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Witness Name: Benjamin Andrew Foat
Statement No: WITNO9980600
Dated: 8 October 2024
THE POST OFFICE HORIZON IT INQUIRY
SIXTH WITNESS STATEMENT OF
BENJAMIN ANDREW FOAT
I, Benjamin Andrew Foat, will say as follows:
Introduction
1. I have been employed by Post Office Limited (POL) as its Group General
Counsel (GC) since 1 May 2019.
2. This witness statement has been prepared in response to a request made by
the Post Office Horizon IT Inquiry (the Inquiry) pursuant to Rule 9 of the
Inquiry Rules 2006, dated 4 July 2024.
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The facts in this witness statement are true, complete, and accurate to the
best of my knowledge and belief.
I have been assisted in preparing this witness statement by Farrer & Co, who
act for me in my personal capacity.
I have previously given three corporate witness statements to the Inquiry
(dated 23 March 2023, 21 June 2023 and 22 August 2023) and four interim
disclosure statements (dated 27 May 2022, 18 October 2022, 30 November
2022 and 12 January 2023). I attended a hearing about disclosure at the
Inquiry as a corporate witness on 4 July 2023. I have previously given two
personal witness statements to the Inquiry (dated 3 May 2024 and 28 May
2024).
As the current Group General Counsel (GC) to POL, due to the limited
privilege waivers by POL, there is material that I am unable to place before
the Inquiry. I have requested that privilege be waived in respect of my
evidence, and certain categories of evidence, but that has not been permitted.
As such, I must remain operating within the confines of the current waivers. A
number of areas of improvement, conformance and transparency were
advised and facilitated by me, and I consider those in this statement although
I have not made the direct link between my advice and those matters for the
reasons detailed in this paragraph.
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7. I have been out of the business on leave of absence since 10 June 2024.
Sarah Gray (SG) has been Interim GC since the beginning of April 2024. As
such, I am only aware of matters which took place before this date and there
may have been developments since then of which I am not aware.
8. I include here abbreviations that I use throughout my statement which I hope
is helpful to the Inquiry.
Acronym
Name
AC Alisdair Cameron, CFO and former interim CEO, and
former CFOO (Chief Finance & Operations Officer)
ACI Assurance & Complex Investigations
ARA Annual Report & Accounts
ARC Audit & Risk Committee (board subcommittee)
BAU Business as Usual
The Board The POL Board
BT Ben Tidswell (RU Chair, SID, Investigations Board
Champion)
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ClJ Common Issues Judgment
CWU Communications and Workers Union
DBT Department for Business and Trade
DW Diane Wills (former RU Legal Director, subsequently the
Inquiry Director)
GC Group General Counsel
GE General Executive (now known as Strategic Executive
Group (SEG) since January 2024 — see below)
GLO Group Litigation Order
Government Secretary of State for the Department of Business and
Shareholder
Trade
Group Litigation
Horizon Group Litigation (including the GLO)
HS
Henry Staunton (former Chairman of POL)
HlJ
Horizon Issues Judgment
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HIT Horizon Issues Trial
HMU Historical Matters Unit (which is now referred to as the
Remediation Unit (RU))
HSF Herbert Smith Freehills
IDG Improvement Development Group
The Inquiry Post Office Horizon IT Inquiry
ISC Inquiry Steering Committee (executive subcommittee)
JB John Bartlett, ACI Director (formerly Head of ACI)
LCASR Legal, Compliance, Assurance, Secretariat & Risk
NED Non-Executive Director
NFSP National Federation of SubPostmasters
NomCo Nomination Committee (Board subcommittee)
NR Nick Read
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Pol Post Office Insurance
POL Post Office Limited
RC Remediation Committee (Board subcommittee for RU)
RCC Risk and Compliance Committee (executive
subcommittee)
RU Remediation Unit (formerly HMU as referred to above), a
transformation program separate from BAU
RemCo Remuneration Committee (Board subcommittee)
SEG Strategic Executive Group (formerly known as the GE
prior to January 2024)
SG Sarah Gray, Interim GC BAU (whose permanent role is
the Group Legal Director)
SID Senior Independent Director
UKGI UK Government Investments
WBD Womble Bond Dickinson
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Background
9. I have been asked to provide details of any updates to my role as General
Counsel, my duties and areas of responsibility at POL since my last statement.
10. I remain employed as the GC of POL, although, as above, I have been on
leave since 10 June 2024.
11. Later in June 2024 I was informed, and it was subsequently announced to the
business, that the areas of Compliance, Assurance and Risk were to be
restructured and placed under the interim CFO (Preetha Mccann), having
previously fallen within my remit.
12. In August 2024 I was informed that, given my absence from the business, I
would cease being Director of First Rate Exchange Services, on an interim
basis until my return.
General experience as General Counsel
13. In respect of my role as General Counsel, my duties and areas of
responsibility, I have been asked to describe what relevant changes, if any,
have occurred in the period since the findings of Fraser LJ, including following
the evidence that has been heard in the Inquiry.
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14.
15.
16.
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Several changes to the role of GC have been made in the period since the
findings of Lord Justice Fraser.
Prior to the Common Issues Judgment (ClJ), and prior to me becoming GC, I
was told by the then-interim CEO, Alisdair Cameron (AC), that the former GC.
role involved making operational and business decisions, particularly in
relation to the Group Litigation. Following the handing down of the ClJ and
given its findings, it was decided by AC that POL needed to reinforce that
decisions were made only by the appropriate accountable forum and that the
Board needed greater oversight and assistance. The phrase “advise not
decide” was used frequently to reflect this change in relation to the GC’s and
legal team’s role. The role of GC (and the legal team) is to advise the General
Executive (GE), the Board and the business, rather than to make decisions.
This is noted in the GE and subsequent SEG terms of reference. It is further
reinforced by the Legal Policy (more on which below).
The POL Board and Executive had realised that given the scale and
complexity of the issues at hand, the Executive and the Board needed
additional external advice and assurance from experts to better understand
and test the multitude of issues and implications arising from the ClJ and other
issues brought about by the Group Litigation.
In April 2019, HSF was appointed to provide the oversight that the former GC’s
role covered in respect of the Group Litigation. In due course, Sir David
Calvert-Smith was appointed specifically to provide assurance and advice in
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respect of the conduct of the criminal appeals including disclosure. Womble
Bond Dickinson (WBD) remained on the record for some time as the solicitors
acting for POL. POL via HSF has also been supported with the provision of
numerous expert legal advices from external KCs (and their juniors).
18. The following specific changes have also been made to the remit and role of
the GC since the findings of Lord Justice Fraser:
18.1. The role of Company Secretary, which sat with Jane McLeod when she was
the GC, was moved away from the GC role to the experienced Company
Secretary (Veronica Branton and subsequently Rachel Scarrabelotti), who
managed the Company Secretariat team. The GC is responsible for the
Company Secretariat team but retains only limited oversight over this role (in
part due to the statutory nature of the Company Secretary role). I would
support the Company Secretary as much as I could with the provision of
headline updates in the monthly CEO report from the Company Secretary and
in our 1:1 discussions. I also helped secured more resource for the Company
Secretariat function. However, this change has meant that the GC is more
removed from the Board and does not attend the Board meetings other than
when invited for specific agenda items. I am not consulted on Board agendas
and certain papers. This is undertaken directly between the Company
Secretary and the relevant Chair and CEO. Moreover, the GC does not see
certain reports, including Remuneration Committee (RemCo) papers, which
are discussed between the Company Secretary, the Board and the relevant
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accountable people within the business. Since approximately 2020, I have
raised my concerns about the above with the SID (Ben Tidswell), CEO (Nick
Read), various CPOs and both Company Secretaries (Veronica Branton and
Rachel Scarrabelotti) about the gaps created by the ways of working around
this separation of roles. Since April 2023, my understanding is that the
Transformation & Strategy Director, Tim MclInnes, and subsequently the Chief
of Staff, Chrysanthy Pispinis, were tasked to progress governance issues
following the issue having been raised by several people including the CFO
(AC).
18.2 At my appointment on 1 May 2019, responsibility for the Risk team was
removed from the GC role. On 1 January 2024, my role was expanded to
include responsibility for the Risk team again (more details of this below), but
this now sits under the CFO (effective from 1 September 2024).
18.3 During 2023, a Group Assurance Director, Anshu Mathur, was appointed who
reports into me as the GC. This role encompasses a ‘second line of defence’
quality assurance function. Given the limited resource and budget, it was
agreed with the CEO, CFO (AC) and CPO (Jane Davies) that this role would
strategically focus on the Retail and IT teams, covering their accountability to
remediate their operations to ensure compliance with the ClJ and Horizon
Issues Judgment (HIJ) remediation programs.
18.4 An LCASR (legal, compliance, assurance, secretariat, and risk) Operations
Director role was established around April 2020 to ensure coordination
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between my direct reports (the directors of each of those functions), as well
as providing Executive management support to those directors and the GC.
This role was also to support those directors to put in place industry
benchmarked policies and procedures such as a Legal Policy and a Contract
Management Framework, as well as to support the GC on the functional
management of the teams. From time to time, the LCASR Operations Director
role has had to support other teams to put in foundational work so that other
areas of my team could progress their work. By way of example, I asked the
LCASR Operations Director, Mark Underwood, to assist the ClO team in
mapping out POL’s data universe so that a more accurate understanding of
POL’s data could be understood by the organisation. To be clear, the
accountable business owners remain accountable for their areas, including
their data.
18.5 There have been numerous changes and improvements made to the
Whistleblowing team and processes, as set out below. This has included the
appointment of a Board Whistleblowing Champion (Zarin Patel and
subsequently Amanda Burton) (removing the GC as Whistleblowing
Champion and sponsor). This allows the GC, especially in the event of a
conflict, to provide legal advice (via external lawyers if necessary) to the POL
Executive and the Board regarding whistleblowing. The dedicated
Whistleblowing Officer reports to the Assurance and Complex Investigations
(ACI) Director, John Bartlett (JB), and in turn to the Group Legal Director,
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Sarah Gray (SG), as sponsor of the Speak Up Policy (more details in relation
to this below).
18.6 Following my direction that Speak Up & Investigations be reviewed by external
experts (resulting in part from the Hamilton judgment), there have been
improvements to investigations processes through the establishment of an
Assurance and Complex Investigations (ACI) team to act predominantly as a
‘second line of defence’ (one of the recommendations from the review). I
requested that the review be done externally, rather than by anyone within
POL, because I wanted it to be done independently and transparently, so we
could understand what industry best practice was and the gaps within POL,
so the recommendations could then be put to the relevant decision-making
forums.
18.7 The ACI Director, John Bartlett ((JB) previously Head of the then-named
Central Investigations Unit) and the ACI team report to the Group Legal
Director, SG (who recruited JB). SG is responsible for overseeing and
managing the ACI Directors team and providing guidance and support to
them. The team are properly trained experienced investigators empowered to
improve investigations processes across POL. They also undertake complex
investigations where required by the Board or the Executive including in
compliance with the Board approved policies (for example, Law Enforcement
and Cooperation Policy or Speak Up Policy). The ACI team does not generally
undertake Postmaster investigations (which are carried out within the Retail
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team) or employment investigations (which are carried out by the People
team) but they might provide guidance and support to those undertaking such
investigations. Where there are investigations which are particularly sensitive,
complex and/or material, the ACI team itself may conduct the investigation.
During my tenure as GC, the Retail team (responsible for Postmaster
investigations) has not sat within my remit. Those in the Postmaster
investigations Retail team are not part of LCASR and do not report to me.
18.8 As noted above, the GC sits on the SEG in an advisory capacity only.
18.9 In or around the beginning of 2020, the Board and Executive were increasingly
concerned about the lack of time and resource being directed to the running
of the Post Office. It was raised and discussed with Board, including the
Government Shareholder Representative, Tom Cooper, as to whether it would
be preferable that the Government take the compensations matters away from
POL, to be administered by a different entity. The Government Shareholder
Representative informed the Board that the Government would not be
amenable to that option. As a result, in or around June 2020, the Board
decided to separate the matters arising from Lord Justice Fraser’s findings
from the BAU business. It appointed Declan Salter to be the Director of that
separate program (his title was therefore Historical Matters Unit (HMU)
(subsequently RU) and Inquiry Director)), reporting directly to the CEO and
the Board.
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18.10 Between September 2021 and July 2023, my role as GC was subsequently
expanded to be the temporary sponsor of the RU and Inquiry programs. The
role was backdated to June 2021 as I informally tried to assist these teams
during that period, but I was not undertaking the role formally until September
2021. During that intervening period, I raised concerns I had around potentially
undermining the ‘adviser not decider’ role which I felt was important because
of my SRA obligations (more on which below).
18.11 At this point the RU and Inquiry programs were separated and subsequently
two new directors were appointed. Fintan Canavan was appointed in October
2021 as Inquiry Director and Simon Recaldin as RU Director in January 2022.
My temporary sponsor responsibilities were to keep the Executive and the
Board updated (through the SEG and Board reports), and to be a contact point
(instead of the CEO who had previously performed that role). In addition, I was
responsible for conducting line management of the two directors (for example,
day to day support, performance management reviews, pay, leave requests,
budget, employee support). Given my existing role and its limits of authority
(i.e. advise and not decide), the above directors were empowered to make
decisions and have decision making forums established above them (more on
which below).
18.12 Prior to the directors’ appointments, other SEG members attended the RU and
Inquiry Steering Committee (ISC) to ensure that decision-making continued.
The RU Director had decision-making authority and, where it was not within
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his authority, such decisions were taken by the Remediation Committee (RC),
which is the Board Subcommittee established to oversee compensation
matters arising from Lord Justice Fraser's findings. The RC was chaired by
Ben Tidswell (BT) in or around August 2021.
18.13 Given that the compensation principles had a financial impact above a certain
authority level, a substantial amount of decision making was taken by the RC.
18.14 The Inquiry Director had authority to make certain day to day decisions, but
significant decisions were taken by an Executive SteerCo (utilising the CEO’s
delegated authority — the ISC as previously referred to). Material decisions
which were not within the ISC’s Terms of Reference, would be made by the
Board (for example, the waiver of legal professional privilege for the Inquiry).
18.15 Both the Inquiry and RU programs had their own legal teams including Legal
Directors outside of the Business As Usual (BAU) teams reporting to the RU
and Inquiry Directors.
18.16 In July 2023 I ceased my temporary sponsorship of the RU and Inquiry
programs. I first started conversations with the CEO around March or April
2023 about me ceasing my sponsorship. There were a number of reasons for
my request to the CEO including that I may be called to give evidence to the
Inquiry and as such an issue of conflict might arise. In addition, I had not felt
(for some time) that, in reality, I had the requisite information, control or
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authority in order for me to properly undertake my role as sponsor (including
in relation to overseeing or directing the programs).
18.17 After ceasing my temporary sponsorship in July 2023, the Group Legal
Director, SG, and Inquiry Director (Diane Wills (DW)) continued to liaise with
each other on the management of legal issues, particularly in the event of
conflicts, and ensuring that POL BAU legal policy and procedures were
complied with in the programs, together with engagement with the SID, who
was legally qualified. I have not been part of the ISC from that time and was
excluded at various times from the SEG and Board meetings on the Inquiry
issues.
18.18 At no time have I been responsible for the Postmaster investigations team
which sits in the Retail team.
18.19 Shortly before 1 January 2024, I was informed that the SEG would be
restructured, and that the GC would not sit on the proposed executive forum.
I was not consulted on this until the decision had been made but did suggest
that it would be appropriate for the CEO and CPO to take direct external legal
advice so that they could ensure that legal risks were managed. I was asked
about my thoughts on the proposed restructure. I queried whether the
restructure had gone through proper governance and whether the risks were
understood (regarding not having the GC attend the SEG) specifically in terms
of risk management, including legal and regulatory risk. The SEG was
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subsequently amended to continue with GC attendance in an advisory
capacity (as had always been the case).
18.20 From 14 May 2020, I was the Chairman of First Rate Exchange Services
Limited which is a joint venture travel currency between the Bank of Ireland
and POL. As noted above, I have been informed that for an interim period I
will step down from this role until my return to the business.
19. In respect of my role as GC, my duties and areas of responsibility, I have been
asked to summarise any proposed changes that have been considered by
POL or are currently being considered by POL, if any, to address the issues
highlighted by the findings of Fraser LJ and/or following the evidence that has
been heard in the Inquiry.
20. For some time throughout my tenure as GC, I recommended that a
Governance Review be undertaken. Around November 2023, a Governance
Review was conducted by Grant Thornton to look at POL’s corporate and
enterprise governance and also at the strategic oversight by the Government
Shareholder. I understand that the draft report was provided to the Board,
CEO, Deputy CEO (Owen Woodley) Chief of Staff and Company Secretary.
