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Witness Name: Charles Hunter Donald
Statement No.: WITN10770200
Dated: 26 April 2024
POST OFFICE HORIZON IT INQUIRY
SECOND WITNESS STATEMENT OF
CHARLES HUNTER DONALD
I, CHARLES HUNTER DONALD, will say as follows
INTRODUCTION
1. lam the Chief Executive Officer of UK Government Investments (“UKGI”). This
is the second witness statement that I have made to the Inquiry, the first being
dated 6 February 2024.
2. In my first statement, I explained the role of UKGI (and its predecessor the
Shareholder Executive (“ShEx”)) in the corporate structure of Post Office
Limited (“POL”) up to the date of the settlement of the Group Litigation Order
proceedings (the “GLO”) in December 2019.
3. As requested in the second part of the Inquiry’s Third Rule 9 Request dated 8
December 2023 (the “Request”), this second witness statement addresses the
relevant changes that have been made in respect of UKGI's role and the
governance arrangements relating to POL since the end of the period covered
by my first statement. As noted in paragraph 35 of my first witness statement,
this will include some of the measures that were introduced before the
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settlement of the GLO and that have been in place since 2018, which are more
appropriately covered in this statement. Where I cover matters that pre-date the
settlement of the GLO, I will provide details of when the relevant measure was
introduced.
. Given the scope of the Request, I have focussed on developments and
enhancements to the governance and Board arrangements relating specifically
to POL as well as on changes to aspects of UKGI’s shareholder role with POL.
I have not sought to provide detail relating to the developments in UKGI's
portfolio practices more broadly; for example, how UKGI reports on risks in
relation to assets within its portfolio, the internal peer review processes UKGI
undertakes in relation to its portfolio and the guidance, training and support that
UKGI shareholder teams and shareholder NEDs are afforded. I would, of
course, be very happy to provide further detail on these matters if that would be
of assistance to the Inquiry.
. lam 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. In
preparing this statement, I have communicated with other members of staff,
including those who have been or are part of UKGI’s shareholder team for POL,
and I have also referred 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 exhibits), I have been assisted by
lawyers employed by UKGI and by Eversheds Sutherland (International) LLP
(the recognised legal representatives for UKGI in the Inquiry).
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6.
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As with my first statement, much of the information relevant to the post-
December 2019 element of the Request has already been provided by UKGI in
the form of (in particular), UKGI/BEIS’s joint response to the Call for Evidence,
the responses to Batch Requests 001-004 (INQ00000028, INQ00000044,
INQ00000888 , INQ00000883, INQ00000009) and UKGI’s Opening Statement
to the Inquiry (SUBS0000006). I have incorporated the contents of those
materials in this witness statement, to the extent necessary to address the
Request.
RESPONSE TO THE REQUEST
7.
Overarchingly, the changes made to the governance arrangements for POL
from a shareholder perspective are multi-faceted and reflect: (i) enhancements
to UKGI’s policies and practices which have been informed by UKGI’s own
learnings as well as developing practice in the private and public sectors; and
(ii) the challenges faced by POL following the GLO “Common Issues” Judgment
and “Horizon Issues” Judgment. For the purposes of this statement, I have
summarised the changes made to the governance arrangements in the
following categories:
a. Practical changes to the governance role including frequency of
meetings and interactions between POL, UKGI and the Department for
Business, Energy and Industrial Strategy/Department for Business and
Trade (collectively, the “Department”)."
1 The Department for Business and Trade assumed ownership of POL from the Department of
Busines:
change.
s, Energy and Industrial Strategy in February 2023 as part of machinery of government
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b. Enhancements to governance arrangements for POL including agreeing
a Framework Document and amendments to POL’s Articles of
Association.
c. Enhanced arrangements to permit UKGI and the Department to have
greater visibility on material litigation.
d. Enhanced Shareholder focus on culture and issues highlighted in the
judgments of the High Court in the GLO.
e. Changes to the role of the Shareholder NED’s role on the POL Board
and POL Board sub-committees.
f. Additional responsibilities of the UKGI Shareholder Team to support
arrangements for compensating Subpostmasters.
Practical Changes to the Governance Role
8. A number of measures have been introduced by UKGI and the Department? to
enhance established governance practices and behaviours in order to provide
appropriate governance and oversight of POL as a Public Corporation. In
addition, the frequency of interactions between POL and Her Majesty's
Government (“HMG’) has increased, reflecting the challenges arising from the
GLO and the fact that POL has required substantial funding from HMG in this
period (as outlined in this statement).
