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Witness Name: Thomas Cooper
Statement No: WITN00200200
Dated: 3 September 2024
POST OFFICE HORIZON IT INQUIRY
Second Witness Statement of Thomas Cooper
I, Thomas Cooper, will say as follows:
1. I am employed by UK Government Investments (“UKGI”) and hold the position
of Director, a position I have held since November 2017. This is the second
statement that I have made to the Inquiry, my first statement being dated 13
June 2024 [WITN00200100]. This second statement is made in response to a
Rule 9 Request made by the Inquiry dated 11 July 2024 (“Rule 9(2)”). In this
statement, I have sought to address each of the questions posed by the Inquiry
in Rule 9(2) either by responding to the question directly, or by cross-referring
to my first witness statement where I consider the question posed has already
been responded to in that statement. I have also referred to relevant
contemporaneous documentation in support of my responses, to the extent that
I have considered this to be of assistance to the Inquiry, and have exhibited key
documents as requested.
Background/Work History
2. I have summarised my professional background and career history, including
my appointment as the Shareholder Non-Executive Director (“Shareholder
NED”) on the Board of Post Office Limited (“POL” or the “Company”) in
paragraphs 4-8 and 12-13 of my first witness statement.
3. I have also explained my understanding of and experience with the Horizon IT
system (“Horizon”) throughout my first witness statement and, in particular, in
paragraphs 31-33.
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Experience on the Board
Induction, Training and Briefings
4. As I explained in my first witness statement, I served as the Shareholder NED
on POL’s Board from March 2018 to May 2023. I described my experiences in
that role throughout my first statement and provided a summary of these in
paragraphs 9-30.
5. In terms of my induction and training for my role on POL’s Board, I attended a
two-day NED training course with the Institute of Directors in April 2018
(paragraph 12 of my first witness statement). This was arranged by UKGI at my
request. I did not receive separate training from POL, but as I explained in my
first statement (at paragraph 22), my induction process included a series of
meetings with POL’s management team and the other Board members at which
I was able to ask questions and gain an initial understanding of how the
Company operated and establish working relationships with the key people
involved in running and overseeing the business. It was also open to me to seek
further one-to-one meetings on specific issues on which I felt I needed a more
detailed briefing, and I gave an example in my first statement (at paragraph 97)
of a meeting I initiated with Jane MacLeod, POL’s General Counsel at the time,
to obtain a better understanding of the group litigation in which POL was
engaged (the “GLO’”). In addition, I led a team within UKGI that was focussed
on POL matters (the “Shareholder Team”) and my colleagues provided me with
background information about the Company. I received briefings from Richard
Callard, my predecessor Shareholder NED. I also had access to UKGI’s
General Counsel, Elizabeth O'Neill, who provided me with a valuable briefing
on the role the Shareholder Team should play in relation to the GLO in light of
the recent Magnox Inquiry (as described in my first statement at paragraphs
26-27).
6. At the time, I did not have any concerns about my induction to the role, nor did
I feel that I required any additional training. Reflecting on those issues now, I
continue to believe that my induction to the role was satisfactory and did not
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give rise to any major issues. In relation to the contents of the briefings I
received on the issues now being considered by the Inquiry, I refer to, and
adopt, the evidence set out in my first witness statement at paragraphs 22-33.
POL’s corporate governance arrangements
7. In paragraphs 35-42 of my first witness statement, I briefly described POL’s
corporate governance arrangements by reference to the directors’ duties under
the Companies Act 2006, POL’s Articles of Association (the “Articles”), other
key documents that regulated the Shareholder’s relationship with POL as well
as POL’s commitment to comply with the UK Corporate Governance Code. My
first statement was concerned primarily with the period from my appointment
as the Shareholder NED in March 2018 up to early 2020 and the immediate
aftermath of the GLO settlement. As I have explained above, I remained on the
Board for a further period of approximately three years, before stepping down
in May 2023 and the reflections on POL’s corporate governance arrangements
I set out below relate to that latter period.
8. Dealing first with the governance arrangements for the Board, in general terms,
the framework within which the Board operated was appropriate and fit for
purpose. I deal with the issue of Board composition in detail below but, in
summary, the Board consisted of a group of experienced and engaged directors
with an appropriate range of expertise and experience.
9. The Board met very frequently during the period from 2020-2023 and I note, for
example, that the full Board met 52 times during the course of the 2020/2021
financial year, partly due to Board’s desire to give very detailed consideration
to the cases that had been rereferred to the Court of Appeal by the Criminal
Cases Review Commission (“CCRC”). The Board’s Audit and Risk Committee
(‘ARC’), Nominations Committee (‘NomCo”) and Remuneration Committee
(‘RemCo”) continued to meet regularly during this period. A new sub-
committee, the Historical Remediation Committee (“HRC”) was established in
August 2021 to provide oversight of the various compensation workstreams,
including the Board’s work in relation to overturned convictions. The HRC
initially met every one to two weeks, and then monthly.
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HRC was chaired by Ben Tidswell, who was a lawyer, and I found it to be an
effective sub-committee. HRC dealt primarily with POL’s Historical Matters
Business Unit (which later became the Remediation Unit) (‘HMBU”) and the
communication between the HRC and the HMBU was extensive and regular.
HRC called for large amounts of information and scrutinised the remediation
issues in detail.
The workload of the Board and its sub-committees was intense, but the Board
was committed to addressing the very significant issues the Company faced
and went about that task with commitment. The terms of reference for the Board
and its sub-committees were clear and I considered the division of labour and
expertise within the Board to be appropriate. Towards the end of my tenure, I
recall suggesting that the Board would benefit from the establishment of an
investment sub-committee, particularly to oversee the New Branch IT
programme (“NBIT”) to replace Horizon with a new computer system. This
suggestion was not taken up at the time but I understand that such a sub-
committee was established subsequently.
There was no shortage of challenge to POL’s management by the Board and,
in general terms, the relationship between the Board and POL’s executive
improved significantly from 2020 onwards with the executive adopting a more
open approach to its interaction with the Board. However, the volume and range
of issues that were being brought to the Board could result in agendas that were
lacking in strategic coherence, which was an observation made by the
Independent Audit review of Board effectiveness conducted in March 2021
[UKGI00017887] (at paragraph 20). Papers presented to the Board were
detailed and generally of good quality (as noted by the Independent Audit report
at paragraph 24). There is always room for improvement when it comes to
Board papers, and the NEDs were noted (at paragraph 25) to be looking for
further improvements in the quality of papers, but the flow of information into
the Board was generally satisfactory.
Although the flow of information into the Board from POL’s management was
generally good, and an improvement from the position when I joined the Board
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in 2018, there were some issues in respect of which I considered the timeliness
and detail of the information provided to the Board by POL’s management was
lacking. It should be noted, however, that the circumstances in which the
Company was operating in this period were very challenging. I deal below with
the handling by POL of the NBIT programme.
The decision was taken in 2020 to commission a new, bespoke IT system to
replace Horizon, but the programme ran into difficulties quite quickly generating
delays and very significant increases to the projected costs. My recollection is
that, as the nature and extent of the problems grew, the flow of information was
not as extensive or as prompt as it should have been. Given the scale and
importance of the NBIT programme, in 2020, the Shareholder Team
recommended that the Department for Business, Energy and Industrial
Strategy (“BEIS”) (now the Department for Business and Trade (“DBT”),
collectively the “Department”) should have its own oversight of the NBIT
programme. In 2021, it was agreed that the Department's investment
committee, called PIC, would provide additional oversight to that of POL’s
Board. Another example was the provision of information about POL’s legal
costs. POL did not have a satisfactory method for forecasting legal costs until
relatively late in my tenure. As a result, the management team was not able to
evaluate the effectiveness of the costs being incurred nor explain adequately
deviations between budgets and actual costs incurred. This matter was
escalated and discussed with BEIS and an agreement was reached with POL
that better pricing, forecasting and understanding of where additional costs
were being incurred was needed. The Shareholder Team also worked with POL
on modelling and monitoring its legal costs.
The central issue, from my perspective, was not with the adequacy of the
corporate governance arrangements themselves, which were essentially fit for
purpose, but with the sheer range and scale of the problems that the Company
was having to address. POL is a complex and multi-faceted business which will
always present significant challenges but, in this period, it also had to deal with
compensation issues, overturned convictions, the Inquiry, designing and
implementing a major IT project, securing government funding, implementing
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the findings of the Common Issues Judgment (the “ClJ”) and Horizon Issues
Judgment (the “HIJ”), and a fundamental overhaul of its corporate culture. The
combination of these challenges inevitably put POL’s management team and
the corporate governance arrangements under strain. The need to have a
vastly expanded number of Board meetings added to the workload of POL’s
management team. All of these factors will have contributed to management
finding it difficult to cope with the workload and a reduced level of focus in a
number of important areas.
