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POST OFFICE LTD BOARD
PROJECT SPARROW
1. Purpose
1.1. Update the Board on progress against the list of actions included in the Horizon
Update paper sent to the board on 27” July 2013.
2. Background
In the update paper we said that we would aim to have completed the following by the
end of August 2013:-
21 finalised the terms of reference for the process of mediation and resolution in
relation to the existing cases and also identified a mediator, so we are ready to
commence the process;
2.2 agreed the process for filtering any ‘new historical’ cases that emerge;
2.3 started engagement with key individual MPs on how we will be taking forward
their cases;
24 completed the second sift of past prosecuted cases;
2.5 developed an initial position on the pros and cons of continuing to bring
prosecutions ourselves;
2.6 identified ‘quick wins’ in relation to process improvements for sub-postmaster
training and support, and started mapping the approach for longer-term
improvements; and
2.7 established the terms of reference for the Branch User Forum.
All of the above actions are complete (details below) other than 2.5 which is in progress
with a full review to be completed by the end of October.
3. Current Activities already underway
3.1 The Initial Mediation scheme was launched on 27" August and so far Second
Sight have received 23 case submissions, 20 of these were reviewed formally on
11" September by the Working Group (Post Office, SS and JFSA) to establish
how many were eligible to progress through the process. Of the 20 cases
received one was a serving subpostmaster who had not exhausted Post Office’s
internal processes and was therefore not eligible for the scheme at this stage.
The other 19 are eligible and will be advised that they can enter the next stage of
the process which is to enlist the help of an advisor to present their case with a
view to mediation.
3.2 The Initial Mediation scheme is designed to run until 31° March 2014, after that
date it will be necessary to decide whether to keep this process in place, to
discontinue it or to replace it with another process which permits independent
oversight.
3.3 A briefing day for the Panel Advisors was held on 5" September. 25 advisors
attended, a mix of lawyers and forensic accountants. The briefing was well
received and about a third of the attendees indicated on the day that they would
be signing up to become a panel advisor; the others wanted to reflect on the
requirements of the role and whether they wanted to sign up. The Panel Advisor
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agreement for the advisors have been sent to the attendees of the briefing day.
The list of Panel Advisors will be finalised on receipt of the signed agreement
and communicated to the Sub postmasters who have submitted their case to the
Scheme — they can choose one of these advisors or they are free to select
another professional firm.
3.4. We have appointed the Centre for Effective Dispute Resolution to provide a
panel of mediators for the Scheme and they are also going to provide
administrative support; a representative also attended the training session.
3.5 One of our public commitments was to appoint an independent Chair for the
working party, a candidate brief and job description has been prepared. Paula
Vennells and Alasdair Marnoch are to meet with a candidate on 24" September.
3.6 Alice Perkins met with James Arbuthnot on 11" September that meeting went
well, he was happy with our plans and said that given the progress that had been
made he would recommend to the MPs that a meeting in October would not be
required and that it should be postponed until the New Year.
4. Ways of Working/ Second Site
44 Angela Van Den Bogerd has pulled together a team of four experienced Network
people to work alongside Second Sight to investigate the cases that are
submitted to the Scheme.
4.2 A meeting has been held to establish how the two teams will work together to
ensure an effective and efficient flow of information between the parties with a
view to concluding the facts of the cases expediently. The findings of the case
will then be presented to the Subpostmasters and their advisor for their
consideration as to whether they want the case to progress to mediation.
This team has also established a process to investigate live cases that have/are
emerging from serving Subpostmasters. This approach will run in parallel with
the Second Sight approach. Lessons learned from these cases will feed into the
process improvement work.
4.3 A monthly cap on the Second Sight fees has been agreed and they have also
agreed in principle, that provided the Post Office team is operating effectively,
that they will hand over the investigation on a date to be agreed. It will be key to
keep James Arbuthnot, MPs and the JFSA aligned in order to achieve this.
5. MP Engagement
5.1 All the MPs who have expressed an interest in this issue were contacted on 27"
August (launch of the Mediation scheme) and our communications team have
offered to meet and discuss the scheme and individual cases, no one has taken
this offer up so far.
6. Criminal Case Review
6.1 Our external firm of solicitors who prosecute our cases have completed three sift
reviews, have discontinued 4 cases and under their continuing obligation of
disclosure have notified the defendants’ legal representatives of the Second
Sight report in 9 cases.
6.2 A meeting with Brian Altman QC was held on 9th September; his role is to
oversee the review of our criminal cases. He had received the protocol that our
external solicitors had developed and are using to inform their review process
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and he also looked at a sample of reviews that had been completed in a number
of cases. He agreed with the approach taken by our external lawyers and
confirmed that the protocol was well thought through being correctly applied in
the cases he reviewed. After discussion he also understood the logic of 1“
January 2010 being the start date for the review on the basis that this was
implementation date for Horizon NG and that the branches had been audited on
transition.
6.3 Brian Altman was also asked to advise on Post Office / external solicitors on its
continued disclosure obligation with particular reference to concluded cases and
on the basis that new facts which emerge on a regular basis. He gave initial
advice and emphasised the importance of ensuring that this information is
collated and communicated to our external firm on a regular basis.
6.4 The Terms of reference for his review will be agreed and will include an opinion
on the Post Office’s position as a public prosecutor and its prosecutions policy.