9. In paragraph 27 of my first witness statement, I have outlined in broad terms
the regular rhythm of meetings that took place between the UKGI Shareholder
Team and POL prior to the settlement of the GLO. These have broadly
2I have addressed the allocation of responsibilities between UKGI's Shareholder Team and the
Department's Policy Team in paragraph 36 of my first statement which have stayed broadly
consistent save for the point I mention below on compensation.
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continued. However, the content and frequency have changed over time and
certain meetings have been put on a more formal footing. In particular:
a. Shareholder meetings: These continue to occur. However, they take
place quarterly and the regularity is more rigorously enforced. They
remain one of the key formal forms of engagement that enable UKGI
and POL to discuss a range of strategic and operational issues, and
enable POL to provide updates to HMG. Since 2018 these meetings
have included the Department's Policy Team (following the split of
responsibilities referenced in paragraph 36 of my first witness
statement). Furthermore, following settlement of the GLO, UKGI's
Shareholder NED has had meetings with the CEO of POL at least
fortnightly (often with the Director of the Department) to share concerns
and update on activities and priorities. UKGI’s shareholder NED also has
regular interactions with the Chair of POL including periodic meetings.
b. Network meetings: Prior to the settlement of the GLO, UKGI (and ShEx)
periodically had meetings to discuss performance and operational
matters relating to POL’s network. These were particularly frequent
when POL was in the process of Network Transformation (a period from
2011 to 2015) and the frequency reduced as the network began to
stabilise in size. From mid-2018, the meetings took place on a quarterly
basis and they moved to monthly meetings from August 2021. During
these meetings, officials from UKGI and the Department review POL’s
performance in meeting its branch network obligations. These meetings
enable UKGI and the Department to: (i) monitor POL’s performance
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against its obligations to provide services as set out in the applicable
Funding Agreements and Entrustment Letters;? and (ii) build effective
working relationships with POL’s management, promoting an effective
interface for the reporting of data of public interest into the Department.
In 2018 and 2019, UKGI encouraged POL to have its network report
approved at Board level and, from 2019/2020 onwards, to have the
report externally audited to provide assurance that POL is complying
with its contractual commitments to HMG.
c. Financial and investment spend monitoring meetings: Financial
monitoring meetings for POL typically took place monthly prior to the
settlement of the GLO. The meetings were an opportunity to review
POL’s monthly management accounts and to ask POL’s finance team
questions regarding operational performance and its performance
relative to budget and forecasts. From 2018, these meetings continued
taking place on a monthly basis between POL and the UKGI Shareholder
Team. However, these meetings were more focussed on investment
spend given the level of investment required in the business during the
2018 to 2021 period. They also provided an opportunity to discuss wider
strategic trends, risk, upcoming commercial issues, and outlook.
Frequent meetings with POL’s Head of Strategy also provide UKGI's
Shareholder Team with an opportunity to ask questions concerning the
performance of POL’s investment spending. These meetings allow the
Shareholder Team to provide quarterly financial performance and
3I described these documents in paragraph 40 of my first witness statement.
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investment spend briefings to the Department’s senior officials and
Ministers which are included in Quarterly Updates prepared by UKGI's
Shareholder Team and the Department's policy team for the benefit of
the Department's Permanent Secretary and Ministers. All of these
meetings continue to this day.
. ‘Working Group’ Meetings: Prior to the settlement of the GLO, UKGI had
regular interactions with the National Federation of Subpostmasters
(“NFSP”) and POL on matters relating to the postmaster relationship. In
June 2019, the Department’s Minister who is responsible for POL and
postal affairs (the “Responsible Minister”) instituted ‘Working Group’
meetings with POL and NFSP, which the UKGI shareholder team joined.
The group considers the relationship between postmasters and POL and
focusses on issues associated with that relationship and the
transformation of the branch network.
10.As well as the continuation of these interactions, UKGI has also organised or
been involved in additional engagements to discuss strategic and operational
issues. For example, since Spring 2020 the Responsible Minister+ and POL’s
CEO have met on a monthly basis.5 These meetings are attended by
representatives from UKGI's shareholder team (usually the Shareholder NED)
and the Department. In addition to these monthly meetings, since 2019 the
POL Chair also meets at least annually with the Responsible Minister or the
Department's Permanent Secretary to discuss the business’ performance and
4 Currently the Parliamentary Under Secretary of State (Minister for Enterprise, Markets and Small
Business).
