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From: Mark R Davies}
Sent: Fri 09/10/2015 7:03:12 AM (UTC)
To: Paula VennellsI
Ce: Tom Wechsler’, Jane MacLeod,
Avene O'Farrell
Subject: Re: Speaking notes for BNR re Lyca & text of email to Chairman
My suggestions would be:
- our transformation is accelerating and there are a number of important other issues I would like to update you
on
- next week we will be informing our Crown branch staff that the network has hit break even (run rate),
triggering pay awards. This is a great achievement when one considers the multi-million pound losses we had on
separation from RMG
- last week we announced the first acquisition in our 370 year old history: our new insurance business, acquired
from Bank of Ireland. A huge step forward and sign of confidence in our strategy
- we are closing in on having transformed 5000 branches: we will be talking to your office about possible
opportunities for you to be involved in marking this moment
- at the same time we are updating colleagues on some difficult changes: in our supply chain this week, with the
closure of a depot and some redundancies
- we will be making similar announcements in back office functions in a couple of weeks
- we are handling these issues carefully and updating your officials. Our first priority is to our people but we are
well prepared should we face strike action or adverse media coverage.
- so while I am grateful for the chance to talk to you on these other issues I did want to highlight some of the
other key issues and the way we are making real progress
Mark Davies
Communications and Corporate Affairs Director
Post Office Ltd
From my iPhone and therefore possibly in transit so please forgive spelling mistakes or brevity!
On 9 Oct 2015, at 07:51, Paula Vennells
Thanks Mark.
Btw I'd like to tell BNR about crown breakeven and any other 'good' news eg., union consultation
/no strike re SC? Pension trustee outcome? What would be helpful/safe to share -
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can I have some suggestions/words?
The point being, if she's been wobbly and worried it would be good to show her the business is
still prgressing strongly. P
Paula Vennells
Chief Executive
Post Office Ltd
Sent from my iPad
On 9 Oct 2015, at 07:43, Mark R Davie:
Hi Paula
The firm makes (or made) multiple deposits on different days into different branches,
which explains the 240k figure: Jane will correct me if I am wrong.
Mark
Mark Davies
Communications and Corporate Affairs Director
Post Office Ltd
From my iPhone and therefore possibly in transit so please forgive spelling mistakes
or brevity!
On 9 Oct 2015, at 07:38, Paula Vennell:
Jane,
thanks very useful brief and notes.
One question: if the deposit made (presumably we can check) was
£240k, then surely we were in breach of our obligations as the cap is
£120k? I hadn't spotted this before but it comes out very strongly below.
Do you need to review what you've written or amend to explain?
Thanks,
Paula
Paula Vennells
Chief Executive
Post Office Ltd
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Sent from my iPad
On 8 Oct 2015, at 21:28, Jane MacLeod
Paula,
1
Apologies for lumping these together, but it's the easiest way on
the iPad! I'll be in the office tomorrow and am available on the
mobile if you want to discuss any of the following:
BNR
I note that Patrick has separately supplied Tom with the
suggested speaking notes for your call in the morning regarding
Sparrow (the proposal that BNR meets with Second Sight and Sir
Anthony Hooper). You may also be interested to know that in
the conference with Jonathan Swift QC this afternoon, he
agreed that the Chairman would need to meet both of those, so
you can reassure BNR that their concerns will be heard.
In relation to the Lycamobile discussion, my suggested points
for the conversation are as follows:
* under the agreements that PO has with the various banks we
can accept deposits from retail customers to be credited to bank
accounts, and under the arrangements with some of those
banks (including Santander) we can also accept deposits of both
cash and cheques from business customers.
* under those agreements, PO acts as the bank's agent and
therefore the primary obligation for regulatory compliance
(including KYC checks, anti-money laundering and anti- terrorist
financing) falls on the banks. PO is required to, and does,
comply with various requirements imposed by those banks to
support these obligations. This includes observing limits set by
the banks on the size of deposits.
* in the case of Lycamobile, the limit imposed by Santander on
the amount of cash that can be deposited through nominated
Post Office branches, is capped (at £120,000).
* it is not unusual for small businesses - particularly retail
businesses, to make material cash deposits and we notice a
significant increase in the level of cash deposits on Mondays.
* while Lycamobile's method of operation (cash in unmarked
bags) is unusual, it is not illegal.
* once we became aware of the Buzzfeed investigation, we
made our own enquiries to determine whether the facts were
as reported by Buzzfeed, and to ensure that PO had operated
compliantly. The facts reported by Buzzfeed as regards PO
appear to be broadly correct, in so far as they describe a pattern
of large cash deposits being made by the same group of
individuals on behalf of Lycamobile. These deposits have been
within the limits set by Santander.
* allegations were made that phones and other ‘gifts' were
made to PO staff. This has not been verified.