As the GC, governance issues create legal risk and I wanted to have oversight
of the report as a result. Over the course of several months, I asked a number
of times to see the draft Grant Thorton report but was refused. I raised this
with the CEO, Chief of Staff and Company Secretary who were responsible
for Governance at this time and had access to this report. This is not intended
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21.
22.
23.
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as a criticism of the Company Secretary or Chief of Staff who I understand
were acting upon instructions.
In my view, it would be helpful for a GC to attend the Board meetings as an
attendee (not as a voting member) as it has been difficult to have oversight
over issues which I do not have access to information or control over. It
therefore makes it more challenging for the GC to be aware of all legal and
regulatory risks in the business. I understand that POL is considering the
outcome of the report, but I am not aware of any decisions having been made.
Although I had advised POL to obtain this report and contributed to its
examination, I have not been involved in its evaluation, drafting, and
implementation to the Board or Executive.
Save as set out above, I am not aware of any further changes which have
been considered by POL or are currently being considered by POL. As set out
above, I have been on leave since 10 June 2024, so it is possible that there
are other changes being considered which I am not aware of.
For the purposes of this question, and as I have been asked, I have focused
on the changes in respect of my role as GC, my duties and areas of
responsibility, not in respect of the wider business.
In respect of my role as GC, my duties and areas of responsibility, I have been
asked in respect of any proposed relevant changes that were not adopted or
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26.
27.
28.
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implemented to detail these, explaining the decisions that were taken and the
reasons why they were not adopted or implemented.
I am not aware of any proposed changes arising from the Grant Thornton
Review or other recent restructures which were not adopted or implemented.
As discussed further below, I raised concerns regarding the temporary
sponsorship role, which were not acted upon.
In respect of my role as GC, my duties and areas of responsibility, I have been
asked to explain the role I played in proposing and/or implementing any of
these changes, if any.
I was in support, and involved in the implementation of, the change made to
the role of the Legal team to reinforce it was only advising rather than making
material business decisions (including that the GC is not a voting member of
SEG or other executive decision-making forums). This model is consistent
with industry discussions and academic literature; it gives inhouse lawyers a
greater degree of independence; reinforces an understanding of who is the
client and the duties owed; and it is consistent with good governance practice
of having the appropriately authorised Board and Executive Committees
making decisions.
The risk around the GC making decisions or being a part of the decision (in
decision making forums) is that they may have to recuse themselves where
they or their team have provided legal advice. Furthermore, the GC being a
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voting member of a Board or Executive can risk compromising their ability to
act as an independent advisor to the Board (if they are having to weigh up
other factors like cost pressures, stakeholder management issues and political
pressure) - this can result in a conflict of interest for the GC.
These issues have been examined in a number of academic and industry
publications such as the Centre for Legal Leadership and by way of example
by Ben W Heineman Jr in Corporate Counsel (former GE senior vice president
for law and public affairs and senior fellow at Harvard University’s schools of
law and government), as well as having been discussed in various industry
forums where other GCs have advised that the GC should sit “beside the
Board”. Should it be helpful to provide further industry or academic literature
on this approach I am happy to do so.
In this way they can still advise the Board and Executive to make the good
commercial decisions, but not decisions that may come into conflict with legal
obligations and the SRA. Furthermore, this preferred model gives clarity in
terms of roles and responsibilities, emphasising the adviser and client
relationship and reinforces the lawyer’s role as an independent adviser. There
are different schools of thought or models on this issue, but I believed that
adopting the “adviser not decider” approach was the preferable model for the
management of legal and regulatory risk at POL. In any event, that was the
decision that the former CEO, AC, and then CEO, Nick Read (NR) adopted.
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I proposed and implemented the appointment of the LCASR Operations
Director as referred to above. I created the remit for this role based on a legal
operations role. I wanted to create a better coordinated process between
those who directly reported to me, and to ensure that there was better
management and reporting of the legal and regulatory risks and that the
second line of defence teams were also putting in place appropriate policies,
processes and controls.
I also recommended a comprehensive review of Compliance & Assurance
across the organisation including reform to the Compliance team, the
establishment of a formal Assurance team (including a Group Assurance
Director) and the design and implementation of a Controls Framework. I felt
this was critically important for the organisation as it provides an enhanced
check on the first line of defence, including POL’s conformance with the
findings of Lord Justice Fraser and response to the Inquiry’s evidence. I first
raised this to the SEG, RCC and ARC as I believed it to be a key component
to any ongoing remediation. A Controls Framework would support the
organisation to ensure ongoing conformance with the changes following the
findings of Lord Justice Fraser. However, the design and implementation of
the Controls Framework would take resource and management time, so the
approach taken by the business was to decentralise the design and
implementation to the first line of defence. This resulted in a delayed rollout
and the need to strategically prioritise Retail and IT. It is an ongoing exercise
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as Improvement Development Group (IDG) oversees the conformance with
Lord Justice Fraser's judgments.
When I was appointed GC, there was not a central investigations team. As
outlined above, Postmaster investigations were (and remain) carried out by
the Retail team. Employment investigations such as conduct issues are (and
remain) carried out by the People Team. Speak Up issues were carried out
within the Compliance function which reported into me as GC. As I set out in
further detail below, following the Hamilton decision and approval of my advice
to POL to conduct an external review of Investigations generally, including
Whistleblowing at POL, I provided the recommendations to the Executive and
Board which included, in respect of my remit, a review of the Speak Up Policy,
the establishment of a dedicated whistleblowing officer reporting to the ACI
Director (that was sponsored by the Group Legal Director) and the
establishment of a Board Whistleblowing Champion. This was to provide
better and dedicated expertise to the Speak Up team as well as better
awareness of the importance of Speak Up across the organisation.
The external review, conducted by KPMG, examined the manner in which
POL conducted investigations more broadly, including Postmaster
investigations. The purpose of this external review was to ensure that POL
operationally and culturally acted upon issues that were raised in the ClJ and
Hamilton judgment, took subject matter expertise and reported to the
Executive and Board, to drive progress in this area. My objective was to ‘shine
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a light’ on issues that had been flagged which I thought POL should address.
The report recommended the establishment of a centralised Investigations
team (now known as ACI). Following approval and with specific input from the
Speak Up Board Champion this was undertaken and the role, Head of ACI
(now ACI Director), was established and reported into, and was overseen by,
the Group Legal Director, SG. Subsequently, a Board Investigations
Champion, BT (who is legally qualified), was also appointed. BT was also the
Chair of the Remediation Committee.
As part of my role as both GC and temporary sponsor I have raised the issues
of poor governance in respect of various issues repeatedly through
discussions with Board members but also formally through CEO reports,
Executive and Board reports including RCC and ARC reports, as well as
through dedicated papers and requesting dashboards on ClJ and HlJ
conformance. In addition, monthly management information pertaining to
Speak Up and Investigations is given to the Board and Executive. Given the
separation of the RU and Inquiry programs, I recommended a number of
matters, including that a RACI (responsibility, accountabilities, consult and
informed), with intersectionality between the RU and Inquiry programs and the
BAU, be undertaken.
In respect of my role as GC, my duties and areas of responsibility, I have been
asked to address the extent to which any changes implemented thus far, if
any, are in my view sufficient to address the findings of Fraser LJ and/or
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40.
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following the evidence that has been heard in the Inquiry and whether further
changes are required.
I have addressed elements of this question in subsequent questions where
the issues or changes have been more specifically raised. I would reiterate my
comments in paragraph 6 above in which I note that due to the limited privilege
waivers by POL there is material that I am unable to place before the Inquiry.
The role of GC was not directly addressed in the findings of Lord Justice
Fraser. However, the findings raised a number of issues within the GC’s areas
of responsibility. Part of my role and area of responsibility is to support the
business (Board, Executive, accountable business owners and organisation)
to comply with the findings of Lord Justice Fraser (and the Hamilton judgment):
ClJ Legal Advice — Postmaster Contracts, Operations and Culture
In summary, the Common Issues Judgment (ClJ) established a mutual duty
of good faith between POL and its Postmasters and implied numerous new
terms into the contract on the basis that they were consequential upon the
duty of good faith or on the grounds of necessity for business efficacy. The
principles and behaviours relevant to good faith include fair dealing,
transparency, cooperation, and trust and confidence throughout the life cycle
of the Postmaster relationship (i.e., from onboarding to termination).
The POL legal team with extensive support from external lawyers articulated
the changes set out by the ClJ to the business. POL Legal updated their
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understanding of the Postmaster contracts including their own tools and
procedures. For example, the legal precedent database was updated, to
ensure that previous external legal advices were not used and updated advice
would be given to the business going forward.
Extensive legal advice including drafting amendments to contract templates,
policies and processes; guidance; and training has been provided to the
business including the Board, Executive and specifically to the relevant
accountable owners within the business (who have responsibility for such
areas (broadly Retail for ClJ and IT for HlJ)). The legal team has supported
the accountable owners / their business client to change their operations and
culture including, by way of example, the contractual restatement work and
communications to existing Postmasters. POL Legal and external legal
advisors have reviewed the Retail Team’s policies and procedures. Moreover,
further legal assurance was also undertaken to support the accountable
business owners’ understanding on whether their operational processes had
changed in conformance with the ClJ. Such assurance also set out numerous
recommendations for the business to undertake. Further external assurance
was recommended. Other initiatives were also undertaken by the Legal and
Compliance team such as the introduction of GLO training and Ethics training
across the business to not only support the accountable owners to
operationalise the findings of Lord Justice Fraser into their policies and
procedures but also to embed cultural improvements.
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44.
45.
46.
47.
48.
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HiJ Advice — Robustness of Horizon
Similar to the ClJ, the legal team with support from external lawyers needed
to set out the findings of Lord Justice Fraser in respect of the HIJ. Broadly, the
HIJ required POL to remediate the management of Horizon defects, core
Horizon data, privilege and remote access of branch accounts, discrepancies
and shortfalls, and identification of defects and causes of shortfalls in branch
accounts. POL needed to ensure that Horizon was sufficiently robust and fit
for purpose. Further external assurance was also recommended.
The CEO established an Executive Group to oversee the accountable
business owners’ progress of these improvements. This was referred to as the
post-GLO program and, as referred to above, the IDG. This group was initially
chaired by the CEO but was subsequently chaired by the COO and, following
that, by the Transformation and Strategy Director.
Generally, I believe the changes that have been made arising from Lord
Justice Fraser's findings and the evidence heard from the Inquiry are positive
cultural and operational changes, but further work is still required and the pace
in which these changes were implemented could have been improved.
The following changes were made to the way in which the LCASR operates in
response to the findings:
There is greater oversight and assurance over the advice given by external
lawyers and the instructions being provided by the business (the Legal team’s
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internal client). By way of example, in relation to a particular project, a third-
party company was appointed to check the business’ instructions and
additional, specialist counsel was appointed to oversee and test the advice
being given by POL’s external lawyers to give POL assurance. Moreover,
UKGI and the Government Shareholder Representative requested a third
counsel to assure the position even further.
48.2 Every member of the Legal team (including new recruits) is trained to ensure
that they understand the findings of the Group Litigation Order and are
specifically trained on the findings of Lord Justice Fraser, which covers both
the legal principles but also general governance. For example, addressing the
criticisms in relation to the culture of secrecy. Moreover, multiple ethics
training sessions have been given to the Legal team to ensure that they are
aware of their regulatory obligations but also the broader ethical framework
from which to operate. Furthermore, the creation of the Ethical Decision
Making Framework has been approved and is incorporated into the Executive
and Board papers. In addition, Speak Up training is mandatory.
48.3 I directed that a new Legal Policy and a Law Enforcement and Cooperation
Policy be implemented following approval from ARC and RCC. The Legal
Policy sets out the minimum operating standards relating to the management
of legal and regulatory risks and clarifies the roles and responsibilities
throughout POL. The Law Enforcement and Cooperation Policy was drafted
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to prevent POL from being able to engage in private prosecutions without the
consent of the Government Shareholder.
48.4 As above, the Legal team ensures that material decisions are being made by
the internal client. This is enshrined in POL’s Legal Policy.
48.5 As part of my role as temporary sponsor of the RU and Inquiry programs, I
conducted a review aided by external lawyers and consultants, the people
team, the change team and finance. I made a number of findings about the
status of the programs and recommendations. A number of these
recommendations were not approved including having KPMG support POL in
developing the RACI structure of the RU and Inquiry programs.
48.6 As part of my role as temporary sponsor of RU, and having witnessed the
challenges faced by Declan Salter, I provided advice on the approach to be
taken in respect of compensation. I understand that privilege over this advice
has not been waived. However, the fact that compensation still has not yet
been completed is of extreme concern and one which I repeatedly flagged.
Moreover, a number of ways of working meetings were held to try to increase
the pace regarding the provision of compensation. I have also flagged the
concern that some directors were so focused on cost management that there
was a risk around losing sight of outcomes in terms of quality and speed. As
I say this was repeatedly raised in September, October, and December 2021;
as well as the implications arising from the increased administration, oversight
and assurance of UKGI and Government Shareholder teams in December
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2021, April 2022, and May 2022, by way of example. As noted above, there
are many times that I have challenged the approach taken by decision makers
and or advisors in these matters in which I have encouraged them to consider
the matter through the postmaster lens or be postmaster centric. Specifically
in respect of my role as temporary sponsor I also flagged that delayed justice
was neither just nor fair in reference to the pace of the compensation schemes.
48.7 As part of my role as temporary sponsor of the Inquiry program, I was directly
involved in recommending a design for the Inquiry program operational
processes and further internal resources and support. This included amongst
a number of things; a Response Tracker to the Inquiry’s evidence as well as
communication of the evidence from the Inquiry to the Board, Executive, and
more broadly across the organisation. There are a number of issues I am not
permitted to bring to the Inquiry’s attention due to privilege not being waived.
48.8 The POL Inquiry team provided both executive summaries and
comprehensive information pertaining to the evidence arising from the Inquiry
to the Board, Executive and senior leaders accountable for matters which
arose in the course of the evidence to the Inquiry as well as more general
information across the organisation. Separate from the Response Tracker, the
Inquiry team provided summaries of each phase to such accountable
personnel to ensure that they were; (1) aware of the evidence arising from the
Inquiry; and (2) could take the necessary action in light of this evidence.
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48.9 The Response Tracker identified, by way of example, over 280 matters in
Phase 1 which the business needed to address. This Response Tracker was
reported to the ISC.
48.10 In January 2022, I directed SG and the former Inquiry Director that
“outstanding areas needed more focus and really quickly... including
corporate governance and investigations”.
6.11 a
accountability of POL’s response to the issues raised in the Inquiry was to be
addressed by the relevant accountable business owners. There are several
examples, including:
48.11.1 When the CEO — Retail, Martin Roberts, and Postmaster Network
Director, Tracey Marshall attended the Inquiry they noted that the
training and onboarding issues that had been experienced in the
past were not adequate and more importantly that the proposed
approach to training for the potential new system would not be
sufficient. Accordingly, they changed the approach that they were
taking in respect of training and onboarding of the potential new
system.
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48.11.2 When the ClOs, Jeff Symth and Zdravko Mladenov, attended Phase
2 of the Inquiry, they noted the extensive design issues and
governance concerns throughout that time. Consequently, the
approach taken to the new Horizon system was amended to take
into account the evidence from the Inquiry including, specifically, the
need for greater assurance.
48.11.3 When the Postmaster NEDs (Sarfaraz Ismail and Elliot Jacobs)
attended, they were concerned that some investigators giving
evidence were still employed at POL. Of particular concern was that
some of them had been re-hired in the RU team. Although overall
accountability for these matters was with the People team. My area
of responsibility included the ACI and Legal team’s support to the
People team.
48.12 During the course of the Phase 1 Evidence, I directed that the Group Legal
Director, SG, and ACI Director, JB, ensure that the potential Speak Up issues
arising from the Inquiry were acted upon. I gave privileged advice in respect
of the investigations into Phoenix and Past Roles. I directed that other BAU
work should be stopped in the Legal team and be devoted to this issue if
necessary. During this time the Legal and ACI teams with my sponsorship
advised the Executive that there was insufficient resource to cope with the
new demand arising from: (1) the newly established central investigations
team; and (2) matters arising from the evidence from the Inquiry. I directed SG
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to strategically prioritise these matters. Later, more resource was secured
from the investment group (which is an executive steering committee). More
details of the above is set out in below..
48.13 I ceased being temporary sponsor in July 2023. I did however continue to raise
my concerns about the limited resource and budget for the POL Legal and ACI
teams. This was reported through the CEO reports, the bi-annual legal reports,
the RCC and ARC papers as well as 1:1s with the Chairman, SID, Speak Up
Champion and CEO.