> For the avoidance of doubt, UKGI has always had regular interactions with Ministers and POL
management which are described in paragraphs 26 and 27 of my first witness statement.
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other relevant issues, including, for example, Board effectiveness and feedback
on the Chair’s performance. The Permanent Secretary will also periodically
meet with POL’s CEO.
11.As part of its monitoring of POL, UKGI has helped implement change in relation
to the governance of POL’s major investment projects. For example, in relation
to POL’s decision to procure a new IT system for its branches (in late 2020),
given the significant investment spend, UKGI required POL to produce a
business case and for POL to seek approval from the Department. Previously,
this would have been a matter which POL would have managed without the
need for further approvals (beyond those it seeks more broadly in relation to
HMG funding). However, given the nature of the project, its importance to the
future of the company and the significant costs involved, UKGI proposed
additional governance at Department level so that HMG could seek its own
assurance about the project and the use of the funding being provided.
Following its approval of the business case, since October 2021, UKGI has
participated in monthly meetings with POL and the Department to monitor
progress of the project.
12.UKGI’s Shareholder Team also meets with POL’s internal audit team
approximately once a year since 2019 (in addition to the Shareholder NED’s
interactions via POL’s Audit, Risk and Compliance committee), which provides
that team with the opportunity to raise any issues with UKGI that it may have
and for UKGI to cover any issues of concern, the internal audit work plan and
resourcing. UKGI continues to be given the opportunity to comment on POL’s
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draft Annual Report before publication (a practice that existed before settlement
of the GLO).
13.Since October 2020 monthly meetings have taken place between POL, UKGI's
Shareholder Team and the Department's Policy Team to monitor the
performance of POL’s Remediation Unit (previously known as the Historical
Matters Business Unit, the “RU”). The RU was set up in July 2020 and has a
remit of delivering the legal and compensation workstreams flowing from the
GLO proceedings. The monthly meetings with the RU are an opportunity for the
UKGI Shareholder Team, alongside the Department's policy team, to provide
challenge to RU management on the progress, delivery and overarching
strategy of the compensation schemes. In addition, there is the opportunity to
review the operating costs of the RU against agreed budgets. In November
2023, these meetings were broadened in scope to combine both RU spend and
Inquiry spend (which was previously discussed regularly albeit on an ad hoc
basis). This regularised discussions on Inquiry spend and facilitated discussion
on Inquiry budget expectations, forecasts and the reasons for any divergence
between predicted and actual spend.
14.The UKGI Shareholder Team and the Department's policy team also have
regular meetings with POL in relation to the establishment, delivery and
monitoring of the compensation schemes flowing from the GLO including the
Historical Shortfall Scheme (“HSS”) and Overturned Criminal Convictions
("OC") processes, which are described in paragraphs 41 to 45 below.
15.Where unexpected events or changes in circumstances arise, UKGI adapts its
interactions with POL to support its monitoring activities. An example is UKGI's
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Shareholder Team’s interaction with POL during the Covid-19 pandemic, which
resulted in a schedule of new meetings and additional reporting being agreed
at short notice. UKGI’s approach to monitoring and the accountability of POL
to HMG is primarily therefore a proactive one, supplemented, where required,
by reactive responses which are tailored to the particular circumstances of a
given issue.
16.Overarchingly, it is UKGI’s view that the range of meetings described above
that the UKGI shareholder team and the Department's policy team have with
POL have enhanced the visibility and intensity of dialogue on various issues
relating to post GLO outcomes.
Enhancements to the Governance Arrangements with POL
Framework Document
17.As I explained at paragraph 15 of my first statement, POL is classed as a Public
Corporation. Traditionally, government shareholdings in Public Corporations
would not have been supported by a Framework Document (“FWD”) and would
instead rely on other company corporate governance documents and
processes, such as the company’s Articles of Association (“Articles”), to provide
structure to government oversight. The prevailing view prior to 2017-18 was
that a FWD was unnecessary given (i) POL’s status as a public corporation;
and (ii) the suite of governance mechanisms provided to the shareholder within
POL’s Articles, Funding Agreement and Entrustment Letter.
