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Message
From: Tim Parker
on behalf of Tim Parker 4
Sent: 16/03/2019
To: Jane Macleod Alisdair Cameron {
ce: Patrick Bourke [~~ ; Mark R Davies
Subject: Re: Call with Kelly Toihurst CONFIDENTIAL & SUBJECT TO LEGAL PRIVILEGE
Thanks Jane, a good summary
Tim Parker
Chairman
National Trust
20 Grosvenor Gardens, London, SW1W ODH
Chairman
Post Office Limited
Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ.
Chairman
Samsonite International SA
Westerring 17, B-9700 Oudenaarde, Belgium
From: Jane MacLeod ¢
Sent: Saturday, March 16, 2019 3:17 pm
To: Tim Parker; Alisdair Cameron
Cc: Patrick Bourke; Mark R Davies
Subject: Call with Kelly Tolhurst CONFIDENTIAL & SUBJECT TO LEGAL PRIVILEGE
Tim, Al
Below is my high level summary of the call today. Given I missed the last minute or so, please let me know if there were
any immediate actions (I have highlighted actions below but most of these are generic) or if the language should be
more nuanced.
Kind regards,
Jane
Participants: Kelly Tolhurst MP, Tom Cooper (UKGI), Gavin Lambert (BEIS), Tim Parker, Al Cameron, Jane
MacLeod, Others?
e =P started by commenting that Post Office was surprised by the legal outcomes of the judgment, however our
intention is to be seen to be fair and not defensive as regards the criticisms levied against Post Office by the
judge. We acknowledge that we can do better and will look at our procedures and practices to ensure this
happens. We’re looking at the potential financial impact of the case (which could be as much as £100m should
the outcomes be adverse to Post Office). We are considering the legal issues raised and considering whether we
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should appeal. Information is being collated for the Board meeting next week. The media coverage has been
modest so far. Although the judgment is news, it is complex and can’t easily be distilled, and the fact of the case
has been public knowledge for some time.
KT stated that the judgment was disappointing, and was pleased to hear that we were taking it seriously, and
that we would be addressing the operational impacts. She noted that as responsible minister she would be held
to account and that she was expecting UQs on Monday, and there were BEIS Orals scheduled for Tuesday in any
event. She was concerned about the criticisms over culture and practices and noted that there was considerable
noise around franchising and agent pay, and therefore these issues would be conflated. To that end she is
meeting 10 Labour MPs on Monday — a meeting that was originally set up to discuss franchising.
She noted that at the meeting last year (PV, AC, JM, MD) we had not indicated that the scale of liabilities would
be as severe as now indicated; and that we had stated we were expecting a different outcome, so she expressed
concern about the quality of advice we were receiving and wanted reassurance as to the independence of the
team who had now been involved for some time. She asked for information on the resulting actions from the
judgment and who would be leading on these.
She noted that there needed to be significant communication and information sharing from Post Office to
Government, and noted that Government would need to be involved in, and potentially sign off, decisions
around funding of the outcome, and therefore she wanted more frequent formal briefings.
She noted that where agents have been treated badly, then her position is that we want them to have justice.
She recognised the good work that Post Office has done to improve its financial position, but was concerned
that the impact of an adverse outcome from the litigation could undermine this.
TP responded:
AC is in charge, and expressed that PO was fortunate to have him. He has been with the business for 4 years so
knows the business well, but does not come with legacy issues.
We have 2 QCs advising us on the litigation and is satisfied with the quality of advice we are getting from them,
and that they are appropriately representing us in Court. We are considering our appeal options and are getting
an independent QC involved on that advice. We are also considering the role of the judge himself and whether
he has demonstrated bias such that we should consider recusal. Lord Neuberger is reviewing this. Nevertheless
it is inherent in court processes that the outcome can be unpredictable. We were surprised by the outcome and
that is why we are considering whether we should appeal.
We understand that politicians and others will seek to conflate operational issues such as agents pay and
franchising with the judgment but we need to try and keep them separate. CWU and Labour MPs will be
concerned that franchising has an impact on union membership. We are looking at all aspects of our the
relationship with agents and we recognise the concerns around transactional based pay. We are seeking to
simplify and automate transactions as this is fundamental to sustainability. and the increased workload driven
by the Banking Framework will be recognised in the remuneration paid to agents.
The criticism in the judgment covers activity over 15-20 years and that is difficult to deal with. However we are
listening and we do think that we have made improvements over the last few years. The operational
management is reviewing as a matter of urgency how we deal with disputes and our control of cash etc.
Tom is a diligent board member. We will make sure there are regular updates so that the Minister knows what
is going on.
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e KT acknowledged the different issues but emphasised that there is a lot of noise around the treatment of
individuals. She stated that she was not frightened of defending Post Office but she needed our reassurance that
criticisms are being followed up and actioned.
She asked about the next trials and wanted to know what the plan was to ensure she was kept up to date and
that could be through officials or directly, so that she could have ‘closer oversight’. AC replied that we would be
happy to update her directly and however frequently as was required, so that not everything was
intermediated.
KT asked about the Board and when it was meeting to review the impact from the judgment.
e TP replied that we have a board call on Monday evening at which we will discuss issues around the Judge’s bias
and how that could impact subsequent trials. Although his initial reaction is that this is not something the Board
is likely to want to do, the Board must act in the best interests of the Company so we need to consider that
option seriously. If we are to make the application, we understand that it must be made urgently and should
not be delayed. The Board has also asked for updated views on appeal, and will be wanting updates on what is
being done to address the criticisms around culture.
e AC stated that we have made improvements over the last few years but there is more that can be done, and
there is lots of opportunity to make further changes, simplify and automate etc. the main emphasis in the short
term is to focus on improvements as to how we made ‘differences’ — in particular the speed and transparency of
our processes.
@ KT queried whether there would be a change in the litigation strategy and whether we were sharing advice
received?
e jJMcommented that the litigation strategy was around addressing the issues raised by each trial given the way
the judge had set up the topics to be addressed at each trial, and described these. TC commented that there
was concern as to whether PO reviewed whether litigation itself was the right strategy. JM noted that the
litigation process required parties to consider mediation/settlement and that as we had flagged in the meeting
last year, once the Horizon trial had finished in early May we would be looking to understand the possible
outcomes and whether there were settlement options that could better delivered the outcomes which the
litigation process was designed to achieve. She noted that the Board received regular updates on the litigation,
and that updates were provided on a regular basis to the UKGI team. KT queried whether UKGI received copies
of the advice, and JM confirmed that the two key pieces of advice (Merits Opinions from May and October) had
both been shared with the UKGI legal team. Action to ensure that UKGI receives updates on advice received.
e ACcommented that following the judgment we have brought in new lawyers (Norton Rose) to look at certain
aspects and we have instructed additional QCs.
e KT then asked about the Banking Framework discussions, and AC updated her on progress — all indications are
that all banks will sign up, although 4 banks have/will make tactical withdrawals as they are not yet through
their internal governance processes, but we expect them to rejoin. KT offered support if there were any
difficulties or stumbling blocks.
@ KT then queried the impact of PV leaving and requested an update on the recruitment for PV’s replacements
and how we would address potential criticism around her departure, and the timing of that.
e AC offered to free up time on Monday/Tuesday to help with briefings for KT if that would be helpful.
Jane MacLeod
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Group Director of Legal, Risk & Governance
Ground Floor
20 Finsbury Street
LONDON
EC2Y 9AQ
Mobile number
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