48.14 In terms of my areas of responsibility and setting the right cultural approach in
relation to Postmasters, I have challenged my team members generally about
their approach to issues which are before the Inquiry in both a technical,
operational and cultural sense. This would be done on an ad hoc basis but
also formally in mid-year and end of year reviews.
48.15 By way of example, I will refer to a specific Postmaster investigation. This
investigation was initially being conducted by the Retail team as a postmaster
discrepancy but subsequently POL received a potential Speak Up in relation
to the particular Postmaster. Consequently, the Speak Up team within the ACI
team became involved in the matter. Subsequently, the ACI Director
(overseen by the Group Legal Director - SG), as a result of a Board discussion
given its complexity, was requested to review and investigate the matter
further. Given the investigation concerned a Board Director, the Chair, Henry
Staunton (HS), spoke to me regarding the matter, together with the CEO (NR)
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and SID (BT). I provided feedback to the ACI Director, copying in SG, about
the manner and approach in which the investigation was being conducted and
in what they were intending to do. I emphasised that the investigation needed
to be robust and comply with the ClJ and Hamilton judgments. I noted that
although I was not privy to the Board discussion, the Postmaster NEDs had
challenged the behaviours of those that had been involved in the process and
we needed to ensure that we acted within our culture to address the lessons
from the past and do such investigations properly. I also explicitly highlighted
the cultural point which is that we need to ensure that we are doing the right
thing, testing our processes, and ensuring that they are Postmaster centric
and so I asked the ACI Director to convey that to the branch audit team. I
provide more information about these changes below.
49. With respect to how specifically the Legal department supported POL in
addressing the findings of Lord Justice Fraser and/or following the evidence
that has been heard in the Inquiry, I consider this further below in my
statement.
Relationship with the Executive and the Board
50. I have been asked to summarise my current relationship with (a) the POL
Executive and (b) the POL Board, including:
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52.
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I have not really had any substantive engagement with the POL Board since
the end of March 2024 (and the POL Executive since June 2024), however
the issues on which I brief the Board and Executive are as follows:
I, together with the LCASR team, typically brief the Board and the Executive
on material legal and regulatory issues having regard to the matters reserved,
delegated authority statement and other governance documents. This also
includes BAU legal matters across the business and material projects. For
example, contracts, commercial disputes, employment issues, investigations,
financial services regulations and competition law. Typically, I brief the Board
and/or Executive following advice obtained from inhouse or external lawyers
or the Compliance team on the specific issues.
As part of industry practice, topics would generally go through the SEG or its
subcommittees prior to going to the Board.
The briefing of the Board in particular can occur through different routes
including, for example, attending Board meetings (on invitation only),
submission of Board papers (on invitation only subject to Board agenda),
advising the Board through the CEO monthly report (each member of the SEG
provides a report to the CEO which is included in the CEO report), legal risk
notes attached to Board papers on material matters, the bi-annual legal risk
review which is provided to the RCC (Executive subcommittee) and ARC
(Board subcommittee), and meetings with Board members such as regular
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56.
57.
58.
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meetings with the ARC Chair, Speak Up Board Champion or the Investigations
Champion (who is also the SID & RU Chair).
I do not brief the Board on issues pertaining to the Company Secretariat, which
is done by the Company Secretary directly.
During my temporary sponsorship of the RU and Inquiry programs, the
relevant directors and I would brief the Board via the Board reports and
attendance at the formal Board meetings with significant support from external
lawyers.
Who my main point(s) of contact with the Board are
My main points of contact with the Board are the CEO, the CFO, the Chairman,
the Chair of ARC, Simon Jefferies, the Government Shareholder
Representative and the SID. I also have formal meetings with the non-
executive directors including the Speak Up Board Champion, Zarin Patel and
Amanda Burton, and Investigations Champion, Ben Tidswell.
In addition to formal Board meetings and as briefly mentioned, I also have
meetings with the ARC Chair usually prior to ARC meetings to go through the
agenda and any particular concerns that I have. I also attend the ARC
meetings, but I am not a member of ARC. That said, in terms of my temporary
sponsorship, both the RU and Inquiry Directors had direct access to the Board
and SEG members. In practice, they would have meetings with the CEO,
Chairman, SID and external legal representatives without my involvement.
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60.
61.
62.
63.
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In respect of the SEG, my main points of contact are the CEO, CFO, CPO and
the Chief of Staff.
In addition to the SEG papers and to assist the CEO briefing the Board, the
CEO receives a report from each SEG attendee which is attached to his Board
report. Such reports are generally prepared by the accountable directors
(directors reporting to the SEG). In terms of my areas of responsibility, my
directors prepare a summary of the relevant risks and issues in respect of their
remit within the LCASR to ensure such relevant risks and issues in the
business are communicated to the Board. This transparency is part of good
governance. I would have sight of the reports from within my function (and
would input on them when needed) before they go to the CEO, such that I
could oversee the directors reporting into me and progress matters as
necessary.
How often I attend Board meetings and in what circumstances
As GC, I do not sit on the Board and only attend upon invitation in respect of
a particular agenda item. In that capacity, I provide an advisory role to the
Board and the SEG and attend meetings to provide advice. I frequently attend
Board meetings on invitation to advise on particular matters, but I only remain
in the meetings for the matters on which I have been invited to advise.
I attend (but am not a member of) ARC which is a Board Subcommittee to
ensure the Board has oversight over the risk management of the business. I
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65.
66.
67.
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attend these meetings in my capacity as GC to support the Board to
understand and challenge the risk management of POL.
I have been asked to set out in detail my interactions with (a) the POL
Executive and (b) the POL Board with respect to any relevant changes
proposed or implemented to POL as an organisation to address the findings
of Fraser LJ and/or following the evidence that has been heard in the Inquiry.
Following the judgments of Lord Justice Fraser, there was an extensive
program of change established at POL. The initial forum was the Post-GLO
Settlement Program, chaired by the CEO (NR). In my role as GC, I was
involved in supporting the business to understand the legal requirements
following Lord Justice Fraser's findings and to support the accountable
business owners to implement these changes. The then-Operations Director,
Julie Thomas, was responsible for the design and implementation of Lord
Justice Fraser’s findings across the organisation. Although the Operations
Director reported into the CFO at the time, I understand that she also reported
to the CEO on such matters. Her role required her to liaise with the Retail
Postmaster Director, Amanda Jones, and the ClO, Shikha Hornsey (and
subsequently Jeff Smyth, in respect of HIJ matters).
The CEO evolved the Post-GLO Executive Group into an Executive forum, the
previously referred IDG, to monitor the operational and cultural changes to
address the findings of Lord Justice Fraser. Members of the IDG included the
COO (Dan Zinner) (who chaired the meeting), the CEO — Retail (Martin
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68.
69.
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Roberts), the Chief IT Officer (CIO) (Jeff Smyth) , the CPO (at that point,
Angela Williams, the CFO (AC), Transformation and Strategic Director, Tim
McInnes, and me (or our delegates). The members and remit of the IDG have
evolved over time. A series of working groups sit below the IDG and are
overseen by the IDG, led by the accountable business owners and, where
relevant, supported by legal representatives or other business services. The
accountable business owners attend IDG meetings to set out the changes
made within their areas of the business. The IDG would be the executive forum
to oversee and test progress.
The legal requirements and observations which arose from Lord Justice
Fraser's judgments have been communicated in many ways to the
accountable business owners, including through advices and various forums
such as the IDG, as well as to the organisation generally including to the
Executive directly (principally via members of my team or external legal
advice). Since 2023 the Group Legal Director and the Assurance director have
been my delegates on the IDG.
As accountable business owners, the COO or the Transformation Strategy
Director would attend Board meetings for these updates. Only on specific
occasions would I attend Board meetings on such matters, for example for
contract modernisation. However, the COO or Strategy Director would have
had the benefit of the legal support prior to attending the Board meetings.
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70.
71.
72.
73.
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POL commissioned external lawyers, including WBD and HSF to provide
extensive legal advice setting out the legal obligations enshrined in Lord
Justice Fraser’s findings. These advices were shared with the relevant
accountable business owners and their teams, as well as the SEG and Board
as necessary.
By way of example, I directed and contributed to the drafting of an operational
paper which set out the legal requirements of the findings and how they
impacted the operating practices, policies and procedures within the
organisation and flagged those which required amendment. A summary of this
paper was provided to the SEG, and the Board was also provided with this
paper for oversight.
Following the implementation of these changes, the Legal team (through
external lawyers) also performed an assurance function, to the extent it was
able to, in respect of the changes. During this time, I strongly recommended
to the Executive that external assurance and external audit over all changes
ought to be conducted. Part of the rationale for this was the context generally
and the findings of Lord Justice Fraser regarding culture.
My view, along with others, was that key stakeholders (including Postmasters
and the public) would take greater comfort that an external party had checked
the changes rather than POL. However, this was not universally accepted.
This was another issue where cost management became prioritised over
quality of outcome. Following the implementation of Phase 2 of the ClJ
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74.
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changes, I directed that Norton Rose Fulbright, supported by the Head of
Legal — Retail, Zoe Brauer, and the Group Legal Director (SG), support the
Retail team to review the changes which had been made to operational
policies and procedures by way of assurance and advise the relevant
accountable business owner (the CEO Retail and his responsible directors),
the SEG and the Board on the level of conformance and further
recommendations.
In order to ensure the Board and SEG had oversight over the changes being
implemented and ongoing conformance, I provided privileged advice which I
do not believe POL has waived privilege in respect of and so I am unable to
provide the Inquiry with further information on this point. My understanding is
that the Retail and IT teams are working on a controls framework (i.e. a live
document that sets out the controls that, if complied with, mean that the ClJ
and HlJ findings would continue to be adhered to on an ongoing basis). In
addition, the Retail and IT teams now provide a Dashboard on the issues
arising from the findings of Lord Justice Fraser to the SEG and Board. Once
I received approval for the Group Assurance Director role, I directed him to
prioritise the ClJ and HlJ conformance. He together with SG have supported
the IDG with that for at least a year.
Upon starting that temporary sponsor role, I conducted a review of the RU and
Inquiry programs which was reported to both the SEG and the Board. I
provided advice in respect of the following areas; governance, previous
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76.
77.
78.
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leadership, program structure, resource and morale and strategic prioritisation
(including purpose and mission, weighing up competing interests of quality,
speed and cost and the prioritisation of those).
This additional Executive oversight did not include decision making authority
for the reasons given above. Unfortunately, approval to have external support
to conduct my review and specifically to have governance advice on the RACI
(which is a project management tool that defines roles and responsibilities and
is key to governance) of the programs and in particular the intersectionality
with the rest of the BAU business was refused initially by the CFO (AC) and
then when I challenged it, it was also refused by the CEO (NR). Had that
recommendation been implemented I think the governance of both the RU and
Inquiry programs would have been better.
As mentioned above, the RU was established as a separate program, outside
of POL BAU, to manage and remediate compensation issues arising from Lord
Justice Fraser's findings as well as the subsequent Court of Appeal Criminal
Division findings (Hamilton). It was not accountable for operational and cultural
improvements arising from the judgments or the Inquiry generally as that sits
within the BAU business. The IDG was the executive committee with
oversight over the operational and cultural change.
In my role as temporary Inquiry sponsor, I was keen to ensure that any issues
raised during the Inquiry were tracked and reported to the ISC (which included
the CEO, certain members of the SEG or their delegates). In the Response
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79.
80.
81.
82.
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Tracker, the actions that arose from the evidence from the Inquiry were
allocated to the relevant accountable areas of the business to be addressed.
Updates were reported regularly to the ISC, as well as to the SEG and the
Board. This tracker did not continue in the format that I directed, and I
understand that a different approach was taken by the Inquiry Director (DW)
to capture issues thematically.
I am not able to provide a proper description of the review which I believe to
be privileged.
I have been asked to what extent the relationship between the GC and (a) the
POL Executive and (b) the POL Board changed since the findings of Fraser
LJ and/or following the evidence that has been heard in the Inquiry and to
what extent, if any, I consider these changes have improved POL as an
organisation.
As I set out in my Fourth Witness Statement, when I took the role of GC, the
ClJ had just been handed down and my impression, although I was not
involved in the Group Litigation at the time, was that the outcome came as a
shock to POL. There had been a disconnect between the outcome and the
legal advice (as provided by WBD and other external counsel) and, as a result,
it felt like the Board and the SEG had less trust in the Legal team.
Consequently, the scope of the Legal team was clarified, as I set out above,
such that their role was clearly to advise rather than to decide. I agreed with
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83.
84.
85.
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this change, having regard to industry and academic literature at the time, as
I felt it allowed the Legal team to provide more objective and independent legal
advice. It provided greater clarity around roles and responsibilities. This
created a clearer separation between decision making forums such as the
Board and the SEG (and their delegated accountable owners) from the
lawyers advising the business. I also considered it beneficial as it made it
clearer “who is the client” i.e. the Board or through the appropriately authorised
decision-making forum. I consider this an improvement to POL.
Another change which took place following the ClJ was that HSF was brought
in to oversee the Group Litigation. This decision was made before I became
the GC. It was felt that this was required in order to ensure greater oversight
and it had the advantage of providing greater assurance than a single GC or
small inhouse team to the Board and the SEG on such a complex and material
matter.
At Board meetings, a HSF representative (usually Alan Watts) would attend
with me to take the Board through the issues pertaining to the Group Litigation
and the post-GLO program, including the Inquiry. A Legal Director, Diane
Wills, and HSF continued to support Simon Recaldin, RU Director, and the
RC.
Generally, the utilisation of informal team meetings and workshops (in addition
to formal management networks such as business partnering) has also
benefited the business. Broader business advice about foundational issues
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such as data management, governance, people welfare issues and culture
generally have helped restore the confidence of the Executive and some of
the Board in the LCASR function.
Upon chairing RCC earlier this year, I recommended that accountable
business owners attend the RCC in respect of their risks rather than the risks
just being reported through the Risk, Compliance or Audit teams. The rationale
for this is (a) they are in fact accountable for them; and (b) it would culturally
encourage greater ownership and capture “hearts and minds” on the
importance of risk management including legal and regulatory risks.
My view is that the changes above have improved POL as an organisation to
be compliant across the broad range of legal obligations but particularly those
arising from Lord Justice Fraser's findings. However, I feel there are more
changes which could happen and that the potential role that a GC could play
in relation to corporate governance is not fully utilised. One way of doing this
would be for the GC to sit on the Board in an advisory capacity so that they
can be privy to the full Board discussion and have oversight of all the principal
issues such that they can spot legal risks. Alternatively, formally authorising
the GC to be accountable and empowering the GC with information and the
ability to direct governance issues could also improve governance.
Separating the role of GC and Company Secretary made it much more difficult
to develop relationships with the Board and to have access to all information
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89.
90.
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and material discussions. I understand that the Chief of Staff, Chrysanthy
Pispinis, is committed to clarifying the roles and accountabilities of SEG.
I have been asked to describe my view as to the adequacy and effectiveness
of POL’s current corporate governance arrangements.
Before setting out my view as to the adequacy and effectiveness of POL’s
corporate governance arrangements, I set out below what is meant by
corporate governance (having regard to both ISCA the Governance Institute
and practice) and then specifically the role of the Secretariat function at POL.
I believe it is important to set out such information before an assessment can
be commented upon.
Corporate Governance, in basic terms, refers to the way in which a company
is governed and to the functions of governing, such as practices and
processes, to achieve its vision, mission and strategies including, by way of
example, how authorised decision making occurs. The UK Corporate
Governance Code notes that “The purpose of corporate governance is to
facilitate effective, entrepreneurial and prudent management that can deliver
the long-term success of the company... Corporate governance is therefore
about what the board of a company does and how it sets the values of the
company, and it can be distinguished from the day to day operational
management of the company by full time executives”. Within POL, reference
has been made to two types of corporate governance: corporate governance
and enterprise or organisational governance. This has been done to help the
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business to understand its part in governance. Corporate governance refers
to the management of the formal legal instruments (constitutional documents
such as articles of association) and associated processes such as Board and
Executive committees’ terms of reference.
The Secretariat team is focused on the Board and SEG governance
processes, details of which are set out below. Enterprise or Organisational
governance refers to how effective decision making is then made at an
organisational level across the business (i.e., how effective and good
decisions are then made across the organisation within the Delegated
Authorities). In terms of roles and responsibilities and to illustrate the above
types: the Secretariat does not sit on every decision-making forum and is not
aware of every decision made across the business. Consequently, it is
important to recognise the difference between governance of a company and
its management and the different roles and responsibilities. Powers to manage
the affairs of the company are given to the Board of Directors, but most of
these powers are generally delegated to the CEO and are delegated further
to the Executive and senior leaders. The Board retains some powers and
responsibilities, and certain matters are reserved for Board decision-making
rather than delegated to the management team. POL has a low delegated
authority threshold. Consequently, most Group Litigation, GLO or IDG matters
need to go to Board unless delegated to a Board Subcommittee or to the
Executive (who may in turn delegate it to an Executive subcommittee).
