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Witness Name: Charles Hunter Donald
Statement No.: WITN10770100
Dated: 19 February 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF CHARLES HUNTER DONALD
I, CHARLES HUNTER DONALD, will say as follows...
INTRODUCTION
1. lam the Chief Executive of UK Government Investments (“UKGI”). I was appointed
to this position in February 2020 and took up the role in March 2020, having joined
UKGI in late May 2018 as the Head of the Financial Institutions Group. Prior to
this, my entire career was in investment banking, during which time I first spent 19
years in financing and equity research before then moving into UK corporate
advisory in 2006, where I held a number of senior management positions.
2. This witness statement is made in response to the Inquiry’s Rule 9 Request dated
8 December 2023 (the “Request”). The Request is the third request for information
under Rule 9 made to UKGI and is described as being relevant to Phase 6 of the
Inquiry. By the Request, UKGI is asked to submit a witness statement in the
following terms:
“A written statement that explains UK Government Investments’ (UKGI) (or its
predecessors’) role in Post Office Limited’s (and its relevant predecessor(s))
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corporate structure during the Relevant Period (as defined in the List of Issues, or
until the date of settlement of the GLO).
This should include (but not necessarily be limited to):
(a) an overview of any relevant board or governance structures
involving UKGI (or its predecessors) and how these operated;
(b) any ownership and relationship between POL and any parent
company/corporation and relevant Government entities and
agencies (including UKGI) and
(c) the relevant changes over this period.”
3. I am duly authorised to make this statement on behalf of UKGI. The contents of
this witness statement are true to the best of my knowledge and belief. As stated
above, I joined UKGI in late May 2018 and I do not therefore have direct knowledge
of the organisation or its predecessor, the Shareholder Executive (“ShEx”), prior to
the date of my first appointment. In preparing this statement, I have therefore drawn
on the institutional memory of the organisation, as conveyed to me through
communications with other members of staff and I have also had reference to
various documents. Where I have referred to information from other sources, I
believe that information to be true. In preparing this statement (and the
accompanying documents), I have been assisted by lawyers employed by UKGI
and by Eversheds Sutherland (International) LLP (the recognised legal
representatives for UKGI in the Inquiry).
4. As the Inquiry is aware, much of the information relevant to the Request has
already been provided by UKGI in the form of (in particular), UKGI’s / BEIS’s joint
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response to the Call for Evidence (INQ00000228), the responses to Batch
Requests 001-004 (INQ00000028, INQ00000044, INQ00000888, INQ00000883
and INQ00000009), and UKGI’s Opening Statement to the Inquiry
(SUBS0000006). I have reproduced the contents of those materials in this witness
statement, to the extent necessary to address the Request.
5. For the purposes of this statement, and in accordance with the Request, I have
concentrated on addressing the period up to the settlement of the Group Litigation
Order (GLO) in December 2019. In accordance with the Request, I have focussed
on describing the structures (including governance structures) by which UKGI (and
predecessors) interacted with POL, but I wish to make clear that this statement
does not constitute a comprehensive description of the work undertaken by the
Shareholder NED or the Shareholder team. I am aware that UKGI has also
received a Rule 9 Request for evidence addressing any relevant changes in the
ownership and governance arrangements since the settlement of the GLO, and I
will provide a further statement dealing with those matters in due course.
RESPONSE TO THE REQUEST
ShEx’s History
6. ShEx was established as part of the Cabinet Office in 2003. In 2004, ShEx was
transferred to what was then the Department of Trade and Industry (“DTI”).
Although in its earliest incarnation ShEx’s role was advisory in nature, following the
transfer of ShEx to DTI ShEx was charged with performing (in conjunction with
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other relevant parts of central Government) central Government functions in
relation to a portfolio of assets owned by the Government (“HMG”), which had
previously been performed by the relevant Government Department. That portfolio
included the Royal Mail Group (“RMG’), of which Post Office Limited (“POL”) was
a subsidiary, as described below.