I note that one of the key findings of the Board evaluation exercise presented
to the Board meeting on 29 March 2022 [POL00438073] was that: “there is a
recognition of the pressure on management, driven by the demands of the
historical matters and funding uncertainty, which in turn affects the materials
provided to the Board, the time available to focus on running the business
today, developing future strategy, understanding competitors and marketing
developments, developing the Board and reviewing past decisions.” This is a
fair reflection of my perception at the time. I also agree with the comment
recorded at page 11 to the effect that the range and complexity of the difficult
issues being brought to the Board meant that the Board and management had
insufficient time to deal with strategy as it had to focus on operational issues:
“we look at strategy but once a year and I see other boards being much closer
to ensuring the agreed strategy is being delivered. As I said before I fear NEDs
are getting overly operational.”
There were also occasions when the effectiveness of the Board and its sub-
committees were compromised by instability within POL’s management team
and the difficulty this caused in obtaining a clear and consistent understanding
of how particular issues were being handled. To take one example, during my
tenure POL employed five different executives responsible for the HR function
(Martin Kirke, Mo Kang, Lisa Cherry, Angela Williams and Jane Davies). By way
of a further example, whilst the arrangements in relation to RemCo were
adequate in terms of remit, composition and terms of reference, its
effectiveness in providing oversight of the issues relating to the payment of
bonuses and termination arrangements for senior members of management
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was impaired by the confusion created by the presentation of a number of
different proposals, formulated at different times by different individuals in
POL’s management team. There was a lack of clarity as to what had been
approved previously, what had changed, and why it had changed. When a
company is facing a variety of complex problems on a number of different fronts
the importance of clarity and continuity become even more important and this
was sometimes lacking during this period.
In relation to the evaluation of POL’s Chair and Board, I am aware that Charles
Donald, UKGI’s Chief Executive Officer, provided a summary of both the
internal and external Board Effectiveness Review (“BER”) processes in his third
witness statement to the Inquiry dated 2 May 2024 [WITN10770300]
(paragraphs 8-26). In addition, he explained how the appraisal of individual
members of POL’s Board was largely an informal process until 2023, following
which formal appraisals were introduced by the new POL Chair in line with
UKGI's best practice guidance [UKG100044313] (paragraphs 27-29). I confirm
that his evidence on these issues as it relates to the period of my tenure reflects
my own understanding of the Board evaluation process. I refer below to the
internal and external Board effectiveness reviews conducted in 2021 and 2022
respectively when addressing the Inquiry’s specific questions on Board
effectiveness and culture.
As to the corporate governance arrangements for POL’s management, as a
Board member I did not have a detailed insight such that I can give a view of
its adequacy and effectiveness in POL’s day-to-day decision-making. From my
perspective, although there were various changes to the executives and their
responsibilities, I did not observe significant changes to the governance
structures of the executive (such as the executive committee, compliance
function and internal audit function) nor in the Board’s delegations to
management. One significant exception to this was the creation of HMBU,
which was set up as a “ring-fenced” business unit primarily to deal with
compensation matters arising from the GLO. It operated independently from
POL's business although it reported directly to Nick Read, POL's Chief
Executive Officer (“CEO”). For a period after it was established, this
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arrangement created some issues in terms of the level of management
oversight, which meant the Board did not have sufficient visibility as to what
was causing delays in progressing the Historical Shortfall Scheme (“HSS”) in
particular. Nick Read subsequently changed the way HMBU operated and the
level of oversight and transparency improved over time.
20. Asto the external corporate governance arrangements, namely the relationship
with Shareholder and UKGI’s role on behalf of the Shareholder, these
arrangements continued to be reflected in the Company’s Articles, which were
updated on 1 April 2020 to include some additional Shareholder rights but did
not fundamentally alter the operational relationship between POL and the
Shareholder. In order to produce a more comprehensive set of expectations as
to the basis of the relationship between POL, the Shareholder and UKGI, UKGI
drafted a Framework Agreement, which was finalised in April 2020. The
Framework Agreement was intended to be read alongside the Articles and
provided the parties with greater clarity as to their respective roles and
responsibilities.
Culture of POL at Board Level and Relationship with Sub-Postmasters
21. I have been asked to describe the culture of POL at Board level at the time I
left the Board in May 2023 and my reflections as to the ways in which the culture
at Board level had changed in the period following the findings of Mr Justice
Fraser in the ClJ.
22. There was an independent review of the Board conducted by Independent Audit
in March 2021 [UKG100017887], which was based on: interviews with all the
Board members; interviews with a number of POL’s executives and BEIS
stakeholders; observations of Board meetings and meetings of Board sub-
committees; and a review of Board information. The executive summary listed
a number of strengths of the Board which included the following: “the NEDs and
Executive share a common goal for all stakeholders, while maintaining a strong
social mission, with a particular focus on postmasters.” It was also noted that,
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in addition to dealing with the fallout from the litigation, the Board was looking
forward and had been engaged in: “Starting to foster a postmaster-centric
culture, taking into account their views and needs. An important first step has
been the decision to appoint two postmasters as NEDs, due to join the Board
in April.” I agreed with both of these comments.
At paragraphs 52-57 of the report, the reviewers addressed the issue of cultural
transformation and the role of the Board in that process. It was noted that: “the
POL Board and Executive are highly attuned to the need to transform the
culture and everyone is determined to make this happen. The postmasters are
very much in focus now with the objective to put them at the heart of the new
strategy and with postmaster-friendly behaviours being targeted. What will be
important in the coming months is to build momentum around this, ensuring
that the Board is able to give it enough focus in helping the Executive to drive
the necessary changes. Culture change is a complex and long-term project,
and the Board will need to constantly challenge itself on whether it is making
enough time — both in formal meetings and outside the boardroom — to make
sure that the management team are pushing the pace.” The reviewer went on
to make a series of suggestions as to how the Board might meet these
objectives and I deal below with the ways in which the Board oversaw POL’s
efforts to build momentum and sustain progress in this area.
In the period after the ClJ, there were four principal ways in which, from my
perspective, the culture at Board level improved in relation to the issues with
which the Inquiry is concerned. First, and as anticipated by the independent
review, two postmasters were appointed to the Board in April 2021 (the
“Postmaster NEDs’). I deal in some detail below with their contribution to Board
discussions and decision making, and my view of the value they added to the
Board. For present purposes, I would simply observe that their presence on the
Board, and their ability to provide the Board with a real-world understanding of
the sub-postmaster (“SPM”) perspective on the issues the Board was dealing
with, was very positive in promoting a culture in which the interests of SPMs
remained at the forefront of the Board’s mind.
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Second, the appointment of Nick Read as POL’s CEO had a positive effect on
the culture at Board level to the extent that, during the early part of his tenure,
he brought a more frank, transparent and ‘no surprises’ approach to
management's dealings with the Board. Discussions at Board level between
the NEDs and the executive were conducted in a more open and less defensive
manner and the level of trust between the Board and the executive team
increased. A relationship of trust between the Board and the executive team is
vital to a healthy corporate culture and I considered that the constructive
approach taken by the CEO to the very significant problems revealed by the
ClJ and the HIJ was beneficial in starting to rebuild that relationship. That said,
from my perspective the picture became less positive as time moved on and
the overwhelming pressures exerted on POL’s management by the
combination of the concurrent challenges I outlined above contributed to the
relationship between the Board and the executive coming under strain during
the latter stages of my tenure.
Third, I found that the Board was much more willing to provide direct and robust
challenge to the legal advice being received by the Company in the wake of the
ClJ. I have set out a detailed account of the initial steps taken in this regard
following the establishment of the Board’s Litigation Sub-committee in 2018 in
my first statement. After the ClJ in 2019, there was a significant evolution of the
Board’s oversight of the litigation strategy and the legal issues that followed the
conclusion of the litigation. These issues were addressed by the full Board
rather than by a sub-committee, and thus the full Board was able to provide
direct challenge to the legal advice with which it was presented. Examples of
this new approach would include the direct input of the Board into the
formulation of the grounds of appeal and the setting of a clear strategic direction
in relation to settlement both of which I addressed in my first statement at
paragraphs 200 to 253.
Fourth, there was greater appreciation on the part of the Board of the need to
properly understand the day-to-day experience of SPMs in running their
business and a willingness to engage more directly with the business at a
branch level. The Postmaster NEDs were a valuable resource in this regard.
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My fellow Board members will need to speak to steps they took to engage more
directly with SPMs and the issues they faced but my general impression is that
the importance of this sort of interaction was appreciated by the Board as a
whole, and to a greater extent than before the ClJ.
For example, I visited POL’s support centre in Chesterfield on 27 November
2019 in order to gain a first-hand picture of how discrepancies were being
handled and disputes resolved. I was taken through the processes used to
resolve queries raised by SPMs. I also spoke to the people who were tasked
with resolving disputes over shortfalls and the team responsible for initiating
branch audits, suspensions and terminations. I received explanations as to
what action would be taken if a shortfall was found and if agreement could not
be reached with the SPM as to the cause. I listened in to a number of calls with
SPMs being handled by the call centre. The impression I gained was very
different from the approach described by Mr Justice Fraser in the ClJ and
significant progress seemed to have been made in this area.
