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First Witness Statement of: Mr Brian Gaunt
Statement No: WITN11320100
Statement Date: 29 August 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF BRIAN GAUNT
I, Brian Gaunt, WILL SAY as FOLLOWS:
Introduction
1. I make this witness statement in response to a Rule 9 Request for Information
issued to me on 10 July 2024. This is the first request that has been made to me
by the Inquiry.
2. This statement is my own evidence prepared independent of Post Office Limited
(POL), and I have instructed a firm of solicitors, Kingsley Napley LLP, to support
me in my preparation of this witness statement. Most of this witness statement is
within my own knowledge and I believe that the facts are true. Where I have derived
information from other sources, I say so and that information is to the best of my
knowledge and belief.
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3. The Rule 9 Request seeks a statement from me addressing a number of questions,
primarily focussed on the changes that have been made within the organisation
following (a) the findings of Fraser LJ in the Common Issues Judgment of 15 March
2019 (ClJ) and the Horizon Issues Judgment of 16 December 2019 (HIJ), and (b)
resulting from other evidence arising out of the Inquiry, which go to the present
relationship between POL and its sub-postmasters.
4. I have addressed those questions sequentially below, relying on relevant
documents where appropriate. A full list of the docs exhibited to this statement is
included in the accompanying index. Where I have quoted from any of these
documents exhibited to this statement, these are in italics.
Background
5. By way of background, I joined the Board of POL as a Non-Executive Director
(NED) in January 2022. I subsequently became a member of the Remuneration
Committee and the Remediation Committee.
6. Since starting my professional life after graduating in Geography at Manchester
University in 1980, my career has largely been in the specialism of Logistics and
Supply Chain Management where I have worked in the manufacturing, retail and
service sectors for major UK businesses including United Biscuits, B & Q, ASDA,
Iceland and Booker Wholesale and Christian Salvesen. I was a member of the
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Management Boards of The Big Food Group PLC (Iceland and Booker), as well as
Christian Salvesen PLC.
7. In 2008, I was appointed Chief Executive of Home Delivery Network, which at the
time was the largest privately-owned parcel delivery business in the UK. I led this
business into its merger with DHL Domestic in 2010, the combination of the
businesses creating the new entity Yodel. I left upon completion of the company
merger and began to work as a NED - taking up appointments with iForce Ltd, a
privately-owned company dealing with managing and delivering online orders
(known as e-fulfilment) and with Mayborn, a baby feeding manufacturer owned by
the private equity business 3i.
8. In 2013, I stepped back into an executive role as the Chief Executive of iForce,
leading the business to a sale in 2017. I remained at iForce till June 2019 ona part-
time basis to oversee the integration of the business into the acquiring entity.
9. After a brief break from work and doing some consultancy work, I took on non-
executive roles in 2019 as Chairman of Buy it Direct Ltd (2019 — 2021), an online
electrical retailer, and of Mosaic Fulfilment Solutions Ltd (2019 — 2022). I am
currently the Non-Executive Chairman of ITD Topco Ltd, a parcel business (2021
— present) and of Specialist People Services Group Ltd (2023 — present).
10. It is worth noting that all of my previous roles as CEO or as a NED were in private
businesses or private equity-backed businesses until taking up the NED role with
POL.
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Joining the POL Board
11.1 was approached by head-hunters at Green Park to join the POL Board as the
incumbent Senior Independent Director (SID), Ken McCall, was stepping down.
Whilst not replacing Mr McCall as SID, my understanding was that I was seen as
a replacement of sorts because my sectoral knowledge in the retail logistics and
mail industry was similar to his — the idea being that I could help shape POL’s
strategy on that front. I was not, and am not, a governance expert.
12.1 was appointed to the Post Office Board as a NED in January 2022. I understand
a NED'’s role to be to provide support and guidance to the Executive, and to sense-
check and give assurance that the business is making the right decisions based
on evidence and facts.