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93.
94.
95.
96.
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Good governance is usually demonstrated through three core principles:
fairness (ethical behaviour and integrity), accountability & responsibility, and
transparency.
The current accountable owner for governance at POL is the Chief of Staff,
supported by others including the Company Secretariat team. Previously it sat
with the Transformation and Strategy Director.
The Company Secretariat team at POL is headed by the appointed Company
Secretary, Rachel Scarrabelotti, who looks after the overall administration of
the Board and the Executive. The GC therefore has a role in corporate
governance by way of oversight, but that is limited as I have outlined in this
statement.
Overall, whilst POL has made some progress, it still has further work to do to
improve its corporate governance and especially its organisational
governance as set out below.
In terms of corporate governance, significant improvements have been made,
such as: (a) having Postmaster NEDs appointed to the Board; (b) the
Government Shareholder Representative sitting on the Board and the RC (the
Board subcommittee responsible for compensation and remediation matters
for Postmasters); (c) improvements to the process around RemCo &
Nomination Committee (NomCo) following the issue with bonus submetrics
and the Annual Report and Accounts (ARA) with enhanced oversight following
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97.
98.
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a previous siloed approach; (d) revised articles of association; and (e) the
introduction of the Shareholder Framework Agreement between the
Government Shareholder, UKGI and POL, which is a non-legally binding
agreement that sets out the expectations and obligations in respect of each
party.
In terms of SEG accountabilities, POL’s commercial objectives are necessarily
constrained by public or social purpose. The Board, SEG and senior leaders
have to actively manage cost, for example. My view is that more strategic
prioritisation (including resource and tools) is required in order to deliver what
is needed from a legal and regulatory perspective in respect of the
foundational and BAU issues. Transformation programs, such as RU and the
Inquiry, are funded through a different process.
The need for greater clarification around SEG accountabilities was flagged in
SEG in 2020. Initially the CFO held the pen on drafting the clarification and he
received input from the then CPO and myself. I, and the CFO, have
continuously raised the issue of governance and the need for improvement
since that time.
To progress the SEG accountabilities issue, the “GE Accountabilities and
Internal Decision-Making Paper” was produced by the Company Secretary
after I consulted the CEO and CFO. The paper, including the
recommendations, went to the SEG in or around November 2022. In short it
sought to set out and seek SEG approval of:
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99.1 the revised SEG Terms of Reference;
99.2 clarification of SEG accountabilities;
99.3 the establishment of a SEG sub-committee being the Retail Board (together
with the proposed Terms of Reference);
99.4 the establishment of a SEG sub-committee being the Information Technology
Board (together with the Terms of Reference); and
99.5 the revised IDG (including its Terms of Reference).
100. The SEG generally approved the recommendations contained within the
paper, but further discussions ensued in relation to how the subcommittee
would be formed and report to SEG and the Board.
101. In assessing the adequacy of corporate governance, I note that there was an
issue as to the reporting of the bonus metric that related to the Inquiry. RemCo
(which I do not sit on) set and approved a description of a bonus target which
was not reported accurately in the ARA specifically in the Remco Chair's
statement. The Inquiry will be aware that Amanda Burton provided a report,
and the Government Shareholder requested that Simmons & Simmons also
provide a report in respect of the matter. POL accepted that the approach and
process around metric and metric owners was flawed and there was a lack of
guidance and support from Remco and the People team. It was also noted
that metric owners did not exercise any decision making power in respect of
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the design or decision making for the bonus scheme and specifically the
Inquiry submetric. Subsequently, following the Board’s approval to implement
the recommendations in full, I directed:
101.1. the Company Secretary to ensure that Amanda Burton’s and Simmons &
Simmons’ reports and recommendations were implemented; and
101.2 that amore robust process around the ARA be implemented to ensure matters
like this do not occur again including broadening and clarifying with specificity
the responsibility of the different parts of the ARA (and as a whole) as well as
additional resource and external assurance.
102. There is no longer any Inquiry related bonus metric.
103. The likelihood of such breaches of governance or errors occurring again
should be materially reduced if; (a) the enhanced controls are maintained; (b)
sufficient resource is maintained; (c) the more collaborative and less siloed
ways of working from the recent ARA continues; and (d) as well as internal
and external assurance and attestations.
104. In terms of the principles of fairness, accountability & responsibility, and
transparency, I believe that whilst the ethical decision-making checklist,
training and program has made a good start, I would continue to recommend
the appointment of an Ethics Director or industry leader to support POL in
designing and implementing best practice in this area.
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105. In relation to enterprise or organisational governance, there have been some
improvements, but I consider this requires substantial ongoing attention by the
SEG and senior leaders to ensure it is adequate.
106. There is not sufficient clarity around decision-making at the Board, SEG and
organisational level — i.e. knowing which team is responsible for issues but
also ensuring that where decision-making has been delegated to an Executive
accountable business owner, that they have properly established decision-
making forums to ensure effective and good decisions are made and that such
material decisions are documented and reported back to the Executive and
Board.
107. For example, greater clarity around accountabilities is required in respect of
the roles of the GC, the Company Secretary, Transformation and Strategic
Director and more recently the Chief of Staff. This was repeatedly flagged.
108. Moreover, some of the Board and SEG are not clear on the SEG
accountabilities particularly in respect of Postmaster issues which sits within
Retail. Postmaster investigations and the branch audit team sits within the
Retail team. They do not sit in the Legal team and have never reported to me.
People issues and investigations generally sits with the People team. The ACI
and Legal teams support those teams. In my view, some of the Board and
SEG did not understand or sought to blur the accountabilities and decision
making.
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109. Culturally even where Delegated Authorities clearly empower Senior Leaders,
there is still a reluctance to take ownership and make decisions, instead
referring them up to the SEG, which is not necessarily the best forum for all
types of decisions. This then has an impact on progression and timing of
delivery. Those closest to the detail and have the expertise should be able to
make decisions (with oversight and appropriate assurance) within their
delegated authority levels.
110. It is also important that the Board, SEG and senior leaders have a reasonable
understanding of the role and remit of the LCSAR teams and other support
functions, such as the People team, and view them as strategic partners to
the decision-making process.
111. I raised issues to the CEO and SID around my temporary sponsorship role
and including, specifically, the approach of the POL Inquiry team (in a number
of respects, including disclosure). I was increasingly side-lined, not given
access to information and certain meetings, my advice and recommendations
not acted upon but when anything went wrong, I was left on paper as the
accountable person when in reality I had little control over the RU and Inquiry.
112. Having said all of the above, several improvements have been made in
relation to organisational governance. For example, the reporting and
management information provided by different business units was not always
provided or was at best conducted on an ad hoc basis.
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113. Following my advice, there is now a dashboard to ensure greater transparency
of reporting on performance of the Retail and IT teams which specifically
includes ClJ and HlJ issues set out in Lord Justice Fraser’s findings. There is
still more to do, but this is a significant improvement, and, for the first time, it
provides the Board and SEG with oversight over these areas in respect of
POL.
114. I There has also been some clarity around SEG accountabilities, but as above
further improvement is required in respect of this, particularly in how issues
intersect between Retail and other functions such as IT for Horizon issues or
Commercial in respect of products and services. An agreed RACI would
assist. This was flagged several years ago in the SEG accountabilities paper
but has, to my understanding, not yet progressed for a number of reasons
including prioritisation, funding, numerous restructures but I also think in part
due a lack of strategic prioritisation of good governance.
115. Within my area of control, by way of example, a Legal Policy has been
introduced. This sets out the minimum operating standards relating to the
management of the legal and regulatory risks and clarifies the roles and
responsibilities of legal risk management throughout POL. It specifically
references its purpose is to ensure, amongst other things, that lessons from
Lord Justice Fraser’s findings are embedded in the organisation, through the
Legal team supporting the provision of training and advice on the GLO, Clu,
HIJ and Hamilton judgments.
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116. There is also a new proposal checklist on the legal intranet that sets out issues
and findings from the ClJ and HlJ to ensure that the inhouse team understands
the GLO findings when advising upon a new contract, product, service or ways
of working for Postmasters. This checklist contains not just the requirements
of good faith, for example, which has been incorporated contractually, but also
sets out culturally appropriate behaviours. For example, communications to
Postmasters are to have a warm and supportive tone and are written free of
legal jargon where possible.
117. Moreover, I have directed that assurance be conducted over all areas of my
responsibility including and specifically Speak Up.
118. Ata broader public policy level, the strategy needs to be clarified with greater
transparency being sought as to POL’s public purpose (given it is Government
owned) and its commercial purpose in order to achieve effective strategic
prioritisation and decision-making and therefore better governance.
119. Tobe clear, the purposes are not always at odds; in fact, they can often work
together effectively. Some former and current members of the Board and SEG
have commented, however, that they have been appointed because of the
commercial purpose and therefore are more focused on strategically
prioritising matters that will achieve commercial sustainability rather than
being more focused on operational improvements and risk management which
is required legally and/or by its public purpose.
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120. Moreover, I have challenged the Executive that they often prioritise cost
management over quality and speed. I have given advice on managing public
monies — that it does not equate to the cheapest provision of services but is
defined by reference to outcomes. By way of example in terms of
compensation, it would be fair and speedy compensation which is the desired
outcome. The organisation then has to find cost effective ways to achieve that
desired outcome. At times I felt that decision making was focused on what
the budget can deliver rather than what ought to be delivered. This was
particularly apparent in the NBIT approach but one of the lessons learnt from
the Inquiry was that the approach in NBIT needed to be revisited.
121. My view, which I have expressed to the Board, SEG and wider organisation
many times and in a number of forums, is that POL:
121.1 needs to view legal, regulatory and governance requirements (which includes
foundational issues considered below) as a licence to trade or otherwise risk
causing legal and regulatory non-conformance;
121.2 needs to operate in a more cross-functional way of working rather than in silos;
and
121.3. more targeted assurance and audit is critically important in rebuilding trust in
POL.
122. By August 2022, I had reached the view that POL should make clear to the
Government Shareholder Representative that it needed more
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transformational funding, in order to improve foundational issues including
data, risk management and governance. The former ARC Chair wrote to the
Shareholder Representative in December 2022 outlining the implications to
risk management. I have continued to raise it in the CEO report which goes to
Board and also through RCC and ARC.
123. I have been asked to set out my view as to whether I consider the level of
attention being directed by (a) the POL Executive and (b) the POL Board to
addressing the findings of Fraser LJ and/or following the evidence that has
been heard in the Inquiry to be adequate.
124. The POL Executive, the POL Board and senior leaders within POL have been
focused on addressing the findings of Lord Justice Fraser and the evidence
heard in the Inquiry.
125. However, as noted above and below, sometimes the POL Board and SEG
have not given sufficient prioritisation and resource to foundational issues
such as data, governance and assurance, which in my view are part of the
broad themes arising from Lord Justice Fraser's findings and the Inquiry. That
is not to say that improvements have not be made in these areas. However,
the POL Board and SEG operate within the funding given by the Government
Shareholder. Consequently, other matters including commercial sustainability
and cutting costs result in there not being enough resource within POL to focus
on everything and sometimes this has meant that it has not addressed proper
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risk management, including the findings of Lord Justice Fraser, as quickly as
it could have.
126. I have consistently raised that there is inadequate operational resources and
support to address the findings of Lord Justice Fraser and ensure proper risk
management within the BAU parts of the business. During my time as Group
Legal Director and GC I have advised that the LCSAR functions require more
resource and funding. To be clear, this is distinct from the GLO, RU, Inquiry
and other programs where the funding for external lawyers follows a different
process. The issue has been flagged to the Board via ARC in the Legal Risk
Reports and to SEG. These areas have not been resourced adequately
(despite requests) and therefore progress has been made more difficult. I
recognise that this is an experience that is shared by many teams across the
business, but POL needs to ensure that it has a “licence to trade” by complying
with its legal, regulatory and governance obligations as expected of an
organisation generally and especially as one owned by a Government
Shareholder.
127. In terms of attention, I would also note that the individual Board Directors’
focus, priorities and required level of detail varied. Although constrained by
resource, the POL Executive and the business have tried to adopt a more
individualised approach to supporting each director on material Board matters.
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128. I have been asked to set out any concerns I may have about my experience
with (a) the POL Executive and (b) the POL Board and to provide details as
to:
129. Their behaviour and attitudes
130. Generally, I believe there was and is a genuine desire by the POL Executive
and the Board to remediate the issues that POL got wrong and to do things
the right way. However, I have, at times, had concerns with the Executive’s
approach to legal and risk management, which can make it difficult for these
teams to perform their role and in turn for the company to manage its legal
and regulatory obligations. The attitudes sometimes expressed at the SEG
demonstrate a lack of maturity or lack of knowledge of governance and risk
management, including compliance and assurance. In order to bring about
improvements, which I have recommended, such as the Retail and IT
Dashboard which seeks to show ClJ and HlJ indicia in the current context
(described above), the Executive required a lot of persuasion and time before
adopting such recommendations. Consequently, there is a need for further
development for SEG in respect of the above matters.
131. Generally, I have found some of the Board to be more capable around risk
management and governance.
132. Their accountability
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133. Despite the Delegated Authorities and that the role of the GC and the Legal
team is to provide advice and are not empowered to make certain decisions,
some Executives have not utilised or acted upon their accountability. As a
result, from time to time, the LCASR function and myself has had to intervene,
but this has caused confusion to some Executives and Board directors over
accountabilities who have then thought that LCASR has become responsible
for such matters. LCASR is and remains broadly a second line of defence or
support function.
134. Notwithstanding the above, and despite the Delegated Authorities and some
clarification to SEG accountabilities, it is not always clear, as I have set out
above, who is accountable for what. I have advised the CEO, SEG and Board
of the need for improved clarification around accountabilities. Governance
issues have been taken off the SEG agenda and / or delayed. The Grant
Thornton report, which I (as GC) was not permitted to see for many months,
required clarification over the Government Shareholder Representative’s role
and the Board’s authority, which would be helpful in providing clarification as
to accountabilities, but further work is required at the organisational level.
135. Whilst there have been various restructures within the SEG and the SEG
Terms of Reference have improved the position, there is still not complete
clarity as to the responsibilities. My understanding is that this clarification sits
with the current Chief of Staff (and has done for approximately a year). Before
that it sat with the Transformation and Strategy Director. The SEG can only
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be accountable for matters up to a certain value, which means that many
material decisions go to the Board. This in turn means that, while it is important
for the Board to have oversight, in reality the Board makes more decisions
than it perhaps need to and consequently it acts as an Executive function.
Greater clarification around the role of a Board and management should be
addressed following the Grant Thorton review.
136. The lack of clarity together with lack of understanding of existing governance
documents including the organisational structure has caused confused to
some Board and Executive members. By way of example, it is not always clear
to some as to the role of support functions to accountable business areas or
the difference between the different lines of defence.
137. Cultural and behavioural challenges
138. There are, at times, tense discussions which happen at the Board and
Executive. I recognise the importance of the Board and SEG robustly testing
and challenging responsible business owners as part of the decision-making
process, but at times they may not always listen to or discuss the issues with
the subject matter experts, and/or they may act based on incorrect
assumptions. Sometimes they are not actually aware of the organisational
structure and responsibilities.
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139. More challenge in how SEG is run, including use of the Delegated Authorities,
could be considered. This would allow SEG to focus on strategically material
decisions.
140. I would otherwise repeat the comments I have made above regarding
prioritisation of costs management over quality outcomes and speed including
the need to address foundational issues and risk management.
141. Any concerns in relation to the attitude of specific individuals
142. Henry Staunton. Working with the former Chairman was of particular concern
given his leadership approach and specifically unprofessional behaviours and
attitudes. By way of example, when I did not answer his questions pertaining
to the identification of a whistleblower and specifically whether it was a SEG
member, he accused me of not “being commercial”. Moreover, when I would
not make a particular investigation “go away” in which he was subsequently
identified, he was very adversarial. I understand he also communicated a
similar message to the Speak Up Board Champion, Amanda Burton, who
spoke to the Government Shareholder Representative and myself about Mr
Staunton. He also accused me of “just being POL’s lawyer” and he alleged
that I was not interested in helping any members of the Board or CEO. An
investigation was carried out, overseen by the Government Shareholder
Representative and Speak Up Board Champion. Findings were made by an
external investigator about the Chairman’s behaviour and attitudes.