I also undertook some visits to branches and met the SPMs. For example, I
visited three branches in the St Albans area in September 2021, accompanied
by the Area Manager. I have no specific recollection of any complaints or
concerns raised by the SPMs and staff I spoke to during these visits relating to
POL’s handling of shortfalls and discrepancies (although they did raise a
number of issues concerning remuneration, and problems with handling cash
and parcels) but the time spent in branches was useful in getting a better sense
of the day to day challenges SPMs faced in running their businesses.
The net effect of these positive developments was that, in the period between
the ClJ and my departure from the Board, the Board became more conscious
of, and better informed about, the challenges facing SPMs in running their
businesses and was able to apply that enhanced understanding in its
discussions and decision-making.
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Actions by POL to Change Culture
31. I have been asked to summarise my understanding of the actions taken by POL
to change the culture of the organisation following the findings of Mr Justice
Fraser, or resulting from evidence arising in the Inquiry.
32. Shortly after his appointment as CEO, Nick Read gave a clear statement of
POL’s values in relation to SPMs who were to be put as he said, “at the heart
of the organisation”. My impression was that the CEO understood the
importance and scale of the challenge facing POL in this respect as reflected
in statements such as the following, which appears in the CEO's report to the
Board at the Board meeting in June 2021: “the business will need to change
direction if it is to survive. We must resolve and fix the past. This is more than
just operational and IT fixes but deep cultural change” [UKGI00041682, at p.
24).
33. I understood statements of this nature to reflect a recognition that SPMs needed
to be treated by POL as true business partners and that POL could only
succeed if SPMs were supported in running successful businesses. It was clear
from Mr Justice Fraser’s judgements that this could only be achieved by driving
very substantial improvements in a wide range of areas including addressing
the specific findings in the ClJ and the HlJ. A further key element of effective
cultural change within POL as an organisation concerned the way in which
SPMs were perceived by POL’s staff and their understanding of the two-way
nature of the relationship. SPMs needed to be valued and their concerns
treated seriously. There needed to be a better understanding, at all levels of the
Company, that POL had obligations to provide a quality service and better
support for SPMs.
34. A fundamental change of attitude on the part of POL’s staff was needed. But it
is important to understand that the deficiencies in POL’s processes that were
pointed out in Mr Justice Fraser’s judgements (including training, business
support and the quality and transparency of dispute resolution procedures)
were essential to achieving such a change in attitude. To give just one example,
it was clear that POL had to change the process that required POL staff to make
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the SPM "settle centrally” a shortfall before the SPM could open their branch if
POL's staff were going to be able to change attitude towards SPMs. Culture
change at POL therefore required wholesale and effective changes to POL’s
processes to be successful.
In my view, therefore, it would be misleading to draw a sharp distinction
between the culture of the organisation and the operational deficiencies
highlighted by the ClJ and HIJ. SPMs are business people running a
commercial enterprise and, in addition to feeling valued and listened to, they
need to be provided with the practical support to enable them to run their
businesses, including a reliable IT system, adequate training, properly
functioning support systems, a fair contractual framework, and an efficient
process for resolving discrepancies and complaints. The ‘culture’ of the
organisation would ultimately be revealed to a significant degree by extent to
which it delivered on these practical requirements.
By the time I left the Board, POL had undertaken a very significant amount of
work in all these areas. But although I considered that POL was working hard
at a ‘cultural’ level to reset the relationship with SPMs, success could only be
measured by the actual day-to-day experience of SPMs in their dealings with
the Company.
Dealing first with the issue of culture and the general approach of POL towards
SPMs, the statement that SPMs should be at the heart of the organisation was
backed up by a range of actions that were regularly reported to the Board. I
have already dealt with the appointment of two postmaster NEDs to the Board
which was clearly a significant step forward from a cultural perspective. Other
measures included:
(i) The production of the ‘Postmaster Support Guide’ setting out changes
made by POL since the judgments which was promoted by the senior
executive team at ‘We're Stronger Together’ roadshows, as reported to
the Board in June 2020.
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(ii) The resetting of POL’s purpose, as approved by the Board in June 2020
as “We’re here, in person, for the people who rely on us”, with the
objective of driving change in culture and the need to embed values and
behaviour that aligned with that purpose.
(iii) The initiation, in 2020, of various initiatives intended to support POL’s
purpose of becoming a successful business that was fundamentally
‘Postmaster centric’. Over time, other initiatives were introduced,
including a Voice of the Postmaster forum in early 2021, a ‘Culture Club’
with representatives from all levels of the organisation in 2022 and the
engagement of external agencies to assist with cultural improvement. A
comprehensive "People Strategy — Culture, Talent and Capability”
programme was presented to the Board in July 2021 designed to ensure
that POL had “the right culture, talent and capability in place” to meet its
2025 strategic objectives and vision [UKG100049025].
(iv) I The organisation of a number of events and initiatives to promote direct
contact with SPMs and gain a better understanding of the day-to-day
reality of running their business and the challenges they faced. These
included postmaster conferences (including in April 2021 and November
2022), and I note that the Board discussed the key issues raised in the
April 2021 conference at the Board meeting on 3 June 2021. The Board
was also informed of roadshows, workshops and programmes, including
the ‘Adopt an Area’ and ‘Postmaster Experience’ programmes launched
in January 2021. The Adopt an Area programme involved senior
managers being partnered with a designated area with the expectation
that they visit branches on a quarterly basis to interact directly with SPMs
to understand the challenges they faced and identify common themes.
The Postmaster Experience programme involved approximately 1,800
members of POL’s support staff to understand the “lifecycle of the
postmaster’.
38. Others will be better placed than me to provide the Inquiry with details as to the
precise nature and effect of the work done by POL in the various respects I
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have outlined above, but my impression (which I believe was shared by the rest
of the Board) was that it evidenced a genuine commitment on the part of POL’s
management to address the culture of the organisation and to work hard to
bring about the necessary changes.
The Board was updated regularly and was concerned to ensure that
momentum was maintained. CEO reports to the Board consistently referenced
the issues of support being provided to SPMs and SPM engagement and the
Board frequently requested evidence of the extent of engagement with SPMs
and their reactions to the changes that were being made (see, for example, the
Board minutes of 26 October 2021).
The Department also took a close interest in this issue. It was consistently made
clear in the annual letters from the Permanent Secretary to POL’s Chair
(“Chair's letters”) that the Shareholder required cultural change to be prioritised
and a more productive relationship between POL and SPMs to be built: see, for
example, the Chair's letters of 31 March 2021 and 23 May 2022. The issue
featured prominently at meetings between Nick Read and the Minister and in
the quarterly shareholder meeting (“QSM”) process. I note, for example, that
the minutes of the February 2021 QSM record me as observing that there was,
‘substantial Postmaster Feedback on issues around the inquiry and cultural
change, and queried how POL will evidence that it has made positive cultural
changes as well as measure progress going forward.’ [UKGI00018184]. The
need for evidence of actual improvement was a consistent priority both for the
Shareholder and the Board.
The evidence obtained by POL as to the effectiveness of the work it was
undertaking to improve the culture of the organisation and its relationship with
SPMs demonstrated that there was a very long way to go if the historic damage
to the relationship was to be repaired. An annual postmaster survey starting in
January 2021 measured (amongst other things) overall sentiment, the quality
of the relationship between SPMs and POL, and how supported SPMs felt
[UKGI00049024 at p.5]. The survey indicated a degree of improvement
between 2021 and 2022, although from a low base, but there was then a degree
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of regression in the 2023 figures. The overall percentage of SPMs who were
positive about their relationship with POL remained low throughout.
The survey results broadly reflected my own general impression, which is that
progress in improving the relationship between SPMs and POL stalled during
the latter part of my tenure on the Board. It was very clear from the outset that
addressing the culture of the organisation and repairing the relationship
between POL and SPMs would be a difficult and lengthy exercise, which is a
point I made in my first statement (at paragraph 278(x)), and the Board was
realistic about the scale of the challenge that POL faced in this regard. However,
although it would not have been realistic to expect these issues to have been
fully addressed by the time of my departure, I was concerned that POL
appeared to be finding it increasingly difficult to sustain progress.
I believe there were a number of overlapping developments that emerged
during the course of 2022 that made it difficult for POL to deliver sustained
improvements in the day-to-day experience of SPMs at branch level. First, the
scale and complexity of the work needed to address the issues raised by the
ClJ and HIJ was very considerable. Although significant progress had been
made in a number of areas, there were other issues that were far more difficult
to resolve, not least the replacement of the Horizon system itself. It was
explained by POL’s management at a fairly early stage that a number of the HIJ
remediation issues could not be addressed by changes to the Horizon system
and would need to await the implementation of a replacement system.
