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Witness Name: Michael John Kinski
Statement No: WITN03420100
Dated: 05 February 2025
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF MICHAEL JOHN KINSKI
I, Michael Kinski, will say as follows:
INTRODUCTION
1. lama former Non-Executive Director of Post Office Ltd.
2. In making this statement I would like to acknowledge the importance of the Post
Office Horizon IT Inquiry (the “Inquiry”) and to offer my full co-operation to Sir
Wyn Williams in his investigation of relevant issues. Although I was not a
Director of the Post Office at the time when relevant prosecutions and civil
actions were commenced against Subpostmasters, I would like to express my
sympathy to all those who were affected.
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. To confirm, I am providing this statement following receipt of a written request
from the Inquiry dated 27 May 2022, to provide a written statement pursuant to
Rule 9 of the Inquiry Rules 2006 regarding corporate knowledge of technical
issues with Horizon prior to roll-out (the “Request”). The Request contained 16
questions which the Inquiry asked me to address in my statement.
. On 17 June 2022 I received a follow-up letter from the Inquiry. This contained
further questions which the Inquiry asked me to address in my statement,
bringing the total to number of questions to 19.
. On 25 January 2025 I received 11 additional documents from the Inquiry, with a
request to review and consider these prior to finalising and completing my
statement.
. For ease of reference, in providing this statement I have written out each
question put to me by the Inquiry with its corresponding question number below.
. I must point out that whilst I have endeavoured to answer all 19 questions as
fully as possible, due to the passage of time, I have very little evidence to give
in relation to the events regarding the Post Office Horizon project which is not
derived from a retrospective analysis of the documents provided to me by the
Inquiry.
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BACKGROUND
Question 1: Please set out your professional background and your
relationship with POL.
8. I list below a summary of my professional background:
vi.
Managing Director of one of Europe's largest Private Equity
Companies
Group Chief Executive Officer of Stagecoach Pic
Chief Executive Operations Scottish Power Plc
Chairman and Chief Executive Manweb Electricity Plc
Chairman and Chief Executive Southern Water Plc
Personnel Director and Main Board Director Jaguar Cars Plc
9. In 1998, I was approached by the Government DTI office to become a non-
executive director of Post Office Ltd based on my general industry business
experience having been a board director of several FTSE 100 companies.
Following an interview with Margaret Beckett, who was I think, President of the
Board of Trade and Industry at the DTI at the time, I was appointed to the Board.
My appointment was for a period of 3 years with effect from 15 June 1998.
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10.1 do not know which specific aspects of my experience motivated my
appointment, beyond general experience in running large companies. My
experience of working constructively with unions may have been a factor and
potentially also my success in people development projects.
11.In December 2000, the Post Office was preparing to separate the Post Office
Counters off from the rest of the Post Office as part of the Postal Services Act
2000. This involved the creation of a new company which would originally be
called 'The Post Office Group plc’.
12. To ensure continuity, all the directors on the Board of the Post Office were asked
to become directors of The Post Office Group plc. This included myself and I
accepted on 31 December 2000. The role was until 25 March 2001 at which
point the company was renamed 'Consignia Holdings Plc’. Starting on 26 March
2001, I became a director of Consignia Holdings plc for approximately 1 year
period. To be clear, Post Office Ltd and Consignia Holdings plc (originally The
Post Office Group plc) were effectively the same company but under a different
name. This meant my role was also the same and there were no additional
board meetings and therefore the role attracted no additional remuneration.
13.On 14 December 2001 my role as director of Consignia was extended for 2
years until 25 March 2003. However, on 12 February 2002 I resigned with
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immediate effect. The reason for my resignation was that I had been offered an
external role which required significant international travel and this was
inconsistent with being able to continue my role with the Post Office. I left on
good terms with the board and Consignia.
Question 2: Please summarise what your role at POL involved, in particular
between 1997 - 2001.