7. ShEx continued to operate from within DTI (and its successor Departments,
including the Department for Business, Enterprise and Regulatory Reform
(“BERR”) and Department for Business, Innovation and Skills (“BIS”) (together, and
including DTI, the “Department’)), until its responsibilities were transferred to UKGI
in April 2016, a newly-formed Government company wholly owned by HM
Treasury. Until April 2016 the Accounting Officer for ShEx was the relevant
Departmental Permanent Secretary.’ From the transfer of ShEx’s responsibilities
to UKGI in April 2016 (as addressed further below), the Accounting Officer for UKGI
was (and remains) the CEO of UKGI.
8. ShEx was responsible for managing HMG’s shareholder relationships with a
portfolio of businesses owned or part-owned by HMG. ShEx’s employees were
drawn from civil servants and the private sector and enabled ShEx to offer a
blended skillset. Additionally, from 2004, ShEx started to provide HMG with an in-
house source of corporate finance expertise and advice. This focussed on advising
HMG on financial interventions and advising and structuring financial transactions
including asset realisations.
‘The Accounting Officer in a public sector organisation is the person who Parliament calls to account
for stewardship of that organisation’s resources. For further information in relation to the role of
Accounting Officer, please see Chapter 3 of HM Treasury's guidance document Managing Public
Money which I exhibit as document UKGI00043211.
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9. In its shareholder role, ShEx’s principal purpose was to enhance HMG’s capability
as an efficient and intelligent shareholder, as distinct from HMG’s role as a policy-
maker, regulator and / or customer for assets within its portfolio. The BERR Annual
Report from 2008-9 (UKGI00043212) notes that the role of ShEx was to: “work with
government departments and management teams to help its portfolio businesses
perform better. Its aim is to create a climate of ownership that, whilst challenging,
is genuinely supportive and provides frameworks for businesses to be successful.
To achieve this, the Shareholder Executive works with boards and management
teams of the Government-owned businesses to create long-term shareholder
value”?
10.The scope and breadth of the shareholder roles that ShEx performed varied
between assets depending principally on the wishes of the owning Department as
well as the constitutional position of the organisations, which ranged from Agencies
(which had no separate legal identity from their Department) to Public Corporations
(which were companies in their own right and with fiduciary Boards). Common to
all, however, was ShEx’s core role of advising Ministers and Departments on
governance arrangements (constitutional documents and (where relevant)
framework agreements, delegations and freedoms, etc.), Board appointments,
business plans and funding arrangements. Typically, ShEx would also play a role
in the monitoring of performance against business plans, including financial
performance. In respect of POL, it should also be noted that, unusually and in
contrast with other assets in its portfolio, ShEx undertook a policy role in addition
2 BERR Annual Report 2008-09, page 70.
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to its more conventional shareholder role. This arrangement, which is described in
more detail below (see in particular paragraphs 19 and 36) persisted following the
transfer of ShEx’s functions to UKGI in April 2016, before coming to an end in
August 2018 when UKGI transferred the policy role in respect of POL to a newly
formed team within the Department. References in this statement to the
shareholder role that ShEx (and latterly UKGI) undertook in respect of POL in the
period prior to August 2018 include the policy work undertaken by ShEx in respect
of POL.
1
.ShEx’s model was either to advise Ministers directly on their shareholder interests
across the portfolio of businesses or to support Departmental Shareholder Teams
with the performance of this role. With respect to POL, ShEx advised Ministers
within the relevant Department directly. ShEx’s CEOs were Director General-level
civil servant appointments within the Department that ShEx operated from. In 2007
ShEx appointed its first non-Executive Chairman. In late 2009 ShEx appointed its
first advisory Board.
The ownership structure of POL
12.In order to understand the relevant Board and governance structures of POL
involving UKGI and its predecessor ShEx, it is necessary first to outline the
ownership structure for POL prior to, and after, 1 April 2012 (when POL became
separated from RMG).
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13.Prior to 1 April 2012, POL was one of a number of principal subsidiaries of RMG (I
note that the 2011 Annual Report and Accounts of RMG (UKGI00043213), listed
six principal subsidiaries of RMG, of which POL was one). During that period, POL
operated a subsidiary Board that was predominantly comprised of RMG
executives, but the main decision-making body for RMG was the board of Royal
Mail Holdings Ltd (“RM Holdings”). RM Holdings’ Board comprised what I would
describe as a structure similar to that of the Board of a listed company, including a
Chair and a majority of independent Non-Executive Directors (“NEDs’).
