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Witness Name: Richard Callard
Statement No.: WITN00140100
Exhibits:
Dated: 14 June 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF RICHARD CALLARD
I, Richard Callard, will say as follows:
1. I am employed by UK Government Investments (“UKGI”) as an Executive
Director, a position I have held since 2012 having joined the Shareholder
Executive (“ShEx”) (UKGI’s predecessor organisation) in March 2007, which
was at the time a part of the Department for Trade and Industry (“DTI”).
2. I make this statement in response to a Rule 9 Request made by the Inquiry dated
9 May 2024 and I have sought to address all of the matters raised by the Inquiry in
as much detail as possible given the passage of time since the events with which
the Inquiry is concerned. In making this statement, I have been assisted by
Eversheds Sutherland (International) LLP, the recognised legal representative for
UKGI, a Core Participant (as defined in paragraph 5(a) of the Inquiry’s Protocol on
Witness Statements) in the Inquiry.
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3. Before turning to the issues raised in the Rule 9 request I wish to start this
statement by acknowledging the hardship and suffering endured by so many
sub-postmasters and their families as a result of the matters with which this
Inquiry is concerned. I have been following the Inquiry and I wish to convey my
deepest sympathy to those who have lost so much, and I welcome the
opportunity to be able to contribute to this vitally important Inquiry.
Background / Work History
4. I qualified as a Chartered Accountant in 2001. I completed my training at
Pannell Kerr Forster and joined Arthur Anderson in 2002, shortly before it
became Deloitte, where I remained working in their Government and
Infrastructure team until 2007.
5. In March 2007, I was offered an 18-month secondment to ShEx. As part of this,
I assisted Stephen Lovegrove (now former UK National Security Adviser and
former ShEx Chief Executive) who was, at the time, the Director responsible for
Royal Mail and also Post Office Limited (“POL”). The relevant teams within
Royal Mail and POL were separate and I was almost entirely dedicated to Royal
Mail and had very limited contact with POL until 2014.
6. I remained in this role when I became employed by ShEx as a permanent
employee in March 2009. As part of my Assistant Director role, I was within the
ShEx team dealing with Royal Mail which was responsible for overseeing the
Government's shareholding in the company. Apart from a 10 month period from
the summer of 2009 until the General Election in 2010, when I worked in the
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office of the Enterprise Champion, my main activities during the period between
2007 and 2010 were analysing Royal Mail's five-year strategic plan in light of
the declining mail volumes, dealing with the state aid implications of
Government's then recent investment in to the company, and undertaking
activities to ready HMG’s attempts to bring a minority private sector stake in to
the company. My interaction with POL during that time was limited to two
specific matters, namely assisting with ShEx’s preparation for and response to
the National Audit Office investigation into the Post Office Network Change
Programme in 2007 and 2008, and a value for money analysis of the Post Office
Card Account contract in around 2009.
In around May 2012, I was promoted and took on a role as Executive Director
leading the team that oversaw the Government's shareholding in the Green
Investment Bank (“GIB”), which I had helped to set up whilst an Assistant
Director in 2011. GIB was an Arm’s Length Body (“ALB”) of the Department for
Business, Innovation and Skills the predecessor of the Department for
Business, Energy & Industrial Strategy (“BEIS”) and which is now the
Department of Business and Trade (“DBT”) (collectively referred to as “the
Department”), specialising in green infrastructure investment and the
management of a portfolio of green financial assets. GIB was a relatively
innovative form of Government intervention for its time (which has been copied
since in the form of the British Business Bank and the UK Infrastructure Bank),
which meant there was a constant stream of new issues arising throughout my
oversight of it.
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At the same time, I continued to work as an Executive Director for the ShEx
team dealing with Royal Mail. During this period, I led the design and
implementation of the employee share scheme and also led on the state aid
work to obtain approval for Government's relief of the company’s substantial
pension deficit. I stayed working on Royal Mail until it was privatised in October
2013 and the employee share scheme went live. As a result of the privatisation,
around 50% of my time was ‘freed-up’ and as such I was available when the
opportunity arose to become involved with POL.
I was officially appointed as the Shareholder Non-Executive Director
(‘Shareholder NED”) for POL in March 2014, having started to lead the POL
Shareholder Team from around January 2014. As I describe further below, from
2014 until the end of 2017, I was required to divide my time 50:50 between the
GIB and POL. This division of responsibilities was difficult to balance at times
and I therefore had to develop an understanding of how to meet the competing
demands of both roles.
My POL Shareholder NED role differed from that of my predecessor, Susannah
Storey, as I was both the Shareholder NED on the POL Board (as she had
been), but also the head of the POL Shareholder Team within ShEx (which had
previously been undertaken by Will Gibson). I was conscious of the potential
for a conflict of interest to arise from the combination of the two roles,
particularly in relation to funding, and it was necessary for me to try to find a
way to balance the two aspects of my involvement with POL in a way that
enabled me to fulfil my obligations to both the Board and the Department. As I
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describe further below, sometimes that would involve me absenting myself from
certain parts of a Board meeting, particularly where funding was discussed, and
manging this tension was a difficult and challenging part of my role.
When I first started working on POL it felt, at times, overwhelming, and this was
a common feature of my tenure throughout. I was very pressed in my new role
which had previously been split between two people (and as I recall the
Shareholder Team lead had generally worked solely on POL), whilst I was
splitting my time between POL and GIB. I cannot now recall all of the detail, or
the precise chronology, but I do have a clear recollection of frequently feeling
that I was skirting over the top of all of the issues without getting into them in
any great depth. In relation to POL, I would have an overarching view as to the
activities of the team and would dip in and out of the variety of issues we were
dealing with at the time as and when my direct input was required, whilst giving
my team autonomy to handle their areas of responsibility.
I held the Board role in relation to POL until March 2018, and stepped down
from the Shareholder Team in May 2018, having ended my involvement with
GIB in or about December 2017 after the National Audit Office’s (“NAO”) inquiry
into its sale, after which I then helped set up the Geospatial Commission.
Following my tenure with POL, I moved to UKGI's joint unit with the Ministry of
Defence (“MOD”), which provides corporate finance and governance advice on
a range of issues facing the MOD. Work there has included leading the
nationalisation of Sheffield Forgemasters and then, for a period afterwards,
leading its Shareholder Team. Separate to my Defence work I also lead the
team that oversees UK Export Finance, the UK’s export credit agency.
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ShEx/UKGI and my role as NED
Appointment and Handover
13. I did not apply for the role of POL’s Shareholder NED but was asked to take it
on. I am not aware of any nomination process leading up to the request and I
do not know whether any other candidates were considered. I had no prior
experience of discharging the duties of a NED, although I had supported
Anthony Odgers in his NED role on the GIB. It is not unusual for ShEx or UKGI
officials to be appointed to a Board without prior NED experience (experienced
NEDs tend to already maintain a portfolio career and are less attracted to
becoming a full time government employee). It was plainly a challenging role,
but I took the position because I felt it was a good opportunity and a great
privilege. I was naturally apprehensive about the NED aspect of the role itself,
and how I would be able manage my time and responsibilities alongside my
GIB role, which was also demanding. The role of Shareholder Team lead for
POL was already both big and complex, but to have a seat on the Board in
addition felt like a step up for me. I continued to be an Executive Director for
the GIB Shareholder Team and I was therefore responsible for two very
significant assets.
14. I believe I was brought in to take over the shareholder role partly because I was
available following the privatisation of Royal Mail and the completion of the
employee share scheme, but also because POL’s new Board required a
diplomatic and measured approach as the predominantly private sector NEDs
of POL’s relatively new Board got used to the notion of a 100% Government
shareholder. As such, I felt that I was a good fit for the role. I like to think I have
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a collaborative style of working which I thought would be beneficial as the new
POL Board continued to find its feet. I have always felt that one of the key tasks
of a Shareholder Team lead, and/or the Shareholder NED, is to act as
interpreter given the unique insight that that person and team is exposed to.
This means being there to explain Government's position to the company
concerned, and to explain the company’s perspectives and concerns to
Government. This has been true of all assets that I have been involved with.
Around the time of my appointment, having a Shareholder NED on the Boards
of assets was increasingly becoming the standard model within ShEx, although
that had not always been the case. When I first joined ShEx, the general policy
was that ShEx should not be on any Boards because of the perceived conflict
between the two roles (for example there was no Government NED on the
Royal Mail Board). ShEx had to tread a fine line of providing oversight, whilst at
the same time allowing an ALB’s management and Board to operate
independently. But gradually, over time, ShEx started to appoint NEDs to the
Boards of assets such as POL. At the time I took up my appointment to the POL
Board, there was relatively limited institutional experience and guidance within
UKGI as to how to approach the Shareholder NED role. As I recall my only
formal training was to attend a course run by the Institute of Company
Secretaries and Administrators, now the Chartered Governance Institute.
On reflection, I think it would have been difficult to have a Shareholder NED
who formed part of the Shareholder Team on the POL Board prior to my
appointment because at that time there were a number of sensitive issues at
that time (including funding discussions and the separation of POL from Royal
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Mail) which could potentially have created a conflict of interest. It was also
something new for POL, who were already getting used to having a full fiduciary
Board. I understood later that, when POL first separated from Royal Mail, the
Chair of the new POL Board refused to have anyone from the Shareholder
Team on the Board because of the perceived conflict in relation to the funding
discussions, which is why (as I understand it) Susannah Storey was appointed,
who was a former ShEx employee by that point and institutionally separate from
the Shareholder Team.
Over time, I think it came to be recognised at ShEx that having separate
individuals filling the roles of the Shareholder Team lead and Shareholder NED
had significant disadvantages because, despite the regular communication of
Board business to the Shareholder Team by the Shareholder NED, it is difficult
for the Shareholder Team to understand fully what was happening at Board
level and for the Shareholder NED to understand fully the detailed work and
issues of the Shareholder Team. In my view, on balance, I think that having a
Shareholder NED that also leads the Shareholder Team is the better model of
the two.
My appointment as Shareholder NED and the structural change that led to the
Shareholder NED also leading the Shareholder Team occurred during the
tenure of Mark Russell as ShEx’s Chief Executive Officer (“CEO”). It is my
understanding that he contacted Alice Perkins (the Chair of the POL Board at
the time) to discuss and explain the new model and I think she accepted it I
cannot remember when I first met with Alice Perkins, but it was before I took up
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my role (I met her one-to-one at BIS and also with Will Gibson at Portcullis
House before he departed).
Prior to becoming the head of the Shareholder Team and Shareholder NED for
POL, I had already led a team on another asset (GIB) and had been part of the
Royal Mail Shareholder Team, so I was aware of what working with an asset
entailed. Although I had previously been drafted in to help POL deal with the
two discrete issues I have described above, I did not have a clear or
comprehensive understanding of shareholder and other commercial and
operational issues specific to POL at the time of my appointment.
In terms of briefing and handovers, I met with Susannah Storey and had several
sessions with Will Gibson in around late November and through December
2013. Will Gibson was aware of the issues the Shareholder Team was dealing
with in more detail than Susannah Storey would have been as the Shareholder
NED and logistically Will and I worked in the same office, which was not true of
Susannah Storey, which made catch-ups with him easier to arrange. That being
said, I was also conscious of the fact that however many briefings were
arranged, it would be impossible to understand the role properly until I had
actually started doing it.
As part of the handover, I also had one-to-one sessions with members of the
Shareholder Team to get a more detailed sense of the issues the team was
dealing with. I also remember Will Gibson taking me to meet Jo Swinson MP
(the Minister for POL at the time). Whilst I do not have much recollection of this
element of the handover process, I do recall that I was introduced to a number
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of members of the POL Executive team at the time, including Paula Vennells
(the CEO).
Will Gibson continued working as the head of the Shareholder Team until
Christmas 2013. I returned to work for a short period after the festive period
before taking three weeks paternity leave starting in mid-January 2014. As
such, despite officially taking over the role as Head of the Shareholder Team
from January 2014, it was not until around early February 2014 that I really
began my POL role in earnest.
In addition to the handover relating to my role as head of the Shareholder Team,
I was also involved in a limited Board induction process with POL. I attended
the February 2014 Board meeting as an observer (POL00021522) and had very
brief chats with the NEDs in the margins of that meeting. I also observed the
Board meeting in March 2014 (POL00006564), before being formally appointed
to the Board at the end of that meeting, with Susannah Storey simultaneously
stepping down.
I do not recall having any ongoing dialogue with Susannah Storey on POL
matters following the Board induction process and handover (although we
periodically stayed in contact socially - Susannah had previously been my line
manager and I worked with her on Royal Mail issues when I first got to ShEx).
I similarly stayed in occasional contact with Will Gibson.
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ShEx Role and Responsibilities
25.
I inherited responsibility for a well-established existing POL Shareholder Team
(sometimes referred to as the Postal Services team) which consisted of four to
five people working mainly full-time on POL issues. The team at that point
included:
(i) Peter Batten who had responsibility for communications and
Parliamentary handling. He also dealt with network issues (e.g.,
monitoring the progress of Network Transformation, dealing with
correspondence about specific branch issues etc). The key issues at
the time included monitoring the proposed changes to the network
under the ‘Network Transformation Programme’ and ensuring that
the network was flexible yet stable in the net number of outlets. He
was also the working level lead on Horizon matters, which were
labelled “Project Sparrow” by Post Office (which I explain in more
detail below).
(ii) Tim McInnes who dealt with financial, budgetary, strategic and
commercial issues, with a view to POL being able to deliver a
financially sustainable stable network within the confines of an
agreed funding plan which I inherited and which included substantial
Government investment with a decreasing subsidy over time.
(iii) I Katrina Lidbetter who focused on Government business related
matters such as encouraging Government to use POL’s digital ID
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service offering and other new service opportunities, as well as
monitoring issues with existing government contracts, for example,
passport check and send.
(iv) James Baugh who dealt with monitoring and processing
Government's £1.15bn working capital loan facility that it extended to
POL and who would support Peter Batten in correspondence and
Parliamentary matters.
Each team member was allocated different tasks but all tasks were ultimately
connected. The overarching goal was the sustainability of the POL network,
which had gone through significant change in recent years (including two
substantial branch closure programmes in the prior decade), and which was
going through a further large change under Network Transformation (which
sought to increase individual branch viability by boosting their non-Post Office
related business). In seeking to fulfil its function, the POL Shareholder Team
would carry out a range of activities to understand how the business was
operating. This ranged from reviewing POL’s financial and operating results to
reviewing the business’ future funding proposals, and this took the form of both
written and verbal communications with POL management. Activities also
included obtaining POL’s help to navigate any Parliamentary issues (e.g.
constituency correspondence, parliamentary questions and debates), which at
the time were fairly extensive given Network Transformation and the reform of
the directly managed “Crown Branches”, and trying to help POL adapt to losing
a lot of government business due to changes in the way that certain services
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were delivered (e.g. online, and moves to direct payment of benefits in to
recipient accounts).
I did not have a formally articulated set of responsibilities as head of the
Shareholder Team and it was simply expected that I would manage the team in
order to deliver the Government's policy objectives. The primary policy
objectives were relatively simple in that HMG required POL to maintain a
minimum level of 11,500 branches (whilst meeting geographical proximity
‘access’ criteria) and do so on an increasingly financially sustainable basis,
using investment funding to reduce the c£200m per annum subsidy down to
c£50m. POL also had to continue to provide its five or six services of ‘social and
general economic interest’, such as access to cash, which was a condition of
EU state aid approval for its funding.
I do not think I was disadvantaged by not having a formal set of responsibilities
and I think there was a benefit in being able to assess for myself what the most
urgent priorities appeared to be and how best to tackle them. Nevertheless
objectives for the year were usually set out in my Performance Review
documents and also in our Portfolio Reviews Documents. I also acknowledge
that the shareholder role is difficult to articulate and that the Government's role
differs on each asset such that a generic description of the role of a Shareholder
NED and/or Shareholder Team lead will be of limited practical value except at
the very highest level of generality. That said, defining the role for myself plainly
had its challenges and there is always a risk, when dealing with a business that
is facing so many difficult issues, that the urgent can drown out the important.
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In addition to the Horizon issue, POL faced a number of other challenges, for
example Network Transformation, the changing nature of mail services, the
expansion of its financial services products and declining Government
business. Many of these issues threatened the ability of POL to deliver its remit,
and in some instances threatened the very existence of POL and/or the viability
of the sub-post offices within the network.
At the start of my tenure, it seemed to me that POL tended to approach these
issues from a position of weakness and vulnerability. Despite being centuries
old, the newly separated organisation was at the same time quite new. Over my
four years, this changed and POL became more commercially confident and
profitable as issues settled down and the Board and management became
stronger. A good illustration of this effect was in relation to Royal Mail — when I
joined POL it was very concerned about the resetting of its ten-year contract
with Royal Mail at the half way point in 2017, fearing that Royal Mail may use
alternative outlets instead of, or in addition to, POL. By the time I left POL was
actively considering taking in parcels from Royal Mail's competitors.
I was also involved in a number of routine tasks as Shareholder Team lead,
including: seeking ministerial approval of POL’s Executive bonus framework
each year; reviewing the yearly POL budget; reviewing and responding to
general communications and correspondence; assisting with responses to
parliamentary questions; and advising on POL appointments, which was
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subject to ministerial scrutiny. These were all tasks specific to my ShEx role as
distinct from my additional role as Shareholder NED.
Oversight of the objectives and activities of the Shareholder Team would be
managed by portfolio reviews within ShEx/UKGI, which take place in relation to
all assets of which ShEx/UKGI acts as a shareholder. During my tenure as
Shareholder Team lead these reviews generally took place quarterly, although
there was a period when they were less frequent. Much like they do now,
Shareholder Teams would explain what actions they have been taking in
relation to various issues relating to the relevant asset and would be challenged
on the approach by their peers. The team prepared slides to support these
reviews. The reviews were a good opportunity to reflect on whether the right
approach and focus was being taken. I considered them to be a valuable ‘pause
point’, often forcing one to reflect on the actions and objectives of the team.
Each month the ShEx risk register would be circulated so it could be updated
before being sent to the central risk team in ShEx, who would sometimes
respond with questions. This process was usually coordinated by a junior
member of my team and the owner of each risk would then review their risk and
update their entries in the register. I would usually review the risk register and
it would then be submitted to the central risk team who would summarise the
risk registers for each of the assets for which ShEx was responsible. This
summary was provided to the ShEx / UKGI Executive Committee (“ExCo”) and
Board. This was the process followed in respect of the POL risk register, an
example of which is at (UKGI00002515).
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The purpose of these risk registers for each asset was to flag the various risks
facing the asset so that ShEx, as an organisation, could understand what the
risks were and their relative significance, which was illustrated by a RAG rating.
The set of risks in relation to POL tended to remain broadly similar but would
vary in their risk rating over time. When I joined the POL Shareholder Team the
specific risk identified in relation to Horizon was the failure of the Mediation
Scheme, and this was rated as a relatively low risk compared to others given
that the team felt there was at that time a mechanism in place to consider sub-
postmaster concerns (UKGI00002515).
Each month the rating of each risk could go up or down (although movement in
risk ratings required careful consideration and usually a change in
circumstances) and occasionally risks would be removed from the register
altogether once that risk had passed or been resolved. In strict terms, the risks
should have been assessed as the risks to ShEx, although in practice the teams
often considered it difficult to distinguish between the risks to ShEx and the risks
to the asset - if there was a risk to the asset it was also generally viewed as a
risk for ShEx given the additional resource that might be required, the
reputational consequences it might generate or any wider governmental risks.
I would not attend ExCo or the ShEx/UKGI Board to speak to the risks within
my areas of responsibility, but I would attend the Quarterly Portfolio Reviews
where these risks might be discussed in some form or other. An example of
one of these Reviews, dated June 2014, is (UKGI00013659).
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Role as Non-Executive Director
36. POL was in a state of flux when I joined the team, having recently established
a new Board upon separation from Royal Mail, prior to which I understand it
had had a subsidiary Board, largely staffed by RMG executives. Prior to 2012,
the Royal Mail Board was the overarching Board of POL.
37. During my time as the Shareholder NED, I sat on the following POL Board
committees: (i) Sparrow Sub-Committee from its inception in April 2014; I
volunteered to sit on this Sub-Committee as one of my first acts after being
formally appointed to the Board in March 2014, as evidenced in the minutes of
the 26 March 2014 Board meeting (POL00006564); (ii) Pensions Committee,
from the point I joined the Board until the committee was wound up in 2015;
and (iii) the Audit, Risk and Compliance Committee (“ARC”), from January
2016.
38. AsaNEDon the POL Board, I had all the same powers and duties as the other
NEDs, as set out in the Companies Act 2006. My core responsibilities were
promoting the company’s success and delivering effective corporate
governance through the exercise of my independent judgement as a non
executive director. In conjunction with the other members of the Board I had the
power to call for the production of information relating to the operation of the
company and hold the Executive management to account for their performance.
The Board also had the power to commission its own specialist advice on
matters where it felt it needed assistance. As Shareholder NED I did not have
any additional rights or powers beyond those enjoyed by my fellow NEDs and
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my vote (to the extent a vote was strictly required, which was very rare) carried
no more or less weight than that of any other NED.
I did not see the responsibilities of the Board of Directors being fundamentally
different to those that would ordinarily apply to the Board of a large company,
simply by virtue of the fact that the company was wholly owned by the
Government. POL’s Articles of Association (UKGI00043217) conferred certain
rights on the Secretary of State as the sole shareholder in POL, including the
right to request information, the right to appoint or remove the Chair, and the
right to receive and approve an annual budget and a periodic strategic plan.
As for my Shareholder NED responsibilities, there would be nine Board
meetings a year and I attended all of them. Each Board meeting would last the
best part of a day. The POL Board papers would take at least a day to read and
digest, given their volume, and this often had to be undertaken outside of my
regular working hours. It was similar for the ARC which involved a larger and
often more technical pack once a quarter. There tended to be fewer papers for
the Sparrow Sub-committee and Pensions Committee as these were more
focussed and met more regularly than the ARC. The quality of the Board papers
when I joined was generally quite good, but improved during my tenure as
Shareholder NED with papers tending to become more structured and
consistent in their drafting and format.
I shared papers for the main Board with my team, would hold team meetings to
get their views prior to the Board, and would provide a readout thereafter.
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Whilst some team members would read the entire pack, others would limit their
review to their particular specialism. I cannot recall sharing ARC papers with
the team but may have done so (particularly if there was a specific topic that I
wanted a colleague's view on). I doubt I shared Pension Committee papers
given its very specific and specialist nature (I had some grounding in pensions
given my Royal Mail work). As noted below, Sparrow Sub-Committee papers
were generally shared with Peter Batten and then Laura Thompson, who
succeeded him.
Balancing my role as a NED (which strictly speaking was done as an individual)
with that of my Shareholder Team role (i.e. enacting Government policy)
presented challenges. Generally speaking there was alignment between these
roles, but I would sometimes have to be very clear from what position I was
speaking, doing so in Board meetings by referring to my “NED hat” or my
“Government/shareholder hat”. I might, for example, state that I agreed with the
Board's course of action given what I knew from Board discussions and my
responsibilities as a NED to the company, but would make clear that Ministers
or other parts of Government might not necessarily agree, or that their
agreement was required before the Board could proceed. Issues where this
‘two-hatted’ approach tended to crystallise were around the likes of executive
remuneration, mutualisation, funding, pension changes and indeed Sparrow.
During my tenure as Shareholder NED, the POL Board had two Chairs, Alice
Perkins and Tim Parker. Each had different styles, but generally the dynamic
across the Board was collaborative. Alice Perkins was very effective in allowing
differing views to be expressed before drawing together the relevant threads to
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achieve a consensus. Although I cannot really remember the specifics relating
to particular issues, there was often substantive debate during Board meetings
in relation to the way forward, for example, on financial and mails services and
on IT systems generally (although not in relation to Horizon specifically).
Overall, the Board appeared to be very capable, with NEDs that had significant
prior experience in retail, finance and risk management. I understood that they
were all high achievers in their various fields and although I had limited
experience upon which to draw, I thought it was a high-quality Board. The
Executive appeared to respond positively to the Board’s engagement, albeit
there were occasions on which I perceived a sense of nervousness or
defensiveness on their part when faced with challenge by the Board. That said,
there were a large number of challenges of existential significance facing the
company during my tenure on the Board and the Executive was always working
under considerable pressure and often having to deliver difficult news
concerning the company’s operations and financial position.
In general terms, I thought the Board was effective in discharging its corporate
governance functions although when I started out as Shareholder NED there
was less definition from ShEx’s perspective of the corporate governance role of
the Board and its NEDs than there is today within UKGI and the assets in its
portfolio. We now have guidance formalising our Board roles, see Post Office
Limited Shareholder Relationship Framework Document (POL00362299) and
the more uniform way in which we expect our Boards to operate, however when
I commenced my appointment as Shareholder NED there was far less guidance
in place. That said, I thought the Board was effective in identifying and
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prioritising the issues that required attention from a corporate governance
perspective and would be proactive where necessary, such as in establishing
sub-committees (for example, the Sparrow Sub-Committee), commissioning
specialist advice, and requiring the provision of information by the Executive.
However, there is no doubt that the large number of challenging issues facing
the business during the period 2014-2018 meant that the capacity of the Board
was very stretched and I often had the feeling that we were firefighting the latest
crisis rather than having the opportunity to think strategically about the direction
of the business, particularly at the beginning of my tenure.
Throughout my time as Shareholder NED I contributed to the induction of new
NEDs to the POL Board in the same way as other NEDs, which is to say I would
seek to arrange an early discussion with them, and I remember speaking with
both Ken McCall and Carla Stent prior to their formal appointments to the Board.
During these discussions, I provided them with a summary of my role as the
Shareholder NED on the Board and the issues that the business (and
Government) faced. At the end of my tenure, I also provided an extended
handover to my successor, Tom Cooper, who joined UKGI in November 2017
before being formally appointed as the Shareholder NED in March 2018. In
addition to the information that I was able to convey to him during our handover
period, he was also able to attend two or three POL Board meetings prior to his
formal appointment (see for example minutes of Board meeting dated 29
January 2018 (POL00021553)).
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46. In terms of stakeholder engagement with the POL Board, there was a Post
Office Advisory Council (“POAC”) which was chaired by one of the other NEDs,
Tim Franklin. Sub-postmasters, the National Federation of Sub-postmasters
("NFSP”), union representatives, and customer organisations and other small
business associations would be invited to discuss issues relating to POL on a
quarterly basis. Mr Franklin would then report back to the POL Board on the
issues discussed (see for example minutes of Board meeting dated 25 March
2015 (POL00027286)) and I think the outcome from discussions at the POAC
was also published in the POL annual report (POL00026722). I attended two
POAC sessions, some of my colleagues in the Shareholder Team would also
sometimes attend other sessions.
Involvement in the appointment of the POL Chair and CEO
47. The appointment of the POL Chair is a Ministerial decision. The appointment is
made following an independent competition and is one which is regulated by
the Office of the Commissioner for Public Appointment (“OCPA”) rules. As such
the recruitment panel is led by an OCPA approved independent chair, and
recommends all candidates deemed appointable to the relevant Secretary of
State, for them to make the final choice (although the Secretary of State can
delegate this to one of their Ministers). During the process that led to Tim
Parker's appointment in 2015, in my role as head of the Shareholder Team
responsible for POL, I helped to administer that process, but I did not attend
any of the interviews with candidates or participate in any of the discussions
concerning their performance at interview. I describe below the nature and
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48.
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extent of my involvement in the decision to appoint Tim Parker as POL
Chairman
As to the appointment of the POL CEO, I had no role in Paula Vennells’
appointment which pre-dated me by a couple of years, and she remained the
CEO at the point of my departure from the Board. The decision regarding the
appointment of a CEO is one for the POL Chair and Board to take, albeit the
decision would probably have been delegated to the Nominations Sub-
Committee who would establish and run the recruitment exercise before going
back to the non-Executives of the Board to confirm the preferred candidate for
appointment. That decision would then be forwarded to the Shareholder Team
who would in turn forward it to the Secretary of State or Minister for his or her
final approval.
I recall that, at the start of my tenure as Head of the Shareholder Team, there
were some concerns about Paula Vennells’ continued suitability as CEO. These
were initially explained to me by my team and, as far as I can remember, these
concerns crystallised following an away day in June 2014, at which Ms Vennells
was felt by many members of the Board (myself included) to be overly passive
and acting more like a NED than a CEO in the way she interacted with members
of her team who came to present an item on the agenda. A contemporaneous
summary of the Board’s concerns is set out in a note that I prepared in August
2014, ahead of a meeting with the Minister (UKGI00002440), which I shared
with the Ministers office and which Alice Perkins had also reviewed
(UKG1I00002439). By this time, Jenny Willott MP had replaced Jo Swinson MP
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50.
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whilst Jo Swinson MP was on maternity leave. The concerns were summarised
in the following terms:
“Efforts to improve her [Ms Vennells] performance have failed. The
Board is increasingly frustrated with the lack of progress on various
areas primarily the lack of ‘grip and pace’ applied to revenue growth, cost
cutting, specific business areas like Horizon and the strategy in general.
This crystallised for the Board at the June away day, where Paula very
much sat back and let her team lead — she acts more like a NED than
someone who leads from the front.”
In July 2014, Alice Perkins, Neil McCausland the Senior Independent Director
and I engaged in a discreet desktop exercise with external agency Egon
Zehnder (“EZ”) (UKGI00045963) to ascertain whether there might be suitable
candidates in the market that we might consider as a viable replacement for
Paula Vennells. Given the discretion required, I agreed with ShEx CEO Mark
Russell that ShEx would pay for the exercise. As part of the process, EZ had
been given an indicative potential remuneration package, the base pay of which
was £100,000 greater than Paula Vennell’s. This was on the basis that Paula
Vennell’s base salary was in the bottom decile of comparable market positions
and we considered that this would be lower than the existing remuneration of
the vast majority of potential candidates (and therefore unattractive).
Despite this enhanced potential remuneration, the agency only managed to
identify potential candidates that Alice Perkins, Neil McCausland and I
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considered to be on a par with, or below, the qualities of Paula Vennells. It was
therefore determined that replacing the CEO at that stage would represent too
great a risk for the business, as well as incurring significant additional costs in
compensating Paula Vennells for the termination of her contract, plus the
additional amount that a replacement would demand upon appointment, both
of which we felt would be difficult to obtain ministerial permission for. It was
therefore resolved that Paula Vennells would be retained and that she would
continue to be coached by Alice Perkins (who also worked in executive
coaching), which I am aware is something that occurred and was considered in
time to have led to some improvements. In addition to coaching from Alice
Perkins, the other way we sought to improve performance was to increase
‘bench strength’ i.e. strengthening the team reporting to the CEO to give her
more bandwidth.
