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POST OFFICE LIMITED
GROUP EXECUTIVE REPORT
Title: Stabe Investigations: Next Meeting Date: I 20" April 2022
Sarah Gray, Group Legal
. Director . Ben Foat, Group General
Author: John Bartlett, Head of Central Sponsor: Counsel
Investigations Unit
Input Sought
The GE is asked to note and discuss the contents of this paper; determine the extent to
which Post Office will in future conduct investigations; and approve the concept of an
Investigations Champion.
Previous Governance Oversight
« Group Executive Tactical Meeting of 5 May 2021
e Group Executive Tactical Meeting of 15 September 2021
Executive Summary
In order to be compliant with the Group Litigation Order and achieve our objectives regarding
the Inquiry the measures outlined in this report are the minimum required actions.
1. Following detailed assessment', KPMG concluded in their report of August 2021 that Post
Office should create a Central Investigations Unit (“CIU”). The introduction of the CIU
was to ensure POL-wide investigations would be properly planned, resourced,
documented, and executed; with lessons learnt fed back into the business. KPMG also
recommended a target operating model.
2. Post Office decided to form a CIU and the Head of CIU (“HCIU”) was appointed on 21
February 2022. We are seeking approval to recruit the rest of CIU in line with KPMG’s
recommendations? and two additional six-month fixed term (FTC) investigators. The cost
per year for the permanent staff is 2x Senior Investigators (Band 3a) and an Intelligence
Analyst (Band 2a) total cost c£240k?. Total costs for the two six-month FTC investigators
is c£60k.
3. CIU would be built as soon as possible with the two FTC investigators providing
additional capacity and capability whilst CIU develops processes, procedures, systems,
thresholds, and internal and external stakeholder relationships. Lead time is six months
from the date of decision to be operating the model. This could be October 2022.
4. All observations made by KPMG are considered as being met or adapted in this proposal
which is as follows:
« A virtual Post Office Investigations Branch develops a one-team approach to Post
Office investigations, ensuring the application of best practice across the
organisation.
1 The scope of KPMG’s work did not include a review of historical investigations or those conducted in relation to the Historical Shortfall
Scheme
? Outstanding recruitment in line with KPMG’s recommendations supported by this paper are: 2x Investigation Mangers (Band 3a), and an
Intelligence Analyst (Band 2a). Both investigators and the analyst roles are in budget for 2022/23.
* Salary plus employers National Insurance/Pension
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« Business-based, de-centralised, teams conduct the highest volume and lower risk
case work with the CIU conducting the higher risk or more complex investigations.
e CIU also provides investigative training, mentoring, and coaching to the de-
centralised teams as well as introducing and carrying out quality assurance of the
lower risk investigations.
e The current Speak Up team’s remit is broadened to act as a centralised triage and
assessment function; providing Post Office with a central view of investigative risk
and escalation route from the de-centralised teams to CIU.
e Make greater use of technology to allow for the expeditious conduct of complex case
work and reliably meet our disclosure obligations more cost effectively. A reserve of
£50k per year for use of a document review and disclosure platform sourced direct
from a supplier rather than via a law firm.
« An alternative to private prosecutions is proposed to permit criminality evidenced by
Post Office investigators to be progressed in all four nations of the UK in order to act
as a deterrent and to seek financial recoveries.
« ANED is appointed as Investigations Champion.
Questions addressed
e¢ How should Post Office fund and structure the conduct of investigations?
« What head count and technology budget is required on an annual basis?
« How should Post Office manage criminal investigations and prosecutions?
Report
Operating Model - Structure & Oversight
1. Post Office is committed to undertake ethically executed, evidence-led, transparent
investigations which can withstand external scrutiny by applying best practice,
applicable laws, and guidance.