13.1 was subsequently asked to join the Remuneration Committee of POL in
September 2022 (where I had to ensure that the rules we had in place for
remuneration were suitable for a business of POL’s size and that these rules were
adhered to), and then the Remediation Committee in March 2023. I took on the
role as Chair of the Remediation Committee in July 2024.
My understanding and experience of the Horizon IT system
14.As I explain below, as a result of my time on the Board, I now broadly understand
what the software does and the historic impact it has had on people’s lives and their
family lives, and the mechanisms by which POL and the Government are trying to
compensate people for their life-changing experiences. But I am not an IT expert,
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and do not have an in-depth understanding of the software, or its functionality and
flaws.
15.My knowledge of the Horizon software prior to joining the Board in January 2022
was very limited, consisting entirely of references within the national media relating
to matters that have now been covered in detail by the Inquiry.
16.Since assuming my role at POL, my knowledge of the Horizon software as an
Electronic Point of Sale (EPOS) and stock reconciliation tool has been developed
through:
a. My induction with POL management, store visits and a consistent stream of
papers coming to the Board either relating to the Inquiry or remediation. I
have also seen papers relating to the plan and build of software to replace
Horizon, the training and roll out requirement of the new software, the need
to extend our relationship with Fujitsu, and the extension of the Belfast data
centre and the need to upgrade it. I have also seen funding papers for the
Horizon extension and the build and roll out of its replacement for sign off by
the Board and for submission to Government.
b. Additionally, I have been in Board meetings that have agreed to seek external
assurance on the initial decision by the Board in 2021 to build the new
software, and have also seen that external assurance presented back to the
Board.
17.The replacement of the current Horizon software, and the effective roll out and
training of sub-postmasters (SPMs) and their staff on the replacement software is
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key to the future of the business, and I cannot recall a Board meeting at which
Horizon or its associated current and future needs have not been discussed in
some form. But those discussions have not involved any insight into the technical
aspects in the Horizon IT system, other than the need to respond to the HIJ and
ClJ findings and ensure that these recommendations are satisfied in any future
software (for example, the ability to dispute discrepancies on the software at the
point of discovery).
Training and induction that received prior to, or on appointment to the POL
Board
18.As I note above, this was my first Board appointment into a public business with
its attendant governance requirements. Some aspects of how POL is run were
therefore new to me.
19.1 did not receive any induction prior to joining the Board. In particular, I was not
fully briefed about the role of Government in the funding of POL, about the role of
UK Government Investments (UKGI) in the business, on the ClJ and HlJ findings,
or on the purpose of the Horizon Inquiry.
20. Upon appointment, my induction was severely curtailed by Covid with the majority
of Post Office staff still working from home. As a consequence, all of my inductions,
other than store visits, were conducted online, with 30-minute slots to meet each
of the key Executives. I was given a 30-minute call with Tim Parker, the then Chair
of the business, but did not meet with any of the other NEDs until the first Board
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meeting - other than Tom Cooper, the UKGI Board member, for 30 minutes in
February. Mr Cooper also arranged a UKGI induction via Teams which took place
in March.
21.1 also had a written brief [POL00448507] sent to me in an email on 21 January
2022 [POL00448506] by the Company Secretary, Veronica Branton, laying out
the key issues facing the business, a historical explanation of issues arising out
of Horizon, Government funding process/issues, the challenge (at that time) of
receiving sufficient funds to deliver the future of the business, as well as avoiding
the likelihood of the business wrongfully trading. It also contained a brief update
on the cultural changes within POL aimed at making the business more focused
on delivering for the SPM community. I was also given access to the Diligent
system, which allowed me to review previous Board meeting papers. However, at
that time, I did not have access to the papers of any of the associated Committees
as they were not then shared with NEDs who were not members of the relevant
Committee.
22.UKGI arranged for me to receive a two-day online course in April 2022 entitled
“Public Bodies — Induction Training”.