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Mr Staunton’s approach as set out in his Project Pineapple email also reveals
a lack of understanding of the organisational structure of POL but also a
willingness to depart from due process.
143. Nick Read. Although I generally found the CEO to have a genuine desire to
do the right thing in that he did acknowledge the importance of Lord Justice
Fraser's findings, my concern is that he did not sufficiently prioritise critical
issues and make decisions that I (and others) escalated to him to make. Such
examples included foundational issues of data, governance, lack of resource
within my teams and Data and People issues, including the former Chairman’s
behaviour, details of which are above. As my line manager, he did not address
the concerns that I raised regarding my temporary sponsorship and certain
Inquiry matters. Various teams are “fire-fighting” on a continuous basis but
without sufficient support from the CEO and CFO. I want to emphasise that
the CEO role is incredibly difficult given the challenging context within which
POL operates. It is necessary for him to balance many issues including
running the current POL network. However, I did have to raise numerous
issues over the years.
144. Alistair Cameron. Understandably as a Board director and CFO, AC, is
particularly costs conscious and robust in respect of cost management.
However, his approach to cost management from time to time has overly
influenced the approach taken by other Executives, including the former ClO
in respect of the NBIT program, to the point that hitting a set number allocated
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in a budget took priority over what was necessary to bring about the
appropriate outcome. That said, AC did champion and flag many
improvements to POL operationally and tested and challenged the Board and
Government Shareholder particularly on RU matters on a number of
occasions.
POL Legal Department
145. I have been asked to provide organisational charts showing the current
structure, personnel and supervisory roles / responsibilities of POL’s in-house
legal department.
146. I have exhibited a structure chart to my witness statement [POL00458047] (as
at 1 September 2024).
147. SG, as Group Legal Director, manages the Legal department and ACI. The
Group Legal Director has a number of Heads of Legal and the Investigations
Director reporting into her. The Group Legal Director reports to the GC.
However, since I have been on leave effectively from April 2024, SG has been
the Interim GC — BAU.
148. I have been asked to set out the extent to which, if any, there has been a
change in the structure of, roles and responsibilities of POL’s in-house legal
department.
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149. Since the commencement of my role as GC (from 1 May 2019), a number of
changes have occurred, most notably:
149.1 a Group Legal Director (contractor) was appointed sometime after I was
promoted to GC and was subsequently replaced by a permanent Group Legal
Director, SG (who is now the Interim GC). Once appointed, SG reviewed the
Legal team structure;
149.2 around April 2020, the LCASR Operations Director was appointed;
149.3. around mid-2020, the former Head of Legal — Dispute Resolution, Rodric
Williams, moved out of the POL Legal Department and into the RU Director's
program reporting initially to Declan Salter. Subsequently, he reported to DW,
RU Legal Director, who was appointed in 2022. DW did not sit in the POL in-
house Legal team but reported to the RU Director;
149.4 following a review by KPMG into POL’s Whistleblowing & Investigations
processes, the Whistleblowing team was restructured so that it sat with a new
tole of the Head of ACI now ACI Director reporting into the Group Legal
Director, SG. The ACI is a different team from the POL Legal team but does
report to the Group Legal Director;
149.5 during the time that I was temporary sponsor of the RU and Inquiry, SG had
oversight over the Compliance team in addition to the Legal team. SG was
eager to increase her experience in the role. The previous Heads of Legal for
Retail and IT have both left the organisation;
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149.6 Christian Spelzini, Head of Legal — Corporate, is the current interim Group
Legal Director whilst SG is interim GC.
150. Although not part of the POL Legal team, my understanding is that the RU
Legal team continues to be managed separately by the RU Legal Director,
Nicola Munden, who now reports to Simon Recaldin, the RU Director. Simon
Recaldin reports to John Dillon, Interim GC — Inquiry and RU. Since I have
been out of the organisation, I understand DW has left POL.
151. I exhibit to my statement two further structure charts, in case helpful, for the
Inquiry Legal Team [POL00458049] and the RU Legal Team [POL00458048]
(both as at 1 September 2024).
152. I understand that as of 1 September 2024, Anshu Mathur has been appointed
Group Director of Assurance and Risk. As such, he will continue to be
responsible for Assurance but also Compliance and Risk reporting to the
Interim CFO, Preetha McCann.
153. I have been asked to describe the extent to which, if any, there has been a
change in the process by which legal advice is given to (a) the POL Executive,
(b) the POL Board, and (c) the organisation more generally.
154. When I joined POL, I noted that there was very limited established legal
operations. During my role as both Group Legal Director and GC, significant
improvement had been made to the provision of legal advice. The starting
point in effective provision of legal advice to the Executive and the Board is
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legal risk management, a subset of which is legal operations, which in turn
ensures that the provision of legal risk management is effective (i.e., that the
Board gets consistent advice in terms of content and methodology). I
therefore discuss these changes first, in order to give important context to my
answer.
155. In relation to legal operations, as part of my role as both the Group Legal
Director and GC, I have assisted in or directed that the following changes be
implemented (all of which, ultimately, have an impact on the developing way
in which legal advice is being given to the Board and Executive):
Documentary
155.1. The creation of a precedent database for external legal advice.
155.2 The creation of a central repository of contracts.
155.3. Standardisation of legal risk notes (internal, individual advice — to include
probability and impact RAG (red, amber, green statuses) and executive
summaries).
Policy and Process
155.4 The creation of a Contract Management Framework (which was rolled out to
the business).
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155.5 I directed that the ClJ and HlJ needed to be operationalised and complied with
on an ongoing basis through a Controls Framework (which incorporated
assurance and audits). Specifically, I drafted a template to be completed by
the former Operations Director, Julie Thomas, together with the Head of Legal
— Retail, Zoe Brauer, under the supervision of the Group Legal Director.
155.6 The introduction of a Law Enforcement and Cooperation Policy and Legal
Policy. These require that only the Legal in-house team obtains legal advice
from external lawyers (rather than individuals throughout the business, outside
of the Legal team), to ensure that the advice obtained identified the correct
issues and questions that needed to be answered and that legal costs were
being controlled effectively and were coordinated across the business. Before
any policy can be implemented, they are approved through the RCC and ARC.
155.7 Designing and implementing (and directing that they remain up to date) legal
manuals of each area of the business (to establish a corporate memory,
business continuity planning and business overview of the various legal areas
— the chapters within the manuals would cover the broad scope of role, the
relevant pieces of legislation and cases). I impressed the need for the legal
operations to be maintained and up to date.
155.8 Establishing a new legal cost management process (managing the costs of
external lawyers). This would also show the time of in-house lawyers and
where their focus needed to be.
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Reports to the Board and Executive Committee
155.9 Not only does the Board get legal advice annexed to agenda items where
necessary, but every six months they receive an overarching legal view of
legal and regulatory risk within the business via the bi-annual Legal Risk
Report (an overview of legal risk management), which continues to be
managed by the Group Legal Director and myself and reported through to the
RCC (Executive subcommittee) and ARC (Board subcommittee). The Board
has also reviewed and approved the legal risk appetite statements. The
Executive, including senior management with delegated authority, are
required to make decisions having regard to the Board’s risk appetite. For
example, POL has an adverse risk appetite in relation to legal and regulatory
risks.
155.10 The template for Board or Executive business papers was amended to
specifically put in a subheading of ‘Risk Management’ to allow for the
accountable business owners, supported by the relevant lawyers, to outline
the legal and other risks to the business in respect of that matter. I have
personally challenged presenters if they have presented a paper to SEG and
that section had not been completed. I would also ask the presenter about the
engagement they had received from my teams.
155.11 The SEG receives a monthly report on FOIA and Investigations including
Speak Up issues (equivalent to the Dashboards I recommended for Retail and
IT).
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155.12 UKGI and its legal team also have received various Board documents and
copies of legal advice through the Government Shareholder Representative
but also Terms of Reference for particular investigations.
Maintaining standards
155.13 A law and trends forum was created, which is a cross-functional forum
identifying upcoming legislation and regulatory changes which impact the
business, and which might require the business to make operational changes
as a result.
155.14 Ethics training and GLO training (which sets out what happened at POL, what
went wrong, Lord Justice Fraser’s findings and new operational and cultural
improvements) has been rolled out to the Legal team. As mentioned above,
an Ethical Decision Making Framework has also been rolled out to the
business with the support of my teams.
155.15 Following a team talk to the inhouse lawyers on 2 August 2023, all
employment law contracts of POL lawyers were amended to formalise the
position in respect of confidentiality, in particular where disclosures can and
should be made, and an acknowledgement that they are regulated by the SRA
or Bar Standards Board.
155.16 The Board has received training on Corporate Governance. The Head of Legal
— Corporate, Christian Spelzini, and the Group Legal Director (SG) produced
the materials, and I reviewed them.
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Legal Management Information and Reporting
155.17 A dashboard (from Retail and IT) for the Executive and the Board — to include
current KELS, errors and bugs was created.
155.18 Investigations and Speak Up management information is provided to the
Executive and Board.
155.19 FOIA management information is also provided to the Executive and, where
appropriate, to the Board.
155.20 During my time as Group Legal Director, we created a monthly legal report
which includes all substantive litigation matters. SG has continued to advise
me and the CEO (including the Board through the CEO Executive Report) of
material legal matters which includes a summary of the relevant legal position.
155.21 In addition, and as I have referred to above, a bi-annual legal risk review and
report, which I sponsor, is provided by the Group Legal Director, to the RCC
and ARC. The RCC and ARC also receive updates on Law & Trends so that
they can see how POL is identifying legislative and regulatory changes and
operationalising those changes.
155.22 An LCASR intranet page has been developed setting out an overview of the
role and remit of LCASR. This sets out the vision, mission, and strategic
alignment of the team.
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155.23 The LCASR Academy provides communications on legal and regulatory
updates.
External lawyers and Assurance
156. On material matters (projects) there has been a greater use of external
lawyers and, where there is significant external lawyer involvement, the
relevant external lawyer will be asked to attend Board and/or SEG meetings
and speak to the advice and give the update directly. The substantive legal
advice is provided to the Board and Executive in advance, in the relevant
papers. On occasion, there will also be briefings before the meeting with
relevant Board and Executive members. Before it goes to the Board it goes
via the Executive on which the GC sits, and I would input where necessary.
157. We have established greater assurance over the external lawyers’ advice by,
at times, instructing another firm to have oversight over the advice being given
(by way of example, HSF gave oversight during the GLO over WBD, and we
have done the same in respect of barristers also). Moreover, it is the role of
the inhouse lawyers within the POL Legal team or within other programs such
as the RU and Inquiry (who have their own legal teams) to oversee and test
external legal advice, accepting that sometimes external lawyers are
appointed because of their specialisation.
158. As a direct consequence of the GLO, I considered that it was necessary to
engage a third party to undertake factual assurance for material legal matters
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and litigation, for example, the previous Corporate Governance review
conducted by Pinsent Masons and Deloitte. In these examples, we have had
a third-party check that business instructions as provided to the internal or
external lawyers and/or Executive and/or Board are factually accurate. We
have also done this in respect of other litigation.
159. Given the limitations on budget and resource, we have created efficient ways
in which to quality assure the legal advice being given. For example, a
checklist including what should be considered in respect of the ClJ has been
put together and circulated to the inhouse Legal team so that there was some
added support and guidance to the team. Increasingly, the Legal and other
teams should strategically adopt and employ legal technologies but again
budget has not yet permitted this.
160. All of this has led to a more coordinated, effective and efficient provision of
legal advice and legal risk management, to the Board, Executive and
organisation more generally.
161. In terms of the provision of that legal advice more generally, where it is
necessary for the Board or Executive to consider a piece of advice, the
accountable business owner will attend the Board or Executive having
engaged (pursuant to the above Legal Policy which was approved by the RCC
and ARC) the Legal Department will support that accountable business owner
to set out that risk and the related advice. Should the accountable business
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owner wish for the relevant inhouse or external lawyer to attend the Board
then they would do so.
162. I have been asked to summarise the extent to which, if any, there has been a
change in how POL obtains advice from, and the role played by (a) external
law firms and (b) Counsel in providing legal advice to POL.
163. As above, there have been changes in how external law firms are engaged
(i.e., always via the Legal Department), and increased assurance over the
instructions sent to them and the advice we receive from them. We cannot test
this in respect of every instruction and piece of advice, but where it is
proportionate and advisable we do so. One of the primary roles of the inhouse
lawyer is to test and challenge the external advice. Due to the multiple sectors
within which POL operates, POL’s legal environment is complex and varied.
The inhouse legal team has therefore retained subject matter experts in a
number of many areas in which POL operates. The breadth and volume of
legal matters is significant, and the inhouse legal resource is limited, external
legal advice is therefore obtained as set out above and below, and we conduct
assurance over that to the extent we are able to, which is improved from
previous practice.
164. POL now utilises the public procurement frameworks for the provision of
external legal services rather than the previous publicly procured panel.
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165. I have been asked to describe the process by and extent to which legal
functions are (a) insourced, and (b) outsourced by POL.
166. POL’s legal and regulatory environment is complex and varied for the reasons
given above.
167. Prior to my commencement at POL, no Legal Policy or legal team operating
manual existed. There was also no central list of legal matters across POL
including those from external law firms. As outlined above, a legal operating
charter and legal manuals were drafted so that the context within which POL
managed its legal risk was understood and documented. Precedents were
stored and reutilised where appropriate and contracts had a central repository.
168. As GCI directed that a Legal Policy be drafted which was approved by SEG
and the Board. In most cases POL’s Legal team manages the appointment
and instructions of external lawyers, however, where the accountable
business owner does not have the requisite authority under the Delegated
Authorities, the Board may be required to make the appointment. By way of
illustration, the Board appointed HSF to act for POL in respect of the RU and
the Inquiry. The POL Legal team discusses the legal resourcing needs with
the relevant accountable business owner or team and facilitates the instruction
of the relevant external lawyer.
169. The POL Legal team utilises an industry standard (good practice) to allocate
or determine whether a matter should be delivered through existing in-house
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provision or sent to external lawyers. The factors relevant to that analysis
include; (i) the complexity of the work; (ii) how ‘standard’ the work is or its
repetition; (iii) whether it is a specialist area already covered in the inhouse
team; (iv) the volume of the work; and (v) the cost models. This resource
model was introduced when I was Group Legal Director, and I consulted with
Gartner (formerly CEB) and other industry forums and publications in adopting
this approach.
170. If it is determined that the work should be outsourced, it is then about ensuring
which external legal team would be the right choice for the work required, in
terms of the nature of the work, their specialisms, their experience, and also
the cost of the work with reference to what is required. POL lawyers are
expected to liaise with their internal client.
171. On complex matters e.g., the appointment of both the RU external lawyers
and Inquiry external lawyers, that would be a decision, ultimately, for the Board
given POL’s Delegated Authorities, as mentioned above. If a matter is non-
BAU, i.e. run through a change program, a similar process occurs and the
relevant accountable business owner is to engage the Legal team and factors
the legal resource model into their planning and budget requirements. Any
cover by existing inhouse lawyers is expected to be backfilled.
172. In practical terms, the Legal Policy requires that the accountable business
owner engages the in-house legal team on legal issues and the in-house legal
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team will advise the accountable business owner on whether it should stay in-
house or be outsourced, with reference to the above.
173. If the matter is to remain in-house, the accountable business owner will liaise
with the relevant lawyer in the in-house legal team, for the provision of that
advice.
174. _ If external lawyers are to be engaged, the accountable business owner goes
to the relevant in-house lawyer who supports them. The in-house lawyer
should either communicate directly with the external lawyers or be copied into
correspondence with external lawyers if the accountable business owner is
liaising with them directly. The in-house lawyer might take the lead on the
communications, depending on a number of factors, taking into account all of
the circumstances and the complexity. It remains the role of the inhouse legal
advisor to check the external legal advice.
175. I have been asked to explain the process by which POL ensures that
appropriately qualified and experienced external lawyers advise in respect of
the matters for which they are retained. I have been asked to provide any
relevant policy or guidance documents on this.
176. POL uses the Crown Commercial Service’s Legal Services Panel to procure
legal services. It was set up for certain Public Bodies to access appropriately
qualified and experienced law firms. The POL Legal team will review and
consider the experience of the relevant law firm and lawyers and a decision
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will be taken in terms of who is best to appoint, in conjunction with the internal
client i.e. the accountable business owner.
177. Depending on the materiality of the issue, for example, if the advice is
estimated to go over a certain amount of fees, the external lawyer's instruction
will need to go to the Board for approval.
178. The instructions will then be drafted using POL’s instruction template, the
content of which is considered by both the in-house lawyer and accountable
business owner. This process is set out in the legal operating charter.