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18.In December 2017, as a result of evolving best practice within UKGI, the
Shareholder Team determined that the agreement of a FWD would be
beneficial to the relationship between UKGI, the Department, and POL.
19. Accordingly, a FWD was agreed between UKGI, the Department and POL, and
became effective in April 2020 (POL00362299). This document was the
outcome of negotiations which had been ongoing since December 2017.
Finalisation was delayed partly while POL examined changes to its group
structure.
20.The FWD sets out the governance interactions, roles and responsibilities
between POL, UKGI and the Department and sets out the government-wide
policies and governance standards that are applicable to POL as a Public
Corporation. It was intended to provide clarity to all parties as to how oversight
of POL by HMG is to be conducted and set expectations between the parties.
In many respects, the FWD codified the governance arrangements already in
place. However, it also included additional commitments and approval points
for the Department as shareholder that do not sit in other documents imposing
constitutional or contractual obligations (for example, POL’s Articles). For
example, Appendix 2 of the FWD includes a list of government-wide policies
that are applicable to POL as a Public Corporation, which in certain instances
require HMG consent; and Appendix 5 of the FWD references specific
arrangements related to POL’s commitment to observe Public Sector Pay and
Terms.
2
.By way of summary, the key additional areas and clarifications with regard to
governance arrangements that the FWD covers are as follows:
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a. the processes relating to Department's approval of POL’s annual and
strategic plans and the criteria which POL should follow when preparing
these;
b. the respective roles and accountabilities (collated in a single document)
of key individuals and teams, for example those of POL’s Board, Chair
and accounting officer and the Department's Policy Team and the UKGI
Shareholder Team;
c. POL Board composition and the corporate governance standards
applicable to POL;
d. further detail on the processes relating to the recruitment, remuneration
and review of the POL Board and senior executives and how this activity
should be conducted in practice;
e. the obligation placed on POL to lay its annual report and Network Report
before Parliament; and
f. information flow (including in respect of litigation matters).
22.UKGI’s governance processes require it to review its Framework Documents
every three years. Commensurate with that requirement, UKGI is in the process
of conducting that review in advance of discussions regarding renewal with the
Department and POL.
Adoption of New Articles
23.At the same time as work was being undertaken in relation to the FWD, further
work was conducted by UKGI in consultation with the Department to review
POL'’s Articles and to introduce updates to refresh the shareholder reserved
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matters and ensure they were fit for purpose from the perspective of the
shareholder several years on from POL’s separation from the Royal Mail Group.
24. The new Articles, which were adopted in 2020° (UKGI00044318) alongside the
FWD, enhanced the Department's oversight in key areas, took account of
POL’s current corporate structure and reflected how POL interacted with the
Department in practice. UKGI facilitated the negotiation of the 2020 Articles, in
tandem with the discussions between the Department, UKGI and POL on the
FWD.
25.The changes to the Articles in 2020 included enhancements to the
Department's consent rights (“Reserved Matters”) which, provided a greater
degree of oversight and control over certain POL Board decisions, including:
a. an expansion of the scope of Reserved Matters to apply to each
company within the POL group; and
b. amendments to Reserved Matters, for example, introducing greater
HMG control on any proposed dividend distribution, and on POL’s
external borrowing.
26. The 2020 Articles also clarified the procedure for seeking Shareholder consent
to Reserved Matters, requiring POL Board consideration prior to seeking
Shareholder consent and requiring the POL Board to give the Shareholder
advance notice. This in practice enhances HMG oversight by:
6 It should be noted that Article 50 of the Articles on the cap on non-executive director remuneration
was amended by a special resolution in December 2022. Therefore, the current Articles are dated
2022.
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a. the Shareholder NED, through their seat on the POL Board, having early
sight of matters potentially requiring Shareholder consent;
b. POL providing, as far as possible, advance notice of the existence of
circumstances in which the need for Shareholder consent is likely to
arise; and
c. The Department, having received this advance notice, being better able
to plan for, and respond to, requests for consent within timeframes that
would not impede POL’s operations.