23. My first Board meeting was via Teams on 25 January 2022. The Board pack was
340 pages long and included papers on “Wrongful Trading and the obligations of
NEDs’”. Reading these papers was the first time that I was made aware that there
was a potential for the business to be wrongfully trading in the absence of a letter
of support/comfort from Government.
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Quality and completeness of any training and induction
24. My view is that the induction overall was quite poor. In particular, the interview
process and the induction did not properly set out the extent of the problems that
the business was trying to cope with. It was quite piecemeal, and there was no
proper discussion or detailed briefing about major issues such as Horizon or the
Inquiry (beyond the short document I was sent by the Company Secretary). The
fact that Covid restrictions were just being lifted meant that a lot of the induction
was carried out online and this did not help.
25. Throughout the interview process and when I joined the Board, my understanding
was that my ‘value add’ on the Board was going to be around the mails strategy
and capability i.e. the sector I had experience in. It was suggested that my focus
was to be on that aspect (especially as revenues were declining rapidly) rather than
on broader governance issues. I was advised by Tim Parker, the Chairman, that
my NED colleagues, who were all from either legal or accountancy backgrounds,
had the required knowledge and skills to manage the governance issue.
26. However, it became clear over time that I had been completely unaware of the scale
of problems and issues. It has proved to be a rude awakening for me and, I believe,
other NEDs. The other aspect that came as a surprise was the time commitment it
required. My contract indicated that the role required 24 days in a year, but I have
put in closer to 60-80 days per annum in each of the last two years to deal with the
business’ requirements. I do not think this was appropriately covered in the
interview process, and I believe it should have been.
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27.1 believe that onboarding of NEDs has improved subsequent to my appointment,
and I have spent time with all NEDs as they have joined POL. First of all, the
business is now operating post Covid and therefore everyone has been available
for face-to-face meetings. I was involved in the interview process for some of the
NED positions in 2023 and I made sure that I expressed to all applicants the full
extent of the problems that the business was facing and the level of time
commitment and reliance required to act as a NED in the business. Secondly, all
three of the more recently appointed NEDs joined at approximately the same time
and it resulted in a more meaningful and in-depth briefing process. For example, I
have seen proper briefing documents posted to Diligent which address the changes
made to place SPMs at the centre of the business. This document was written
specifically for the new NEDs joining the business. The opening of Diligent to allow
access to all Committee materials to all NEDs facilitates an understanding of the
key issues and discussions in the business, and how they are being addressed.
Briefings on issues within the scope of the Inquiry
28.1 did not receive any such briefings prior to joining the Board.
29. My sole briefing was in the form of the document from the Company Secretary that
I previously referred to [POL00448507]. The briefing paper was 18 pages long of
which 4.5 pages related to Horizon, the Group Litigation Order, and the Inquiry.
Whilst good background, I did not consider it to be adequate in terms of either
depth or thoroughness.
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30.Reviewing previous Board meeting papers available in Diligent would have been
my only other source of written material.
POL’s current corporate governance arrangements
31.As I note above, given my previous experience was in businesses of a very
different nature, it would be difficult for me to compare and contrast governance at
POL with any other public body or PLC. The governance within privately owned
businesses is significantly different to that in a public body like POL, and therefore
I have no direct comparator. Additionally, I am not professionally qualified and
therefore unable to reflect on this question in the way that someone with legal or
accountancy background may be able to.
32. My key observation would be around the considerable churn of personnel at Board
level. The obvious weaknesses in governance have been revealed through the
public scrutiny that POL has rightly been subjected to. I would attribute some of
this to a lack of continuity in approach as a result of the ever-changing cast at Board
level. My 30 months with POL which has seen me working with four Chairs, and
seen the departure of three SIDs, two NEDs and one Company Secretary. This
creates challenges for the organisation.
33.In general, however, there has been an understanding for some time that POL
governance needs to be brought in line with modern day best practice. As the
Inquiry is aware, prior to his removal as Chair of POL, Henry Staunton
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commissioned a review of POL governance by Grant Thornton [POL00446477].