14. Starting on 10 June 1998, I was a Non-Executive Director of the Post Office Ltd.
My Terms of appointment contained no specific role description. I was also
Chairman of the Remuneration Committee. My role as Non-Executive Director
involved attending board meetings approximately 10 or 11 times a year. I would
also have attended a small number of away days to discuss strategy. I would
probably have engaged with the Government and the Chairman and the
remuneration committee 2 — 3 times a year and had calls with the Chairman of
Post Office once a month. Prior to board meetings I would have spent
approximately a day reading the papers in preparation. On reflection, I probably
spent around 2 and a half days a month carrying out my duties as a Non-
Executive Director which I consider to be typical for this kind of role.
15.As Chairman of the Remuneration Committee, my job was to liaise with the
Government on potential changes to terms and conditions of the Executive
Directors.
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16.In October 2000 I also began work for the Post Office on the Beta Project. This
was a consultancy role to assist with a potential major acquisition which was
nothing to do with Horizon. The role was only for a short period of time as the
project was subsequently dropped.
Question 3: Please summarise what experience you have (and had as at
1999) in respect of major IT projects.
17.1 am not an expert in IT projects but both prior and subsequent to 1999 I have
reviewed a number of IT projects as part of my general management roles in
industry. For example, I assessed strategy and business plans for IT projects at
Scottish Power on customer service. I would not have been involved in technical
evaluation of IT projects in my previous roles. This task would have been
completed by executives with the relevant experience.
18.1 would like to highlight that there were no specific duties or obligations placed
upon me in relation to IT development on the Horizon project. My duties were
as you would expect of a typical non-executive director which, in broadest
terms, was to assist in the strategic direction and monitor the smooth running of
the overall business.
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BOARD MEETING OF 10 NOVEMBER 1998
Question 4: Please consider (RMG00000015). These are the Board Minutes of
10 November 1998.
a. What did you understand the position of the Government and ICL to be at
that time in relation to the future of the project?
19.1 did not attend this meeting however I know that the Government took a leading
role. It is clear to me from reading the minutes that the Government was
considering 3 options on Horizon: continuation, termination or continuation
following a negotiated settlement. I have made an assumption that this last
option (continuation following a negotiated settlement), or something similar, is
‘Option b(3)' as referred to in the letter dated 23 May 1999 from Neville Baine in
document (POL00028611), although I cannot be sure.
b. What (if any) concerns did you have at that time about the quality and
reliability of the Horizon system?
20.When I joined the Board in June 1998, there were ongoing concerns about the
Horizon project, including in relation to software issues, quality, delays and ICL's
ability to deliver the project. The Government was concerned about how the
project would be funded and that ICL was not financially stable.
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21.The Government was taking control and were trying to renegotiate the contract
between the Post Office and ICL to put in place a suitable contract to iron out
the software difficulties. They were in the driving seat in renegotiating the
contract and were considering whether the project should be changed or
delayed. They were also taking legal advice on termination and whether this
would affect other companies.
c. What, if any, action did you to take to address such concerns?
22. Although I cannot recall this meeting I do remember that we had a robust Board
who would challenge anything put to us and therefore I believe that the Board
would have debated and challenged the issues and options and given advice
and guidance. I cannot remember exactly but I can imagine that the non-
executive directors would have been concerned to ensure that there was a
correct balance of control between the Post Office Board and the Government,
which was on ongoing problem.
BOARD MEETING OF 8 DECEMBER 1998
Question 5: Please consider (RMG00000012). These are the Board Minutes of
8 December 1998.
a. What did you understand about the cause(s) of delay to the Horizon
project at that time?
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23.1 cannot remember and therefore my understanding is only taken from what is
described in the minutes that the programme needed further testing. There is
a reference at page 89 of the minutes to a letter from Stephen Byers
(P098/126) but I cannot recall the contents of this letter and have not been
provided with a copy as part of my replies to the Inquiry's questions.
b. What did you understand the position of the Government and ICL to be at
that time in relation to the future of the project?
24.From the minutes it is clear to me that the Government had very significant
control over the Horizon project at that time and were considering three
options: continuation, termination or continuation following a negotiated
settlement. In relation to termination, I understand that the Government were
considering legal action.
c. What did you understand about the results of software testing at that
time?
