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POST OFFICE LIMITED GROUP LITIGATION SUB-COMMITTEE MEETING
Confidential and subject to legal Privilege: do not forward
MINUTES OF A MEETING OF THE GROUP LITIATION SUBCOMMITTEE OF POST OFFICE LIMITED HELD ON
THURSDAY 21 FEBRUARY 2019 AT 20 CLEARKENWELL GREEN, LONDON, EC12 ODP AT 11.00 AM
Present: Tim Parker (by phone) Chairman (TP)
Paula Vennells (by phone) Group Chief Executive (PV)
Ken McCall (by phone) Senior Independent Director (KM)
Tom Cooper (by phone) Non-Executive Director (TC)
Alisdair Cameron Group Chief Financial and Operating Officer (AC)
In Attendance: Jane MacLeod Company Secretary (JM)
Veronica Branton Head of Secretariat (VB)
Anthony de Garr Robinson Qc (A d-GR)
Rodric Williams Head of Legal, DR and Brand (RW)
Rob Houghton Group Chief Information Officer (RH)
Andrew Parsons Womble Bond Dickinson (AP)
Mark Underwood Portfolio Director (MU)
Angela Van Den Bogerd Business Improvement Programme Director (AvdB)
ACTION
1. WELCOME AND CONFLICTS OF INTEREST
A quorum being present, the Chairman opened the meeting.
2. Upcoming Horizon trail
Anthony de Garr Robinson briefed the Sub-Committee on the Horizon Trial.
Fifteen questions would be addressed at the trial covering three core sets of issues:
whether the Horizon System was robust; the causes of shortfalls in branches, including
whether Fujitsu was “manipulating” the data behind the scenes; and miscellaneous.
The key issue was the robustness of the Horizon system and our view was that it was
critically robust. The claimants’ expert had identified system errors but his report lacked
balance. There would a number of additional lines of attack but we would keep bringing
attention back to the key issues. The claimants would seek to criticise PO Limited for not
providing sufficient documents and for Fujitsu’s ability to change branch data.
We were not seeking to prove that the system could not be improved or did not have any
bugs but would emphasise that it recorded data accurately in most cases. No-one had
found a fundamental flaw in the System; it had been well designed and managed by the
same provider throughout. When there had been system issues the systems and processes
to address these had worked well in practice. Several of the bugs identified by the
claimants’ experts were not in fact system bugs and several would not have affected branch
accounts. Several bugs had been triggered by an unusual combination of events. For the
vast majority of the time, Horizon was a very reliable system.
The claimants’ expert was arguing that there could be thousands of undetected bugs in the
Horizon system. Our expert argued there could not be a sufficient volume of bugs in the
system to have generated the losses being alleged by the claimants. The error rate was low
when assessed against the number of users and 50 million transactions a week.
The claimants had lodged a supplemental report on 1 Feb 2018 which was longer than the
original report. We had decided not to ask for an adjournment because we thought this
would be detrimental to the Judge’s perception of our case. Fujitsu were working at speed
to provide evidence to address the points raised in the supplemental report. This should be
completed in the next week.
The key risks in the case were:
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POL00006753
POL00006753
POST OFFICE LIMITED GROUP LITIGATION SUB-COMMITTEE MEETING
Confidential and subject to legal Privilege: do not forward
1) That the bar we have set ourselves was very high as we had said that the Horizon System
was robust and very unlikely to cause significant losses. We had to be able to support this
starting position. Not meeting that bar would have a serious impact on PO Limited’s
operating procedures and would open up 18 years of previous decisions. The claimants
alleged an of asymmetry of information
2) Witnesses. The quality of witness evidence was important. There would always be a risk
of witnesses breaking under cross examination. Our expert relied on statistical analyses
which required some assumptions to be made but had noted that all his assumptions
were extremely conservative. His report also included a qualitative analysis. It had
proved difficult to obtain all the technical analysis we needed from Fujitsu and some
information had been inaccurate and had needed to be replaced. Fujitsu were fully
engaged now and were working swiftly to provide the information needed following the
lodging of the supplemental report
3) Most of the issues related to legacy Horizon. It was an old system and some obscure
questions had been raised about how it had operated. Several points made by the
claimants’ expert or given emphasis to, had only been raised in the last month. We had
considered whether to submit our own supplemental report
4) Remote access risk. The claimants had posited the theory that Fujitsu had interfered with
branch data in secret. PO Limited and Fujitsu’s case on remote access had changed over
time. Initially Fujitsu had said that remote access was not possible. The Deloitte audit
had found that it was. The claimants’ expert was arguing that the scope for remote
access was even greater than now stated. The Court was likely to want to test this fully.
We should be in a position to provide more evidence on each and every remote access
tool by the time the trial began
5) Risk mitigation: the legal team was seeking to build this into our case. We had drawn a
distinction between the current Horizon System and the legacy Horizon system which had
been in place before 2010. We had set out markers on why the case had been unfair to
PO Limited including: a) that the evidence laid by the claimants was contrary to what the
Judge had requested b) the length and new content of the supplemental report.
Our opening submissions would be reasonably short. We anticipated receiving criticism on
some aspects of the Horizon System but thought our arguments were strong.
Questions
Whether we were less optimistic than we had been a few weeks ago because of the
supplementary evidence and the approach of the Judge?
Ad-GR reported that we remained reasonably optimistic but somewhat less so than before
Christmas.
It was also noted that there was a limit to the planning we could do before we had the
judgement from the Common Issues Trial. We would also get indications as we went
through the Horizon Trial and could take a view on whether we needed to “dial up” the
work on any of the risk mitigations.
TP requested an update on the risk mitigation. This would be provided and JM also
suggested that the Sub-Committee should be taken through the risk mitigation activities
being considered by the business.
The communications plan would be circulated again to everyone on the call.
What would we do if we had not been able to obtain all the evidence on the counter
measures taken to correct the bugs that had been identified in the supplemental report in
advance of the Horizon Trial? It was reported that most of the bugs that had been identified
in the supplemental report had had a really small impact. The issue was less one of whether
counter measures had been implemented and more one of whether these had been picked
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MD?
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POST OFFICE LIMITED GROUP LITIGATION SUB-COMMITTEE MEETING
Confidential and subject to legal Privilege: do not forward
up as part of business as usual (BAU) or because an error had been raised via the Helpline.
The latter had only been the case in a relatively small number of cases.
Whether an accusation was being made that PO Limited had been involved in instructing
Fujitsu to change transactions? It was noted that only Fujitsu could change data and there
was no suggestion that PO had operated a policy to get Fujitsu to manipulate the branch
data. The claim was that we had lied about Fujitsu’s ability to change branch data. It was
noted that it was hard to capture the number of instances in which data had been changed,
especially in the legacy Horizon System because of the way that data was captured. We
could not distinguish easily between maintenance access and making changes to branch
data. However, Fujitsu had been clear that branch data had only been changed on very rare
occasions.
Where was the line drawn between a bug and a systemic system error? It was reported that
there was no legal test that one applied for this purpose. The practical question was how
likely it was that a set of Horizon accounts had been distorted by a bug in any given instance.
It was reported that appeals were rare in expert witness trials because the findings were
factual rather than arguing points of law.
The meeting closed at 12.15 pm.
Chairman
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