In February 2021, POL set up the Improvement Delivery Group (the “IDG”)
under the leadership of Dan Zinner, the Group Chief Operating Officer (“COO”),
to oversee the work needed to implement the findings of the ClJ and HIJ. Dan
Zinner appeared to bring energy and commitment to the role and I was
impressed by the early progress that was reported to the Board in the
presentations it received. Unfortunately, when Dan Zinner decided to step down
as COO in October 2022 it seemed to me that POL struggled to find a
replacement to lead the IDG and its effectiveness deteriorated as a result. I
raised my concerns about a replacement for Dan Zinner with Nick Read in my
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regular calls with him and at the ARC meeting in January 2022 but this was an
issue which had yet to be effectively addressed by the time of my departure.
It also became increasingly apparent that the work being done to implement
the ClJ and HIJ lacked an overall strategic direction. Put simply, it seemed to
me that whilst a large amount of work was being done, and effort expended,
there was no clear articulation of what the ultimate outcome was intended to be
and whether the result could objectively be described as POL having a fit-for-
purpose business in its dealings with SPMs. The difficulty that POL’s
management seemed to encounter in providing a clear explanation of what
success should look like in terms of compliance with the ClJ and HlJ findings
meant that it was difficult for the Board effectively to assess progress. I also
believed that POL lacked an assurance plan to give comfort that the changes it
was making would meet the expectations of SPMs in implementing systems
and processes that were fit for purpose in a modern business environment.
The NBIT programme to replace Horizon proved to be particularly challenging.
Others are better placed than me to provide a detailed account of the progress
of the NBIT programme, which has a long and complicated history and was still
ongoing when I left the Board in May 2023. The key point, however, is that
POL’s programme to replace Horizon with a reliable and user-friendly IT system
was challenging and faced a number of significant setbacks. In particular, the
programme faced technical challenges which led to delays and substantial
increases in costs. It also turned out to be the case that insufficient
consideration had been given to rolling the new system out to branches once
the technical solution had been developed. Whilst there was an initial business
case, when changes to cost estimates were presented, they were often difficult
to reconcile to the previous version. As a result of the delays, the introduction
of anew system, which would directly affect the ability of POL and SPMs to run
their businesses in an efficient way, remained unresolved by the time I left the
Board.
I was also concerned that there may have been some deterioration in the
service provided to SPMs. I recall the Board being made aware in September
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2022 that there would be a change of leadership at the Chesterfield office and
there was a deteriorating trend in the number of unresolved discrepancies. In
addition, at around the same time, a paper was presented to the Board about
the AEI Exit and ATM Banking Strategy programmes which highlighted how
these programmes had been managed poorly and had been disruptive for
SPMs affected. One of the Postmaster NEDs had also raised an issue with the
call centre.
Despite these reservations, I was confident that there had been a number of
significant improvements in the way SPMs were treated by POL, particularly in
relation to the handling of discrepancies and_ shortfalls. The Board’s
understanding was that the old approach of bullying SPMs into making good
shortfalls and then pursuing termination and/or prosecution if they failed to do
so had ceased and the number of terminations had fallen very substantially. I
was aware of the introduction of a “dispute button” into the Horizon system that
would enable SPMs to raise a dispute immediately after processing a
transaction with a customer thus avoiding the need for SPMs to raise disputes
via the helpline. POL had also introduced a comprehensive suite of new
postmaster policies designed to ensure that POL would act in a manner
compliant with the ClJ in its interpretation of postmaster contracts. These
policies were assured by Norton Rose Fulbright. Taken together this reflected
a significant body of work and substantial progress.
In light of these observations, my answer to the question of whether the culture
of POL supported the building and maintaining of trust between POL and SPMs
(and their staff) at the time of my departure from the Board is that although a
great deal of work had been done by POL’s management to improve the culture
of the organisation, and its relationship with SPMs, there remained a long way
to go in May 2023. In particular, it was my perception that whilst significant
progress had been made in changing POL’s attitude towards SPMs at a cultural
level, and in relation to the handling of shortfalls and discrepancies in particular,
there was much still to be done in delivering the practical improvements that
would demonstrate to SPMs that they were genuinely valued by POL as
business partners.
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The Board's Relationship with External Stakeholders
50. POL’s Board had no direct relationship with NFSP, CWU or Fujitsu during my
tenure as a NED. The Board’s knowledge of POL's relationships with these
external stakeholders and POL’s discussions with them came from reports
provided to the Board by POL’s management. I do not recall any occasion on
which representatives from the NFSP, CWU or Fujitsu attended a meeting of
the Board or its sub-committees, nor do I recall any occasion on which any of
these external stakeholders made representations directly to the Board as a
whole.
51. As regards POL's relationship with UKGI and the Department of Business and
Trade or its predecessor, BEIS, (collectively referred to as “HMG’), in his
second witness statement to the Inquiry dated 26 April 2024 [WITN10770200],
Charles Donald, UKGI’s CEO, explained how the relationship between POL
and HMG changed over the material period, and most notably following the
conclusion of the GLO proceedings. In particular, he described:
a. The practical changes to the governance role, including the frequency of
meetings and interactions between POL and HMG (paragraphs 8-16); and
b. I Enhancements to:
i. the governance documentation of and relating to POL (paragraphs
17-26);
ii. the governance arrangements in respect of litigation and legal
matters (paragraphs 27-29); and
iii. POL’s corporate culture, including an increase in the dialogue
between UKGI, DBT and POL on corporate culture and postmaster
relations (paragraphs 30-35).
52. I have reviewed these aspects of Charles Donald’s evidence and they
accurately reflect my understanding of the position regarding the relationship
between the Board and HMG. As to my experience of the relationship between
the period covered in my first statement and my departure from the Board, I
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considered it to be open and constructive in general. On the issue of the culture
of the organisation and the need for fundamental change in light of the findings
in the ClJ and HIJ, there was a clear and consistent recognition by all three
parties of the scale and importance of the work that needed to be done by POL,
as reflected in the Chair's letters, the regular meetings between the Minister
and POL’s CEO, and the QSMs. There were inevitably some issues where
there was a tension between the position of POL’s management or the Board
and the Shareholder/UKGI, particularly in relation to funding and financial
approvals, but it was well understood by all concerned that issues of this sort
would arise from time to time and, in general terms, they were managed
appropriately.
I am aware that since my departure from the Board, a Board Evaluation Report
of 2022/2023 was released [POL00447838] and referred to the Board wanting
further clarity on the shareholder representative's role on the Board and there
being a “widespread view that UKGI delved too much into the detail, and some
felt that UKGI acted as a filter on messages to the shareholder.” Whilst I have
not explored this matter further with POL given the Board Evaluation Report
was delivered around the time of my departure from the Board, my own
perspective is that the scale of the challenges the Company was facing
inevitably required the Shareholder Team to become more involved in the detail.
The Company faced a multitude of issues which needed approvals from HMG
or other involvement with HMG. Funding issues during the period covered by
the Board Evaluation Report became more challenging than they had been
previously and the Shareholder Team believed it was necessary to understand
the detail in order to perform its role. I do not understand the comment about
UKGI acting as a filter to the shareholder. However, if it is being suggested that
the Department was not hearing from the Company directly, I disagree that this
was the case. The Department's policy team and Minister had regular face to
face interaction with POL (as Charles Donald has described in his second
witness statement WITN10770200) so there was no shortage of avenues by
which POL could interact directly with the Shareholder.
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Board Composition
Composition of the Board — Experience, Expertise, Ability - [13]
54. I have been asked to address the current composition of the Board in relation
to experience, expertise and ability. As I have explained above, I left the Board
in May 2023 and so I am unable to provide an assessment of the Board as
currently constituted. I set out below my views on the position as it stood at the
time of my departure but, in order to understand properly the position in May
2023, it is necessary to take account of the changes to the Board composition
that had either recently occurred or were in progress at the time.
55. — In March 2021, an independent review of the effectiveness of POL’s Board and
its committees was undertaken by Independent Audit as referred to above
[UKGI00017887]. The issue of Board composition is addressed at paragraph
26 of the review in the following terms:
“The Board currently benefits from the insights of experienced directors who
have a good range of knowledge and skills, covering all the key aspects of
POL’s business model, including Retail, [T/Digital, Mails/Parcels and Financial
Services. All the NEDs work hard, putting in much more time than they would
in a typical non-executive role, and executives value their contributions. The
Board has a shareholder representative NED from UKGI who is felt by
colleagues to be engaged and constructive, and to provide good input into
debates.”
56. I agreed with this assessment and I felt that the Board benefitted from an
appropriate range of experience and expertise. At this stage, the Postmaster
NEDs had yet to take up their appointments to the Board but, as the report
recorded at paragraphs 27-28, this was expected to occur in April 2021 and I
agreed with the assessment of the reviewers that the Board was ‘clearly very
committed to integrating the new members effectively’; and that the decision to
appoint two Postmaster NEDs, rather than just one, was a sensible and
appropriate one [UKGI00017887].
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However, as the review correctly identified, at paragraph 32, the Board faced a
significant challenge over the course of the following 18 months or so because
a number of the most experienced NEDs (including the Chair and Senior
Independent Director) were due to finish their terms. As set out at paragraphs
34-35 of the review, the Board had started to plan the succession and had
discussed the profiles of skills and experience that would be required to replace
those members of the Board that would be leaving [UKGI00017887].