As can be seen from the note that I prepared at the time (UKGI00002440), I
was attempting to anticipate the sorts of questions which the Minister might ask
about the senior management at POL, specifically in relation to POL‘s Chief
Financial Officer (“CFO”) at the time, Chris Day. Before I arrived, the Board,
including Paula Vennells, had felt that a stronger CFO was needed. Whilst the
existing CFO Chris Day had managed the separation of POL from Royal Mail
well, and was generally felt to be good at his job, the Board felt that they needed
someone to take POL to the next level as it faced fiercer commercial
competition and difficult investment decisions in the years ahead. I planned to
raise this with the Minister because, if the CFO was going to be removed, that
would require the Minister's authorisation as Chris Day would need to be paid
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53.
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c.12 months’ notice by way of compensation as part of his contract, and that
amount was in excess of the cap that could be authorised by the company
alone. As the note explains, one of the benefits of having a stronger CFO would
mean that there was a potential natural successor to Paula Vennells, or
someone who could ‘hold the fort’ until a successor was found, which was not
at that time the case.
In the event, the Minister was unwilling to authorise this payment to replace
Chris Day and over the following 6 months or so, my team and I had to continue
to press the point with Jenny Willott MP, and then the returning Jo Swinson MP,
until the latter ultimately decided to escalate the decision to the Secretary of
State who approved the request. This then enabled a new CFO, Al Cameron,
to be appointed in early 2015.
It is worth noting that Paula Vennell’s performance improved over time, which
from my perspective was for a number of reasons. First, the new CFO and other
new executives (commercial director, people director, IT director etc) began to
lighten her load. Second, the business itself began to stabilise as some big
programmes like Network Transformation got back on track. Finally, Paula
Vennells most likely simply grew into what is a very challenging role. The role
of POL CEO is, in my view, an exceptionally complex and multi-dimensional
one. Rather than POL being a single business, it is a conglomerate of many
disparate ones — it is a mails business, a financial services business (insurance,
savings, foreign exchange), it had the biggest retail network in the country by
far, was the third largest cash distribution business in the UK, provided
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broadband and telephony services, and also supplied Government services
(which were rapidly evolving).
Relationship with Ms Vennells and POL Executives
55. Despite the Board’s concerns about Paula Vennells towards the start of my
tenure, my working relationship with her was cordial and professional and she
continued in post throughout my period of appointment. At no stage did I
consider her to be untrustworthy or untruthful, but I did feel she had a tendency
to keep issues at arm’s length rather than ‘leading from the front’. I cannot
remember much about the specific instance related to the email that the Inquiry
has asked me about (UKGI00006547), but the comment that there was
“something ‘teflon’ about her’, reflected my sentiment that she would often fail
to take ownership of things for which she was ultimately responsible as CEO,
which in this case was the substantially higher IT costs than had been
anticipated. Much the same point is reflected in my observations regarding her
performance at the June 2014 away day where I felt that she sat back and let
other members of her team take responsibility for issues that I thought she
should be leading on.
56. Generally speaking, my working relations with POL’s other senior executives
were good, although tensions did naturally arise at various points, particularly
around the issues of mutualisation and funding. There was a general
willingness to be collaborative and to understand the responsibilities of the
Shareholder Team, which I welcomed, because it stood in marked contrast to
the approach of Royal Mail which I had found to be much more guarded and
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defensive in most areas. To briefly outline my reflections on a number of those
individuals I worked with during my tenure:
(i) Chris Day: Chris Day was the CFO at the outset of my tenure and I
have described above the reasons why the Board considered that he
should be replaced. My working relationship with him was fairly
limited in the short period before he was replaced by Al Cameron.
(ii) I Al Cameron: Al Cameron was Chris Day’s replacement as CFO and
was generally considered to have strengthened the management of
the business, particularly around accounting controls. I describe
below, in the section of my statement dealing with the ARC, how he
introduced a more rigorous and reliable process of financial reporting
and, to that extent, I found him to be effective and capable. At a
personal level I found him quite difficult to deal with, although our
relationship was always professional. The impression he conveyed
was that he considered the Shareholder Team (and by extension me)
to be too demanding and inquisitive during our interactions at monthly
meetings with him or his colleagues, and I therefore felt he was not
as collaborative as he could have been. We would sometimes have
quite challenging conversations around how POL presented their
business cases to the Department, and it was for this reason that the
funding package that was agreed towards the end of my tenure had
more explicit measures to allow HMG to withhold funding to compel
improvement in the quality of those investment business cases.
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(iii) I Jane MacLeod: Jane McLeod was the POL General Counsel from
early 2015 and my interaction with her tended to be limited to those
occasions on which she provided written or oral briefings to the Board
on legal issues, including the progress of the litigation. I did not deal
with her particularly regularly and when dealing with her directly I
found her to be quite defensive. During our first meeting at Old Street,
I specifically flagged Sparrow as one of the most difficult issues that
POL and the Shareholder Team were dealing with, and asked her to
approach the Horizon issue with a fresh pair of eyes, which she
undertook to do.
(iv) I Mark Davies: Mark Davies was POL’s communications director. I
found him cooperative and easy to work with although as a former
Special Adviser in Government I thought he sometimes did not
appreciate the pressure that the Shareholder Team would come
under from Ministers, e.g. on the issue of mutualisation. He was
however very straightforward to deal with.
My involvement in determining short-term incentive plan (“STIP”) measures for
POL Executives was limited from a Board perspective although my involvement
in the fairly complex administrative arrangements for approving such payments
within Government was quite extensive. In the first instance, the extent of any
STIP measures would be considered by the Board’s Remuneration Committee
(‘RemCo”) and then recommended to the POL Board for approval. I was never
a member of the RemCo and so my first consideration of the issue may well
have taken place at the Board approval stage. At this point my dual NED / ShEx
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58.
59.
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role could generate a degree of tension — as a Board member I may have
agreed with the proposals (and will have given my views on the bonus criteria)
but I would have had to make clear to the Board that the bonus framework for
the year required ministerial approval (from BIS and HMT), which my team
would seek to obtain.
Once the proposed measures had been approved by the Board there would
then be a complex process of Governmental approval. In brief, the Shareholder
Team would challenge the RemCo Chair (Neil McCausland and then Ken
McCall) on the logic of the measures and targets proposed by RemCo, and that
could lead to some changes being made. Depending on the year, this may
have occurred before or after full Board approval.
When the Shareholder Team was comfortable with the position being proposed
by POL, it would present those recommendations to the Department's Senior
Remuneration Oversight Committee (“SROC”) to obtain the committee’s input
and advice. Following consideration by the SROC, the recommendation would
then be presented to the Minister for his or her approval. Dependent on the
outcome of that (it was sometimes sent back again for reconsideration by the
RemCo), that approval would then be presented to Treasury officials (being the
BIS spending team and the Work Pay and Pensions team) before going to the
Chief Secretary to the Treasury to provide final approval for the proposals.
Again, this could involve challenges back from Treasury officials or Ministers.
This process could at times take a considerable number of months.
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60. Tobe clear, Ministers approved the framework by which STIP bonuses were to
be determined at the end of the year based on the company’s performance. It
was for RemCo to determine the final bonus amount and make the award —
Ministers had no role in that aspect.
Information Sharing
61. I shared the vast majority of information I received in my capacity as
Shareholder NED with the Shareholder Team, without restriction. I considered
that to be a vital part of my role and I would not have been prepared to withhold
information that was relevant to the Shareholder Team or to Ministers. I recall
that there was initially some nervousness within POL about my ability to
circulate POL Board papers to members of my team (as this had not been done
when Susannah Storey had been on the Board), although these were resolved
by me agreeing to sign a Non-Disclosure Agreement (UKGI00044246) that also
required me to procure a similar agreement from members of my team, before
sharing Board papers with them, which I then put in place (UKGI00002223)-
62. Once this agreement was in place, I do not recall there being any restrictions
imposed upon my ability to share information with the Post Office Shareholder
Team. In this regard, I have noted that amongst the documents that have been
shared with me by the Inquiry, there is a draft set of minutes for the first meeting
of the Project Sparrow Sub-Committee on the 9 April 2014 (POL00203296), in
which at minute 14(2)(c), there is a suggestion that I would be “comfortable”
during the exploratory stages of the Sub-Committee’s work to keep the
discussions of the Sub-Committee “private”. I do not recall this being my
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position and I believe the business was aware that this was not the case, which
may explain the comment bubble in the draft minutes querying whether the
inclusion of that entry was necessary. In any event, I note that the entry was
removed from the final signed version of the minutes (POLO0006565). I did in
fact continue to share information relating to Project Sparrow with the
Shareholder Team, and I note that there are a number of examples in the
documentation provided to me by the Inquiry of me corresponding with
members of the Shareholder Team on issues relating to Project Sparrow in the
months following this initial meeting of the Sub-Committee (UKGI00002274).
The only exception to my ability to share information concerning the company
with the Shareholder Team arose in the context of funding where there was the
potential for a conflict of interest to arise and, as the Board minutes
demonstrate, there were occasions when I was required to absent myself for
certain parts of the discussion. One example is provided by the minutes of the
July 2017 Board meeting where it is noted that I was absent for item 17/52
(‘Funding Update’) and joined the meeting thereafter (POL00021549). I do not
recall this occurring in any context other than funding and I do not think that this
restriction impeded my ability to exercise oversight of the matters with which
the Inquiry is concerned. I do however recall having to recuse myself from the
Board in those instances to have been very difficult, both personally and
professionally, and it perhaps encapsulates the difficulties of the Shareholder
NED role.
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Interactions with Government Ministers
64. I regularly interacted with government ministers within the Department on POL
matters. Initially, the Minister was Jo Swinson MP although very shortly after I
was allocated responsibility for POL she went away on maternity leave and was
replaced by Jenny Willott MP and did not return until October 2014. Following
the General Election in May 2015, after a short delay, Baroness Neville-Rolfe
was appointed as the Minister under the new Conservative government. I did
also discuss Horizon issues with Margot James MP and, to a lesser extent,
Andrew Griffiths MP during their tenures as Ministers.
65. In general, I considered my working relationship with each of these Ministers to
be professional. There were, however, challenges, as demands were often
made for support or advice, sometimes at very short notice. My impression was
that tensions would rise if a Minister felt exposed on an issue, hence the need
to provide them with frequent written briefings/submissions and to try and
anticipate what they would need to know if an issue was raised in Parliament
or brought to their attention by other MPs or the media.
66. In relation to this issue, I have been asked to consider an email in which some
negative feedback from Baroness Neville-Rolfe was summarised
(UKGI00017443). As may be seen, she criticised ShEx for being “too
technocratic and not sensitive enough on the politics’. My recollection of the
background for this criticism was in the context of GIB, where the Minister had
been having a difficult time in the House of Lords who were continuing to seek
Parliamentary protection for GIB’s green purposes once it was in the private
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67.
68.
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sector, which HMG was not in a position to offer whilst simultaneously
privatising the company.
As may be seen from my email in response, I thought the criticism was a “bit
harsh” as, in general terms, I felt that I was not in a position to deliver the
outcomes that the Minister wanted, particularly in relation to the GIB
(UKGI00017443). As to Horizon I also felt that I had been doing a reasonably
good job of preventing the Minister from being criticised publicly in relation to
Horizon, which I saw as part of my role, and that is what I was referring to when
I said that we had “kept a lid’ on things. As I explain further below, our
overarching approach in relation to Horizon was that this was an issue for POL
to address and there was no real role for Government to play, particularly in the
absence (as we understood it) of any evidence of a fault with Horizon that might
have caused losses in branch accounts. It would be inappropriate for
Government to interfere in an independently administered mediation scheme,
and it would be inappropriate for Government to interfere in court proceedings
(civil or criminal) should any such proceedings be commenced. This approach
is reflected in the statement of the Minister’s objectives at (UKGI00000024),
which I considered to be accurate and appropriate, and consistent with what I
understood to be the position prior to my appointment. That position was
subsequently confirmed with the Secretary of State early on in the life of the
new administration, (see email dated 16 July 2015 (UKGI00005062)).
The challenge, therefore, which is reflected in the email response from Justin
Manson in the same chain, was finding a way for the Minister to engage publicly
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on a matter of significant public concern whilst keeping her distance from the
issue which to my mind could only be resolved with any finality in the civil and
criminal courts. That is the tension I perceived, and the difficulty that I felt we
needed to ‘keep a lid on’. As to my reference to a “perceived but non existent
IT problem” this simply reflected my understanding at the time, the basis of
which I explain in detail below, that despite several years of investigation no
evidence of any faults in Horizon had been identified or submitted and at that
point no appeals or successful civil actions had been brought.
In general terms, I found it difficult to identify the correct balance when it came
to the appropriate level of Government engagement on the Horizon issue. On
the one hand I thought it was clear that Government should not intervene
directly in the Mediation Scheme or court proceedings, but on the other this was
clearly a matter of public concern, often raised in Parliament and in the media,
with which Ministers were required to engage. There was also the general point
that, from my perspective, it was difficult to see what the Government could
realistically be expected to do in response to the concerns that were being
raised in the apparent absence of a problem with Horizon, the stated decisions
of numerous different criminal proceedings, and the unequivocal assertions by
POL that the issue had been exhaustively investigated and no evidence of any
problem had been found. I thought the Government was in a difficult position in
relation to this issue and it was part of my job as a civil servant to help Ministers
steer a path through these competing considerations.
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70. Whilst I did my best to do so, my job is subjective and I acknowledge that there
were times where I got the balance wrong, and one example is provided by an
email exchange in March 2015 where I agree with other members of the
Shareholder Team that there were dangers in the Minister, Jo Swinson MP,
receiving a copy of the Second Sight thematic report (UKGI00003972). In
essence I agreed with the advice of Laura Thompson that “The Minister and
Government should maintain its independence here”, and I expressed that view
in an offhand reply that it would be “bonkers” for the Minister to compromise
that independence, which we had considered a key part of the scheme, by
receiving the report in circumstances where she might then be required to
express a view and potentially take a side.
71. Similar issues arose later on in 2015 when a meeting between the new Minister
Baroness Neville-Rolfe and Second Sight was proposed. On the latter occasion
I supported the proposal for a meeting, notwithstanding the strong opposition
from POL, and I think that was the right thing to do. However, when reflecting
on the earlier example of the Second Sight report I acknowledge that I was
wrong to try and dissuade the Minister from receiving a copy and she was right
to overrule us.
Oversight of POL for Criminal Prosecutions, Civil Litigation, and POL’s IT
Infrastructure
72. I have been asked to set out, in general terms the level of oversight exercised
by me and/or my teams over the issues of: (i) criminal prosecutions brought in
the name of POL; (ii) civil litigation brought by POL; and (iii) POL’s IT
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73.
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infrastructure and services. I set out my high-level answers to these questions
below, but I inevitably deal with these issues in more detail in the sections of
my statement which address the specific questions that the Inquiry has posed
on each of these issues.
As to criminal prosecutions brought in the name of POL, by the time that I was
appointed to the POL Board in 2014, my understanding was that criminal
prosecutions that were brought by POL had stopped, or were in the process of
being stopped, except in the most egregious cases. I had leamed this prior to
my formal appointment, at around the time that I first attended the POL Board
in February 2014, as the papers for that meeting described POL having carried
out a review of its prosecutions policy, which led to a change in approach being
adopted. I took comfort from my understanding that the review had been
conducted by an external law firm, Cartwright King, overseen by a senior
criminal barrister, Brian Altman QC, and I recall reference being made to his
description of POL’s involvement in criminal prosecutions as “anachronistic”,
which seemed apposite to me, particularly given the formation of a new POL
Board, whose aim was to develop a sustainable (and ideally profitable)
commercial enterprise (see Prosecutions Policy dated November 2013
(POL00027501)).
Accordingly, when I was appointed to the POL Board, I did not see any role for
myself or for my team in overseeing POL’s involvement in criminal
prosecutions, given the reviews that had been undertaken and the forthcoming
change of prosecutions policy. I also took some comfort, perhaps now
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75.
76.
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mistakenly, that whilst POL could bring prosecutions against sub-postmasters
and their own staff, it could not convict them. That was for the courts, the judge,
and the jury in each case.
The general impression I got from the rest of the Board was this was an issue
which had been dealt with over the course of the preceding nine months or so,
as part of the extensive programme of work that had followed the Second Sight
interim report and I do not recall anyone being particularly concerned about
prosecutions being brought in the name of POL in accordance with the new
policy. I cannot now recall precisely what I understood practically of the new
policy but I became aware (as I describe below in the section of my statement
dealing with private prosecutions) that it was subject to annual review. Overall,
I felt it was a fresh approach being taken by a new Board that was beginning to
assert itself and change the way POL operated now that it was out from under
the control of Royal Mail.
At the time I took up my appointment, I was unaware that the Criminal Cases
Review Commission (“CCRC”) had asked POL for information concerning its
historic prosecutions in 2013. So far as I can recall, I only became aware of the
CCRC’s prior involvement with POL when they re-engaged in early 2015.
Around the time that I joined the Sparrow Sub-Committee, I recall asking
whether there had been any successful appeals and was told that no one had
actually appealed at all. I accepted that response as a fact and it informed my
position about the safety of Horizon.
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77.
78.
79.
80.
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Given the involvement of the CCRC from 2015, I did not consider there to be
an oversight function for me or my team in that respect, except to ensure that
ShEx and POL cooperated with them as fully as possible. As far as I was
concerned the CCRC was the correct body to be considering any previous
convictions and when I learned of their involvement I was pleased that they
were doing so.
As to POL’s involvement in civil litigation, in general terms, I considered civil
litigation to be an operational matter for the business and not something that
called for oversight from me or my team. That was the position that I inherited,
it was one that made sense given the contractual nature of the relationship
between POL and its sub-postmasters, and it was one that I confirmed with the
incoming Government in 2015 (as noted above).
Fairly early on in my tenure, it was explained to me that civil claims against POL
had been intimated by sub-postmasters on a number of occasions in the past,
but that these had never led to any formal legal action being taken. This did
provide me with some degree of reassurance, as I felt that if the claims had
merit, they would have proceeded.
When the Group Litigation (“GLO proceedings”) was later commenced, the
business alerted the POL Board and the Shareholder Team. The updates they
provided during the early stages of the litigation were generally procedural and
I did not think that that called for any particular Board or Shareholder oversight
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81.
82.
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at that stage (particularly given what I understood to have been the findings of
the Parker Review, as expressed to Ministers, which I address further below).
It was not therefore until around January 2018 that the Board began to become
more engaged in response to the updates that were provided by POL’s General
Counsel, Jane MacLeod (POL00253343). Jane MacLeod had repeatedly
informed the Board that there was nothing new in the claims and that POL was
confident of success. I provide a detailed account of the oversight I and my
team exercised over the GLO proceedings below but, in general terms, I
thought the litigation was the only way in which the issue was going to finally be
resolved. I thought POL would be successful in the case (given my
understanding of the issues at that point) and therefore our level of oversight
was relatively light touch.
When the Board was informed of the GLO proceedings, my team and I informed
BEIS Legal so that the Department was kept up to date. I recall that their initial
view was similar to ours, namely that civil litigation was an operational matter
for the business and not something that the Department should become
involved in. Nevertheless, as the litigation progressed, we kept BEIS Legal
updated and as it proceeded towards the first substantive hearing in 2018,
UKGI pressed for a litigation protocol to be introduced so that we could share
important legal updates and advice with the Department (see email from Tom
Cooper dated 5 April 2018 (UKGI00018975)). In doing this, we therefore sought
to introduce oversight and reporting, at the stage that it appeared appropriate
to do so, on the basis that the Permanent Secretary of BEIS was the Accounting
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83.
84.
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Officer or POL, and was therefore accountable to Parliament for any decisions
that POL ended up making on litigation.
As to oversight of IT infrastructure and services, I regarded these as operational
issues for the company and I did not see a role for the Shareholder Team in
this aspect of POL’s operations. The position of the Board was essentially the
same and, as far as I can recall, IT issues were only ever raised at the POL
Board if something very significant had happened, for example when there was
a national Horizon outage (see email chain dated 2 May 2017 (POL00248910)).
or a significant overspend in the amount budgeted for those services. Both the
Board and the Shareholder Team would also be sighted on any large IT
procurement issues, or contractual disputes with IT providers. Where significant
IT issues arose, we would generally look to POL’s Chief Information Officer,
Lesley Sewell, and then her successor (Rob Houghton) to provide factual
updates to the Board (see Board minutes dated 28 January 2015
(UKG100003236)).
I recall one major issue relating to IT procurement being raised at the Board.
This followed a successful bid for a contract having been made by IBM and the
business then realising that a change of IT provider from Fujitsu, who had not
taken part in the bidding process for the contract, would be too complicated to
implement in the time available. The company therefore had to make a decision
to re-engage Fujitsu and to pay IBM compensation for the work they had carried
out. This issue was poorly handled and carried a significant financial cost and
so inevitably came to the attention of the Board, which considered it in detail at
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the 2 July 2015 Board meeting (POL00027568). Further details on this matter
can be found below.
Horizon IT System and Knowledge of Faults
85. I have been asked to describe my knowledge of the Horizon system when I was
first appointed to the Board. I was aware of the existence of the system and the
fact that it was integral to the operation of the network but I had no technical
understanding of how it operated. I was aware that there was a lengthy
background of concerns being expressed by a number of sub-postmasters
concerning the integrity of the system, but I had no understanding of the precise
nature of the faults or defects that were said to exist or how they might give rise
to accounting discrepancies at an individual branch level.
86. I did not receive anything in the form of a technical briefing as to how Horizon
operated as a piece of software and I did not have any technical understanding
of the differences between Horizon Online and Legacy Horizon. Indeed, I do
not recall ever receiving that level of technical briefing at any stage during my
tenure as Shareholder NED, nor did I ask for one because I did not think it would
yield any particularly useful information given my lack of IT systems knowledge.
87. I do not think that my position was any different from the other non-executive
members of the Board in this regard as the technical operation of a particular
IT system would generally fall outside the remit of a non-executive director. The
reports I did receive that related to Horizon, including the Linklaters Report, the
Second Sight thematic report, and the Deloitte material (all of which I address
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88.
89.
90.
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below), I found to be broadly intelligible. That said, none of them drilled down
into the technical operation of the software.
The knowledge I had gained concerning the Horizon system prior to my
appointment to the Board came largely from written briefings into which I was
copied, and verbal briefings from colleagues, during the short period between
my appointment to the Shareholder Team and taking up my position as
Shareholder NED.
At that point, I became aware, at a general level, that various complaints had
been made about the Horizon system over the years, although at that stage, I
did not know of the details of any of those complaints. In addition, I was informed
that POL had carried out a review of its past prosecutions and had engaged an
independent investigator, Second Sight, to examine the Horizon system. I recall
hearing about an Interim Report having been produced by Second Sight and
that they had concluded that there were no ‘systemic’ issues with the system. I
was also informed that this had led to the creation of a Mediation Scheme to try
to resolve sub-postmaster complaints.
A representative example of the level of detail I received is provided by a
briefing note sent to me by Will Gibson on 2 December 2013, knowing that I
would be soon taking over his team, on the basis that I had said I was keen to
see the ‘top lines’ (email from Will Gibson dated 2 December 2013
(UKGI00002179)) and appended note (UKGI00002180)). The summary in
respect of Horizon referred to the Second Sight Interim Report and provided the
following account of the current position:
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91.
92.
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“The review explicitly confirms that there is “no evidence of system-wide
problems with the Horizon software”. Horizon successfully handles six
million customer transactions every day, and tens of billions since its
national rollout in 1999. The interim report makes no comment about the
safety or otherwise of any conviction of a subpostmaster for fraud, theft
or false accounting. A review and mediation scheme has been
established to address subpostmasters’ concerns in individual cases.”
This is an accurate encapsulation of what I was told at the time.
Given that position, I recall feeling that POL had taken the findings of Second
Sight’s interim report seriously. They had undertaken a review of convictions
using an external firm and a QC; they had disclosed the report to a number of
defence teams of previously convicted sub-postmasters; and they had set up a
business support programme to address failings in training and the helpline.
Furthermore, they had retained Second Sight to investigate individual cases via
a Mediation Scheme that was facilitated independently by the Centre for
Effective Dispute Resolution (“CEDR’), which was overseen by an independent
working group led by a former Court of Appeal judge. Members of the Board,
particularly the Chair, had also been clear that it was imperative to understand
whether Horizon functioned as it should.
However, at around this time, I had begun attending meetings with POL and, in
February 2014, I recall attending a meeting to discuss Project Sparrow, which I
summarised later that week in an email to Peter Batten (UKGI00002191).
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93.
94.
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Again, the key messages that I received from POL were that “No faults have
been found with the system” but there was a concern that the Mediation
Scheme was making slow progress and POL was beginning to lose confidence
in both Second Sight and the Chair of the Working Group.
Before my formal appointment at the Board’s meeting on the 26 March 2014, I
would also have seen the Board papers for the February 2014 Board meeting,
which I attended as the Shareholder NED Designate alongside my
predecessor, Susannah Storey. Having reviewed the minutes of that meeting, I
will therefore have received information relating to POL’s review of its
Prosecution Policy and the progress of the Mediation Scheme (POL00021522).
I would also have received the papers for the Board meeting on the 26 March
2014 ahead of my formal appointment, at which Project Sparrow was also
discussed (POL00201986).
I note that I was an attendee at a meeting between the Secretary of State, the
POL Chair (Alice Perkins) and the POL Chief Executive (Paula Vennells) on 5
March 2014, although I do not recall this meeting. I will have seen the
submission prepared by Peter Batten for the Secretary of State in advance of
that meeting (UKGI00002204) and the summary he provides under the heading
‘The integrity of POL’s ‘Horizon’ accounting software’ is an accurate
encapsulation of my state of knowledge at the time, as derived from what I had
been told by POL and during the course of my handover, including the following:
“An independent report, published in July 2013 found there were “no
systemic” issues with the software, but made recommendations about
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95.
96.
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POL’s processes for handling financial irregularities in subpostmaster
accounts. Following the report, POL has worked with a group
representing the former subpostmasters and the report’s author (a small
firm of forensic accountants called Second Sight) to establish a working
group under an independent Chair that has set up a mediation process
for former subpostmasters who feel wronged by the Horizon system.”
The essential message from POL concerning the process of investigation
undertaken prior to my appointment, and the outcome of that investigation,
remained consistent throughout my tenure. The starting point was always that
there had been a process of extensive investigation over a period of 2-3 years,
which had revealed no systemic problems with Horizon. This process of
investigation pre-dated my appointment and so I was not aware of precisely
what it had entailed, other than the engagement of an independent firm of
forensic accountants, but there was never any suggestion that the conclusion
of that process was anything other than an unequivocal endorsement of the
integrity of the system.
A further representative example of the terms in which this message was
relayed is provided in an email that I received from Gavin Lambert, Paula
Vennells’ Chief of Staff, on 15 October 2014 (POL00210905), which attached
a letter that Paula Vennells had sent to the Minister (Jo Swinson MP), enclosing
an update on the Mediation Scheme that had been prepared by Chris Aujard,
POL’s General Counsel (POL00210906). In her cover letter to the Minister,
Paula Vennells stated:
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“...aS Chris highlights, after over two years’ investigation Second Sight
have not found a systemic problem with Horizon and we beleve this will
continue to be the case. We will need to stand behind the extensive
work we and Second Sight have undertaken investigating every case
and defend our approach on the basis that we have acted impartially
throughout and in good faith’.
97. In his update on the Mediation Scheme (POL00210906), POL’s General
Counsel conveyed the same message in similar terms:
“So far we have found nothing in those cases which has raised concerns
about faults with the Horizon system, the safety of convictions or Post
Office’s liability for the losses being claimed by applicants. It remains the
case that Horizon is used by 78,000 people across our 11,500 branches
and successfully processes over 6 million transactions every day. After
what now amounts to over two years’ investigation, Second Sight have
not found a systemic problem with Horizon”.
Having listened to testimony during the Inquiry, I know now that there were in
fact issues around the safety of convictions, but as noted below, I was not to
learn of that until after I had left the POL Shareholder Team.
98. Following the Westminster Hall debate in December 2014, POL published a
response on its website (UKGI00002984) and (UKGI00002985) which again
conveyed the same position in essentially the same terms:
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99.
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“Post Office has been determined to ensure that Horizon, together with
its associated processes, operates effectively, reliably and fairly so that
Subpostmasters can have confidence in the system. It is in Post office’s
interests to do so, with 78,000 people using the system to process six
million transactions for customers every working day. To date, and after
two and half years of investigation and independent review, the facts are
that Post Office has found no evidence, nor has any been advanced by
either an Applicant or Second Sight, which suggests that Horizon does
not accurately record and store branch transaction data or that it is not
working as it should.”
The Inquiry will be aware that assertions to similar effect, and expressed in
similarly unequivocal terms, were made by Paula Vennells when she appeared
before the BEIS Select Committee in 2015. Shortly after the Select Committee
hearing an ‘update and options’ paper was prepared by POL for the Sparrow
Sub-Committee by Jane MacLeod and Mark Davies which provided a narrative
of the background including the following (POL00351871):
“Despite extensive investigations by Post Office and independent review
from forensic accountants Second Sight, no evidence of system wide
problems have been found...The Horizon system has been used by
almost 500,000 people without problems since it was introduced more
than a decade ago. It deals with six million transactions every day.”
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100. Although it now seems naive for me to have done so, knowing what I now know
about the reliability of these assertions, it genuinely did not occur to me at the
time that they would be consistently made by POL Executives if they did not
know them to be true. I was also aware that I had joined the Board at a time
when this issue had already been continuing for over two years and I assumed
that, if the statements made by the company did not accurately reflect the
position that had been reached by the time of my appointment, those who had
been in post during the material period would say so.
101. This, therefore, was the starting point of my understanding of the background
to the Horizon issue, which influenced my thinking and approach from the
outset: the system handled 6 million transactions a day and was used by 78,000
people; there had been a two-year process of investigation, including a review
by forensic accountants which had found no tangible evidence of any systemic
problems; POL appeared to be genuinely committed to addressing the issue
and so had established a Mediation Scheme.
102. Importantly, from my perspective, POL maintained this line not just in press
releases and statements in response to the JFSA but also in briefings to
Ministers and in evidence to a Parliamentary Committee. This was a reputable
business with an experienced Executive team and I assumed that I could take
them at their word when it came to the assertions relating to Horizon that I have
described. That is why I either communicated or approved communications to
Ministers and officials that reflected POL’s essential position in relation to
Horizon.