Conduct of Litigation
179. I have been asked to explain the extent to which, if any, there has been a
change in how POL manages and oversees new litigation.
180. At the outset, one of the primary changes I have recommended to relevant
senior leaders has been the manner in which disputes are managed. I have
sought to ensure that the correct manner and approach was adopted by my
team and the relevant accountable business owners. The Ethical Decision
Making Framework helps illustrate how the relevant decision-making forums
or accountable business owners should manage decision-making, including
in relation to a potential dispute.
181. For extensive, significant or otherwise material litigation, the POL accountable
business owner is likely to be the Board and/or Executive. The legal team is
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responsible for the provision of legal advice in respect of the litigation to the
accountable business owner. It is not the role of the lawyer to decide the
approach to be taken, including in relation to settlement, although advice and
recommendations would be provided by the Legal team on these topics.
There is assurance over the provision of legal advice (as referred to above),
in terms of additional lawyers overseeing or quality checking existing lawyers’
work and third-party assurance in respect of the business’s instructions. This
cannot be done in respect of all litigation, given the cost involved, this has to
be utilised in a proportionate manner. In addition to this, there have been
changes which I have outlined above relating to the way in which instructions
are given and lawyers themselves instructed.
182. Inhouse litigation lawyers are required to review the external advice to assess
and consider it, wherever it goes within the organisation. Had more resource
and BAU funding been available, I would have directed more quality
assurance. The constraints of resource in the LCSAR and ACI teams has
been articulated at Executive and Board level.
183. Decisions that need to be taken in respect of litigation must follow the correct
governance process and be taken by the correct decision making forum(s)
which, depending on the circumstances, might well be the Board or a Board
subcommittee (having been through the relevant Executive forum).
184. In that situation, the relevant decision maker should have regard to the Ethical
Decision Making Framework (as noted above) when making a decision. This
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includes an assessment of whether the decision is legal, and if the individual
is acting with integrity, fairness, and thinking inclusively. This process is to be
used in all decisions being made at POL, including in relation to litigation.
185. There has been far greater oversight and intervention by UKGI and the
Government Shareholder during my time at POL. This oversight and
intervention has increased (and continued to increase) during my tenure as
GC.
186. During the course of the Group Litigation, but increasingly through the post-
GLO period, I had meetings with the UKGI GC, Richard Watson and
subsequently Lucie Lambert, and Government Shareholder Representative.
They have their own teams conducting oversight and assurance in respect of
POL’s material litigation, including the establishment of the compensation
schemes in the RU. Naturally they have asked lots of questions and made
extensive requests for information as well as appointing external lawyers to
assist them with this oversight.
187. AsI briefly highlighted above, in respect of other material litigation, enhanced
legal assurance and advice was obtained. For example, we have sought an
additional KC opinion in respect of significant litigation to provide comfort to
the Board and the Government Shareholder, in respect of the advice of the
existing KC. My rationale for this was; (a) to obtain assurance; and (b) avoid
any potential group think or bias. UKGI and the Government Shareholder also
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have their own requirements and assurance to perform in respect of POL in
relation to such matters.
188. There is also increased review and assessment of advice. As may be noted
from the Board and Executive minutes, particularly in relation to the legal
matters, greater challenge and oversight has been undertaken by the
Executive and Board. The failings of the Group Litigation have enabled
accountable business owners or relevant decision-making forums such as
SEG and the Board to be more demanding and challenging of legal advice
which is entirely understandable and appropriate. There is a new Head of
Legal for Litigation, Kirsty O’Connor, overseeing the BAU litigation.
189. Asnoted above, there is also increased reporting to the Board, through the bi-
annual legal risk report (which includes an overview of material litigation risk).
Disclosures made in the ARA are also reviewed and assured, as referred to
above.
190. I have been asked to describe the process by which I inform (about new
litigation):
a) the POL Executive;
191. To give a practical example, if the business receives a claim form, this will go
to the Legal team and then to the accountable business owner. As a result of
claims not always being served on Head Office, a Service of Claims Protocol
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was developed by the former Head of Legal — Dispute Resolution (Rodric
Williams) under my supervision.
192. Depending on the circumstances, including the claim’s potential implications
and its anticipated value, it may then go to the SEG, through a SEG paper
(which the accountable business owner would produce with input from the
Legal Department). Updates will be given in the same way as the claim
progresses. Internal advice and/or external advice would be included. The GC
will see what goes to the SEG (but would also be aware of the matter from the
monthly CEO report). Depending on the nature of the claim, it may well then
be passed to the Board. What goes to the Board depends on materiality of the
claim.
193. Accountable business owners have delegated authority up to a certain
amount. The CEO has delegated authority beyond that, and then it would be
necessary for the Board to be informed. Whilst potential cost implications are
a factor, there are other considerations too, such as potential reputational
impact. It could be, therefore, that the claim may not be material from a
financial perspective, but there are other material factors which mean it needs
to be escalated.
194. In terms of ongoing reporting and updates on the status of the litigation, it is
for the accountable business owner and lawyer to keep the GE, or indeed the
Board, as up to date as necessary.
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b) the POL Board;
195. I have considered this above. There is great consistency between what the
SEG sees and what the Board ultimately sees. The Board report may be
revised in light of the different audience and their different focus.
196. the Department for Business and Trade; and
197. _ UK Government Investments
198. I have addressed the DBT and UKGI together, for reasons that will become
apparent.
199. The Government Shareholder Representative, who is a UKGI representative,
sits on the Board. I refer to paragraph 59 of my Fourth Witness Statement
about the role of the Government Shareholder. They become aware of
material litigation matters by virtue of the Board reports which will include legal
tisk notes from the POL legal team. In addition, I would make myself available
to discuss with the Government Shareholder Representative any legal,
regulatory or governance issue if I am asked to do so. It is the role of the
Government Shareholder Representative to keep the Government
Shareholder updated on such matters.
200. Thereis also a quarterly Government Shareholder meeting where POL reports
on issues including material legal matters (such as key litigation). A report is
prepared by POL in advance of this meeting, which is sent to the UKGI and
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Government Shareholder. There are numerous representatives from UKGI
and the Government Shareholder at that meeting and they would be aware
and engaged in the issues prior to receipt of the report.
201. On material matters, we also have frequent, separate meetings, where POL
and UKGI and Government Shareholder representatives can discuss matters
of strategic importance including, by way of example, assurance over litigation
and oversight generally.
202. Legal advisers instructed by the relevant parties may attend the above ad hoc
meetings and the quarterly Government Shareholder meetings as necessary.
203. I have had frequent contact with the UKGI GC. They would be invited to POL
meetings as above to maintain oversight and I would also have one-to-one
meetings with them. They would hear external legal advice directly, by virtue
of those meetings. In addition, they would also receive legal advice as part of
those meetings. We have put in place a litigation protocol so that POL can put
controls around the use of that advice so that legal professional privilege is
maintained where possible (through common interest privilege).
204. Consequently, there was increasing oversight of the Group litigation and
especially during the post-GLO program, which included an operating
agreement between POL, UKGI and the Government Shareholder in respect
of compensation issues.
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205. I understand that UKGI and the Government Shareholder had a number of
their own lawyers, including external lawyers, working on POL’s key litigation,
such as the GLO and the post-GLO program. An overview of investigations
was provided to UKGI and the Department for Business and Trade (DBAT)
but the ACI Director together with the Board Investigations Champion.
206. _I have been asked to set out POL’s current document management protocols
for obtaining, retaining and preserving material within its control when litigation
is anticipated or ongoing relevant to the matters being investigated by the
Inquiry.
207. This process is contained within the Litigation Legal Manual and Document
Retention Policy.
208. The POL Head of Legal for Dispute Resolution maintains a register for all the
active litigation holds in the business at any time.
209. The Litigation Manual notes Paragraph 7 of Practice Direction 31B of the Civil
Procedure Rules (the CPRs) requires that “As soon as litigation is
contemplated, the parties’ legal representatives must notify their clients of the
need to preserve disclosable documents. The documents to be preserved
include Electronic Documents which would otherwise by deleted in
accordance with a document retention policy or otherwise deleted in the
ordinary course of business.” (a “A Litigation Hold Notice”). The Litigation
manual also refers to the types of Electronic Documents as defined in
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paragraph 5(3) of the Practice Direction 31B. The Litigation Manual sets out
the rules in respect of document retention where litigation is in reasonable
contemplation including that such documents must be retained and any
automatic deleting/archiving systems should be suspended until further
notice; also ensuring that any new joiners receive the notice of the documents,
and any documents relevant to POL’s case, including those which are
potentially adverse, must be kept.
210. The Documentation Retention Policy refers to the roles and responsibilities of
the interim Data Director, Chris Russell (who reports into the ClO, Andy Nice)
and others in respect of data retention, the risks around inappropriate or
unauthorised deletion of data, the control environment and the Executive and
Board committee responsibilities.
211. In or around the time I became temporary sponsor of the Inquiry, it came to
my attention that a legal hold notice had not been issued in respect of the
Inquiry. In September 2021, a document preservation notice was issued
across the organisation in my name. The GLO document preservation notice
remains in place. Further communications reminding the business to continue
to comply with the GLO, RU and Inquiry holds have been sent to the business.
212. The work pertaining to the Inquiry revealed that the data universe at POL was
unclear, and as a consequence this was raised through the RCC and ARC.
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213. Forcontext, each business area is accountable for the management of its own
data and ensuring that it complies with POL’s policies and controls (for
example, POL’s Document Retention Policy). It has not always been clear who
owned data management at the SEG level, albeit generally it sat with the ClO
and subsequently with the Strategy Director. It now sits with the Interim Data
Management Director who has overall accountability to the Board for the
design and implementation of controls to ensure that the Group complies with
its legal obligations and business requirements.
214. I formally raised several times that POL needed to effectively manage its
historical data / data universe. This was flagged to the Board and Executive
and specifically with the ARC chairs, CEO and the SID. This was also raised
through the risk register at RCC and ARC.
215. I supported the business, in particular the ClO function, in obtaining a better
understanding of what POL’s data universe is. This resulted in further
disclosure to the Inquiry and a greater understanding of what data POL holds
and where it is held so that in any future litigation POL can have proper regard
to its data universe.
216. I have been asked to provide the details of any policies, guidance, training or
instructions given to those responsible for conducting litigation on behalf of
POL relevant to the matters being investigated by the Inquiry.
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217. ‘It is the role of the Group Legal Director and Head of Legal — Dispute
Resolution to support the business to manage litigation. There is a Legal
Policy and Litigation Manual which I have directed that they keep up to date. I
refer to this earlier in my statement. Training has also been provided on
litigation issues through external law firms and the LCASR academy. FAQs
were also developed by the Head of Legal — Dispute Resolution. As part of
supporting our SRA obligations, each POL solicitor has a_ personal
development plan which the Group Legal Director oversees.
218. Whilst I was Group Legal Director, I established an LCASR Academy (which I
have previously referred to) which provides training on legal and regulatory
issues to both inhouse lawyers but also POL business colleagues. The Legal
team also provides bespoke training to business colleagues and business
decision making forums such as the Board. By way of example, the Board and
Executive have been provided with various training. SG has maintained this
legal control via the LCASR Academy.
219. There are a number of other relevant policies and procedures:
219.1 The Code of Business Policy which includes a number of controls such as the
Ethical Decision Making Framework;
219.2 The Investigations Policy, which details how matters are investigated at POL,
including control measures;
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219.3 The Law Enforcement and Cooperation Policy which introduces an internal
prevention on POL undertaking private prosecutions without Government
Shareholder Consent; and
219.4 The Speak Up Policy.
220. There is a significant amount of training undertaken at POL of relevance to the
litigation lawyers, including GLO training on the lessons learnt from the Group
Litigation and also training on ethics to the legal team as noted above. There
is also:
220.1 legal updates to inhouse lawyers;
220.2 training from panel law firms; and
220.3 the Legal team does legal newsletters through the LCASR Academy to the
business.
Organisational culture
221. I have been asked to describe the current culture at POL Executive and POL
Board level, identifying any key individuals who shape or influence that culture.
222. _I have been on leave since 10 June 2024 and cannot comment about events
since that date.
223. Generally speaking, the POL Board and Executive have a genuine desire to
ensure that things are done right, pragmatically, and collaboratively. Since the
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conclusion of the Group Litigation and the development of the GLO program,
POL has sought to address the wrongs of the past. The culture at the POL
Executive and Board level has been especially challenging over the last 18
months. The organisation has been under intense strain for a protracted
period, including in relation to the issues that the Inquiry is investigating, the
ongoing management of one of Europe’s largest retail networks, and the
changes to consumer practices, as well as POL’s position in the market and
the need for further investment in technology. In addition, continuous turnover
of personnel including at the Board and the Executive has made the work
environment challenging. At times, the over personalisation of issues has
distracted from objective problem solving and collaborative working.
Sometimes I have been concerned that perspectives are not necessarily
evidence or fact based or brought about by due process but rather
assumptions, immediate reactions without reflection, or prioritising areas of
focus when Board members should look at matters through a broader lens.
Conversely (in contrast to immediate reactions), there have been times when
decision making has become paralysed. I have felt at times that some decision
makers who are empowered to make decisions have not taken responsibility
for matters within their remit.
224. The Board, including the Chairperson, Postmaster NEDs, SID/Investigation
Board Champion & RU Chair, Speak Up Board Champion, Government
Shareholder Representative and the CEO and CFO, in addition to senior
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leaders, obviously play a critical role in how that culture develops, continues,
changes or evolves. Some areas of the business have more influence on
POL’s culture than others. The Retail team is the largest team at POL and is
responsible for the relationship with Postmasters and network operations. The
People team lead the cultural reform at POL, but all employees (including
LCASR) have a responsibility to shift the culture in the right direction. I hope
that training in the GLO, Speak Up, and the Ethical Decision Making
Framework helps support the cultural transformation across the POL
business.
225. In addition to running POL in a challenging commercial environment, the POL
organisation has come under significant scrutiny and criticism which has had
an impact on culture.
226. Although there has been some improvement, there have been a number of
Chief People Officers (CPOs) appointed over recent years, which has resulted
in cultural change not happening at the pace it ought to. I am aware that it is
a priority for the CPO, Karen McEwan.
227. I have been asked what the POL Executive and POL Board’s relationship with
SPMs is like now. I have been asked to set out how the relationship has
changed since I have been GC and to provide my reflections on (a) what has
improved and (b) what could be better.
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228. My viewis that there has been improvement in understanding the issues that
Postmasters face with a view to strengthening the relationship between POL
and Postmasters. The appointment of Postmaster NEDs on the Board
illustrates POL’s desire to ensure that the Postmaster voice is heard by the
Board, so that when it is addressing issues, it can do so with an understanding
of what the concerns, issues and priorities of the Postmasters are. POL has
rolled out mandatory GLO training for all employees so that everyone
understands and appreciates the history of the matter, underscoring the
importance of Postmasters to POL. There is separate training on the impact
on Postmasters from the GLO, and root cause failures.
229. There are various initiatives to support the cultural change through senior
leaders engaging with Postmasters. A key part of this is asking Postmasters
for feedback about what can be improved. Employees then report the
feedback back to the Retail team and Area Managers who assess the themes
flowing from that feedback such that this can inform the Board and Executive's
decision making. There are also Postmaster engagement evenings, which I
have attended, where questions can be asked by Postmasters directly to the
Executives.
230. My viewis that the relationship has improved in some respects, but it requires
ongoing focus and investment by POL. Postmaster remuneration remains the
number one priority as it has been for several years. Tools such as the
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Postmaster engagement survey help with the continued assessment of the
relationship.
231. In terms of improvement, POL should give thought to creating more
Postmaster forums which represent the different types of Post Office
branches, in addition to the Postmaster NEDs on the Board. This would assist
the business in understanding the varying perspectives of different
Postmasters. Involving Postmasters in existing decision-making forums would
also be helpful. Accountable business owners also need to ensure that they
are mindful of the Postmaster perspective when making decisions or
recommendations to the Board and Executive. This is now embedded into the
Ethical Decision Making Framework, but it would be beneficial to have
Postmasters ‘in the room’ with accountable business owners giving direct
feedback.
232. The Retail team has demonstrated willingness but has found it challenging to
make the changes required in a timely manner. Over the last 18 months, POL
would have benefited from a COO to help the CEO — Retail, Martin Roberts,
drive this forward.
233. I have been asked to summarise my understanding and experience of the POL
Executive and POL Board's relationship with key relevant external
stakeholders, such as the National Federation of SubPostmasters (NFSP),
Communications and Workers Union (CWU), Fujitsu, UK Government
Investments (UKGI) and the Department for Business and Trade (DBT).
