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Witness Name: Mike Hannon
Statement No. WITNO5600100
Date: 25 April 2023
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF MIKE HANNON
I, MIKE HANNON, will say as follows...
1. I have prepared this statement in response to the Rule 9 request of 24 August
2022 and in response to the further supplementary questions of 28 March
2023.
Overview
2. I was a Contracts and Commercial Manager within Post Office Ltd responsible
for negotiation and managing contracts including with Fujitsu during my time
at Post Office. This included being involved in the delivery of the Horizon
Contractual Agreements with Fujitsu.
3. I had no formal qualifications at that time but later became MCIPS qualified.
4. I attended a number of development courses to support my development to
perform my role within Post Office Ltd. Upon joining Post Office, like every
Postal Officer, I was trained in all the transactions that could be undertaken at
Post Office counters, including Benefits Agency transaction.
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5.
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I am unable to recall the specific later development courses, or the times and
dates of these, but they were aligned to my development as middle manager
in Post Office and would have included Contract Law and Negotiation Skills
courses.
I worked for Post Office from November1986 to December 2007. I joined Post
Office Ltd in 1986 as a Postal Officer working in a Branch Post Office in and
around the East London area. I went onto managing Branch Post Offices in
the same region until 1991 where I joined the Financial Market Team in Post
Office as an Operations manager, supporting the Benefits Agency as a
customer. As part of the Role, I supported the BA/POCL PFI programme and
then became the Product manager for the BA Payment Card. The work I
undertook as the product Manager for the BA Payment Card was to ensure
the user journey for the Benefit Encashment Service was intuitive, user
friendly and the process complied with the rules set out by the Benefits
Agency, based on my experience as a Postal Officer and the work we
undertook with the Benefits Agency. The Payment Card (Benefit Encashment
Service) did not get rolled out in full onto Horizon and Benefits Agency were
removed from the automation project and at that point I joined the Commercial
team in Post Office.
Within the Commercial Team in Post Office, I was a Contract and Commercial
Manager for the Fujitsu Contract. This role involved a number of activities,
including providing commercial assurance for change control activities which
would have included ensure none of the changes being proposed
inadvertently changed the contract; the correct charging rates were applied on
the Change Control Notes and changes to the contract were applied
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appropriately including correct authorisation in line with delegated authorities.
I would also provide commercial support and guidance where required by the
Post Office technical teams. I would review Documents such as
“Communications Management Team: Service Description (version 1.0)”
[FUJ00002009] and “Fujitsu End to End Reconciliation Reporting Service
Description - V1.0" [FUJ00080024] to ensure it aligned with the commercial
principles of the Agreement in place at that time. The Fujitsu Horizon Contract
was not the only Contract I was responsible for during the time I was in the
Post Office Commercial team, I also managed other suppliers such as LINK
Interchage Network, IBM and Ingenico. During periods where the Contract
was being negotiated or preparation for renegotiation, I would be involved in
reviewing and negotiating elements of the Agreement. The documents “Email
from John G Cook to Forrest Hilary regarding network banking contract
meeting notes held on the 23 Aug 2001” [POL00091743]; “Introduction to the
Contract with Fujitsu Services for Horizon (v1.0)” [POL00090420] and
“Horizon Service Partnership Proposal of 12 September 2005 and Associated
Documents (includes PP slides and email chains)’ [POL00090439] are all
examples of where I would review and comment, from a commercial
perspective, on the structure and content of an agreement.
. Ileft Post Office Ltd in December 2007 and went to work for the Royal Mail
Procurement team where I continued to work until Sept 2020. At that time I
joined Royal Mail, Post Office and Royal Mail were part of the same
organisation and I undertook some Procurement activity for Post Office but
did not get involved in managing or negotiating Horizon after joining Royal
Mail. Document “Bid Approval Review - POL Application, Enrolment & Identity
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(AEl) UKR&RMG-ITE-40276 v.7.8” [FUJ00116491] is not a document I have
seen before or would have been shown to me. I believe it refers to a
Stakeholder Account Management plan view of a project I was involved with,
Application, Identity and Enrolment (AEI) Service for Post Office. Pages 19 &
21 show the Account management plan where I am a Royal Mail stakeholder
in the project. Fujitsu were not awarded the Contract to Post Office for AEI.
