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POST OFFICE LIMITED
GROUP EXECUTIVE REPORT
Title: CIU Resourcing Requirements Meeting Date: I 25%" January 2023
Author:
John Bartlett, Head of Central
Investigations Unit
Ben Foat, Group General
Counsel
Sponsor:
Input Sought: Decision
The GE is asked to agree the priorities for CIU for the next two financial years (2023/24 and
2024/25) and approve the additional funding necessary to service current and projected future
demand.
Previous Governance Oversight
Group Executive Tactical Meetings of 5 May 2021, 15 September 2021, 20 April 2022 and 3%
August 2022.
Executive Summary
1.
The GE approved the CIU’s remit as being a triage and assessment function; a training
capability; a quality assurance framework to regulate all Post Office investigations (with
some exceptions e.g., HR grievance investigations); as well as a centralised major/serious
investigation capability. Investigations which did not meet the ‘high risk’ threshold were
to continue to be conducted by the relevant business team but would adhere to the
minimum standards and protocols set by the CIU. The CIU would also perform periodic
quality assurance over the ‘low risk’ investigations.
Though CIU structures and its investigatory arm were not to go live prior to 2023, it
already has a current caseload of 50+ investigations with a known pipeline of >50 more;
principally driven from Dispute Resolution, Branch Support, Contracts, and Historical
Matters (including the Inquiry). This caseload is not sustainable for a team of four
investigators - c35% of the current caseload have already had to be paused or de-
prioritised.
In order to be able to operate effectively and progress cases fairly, effectively, and in
compliance with best practice and law, the GE is asked to approve:
o CIU prioritising i) the investigation of PIDA qualifying and Inquiry / HSS
investigations (Legal Risk); ii) Executing its TOM (Functional Development); iii)
substantiated losses >£100k; systems and process integrity only at an enterprise
risk level; and behavioural/conduct integrity only relating to GE and Board (Business
Integrity).
o Funding for 12 additional roles within CIU, at a cost of £540k in FY23/24. Without
these additional staff, CIU’s case load would have to be lowered using even tighter
case acceptance criteria and/or a ready reserve of £500k to use contractor
investigators on a case-by-case basis.
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Questions addressed
1. I Why was it necessary to create CIU? How does it operate, and which cases does it currently
Investigate?
2. What is CIU’s current workload, is this sustainable and which areas of the business are
driving the demand?
3. What should CIU’s priorities be, how do they align with POL’s strategic priorities and what
implications does this have in terms of caseload, resource and funding?
4. Are there alternative options?
Report
5. Subsequent to the Court of Appeal Criminal Division finding a number of the private
prosecutions brought by Post Office to be unsafe and “POL’s failures of investigation and
disclosure so egregious as to make the prosecution of any Horizon cases an affront to the
conscience of the court”, Post Office sought assurance that current investigations were
being conducted appropriately. The GE approved the creation of a centralised
investigations team to ensure all future investigations were delivered in line with a set of
minimum standards / protocols and that high-risk investigations were performed by
independent investigators. The introduction of a CIU was also to ensure investigations
were properly planned, resourced and executed with lessons learnt fed back into the
business.
6. December 2022 was the target date for the establishment of a triage function for CIU and
Speak Up; the creation of a new investigation risk intelligence function; the designing and
documenting of new processes and procedures; as well as the creation of an assurance
framework for the other teams falling under the Investigation Branch. This was to allow a
fully formed CIU to start taking cases into a properly structured function and to begin
assuring the other teams’ investigative activities from the start of January 2023. However,
business need has required CIU to take on live cases prior to the end of December 2022.
7. CIU is made up of 2 teams with 3 functions - the Speak Up team which predominantly
deals with whistleblowing (2 FTEs) and the CIU ‘proper’ (2 FTEs) who conduct all other
investigations which meet the current CIU threshold test. There is a current caseload of
c60 investigations which can be categorized as follows:
Impac Types of Cases
t
High + Modern Slavery. + Criminal cases collectively in excess of £1.5m
Impact: * Process failures e.g. Zunoma contract (£0.5m of assets restrained by Police in POL's
management. favour) and a £5.2m money laundering case.
* Process issues e.g., Payzone loans and + Conflict of interest.
invoices.
