okay. At paragraph 252 of your witness statement, you refer to a Board meeting on 26 November 2019 at which it was confirmed that the Common Issues appeal decision had gone against POL and that it was now necessary to implement the findings of the Common Issues judgment in full, including asking subpostmasters to sign new contracts.

However, postmasters were never asked to sign new contracts and the NFSP were never informed that it was considered that postmasters should sign new contracts. Could you explain why that was?

Thomas Cooper: Yes. I can. So I think the initial advice that Post Office got and the Board got was that postmasters would need to be asked to sign new contracts. I think the team led by Nick Read considered that and I think the practical answer that they came up with was for the company to restate all its policies in relation to how the contract would – the existing contract would be interpreted.

So there were new policies issued around things like terminations, suspension, investigation and disputes, those kind of – all those issues that came out of the Common Issues judgment and so, effectively, Post Office said unilaterally “We are going to interpret the contract in a way that’s compliant with the Common Issues judgment”, and that avoided then the need for subpostmasters to sign new contracts.

Ms Shah: Finally, in terms of finances in the future would you accept that Post Office will likely never be able to afford the costs involved of the Horizon scandal, in terms of administration and redress without ongoing financial support from the Government?

Thomas Cooper: Well, never say never. But I think, certainly at the time I left the Board, which was over a year ago now, I think it’s clear that Post Office would not be able to – it’s abundantly clear it wouldn’t be able to afford the cost of the compensation and the ongoing business model was unsustainable, financially. Yes.

Ms Shah: Thank you very much, those are my questions.

Sir Wyn Williams: I’m very sorry that – hang on, I seem to have disappeared. No, here we are.

I’m very sorry that I asked you to wait for 45 minutes for delivering those. If I had thought that you’d have been as short winded as that, I would certainly have permitted you to ask the questions before lunch. So my apologies.

Ms Hodge: Thank you, sir, I have some very brief follow-up questions, please, if I may.

Further Questioned by Ms Hodge

Ms Hodge: Mr Cooper, I would like to briefly revisit the issue of the Department’s level of engagement in the Group Litigation. Could we look, please, at what you say about that at paragraph 80 of your witness statement. It’s page 39, please. Thank you.

You explain in the preceding paragraph, paragraph 79, that the Department had the same rights as UKGI in relation to receiving information and reports from the Post Office, concerning the litigation; is that right?

Thomas Cooper: That’s what I believe the protocol said, yes.

Ms Hodge: You go on to say at paragraph 18:

“In practice, however, it was made clear by the Department that it expected UKGI to take the lead on monitoring the litigation and keeping the Department informed. As I explain below, the Department was provided with regular updates throughout the litigation. My perception was that the Department was interested in the progress of the litigation, and wished to be updated, but did not envisage playing an active role in the oversight of the proceedings. This is reflected in the read out from the UKGI quarterly portfolio meeting on 5 July in which it is record that whilst it was UKGI’s view that the Department’s Legal Team should be involved at every stage of the litigation, securing such a level of engagement ‘may be a challenge’.”

Do you consider that you were hampered in your oversight of the Group Litigation by the Department’s refusal to engage more meaningfully, as you saw it?

Thomas Cooper: Sorry, was my effectiveness hampered?

Ms Hodge: By your perception that the Department were not engaging more meaningfully?

Thomas Cooper: I think the Department could have been more effective on areas where I had thought it would matter to them, yes, had they been more involved. And, as I said earlier, I think the absence of meetings to talk about this, the litigation, was, you know, regrettable.

Ms Hodge: You go on to say in the same paragraph that:

“As I explain below, there was a step-change in the active interest from the Department following the handing down of the Common Issues judgment and the subsequent progress towards settlement, but, with the exception of the meeting between [Post Office] the Minister, the Permanent Secretary and others in October 2018, prior to that point the model was largely one of UKGI providing the Department with progress updates.”

I just want to test with you briefly whether your recollection in relation to the timing of the Department’s intervention is quite right. Can we look, please, at UKGI00008656. This is a summary of a meeting you attended with Kelly Tolhurst on 19 November 2018 produced by an official in UKGI. It reads:

“All,

“We had a meeting with Kelly Tolhurst this morning – Tom C [presumably a reference to you] dialled in, whilst Sam W, Sam R and I were in attendance.

It goes on to say:

“Kelly had concerns over [Post Office’s] potential liabilities over the court case.

“She was sorry to hear Paula is leaving but suspicious about the timing given the ongoing litigation case and asked about the process for getting her replacement.”

It says:

“Keen to be properly briefed as the litigation case progresses and would welcome both verbal and written updates on a biweekly basis …

“She would also welcome a face-to-face meeting with Tom C …”

Thomas Cooper: Thank you, yes, so I understand what you were saying earlier now. So I think, firstly, my witness statement is accurate because the period I was addressing in my witness statement was up to October 2018, this email is in November. So I think that meshes, that’s consistent. But you’re right, I had said earlier I had no recollection of Kelly asking for more information until March 2019, and you’re right, there’s evidence here that she was asking for it earlier.

Ms Hodge: Thank you. Finally, I’d like to ask you some brief questions about the Department’s reactions to the Common Issues judgment. You address these at paragraph 170 of your statement on page 80. That reads:

“The Common Issues judgment was formally handed down on 15 March 2019. On the same day there was a meeting for [Post Office] to brief Departmental officials. The ministerial briefing to which I referred in my email to the Board took place on 16 March, the day after the judgment was handed down. I recall the Department being very concerned about the judgment and what could be said publicly in response. During the course of the briefing … I recall the Secretary of State, Greg Clarke MP, making a comment to the effect that he had always believed the [subpostmasters] were right and that it was now important that these cases were resolved as quickly as possible.”

You then go on to say:

“I had not previously heard those views previously expressed by the Secretary of State (or anyone else in the Department).”

You appear to be suggesting at various points throughout your statement that the handing down of the Common Issues judgment marked a turning point in the Department’s engagement in the litigation; is that fair?

Thomas Cooper: Yes.

Ms Hodge: Were you emboldened by the intervention of the Minister to take more decisive action in your oversight of the litigation?

Thomas Cooper: Not really. I felt I was engaging with the litigation in the way I thought it was appropriate for a Non-Executive and a member of the Shareholder Team. I don’t think I was particularly – I mean, the Common Issues judgment was massive event, and it needed to be fixed. I don’t think I needed Greg Clarke’s views about the litigation to change how I approached that.

My point in relation to his views were that I think they – had I known, it possibly might have made a difference before the Common Issues judgment and I think it might have made me more challenging in terms of what I was hearing from the postmasters. I mean, it would be good to know why he thought the postmasters were always right and, perhaps, you know, that would have been good to get, to help me. So my point was in relation to pre-Common Issues, rather than post.

Ms Hodge: His intervention coincided, did it not, with your decision to initiate discussions with the Chair about the replacement of the Post Office Legal team?

Thomas Cooper: Yes, but they’re not connected. I formed my own – I think I explained earlier the first Board meeting after the Common Issues judgment was handed down, and the interaction I’d had with Jane MacLeod at that meeting, and I said earlier that I – something to the effect that at that point I’d lost all faith, whatever faith I had left in the Legal Team, and it was off the back of that that I felt it was imperative that the Legal team was changed, and that prompted me to discuss it with Tim Parker and we got on quickly with making that change. So that would have happened independently of whatever Greg Clarke had to say on the topic or not.

Ms Hodge: Do you consider the Department was in any way instrumental in bringing about a change in strategy within the Post Office in respect of the litigation?

Thomas Cooper: No, because I think everyone was completely aligned. I mean, the Department was – and the Board were in the same place. You know, something had gone badly wrong, it needed to be fixed as a matter of urgency.

Where I think – had the Department said, “Hang on a minute, we don’t want you to settle with the claimants or, you know, spin this out as long as you keep – as long as you can”, whatever, if they’d had a different motive or agenda from the company, then the Department’s views would have made a difference but I think all of us were completely aligned in what we wanted to happen afterwards.

Ms Hodge: To whom, therefore, do you credit the significant change in litigation strategy which resulted in a settlement of the Group Litigation later in 2019?

Thomas Cooper: Sorry, say that again?

Ms Hodge: To whom do you credit the change in litigation strategy, which resulted in the settlement in late 2019?

Thomas Cooper: The Board. The Board. This had gone badly wrong, it needed to be solved and the claimants were right, the Post Office was wrong. It had to be settled and the people affected had to be compensated.

Ms Hodge: Thank you. I’ve got no further questions.

Thomas Cooper: Thank you.

Questioned by Sir Wyn Williams

Sir Wyn Williams: Just before you finish, Mr Cooper, at various points in your witness statement, you suggest that Post Office Executives thought that your approach to your role as a Non-Executive Director was a bit too enquiring and a bit too interfering.

Can I just try and get some detail of that? First of all, was that something you felt almost from the beginning of your role as a director or did that sort of emerge as time went by, so to speak?

Thomas Cooper: No, it was pretty early on, Sir Wyn, and, you know, the kind of formal feedback I got through Tim Parker to Mark Russell came, I think, in the summer of 2018, but it was clear earlier on that some of the individuals we’d dealt with in the company were not happy with the way – with what we were trying to do.