The Board has fully engaged with this process, has reviewed and agreed the
findings, and is now committed to making the recommended changes contained
within the report. This report has been shared with the Inquiry. On 9 August 2024,
the Board received their first update paper on the agreed actions and timelines for
delivery.
34.1 believe that the Board is now in a place where it has a good range of capability
and experience that was not previously available, and governance is improving as
a consequence. Three NEDs were appointed in the summer of 2023 and will have
three-year tenures which can be extended by a further three years. Whilst the SID
stepped down in July 2024, one of the newer NEDs has stepped up to replace him
— Andrew Darfoor. I expect that this group will provide the nucleus that will ensure
that the improvement in governance we have recently experienced will continue for
some time. As an example, Amanda Burton, as Chair of the Remuneration
Committee, has quickly got to the bottom of the issue on Executive bonuses, and
has put clear rules and schemes in place to ensure that the shareholder and
Executives have clear line of sight to the appropriate achievements that would
generate bonus remuneration.
Changes in POL Culture
35.1 have been asked to comment on the culture of POL at Board level, and any
reflections I may have on the ways in which the culture has or has not changed
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following Fraser LJ’s ClJ and/or as a result of evidence provided by others to the
Inquiry.
Impact of the ClJ on the culture
36.1 was not in the business until 2022 and therefore am unable to comment on how
the culture at Board level has or has not changed following the Fraser LJ’s findings
— a lot of changes were already in train when I joined the Board.
37.1 believe that the appointment of Postmaster NEDs to the Board was a key
response to the many issues highlighted in the ClJ. My view is that their presence
and involvement in Board meetings and Committees has been a very powerful
catalyst for change within POL. I have not experienced the attendance of workforce
representatives in any of the businesses that I have been associated with, but have
been very positively influenced by the contribution that the two Postmaster NEDs
have made.
38. They effectively act as the conscience of the Board and whilst their feedback can
be uncomfortable to hear at times, I believe that it has helped significantly in the
journey POL is making to make SPMs the centre of the business.
Impact of Inquiry evidence on culture
39.The key takeaways from the Inquiry are shared by the Board on a weekly basis
and I believe that all Directors have attended the Inquiry in person at least once,
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and observed televised sessions to supplement their knowledge. I believe that the
Board are united in wanting our SPM population to feel that they are the most
important people in our business, and to find ways to remunerate them adequately
for the role that they play in our local communities.
40.The Inquiry proceedings have served to reinforce the Board’s commitment to
learning from the mistakes of the past, as well as ensuring that any changes in the
commercial proposition or in process/system are discussed by the Board through
the lens of how it may impact SPMs.
41.My overarching view is that I believe the culture at Board level at POL is
challenging, supportive, inclusive, respectful and still developing. The development
of a single purposeful culture has — just as with the NED population — been
hindered by the changes that have been experienced within the Executive team
during my tenure. The Board needs a settled period to develop a sustainable and
constant culture in the future. Attracting high quality individuals to a business with
the scale and number of issues that the Board will continue to be another challenge.
Action taken to change culture
42.As I note above, a large number of the action points arising out of the ClJ and the
Inquiry were already in place within the business prior to my joining, which makes
it difficult for me to reflect on how effective the changes have been. That said,
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what I can say is that there has clearly been a concerted effort to change the
culture of POL in recent years.
43.In terms of direct action to ensure the necessary business/cultural change within
POL and how that is working in practice, I receive the following information that
allows me and other NEDs to assess progress:
a. There have been quarterly updates provided to the Board by the Chief
Operations Officer (initially Dan Zinner and then Martin Roberts).
b. Mr Zinner led a group of Executive Directors called the Improvement
Delivery Group. This Group was responsible for monitoring and validating
progress and auditing actions identified within the ClJ and HlJ
recommendations and findings to improve the Horizon software, operating
processes, and managing the contractual relationship with SPMs — all with
the central cultural objective of placing SPMs at the centre of the business.
c. Following Mr Zinner’s resignation from the business in 2022, the
responsibility for maintaining progress on the improvement initiatives was
taken over by Mr Roberts. He produced a Retail Performance Dashboard
which has 37 metrics for review at the periodic Executive Board meetings,
and also on a quarterly basis for the POL Board. For completeness, I note
that Mr Roberts stepped down from his role at the end of July 2024. An
interim COO has been appointed to replace him, and my assumption is that
he will continue to provide the Board with updates.