9. For clarity I have never worked for Fujitsu.
10. From recollection, documents “Communications Management Team: Service
Description (version 1.0)” [FUJ00002023); “Fujitsu Services Reconciliation
Service: Service Description HNG-X. Version 1.0” [FUJ00002031]; “Service
Desk: Service Description” [FUJ00002036] and “Fujitsu Services Application
Support Service (Fourth Line): Service Description. Version 1.0”
[FUJ00002037] were required to be delivered contractually to set out the
transition state of the services from Horizon to HNG-X and the final state
contracted service of HNG-X. My role in reviewing these documents would
have been to ensure they aligned with the Agreed Contract position.
11.1 am led to understand Horizon Online was the later iteration of Horizon which
was progressed post my move from Post Office to Royal Mail. I’m not clear on
the exact timings but Horizon Online may have even been started after Post
Office had split from Royal Mail Group.
Advice and Assistance
12. The only time I had contact with Sub-Postmasters was as part of
Communication events where, as a Senior Manager in Post Office, I would
attend and deliver a standard presentation. These presentations would be
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business related, performance standards and distillation of the current Post
Office Vision statements etc. I am unable to recall any specific details relating
to these events.
13.“Meeting minutes of Horizon Service Review Forum” [FUJ00119979] sets out
an action for someone to clarify the position regarding the creation of a Single
Point of Contact (SPoC). This was looking at creating a single phone number
Sub-Postmasters/users would use to engage help and guidance from Post
Office helpdesks, including the Horizon Helpdesk. From recollection the
reason this was being looked at was to stop any confusion about which
number to call, as there was more than one, and there was a cost saving in
Fujitsu not providing a separate phone line. The single line would have had an
interactive choice selection for users to select the appropriate option for them.
My role would have been to look at the options from a commercial
perspective, approve any contractual saving and ensure the Agreement was
changed to address the agreed change.
14.1 was not responsible for providing any advice or guidance to Sub-
Postmasters or Assistance regarding the Horizon System.
15.I cannot recall any operational issues raised with me, from these sessions if
they had I would have directed to the Area Managers- Line Management.
16.1 do not recall any specific difficulties being raised directly to me regarding the
Horizon System.
17.I have been asked if there were any steps that I thought should have been
taken in response to any concerns that I raised that were not. No.
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18.I have been asked if there was anyone who I felt could have done more to
assist or make things better for Sub-Postmasters. I cannot comment as I was
not aware of any issues from Sub-Postmasters.
Training
19. I was not responsible for Sub-Postmasters Contracts.
20.1 do not recall any specific instances of anyone not feeling confident using the
Horizon System.
21.1 was not involved in the development of the training for Sub-Postmasters.
22.In “HNG-X rollout: Risk Log as of 26/4/2010; Issue Log as of 6/5/2009;
Decision log as of 21/5/2009” [POL00039210], whilst there may have been a
reference to Mike Hannon against Row 21 the date of this reference to me of
01/09/08, this was approximately 9 months after I left Post Office, joining
Royal Mail in December 2007, so the request would not have come to me for
a decision. As per my response to Document Reference FUJ00002036 (for
the HNG-X Service Desk, Service Description) set out in Point 8 above, I
would have reviewed the document ensure they aligned with the Agreed
Contract position. I was not involved in any aspect of Horizon Online Contract
or any training documents for the NBSC Staff for this solution.
23.1 was not involved in any decision around the level of training NBSC staff
received or did not receive, supporting either version of Horizon or HNG-X
systems, as this would have been an operational activity not a Supplier
related activity.
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Issues With Horizon System
24.