Sir Wyn Williams: All right. Can you actually pinpoint any individuals who made that clear to you?

Thomas Cooper: I think, if I can say, the communication of it came more through actions than words, or responses to requests, and I think that the issues we had were with the – predominantly the Legal team, with Jane MacLeod and Rod Williams primarily, and, you know, there were specific issues with the Finance Team, with Al Cameron.

Sir Wyn Williams: All right, thank you very much.

Well, thank you, Mr Cooper, for your detailed witness statement and for giving evidence interesting the course of this morning and into this afternoon. I’m grateful to you.

The Witness: Thank you.

Sir Wyn Williams: So, Ms Hodge, I won’t disappear. I don’t think I need to disappear. I’ll just wait for the handover.

Ms Hodge: Thank you, sir.

Sir Wyn Williams: I see Mr Stevens is in pole position next do you so –

Ms Hodge: Ready to go. Thank you.

(Pause)

Mr Stevens: Good afternoon, sir. Can you hear and see me?

Sir Wyn Williams: Yes, thank you very much.

Mr Stevens: Thank you, sir. We’ll be hearing from Mr O’Sullivan.

Patrick O’Sullivan

PATRICK HENRY PIERCE O’SULLIVAN (sworn).

Questioned by Mr Stevens

Mr Stevens: Thank you. Please can you state your full name.

Patrick O’Sullivan: Patrick Henry O’Sullivan.

Mr Stevens: Thank you, Mr O’Sullivan, for giving evidence to the Inquiry and thank you to you for producing a written witness statement, which should be in front of you. Is that in front of you?

Patrick O’Sullivan: Yes.

Mr Stevens: For the record that witness statement is reference number WITN11000100. Before I take you to your signature, I understand there’s a correction to be made. Please can we bring up page 2 of the statement, paragraph 5. So in paragraph 5, there are two corrections to your qualifications in the second sentence. I believe the first is that the words “arts in” should be removed so it just says, “bachelor’s of business studies”; is that correct?

Patrick O’Sullivan: Correct.

Mr Stevens: Secondly, the words “master’s of economics” should be removed and in place it should read “MSC in accounting and finance”?

Patrick O’Sullivan: Correct.

Mr Stevens: Thank you. That statement can come down now. Thank you. Can I ask you, please, in your hard copy to turn to page 23.

Patrick O’Sullivan: Yes.

Mr Stevens: There should be your signature or a Docusign version of it; do you see that?

Patrick O’Sullivan: I do.

Mr Stevens: It is your signature, is it?

Patrick O’Sullivan: Yes.

Mr Stevens: Can you confirm, please, that the facts stated in that witness statement, subject to the corrections you’ve just made, are true to the best of your knowledge and belief?

Patrick O’Sullivan: They are.

Mr Stevens: That now stands as your evidence to the Inquiry. The statement will be published on the Inquiry’s website shortly. I am going to ask you some questions about it. I’ll start with your background. You trained as a chartered accountant; is that right?

Patrick O’Sullivan: Correct.

Mr Stevens: During your career, you worked in a number of executive positions at various financial institutions?

Patrick O’Sullivan: Correct.

Mr Stevens: You began to undertake Non-Executive roles in 2007?

Patrick O’Sullivan: Correct.

Mr Stevens: I think your last executive role was as Vice-Chairman of Zurich Financial Services, which you resigned from in 2009?

Patrick O’Sullivan: Correct.

Mr Stevens: Since then you focusing on non-executive roles.

Patrick O’Sullivan: (The witness nodded)

Correct.

Mr Stevens: Thank you.

You became Non-Executive Chairman of the Audit Committee of the Bank of Ireland in 2009?

Patrick O’Sullivan: Correct.

Mr Stevens: You became Deputy Governor of the same institution in 2011?

Patrick O’Sullivan: That’s correct.

Mr Stevens: You stayed there until 2015?

Patrick O’Sullivan: Yes.

Mr Stevens: In your witness statement, you say that the time commitment for the role of Deputy Governor was one day per week?

Patrick O’Sullivan: That expanded, depending on the need at the time. It could have been –

Mr Stevens: You anticipated my next question. In practice, how often did you, on an average week, spend working as Deputy Governor?

Patrick O’Sullivan: Two days a week.

Mr Stevens: Two days a week. You were appointed as a Non-Executive chair of Old Mutual Plc in 2010?

Patrick O’Sullivan: Correct.

Mr Stevens: In your witness statement, you say that the time commitment for that was four days a week?

Patrick O’Sullivan: That is correct.

Mr Stevens: In practice, how much time did you need to spend on that?

Patrick O’Sullivan: Three days a week.

Mr Stevens: So less time than – okay. From 2013, you were Chair of Lloyd’s Syndicate 218?

Patrick O’Sullivan: Correct.

Mr Stevens: Do you remember roughly when in 2013 you started that role?

Patrick O’Sullivan: I believe it was September.

Mr Stevens: September 2013?

Patrick O’Sullivan: (The witness nodded)

Mr Stevens: What was the time commitment for the Lloyd’s Syndicate role?

Patrick O’Sullivan: One day a month.

Mr Stevens: Did that translate into how much time you actually spent on it?

Patrick O’Sullivan: It did, except for the occasional phone call, et cetera.

Mr Stevens: So you were appointed to become the Chair of the Shareholder Executive Board – well, you were appointed on October 2011 but you started that position in March 2012?

Patrick O’Sullivan: That’s correct.

Mr Stevens: In your witness statement, if we could bring it up, please, paragraph 6, page 2, so in the middle, we see it says – sorry, before there we see you refer to the Deputy Governor role. Then you say:

“The Secretary of State appointed me as Chair of the [Shareholder Executive] Board in October 2011, with a start date of March 2012. The time commitment for each of these roles was one day a week.”

Pausing there, I think in practice you said that was two days –

Patrick O’Sullivan: (The witness nodded)

Mr Stevens: – and then two days a month respectively. So what you’re saying in the witness statement is the Chair role took up two days a month; is that right?

Patrick O’Sullivan: Excuse me, that’s technically incorrect. It was one day a week.

Mr Stevens: One day a week. That statement can come down. Thank you. Did you have sufficient time to commit to Shareholder Executive, given your other commitments to Old Mutual and the Bank of Ireland?

Patrick O’Sullivan: Yes, in – I put in the extra time to the extent that it was required, at weekends, evenings, or whatever.

Mr Stevens: At any point did you feel that you were in conflict, in the sense that you had too many tasks for different companies?

Patrick O’Sullivan: Well, jumping ahead, that was one of the major reasons that I did not extend beyond September ‘14 because the intensity of the work with Old Mutual was exceptional at that point.

Mr Stevens: Did you feel you were able to honour your commitment and the time required to the role as Chair of ShEx?

Patrick O’Sullivan: Yes.

Mr Stevens: Let’s look, then, at the role of ShEx, please. Actually, if we can bring back up the statement, page 10, paragraph 26. It says that:

“I am asked to address matters that go to reporting and risk structures within ShEx. These evolved over time, and I understand the evolution of these matters will be addressed fully by other UKGI witnesses to the Inquiry.”

I think you may be referring to Mr Russell, who appeared yesterday, and the witnesses next week; is that right?

Patrick O’Sullivan: That’s correct.

Mr Stevens: Would you agree that one of the core roles of the Executive of any body or company or Government department is to identify, analyse and mitigate risk?

Patrick O’Sullivan: Yes, it’s among the important governance requirements of any Executive Team.

Mr Stevens: In respect of ShEx, the Executive were required or needed to take steps to identify, analyse and consider mitigation for risks of its assets, such as Post Office Limited; would you agree?

Patrick O’Sullivan: I do.

Mr Stevens: Whose responsibility was it to carry out that risk management?

Patrick O’Sullivan: That was the responsibility of the team specifically within ShEx reporting to the CEO.

Mr Stevens: I want to look at the ShEx Board now, of which you were the Chair and look at what its role was in respect of risk management whilst you were there. Please could we bring up UKGI00041953.

This is a paper on the ShEx Board’s remit, which I understand was prepared by your predecessor as Chair; is that right?

Patrick O’Sullivan: That is correct.

Mr Stevens: We don’t need to bring this up but, at paragraph 18.2 of your statement, you say that you think this document fairly reflects the role of the Board of ShEx?

Patrick O’Sullivan: That is correct.

Mr Stevens: In particular, you refer to paragraphs 6 and 7 of some terms of reference which are appended to it. If we could look further down the page, please, paragraph 7 is quoted there, and it says:

“… of the existing Terms of Reference sets out the Board’s overall remit: ‘The Board has an advisory role in relation to the work of the Shareholder Executive as a whole. This will include setting strategic direction in the light of Ministerial objectives, periodically reviewing the delivery of objectives as set out in the business plan and considering any specific issues referred to it by the Executive Committee.”

It says:

“This holds true but, more specifically, the Board should expect to …”

Then if we turn the page, thank you, we see some other points there. One of them is:

“Review the progress and status of big projects …”

“Projects”, is that referring or will it include assets such as the Post Office?