25.1 understand that they were looking to solve software problems which I assume
they must have decided were solvable, otherwise they would not have gone to
the implementation stage.
d. How (if at all) did this affect your assessment of the quality and reliability
of Horizon ?
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26.It would have been too early to be sure whether technical issues could be
resolved but the Government made the decision that they could be and wanted
to continue on that basis. Based on the minutes it appears that the Board
considered it credible that the technical issues could be resolved.
e. What (if any) action did you take to address these matters?
27.The minutes illustrate that concerns were discussed at the board meeting about
how to resolve the contractual issues and how to get the programme back on
track. In the end, the Government and Post Office agreed for it to continue.
CANCELLATION OF THE BENEFITS PAYMENT CARD
Question 6: Please consider (POL00028611).
a. What did you understand the government's relationship with ICL and
Fujitsu to be like in the period January— May 1999?
28.1 would not have been party to any of this although I consider that the
relationship would have been somewhat fraught at that time.
29.1 have read document (POL00021469), the Board Minutes of 14 March 2000,
and on page 18 under the section ‘Operating Plan and Budget POB(00)12, it
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notes the non-executives expressing concern about the overall performance of
the budget. This is the Board exerting its fiduciary duties and trying to hold
directors and the Executive Team to account.
30.Paragraph i of the next section ‘Commercial Development of the Horizon
Platform in the Post Office Network POB(00)13' shows that the Board are told
that for the past 7 months, all milestones have been reached in relation to
Horizon and the Post Office executives were even considering the possibility of
extending the project commercially, beyond the Post Office.
31.Things at this point were going better than in 1998. There was a hiatus to try
to agree a revised contract with ICL and then the progressive rollout was
hampered by some operational software issues. This was followed by a
temporary hold on the rollout and then the Board being progressively told that
the issues were being resolved and the rollout was going according to plan.
b. What did you understand the position of the Prime Minister to be in
relation to the future of the Horizon project?
32.1 have no knowledge of Tony Blair's position as to the future of the Horizon
project between January and May 1999. Based on the minutes, I understand
that there were several meetings between the Post Office executives and the
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Government, including two select committees, because they were our
shareholder. I also had no knowledge of Tony Blair's views on the cancellation
of the Benefits Payment Card.
c. What did you understand the options identified by the Treasury review
for the future of the Horizon project to be in the period January— May
1999?
33.1 have no copy of the Treasury review and therefore cannot comment upon
this.
d. Please describe the position of the Post Office in relation to the options
identified by the Treasury Review.
34.1 have no copy of the Treasury review and therefore cannot comment upon
this.
e. Please describe the circumstances in which the Post Office signed
Heads of Agreement with ICL.
35. Document (POL00028611) encloses a letter from John Roberts dated 24 May
1999, which sets out the conditions on which the Board approved the Heads
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of Agreement and attaches two letters which discuss the circumstances
around the Post Office signing the Heads of Agreement.
36. The first letter is sent from Neville Baine to the Secretary of State and dated
23 May 1999. It starts off by saying that in light of a letter expressing the
government's wish for the Post Office to sign the Heads of Agreement with ICL,
the Board had met that night. I have not been provided with a copy of that
letter, but have been provided with the minutes of the Board Meeting held on
23 May 1999 (POL00043599), which confirms that I attended the meeting via
telephone conference from 8pm. The minutes confirm that the purpose of the
Board meeting was to consider the request from Government that the Post
Office Board sign the Heads of Agreement negotiated by the Treasury with ICL
(and which POL had not been party) by the ICL/Fujitsu deadline of midnight.
37.The letter from Neville Baine to the Secretary of State confirms that the Board
have considered the Government's proposal and the unanimous view of the
Board is that they believe option b(3) is likely to lead to a deterioration in the
financial position of the Post Office and is not in the best interests of the
shareholder. Option b(3) is not explained and I cannot think what it would be
apart from the third option referred to in the minutes of 10 November 1998
(RMG00000015) — continuation following a negotiated settlement. The Board
have expressed their concerns in light of their fiduciary duties. However, the
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letter acknowledges that the Government think that this is the best way forward
and the Board have the next three months to see if they can make it workable.
