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Annex A: Options for Ministers to consider
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Option
Advantages
Risks
1: Challenge the POL Chair and Board
to change their litigation strategy.
SoS/Kelly Tolhurst could express their
dissatisfaction with the current status of
the litigation at a meeting with POL
leadership, following on from the Chair's
recent reply to Kelly’s letter. Ministers
could provide clear guidance to POL to
pursue early settlement of the case
(either after the Horizon case or after the
Court of Appeal).
Provides clear guidance to POL on the
action the department wants them to
take.
Begins the process of bringing the
litigation to a close as soon as is
possible.
Making such a challenge would not
raise shadow director risks.
Avoids adding more uncertainty and
delay by recruiting and embedding
new leadership.
Risk that the Department's position is
leaked, which will weaken POL’s hand
in any settlement negotiation leading
to a more costly settlement.
The relationship between the SoS and
the Board is set out in governance
arrangement (Articles of Association).
These enable the SoS to question and
challenge but there is a risk (see para
11 of sub) if SoS strays beyond the
confines of the Articles of Association
and appears to direct or instruct and
the POL follows. This could be
considered as acting as a shadow
director. This only really becomes
critical in the event of insolvency which
is low in these circumstances.
Should POL feel they have to
implement SoS’s view and settle
quickly at all cost this could increase
the likelihood of POL seeking BEIS
funding for settlement costs.
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Providing guidance to the Board has a
low risk of Ministers being regarded as
a shadow director
2: BEIS Ministers to state publicly that
they want to see justice resulting from
litigation for claimants with valid
claims
One opportunity for this would be the oral
evidence session for the BEIS Select
Committee inquiry on 25 June.
This would reinforce messages
already delivered through the ‘Dear
Colleagues’ letter and enable Ministers
to demonstrate that they are
sympathetic to the plight of
postmasters.
It would require careful wording to
avoid the risk of BEIS being in public
conflict with POL potentially leading to
a higher financial settlement.
POL might believe that they are being
told to settle at all cost and act
accordingly.
3: Challenge Post Office to announce
that it believes some of the claims
have merit and intends to seek to
settle a fair settlement of such cases
expeditiously. POL will continue its
appeal against the Common Issues
judgement and will continue to resist
settling claims which lack substance.
Statement could be made at the
conclusion of the Horizon trial (for
example).
Clear statement of a change of strategy
by POL and acceptance of fault in some
cases.
Will encourage Claimants and could
lead to a higher pay-out.
POL would continue with some aspects
of the litigation meaning some of the
companies resources will continue to
be focused on handling the litigation
and won't provide a ‘clean break’, with
ongoing risk of reputational damage if
there are further critical judgments.
4: Commission POL to carry out a
project on how to structure and
operate a settlement — including a
fund which would subsequently
assess claims and award
Sends a clear signal on the direction of
travel for the settlement of the litigation
and would be a practical step towards
taking this forward
Would begin to establish how any
settlement would be funded and the
None
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compensation according to pre-
agreed criteria
potential costs to POL and BEIS
involved.
This is work that POL should be
undertaking as part of their settlement
strategy in any regard, so lessens the
tisk of accusations of shadow
directorship
5: Put UKGI lead legal counsel (or
other legal adviser) on the POL
litigation sub committee as director or
observer
This would give Ministers additional
assurance that the POL litigation
strategy because it would be actively
scrutinised and challenged = by
government legal advisors.
Ministers would have direct legally
qualified feedback from the litigation
sub-committee in addition to feedback
from the shareholder NED
Shadow director risk if the appointee
gives instructions to the sub-committee
Director would have legal obligations to
act in interests of the company
6: Invite Nigel Boardman, chair of the
BEIS Audit and Risk Committee, to
carry out some independent due
diligence on POL’s litigation strategy.
Would give Ministers an additional
independent view of POL’s handling of
the litigation and their ability to deliver
any new litigation strategy.
We have informally discussed this
approach with Nigel and he is willing to
carry out this role.
None
7: Go public with a stronger SoS
statement than in option 2, giving SoS
view against POL
Would enable Ministers to demonstrate
their support for the postmasters’
cause.
Would be inconsistent with BEIS
position taken thus far that this is an
operational matter for POL. Would
bring further pressure on SoS to take
action when the only legal power he
has is to appoint/remove directors.
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There is a significant risk that putting
the Department on the opposite side to
POL could hamper POL’s ability to
achieve a reasonable settlement with
the claimants and lead to an increased
pay-out.
Invites speculation/criticism that POL
is out of control in the handling of the
case and one of SoS’s few levers is to
criticise POL in public.
Given a SoS public statement POL
may feel they need to settle at all cost.
8: Change Chair/Board or
management team
Provides a clear signal of the
dissatisfaction you have with the way
the litigation has been handled to date,
and an opportunity to bring in new
leadership with a clear steer on the
direction Ministers want them to take.
Begins the process of resolving the
litigation, though the time required to
make changes will slow this down
initially.
POL has already changed the
management team by replacing the
Company’s chief Counsel. Further
changes to the leadership team will risk
disrupting the progress POL have been
making in other areas of the operation
of the business, including transforming
the business from loss making to
returning a profit for the first time in 16
years.
Ultimate responsibility at the company
for the litigation rests with the Chair.
Replacing the Chair needs to be seen
against the background that he is
generally viewed as having done an
excellent job in steering the Company
through its transformation over recent
years.
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BEIS Ministers have appointed many of
those currently in post on the board and
leadership team, with the Chair having
been reappointed only last year.
Making changes to the
board/leadership team could lead to
criticism of BEIS/Ministers role in these
appointments. (See Annex B for further
background on the level of churn in
POL at senior levels.)
Low risk of legal challenge (and
associated cost) from those who have
been dismissed from the
board/leadership team if they feel they
have been dismissed unfairly
9: BEIS to take over litigation by
instructing BEIS/UKGI legal advisors
to assume control of the litigation
strategy, working directly with POL’s
legal advisors, in consultation with
POL
BEIS would have full control of the
litigation strategy and action taken
Likely to significantly damage the
relationship between the department
and POL, displaying a lack of trust in
POL/’s ability to deliver.
Ministers would be directly responsible
for the conduct of the claim and
compensating claimants. Ministers
could no longer argue it is an
operational matter for which POL is
responsible. Political pressure for a
generous settlement would increase.
Taking this action would likely to
become known to the claimants which
would weaken POL’s negotiating
position in any settlement discussions
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leading to a higher pay-out in
compensation.
Serious questions over the
feasibility/egality of this option. It would
require POL’s agreement and POL
would have no incentive to cooperate.
External legal support would be
required as BEIS/UKGI Legal would not
have the necessary litigation expertise
or capacity.