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PS 14/1-14/6 POST OFFICE LTD
PROJECT SPARROW SUB-COMMITTEE
Minutes of a meeting of the Project Sparrow Sub-Committee of the Board
held at 148 Old Street, London EC1V 9HQ on Wednesday 9 April 2014
Present: Alice Perkins (AP) Chair
Alasdair Marnoch (AM) Non-Executive Director (by telephone)
(from item PS 14/1-part of PS14/4)
Richard Callard (RC) Non-Executive Director
Paula Vennells (PV CEO (from item PS 14/3)
Chris Aujard (CA) General Counsel
In
Attendance: Chris Day (CD) CFO
Angela Van-Den-Bogerd (AVDB) — Network Change Operations Manager
Belinda Crowe (BC) Programme Director, Project Sparrow
Mark Davies (MD) Communications Director (by telephone)
David Oliver (DO) Programme Manager, Project Sparrow
Carolyn Low (CL) Programme Team, Project Sparrow
Gill Catcheside (GC) Assistant Company Secretary
PS 14/1 OPENING OF MEETING
A quorum being present, AP opened the first meeting of the Project
Sparrow Sub-Committee (“the Committee”).
PS 14/2 TERMS OF REFERENCE
(a) The draft Terms of Reference (“TOR”) for the Project Sparrow
Committee had been circulated prior to the meeting. The Chairman
advised that she would like the Committee to comprise five members
— the Chairman, two Non-Executive Directors, the CEO and General
Counsel.
AP asked that any comments regarding the TOR should be submitted
(b) in writing to the Company Secretary, with a view to them being
ACTION: ALL approved at the next Committee meeting.
PS 14/3 INITIAL COMPLAINT REVIEW AND MEDIATION SCHEME (“THE
SCHEME”)
1 AP suggested that there were a number of key issues for the
Committee to consider:-
1a What commitments had been made publicly about the Scheme (in
particular in the House of Commons)?
1b What had changed since the Scheme was announced to prompt the
need for a different approach? i.e. what problem was the Post Office
trying to solve, acknowledging that the process was taking longer,
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was costing more and the expectations of SPMRs were exceeding
what the Post Office originally envisaged?
1c What would the Post Office ideally like to do?
1d What could be done in light of previous public statements about the
Scheme, in particular those made by the Minister? A paper to be
ACTION: produced on the key variables to modify the Scheme — including
Programme financial analysis and assessment of alignment with Ministerial
Team commitments and a recommended way forward.
2 In terms of the present position with the Scheme, and key timescales,
the Committee noted:
2a The Post Office has passed around 20 cases to Second Sight for
review. Second Sight had produced three case reviews which have
all been rejected by the Working Group as not sufficient for mediation.
Second Sight had also produced an early draft of their thematic report
which Tony Hooper had dismissed as not ready for Working Group
discussion.
2b The Working Group has tasked Post Office and Second Sight to
focus on the preparation of 2 — 3 cases, which do not raise thematic
issues, for discussion at the next face to face Working Group on 1
May with a view to deciding whether those cases should progress to
mediation. If one or more of those cases are approved for mediation,
a date for the mediation would be set within four weeks and,
potentially, the first case(s) mediated within about ten weeks from
now.
3 The following points were made in discussion:
3a _ The paper had been developed as an “options paper” to address the
problems of cost, time, investigation length, Second Sight
competence and capacity, the expectation gap and the management
overhead and impact on BAU.
3b The Scheme as currently configured was broadly consistent with
Ministerial commitments. A more detailed assessment of all public
statements (PQs etc.) made by the Minister about the Scheme should
be undertaken. It was recognised that the statement made in
Parliament by the Minister for Postal Affairs preceded the Post
Office's announcement of the Scheme; the former did not mention the
Mediation Scheme. A paper was requested for the next Sub-
ACTION: Mark Committee meeting on all of Jo Swinson's public comments on the
Davies with BIS Scheme including correspondence, PQs and other public
and Programme engagements — identifying, inter alia, references to the Mediation
Team Scheme or timefines.