They are therefore prepared to approve the Heads of Agreement but only if four
conditions are met. This includes that the £50m cancellation payment is treated
in the same way as the £480m (a clear loss in the statutory accounts).
38.The letter concludes by saying that the Board are also concerned about the
whole way that this has been handled and about the relationship between the
Secretary of State as sponsoring Minister and the Board. They have therefore
requested an urgent meeting to take place. I cannot recall whether this meeting
ever happened. However, I can see from Board Minutes of 7 and 8 June 1999
(POL00095461) that a meeting with the Secretary of State to discuss the
Working relationship with DTI following recent developments with Horizon had
been arranged for 10 June 1999 and that John Roberts, Rosemary Thorne and
John Lloyd from the Board would attend. I can confirm that I did not ever attend
any meetings about these issues raised by the Board with the Secretary of
State.
39.The response letter from Stephen Byers dated 23 May 1999 confirms that he
has considered the Board's response and that the Government will accept the
proposed conditions.
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40.To me, these letters show that the Government is influencing the Board to go
along a certain path that is not the Board's preferred option. The Board have
fulfilled their fiduciary duties in flagging their concerns. It is proper for a
shareholder (the Government) to indicate what is in its best interests and the
Board, having raised their concerns, must take the shareholders views into
account.
41.When we subsequently moved on to the next phase of the project
(implementation) we were regularly updated on the progress of Horizon by the
Executive Team and it appeared that any issues were being resolved
incrementally, prior to full roll-out.
f. What (if any) pressure was brought to bear by the Government in relation
to the Heads of Agreement?
42.Please see above my answer to question 6(e) above which shows that the
Government took control and influenced the Board to approve the Heads of
Agreement on a basis which they had not thought was the best option.
Ultimately it is up to the Board to make the decision but where a shareholder is
fully informed and directs that its interests are served in a particular way, this is
obviously a heavily influential factor. While the Board could have considered
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resignation at this stage, this would not have been appropriate where there was
a credible prospect of attempting to the make the Government's proposal work.
g. What did you understand regarding the robustness of Horizon at this
time?
43.1 have no specific recollection of my appreciation of the robustness of Horizon
at this particular point in time. It is clear from the minutes and correspondence
that there were issues but that it was considered credible that these could be
resolved.
h. What did you understand of any technical issues?
44. There were some software issues which ICL were looking to resolve but the
Board evidently believed that there was a realistic prospect that any technical
issues could be resolved in the roll-out and troubleshooting phase.
i. To what extent (if at all) did technical issues with Horizon influence the
public sector negotiations over the future of the project at this time?
45.The contract negotiations were being conducted by at senior level by the Post
Office and the Government. These negotiations, as on behalf of the Post Office,
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would have been delegated by the Board subject to directions on general
approach. I cannot recall the extent to which technical issues influenced
negotiations.
To what extent (if at all) did the financial implications of cancelling the
project impact the focus upon the technical integrity and robustness of
Horizon during the public sector negotiations over the future of the
project?
46.The potential financial implications included the Post Office and / or the
Government being sued if the project was cancelled, wasting money on trying
to make the project work and the project not being delivered on time. If a project
has challenges you can either try to resolve them or you can take the hit and
not commit any more money. The earlier you commit to closing a project that is
not working, the less money you lose. I think during this period there were a lot
of discussions between the Government and ICL about getting the right
structure in place and the focus was on getting the project done, although it is
evident that they were also considering termination. This would have wasted the
money already spent but prevented further loss if the project ultimately failed.
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BOARD MEETING OF 20 JULY 1999
Question 7: Please review (POL00000352). These are the Board Minutes of 20
July 1999.
a. What did you understand regarding the robustness of Horizon at that
time?
47.1 cannot recall the board meeting of 20 July 1999 but I understand from the
minutes that the project was in difficulty and the Board had concerns over
funding and accounting treatment. On the latter point, the Post Office
executives were in discussions with the Government and the advice from the
Board was that any accounting treatment should be appropriate and
transparent.