Patrick O’Sullivan: Yes, but it’s important to remember that the Post Office, when this was written, of course, was such a division of Royal Mail.

Mr Stevens: Yes. Until April 2012, when it became under direct …

Patrick O’Sullivan: Correct.

Mr Stevens: We’re going turn to that shortly, but do you agree with the suggestion here that this also formed part of the Board’s responsibilities?

Patrick O’Sullivan: Absolutely.

Mr Stevens: That document can come down, thank you.

At the Board level, what role did you see the ShEx Board as having in respect of risk management?

Patrick O’Sullivan: Well, as I think has been pointed out by Mark Russell yesterday, it was an evolving process but it was very clear that the experience level of the Shareholder Executive at the time that I assumed my position did not have, at that point, the benefit of current risk management, as practised in most major corporations that I was part of. And it became our objective to begin to improve that process and, as you heard, a Risk Committee was established under Fiona MacGregor, and then, later on, the RAG or Red, Amber and Green analysis process was commenced and then refined in 2014.

Mr Stevens: You say that it evolved. When you started in your role as Chair, what steps did you take as chair, or did the Board take, in respect of improving risk management?

Patrick O’Sullivan: We spent quite a bit of time discussing the process as currently practised at that point in the corporations that I happened to be involved with, with Mark, and he duly took up the cudgel and went to work on applying those standards, taking advice from some of the corporations that I worked with.

Mr Stevens: In order for the Board to properly carry out its role, did it need to satisfy itself that the executive had identified the appropriate risks for each asset?

Patrick O’Sullivan: Well, as I indicated, it was an evolving process and just the number and size and complexity of what was being looked at and reviewed at that time was, by any standards, very heavy. Particularly in the light of the fact that Royal Mail was being floated and all of those issues around the impact on the shareholder’s investment in Royal Mail, nuclear decommissioning, which was costing hundreds of millions of pounds a year, the establishment of the British Business Bank, the Green Investment Bank, so in the context of looking and reviewing the risks around those investments, it depended on the size and scope of the particular investment.

And at that point in time, at the beginning in 2012, Post Office would have been well down the list in the context of the perceived levels of risks.

Mr Stevens: I’m asking you questions generally there but we’ll test that as we go through the chronology. I’ll stick with a few other general questions first, though. The first is: did anyone on the ShEx Board have expertise in the legal function of a corporate body?

Patrick O’Sullivan: Not specifically.

Mr Stevens: Why not?

Patrick O’Sullivan: We were not a corporation that was constituted under the Companies Act. We were an advisory board and, as judged, I think, by my predecessor and subsequently reinforced by me, the key was to get a skillset around that board table of great experience, which would complement and supplement some of the lack of experience within the Shareholder Executive.

Mr Stevens: Two points, there. Firstly, in terms of identifying the skills required at the ShEx Board meetings and who was a member of the Board, was that your responsibility as Chair?

Patrick O’Sullivan: I inherited a Board from the outset and changes to that Board were my responsibility.

Mr Stevens: When we consider that one of the assets that ShEx was overseeing, Post Office Limited, we consider that it was prosecuting subpostmasters, which was a legal function, do you think it would have assisted the ShEx Board to have someone with experience of the legal function of a corporate body?

Patrick O’Sullivan: Well, in the context of the Board’s knowledge or indeed the Shareholder Executive’s knowledge of what the prosecutions were being – what the impact of those prosecutions were at the time, it was very, very limited. In fact, I cannot remember a discussion at any point in time in my tenure on the Post Office prosecutions issues. There was a discussion which was between myself and the Chairperson of the Post Office around the key issues that were concerning her at the time. This was the standard type of questioning that I had for each Board member that I interacted with, and her response was that it was just some challenges dealing with the subpostmasters and their union.

Mr Stevens: We’re going to come to that. I assume you’re talking about a meeting with Alice Perkins?

Patrick O’Sullivan: Correct.

Mr Stevens: We’ll come to that shortly. Can we please bring up UKGI00045855. This is a letter to you dated 4 October 2011, it’s your letter of appointment. If we could turn to page 3, please, to paragraph 3b. It says:

“As Chairman, your key role will be to provide high level strategic direction to the Shareholder Executive.”

We don’t need to go through all of them. One of them is to:

“develop a constructive, frank and open relationship with the Chief Executive, holding him/her accountable for the effective implementation of decisions …”

Did you consider that to be a personal responsibility, to hold the Chief Executive to account, in respect of his duties in relation to risk management?

Patrick O’Sullivan: Most certainly.

Mr Stevens: That can come down. Thank you. My last sort of general topic on Post Office Limited as an arm’s-length body. Please could we bring up your witness statement at page 3, paragraph 10. Thank you. You say at paragraph 10:

“The Secretary of State for [the Department of Business, Innovation and Skills], at the time, had ultimate responsibility for the … shareholdings in Royal Mail Group and [Post Office Limited]. The Secretary of State could not delegate his responsibilities.”

When you refer to the Secretary of State’s responsibilities here, what are you actually referring to?

Patrick O’Sullivan: In respect of arm’s-length bodies.

Mr Stevens: Could you define precisely what the responsibilities are?

Patrick O’Sullivan: We did not, no, those were defined either in practice, or –

Mr Stevens: Sorry, what I mean is when you’re here in your witness statement saying “had ultimate responsibility”, and you’re saying the Secretary of State could not delegate his responsibilities, my question is: precisely what responsibilities are you referring to when you write these sentences?

Patrick O’Sullivan: I can’t recall the distinction between whether they were actually delineated in writing but, obviously, the rules and the overview of how an arm’s-length body, such as the Post Office would have been run and managed would have been set out either in emails or statutorily.

Mr Stevens: Let me ask it another way: when you were writing this part of your statement, what did you think was required of the Secretary of State when you said that the Secretary of State could not delegate his responsibilities?

Patrick O’Sullivan: Well, I believe that the Shareholder Executive was acting as his agent, if you like, that may be the wrong legal term, in ensuring that he was – he or she, but it was a he – were aware of all of the key issues that needed to be elevated to his level, so that issues that were important, either politically or in the context of funding, et cetera, were made very clear to him.

Mr Stevens: If we look, maybe, at UKGI00044314, please. You refer to this in your witness statement as the ShEx Handbook. At page 2, please, right at the bottom, so “The Shareholder Executive model of corporate governance”:

“The Government intends to operate as an intelligent and informed shareholder.”

Then, if we go over the page, please. “How the Government intends to operate as a shareholder”, it says:

“The basic shareholder model as set out below summarises the key actions of the shareholder …”

Then in the box, we don’t have to read it all but you’ll see it there, the final one is:

“The shareholder monitors the performance of the business to satisfy itself that the strategic plan is on track and ensure that any interventions required are well informed and appropriate.”

Are these the responsibilities you were referring to?

Patrick O’Sullivan: Yes, they certainly were among the key responsibilities.

Mr Stevens: If we can turn the page, please, we have what the Government expects of its businesses:

“Principle 1. Businesses should seek an honest, open and ongoing dialogue with the Government as shareholder.

“Principle 2. Businesses should operate a ‘no surprises’ policy ensuring that the Government as shareholder is informed well in advance of anything potentially contentious in the public arena.”

As an intelligent and informed shareholder, should the Government have taken steps to satisfy itself that the businesses it owned were following these principles?

Patrick O’Sullivan: Well, the Government was – through Martin Donnelly, the Permanent Secretary, was assured on an ongoing basis as to where we might or might not have been performing under these requirements, these principles.

Mr Stevens: Let’s frame it in another way. If the Shareholder Executive is, I think using your words, acting as an agent of Government – I think that’s what you said earlier?

Patrick O’Sullivan: Yes.

Mr Stevens: You’re nodding. Yes. When it says, “What government expects of its businesses”, let’s consider “business” there to be Post Office?

Patrick O’Sullivan: The business to be?

Mr Stevens: The Post Office?

Patrick O’Sullivan: Yes, correct.

Mr Stevens: Do you think, as the Shareholder Executive in managing the Government’s shareholding function, that the Shareholder Executive should have taken steps to see that, for example, the Post Office was complying with principles 1 and 2?

Patrick O’Sullivan: There was no reason to doubt that an honest, open and ongoing dialogue was not taking place between Post Office Executives and the Shareholder Executive.

Mr Stevens: That’s a slightly different answer. That’s to whether or not what actually happened. I’m asking as a matter of principle whether you accept that the Shareholder Executive, as acting as an agent of government, as you said, owed steps to satisfy itself that principles 1 and 2 were being complied with?

Patrick O’Sullivan: I agree completely.

Mr Stevens: That can come down. Thank you. Can we go back, please, to your witness statement, page 3, paragraph 11. You say that:

“The Secretary of State, in my view, cannot have been expected to have taken any more of an active role in overseeing the day-to-day operations of Royal Mail Group and/or [Post Office]. This reflects usual practice – the role of a shareholder is not to manage the operations of the company.”

There’s a difference, isn’t there, between managing the operations of a company on the one hand and overseeing the management of a company’s operation on another?

Patrick O’Sullivan: There is.