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103. Looking back now, at what I wrote and approved, I wish I had been more
sceptical about the validity of the assertions made by POL concerning Horizon
and more equivocal in my correspondence about the issue. On reviewing the
documents as a whole it is clear that I was more willing to take POL’s position
at face value than I should have been, and adopted what I was told as accurate
too readily. That is not to say that the Shareholder Team and I did not ask
questions of POL at all, (Submission from Richard Callard to Baroness Neville
Rolfe dated 3 December 2015 (UKGI00020116)), but on reflection I could have
probed more to seek to verify the position for myself to the extent that I could. I
do not recall reading the Second Sight Interim Report when joining the team as
I felt that POL’s response had been positive and investigations were ongoing.
Similarly, I did not seek to obtain the documents that had been generated in the
course of the review of past prosecutions given that I had no real understanding
of procedures around criminal convictions and I did not feel I would have had
the ability to make any difference on that issue given my lack of experience and
knowledge of that field. However, as set out in my section of reflections below,
I accept I clearly could and should have done more to verify POL’s position for
myself.
104. On every occasion during my tenure when significant allegations were made
concerning the integrity of Horizon, the response from POL would be to produce
a detailed rebuttal of the allegations emphasising that extensive investigation
of the system had been undertaken and that there was no evidence to support
the allegations that had been made. I have referred above to POL’s response
to the Westminster Hall debate in late 2014 and I deal below with the 83-page
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rebuttal document produced by the company in response to the Second Sight
Part 2 thematic report. A further example of this approach is provided by the
events surrounding the Panorama broadcast in 2015.
105. As the Inquiry will be aware, Panorama broadcast a programme on 17 August
2015 in which various allegations were made concerning the integrity of the
Horizon system and the extent to which it might be responsible for losses in
branch accounts. Prior to the broadcast we received extensive correspondence
from POL to the effect that the allegations Panorama were intending to make
were unsubstantiated. For example, on 6 August 2015, I and others on the POL
Board were informed by Mark Davies that Panorama was now due to air on 17
August 2015 and that POL would “continue to push back very hard with the
programme” and were continuing to “explore every possible avenue to
challenge their unsubstantiated allegations’ (UKGI00019357).
106. In the aftermath of the programme, POL responded to the allegations of the
programme in the form of a detailed rebuttal, including those allegations made
by Richard Roll, the Fujitsu whistleblower who appeared in the broadcast
(UKGI00005717). In relation to Richard Roll, the rebuttal included the following,
at paragraphs 31 to 33:
“Panorama referenced statements by Mr Rolls [sic] about financial
records being changed remotely. Transactions as they are recorded by
branches cannot be edited and the Panorama programme did not show
anything that contradicts this. Mr Rolls spoke of making changes
‘through the back door’ and ‘putting in several lines of code in at a time’.
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Fujitsu has confirmed that this is likely reference to maintenance and
Support tasks as would be expected of any standard IT function. Such
remote access could not be used to manipulate transactions. Remote
agents cannot and could not ‘work the terminals’ as there is no
functionality for this.”
During the Board meeting on 22 September 2015, Paula Vennells reported that
a formal complaint had been made to the BBC regarding the inaccuracies of
the Panorama programme (POL00021538).
107. This pattern of every new allegation being met with a detailed, and apparently
comprehensive, rebuttal by POL meant that I never felt that I had cause to
revise my understanding of the position communicated to me at the outset of
my tenure, that there was nothing ‘wrong’ with Horizon and there was no
evidence to the contrary. The net effect was that I did not have significant
concerns during my tenure as Shareholder NED about the existence of bugs,
errors or defects in Horizon; or as to the integrity of the data processed and
recorded by Horizon; or as to the risk that faults in Horizon were causing
apparent discrepancies or shortfalls in branch accounts. Nor did I express any
such concerns to Ministers. On the contrary, and as I have sought to explain, I
regret to say that I and my team communicated to Ministers the confidence in
the integrity of Horizon that was communicated to us (and to the Board, to
Ministers, to the media, and to Parliament) by POL.
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108. The steps I took to obtain reassurance about the integrity of Horizon were
largely limited to receiving and considering the information provided by POL, to
the Board and more generally. As I have explained, the company generated a
relatively large amount of material on this issue during my tenure including the
detailed responses to the Second Sight thematic report and the Panorama
broadcast and there were written and verbal updates provided to the Board. I
was also involved in the decision to commission the review by Tim Parker, and
I considered the information he provided as to the outcome of his review. In
general terms, however, I felt that the issue was being continually investigated
and addressed during my tenure by, in the first instance, the Mediation Scheme,
then by the Tim Parker Review, then by the litigation process, and I did not
consider that it was necessary (or appropriate) for me to engage in a parallel
process of obtaining some form of additional reassurance.
109. Reflecting on this issue now, I accept that there was scope for me to be more
sceptical and proactive in understanding the evidential basis for POL’s
confidence in the system. Knowing what I know now, I wish that I had sought to
interrogate the Executive on precisely why it was that they were saying that a
two-year process of investigation had revealed no faults with the system and
that there was no evidence to the contrary, and to require the provision of any
relevant documents that dealt with the issue. Indeed, I would go further and say
that if I found myself in the same position today, dealing with an asset making
confident assertions about its position in relation to a long running dispute, I
would be far more challenging and sceptical and I would want to establish for
myself why they were so confident.
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110. In terms of POL’s relationship with Fujitsu more generally, I gained an
understanding from my interactions with POL that they perceived Fujitsu to be
expensive and that once a company was engaged with them contractually, it
was difficult to disentangle itself from those arrangements. Logistically, from a
business perspective, the suggestion of replacing an IT system that was
installed in 11,500 branches seemed to me to be incredibly complicated and
risky, particularly given it was relied upon to transact the business of the
company each day. Any change would therefore have to be very carefully
handled.
111. That said, the POL Board was very clear that the business needed an EPOS
system that it could rely upon and viewed this as fundamental, I heard NEDs
on the Board say as much and this is reflected in the minutes of the Board
(POL00163438). If we had believed that the Horizon system was unreliable then
I have no doubt that we would have insisted that it be replaced or rectified, and
much of the work commissioned by the company was in an effort to determine
this one way or another. Although I cannot now say that I recall thinking it
specifically at the time, it is fairly obvious that from an accounting and
compliance perspective, any system that is processing six million transactions
per day, has to work with integrity. If it did not there would be a range of
potentially very serious consequences including customers’ money going
missing, an inability to accurately state company revenues and accounts, the
potential for fraud, an inability to discharge money laundering obligations, and
a whole host of other accounting and compliance issues. If the Board, or the
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Shareholder Team, had been aware that the data produced by Horizon was not
reliable then it would have been very clear that it needed to be fixed immediately
or replaced, and the consequences of that fault for sub-postmasters would have
had to have been addressed and recompensed.
112. I have been asked to explain the nature and extent of my involvement in
considering the future of Horizon ‘and the need to extend the contract with
Horizon’ (which I take to mean the contract with Fujitsu for the delivery of
Horizon). My involvement did not extend beyond my role as a member of the
Board to oversee major procurement issues of this nature, in addition to seeking
advice and informing the Department.
113. As I have outlined above, the post-procurement implementation process that
ultimately led to the extension of the Horizon contract was poorly handled. My
recollection is that an open procurement competition was run and IBM was
identified as the preferred bidder. After awarding the contract to IBM, it later
became apparent that replacing Horizon via IBM would be significantly more
expensive, and take longer, than originally anticipated, with the end date for the
Fujitsu contract looming in around six months’ time.
114. This put the business, and the Board, in a difficult position. The business had
left it too late to implement the IBM solution and operationally had no alternative
but to ask Fujitsu for an extension. However, under Government procurement
rules contract extensions cannot simply be awarded, and yet there was no time
for another competition. This was extremely concerning for the Board and I note
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that in the documentation provided by the Inquiry I ask for advice as to whether
those involved, including me and my colleagues on the Board, might be
exposed to a risk of allegations of misfeasance in public office if there was a
risk that we had engaged Fujitsu without proper procurement rules being
followed (email dated 8 February 2016 (UKGI00006514)).
115. I kept Ministers and BEIS Legal fully informed of this issue and, in the event,
the consequences were limited to the payment of compensation to IBM. To their
credit, POL did manage to find a legal way through. A notice of the intention to
extend the Fujitsu contract was posted in the Official Journal of the European
Union, and on the basis that no party challenged it during the relevant period
thereafter, the contract was awarded legally.
116. It is important to state that, as far as I am aware, the ongoing dispute between
POL and sub-postmasters concerning the integrity of Horizon had no bearing
on the conduct of this procurement exercise, and I do not recall this aspect
being raised at the Board during these discussions. I note that the Trinity
Stakeholder Communications Plan at (POL00158306) provides some further
detail and context relating to this issue.
The JFSA, the intervention of MPs, the Second Sight Investigation and media
coverage
117. At the time of my appointment as Shareholder NED I was aware, in general
terms, that there had been a threat of civil litigation on the part of sub-
postmasters in the relatively recent past but, as I understood it, the threat had
not materialised. I was not aware of any details as to the basis of the potential
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claim, or why the decision had been taken not to proceed. The Mediation
Scheme was running at that point and it seemed to be the focus for providing
some sort of resolution. In any event, there was no current litigation, or threat
of imminent litigation, at the time I took up my appointment to the Board and so
I did not have any concerns about the merits of any such claim.
118. However, although there was no ongoing litigation, or imminent threat of
proceedings, I was aware of the longstanding concerns of a number of sub-
postmasters, and the JFSA, concerning the integrity of Horizon and it was
apparent to me that litigation was still a possibility. In fact, there was an extent
to which I found it quite difficult to understand why the JFSA had not
commenced proceedings by that stage. I recall seeing the letter from Alan Bates
to Jo Swinson MP dated 16 April 2014 (UKGI00002264) relatively shortly after
my appointment in which Alan Bates set out his concerns about the Mediation
Scheme and observed that many people thought that litigation would be the
only way to resolve the issue.
119. In general terms it seemed to me that POL was taking the issue seriously. The
Mediation Scheme had been established, there was a new Prosecutions Policy
and I was aware that there had been a considerable amount of work done in
response to the Second Sight Interim Report during the second half of 2013.
The Board also seemed to be taking the matter seriously and one of the
decisions taken at the March 2014 Board meeting at which my appointment
was confirmed was to establish the Sparrow Sub-Committee to provide
oversight of the issue and the Mediation Scheme in particular.
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120. When I first joined the Sparrow Sub-Committee, my initial understanding of the
position was that POL had acknowledged that the concerns raised relating to
the Horizon system needed to be looked into, but did not consider there to be
any particular fault on their part, based on the investigations POL had
conducted by that stage and the results of Second Sight’s interim report. It was
a difficult issue at a time when there were critical issues the business was
grappling with, such as financial services expansion and network
transformation.
121. Assuch, my understanding was that the Sparrow Sub-Committee had been set
up to get to grips with those Horizon issues that needed to be scrutinised and
resolved, to give the main Board more bandwidth to discuss other issues (a
similar approach was taken with pensions and financial services). That is not to
say that Sparrow, Financial Services and Pensions issues were fully
“outsourced” to a committee, but it allowed such issues to be explored more
thoroughly with briefings and decisions going back to the main Board where
necessary.
122. Ultimately, the Board wanted to investigate to ascertain the truth of the matter
and draw a line under it one way or another. The Board needed POL to have a
point-of-sale system that it could trust. This latter point was crucial and the
impression I gained on joining the POL Board was that it had a genuine interest
in getting to the bottom of the issue. If there was a problem with Horizon it was
vital for the future operation of the business that it be detected and rectified.
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123. Belinda Crowe led on Project Sparrow for POL and her remit included the co-
ordination of the Mediation Scheme on behalf of POL. My recollection is that
this involved her reviewing the cases being mediated, along with POL’s
response. She would usually attend the Sparrow Sub-Committee meetings and
was Close to the detail of the project. I do not recall having a formal briefing with
Belinda Crowe to learn about Project Sparrow although I saw her and spoke to
her over the phone and in person quite regularly during that time (with Peter
Batten likely to have done so even more frequently). I got the impression that
she took the issues seriously and I did not suspect that there was anything
motivating POL’s approach other than a genuine desire to get to the bottom of
the issue.
124. Minutes were prepared for the Sparrow Sub-Committee meetings although they
were generally anodyne and rarely reflected the full nature of the discussions
which took place during the meetings (as a matter of administrative practice).
However, broadly speaking, the minutes captured and summarised points of
discussion. If I disagreed with anything in the minutes, I would have said so. I
can recall on some occasions during my tenure, perhaps half a dozen, where I
specifically requested Board minutes to be amended or updated but this was
not necessarily in the context of Project Sparrow and I do not have any direct
recollection of requesting changes to Sparrow Sub-Committee minutes.
125. The process for sharing information in relation to the Sparrow Sub-Committee
was similar to the process taken in relation to other sub-committees. Any
discussions by the Sparrow Sub-Committee were relayed to the Board as part
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of the Chair's update at the next Board meeting. The minutes of the Sparrow
Sub-Committee meetings were usually shared with the Board and were often
recorded as noted in the Board minutes. There would also sometimes be a
summary of the discussions that took place at the Sub-Committee meetings,
for example, by the Chair, and indeed some major decisions (such as closing
the Working Group in early 2015, and potential reforms to the Mediation
Scheme in June 2014) came to the full Board. There could sometimes be more
than one Sparrow Sub-Committee meeting between each Board meeting. The
Board could have asked for further information and individual Board members
could volunteer to sit on or attend the Sparrow Sub-Committee. Other members
of the Board who sat on the Sparrow Sub-Committee included Alice Perkins,
Paula Vennells, and Alasdair Marnoch, the then Chair of the ARC.
126. The Sparrow Sub-Committee had genuine conversations about how to
progress Project Sparrow and, as far as I was aware, the Sparrow Sub-
Committee members gave their honest opinions. It was never the case that the
Sparrow Sub-Committee members were prevented from saying what they
thought. I do not recall there ever being any suggestion that certain discussions
were privileged and so could not be fully recorded, nor were there any “no go
areas” for discussions. The forum was a very open one, which was Alice
Perkins’ way of discussing things.
127. In general terms, therefore, I felt that the issue was being taken seriously, by
both the company and the Board. What I was much less clear about, as time
went on, was what could realistically be done to resolve the issue. I was aware
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that allegations continued to be made concerning the integrity of Horizon but
what I had real difficulty in understanding was why, if there was evidence to
support those allegations and demonstrate that what the company was saying
was wrong, it was not being presented. On the issue of past prosecutions, in
particular, I had the perhaps rather simplistic understanding as a non-lawyer,
that if there was evidence to demonstrate that a conviction was unsafe the
appropriate course of action was to appeal the conviction and present that
evidence to the court. From the ShEx perspective, I did not see how I could be
in a position to advise Ministers the convictions were unsafe, or that
compensation should be paid, without hard evidence to support that position.
And so, whilst I had the general sense that everyone was taking the issue
seriously, I found it hard to see what more could be done, and I did not regard
the lack of resolution to be attributable to POL failing to treat the issue with the
importance it deserved.
128. I describe below, in detail, the steps I took to satisfy myself that the concerns
relating to Horizon were being properly investigated by POL in the specific
contexts of the Mediation Scheme, the commissioning of reports by Second
Sight, Deloitte and Linklaters, the review by Tim Parker, and ultimately the GLO
proceedings. In general terms I exercised oversight of the company’s actions in
relation to Horizon through my seat on the Board, and in conjunction with my
fellow directors, including on the Sparrow Sub-Committee. We received regular
updates and briefing papers from the company concerning the Mediation
Scheme and, subsequently the GLO proceedings. We directed that work be
commissioned from Linklaters (although, as described below, this was before
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my appointment) and Deloitte. Summaries of those reports would be relayed to
the Board. I also received information of a similar nature through direct
engagement between the Shareholder Team and POL.
129. From my perspective, it is important to keep in mind that, throughout my time in
post, there was always an underlying process of investigation into Horizon
underway. At the time of my appointment this was the Mediation Scheme,
overseen by the Working Group chaired by Sir Anthony Hooper. Although this
was running into difficulty by the time I joined the Board (as I describe below) it
continued to run into the Autumn of 2015 and POL appeared to remain
committed to it (as evidenced by the two letters we received from CEDR in
which they confirmed that POL had “been consistently responsive to CEDR’s
requests ...it is clear from the reports that the Post Office has a willingness to
explore the options, express empathy and have constructive dialogue with the
subpostmasters.”) (UKGI00005251) and (POL00119531). Once it became
clear that the Mediation Scheme had failed, the Minister Baroness Neville-Rolfe
commissioned a ‘fresh eyes’ review by the new Chairman, Tim Parker. This ran
into early 2016 and was yet to be completed when the GLO proceedings
commenced and we were advised by POL’s legal team that this was now the
appropriate forum to continue the remaining investigative work and for resolving
the dispute once and for all.
130. With the benefit of hindsight it is clear that the steps taken by both the Board
and the Shareholder Team to satisfy ourselves that POL was taking the
concerns regarding Horizon sufficiently seriously were inadequate. In particular,
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there was a general failure to ascertain whether POL was genuinely seeking to
address the issue with an open mind and, looking back now at some of the
documentation relating to the Mediation Scheme, I can see that the starting
position adopted by POL, namely the firm assertion that it had already been
established that there was nothing ‘wrong’ with the Horizon system, meant that
the process was probably doomed to fail from the outset.
131. By the time we reached early 2015 I was increasingly convinced that the only
way the issue would be finally resolved was through litigation. For my part, I
found it very difficult to see what I (or the Board, or the Shareholder Team) could
do to bring about a resolution of the dispute prior to litigation. Both sides were
in firmly entrenched positions, the dispute had been going on for several years,
the Mediation Scheme had largely failed (or was about to), and no new
evidence appeared to be forthcoming. Even if there was some means by which
we could have encouraged POL to take the matter more seriously I do not think
it would have made any material difference to the outcome.
132. I have been asked to describe my ‘reaction to the findings of Second Sight’s
interim report’, which I understand to be the report produced by Second Sight
in July 2013. As I have explained above, this report pre-dated my appointment
and although I was informed about it in the general terms that I have described,
I do not recall reading it at the time of my appointment, or of having any
particular ‘reaction’ to it. I was given the general impression that it underpinned
POL’s position and, as I have said, I was expressly told that it had identified no
‘systemic’ issues with Horizon. Accordingly, to the extent that I engaged with
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Second Sight's Interim Report at all, I was reassured by what I was told about
its conclusions.
133. There was a further report prepared by Second Sight during my tenure as
Shareholder NED. In the Board pack circulated prior to the Board meeting on
25 March 2015, there was a report from POL’s CEO to confirm that she had
received a draft of Second Sights Part Two, or ‘thematic’, report
(POL00027308). I am aware that there was some discussion of the draft
thematic report at the meeting, at which I was in attendance, but I am unable to
recall any detail beyond what appears in the minutes which simply record the
Board being told by the CEO that, “second sight has given us their updated
draft report’.
134. In the months prior to that point I had understood that POL had been unhappy
with Second Sight’s initial drafts of the report, which they felt made a number of
unevidenced claims. I was told that there had been discussions with Second
Sight in an effort to resolve that disagreement prior to its publication and to that
degree, the Report was quite well trailed.
135. I personally received Second Sight’s thematic report on 14 April 2015
(POL00226519) a few days after its publication. When the report arrived, it was
accompanied by a detailed rebuttal from POL running to 83 pages
(UKGI00000018). I read the Second Sight report and the rebuttal over the
coming days. To be frank I found the process to be a rather dispiriting one, for
the following reasons in particular:
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(i) The Second Sight report did not seem to me to provide clear answers to
the fundamental questions that had been raised about the integrity of the
Horizon system. I was hopeful that it would enable us to identify, one
way or the other and with clarity, whether the system was responsible
for the discrepancies that had been identified.
(ii) The report identified 19 “commonly mentioned issues’ which were said
to be ‘themes’ arising from the 150 applications considered under the
Mediation Scheme. These issues appeared to cover a wide range of
disparate aspects, including comment upon contractual issues which I
felt did not sit clearly within the remit of a report by forensic accountants,
and areas that I felt extended beyond Horizon itself (e.g. procedures
surrounding ATMs). Given the relatively small number of cases
addressed in the Mediation Scheme it seemed likely that at least some
of the 19 ‘themes’ were based on a small number of individual cases
which made me question how useful they were in generating conclusions
of general application.
(iii) I felt a number of Second Sight’s conclusions were expressed using
imprecise language and seemed to be made without reference to the
underlying evidence upon which they were based. Even if they had been
anonymised, specific illustrations of instances of actual events and how
they would cause losses for sub-postmasters would have been helpful
and leant credibility to the report, and may also have helped sub-
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postmasters articulate those issues as part of their mediation process
(which I understood to be the purpose of the report).
(iv)I found it difficult to understand and interpret the reference at page 7 of
the report to the majority of discrepancies being attributable to ‘errors at
the counter’, which seemed to imply human error in the inputting of
transactions or following of procedures rather than a fault with the
system, which had been one of the general theories being expressed by
POL to explain what had been happening in branch.
(v) POL provided an assertive and detailed rebuttal of Second Sight's
analysis. It appeared as though there was no common ground
whatsoever and no material conclusions which could safely be regarded
as matters of consensus.
(vi) The net effect of the report and the rebuttal seemed to me to not go much
further than to establish what we already knew, namely that despite a
lengthy process of investigation by Second Sight, there remained
fundamental issues of dispute between sub-postmasters and POL with
an unclear cause. To my mind the position was not therefore definitive
enough to take to others in Government to support the assertion that
there was an issue with Horizon that had caused miscarriages of justice
or that compensation was required for those who had to repay losses.
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136. I note that Second Sight’s thematic report contains reference to historic
prosecutions and observes (at 25.2.1) that in some cases criminal charges did
not seem to have been supported by the necessary degree of evidence, or had
been resolved by acceptance of a guilty plea to a lesser charge of false
accounting. Whilst POL responded to this in their response to Second Sight, I
recall that this latter point had already prompted some debate around that time,
and UKGI raised this with POL as to whether this was the case. I have seen a
letter dated 24 February 2015 from Jane MacLeod to Second Sight
(POL00040868) setting out her concerns and stating, amongst other matters,
that Second Sight were incorrect to advise that false accounting was a less
serious offence than theft. I do not recall seeing this letter at the time, but I have
some recollection of this being a contentious issue, along with a large number
of other points of dispute between Second Sight and POL arising from the
report. I also have some recollection of speaking with Laura Thompson about
the issue and the suggestion that sub-postmasters were being pressurised to
plead guilty to false accounting by adding theft to the charges, which was an
issue that came up in the Panorama broadcast, but I cannot remember whether
this discussion was in reaction to the Second Sight report or Panorama. I cannot
recall what was said other than that we were sceptical of the assertion that false
accounting was a lesser charge and Laura told me that she had discussed this
point with the business.
137. From my perspective, it did not seem that the dispute between Second Sight
and POL over whether some historic prosecutions may not have been properly
conducted was one on which I (or the Shareholder Team) could adjudicate. I
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assumed that each prosecution had been subject to impartial legal
proceedings, including the availability of a defence counsel and of a subsequent
appeal, and each with its own separate judge and jury. I was also aware by that
time that the CCRC was conducting an independent investigation and that this
provided the best mechanism for addressing the issue. I was also unsure as to
the extent to which Second Sight, as a form of forensic accountants were in a
position to provide an authoritative assessment of historic prosecutions, or as
to the evidence base on which they had reached their assessment.
138. In light of the difficulties that had been experienced during the Mediation
Scheme in the preparation of the case-specific reports and the failure, at least
as I saw it, of the Second Sight thematic report materially to advance the
resolution of the Horizon dispute I was sceptical as to whether Second Sight
were in a position to contribute anything more of value to the process. However,
I was aware that Second Sight continued to have the support of the JFSA and
that they had inevitably built up a significant amount of institutional knowledge
in relation to Horizon over the course of the several years that they had been
involved.
139. On 1 October 2015, the Shareholder Team prepared a submission to Baroness
Neville-Rolfe setting out the advantages and risks of agreeing to a meeting with
Second Sight (UKGI00006056). Laura Thompson took the lead in drafting this
briefing but I would have reviewed it before it was sent. Whilst it is apparent
from the submission that we regarded the decision to be relatively finely
balanced we came down in favour of recommending that the Minister agree to
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the meeting. We took account, in particular, of the increasing pressure from
James Arbuthnot MP and others following Panorama, the fall out of the debate
in Parliament brought by Andrew Bridgen MP in July, and the concerns raised
directly by Ron Warmington, the Managing Director of Second Sight, which I
was made aware of when Baroness Neville-Rolfe’s team forwarded the relevant
email correspondence to Laura and myself (UKGI00005279).
140. I recall that POL lobbied strongly for the meeting between Baroness Neville-
Rolfe and Second Sight not to take place, and that Paula Vennells spoke to me
and then directly to the Minister about the matter. My impression was that POL’s
trust and confidence in Second Sight had completely disappeared by this point.
In the call I received from Paula Vennells she made clear that she did not agree
with the meeting going ahead and that our advice was wrong. I have no direct
recollection of precisely how I responded to the call other than to tell her that
our recommendation would stand and that if she felt that strongly I would
recommend to the Minister that they (i.e. Paula Vennells and the Minister)
should speak. It was a finely balanced decision, which we acknowledged in the
submission, but we remained of the view that it should be recommended so that
the Minister could be allowed to make up her own mind about Second Sight,
having both met them and read their thematic report, which we had sent to her.
141. In the event, and notwithstanding Paula Vennells’ intervention, Baroness
Neville-Rolfe agreed to meet Second Sight and the meeting went ahead on 16
October 2015. The Shareholder Team prepared a briefing ahead of that
meeting, (UKGI00006175). Second Sight felt it was important that the meeting
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went ahead ‘off the record’ (for reasons that were not explained), however, we
recommended that Laura Thompson should attend and following this meeting
she prepared a brief note of the discussions, (UKGI00007316). I expect that I
will have read Laura Thompson's note at the time but I do not now recall my
reaction to it, although again there does not appear to have been any specific
evidence of problems with Horizon advanced. There had been a concern from
an early stage of my tenure, at both the Sparrow Sub-Committee and the Board,
that whilst Second Sight were supposed to be independent of both POL and
sub-postmasters, over time they appeared increasingly to sympathise with sub-
postmasters. This had led to a concern that they could no longer be regarded
as neutral in the process of trying to resolve the Horizon issues. I expect that
the note of the meeting will have served to reinforce those prior concerns.
142. Baroness Neville-Rolfe wrote a letter to Oliver Letwin MP on 29 November
2015, following her meeting with Second Sight (UKGI00010325) in which she
acknowledged that ‘important points were raised’ by Second Sight, although I
cannot now recall specifically what these were. I think Laura Thompson drafted
this letter and I will have reviewed it before it was sent.
143. The events surrounding the production of the Second Sight thematic report and
the meeting with the Minister later in 2015 only served to reinforce the
impression I had gained at the time of my appointment (and which I explain
below in the section of my statement dealing with the Mediation Scheme),
namely that POL had managed the engagement of Second Sight very poorly.
Although I was not in post at the time of the initial engagement, and so cannot
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speak directly to the decision making that led to their engagement, my
understanding was that Second Sight had been instructed as an independent,
expert body in order to conduct an investigation into the integrity of the Horizon
system in which both sides could have confidence. By the time we reached mid-
2015, and Second Sight had been engaged for well over two years, POL had
reached the position where it was not even prepared to contemplate Second
Sight meeting with the Minister. Each time Second Sight produced a piece of
work POL would put together a detailed rebuttal and call into question Second
Sight’s independence and/or competence.
144. I have been asked to describe the nature and extent of my involvement in
responding to concerns in the media about the Horizon IT system. The short
answer to this question is that my involvement was very limited, both as
Shareholder NED and as a member of the Shareholder Team. Neither the
Board nor ShEx engaged directly with the media in relation to Horizon and my
involvement in POL’s response to media concerns on this issue was generally
limited to receiving an update from the company as to whether they intended to
respond to media reporting and, if so, the general line that they intended to take.
I refer below to some of the briefings I received from the company in relation to
the media interest generated by the GLO proceedings and this is representative
of my involvement in media engagement more generally. The Panorama
broadcast in August 2015 was of a different order to general media interest and
I took a more direct interest in following the detail of POL’s media engagement
strategy in relation to this broadcast, and made sure I kept the Minister and the
Department up to date with what was reported and what POL intended to say
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in response. Part of the role of the Shareholder Team was to keep Ministers
sighted on issues that might arise in the media and on which they might be
asked to comment, either in Parliament or outside.
145. In general terms, and as can be seen from the relevant correspondence and
briefing, we advised Ministers that they should maintain the line that the dispute
between POL and sub-postmasters was an operational matter for POL and it
was not for Government to interfere, as had been confirmed with the Secretary
of State (UKGI00000063). That reflected the fact that for almost all of the time
I was in post the Horizon issue was subject either to an independent mediation
process or litigation, and we did not think it appropriate for Ministers to comment
substantively in the media on an issue that was subject either to mediation or
litigation.
146. As to my engagement with the NFSP, this was relatively extensive. They were
a key stakeholder in POL-related issues and so the Shareholder Team would
engage with them frequently, including at fairly regular meetings. There would
be a wide range of issues on the agenda but network transformation and
Government business were the issues that were most frequently discussed. My
recollection is that the level of engagement dropped somewhat after the new
Government came into power in mid-2015 but we maintained a direct line of
communication between the NFSP and the Shareholder and I note that the
material provided to me by the Inquiry contains a number of examples of contact
between my team and George Thompson in particular.
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147. My recollection is that relatively little of our interaction with the NFSP was
concerned with Horizon and the dispute between POL and a number of sub-
postmasters. George Thompson's position, as I recall it, was that he did not
think that there was a problem with the Horizon system and that the ongoing
dispute was damaging for the reputation of the Post Office and thus harmful for
his members. It seemed to me that he was keen for the integrity of the system
to be confirmed and I address below an exchange of correspondence which
reports a concern on the part of George Thompson to the effect that if POL
were to abandon prosecutions on the basis of an assertion that Horizon was
unreliable then it would be very difficult to establish the necessary confidence
in the system. I also recall an occasion when I asked him for his views on the
fairness of the contract and I recall him saying, in effect, that it had been in place
for quite some time and he had no concerns about it.