Medium + Theft & fraud. + Missing cash pouches.
Impact: * Auditing concerns. * Behaviour in branches.
. Harassment.
Low * low value theft, fraud, accounting + Policy breaches.
Impact: concerns. * Compliance breaches.
+ Bullying / ethics breaches.
8. The current case load is not sustainable with the present staffing levels alongside the time
commitment of assuring the other investigation teams. 17 of the low and medium impact
cases have been paused to allow the combined team to focus on the highest impact
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investigations. This has required a prioritisation of activity on a weekly basis without the
ability to reference a current strategic priority statement that defines scope, scale, or
value. In effect, this ad hoc approach has resulted in the Head of CIU determining the
strategic priorities for the investigation function.
9. There is a known pipeline of a further >50 cases in the Inquiry, Contracts, Dispute
Resolution, Branch Support, and Postmaster Remuneration teams. Should the additional
projected caseload materialize, this is over six times the sustainable volume CIU and
Speak Up teams can manage with the current resource levels and case acceptance criteria.
10. To service all this unfiltered demand, CIU would require an additional budget of between
£725k and £1.825m‘ depending on variables that are difficult to predict at this time. This
can however be reduced by revising CIU’s priorities and acceptance criteria to release CIU
capacity to manage the current case load and by removing some future commitments.
11. Assuming the scope of CIU remains both inward looking (e.g. significant process failures
and senior conduct issues) and outward-looking business integrity investigations (e.g.
evidence-based, transparent, ethically conducted recovery of assets) the following
changes to CIUs priorities are proposed:
‘Approved at GE on 20 April and 23 August
Proposed (changes to original proposal in blue)
Legal Risk — PIDA-qualifying and other Speak Up-
reported investigations.
Legal Risk - PIDA-qualifying investigations and
Inquiry/HSS/HMU Ops- linked investigations
Many of the non-PIDA Speak Up-routed reports would need to
be taken up by the Complaints team, Area Managers, or other
teams.
Functional Development - Building a CI-compliant
Investigation Branch which withstands external and
internal scrutiny through documented _ policies,
processes, guidance, assurance, and training.
Functional Development - Building a ClJ-compliant
Investigation Branch which withstands external and internal
scrutiny through documented policies, processes, guidance,
assurance, and training: e.g.:
Assuring investigative work conducted in the Contracts, Dispute
Resolution, Network Monitoring, Information Rights, People-
based investigation unit, and Financial Crime teams
Producing and maintaining the Investigator’s Manual and
supporting guidance, templates etc
Business Integrity - Financial integrity by I Financial_integrity: Criminal investigations and POCA
investigating substantiated losses with a view of making
reports to the police and public prosecutors (no
thresholds were set as the potential scale of this was
unknown); systems and process integrity failures (the
nature of these issues was not defined again due to the
unknown nature and frequency of these matters); and
behavioral/conduct matters relating to Grade 4 staff
and above.
compensation process into substantiated losses >£100k. This
raises the informal threshold from £50k. This would require CIU,
where authorised under policy, to report suspected criminal
matters below £100k to the police without the benefit of CIU
evidentially supporting any subsequent police investigation;
Collection of evidence to consider potential civil action for
amounts of >£50k leading to civil recovery
Systems and process integrity: Only at an enterprise risk level
where the fact base is not broadly known. This would result in
Payzone and Zunoma-type cases being dealt with within line
management or by Internal Audit; and
Behavioural Integrity: Matters relating to GE and Board only. All
other conflicts of interest or allegations of misconduct would
* Though this should be seen alongside the potential to recover funds via criminal compensation, civil recovery, and from deductions from remuneration.
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need to be managed elsewhere, perhaps in the new People
investigation team.
12. If the modified priority areas and the thresholds described above are adopted from
February 2023, budget implications would be reduced from a worst case of an additional
£1.8m to £540k in 23/24, built up from the following:
I. Inquiry / HMU: 4x Grade 3a Investigators. ‘of budget to be transferred from
the Inquiry and HMU budgets. Three of these roles are included in the Inquiry and
HM budget proposals going through Board on 24 January.