Mr Stevens: You go on. You say:

“Nor was it the function of [the Department for Business, Innovation and Skills] (or ShEx, as an organisation within [that Department]) to be responsible for the operations of Royal Mail Group and/or [Post Office Limited]. Responsibility for the company’s operations was with the [Post Office] Board, comprised of senior management and independent Non-Executive Directors, including a representative of the Secretary of State, through ShEx, the Shareholder NED.”

Breaking that down, you say it wasn’t the Department’s role to be responsible for the operations of Royal Mail or Post Office. Is that your evidence?

Patrick O’Sullivan: Correct.

Mr Stevens: You then say that the responsibility for the company’s operation was with the Post Office Board?

Patrick O’Sullivan: Yes.

Mr Stevens: You say that the Post Office Board was comprised of Executive Directors and independent Non-Executive Directors –

Patrick O’Sullivan: Yes.

Mr Stevens: – and the responsibility for the company’s operation therefore lay with those Directors?

Patrick O’Sullivan: Yes.

Mr Stevens: One of those Directors was the Shareholder Non-Executive Director, correct?

Patrick O’Sullivan: Correct.

Mr Stevens: That was a Shareholder Executive official, correct?

Patrick O’Sullivan: Correct.

Mr Stevens: You describe that person as the Secretary of State’s representative?

Patrick O’Sullivan: Yes, correct.

Mr Stevens: Why, then, do you say that ShEx and the Secretary of State did not have responsibility for the day-to-day running of the company?

Patrick O’Sullivan: Well, what I said was they don’t get involved on day-to-day decisions nor the normal requirements of management in deciding on investment policy, et cetera. This is an issue where the Secretary of State, through the full time appointment of a ShEx representative of the Board, ensured that adequate oversight and review was happening.

Mr Stevens: Yesterday, the Inquiry heard evidence from both Mark Russell and Robert Swannell. They agreed that, as an arm’s-length body, the Minister was ultimately responsible and accountable for the operations of Post Office; would you agree with that?

Patrick O’Sullivan: I would.

Mr Stevens: I want to look at some of the specifics now in the oversight of Horizon. Could we look at page 20 of your witness statement, please, paragraph 45. Thank you. At 45, you say that you’ve been asked – that’s asked by the Inquiry – whether the ShEx Board was informed or had knowledge of the following matters and in the subparagraphs there’s listed various matters, including some documents that the Inquiry sent you. You see there’s the Second Sight Interim Report at 45.3; then the Clarke Advices; and 45.7 there’s Deloittes Project Zebra Report.

If we turn over the page, please, and have paragraphs 46 and 47 on screen, if we can. Thank you. You say:

“The matters and documents referred to at paragraph 45 … were not raised with the ShEx Board.”

Patrick O’Sullivan: That’s correct.

Mr Stevens: Now, in paragraph 47, you refer to a conversation with Richard Callard about the instruction of Deloitte. I am going to come to that later. Excluding that, were any of the matters or documents referred to in paragraph 45 raised with you personally outside of the Board?

Patrick O’Sullivan: No, they were not.

Mr Stevens: At 46, if we can just go back up, please, you say:

“What information is passed to the ShEx Board is dependent on what ShEx Team and the ShEx CEO deem to be an issue that required the attention or advice of the ShEx Board. It is now clear that the documents referred to raised serious issues in relation to the functioning of the Horizon system, and the prosecution and treatment of subpostmasters. I think that both ShEx and the Board should have been made aware of these very significant matters.”

That can come down. Thank you.

It may seem an obvious question but can I ask you why you believe that the ShEx Board should have been made aware of those documents and matters?

Patrick O’Sullivan: It became clear, in hindsight, reading the documents now, that there was a lot of – there were many issues happening in the context of that relationship with the subpostmasters and, indeed, although not in absolute volume terms, a huge number of issues being raised in Parliament. Though we should have had a mechanism that would have allowed us to be aware of just those factors.

Whether it would have led to a different advice is something I couldn’t comment on.

Mr Stevens: I mean, is it the fact that the matters raised go to the heart of the operations of Post Office Limited?

Patrick O’Sullivan: They –

Mr Stevens: The significant issues, for instance.

Patrick O’Sullivan: Yes, they do.

Mr Stevens: On that basis, they posed a significant risk to the business?

Patrick O’Sullivan: Yes, and that’s only evident on hindsight. For example, the Linklaters report, which mentioned a risk of 100 million, 0 to 100 million in settlement risk, which was a significant number in reference to the P&L of the Post Office. That should have been flagged.

Mr Stevens: Can I ask you how often would you meet people from the Post Office team within the Shareholder Executive?

Patrick O’Sullivan: My role was to meet with the Chairperson, which would be, at most, twice a year.

Mr Stevens: Let me clarify the question, sorry. I’m talking about within the Shareholder Executive those persons working on the Post Office as an asset? How often did you –

Patrick O’Sullivan: Most of my time was spent with the Chief Executive, Stephen Lovegrove, followed by Mark Russell, and the individual team members only as issues arose. So the leader of the team, Susannah Storey or, in later cases, Roger, the – it was more frequent but on, I should say, an unplanned basis.

Mr Stevens: When you say “as issues arose”, what issues are you referring to?

Patrick O’Sullivan: Well, I’m referring in the main to Royal Mail issues at the time.

Mr Stevens: So Royal Mail issues, so the company had separated in April 2012 –

Patrick O’Sullivan: Correct.

Mr Stevens: – is that correct?

Patrick O’Sullivan: Correct.

Mr Stevens: The Secretary of State maintained a shareholding until I think it was the next year; is that right?

Patrick O’Sullivan: Correct.

Mr Stevens: Is your evidence that the Post Office team were dealing with Royal Mail issues still?

Patrick O’Sullivan: The – no. I’m misleading you. The issue was that the dominance of the Royal Mail issues in the context of what the Shareholder Executive was reviewing and following up with, it became a major exercise.

Mr Stevens: For example, you mentioned Susannah Storey earlier. What issues did you discuss with Susannah Storey?

Patrick O’Sullivan: Well, things were discussed, really, through the Chief Executive as to her experience on the Royal Mail Board and the Post Office Board, and I believe Mark referred to it yesterday, Mark Russell, when he said it was not an easy relationship.

Mr Stevens: Can you recall any issues relating to the Post Office as a business, which you were aware of through Susannah Storey?

Patrick O’Sullivan: No.

Mr Stevens: Let’s look at your first Board meeting as Chair, please. It’s UKGI00045852. We see 7 March 2012, you’re listed as in the Chair. If you could go to the bottom, please, of the document. There’s an introductory paragraph, and it says:

“Patrick informed the Board that he would step out if there were any discussions on the Royal Mail side relating to Bank of Ireland as he was Deputy Governor.”

Did you ever have to do that: step away from a discussion on Royal Mail because of your ongoing relationship with the Bank of Ireland?

Patrick O’Sullivan: Yes, of course it should say Post Office, because the relationship between Bank of Ireland on the Financial Services side was with the Post Office, and I do recall at least on one occasion recusing myself.

Mr Stevens: Do you recall what the issue was about?

Patrick O’Sullivan: The financial arrangements of the transaction.

Mr Stevens: When you say “the transaction”, is –

Patrick O’Sullivan: The agreement between Post Office Limited and Bank of Ireland to supply certain Financial Services products.

Mr Stevens: If a person was raising with you an issue about Horizon, which was the system that generated the data on which Post Office put together its accounts and which it provided information to its clients, would you have been able to deal with that or consider it without being in conflict?

Patrick O’Sullivan: Yes, indeed. I don’t think it would have been in conflict at all.

Mr Stevens: Why do you think that?

Patrick O’Sullivan: Because the system – the operation system through the Post Office was not really related to the services provided by Bank of Ireland.

Mr Stevens: Are you aware of there being any reluctance or reticence within the team to discuss issues with you regarding Post Office because of your relationship with the Bank of Ireland?

Patrick O’Sullivan: None.

Mr Stevens: We mentioned earlier Susannah Storey and the appointment of the Shareholder Non-Executive Director. Are you aware how Susannah Storey was selected for that role?

Patrick O’Sullivan: That was the choice of the Chief Executive.

Mr Stevens: Are you aware of whether anyone – well, let’s say the Chief Executive considered her suitability for the appointment, or what consideration he applied?

Patrick O’Sullivan: It had already occurred by the time I started so I didn’t – it didn’t arise.

Mr Stevens: Could we look, please, at page 19 of your statement, paragraph 43. You say:

“Following [Post Office Limited’s] separation from Royal Mail its status was raised to priority level. [Post Office Limited] had been a division of a major asset, and now it was a major asset in its own right, receiving substantial levels of funding from the government and so it was wholly appropriate for ShEx to take a more direct role in its governance.”

When you say it was raised to priority level, what did that mean in practical terms?

Patrick O’Sullivan: In practical terms, it probably meant that it was more visible within the portfolio –

Mr Stevens: Visible to whom?

Patrick O’Sullivan: Visible to the Shareholder Executive management and, in respect of peer reviews, for example, within the Shareholder Executive, it would have been under much greater scrutiny than it had been as a division of Royal Mail. They’re the points that strike me most of all, I think.