14.In the period up to and until April 2012, HMG did not have a seat on RM Holdings’
Board (this is explained further at paragraphs 21 and 23 below) but HMG did hold
a special share in RM Holdings. That special share conferred certain rights on
HMG over the activities of RM Holdings, including a right to request certain
information (including information with respect to POL) and to require HMG’s
consent in respect of certain specified actions, for example major transactions,
Board appointments (including, in respect of POL, the appointment of NEDs to the
POL Board, and the appointment of the CEO / Chair), Board remuneration and
borrowing.
15. Following the formulation of Government policy to privatise the Royal Mail Group
while preserving Post Office in public ownership, RMG underwent a complex group
restructuring before separating from POL on 31 March 2012. Therefore, from 1
April 2012, POL existed separately from RMG and was classified as a Public Non-
Financial Public Corporation (“Public Corporation”) by the Office for National
Statistics’ national account system. It was then, and remains today, wholly owned
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by the Secretary of State for Business, Innovation and Skills (“BIS”), the
predecessor Department to what would become the Department for Business
Energy & Industrial Strategy (“BEIS”) and what is now the Department for Business
and Trade (“DBT”).
16. Public Corporations are designed to operate at a distance from Ministers and HMG,
with accountability placed with the Board and executive team who are appointed
based on their expertise and specialisms, to manage and oversee the company. A
core tenet of the classification (described in guidance published by HM Treasury
(UKGI00043214), and which has remained consistent throughout the period from
April 2012 to date) is the ability of the Public Corporation to have “appropriate levels
of freedom to exercise commercial judgement, within appropriate delegated
authority arrangements that protect Departments".
17.As a Public Corporation, POL was therefore expected to operate at arm’s length
from Ministers and HMG as a separate institution from its shareholder Department,
and its governance arrangements were designed to provide it with substantial
independence from HMG. Neither the Secretary of State as Shareholder, nor the
Department, were directly involved in the day-to-day operations of POL, oversight
of which was the responsibility of the POL Board. Instead, the POL Board was and
is accountable for the performance of the company to the Secretary of State as
POL’s shareholder. Further details on the shareholder consent rights that HMG
had under POL’s constitutional arrangements, post its separation from RMG in
2012, are set out in paragraph 39 below
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ShEx’s Performance of the Shareholder Role
18. From 2004 (i.e., the point at which ShEx was transferred from the Cabinet Office
to DTI, as set out at paragraph 6 above), whilst POL remained a subsidiary of
RMG, there was a team within ShEx (the POL Shareholder Team, distinct from the
Royal Mail Shareholder Team) which undertook a shareholder role in respect of
POL on behalf of the Department. During this period (and subsequently) the
Shareholder Team reported to a Director-level civil servant within ShEx (who was
ultimately accountable to the CEO of ShEx). The shareholder role during this
period included reviewing financial and performance reports and related
information in connection with POL’s business; engaging with the business to
secure funding from HMG to deliver the policy objectives set for the business by
the Department (and related funding matters, including the day to day
administration of a working capital facility); oversight in relation to certain
appointments to the POL Board (including the CEO and Chair, as set out at
paragraph 14 above); and oversight of the remuneration of the POL Board.
19.As is set out at paragraph 10 above, until August 2018, the role undertaken by the
Shareholder Team also included policy responsibility for POL on behalf of the
Department. In the period prior to April 2012, this included monitoring the
implementation of policy objectives relating to the Post Office network, including
changes to, and the continued sustainability of, POL’s network of post offices and
Crown branches, as well as supporting Department Ministers on these policy
decisions and with Parliamentary or other stakeholder engagement relating to POL
(including liaising with other Government Departments, such as HM Treasury in
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respect of funding matters). The principal aim of HMG for POL at this time was the
maintenance of as many post offices as could be kept viable (including with the
assistance of a Government subsidy), a theme which continued throughout the
relevant period. I understand that there were a significant number of policy
objectives which changed over time. In particular, following the formulation of
Government policy regarding the privatisation of RMG, the Shareholder Team were
also preparing for the anticipated separation of POL from RMG, as a result of the
expected privatisation of the latter.