II. Dispute Resolution:
a. Historic cases: FTC for 1x Grade 3a Investigator, 1x Grade 2
Investigator, 1x Grade 2a Transaction Analyst. Salaries totaling {
b. Recent and Projected cases: FTC for 1x Grade 2a Integrity Investigator and 1x
Grade 2a Transaction Analyst. Salaries totaling i
III. PM Remuneration: FTC for 1x Grade 3a Investigator and 1x Grade 2a Transaction
Analyst. Salaries totalling!
IV. Branch Support: FTC for 1x Grade 3a Investigator, 1x Grade 2a Investigator, 1x
Grade 2a Transaction Analyst. Salaries totalling:
Vv. Contract Grade 2a Investigator, plus 1x Grade 2a Transaction Analyst. Salaries
totalling
Integrity
13. The funding of these additional roles will form part of the budget bid (and conversations
with Finance) for 23/24. The detailed rationale behind their need is set out at Annex A.
If the additional funding cannot be provided, the information has been presented in Annex
A, in a tabular / shopping list type format, to enable the GE to agree which of the additional
investigations driving the funding request should not conducted by CIU.
14. Three other potential options were also considered though these have been discounted
as, in short, they go against the original rationale for establishing the CIU. For
completeness, they were as follows:
I. Significantly reduce the scope of CIU and Speak Up’s case adoption criteria to either
focus only on a subset of the three priority areas or maintain a rigid number of High,
Medium, and Low cases across a year on a first come, first adopted basis. This has
the advantage of certainty in that the operational requirements for the team are
clearly set out and can be managed firmly. The disadvantage is that flexibility is
designed out but more importantly it only allows for a very limited number of cases
to be conducted
II. Have a ready reserve of £500k available to the Head of CIU over the two-year period
to call on contractor investigators for specific cases as required across a year. This
provides flexibility and the potential to conduct more cases than Option 1 (but not
all listed in the Annex) but has budgetary uncertainty as how much of £500k will be
required. Contract resources are more expensive than in-house team members and
case for case, this may be the more expensive way of delivery a reasonable case
load.
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@
III. Drastically reduce or cease the size and scope of the assurance work conducted by
CIU to release more of the two Senior Investigation Managers’ time for case work.
This option would scale back or stop the investigative assurance work of the two CIU
Senior Investigation Managers. The current planned commitment to spend on
assuring the average portfolio of 500+ cases held by the decentralised teams is two
days per week each. If this was reduced by half, up to one additional High Impact
case or two Medium Impact cases could potentially be carried at any one time by
each of the Senior Investigation Managers. If stopped completely, the gain would
logically be double. It would, however, reduce or remove the level of assurance of
the wider investigative activity which GE may consider to be of a CIJ-priority nature.
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Business Area Projected Additional Business Case / Rationale for Funding Funding
/ Driver of additional Resource Mechanism
Demand caseload in next I Requirement &
12 months Cost
Inquiry Best case 9 3x Grade 3a There are various allegations of wrongdoing against POL staff members (current and former) which I Inquiry Programme
Investigators have come to light in the context of the Inquiry: Budget -
(2 matters (the
P&P cases) with * During the Human Impact hearings - 31 have been referred to the POL ‘Speak Up’ team. I One-year fixed
CIU now, 7 others Letters have been sent requesting further information and, during w/c 24 October, 2 I term contracts
will be by end of postmasters responded.
March 2023) * Arising during the Human Impact hearings, a matter involving a particularly serious
allegation about the planting of evidence. A case summary has now been prepared by P&P
Poten 38 and referred to CIU.
(10 phased to end .
of March,
remainder with
unknown phasing) It should be noted that the HMU are also looking at how allegations made in the context of claims
to the HSS should be investigated. There are five potential cases under consideration at this stage.
It is important that the allegations are considered for investigation to:
* Demonstrate that POL has been listening to the Human Impact evidence and is takin:
seriously the allegations made by postmasters. et
Dr
+ Honour commitments made to the Inquiry in POL’s Opening Statement about carrying out
investigations as part of the Response tracker worl
A
further round of letters was sent on 19 December 2022 to those that raised issues in I yy budget
1x Grade 3a phase 1 hearings.