2. As part of this commitment, it is proposed that there are two levels of investigative
capability within Post Office*. This approach was also suggested by KPMG. The first level
is a small group of experienced and trained professional investigators who conduct
investigations into matters presenting the greatest risk to Post Office or which are the
most complex to carry out. The CIU and the Speak Up Investigations Team form this
group of investigators. The other strata of investigators are based in the business and
will continue to either conduct investigations infrequently or carry the lower risk and
volume cases. Conducting investigations may be only a small part of their role or are
quite routine or similar in nature. CIU will be their escalation point.
3. Together, it is proposed that the centralised and de-centralised teams form a virtual
resurrected Post Office Investigations Branch (“IB”). The de-centralised investigative
* As well as proposing a central investigative function, the KPMG review examined the investigative activity conducted by the following
teams: Network Monitoring, PM Dispute Resolution, PM Complaints, Contracts, Customer Complaints, Financial Crime, Conduct Compliance,
Whistleblowing, Data Protection, and Cyber, as well as those under HR’s remit eg Grievances, Code of Conduct, and Dignity at Work
complaints.
SThe Post Office Investigations Branch was the first recognised investigation unit in the world dating back to near the foundation of the Post
Office itself. It has an unblemished reputation. It’s motto was Suaviter in Modo, Fortiter in Re meaning Gentle in Manner, Resolute in Deed
which is very much in keeping with the intended approach of the new investigation function.
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activity would continue under their existing reporting lines but for investigative activity
they have a dotted line to the centralised team. The IB as a whole will perform to the
same standards and methodologies adjusted for the complexity of the cases in-hand. By
using the IB brand the aim is to foster a one team approach in the conduct of
investigations.
4. It is proposed that the Head of IB (who is also HCIU), assisted by the CIU, will set
standards, provide coaching, and conduct quality assurance of lower-risk investigations
conducted by the de-centralised staff. It is not practical for a centralised team of
dedicated investigators to conduct all investigations. However, within appropriate
parameters and with suitable support, those not in the central team can conduct quality
investigations that meet the requirements of Post Office best practice. Head of IB is
accountable for these investigations as well as those conducted by the central teams.
5. Once the additional staff are recruited there will be sufficient capacity and capability to
start increasing the volume of investigations from the current run by the three Speak Up
investigators. At the same time, CIU and Triage will develop processes, procedures,
systems, thresholds, and internal and external stakeholder relationships to operate the
model. Lead time is six months to recruit and be fully operating the model. This could be
October 2022.
Operating Model - Information & Intelligence Collection: Triage Process
5. The lifeblood of any investigative function's activities is intelligence and information. To
ensure that the right risks are identified, the right investigations are conducted, by the
right team, Post Office requires a single picture of past, possible, and current
investigations. This requires a central clearing house of information and intelligence
which is then also well placed to act as a triage function and produce thematic,
geospatial, temporal or other analytical assessments for GE, Board, Legal, and senior
business leaders.
6. The Annex 1 shows the flow of information and tasks between the decentralised teams
and the centre utilising a Notification / Referral approach. It is proposed that the teams
will have agreed criteria to apply in their own environments which will determine
whether they will provide a Notification to the triage function or whether they make a
Referral.
7. A Notification: agreed criteria applied by the business-based teams to pass details to
Triage relating to what the notifying team considers to be their low/medium-risk
investigation and where they are not requesting assistance from the central teams. This
information can be drawn upon in assessments thereby contributing to wider
investigative risk management. Triage would review the Notification and most likely take
no further action. However, if they assess the Notification as a high risk and/or it fits in
to a wider piece of on-going work, and/or it is their view that there is insufficient
independence of the business-based investigator then Triage are able to re-allocate the
investigation to Speak Up, to CIU, or to a different business-based investigator. This
would be a collaborative process, but the Head of IB would have the authority to make
the final decision in order to maintain the independence of the investigation or
appropriately manage risk.
8. A further advantage of this approach is that each investigative risk is triaged twice:
firstly, by the business in considering whether to make a Notification or a Referral and
then by the Triage team in reviewing the Notification. This provides a local and central
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assessment of the issue, each with recorded decision-making being applied resulting in
safer management of the issue.
