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POST OFFICE LTD BOARD
PROJECT SPARROW - UPDATE AND OPTIONS
1. Purpose
The purpose of this paper is to:
1.1. Update the Board on Project Sparrow following the Board Sub-Committee
meeting of 18 February 2015.
1.2. Endorse the Sub-Committee’s recommendation of the preferred course of
action:
. Post Office adopt a presumption in favour of mediating all non-criminal cases
within the Complaint Review and Mediation Scheme;
. the Working Group overseeing the Scheme role ceases and is closed; and
. the current engagement with Second Sight be terminated.
2. Background
2.1. The Project Sparrow Sub-Committee met on 18 February to discuss the
latest developments on the Complaint Review and Mediation Scheme (the Scheme)
and considered 5 possible options for taking the Scheme forward. The Sub-
Committee minutes and papers are attached to this paper.
2.2. After discussion, the Sub-Committee endorsed the Project Team’s preferred
approach (summarised at para 1.2 above) and asked for the proposal to be
circulated for the Board’s endorsement along with some additional material to
inform the Board’s consideration.
2.3. The Sub-Committee asked for a clear articulation of how a presumption in
favour of mediating non-criminal cases would be applied and where exceptions may
be made. In summary:
° In the documents being drafted for publication, the proposed approach is
described as Post Office offering the opportunity for mediation in all cases that
do not involve Court decisions.
. In effect, Post Office would plan to offer to mediate all 71 cases remaining in
the Scheme where the applicant has not had a criminal conviction. Post Office
would only deviate from this approach if the circumstances of a case were
genuinely exceptional (e.g. a Civil Court judgment against the applicant) or
where there was patently no prospect of achieving resolution.
. For example, Post Office has already declined to mediate 1 case where the
applicant did not have a conviction but had been subject to a lengthy High
Court Judgment that made it clear that they were solely responsible for the
loss.
° It is not possible to be definitive on the number of cases where an exception
may be made but we anticipate this being very low.
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° There are approximately 19 cases where we believe that the applicant is very
unlikely to be satisfied by the mediation process owing to the lack of evidence
2.5. We are working with CEDR to ensure that the information being sent to
applicants and their advisors is appropriate to ensure they understand the
mediation process, what information they need to provide and manage
expectations. Post Office will also ensure that its mediation statements (issued in
advance of mediation) are clear on Post Office’s assessment of what it is
reasonable to expect might be achieved through mediation.
3. Timing and Next Steps
3.1. As set out in the Sub-Committee paper, we expect to be ready to announce
Post Office’s change of approach in week commencing 9 March. We believe that
there are good arguments for doing so as early as possible. The two key drivers of
the proposed timetable are:
. Second Sight have advised that they expect to circulate the draft of their
second report most likely during the first week of March and the draft report is
scheduled to be discussed at the March Working Group meeting to be held on
24 March. We think it is unlikely that we will be able to prevent the release of
that report to the Working Group, and there is therefore a material risk that the
draft report may be leaked whether or not we have stood Second Sight down.
It would be preferable to have made our announcement first.
. If the BIS Select Committee decide to issue a report, it must be published by
end March. The Select Committee are under pressure to produce up to 5
reports within this timescale which is not feasible. This may mean that they do
not publish a report on Post Office but we should assume that they will. Again,
it would be preferable to have made our announcement first.
3.2. We have developed a detailed timetable (attached) setting out the various
required actions and communications and the sequencing of these, both leading up
to, and following the implementation date. This timetable and the development of
the individual items referred to in it, remain work in progress, but will give the Board
an overview of the various stakeholders that will be managed through the process.
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3.3. In addition, we are working on an “End of Term” report setting out Post
Office’s position. Attached is a first draft summary of the report for information.
This is a work in progress. It will be reviewed and edited alongside completion of
the report this week.
3.4. The precise date of the announcement should be determined by our best
opportunity to manage media and Parliamentary risks. As flagged above, we
currently believe that this will be in the week commencing 9 March. Accordingly, the
Board are asked to agree that responsibility for agreeing the implementation date
for the plan should rest with the CEO. The Board would be informed ahead of
implementation.
3.5. Although we believe we can manage down the risks of widespread coverage
of the announcement when it is made, significant work will flow from it. Alongside
managing a substantial mediation process, we can expect a continuation of the
campaign against Post Office from JFSA and potentially the MPs who continue to
back them. It may also hasten any legal action from JFSA.
4. Second Sight
4.1. The Sub-Committee requested that we consider the relationship with Second
Sight and the legal position should it need to be enforced. These plans impact on
the role of Second Sight going forward as its role will be substantially reduced. Post
Office can terminate Second Sight’s engagement in the Scheme at any time and for
any reason on 30 days' written notice. Second Sight may claim that it has some
other engagement beyond the Scheme but would need to convince Post Office of
the rationale for this.
4.2. During the notice period, Second Sight’s preference is likely to be to work on
completing its “Part Two” report. However, our proposal is that they should be
asked to complete the individual case reports that are due to be delivered in that
period. Post Office need only pay for the work it asks Second Sight to perform.
4.3. Second Sight will continue to have access to all material until the end of the
30 day notice period. Second Sight will continue to be bound by confidentiality
throughout the notice period and following termination, and are prohibited from
acting against Post Office’s interests and reputation for 15 months. Post Office
could enforce these obligations through legal action if appropriate.
4.4. Post Office will therefore remind Second Sight of its obligations regarding
delivery of work product and use of non-public information at the same time as it
serves notice of termination.
5. Recommendation
The Board is asked to:
* endorse the Sub-Committee’s recommendation of the preferred course of action;
and
* agree that responsibility for agreeing the implementation date for the plan should
rest with the CEO.
Jane MacLeod / Mark Davies
2 March 2015
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Attachments:
A. The minutes of the Sparrow Sub-Committee meeting of 18 February.
B. The papers submitted to the Sparrow Sub-Committee, including:
o The update and options paper
co Sir Anthony Hooper's letter of 30 January to the Chair of the BIS Select
Committee
o Aseries of tables summarising the options set out in the Sub-Committee paper
C. A first draft summary of the proposed “End of Term” Report.
D. Acommunication and stakeholder management plan for Post Office’s announcement
based on the proposed option.
E. A proposition for how mediation could be completed in approximately 6 months under
the proposed option.
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