18 Case Investigator «Identify broader issues for POL which can be remediated, such as where gaps in training I One-year fixed
Reviews (Ready may have been behind the wrongdoing. term contract
to be allocated) * Treat employees fairly by exploring allegations which have been made against them in a
public forum.
These cases form a pool of matters where postmasters are making repayments following a mix of
criminal convictions or repayment agreements following an investigation by POL re historic
shortfalls. All these cases involve some form of admission which are seemingly evidenced to a
varying degree of certainty. Consideration is being given as to whether these repayments should
cease. To inform this decision making, CIU has been asked to conduct full file reviews to determine
whether the outcomes generated in each of these cases were based on 1) sound evidence and 2)
achieved ethically, transparently and in accordance with best practice and any applicable laws or
code.
Dispute 5 Historic For the historic These historic cases are valued at around £750k in potential loss to Post Office. The unadopted I New Funding — for
Resolution elements: cases may need to be written off. This could be treated as a one-year project and any compensation I 1 year using fixed
(Shortfall cases awarded by the courts under POCA or civil routes to be returned to POL. term contracts
with suspected
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criminality
elements relating
to former PMs)
3 Recent
(Shortfall cases,
expected to be
referred to CIU in
January 2023)
6 Projected
referrals in
2023-24
(Matters of a
criminal nature or
where civil
recovery is
considered)
Ix Grade 3a
Investigator, plus
1x Grade 2a
Integrity
Investigator, plus
1x Grade 2a
Transaction
Analysts
es totalling
For the recent and
projected shortfall
cases:
1x Grade 2a
Integrity
Investigator, plus
1x Grade 2a
Transaction Analyst
(Salary totalwssu)
Two of the three current cases are criminal investigations each with a possible loss of <£100k and
will be referred to CIU in January 2023. The third is a complex & sensitive shortfall case consisting
of seven Tier 3 reports requiring CIU's analytical capability and interaction with the PM's legal
advisor and MP. Without monetary or other thresholds applied to the rest of the portfolio additional
resource is required to progress these significant cases. Any compensation awarded by the courts
under POCA would be returned to POL for the criminal cases and via deductions from remuneration
or civil court for the third matter if supported by evidence.
The Dispute Resolution Committee is considering cases on a monthly basis which current trends
suggest the need for CIU's involvement in collecting and testing evidence to support a police
investigation or a civil recovery action. Any compensation awarded by the criminal courts under
POCA would be returned to POL, as would any order-enforced award in the civil context.
New Funding -
permanent
additional budget
PM Remuneration
Up to 100 cases
1x Grade 3a
Tt has been reported that potentially 100 post offices have generated additional and fraudulent
New Funding - as a
Investigator and Ix
Grade 2a
Transaction Analyst
&
ry total
Temuneration through an abuse of process. This is a significant tisk which requires dedicated
resource over an extended period to evidentially test the report. As the enquiries and analysis can
be templated, resource requirements are more modest than that required to investigate varied
allegations. Civil recovery or deduction from remuneration may be possible where supported by
evidence.
T-year project
using fixed term
contracts
Branch Support
6 cases
(Due in January
2023)
Ix Grade 3a
Investigator, plus
1x Grade 2a
Investigator, plus
1x Grade 2a
Transaction Analyst
Six large value potential stamp-reversal theft cases (total c£2.2m). These are significant cases
given the value and “live” nature of the concerns, Any compensation awarded by the courts under
POCA will be returned to POL. These cases were detected by a new risk analysis tool which is
believed to be detecting large concerns, the number of which can be seen to be diminishing the
longer the tool is run. Therefore, a surge of cases such as these six cases are considered unlikely
and so capacity to investigate them is not considered to be required long term.
New Funding ~ for
one year
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Contracts 6 cases per year I ix Grade 2a Contracts team are anticipated to require support with the collection of evidence for the police or I New funding —
Investigator, plus civil court from their portfolio over the course of a year separate to cases referred to them by I permanent
1x Grade 2a Dispute Resolution. These cases have traditionally not resulted in recovery of loss in recent years I additional budget
Transaction Analyst I and CIU's evidence collection and assessment capability is required to present quality and impartial
r evidence to the police or in support of civil action.
(Salary tot}!RRELEvaNT;
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