9. A Referral: made to Triage when the de-centralised teams or senior managers consider
that the issue at hand is sufficiently complex or exceeds their local risk appetite and that
assistance from CIU is needed. A Referral may also relate to Speak Up issues and these
should be reported following the Whistleblowing Policy. As part of KPMG’s review, a
working group established a proposed table of escalation criteria (Annex 2) which is a
good starting point for defining the criteria for Referral and can be refined further at a
later date. Triage will engage with the referrer and with the HCIU to determine the
appropriate approach. This may be that CIU will assist the decentralised team in the
conduct of the investigation or CIU may take carriage of the case and seek specialist
support as appropriate. Again, and for the same reasons, the Head of IB is the decision
maker as to where a Referral sits.
Operating Model - Structure of the Triage Function & Team Size
10. The triage function will form part of a new combined team together with the assessment
and Speak Up functions.
11. Until volumes are better known, it is proposed that this team will be staffed by a
manager plus two Speak Up Investigators and an intelligence analyst. This team reports
into HCIU.
12. The manager and the analyst would carry the triage function, supported on a surge
basis by Speak Up and/or CIU staff as needed, with the analyst producing assessments
as required. If Notification / Referral volumes reach a level that prevents the analyst
from producing the MI and assessment papers then a second analyst may be needed. A
review of volumes and the impact on effectiveness is recommended after 12 months of
operation.
13. Whilst KPMG did identify that a triage function was required their report did not specify a
centrally resourced triage team. KPMG observed that each team _ conducting
investigations should have a more formalised triage activity within their own team and
then refer cases to CIU based on agreed criteria. This does not facilitate a central
oversight of potential cases, a central assessment of independence and transparency
risk, and does not result in a single enterprise-wide picture from which central reporting
can be produced.
14. It is proposed that the analyst is recruited as soon as possible in Q1 FY 2022/23 to assist
in the design and build of the triage function. The Speak Up investigators would continue
with their current role.
15. The existing Speak Up team and the Intelligence Analyst are in the 2022/23 budget
submission.
Operating Model - Wider Function of CIU
16. In addition to conducting the most complex or high-risk cases, CIU has responsibility for
the continuous improvement of the non-centralised investigative activity and in assuring
this work. A CIU staff member will provide training in investigative approaches and
methodologies, in particular ensuring that investigation records are maintained to an
agreed standard that works for both the de-centralised team and the organisation as a
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whole. Standardisation of approach and minimum standards are important in driving
consistency. It also makes quality assurance easier and more effective.
17. CIU will also provide coaching and mentoring on particular cases to others conducting
investigations. This allows for live monitoring of standards, the identification of best
practice that could be adopted or improved, but also facilitates skills transfer as a
capability and capacity improvement.
18. A Quality Assurance Framework (“QAF”) will be produced together with the de-
centralised teams which is an industry standard approach to ensure incremental and live-
time continuous improvement. CIU will conduct monthly QAF reviews of a sample from
each area where investigations are conducted. There are binary elements to this (eg is
there a strategy and plan for the investigation or is there a record of decisions with
rationales) as well as a qualitive assessment (eg how good is the strategy and plan or
are the decision rationales sufficiently detailed). The more universal and standardised
the record keeping across investigations the more effective for the organisation the QAF
will be. Annual reports can be produced, hopefully charting the improvement across the
year. CIU should be measured on this improvement.
19. In areas like HR, the CIU may be able to assist in setting a standardised approach for
investigating managers who are allocated an HR-related matter to follow together with
guidance.
Operating Model - Structure of CIU
20. HCIU will also be the Head of the IB. It is proposed that reporting directly in to HCIU will
be one Senior Investigator responsible for England & Wales and another for Scotland
and Northern Ireland combined. This recognises that the different legal environments
will impact how they conduct their work. The Inquiry, in their Completed List of Issues,
had an interest in how POL would approach investigations differently in the four
nations®.