148. In short, my clear impression from my interactions with him was that George
Thompson did not believe that Horizon was responsible for losses in branch
accounts and he was also frustrated that the issue continued to rumble on
without apparently getting any closer to a resolution. I took reassurance from
this given that most of the discussions the team and I had with George
Thompson and colleagues consisted of a stream of complaints and concerns
about Post Office and Government.
Project Sparrow and the Mediation Scheme
149. The establishment of the Initial Complaint Review and Mediation Scheme pre-
dated my appointment as Shareholder NED. I understand that the Mediation
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Scheme was established in mid-2013 as part of the response to the Second
Sight Interim Report and I had no involvement in the decision-making
concerning the establishment or design of the scheme. It follows that I am not
in a position to comment as to the extent to which the decision to establish the
Mediation Scheme was an appropriate response to the Second Sight Interim
Report, although I understand that the establishment of the scheme was
supported by both the JFSA and James Arbuthnot. From my perspective, a
Mediation Scheme administered by a specialist body such as CEDR, operating
under the oversight of an independent working group, and that investigated the
cases of those that had had issues with Horizon appeared to be a sensible and
appropriate means of resolving a long-standing and intractable dispute, at least
in principle.
150. I had no involvement in the appointment of Sir Anthony Hooper as Chair of the
Working Group and I am not aware of the process by which he came to be
appointed. I was also not involved in setting the remit of the Working Group or
defining the process by which cases were triaged for admission into the
scheme. By the time of my appointment the Mediation Scheme had been in
operation for approximately six months.
151. Early in my tenure, I recall becoming aware of concerns regarding the
effectiveness of the Mediation Scheme in general, and the performance of
Second Sight in particular. I was not aware of the background to the
engagement of Second Sight, or the decision making which led to their
involvement in the Mediation Scheme and so I cannot comment on the context
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or rationale for either decision, but the general impression I formed was that the
process was not living up to the expectations of sub-postmasters and nor, for
that reason, the company.
152. My understanding was that the intention was for the Working Group to be
informed by the work done by POL and Second Sight in order to triage individual
claims brought by sub-postmasters and identify whether a case was suitable
for mediation or not. This triage process was proving to be slow and I was
informed that Second Sight were felt by POL to be taking too long to produce
reports relating to claims by participants in the scheme and that the reports
when they were finally produced sometimes had to be revised following
comments from Sir Anthony Hooper.
153. I recall my initial view at the time was that this must be a fairly difficult job for
Second Sight given that they were a relatively small firm of accountants dealing
with a large volume of potential claims, and some of the matters raised in the
course of the work were likely to have been outside of their expertise, such as
legal issues. I got the impression that Second Sight was rather overwhelmed
by the workload, particularly as I had come to understand that there were only
two or three individuals at Second Sight undertaking this large-scale exercise.
As I have indicated, I was not involved in the decision to appoint Second Sight
and I do not doubt that there were good reasons for the choice but, by the time
of my appointment, the scale and complexity of the task had grown and I
wondered whether it might have been preferable to engage a larger firm with
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greater resources and in-house access to other areas of expertise (such as
legal advice).
154. Whilst I understood that Second Sight had been instructed to produce individual
case reports for the mediation, I did not see any of the case reports myself, as
it was important that the independence of the mediation be respected and
preserved. On reflection, I do now wonder whether I should have asked to see
a couple of randomly selected anonymised copies, to make an assessment of
them for myself. However, the message that was being received by the Sparrow
Sub-committee, primarily from POL, was that there were problems both with the
speed at which the reports were being produced, and in some instances, with
their quality. I note from an email I sent to Peter Batten on 25 March 2014 that
I had been told by Paula Vennells at a pre-Board meeting the day before, that
Sir Anthony Hooper considered the Second Sight reports sent to him thus far
to be poor quality and that his faith in Second Sight was ‘waning’
(UKG100002221).
155. I was not in a position to judge the validity of the concerns being expressed
about Second Sight’s reports. I had not seen those reports and, as I have
indicated, it was important that the Government (and the POL Board) respected
the independence of the mediation process and maintained an arm’s length
approach. Nor was I in a position to judge the validity of the concerns being
expressed by Second Sight as to the difficulties they were encountering in
obtaining access to relevant material from POL (which POL robustly refuted
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when challenged). However, overall, it was clear that the Mediation Scheme
was stalling and running into difficulties (UKGI00019320).
156. My first meeting of the Sparrow Sub-Committee on 9 April 2014 referred to
some of these concerns as well as broader issues around the Mediation
Scheme. A paper was presented to the Sub-Committee by POL entitled ‘Initial
Complaint Review and Mediation Scheme — Options for the future of the
scheme’ (POL00138251). It stated that ‘The Scheme was established in August
2013 to resolve complaints in respect of the Horizon system, on the basis that
there were no systemic problems with Horizon’ (page 2 — emphasis in
original), and it set out a number of options for the future conduct of the
Mediation Scheme. However, I did not feel that that basis of the scheme (that
there were no systemic problems with Horizon) necessarily mattered when
individual cases were being investigated, as I had presumed that each case
review would consider each situation on its merits and might find issue with
Horizon if it was present.
157. As to the role of Second Sight, and as recorded at paragraph 2(a) of the
minutes, we were informed that POL had carried out internal investigations of
20 cases which had been submitted to Second Sight but the three case reviews
prepared by Second Sight had been rejected by the Working Group
(POL00006565). Second Sight were due to produce a further ‘2-3 case reviews’
by 1 May. This struck me as a very slow rate of progress and the fact that the
reviews that had been produced had been rejected by the Working Group was
also a cause for concern. The Sub-Committee directed that a paper be
prepared for consideration at its next meeting addressing the role of Second
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Sight and options to support them or reduce their role, taking account of
stakeholder views.
158. The paper was produced by Chris Aujard and is dated 28 April 2014
(POL00022125). It stated that Second Sight continued to enjoy the support of
the JFSA and a ‘number of MPs’ but that “it is [sic] appears increasingly evident
that Second Sight’s ongoing involvement in the Scheme (at least in terms of
fulfilling their role as the providers of expert advice to assist the parties resolve
their disputes) is unsatisfactory’. The dilemma as described by Chris Aujard
was of POL regarding the involvement of Second Sight to be unsatisfactory in
terms of performance, whilst acknowledging that their continued involvement
was important to both maintain stakeholder support for the process and meet
Parliamentary commitments. This message was consistent with what I had
been told at an early briefing from Belinda Crowe in February 2014, which I
reported in an email to Peter Batten on 20 February 2014 and in which I
observed that, “/ am not sure how POL managed to get themselves into this
situation!’ (UKGI00002191). The essence of the problem, at the point of the first
meeting of the Sparrow Sub-Committee in April 2014 was that the Mediation
Scheme had been in operation for eight months and had originally been well
received, but it had yet to achieve any significant progress in resolving the
dispute between sub-postmasters and POL concerning Horizon and there
appeared to be little prospect of any imminent improvement in the efficiency or
efficacy of the scheme.
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159. From my perspective as the Shareholder NED it was obviously disappointing
that the Mediation Scheme appeared to have run into significant difficulties as
the Board and the Shareholder Team had hoped that it would provide the
means of resolving a complex and intractable dispute. However, the scope for
me to intervene directly in the Mediation Scheme in order to try and address
these issues was very limited. Independence of the scheme was fundamental
to its proper operation, as emphasised in the statement made by James
Arbuthnot on 27 August 2013 (UKGI00002659) and in the letter sent to Sir
Anthony Hooper in April 2014 shortly after my appointment to the Board
(POL00100578). As to the role of Second Sight, whilst POL seemed able to
define what it perceived to be the problem, namely the slow production of
reports of insufficient quality, it did not appear to have a solution within the
constraints in which it found itself.
160. From relatively early on, it was apparent to me that the Mediation Scheme was
facing significant challenges and I was relatively pessimistic about its ability to
deliver a satisfactory resolution of the dispute. On 25 April 2014 I was sent a
copy of a letter from Alan Bates to the Minister dated 16 April 2014
(UKGI00002264) in which he also expressed a degree of pessimism in relation
to the Mediation Scheme, observing that “Many observers to the process now
believe that the only way we are really going to resolve this matter is through
the media and the courts, as fortunately so much more has come to light during
the course of this Scheme. But whilst JFSA will stay engaged and support the
Scheme for the present we have had to begin considering other options for the
future”. So, the essential position seemed to be that whilst both sides appeared
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to be willing to continue to try and make the Mediation Scheme work, they were
both expressing significant reservations about its ability to deliver a successful
outcome, and the JFSA seemed to be considering “other options”, which I took
to mean legal action, as being the only viable way of resolving the dispute once
and for all.
161. A further paper was prepared by POL proposing options for the future
administration of the scheme, which was presented to the Sparrow Sub-
Committee meeting in June 2014 (POL00022128). We were told that there had
been 150 applications to the Mediation Scheme of which 14 had been
‘rejected/resolved’. The rest were at various stages of progress. Three options
were presented, which were predicted to take 18 months, 16 months and 7
months respectively, with the first option being to continue the scheme as
currently configured. The ‘Communication Key Messages’ for option 3, which
was the POL recommendation, included the following:
“We have therefore decided to move to a new approach where Post
Office will investigate all cases and provide applicants with a
comprehensive report. We will mediate in cases where appropriate. We
have full confidence in the Horizon system which process [sic] six million
transactions every day. Applicants in the Scheme represent less than
0.3% of the 68,000 people using the system. Once we have investigated
all cases we will provide a summary report and make any improvements
that can be made in light of these findings.”
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Having already considered this issue at its meeting on 30 April
(POL00006566), the Sub-Committee recommended option 3 to the Board, but
this was ultimately rejected by the Board on 10 June 2014 (POL00021526).
162. I have been asked whether the number of applications made to the Mediation
Scheme caused me concern. Whilst 150 cases was clearly a substantial
number, and it was plainly of concern that there were this many sub-
postmasters who were alleging that was some form of fault in the operation of
Horizon, the context provided by POL (which I could not factually disagree with)
was consistently to the effect that there were 11,500 branches, 78,000 users of
the system at any one time, 6 million transactions a day, with those 150 in the
scheme covering a timeframe of approximately 15 years covered by the
Scheme (an average of ten per year). In that context 150 cases appeared to
represent a very small fraction of the hundreds of thousands of users of the
system over the material period. I do not therefore recall the number of
applicants to the Scheme in and of itself causing me to doubt the information
that I had been given as to the integrity of Horizon, given the very limited
proportion of cases involved, and given each case was being individually
investigated by both POL and then Second Sight. It did not seem incongruous
at the time with being consistently told by POL that none of the cases
investigated as part of the Scheme had identified any problems with Horizon,
and that cash shortfalls were caused by some other reason e.g. user error.
163. During the second half of 2014, the Board received updates on the continued
operation of the Mediation Scheme from POL the essential effect of which is
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captured in the minutes of the October 2014 Board meeting (POL00021529):
“The CEO updated the Board on Sparrow and an antagonistic conversation with
James Arbuthnot MP about the business’s approach to the Mediation Scheme.
She reiterated that the investigations were progressing well. The Business was
refusing to progress all cases into mediation, although it was offering to meet
and go through each case with the applicant.” In short, it was clear that the
Scheme continued to face significant challenges in maintaining stakeholder
engagement but it was still operating and cases were still being investigated.
164. As to the extent to which the investigation undertaken in the course of the
Mediation Scheme had identified any concerns relating to the integrity of the
Horizon system, the position, as at October 2014, was set out in letters to the
Minister from Paula Vennells and Chris Aujard on 14 October 2014
(POL00210905); (POL00210906). Chris Aujard’s letter included the following,
under the heading ‘Scheme progress’: “So far we have found nothing in those
cases which has raised concerns about faults with the Horizon system, the
safety of convictions or Post Office’s liability for the losses being claimed by
applicants.” He acknowledged that it was inevitable that there would be a
considerable number of applicants remaining dissatisfied at the end of the
process but asserted that, “After what now amounts to over two years’
investigation, Second Sight have not found a systemic problem with Horizon. If
this continues to be the case, and we have every reason to believe it will, then
we will need to stand behind the evidence of the extensive work we and Second
Sight have undertaken investigating every case...”.
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165. As Paula Vennell’s acknowledged in her letter to the Minister (POLO0210906),
the Mediation Scheme continued to face significant challenges, and it was clear
that stakeholder engagement was increasingly fragile, but from the account that
was being given it seemed as though the Scheme was continuing to investigate
cases and provide further insight into the operation of Horizon.
166. The loss of confidence in the Mediation Scheme on the part of the JFSA anda
number of MPs, including James Arbuthnot, was clearly demonstrated by the
Westminster Hall debate on 17 December 2014, during which allegations were
made to the effect that the Mediation Scheme was a ‘sham’ and that POL had
not been engaging in good faith (POL00308842). Whilst these were concerning
allegations, POL had been consistently providing reassurance both to the
Board and to the Minister that it was engaging constructively in the Mediation
Scheme and that cases were being carefully investigated. Some of the
statements made in the debate, such as POL refusing to mediate 90% of cases,
were contradicted by the facts as I understood them, including by statistics
provided by Sir Anthony Hooper to Jo Swinson MP at the time (Paper on Post
Office Response to Westminster Hall Debate, January 2015
(UKGI00003008)). This made me less inclined to question POL’s assurances.
167. That reassurance was repeated in the detailed response POL prepared
following the debate (UKGI00002985) which included the following: “To date
and after two and a half years of investigation and independent review, the facts
are that Post Office has found no evidence, nor has any been advanced by
either an Applicant or Second Sight, which suggests that Horizon does not
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accurately record and store branch transaction data or that it is not working as
it should. This offers welcome reassurance to everyone who works in the Post
Office network, all of our customers and our partners and the millions of people
who support and depend on the Post Office. Post Office has now completed its
investigation of nearly all cases within the Scheme.”
168. I was not directly involved in the operation of the Mediation Scheme and I had
not seen the investigation reports of the individual cases so I was not in a
position to assess for myself the accuracy of these assertions, but I had no
reason to doubt that they were accurate or that POL would make them unless
it had a proper basis for doing so. POL also provided a lengthy and detailed
rebuttal to suggestions that it had not approached the Mediation Scheme in
good faith and from my perspective I had seen the Board asking and expecting
POL to do so. In short, therefore, POL’s position was that the reason the
Mediation Scheme had not delivered the desired outcome from the applicants’
perspective was not because the Mediation Scheme (or POL’s engagement
with it) was defective, but because the extensive investigations undertaken as
part of the Mediation Scheme had not revealed any evidence of problems with
Horizon.
169. This is the context in which I wrote the email to the Minister's office on 17
December 2014 attaching a briefing for the Minister in relation to points James
Arbuthnot might raise during the Westminster Hall debate (UKGI00002853)
(UKGI00002854). To be frank I was becoming quite frustrated by this point. I
had wanted the Mediation Scheme to be successful in delivering a resolution to
this long running dispute, as had the Board and the Minister. POL was
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repeatedly and robustly asserting that all the investigations undertaken to date,
including all the investigations carried out as part of the Mediation Scheme, had
confirmed the integrity of Horizon. The JFSA and its supporters, including
James Arbuthnot, were asserting that position was wrong but did not appear to
be providing any tangible evidence in support of that assertion. If the JFSA, or
James Arbuthnot, had evidence to demonstrate that what POL was saying was
wrong I felt strongly that it should be produced, which is why I included a robust
suggested line in the briefing (which I do not think the Minister ended up using)
to the effect that allegations of wrongful conviction or miscarriage of justice were
very serious and if there was evidence to back up such allegations it should
immediately be disclosed.
170. Similarly, in my covering email, I sought to make the point that there was no
point in continuing to conduct further reviews in circumstances where POL was
stating that every review conducted over the last two and half years, including
ones conducted by Second Sight, had only served to reinforce the conclusion
that no new faults had been found with Horizon, unless those who asserted
otherwise were in a position to produce evidence to the contrary. The mediation
process had not revealed the existence of a ‘smoking gun’ as I understood it
(by which I meant clear evidence of a defect in Horizon which might explain
sub-postmaster losses) and I saw no reason to think that a further review was
likely to do so (as noted in my email to the Minister dated 17 December 2014
(UKGI00002853)). I felt that the risk for Ministers was that the Government
could ask POL to conduct review after review, but if there was not a problem to
find, those reviews would not bring closure to sub-postmasters nor POL.
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171. It is for this reason that, in my covering email, I noted that my proposed lines
for the Minister were perhaps stronger than they had been previously. In short,
I wanted her and her office to know that this was a conscious decision on my
part, although ultimately it would be a decision for the Minister whether to take
that stance or not.
172. My scepticism about the merits of instituting a further review is also reflected in
an email that I sent to the Minister's office the day beforehand (UKGI00002842),
in which I expressed concern about the value of further reviews given that the
Mediation Scheme had not led to a successful resolution nor as I understood it
identified clear flaws in Horizon that resulted in losses for sub-postmasters. I
considered the Mediation Scheme to be an independent review of Horizon on
the basis that it was being administered by CEDR under the oversight of a
Working Group chaired by a senior former judge, which would most importantly
include investigation of specific sub-postmaster complaints regarding Horizon
by an independent firm of forensic accountants. I considered that, in light of its
structure and independence, the Mediation Scheme ought to be effective in
identifying any significant flaws in the Horizon system if they existed by targeting
specific cases where such issues had been cited. This was in addition to
reviews already undertaken by Deloitte and Cartwright King. I was therefore
unconvinced that a further independent review would add any value in that
regard. My reservations about inviting the CCRC to undertake a review were of
a similar nature in that I did not see any reason to believe that a review would
achieve a resolution of the dispute and I thought that issuing an invitation to the
CCRC to review convictions would be likely to be (mis)reported in the press as
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indicating a belief on the part of Government that convictions were unsafe.
However, in this regard and as can be seen from my email, I was in two minds
as to the way forward and remained open-minded to the idea provided that the
rationale for it was made clear i.e. to draw a line under the issue rather than
indicating Government thought there was an issue.
173. I have also been asked to explain why I described James Arbuthnot's
suggestion that POL should stop prosecuting cases as “unreasonable”. To put
this comment in context, it was my understanding that, by this stage, POL had
already stopped prosecuting cases generally, although it retained the ability to
do so in the most egregious cases. As reflected in my direct response to point
5 slightly further up the email, I understood that the possibility of a criminal
prosecution was necessary in order to retain some deterrent effect against
criminal activity and I did not consider it reasonable that this deterrence should
be removed entirely, when to my knowledge no evidence of a miscarriage of
justice had been produced, no appeals had been brought, and no convictions
had actually been overturned.
174. As we moved into 2015, and despite the fact that the Mediation Scheme was
continuing to operate and cases continued to be investigated, it was becoming
increasingly clear to me that the Mediation Scheme was not sustainable in its
current form and was not going to produce a resolution of the dispute. Only a
handful of cases had been successfully mediated in a period of approximately
two years, the relationship between POL and Second Sight appeared to have
broken down and my overall impression was that none of the parties considered
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that the Mediation Scheme was successfully meeting their expectations. The
problems were starkly illustrated at a hearing before the BIS parliamentary
Select Committee in February 2015 at which it was made plain that nobody was
happy with the Mediation Scheme in its current form. From my perspective it
was very difficult to see how the scheme might continue to operate beyond this
point without very significant overhaul.
175. I have been asked to comment on an email that I wrote to Alice Perkins on 4
February 2015, the day after I had attended a meeting of the BIS Select
Committee at which Paula Vennells had given evidence (UKGI00003209). In a
‘p.s.’ to the email I give my perception of the proceedings as being a “bit of an
ambush”. This comment was intended to convey my impression that the
environment was a hostile one for Paula Vennells. I recall her and Angela van
den Bogerd sitting next to a representative from Second Sight, and so Paula
Vennells was facing questions or assertions from both the committee of MPs
and from other members of the panel. She seemed to be quite isolated and I
got the impression that she was not prepared for the intensity of the questioning
she faced.
176. When I drafted my email, I was not seeking to make any comment on the
substance of the questioning itself, it was more about tone and balance. As to
my offer to Alice Perkins of a chat, I do not recall any specific discussion with
her about the Select Committee proceedings, although by the time we next
reconvened for a Sparrow Sub-Committee meeting I think most people had
seen the recording of the session. By that stage, POL was engaged in preparing
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its response which included a letter to the Sub-Committee and I do not recall
being asked for any further feedback on Paula Vennells’ evidence.
177. There was a meeting of the Sparrow Sub-Committee on 18 February 2015 at
which POL presented a paper on the options for the future conduct of the
Mediation Scheme (UKGI00003366). This work had been commissioned by the
Sub-Committee at its January meeting, in light of the concerns I have described
above as to the continued viability of the Mediation Scheme.
178. My overall impression of the proposals was favourable. I noted, in particular,
that under the new proposals the triage stage would be removed so that every
applicant would have a mediation (except for criminal cases); and that every
applicant would have their case investigated and have the right to request a
Second Sight report if they wished. Second Sight would also finalise their
thematic report.
179. I realised, however, that the proposal was unlikely to find favour with the JFSA
and briefed the Minister accordingly. Although the proposals envisaged a
continued role for Second Sight in the investigation of individual cases and the
finalisation of the thematic report, I was aware from the outset of my tenure that
any reduction of the role of Second Sight and a prospective end to their
engagement would prompt a strong reaction from the JFSA. This was at least
part of the reason why the POL Board had decided not to act on its concerns
regarding the quality of Second Sight’s input when considering the future
operation of the Mediation Scheme in early to mid 2014.
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180. The proposal to overhaul the Mediation Scheme, dispense with the Working
Group and re-define the role of Second Sight was however the subject of much
deliberation and consideration by the Sparrow Sub-Committee and the POL
Board (see minutes dated 30 April 2014 (POLO0006566), Sub-Committee
Recommendation dated 6 June 2014 (POL00027153), and Sub-Committee
Update and Options paper dated February 2015 (UKGI00003366)). The issue
was considered by the Sparrow Sub-Committee first, and then at Board level.
The Minister, Jo Swinson MP, was informed of the plans (see emails dated 4
March 2015 (UKGI00019671) and 3 April 2015 (UKGI00000920) and a letter
from Paula Vennells to Jo Swinson MP dated 9 March 2015 (POL00119752)
and a Submission from Jo Swinson to Laura Thompson dated 4 March 2015
(UKGI00000032)). Care was taken to check that the plan conformed to her
parliamentary statements.
181. I have been asked to explain a comment I made in the course of
correspondence on this issue, in an email to Laura Thompson on 12 March
2015 (UKGI00019720), where I state that the Minister had “clearly not read the
sub”. The context of this email was a submission to the Minister on 4 March
2015 (UKGI00006140) in which we sought to brief her on the proposed changes
to the Mediation Scheme, including the revised role for Second Sight where it
said “POL will terminate their engagement with Second Sight, but provide
funding for applicants who wish to have Second Sight or other forensic
accountants produce a report on their case before mediation”. The submission
also sought to explain that, under the new arrangements all cases (except
criminal ones) would be mediated and there would be no preliminary triage
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process. The submission also sought to explain that, whilst there was likely to
be some opposition to the proposals it was important to focus on the substance
of what was being done to the Scheme, and the rationale for it, rather than what
we anticipated to be the ‘noise’ that would be generated by the proposals. The
overarching point, from my perspective, was that this was the last chance to
keep the Mediation Scheme alive, as the existing model had not worked and
was not going to work — there was no point in hoping otherwise.
182. That inevitably required some tough decisions and I was conscious that there
would be significant opposition to the proposals. I felt that it was going to be
impossible to find a way forward that kept everyone happy and that the Minister
needed to understand that there were likely to be some difficult conversations
ahead, but that the Board had not reached the position without very careful
consideration.
183. This was the background to the email from Laura Thompson in which she
reported, amongst other things, that the Minister had complained that she was
not aware that POL “were terminating Second Sight’s contract”
(UKGI00019720). The submission had to my mind clearly explained that
Second Sight’s existing engagement would be terminated but that they would
be retained as investigators in individual cases, and would complete their
thematic report. My observation that the Minister had not read the submission
was a flippant way of noting that she had clearly not taken on board the change
to Second Sight’s engagement as described in the submission, as opposed to
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me suggesting that she had not read the submission at all (which she clearly
had, as she had responded to it via her office).
184. As for the rest of the email, which was written between colleagues in informal
language which I regret, I was seeking to make the point that it was going to be
necessary for the Minister to stand behind the hard choices that had been made
in a final attempt to keep the mediation process alive and to be realistic as to
the extent to which it was going to be possible to find a way forward that pleased
everyone. My reference to it being unrealistic to provide Jo Hamilton with “wads
of cash” was expressed in thoughtless and insensitive language.
185. From my perspective, and from the perspective of the Board, there was
however no evidential basis upon which we could justify the payment of large
amounts of compensation to sub-postmasters (convicted or otherwise) or to
reach a conclusion that they were owed an apology, when none of the sub-
postmasters had sought to appeal their conviction or take their contractual
dispute to the courts. My comment was not intended to single out Jo Hamilton’s
case specifically, I was more making the general point above and referenced
Jo Hamilton as she was one of the highest profile cases in the public domain.
lam sorry to Jo Hamilton for the offence this phraseology will have caused.
186. The consistent and unequivocal message from POL was that after two and a
half years of investigation there was no evidence of any defect in Horizon and
that every case investigated in the course of the Mediation Scheme reinforced
that conclusion. I was becoming increasingly frustrated because despite what
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we were being told by POL there was no let up in the assertions by sub-
postmasters that POL’s position was wrong, Horizon was flawed and
responsible for their losses. I would have liked to be able to do something to
resolve the issue, as would the Board. I was spending a large proportion of my
time on this issue and there seemed to be no solution in sight. I had no interest,
financial or otherwise, in the outcome of the Mediation Scheme and I remember
thinking at the time that things would be much easier, from my perspective, if
the investigations had identified a clear flaw in Horizon which demonstrated that
sub-postmasters should be compensated. The Shareholder Team, and the
Board, would then have had something more tangible to get to grips with.
187. I recall the decision to reconfigure the Mediation Scheme being a difficult
decision, and one that the Board would not have taken had it felt that there was
a realistic alternative of allowing the Mediation Scheme to continue in its current
form. My impression, at this stage, as someone who had been on the Board for
just under a year, was that the Board was becoming increasingly frustrated at
the lack of progress being made in reaching a clear resolution of the Horizon
issues. As I have described above, it had, by this stage, instructed Deloitte to
undertake a review, it had appointed Second Sight, it had considered and
approved the Mediation Scheme and it had established the Sparrow Sub-
Committee to provide oversight of the issue. Despite these steps, the issues
remained intractable and there was still no clear answer to the basic question
of whether or not there were serious systemic flaws in Horizon. No ‘smoking
gun’ had been identified, at least as far as we understood it, but nor had the
integrity of the system been conclusively demonstrated to everyone’s
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satisfaction. The essential question the Board was asking in late 2014/early
2015 was what further options were available for trying to get to the bottom of
the matter. It was in this context that the proposed re-design of the Mediation
Scheme was considered to be an option worth pursuing.
188. I did not disagree with the decision to close the Working Group and reconfigure
the Mediation Scheme. I was however concerned to ensure that it was
compatible with statements previously made by the Minister and I was
pessimistic about the prospects of it being welcomed by the sub-postmasters
but, fundamentally, I thought it was right to try and keep the option of mediation
alive through a re-designed scheme. No one, including POL, the JFSA and the
other stakeholders, seemed to be happy with the existing scheme and the
decision to close the Working Group seemed to me to be in the spirit of what
everyone wanted, namely a speedy resolution to a lengthy and intractable
dispute.
189. Once the decision to close the working group was publicised, I recall it being
presented by James Arbuthnot MP during Prime Minister's Questions in March
2015 as ‘the sacking of Second Sight and the suppression of Second Sight’s
second report’ (UKGI00000930). That did not accurately reflect the Sparrow
Sub-Committee’s understanding or reality at that time. Second Sight were still
contracted to prepare individual case reports for the purposes of the Mediation
Scheme and were still commissioned to complete their thematic report, which
was to be sent to all participants in the Mediation Scheme to assist with that
process. The changes were also characterised as closure of the Mediation
Scheme, but mediation would continue; it was the triage process of the Working
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Group which was being stopped, with an assumption of mediation being made
in every case henceforth (a position I understood the JFSA to have been
pushing for). I did not consider that there was any attempt by POL to suppress
the thematic report. Although I was not privy to the instructions to Second Sight
for the preparation of this report, it was my understanding that the thematic
report was being prepared for the purpose of assisting the mediation process
and therefore was meant to go only to those involved in the scheme, as
opposed to a more general population (although thought was given to
publishing if after all the mediations had been completed). It nevertheless ended
up in the public domain and we received a copy as noted above.
190. I had briefed the Minister on the re-designed Mediation Scheme and she had
received a letter from Paula Vennells about the changes being made
(UKGI00019696). I made it clear that I thought the assertion that Second Sight
had been sacked was a mischaracterisation. As I have described above, I also
sought to enlist the Minister's support in defending the re-configuration of the
Mediation Scheme. I should make clear, however, that I did not regard the
dispute over the merits of the re-designed scheme as being capable of
constructive resolution and my underlying expectation at this stage was that
mediation, whether of the type now proposed or otherwise, was unlikely to
provide the solution. It was however a way to change the unsatisfactory status
quo and accelerate cases for mediation which some at least might find useful.
191. Asto POL’s approach to the Mediation Scheme after the re-configuration of the
scheme in early 2015, my understanding was that the mediation process went
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on, and cases continued to be investigated, although a number of applicants
pulled out. The position of the JFSA appeared to be that it could no longer
support the Mediation Scheme and was encouraging applicants not to engage
and to await the establishment of some other form of investigation such as a
judicial review. It seemed to me that the prognosis for the Scheme was poor
but that it was at least still running. I note that we received an update from
CEDR in August 2015 (UKGI00005307) indicating that the Mediation Scheme
was running at a 40% settlement rate, which was lower than other schemes,
but indicated that at least some cases were being resolved and that “Post Office
are agreeing to mediate in almost all cases, even where the prospect of
settlement is slim’ (UKGI00005307).
192. On6 August 2015, I attended a meeting with the Minister where Paula Vennells
presented a series of slides (UKGI00000035) which included reference to
POL’s continued willingness to engage constructively in mediation. This was
the first time that POL had had the opportunity to present its case quite so
directly and comprehensively to the Minister, and for her to ask questions
directly of them in return. The slide show provided by POL consisted of c30
pages giving details of the issue and the Mediation Scheme. A breakdown of
cases was provided (at page 11) (POL00113308) which seemed to indicate that
there was at least some willingness on both sides to continue to mediate.
