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From: Gibson Will (ShEx)[/O=DTI/OU=DTIHQ/CN=RECIPIENTS/CN=WGIBSON]
Sent: Wed 03/07/2013 10:05:32 AM (UTC)
To: ‘Martin Edwards'
Subject: RE: JA meeting brief
How did the meeting go?
Will Gibson I Executive Director I Shareholde!
BIS, 1 Victoria Street, London SW1H OET I1.
www.gov.uk/government/organisations/the-shareholder-
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From: Martin Edwards [mailto:
Sent: 03 July 2013 10:27
To: Gibson Will (ShEx); Whitehead Mike (ShEx); Batten Peter (ShEx)
Subject: FW: JA meeting brief
Will, Mike, Peter
We thought it might be helpful for you to see this brief which we prepared for the meeting with Arbuthnot this
morning, to give you a clearer picture of both the facts and the handling issues at play. (Haven’t heard how the
meeting went yet.)
Obviously strictly P&C, but happy for you to share some or all of it with Jo if you believe that would be helpful —
V'll let you judge. (Useful to know ahead of Paula’s call with her so she knows what she’s sighted on).
Cheers,
Martin
From: Martin Edwards
Sent: 03 July 2013 02:04
To: Alice Perkins §_ ); Paula Vennells
Cc: Susan Crichton; Alwen Lyons; Mark R Davies; Hugh Flemington; Rodric Williams; Simon Baker
Subject: JA meeting brief
Alice, Paula
With many thanks to Susan, Alwen, Mark and everyone else involved, here’s the briefing note for the meeting
with JA (attached as both a Word doc and PDF, and also pasted in the email below in case easier to read on
blackberry. I think Alwen will try to bring printed copies if she has time).
Also attaching a more detailed factual background brief in case needed, which is what we’re developing as our
main fact base for reference throughout this process. It includes details of the 4 cases under review by SS in the
interim report and also a summary of the cases pertaining to JA and OL’s constituencies.
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I mentioned a website earlier which provides guidance on the proper process for independent enquiries,
including in relation to ‘Salmon letters’ — have referenced the key read-across in the brief, but here’s the link if
anyone wants to read up on this in more detail:
http://publicinquiries.org/holding a_hearing/fairness to_witnesses
Best wishes for the meeting,
Martin
Briefing for meeting with James Arbuthnot, 3 July 2013
SPEAKING NOTES
Introductory points:
e Thank you for agreeing to meet us.
e SS provided us with an update following your call with them on Tuesday morning.
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e — Following that, would like to discuss with you:
a) Communications around the report and media/parliamentary handling
b) The approach to the report itself and Monday’s meeting
c) The approach beyond next Monday to close down other MPs’ cases and learn lessons
¢ But first point to reiterate is that we take this whole process extremely seriously indeed. That is why we
set up the independent investigation in the first place. It is important we get to the truth and learn lessons
where appropriate.
i) Communications around the report and media/parliamentary handling
e Would be useful to understand your plans for communicating the report to the media and Parliament.
(Second Sight’s read-out of your conversation gave us some areas for concern.)
e The single most important principle from our point of view is that the report and the associated
communications must be rigorous and completed grounded in the facts. The Post Office is too important a
business to thousands of sub-postmasters and millions of customers (and taxpayers) across the country
for confidence to be undermined unfairly.
° From the SS update we have been made aware of the potential for different interpretations on the
definition of Horizon. Whilst we both agree that the wider system is part of the review (as defined in the
ToR) we consider that the report and communications should clearly distinguish between the ‘computer
system’ and the wider support processes.
« From what we have been told by SS so far, there is no evidence in the interim report to support any
suggestion of systemic failures with the Horizon system (and this is based on the four “best” cases from all
those under review).
« If this is the case, important that point is communicated clearly given some of the original allegations
against the system - otherwise customer and agent confidence in the integrity of the system could be
fundamentally undermined.
e This is not to belittle the importance of the overall user experience for spmrs. It is essential that we
continue to improve our wider systems of support and training for agents, and we are grateful for some of
the additional insights generated by this investigation to date. Many of these process issues are historical
and have already been rectified through improved guidance to staff and training for spmrs — but where
further changes need to be made we will absolutely act on them. Will come back to how we propose to
engage JFSA and spmrs and identifying further process improvements.
e We’re concerned to hear that you may have lined up an interview with the BBC in advance of the report
being shared. Keen to understand your thinking here.
e = We will let you know our handling plan in relation to the media, and share statements. We would be
grateful if you were able to do the same. You will appreciate the danger of the media exaggerating the
report and our need firmly to defend our reputation.
ii) The approach to the report itself and Monday’s meeting
« SS propose to share with us the draft report on Friday. We will work urgently over the weekend to check
for factual accuracy.
¢ Clearly this issue has significant bearing on our main supplier for Horizon, Fujitsu. They will therefore also
be asked for their views on the facts contained in the report before publication.