The generally positive picture in terms of Board composition was also reflected
in an internal Board evaluation exercise conducted in 2022. The report was
authored by the Company Secretary and sponsored by Zarin Patel, the Senior
Independent Director. It was presented to the Board at the Board meeting on
29 March 2022 [POL00438073]. The methodology included questionnaires
completed by all the Board members (along with the General Counsel and
COO) which assessed the composition and performance of the Board in a wide
range of aspects in accordance with a five-point scale running from 5 (excellent)
down to 1 (requires significant development). A score of 3 denoted performance
that was ‘good/at required standard’.
The first question addressed by the evaluation exercise was: “How appropriate
is the composition of the Board for the requirements of the business?”. As noted
at paragraph 4 of the report, the average response score in relation to this
question was 3.8, and this was one of the most positive findings in the
evaluation exercise. The detail of the findings in relation to this issue are
contained in the Appendix to the report. The recorded comments included an
observation that new members had added expertise in ‘mails, IT and legal’; and
the specific question of IT capability was scored at an average of 3.2. This
assessment broadly matched my own views and I do not recall being concerned
that the Board was lacking in terms of expertise or experience in any key area
at this point. I also agreed with the comment recorded at page 8 of the report
that the Postmaster NEDs ‘have brought a very welcome perspective to our
discussions and decision making’ and I return to this issue below
[POL00438073].
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60.
61.
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The Shareholder Team was actively involved in Board succession planning.
This included preparing for the departure of Tim Parker as Chair at the end of
his second term. Around a year before this in October 2021 the Shareholder
Team began supporting the Department in managing the selection process,
including taking steps to outline the criteria for the Chair, including proposed
remuneration. Unlike the recruitment process for other Board appointments, the
appointment was regulated by The Commissioner for Public Appointments
(‘OCPA”). An OCPA appointment involves the appointment of an Advisory
Assessment Panel to select from the candidates a number of appointable
candidates for recommendation to the Secretary of State. The Secretary of
State’s primary role is to select the successful candidate from the list of
appointable candidates put forward. The Advisory Assessment Panel consisted
of the Permanent Secretary, UKGI’s CEO, POL’s Senior Independent Director
and an independent member not associated with POL. The Shareholder Team
assisted the Advisory Assessment Panel with procedural matters at each stage
of the process. I was not a member of the Advisory Assessment Panel and I
was not involved in the appointment process. The Department also took an
active interest in the process and once a list of appointable candidates was
proposed by the Advisory Assessment Panel, the Secretary of State selected
Henry Staunton to be POL’s Chair.
During 2022, the Shareholder Team also worked with POL to address the task
of replacing POL’s NEDs whose tenure was drawing to an end and recruitment
exercises were commenced to find replacement NEDs with the appropriate
profiles of expertise and experience.
In June and July 2022, NomCo discussed succession for the departing NEDs
including the skills, knowledge and experience the Board needed in the new
NEDs. It was agreed that the search should look for candidates with a deep
understanding of one or more of the following areas: “operations, organisational
effectiveness and business transformation (talent, brand, capability of
organisation to execute) and diversity and inclusion” (as summarised in the
subsequent submission 1 September 2022). On 1 September 2022 a
submission was sent to the Minister seeking approval to commence a
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recruitment exercise to find replacements for three NEDs who would be leaving
between February and August 2023: Carla Stent, Zarin Patel, and Lisa
Harrington. It was anticipated that Carla Stent’s replacement would take over
her role as Chair of ARC; and that Lisa Harrington’s replacement would take
over her role as Chair of RemCo.
It was noted in Annex B of the submission that Lisa Harrington’s areas of
particular expertise included ‘digital and business transformation expertise’.
Given the significance of the NBIT programme, it was recognised that POL
should try to recruit at least one NED with expertise in this area. Accordingly,
the job description for new NEDs, at Annex C of the submission, put ‘large
scale/complex business transformation and digital change’ at the top of the list
of ‘essential experience’ for candidates.
Approval was given to commence the recruitment exercises which were run
over the course of the next several months. As set out in a submission dated
26 January 2023, Simon Jeffreys was identified as the appropriate candidate
to replace Carla Stent and take over as Chair of the ARC. Simon Jeffreys is a
Chartered Accountant with considerable experience as a non-executive
director and audit committee chair. He also had a combination of public and
private sector experience. The recommendation was approved and Simon
Jeffreys was duly appointed.
As set out in a submission dated 27 March 2023, approval was sought for the
appointment of Amanda Burton to replace Lisa Harrington and to take over her
role as Chair of RemCo. Amanda Burton did not have Lisa Harrington’s
experience of digital transformation but my recollection is that it proved very
difficult to find a suitable candidate who it was felt had the necessary
combination of appropriate non-executive experience, capability to chair
RemCo effectively as well as significant experience in the digital transformation
field. So the decision was taken that Amanda Burton should be appointed at
this stage and digital transformation experience should be prioritised in the next
NED recruitment exercise.
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66. __I was not directly involved in the recruitment exercise to replace Zarin Patel but
I understand that it continued to be challenging to find a suitable candidate with
significant IT/digital transformation expertise. In the event, Andrew Darfoor was
appointed after I left the Board. As far as I am aware, this decision was taken
on the basis that, in addition to his considerable expertise and experience in a
range of areas relevant to POL’s business, he had at least some digital
transformation experience from a business he had previously run as CEO.
67. _ It will be apparent from this summary of the background that, at the time I left
the Board in May 2023, the Board was in the midst of a process of transition.
There was a relatively new Chairman, appointed in December 2022; two new
NEDs had recently been appointed to take over as Chairs of the ARC and
RemCo respectively; and a selection process was underway to replace the
Senior Independent Director when her term finished. The Board had been
strengthened by the appointment of the Postmaster NEDs but it was proving
very difficult to find a suitable candidate with digital transformation expertise of
the type that had previously been provided by Lisa Harrington.
68. I note that the Board meeting of 6 December 2022 was the first Board meeting
chaired by Henry Staunton, and that I attended two further Board meetings that
he chaired (including the additional meeting on 9 March 2023) before my
departure from the Board. I did not reach any concluded views as to his
expertise or abilities in that short period. Similarly, it was too early to form a
view as to how the Board as a whole, following the recent and prospective
appointment of several new NEDs, would perform.
Board Representation
69. I am firmly of the view that the appointment of the Postmaster NEDs was an
unequivocally positive and welcome development. As I set out in my first
statement (at paragraph at 278(x)) I felt that the Postmaster NEDs provided the
Board with an incredibly useful perspective on how POL's actions translated
into what happened on the ground in branches and enabled the Board to
engage in more effective and insightful challenge to POL’s management on a
range of issues that directly impacted the way in which SPMs ran their
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businesses. As I have said above, I agree with the observations made in the
2022 Board evaluation as to the value added by the Postmaster NEDs to Board
discussions. I would also reiterate what I said in my first statement, at paragraph
278(v), that one of the significant failings on the part of the Board in dealing with
the Horizon issue was a lack of understanding of the lived experience of SPMs
and a lack of appreciation of what it was actually like trying to run a branch while
dealing both with the Horizon system itself and POL’s approach to shortfalls
and disputes.
The specific issues in relation to which the contribution of the Postmaster NEDs
had a direct impact on Board decision-making will be apparent from the Board
minutes. They contributed on a wide range of issues, not just those that directly
affected SPMs and their businesses. To give just three examples of their
involvement: the discussion in June 2021 concerning postmaster
representation on the new forums being established by POL; the discussion in
October 2021 on postmaster detriment (an initiative by POL to identify issues
arising from the ClJ and HIJ where SPMs were entitled to compensation but
which were not within the scope of the HSS, for example suspension pay in
cases where the SPM had not suffered a shortfall); and the discussion in
November 2022 on the operation of call centres and the dispute button on
Horizon. I also recall that the Postmaster NEDs provided valuable input on the
types of equipment to be deployed in branches as part of the NBIT programme
that SPMs would find most useful for their businesses. In general terms, I found
the contribution and influence of the Postmaster NEDs to be wide-ranging, and
positive, in all our Board discussions.
I am also aware that, in addition to their contribution to the Board, the
Postmaster NEDs provided an additional route by which SPMs could
communicate their concerns about specific issues which could then be passed
on to POL’s management and/or the Board. The Postmaster NEDs participated
in various SPM forums and events organised by POL which enabled them to
provide direct feedback to POL’s management on issues being experienced by
SPMs in their branches. Having witnessed the positive impact of postmaster
representation on the Board over the course of the two years or so between the
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appointment of the Postmaster NEDs and my departure from the Board, I think
that continued representation of postmasters on the Board would be beneficial.