193. I do not recall there being any direct involvement in the Mediation Scheme on
the part of either the Board or ShEx during 2015 other than receiving updates
from time to time along the lines I have described. From my perspective this
remained an independent process, confidential as between the parties, and for
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as long as there were applicants who were prepared to engage in mediation
the Scheme continued to provide something of value — regardless of whether
mediation was successful, or whether it even proceeded to mediation, cases
were being re-investigated by POL and reviewed by Second Sight.
194. However, and as I describe below, as we progressed through the summer of
2015 it was apparent that a new process of investigation would be required and
we started to work up options for the new Minister, Baroness Neville-Rolfe,
which ultimately resulted in the commissioning of a review by Tim Parker, the
incoming POL Chairman.
Parker/Swift Review
195. In light of the effective collapse of the Mediation Scheme and the continuing
Parliamentary activity in July of 2015 there was an obvious need to try and
come up with alternative ways to progress the resolution of the Horizon issues
and reach clear answers to the fundamental questions of whether there were
deficiencies in the Horizon system and whether they might be responsible for
the reported discrepancies.
196. As stated in the submission from Laura Thompson to Baroness Neville-Rolfe of
31 July (UKGI00000007), it was noted that the Shareholder Team had begun
“exploring options to address the concerns” she had raised, recommended that
she meet Paula Vennells and Jane McLeod the following week (which was the
6 August meeting referenced above), and that ShEx would prepare “proposals
for options you can consider to ensure that there is an independent oversight
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of this matter, rather than Government having simply to take the side of one
party or another.”
197. To that end, the Shareholder Team presented a paper to Baroness Neville-
Rolfe dated 4 August 2015 (UKGI00019300) in which we set out a number of
options for a further review of the Horizon issues. These options included review
by a senior civil servant, review by an independent person (judge or similar),
review by a professional firm such as lawyers or accountants, requesting
assurance from CEDR, or maintaining the status quo, although we accepted
that the latter was unlikely to be a realistic option because it would not have
provided any reassurance for Ministers or those affected and we foresaw that,
if that option was taken, “the Government could be accused of inaction or wilful
ignorance by JFSA.”
198. The meeting with Baroness Neville-Rolfe, at which we discussed the options
outlined in the paper, took place on 4 August 2015 (UKGI00005677) and I think
included attendance by Special Advisers. I have some limited recollection of
this meeting with Baroness Neville-Rolfe. The meeting was like a workshop and
the options paper (UKGI00019300) was used to prompt discussion of the
various options and generate other ideas. It was relatively unusual for us to go
to a Minister with options rather than a firm view on the approach to be taken.
The reason we identified options rather than making a recommendation was
because we were unsure which option was best (although some were clearly
better than others) and wanted to understand the Minister's views.
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199. I cannot recall who instigated the meeting with Baroness Neville-Rolfe but it
was no doubt in response to the concerns she had expressed, as
acknowledged in the submission of 31 July 2015 (UKGI00000007). At that time
Laura Thompson and I would see her quite regularly because we were working
on a legislation issue for GIB, as well as general POL issues, so it may have
been that we could sense she was not content with the position that had been
reached in relation to Horizon and was likely to want to consider alternative
options.
200. I cannot remember the discussion at the meeting on 4 August 2015 in much
detail. The paper did not expressly include an option of instructing Tim Parker
to conduct a review, although this is not surprising given the purpose of a
workshop is, in part, to generate further ideas. A number of the options that
were included concerned the commissioning of a review by a senior figure
whose conclusions would carry weight (such as senior civil servant or judge)
and there had also been external suggestions (specifically from Andrew
Bridgen MP) for a senior business figure with no vested interest to undertake a
review (Andrew Bridgen MP had mentioned Sir Terry Leahy, former CEO of
Tesco).
201. I am not sure which of us came up with the idea, but the notion of Tim Parker
undertaking a review was quite a neat governance-based solution in my view.
He was a highly respected although lesser-known business figure who would
be coming into the business with fresh eyes and no pre-conceived ideas as to
the integrity of Horizon. But importantly, as incoming Chairman, he would also
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be in a position to ensure that he had full access to all relevant material and the
necessary resources to be able to undertake a thorough review. The outcome
of the discussion was therefore that Baroness Neville-Rolfe would speak with
Tim Parker, to invite him to take a fresh look at the Horizon issues.
202. I was supportive of the decision to commission Tim Parker to undertake a ‘fresh
eyes’ review. Although it would be yet another review in an increasingly lengthy
series, the Mediation Scheme had failed, it was anticipated that the forthcoming
Panorama programme would include some serious allegations, and there
continued to be pressure from MPs and the JFSA to achieve a resolution. I
thought it was at least worth a try and might confirm whether there was an issue
or not with the Horizon system, and in particular to understand whether what
POL had been telling the Shareholder Team continued to be correct. It was
consistent with the suggestions that were being made by the parties that we
seek a review by senior and well-respected figure, which Tim Parker certainly
was, and as Chairman he would have access to all areas. He would also have
no vested interest, grievance, or views about the issue. I had met him and
thought that he was highly competent and experienced and for all of those
reasons it seemed to me to be a sensible way forward.
203. By way of further background to Tim Parker’s appointment, the Shareholder
Team had been made aware by the Chair in situ, Alice Perkins, that she was
looking to step down and so we knew we would need to begin looking into who
would replace her. Mark Russell, the Chief Executive of UKGI at the time, had
been contacted by somebody in the Cabinet Office who had recommended Tim
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Parker. He had a private equity background and his reputation was that he had
commercially transformed various companies including AA and Clarks,
following which he had been the Chairman of Samsonite’s Board. His potential
appointment came at a time when we were thinking as a team that we required
a more commercial Chair to meet the emerging challenges POL faced. Alice
Perkins was from a civil service background and had been chosen at the time
to steer POL through the difficult separation from Royal Mail and navigate its
new direct relationship with Government. Given that relationship was now firmly
established, the view of Justin Manson, Mark Russell and myself was that we
wanted to take the business in a more commercial direction to further secure
the network and build on the progress made. We thought Tim Parker, with his
experience, sounded like a good prospect for the position of POL Chair.
204. Anthony Odgers, Justin Manson and I met with Tim Parker and had an initial
discussion, although I cannot recall exactly when this took place. Both Anthony
and Justin were Directors in ShEx who had been, or were at the time
respectively, the Director in charge of the POL Shareholder Team. They also
sat on the ShEx Executive Committee.
205. Following this, there was a formal independent competition process to select
who would be the new Chair; a panel was convened and eventually Baroness
Neville-Rolfe considered that Tim Parker was the most suitable candidate
(having met three of the appointable candidates). Whilst I had not been a party
to the interviews, I was a part of the team who dealt with the administration and
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so I was aware of how Tim had performed during his interview, and how highly
he was rated by the panel.
206. Although I cannot fully recall, Laura Thompson or I would have probably written
the letter that Baroness Neville-Rolfe sent to Tim Parker on 10 September 2015
in which she asked him to give the Horizon issues his earliest attention upon
assuming his role as Chair (UKGI00019366). Subsequently, I would have seen
the letter that Tim Parker wrote in response to Baroness Neville-Rolfe on 1
October 2015 (UKGI00010326), confirming that he would appoint a QC to assist
with him with the scope of his investigation, subsequently confirmed to be
Jonathan Swift QC (former First Treasury Counsel), assisted by Christopher
Knight.
207. Aside from the above, I had no real knowledge of the methodology of the review
and had no sight of any instructions, either in draft or final form, which may have
been sent to Jonathan Swift QC. I also held no preconceived ideas as to what
the product of the review would look like. I was content to leave it to Tim Parker
to conduct the review as he saw fit and to present his findings to the Minister in
a manner he deemed appropriate. It was his review, as the new Chair.
208. My understanding of the essential scope of the review is reflected in the email
from Laura Thompson to the Shareholder Team on 20 November 2015
(UKGI00006250) in which she says: “Tim Parker agreed with Baroness Neville
Rolfe that he would undertake a review into the Post Office ‘Horizon’ IT system
and various claims that subpostmasters have been wrongly prosecuted as a
result of faults in the system.”
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209. As to the progress of the review, I have seen a chain of emails between myself,
Laura Thompson and Tom Wechsler (POL Chief of Staff) on 6 January 2016,
(UKGI00006451). I have no direct recollection of these emails but having
reviewed this correspondence for the purposes of preparing my statement, I
can now see that the Shareholder Team requested an update as to when POL
were expecting to hear from the Chairman following the completion of his review
and wanted to arrange a meeting between Tim Parker and Baroness Neville-
Rolfe so that she could be updated on his progress following his first few months
in post.
210. Aministerial briefing was prepared by the Shareholder Team, dated 22 January
2016 (UKGI00010327) ahead of the Minister's meeting with Tim Parker. I see
from the note of the meeting (UKGI00006482) that I did not attend, although
Laura Thompson was present and I expect that I would have been briefed by
Laura Thompson after the meeting and I am likely also to have read the note of
the meeting which I understand was prepared by the Private Secretary to the
Minister, Andrew Smith, and which included a summary of Tim Parker's
indication that “the QC was about to report. He had found no systemic problem.
TP thought the issue might have passed it peak interest.” (UKGI00006482) .
211. Tim Parker communicated his findings to Baroness Neville-Rolfe by way of a
letter dated 4 March 2016, in which he provided a summary account of the
findings of the review (UKGI00008800). This letter was attached to an email
from POL’s Programme Director (Patrick Bourke) to the Shareholder Team
dated 7 March 2016, (UKGI00006574) and was subsequently appended to a
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submission to the Minister drafted by the Shareholder Team on 9 March 2016
(UKGI00008801). I would have read and approved that submission.
212. Tim Parker's letter speaks for itself but the key conclusions, in summary, were
that POL had complied with its duties as prosecutor including in respect of
disclosure, that no evidence had emerged to suggest that a technical fault in
Horizon resulted in a sub-postmaster wrongly being held liable for a loss, and
some limited further investigation was required in order to reach final
conclusions. We summarised those findings in the submission to the Minister
and, in light of the reference to some further investigation being necessary, we
recommended that she seek an update at her next meeting with Tim Parker.
213. My thoughts on reading Tim Parker's letter were that the conclusions of his
review were reassuring but that was very different to it representing an end to
any dispute. On the contrary, it seemed that we were no closer to a final
resolution although it did provide me with some comfort that POL and Horizon
were not at fault for the losses suffered by sub-postmasters, and that in his view
POL had acted reasonably in their investigations. I continued to suspect that
litigation was ultimately going to be the only way that the dispute between POL
and the sub-postmasters would be finally resolved, and as noted in the 20
November 2015 email referred to above, the first indications a potential legal
challenge had already emerged (UKGI00006250). I had no reason to think that
Tim Parker's review as deficient in any material respect, or that the conclusions
reached were unreliable, it was simply that I did not expect the JFSA and others
to accept his findings.
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214. I did not see a copy of Jonathan Swift QC’s report and, as far as I am aware,
the report was not provided to the Minister either. From my perspective, the
mechanism of a letter from the Chair to the Minister setting out the conclusions
of the review seemed to me to be an entirely appropriate way of dealing with
the issue. In particular, I thought it was important that the Minister and the
Shareholder Team should be provided with Tim Parker's own views and
conclusions, given the discussions he had had internally at POL, with Second
Sight and with Lord Arbuthnot (UKGI00006459), in addition to his interpretation
and understanding of Jonathan Swift QC’s report. Whilst the ‘Swift Report’ is
now common parlance, at the time we in the Shareholder Team did not refer to
the ‘Swift Report’ and talked instead of the ‘Parker Review’, because that is
what we wanted and had asked for, being his view, not the views and
conclusions of all of those who may have contributed to his review. I was aware
that Tim Parker had held a number of meetings in the course of his review with
stakeholders including Second Sight and James Arbuthnot MP (UKGI0006459)
and that Jonathan Swift QC’s report was part of the underlying material that had
contributed to his conclusions.
215. I have been provided with an email chain, into which I was not copied at the
time (POL00239781), in which there is reference to concerns on the part of POL
and, it would seem, BIS officials as to the privilege implications of providing the
Minister with Jonathan Swift QC’s advice. For my part I do not recall being
particularly concerned about privilege at the time, which was not an issue that,
as anon-lawyer, would have occurred to me. Indeed, I note from an email chain
dated 20 January 2016 that the Shareholder Team’s advice to the Minister's
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office was that they should discuss with Tim Parker how the findings of his
review might be made public (UKGI00006459). My view was simply that it was
Tim Parker's review and the important thing was that his conclusions were
communicated, clearly and directly, to the Minister and, if possible, placed in
the public domain.
216. Had Tim Parker's letter been less reassuring as to the integrity of Horizon and
the actions of the Post Office I would have proactively sought the underlying
material, including Jonathan Swift QC’s report; but the fact that his conclusions
appeared to be consistent with POL’s position over the preceding 2-3 years
suggested to me that he had not found any significant new evidence. On
reflection, I wish that I had seen Jonathan Swift QC’s report - I should have
asked for it and then provided a copy to the Minister. The information it
contained regarding the evidence of Gareth Jenkins and balancing transactions
was Clearly very significant, as was the description of the nature and scale of
the further work identified by Jonathan Swift QC.
217. Aside from the Parker Review giving me further assurance, it is worth noting
that it played a significant role in my approach to the subsequent GLO
proceedings. In particular, I am confident that sight of Jonathan Swift QC’s
advice would have led me to take a different, and far more challenging,
approach. When the litigation was commenced my assumption was that POL’s
position was strong, that there were no new (or newly found) areas for concern,
and that the outcome of the litigation was likely to be a final resolution of the
issue in POL’s favour.
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218. I note that a submission was put up to the Minister on 9 March 2016 (the
document is incorrectly dated 9 March 2015) addressing the way forward in
light of Tim Parker's letter (UKGIO0006576). The submission was drafted in
response to a request from the Minister for advice as to whether a reply and/or
a meeting was required (UKGI00006574). The submission, which was drafted
by Laura Thompson and sent to me and other members of the Shareholder
Team in draft recommended (at paragraph 8) that: “while Mr Parker's review
concludes and the CCRC investigations are ongoing, there is no need for a
further meeting on this subject or a reply to Mr Parker's letter, unless you wish
to send a short note thanking him for the update and proposing to discuss in
May/June.” I understand that the reference to ‘May/June’ was to the next
scheduled meeting between the Minister and Tim Parker.
219. In fact, the next meeting between Baroness Neville-Rolfe and Tim Parker took
place on 27 April 2016. I note from an email chain provided to me by the Inquiry
(UKGI00020194) that the Minster had requested an earlier meeting and the
timing was at Tim Parker’s suggestion, based on the anticipated progress of the
further work he had commissioned. I was at the meeting as I recall that it was
held in a Lord’s committee room in the Houses of Parliament. By this stage,
litigation had commenced and Tim Parker gave an update on the litigation and
POL’s response to the Letter of Claim. He further explained that the last piece
of his review was underway and that Deloitte was engaged to conduct the
remaining work, which was expected to take another month or two
(UKGI00019303). The fact that a formal letter of claim had been received by
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this stage reinforced my view that litigation was likely to be the only way that
the issues concerning Horizon would be finally resolved and, in my mind at
least, Tim Parker’s review diminished in significance as a result. It seemed to
me that regardless of what Tim Parker did, or did not, conclude the final
resolution of the dispute could only be determined in court.
220. During the meeting, I am confident that Tim Parker did not refer to the issues
around Gareth Jenkins or Balancing Transactions, which would have been an
opportunity to do so outside the confines of written correspondence and any
concerns around legal privilege. On the issue of Balancing Transactions, I feel
that that issue would have particularly resonated with me if he had mentioned
it, because I was on the Board and Sparrow Sub-Committee at the time of the
Deloitte Board Briefing in June 2014, and would have taken that news quite
personally that I had missed something. I did not however come away from the
meeting with that feeling.
221. Following the meeting on 27 April 2016, a submission was sent to the Minister
on 3 May 2016 (UKGI00006692) which I would have seen and approved. The
submission provided an update on the current state of the litigation and referred
to Mr Parker's intention to discuss the litigation at the forthcoming Board
meeting on 24 May 2016.
222. I attended the Board meeting on 24 May 2016 (UKGI00006798), at which POL’s
CEO and General Counsel provided the Board with an update on the litigation.
I do not believe there was any discussion of Tim Parker's review or of Jonathan
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Swift QC’s advice, nor do I recall any documents relating to the review being
provided to the Board. As far as it is possible to ascertain from the minutes, the
Board does not appear to have been provided with Tim Parker's letter of 4
March 2016 either. The focus of the Board at that meeting was on the litigation,
as reflected in the minutes.
223. I doubt that I regarded the omission of any discussion of Tim Parker's review or
the circulation of any papers relating to it to be particularly significant,
particularly given that his letter did not suggest POL had done anything wrong
and that nothing new had come to light. I had expected, for some time, that
litigation would be commenced, and that this was likely to be the only effective
way of concluding what had become an increasingly intractable dispute, and
whilst the summary Tim Parker had provided of his findings was reassuring, I
did not expect it to lead to any form of resolution however, as I reflect below, I
should have insisted this went to the Board.
224. The Minister met with Tim Parker again on 19 July 2016, although I did not
attend the meeting as I was on annual leave. Laura Thompson attended as the
representative of the Shareholder Team. In the briefing to the Minister,
prepared by Laura Thompson (UKGI00001025), it was noted that, “We advised
when we saw you recently that POL were taking additional legal advice from a
QC regarding the group civil litigation against Post Office, and the implications
of this action on ongoing work regarding the Horizon matter. Mr Parker will give
you an update on this matter and the implications for his review of the system.”
This reflects the fact that, by this stage, our focus had moved away from Tim
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Parker's internal review and on to the litigation as the means of resolving the
Horizon issues.
225. POL also prepared a briefing note for the Chairman ahead of his meeting with
Baroness Neville-Rolfe on 19 July 2016 (POL00103225). Within this note, there
is reference to ‘Speaking Notes’ which I understand to be notes for the
Chairman. Included in the notes was reference to the Minister requiring a better
understanding of the reasons underpinning the legal advice received that the
Chairman's review should come to an immediate end and instead be ‘carried
forward under the scope of the litigation’. I doubt I would have been sent this
briefing note at the time, nor can I recall the precise detail of what we were told
of the legal advice being received by POL at this stage, but these documents
are consistent with my general recollection that the legal advice received from
the lawyers acting for POL in the litigation was that now the litigation had
commenced no further work should be done under the auspices of Tim Parker's
review as the litigation was now the appropriate forum for the issues to be
resolved. I cannot now recall the rationale for this advice, or whether it was even
explained to me at the time, and I would not have been in a position to second-
guess legal advice of this nature anyway. But it would have again conformed to
my sentiment at the time that this dispute was best solved via the courts, and
such a process would require both sides to the dispute to substantiate their
cases and have them scrutinised by a court.
226. I have no recollection of any further discussion specifically concerning Mr
Parker's review until I received a phone call from Tom Cooper in 2020 whilst he
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and the Shareholder Team were in the midst of preparing for the BIS Select
Committee hearing following the result of the GLO. Tom informed me that the
Chairman had received a detailed written report from a QC which concluded
that remote access was possible without the knowledge or consent of sub-
postmasters. I was surprised and concerned to receive this information as it
was inconsistent with both my understanding of what had been produced during
the course of Tim Parker’s review and the summary of his findings that I could
recall set out in the letter to the Minister. As noted above, given this was in
relation to my time on the Sparrow Sub-Committee I felt it quite personally.
227. \Ihad the opportunity to review Jonathan Swift's February 2016 report for myself
in 2020. Whilst in some places it is reassuring, I struggle to see how its findings
on those two particular issues above (expert witnesses and Balancing
Transactions) can be reconciled with the Chairman’s letter of 4 March 2016 to
Baroness Neville-Rolfe (UKGI00008800), which we thought as a Shareholder
Team at the time was broadly re-assuring.
228. The problems highlighted with regards to historical prosecutions and remote
access seemed to me to be fundamental. Given that it was the Government,
through Baroness Neville-Rolfe and the Shareholder Team that commissioned
the review, I would have expected to have been given the full picture as the
Government's representative on the Board and would have also expected such
significant findings to have been communicated to rest of the POL Board,
particularly given POL was at the start of a litigation process. I do not know why
the full extent of Jonathan Swift's findings, and particularly the negative issues
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found, were not shared with me, the Shareholder Team, the POL Board or
Ministers.
229. On reflection, I should have made the point at that May 2016 Board (or indeed
an earlier one on 21 March 2016) that Government had received Tim Parker's
letter, and prior to that I should have encouraged Tim Parker to share it.
Regardless of whether I thought it did not represent ‘new news’, I should have
made sure the Board had the opportunity to judge for itself. Whilst I am unsure
what judgement the Board would have indeed drawn from the letter, it may have
prompted a conversation at the Board which would have drawn out the two
important issues that I now know featured in the Swift Review but were not to
my mind referenced in his letter. However, at the time I had no reason to doubt
that Tim Parker’s summary was accurate or complete, or that the underlying
material was consistent with the conclusions set out in the letter. I also
subsequently understand in documents that have been disclosed by Inquiry that
Jonathan Swift QC reviewed the letter and was content with it before it was sent
to the Minister.
230. I do not know why Tim Parker decided not to provide a copy of his letter of 4
March to the Board, or why it did not more fairly reflect the sentiments of the
Swift Report. In all other respects I found Tim Parker to be an excellent Chair,
who cared deeply for POL and gave it a commercial drive and confidence that
it had previously lacked. To my mind he was always open about difficult issues
with both me and the Board, and sought to address them head-on, which makes
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the lack of disclosure in this instance all the more surprising. But in the event,
and as I have described above, the commencement of the litigation then
became the dominant issue and Tim Parker's review fell off the agenda.
Audit, Risk and Compliance Committee
231. The functions and responsibilities of the ARC are accurately encapsulated in
the description of the ARC set out in POL’s Annual Report and Financial
Statements for 2015/2016 (POL00103188). The overall responsibility of the
ARC was to assist the Board in fulfilling its fiduciary responsibilities by: (i)
contributing an independent view on the accounting, financial control and
financial reporting of Post Office; (ii) taking all reasonable steps to ensure
accurate and informative corporate financial reporting and disclosures which
meet appropriate accounting and corporate governance standards; and (iii)
providing oversight of POL’s risk management systems, including the steps
taken to mitigate those risks. There were a number of other additional
responsibilities, as set out in the Annual Statement, which also provides an
account of the manner in which the ARC had exercised its functions over the
course of the year. The ARC had detailed written Terms of Reference, approved
by the Board, a copy of which can be found at (POL00240662), page 155.
232. I was appointed to the ARC in the aftermath of a significant financial reporting
error on the part of the company which had required a restatement of the prior
year’s accounts and delayed approval of the accounts for that year. That issue
had understandably been viewed very seriously by the Shareholder Team, the
Department and Baroness Neville-Rolfe. My first meeting was on 22 January
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2016, and I remained on the ARC until I left the Board in early 2018. My role in
attending the ARC was essentially the same as the other Board members. I
would read the papers submitted in advance of the meetings. I would contribute
to discussions and decision making. I would question the Executive in relation
to the information presented to the committee and I would participate in the
approval of the annual accounts on behalf of the Board, which was one of the
core functions of the ARC.
233. As explained in the Terms of Reference there were specific tasks reserved to
the ARC, of which one was the approval of the annual accounts, but the Board
could also delegate particular tasks to the ARC if it considered that they fell
within the ARC’s specialist expertise. In relation to an issue such as the Horizon
litigation, the sort of question that might be reserved to the ARC would be
whether the company’s exposure should be included in the accounts as a
contingent liability.
234. I joined the Committee at the same time as Carla Stent, who was its new Chair,
and the newly appointed Senior Independent Director Ken McCall, both of
whom remained in that post beyond the end of my tenure. I thought that the
ARC was well-chaired and effective in discharging its terms of reference. Carla
Stent led robust discussions in which everyone was encouraged to participate
and she seemed to be very engaged with the Executive team outside of
meetings, and who were therefore well prepared. Overall, I thought that Carla
Stent was particularly effective in making progress on how risk was thought
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about by the company and how it was presented, although I do not remember
many of the specifics some years on.
235. Given the circumstances surrounding my appointment to the ARC I was
particularly focussed on reporting and financial controls and I considered that
the ARC oversaw some positive developments in this area. The new CFO, Al
Cameron, undertook a programme of improvement in the company’s financial
control mechanisms, including a requirement that everyone in the business who
provided him with financial information had to personally attest to its accuracy.
I thought that was a positive development and it seemed to me that the
company’s financial and risk reporting continued to improve over time.
236. However, looking back at the ARC papers now, it is clear that the Horizon issue,
both prior to and during the litigation, does not feature very extensively in the
work of the ARC during my tenure. The Chair was primarily responsible for
setting the agenda, in consultation with the Executive, and will be better placed
than me to provide the reasons for that; but from my perspective it was difficult
to crystallise and/or quantify the risk to the company posed by the Horizon
dispute and how that might be reported in the accounts. As noted below, for
most of my tenure the issues associated with the litigation tended to be rather
more procedural, making any quantification or judgement of risk quite difficult
during that time. Indeed, I note from an email from Jane MacLeod dated 28
June 2018 (POL00041834), provided to me by the Inquiry (i.e. after I had
stepped down from the Board), that when Ernst & Young advised that POL’s
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exposure in the litigation (reported to be £80m - £90m) should be reported, Jane
MacLeod opposed that suggestion on the basis that there was no ‘substance
to that number.’
237. Ateach year-end POL would provide the ARC with a Briefing Book to inform its
consideration of the annual accounts. As set out in the introduction
(POL00103188, page 35) the purpose was to summarise “key data, trends and
analyses which readers may find useful to further their own understanding of
the results [for the year] ”. The Briefing Books for the years to March 2016 and
March 2017 both contained a factual summary of the state of play concerning
Horizon. In the March 2016 briefing, for example (POL00103188, page 67) the
Committee were informed that Second Sight had found no systemic problem
with Horizon; that all cases had now progressed through the Mediation Scheme;
and that a claim form had been issued in the High Court but no action was
required on the part of the company at that stage. The relevant section in the
Briefing Book for the year to March 2017 is at (POL00027914, page 132). An
update on the litigation was provided and it was explained (at paragraph 19.20)
(POL00027914, page 133) that the claim had not been quantified and so no
provision had been made by the company. Those assessments would have
been discussed between the Executive and the auditors prior to the Briefing
Book coming to the committee, and Ernst & Young would have agreed with the
approach adopted by the company.
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238. On reflection, whilst the decision as to what was disclosed in the accounts was
probably right given the information provided to the Committee at the time (and
based on what I knew), as was the comfort taken as part of the external audit
process, it is clear now that the ARC should have spent more time interrogating
the Executive on Horizon related issues raising any concerns with the full
Board.
Instruction of Linklaters and Deloitte
239. At the February 2014 Board meeting, which I attended as an observer, there
was a discussion of the progress of the Mediation Scheme, during which the
Board decided to commission some legal advice. The decision-making relating
to this issue is recorded in the minutes in the following terms (POL00021522):
“It was noted that, in respect of each individual application, the project
team were taking extensive advice about the Post Office’s potential legal
exposure. However, it was acknowledged that, in light of the facts now
available, and the projected level of legal claims and costs, it would be
sensible to commission more generic legal advice on the overall level of
legal and financial disclosure (taking account of the possibility of class
actions). This advice should consider the steps that could be taken to
mitigate any exposure including considerations of alternative structures
that might be available to deal with the mediation cases. Such advice
should have regard to alternative dispute resolution mechanisms, such
as the Financial Ombudsman Service.”
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240. My understanding is that it was this commission that led to the production of the
Linklaters report that was presented to the Board at the March 2014 meeting,
at the conclusion of which my appointment of Shareholder NED was confirmed.
lam not able to provide any insight into the rationale for the commission beyond
what is recorded in the minutes although I do find it understandable that the
Board would want to understand the level of financial and legal risk the
company was potentially facing given the numbers emerging from the
Mediation Scheme - it is their duty to do that, on behalf of the Company. I also
recall, not necessarily from that meeting but perhaps shortly thereafter, that
references to alternative dispute resolution procedures were a reaction to a
Mediation Scheme that was already suspected to be in trouble and not likely to
bring the closure that the company and sub-postmasters were hoping for.
241. The Linklaters report was circulated to the Board in advance of the March 2014
meeting under cover of a paper by Chris Aujard (POL00105529). Although I
was not appointed as a NED until the end of the March 2014 meeting I am
confident that I received the Board papers in advance and will have read both
the Linklaters report and Chris Aujard’s covering paper. Chris Aujard’s paper
noted that:
“In preparing their advice, Linklaters have, in effect, made the working
assumption (which we believe to be correct) that there is nothing ‘wrong’
with the Horizon system.” He identified one of the key conclusions of the
report as being, “There can be no question of a claim for consequential
losses [by an SPMR] based simply on the recovery by the Post Office of
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losses [i.e. the amounts that POL believes were owing to it] if the losses
were properly payable and the Post Office was entitled to the money’.
The Board was invited to ‘note’ the report and that steps were being taken to,
“...develop options for the future of the Scheme and or alternatives to it.”
242. I do not recall having any strong reaction to Chris Aujard’s papers or to the
report itself when I read them in preparation for the March 2014 Board meeting.
I thought that the report provided some useful background as to the legal
relationship between sub-postmasters and POL, which was often
misinterpreted as an employer/employee relationship. I did not find any of the
conclusions expressed to be particularly concerning or surprising. The
conclusion that POL would not be liable for consequential losses flowing from
the recovery of money that was properly owed to POL struck me as largely self-
evident if, as was suggested, the Horizon system was working properly.
243. I have some limited recollection of the March 2014 Board meeting at which the
Linklaters report was discussed (POL00021523). I recall where I was sat at the
meeting, and I was there along with Susannah Storey. I recall being formally
appointed to the Board at the end of the meeting. As Shareholder NED
designate I do not think I contributed particularly to any discussion during the
meeting given that I was not at that stage a formal member of the Board. As
noted in the minutes, I did however make a contribution on the issue of
executive remuneration and the specific nature of my shareholder role (which I
have described in more detail above).
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244. I recall that my appointment to the Project Sparrow Sub-Committee was
confirmed at the end of the meeting. I note that Christa Band of Linklaters
attended the meeting and spoke to the report but I do not have any clear
recollection of the discussion, and I do not recall any concerns being expressed
about the conclusions reached in the report. I have reviewed the minutes of the
Project Sparrow part of the meeting and what is recorded there is consistent
with my understanding of the background to the Horizon issues at that point.