* PO has consistently stated that we take our regulatory
responsibilities seriously. We are not aware of anything that
would make this statement untrue.
* asa result of the Buzzfeed allegations we are checking the
security arrangements at each of the branches named in the
report.
* we are also considering the processes and security checks
that need to be embedded to support the future extension of
business banking services under the proposed Banking Services
Framework.
© [while we don’t believe that PO was the target of the
investigations, we are monitoring media reports, and are in
contact with Channel 4 which has also reported interest in the
story. ]
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Email to the Chairman (please not alternative options
(highlighted) in the Sparrow paragraph depending on when
you send the email, and the outcome of your discussions with
the Minister):
“Dear Tim
While you have been away, two matters have arisen affecting
Post Office of which you should be aware. We can discuss these
in more detail if you wish on Monday, however the following is
a brief summary:
Sparrow
The Minister is under pressure to speak to various parties
including representatives Second Sight (forensic accountants)
and Sir Anthony Hooper (former Chairman of the Steering
Group). We believe that as part of your investigation you
should meet with each of these parties, and we have therefore
recommended to the Minister that she should not meet with
There are a number of reasons why we are reluctant for the
Minister to speak to these parties (particularly Second Sight) at
this point:
* By speaking to these parties, the Minister undermines the
rationale for your own independent investigation.
* Second Sight are active on social media and we believe that
they would make public the fact of any such meeting. This will
only encourage expectation of some form of government
intervention.
* We now have the majority of outstanding (non-criminal)
cases scheduled for mediation. Any expectation of government
intervention is likely to cause Applicants to withdraw from the
mediation scheme.
You may wish to speak to the Minister to understand the reason
for her views.
Buzzfeed report on Lycamobile on Monday
Buzzfeed (an online media outlet) published an article late on
Monday which alleged inappropriate corporate behaviour on
the part of Lycamobile, whose owner is a major donor to the
Conservative Party. The article includes allegations that
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Lycamobile staff have deposited substantial sums (exceeding
£240,000) in cash through Post Office branches into accounts
with Santander; the implication is that this practice constitutes
money laundering. (see
http://www.buzzfeed.com/heidiblake/this-tory-donor-was-
secretly-filmed-dropping-cash-stuffed-
ru?bftwuk&utm_ term=4ldgpgm#4idqpgm).
The background to this issue is as follows:
* under the agreements that PO has with the various banks we
can accept deposits from retail customers to be credited to bank
accounts, and under the arrangements with some of those
banks (including Santander) we can also accept deposits of both
cash and cheques from business customers.
* under those agreements, PO acts as the bank's agent and
therefore the primary obligation for regulatory compliance
(including KYC checks, anti-money laundering and anti- terrorist
financing) falls on the banks. PO is required to, and does,
comply with various contractual requirements imposed by those
banks to support these obligations. This includes observing
limits set by the banks on the size of deposits. PO also complies
with relevant anti-money laundering regulatory requirements,
including the obligation to file SARs (suspicious activity reports)
* in the case of Lycamobile, the limit imposed by Santander on
the amount of cash that can be deposited through nominated
Post Office branches, is capped (at £120,000).
* it is not unusual for small businesses - particularly retail
businesses, to make material cash deposits and we notice a
significant increase in the level of cash deposits on Mondays.
* while Lycamobile's method of operation (cash in unmarked
bags) is unusual, it is not illegal.
* once we became aware of the Buzzfeed investigation, we
made our own enquiries to determine whether the facts were
as reported by Buzzfeed, and to ensure that PO had operated
compliantly. The facts reported by Buzzfeed as regards PO
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appear to be broadly correct, in so far as they describe a pattern
of large cash deposits being made by the same group of
individuals on behalf of Lycamobile. These deposits have been
within the limits set by Santander.
* allegations were made that phones and other ‘gifts' were
made to PO staff. This has not been verified.
* PO has consistently stated that we take our regulatory
responsibilities seriously. We are not aware of anything that
would make this statement untrue.
¢ Asaresult of the Buzzfeed allegations we are reviewing the
security arrangements in place to protect branches that accept
large cash deposits, and we are checking the security
arrangements at each of the branches named in the report.
* we are also considering the processes and security checks
that need to be embedded to support the future extension of
business banking services under the proposed Banking Services
Framework.
* while we don’t believe that PO was the target of the
investigations, we are monitoring media reports, and are in
contact with Channel 4 which has also reported interest in the
story.
We are continuing to monitor the story, investigate the
background facts, and consider what impact similar issues could
have on future operations. I will keep you updated on the
findings.
[salutations etc]”
Happy to discuss any of this.
Kind regards,
Jane
Jane Macleod
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General Counsel
The Post Office
Sent from my iPad