48.The minutes show that the Board was given assurance by the Horizon
Programme Director that the system was robust and fit for service apart from
concerns over training which they were putting in. A new training programme
was planned and additional resources (some 300 managers) had been
allocated to help staff as offices came online. However, I have never known an
IT project that did not have teething problems.
b. What did you understand of any technical issues?
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49.The minutes show that Post Masters were continuing to experience difficulties
with balancing but the Board was being told that these were resolvable and ICL
had resolved these sorts of issues before. The Board said that these problems
must be resolved before the contract is signed.
c. What did you know of any problems experienced by sub-postmasters?
50.The minutes show that we were briefed that some Subpostmasters were
experiencing problems hence the additional training and resources plus some
delay in roll-out.
d. Did you raise any concerns regarding your answers to (a), (b) and (c) and
if so, who with?
51.Concerns were raised by the Board, with the executive team, over the
technical issues and the Benefits Agency contract position was not clear.
Page 92 shows that the Board made it clear that technical issues needed to
be addressed before the Board would support a revised contract with ICL.
52. Although I cannot remember the discussion itself, as stated above, I do recall
that the Board would rigorously challenge any subject put to them. I am
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therefore confident that they would have challenged the status of Horizon
along with the concerns over funding and accounting treatment.
e. Why was the decision to sign the contract with ICL remitted to the
Chairman and Chief Executive?
53. The Board delegated the decision as to whether to sign a revised contract to the
Chairman and the Chief Executive. This is fairly standard practice as it is not
practical for the whole Board to engage in contract negotiations. It is common
practice to delegate this task to the Chief Executive but Neville Baine was quite
hands-on and so it was decided that it was better to have two people
representing the Board i.e. both the Chairman and the Chief Executive.
Pursuant to their right to intercede in contracts, the Government would have
negotiated the contract but the Post Office would have had to sign the contract.
BOARD MEETING OF 14 SEPTEMBER 1999
Question 8: Please review (POL00000353). These are the Board Minutes of 14
September 1999.
a. What did you understand regarding the robustness of Horizon at that
time?
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54. By reference to the minutes, paragraph Ill on page 99 shows me that despite
the Horizon Programme Director being confident in the July board meeting that
system acceptance would occur as planned on 18 August 1999, this would
now be delayed by a month to September 1999 due to three high priority
acceptance issues over "training, stability of the system (lockups and screen
freezes) and quality of accounting data." ICL did not agree with the ‘high’
categorisation of these incidents although they accepted the decision to defer
acceptance until 24 September.
55.Paragraph IV confirms that the decision on national roll-out was also deferred.
The Board were informed that training was going well but concerns existed
around meeting the revised final acceptance date of 15 November 1999.
56.In the meantime, Post Office executives wanted to continue PILOT roll-out to
a limited number of offices but the Board raised concerns over this due to the
reliability of the software. These initial live trials were to 900 Post Offices and
they were part way through that and encountering problems. Although they
wanted to continue this rollout at no cost we suggested that they held off for
those as well and not to rush it until the problems were sorted. The Executive
Team said that they would consider this.
57.In the meantime, progress on training went well and was downgraded to a
medium priority. However, system stability and accounting was still being
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analysed and rectification was not expected before December. The final
acceptance date of the revised contract was 15 November 1999 but there was
uncertainty as to whether the plans that were currently in place would allow this
deadline to be met. The minutes make it clear that the system would only be
accepted if it achieved the necessary service standards.
b. What did you understand of any technical issues?
58. Please refer to my answer at question 8(a) above.
c. What did you know of problems experienced by sub-postmasters?
59. Please refer to my answer at question 8(a) above.
d. Did you raise any concerns regarding your answers to (a), (b) and (c)
and if so, with who?
60. It is clear that the Board were telling ICL to hold off both the national rollout
and live trials until problems were resolved, despite ICL wanting to carry on
with the live trials. The Board was not pressuring roll out before it was ready
but was doing quite the opposite and was being cautious and realistic about
rolling out the project in a robust way
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BOARD MEETING OF 26 OCTOBER 1999
Question 9: Please review (POL00000354).
a. What did you understand regarding the robustness of Horizon at the
time?
