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From: Lesley J Sewell
Sent: Wed 03/07/2013 8:
To: Martin EdwardsI
Subject: Re: JA meeting brief
Martin
Just to be clear on the anomalies - these were not undiscovered issues, we brought them too SS attention for
completeness. Also, when Susan and I were crafting the briefing we were careful in our wording as these were
associated with potential losses to SPMRs in their trading statements. This was so that we could differentiate
from other issues - a good example is the PIN Pads issue we had 3 years ago which did get some publicity in the
press. In addition, Rod is reviewing another issue he raised with us on Friday - although he believes it did not
affect SPMRs - I've asked him to double check.
We need to be careful in our comms not to indicate that we do not have anomalies or exceptions as that is not
the case - it's the context which is important and in this case the fact that they could and did affect Trading
Statements.
Hope this helps.
L
Sent from my iPad
On 3 Jul 2013, at 08:02, "Martin Edwards" + “> wrote:
Thanks.
I think sharing with BIS would be helpful - I know they would certainly appreciate it. I'll just re-
read to check for any issues which could be misinterpreted or unhelpful to our position, but
otherwise I'll forward around 8.30 unless anyone objects before then.
I'll defer to Susan and Alwen on SS, but presumably a bespoke letter drawing on some of the
points in the brief would be the safest approach if we need something in writing.
And I'll send to ExCo on your behalf Paula (presumably you mean now rather than holding off
until after the meeting?).
Martin
Martin Edwards
Chief of Staff to the Chief Executive
On 3 Jul 2013, at 07:21, "Paula Vennell
wrote:
A thought, four actually. You may already be ahead of me :
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1) this could be shared with BIS as background briefing to my call with JS later
today.
2) it puts the whole issue into context, which as we discussed yesterday, needs to be
brought out in the SS report. Is there merit in sharing with SS, so they understand
how seriously we take the issue of proportionality and related reporting? Also with
our lawyers who will be reviewing their report over the weekend.
3) Share with the Board but after the JA meeting - Alwen, Alice and I will discuss,
post. JA.
4) it should be sent to the ExCo please with a covering note from Martin on my
behalf, explaining briefly what is happening and to be kept P&C.
Thanks Paula
Sent from my iPad
On 3 Jul 2013, at 02:04, "Martin Edwards"
wrote:
Alice, Paula
With many thanks to Susan, Alwen, Mark and everyone else involved, here’s
the briefing note for the meeting with JA (attached as both a Word doc and
PDF, and also pasted in the email below in case easier to read on blackberry. I
think Alwen will try to bring printed copies if she has time).
Also attaching a more detailed factual background brief in case needed,
which is what we’re developing as our main fact base for reference
throughout this process. It includes details of the 4 cases under review by SS
in the interim report and also a summary of the cases pertaining to JA and
OL’s constituencies.
I mentioned a website earlier which provides guidance on the proper process
for independent enquiries, including in relation to ‘Salmon letters’ — have
referenced the key read-across in the brief, but here’s the link if anyone
wants to read up on this in more detail:
http://publicinquiries.org/holding_a_hearing/fairness to witnesses
Best wishes for the meeting,
Martin
Briefing for meeting with James Arbuthnot, 3 July 2013
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SPEAKING NOTES
Introductory points:
Thank you for agreeing to meet us.
SS provided us with an update following your call with them on Tuesday
morning.
Following that, would like to discuss with you:
a) Communications around the report and
media/parliamentary handling
b) The approach to the report itself and Monday’s meeting
c) The approach beyond next Monday to close down other MPs’
cases and learn lessons
But first point to reiterate is that we take this whole process extremely
seriously indeed. That is why we set up the independent investigation in
the first place. It is important we get to the truth and learn lessons
where appropriate.
i) Communications around the report and media/parliamentary handling
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Would be useful to understand your plans for communicating the report
to the media and Parliament. (Second Sight’s read-out of your
conversation gave us some areas for concern.)
The single most important principle from our point of view is that the
report and the associated communications must be rigorous and
completed grounded in the facts. The Post Office is too important a
business to thousands of sub-postmasters and millions of customers
(and taxpayers) across the country for confidence to be undermined
unfairly.
From the SS update we have been made aware of the potential for
different interpretations on the definition of Horizon. Whilst we both
agree that the wider system is part of the review (as defined in the ToR)
we consider that the report and communications should clearly
distinguish between the ‘computer system’ and the wider support
processes.
From what we have been told by SS so far, there is no evidence in the
interim report to support any suggestion of systemic failures with the
Horizon system (and this is based on the four “best” cases from all those
under review).
If this is the case, important that point is communicated clearly given
some of the original allegations against the system - otherwise customer
and agent confidence in the integrity of the system could be
fundamentally undermined.
This is not to belittle the importance of the overall user experience for
spmrs. It is essential that we continue to improve our wider systems of
support and training for agents, and we are grateful for some of the
additional insights generated by this investigation to date. Many of these
process issues are historical and have already been rectified through
improved guidance to staff and training for spmrs — but where further
changes need to be made we will absolutely act on them. Will come
back to how we propose to engage JFSA and spmrs and identifying
further process improvements.
We’re concerned to hear that you may have lined up an interview with
the BBC in advance of the report being shared. Keen to understand your
thinking here.
We will let you know our handling plan in relation to the media, and
share statements. We would be grateful if you were able to do the same.
You will appreciate the danger of the media exaggerating the report and
our need firmly to defend our reputation.
ii) The approach to the report itself and Monday’s meeting
SS propose to share with us the draft report on Friday. We will work
urgently over the weekend to check for factual accuracy.