6.5 Meeting in Scotland with the Procurator Fiscal and our external lawyers to deal
with their concerns re the impact of the SS report on prosecution evidence —
satisfactorily resolved and new ways of working to be developed which will in any
event be more effective.
7. Improvement Process
7.1 Defining the “As is” process work is on track to be completed by 30" Sept. From
the 80 gaps/issues recorded so far there are common themes emerging:
Training; Comms; Processes; Products; Horizon; Support; Ownership; Systems;
Ownership and Leadership.
7.2 There are 26 quick wins that have been identified and whilst these are low level
issues fixing these will have a positive impact on in-branch users and will reduce
effort/duplication with the support/central functions. The relevant business
owners have taken ownership of these quick wins and started to
deploy/implement from 9th Sept onwards.
7.3 Stakeholder input/engagement continues with the project on track to complete
the recommended future state by 20th Oct.
8. Branch Users Forum
8.1 The purpose of the Branch User Forum is to provide a way for sub-postmasters
and others to raise issues and insights around business processes, training and
support directly feeding into the organisation’s thinking at the highest level. The
forum is a forward looking mechanism to ensure the business processes and
approaches are fit for purpose for users and are in keeping with Post Office
behaviours and values.
8.2 The Branch User Forum terms of reference have been established.
8.3 It is intended to issue a communication to the network to raise awareness of the
Branch User Forum and invite Subpostmasters and staff to put themselves
forward to become Forum members with a view to holding the inaugural Branch
User Forum in early/mid October
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9. Next Steps
9.1 Interview and appoint (subject to agreement on fees) the Independent Chair of
the Working Group. Once this appointment has been made it will be necessary
to finalise the terms of reference for the Working Group and plan for meetings.
9.2 Work with SS to manage the flow of cases through the mediation process and
ensure that the new Post Office have sufficient resources to make the process
timely and efficient.
9.3 Continue to engage with MPs.
9.4 Facilitate a discussion on remedies to be offered as part of mediation process..
9.5 Brian Altman's review to be completed by end October; including a
recommendation on Post Offices prosecution policy; and whether it should
continue to act as a public prosecution.
9.6 Implementation of process improvements in support the Post Office gives its
subpostmasters.
9.7 Continue to monitor costs of programme (see appendix A).
10. Risks
10.1. Continued risk to reputation and brand if the mediation process is not successful,
i.e. insufficient cases are reviewed, it should be noticed that media interest has
been more balanced since the announcement of the mediation process.
10.2 Risk to NTP if concerns as to how subpostmasters are treated leads to lower
take up of new models.
10.3 Potential of destabilising relationship with NFSP mitigated by Angela Van Den
Bogerd who has regular meetings to keep them informed and they will be invited
to take part in the Branch User Forum.
10.4 The process re-engineering that will be required for the IT training and support
systems which may in the short term add further complexity and risk to the
existing transformation programme.
10.5 The costs of the programme may over-run as the budget has been based on 75
cases going through the full mediation process and there may be more than that,
it addition the criminal costs are front loaded as the main bulk of the reviews
have been completed.
11. Recommendations
The Board is asked to note the update.
Susan Crichton
18 September 2013
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Appendix A
Budget — Forecast (Aug 2013 — March 2014)
Tem fk Ektotal_ineVAT comment Boar Pagar Goud Pape]
net VAT @ 20% ~
‘Complete Cases (using Mediation) ‘Assumed number of cases: 75
Second Sight 125 Second Sight at 25k per month (Aug-December) 100 150}
Back fill for internal resources & 90 15k per month, 6 months
external assistance
Mediator(s) 225 ‘Assumed 3k per case - will use a national company
Mediator Expenses 50 travel, meeting rooms, training etc
Legal support case preparation - BD 56 £750 per case assume all cases
Legal support - case advice 28 £400 per case. assume all cases. £400 is their estimate for
simple cases, but if we assume some will drop out this should
average out
Legal support - mediation meeting 150 £2k per case - assume alll cases - could recruit internal staff to
reduce costs?
Independent advisor for 238 Per case: £1.5k case prep + £1k mediation meeting,
‘Subpostmasters Plus £50k contingency for more complex cases
350 550]
Total: Complete Cases (using Mediation) 962 «1154 450 700}
Legal and Governance
General External Legal Advice - BD 120 ‘Advice on: preparing and agreeing mediation process and
packs of information for SPMRs. Engaging and briefing
mediators, attending working group meetings (ie. advising on
rejecting cases; revising mediation process). Advising on Fujitsu
related matters. £15K per month
Case Review - CK 175 Includes QC, Bond Dickinson and Cartwright King 100 300I
Kay Linnell/ Alan Bates 4 £2k per month (up to)
Independant Chair 25 0 10
Total Legal and Governance 334 401 100 310}
Improvement project
Back Fill for Gayle Peacock and Ann 42 Back fill for 5 people to conduct the gap analysis across the 200 200]
Allaker business groups
Contact Centre oO assumed this can be done with current resources 40 40I
FSC 0 assumed this can be done with current resources 100 100}
Total: Improvement project 42 50 340 340}
‘Technology
Horizon improvements 50 Funding needed beyond the £100k Fujitsu funded costs 0 I
‘Total: Technology 5060 0 ty)
‘Total 13881665 __ 90] 1350
Horizon Update
September 2013
Susan Crichton
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