Mr Stevens: Was it raised as a priority for the Board?

Patrick O’Sullivan: No.

Mr Stevens: Why not?

Patrick O’Sullivan: Because – in the sense that it was reported on occasionally in the time that I was in charge, it – there was no change in intensity, in the sense that Post Office was not perceived at that time to be an issue of concern, of great concern.

Mr Stevens: Sir, that’s probably a good time for the afternoon break. If I could ask that we come back at 3.30, I’d be grateful. Thank you, sir.

(3.20 pm)

(A short break)

(3.30 pm)

Mr Stevens: Sir, can you see and hear me?

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

Mr Stevens: Please can we bring up UKGI00036711. It’s minutes of a Board meeting on 8 May 2012. You say in your witness statement that you’re satisfied that these minutes accurately record the discussions at the various meetings.

Patrick O’Sullivan: Correct.

Mr Stevens: This is the first meeting after Post Office Limited becomes independent of Royal Mail; is that right?

Patrick O’Sullivan: Correct.

Mr Stevens: So in terms of, as we discussed before, the governance shifted in that, for the first time, the Shareholder Executive and the Secretary of State were directly – had a direct line, essentially, into Post Office Limited?

Patrick O’Sullivan: Correct.

Mr Stevens: And is it fair to say that, previously, as Royal Mail Group, as part of Royal Mail Group, the Shareholder Executive’s visibility of the risk to Post Office Limited were not clear, shall we say?

Patrick O’Sullivan: That would be absolutely a fair description.

Mr Stevens: If we turn to the page 2, please. If we go down to Royal Mail, thank you, item 4, we see Royal Mail is discussed. Over the page, please. It talks about State Aid approval for Post Office funding. Then 4.2:

“Board members discussed a transaction, specifically points around a trade sale [versus] IPO; employee shares and the mutualisation consultation for the Post Office; and union interest.”

It doesn’t appear that there was any discussion, or a deep dive, as it were, into the risks of Post Office Limited as an asset in itself –

Patrick O’Sullivan: Correct.

Mr Stevens: – or in fact to the corporate governance of Post Office now as an asset?

Patrick O’Sullivan: It would have been too early in the life of the Post Office as an independent business to do that, at that time.

Mr Stevens: Do you think, at some stage, that should have been done by the Shareholder Executive –

Patrick O’Sullivan: Yes.

Mr Stevens: – and by the Board?

Patrick O’Sullivan: Yes.

Mr Stevens: How long should it have waited until it –

Patrick O’Sullivan: Oh, only 18 months after establishment.

Mr Stevens: Why at this stage, when it was a business that had been running for a while, in terms of the actual business of the Post Office, why was then not the ideal time to analyse what the risks were to the business?

Patrick O’Sullivan: The structure of the spin-off of the Post Office from Royal Mail was one where it was business as usual for the Post Office. There were no major changes in its operating procedures.

Mr Stevens: Wasn’t this a time when, after not having visibility of the Post Office, ShEx now had visibility and could understand the risks that that business had? Why didn’t it do that?

Patrick O’Sullivan: Well, as I said, I think some period of time after its official foundation would have been more appropriate.

Mr Stevens: Would you accept that the Board should have done risk or a deep dive of a risk assessment of Post Office Limited within the first six months, say, of separation?

Patrick O’Sullivan: There were no reasons at that point of time, visible to the Board or to the ShEx Executive, that would suggest that such a deep dive was required.

Mr Stevens: How could the Board satisfy itself that that was an appropriate course of action without having done a deep dive of what was effectively a new relationship with an asset?

Patrick O’Sullivan: Well, you’ll have seen the split of the categorisation of the various parts of the portfolio and, at that point in time, we had just appointed the first Shareholder Executive representative to the Post Office Board. That person and the whole organisation needed time to bed down.

Mr Stevens: On that point, can we look, please, at UKGI00019348. These are minutes of the Post Office Limited Board meeting on 23 May 2012. Can we turn, please, to page 4. If you can go down, thank you.

The Inquiry asked you to consider the entry at POLB12/60 and your evidence was, or is, that you didn’t see these Board minutes at the time.

Patrick O’Sullivan: Correct.

Mr Stevens: If we look, it says Susannah Storey here is outlining the reasons for representation of ShEx on the Board of Post Office Limited and we see that she says at the end of paragraph (a):

“She clarified that she would not be sharing the Board papers with her colleagues at [Shareholder Executive].”

Was that something you were aware of?

Patrick O’Sullivan: No.

Mr Stevens: Given the role of the Shareholder Non-Executive Director was so important in oversight of Post Office Limited, should the Board of ShEx have been aware of this position?

Patrick O’Sullivan: It would have been perfectly reasonable for the Chairperson to have requested that Board papers did not go outside the Boardroom whether it was for the Post Office or any other public company. However, there was nothing to prevent Susannah from communicating the essence of what the Board meeting and what the Board papers were saying.

Mr Stevens: But why wasn’t you, as chair, and the Board aware of what appears to be quite a significant self-imposed restriction on sharing Board papers?

Patrick O’Sullivan: This is nothing unusual in the context of normal Board practice.

Mr Stevens: So is it your evidence that the Board of ShEx didn’t need to know about this?

Patrick O’Sullivan: At that point, no.

Mr Stevens: So how could the Board understand the flow of information from its assets, such as Post Office Limited, to the Board?

Patrick O’Sullivan: Through Susannah as the representative.

Mr Stevens: What steps did you take to satisfy yourself that Ms Storey was discharging her role as Shareholder NED effectively?

Patrick O’Sullivan: She was highly regarded within the Shareholder Executive. She was one of the most experienced members of staff at that level and, of course, much of this too would have been a learning experience for her, as well as everybody else appointed to such positions.

Mr Stevens: Shortly after that meeting, Second Sight were instructed to address concerns raised by Members of Parliament in June/July 2012. Were you aware of that at the time?

Patrick O’Sullivan: No.

Mr Stevens: The MPs represented subpostmasters, some of whom had been convicted on the basis of data generated by the Horizon IT System; were you aware that there were such convicted persons?

Patrick O’Sullivan: I was not.

Mr Stevens: Second Sight’s terms of reference were to consider and to advise on whether there are any systemic issues and/or concerns with the Horizon system including training and support processes, giving evidence and reasons for the conclusions reached, so effectively an investigation into Post Office’s front-end accounting system; do you agree?

Patrick O’Sullivan: Yes.

Mr Stevens: If Second Sight had found any issues with that, any problems, that would have been significant to the Post Office?

Patrick O’Sullivan: It would.

Mr Stevens: Firstly, there would have been, or there could have been, unsafe convictions if they’d found issues; do you agree?

Patrick O’Sullivan: With the benefit of hindsight, absolutely.

Mr Stevens: Secondly, the data on which Post Office produced its accounts would possibly be unreliable. Would you agree?

Patrick O’Sullivan: There’s always a possibility. That depends on the impact of what the judgment was in the context of the financial impact on the balance sheet and P&L of the Post Office.

Mr Stevens: At paragraph 31 of your statement you refer to meetings of the Board on 11 July 2012 and the 12 September 2012 and you say there was no – well, there was no reference in those meeting minutes to the launch of the Second Sight investigation. Why was such a significant issue not raised with the Board; can you assist us with that?

Patrick O’Sullivan: Well, as I – as I think – again, with hindsight, it is clear that these matters were believed to be business as usual, and it was an internally sponsored inquiry.

Mr Stevens: It might be a surprise to some that the Chair of the body of ShEx with responsibility for overseeing Post Office wasn’t aware of the Second Sight review. With hindsight, where do you think the problem lay in this not being raised to the Board?

Patrick O’Sullivan: I believe that the modus operandi of the Post Office Management team was the assumption that the system was adequate and did not have systemic issues. It may have been a self-reinforcing view that they took and their approach to any review of the system as a consequence.

Mr Stevens: Do you think you should have taken more interest in the Post Office itself as an asset?

Patrick O’Sullivan: I think that interest grew significantly as time progressed. But perhaps, with hindsight now, the answer is probably yes.

Mr Stevens: When did it grow, your interest?

Patrick O’Sullivan: It grew over the two years that I was – two and a half years that I was Chairman.

Mr Stevens: What caused your interest to grow?

Patrick O’Sullivan: The size of the request for Government funding, the nature of the political decisions around, sadly, not the ones we’re discussing here, but rather the issues of Post Office representation around the country, the ownership of last mile in delivery and postcodes. Those issues became very important.

Mr Stevens: So as you gained more interest and became more involved can you help us with how you, as you say, in your statement, remained unaware of issues such as the prosecution of subpostmasters?

Patrick O’Sullivan: Can you say the question again, please?

Mr Stevens: Yes, so as your interest grew and you took more of an interest in Post Office Limited, can you assist us with how, when you were discussing Post Office with people, you apparently remained unaware of issues such as prosecution of subpostmasters?

Patrick O’Sullivan: I think I said at the beginning that these issues were regarded as business as usual, by Post Office Management. In that sense, there was no evidence or urgency around it, nor that indeed it might be severely damaging.

Mr Stevens: You referred to, in your statement, biannual meetings with the Chair of Post Office, yes?