Governance in respect of litigation and legal matters
27.UKGI has also taken steps to develop the visibility it and the Department have
in relation to material litigation. In particular, in 2018, UKGI entered into a
litigation protocol with POL and the Department that provided UKGI and the
Department with enhanced access to legal advice being provided to POL in the
context of the GLO (BEIS0000079). Following the settlement of the GLO, the
scope of the litigation protocol has been expanded to cover the settlement
processes which flowed from the GLO (UKGI00044319).
28.UKGI has also reflected on the role that it should play when one of its assets 5
engaged in potential or actual material litigation in the future and has taken
steps to introduce specific provisions into all new or revised framework
documents for assets for which it performs the shareholder role, which permit
UKGI and the relevant Department to have greater visibility on substantial
litigation. Such provisions were included in the 2020 POL FWD described
above, which: (i) requires POL to report at least quarterly on any active litigation
and any threatened or reasonably anticipated litigation; and (ii) codifies the
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requirement to enter into information sharing protocols for substantial litigation
to facilitate the sharing of legally privileged information and to ensure UKGI and
the Department retain adequate visibility of the substance and progress of such
litigation.
29.In addition, and with UKGI’s encouragement, in July 2021 POL appointed a
NED with legal expertise to the POL Board, Ben Tidswell. This appointment
bolstered the strength and capability of the POL Board by improving the Board’s
ability to oversee and challenge the POL executive on its work to resolve
compensation matters arising from the GLO. Since his appointment, Mr
Tidswell has been the Chair of POL’s Remediation Committee (described
below) and Senior Independent Director since March 2023.
Enhancements relating to culture
30. Following the settlement of the GLO, UKGI has increased its dialogue with POL
and the Department on POL’s corporate culture, with a focus on resetting the
relationship between POL and subpostmasters. It has done this by: (i) placing
specific objectives into the Chair letter issued to POL; (ii) supporting the
appointment of two Postmaster NEDs; and (iii) increased interactions with POL
on culture and postmaster relations. I develop these points below.
Chair's letter
31.By way of background, the issuance of an annual Chair's letter has been an
important feature of the governance model for POL since 2017. Annual Chair's
letters complement other core governance documents such as FWDs and other
constitutional agreements such as Articles and focus on shorter-term priorities
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32.
33.
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and expectations of Ministers and government departments. They do not
attempt to be comprehensive (in terms of all that is required from the Chair, the
Board and the organisation) but rather highlight the particular focus required for
the forthcoming year from the perspective of the shareholder.
Following the settlement of the GLO, in order to ensure enhanced focus of the
POL Chair and Board on POL’s corporate culture and resetting the relationship
between POL and subpostmasters, UKGI worked with the Department to place
specific objectives in relation to culture into its annual Chair's letter from 2020.
The Chairs letter issued in February 2020 (UKGI00011628 and
UKGI00027016), directed POL to “...Prioritise culture change, in particular
building a more productive relationship with postmasters that helps them to
deliver better services to consumers’. This was also built upon in the Chair's
letter issued in March 2021 (UKGI00000049), which set further expectations for
POL in relation to key post-GLO issues. This included prioritising cultural
change and building a more productive relationship with postmasters, and
building a more diverse board and taking responsibility for the induction of two
Postmaster NEDs (see further below). Chair's letters in 2022 (UKGI00044315)
and 2023 (UKGI00044317) have similarly emphasised the importance of
driving forward the company’s culture change programme and embedding any
learnings and changes.
As well as a focus on POL’s corporate culture, Chair's letters from the period
2020 to 2023 have focussed on a number of additional strategic priorities and
objectives relating to post-GLO issues including:
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a. Fully engaging with the Inquiry in an open, transparent and proactive
manner.
b. Resolving historical litigation issues including effective delivery of
compensation in a timely manner.
c. Resolving issues with POL’s systems and processes that were
identified: in the Common Issues judgement; the Horizon Issues
judgement; and by POL and consultants employed by POL after the
GLO.
d. Managing legal costs particularly on compensation and Inquiry matters.
e. Objectives relating to the delivery of key investment spend including with
regards to a new IT system for branches.
f. Maintaining and improving capacity, capability and resilience at all levels
of the organisation to ensure the delivery of its business plan.
g. Effective financial management to ensure medium term viability.