I was not aware of any major issues with the Horizon System. As part of the
development activities for the Benefits Encashment Service, I was aware
there were errors/bugs that were discovered and corrected as part of testing
and there were bugs in live running, that were fixed, but I cannot provide any
specific reference to these of what these were. As part of the BA/POCL
programme I was responsible for the Benefits Encashment Service during the
early development phase and it was not unusual to have typographical, layout
or colour errors, which were picked up as part of acceptance reviews. During
the short time Benefits Encashment Service was on Horizon it was an
independent service and I didn’t get involved into how the accounting
transaction outputs fed into the cash accounts and I didn’t get involved in the
detailed development review of the rest of the solution.
25.Reading “PC0055303 PinlICL Report’ [FUJ00075375] my understanding is the
26.
Benefit Encashment Service transaction numbers were increasing and the
agreed file transfer space with Benefits Agency had not been made fully
available and therefore the files could not be transferred as per agreed
processes because they were too large. This was a technical issue on the
Benefits Agency systems and it was part of my role at the time to liaised with
Benefits Agency and help resolve.
When I moved from my role as Benefits Encashment Service Products owner
into the Commercial team and as part of the wider team in Post Office Ltd I
was aware of some bugs but I wasn’t part of the technical teams I wasn’t
provided any detail or severity about these.
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27.The level of bugs I understood to be raised was not significant. I had no
interaction relating to these bugs with any Postmaster, Assistant or Post
Office Manager.
28.With reference to the “Email from Andrew Perkins, LFS Product Manager at
Post Office Ltd, to Nicholas Samuel, POCL, re 'Change to stock unit cash on
hand total time’ (CCN965)” [POL00031810], my team’s role would have been
to review this CCN from a commercial perspective and ensure the appropriate
authorisation had been obtained before approving. I would not be able to
describe the technical change CCNO0965 raised and I cannot recall any
consequential knock on impact implementing the CCN caused.
29.As referenced earlier in the early part of the Project I was the product owner
for the Benefits Encashment Service (BES) linking to the Benefits Agency
Payment Card. Part of this work was supporting the teams completing the
matching electronic records of payment with Benefits Agency. “PC0014389
PinICL Report” [FUJ00111671] sets out an incident raised by a Sub-
Postmaster where a transaction has been voided. I cannot recall the specific
incident as it was nearly 25 years ago, but we were not looking at the incident
as a human or system error, this would have been passed onto another team.
The Reconciliation team were not looking at how the transaction was voided
just at the electronic totals that Benefits Agency had reconciled against values
on the Post Office/Horizon electronic accounts. The specific acceptance of
liability here was to Benefits Agency as there was no electronic file of the
completed transaction back to the Benefits Agency and therefore we could
only settle on the electronic evidence we had. With reference to my answer at
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point 24 this incident was not referred to as a bug/malfunction of the system
but a voided transaction.
30. The Benefits Encashment Service was withdrawn as an application on
Horizon shortly after it was launched, and I moved away from the joint
BA/POCL Programme operational aspects of the product into the Post Office
Commercial team before the Service was fully closed down on Horizon. I do
not recall seeing enough of these type of incident in Document FUJ00111671
being commonplace to suggest there was a problem with the Benefits
Encashment Service or Horizon. In my time in this role and having worked on
a Post Office Counter I would have escalated any concern I had if I had any
concern it was a system fault.
Resolution of Disputes
31.With regards to “POL Handover note: Dave King” [POL000291 36}, I cannot
say for sure what the nature or purpose of the document was and it was not
something I can recall seeing, but it was the point in time where it was a joint
project with Benefits Agency and Post Office. It is correct in stating that while I
was on the BA/POCL project I was responsible for the security related
aspects of the Benefit Payment Service (Benefit Encashment Service
Product). For context going into the BA/POCL project there were known Fraud
issues with the paper-based payment products, that were being used at the
time, and the Benefits Agency had significant Security resources invested into
the Payment Card system, which was greater than the Benefits Encashment
Services as it also included internally run Benefits Agency payment systems.
