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PS 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.
() AP advised that RC had indicated that he would be comfortable,
whilst the Committee was at an exploratory stage with Project
Sparrow, to keep Committee discussions private. { ‘Commented [GC1]: Not sure this paragraph needs to be ]
included?
Ps 14/3 INITIAL COMPLAINT REVIEW AND MEDIATION SCHEME
(a
AP advised that there were a number of key questions for the
Committee to consider:-
* What problem was the Post Office trying to fix? The process
was taking longer than initially envisaged, with higher costs.
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* What action could be taken in light of previous
announcements?
(b) The Committee discussed the following issues:-
(i) The content of announcements made in Parliament and in
public by both the Minister for Postal Affairs, and the Post
Office, regarding the Initial Complaint Review and Mediation
Scheme (‘the Scheme’);
(ii) the expectations of external stakeholders and Post Office at
the time of the announcements and what has changed since
then;
(iii) Second Sight’s lack of capacity to prepare and deliver
reports on time, and failure to deliver a Thematic report;
(iv) The expectation gap created by SPMs, and how that
expectation is dealt with by Post Office;
(v) Lessons learnt in how Post Office behaves to SPMs and
their training — Branch Support Programme now in place,
and how might Post Office have handled things
differently/how Post Office is now managing its operations;
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Consideration was given how to take the issues forward:-
- Timing ~ expectations gap will only get bigger the longer
things are left.
- Linklaters report -which clarifies Post Office's legal liability
and the contractual position. It should be noted that careful
consideration will need to be given to the release of any of
the Linklaters report as disclosure of any part of it could
result in Post Office waiving its legal privilege to the
contents. Post Office is comfortable there is not an
unavoidable compensation bill; and
- The need for a detailed timeline outlining next steps, once
agreed.
(d) Progress on claims made was discussed. Post Office has carried
out internal investigation on 20 cases, which have been submitted
to Second Sight. Three case reviews have been produced by
Second Sight which have been rejected by the Working Group as
they are not of an acceptable standard for Mediation. Second Sight
are due to produce another 2-3 case reviews at the 1 May Working
Group. If submitted for Mediation, the process could then take up
to ten weeks, Financial Ombudsman of the view that all cases
should be seen together, but the Working Group had directed
Second Sight to focus on the cases that have no thematic issues.
(e) The Committee discussed Second Sights role in the process, and
what help could be offered by Post Office to expedite matters. It
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was agreed it would be more helpful if Second Sight had more
evidence/specificity in its reports. It was noted that Second Sight
was increasing the mismatch in expectations by discussing cases
with advisors and raising their expectations.
The future of the Mediation Scheme was considered, including the
length of time it would take to get a number of cases into Mediation,
the cost of the process, advisors and mediators, and the possibility
that the whole process would not necessarily result in a total
resolution of the issues. However, it was noted that the Mediation
process had been set up and would be difficult to reverse, and
would also need to balance financial cost against reputational
costs. It was agreed that some cases should be put through the
Mediation process as a matter of urgency.
The Committee debated the number of cases likely to end up in the
Mediation Scheme:-
- Criminal cases (circa 50) ~ Post Office would propose that
Working Group investigate these cases but not put them
into Mediation — proof of redress would be available through
the Criminal courts.
- Civil cases (only 4-5) - Already considered by the Court.
Post Office and Working Group should have due regard to
the Court's opinion. Investigate cases but not put into
Mediation.
- Remaining cases (circa 100) ~ Post Office investigate and
then Second Sight produce report advising on whether case
should go to Mediation. Concem about Second Sight's
opinion that majority of cases should go to Mediation.
Mediation costs in the region of £10K per case.
It was noted that some members of the Board were keen to get
some of the cases into mediation as a method of managing
expectations, particularly if those cases are ones where Post Office
believes that there is clearly no case to address.
Committee members understood the need for SPMs to “have their
day in Court’, but Post Office had a legal opinion that it was not
under any obligation to pay compensation. As Post Office was a
public authority, would Post Office want to make an ex-gratia
payment to SPMs when it had no legal liability. The possibility of a
token ex-gratia payment was considered, it being noted that the
Committee did not have a view on whether a token payment was
appropriate or not.
It was agreed that more comfort was needed on the Horizon work,
so while that work was taken forward Post Office should continue
with the Scheme. Once the Horizon work was concluded it was
agreed that (providing the outcome was satisfactory) it should be
used with the Linklaters report to manage expectation.
The Committee asked for greater clarity on costs, particularly
around the cost of investigating every case.
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PS 14/4
PS 14/5
MD/Programme
Team
Programme
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Programme
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Carolyn Low
Programme
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UPDATE ON HORIZON ASSURANCE WORK
‘An update on the Horizon Assurance work, being carried out by
Deloittes, was considered by the Committee.
It was noted that Part 1 consisted of assurance mapping, to see if
assumptions for assurance reviews were reasonable, adequate and
sensible, and whether the system was fit for purpose, and could not
be interfered with. Part 1 does not question whether Horizon was
set up properly as this is one of the issues picked up by Part 2.
Part 2 was not an essential piece of work at this stage, but would
look at the user acceptance testing at the time of the system being
set up to categorically substantiate that the system was fit set up
correctly and was fit for purpose. If was agreed that if there were
systemic problems in the system these would have surfaced with
usage. It was agreed there needed to be clarity over whether Part 2
was essential or not, and that the Chief Information Officer ("CIO")
should attend the next Board meeting to discuss a more detailed
paper on the assurance work.
Post Office was confident that although not absolutely “bullet proof”
on Horizon until every case had been investigated, it had not yet
seen any issue which could cause doubts about Horizon.
ACTION
A paper to be produced on all of Jo Swinson’s public comments on
the Scheme including correspondence, PQs and other public
‘engagements, to identify any references to the mediation Scheme
or timelines.
A paper to be produced on the role of Second Sight and options to
support them or reduce their role. The paper should likely include
Stakeholder views.
‘A 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 Communications/Stakeholder engagement.
A paper to be produced on the Post Office position on making
token payments to Scheme applicants, taking account of the use of
taxpayers’ money, and drawing on the advice from Bond Dickinson
on Settlement Policy, and the contents of the Linklaters report.
A paper to be produced on key variables to modify the Scheme,
including financial analysis and assessment of alignment with
Ministerial commitments with a recommended way forward.
A timeline of key actions and decision points to be produced from
today through to Summer Recess.
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Lesley Sewell
Lesley Sewell
Angela Van-
Den-Bogerd
Angela Van-
Den-Bogerd
Angela Van-
Den-Bogerd
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CIO to attend the Board on 30 April to present the findings of Part 1
of the Deloitte work.
CIO to attend the next Committee meeting to provide a detailed
update on the Deloitte work, to include whether Part 2 is required
and how long it will take.
Try to accelerate cases that are not thematic and might be useful to
show the Minister.
Table to be produced setting out, to the extent practicable and that
the case permits, demonstrating that Post Office is rebutting the
concerns raised by Second Sight in relation to Horizon.
A paper to the July Board mapping the lessons leamt from the
Scheme.
DATE OF NEXT MEETING
The next meeting of the Committee to be held after the Board on 30
April 2014.
CLOSE
There being no further business, the meeting closed.
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