20.Prior to 2012, engagement with POL included regular meetings with the executive
team and senior management on policy and shareholder matters, supporting
Ministerial meetings and Ministers’ objectives, including the funding for the
organisation; monthly meetings between the Shareholder Team and members of
POL’s senior management team to discuss POL’s performance; quarterly
performance reviews to discuss more strategic and / or long-term matters; and the
receipt and approval of the group’s strategic plan. Further visibility on financial
performance was also enhanced via holding annual and interim investment reviews
of POL, following its separation from RMG.
21.Despite the above, it is important to note that, prior to 2012, without a seat on the
Board of RM Holdings, the role of ShEx with respect to POL was limited primarily
to receiving information from RMG (including POL) and engaging with it on the
matters detailed above (and related areas of policy). At this stage, ShEx did not
have the broader shareholder role and corporate governance responsibilities for
POL that it was to assume later.
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22.Once the timetable for the privatisation of RMG was known, POL’s Board was
restructured in anticipation of POL’s separation from RMG, with the aim of
promoting POL’s independence from RMG, and putting in place suitably robust
governance arrangements for POL. In particular, a new Chair was appointed in
July 2011. This was followed by the appointment of a senior independent (non-
executive) director in September 2011. Following POL’s separation from RMG in
April 2012, the new Board met for the first time in April 2012.
23.In the period after April 2012, ShEx’s shareholder role in respect of POL (including
its related policy role, until August 2018) was performed in two ways: firstly, via the
dedicated Shareholder Team within ShEx; and secondly, via the appointment of a
new Shareholder NED to the POL Board. The appointment of a Shareholder NED
to a ShEx portfolio asset was a relatively novel concept for ShEx and HMG at the
time, reflecting a desire, in particular, to ensure that Government-owned assets,
particularly those constitutionally distant from their Department, were clear on the
objectives of Departments and their Ministers for the organisations. It also provided
HMG with an enhanced line of sight into the activities of Government-owned
assets. Prior to 2012, very few Arm's Length Bodies (“ALBs”) had Government
Officials on their Boards in a shareholder representative capacity. Given its historic
independence from HMG, as a subsidiary of RMG, convincing POL to allow a
Shareholder NED onto its new Board was particularly challenging.
24. Initially, the Shareholder NED did not lead the Shareholder Team (which instead
reported to a Director-level civil servant within ShEx, as set out above, and who
was ultimately accountable to the CEO of ShEx) but rather worked collaboratively
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with it. The Shareholder NED focussed on her responsibilities as HMG’s
representative on the POL Board, whilst the Shareholder Team focussed on the
delivery of the shareholder role. There was regular interaction between the
Shareholder NED and the Shareholder Team during these early years, although
the sharing of information between the two was subject to certain restrictions,
primarily due to POL’s concern that having a member of the Shareholder Team on
the POL Board at a time when funding arrangements were being negotiated might
give rise to a conflict of interest. Consequently, copies of POL Board papers were
not automatically shared with the Shareholder Team, although the Shareholder
NED did meet regularly with the Head of the Shareholder Team, which allowed for
an informal flow of information from the POL Board (and vice versa).
25.In March 2014, the structure of the Shareholder Team was changed when the head
of the Shareholder Team was appointed to be the Shareholder NED, and the two
roles were then performed by the same individual (albeit that the head of the
Shareholder Team continued to report to a Director-level civil servant within ShEx,
in accordance with the reporting structure summarised above). As the relationship
with POL developed, the Shareholder Team was able to receive copies of the
information that POL shared with the Shareholder NED, providing it with enhanced
visibility on the issues being considered at the POL Board.
26.Whilst the Shareholder Team role was subject to a degree of evolution between
2012-2019, the principal functional responsibilities of the team post-2012 included:
a. monitoring and evaluating POL’s corporate and financial performance,
including against policy objectives and the obligations in the existing
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Funding Agreement (albeit that from 2018 this was primarily limited to
monitoring POL’s performance against its obligations to maintain an
appropriate network, in light of the creation of a policy team within the
Department) and reviewing POL’s strategic plan;
b. working to ensure the sustainability of POL’s financial position, including in
relation to its financing and applicable EU state aid approvals;
c. monitoring significant risk issues and reporting these to the Department;
d. acting as a liaison between POL and the Department to provide relevant
shareholder consents in respect of Reserved Matters (explained further in
paragraph 39 below);
e. advising ministers in respect of the foregoing, and assisting the Department
to secure sufficient funding from HMG for POL to deliver the Department's
policy objectives, as well as supporting the Department Ministers with
Parliamentary or other stakeholder engagement;
f. advising on appointments to the POL Board, including remuneration for
these roles; and
g. arranging and attending ad hoc meetings between the Shareholder Team /
Shareholder NED and POL management to discuss matters relevant to the
above.
