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From: Martin Edwards[/O=MMS/OU=EXCHANGE ADMINISTRATIVE GROUP
(FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=MARTIN EDWARDS1F838E9D3-CC99-4040-
B432-33552E99ED2DDD]
Sent:
To: Kevin Gilliland[t,
Nicholas _
‘Martin Moranf
Cc: ~}; Susan
Subject:
Attachment: 20130702 JA meeting brief.doc
Attachment: 20130702 JA meeting brief.pdf
Attachment: 20130703 Briefing Note re Second Sight Interim Report - 02 07 13 (2).pdf
Hi all — for information - Paula asked me to forward this brief on to you all to keep you in the loop on the Second Sight
investigation. (Please keep strictly confidential).
To summarise very briefly:
e SS are due to publish their interim report into Horizon issues on Monday. The have reviewed in detail the
four “best” cases from the 49 which have been submitted via MPs or the JFSA (i.e. those cases where the
evidence against us appeared to be most compelling/substantive).
e The headline point to note is that, to date, no systemic issues have been identified in the Horizon system
itself through this process. However, we expect SS will draw attention to areas for improvement in our wider
support systems (e.g. the guidance and training provided to spmrs). We should receive a draft of the report
on Friday.
e We still face very serious reputational risks if this position isn’t communicated to the media and Parliament in
a factual and balanced way. James Arbuthnot, the MP who has been ‘chairing’ this process on behalf of MPs,
is the central figure on this point, and Alice, Paula and Alwen have a meeting with him this morning to gain a
better understanding of his intentions and emphasise the significant risks if this isn’t handled carefully. The
attached brief is to support that meeting and will give you more of a sense of the issues at play.
e Weare of course preparing a detailed communications and stakeholder plan to manage the potential
scenarios.
We can obviously update on the issues and answer any questions under AOB at ExCo this afternoon. (Paula may have
to dip in and out of the meeting as she has a phone call with Jo Swinson on the topic and potentially other urgent calls
to make).
Thanks,
Martin
From: Martin Edwards
Sent: 03 July 2013 02:04
To: Alice Perkins
Cc: Susan Crichton; Alwen Lyons; Mark R Davies; Hugh Flemington; Rodric Williams; Simon Baker
Subject: JA meeting brief
Alice, Paula
With many thanks to Susan, Alwen, Mark and everyone else involved, here’s the briefing note for the meeting with JA
(attached as both a Word doc and PDF, and also pasted in the email below in case easier to read on blackberry. I think
Alwen will try to bring printed copies if she has time).
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Also attaching a more detailed factual background brief in case needed, which is what we’re developing as our main
fact base for reference throughout this process. It includes details of the 4 cases under review by SS in the interim
report and also a summary of the cases pertaining to JA and OL’s constituencies.
I mentioned a website earlier which provides guidance on the proper process for independent enquiries, including in
relation to ‘Salmon letters’ — have referenced the key read-across in the brief, but here’s the link if anyone wants to
read up on this in more detail:
http://publicinquiries.org/holding a hearing/fairness to_witnesses
Best wishes for the meeting,
Martin
Briefing for meeting with James Arbuthnot, 3 July 2013
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KEY OBJECTIVES AND POINTS TO COVER AT THE MEETING
Headline messages of reassurance:
* We take sub-postmasters’ concerns very seriously which is why we set up investigation in the first place.
* No evidenceof systemic failures in the system. But does highlight some important lessons onwider support
processes. Many of these are historical issues which have already been addressed, but we’re determined to
continue making improvements (with input from a new user forum).
* Important this is seen in context—6 million transactions per day across 11,800 branches. More transactions
per second (1,500) than this entire review. Inevitable that some issues will arise on a system of this scale,
the important thing is that they are handled properly.
Process and handling points:
The Post Office is too important to too many people for confidence to be undermined unfairly.
i. Gain an understanding of JA’s intentions for media and Parliamentary handling in relation to the report
— emphasising importance of an even-handed and proportionate approach which doesn’t undermine
public confidence in the Post Office.
ii. I Emphasise importance of drawing clear distinction between issues with computer system versus our
wider support systems. To date no systemic problems found with computer — there can’t be any
confusion about this as otherwise would undermine customer and spmr confidence in Horizon.
iii. I Reiterate the importance we attach to this being a rigorous, credible and independent report, and
therefore we (and Fujitsu) will be checking carefully for factual accuracy on Friday/over the weekend.