I provided some detailed reflections on the desirability of legally qualified Board
members in my first statement at paragraph 278(iv) and my views remain as
expressed in that paragraph. In short, it is clear to me that having had a NED
with legal expertise on the Board when it was dealing with the GLO could have
had a number of significant benefits, although the extent of those benefits would
have depended on the expertise and personality of the individual and their
ability and/or willingness to provide robust challenge to the legal advice being
received by the Board. I also observed in my first statement that the Board
benefitted from the legal expertise of Ben Tidswell after he was appointed as a
NED, and I remain of that view. That said, and as I have previously observed,
it is not possible to have an expert in every potentially relevant area on the
Board and the importance of legal expertise at any given point will depend on
the significance of the legal issues facing the Company such as involvement in
large scale litigation.
I have largely addressed the issue of IT experience and expertise above in my
account of the composition of the Board and the importance that was attached
to IT/digital transformation experience in the NED recruitment process. In
general terms, experience of this nature will always be very valuable for a
commercial organisation like POL. IT systems are almost invariably an
important part of any company’s strategy, operational delivery and risk profile.
Boards are frequently faced with the need to provide effective oversight of
transformative IT projects. This is likely to become even more common as
businesses deal with the Al revolution and the very substantial changes that
this will bring. The need for IT/digital transformation expertise on a board
inevitably becomes particularly valuable when the company concerned is
dealing with issues such as the integrity and/or replacement of core systems.
However, the general need for experience of this nature on a board faces the
practical issue that there is limited availability of suitable candidates. The NED
recruitment exercise in late 2022/early 2023 that I describe above, illustrates
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the difficulty that can be encountered in practice. The Board was fortunate to
have Lisa Harrington's experience of digital transformation projects but finding
a suitable replacement with the same skillset was very challenging. Boards that
experience difficulties such as these will usually have to make effective use of
external sources of expertise to obtain assurance in relation to large scale IT
and digital transformation issues.
Whistleblowing
75. I am aware that in his third witness statement to the Inquiry dated 2 May 2024
[WITN10770300], Charles Donald provided a high-level overview of how
whistleblowing policies and procedures were adopted within POL from 2012
onwards (paragraphs 37-62). He also summarised UKGI’s approach to
whistleblowing from 2016 onwards (paragraphs 63-65). I have reviewed those
parts of Charles Donald’s witness statement. I agree with them and, as far as I
am aware, they provide an accurate account of the relevant policies and
procedures relating to whistleblowing.
Whistleblowing — Culture
76. From my perspective as a member of POL’s Board, my impression was that the
culture within POL did encourage whistleblowers to speak openly and honestly
about their concerns. That said, my direct involvement in whistleblowing was
limited. Zarin Patel was the Whistleblowing Champion on the Board and took
the lead on this issue at Board level. Subject to the one instance I address
below, I did not have any personal involvement in any specific whistleblowing
complaints.
77. I My impression that the culture of the Company was conducive to encouraging
whistleblowers to speak up openly and honestly derived from four principal
sources. First, and as I have outlined above when dealing with POL’s culture in
so far as it concerned its dealing with SPMs, the CEO clearly regarded it as
important to seek the frank views of SPMs as to challenges they were
experiencing running their businesses and a number of different forums were
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78.
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established to encourage SPMs to communicate their concerns. There were
surveys, consultation exercises and postmaster conferences and I have
provided a number of specific examples above. In general terms, SPM
engagement was an issue that the Board took very seriously and it received
regular updates from POL’s management about the steps being taken to
address the issue. The perspective of the Postmaster NEDs was very valuable
in these discussions. Overall, the impression conveyed to the Board was that
POL had worked hard to encourage SPMs to believe that, if they had concerns,
they would be taken seriously and acted upon.
Although the various forums I have outlined above were not directly concerned
with whistleblowing specifically, I would hope and expect that this cultural
change would encourage whistleblowers to feel free to come forward from
among SPMs and POL’s employees. As to the latter, the public statements
made by POL’s management as to the importance of cultural change and
resetting the relationship with SPMs ought to have increased confidence that,
were a whistleblowing report to be made, it would be subject to a proper
process of investigation.
Secondly, ARC received annual whistleblowing reports which provided a
relatively detailed overview of the extent of whistleblowing activity and the
Company's handling of whistleblowing complaints. These reports would often
be supplemented by additional material relating to whistleblowing placed in the
ARC Reading Room, to which ARC members had access. I refer, by way of
representative example, to the Whistleblowing Report presented to the ARC
meeting on 28 September 2021, authored by Sally Smith (Money Laundering
Reporting Officer and Head of Financial Crime) and sponsored by the General
Counsel, Ben Foat. The report covers the period of six months since the
previous report. The ARC paper was supplemented by a more extensive report
in the Reading Room.
At paragraph 4 the Board paper lists a number of actions taken since 2021
including: the provision of mandatory whistleblowing training to all employees;
the publication of an article by the Whistleblowing Champion (Zarin Patel)
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designed to raise awareness of the importance of speaking up; the updating of
the Postmaster Support Guide to provide additional information about
whistleblowing; the appointment of a new Whistleblowing Manager; and the
commencement of quarterly meetings between POL’s Whistleblowing Team
and the Board’s Whistleblowing Champion. The specific actions would
inevitably vary from report to report but, as with this example, the impression
given was that the Company took whistleblowing seriously and was taking
active steps to promote awareness of the importance of whistleblowing and the
mechanisms available for whistleblowers to raise complaints.
The Board paper was also typical in that it included, at paragraphs 7-12, an
analysis of the number of instances of whistleblowing and their resolution. It
noted that the initiatives to raise awareness of the whistleblowing service and
the promotion of the speak-up culture meant that POL’s Whistleblowing Team
was predicting an increase of over 90% in the volume of whistleblowing reports,
from 41 and 43 in 2019/20 and 2020/21 respectively to approximately 80 in
2021/22. Information was provided about whistleblowing reports that had been
found to be substantiated, along with an analysis of the various routes by which
reports were made. These were valuable updates which provided ARC with a
degree of assurance that whistleblowing was being treated with the importance
it deserved and that the procedures in place to encourage reporting were
working.
Thirdly, POL periodically sought external assurance of the adequacy and
effectiveness of its whistleblowing policies and procedures. This included a
review by Herbert Smith Freehills (“HSF”) which was summarised in the papers
for the ARC meeting on 20 March 2021. When I left the Board, a review was
being conducted by Ernst and Young (“EY”) that was due to report shortly. I was
also aware that POL had engaged Protect (the UK whistleblowing charity) in
2020/2021 to provide it with assistance in assuring its processes and
procedures in this area. The willingness to obtain external assurance was
reassuring, and I thought it likely that any significant issues or deficiencies
would be identified in the course of these external assurance exercises.
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83. Finally, I also took comfort from the role of the Board’s Whistleblowing
Champion who was very engaged on this issue. I believe she would not have
hesitated in bringing forward to the Board any concerns she may have had.
84. Accordingly, my perspective was that this was an area which was being
proactively and effectively addressed by the Company and my impression,
which I believe was shared by the Board, was that the culture of the Company,
from 2021 onwards, was one that encouraged open and honest reporting of
concerns through suitable whistleblowing procedures. However, in expressing
that view I would, of course, acknowledge that the legacy of mistrust left by
POL’s handling of the Horizon issue was very substantial and I can well
understand why individuals wanting to raise concerns by whistleblowing may
have been sceptical about whether they would be listened to and taken
seriously.
Whistleblowing — Cases
85. I had direct involvement in only one whistleblowing complaint received by POL
following the GLO. This concerned the appointment of Elliot Jacobs as a
Postmaster NED. It was a complaint made by NFSP that Elliot Jacobs did not
fulfil the criteria for appointment. This was raised in one of the regular meetings
between the Department and NFSP and was brought to my attention by BEIS’
policy team.
86. My recollection is that NFSP initially made contact with the Department in
December 2021 to raise its concerns regarding Elliot Jacobs’ appointment
following which I then contacted Calum Greenhow, NFSP’s Chief Executive, to
ascertain the nature of the issues that NFSP had raised. Having done so, I then
passed the information I had been given to POL’s General Counsel, Ben Foat,
who decided to treat it as a whistleblowing complaint. My understanding is that
the complaint was then investigated under POL’s ‘Freedom to Speak Up’ policy
but I was not involved in that investigation.
87. Asto the outcome, which I became aware of in August 2022, my understanding
is that the investigation determined that the complaint should not be upheld and
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this outcome was communicated to NFSP. I made enquiries of POL as to the
basis upon which the decision had been taken and I was informed that the
complaint related to the question of whether Elliot Jacobs met one of the
specified criteria for appointment as Postmaster NED. It was explained to me
that, during the selection process, POL had decided to grant exceptions to one
of the criteria in relation to a number of candidates for the role, including Elliot
Jacobs. POL accepted that it had not made the policy of giving exceptions in
certain cases sufficiently clear to potential candidates. The issue was
subsequently considered by NomCo, which identified the need for POL to be
more rigorous and transparent in future appointments when deciding on
appointment criteria and how they would be applied. I spoke to Calum
Greenhow in August 2022 after he had been in touch with me to express his
dissatisfaction with the outcome of POL’s investigation. I followed up with POL’s
General Counsel to ask if there were any concerns in relation to how the
whistleblowing policy was applied. Calum Greenhow followed up again with me
in around December 2022/January 2023. During the conversation, I suggested
that he could raise the issue with the Minister if he remained concerned about
the issue.
