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POL00255796
From: Alisdair Camerot
Sent: Mon 16/07/2018 8:32:25 AM (UTC)
To: Jane MacLeod...
Subject: Re: POL Contingent Liability Issue and Outstanding Items
Great, I suggest we cover unanswered questions by answering them in an appendix - we don’t know this
information etc. Thanks Al
Alisdair Cameron
Chief Finance & Operating Officer
20 Finsbury Street
London
EC2Y 9AQ
From: Jane MacLeod
Sent: Sunday, July 15, 2018 7:08:44 PM
To: Alisdair Cameron
Cc: Michael Passmore; Briony Tristram; Mark Underwood]; Rodric Williams
Subject: Re: POL Contingent Liability Issue and Outstanding Items
Thanks Al, I think this approach to the response is likely to be more manageable than what EY have actually
asked for. I’ve separately asked Mark & Rod to identify materials that already exist that we can use to source the
necessary facts etc, and this is underway.
I’m back in the U.K. tomorrow night and will flesh out the draft response for discussion on Tuesday.
Jane
Jane MacLeod
Group Director Legal, Risk & Governance
Post Office
From: Alisdair Cameron
Sent: Friday, July 13, 2018 2:47:23 PM
To: Jane MacLeod
Cc: Michael Passmore; Briony Tristram
Subject: FW: POL Contingent Liability Issue and Outstanding Items
Jane, we agreed two papers and Briony has drafted the easier one!
My suggested approach to this would be for WBD to right a short, factual paper broadly as follows:
1. Some postmasters originally alleged this around this time period.....
2. We set up a mediation scheme etc. This many postmasters went through it, this many were settled for this
much, this many weren’t, this many had criminal convictions. The claims totalled X but included school fees
and so on.
3. This has been explained in public via select committee, Panorama etc
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4. 5xx postmasters are in the current claim of which we believe XXX went into the mediation, Y have settled
with us and z are time barred
5. Our view at the end of the mediation is that we don’t owe anyone any money. We believe that Horizon works
(because) and that out contract stands up (because). On the fundamental claim that they lost money for
reasons not their fault we can find no evidence.
6. That view could be changed by the next two trials — if we owe a different contractual duty or if Horizon is
found to be at fault that situation would change.
7. The right time to estimate which claimants could have suffered a loss as a result would be after the two trials
and not before.
8. Ina typical year, we find missing cash in the Network — we look for it. It may have been stolen by a third
party, stolen by the postmaster or lost or borrowed. Last year £xm was identified as missing, £xm paid back,
£xm_ being paid back and everything else was 100% provided for. When we find a significant loss we
terminate the relationship.
Thoughts?
Thanks Al
Alisdair Cameron
Chief Finance & Operating Officer
20 Finsbury Street
London
EC2Y 9AQ
From: Peter Mclver [mailtd.
Sent: 12 July 2018 12:35
To: Alisdair Cameron <_
Michael Passmore
Cc: Claire Johnson ¢ Sana M Gangat
Subject: POL Contingent Liability Issue and Outstanding Item:
Dear All,
Further to our discussion today, we held our internal Panel last night to discuss the above and the together we
discussed the following:
e We appreciate that no formal Particulars of Claim have been received to date
e We understand that POL are of the position that they are unable to determine the outcome of the
proceedings and whether that would be material or adverse as yet
e We have received from POL’s lawyers a letter recently where they confirmed that they believe that POL’s
position that it is currently unable to estimate the amount of the ultimate liabilities which might be incurred is
reasonable
e Weare aware the Freeths estimate in the Skeleton argument was not a formal estimate of damages and was
subject to further analysis and information
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We and the panel therefore focussed on obtaining more of a deeper understanding as to the background of what
caused the claim to arise, the history of it, and want to understand, given POL is defending the matter vigorously,
what is POL’s view of the likely population of Postmasters affected and the possible quantum. We would also like to
understand can the population then be stratified into various categories of ones which may be valid, those likely to be
defendable and those that may require more investigation etc.
The reason this is asked for is to determine is the ultimate claim likely to be material and therefore fundamental to
the financial statements. This will then guide the panel further in determining the disclosure and whether we include
an emphasis of matter within our audit report.
As we mentioned in the last ARC we said we may require further information and discussion.
Therefore the questions we would like responded to in a formal paper for the panel to consider are:
1. What analysis has POL undertaken to date to determine the population of Postmasters affected, both in
number of Postmasters and quantum/value of the claim?
2. Do POL have a record of the number of postmasters terminated over time that may be possibly part of this
claim (and possible future claims) or a list of all Postmasters who were terminated for breaching their
contracts?
3. Do POL have an idea of the value or quantum of money that was owed by these Postmasters when a
termination was sought?
4. Do POL have a record of how much money if any has been collected or has not been collected from these
postmasters as part of the terminations above?
5. Are there any receivables or payables carried in POL’s books for these amounts?
6. Has any amount been paid out by POL in the event of differences from Horizon (or Fujitsu) to postmasters
who were terminated as per above? Do POL have a record of such amounts/value involved?
7. Prior to the case, we understand there was mediation and possibly some settlements made — can we have
the full number and value of those please?
8. You have mentioned some cases may be time barred now — do we have an analysis of those or others?
9. Similarly some instances where there was legal proceedings against the individuals an analysis of them
please?
10. How many terminations of postmasters were subsequently replaced by alternative postmasters?
11. What were the key contractual terms under which these terminations occurred and the general reasons for
termination?
12. What is the level of analysis undertaken by in house legal/ external lawyers on the terms of the contracts i.e.
are they relevant/water tight and the resulting strength of POLs position?
13. Have any experts been used by POL to report on the functioning of Horizon and Fujitsu to date? What was the
outcome of that?
14. What is the historic trend in terms of the accuracy of the reporting from Horizon? Any assessment made to
date on its robustness?
We and the panel would also like POL to produce an Accounting Treatment Paper as to why this is a Contingent
Liability under 1AS37 ( and no provision required) and as a consequence what exact type of contingent liability this is
and cover the disclosure required per IAS37. This is due to the fact that the litigation is now advancing this year, with
the two test cases coming up. At present the paper from Legal only covers disclosure recommendations.
We and the panel also recommended a further private meeting or call with Womble Bond Dickinson, your external
lawyers, along with POL in house legal/finance team to to discuss the level of analysis/strength of the case to forma
view if this is a probable or possible claim? This should occur after the questions above have been responded to
formally.
Once we have done this we can provided these responses and papers to a further panel.
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Thank you for your assistance.
Lastly, as mentioned at the end of the call, we will do up an outstanding list split into a) what matters are required
from yourselves and b) matters where we have received information from you and are still finalising our
work/testing.
Kind regards
Peter
_.q@@@@’ Peter Mclver I Partner I London Audit Leader I
nest Assurance
Emst & Young LLP
1 More London Place , London SE1_2AF, United Kingdom
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Website: hitp://
Helen Webster I Phon
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