Our expectation is that this will enable the report to be shared on Monday, but very tight turnaround so
we'll need to re-consider timing in light of any fundamental differences of understanding.
iv. Explain we’d like option to attend Monday’s meeting as observers to ensure we have accurate record
(avoiding discrepancies which emerged from last meeting).
v. Propose that both sides share draft media statements and agree factual Q&A.
vi. Explain that we would like to work with JFSA to progress remaining spot reviews and MP cases (where
there is adequate evidence), with the aim of taking on board lessons learned as quickly as we can. We
need to consider carefully what role SS should play in that process.
Reassurance on JA’s two points of concern/annoyance:
* On prosecutions - since start of SS investigation we have not pursued a criminal conviction which relies
solely on Horizon computer system evidence and we have also put on hold civil recovery proceedings in
certain cases whilst we await final report. But we dostill have duty to protect public money in other cases.
* On the two ‘exceptions’ - we proactively disclosed to SS two systems exceptions (or ‘anomalies’) where
spmrs’ accounts have beenaffected. Our internal and system processes identified these cases, appropriate
action has been taken andthey did not lead to any disciplinary action against spmrs. No reason to believe
this means there are otherundiscovered issues. (We are sorry this information was not passed onto you at
an earlier stage — if we had considered to materially change the investigation we would have flagged it
directly, but it doesn’t).
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SPEAKING NOTES
Introductory points:
e Thank you for agreeing to meet us.
e — SS provided us with an update following your call with them on Tuesday morning.
e — Following that, would like to discuss with you:
a) Communications around the report and media/parliamentary handling
b) The approach to the report itself and Monday’s meeting
c) The approach beyond next Monday to close down other MPs’ cases and learn lessons
¢ But first point to reiterate is that we take this whole process extremely seriously indeed. That is why we set up
the independent investigation in the first place. It is important we get to the truth and learn lessons where
appropriate.
i) Communications around the report and media/parliamentary handling
e Would be useful to understand your plans for communicating the report to the media and Parliament. (Second
Sight’s read-out of your conversation gave us some areas for concern.)
e The single most important principle from our point of view is that the report and the associated communications
must be rigorous and completed grounded in the facts. The Post Office is too important a business to thousands
of sub-postmasters and millions of customers (and taxpayers) across the country for confidence to be
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undermined unfairly.
© From the SS update we have been made aware of the potential for different interpretations on the definition of
Horizon. Whilst we both agree that the wider system is part of the review (as defined in the ToR) we consider that
the report and communications should clearly distinguish between the ‘computer system’ and the wider
support processes.
¢ From what we have been told by SS so far, there is no evidence in the interim report to support any suggestion
of systemic failures with the Horizon system (and this is based on the four “best” cases from all those under
review).
° — If this is the case, important that point is communicated clearly given some of the original allegations against the
system - otherwise customer and agent confidence in the integrity of the system could be fundamentally
undermined.
¢ — This is not to belittle the importance of the overall user experience for spmrs. It is essential that we continue to
improve our wider systems of support and training for agents, and we are grateful for some of the additional
insights generated by this investigation to date. Many of these process issues are historical and have already
been rectified through improved guidance to staff and training for spmrs — but where further changes need to
be made we will absolutely act on them. Will come back to how we propose to engage JFSA and spmrs and
identifying further process improvements.
e We're concerned to hear that you may have lined up an interview with the BBC in advance of the report being
shared. Keen to understand your thinking here.
e = We will let you know our handling plan in relation to the media, and share statements. We would be grateful if
you were able to do the same. You will appreciate the danger of the media exaggerating the report and our need
firmly to defend our reputation.
ii) The approach to the report itself and Monday’s meeting
e — SS propose to share with us the draft report on Friday. We will work urgently over the weekend to check for
factual accuracy.
e Clearly this issue has significant bearing on our main supplier for Horizon, Fujitsu. They will therefore also be
asked for their views on the facts contained in the report before publication.
¢ Our hope and expectation is that this fact checking and consultation can be completed in time to allow the report
to be shared with MPs on Monday afternoon — but obviously an extremely tight turnaround, so we will need to
review the situation on Monday. If there remain fundamental concerns around factual points, it would be better
for the report to be delayed rather than misleading statements to be issued.
e — [If needed: none of this undermines the independence of the SS investigation — on the contrary, our aim is to
protect its credibility and rigour. Also has parallels with the statutory process for public enquiries — Inquiries Act
2005 recognises the need for ‘Salmon letters’ to give appropriate warning to any person or organisation about
whom criticism could be inferred from an enquiry.]
e In terms of the meeting itself, we understand that the JFSA and their lawyers will be in attendance alongside the
invited MPs. As both the commissioner and subject of the report, we would appreciate it if you could also give us
the option of sending observer representatives. Most likely to involve one employee and one external lawyer.