Whistleblowing — Adequacy/Effectiveness of Procedures
88. I have largely addressed my perception of the adequacy and effectiveness of
POL’s whistleblowing policies and procedures in the course of my answer to
the question of whether the culture in POL actively encouraged whistleblowing
as there is an obvious overlap between the existence of a supportive culture
and the implementation of effective procedures to facilitate the making of
reports. In short, I would repeat what I have said above concerning the sources
of internal and external assurance available to the Board in support of my view
that the policies and procedures were generally effective.
89. In assessing the effectiveness of POL’s whistleblowing policies and procedures
I was also assisted by a Guidance Note prepared by the UKGI Corporate
Governance and Legal teams designed to assist Shareholder Teams with
identifying good practice in the handling of whistleblowing and other serious
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complaints. The document at UKGI00044274 is an updated version of this
Guidance Note dated November 2023 but, from recollection, the version(s) in
existence during my tenure as a NED were very similar.
At section 3 of the Guidance Note there is a helpful list of relevant questions to
ask for the purpose of determining whether an organisation’s whistleblowing
policies and procedures are adequate. By reference to some of the key
questions on that list:
(i) I was aware that POL's whistleblowing policies and procedures were
reviewed regularly by the ARC, including an analysis of how those
policies and procedures were operating in practice.
(ii) I Assurance against best practice had been sought through external
review, including the work done by HSF, Protect and EY which I have
outlined above.
(iii) I Acapable and engaged Board level Whistleblowing Champion had been
appointed who exercised close oversight of the issue, including a
programme of regular meetings with the Company’s Whistleblowing
Team.
(iv) IThe Board received regular updates covering the number and type of
whistleblowing reports and their resolution, through the Whistleblowing
Reports presented to ARC. The Board did not operate a set threshold for
reports that should be escalated to the Board as this was essentially a
question of judgment for POL’s management team and/or the
Whistleblowing Champion, but I believed that if specific reports raised
issues of sufficient seriousness they would be brought to the Board’s
attention.
(v) The Whistleblowing Reports presented to ARC, an example of which I
have described above, did contain detail as to the various channels for
making reports, including the frequency with which they were used, as
well as dealing with issues of training and awareness.
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91. In summary, therefore, I was broadly satisfied that POL’s whistleblowing
policies and procedures were adequate and effective at the time I left the Board,
and that the Board exercised an appropriate level of oversight over those
policies and procedures.
Sharing legally privileged information with the Board
92. At paragraphs 73 to 80 of my first statement I set out a detailed account of the
efforts the Shareholder Team made in 2018 to establish an information sharing
protocol under which legally privileged information would be communicated
between POL, the Shareholder Team and the Department. I have also
described the operation of the Board's Litigation Sub-committee and the
oversight of the litigation exercised by the Board following my appointment,
including receiving advice prepared by the external legal advisers on merits,
grounds of appeal and settlement.
93. Although I am not a lawyer, I gained some understanding of the concept of legal
professional privilege through this work, including the extent to which legally
privileged information can be shared with the board of the company concerned.
My understanding of the principles relating to legal professional privilege
developed further in 2020 in the course of HMG’s consideration of POL’s
handling of the Swift Review in 2016.
94. In short, it is my understanding that there are no restrictions on the ability of a
board to receive and consider legally privileged information where the privilege
is held by the company. In essence, the company is the client and the board is
part of the company. Accordingly, there should be no circumstances in which
the company’s management should withhold information from the board on the
grounds that it is subject to legal professional privilege and the board has the
right to call for any privileged information or documentation it wishes to see.
The only exception to this general principle applying in a board context, of which
I have experience, arises if one of the directors has an interest in the litigation
(or other legal issue) to which the privileged material relates. In those
circumstances, it may be appropriate to ensure that the privileged material is
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95.
96.
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not shared with that director. However, were this situation to arise it should not
prevent the material from being shared with the rest of the board.
As to the sufficiency of the provision of legal information to the Board, I have
described in my first statement that this was wholly inadequate at the time I
took up my position on the Board in early 2018. At that stage the Board was not
being provided with any documentation relating to the GLO by POL’s
management and was reliant on oral briefings as to the progress of the litigation
and the advice being received from the external legal team. Matters improved
to a limited extent with the establishment of the Litigation Sub-committee which
received a small amount of privileged information but was still generally reliant
on oral briefings such as the summary by David Cavender QC of his merits
advice, which was not provided to the Litigation Sub-committee as a document.
I have also described how I continued to encounter difficulties in obtaining
access to some types of material (including the witness statements of the lead
claimants). By early 2019, and the handing down of the ClJ, the situation had
improved and the Board (including the Litigation Sub-committee) regularly
received legally privileged information, including advice from POL’s external
legal advisers.
By the time I left the Board in 2023 there had been a marked change of culture
and practice in the sharing of legally privileged information compared to when
I joined five years previously. The Board would be routinely provided with legally
privileged information and if it asked to see any privileged information then it
would be provided without objection. As with other types of information there
was not an automatic assumption that every legally privileged document would
be provided to the Board — there is always a need to exercise judgement in
determining what the Board needs to be sighted on — but I was confident that
whatever the Board wanted or needed to see would be provided and there was
no question, as far as I was aware, of legal professional privilege being cited
as a reason not to provide the Board with information. This also applied to the
sharing of legally privileged information by POL with the Shareholder and UKGI.
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Departure from the Board
97. Asthave explained above, I left POL’s Board in May 2023. By that stage, I had
been planning my departure for some time, having originally discussed it with
Charles Donald in early November 2022. Charles Donald agreed to look for a
replacement who could be appointed on or before the fifth anniversary of my
appointment to the Board in March 2023. Lorna Gratton was identified as a
suitable replacement. The decision was then communicated to POL in February
2023. It took some time for Lorna Gratton’s appointment to be finalised, and I
stepped down in May 2023. The period between March and May 2023 was
used as a handover period during which Lorna Gratton took over my
responsibilities. The last Board meeting I attended as a NED was on 29 March
2023.
98. I felt that the Board would benefit from a fresh pair of eyes and that my tenure
as Shareholder NED was approaching a natural end. I had served on the Board
for a relatively long period and it was agreed that a change was appropriate. By
the time I departed I was the longest serving NED on the Board.
99. Although I formally stood down from the Board in May 2023, I was asked to
continue to attend a small number of HRC meetings as an observer, to help
smooth the handover to Lorna Gratton.
Key Events
Times Article dated 19 February 2024 — [21]
100. I have been asked to consider the contents of an article that appeared in the
Times on 19 February 2024 [RLIT0000201] and to set out my understanding of
the matters raised in that article. As the Inquiry will appreciate, the article was
published approximately nine months after my departure from the Board and
although I set out below my understanding of the issues raised in the article as
at the time of my departure (insofar as I am able to do so) it may well be that
matters moved on in the period after I left.
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101. I deal first with the issue of how the Postmaster NEDs were viewed, and treated,
by other members of the Board and the view expressed by Elliot Jacobs that
he and Saf Ismail were ‘ignored and seen [...] as an annoyance’ by other
members of the Board. I wish to make clear at the outset that I never regarded
either Saf Ismail or Elliot Jacobs as an ‘annoyance’ and nor did I ignore the
contributions they made to the Board discussions. I held them both in high
regard and I interacted with them frequently, at Board meetings and in private
discussions. As I have set out above, I was strongly supportive of their
appointment to the Board and I considered their contribution to the Board
discussions to be invaluable. I felt that the Board benefitted from their ‘real
world’ experience of life as SPMs running post offices and I have given a
number of specific examples of instances where their perspective and insight
was incorporated into Board discussions and decision-making. I have also
explained that I regarded them as a valuable conduit for the communication of
SPM’s concerns to POL’s management and to the Board. If they had raised any
concerns about their own treatment by the Board, I would have taken that very
seriously indeed.
102. As far as I was aware, the rest of the Board shared my view as to the value and
importance of the contribution made by the Postmaster NEDs and I note for
example, that the Board evaluation report for 2022/23 records that: “Board
Directors were pleased about a number of aspects of the way the Board
operated during FY22/23 including the contributions of the Postmaster Non-
Executive Directors, particularly in bringing the Board closer to the business.” I
do not know whether the quotation from Elliot Jacobs in the press article is an
accurate and complete expression of his views, and those of Saf Ismail, or
whether they relate to the period from April 2021 to May 2023 when we were
on the Board together. If so, then I would be very concerned to learn that they
were made to feel that way.