61.The Chairman had two issues that he wanted the Board to address:
performance (where they weren't making enough money); and the
government's failure to address and respond to important issues that affected
the management and organisation of the company. I do not think that the
comments about delays and failures to respond to important issues by the
Government relate to the Horizon project in particular.
62.The Chairman also raised several issues at this meeting about how
relationships between the Post Office and Government were affecting the
operation and management of the organisation. This was not directly attributed
to Horizon.
63. The Board were also informed that following remedial work around several
issues, the Horizon system had now been accepted with implementation
proceeding at a rate of 200 offices per week. Roll-out would continue until 8
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November 1999 at which point it would cease until January 2000 thereby
allowing a period of review to be undertaken.
64.Page 119 (previously 100) gives the financial overview of Horizon, stating that
Post Office’s half year results would show a loss of £420m after tax, including
the impact of the Horizon write-off. Paragraph v states:
"There was some suggestion emanating from DTI that the Horizon write-off
should be treated in the accounts in such a way as not to give rise to a Post
Office loss. However, the Board unanimously agreed that the only correct
treatment of the Horizon write-off was for it to pass in full through the Profit
and Loss account.”
65. It is clear from this paragraph that it was put to the Board that it should use a
way to account for the loss which made it less transparent. However, the
Board refused to do so. To me, that is the decision of a Board that is operating
properly and not giving in to pressure when needed to ensure transparency
and proper accounting.
b. What did you understand of any technical issues?
66. Please refer to my answer at question 9(a) above.
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c. What did you know of problems experienced by sub-postmasters?
67.Please refer to my answer at question 9(a) above.
d. Did you raise any concerns regarding your answers to (a), (b) and (c)
and if so, who with?
68.Despite Post Office executives being asked to make the loss less transparent,
the Board unanimously agreed that the only correct treatment of the Horizon
write-offs was for it to pass through the profit and loss account. I am pretty sure
that this would have been led by the Chair of the Audit Committee. This is a
board operating properly, challenging things that they do not agree with and
demonstrates what I have said above about having a robust board.
BOARD MEETING OF 11 JANUARY 2000
Question 10: Please review (POL000000336). These are the Board Minutes of
11 January 2000.
a. What did you understand regarding the robustness of Horizon at that
time?
From the notes, Duncan Hine informed the Board that the technology and
information systems within the Post Office at that time were costly to maintain
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and that they needed a more integrated system. There was massive change
going on and lots of legacy issues. I recall having heard a similar thing in many
organisations at the time and the Post Office was not alone in trying to get to
grips with this. I do not think from my recollection or from having read the
meeting minutes that this issue was specifically linked to Horizon and I think
that Mr Hine would have left the meeting before the discussion moved on to
specifically discuss Horizon.
b. What did you understand of any technical issues?
69.A great deal of work had been undertaken to rectify difficulties in three areas
in Horizon: system stability, accounting integrity; and the provision of support
to offices. This included putting 300 managers into work with the Post Office
Counters. However, it was not anticipated that these issues would prevent
rollout, which was due to recommence on 24 January 2000.
c. What did you know of problems experienced by sub-postmasters?
70.Please see above my answer to question 10(b).
d. Did you raise any concerns regarding your answers to (a), (b) or (c) and
if so, who with?
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71.1 think that the Board would have come away from this meeting thinking that
good progress was being made and that there were no major issues on
Horizon. Therefore, no concerns needed to be raised.
BOARD MEETING OF 12 JUNE 2001
Question 11. Please review (POL00021476). These are Board Minutes of
Consignia of 12 June 2001.
a. What did you understand regarding the robustness of Horizon at that
time?
72.1 cannot see from the minutes that any major issues were raised in relation to
Horizon. Paragraph H of page 22 states:
"Horizon: the Board also expressed its congratulations and thanks to the team
working on the Horizon programme, on the successful completion of the
installation of over 40, 000 machines and training over 60, 000 people in Post
Office Network."
73.These words are indicative of a Board which has been briefed on the
completion of a successful rollout of a project without any notable concerns. I
cannot recall this meeting and therefore have no reason to think otherwise.
b. What did you understand of any technical issues?