Patrick O’Sullivan: Correct.

Mr Stevens: What was the purpose of those meetings?

Patrick O’Sullivan: My role in taking over the chairmanship was to bring corporate experience to bear on the review of portfolio companies. I’d had a lot of that experience in prior roles as Chief Executive and subsequently Chief Financial Officer of financial institutions.

We instituted what was called a fireside chat review with the Chairpeople, where there was an attempt to create an atmosphere that was non-threatening, so that they could express, without fear of retribution, any issue around their major concerns. The question normally phrased was “What keeps you awake at night?” It never came up in that context.

Mr Stevens: Just to be clear, when you say concerns, is that concerns in relation to the business or concerns in relation to Post Office Limited or concerns in relation to how ShEx was overseeing the business?

Patrick O’Sullivan: All of the above.

Mr Stevens: You say – we don’t need to bring it up – that in one of the meetings with Alice Perkins – sorry, sir, it’s page 14 paragraph 31.2, if you want to review it – you say that you remember Alice Perkins mentioning, almost as a passing comment, that there was a small segment of difficult subpostmasters and ongoing difficulties with the union?

Patrick O’Sullivan: That’s correct.

Mr Stevens: Did you ask any questions about those difficulties?

Patrick O’Sullivan: I can’t recall what the substance of the conversation was but it was very much in the vein I’ve mentioned of this is just business as usual, we’re getting on with it.

Mr Stevens: Did you discuss, though, those issues with anyone at Shareholder Executive?

Patrick O’Sullivan: Mark Russell and I had some conversations about the effectiveness of the Post Office Management, which was – some of my concerns were that they could have been doing a better job.

Mr Stevens: Who within Post Office Management?

Patrick O’Sullivan: That’s the chairperson and the CEO.

Mr Stevens: So you had a conversation with Mark Russell about whether they could have been doing a better job?

Patrick O’Sullivan: We – and that is normal. We did this with all the portfolio management team.

Mr Stevens: What were your concerns with the Chair and the CEO?

Patrick O’Sullivan: I – in particular in the context of the Chair, an appointment which preceded my time in ShEx, I had a concern that Alice’s experience was not particularly suitable to the role of chairing a business of this nature.

Mr Stevens: What were the basis for those concerns?

Patrick O’Sullivan: My personal experience.

Mr Stevens: What about Paula Vennells? What were your concerns with her?

Patrick O’Sullivan: No, those were more in the nature of the points raised which led to a review of her performance later on.

Mr Stevens: What were they?

Patrick O’Sullivan: I can’t recall.

Mr Stevens: When you were having meetings, these fireside chats, as you described them, were you briefed by anyone at Shareholder Executive prior to the chat?

Patrick O’Sullivan: Yes, by the portfolio responsible – portfolio individual responsible.

Mr Stevens: As part of that briefing, did no one raise with you the Second Sight review?

Patrick O’Sullivan: No, they did not.

Mr Stevens: Let’s move forward in the chronology. We have the Second Sight Report that’s published, the Interim Report on 8 July 2013. My understanding of your evidence is that this wasn’t discussed at Board level?

Patrick O’Sullivan: That’s correct.

Mr Stevens: Your evidence is that you weren’t made aware of it?

Patrick O’Sullivan: Correct.

Mr Stevens: Were you made aware of the involvement of the CCRC in investigating past convictions of subpostmasters?

Patrick O’Sullivan: I was not.

Mr Stevens: I want to look at one matter in particular where you say you do have some knowledge. Can we bring up, please, page 20, paragraph 45 of your statement – sorry, page 21, paragraph 47. So we’ve been to paragraph 46 already, that’s where you discuss your knowledge of various documents. Paragraph 47 says:

“… I should add that I recall a conversation with Richard Callard in which he referred to Deloitte having been instructed to conduct a review to give assurance in respect of concerns raised in Parliament. I recall saying to him that I had experience of Deloitte, and would recommend them.”

In what context was that conversation with Richard Callard?

Patrick O’Sullivan: He was the head of the team at the Shareholder Executive with responsibility for Post Office and, in my normal occasional conversation with those positions, those people in those positions, I tried to impart some of my knowledge of who would be the best people in the context of an external review. It was at that point – I had never heard of Second Sight, never – had no experience of them. So I tried to press on him that the Deloitte team would be best equipped to do the kind of deep dive required to determine what the issues were. As it turned out, they did a desktop review.

Mr Stevens: Did you ask what the issues were, that were to be investigated?

Patrick O’Sullivan: He mentioned they were around the Horizon system at that time, the “systems”, quote/unquote.

Mr Stevens: Did he refer to the fact of subpostmasters being prosecuted?

Patrick O’Sullivan: No, he did not, to my memory.

Mr Stevens: You say that he was – he said it was to review to give assurance in respect of concerns raised in Parliament. Did you continue to believe that it was business as usual at this stage?

Patrick O’Sullivan: Yes, I did.

Mr Stevens: Would you consider to be business as usual for a business to face concerns raised in Parliament about its accounting software?

Patrick O’Sullivan: It’s highly unusual and, looking back on it with hindsight, there was a level at which the inquiry, the inquiries, or rather the issues, being raised by MPs, had risen to a volume that should have been brought to the attention of the Shareholder Executive in the first place, and possibly to the Board after that.

Mr Stevens: Well, if we bring up your witness statement, please, at page 22, paragraph 50.

Sir Wyn Williams: While that’s being done, can you give me some indication of the year in which you had the conversation with Mr Callard, ie was it towards the end of your period or some other time?

Patrick O’Sullivan: Yes, sir, it was towards the end of my period about April time.

Sir Wyn Williams: Yes, April 2014, yes.

Patrick O’Sullivan: Yes.

Sir Wyn Williams: Fine. Thank you.

Mr Stevens: In these paragraphs, you’re saying, you’re commenting, on things you would have handled differently and giving reflections. In paragraph 50 you say, as a leader point, you say:

“I believe that it could have been helpful for ShEx board packs to have a schedule of significant issues raised in Parliament relating to Government assets where ShEx handled the shareholder role.”

Well, the fact that Parliament was – concerns had been raised in Parliament was raised directly with you by Richard Callard, why did that not set alarm bells ringing as to the significance of this issue with Post Office Limited?

Patrick O’Sullivan: Most probably because of the timing. In other words, the reviews were just, in the case of Deloitte, beginning, rather than at the end, and I had not had any knowledge of the Second Sight Interim Report.

Mr Stevens: Do you think, at this stage, you should have asked more questions on the background to the issue?

Patrick O’Sullivan: With perfect hindsight, absolutely.

Mr Stevens: Well, not with hindsight. If you’re told that there are concerns raised in Parliament about a business that the Shareholder Executive is overseeing, do you think, with the information you had at the time, you should have asked more questions about it?

Patrick O’Sullivan: I think the level at which the number of questions being raised – it started in the single figures, and then eventually rose to 47, I believe, by about this time; 47 is certainly a number that should have been raised.

Mr Stevens: 47 what, sorry?

Patrick O’Sullivan: 47 specific questions in Parliament from different MPs about the Horizon system.

Mr Stevens: That’s a slightly different question. I’m asking: at the time, with what you knew, should you have asked more questions of Richard Callard or the Shareholder Executive Team, once you’d been told that Deloitte were involved and there were concerns raised in Parliament?

Patrick O’Sullivan: At the time, I felt I addressed the issue satisfactorily.

Mr Stevens: Let’s look at the Board Briefing, please. It’s for the Deloitte report. It’s POL00028069. You’ve had a chance to read this in preparing for your witness statement and the Inquiry has seen it several times. I’ll whistle through the key points. Can we look at page 3, please, and at the bottom, “Limitations and Assumptions”. As you said earlier, it’s a desktop report. It says:

“… we have not validated whether Horizon has been implemented or operated as described in the documentation reviewed.”

Second bullet point refers to “significant gaps existing in the information available”.

If we go over the page, please, you see it says that the assumptions include that:

“The documents proffered are a complete and accurate representation of the Horizon design.”

Then, finally:

“Assertions made by [Post Office Limited] and Fujitsu staff have been accepted as accurate without corroboration or verification.”

Those are quite significant assumptions, aren’t they?

Patrick O’Sullivan: They are.

Mr Stevens: Can we turn to page 7, please. If we go down – sorry, stay there for the moment. Matter 3, the issue is:

“Baskets of transactions recorded to the Audit Store are complete and ‘digitally sealed’, to protect their integrity and make it evident if they have been tampered with.”

We don’t need to go through all the detail but, if we see the third bullet point down, the final sentence:

“This could allow suitably authorised privileged staff in Fujitsu to delete a sealed set of baskets and replace them with properly sealed baskets, although they would have to fake the digital signatures …

“We have not identified any document controls designed to:

“Prevent a person with authorised privileged access from deleting a digitally sealed group of data and replacing it with a ‘fake’ group within the Audit Store …”

Then over the page at 8, please. Down to Matter 5, “Balancing transaction process”, it says:

“… an emergency process, accessible only to restricted individuals in Fujitsu, which can create transactions directly in Branch ledgers. This process creates an identifiable transaction in the ledger, verbally asserted by [Post Office Limited] staff to be visible to subpostmasters in their branch reporting tool but does not require positive acceptance or approval by the subpostmaster. The use of the process has a full audit trail, monitored by Fujitsu.”