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e Our hope and expectation is that this fact checking and consultation can be completed in time to allow the
report to be shared with MPs on Monday afternoon — but obviously an extremely tight turnaround, so we
will need to review the situation on Monday. If there remain fundamental concerns around factual points,
it would be better for the report to be delayed rather than misleading statements to be issued.
e — [If needed: none of this undermines the independence of the SS investigation — on the contrary, our aim
is to protect its credibility and rigour. Also has parallels with the statutory process for public enquiries —
Inquiries Act 2005 recognises the need for ‘Salmon letters’ to give appropriate warning to any person or
organisation about whom criticism could be inferred from an enquiry.]
° In terms of the meeting itself, we understand that the JFSA and their lawyers will be in attendance
alongside the invited MPs. As both the commissioner and subject of the report, we would appreciate it if
you could also give us the option of sending observer representatives. Most likely to involve one
employee and one external lawyer. Will help us to ensure we have a clear and accurate read-out of the
meeting and that we can follow-up on any queries or action points as appropriate.
iii) The approach beyond next Monday to close down other MPs’ cases and learn lessons
e¢ Clearly we recognise that the interim report does not cover all the cases put to Second Sight. We agreed
on this approach and we also recognise the need to complete the review of the other cases put to Second
Sight by the JFSA and MPs.
¢ We'd like to work with JFSA to continue this work but we do have concerns about the process. It has
taken too long, and we have to have regard for the appropriate use of public money.
© Need to stress as well that, in Second Sight’s view, in around half of the cases from MPs there is insufficient
evidence on which to investigate, despite requests for further information to be submitted.
© So we suggest a refined approach for the remainder of the cases. We want to set up a user group (chaired
by CIO) which would meet regularly to learn from experiences of spmrs and to provide a forum for
continual improvement.
© We suggest that this would include JFSA and for the immediate period the forum could (potentially) also
include Second Sight and have as its priority the completion of the reviews of the cases put to it. This
approach might be more effective than the process we have gone through, which you will accept has not
been perfect.
* Once the cases put to us have been reviewed by the group and a conclusion or conclusions reached, the
forum would continue as a structure through which we can continue to refine and improve our processes.
¢ We would hope that the JFSA would continue to be a part of this, along with other interested parties such
as the NFSP.
Additional point if needed
Depending on the tone of the meeting, it may be appropriate to address head on JA’s apparent annoyance at
the issues around prosecutions and the systems ‘exceptions’.
Current prosecutions
e — Since the start of the SS investigation we have not pursued a criminal conviction which relies solely on
Horizon computer system evidence. We have also put on hold civil recovery proceedings in certain cases
whilst we await final report.
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e As you now, we also prepared an ‘immunity agreement’ with the JFSA to provide reassurance to spmrs
thinking of submitting evidence to the process.
e¢ But in cases where it is clear that Horizon system isn’t the issue, we have a duty to take appropriate action
to safeguard public money. For criminal prosecutions we treat each matter on a case by case basis, with a
detailed investigation and legal review (generally involving external lawyers).
Historical convictions
e Nothing has emerged from the interim findings given to us by SS which would point to specific convictions
being unsafe. Cases have been through the judicial process and the Court considers all relevant evidence
not just that relating to the Horizon computer system.
e Inthe event that any person considers that there has been a miscarriage of justice they have the right to
apply to the Court of Appeal to have their conviction reviewed.
System exceptions
e We know of two systems exceptions (anomalies) under the current Horizon system where spmrs’ accounts
have been affected, and both were voluntary communicated to SS (although not directly related to the
cases under review).
e¢ Key point to note is that in both cases our processes picked up these issues, appropriate remedial action
has been taken and they did not lead to any disciplinary action against the affected spmrs.
e Absolutely no reason to believe this means there are other undiscovered issues.
e We are sorry this information was not passed onto you at an earlier stage — if we had considered these
cases to materially change the investigation we would have flagged them directly to you, but in our firm
view they don’t.
Further detail on the two cases if required:
«The “62 branches exception” - 3 years old at the time of migrating branches from old Horizon the HNG:
o Affected 62 branches (13 Crowns; 12 Multiples; 37 Sub postmasters)
o Sub-postmaster branch losses ranged from £115.60 down to 8p
o Identified by Horizon’s built-in checks and balances which are designed to flag up these types of
discrepancies. Appropriate action taken to rectify issue.
© 17 sub-postmasters were adversely affected, i.e. had a loss attribute to their branch.
© Sub-postmasters notified in March 2011 and (where appropriate) reimbursed.
o Sub-postmasters who made a gain through the anomaly were not asked to refund this.
«The “14 branches exception”
o Financially impacted 14 branches (4 Crowns; 5 Multiples; 5 Sub-postmasters)
© Concerns an error where historic accounting entries in the 2010/11 financial year were replicated in
accounts for 2011/12 and 2012/13, only showing up a year later.
o Raised by 2 sub postmasters affected by the exception.
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© 1sub postmasters and 4 multiple partners were adversely affected, i.e. had a loss attribute to their
branch.
o We suspended attempts to recover known losses from affected sub-postmasters
© Letters to notified sub-postmasters will be sent out imminently
o The worst loss to a branch would have been £9,799.88. This was one of the first cases notified, so
no recovery action was progressed. Other losses ranged from £113.14 down to a penny.
o Action underway to modify the system to prevent any repeat of this exception
Martin Edwards I Chief of Staff to the Chief Executive
postoffice.co.uk
@postofficenews
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