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74.No technical issues raised.
c. What did you know of problems experienced by sub-postmasters?
75. There were no problems experienced by sub-postmasters raised.
d. Did you raise any concerns regarding your answers to (a), (b) and (c)
and if so, who with?
76. There were no concerns raised as the Board was not briefed that there were
any issues with Horizon.
GENERAL
Question 12: Are there other meetings that you recall that were significant in
respect of the procurement, design, pilot, rollout and modifications to the
Horizon IT system?
77.From the Board minutes provided to me, I can see that Post Office executives
met with Government officials on Horizon and the subject was discussed at
several Trade and Industry Select Committee meetings.
78. In respect of procurement, design, pilot, roll out and modifications to the Horizon
IT system, I do not recall any meetings which were significant.
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Question 13: Are there any steps that you recall to seek reassurances from ICL
/ Fujitsu?
79.Based on the meeting minutes, the Board were informed that Post Office
executives had arranged for Fujitsu to provide a written guarantee on future
support given that ICL's own future was uncertain.
Question 14: Were there any political pressures that you recall to agree the
contract with ICL / Fujitsu?
80.1 do not recall any direct political pressure on the Board, other than as set out
above at paragraph 35. The Board, and the non-executive Directors in
particular, had very little dealing with the Government. Very occasionally they
would attend meetings but it was the executives who did all the direct
negotiations. For example, I noted above in relation to the minutes of 26
October 1999 where it says allegedly that the DTI or Treasury had come up
with suggestions as to how to account for the write-off on Horizon and the
Board responded by saying that whatever was done, it had to be transparent
and appropriate. When the Government wanted to prevent bad news, it was
the Board who stopped them, saying things must be done properly. This was
a robust board not succumbing to political pressure.
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81.If there was potential for political pressure, this came from the relationship
between the Post Office executives and the Government who was the
shareholder. They would have had direct meetings about a whole host of
things although I was not present at these meetings and I was not aware of
any specific political pressure to agree the contract with Fujitsu, other than
paragraph 35.
82.In very general terms, I recall that the Post Office executives and the
Government did not have a good relationship. The executives wanted more
commercial freedom and in the minutes there is mention of commercial
freedoms of the post office i.e. privatisation. They wanted a system which
would work as well in a privatised organisation as it would in a public one. At
this point the decision on privatisation had not been reached.
Question 15: Were there any political pressures that you recall in respect of
the timing of the roll-out?
83.In relation to the timing of the roll out of Horizon, I am not aware of and certainly
cannot remember any political pressures for the roll out to happen before the
system was ready. At paragraph 53 above, I have cited a section in the board
minutes of 14 September 1999 which make it clear that the Board were not
putting any pressure for the project to be rolled out before it was ready and were
telling the Post Office executives to hold off both the national and pilot roll out
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until all problems were sorted. To me, this is evidence of a Board which is
exercising proper oversight of a project.
84. However, as noted above, the relationship between the Post Office executives
and Government was not good at the time and the Government had taken
significant control of the project contract negotiations despite concerns raised
by me and other non-executive directors. I believe that we would have raised
this with the Government and the Minister to obtain assurances that matters
would improve.
Question 16: Did you consider there was sufficient knowledge of the
difficulties with Horizon in the Board during the period 1999 to 2001?
85.In hindsight, I do not think that the Board was fully aware of the local
implementation issues with Horizon and I think the same applies for the senior
Post Office executives who attended and briefed the Board.
86.With the benefit of hindsight it is apparent that there were problems and
therefore it follows that the reports given to the Board by the Post Office
Executive Team were not totally factually correct. However, I do not think that
this was due to any intentional deceit but that the Executive Team's analysis
appears not to have identified the issues on the ground. My thoughts on this
point are based on my instinctive impression that they were people of integrity
and honesty.
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87.1 cannot comment on whether Senior Executives were under pressure from
the Government to call it a success and get it rolled out.
Question 17: Did you consider there was sufficient expertise amongst the
board in respect of the governance of an IT project of this sort?