Will help us to ensure we have a clear and accurate read-out of the meeting and that we can follow-up on any
queries or action points as appropriate.
iii) The approach beyond next Monday to close down other MPs’ cases and learn lessons
e Clearly we recognise that the interim report does not cover all the cases put to Second Sight. We agreed on this
approach and we also recognise the need to complete the review of the other cases put to Second Sight by the
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JFSA and MPs.
¢ We'd like to work with JFSA to continue this work but we do have concerns about the process. It has taken too
long, and we have to have regard for the appropriate use of public money.
e Need to stress as well that, in Second Sight’s view, in around half of the cases from MPs there is insufficient
evidence on which to investigate, despite requests for further information to be submitted.
© So we suggest a refined approach for the remainder of the cases. We want to set up a user group (chaired by
ClO) which would meet regularly to learn from experiences of spmrs and to provide a forum for continual
improvement.
© We suggest that this would include JFSA and for the immediate period the forum could (potentially) also include
Second Sight and have as its priority the completion of the reviews of the cases put to it. This approach might be
more effective than the process we have gone through, which you will accept has not been perfect.
¢ Once the cases put to us have been reviewed by the group and a conclusion or conclusions reached, the forum
would continue as a structure through which we can continue to refine and improve our processes.
e We would hope that the JFSA would continue to be a part of this, along with other interested parties such as the
NFSP,
Additional point if needed
Depending on the tone of the meeting, it may be appropriate to address head on JA’s apparent annoyance at the
issues around prosecutions and the systems ‘exceptions’.
Current prosecutions
e — Since the start of the SS investigation we have not pursued a criminal conviction which relies solely on Horizon
computer system evidence. We have also put on hold civil recovery proceedings in certain cases whilst we await
final report.
e As you now, we also prepared an ‘immunity agreement’ with the JFSA to provide reassurance to spmrs thinking
of submitting evidence to the process.
e But in cases where it is clear that Horizon system isn’t the issue, we have a duty to take appropriate action to
safeguard public money. For criminal prosecutions we treat each matter ona case by case basis, with a detailed
investigation and legal review (generally involving external lawyers).
Historical convictions
© Nothing has emerged from the interim findings given to us by SS which would point to specific convictions being
unsafe. Cases have been through the judicial process and the Court considers all relevant evidence not just that
relating to the Horizon computer system.
e Inthe event that any person considers that there has been a miscarriage of justice they have the right to apply to
the Court of Appeal to have their conviction reviewed.
System exceptions
e We know of two systems exceptions (anomalies) under the current Horizon system where spmrs’ accounts have
been affected, and both were voluntary communicated to SS (although not directly related to the cases under
review).
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¢ Key point to note is that in both cases our processes picked up these issues, appropriate remedial action has been
taken and they did not lead to any disciplinary action against the affected spmrs.
e Absolutely no reason to believe this means there are other undiscovered issues.
¢ Weare sorry this information was not passed onto you at an earlier stage — if we had considered these cases to
materially change the investigation we would have flagged them directly to you, but in our firm view they don’t.
Further detail on the two cases if required:
¢ The “62 branches exception” - 3 years old at the time of migrating branches from old Horizon the HNG:
o Affected 62 branches (13 Crowns; 12 Multiples; 37 Sub postmasters)
© Sub-postmaster branch losses ranged from £115.60 down to 8p
©. Identified by Horizon’s built-in checks and balances which are designed to flag up these types of
discrepancies. Appropriate action taken to rectify issue.
© 17 sub-postmasters were adversely affected, i.e. had a loss attribute to their branch.
© Sub-postmasters notified in March 2011 and (where appropriate) reimbursed.
© Sub-postmasters who made a gain through the anomaly were not asked to refund this.
e The “14 branches exception”
© Financially impacted 14 branches (4 Crowns; 5 Multiples; 5 Sub-postmasters)
© Concerns an error where historic accounting entries in the 2010/11 financial year were replicated in
accounts for 2011/12 and 2012/13, only showing up a year later.
o Raised by 2 sub postmasters affected by the exception.
© 1sub postmasters and 4 multiple partners were adversely affected, i.e. had a loss attribute to their branch.
o We suspended attempts to recover known losses from affected sub-postmasters
© Letters to notified sub-postmasters will be sent out imminently
© The worst loss to a branch would have been £9,799.88. This was one of the first cases notified, so no
recovery action was progressed. Other losses ranged from £113.14 down to a penny.
© Action underway to modify the system to prevent any repeat of this exception
Martin Edwards I Chief of Staff to the Chief Executive
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@postofficenews