The general feeling on the part of the Board was that the Mediation Scheme
was facing significant challenges and it wanted to obtain an understanding of
what the options might be for taking matters forward.
245. The Board decided that there should be a further piece of work commissioned
in this regard and that decision is recorded in the minutes in the following terms;
“The Board agreed that they needed to commission a piece of work, to
complement that undertaken by Linklaters, to give them and those concerned
outside the Business, comfort about the Horizon system. The Business was
asked to revert with the terms of reference and timescale for the work which
should cover: The work undertaken by Angela Van Den Bogerd explaining ow
the system works; A review of the data integrity aspects of the system; A
reference to all audits and tests carried out on the system; A response to the
most significant thematic issues raised by Second Sight.” I am unable to add
anything to the record of the decision to commission what I understand to be
the Deloitte report beyond what appears in the minutes. At this point I was yet
to be formally appointed to the Board and I was there to observe the discussion.
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As far as I can recall, it seemed that the further work commissioned by the
Board was sensible and appropriate, and I do not recall having any concerns
about the decision.
246. The minutes go on to record that the terms of reference for the further piece of
work should be “tested with Linklaters to ensure that this work would satisfy
them as evidence that Horizon is reliable and then agreed by the Board Sparrow
Sub Committee”. I do not now recall being provided with draft terms of reference
to approve in the period between the March 2014 Board meeting and the
circulation of the draft Deloitte report at the end of April, but it is possible that
draft terms of reference were circulated to the members of the Sparrow Sub-
Committee as envisaged by the minutes and we provided our approval by
email. I assume that the terms of reference were also ‘tested’ with Linklaters,
although I have no recollection of being aware of that being done at the time. I
have been provided with a document by the Inquiry (POL00022093) which
appears to be a paper prepared by Linklaters on 28 March 2014 setting out
options for the scope of the further report, but I do not recall being sent this
document at the time and I do not know what further input Linklaters had into
the formulation of the terms of reference.
247. Iwas however party to further discussions as to the further work Deloitte would
undertake, in a series of emails between members of the Sparrow Sub-
Committee between the 9 and 14 May 2014, which further refined the scope
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including the question of whether to examine Horizon Legacy in addition to
Horizon Online.
248. As to that specific question of why Deloitte came to be initially instructed in
respect of Horizon Online but not Horizon Legacy I am not able to provide any
insight into that aspect of Deloitte’s terms of reference. I do not recall a specific
decision, by me personally or the Sparrow Sub-Committee as a whole, to
restrict the terms of reference in that way; nor do I recall any advice being given
by Linklaters to that effect. At this point I had only been very recently appointed
to the Board and a had limited knowledge of the background to the Horizon
issues that had been going on for a number of years by that point. I do recall
appreciating the difference in the two systems when seeing Deloitte’s Executive
Summary of 29 April 2014, and as noted above the Sparrow Sub-Committee or
Board did then go on to consider that issue (as acknowledged in Chris Aujard’s
email to the Sub-Committee of 9 May 2014 (UKGI00018921)). However, the
initial terms of reference for Deloitte would appear to have been settled at some
point shortly after the March 2014 Board meeting at which I was appointed and
I suspect that, if I did see draft Terms of Reference, I would have taken my lead
as to their adequacy from the more experienced members of the Sparrow Sub-
Committee and Board. I also note that the commission from the Board seems
to have been directed at how the Horizon system was working at the time (‘how
the system works’ etc) and so as noted above I doubt that the distinction
between Horizon online and Legacy Horizon would have resonated with me at
that specific time.
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249. Irecall an update being given at the Sparrow Sub-Committee meeting on 9 April
2014 to the effect that Deloitte had been commissioned to produce a piece of
assurance work relation to the Horizon system (POLO0006565). The work was
described to the Sub-Committee as a largely desk-based exercise (Part 1) with
a potentially larger exercise (Part 2), depending on the findings of Part 1. I do
not recall whether terms of reference were provided to, or discussed by, the
Sub-Committee at that meeting.
250. I recall being pleased that a firm of Deloitte’s calibre was looking into Horizon.
Having previously worked at Deloitte myself, I felt that those who would be
conducting the review on behalf of Deloitte would be likely to have the required
expertise and qualifications to undertake the review, and to approach the
exercise with rigour and independence. I did not know any of the individuals
working on the review and my impression was a general one based on my
experience of the firm and its reputation.
251. On 29 April 2014 the Board was sent an email (POL00203586) in which Lesley
Sewell and Chris Aujard informed us that Deloitte had recently been
commissioned to “consider whether our current assurance work covers the key
risks relating to the HNGx processing environment’. A summary of the draft
report was attached to the email and we were told that, “Recognising that work
of this nature cannot give total assurance, the Board can take comfort from the
initial findings that the work undertaken on the IT Control Environment, HNGx
Implementation and Specific Risks is comparable with similar organisations,
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and that in particular the IT control environment adopts best practice.” It was
explained that POL intended to continue working with Deloitte with the aim of
providing “greater comfort’ and that the full report was expected in May.
252. As far as I recall the document attached to the email is the document at
(POL00203587) described as a draft Executive summary providing “emerging
findings at 29/04/14, subject to completion of Deloitte work.” The document was
short at five pages long and marked as subject to legal privilege.
253. I remember being at the meeting but I have reviewed the minutes of the Board
meeting and I am afraid that, ten years later, I am unable to provide any further
detail as to what transpired at the meeting beyond what is captured in the
minutes. Gareth James, a partner at Deloitte, attended the Board meeting along
with POL’s General Counsel, Chris Aujard and the effect of the advice given by
Gareth James is recorded in the minutes in the following terms, “all the work to
date showed that the system had strong areas of control and that its testing and
implementation were in line with best practice’ (POL00027411). Although I had
only been in post for a few weeks and was not yet in a position to formulate any
firm views about the matter, Gareth James’ assessment was consistent with the
information relating to Horizon that I had been given by that point and my
general understanding of the background. I considered it to be reassuring and
do not recall hearing anything at the meeting that set alarm bells ringing as far
as Horizon was concerned.
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254. I note that Chris Aujard made a contribution to the effect that Deloitte’s work
would be valuable in addressing concerns expressed by some postmasters
regarding ‘phantom’ transactions and I have some recollection that he was keen
for the report to be published or disseminated in some way to provide some
reassurance in this area. I recall that this was an issue which also came up at
the Sparrow Sub-Committee that took place on the same day.
255. Ihave reviewed the minutes of the Sparrow Sub-Committee meeting on 30 April
2014 (POLO0006566) and it would appear as though the discussion of the
Deloitte and Linklaters reports was limited to the issue of dissemination. At that
point, the view of the Committee would seem to have been that the Linklaters
report should not be disseminated in its current form because it was too long
and complex, and needed to be condensed into a clearer and more accessible
document if dissemination was to serve a useful purpose. As for the Deloitte
report, all we had at that stage was a draft summary of ‘emerging findings’ which
were said to be subject to further work and so dissemination seemed to be
premature (POLO0006566).
256. I note from the documentation with which I have been provided that the Board
was sent further iterations of Deloitte’s report over the course of the following
few weeks. There is a ‘Board Summary’ marked as a draft and dated 16 May
2014, which is entitled ‘HNG-X: Review of Assurance Sources’ and is said to
be a subject to a final report (POLO0138364). I have no specific recollection of
receiving this Board Summary but I may have done and I note that the first of
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the key findings set out by Deloitte is that “Nothing has come to our attention to
suggest any deficiencies of significance in the design of the Horizon system.”
257. At the next Board meeting, on 21 May 2014, the final version of Deloitte’s Part
1 report had yet to be provided. I note that the minutes (UKGI00019316) state
“The Draft Executive Summary of the Horizon Assurance Review, prepared by
Deloitte, had been circulated to the Board’. I take that reference to mean the
document referred to above of 29 April, which was sub-titled “Executive
Summary — Draft” and not the document of the 16 May, which was sub titled
“Board Update”. The minutes also go on to note that Deloitte's review would be
considered at the next Sparrow Sub-Committee meeting, which was due to take
place a few weeks’ later on 6 June 2014.
258. On 4 June 2014 the Board was sent an email (POL00138401) from Lesley
Sewell and Chris Aujard attaching a document described as ‘Project Zebra —
Board Briefing 040614’ (POL00138402). The email from Lesley Sewell and
Chris Aujard noted that the Deloitte briefing was “heavily caveated’ and that
Deloitte has set out a number of limitations and assumptions that underpinned
their findings. That said, they drew the attention of the Board to what they
presented as Deloitte’s key findings, which included:
“Deloitte has “not become aware of anything to suggest that the system
as designed would not deliver the objectives of processing baskets of
transactions and keeping copies of them in the Audit Store with integrity’;
and “Deloitte’s review of “extensive operational documentation”
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identified features in Horizon “which if implemented, would support the
robust operation of the system’.
259. This particular email and document causes me a great deal of discomfort now.
I have included my reflections on the missed opportunity that this generated
further below. I do not have any direct recollection of receiving this email and
the attached Board Briefing but I note that I am one of the addressees on the
email and I have no particular reason to doubt that it was sent or that I received
it. I recall receiving a call from Tom Cooper in 2020 whilst he was preparing for
the BIS Select Committee asking me about a Deloitte Board Briefing from June
2014 that mentioned Balancing Transactions. I recall acting with surprise as the
only Deloitte report I remember seeing was the one from the Board meeting on
30 April. In addition, I would ordinarily pass on significant correspondence of
this nature to Peter Batten, sometimes with some comments reflecting my views
on the material, but on subsequently searching I could not find any record of
having done so on this occasion.
260. Whatever may have happened, it is not clear to me why there is no reference
to the Deloitte Board Briefing in the minutes of the meeting of the Sparrow Sub-
Committee meeting on 6 June 2014 (POL00205498), which would seem to be
an obvious opportunity to discuss a document of this nature circulated only two
days previously. I do have some recollection of a discussion at around this time
as to whether Deloitte’s reporting could be publicised, or otherwise
disseminated in some way, and that Deloitte were not prepared to allow that to
occur given the limitations of the exercise that they had carried out. I do not
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recall having strong views on this issue at the time probably because, having
worked for Deloitte, I was aware that they were very risk averse and would be
very strict that their professional opinions would go no further than their
engaged client, and so I doubt I would have been surprised at the stance that
they took.
261. It is also surprising that the Board Briefing does not appear to have been
discussed at the Board meeting on 10 June 2014 (POL00021526), at least
according to the minutes. I note that POL’s General Counsel prepared a Board
summary (UKGI00002376), apparently for the forthcoming Board meeting on
10 June 2014, but dated 6 June 2014 (and received from the Company
Secretary after the Sparrow Sub-Committee of the same day), which provided
a summary of Deloitte’s work up to that point.
262. The essential conclusion of that summary was that a line should be drawn under
the Deloitte exercise on the basis of Deloitte's view that a lot of further work
could be done which may well not yield any further insight and that “For the
avoidance of doubt Deloitte are not recommending that any further “backward
looking” review of the Horizon system would be appropriate’. IIn fact, in
discussions with Chris Aujard, he reported that Deloitte said “One could thus to
a lot of work and not be any further forward” but Chris added that the question
of further work would “be brought to the ARC (or Board) via the R&CC”. I am
not sure if any such discussion took place (and I was not on the ARC at the
time, nor on POL’s Risk and Compliance Committee, which was an Executive
committee).
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263. The 10 June 2014 Board meeting took place during a strategy away day which
may have reduced the formality of the meeting and led to parts of the meeting
being minuted less thoroughly than usual. In any event, the minutes do not
record the General Counsel’s summary being presented to the Board or any
discussion of its contents and I cannot now recall whether any such discussion
took place. I cannot recall the Deloitte report being discussed at any subsequent
Board meetings, including those that took place in July and September 2014.
264. On reflection, having now considered the report for the purposes of preparing
this witness statement, and having obtained a copy and read it shortly after my
telephone call with Tom Cooper, I can see that the Board Briefing document
has a number of passages that I should have regarded as significant with regard
to Balancing Transactions and digital signatures, notwithstanding the relatively
comforting covering email which repeated aspects of the report, such as
Deloitte having “not become aware of anything to suggest that the system as
designed would not deliver the objectives of processing of baskets of
transactions and keeping copies of them in the Audit Store with integrity’.
265. It represents a significant missed opportunity to probe further into the issue of
how the branch accounts could in fact be altered without the sub-postmaster
being aware. Notwithstanding the fact that it was sent to the Board, and it may
be that other Board colleagues took comfort from the covering email by Lesley
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Sewell and Chris Aujard and/or the paper prepared by POL’s General Counsel
for the June Board meeting, the Board should have discussed it.
Conduct of Private Prosecutions
266. By the point I took up my position as Shareholder NED in early 2014, I felt that
a line had been drawn under the issue of prosecution of sub-postmasters by
POL. When attending as an observer alongside Susannah Storey, I had
observed at the Board in February 2014 (POL00021522) a discussion about
POL’s Prosecution Policy but I had no real awareness, at that stage, of the
background or what had led to the change in approach other than what was set
out in the accompanying Board paper. My understanding was therefore limited
to a general awareness that POL had decided to significantly reduce the scope
of its prosecution activity and to focus only on particularly high value or
particularly egregious cases. The impression I got was that there had been an
overhaul of the POL prosecution policy by a new Board that was beginning to
assert itself in the newly separated POL, and do things differently than POL had
had to do under the ownership of Royal Mail. I did not get the impression that
this necessarily had much to do with the Horizon issue, but for obvious reasons
the Board seemed mindful of that connection.
267. As part of that paper and those discussions, I understood at a general level that
the change in policy had been informed by a review undertaken by Cartwright
King, which had itself been reviewed by a senior barrister, Brian Altman QC. I
did not know the detail of the work that had been undertaken in the course of
those reviews and I do not recall seeing any documentation relating to them,
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but the general impression I got was that the findings had been reassuring as
far as POL’s approach to past prosecutions was concerned and that the
adoption of a new prosecution policy was sufficient to address the issues that
had been identified. As part of that review I understood that Brian Altman QC
had labelled POL bringing its own prosecutions to be “anachronistic” and indeed
there were a only a limited number of examples (mostly from Government) of
where other organisations did the same.
268. Iwas not told anything about advice to the effect that unreliable expert evidence
had been called by POL in support of historic prosecutions, or that there were
unresolved concerns about whether POL had discharged its disclosure
obligations (I understood that the Second Sight Interim report had been shared
with relevant defence teams). For clarity, I do not recall the discussion at the
Board mentioning issues around unreliable witnesses either, nor their specific
names being mentioned. I have noted that on re-reading the Linklaters report
presented to the March 2014 Board and provided to me by the Inquiry that the
names of Gareth Jenkins and Anne Chambers were mentioned as witnesses,
but such references were in passing in a paper about the contractual
relationship between POL and sub-postmasters (and not prosecutions), did not
raise any concerns about them, and so would not therefore have prompted any
queries on my part, nor any memory of their mention. I have no recollection of
reading their names at the time, and in effect, I first heard of them as part of the
GLO proceedings.
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269. As anew member of the Board I did not perceive there to be any significant
concern on the part of my more experienced colleagues as to the POL’s current
or historic approach to prosecutions. The focus of the Board’s attention by that
time, as far as Horizon was concerned, was on the Mediation Scheme and I
understood that this was intended to be the mechanism for addressing the
outstanding concerns about Horizon. I cannot now recall the detail of my
knowledge at the time but I have some recollection of being aware that the
Mediation Scheme provided scope for the investigation of past prosecution
cases, even if those cases did no proceed to mediation themselves.
270. I do not recall being particularly troubled by the idea that POL was able to act
as a prosecuting authority. I had no experience of criminal prosecutions in
general, or the ability of large organisations such as POL to act as a prosecuting
authority in particular, and as far as I can recall I just assumed that this was just
the way that things were done. I note from some correspondence with Laura
Thompson in March 2015 that I had a general understanding that POL operated
in the same way as local authorities when it came to bringing prosecutions
(UKGI00019690) but I do not recall my understanding ever becoming more
developed than that. In any event, it was apparent that POL was intending to
reduce its prosecutorial activity substantially in accordance with a new policy
which had been developed over the course of the preceding few months, and
which brought POL more into line with commercial practice of the private sector.
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271. One of the documents provided to me by the Inquiry is a Prosecutions Policy
Briefing (UKGI00002202) sent to the Board by Alwen Lyons on 28 February
2014 (UKGI00002196). I have reviewed this document and although it pre-
dated my formal appointment as Shareholder NED it accurately captures my
understanding of POL’s position in relation to prosecutions at the time of my
appointment. It describes the adoption of a new prosecutions policy by POL to
be published on its website in the interests of transparency. The description of
the background to the new policy included the following:
“As a responsible business we undertook this review as part of our
response to concerns raised about our prosecutions policy by some
stakeholders, and in order to clarify our position on prosecutions...Very
few prosecutions are taken forward each year — approximately 50, which
equate to 0.1pc of all those who work in the network....Where
subpostmasters, current or past, have felt unfairly treated as a result of
Post Offices processes we have set up a mediation scheme to seek to
resolve such issues.”
272. Inthose circumstances, and in general terms, the issue of prosecutions was not
one that seemed to me, at this point, to carry any particular urgency or
significance. My general understanding was that any prosecutions would have
been resolved through the due process of criminal courts and that convictions
would have been the result of either guilty pleas or the prosecution proving its
case to the required standard to the judge and jury. I do not recall having any
reason to think that any historic convictions were unsafe and, as far as I was
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aware, there had been no successful appeals against convictions, indeed,
when I asked the question of POL early on in my tenure, I was told there had
been no appeals at all. It also seemed to me that criminal prosecutions were for
the Courts to resolve and that it was neither appropriate nor desirable for my
branch of Government to intervene in proceedings of this nature.
273. In the period following my appointment to the Board I had the consistent
impression that POL had effectively ceased all prosecutorial activity. A new
policy had been formulated and approved by the Board in February 2014 and it
was to be reviewed annually as required by the policy itself. As far as I was
aware prosecutions then dropped very substantially and I note that the papers
prepared by POL for the ARC meeting January 2017 include a reference to the
fact that POL had recently undertaken very few prosecutions and none at all in
2016-2017 (POL00247018). That being so, the conduct of current prosecutions
did not seem to me to be a pressing issue and, as far as historic prosecutions
were concerned, I understood that there had been a review in 2013 by
Cartwright King and Brian Altman QC, which had been reassuring, and that any
outstanding concerns regarding past prosecutions were for the courts to
address, not the Board or the Shareholder.
274. I do not recall having any significant involvement in determining whether POL
should continue to prosecute. As I have explained, the new prosecutorial policy
required that it be reviewed and approved annually, and I have some
recollection of being involved in that annual review process through my position
on the ARC and Board. However, each time the policy was brought back for
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review and approval it was in the context of the policy having been formulated
in light of the extensive review in 2013 undertaken by Cartwright King and
overseen by Brian Altman QC, and I do not remember the Board having any
reservation about renewing approval for the policy. There is an example of the
annual review process in the minutes of the January 2016 Board meeting
(POL00125814) which records that the General Counsel introduced the ‘new
Prosecutions Policy proposal’ which was noted by the Board, with
accompanying policy having been presented in the Board pack for that meeting.
275. As to the Inquiry’s question of whether I thought it appropriate, during my tenure
as Shareholder NED for POL to continue to bring prosecutions against sub-
postmasters (and Crown employees) I have explained above that my
understanding was that few, if any, prosecutions were being brought. I was also
aware that, were any prosecutions to be brought they would be subject to the
new prosecutions policy that had been formulated in 2013/14 and had involved
an extensive programme of work with advice from criminal law specialists. I do
not recall being made aware of any concerns regarding any prosecutions
brought during my tenure as NED. In short, therefore, I had no reason to doubt
the appropriateness of POL’s current prosecution policy during my tenure as
NED, and I did not think it was necessary for me to undertake an assurance
exercise to satisfy myself that prosecutions were being brought in compliance
with POL’s legal obligations. POL frequently stressed their adherence to those
legal obligations.
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276. Although I do not recall any concerns being brought to my attention regarding
current prosecutions, I was aware, of course, that there were a number of sub-
postmasters who were asserting that they had been wrongfully convicted and
concerns of this nature were raised frequently by the JFSA, by MPs including
James Arbuthnot MP and in the media. From my perspective, allegations of
historic miscarriages of justice were troubling but I could not see what role I
could play in addressing those allegations, whether as a member of the Board
or as part of the Shareholder Team, unless evidence was presented to
demonstrate that convictions were unsafe. Indeed, even if such evidence were
to exist then I would not have regarded myself as the person best qualified to
assess it and would have assumed that the appropriate mechanism for dealing
with the issue would be an appeal.
277. I do not recall the precise circumstances in which I became aware of the
involvement of the CCRC in early 2015 although it was probably at the January
2015 Board meeting, where the minutes show that “Mark Davies reported that
the Business had received a letter from the Criminal Case Review Commissions
(CCRC) asking for Criminal cases involved in Sparrow’ (UKGI00003236). This
was followed a couple of days later by a note from Mark Davies to the Board
(UKGI00003151) which notes that the CCRC first contacted POL in 2013. I
have no recollection of that earlier engagement, nor what prompted the
Commission to re-engage in 2015. Mark Davies's note re-iterated that POL has
“not identified anything through the Scheme to suggest a conviction is unsafe
and no appeal has been made against a conviction, usually a key prerequisite
to a CCRC review’, and so this would have provided the immediate context.
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278. I donot recall feeling concerned by the involvement of the CCRC. It seemed to
me like a logical next step particularly for those who had criminal convictions,
and so did not come as a particular surprise given what sub-postmasters had
been saying publicly about the issue. I had previously taken some reassurance
from the fact that no one had appealed against their conviction, which I thought
would have been a step people would have taken if thought they had been
wrongly convicted. I understood the CCRC to be an independent and specialist
body, and I assumed that a CCRC investigation would identify any issues with
historical convictions that had not been picked up in the course of the
proceedings themselves. The fact that the CCRC had opened an investigation
did not indicate, to me at least, that convictions were unsafe, but rather that,
much like the POL Board, the CCRC wanted to reassure itself that this was not
the case.
279. Put simply, therefore, I was pleased when the CCRC became involved. I
thought it was good to have an extra pair of eyes looking at the issues, and it
seemed to me that the CCRC was much better placed than the Shareholder
Team to do so. There was never any resistance from the Shareholder Team
about providing information and assistance to the CCRC, although we
confirmed with BEIS’s legal team that everything could be shared. I recall that
Amanda Pearce of the CCRC attended our offices and sat at Laura Thompson’s
computer for a day to look at all the files we had prepared. We then
subsequently provided the CCRC with copies of the records that they had
specifically requested. I hoped the CCRC would make quick progress and that,
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if the CCRC did not identify any issues, that would go at least some way to
drawing a line under the persistent concerns regarding past prosecutions.
280. In light of this background, the short answer to the Inquiry’s question of what
steps I took to satisfy myself that POL had acted in compliance with its legal
obligations in bringing past prosecutions was that I did not take any significant
steps to do so other than reviewing the information which came to me either as
a Board member or via the Shareholder Team. I understood that the conduct of
past prosecutions had been thoroughly reviewed (by Cartwright King and Brian
Altman QC) prior to my appointment, that the Board prior to my appointment
was Satisfied with the outcome of that review, and that (from early 2015) the
conduct of past prosecutions was being reviewed by the CCRC. In those
circumstances I did not see a role for the Shareholder Team in relation to past
prosecutions and, in any event, I would not have regarded myself as qualified
to undertake some form of parallel assessment of the extent to which POL had
acted in accordance with its legal obligations when bringing historic
prosecutions. I do not have any recollection of discussing the CCRC
investigation with POL aside from the odd written or oral update about when
their review might conclude.
281. My overall approach therefore was simply that the CCRC should be left to get
on with its work, and BEIS Legal seemed to agree with that approach, and I
took assurance from the fact that these issues were in the “right place”.
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282. I have been asked to comment on an email that I sent to Michael Dollin, a
member of the Shareholder Team, on 7 October 2015 in which I refer to a
discussion I have had with ‘Mark D’, which I believe is a reference to Mark
Davies, the POL communications director (UKGI00006122). The background
to this exchange would seem to have been a meeting between Michael Dollin
and George Thompson of the NFSP. Michael Dollin’s email to me providing a
readout of that meeting does not expressly address the issue of prosecutions
but we worked very closely together and so I expect that I am replying to
something he said to me, in addition to the written read out. I was well aware
from my own contact with him that George Thompson supported POL’s position
on Horizon and that he felt that confidence in the integrity of the system was
important for the success of the business and, by extension, his members. As
I recall it, one of his concerns was that if POL were to adopt the position of
stopping prosecutions because of concerns about the integrity of Horizon that
would damage confidence in the system and undermine their central message
that Horizon was robust.
283. To the best of my recollection, this is the point that I sought to convey to Mark
Davies in the meeting that I describe in my email. In short, stopping
prosecutions due to concerns about Horizon whilst stating that Horizon was
robust and reliable was an inconsistent position for the company to take and
would only serve to perpetuate concerns about the integrity of the system. If the
company was going to take the position that Horizon was not to blame for any
losses on the part of sub-postmasters then it needed to be consistent in
maintaining that position. I recognised that the conduct of prosecutions was
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essentially a policy and operational issue for POL (albeit one brought to the
Board annually) and so, having made the point, I left it to Mark Davies to
consider how to best to take the matter forward. In my mind there was a
significant difference between not undertaking any prosecutions in all but the
most significant cases — which was a position I had no difficulty with - and
abandoning prosecutions if the losses were blamed on Horizon, whilst at the
same time seeking to satisfy everyone that Horizon was robust and could not
be responsible for the losses. For the avoidance of doubt, I was not seeking to
encourage Horizon related prosecutions, I was simply pointing out the
inconsistency and did not think much more of it given that, as I understood it,
very few prosecutions were occurring and any change of policy would have to
come back to Board for discussion.
284. I have been asked to provide a full account of the issue discussed in an email
from me to lain King dated 7 July 2016 with the subject ‘Post Office and fraud
case’ (UKGIO0006888). My recollection is that this concerns an issue which
arose in the course of approving the annual accounts for 2016, and caused their
signing to be delayed. As I recall, the ARC was at the point of signing off the
accounts when we were informed by Ernst & Young, the auditors, that they had
learned of a case of fraud by an ex-sub-postmaster which amounted to
c£800,000. I cannot remember the exact detail but the former sub-postmaster
was using POL paying-in slips to falsely credit accounts from which he
benefitted. The concern being expressed by Ernst & Young was not that the
value of the fraud was sufficient to be material for the purposes of the annual
accounts, but that they had not been told about it during a recent meeting with
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POL’s fraud team and this undermined their confidence in the reliability of the
information they had been given about fraud by the company generally. In those
circumstances Emst & Young were not prepared to sign off on the accounts as
auditors until they had ascertained why they were not told about the fraud and
could assess whether they had sufficient confidence in the reliability of the
information that they had been given by the company. The issue was primarily
the fact that notification of fraud had not been sufficiently escalated.
285. As to the implications of the issue for POL and/or the Government, it was clearly
a source of embarrassment to POL and it did result in some delay in signing off
the accounts. I will have informed lain King because he was my counterpart in
BIS Finance, and it would have been the Finance team’s role within BIS to
consider issues of propriety on behalf of the Permanent Secretary in his role as
Accounting Officer. From recollection, I think that a delay to POL’s accounts
might also have had the potential knock-on effect on BIS’s own accounts being
finalised and laid by the BIS Finance team.
286. I cannot now remember what enquiries were made by Ernst & Young and how
they reached the position of being prepared to sign off the accounts but they
obviously reached the point where they felt able to do so. There were no direct
implications for the Government, which would inevitably have been
unimpressed both by the delay and the reason for it. For the avoidance of doubt,
neither the underlying issue nor my correspondence with lain King had anything
to do with Horizon or the concerns being expressed by sub-postmasters.
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287. To conclude in relation to the conduct of private prosecutions, whereas I have
reflected and acknowledged elsewhere in my witness statement, above and
below, as to what more I could have done in relation to the matters asked of me
by the Inquiry, I do not feel I could have done much more than I did in relation
to POL’s conduct of prosecutions. As already noted, I felt that a line had been
drawn under past prosecutions by the Board prior to my joining, and a more
“modern” prosecution policy had been implemented. I know now that the Board
was not informed about the Simon Clarke advice in 2013, which I imagine would
have made a significant difference to the decisions then made. But I do not feel
that it was unreasonable of me to have accepted the result of the deliberations
that preceded me, particularly given my lack of experience and qualifications in
the area of prosecutions.
GLO Proceedings
288. The threat that litigation would be commenced against POL by sub-postmasters
had been present since the start of my tenure as Shareholder NED. The letter
from Alan Bates to the Minister in April 2014 (UKGI00002264) had expressed
pessimism as to the outcome of the Mediation Scheme and observed that many
people thought that the only way the issue would be resolved was through
litigation. In December 2014, a firm of solicitors called Edwin Coe had issued a
press release stating that a group action was being prepared but in the end
nothing appeared to come of this, and I had understood that litigation had been
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previously considered before I joined the Shareholder Team via the firm
Shoosmiths.
289. In November 2015 the Shareholder Team noted that the JFSA had posted an
announcement on its website stating that they were working with a law firm
called Freeths to prepare a claim and inviting potential claimants to come
forward. A brief note (UKGI00006257) was prepared for the Minister informing
her of this development, including some background to the effect that the threat
of litigation was nothing new and that claims had been threatened before but
had not materialised. I see that I reviewed the note before it was sent
(UKGI00006256) and made some amendments with the intention of preventing
‘unnecessary wobbles’, which was intended to be a reference to the fact the
threat of litigation was nothing new and that the Government's consistent line,
namely that it would not be appropriate for Government to intervene in litigation
between POL and sub-postmasters, remained applicable.
290. In February 2016 I was informed by Mark Davies that Computer Weekly had
been in touch with POL to say that the JFSA had secured funding for a claim
(UKGI00007165) I asked him to keep me posted
291. On 13 April 2016 the Shareholder Team noted that the JFSA website had been
updated to say that that “High Court proceedings have been issued against
POL” (UKGI00020223) and, later the same day, the Shareholder Team was
informed by POL that it was in receipt of a letter from Freeths confirming that
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legal proceedings had been issued (UKGI00006646). We informed the Minister
immediately, before following up on 3 May 2016 with a submission which noted
that the Minister had discussed the letter of claim with Tim Parker at a meeting
and that it was going to be discussed at next Board meeting (UKGIO0006692).