It goes on to say some various assertions. Then finally, over the page, please, it refers again to the:

“Balancing transaction processes [that] are controlled by Fujitsu via formal change control and monitoring processes. An audit trail is retained over the use of this process and, since 2008, when reporting became easier, it is asserted by Fujitsu staff that the audit trail is monitored by a Fujitsu department independent of those with access to the function also in Fujitsu. The degree of formality over this monitoring, and its frequency, is unknown.”

It goes on.

If this report had been put before the Board as, in your evidence, you say it should do, what action do you think would have been taken by the ShEx Board?

Patrick O’Sullivan: We would have pointed out that a desktop review in the context of everything that had been written warranted a full blown analysis of what was going on with the system.

Mr Stevens: When you say it warranted a full belong analysis, what precisely do you mean?

Patrick O’Sullivan: It would mean going into a deep dive and audit of transactions from start to finish, and the fallout or implications of those actions, where there were, for example, discrepancies.

Mr Stevens: If the report was before the Board, we’ve heard from witnesses – I think you listened to yesterday’s evidence about the degree by which oversight was exercised by the Shareholder Executive, I think people referred to arm’s lengthening or shortening, would this report have led to a shortening of the arms, in terms of oversight of –

Patrick O’Sullivan: It most likely would have.

Mr Stevens: I’ll move on and look at a matter in your statement about Shareholder Executive, page 12, paragraph 30, please. You set out, in paragraph 30, the various structures that were in place to oversee Post Office which we turn to. I don’t need to read out.

You say:

“… I believe that there was a governance structure in place that provided an appropriate level of oversight of [Post Office].”

Does that remain your belief?

Patrick O’Sullivan: It does.

Mr Stevens: How do you reconcile that with the fact that you say the Board weren’t aware of the significant issues referred to, that you say it should have been aware of?

Patrick O’Sullivan: Because the oversight function is a two-way process, it’s both bottom-up and top-down. We were in the top-down role as the Shareholder Executive. The bottom-up process of understanding the risks, the importance of those risks, the significance of them, and bringing them appropriately to the Post Office Board, failed.

Mr Stevens: Could we look, please, at UKGI00016718. This a Board meeting on 16 July 2014 of the Shareholder Executive. You’re in the Chair and Robert Swannell, who gave evidence yesterday, who became Chair in September, was also in attendance, marked as RS, you’re POS. If we go down to “Risk Registers”:

“The Board agreed that the revisions to the risk register were a significant improvement.”

It says at the end that:

“[You] summarised that the key aim of the risk registers should be to provoke questions and cautioned against further significant changes.”

What significant changes were you cautioning against?

Patrick O’Sullivan: I can’t recall what was being proposed at the time but, at this point, we had implemented the colour-coding and the heatmap and that was best practice in industry at the time.

Mr Stevens: Were you satisfied with the process of risk management in ShEx at this point?

Patrick O’Sullivan: At that point, yes. With hindsight, clearly there were some shortcomings.

Mr Stevens: Please can we bring up your witness statement at paragraph 50. I want to look at some of the recommendations that you suggest. It’s page 22, sorry. I should have said. We’ve been to paragraph 50 already. This is where you say you believe it would be helpful for the ShEx Board pack to have a schedule of significant issues raised in Parliament. Do you think that would add anything additional to a well-run risk management process where risks were identified and brought to board level?

Patrick O’Sullivan: It might. It may not. In the context of a risk management system which cascaded the key issues to the correct levels, it might have been an extra, additional burden on top of that process, if it was working effectively. However, here we have a situation where the Government is at arm’s length from the shareholder, in other words is arm’s length from the business, but we have a responsibility on behalf of the owners of that business, who are the citizens of this country, and their representatives in Parliament, who, when they raise issues of significance – and that’s the key difficult item to define, what is significant and what is not – that process should – the full circle should occur, which brings it back into the realm of the Government bodies charged with looking after those investments.

Mr Stevens: Does there need to be better communication between the Department and – sorry, let me rephrase that.

When you were there, did you think there needed to be better communication on issues like that between the Department and ShEx?

Patrick O’Sullivan: I never that the impression that I wasn’t – didn’t have sufficient time, or not discussing the right issues with both the Permanent Secretary and the ministers.

Mr Stevens: At paragraph 51, you –

Sir Wyn Williams: Before we get to 51, Mr Stevens, in terms of the schedule of significant issues raised in Parliament, I suppose the advantage of that is that it takes away judgment about risks, ie if something is significant enough to be raised in Parliament, it’s significant enough for you to pay attention to it.

Patrick O’Sullivan: Well, sir, I would expect there would be a healthy tension between the risk register in Parliament and the risk function in the underlying businesses.

Sir Wyn Williams: Exactly so. Yes. Sorry, Mr Stevens.

Mr Stevens: Not at all. Thank you, sir.

Paragraph 51, you say:

“In addition, I would like to have raised as a query at ShEx board level the way in which ShEx Teams received and challenged information received from Government assets, as I believe it is now clear that there were deficiencies in information flow within [Post Office Limited] and up to ShEx.”

What type of queries did you have in mind when you were drafting this statement?

Patrick O’Sullivan: Well, I’m referring to the risks, the whole Horizon issues, and whether these were being surfaced at the right levels in the underlying asset, in this case Post Office. So corporate practice, I might add, was in constant change in the previous 10 years to this, where a lot of risks were inadequately addressed in many corporations. You only have to look at the failures, but we won’t go there, of public corporations. This was an ongoing exercise to improve how you raised the issues and who signed off on raising those issues, so there was accountability for raising the issue and being held accountable that the issue was properly addressed in due course.

Mr Stevens: So if you were thinking about what chairs of businesses or bodies should do in future, what type of queries they should be asking, what springs to mind?

Patrick O’Sullivan: Well, Boards are entirely dependent on management, and the experience of the Board members. It becomes a really critical issue, in the case of the Post Office Board, whether they had the right mix of skills to properly challenge internal audit, legal, risk management, on the issues, and that is, of course, where some of the weaknesses can appear.

Mr Stevens: The Inquiry will hear in the coming weeks from witnesses who make other recommendations. One suggestion that will be made is that there should be a change in the law to empower a minister to become directly involved in the decision making of the board of a company, such as Post Office. What would your view of that be?

Patrick O’Sullivan: I think my view is that ministers have total authority right now to investigate anything they wish to look at and it might be superfluous.

Mr Stevens: Sir, that concludes my questions. I think there are two sets of Core Participant questions, one from – how long?

Five minutes from Howe+Co and ten minutes from Hodge Jones & Allen. That should bring us to a close within time.

Sir Wyn Williams: Good. So I shall look forward to the discipline of the advocates in ensuring that, Mr Stevens.

Questioned by Mr Jacobs

Mr Jacobs: We act for Alan Riddell, who is a subpostmaster from Sunderland, and he has travelled down here today with Jean Smith. His wife Carol, who is watching, I understand, remotely is unable to attend today. Now, they were involved with the East Boldon Post Office, and their member of Parliament, Stephen Hepburn, wrote to Ed Davey as a minister in February 2012, and they say they never received a proper reply beyond simple acknowledgement.

Now, you say at paragraph 36 of your statement that you had no involvement in this particular case. At paragraph 38, you say:

“The messaging from Post Office through the ShEx Team was that Horizon was robust, POL was addressing matters including by way of the Second Sight Review and the ShEx team considered that this was an operational matter for POL.”

Is that your understanding of where we were –

Patrick O’Sullivan: That’s correct.

Mr Jacobs: – at the time. So it follows then, doesn’t it, that it was your understanding that the ShEx team was informed and instructed by POL, Post Office, in relation to complaints that were escalated, or being attempted to be escalated, to ministers through MPs?

Patrick O’Sullivan: I would not have had any sight of those issues.

Mr Jacobs: Yes. But what you’ve said is that it was because of the messaging from POL, which was being communicated to the Minister via ShEx. So you were aware of the messaging from POL, weren’t you?

Patrick O’Sullivan: Yes, that was a normal – this is, in effect, a sort of dual mandate for the Shareholder Executive to communicate back to the Minister and to help assist the arm’s-length business with that exercise.

Mr Jacobs: What I want to ask you then is, in relation to paragraph 37, Mr O’Sullivan you say:

“If the issues being raised by subpostmasters with Horizon and the associated ministerial complaints had been flagged as significant or as a significant issue by the ShEx team, I would have expected to have had sight of it.”

Is that your understanding?

Patrick O’Sullivan: That’s correct.

Mr Jacobs: So what sort of complaint made by a subpostmaster or subpostmistress communicated through a Member of Parliament would have amounted to a sufficiently significant issue for you to get involved, Mr O’Sullivan; what would it have taken?

Patrick O’Sullivan: The reality in these situations is that it might have been communicated on the basis of complaints about the effectiveness or rather the usefulness of the IT system. That would be a normal operating issue, not one for the Board.