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234. In relation to the NFSP, the relationship is governed by a long-term contract,
which sets out the exclusivity of the relationship and the genuine desire of POL
to communicate, collaborate and engage with the NFSP who represent
Postmasters, to ensure it gains a better understanding of Postmaster issues
and solutions. The Chairman, CEO and CEO - Retail are principally
responsible for the relationship between POL and the NFSP. The POL Legal
team and specifically the Head of Legal — Retail supports the CEO — Retail in
this respect.
235. In terms of the CWU, amongst other things, this relationship is focused on
negotiations in relation to pay awards. My perception is that there is a genuine
desire on the part of POL to do as much as can be done in relation to pay
awards whilst having regard to the financial limits of the company. The CPO
runs the negotiation in relation to pay awards and reports and updates the
Executive and the Board on this matter and including in relation to other
industrial matters. The POL Legal team and specifically the Head of Legal —
HR & IR (Industrial Relations), Laurence O’Neil, has from time to time
supported the CPO and Industrial Relations Director, Lee Kelly, in these
discussions.
236. Regarding Fujitsu, as one might expect given the history, I understand that the
accountable Executives for the relationship with Fujitsu, the ClOs, have
expressed concern about the strained relationship between POL and Fujitsu
and have communicated this to the POL Board, UKGI and the Government
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Shareholder. I would describe it as a formal relationship. The Head of Legal —
IT & Procurement, Sarah Clayton, supports the ClO and IT team.
237. In terms of UKGI, the relationship has developed over the last few years.
There has been increased oversight as I have explained. This development in
the relationship has, at times, impacted the speed at which things are
delivered (as highlighted at paragraphs 63 and 64 of my Fourth Witness
Statement in relation to compensation). In the post-GLO period, both the
Government Shareholder and UKGI have not only significantly increased their
oversight over POL but have also directly been involved in the management
of the post-GLO program, particularly compensation, given the operational
agreements and approvals regarding compensation principles were required
from them. This additional oversight has contributed to the delay in
compensation. Whilst I appreciate that the Government Shareholder and
UKGI must follow their operational processes, concerns regarding delay were
expressed on a number of occasions. POL advised DBT and UKGI that their
approach was delaying compensation with the impact ultimately on the
Postmasters.
238. My understanding is that some of the Executive and the Board had at times a
challenging relationship with UKGI and the Government Shareholder because
of their perception that they were encroaching on the independence of the
POL Board. This is a byproduct of the cross section of the Government
process in relation to a Government owned company - which is different and
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separate — to a commercially operating entity. The Shareholder Framework
Agreement implemented after the Group Litigation formally sets out the nature
of the relationship and roles and responsibilities of the three entities: POL,
UKGI and the Government Shareholder. This was a helpful clarification but,
as I understand the Grant Thornton review demonstrates, more work is
required in this area.
239. I have been asked to set out my reflections as to the ways in which the culture
has or has not changed following the findings of Fraser LJ and/or following the
evidence that has been heard in the Inquiry.
240. There are a number of fundamental changes that speak to culture, following
the findings of Lord Justice Fraser and the evidence that has been heard in
the Inquiry, as I have set out above.
241. I would emphasise that generally it is better understood that investigations
need to be undertaken with regard to industry good practice and ethics, with
reference to enhanced organisational controls such as the new Code of
Business and the Speak Up Policy.
242. Importantly, there has been a direction, in accordance with the Code of
Business, to apply that ethical approach (as detailed above) to all decision
making throughout the business.
243. Also, there has been a general shift in encouraging greater reflection and
applying scrutiny to decisions through assurance, although much further work
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and resource is required in this area. The new leadership behaviours and
values including specifically to “Be Curious” is also a helpful cultural
development.
244. In addition, there is a need to pay great care and attention to potential
whistleblowing, in accordance with the new Speak Up Policy and
whistleblowing procedures, which I cover in more detail below.
244.1 There have been significant changes to operational processes to be ClJ
compliant and working through the HIJ. Tracey Marshall (Retail Director), Mel
Parker (Retail Director), and Simon Oldham (IT Director) are best placed as
the accountable senior leaders to give further detail regarding these
processes.
244.2 I have referred previously in this statement to strategic prioritisation and other
improvements which could be made.
244.3. As temporary sponsor of the Inquiry program, and as outlined above, I
recommended that POL senior leaders, including Board members attend the
Inquiry from time to time, in addition to the communications they received from
the Inquiry team, to better understand the issues arising from the Inquiry. I am
aware of a number of those senior leaders reflecting and improving POL’s
controls, policies and/or processes as a result of what they heard at the
Inquiry. In addition, and as also mentioned above, during my period as
temporary sponsor of the Inquiry program, I required a response tracker that
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listed all matters to be sent to the accountable business owners for reflection
and action.
245. I have been asked to explain the steps I have personally taken, if any, to
influence and implement cultural change within: (a) the POL legal department,
(b) the POL Executive and the POL Board, and (c) the organisation more
generally.
246. There are certain matters that I am not able to discuss given the reasons set
out in paragraph 6 above.
247. As part of my personal values regarding the importance of education and
continuous improvement, I have encouraged a continuous improvement ethos
and compliance with the law and due process in my own areas of responsibility
but also across the business. In respect of myself, I have sought to
continuously learn and improve my approach as evidenced through a number
of undertakings including; (a) personal development coaching; (b) I undertook
an ICSA Corporate Governance course; (c) I obtained, reviewed and
considered EYR and Mid-Year Feedback; (d) I undertook the Oxford Strategic
Management Executive Program; (e) I have attended various Postmaster
engagement initiatives.
248. In terms of the POL Legal department:
248.1 I have covered a number of the changes above including changes to the
operations of the team. I would also note, as referenced above, the provision
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of feedback to key individuals including the Group Legal Director, ACI Director,
RU Director and Inquiry Director.
248.2 I have continuously advocated publicly and directly to the Legal team as well
as my other teams of the need for POL to be compliant with Lord Justice
Fraser's findings as well as in all respects of the law. I have directed my direct
reports to ensure that this compliance with legal and regulatory requirements
is seen as mandatory and as part of their SRA duties through multiple training
sessions and personal development plans of lawyers in the POL Legal team.
248.3 I have directed reviews and improvements to my areas of responsibility, as
well as to other parts of the POL business. For example, the improvements
made to the Speak Up process (considered below), assurance and
investigations (considered above).
248.4 I have encouraged that subject matter experts and/or individuals with specific
specialisms are appointed to the correct roles, and be empowered to perform
their roles with autonomy, with appropriate oversight.
248.5 The corollary of the former, is that a dedicated whistleblowing champion and
an ACI Director (who is experienced in conducting investigations) have been
appointed, following the Board’s approval.
248.6 I have given extensive advice throughout the business in relation to ClJ and
HIJ conformance, and general legal risk management.
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248.7 For example, I have given directions to the CEO and Company Secretary on
governance including the need for greater clarification on accountabilities and
decision-making forums, Management Information and reporting. I have also
tried to assist on governance issues (specifically reporting and oversight)
including the provision of Dashboards from the Retail and IT teams (and the
ACI team) as well as offering any support to the Chief of Staff if she requires
support or advice.
249. In terms of the POL Executive and Board:
249.1 The changes I have implemented during my time in the Legal department have
almost all had the direct or consequential impact of seeking to improve culture,
in relation to the Executive and the Board.
249.2 I have challenged the business, informing and encouraging my legal team to
also challenge accountable business owners if they have concerns about the
approach being taken, or if it potentially falls outside of the Board Risk
Appetite.
249.3 By way of illustrating the support I have given, I have participated in the
development of leadership behaviours and sent the CEO and former CPO the
Government report entitled “Leading in Practice” by the committee on
Standards in Public Life, which focuses on the role of leadership in embedding
an ethical culture in organisations, which I considered ought to be incorporated
at POL.
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249.4 I have challenged Board decisions, such as the decision to recover
Outstanding Balances, which was inconsistent with Lord Justice Fraser's
findings. The Board subsequently reversed the decision. I repeatedly raised
concerns in respect of the delay in remediating compensation (with the Board
and others including the Government Shareholder, UKGI and external lawyers
(as well as the internal RU team)) and provided advice regarding the same,
which I understand remains privileged. In addition I repeatedly challenged
operational processes as a result of Lord Justice Fraser's findings.
249.5 I have given feedback in the Board evaluation survey, particularly concerning
matters of governance and the relationship between the Government
Shareholder and the Board.
250. In terms of the organisation more generally this is demonstrated through:
250.1 my strong advocacy for compliance with the law generally, specifically, the
need for ClJ and HIJ conformance both operationally and culturally and that
conformance with the law should be seen as mandatory. A culture that
enshrines Fraser J’s findings;
250.2 my direction for assurance over LCASR, the Inquiry, the RU and business
functions;
250.3 I have also directed and provided extensive advice and recommendations to
improve the culture of POL in terms of improvements to policies and
procedures (i.e., the controls) as referred to above (and several other
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amendments to the legal approach generally as outlined) and emphasising
leadership behaviours;
250.4 I have also advocated, directed and advised on governance, RACI and
resource but also putting in place the right structures (e.g the ACI);
250.5 I have given honest challenge and constructive feedback to the Board, SEG,
and senior leaders, including my direct reports on various topics including, by
way of example, data, governance, risk management generally, legal and
regulatory risks, need for assurance and controls framework, as well as for
improvements to the way investigations are conducted (starting with the
KPMG review I refer to above which I directed be undertaken);
250.6 my advice in respect of issues which have been referenced in the recent Code
of Business Conduct and Ethical Decision Making Framework is an example
of how I have tried to implement cultural change. Likewise, the significant
amendments I have made to the Speak Up Policy procedures including the
report to SEG and Board through the Board Champion. I have been clear as
to where our standards should be from an integrity perspective, in terms of
how we conduct ourselves throughout the business;
250.7 increased communications have been issued about various matters, including
Speak Up;
250.8 breaking down siloed working between Retail and IT but also within my own
team and within other teams that we support;
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250.9 furthermore, we have linked the undertaking of compliance training to
employees’ objectives and their performance reviews so that POL creates a
culture of compliance with Lord Justice Fraser’s findings and, I would hope in
due course, the Inquiry’s findings; and
250.10 as noted above, through my and my team’s personal encouragement to have
the Board, Executive and other senior leaders attend the Inquiry and hear
pertinent evidence, including the Human Impact phases, accountable
business owners have made improvements to existing policies and
procedures.
251. I have been asked to summarise the extent to which (a) I, (b) the POL legal
department, and (c) the POL Executive and the POL Board, evaluate their own
culture and address any issues.
252. I have reflected on my own values and culture throughout my time at POL.
The value of embracing lifelong learning and continuous improvement is
reflected in my leadership approach.
253. I, like other SEG and senior leaders, all receive mid-year and annual 360
feedback. Even before this was introduced, I would obtain feedback from my
direct reports.
254. There is also an annual employee engagement survey. I have directed a
LCASR response plan to the engagement survey which employees complete
annually so that feedback can be acted upon.
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255. I have also received coaching and engaged with other GCs as well as
reflecting on industry, academic and media publications. I have reflected on
external commentary, considered it and, where appropriate, implemented or
recommended changes.
256. Moreover, in respect of myself, I have sought to continuously develop and
improve my approach as evidenced through a number of undertakings as
referred to above.
257. Whilst each of the directors of LCASR are responsible for the culture within
their teams, I have obtained feedback from the business, Board and senior
leaders regarding LCASR which I have discussed with them. This has been
throughout the year but also in mid-year and end of year reviews.
258. I have also supported my direct reports in relation to their personal
development. To this end, I have facilitated external support e.g. coaching,
where I considered it would be helpful.
259. The POL Board has annual reviews coordinated through the Company
Secretariat function which I have fed into. Every third year an external
assessor evaluates the Board’s effectiveness. I do not receive the board
evaluation report.
260. As referred to above, a review was undertaken by Grant Thornton, which I
suggested be done and fed into.
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Whistleblowing
261. I have been asked to set out my reflections as to the adequacy and
effectiveness of POL's current whistleblowing policies and procedures.
262. In summary, significant improvements have been made over several years
which have resulted in improving the adequacy and effectiveness of POL’s
Speak Up policies and procedures following Lord Justice Fraser's findings. I
have continued to recommend that the ACI team (which encompasses Speak
Up) should receive more resource to undertake their specialised work
efficiently and build on the progress to date.
263. For clarity, Speak Up matters as defined in the Speak Up Policy are currently
managed by the Whistleblowing Officer, within the ACI team, led by the ACI
Director, reporting into the Group Legal Director and ultimately me. Speak Up
investigations are different from grievances or conduct investigations which
are managed under two separate policies, namely the Dignity at Work Policy
and Grievance Policy, which are sponsored by the People team. As noted
above, the People team are responsible for the management of people issues
and grievance investigations.
264. The identification of Postmaster discrepancies are managed under separate
policies including the Postmaster Accounting Dispute Resolution Policy and
Postmaster Complaints Handling Policy, which are sponsored and managed
by the Retail team.
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265. The Legal team has provided legal advice and support to those teams in
amending such policies as a second line of defence function. Assurance has
also been conducted in some of these areas.
266. Prior to becoming GC, whistleblowing in its formal sense (i.e., a protected
disclosure under statute) sat within the Compliance function reporting to the
Head of Financial Crime and was overseen by the former GC, Jane Macleod.
Consequently, as Group Legal Director I had little involvement at that time. I
subsequently learnt that although cases were triaged and assessed by a
Whistleblowing team, cases may be investigated by a wide selection of POL
employees.
267. In May 2019, upon becoming GC I inherited the accountability for the
Compliance team including the Whistleblowing team. Whistleblowing or
Speak Up was governed by the Whistleblowing Policy which set out the
minimum control standards and this was reviewed in 2019 by the RCC and
ARC.
268. In October 2020, as part of the Post-GLO program and IDG, I directed that
POL review its policy and procedures and approach an industry body
(“Protect”, a whistleblowing charity) specialising in Whistleblowing to support
POL to review the same. A whistleblowing manager with industry experience
was appointed into the Financial Crime team. Part of the reason for SG’s
appointment as Group Legal Director was due to her experience at Santander
in Whistleblowing and investigations.
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269. As reported to RCC and ARC, one of the key recommendations made by
Protect was in relation to POL’s training and communications around
whistleblowing.
270. In or about December 2020, I intervened to ensure that sufficient progress
was being made in a timely manner.
271. In January 2021, a working group was set up to undertake a more
comprehensive review of Speak Up _ investigations and Postmaster
complaints. This working group looked at, amongst other things, the various
ways in which Postmasters could raise complaints, which may include Speak
Up concerns, and how those concerns could communicated to the Speak Up
team. I was concerned that Postmasters may not be using POL’s Speak Up
hotline but raising concerns in other ways (given the varying ways available to
them) which me or my team may not have awareness or oversight of.
272. In or about August 2021, following the Hamilton judgment, POL received a
KPMG report to assess the current status of investigation processes including
whistleblowing and advise on a target operating model.
273. In or about September 2021, a number of additional milestones had already
been achieved:
273.1 a training workshop was run by Protect in which some members of the SEG,
senior leaders and the whistleblowing team attended;
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273.2 a Speak Up Board Champion was appointed (previous NED Zarin Patel (who
also sat on the RC), who was subsequently replaced by Amanda Burton) to
oversee the whistleblowing procedures replacing myself as sponsor. This was
formally approved at the ARC meeting on 30 March 2021;
273.3 Meetings were held with the Whistleblowing Champion on at least a quarterly
basis;
273.4 the creation of a designated role as POL’s “whistleblowing manager” to
oversee POL’s whistleblowing procedures and activities;
273.5 there was a policy review by external lawyers, HSF (who were instructed with
overseeing the GLO), of the Whistleblowing Policy, the Postmaster
Complaints Policy (which the Retail team were accountable for), and the
Investigations Policy to ensure better of triage and coordination of potential
whistleblowing across the organisation. A centralised Postmaster Complaints
dashboard which can be viewed alongside the whistleblowing dashboard to
track any Postmaster complaints that should be captured was also created;
273.6 training to all employees on whistleblowing with subsequent improved
communications through a variety of channels internally and to Postmasters;
and
273.7 +more communications to Postmasters was undertaken which was coordinated
with the Retail and Communications team.