We advised the Minister that the litigation was essentially an operational matter
for POL to address but we considered it important that the Department be kept
fully informed and on 6 May 2016 I wrote to the BEIS legal team
(UKGI00006708) explaining that as the Horizon issue was now “moving into
legal territory’ and that more regular updates between our respective team may
be required.
292. As anticipated, the litigation was discussed at the POL Board meeting on 24
May 2016 (UKGI00006798). POL’s General Counsel provided the Board with a
verbal update about the litigation. The Board was told that the Letter of Claim
had identified no new areas of concern which had not previously been raised
during the mediation process, and that the legal team that POL had recruited
solicitors with detailed experience in the relevant areas. The Shareholder Team
was not involved in POL’s engagement of Bond Dickinson as this was an
operational matter for POL but I saw no reason to doubt their suitability to deal
with the litigation on POL’s behalf — I felt that was a decision for POL’s
management to make.
293. From my perspective, the service of the Letter of Claim meant that after two
years of trying to bring the Horizon issues to some form of resolution acceptable
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to the parties, the court would now be the final arbiter and provide a conclusive
answer to the outstanding questions relating to Horizon. I had two principal
thoughts at this stage. The first was that the commencement of litigation had
confirmed what I had long suspected, which was that unfortunately litigation
was likely to be the only realistic way for this intractable dispute to be resolved.
Second, now that litigation had commenced, the conduct of that litigation was
an operational matter for POL and its legal team to manage. It was therefore
neither practicable, nor appropriate, for the Government including the
Shareholder Team to seek to involve itself in that process.
294. On 29 July 2016 the Board received a written update on the litigation from
POL’s General Counsel, Jane MacLeod (UKGI00006959). She explained that
a formal response to the letter of claim had now been sent, which she described
in the following terms:
“As mentioned in my briefing at the May board, on 28 April Freeths had
sent to us a lengthy Letter of Claim. Bond Dickinson (on our behalf)
responded to this last night. The response letter (which runs to 99 pages)
provides a detailed rebuttal to each and every issue raised in the Letter
of Claim and was discussed at length within Post Office and has been
reviewed by our QC Tony Robinson. While none of the allegations set
out in the Letter of Claim are new and we are not relying on any new
information in our rebuttal, the tone of our response is more assertive
than we have used previously...”.
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295. Over the course of the next 18 months or so, the POL Board would receive
regular updates about the progress of the litigation from POL’s General
Counsel, Jane MacLeod. I do not recall the Board receiving any updates directly
from POL’s solicitors, Bond Dickinson, during this period. To the best of my
recollection all updates were provided by Jane MacLeod. These updates were
generally delivered verbally at Board meetings and would focus on key
procedural developments, what was expected to happen in the next phases of
the litigation, and the overall strategy. My recollection is that there seemed to
be very little progress made during this period, although I had very limited
experience of large-scale litigation of this nature and had never previously had
any involvement in (or oversight of) a large group action. I had the impression
that the procedural progress of the claim was conventional, but very slow.
296. The minutes of the Board meetings from May 2016 to March 2017
(UKGI00006798) are consistent with my recollection and demonstrate that
relatively limited information was being provided to the Board about the
progress of the litigation and relatively limited discussion was taking place.
However, as I have explained, I did not think that the Board was being kept in
the dark and I understood the relatively limited flow of information to be due to
the fact that relatively little of substance was happening in relation to the
litigation.
297. I have been asked to review the minutes of the ARC meeting of 30 January
2017 (POL00247182) and to describe the discussion of the GLO proceedings
that took place at that meeting. I do not now have any direct recollection of that
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meeting, or of that aspect of the discussion in particular, but I have no reason
to doubt the accuracy of the summary in the minutes: “GC gave an update on
Sparrow. The Group Litigation Order had been heard by the Court. The initial
hearing went as well as could be expected, with the court requiring a high level
of information from the claimants. The next procedural hearing would be in
October but it was not expected that any substantive matters would be heard
before next year.” In general terms this is typical of the general procedural
update that we would receive from the GC from time to time both on the ARC
and at the full Board, with the next milestone always being seemingly quite
some time away.
298. We were informed that, on 27 March 2017, a Group Litigation Order had been
made and that date had been set for a Case Management Conference in
October 2017 (POL00027188). As far as I can recall nothing of any substance
relating to the litigation was brought to my attention over the course of the next
several months and I note, for example, that the minutes of the Board meeting
on 25 July 2017 (POL00021549) make no reference to any discussion of the
litigation at that meeting, and I do not recall any such discussion taking place.
299. There was, however, some reference to prosecutions at this meeting, which
appears to have come up in the course of the discussion about the financial
performance report for June 2017. I note that the CEO is recorded to have
intervened in the discussion to explain that, “the decision not to prosecute
agents if they could use the Horizon system as a defence would be
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reconsidered once Deloitte had completed their work on Horizon and could be
used in court as an expert witness.” I do not now recall this intervention or what
prompted the CEO to make it during a discussion of the June 2017 financial
report. Looking at the minutes now this strikes me as an odd intervention by the
CEO because that was not my understanding of the prosecutions policy being
followed by POL.
300. In the papers for the ARC meeting in January 2017 (POL00247018) we had
been informed by POL (at page 100) that “Over the last few years Post Office
has undertaken very few prosecutions by contract [sic] with its previous
practices — none have been brought to date in 2016-17. This lack of appetite
has been observed by the agency network....Post Office has a Conduct of
Criminal Investigation Policy which sets out the procedure to manage
prosecutions.” My understanding, therefore, was that POL was not currently
prosecuting but that it had a settled policy to follow if it were to do so. I am not
able to offer any further insight into the thinking behind this intervention by the
CEO.
301. On 20 October 2017, Jane MacLeod provided a written update to the Board
(POL00103314) by which she informed us that a trial had been set for
November 2018 to deal with ‘issues relating to the postmaster contracts’; that
the deadline for new claimants to join the action had been extended to 24
November 2017; and that various procedural directions had been made
concerning disclosure and the selection of lead claimants.
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302. The update in relation to the litigation we received at the POL Board meeting
on 23 November 2017 (UKGI00042836) was typical of the type of high-level
procedural update that we would be given as to the progress of the litigation.
Paragraph 9 of the minutes records the following by way of an update about the
litigation: “JM provided an update on the outcome of the Case Management
Conference held on 19 October and outlined the dates set for future hearings.
She noted that the judge had indicated that the court dates would not be set by
reference to counsel availability. This posed a potential issue for Post Office in
relation to the court hearing in November 2018 as the lead counsel may not be
available due to another trial, and advised that contingency plans were being
developed.”
303. I did not get any sense from POL that the stance it was taking in the litigation
was in any way controversial or unreasonable. In November 2017 I learned that
an article had appeared in the law gazette which suggested that the Judge
dealing with the claim had threatened POL with draconian costs penalties and
I sent the article to Jane MacLeod saying that I was concerned and asking what
POL’s costs exposure might be (POL00041544). I cannot now recall the precise
terms of her reply but from documents provided to me by the inquiry that she
obtained advice from the external legal team in which Andrew Parsons
confirmed that, “My and Tony’s view is that the substantive positions we are
taking are reasonable....We are not getting credit for the reasonable stances
we are taking and so need to work harder in getting our proposals out to Freeths
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at an early stage.” (POL00041544) I expect that something to that effect was
fed back to me.
304. Accordingly, the extent of my oversight of the litigation, both as a member of
the Board and in my shareholder role, during the period from April 2016 to the
end of 2017 was limited. As I have outlined above, there were four principal
factors that influenced my approach. First, the position consistently expressed
by POL was that there was nothing new in either the Claimants’ allegations or
POL’s response, and the company was confident in its position. As noted
above, this position was reinforced in my mind by the Parker Review and the
letter of the 4 March 2016, therefore I felt Post Office was entering the process
from a position of confidence. Second, the procedural progress of the litigation
did not seem unconventional given my limited experience albeit it was very
slow, and the position being taken by POL did not strike me or as I recall other
Board members as being unreasonable; there were no substantive issues to be
decided at this stage. Third, I considered the management of the litigation to be
an essentially operational matter for POL and its external legal team and that it
would not be appropriate for the Department to intervene directly in the conduct
of litigation of this nature at this stage. Fourth, I was keeping the Department's
legal team up to date with the progress of the litigation and it was not being
suggested to me that any further oversight or intervention was required.
305. By early-2018, and as the Common Issues trial began to loom larger on the
horizon, it was felt by the Board that it needed to be more proactive in
understanding and, to the extent appropriate, overseeing the litigation. To this
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end a litigation sub-committee was established January 2018. As I was soon to
be stepping down as the Shareholder NED, it was agreed that my successor,
Tom Cooper, would sit on that committee as Shareholder NED designate prior
to formally taking up his appointment in March 2018.
306. On 4 February 2018, the Board received a written update from Jane MacLeod
(POL00103333) concerning a recent procedural hearing that had covered a
variety of issues including disclosure and the identification of issues of fact.
Jane MacLeod said that POL was pleased with the outcome of the hearing and
that there would be a further procedural hearing later in February. There was
nothing in this update that gave me any cause for concern and I continued to
have the impression that the litigation was at an essentially procedural stage
and all was proceeding as expected.
307. Although I had largely stepped back from oversight of the litigation by this stage,
as part of my handover to Tom Cooper, I did have some involvement in the
establishment of a protocol for sharing information (including privileged
information) conceming the litigation. I produced a first draft of a submission
explaining the need for a protocol in mid-February 2018 and, on 16 February
2018, I wrote to Patrick Bourke proposing a meeting between Jane Macleod
and Elizabeth O’Neill (the UKGI General Counsel) in order to, “put in place
some more formal protocols to ensure that UKGI/BEIS are sufficiently patched
in to what's going on, and to ensure that as POL’s accounting officer, the Perm
Sec is content’ (UKGI00020855). The reference in that email to other litigation
in which the need for such protocols had been identified was to the Magnox
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litigation, where a number of lessons had recently been learned in this area. I
did not attend the meeting but I was copied in to a read out on 27 February
2018 (UKGI00020885) which suggested that POL had been reluctant to agree
to information sharing protocols.
308. On 18 May 2018 I drafted a submission to Alex Chisholm concerning the
Horizon litigation (UKGI00019311). This is a document which I prepared after
Tom Cooper had become the Shareholder NED and was effectively the last
piece of substantive work I completed before leaving the Shareholder Team.
The document provided an update on the implementation of the litigation
protocol and reflects the fact that, as I understood it at the time, there were
difficulties in agreeing and implementing the protocol.
309. This is the context of my email to Tom Cooper of 7 June 2018 (UKGI00008139)
in which I advise that the issue be escalated to Paula Vennells as “it’s constant
defer defer defer.” By this stage nearly four months had passed since I had first
explained to POL’s legal team the need for an information sharing protocol to
cover the litigation and there was still no agreement. My perception was that
this delay was the result of POL dragging its feet on the issue and deferring its
agreement to the proposed protocol, but Tom Cooper was more closely
involved in the issue by this stage and will be able to give a more accurate
perspective. I understand that the protocol was eventually agreed shortly after
this exchange of correspondence.
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310. I do not recall thinking at the time that POL’s delay in agreeing a protocol was
because it wanted to avoid Board and/or Shareholder scrutiny of its handling of
the litigation, although it is of course possible that this may have been part of
the reason for the delay. My sense was simply that it was typical of the approach
of the company, and Jane MacLeod in particular, to what it perceived as
Shareholder interference in operational matters and reflected a failure to
understand or accept that, as Accounting Officer, the Permanent Secretary was
ultimately accountable to Parliament for matters such as the GLO proceedings,
and so needed to be kept properly informed.
311. I stood down from my position as Shareholder NED at the POL Board in March
2018 (UKGI00018134). Tom Cooper was appointed as Shareholder NED at the
same meeting. I left the Shareholder Team in May 2018 and so by the time the
Common Issues trial started later in 2018 I was no longer dealing with POL
related issues beyond the occasional email to access my corporate memory. I
was not sighted on the litigation strategy being pursued at this point or any
advice that was being given as to the merits of POL’s position.
312. I have been asked to comment on the ‘communications policy adopted by POL
in respect of the GLO’ and why I considered that communications policy to be
appropriate. I do not recall giving much thought to POL’s communication policy
concerning the GLO proceedings or being asked to approve the approach being
taken, either on the Board or in my shareholder capacity. We would
occasionally be given an indication as to the line POL intended to take at points
where publicity relating the litigation was anticipated, and the email from Jane
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Macleod to the Board on 20 October 2017 following the Case Management
Conference (POL00103314) is typical of the level of detail: “Press
representatives were in Court during the hearing and we expect that there will
be some press coverage over the next few days. The Post Office media team
are on standby with prepared lines.” As to what those lines were, my
understanding, which I picked up from correspondence such as the email from
Jane MacLeod on 25 January 2017 (POL00103302) was POL would respond
‘positively’ to any media enquiries, “welcoming the Court's decision as the best
opportunity for matters to be heard and resolved, but otherwise not offering any
comment.” I do not recall thinking that there was anything inappropriate about
that approach, and they quite rightly did not go into the specifics of the case.
313. Ido not recall ever gaining the impression that concerns about adverse publicity
affected the way in which POL presented its case in the GLO proceedings. As
I have explained the proceedings, by the time I left the Board in early 2018, the
proceedings had been confined largely to procedural issues and, as I
understood it, the parties were simply going through the steps necessary to
organise large scale litigation of this nature. As noted above, on the one
occasion where I queried the approach being taken to the litigation in light of
some press reporting I had seen, the message that came back was that POL’s
position was reasonable and appropriate. As I have indicated, I had no
experience of large scale litigation of this nature and I do not know what scope
there might be for adverse publicity to affect the conduct of procedural hearings
in the early stages of group litigation, but I do not recall any concerns of this
nature being expressed to me by any of my legal colleagues.
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314. I have been asked to provide my understanding of a potential investigation by
the National Audit Office (“NAO”) into the GLO proceedings. I have no
recollection of the NAO enquiry and I see from the documentation with which I
have been provided by the Inquiry that it post-dated by tenure as Shareholder
NED. I see that I was asked in late November 2018 (see emails dated 28
November 2018 (UKGI00008721) and 6 December 2018 (UKGI00008787) for
assistance in identifying the briefing provided to the Minister around the time of
the review conducted by Tim Parker in early 2016, and whether I had any
objection to material relating to Tim Parker's review being shared with the NAO.
I provided an account of what I could recall and I confirmed that I had no
difficulty with any material being shared with the NAO. I do not know what
prompted the NAO to seek the material relating to Tim Parker's review and I
was not sighted on the further progress or outcome of the NAO enduiry. As far
as I can see I was just being asked for assistance with my corporate memory
of events in 2016.
315. I have reflected on whether there was scope, prior to early 2018, for the Board
to obtain better or more detailed visibility of the litigation strategy than it received
from the periodic verbal briefings delivered by POL’s General Counsel at Board
meetings. I think that the short answer to that question is that there probably
was scope for the Board to have done so, and that it would have been better
had it sought to gain a more complete understanding of how the litigation was
being handled and the merits of POL’s position. That said, and even with the
benefit of hindsight, it is impossible to say what, if any, difference it would have
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made to the approach taken by the Board to the litigation as it would entirely
depend on what we would have been told. The overwhelming impression of the
litigation which I formed whilst I sat on the Board was that not very much was
happening and what was happening was largely procedural.
316. That said, my approach now would be different if an asset within my portfolio
was engaged in large scale litigation of the significance of the GLO
proceedings. It is worth noting that UKGI’s legal capability is much more
substantially resourced and experienced than it once was, and is now a much
more inherent part of the organisation. As a result, I am now aware that it is
both possible, and important, for the Board to obtain a clear, and early,
understanding of the issues in the case, the merits of the company’s position
and the litigation strategy being pursued. I am aware of the ability of the Board
to require merits advice to be provided, to hear directly from the external legal
team involved in the litigation and for the Board to commission its own legal
advice as necessary. These are steps I would be proactive in taking should I
find myself in a similar situation.
Resignation from the Board
317. I have been asked to provide an account of my reasons for my departure from
the POL Board in early 2018. By this stage I had been on the Board for 4 years.
The preceding 18 months or so had been dominated by difficult and protracted
discussions on funding for POL, which had taken up the majority of the time I
had spent dealing with POL-related issues (which, as I have explained, made
up 50% of my role at UKGI). The funding process was draining and stressful as
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I had to try and navigate the inevitable conflict that was inherent in my role,
between the interests of the company on the one hand and the interests of the
Shareholder on the other. It was in the context of funding that this inherent
conflict was encountered most starkly; in essence, it was in the company’s best
interests to extract as much funding from the Government as possible, and it
was in the Government's interests for the company to deliver its strategic
objectives with the minimum allocation of limited public funds. This was made
all the more difficult by the discussions being held outside the usual spending
round process, something which the Shareholder Team had flagged would
occur during the last spending process, but which appeared to have faded in
people’s minds.
318. There were a number of occasions where I had difficult conversations with both
sides questioning where my loyalties lay, including one occasion at a pre-Board
discussion that Mark Russell and Justin Manson had been invited to attend,
where a fellow director asked whether there was any point me being on the
Board if I could not secure the funding from the Department that the company
was looking for. I recall Justin later praising me for my answer (which I cannot
now recall) but I felt that I was being required to strike an impossible balance
between competing priorities and that both sides felt that I was favouring the
other. This is the issue that underlies the email from Robert Swannell to Mark
Russell on 8 November 2017 (UKGI00020798) in which he recounts a
conversation with Tim Parker:
“Tim was very pleased with the settlement agreed with BEIS/HMT. He
was also very happy with the support of UKGI and singled Richard
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Callard out for his contribution generally and at the board. He had
thought it unfair that he had been labelled as being too close to PO; he
was effectively objective and robust.”
319. As Tim Parker's observations indicate, being seen as effective and constructive
by the Board led to me being seen to ‘too close’ to POL by some in the
Department. Yet I had also been criticised by Board colleagues for not doing
enough for POL, being conflicted, and having to recuse myself from Board
meetings. Whilst I felt that if both sides were equally unhappy I must be
somehow getting the balance right, I was frankly tired of having to try and walk
that tightrope whilst dealing with all the other issues that POL and GIB were
generating.
320. POLis a very interesting and varied organisation, but even ignoring the Horizon
issue for a moment, it is equally very intense given the significant level of public
scrutiny it receives at national and constituency level, across political,
commercial, industrial relations and community issues. I also felt that having
reached the end of a funding settlement period, and having achieved the policy
goal of having a stable number of branches above the minimum required by
Government, it was a sensible time to move on and let others take forward the
next funding package.
321. Ultimately, though, it was the thought of another funding round that was the
tipping point. Given that the funding settlement that had taken 18 months to
achieve only covered a 3-year period, I realised that it would not be long before
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the whole process started again and I was very reluctant to repeat the exercise.
Accordingly, I made it clear to UKGI in late 2017 that I wished to step down from
the POL Board and from the Shareholder Team. Tom Cooper was then
appointed as head of the Shareholder Team and I reported to him during a
handover period of a few months before he took over as Shareholder NED in
March 2018.
322. I have specifically been asked to describe my perception of the risks and/or
compliance issues facing POL at the time of my departure from the Board in
relation to: (i) the conduct of past prosecutions by RMG/POL; (ii) POL’s
prosecutorial policy; (iii) the civil claims threatened by sub-postmasters; and (iv)
the operation of the Mediation Scheme. I address each in turn.
323. As I have set out above in the section of my statement dealing specifically with
prosecutions my perception was that the issue of past prosecutions had been
addressed in the review by Cartwright King and Brian Altman QC prior to my
appointment, and that any outstanding issue would be dealt with by the CCRC
or by way of appeals in individual cases. There had been no such appeals
during the period I sat on the Board and, by the time of my departure, there had
been no indication from the CCRC that any past convictions were unsafe. I was
not aware of the concerns that had been identified in 2013 regarding the
evidence of Gareth Jenkins and I was not aware of any evidence that past
prosecutions had been mishandled or that convictions were unsafe. In short,
the position in respect of past prosecutions had not moved on significantly from
when I joined the Board in 2014, which I have described in detail above.
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324. As for POL’s prosecutorial policy, I was aware that a new prosecutions policy
had been formulated in 2013 and approved by the Board in early 2014, and that
the policy was subject to annual review. My understanding was that the new
policy was informed by the review conducted by Cartwright King and Brian
Altman QC and aside from the issues noted above (about not prosecuting
where Horizon was cited as a defence) I had not heard any concerns expressed
about the formulation or operation of the policy at any stage during my time on
the Board. The policy was renewed annually, as required, and as far as I was
aware it was fit for purpose. In any event, my understanding was that POL was
not in fact engaging in any significant prosecutorial activity during my tenure on
the Board and I have referred above to the paper provided to the ARC which
confirmed that there had been no prosecutions brought in the course of the
preceding year (2016-2017). Whilst I was aware that there were ongoing
concerns being expressed about the conduct of past prosecutions I do not recall
any similar concerns being expressed about the current prosecutorial policy
and so my perception of the level of risk in this area was that it was low.
325. By the time of my departure from the Board, the risk in respect of the claims
‘threatened’ by sub-postmasters had crystallised into to the GLO proceedings
that had been underway for almost two years by that point, with the substantive
Common Issues trial scheduled for November 2018. For the reasons I have
sought to explain above, my perception of the risk that POL would lose the
litigation was shaped by the updates we received from the company, and the
General Counsel in particular, to the effect that the claims had raised nothing
new. POL had been able to provide a detailed rebuttal to all the points made by
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the sub-postmasters; and the company was confident of success. Neither I, nor
the Board as a whole, had any other source of information as to the merits of
the claim and, as a non-lawyer, I accepted what I was told at face value. That
being so, I expected the claim to fail and the outcome of the litigation to be an
endorsement of the integrity of the Horizon system, and I hoped that would
finally bring the matter to a close.
326. As for the operation of the Mediation Scheme, this had ceased to operate in
any meaningful way almost two and a half years prior to my departure and so I
did not really have any perception of the risks and/or compliance issues relating
to its operation and I do not recall giving the matter any thought at the point of
my departure from the Board in early 2018. It was clear that although some
cases had apparently been successfully mediated the scheme as a whole had
failed to deliver the outcome that had been hoped for, and the commencement
of the GLO proceedings was an obvious illustration of the scheme’s lack of
success.
327. My perception of the extent to which the risks were being managed
appropriately by POL and/or the Board flows from my understanding of the
nature and extent of the risks themselves, as outlined above. On the issue of
prosecutions I had no significant concerns about the way in which the risks were
being managed. I understood that any remaining issues regarding past
prosecutions were being addressed by the CCRC, which I thought was the
appropriate body to be dealing with issues of that nature, although I was
periodically frustrated by their lack of progress. I understood the current
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prosecutorial policy to be fit for purpose and, in any event, no prosecutions were
being brought, as far as I was aware. The GLO proceedings were in the hands
of POL’s external legal team and appeared to be proceeding in a slow and
largely procedural manner and the Board was being consistently told that all
was proceeding according to plan and the company was confident of success.
The Mediation Scheme had long since ceased to operate and so there were no
risks to manage. In short, therefore, I had no significant concerns regarding the
way in which POL and/or the Board were managing risk in these four areas and
so I did not communicate any such concerns to my successor other than to say
that I thought the courts were the best place for resolution of the issues.
328. On reflection, and knowing what I now know of the material that was potentially
available at the time, I think it is clear that neither I, nor the Board as a whole
had sufficient information to be able to make an accurate assessment of the
risks facing POL on the issues of past prosecutions and the GLO proceedings
in particular.
329. On the prosecutions issue neither I nor the rest of the Board (as far as I am
aware) had seen the Simon Clarke advice from July 2013 indicating that the
expert evidence relied upon by POL in support of past prosecutions was
unreliable. The comfort I took from what I understood to be a thorough review
by Cartwright King and Brian Altman QC was clearly misplaced. I am also
conscious that, by the time of my departure, I had never heard directly from any
of the affected sub-postmasters on the issue of past prosecutions and, had I
(and/or the Board) done so then that may have caused me to rethink my general
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assumption that, if there was evidence to indicate that a conviction was unsafe,
then the affected sub-postmaster could simply appeal.
330. As I have already mentioned, I also consider, with the benefit of hindsight, that
a careful reading of the material produced by Deloitte in 2014 and/or the review
prepared by Jonathan Swift QC would have provided the Board (including me
as Shareholder NED) with cause for concern regarding the validity of the
assertions that had been consistently made by POL as to the Horizon system
and, by extension, the safety of past prosecutions that had relied on the integrity
of the system.
331. Consideration of this material is also likely to have caused us a greater degree
of concern regarding POL’s position in the GLO proceedings. In addition, I now
have a much better understanding of the steps that a Board can take in seeking
to understand the level of risk faced by a business engaged in large scale
litigation, such as asking to hear directly from the external legal team, requiring
the provision of written merits advice and, if necessary, commissioning its own
legal advice to obtain a second opinion. I was not aware of these tools at the
time, they did not occur to me, as I had never previously been involved in Board
oversight of litigation and neither were they suggested to me. But it is clear now
that had the Board sought to gain a fuller understanding of the merits of the
GLO claim in this way during the first two years of the litigation it would have
been much better placed to reach an informed assessment of the level of risk
presented by the claim.
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332. In direct answer to the Inquiry’s question, therefore, whilst I consider that I had
sufficient information at the time of my departure to assess the level of risk faced
by POL in respect of its current prosecutions policy and the Mediation Scheme,
I had insufficient information to assess the level of risk presented by the
handling of past prosecutions and the ongoing GLO proceedings, as
subsequent events clearly demonstrate.
General Reflections
333. Over the years since the outcome of the GLO proceedings I have reflected very
carefully on my tenure as Shareholder NED, and whether there is anything I
should have handled differently in relation to the Horizon IT system and its
associated issues. I have followed the evidence given to the Inquiry very closely
and asked myself whether there is anything more I could or should have done
to identify what had gone so badly wrong. I am very grateful for the opportunity
to provide my reflections to the Inquiry, and I have done so below.
334. I have structured my reflections in accordance with three broad themes. First
are the opportunities that were missed that may have led to a different path
being taken and, potentially, an earlier resolution of the issues. Second are my
reflections on the advice provided to Ministers. Third are my reflections around
whether I was sufficiently open minded in my approach. I then address any
remaining questions posed by the Inquiry.
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335. Turning to the first theme, as I have noted above in response to the Inquiry’s
questions, there were clear opportunities that were missed in the information
that came to me as Shareholder Team lead, and as part of the Board.
336. The first relates to the Deloitte Board Briefing of 4 June 2014. As I have
explained above, I have no reason to believe that I did not receive this briefing
when it was circulated to the whole Board on 4 June 2014. It remains
unfathomable to me as to why the briefing does not appear to have been
discussed either at the Sparrow Sub-Committee meeting on 6 June 2014 or the
Board meeting on 10 June 2014. It clearly should have been and I acknowledge
my responsibility in failing to ensure that it was properly considered by the
Board. There were important findings in the report which might well have
prompted the Board to commission further work. It is clear to me now, on
reading the briefing, that I did not recognise either its significance or the extent
to which it identified the need for further investigation to be undertaken. There
was, in my view, a fundamental failure on the part of the Board to commission
a thorough and rigorous expert analysis of the Horizon system and, looking
back at the period of my tenure on the Board, this seems to me to be the
clearest and most obvious opportunity that was missed to commission that
work.
337. The second obvious missed opportunity was the Parker Review. The failure to
ask for sight of the material generated in the course of Tim Parker's review is
difficult to justify or explain with hindsight. This was an important exercise, that
was commissioned in the wake of the collapse of the Mediation Scheme and
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the new Minister's request to gain her own assurance. It was designed to
provide a clear and conclusive answer to the fundamental question of whether
there was a significant problem with Horizon, and whether Post Office had
conducted itself properly. Tim Parker was the Chairman of the company and
had full access to all relevant material and a free hand as to who he spoke to
and how he conducted his review. We were made aware that, amongst other
things, he had commissioned specialist advice from a QC. In those
circumstances, a relatively short letter to the Minister reporting a set of generally
reassuring conclusions now looks to be an inadequate way of dealing with the
matter, even if at the time it felt proportionate.
338. I have reflected on why that did not happen, and I think the essential reason is
that it simply did not occur to me that Tim Parker's letter might be materially
incomplete or fail to adequately reflect the material he had assembled in the
course of his investigation. I should have probed harder as to the work his letter
was based on, which would probably have led me and the Board to asking to
see the Swift Report itself. I am unclear as to whether this would have in fact
led to a speedier resolution of the issues for sub-postmasters by that point (in
2016), but I think it would have substantially affected my perception of POL’s
litigation strategy and, I anticipate, the perception of the Board as a whole. An
earlier settlement may have been a possible result.
339. Third, on reflection, I took too much comfort from the involvement of
independent third parties and the belief that if there was a fundamental problem
with Horizon, they would clearly identify it. At various points in the chronology,
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and for differing reasons, I was reassured that parties such as Deloitte,
Linklaters, the NFSP, Second Sight, the CCRC, the CEDR and Sir Anthony
Hooper were engaging with the Horizon issues. Looking back, I could have
made more of the opportunity provided by their involvement to obtain objective
assurance of the integrity of the Horizon system. I accept that speaking more
directly to these third parties, and indeed the JFSA, may have led me to be
more challenging of the established position.
340. The second theme of my reflections concerns the advice provided to Ministers.
I was too willing to take POL’s assertions regarding the integrity of the Horizon
system, and the extent to which past investigations had given it a clean bill of
health, at face value. The underlying logic of the situation, regarding the sheer
scale of the network and number of users versus the size of those that had had
issues, made a lot of sense at the time, but was to me perhaps more compelling
than it should have been.
341. On reflection, I should have challenged those assertions more than I did and
sought to understand the evidence on which they were based. There is a
danger that when reviewing the advice that I presented to Ministers it seems
that I blindly took Post Office at their word — I did not. During my tenure, Peter
Batten (and then Laura Thompson) and I would spend significant amounts of
our time meeting Post Office and talking to them over the phone, questioning
them on a range of matters that were pertinent at the time e.g. proposals to
close the Working Group, the status and terms of the contract, remote access
(e.g. questioning them on the Rudkin / Bracknell allegations), requesting an
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answer to Panorama investigations, the issue of false accounting versus theft
etc. For some of Peter Batten’s time, and particularly for most of Laura
Thompson's time, this was their main Post Office related activity, and as a
result, we would only include in briefings and submissions information from Post
Office that we were satisfied with, which was the same approach we took to
other, non-Sparrow, topics.