Clearly this issue has significant bearing on our main supplier for Horizon,
Fujitsu. They will therefore also be asked for their views on the facts
contained in the report before publication.
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Our hope and expectation is that this fact checking and consultation can
be completed in time to allow the report to be shared with MPs on
Monday afternoon — but obviously an extremely tight turnaround, so
we will need to review the situation on Monday. If there remain
fundamental concerns around factual points, it would be better for the
report to be delayed rather than misleading statements to be issued.
[If_ needed: none of this undermines the independence of the SS
investigation — on the contrary, our aim is to protect its credibility and
rigour. Also has parallels with the statutory process for public enquiries —
Inquiries Act 2005 recognises the need for ‘Salmon letters’ to give
appropriate warning to any person or organisation about whom criticism
could be inferred from an enquiry.]
In terms of the meeting itself, we understand that the JFSA and their
lawyers will be in attendance alongside the invited MPs. As both the
commissioner and subject of the report, we would appreciate it if you
could also give us the option of sending observer representatives. Most
likely to involve one employee and one external lawyer. Will help us to
ensure we have a clear and accurate read-out of the meeting and that we
can follow-up on any queries or action points as appropriate.
iii) The approach beyond next Monday to close down other MPs’ cases and
learn lessons
Clearly we recognise that the interim report does not cover all the cases
put to Second Sight. We agreed on this approach and we also recognise
the need to complete the review of the other cases put to Second Sight
by the JFSA and MPs.
We'd like to work with JFSA to continue this work but we do have
concerns about the process. It has taken too long, and we have to have
regard for the appropriate use of public money.
Need to stress as well that, in Second Sight’s view, in around half of the
cases from MPs there is insufficient evidence on which to investigate,
despite requests for further information to be submitted.
So we suggest a refined approach for the remainder of the cases. We
want to set up a user group (chaired by CIO) which would meet regularly
to learn from experiences of spmrs and to provide a forum for continual
improvement.
We suggest that this would include JFSA and for the immediate period
the forum could (potentially) also include Second Sight and have as its
priority the completion of the reviews of the cases put to it. This
approach might be more effective than the process we have gone
through, which you will accept has not been perfect.
Once the cases put to us have been reviewed by the group and a
conclusion or conclusions reached, the forum would continue as a
structure through which we can continue to refine and improve our
processes.
We would hope that the JFSA would continue to be a part of this, along
with other interested parties such as the NFSP.
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Additional point if needed
Depending on the tone of the meeting, it may be appropriate to address head
on JA’s apparent annoyance at the issues around prosecutions and the
systems ‘exceptions’.
Current prosecutions
e Since the start of the SS investigation we have not pursued a criminal
conviction which relies solely on Horizon computer system evidence. We
have also put on hold civil recovery proceedings in certain cases whilst we
await final report.
e As you now, we also prepared an ‘immunity agreement’ with the JFSA to
provide reassurance to spmrs thinking of submitting evidence to the
process.
e But in cases where it is clear that Horizon system isn’t the issue, we have
a duty to take appropriate action to safeguard public money. For criminal
prosecutions we treat each matter on a case by case basis, with a detailed
investigation and legal review (generally involving external lawyers).
Historical convictions
e¢ Nothing has emerged from the interim findings given to us by SS which
would point to specific convictions being unsafe. Cases have been
through the judicial process and the Court considers all relevant evidence
not just that relating to the Horizon computer system.
e In the event that any person considers that there has been a miscarriage
of justice they have the right to apply to the Court of Appeal to have their
conviction reviewed.
System exceptions
° We know of two systems exceptions (anomalies) under the current
Horizon system where spmrs’ accounts have been affected, and both
were voluntary communicated to SS (although not directly related to the
cases under review).
e Key point to note is that in both cases our processes picked up these
issues, appropriate remedial action has been taken and they did not lead
to any disciplinary action against the affected spmrs.
e Absolutely no reason to believe this means there are other undiscovered
issues.
e = Weare sorry this information was not passed onto you at an earlier stage
— if we had considered these cases to materially change the investigation
we would have flagged them directly to you, but in our firm view they
don’t.
Further detail on the two cases if required:
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e The “62 branches exception” - 3 years old at the time of migrating
branches from old Horizon the HNG:
o Affected 62 branches (13 Crowns; 12 Multiples; 37 Sub
postmasters)
© Sub-postmaster branch losses ranged from £115.60 down to 8p
o Identified by Horizon’s built-in checks and balances which are
designed to flag up these types of discrepancies. Appropriate
action taken to rectify issue.
© 17 sub-postmasters were adversely affected, i.e. had a loss
attribute to their branch.
© Sub-postmasters notified in March 2011 and (where appropriate)
reimbursed.
© Sub-postmasters who made a gain through the anomaly were not
asked to refund this.
e The “14 branches exception”
© Financially impacted 14 branches (4 Crowns; 5 Multiples; 5 Sub-
postmasters)
o Concerns an error where historic accounting entries in the
2010/11 financial year were replicated in accounts for 2011/12
and 2012/13, only showing up a year later.
o Raised by 2 sub postmasters affected by the exception.
© 1 sub postmasters and 4 multiple partners were adversely
affected, i.e. had a loss attribute to their branch.
o We suspended attempts to recover known losses from affected
sub-postmasters
o Letters to notified sub-postmasters will be sent out imminently
o The worst loss to a branch would have been £9,799.88. This was
one of the first cases notified, so no recovery action was
progressed. Other losses ranged from £113.14 down to a penny.
o Action underway to modify the system to prevent any repeat of
this exception
Martin Edwards I Chief of Staff to the Chief Executive
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Martin. Edwards i
postoffice.co.uk
@postofficenews
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