21. The Senior Investigators, whilst predominantly working in their specialist jurisdictions,
will be required to flex across geographical areas and lead complex casework where
required based on need. They will also plan and conduct the capability training with the
decentralised teams, conduct QAF reviews, and have relationship management
responsibilities with the senior staff in the decentralised teams, providing investigative
mentoring. It is proposed that these two roles are recruited as soon as possible in Q1 of
FY 2022/23.
22. The Senior Investigators will be assisted by two junior CIU Investigators on FTC for six
months in the conduct of investigations, provision of training and coaching, and carrying
out QAFs. They will be a central resource allocated on need. It is proposed that these
two roles are recruited in Q1 of FY2022/23.
23. KPMG recommended in their report that CIU would have similar functions as outlined
above. Budget provision for 2021/22 was for HCIU plus one Senior Investigator in CIU
but only HCIU was recruited. Budget submission for 2022/23 includes HCIU and the 2x
Senior Investigators. Approval for the two more junior FTC investigator roles is also
required.
Operating Model - Use of Technology
* Point 162 of the Completed List of Issues
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24. Our ability to have a single, enterprise-wide view of investigative activity, the ability to
produce MI and assessments, and to conduct evidenced-based complex investigations at
pace is dependent on access to, and effective use of, technology. This was also an issue
raise by KPMG.
25. It is proposed that all Notifications / Referrals should be submitted to Triage via
Convercent, the software used for Speak Up submissions. Post Office have unlimited
licence use and so all staff conducting investigations would be able to enter information
and up-load evidence or other material into Convercent at no additional cost’. This
collates all data into a single system.
26. Convercent can also be configured to allow tags and sorting in order to segregate Speak
Up material from other matters and to facilitate analysis. It has the capability to be used
as a basic case management system, preserving an audit trail for activity and actions,
negating a need to purchase a more bespoke and costly system.
27. Reviewing emails, Teams messages, reports and other material from Post Office systems
is necessary. Unless an in-house solution can be found (this is being explored), this
requires a document review platform such as Relativity. Post Office does not have this in-
house. It is recommended that budget is allocated to provide on-demand services for
this requirement. A digital forensics capability, primarily to work on Post Office mobile
digital devices, is also required. Document review and digital forensics can often be
provided by the same company. Depending on volumes, an initial reserved budget of
£50k would cover both services unless a significant case (>20,000 documents) arises.
Dealing directly with a supplier is less costly than sourcing through a law firm.
28. As part of the document review provision, Post Office should look to use technology
assisted review on the larger cases (>20000 documents). This is now an accepted, even
expected, concept in civil and criminal courts, reducing investigation timescales without
degrading reliability of evidence. Machine learning and thematic sorting allows the
discovery of the highest impact evidence earlier in a document review than traditional
methods and also aids faster and defendable disclosure exercises.
29. To aid the analyst in producing assessments and also the investigators in producing
investigation reports it is recommended that i2 or another analysis and visualisation tool
is used. Costing this tool is yet to be carried out.
30. Once the new function has operated for a year, a review of the types of cases conducted
should be conducted. If necessary, Altia should be considered. Altia is a combined
financial investigation analysis tool and case management system. It is used by all 40+
police forces and law enforcement agencies in the UK and would significantly assist in
the preparation of casefiles and risk reduction in the conduct of cases. Cost will
dependent upon used functionality and scale of deployment. It also has a built-in
visualisation tool.
Operating Model - Extent of Investigative Remit
31. For an operational investigation function the Post office is not a straightforward
organisation. Normally, the full extent of a corporate’s activities and all “staff” would fall
within the function’s remit. However, the Post Office is a more complex environment for
an investigation function to engage with.
32. Given this complexity, it is proposed that GE selects one of the below options (or
another variation) as the remit for the investigation function for the first 12 months that
” Currently, use of Convercent is £6k p.a. Some additional costs would be incurred in the reconfiguration work.