Having been in my previous role as the Benefits Agency Account team in Post
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Office we knew the paper-based system could be manipulated including
overprinting dockets with higher values or even printing whole batches of
documents for fraudulent gain. There were also know proven cases of Post
Office staff undertaking fraudulent activity. The introduction of electronic
payments was an attempt to get greater control of fraudulent activity, as well
as cost savings to taxpayer with cost effective systems. My role was to build
in security by the design of the transactions, such as, only payments made on
presentation of a Card with an associated PIN number to release payments.
With regards to the statement “There is a need to ensure that the interests of
POCL with regard to the investigation of any suspected dishonesty by their
staff, and agents, are protected”, I believe this is saying that Post Office needs
to be directly involved in or own any investigation being conducted on its Staff
and it should not be left to the large Benefits Agency Security Team to
exclusively investigate Post Office matters.
32. Security Management Service: Service Description [FUJ00088180] was
required to be delivered contractually to set out the transition state of the
services from Horizon to HNG-X and the final state contracted service of
HNG-X. My role in reviewing these documents would have been to ensure
they aligned with the Agreed Contract position. I had left Post Office before
the full transition of HNG-X happened, but this document related to the
Security of the HNG-X solution and therefore should not have been used for
the investigation, dismissal, and/or prosecution of Sub-Postmasters.
33.1 have been asked whether I was involved in or party to any disputes between
the Post Office and Sub-Postmasters regarding any alleged shortfalls of
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money. I was not involved with any party relating to any alleged shortfall of
money.
34.1 have been asked to describe the process by which any disputes were raised
and resolved. I was not involved in the process and am unable to describe the
process to raise or resolve disputes.
35.1 have been asked to describe whether I was aware of any contact or input
from Fujitsu in the resolution of any disputes I was not aware of process with
Fujitsu.
36.1 have been asked to give my view on whether there could have been any
improvement in this process I am unable to comment.
37. There are no other matters that I consider the Chair of the Inquiry should be
aware of.
Statement of Truth
I believe the content of this statement to be true.
Dated: 25 April 2023
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Index to First Witness Statement of Mike Hannon
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No.
URN
Document Description
Control Number
FUJ00002009
Communications Management
Team: Service Description
(version 1.0)
POINQ0008180F
FUJ00080024
Fujitsu End to End
Reconciliation Reporting
Service Description - V1.0
POINQ0086195F
POL00091743
Email from John G Cook to
Forrest Hilary regarding network
banking contract meeting notes
held on the 23 Aug 2001
POL-0091319
POL00090420
Introduction to the Contract with
Fujitsu Services for Horizon
(v1.0)
POL-0087389
POL00090439
Horizon Service Partnership
Proposal of 12 September 2005
and Associated Documents
(includes PP slides and email
chains)
POL-0087408
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FUJ00116491
Bid Approval Review - POL
Application, Enrolment &
Identity (AEI) UKR&RMG-ITE-
40276 v.7.8.
POINQ0122662F
FUJ00002023
Communications Management
Team: Service Description
(version 1.0)
POINQ0008194F
FUJ00002031
Fujitsu Services Reconciliation
Service: Service Description
HNG-X. Version 1.0
POINQ0008202F
FUJ00002036
Service Desk: Service
Description
POINQ0008207F
10
FUJ00002037
Fujitsu Services Application
Support Service (Fourth Line):
Service Description. Version 1.0
POINQ0008208F
11
FUJ00119979
Meeting minutes of Horizon
Service Review Forum
POINQ0126171F
12
POL00039210
HNG-X rollout: Risk Log as of
26/4/2010; Issue Log as of
6/5/2009; Decision log as of
21/5/2009
POL-0035692
13
FUJ00075375
PC0055303 PinlCL Report
POINQ0084964F
POL00031810
Email from Andrew Perkins,
LFS Product Manager at Post
Office Ltd, to Nicholas Samuel,
POCL, re ‘Change to stock unit
cash on hand total time’
(CCN965)
POL-0028712
15
FUJ00111671
PC0014389 PinlCL Report
POINQ0086195F
16
POL00029136
POL Handover note: Dave King
POL-0025618
17
I FUJ00088180
Security Management Service:
Service Description
FUJ-00088180
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