POL00148075
POL00148075
bPS 14/1-14/ POST OFFICE LTD
PROJECT SPARROW SUB-COMMITTEE
Minutes of a meeting of the Project Sparrow Sub-Committee of the Board
held at 148 Old Street, London EC1V 9HQ on Wednesday 9 April 2014
Present: Alice Perkins (AP) Chair
Alasdair Marnoch (AM) Non-Executive Director (by telephone)
(from item PS 14/1-part of PS14/4)
Richard Callard (RC) Non-Executive Director
Paula Vennells (PV CEO (from item PS 14/3)
Chris Aujard (CA) General Counsel
In
Attendance: Chris Day (CD) CFO
Angela Van-Den-Bogerd (AVDB) Network Change Operations Manager
Belinda Crowe (BC) Programme Director, Project Sparrow
Mark Davies (MD) Communications Director (by telephone)
David Oliver (DO) Programme Manager, Project Sparrow
Carolyn Low (CL) Programme Team, Project Sparrow
Gill Catcheside (GC) Assistant Company Secretary
PS 14/1 OPENING OF MEETING
A quorum being present, AP opened the first meeting of the
Project Sparrow Sub-Committee (‘the Committee”).
PS 14/2 TERMS OF REFERENCE
(a) The draft Terms of Reference (“TOR”) for the Project Sparrow
Committee had been circulated prior to the meeting. The Chairman
advised that she would like the General Counsel to be a
permanent member of the Committee so that the Committee would
comprise five members — the Chairman, two Non-Executive
Directors, the CEO and General Counsel.
(b) AP asked that any comments regarding the TOR should be
submitted in writing to the Company Secretary, with a view to them
being approved at the next Committee meeting.
PS 14/3 INITIAL COMPLAINT REVIEW AND MEDIATION SCHEME (‘THE
SCHEME’)
AP advised that there were a number of key issues for the
Committee to consider:-
(a) What commitments had been made publicly about the Scheme (in
particular in the House of Commons)?
POL00148075
POL00148075
(b) What problem is the Post Office trying to solve, acknowledging
that the fact that the process is taking longer is costing more and
that the expectations of SPMRs are exceeding what Post Office
originally envisaged?
(c) What would the Post Office like to do? And what has changed
since the Scheme was announced to prompt the need for a
different approach?
(d) What could be done do in light of previous public statements
about the Scheme, in particular those made by the Minister?
The following points were made in discussion:
) The paper had been deliberately developed as an options paper to
address the problems of cost, time, investigation length, Second Sight
competence and capacity, the expectation gap and the management
overhead and impact on BAU.
(f) The Scheme as currently configured was, broadly, consistent with
Ministerial commitments. A more detailed assessment of all public
statements (PQs etc.) made by the Minister about the Scheme and take
account of that in considering any changes to the Scheme. However, it
was acknowledged that the statement made in Parliament by the
Minister for Postal Affairs preceded Post Office’s announcement of the
Scheme.
(9) The importance of acting on the lessons learned as cases are
investigated and building that into the way we engage with SPMRs and
manage our business going forward. This work is being taken forward
in the Branch Support Programme, led by AVDB and will form an
important part of any narrative about the Scheme in the future.
The so called expectation gap has still not been addressed. Post Office
never had cause to contemplate paying ‘compensation’ of the order
being claimed, and the Linklaters advice has confirmed Post Office’s
very limited liability in relation to financial redress. Whilst it is important
to be transparent in terms of setting out the Post Office position as early
as possible, any steps to do so must be taken in the context of wider
decisions about the Scheme.
(h)
(i) Careful consideration would be needed in terms of how the essence of
the Linklaters advice could be communicated to applicants to ensure
that Legal Professional Privilege is not waived unintentionally.
(j) The results of the Horizon assurance work (over which Legal
Professional Privilege is also being claimed) due to be delivered, at
least in summary form for the April Board meeting, would need to form a
POL00148075
POL00148075
part of any communication to applicants setting out the legal position.
The handling and sequencing of what would be a public message will
be crucial and would need to take account of the position of key
stakeholders, in particular Tony Hooper, James Arbuthnot and other
MPs.
(k)
Further consideration should be given to the appropriateness of Post
Office making ‘ex gratia’ payments as it receives public funding, and
such payments should, in any event be nominal and made in
accordance with very specific criteria.
) There is also a general expectation by the Working Group and
applicants that the majority of cases will go to mediation, and Post
Office acknowledges that many applicants will want the opportunity to
(m) be able to discuss their case face to face with Post Office.
The cost of all cases in the Scheme going to mediation would be in the
region of £1m although the Scheme feels set in the direction of
mediating the cases and any change to this balance the financial cost
and the reputational costs.
(n)
Post Office does not anticipate mediating on Post Office on cases which
have gone through the either the Criminal or Civil courts — this accounts
for approximately a third of the caseload. Criminal cases are being
investigated by both Post Office and Second Sight. Tony Hooper has
made clear that any case judgements needed to be treated very
seriously.