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274. On 23 June 2021, to acknowledge World Whistleblowing Day, POL released
a blog regarding whistleblowing in order to raise awareness throughout the
company. It explained that whistleblowing helps POL find out about things that
are not right. It noted that even where an allegation is not substantiated, it can
help highlight an area POL can improve, for example, enhancements to
culture, training or communication. A number of important points were
highlighted:
274.1 any person (Postmaster, branch teams, employees, customers, third parties),
can raise a concern via the whistleblowing channel;
274.2 a whistleblower does not need to have a raft of evidence to raise concerns —
sometimes it may be that something is not right but there is little evidence to
prove it;
274.3 reassurance that nobody will get into trouble for using the Whistleblowing
Process;
274.4 anewexternal and independent Speak Up provider was appointed and a new
website was launched with an additional FAQ section giving employees and
Postmasters the opportunity to ask the whistleblowing team questions; and
274.5 enhancements to existing MI covering whistleblowing reports to more easily
track and monitor Postmaster reports received and outcomes achieved.
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275. Although as GC I was not responsible for all investigations across the
company as the conduct of investigations was and still remains decentralised
sitting within relevant teams (Postmaster investigations in the Retail team and
people investigations in People team), given the issues arising from the
Hamilton judgment by the Court of Appeal and those in Fraser LJ’s findings,
as referred to above, I obtained approval for an external review of
investigations across the organisation. The GE received a paper on the
KPMG report’s findings as did the Speak Up Board Champion. The review
was also reported through the appropriate governance forums of the RCC and
ARC.
276. In summary, KPMG found that:
276.1 POL should create a centralised investigation unit. This would assist in
ensuring that investigations are delivered in line with minimum standards and
protocols and that high-risk investigations are performed by independent
investigators. The introduction of a centralised investigation unit could
facilitate a more properly structured, planned and best practice approach to
investigations with an understanding of themes and lessons learnt fed back to
the business.
276.2 Investigations were not conducted consistently across POL, with differing
levels of expertise, oversight, reporting and quality assurance. Where
investigations touch multiple teams, accountabilities are confused, and
lessons learnt were rarely acted upon by the business.
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277. Asaresult of discussions with RCC, ARC and the Speak Up Board Champion,
with approvals obtained, a number of actions were taken:
277.1. A new centralised investigations team was established with a primary focus
on providing support to the business in relation to investigations (second line
of defence). As outlined above, for specific, sensitive and / or complex
investigations (generally not including employment matters and Postmasters
investigation which had their own investigation teams), the ACI might be asked
to conduct the investigation themselves or through an external investigator
(first line of defence).
277.2. Such a team would move from Compliance to Legal, reporting into the Group
Legal Director (SG).
277.3 Formal documentation and better investigation case management tools were
produced, including more guidance on how investigations should be
conducted or carried out;
277.4 Training and guidance was given to those carrying out investigations; and
277.5 Additional expertise resource would be obtained.
278. Atthe end of 2021, POL re-ran the Protect assessment and it was clear that
significant improvement had been made with the scores increasing from 46%
to around 80%.
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279. A recruitment process was undertaken at POL and JB, an experienced
investigatory manager, was appointed as Head of the ACI team (which was
the renamed the Central Investigation Unit referred to above) in February
2022. Since his appointment he has remained reporting to the Group Legal
Director.
280. As noted above, in addition to the Speak Up investigations, the newly
established ACI’s remit was to include complex investigations. There have
been a number of material complex investigations of which I was made aware:
280.1 Potential Speak Up matters arising from the Inquiry (including in relation to
Postmaster investigations conducted by the Postmaster Retail investigations
team). As noted above, as part of my role as temporary sponsor, I directed
that an Inquiry Response Tracker identifying issues arising from the evidence
from the Inquiry be drafted and reported to the ISC. This included a number
of potential Speak Up matters which were raised throughout the course of the
Inquiry. This was flagged to the Group Legal Director and the ACI Director
who were responsible for managing the specific Speak Up issues. There were
significant resource challenges given that ACI was a newly established small
team and the volume of matters arising from the Inquiry and also across the
business meant that substantial funding and further resource was required.
However, I did direct SG to strategically prioritise this work.
280.2 When it was escalated to me in March 2023 I confirmed to the Inquiry Director,
SG, JB and the former CPO that this work was “absolutely critical” and that
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“POL had promised the Inquiry to do this and we had an operational process”.
I did provide the team, by which I mean principally SG, an “honest challenge”
(an internal POL term) which included that this matter was supposed to be
addressed 9 months ago. I noted that it had not been escalated to me that it
was not being progressed until recently, despite having repeatedly raised it at
ISC. I received assurances that it was being worked on but was taking time.
280.3 I have also said that the BAU business must reprioritise to address this. I
acknowledged that it was not easy because the ACI had advised SEG that
more resource and funding was required and that although that was a fair
point, I asked that we reprioritise BAU to address it. I understand that the-then
Inquiry Director, DW (who had previously been the RU Legal Director),
subsequently directed a different timeline with the ACI Director directly,
despite my request to the contrary.
280.4 As above, when these suggestions of further delays were raised in May 2023,
I responded to JB that I had not agreed that timetable and I requested that we
review our resource models to accelerate this including external resource. I
noted again that it had been outstanding for a year. Furthermore, in a separate
email to SG entitled “Outstanding Inquiry Tracker issues” (on 12 June 2023),
I again repeated my “honest challenge” to the Group Legal Director to
strategically prioritise resource and to track all issues within her team and
report them. Moreover, by way of example, I flagged again in June 2023 to
SG and JB to further reflect on what sensitive or material investigations should
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be reported to SEG and Board so that we are ensuring that such committees
have appropriate oversight.
280.5 The funding request by CIU was refused several times by the Executive and
a strategic prioritisation exercise was ultimately undertaken. Following
subsequent challenge, some additional resource was obtained in the matter.
These issues was flagged to the Executive and the Board including the Board
Investigations Champion/SID/RC Champion. ACI Monthly reports were
provided.
280.6 By October 2023, the Phoenix panel (CIO (Chris Brocklesby), CEO Retail
(Martin Roberts), Group HR Director (Nicola Marriott)) sat and determined that
the People team (the Group HR Director, who was the most senior people
officer in the company at that time, and then subsequently the Chief People
Officer, Karen McEwan) should continue the investigation into a particular
person (who sat in the retail Postmaster investigation team and never sat
within the LCASR). The People team continued conducting this matter and
the program entitled Past Roles, which was a broader desktop review of
people in the business who had past roles that touched upon Postmaster
operations and investigations. This program of work was supported by the ACI
team and the Head of Legal — Employee Relations and Industrial Relations,
Laurence O’Neil, under the supervision of the Group Legal Director (SG) The
Chief People Officer reported to the SEG and Board on this matter.
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280.7 Both of the matters were discussed at the Executive and Board. I also gave
further direction to JB, SG, the Head of Legal — Dispute Resolution (Kirsty
O'Connor), Company Secretary (Rachel Scarrabelotti) and Deputy Company
Secretary (Alison Hoyland) to further improve the governance around
investigations (within their remit) and some lessons learnt.
280.8 Postmaster NED investigation. Following the Retail team’s initial investigation
into a Postmaster who was also a NED on the Board and a Speak Up
pertaining to that NED, the former Chairman, HS, having consulted the SID,
asked me to have the ACI team investigate the matter. An investigation was
conducted by ACI and a report was subsequently produced.
280.9 I provided feedback to JB and SG about concerns that the relevant Postmaster
NED had during the course of the investigation. I had personally provided
assurance to the Postmaster NED that POL was very mindful of the
presumption of innocence, having made that position clear across the
organisation consistently. That investigation was handed back to the relevant
accountable business owner, the Retail team, who continued and finalised the
investigation and made certain decisions regarding the established loss.
280.10 Legal advice was subsequently obtained and provided to a limited subsection
of the Board (as determined by the Chairman, HS) at or about the end of
September 2023. A closure report was finalised in or around October 2023
with the approval of the relevant accountable business owner, namely Martin
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Roberts CEO — Retail. The closure report was subject to particular issues as
to the accounting treatment in the 22/23 ARA.
280.11 During that time it only became known to those outside of the Retail team,
(when Retail advised) that the other Postmaster NED had a different category
of money owing to POL.
280.12 The Chair took the decision regarding the established loss having regard to
the recommendations from the Retail team, together with the legal advice, as
well as having consulted the limited sub-group of the Board and also the
Postmaster NED’s themselves. It was important that POL understood and
considered the treatment of these monies in the ARA 22/23 in which the ARC
and subsequently the Board were seeking to sign off in December 2023.
Advice was taken and reference to the above was made in the ARA.
280.13 Former CPO (Jane Davies). I would note that external investigations were
undertaken in respect of various matters raised, external legal advice taken
and reported to a limited Board Sub-Group on the direction of the former
Chairman. The SID/Investigation Champion, Speak Up Board Champion, and
Government Shareholder Representative were kept appraised of matters. The
decisions as to the conduct of the investigation were made by the Speak Up
Board Champion and the Government Shareholder Representative. In mid-
January I became aware of a document entitled Project Pineapple. That letter
contained a number of allegations which I deny. I subsequently received an
apology from Sarfaraz Ismail and Elliot Jacobs, having discussed the factual
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inaccuracies in their note, including that I had not been the sponsor of the
Inquiry for at least six months and that the Postmaster investigators such as
Stephen Bradshaw had never reported to me, amongst other things.
281. Far from being complacent, I have continued to advocate for improvements in
investigations across the business including Speak Up. In particular, I
advocated for them to have more resource and also ensured that the CEO,
Executive, Board Champion, RCC and ARC received management
information regarding the status of investigations at POL.
282. As noted above, I have provided feedback from Board Directors and the
Executives, together with my own observations, as well as giving direction on
areas for improvement and strategic prioritisation, to both the Group Legal
Director and ACI Director. Moreover, I have challenged other directors who
have overruled my strategic direction regarding the prioritisation of Past Roles
and Phoenix.
283. In June 2023, further external assurance was conducted by Ernst & Young
(EY) reviewed POL’s Speak Up Policy and procedures and_ their
recommendations were subsequently incorporated in further amendments to
the Speak Up Policy. Further recruitment was approved towards the end of
2023 to support the vision and mission of the Speak Up function.
284. Throughout 2022 and 2023, JB and his team continued to make improvements
to investigations and, specifically, Speak Up. Improved Executive and Board
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reporting was put in place including Monthly SEG reports which track the
effectiveness of ACI reports (including numbers, themes and actions) as well
as the length of time investigations may take and the outcome of the
investigations. Annual reviews are conducted by the team, with support from
an external reviewer, and are reported through the appropriate governance
forums including the RCC and ARC.
285. By; (a) bringing in Protect and external experts to review the whistleblowing
function and investigations generally; (b) POL adopting most of the
recommendations made; (c) investing more resource (and expertise) as well
as better tools (claims system); and (d) ensuring better governance, the
adequacy of the Speak Up process is vastly improved. Continuous monitoring
and improvement will always be required. As noted above I have continued to
relay my own observations as well as others feedback to the ACI director and
the Group Legal Director. In SG’s end of year review, I set out areas where I
thought she could focus to improve the team — this included:
285.1 the Speak Up team’s understanding of governance and decision-making;
285.2 continued development of Speak Up documentation to standardise processes
and decision-making;
285.3 developing better engagement with the Postmaster community directly; and
285.4 continuing to increase communication with Postmasters.
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286. In my view, ongoing conformance will be achieved through:
286.1 the establishment of a controls framework of Speak Up to ensure continuous
compliance of the control environment;
286.2 POL’s Assurance and Audit function providing internal Assurance and internal
Audit;
286.3 external assurance and / or audit and review should be conducted annually;
and
286.4 continued communications and training of Speak Up across the organisation.
287. Overall, and in summary, for the reasons given above I consider POL’s
approach to Speak Up has been significantly improved but continuous
improvements are required, together with and cultural embedding of this
matter. I would continue to encourage the POL Board and SEG to ensure that
the ACI team (responsible for looking into all Speak Up matters) receives
adequate resource and guidance to continue the progress that has been made
to date.
Conclusions
288. I have been asked to set out any other comments, reflections or concerns (if
any) I may have about my experience as POL GC since the findings of Fraser
LJ and/or following the evidence that has been heard in the Inquiry.
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289. Anecdotally, compared to most organisations in the UK, the challenges faced
by POL (which include but go well beyond the Terms of Reference of this
Inquiry), are more complex, multifaceted and material than most other
organisations in the UK.
290. The failure to address foundational issues as a strategic priority created
numerous issues and has undermined POL’s ability to comply with Lord
Justice Fraser's findings and the matters before this Inquiry at the pace in
which it ought to have done.
291. The decision not to take the compensation matters away from POL and to
separate the RU program from POL BAU as a result, was based on a logical
rationale, but it added to the complexity and increased siloed working. These
challenges were repeatedly flagged to the CEO and SID.
292. Through compensation, via the RU (former HMU; post-GLO program) and in
the design and establishment of the compensation schemes, POL sought to
take on the feedback from the original GLO Claimants in the Group Litigation,
and as part of the settlement to establish a scheme where Postmasters would
not have to be legally represented or go through a legal process. The HSS
was well intentioned and incorporated feedback from external legal advisers.
POL set up an external panel who determined the claims. However, the
involvement of Government processes and ultimately control over the
compensation scheme(s) significantly impacted the delivery of compensation,
which is extremely regrettable and deeply disappointing.
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293. Being the GC at POL during this period has been challenging. I am in a
different position to the other SEG members, given my SRA obligations.
Seeking to reform such an organisation with the above context has been
equally challenging but I have committed myself fully to the role.
294. In addition to the above, I have found that the high turnover of personnel in
various areas of the business including the Board and Executive, as well as
the capability and knowledge gaps across the organisation very challenging.
295. In my role as GC and temporary Sponsor, I found that I was not always given
the requisite information, control, or access to forums which made my role
more difficult.
296. Culturally, and in some respects understandably given past advice, some
within the Executive and Board (but to a lesser extent the Executive), sought
to blame or use Legal as a shield for matters that are in fact within the
business's control and/or sit outside of the LCASR function. This is not to say
that LCASR have always got everything right and when I have received
feedback I have acted on it with my team. Moreover, some of the Board and
Executive have complained about LCASR’s timeliness in respect of certain
matters despite the fact that limited resources in LCASR has been repeatedly
raised and not sufficiently acted upon by the Executive and the Board. Whilst
feedback is welcomed and I agree that matters could have been expedited,
the lack of resource was one of the principal explanations for the lack of pace
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particularly in respect of BAU legal and ACI matters as well as the foundational
issues not being addressed.
297. As GC, I spent a significant amount of time supporting LCASR directors and
increasing the understanding of the Board and Executive regarding the
rationale for the business to make changes in conformance with the law but
specifically in relation to Lord Justice Fraser’s findings.
298. Whilst it has taken time to address and remediate the issues arising from Lord
Justice Fraser's findings and other foundational issues generally, I do think
there has been a genuine desire to get things right. However, ultimately, there
was not sufficient prioritisation to see this as the fundamental focus and give
it sufficient resource from the outset. Lessons have been learnt along the way.
The Government Shareholder Representative, POL Board and SEG were
focused on other strategic initiatives and costs management. As noted above,
it took POL time to develop a compensation scheme which was appropriately
encompassing and the increasing oversight and complexity of Government
processes inevitably slowed the progress of remediation matters (specifically
compensation).
299. There is still a lot to continue to deliver and my hope is that the current
Executive and Board, with pragmatic and efficient support from the
Government Shareholder, prioritises the operationalisation and cultural
enshrinement of Lord Justice Fraser's findings and in due course will address
the recommendations of the Inquiry.
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300. I have been asked to set out any other matters relevant to the Inquiry's Terms
of Reference that I consider the Chair of the Inquiry should be aware of.
301. I think it is important to note the necessary implication, although it will be
obvious to Inquiry, that my evidence has been curtailed to an extent, such that
the full facts and circumstances have not been able to be produced to the
Inquiry to be weighed and or weighed against others’ evidence. I am, as
highlighted above, in a unique position as POL’s GC given the extent of the
advice I have given to the business over the years (privilege in respect of much
of which has not been waived).
302. I have answered these questions to the best of my knowledge and belief. If
there are documents I have not addressed or matters I have not covered which
the Inquiry would like me to, I am very happy to provide any such further
assistance to the Inquiry should it required it. I will be guided by the Inquiry
and POL should those matters stray into privilege, which has not been waived.
Statement of Truth
I believe the content of this statement to be true.
Benjamin Andrew Foat
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Date: 8 October 2024
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Index to Sixth Witness Statement of Benjamin Foat
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No. URN Document Description Control Number
POL00458047 I Legal team structure chart as at 1 I POL-BSFF-
September 2024 WITN-048-
0000003
POL00458049 I Inquiry Legal team structure chart as I POL-BSFF-
at 1 September 2024 WITN-048-
0000005
] RU Legal team structure chart as at I POL-BSFF-
1 September 2024 WITN-048-
0000004
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