342. Nevertheless, my acceptance of what I was told by POL regarding the historic
investigation of the Horizon system, and the lack of any evidence of any fault in
the system, inevitably influenced my communications with Ministers and the
Department on these issues and led to me passing on POL’s confidence in the
system without appropriate caveats. Looking back now at the correspondence
and submissions that I drafted or approved it is quite clear to me that I did not
always make sufficiently clear that what was being said regarding the integrity
of Horizon and the merits of the allegations by sub-postmasters was based
more on what we had been told and became satisfied with rather than what we
directly had established for ourselves. This may have inevitably encouraged
Ministers to develop a greater degree of confidence in the Horizon system than
the evidence warranted, although the Ministers I worked for did generally
remain sceptical of that position throughout.
343. It is worth noting at this point that, in my view, Ministers did what they could in
difficult circumstances and ensured that investigations continued throughout my
tenure. The appointment of, and reporting by, Second Sight and the
establishment of a well-received Mediation Scheme occurred during Jo
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Swinson’s oversight, and arguably this was the first time that the matter had
been taken seriously by Royal Mail or Post Office since the system was
implemented in 1999. Baroness Neville-Rolfe remained sceptical of the issue
throughout her tenure, commissioning the Parker Review and meeting the key
stakeholders including Second Sight. Margot James and Andrew Griffiths had
limited opportunities to take any action given that by that stage the issue was
with the Courts.
344. I have to acknowledge that looking back at some of what I wrote and approved
at the time in relation to Horizon is deeply uncomfortable for me now. As I have
said above, my approach to this issue was often characterised by a degree of
frustration in that I wanted the matter to be resolved, one way or the other, but
I could not see how that was going to happen short of litigation or appeal and I
could not understand why evidence of faults with Horizon or miscarriages of
justice were not being presented, to the courts or the company, if that evidence
existed. Some of that frustration comes through in what I wrote or approved at
the time, which I regret. I am sorry for the offence no doubt caused to sub-
postmasters, individually and collectively, who will have subsequently seen
them.
345. The underlying belief that Horizon had been, or was being, thoroughly
investigated and there was no evidence of any systemic fault ultimately
influenced the analysis and advice given by the Shareholder Team to Ministers
as to the appropriate stance for Government to take on the issue. As I have
sought to explain above, for almost all of my tenure the Horizon issue was being
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addressed by either an independent Mediation Scheme, a Chair review, or court
proceedings. I still think that the essential advice that it would not be appropriate
for the Government to be seen to intervene directly in either process was sound.
The advice given to Ministers regarding the extent to which it would be sensible
to engage in the issue directly was inevitably influenced by the belief that the
system had been exhaustively investigated and evidence of fault had not been
found, and that, in those circumstances, there was no realistic prospect of
Government being able to provide a solution.
346. Whilst there were occasions where I think our advice was correct, including the
advice to the Minister to meet Second Sight despite the objections of POL and
the facilitation of the Tim Parker Review once it became clear that the Mediation
Scheme had failed, there were others where I think, on reflection, we got the
balance wrong, including the advice (rightly rejected) that the Minister should
not receive a copy of the Second Sight thematic report to preserve scheme
independence, and the advice following the Panorama broadcast to the effect
that it appeared to reveal nothing new by way of evidence of a fault with the
system. Clearly the presence of a named Fujitsu whistleblower was new and
significant, despite the reassurances received from Fujitsu via POL.
347. The third theme of my reflections concerns whether I was sufficiently open-
minded when it came to issues concerning the integrity of Horizon. I had no
personal or financial stake in the outcome of the Horizon dispute as the
Shareholder NED and, frankly, if someone had come forward with clear and
conclusive evidence that there was a fault in Horizon that could be responsible
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for losses in branch accounts, I would have been pleased and relieved that we
finally had an answer. In that sense, I was open-minded. However, on reflection,
I think it is clear that I was too willing to accept at face value the established
position that Horizon had been thoroughly investigated and given an essentially
clean bill of health to date.
348. As to my reflections on POL’s handling of challenges to the integrity of the
Horizon system by sub-postmasters, Crown employees, MPs and the press,
these are straightforward and unsurprising. I think it was in the end grossly
inadequate. I feel that it started well and with the right sentiment — Post Office
and Royal Mail prior to separation had simply not engaged with the issue
beforehand, and the subsequent engagement of Second Sight and the creation
of the Mediation Scheme were positive steps that had not been previously taken
before separation and were welcomed at the time. The Board I joined did
genuinely want to understand whether there was an issue with Horizon.
However, things started to go awry as a clear cut answer one way or another
failed to materialise despite significant amounts of work, and the situation
became more polarised. In the end the mantra of the company that had become
established regarding the integrity of Horizon by the time of my appointment,
and which was consistently repeated throughout my tenure, was asserted with
a degree of confidence that could not be justified when it came to be tested by
the courts.
349. On the specific issue of prosecutions, and the disclosure of information to sub-
postmasters convicted on the basis of Horizon data, I can only repeat what I
have sought to explain above. At the time I took up my position on the POL
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Board I thought that this issue had been addressed by the reviews that had
been conducted in the aftermath of the Second Sight interim report and that
POL had been given a clean bill of health as far as its disclosure obligations
were concerned. A year or so later, when I learned of the involvement of the
CCRC, I assumed that if there were any issues relating to historic disclosure
they would be identified in the course of the CCRC review. In those
circumstances I continue to find it difficult to identify precisely what more should
have been done in relation to this issue, other than me keeping in regular
contact with the CCRC.
350. That position is subject, of course, to the fact that I had not seen the advice that
indicated that POL had relied on tainted expert evidence in support of some
prosecutions and that documents had indicated a culture of secrecy and
general aversion to disclosure in the POL prosecution department, including
references to the shredding of documents. Even now, I am at a loss to
understand how, if there were disclosure failings in the conduct of past
prosecutions, these failings were not identified and addressed in the course of
the reviews conducted by internal and the specialist external lawyers
commissioned to address precisely this issue in the period prior to my arrival. I
also cannot understand why this was not conveyed to Board members in 2013
or indeed later on when this issue was revisited during the Parker Review. In
my view had this been disclosed to the Board in 2013, it is likely that I would
have joined a Shareholder Team and a Board that would have been on a
completely different path to that which I encountered on my arrival.
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351. I would like to conclude this statement in the same way as I started it by
expressing my profound regret for the injustice, suffering and hardship
experienced by so many sub-postmasters. I am sorry that I did not do more to
bring that to an end sooner. I hope that my evidence may provide the Inquiry
with some assistance in the vitally important task of ensuring that nothing like
this ever happens again.
STATEMENT OF TRUTH
I believe the content of this statement to be true.
Signature! G RO
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URN Document Description Control Number
1. POL00021522 POL Board Meeting Minutes for 26 I POLO000055
February 2014.
2. POLO0006564 POL Board Meeting Minutes for 26 I POL-0017658
March 2014.
3. UKGI00002515 Example POL Shareholder Executive I UKGI013329-001
Risk Register.
4. UKGI00013659 Shareholder Executive HM I UKGI024452-001
Government - Post Office Limited
(POL) Quarterly Review June 2014.
5. UKGI00043217 New Articles of Association of Post I UKGI00043217
Office Limited (adopted by a written
resolution passed on 12 September
2013).
6. POL00362299 Post Office Limited: Shareholder I POL-BSFF- 0190809
Relationship Framework Document.
7. POL00021553 POL Board Meeting Minutes for 29 I POLOO00086
January 2018.
8. POL00027286 POL Board Meeting Minutes for 25 I POL-0023927
March 2015
9. POL00026722 Post Office Limited Annual Report and I POL-0023363
Financial Statements 2014/15.
10. I UKGIO0002440 I Note prepared by Richard Callard I UKGI0O13254-001
regarding CEO and CFO dated 20
August 2014.
11. I UKGIO0002439 I Email from Richard Callard to Jo} UKGI013253-001
Swinson dated 20 August 2014.
12. I UKGI00045963 Initial scoping exercise for recruitment I UKGI056925-001.
of new CEO from UK Shared Business
Services
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URN
Document Description
Control Number
13.
UKGI00006547
Email chain from Richard Callard to
Justin Manson dated 22 — 25 February
2016 re: the submission on POL’s IT
renewal.
UKGI017361-001
14.
UKGI00002223
Email from Richard Callard to
Shareholder team dated 28 - 31
March 2014 re: non-disclosure.
UKGI013037-001
15.
UKGI00044246
Post Office Two way confidentiality
agreement with Richard Callard (DBT)
signed by Alwen Lyons.
UKGI052790-001
16.
POL00203296
Draft minutes of Sparrow Sub-
Committee Meeting on 9 April 2014.
POL-BSFF-0041359
17.
POLOO006565
Final minutes of Sparrow Sub-
Committee Meeting on 9 April 2014.
POL-0017844
18.
UKGI00002274
Email chain from Richard Callard to
Peter Batten dated 24 April 2014 re:
Papers for the Board Sub-Committee
UKGI013088-001
19.
POL00021549
POL Board Meeting Minutes for 25
July 2017.
POL0000082
20.
UKGI00017443
Email chain between Richard Callard,
Mark Russell and Justin Manson
dated 18 - 27 November 2015 re:
Baroness Neville Rolfe.
UKGI027450-001
21.
UKGI00000024
Briefing from Richard Callard to Jo
Swinson dated 15 December 2014
VIS00000985
22.
UKGI00005062
Email from Laura Thompson to Javid
MPST and Richard Callard re. Post
Office:
Neville-Rolfe on
submissions to Baroness
Network
UKGI015876-001
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URN Document Description Control Number
Transformation and on Horizon / BBC
Panorama.
23. I UKGIO0003972 Email chain from Richard Callard to I UKGI014786-001
Laura Thompson re: Post Office
Mediation: response to letter from BIS
Select Committee dated 18 - 24
March 2015.
24. I POL00027501 Post Office Audit, Risk and I POL-0024142
Compliance Committee -
Prosecutions Policy.
25. I POL00253343 POL Board Meeting Minutes for 29 I POL-BSFF-0091406
Jan 2018.
26. I UKGI00018975 Email chain from Tom Cooper to I VIS00012374
Elizabeth O' Neil, Helen Lambert cc
Richard Callard dated 5 April 2018 re:
Litigation and Appointment - next
steps.
27. I POLO0248910 Email from Rob Houghton to Tim I POL-BSFF-0086973
Mcinnes, Cc'd Nick Parker, Richard
Callard and others dated 2 May 2017
re: Horizon outage.
28. I UKGI00003236 I POL Board Meeting Minutes for 28 I UKGI014050-001
January 2015
29. I POLO0027568 POL Board Meeting Minutes for 2 July I POL-0024209
2015.
30. I UKGI00002179 I Email from Will Gibson to Peter Batten I UKGI012993-001
copying Richard Callard and others
dated 2 December 2013 re: 20131202
Royal Mail - Post Office -131021
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URN
Document Description
Control Number
31.
UKGI00002180
Notes regarding Post Office prepared
for UKGI.
UKGI012994-001
32.
UKGI00002191
Email from Richard Callard to the
Shareholder Team dated 20 February
2014 re: Sparrow update.
UKGI013005-001
33.
POL00201986
POL Board Pack for POL Board
Meeting on 26 March 2014.
POL-BSFF-0040049
34.
UKGI00002204
Briefing from Petter Batten to
Secretary of State and Jenny Wilmott
re: Briefing for meeting with Post
Office Ltd Chair and CEO dated 4
March 2014.
UKGI013018-001
35.
POL00210905
Email chain dated 15 October 2014
from Belinda Crowe to Chris Aujard re:
letter to Jo
Mediation Scheme
Swinson.
POL-BSFF-0048968
36.
POL00210906
Letter from Paula Vennells to Jo
Swindon re: Chris Aujard's Update on
the Mediation Scheme - Current and
emerging issues.
POL-BSFF-0048969
37.
UKGI00002984
Email from Belinda Crowe to Richard
Callard and others dated 14 January
2015 re: POL’s response to the
Westminster Hall debate.
UKGI013798-001
38.
UKGI00002985
Post Office Response to Westminster
Hall Debate : Complaint and Mediation
Scheme dated 17 December 2014.
UKGI013799-001
39.
POL00351871
Post Office Limited - Project Sparrow
Sub Committee Update and Options.
POL-BSFF-0177592
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URN
Document Description
Control Number
40.
UKGI00020116
Submission from Richard Callard to
Baroness Neville-Rolfe dated 3
December 2015
UKGI02901 1-001
41.
UKGI00019357
Email from Richard Callard (ShEx) to
Alwen Lyons cc Paula Vennells; Laura
Thompson (Shareholder Executive)
dated 6 August 2015 re: Panorama.
VIS00013179
42.
UKGI00005717
BBC1 Panorama notes regarding Post
office prosecutions
UKGI016531-001
43.
POL00021538
POL Board Meeting Minutes for 22
September 2015.
POLO0000071
44.
POL00163438
POL Board Meeting Minutes for 27
November 2018.
POL-0152061
45.
UKGI00006514
Email from Richard Callard to Stephen
Devitt dated 8 February 2016 re:
Extraordinary Meeting of the Post
Office Limited Board - 09 Feb 2016
UKGI017328-001
46.
POL00158306
Trinity Stakeholder Communications
Plan for W/C 22 February.
POL-0146664
47.
UKGI00002264
Letter from Alan Bates / JFSA to Jo
Swinson dated 16 April 2014.
UKGI013078-001
48.
UKGI00005251
Letter from John Munton (CEDR) to
Post Office Mediation dated 6 March
2015 re: Post Office Complaint
Review and Mediation Scheme and
providing feedback and
recommendations.
UKGI016065-001
49.
POL00119531
Letter from John Munton (CEDR) to
Patrick Bourke dated 31 July 2015 Re:
POL-0119843
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URN
Document Description
Control Number
Post
Review Scheme-Review 2.
Office Mediation Complaint
50.
POL00027308
POL Board Pack for POL Board
meeting on 25 March 2015.
POL-0023949
51.
POL00226519
Email from Tom Wechsler to Richard
Callard dated 14 April 2015 with
Second Sight report and draft POL
response.
POL-BSFF-0064582
52.
UKGI00000018
POL to Second Sight
briefing report - Part Two as part of the
response
Complaint Review and Mediation
Scheme.
VIS00000979
53.
POL00040868
Letter from Jane MacLeod to Second
Sight dated 24 February 2015.
POL-0037350
54.
UKGI00006056
Briefing from Laura Thompson to
Baroness Neville Rolfe dated 1
October 2015.
UKGI016870-001
55.
UKGI00005279
Email from Baroness Neville Rolfe to
Laura Thompson and Richard Callard
dated 4 August 2015 re: Second
Sight's Briefing Report - Part Two.
UKGI016093-001
56.
UKGI00006175
Briefing from Laura Thompson to
Baroness Neville Rolfe dated 16
October 2015.
UKGI016989-001
57.
UKGI00007316
Note on the key points from the
Second Sight meeting.
UKGI018130-001
58.
UKGI00010325
Letter from Baroness Neville Rolfe to
The Rt Hon Oliver Letwin MP dated 29
November 2015.
UKGI021133-001
Page 179 of 191
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URN Document Description Control Number
59. I UKGIO0000063 Briefing/Update relating to meeting I VISO0001024
with MPs and stakeholders
60. I UKGIO0002221 Email from Richard Callard to Peter I UKGI013035-001
Batten, Katrina Lidbetter, James
Baugh and others dated 25 March
2014 re: Paula Readout.
61. I UKGI00019320 I POL Board Meeting Minutes for 26 I VISO0013134
February 2014.
62. I POLO0138251 Project Sparrow Sub-Committee I POL-BSFF-
agenda and papers for the meeting to I 0000480
be held on 9 April 2014.
63. I POL00022125 POL Board Sub-Committee: Initial I POL-0018604
complaint review and Mediation
Scheme: The role of Second Sight in
supporting the committee.
64. I UKGIO0002659 Post Office announces independent I UKGI013473-001
mediation scheme for sub-
postmasters.
65. I POLO0100578 Letters from Jenny Wilmott MP (on I POL-0100161
behalf of BIS) to Alan Bates and Sir
Anthony Hooper re_ Initial Case
Review and Mediation Scheme
66. I POLO0022128 Agenda and documents in preparation I POL-0018607
for the Sparrow Sub Committee
meeting on 6 June 2014.
67. I POLO0006566 Minutes of the Sparrow sub- I POL-0017845
committee for 30 April 2014.
68. I POL00021526 POL Board Meeting Minutes for 10 I POLO000059
June 2014.
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URN
Document Description
Control Number
69.
POL00021529
POL Board Meeting Minutes for 29
October 2014.
POLO000062
70.
POL00308842
Westminster Hall Debate:
Subpostmaster Mediation Scheme,
Lord James Arbuthnot MP.
POL-BSFF-
0146892
71.
UKGI00003008
Paper on Post Office Response to
Westminster Hall Debate January
2015
UKGI013822-001
72.
UKGI00002853
Email from Richard Callard to MPST
Swinson CC’ing Tim Mcinnes, James
Baugh and others dated 17 December
2014. Re: URGENT:
Horizon/Arbuthnot rebuttals.
UKGI013667-001
73.
UKGI00002854
James Arbuthnot Points to be raised.
UKGI013668-001
74.
UKGI00002842
Email from Belinda Crowe to Richard
Callard, Patrick Bourke, Tim McInnes
and others dated 17 December 2014
UKGI013656-001
75.
UKGI00003209
Email from Richard Callard to Alice
Perkins dated 4 February 2015 RE:
SoS etc. — Sparrow didn’t go well
yesterday.
UKGI014023-001
76.
UKGI00003366
Post Office Limited Project Sparrow
Sub-Committee Update and Options
Paper.
UKGI014180-001
77.
POL00027153
Post Office Ltd Board - Initial
Complaints Review and Mediation
Scheme: Sub Committee
Recommendation, prepared by Chris
Aujard and Mark Davies.
POL-0023794
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UKGI00019671
Email chain from Hannah Franklin-
Wallis to Laura Thompson, Richard
Callard, CC Tim Mclinnes and others
dated 4 March 2015 re: Submission to
Jo on POL Horizon mediation scheme.
UKGI028566-001
79.
UKGI00000920
Email form Laura Thompson to Jo
Swinson CC Richard Callard and
others dated 4 March 2015 re:
Submission on Post Office Horizon
mediation scheme.
VISO0009058
80.
POL00119752
Letter from Paula Vennells to Jo
Swinson MP regarding the Complaint
Review and Mediation Scheme.
POL-0119750
81.
UKGI00000032
Submission from Jo Swinson to Laura
Thompson dated 4 March 2015
VIS00000993
82.
UKGI00019720
Email from Richard Callard to Laura
Thompson, Tim Mclnnes, James
Baugh re: Readout from Jo's office on
Project Sparrow/ Second Sight.
UKGI028615-001
83.
UKGI00006140
Brief from Laura Thompson to Jo
Swinson re: Post Office mediation
scheme: revised approach.
UKGI016954-001
84.
UKGI00000930
Email from Ministerial Advice Team to
Laura Thompson, CC’ing Hancock
MPST, Clark MPST and others re
Submission to Secretary of State and
Jo Swinson on Post Office Mediation
Scheme.
VIS00009068
85.
UKGI00019696
Letter from Paula Vennells to Jo
Swinson dated 9 March 2015
UKGI028591-001
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86.
UKGI00005307
Summary of CEDR’s Observations on
Post Office Mediation Scheme:
August 2015.
UKGI016121-001
87.
UKGI00000035
Baroness Neville Rolfe meeting with
Post Office: Thursday 6 August
Agenda
VISO0000996
88.
POL00113308
Project Sparrow PowerPoint
Presentation - August 2015.
POL-0110686
89.
UKGI00000007
Briefing update note from Laura
Thomason to Baroness Neville-Rolfe
concerning proposals on
investigation/mediation process and
Post Office Horizon: Next Steps
VISO0000968
90.
UKGI00019300
Options for review / oversight of the
process / Horizon system and
mediation scheme.
VIS00013128
91.
UKGI00005677
Minutes of a meeting between BNR,
BIS and ShEx dated 4 August 2015
UKGI016491-001
92.
UKGI00019366
Letter from Baroness Neville-Rolfe to
Tim Parker dated 10 September 2015.
VIS00013206
93.
UKGI00010326
Letter from Tim Parker to Baroness
Neville-Rolfe re: Induction to Post
Office.
UKGI021134-001
94.
UKGI00006250
Email from Laura Thompson to
Annette Rusling, Tim Mclinnes and
Richard Callard dated 20 November
2015. Re: Briefing for SoS/Tim Parker
meet next week.
UKGI017064-001
95.
UKGI00006451
Email from Tom Wechsler to Laura
Thompson dated 6 January 2016 re:
UKGI017265-001
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Meeting between Time Parker and
Baroness Neville-Rolfe.
96.
UKGI00010327
Briefing relating to forthcoming
meeting with Tim Parker on 26
January 2016.
UKGI021135-001
97.
UKGI00006482
Note of meeting with Tim Parker on 26
January 2016 at 9:30 am.
UKGI017296-001
98.
UKGI00008800
Letter sent from Tim Parker to
Baroness Neville — Rolfe re: Post
Office Handling of complaints made by
Sub-Postmasters review.
UKGI019608-001
99.
UKGI00006574
Email from Laura Thompson to
Richard Callard, Justin Manson and
Patick Kilgarriff dated 9 March 2016
re: Draft advice for the Minister
UKGI017388-001
100.
UKGI00008801
Briefing from Laura Thompson to
Baroness Neville-Rolfe concerning
Tim Parker’s review into POL handling
of Horizon IT system.
UKGI019609-001
101.
UKGI00006459
Email chain from Laura Thompson to
Richard Callard and Annette Rusling
dated 20 January 2016 re: TP/BNR
meeting briefing: Sparrow — Review of
Post Office’s Horizon System and
Second Sight Reports.
UKGI017273-001
102.
POL00239781
Email from Patrick Bourke to Mark
Underwood, Jane MacLeod and
others dated 19 February 2016 re:
Draft letter from Tim Parker to
Baroness Neville-Rolfe.
POL-BSFF-
0077844
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103.
UKGI00006576
Briefing Note to Baroness Neville-
Rolfe from Laura Thompson, Shex, Re
Post Office Horizon: update letter from
Tim Parker
UKGI017390-001
104.
UKGI00020194
Email chain from Laura Thompson to
Richard Callard dated 21 March 2016
re: Call — BNR’s PS asked for a
meeting with Tim.
UKGI029089-001
105.
UKGI00019303
Note to Baroness Neville Rolfe to
Laura Thompson re: Post Office
Horizon: Update on Group Legal
Action
VIS00013187
106.
UKGI00006692
Briefing from Laura Thompson to
Baroness Neville-Rolfe re: Post Office
Horizon: update on group legal action.
UKGI017506-001
107.
UKGI00006798
POL Board Meeting Minutes for 24
May 2016
UKGI017612-001
108.
UKGI00001025
Briefing from Laura Thompson to
Baroness Neville-Rolfe re Meeting
with Tim Parker (Chair, Post Office)
Tuesday 19th July 17.00-17.30.
VIS00009163
109.
POL00103225
Brief for Tim Parker Meeting with
Baroness Neville-Rolfe 19 July 2016.
POL-0102808
110.
POL00103188
Post Office Audit Risk and
Compliance Agenda & pack for 19
May 2016
POL-0102771
111.
POL00240662
POL Audit, Risk and Compliance
Agenda & pack for 17 March 2016
POL-BSFF-
0078725
112.
POL00041834
Email from Jane MacLeod to Carla
Stent and others dated 28 June 2018
POL-0038316
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re: Contingent Liability in PO Group
Litigation.
113.
POL00027914
POL Meeting Minutes of Audit, Risk
and Compliance Committee 28 March
2017.
POL-0024555
114.
POL00105529
Initial complaint and mediation
scheme review by Chris Aujard.
POL-0105096
115.
POL00021523
POL Board Meeting Minutes for 26
March 2014.
POLO000056
116.
POL00022093
Outline of points produced by
Linklaters to explain Horizon and form
a basis for a report to respond to public
criticism and individual complaints by
SPMs.
POL-0018572
117.
UKGI00018921
Email from Chris Aujard to Alice
Perkins, Belinda Crowe, Martin
Edwards and others dated 14 May
2014 re: Update: Sparrow Board
Committee
VIS00012320
118.
POL00203586
Post Office email re Deloitte's Project
Zebra draft report - item 6.
POL-BSFF-
0041649
119.
POL00203587
Deloitte HNG-X: Review of Assurance
Sources - Draft Executive summary.
POL-BSFF-
0041650
120.
POL00027411
POL Board Meeting Minutes for 30
April 2014.
POL-0024052
121.
POL00138364
Deloitte HGN-X: Review of Assurance
Sources - Board Update.
POL-BSFF-
0000588
122.
UKGI00019316
POL Board Meeting Minutes for 21
May 2014.
VIS00013143
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123.
POL00138401
Email from Alwen Lyons to Alice
Perkins, Neil McCausland, Virginia
Holmes & others cc Chris Aujard,
Lesley J Sewell, Alwen Lyons RE:
Deloitte Briefing - Message from Chris
Aujard and Lesley Sewell.
POL-BSFF-
0000625
124.
POL00138402
Deloitte Board Briefing: Document,
further to our report “Horizon: Desktop
review of assurance sources and key
control features” dated 23/5/14,
responding to five specific matters
identified by POL as critical to POL’s
legal position.
POL-BSFF-
0000626
125.
POL00205498
Minutes of the Project Sparrow Sub-
committee for 6 June 2014.
POL-BSFF-
0043561
126.
UKGI00002376
Initial Complaints Review and
Mediation Scheme: Sub Committee
Recommendation - Chris Aujard and
Mark Davies.
UKGI013190-001
127.
UKGI00019690
Email chain from Richard Callard to
Laura Thompson re: Submission on
Post Office Horizon mediation
scheme.
UKGI028585-001
128.
UKGI00002202
Prosecutions Policy Reactive Briefing
25/02/2014 v2 (attachment to Email
from Alwen Lyons to Alice Perkins,
Neil McCausland, Virginia Holmes and
others re: Update after February
Board).
UKGI013016-001
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129.
UKGI00002196
Email from Alwen Lyons to Alice
Perkins, Neil McCausland, Virginia
Holmes and others re Update after
February Board.
UKGI013010-001
130.
POL00247018
Post Office Audit, Risk and
Compliance Committee Agenda &
pack for 30 January 2017.
POL-BSFF-
0085081
131.
POL00125814
POL Board Meeting Minutes for 22
January 2016.
POL-0131425
132.
UKGI00003151
Update on Sparrow from the Criminal
Case Review Commission (drafted by
Mark Davies).
UKGI013965-001
133.
UKGI00006122
Email from Richard Callard to Michael
Dollin, Tim McInnes, Laura Thompson
and others re readout from meeting
with the NFSP - George Thomson and
lan Park - 7 October 2015.
UKGI016936-001
134.
UKGI00006888
Email from Richard Callard to lain King
cc Olutobi Adetimilehin, Justin
Manson ‘and others' re: Post Office
and Fraud case.
UKGI017702-001
135.
UKGI00006257
Note from Laura to Sophie and
Andrew, re developments on Horizon
issue for Baroness Neville- Rolfe.
UKGI017071-001
136.
UKGI00006256
Email from Richard Callard to Laura
Thompson, cc'ing Justin Manson re
Sparrow email
UKGI017070-001
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137.
UKGI00007165
Email chain from Laura Thompson to
Laura Thompson re: Computer
weekly.
UKGI017979-001
138.
UKGI00020223
Email from Laura Thompson to
Richard Callard re: JFSA update.
UKGI029118-001
139.
UKGI00006646
Email from Mark Underwood to Laura
Thompson, cc'ing Tom Wechsler re:
Letter from Freeths - Proceedings
Issued for GLO.
UKGI017460-001
140.
UKGI00006708
Email from Richard Callard to Patrick
Kilgarriff and Gareth Evans cc'ing
Laura Thompson regarding POL &
Horizon.
UKGI017522-001
141.
UKGI00006959
Email from Richard Callard and Laura
Thompson CC Claire French re
Postmaster Litigation - Update to
Board.
UKGI017773-001
142.
POL00247182
POL Audit, Risk and Compliance
Committee meeting minutes for 30
January 2017.
POL-BSFF-
0085245
143.
POL00027188
POL Board Meeting Minutes for 28
March 2017.
POL-0023829
144.
POL00103314
Email from Jane MacLeod to Paula
Vennells, Alisdair Cameron; Tim
Parker, and others, re: Postmaster
Litigation - Update from CMC.
POL-0102897
145.
UKGI00042836
POL Board Meeting Minutes for 23
NOVEMBER 2017
UKGI051731-001
146.
POL00041544
Email from Rodric Williams to Andrew
Parsons re. Horizon article.
POL-0038026
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147.
POL00103333
Email from Jane MacLeod to Tim
Parker, Ken McCall, Carla Stent and
others, re: Postmaster Group
Litigation - Subject to legal privilege -
do not forward.
POL-0102916
148.
UKGI00020855
Email from Richard Callard to Patrick
Bourke CC Mark R Davies and Jane
MacLeod RE: Project sparrow
meeting - Nuclear Decommissioning
Authority.
UKGI029750-001
149.
UKGI00020885
Email from Richard Callard To:
Elizabeth O'Neill, Helen Lambert re
FW: Meeting with POL.
UKGI029780-001
150.
UKGI00019311
Submission to Permanent Secretary
re: POST OFFICE — LITIGATION RE
HORIZON IT SYSTEM dated 18 May
2018.
VIS00013171
151.
UKGI00008139
Email from Richard Callard to Tom
Cooper re: Post Office Group
Litigation - Subject to legal privilege.
UKGI018951-001
152.
UKGI00018134
POL Board Meeting Minutes for 27
March 2018. Minutes of a Meeting of
the Board of Directors of Post Office
Limited.
UKGI028141-001
153.
POL00103302
Email from Jane MacLeod to Tim
Parker, Ken McCall, Carla Stent et,
RE: Subject to privilege- Postmaster
litigation: GLO Application.
POL-0102885
154.
UKGI00008721
Email from Richard Callard to Stephen
Clarke, Laura Thompson, CC'ing: Tom
UKGI019529-001
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Aldred, Richard Watson and others -
Re: NAO - POL litigation enquiries.
155.
UKGI00008787
Email chain from Richard Callard to
Stephen Clarke, Tom Aldred, Richard
Watson and others re: NAO - POL
litigation enquiries.
UKGI019595-001
156.
UKGI00020798
Email from Robert Swannell to Mark
Russell CC Rachel Mortimer RE: Post
Office and Richard Wohanka - briefing
note.
UKGI029693-001
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