44. The first Board report I received on these matters was prepared by Mr Zinner in
March 2022 [POL00448508]. This indicated that in June of the prior year (2021),
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the Improvement Delivery Group had reported to POL Board that there were 392
improvement items of which 280 were closed as completed and 48% of these had
been audited for completeness. The report update for March 2022 indicated that
the number of actions had increased to 516 but that 87% of these were closed as
completed and 62% of these actions had been audited as completed. The Board
were advised on the status of the non-completed items and the cost to date of the
changes needed to conform to the recommendations of the ClJ and HlJ.
Consequently, a large element of the actions in the two judgments were already
in place within the business prior to my joining, which (as I say above) makes it
difficult for me to reflect on how effective the changes have been.
45.The Audit Committee has oversight of the Retail Performance Dashboard on a
periodic basis, adding another level of assurance on progress and achievement.
46. There appears to be considerable progress in terms of actions to implement the
necessary changes. I believe that there is adequate monitoring across the
business of all of the key metrics that allows the Executive to see that they are
acting in the best interests of SPMs, and typically the metrics that are produced
continue to show positive trends.
47.There are a limited number of actions suggested by the HIJ that cannot be
delivered within the existing software version of Horizon. My understanding is that
the delivery of New Branch IT (NBIT) and the development of new processes
around this will allow POL to complete all of the actions contained within both the
judgments, and should allow for any further outcomes from the Inquiry report to
also be built into the new software and into the associated operating procedures.
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48.In my experience in industry, cultural change programs take significant time to
produce meaningful and sustained change. The culture of the business will
continue to evolve as new principles and ideas are added by colleagues wanting
to change the business further through their feedback or through ideas gained as
a result of experience in other businesses. But I do believe that the culture of POL
has changed positively and continues to do so.
49. However, there will always be a debate about whether the culture has changed
quickly enough or not. I only joined the Board in 2022 so I have no direct experience
of what the culture used to be other than through what I read and hear of those
times. As a fresh but experienced pair of eyes walking into the business in 2022,
and with 45 years of working in large businesses operating through thousands of
colleagues, I can say that the business continues to talk about its culture, and that
it has a deep sense of guilt at the harm that it has caused its SPMs, accompanied
by a desire and willingness to put things right. I also believe that this desire has
and is being translated into tangible action.
Trust between POL and SPMs, managers and assistants
50. Many of the changes resulting from the two judgments have helped to regain and
build trust with the SPMs and colleagues. The changes to software, particularly the
addition of the dispute capability, have provided for a much more stable software
platform and there are now far more equitable processes in place to explore the
reasons for items being in dispute with the SPM, rather than them being
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immediately being seen as guilty of fraud or theft. POL has not yet reached the
finish line here but significant progress has been made.
51.One barrier to relations between SPMs and POL remains. I have never understood
why POL was placed in the position of being the arbiter of Horizon-related
compensation claims and the determination of the value of claims as this, in my
view, cuts across the desire for there to be a trusting relationship between SPMs
and POL. I believe that the duty of determination of an individual's right to
compensation and the quantum of payment should have been handled outside
POL in the way that the Group Litigation Order scheme was. Whilst I believe that
the process that has been developed is applied with fairness and with a real desire
to pay wronged individuals (with the right of applicants for compensation to appeal
to an independent panel with independent legal advice reimbursed by POL), it still
feels like POL is marking its own homework and this does not feel right.
Board relationship and approach towards SPMs
52. My experience of the Board is that it believes and supports the requirement to place
SPMs at the centre of the business, and that everything POL sets out to achieve
should seek to a) support the SPMs in delivery of service to customers; and b) also
aim to improve SPM remuneration.