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it is in place and that this decision is reviewed at the one-year marker®.
33. This appetite would then form a mission statement e.g.: The investigation function
conducts structured, transparent, objective, fair, and evidence-based collection and
assessment of information with the intent to prove or disprove the suspicion of wrong-
doing, or assertion of a chain of events, that has or could affect (insert applicable
categories from the table below)
Option I Extent POLE POL I Postmasters I Postmasters’ I POLS I Customers I Post Ofice
of stall elf Business atapost website
remit Partners office visitors
a v v v v v v
2 v v v v v
3 v v v v
4 v v v
5 v v
6 v
* Denotes current investigative activity. However, investigations which consider
Postmaster conduct or activities, such as that governed by the Dispute Resolution
Committee, do not currently have an escalation point for evidential investigations and
ultimately referral on to law enforcement.
34. It is our recommendation that the minimum remit of the investigation function is Option
4. This would allow POL to act in determining facts relating to situations ranging from
allegations of theft or fraud by Postmasters’ staff using/misusing POL systems or
functions where either or both POL and the Postmaster are victims, through to
misconduct or HR-related matters in POL and the subsidiaries. The Horizon issue
identified a failure to investigate beyond the Postmaster in determining culpability. By
investigating Postmasters’ staff we demonstrate that POL has learned from that finding
and would seek to determine actual culpability, if any, which is treating the Postmasters
fairly. Allegations of misconduct by Postmasters would be explicitly included in the
proposed remit.
35. There may be situations where it is suitable for the investigation function to conduct an
evidential investigation building on intelligence work conducted by Financial Intelligence
Officers in Compliance e.g. when a post office is the venue of a serious and/or series of
frauds or money laundering which uses Post Office infrastructure to facilitate the
offence. Cooperation and liaison with other organisations and agencies would be
essential in these circumstances.
36. It is our view that more exploratory work is required to better understand the
investigation needs of Post Office’s on-line presence before proposing an investigative
remit in this space.
Operating Model - Criminal Investigations & Prosecutions
37. It is understood that there is a policy decision for Post Office to cease acting, for the
moment, as a private prosecutor of alleged criminal offences in England & Wales. This
paper does not seek to change that decision.
38. AS a government organisation, Post Office is viewed by law enforcement (LEA)
differently from a privately owned company. It is unfortunately fact that LEAs de-
prioritise most reports of crime made by government-linked organisations if made in the
® The Whistleblowing team sits outside this decision as those types of investigations are determined by the Public Interest Disclosure Act
1998 and laid out in the Whistleblowing Policy.
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traditional way. There is an expectation that a degree of self-sufficiency exists. Without
recourse to private prosecutions an alternative is required if the interests of Post Office,
Postmasters, our staff, and shareholder are to be protected.
39. Dishonesty offences would form the vast majority of our criminal investigations. This
would include theft, false accounting, fraud of all types, and money laundering. These
types of offences are those to which LEAs do not have sufficient, nor sufficiently skilled,
resource allocated and which are lengthy to investigate, often resulting in them not
being prioritised. If we do not investigate these matters then the likelihood of recoveries
significantly diminishes, as does the deterrence factor.
40. Jurisdiction is also relevant. Typically, authorities in Scotland are less inclined to adopt
evidence collected by non-LEA investigators. England & Wales LEAs expect an almost
complete case in an admissible format and Northern Ireland is likely to be somewhere
between the two.