3c The importance of acting on the lessons learned as cases are
investigated and building these into the way we engage with SPMRs
and manage our business going forward. This work is being taken
forward in the Branch Support Programme, led by AVDB and will form
a key part of any narrative about the Scheme in the future. A paper
ACTION: AVBD was requested for the July Board mapping the lessons learnt from the
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Scheme.
3d The so called expectation gap was an issue. On the basis that
Horizon was working as it should, the Post Office would not
contemplate paying ‘compensation’ of the order being claimed, and
the Linklaters’ advice had confirmed the Post Office’s very limited
liability in relation to financial redress. Whilst it is important to be
transparent in terms of setting out the Post Office position as early as
possible, any steps to do so must be taken in the context of wider
decisions about the Scheme.
3e Careful consideration would be needed in terms of how the essence
of the Linklaters advice could be communicated to applicants to
ensure that Legal Professional Privilege is not waived unintentionally.
3f The results of the Horizon assurance work (over which Legal
Professional Privilege is also being claimed) due to be delivered, at
least in summary form for the April Board meeting, would need to
form a part of any communication to applicants setting out the legal
position. The handling and sequencing of what would be a public
message will be crucial and would need to take account of the
position of key stakeholders, in particular Tony Hooper, James
Arbuthnot and other MPs. It was agreed that a paper be produced for
ACTION: the next Sub-Committee meeting setting out approaches to
Programme disseminating the Horizon report from Deloitte and the essence of the
Team legal opinion from Linklaters to advisors, applicants and MPs
including action planning and Communications and Stakeholder
engagement. It was noted that approaches might, for example,
include asking Tony Hooper to commission legal advice on the
liability in light of the expectation gap.
3g Further consideration should be given to the appropriateness of the
Post Office making ‘ex gratia’ payments as it receives public funding,
and such payments should, in any event be nominal and made in
accordance with very specific criteria. A paper should be produced for
the next Sub-Committee on the Post Office’s position on making
ACTION: “token payments” to Scheme applicants taking account of the use of
Programme taxpayers’ money, drawing on the Bond Dickinson draft Settlement
Team Policy, and having regard to the Linklaters advice on Post Office's
liability.
3h There is a general expectation by the Working Group and applicants
that the majority of cases will go to mediation, and Post Office
acknowledges that many applicants will want the opportunity to be
able to discuss their case face to face with Post Office.
3i The cost of all cases in the Scheme going to mediation would be in
the region of £im. Having set up the Mediation process, it would be
difficult to reverse, and the Business would need to balance financial
cost against reputational costs.
3} The Post Office does not anticipate mediation being appropriate for
cases which have gone through either the Criminal or Civil courts —
this accounts for approximately a third of the caseload. Criminal
cases are being investigated by both Post Office and Second Sight.
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Tony Hooper has made clear that due regard should be given to the
Court's judgement.
3k The Scheme was established as an attempt to resolve at least some
of the dissatisfaction of SPMRs and stakeholders. However the
differing expectations between the Post Office, applicants and
stakeholders, create a real risk that, unless action is taken, and
despite the time and cost invested in the Scheme, many applicants
will remain dissatisfied at the end of the process.
31 Consideration should be given to what support might be provided to
Second Sight to address concerns about lack of capacity and
capability as part of any assessment of how the Scheme might
proceed in a way that remains consistent with Ministerial statements
about their on-going involvement in the Scheme. A paper should be
ACTION: produced for the next Sub-Committee meeting on the role of Second
Programme Sight and options to support them or reduce their role. The paper
Team should include Stakeholder views.
3m Whilst getting some cases through the Scheme early might help to
manage the expectations gap, the Post Office must avoid setting any
precedent in doing so and, until a decision is made about the future of
the Scheme, should avoid any actions which might close off options
in the longer term. It was agreed that effort should be made to try and
ACTION: AVDB accelerate cases that were not thematic and which might be useful to
show the Minister.
ACTION: 3n It was agreed that a timeline of key actions and decision points be
Programme produced from today through to the Summer Recess.