88.The Board comprised of non-executive Directors (as appointed by the
Department of Trade and Industry), the Chairman and Post Office executives,
including the Chief Executive. All of the executive Board Members had
considerable Post Office experience and the non-executive Board Members
had wide industry experience. This was a typical board structure for the
governance of major projects.
89.1 do not recall that any of the people on the board had technical knowledge of
project management for IT projects but that was a skill that was delegated
specifically to Duncan Hine and David Miller. Both Mr Hine and Mr Miller woul
id
have had a close understanding of what was going on with IT issues in Horizon,
particularly Mr Miller. The Board was made up of strong corporate individua'
with excellent experience who were robust and challenging in their approach.
Is
It
is not the Board's job to interview all the people and assess whether they are
competent but they rely on the Chief Executive to come up with the right people
to lead on the technical aspects of the IT project and it is usual practice an
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id
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reasonable for them to assume that the Chief Executive has chosen the best
person they could think of for the job.
Question 18: Looking back, do you feel that the Board effectively
scrutinised the procurement, PILOT and roll-out of Horizon?
90. In hindsight I do not think that the Board was fully aware of all of the local issues
with the project. Based on my reading of the minutes, the reports given to the
Board by the IT specialists within the Executive Team certainly did not reflect
that there were any serious issues remaining at the time of full rol-out. I cannot
comment on whether the reports given to the Board were accurate in this
respect, or whether the executive and technical teams themselves understood
that there were residual issues. It is clear to me from the minutes that there was
a difficult working relationship between the Post Office Executive Team and the
Government which I do not think would have helped with addressing some of
the more strategic issues on Horizon.
9
.I think that the Board exercised appropriate oversight of the project from
working with the Government on contract negotiations to oversight of the
technical rollout. The Board flagged their concerns with the Government and
the Executive Team whenever this was appropriate.
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Question 19: Are there any other matters that you consider will assist the
Chair?
92. The additional documents provided to me on 25 January 2025 included a set
of Board Minutes dated 15 February 1999 (POL00362935). Having reviewed
these minutes I can see that it was noted that both DSS and Counters were
excluded from Treasury discussions with ICL on Horizon. This concern was
raised by the then Executive Directors to lan McCartney, Minister of State DTI,
who was present at the meeting. I can also see that during this meeting I
expressed a concern, also shared by the other Non-Executive Directors, that
the control and direction of the Horizon programme no longer appeared to be
held within the Post Office. I recall feeling that Post Office should be included
in Government discussions on the use of Horizon and that the business
should have ultimate control of the Horizon Project, not the Government in its
capacity as shareholder.
93. There are no other matters that I consider will assist the Chair.
Statement of Truth
I believe the content of this statement to be true.
Dated: 05 February 2025
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Witness Statement of Michael Kinski - Document Index
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Document
no.
URN
Document
Description
(Control Number
RMG00000015
Post Office Board
Minutes —
Minutes of
meeting held on
10 November
1998
1$00007423
POL00028611
Letters
exchanged after
Board Meeting
held on 23 May
1999
1$00003875
RMG00000012
Post Office Board
Minutes —
Minutes of
meeting held on 8
December 1998
1S$00007420
POL00021469
Post Office Board
Minutes —
Minutes of
meeting held on
14 March 2000
POL0000002
POL00043599
Post Office Board
Minutes —
Minutes of
meeting held on
23 May 1999
IPOL-0040102
POL00095461
Post Office Board
Minutes —
Minutes of
IPOL-0095044
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meeting held on 7
and 8 June 1999
POL00000352
Post Office Board
Minutes —
Minutes of
meeting held on
20 July 1999
1S$00001326
POL00000353
Post Office Board
Minutes —
Minutes of
meeting held on
14 September
1999
1$00001327
POL00000354
Post Office Board
Minutes —
Minutes of
meeting held on
26 October 1999
1$00001328
10.
POL000000336
Post Office Board
Minutes —
Minutes of
meeting held on
11 January 2000
1S$00001310
11.
POL00021476
Post Office Board
Minutes —
Minutes of
meeting held on
12 June 2001
IPOL0000009
12.
POL00362935
Post Office Board
Minutes —
Minutes of
meeting held on
15 February 1999
POL-0185261
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