41. Itis proposed that ahead of any specific case referrals:
England & Wales:
« A CEO letter to BEIS and then on, with a Minister’s endorsement, requests
assistance from the Commissioner of the City of London Police’s (CoLP) Economic
Crime Directorate (ECD) (the national lead force for fraud and other economic crime)
to work in partnership with CIU to investigate and then refer to the Crown
Prosecution Service all strong cases of dishonesty-based offences above a certain
level of complexity or monetary loss;
« A dedicated team to be formed within CoLP ECD and working closely with CIU under
a MoU would be the best-case scenario - its size would be dependent upon volumes
and budget;
« Post Office or BEIS may be asked to contribute to the cost of this team
Scotland:
e ACEO letter to BEIS and then on, with a Minister’s endorsement, to the Crown Office
and the Chief Constable of Police Scotland seeking a similar arrangement to England
& Wales; OR
e the HCIU and CIU Senior Investigator for Scotland engage Police Scotland and seek
a solution at a more operational level with their ECD;
Northern Ireland
e A CEO letter to BEIS and then on, with a Minister’s endorsement, to the Public
Prosecution Service and the Chief Constable of the Police Service of Northern Ireland
(PSNI) seeking a similar arrangement to England & Wales; OR
e« the HCIU and CIU Senior Investigator for Northern Ireland engage PSNI and seek a
solution at a more operational level with their ECD;
42. The purpose, as ever with criminal case work, is to act as a deterrent, seek punishment,
and to seek compensation for the victim(s) (including Postmasters where they are the
victims). By working with and through LEAs we could achieve all three but this is less
predictable if we take an ad hoc approach to LEA referrals.
Investigation Champion
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43. The Speak Up function includes a visible endorsement of its purpose and independence
by having a NED appointed as Speak Up Champion. To demonstrate the independence
of the investigation function in the same manner, it is recommended that a NED
Investigation Champion is appointed. This will hopefully foster greater trust in
investigation activities.
Next Steps
44. Based on approvals given and decisions made as a result of this paper, The Group
Investigations Policy will require up-dating.
45. Annex 3 shows HCIU’s mapping of KPMG’s observations and Post Office business
leaders’ up-dates relating to KPMG’s observations onto the proposed approach contained
in this report. Decisions made from this report will be reflected in this mapping to ensure
all issues are captured. All observations made by KPMG are considered as being met or
adapted in this proposal.
46. The Cooperation with Law Enforcement Policy will also require amending to reflect any
decision made and subsequent work with LEAs.
47. Recruitment of two CIU Senior Investigators, two FTC CIU Investigators, and Triage’s
Intelligence Analyst to commence once role descriptions have been completed. Working
practices with de-centralised teams can then be developed.
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Annex 1 - Flow of Information and Tasks
Whistieblowing
pase compo cases I
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Investigations
Annex 2 - KPMG’s criteria for identifying higher risk
investigations
Possible criteria for BAU Potential to be high risk if several Possible criteria for high risk
sis Sallsbi
Financial impact
Reputational damage
Seniority of those being
investigated
Postmaster or employee
theft or misappropriation of
assets
Regulatory breaches by
Postmaster or employee,
Misconduct by employee
Privilege required
Postmaster detriment
Referral from business.
Financial impact under e.g. £50,000
Unlikely to be reputational damage
Below Band 4
NIA - No allegation of theft or
misappropriation of assets
NIA -No regulatory involvement
‘Allegation of misconduct
No suggestion of tigation
NIA ~No Postmaster detriment
NA
Financial impact between e.g, £50,000 and £1m
Potential for reputational damage
Band 4 and above
‘Suspicion of theft or misappropriation of assets
Potential for regulatory notification
Potential to be gross misconduct
Possiilty of tigation
Potential for individual Postmaster detent
NA
Financial impact e.g. > £1m
Capable of significant reputational damage
to the business / significant media coverage
‘Concerns a member of Board / GE / certified
role
‘Serious allegation of theft
‘or misappropriation of assets
Relates to a identified breach or issue
Relates to gross misconduct,
Likely to result in itigation
Potential to lead to pervasive Postmaster
detriment
Requested by a Director level or above
These criteria are designed to allow flexibility and interpretation, rather than provide a prescriptive approach to ensure that all investigations are given the appropriate consideration
in relation to risk.
Annex 3 - KPMG Observations mapping to proposed TOM
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