Mr Jacobs: So that sort of complaint would get through to you?

Patrick O’Sullivan: It would not, normally.

Mr Jacobs: What would get through to you, was my question?

Patrick O’Sullivan: Well, it’s very clear now, with hindsight, that, as the issues of complaints arose about the process used with the subpostmasters to prosecute them and to prosecute them as part of the Post Office’s remit, which was different than handing to it an external counsel to do it, that sort of issue would have been – should have been raised.

Mr Jacobs: Should have been. But what you said in your statement is that complaints, ministerial complaints, if they were flagged as a significant issue by ShEx, those are the ones you would have expected to have sight of. I’m not talking about with hindsight; I’m talking about back in 2012 –

Patrick O’Sullivan: Yes.

Mr Jacobs: – and thereafter. What was a significant issue that would have led to you having sight –

Patrick O’Sullivan: At that time, a threat to the financial performance of the Post Office.

Mr Jacobs: So there’s nothing, really, it seems, that a subpostmaster could have done to have gone over the heads of the Post Office, to the owner of the company, to the Minister, there’s nothing that really would have got to your attention; is that what you’re saying?

Patrick O’Sullivan: It’s difficult to see how that might have happened but that’s hence my recommendation that there would be a risk register within Parliament to – back to the owner.

Mr Jacobs: Do you accept, then, I think it follows, that when subpostmasters such as my clients who sit behind me, when they sought to escalate their cases to the Minister, via their Members of Parliament, through the democratic process, it was the Shareholder Executive who blocked those attempts, wasn’t it?

Patrick O’Sullivan: No, I would not agree with that.

Mr Jacobs: Well, your statement says that these were considered to be operational matters because of the messaging from POL. So they didn’t get through.

Patrick O’Sullivan: But in the context of the Post Office Board, who had the responsibility to determine the significance of these issues, along with management, executive management. It was not ShEx’s role to second guess at that point what the POL Board was doing.

Mr Jacobs: You will no doubt have been following the evidence in the Inquiry –

Patrick O’Sullivan: Correct.

Mr Jacobs: – and you will have heard perhaps the evidence in the Human Impact hearings from subpostmasters?

Patrick O’Sullivan: Yes, and like everybody else, I regret them deeply.

Mr Jacobs: These are all significant matters, aren’t they, that everybody has raised, all the subpostmasters?

Patrick O’Sullivan: They are indeed.

Mr Jacobs: So these issues were in the public domain. Do you accept that, when subpostmasters tried to use the democratic process – MP, Minister – to escalate their complaints, the Shareholder Executive should have let them do that, should have let the Minister –

Patrick O’Sullivan: The Shareholder Executive did not stop the complaints from Parliament reaching either the ministers or the Post Office Board.

Mr Jacobs: Well, they advised ministers that these were contractual and operational matters?

Patrick O’Sullivan: Contractual in the context of the day-to-day operations of the business. As the significance of them grew, based on the circumstances, independent judgement at that time might have judged differently as to how operational they were or how significant they were.

Mr Jacobs: Isn’t the reality of the matter that, if the Shareholder Executive had said, “Our advice is these are probably contractual matters, probably operational matters, but these appears to be significant matters and the Minister should look at them if the Minister feels that that would be the right thing to do”, that’s the advice you should have given, isn’t it?

Patrick O’Sullivan: If we had had the information, absolutely.

Mr Jacobs: You no doubt accept, then, that the Shareholder Executive, in not giving that advice, failed subpostmasters who tried to escalate their cases to the Minister?

Patrick O’Sullivan: I respectfully disagree. I repeat that the issue is what information the Shareholder Executive had to be able to make those judgements as to complexity, importance or significance from a Post Office perspective.

Mr Jacobs: Thank you. I don’t have any further questions for you.

Questioned by Mr Henry

Mr Henry: Mr O’Sullivan, you were appointed in 2011. Can you help us when that was?

Patrick O’Sullivan: I believe it was October. It’s on the appointment – the appointment letter from my predecessor. Let me have a look.

Mr Henry: Let’s take it as October, then, Mr O’Sullivan. So that would be October 2011.

Sir Wyn Williams: I think, Mr Henry, just to help, his witness statement says appointed October 2011, started March 2012.

Mr Henry: Thank you very much, sir.

So October 2011, coincidentally, there was an article in Computer Weekly which said 85 subpostmasters seek legal support in claims against the Post Office computer system.

Throughout this Inquiry, we have seen, from inside the Post Office – and obviously not necessarily ShEx because that was different – but inside the Post Office, an obsession with the media and how the plight of the subpostmasters is being portrayed in the media. Were you aware of that background?

Patrick O’Sullivan: No, I was not.

Mr Henry: So it follows that, before your appointment, the six stories in Computer Weekly – I can go through them, if you like – the BBC News programmes, et cetera, et cetera, none of that permeated your consciousness?

Patrick O’Sullivan: Correct.

Mr Henry: During your tenure, which was from March 2012 to September 2014, we’ve got ten stories in Computer Weekly; you were presumably not made aware of those either?

Patrick O’Sullivan: That’s correct.

Mr Henry: Right, could we go to UKGI00016739, and while that is being put up, you would accept, sir, would you not, that the vital thing in any flotation is that the listing particulars in the prospectus are completely accurate, that you get a warts and all – forgive that expression – but a warts and all picture of the business so that anybody who wishes to subscribe or take up shares is fully acquainted with proper risk?

Patrick O’Sullivan: I agree.

Mr Henry: Right. So this is a ShEx Board meeting of 13 March 2013 and at page 17 of 39 we go to the proposed flotation of RMG, and it’s noted that:

“A number of critical transaction ‘enablers’ have been confirmed in the last two months.”

I omit words, and then further down we can see, if we go to number 3:

“On the basis of this work we are now in a position to recommend that:

“We should pursue a sale of shares.

“We should prepare for an IPO in autumn 2013.”

Then over the page at page 18 we have “Key risks” and we’ve got “Industrial relations”, this is under paragraph 5, “Financial performance”; “Investment appetite”; “Market Economic Conditions”; “Regulation”. Then going over to page 19 internally but 18 on the document itself, we’ve got at paragraph 6 at the top of the page:

“These risks are significant and there remains a strong possibility that one or more could materialise; we are continuing to assess contingency options should this be the case. However, at this stage we (and [the Union Bank of Switzerland]) remain of the view that a sale should be feasible from autumn 2013.”

Now, the position, as you say, however – if I may be forgiven for making an observation – improbable it is, that you had no idea about the noise, as it has been contemptuously described, generated by the subpostmasters, but the position is that the risk of historical prosecutions, of sending innocent people to prison, appears nowhere in this document.

Patrick O’Sullivan: That’s correct.

Mr Henry: You would surely agree with me that, if that had been a known risk, it would have killed the flotation completely?

Patrick O’Sullivan: I couldn’t – I couldn’t necessarily agree with that because –

Mr Henry: Why not?

Patrick O’Sullivan: – the analysis would and the counter – the rebuttal might have been sufficient to mitigate what was perceived at that time as an unlikely event.

Mr Henry: So, in other words, it would be compounded because there would be, therefore, a false denial of accountability and, down the line, there would be, when this all blew up, there would no doubt be recriminations that it had been wrongly priced?

Patrick O’Sullivan: If you – the Board was entitled to look at the Linklaters, I believe, review, which categorically stated that the probability of loss from the postmasters’ actions was low, although it could be 100 million, was the number. That should have been stated.

Mr Henry: Categorically is somewhat overstated. It was a very, very highly caveated report, was it not?

Patrick O’Sullivan: Well, in reading it post-the event, yes.

Mr Henry: Yes. May I ask you, were you aware that people from your Department, people from ShEx, were trying to remove what were perceived to be adverse or critical remarks about Horizon from the prospectus?

Patrick O’Sullivan: I was not.

Mr Henry: So, therefore, it follows that you cannot have been aware that the Chief Executive Officer of the Post Office, when the officials at ShEx had failed, intervened and actually had what was perceived to be damaging and critical material of Horizon removed from the prospectus?

Patrick O’Sullivan: I was not aware of that.

Mr Henry: That would be, on any view, given what we now know, contrary to the whole principle of candour and transparency so far as risk; do you agree?

Patrick O’Sullivan: You could reach that conclusion.

Mr Henry: I’m grateful. Thank you.

Sir Wyn Williams: Thank you, Mr Henry.

Thank you to everyone for bringing this afternoon’s proceedings to a timely close. I’m grateful to you.

I’m also grateful to you, Mr O’Sullivan, for making your witness statement and for coming to answer questions at the Inquiry this afternoon.

The Witness: Thank you, sir.

Sir Wyn Williams: Right. So we won’t sit tomorrow and we will resume on Friday –

Mr Stevens: That’s correct, sir, yes.

Sir Wyn Williams: – I take it, Mr Stevens?

Mr Stevens: Sorry, sir. Spoke over you, then.

Sir Wyn Williams: No, no. I take it at 9.45 on Friday?

Mr Stevens: Yes, 9.45, thank you.

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

(4.27 pm)

(The hearing adjourned until 9.45 am on Friday, 12 July 2024)