27.In addition to the information that the Shareholder Team received via the
Shareholder NED and Board papers, there was also regular additional information
supplied to the Shareholder Team as well as a rhythm of meetings and interactions
with POL (in addition to the Shareholder NED’s attendance at Board meetings)
which facilitated their role. For example:
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a. POL provided the Shareholder Team with the monthly financial packs that
were prepared for the POL Board, and also with quarterly shareholder
meeting packs, which were produced separately from Board papers (and
specifically for the shareholder) and which provided further insight into
POL’s commercial and other initiatives;
b. regular (generally quarterly) shareholder meetings were held with POL’s
senior management, which were generally attended by POL’s CEO and / or
CFO, to discuss financial and commercial performance, outlook and POL’s
performance against HMG’s objectives;
c. monthly monitoring meetings were held with POL senior management on a
range of issues including network sustainability, communications, and
industrial relations; and
d. other ad hoc interactions with POL senior management either on a
reactionary basis or in relation to shorter term projects where Shareholder
visibility was deemed appropriate.
The Shareholder NED
28.The Shareholder NED’s position on the POL Board was filled by a nominated
representative from ShEx (and subsequently UKGI), initially Susannah Storey, who
held the post from April 2012 to March 2014. From March 2014 — March 2018, the
post was held by Richard Callard (who, as set out at paragraph 25 above, was
head of the Shareholder Team). From March 2018 — May 2023, Tom Cooper (also
head of the Shareholder Team), was in post. The current Shareholder NED and
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Head of the Shareholder Team is Lorna Gratton, who has been in post since May
2023. These individuals all undertook the role on an unremunerated basis, as
employees of ShEx / UKGI.
29.As mentioned in paragraph 23, unlike other NEDs on the POL Board, who provide
specialist subject-matter expertise to the POL Board, the Shareholder NED sought
to bring HMG’s perspective to the POL Board and to provide further context to the
Department's objectives (and, where relevant, concerns) in Board and sub-
committee meetings to aid decision-making. It is also important to note that the
Shareholder NED was and is only one of a number of members of the Board, and
their responsibilities are the same as those of their fellow Directors. The
Shareholder NED participates in collective decision making around the Board
table, in the same way as their colleagues, and does not have any powers to direct
the actions of the Board or override decisions of which he/she does not approve.
Although the Shareholder NED had, and continues to have, the same legal
obligations and responsibilities as other NEDs on the POL Board, the discharge of
their functions also involves regular interactions with HMG, in keeping with the
purpose of their role in enhancing HMG's visibility of activities within POL.
30. It is also important to note that the role of the Shareholder NED has evolved over
time, particularly given that, when Ms Storey joined the POL Board in April 2012
as the first Shareholder NED, the POL Board was brand new and was still in
transition to a standalone company following separation from RMG. Further, the
list of Board sub-committees on which the Shareholder NED has sat is not
prescribed and has not remained static but has adapted to meet the specific focus
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of the Shareholder over time. For example, in addition to her position on the POL
Board, Ms Storey was also a member of the POL Board’s Audit, Risk and
Compliance sub-committee (“ARC”) from her appointment as Director until March
2013, and a member of the Pensions subcommittee until her departure from the
Board in March 2014.
31.Mr Callard also sat on a number of POL Board sub-committees during his tenure
including the Pensions sub-committee (from October 2014), the ARC sub-
committee (from January 2016), and the Project Sparrow sub-committee (from its
inception in April 2014 until it ceased to sit in 2015). Of these, it may be noted that
the purpose of the Sparrow sub-committee, as defined in the Terms of Reference
(UKG100043219) was to “make recommendations to the Board in respect of Project
Sparrow and provide strategic oversight of the delivery of the project and the
development of the Initial Complaints Review and Mediation Scheme”. However,
it should also be explained that the sub-committee did not consider any individual
cases under the Mediation Scheme; rather it had an overview of the scheme’s
development, operation and delivery. Mr Callard’s role and responsibilities
remained essentially unchanged following the transfer of ShEx’s functions to UKGI
in April 2016.