103. The second issue addressed in the article is the view attributed to Elliot Jacobs
that there was an embedded culture at POL that postmasters were ‘guilty’ and
‘on the take’. I have addressed the issue of POL’s culture in detail above and I
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have sought to explain my perception of the progress that was made by POL in
its attitude towards SPMs in general, and its handling of discrepancies in
particular. Many measures had been introduced by POL to change the way
SPM’s were perceived and treated by POL’s staff. In addition, an internal audit
report in January 2023, shortly before I left the Board, painted a positive picture
of the way POL’s staff interacted with SPMs in relation to the resolution of
discrepancies and disputes, although the report also acknowledged that not all
SPMs engaged with the process in the way they were expected to under POL’s
new policies and procedures.
104. That said, as a Board member, my experience of the daily interactions between
SPMs and POL was inevitably limited and I left the Board around nine months
before the article quoting Elliot Jacobs was published. If the article accurately
records his opinion, then I have no doubt that he will have had good reason for
reaching that view and I would not dispute it. I would say, however, that I do not
recall Elliot Jacobs expressing that view during my time on the Board, either in
the course of a Board meeting, or during our conversations outside the Board.
I do recall receiving some general feedback from the Postmaster NEDs that
POL remained a difficult organisation to deal with from their perspective
(particularly with regard to how long it took to progress matters and deal with
issues they raised) but I do not recall any specific reference to SPMs being
generally regarded as dishonest. Had he done so I would have taken the issue
very seriously and raised the matter both with the Board and the Shareholder.
105. The third issue addressed in the article concerns the opinion, attributed to Elliot
Jacobs, that POL’s investigation department was ‘out of control’ and continued
to include around 40 investigators who were described as ‘untouchable’ by the
CEO. Again, I do not recall Mr Jacobs expressing this opinion, either at a Board
meeting or during our informal discussions. Nor do I recall Nick Read referring
to investigators employed by POL as ‘untouchable’. As with the other matters
raised in the article, if the quotations ascribed to him accurately capture Elliot
Jacobs’ view, then I have no doubt it was honestly held and that he will have
had good reason to reach that view. For my part, I can only repeat the account
I have given above of my impression that the approach of POL to dealing with
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shortfalls or discrepancies in branch accounts had changed significantly by the
time I left the Board.
Dismissal of Henry Staunton on 27 January 2024 — [22]
106. I have been asked about my understanding of the circumstances that led to the
dismissal of Henry Staunton on 27 January 2024. Having left the Board eight
months earlier, I am afraid I have no knowledge of the circumstances in which
he was dismissed, the background to the decision, the relevant chronology or
the actions of any of the individuals involved.
Resignation of Alisdair Cameron on 25 June 2024 — [23]
107. The first time I became aware of discussions that might lead to Al Cameron's
departure from the Company was in 2020, when I learned that the relationship
between Nick Read and Al Cameron had become difficult and that Nick Read
wanted to replace Al Cameron with a new CFO with whom he could develop a
more effective working relationship. This prompted POL to consider the terms
of an appropriate package to put to Al Cameron for the purposes of agreeing a
consensual termination of his employment and three options were identified.
108. The options identified by POL were set out in a submission to the Secretary of
State in November 2020 [UKGI00046940]. The submission reflected the
understanding of the Shareholder Team that the central issue was the working
relationship between Al Cameron and other members of POL’s management
team.
109. The Secretary of State delegated the decision to the Minister who responded
by directing that further consideration be given to the terms of any consensual
termination, including the attachment of conditions to the agreement. As a result
of the Minister’s intervention, a fresh proposal was formulated and set out in a
submission dated 19 January 2021 [UKGI00049020 and UKGI00049021]
which was subsequently approved by the Minister on 26 January 2021
[UKG100035753].
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110.
111.
112.
113.
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At the RemCo meeting in April 2021, RemCo was informed that, in light of the
Secretary of State’s approval, an initial conversation had taken place with Al
Cameron during which Al Cameron had indicated the approximate sum he
would be seeking as part of any consensual termination agreement. An
explanation was given as to the rationale for Al Cameron’s position and there
was a discussion about the extent to which it would be appropriate to amend
the financial element of the proposed package. There was a general consensus
that it was important for the issue to be resolved quickly but I observed that, on
the issue of whether a substantially enhanced financial offer should be made,
the Government's view would most likely be different to POL's.
In May 2021, there was a further submission updating the Minister as to the
latest situation [UKGI00049022]. In short, the position appeared to be that Al
Cameron was threatening to take legal action against POL citing a number of
grievances. POL was proposing a revised exit package in a further attempt to
reach a negotiated settlement, the essential elements of which were largely the
same as the proposal approved in January 2021 but with enhanced bonus
entitlements as a good leaver.
From my perspective the situation was clearly unsustainable. It is not possible
to have an effectively functioning executive team if the relationship between the
CFO and the CEO has broken down and the CFO is threatening the company
with legal action. The Board was keen to see the matter resolved but there
seemed to be little scope for resolution if Al Cameron maintained his
expectations as to the financial element of the package.
The matter was discussed at a RemCo meeting on 1 July 2021. I observed that
the Department was likely to have reservations about a significantly enhanced
financial offer to Mr Cameron. I also explained that I intended to recuse myself
from any decision to recommend that such an offer be made, as I thought the
Department would not want its representative on the Board to support such a
proposal. However, my reservations would not prevent POL from seeking
approval from Ministers for a proposed package if RemCo decided to approve
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114.
115.
116.
117.
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the proposal. In the event, I believe that no proposal was made, and Al
Cameron remained in post.
I do not recall there being any significant further developments in relation to Mr
Cameron's potential departure until March 2023 when a submission was put up
to the Secretary of State and the Minister informing them of the current options
POL was considering in relation to Al Cameron’s departure [UKGI00049023]. A
draft letter from the Chair to the Secretary of State was attached which set out
the relevant background. The essential purpose of the submission was to
ensure that the Secretary of State and the Minister were sighted on POL’s
proposed approach to the issue and to provide them with an opportunity to
indicate their thinking on the issue before any formal request for approval was
made.
My understanding of the material developments in the period since the
discussions regarding Al Cameron's departure in 2021 are reflected in
paragraph 4 of the submission [UKG100049023], as follows:
“We understand that in recent months there have been various complaints
about the CFO’s behaviour, which led POL to revisit the options for dealing with
his behaviours and how the situation could develop. POL set out the current
options in a draft letter to the Secretary of State (Annex A). However, events
are unfolding quickly, and subsequent to the drafting of this letter additional
information has come to light about the CFO’s conduct which has prompted
POL to examine [the following options].”
I was not involved in POL’s examination of the options referred to in the
submission. As the submission noted, POL had yet to reach a concluded view
as to how to proceed and the options identified by POL were due to be
discussed at the forthcoming Board meeting on 28 March 2023.
A number of the options included the payment of substantial sums to Al
Cameron and my recollection is that the Minister was strongly opposed to a
large payment being authorised to someone about whom significant
behavioural concerns had been raised without an investigation of those
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concerns being undertaken. I informed Jane Davies, POL’s Chief People
Officer, of the Minister’s position and she explained that POL’s CEO was not
prepared to sanction an investigation into the complaints about Al Cameron’s
behaviour. That impasse remained at the point that I ceased to have any further
dealings with the issue when I stepped down as Shareholder NED in May 2023.
STATEMENT OF TRUTH
I believe the contents of this statement to be true.
Date: 3 September 2024
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Index to Second Witness Statement of Thomas Cooper
No. I URN Document Description Control Number
1. I WITNO0200100 Tom Cooper First Witness WITN00200100
Statement
2. I UKGIO0017887 Independent Audit Review of UKGI027894-001
Board Effectiveness — March
2021
3. I POL00438073 Board evaluation exercise POL-BSFF-095-
2021/2022 — Board Meeting 0000009
29 March 2022
4. IWITN10770300 Charles Donald Third Witness I WITN10770300
Statement
5. I UKGI00044313 Guidance Note 14 — NED UKGI053037-001
Appraisal — March 2023
6. I UKGI00041682 CEO report — June 2021 (p. 24 I UKGI050577-001
of POL Board papers for 3
June 2021)
7. I UKGI00049025 People Strategy Paper UKGI057781-001
delivered by Angela Williams —
July 2021
8. I UKGIO0018184 Minutes of QSM — 16 February I UKGI028191-001
9. I UKGI00049024 Postmaster Survey Results (p. I UKGI057780-001
10. I WITN10770200 Charles Donald Second WITN10770200
Witness Statement
11. I POL00447838 POL Board Evaluation Report I POL-BSFF-106-
2022/23 0000078
12. I UKGI00044274 Guidance Note 21 - UKGI052998-001
Whistleblowing and Serious
Allegations - November 2023
13. I RLITO0000201 Times Article — 19 February RLIT0000201
2024
14. I UKGI00046940 Submission to Secretary of UKGI055789-001
State — 5 November 2020
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15. I UKG100049020 Email to Minister with UKGI057777-001
submission of 19 January
2021
16. I UKGI00049021 Submission — 19 January UKGI057778-001
2021
17. I UKG100035753 Approval by Minister — 26 UKGI044648-001
January 2021
18. I UKGI00049022 Submission — 6 May 2021 UKGI057779-001
19. I UKGI00049023 Submission — 24 March 2023 I UKGI057782-001
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