Team
30 A table to be produced, to the extent practicable and to the extent that
ACTION: the case permits, demonstrating that Post Office is rebutting the
AVDB concerns raised by Second Sight in relation to Horizon.
PS 14/4 UPDATE ON HORIZON ON-LINE HNG-X (“HORIZON”)
ASSURANCE WORK
(a) An update on the Horizon Assurance work, being carried out (subject
to Legal Professional Privilege) by Deloittes, was considered by the
Committee.
(b) It was noted that Part 1 consisted of a largely desk-based exercise to
assess the control framework within which Horizon operates. As part
of its business as usual activity Post Office and Fujitsu undertake a
range of assessments and audits of Horizon’s operating environment.
Deloittes will review those assessments and audits and provide an
assessment of the assurance landscape and identify any gaps. The
assessment will not consider the integrity of the Horizon processing
environment at implementation. That would form Part 2 of the work.
(c) Although no system could be absolutely “bullet proof’, no issues had
yet been identified through the cases being investigated or any other
route that has called into question the integrity of Horizon. Nor have
any wide-spread systemic faults been identified since Horizon on-line
was implemented. These two points, along with the Part 1 work
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(depending on the results) should be sufficient to assure Post Office
that Horizon is fit for purpose.
(d) Part 2 was not an essential piece of work at this stage, but if
commissioned, would look at the adequacy of Horizon at
implementation, user acceptance testing etc. to determine whether
the system was set up correctly. This would be a larger and more
costly exercise and should not be undertaken unless deemed
necessary based on the results of part 1.
(e) Part 1 of the Horizon Assurance work to be considered at the next
ACTION: CIO Board. The Chief Information Officer (“CIO”), Lesley Sewell, to attend
to present the findings.
(f) The CIO to attend the next meeting of the Sub-Committee to provide
ACTION: CIO a detailed update on the Horizon Assurance work and in particular
Part 2 and whether it is required and how long it will take.
PS14/5 DATE OF NEXT MEETING
ACTION: CoSec (a) The next meeting of the Committee to be held after the Board on 30
April 2014.
PS 14/6 CLOSE
There being no further business, the meeting closed.
POST OFFICE LIMITED
PROJECT SPARROW SUB-COMMITTEE
ACTIONS LIST AS AT APRIL 2014
No. ACTION BY WHOM STATUS
Pst Comments on the Terms of Reference in writing to the Company Secretary. All
PS2 Paper to be produced on key variables to modify the Scheme — including financial Programme Team
analysis and assessment of alignment with Ministerial commitments and a
recommended way forward.
PS3 A paper to be produced for the next Sub-Committee on all of Jo Swinson’s public Mark Davies to work
comments on the Scheme including correspondence, PQs and other public with BIS and
engagements — identifying, inter alia, references to the Mediation Scheme or timelines. _I programme team
PS4 Paper to the July Board mapping the lessons learnt from the Scheme. AVDB
PS5 Paper to be produced for the next Sub-Committee setting out approaches to Programme team
disseminating the Horizon report from Deloitte and the essence of the legal opinion from
Linklaters to advisors, applicants and MPs including action planning, and
Communications and Stakeholder engagement .
NB approaches might for example include asking TH to commission legal advice on the
liability in light of the expectation gap.
PS6 Paper to be produced for the next Sub-Committee on Post Office's position on making Programme Team
“token payments” to Scheme applicants taking account of the use of taxpayers’ money,
drawing on the Bond Dickinson draft Settiement Policy and having regard to the
Linklaters advice on Post Office’s liability.
PS7 A paper to be produced for the next Sub-Committee on the role of Second Sight and Programme team to
options to support them or reduce their role. This paper should include likely produce
Stakeholder views.
PS8 Try to accelerate cases that are not thematic and might be useful to show the Minister. I AVDB
PS9 A timeline of key actions and decision points to be produced from today through to Programme Team
summer recess.
PS10 I Table to be produced, to the extent practicable and to the extent that the case permits, I AVDB
demonstrating that Post Office is rebutting the concerns raised by Second Sight in
relation to Horizon.
PS11_I Part 1 of the Horizon assurance work to be considered at the next Board. The CIO to clo
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