32.In March 2018, Mr Callard was succeeded, as Shareholder NED and head of the
UKGI Shareholder Team, by Mr Cooper. Mr Cooper was a Director-level appointee
within UKGI, and was therefore in a position to oversee the Shareholder Team on
3 As is set out in UKGI's Opening Statement at paragraph 26, Project Sparrow was POL's internal
reference for issues relating to Horizon.
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behalf of the UKGI executive committee. Mr Cooper sat on the Remuneration, ARC
and the Postmaster Litigation Board sub-committees (from 2018 to 2020).* As
described in the Terms of Reference (UKGI00019294), the Postmaster Litigation
Board sub-committee was “established to receive legal advice on the Post Office’s
Defence in the Group Litigation [Alan Bates & Ors v Post Office Limited] as it
proceeds to final resolution.” I\n practice, this meant it was a forum for the members
of the sub-committee to consider legal advice provided to it by POL’s legal team
as well as matters arising in the group litigation more generally, and, in certain
instances, discuss these matters with POL’s external counsel.
The transfer of ShEx’s functions from BIS to UKGI
33.Until April 2016, ShEx was a directorate within the Department (and as noted at
paragraph 7 above, the Accounting Officer was the Permanent Secretary of the
Department). However, with the formation of UKGI in April 2016, ShEx’s
shareholder role (including, in respect of POL, its related policy role) was formally
delegated to UKGI, a wholly owned subsidiary of HM Treasury and whose
Accounting Officer is the CEO of UKGI. Since that date, UKGI has therefore
performed the POL shareholder role on behalf of the Department.
34.In practice, the transfer of the shareholder role from ShEx to UKGI involved the
civil servants that had comprised the ShEx directorate within BEIS (and its
predecessor Departments) transferring to a company wholly owned by HM
4 Mr Cooper also sat on the Historical Remediation Committee from its inception in July 2021, which
will be addressed in response to the second witness statement requested by the Inquiry in its Rule 9.
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Treasury and operating outside and independently of a Government Department.
Since 2016 UKGI has had an independent Board and a range of clearly defined
responsibilities set out in its own Framework Document (UKGI00043215). The
transition from ShEx to UKGI did not result in any fundamental change in the
structure of the role in relation to POL. A Shareholder NED remained on the POL
Board and that individual remained the head of the Shareholder Team within UKGI.
Whilst UKGI was now owned by HM Treasury, it continued to perform these
functions as shareholder representative for the Department, who remained the
shareholder of POL.
35.Since 2018, UKGI and the Department have introduced a number of measures
designed to augment the established governance practices and behaviours that
were already in place in respect of the governance and oversight of POL as a public
corporation. The purpose of those steps was to enhance and broaden HMG’s
oversight of POL and to bring together and to document existing practices. Whilst
some of these measures pre-date the settlement of the GLO, a significant
proportion were introduced after the settlement and I will therefore deal with them
together in my second witness statement. For reference, they are described at
paragraph 32 of the UKGI response to the Call for Evidence.
36.In August 2018, a separate BEIS policy team was formed to deal with POL policy-
related issues. The team was introduced to align the governance of POL to the
best practice model adopted for other BEIS-owned ALBs — which envisages the
separation of the shareholder and policy roles — and as a consequence of the
increased volume and complexity of policy-related interactions between POL and
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BEIS. From this point forwards, the BEIS policy team took on responsibility for
setting the overall policy direction for POL, including in relation to POL’s social
purpose and long term strategy, responding to Parliamentary scrutiny, engaging
with stakeholders on issues relating to the policy direction of POL and ensuring
POL’s activity was consistent with the wider Government policy framework. UKGI
retained the responsibilities described at paragraph 26 above (with the qualification
in respect of policy-related matters stated at paragraph 26(a)). While this
represented a formal allocation of responsibilities between the BEIS policy team
and the UKGI Shareholder Team, in practice, the teams operated (and continue to
operate) with a close working relationship and collaborate on a range of issues to
ensure that the expertise from each team is utilised appropriately.