Appointment of Postmaster NEDs
34. Another significant governance development since the settlement of the GLO
has been the appointment of two Postmaster NEDs to the Board. These
appointments were instituted to enable postmasters to be represented at the
highest levels within POL. UKGI and the Department actively supported this
initiative, recommending it to the Secretary of State in July 2020. UKGI’s belief
is that the appointment of Postmaster NEDs to the Board enables the interests
of postmasters to be more effectively represented and helps the POL Board to
understand, more directly, the experiences of those working within the post
office network. UKGI also considers that the appointment of Postmaster NEDs
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is an important signal of POL’s commitment to put the success of postmasters
at the centre of the company’s future strategy and to alter its culture.
Increased dialogue on culture and postmaster relations
35.With encouragement from the Department and UKGI, POL has reviewed its
engagement model and the processes it uses in its dealings with postmasters.
UKGI has also substantially increased its dialogue with POL on both (i)
corporate culture and (ii) postmaster relations, with these topics being a point
of discussion in:
a. Quarterly Shareholder Meetings with POL where it often features as an
agenda item;
b. Monthly ministerial meetings involving UKGI, POL and the Department;
c. Meetings between the Shareholder Team and POL’s executive including
the CEO;
d. The Shareholder NED’s interactions with the Chair; and
e. The ‘Working Group’ meetings with the NFSP.
UKGI’s Shareholder NED’s role on the POL Board and POL Board Sub-
Committees
36.As I described in my first statement, Tom Cooper succeeded Richard Callard
as the Shareholder NED and head of the POL shareholder team in March 2018.
In addition to being a member of the POL Board, from the beginning of his
tenure, he was a member of the POL Board's Litigation Sub-Committee (until it
was brought to a close in March 2020), Remuneration Committee and Audit,
Risk and Compliance sub-committee (“ARC”). Following the settlement of the
GLO, Mr Cooper continued his engagement with the issues that had been the
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subject-matter of the GLO by attending regular additional POL Board meetings
that were two to four times per month for a period of five months to oversee
POL’'s response to ongoing legal proceedings, and also via his appointment to
POL’s Remediation Committee’, which was established in April 2021 (the
“RemedCo”). Mr Cooper was also appointed to POL’s Nomination Committee
in March 2021.
37. The RemedCo is a sub-committee of the POL Board. The RemedCo’s purpose
is set out in the sub-committee’s terms of reference, a copy of which I attach
(UKGI00044316). It includes the oversight of the Historical Shortfall Scheme
(“HSS”), determining POL’s stance in relation to appeals by convicted
postmasters against their convictions, the management of the claims made for
compensation against POL by those who have had their convictions overturned
(“OC”) and addressing all other compensation matters arising out of the GLO
“Common Issues” and “Horizon Issues” judgments. During his tenure, Mr
Cooper attended meetings of the RemedCo which were held on a weekly to
monthly basis.
38.The Shareholder NED’s responsibilities at RemedCo are the same as the other
members and includes receiving and reviewing documents relevant to its terms
of reference; providing constructive challenge on the matters being addressed
by the RemedCo; participating in decision making and _ providing
recommendations to the Board. From a governance perspective, the
Shareholder NED’s position on the RemedCo is intended to provide a line of
7 Previously named the “Historical Remediation Committee”
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sight for HMG on the matters being addressed by the RemedCo and to bring a
HMG perspective to aid the RemedCo’s decision-making.
39.In addition, the Shareholder NED attends, as an observer, meetings of the
Department Steering Committee for the HSS (the “HSS SteerCo”) and of the
Department's POL Overturned Criminal Convictions Board (“POC Board”),
which are each responsible for providing approval on behalf of HMG to POL on
certain key compensation-related decisions being made by POL (and, as
necessary, challenge the approach being proposed by POL). The UKGI
Shareholder Team (along with the Department's Policy Team) provided support
to these Governmental committees (see below), however the decision makers
in relation to matters referred to them are officials from the Department and
HMT. The Shareholder NED’s status as an observer (i.e. not a decision maker
but a participant in the discussions) is intended to ensure that officials from the
Department and HMT can draw on relevant insights and information being
considered at the RemedCo and POL Board.
40.When Mr Cooper completed his tenure as the Shareholder NED in May 2023,
he was succeeded by Lorna Gratton who remains in post. In addition to her
membership of the POL Board, the RemedCo, and her attendance as an
observer at the above meetings, Ms Gratton is also a member of POL’s ARC,
Remuneration Committee, Nomination Committee and Investment Committee.