(0)
The Scheme was established as an attempt to resolve at least some of
the dissatisfaction of SPMRs and stakeholders. However the differing
expectations between Post Office, applicants and stakeholders, create
a real risk that, unless action is taken, and despite the time and cost
invested in the Scheme, that many applicants will remain dissatisfied at
() the end of the process.
In considering the future role of Second Sight, consideration
should be given to what support might be provided to Second
Sight to address concerns about lack of capacity and capability as
part of any assessment of how the Scheme might proceed in a
way that remains consistent with Ministerial statements about their
on-going involvement in the Scheme.
(a)
Whilst getting some cases through the Scheme early might help to
manage the expectations gap, Post Office must avoid setting any
precedent in doing so and, until a decision is made about the future of
the Scheme, should avoid any actions which might close off options in
the longer term.
In terms of present position with the Scheme, and key timescales, the
Committee noted:
POL00148075
POL00148075
(r) Post Office has passed around 20 cases to Second Sight for review.
Second Sight have produced three case reviews which have all been
rejected by the Working Group as not sufficient for mediation. Second
Sight have also produced an early draft of their thematic report which
Tony Hooper had dismissed as a very early draft which was not ready
for Working Group discussion.
(s)
The Working Group has tasked Post Office and Second Sight to focus
on the preparation of 2 — 3 cases, which do not raise thematic issues,
for discussion at the next face to face Working Group on 1 May with a
view to deciding whether those cases should progress to mediation. If
one or more of those cases are approved for mediation a date for the
mediation would be set within four weeks and, potentially, the first
case(s) mediated within about ten weeks from now.
PS 14/4 UPDATE ON HORIZON ON-LINE HNG-X (“HORIZON”)
ASSURANCE WORK
(a) An update on the Horizon Assurance work, being carried out
(subject to Legal Professional Priviledge) by Deloittes, was
considered by the Committee.
(b) twas noted that Part 1 consisted of a largely desk-based exercise to
assess the control framework within which Horizon operates. As part of
its business as usual activity Post Office and Fujitsu undertake a range
of assessments and audits of Horizon’s operating environment.
Deloittes will review those assessments and audits and provide an
assessment of the assurance landscape and identify any gaps. The
assessment will not consider the integrity of the Horizon processing
environment at implementation. That would form Part 2 of the work.
(c) Although no system could be absolutely “bullet proof’, no issues
had yet been identified through the cases being investigated or
any other route that has called into question the integrity of
Horizon. Nor have any wide-spread systemic faults been identified
since Horizon on-line was implemented. These two points, along
with the Part 1 work (depending on the results) should be sufficient
to assure Post Office that Horizon is fit for purpose.
(4) Part 2 was not an essential piece of work at this stage, but would
look at the adequacy of Horizon at implementation, user
POL00148075
POL00148075
acceptance testing etc. to determine whether the system was set
up correctly. This would be a larger and more costly exercise and
should not be undertaken unless deemed necessary based on the
results of part 1.
POL00148075
POL00148075
Reference
Action
01/01
A paper to be produced on all of Jo Swinson’s public comments on the Scheme
including correspondence, PQs and other public engagements — identifying, inter
alia,any references to the mediation Scheme or timelines. Mark Davies to work
with BIS and programme team to produce
02/01
A paper to be produced on the role of Second Sight and options to support them or
reduce their role. This paper should include likely Stakeholder views. Programme
team to produce
03/01
Paper to be produced setting out approaches to disseminating the Horizon report
from Deloitte and the essence of the legal opinion from Linklaters to advisors,
applicants and MPs including action planning and comms and stakeholder
engagement required. ACTION programme team
NB approaches might for example include asking TH to commission legal advice on
the liability in light of the expectation gap.
04/01
Paper to be produced on the POL position on making “token payments” to Scheme
applicants taking account of the use of taxpayers’ money — drawing on the BD draft
settlement policy and having regard to the Linklaters advice re POL liability. Action
Programme Team
05/01
Paper to be produced on key variables to modify the Scheme — including financial
analysis and assessment of alignment with Ministerial commitments and a
recommended way forward. Action Programme Team
06/01
A timeline of key actions and decision points to be produced from today through to
summer recess Programme Team to produce with input from all.
07/01
Sub Committee to next meet on the day of the full board — this meeting will need to
be longer suggest at least two hours. Action COSEC
08/01
CIO to attend the April full Board to present the findings of Part one of the Deloitte
work
09/01
CIO to attend the April sub-committee of the Board to provide a detailed update on
the Deloitte work in particular Part two and whether it is required and how long it
will take.
10/01
Try to accelerate cases that are not thematic and might be useful to show the
Minister Action AVDB
11/01
Table to be produced setting out to the extent practicable and to the extent
that the case permits demonstrating that Post Office is rebutting the concerns
raised by Second Sight in relation to Horizon Action AVDB
12/01
Paper to the July Board mapping the lessons learnt from the Scheme are being
taken forward in the BSP - ACTION AVDB
POL00148075
POL00148075
PS14/7 DATE OF NEXT MEETING
(a) The next meeting of the Committee to be held after the Board on
30 April 2014.
PS 14/8 CLOSE
There being no further business, the meeting closed.