37. This updated relationship between BEIS and UKGI was subsequently set out in a
Memorandum of Understanding dated 12 December 2019 (UKGI00013078), which
contains a detailed description of the shareholder role and is addressed in my
second witness statement in light of the fact that it post-dates the settlement of the
GLO.
GOVERNANCE DOCUMENTATION
Articles of Association & Other Constitutional Documentation
38.Although POL is classified for public sector purposes as a public corporation by
virtue of HMG’s ownership, it is a private company limited by shares for the
purposes of the Companies Act 2006 and, as with any private limited company,
POL was, and is, governed by its Articles of Association (“Articles”). The Articles
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which governed POL immediately following its separation from RMG were those
adopted following a resolution on 2 April 2012, and further Articles were adopted
by a resolution on 12 September 2013.
39. Both the 2012 and the 2013 Articles (UKGI00043216 and UKGI00043217) include
provisions at article 10 relating to the Special Share held by the Secretary of State,
and, at article 11, list a number of the matters in respect of which POL required the
written consent of the Shareholder. The effect of these consent rights was to
provide the Department with a degree of oversight and control over certain POL
Board decisions. These included:
a. the appointment or removal of Directors of the company;
b. setting and approving changes to Directors’ remuneration;
c. borrowing in excess of certain pre-limits, as agreed with HM Treasury;
d. adopting and implementing the company’s strategic plan;
e. disposing of substantial assets of the business, and entry into other high-
value transactions;
f. voluntary winding-up of the company or a member of the group;
g. varying the company’s Articles of Association, including special shareholder
rights; and
h. issuing or allotment of shares or granting of shares in the company.
40.In addition to the Articles, oversight of POL by ShEx / UKGI/ the Department was
provided for by the terms of applicable Funding Agreements, and Entrustment
Letters:
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a. Funding Agreements (an example of which is at document UKGI00043218)
set out the obligations placed on POL by the Department, including with
respect to network size and scope (i.e. the minimum number of branches to
be maintained), conditions for funding release, and important reporting
requirements to the shareholder;
b. Entrustment Letters (an example of which is at UKGI00001330) articulated
the service and network requirements that justified and underpinned the
State aid approval to allow POL to receive and use public funding.
Statement of Truth
I believe the content of this statement to be true.
Dated: 19 February 2024
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WITN10770100
Index to First Witness Statement of CHARLES HUNTER DONALD
No. I URN Document Description Control Number
1. I INQ00000228 UKGI's / BEIS’s joint V1IS00000300
response to the Call for
Evidence
2. I INQ00000028 Response to Batch VIS00000345
Request 001
INQ00000044 Response to Batch VISO0000365
Request 002
INQ00000888 Response to Batch VIS00000649
Request 003
INQ00000883 Response to Batch VIS00000560
Request 004 (Questions 1
-4,7&8)
INQ00000009 Response to Batch V1IS00000233
Request 004 (Questions 5
& 6)
3._ I SUBS0000006 UKGI Opening Statement _I SUBS0000006
4. I UKGI00043211 HM Treasury Managing UKG1I00043211
Public Money
5. I UKGI00043212 BERR Annual Reports UKG100043212
from 2008-9
6. I UKGI00043213 2011 POL Annual Report I UKGI00043213
and Accounts
7. I UKGI00043214 HM Treasury Consolidated I UKGI00043214
Budgeting Guidance:
2023-24
8. I UKGI00043219 Sparrow Subcommittee UKGI052975-001
Terms of Reference
9. I UKGIO0019294 Postmaster Litigation VIS00013145
Board Sub-committee
Terms of Reference
10. I UKGI00043215 UKGI Framework UKG1I00043215
Document
11. I UKG100013078 Memorandum of UKG1023872-001
Understanding dated 12
December 2019
12. I UKGI00043216 POL Articles of UKGI00043216
Association 2012
13. I UKGI00043217 POL Articles of UKG1I00043217
Association 2013
14. I UKGI00043218 Funding Agreement UKG100043218
15. I UKG100001330 Entrustment Letter UKGI012144-001
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