Ms Gratton also attends the HSS SteerCo and POC Board as an observer.
Since May 2023, Ms Gratton attends as an observer the Horizon Compensation
Programme Board with POL and the Department's Policy Team (this is a
Department led board), which looks at cross cutting issues between the
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compensation schemes and seeks to achieve consistency between them. Ms
Gratton’s other responsibilities are the same as those of Mr Cooper described
above.
Additional responsibilities of the Shareholder Team to support compensation
41.1 have outlined in my first Witness Statement that, following the creation of the
Department's policy team in 2018, UKGI's responsibilities in relation to POL
primarily focused on corporate governance, strategy and monitoring POL’s
stewardship of its financial resources, as well as advising the Department on
matters relating to the GLO. As noted above, the Shareholder Team also
assisted HMG with certain matters following the settlement of the GLO,
including providing support to the Department in relation to the HSS, OC and
certain other compensation payment workstreams.
42.HMG work on, and the associated governance of, compensation workstreams
(including use of external advice) was the subject of discussion and agreement
between UKGI and the Department. I have outlined below how the allocation of
UKGI and Departmental responsibility and resourcing varied over time
depending on the nature and progress of the compensation workstreams and
the resources available in the Department and UKGI.
43.In mid-2020, it became apparent that POL would require HMG funding for the
HSS and following a formal request from POL in October 2020, UKGI's
Shareholder Team began assisting the Department with compensation-related
matters.
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44.HMG maintained responsibility for decision making with regards to each
compensation process (and UKGI did not provide any legal and financial
assurance to HMG). With regards to the HSS and OC, UKGI’s Shareholder
Team's responsibilities included: (i) advising on the design of the governance
arrangements including through an operations agreement which detailed the
roles and responsibilities of POL, the Department and UKGI, and outlined key
decision points and those matters requiring HMG approval; (ii) supporting the
HSS SteerCo and the POC Board with the approvals needed under the
operations agreement; and (iii) monitoring, together with the Department's
Policy Team, progress in relation to the HSS and OC.
45.In September 2023, it was agreed that UKGI would move to a more strategic
role in relation to the HSS and OC, with greater focus on monitoring progress
and POL’s performance against objectives and budget, rather than matters
relating to the working level delivery of compensation. This reflected the
progress made under the HSS, with 99% of offers made in relation to the
original cohort of claims; the fact that POL was moving to a new remediation
approach to compensation in relation to the OC process which lessened the
need for UKGI involvement; the well-established governance processes in
place in relation to both schemes; and the expansion of the Department's team
handling compensation matters (as well as development in their knowledge of
the detail of the different workstreams) which meant there was significant
overlap with UKGI’s role.
Statement of Truth
I believe the content of this statement to be true.
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WITN10770200
WITN10770200
Dated: 26 April 2024
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WITN10770200
WITN10770200
Index to Second Witness Statement of CHARLES HUNTER DONALD
No. I URN Document Description Control Number
INQ00000228 UKGI/BEIS's joint VIS00000300
response to the Call for
Evidence
INQ00000028 Responses to Batch VIS00000345
Request 001
INQ00000044 Response to Batch VIS00000365
Request 002
INQ00000888 Response to Batch VIS00000649
Request 003
INQ00000883 Response to Batch VISO00000560
Request 004 (Questions
1-4, 7 & 8)
INQ00000009 Response to Batch VIS00000233
Request —4 (Questions 5
&6)
SUBS0000006 UKGI’s Opening SUBS0000006
Statement to the Inquiry
POL00362299 POL Shareholder POL-BSFF-0190809
Relationship Framework
Document
UKG100044318 POL's Articles of UKGI052980-001
Association 2022
10 I BEISO000079 Information Sharing BEIS0000059
Protocol June 2018
11 I UKGI00044319 Information Sharing UKGI052981-001
Protocol November 2023
12 UKGI00011628 Chair Letter - 26 February I UKGI022436-001
2020
13 I UKGI00027016 UKGI Governance UKGI03591 1-001
Expectations of a Chair
2020
UKGI00000049 Chair Letter - 31 March VIS00001010
2021
UKGI00044315 Chair Letter — 23 May UKGI052977-001
2022
UKGI00044317 Chair Letter - 29 June UKGI052979-001
2023
UKGI00044316 Terms of Reference of UKGI052978-001
the Historical
Remediation Committee
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