53.SPM sentiment and feedback is largely focused through the two postmasters
serving on the Board as NEDs - Elliot Jacobs and Saf Ismail (the Postmaster
NEDs) - who have both worked hard to build a network of contacts across the
postmaster and SPM community, which enables them to effectively feed back on
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various issues. They have been a valuable addition to the Board, and at times have
challenged the Board’s thinking. There are competing pulls and pressures as a
result. The Board has on occasion had to try and help find a middle ground between
the demands of the Postmasters NEDs and the need to maintain a viable business.
The Postmaster NEDs have also on occasion criticised initiatives, which has
resulted in some embarrassment to the Executive Directors and the Board more
generally. This need not be a negative - from my experience, this provides a healthy
tension which drives a necessity to keep talking about the need to SPMs to operate
financially viable businesses. As the Postmaster NEDs have got more embedded,
the Board has found itself conferring and consulting much more with them prior to
landing initiatives, and the Postmaster NEDs spend a great deal of time making
themselves available to talk through proposed changes.
54. Beyond that, direct contact with SPMs is limited. I believe that most Independent
NEDs have attended at least one postmaster conference. I attended one in 2022,
which gave me the opportunity to listen to a large number of SPMs. Typically, their
feedback was pointed, helpful and supportive. I believe that everyone in the Post
Office buys in to what we offer and provide to our communities, and I believe that
there is alignment of this purpose within POL as an organisation. As I have
previously stated, I believe that the Board understand that the SPMs and
colleagues who work in branch are fundamental to the elevated position that the
Post Office brand has in the general public and that POL needs to do everything
that it can to maintain and to build on this. This requires us to involve them in the
shaping of the business, listen to their feedback, treat them with fairness and
respect, recognise them for their efforts in the community, and pay them fairly.
Without the continued goodwill of the SPMs, the business is nothing.
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55. The topic of fair payment is one that the Board continues to grapple with as it
strengthens its relationships with SPMs. The recent increase in the living wage,
rent increases on the high street, and energy costs have had a significant negative
effect on the profitability of Post Offices across the country. The Postmaster NEDs
are always challenging the overhead costs of the business and seeking increased
remuneration for the transactions that they carry out in store. I believe their
challenge is a fair one as all revenue is generated in store, not in Head Office. But
to achieve this, POL needs financial support to deliver modernisation to allow it to
reduce its central overhead costs. These issues have been shared with UKGI and
with successive Ministers when the business has applied for funds to modernise
the Post Office, but funding has consistently been significantly short of
requirements. In addition, the subsidy the Government provide to keep the non-
profit-making franchisees open is below the actual cost of maintaining their
presence. POL needs investment both at the centre and at branch level to drive
operational efficiencies. Without doing so, it cannot create a more profitable
business from which SPMs can derive a higher income.
Board relationships with external stakeholders
56.The Board does not have a direct relationship with the Communications and
Workers Union (“CWU”), the National Federation of SubPostmasters (“NFSP”) or
Fujitsu. With these three organisations, relationships are managed by the
Executive team and reported on by the CEO to the Board.
57. There is a closer link with UKGI given their presence on the Board. UKGI also act
as a conduit with the Department for Business and Trade (DBT).
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CWwu
58.The CWU represent the directly employed workers of the Post Office in what is
now a largely franchised business (well over 90% of Post Offices are independently
operated). In these circumstances the number of employees engaged by Post
Office and represented by the CWU is declining steadily as the remaining Directly
Managed Branches are converted to franchise businesses. Typically, advice to the
Board regarding dealings with the CWU is focussed around the annual pay
negotiation and award. The recent review of Board Governance by Grant Thornton
[POL00446477] has suggested that the Remuneration Committee put workforce
pay negotiations onto their agenda and this has been agreed.
NFSP
59. The relationship with the NFSP is a formal one that recognises them as the body
that represents the SPM population. The agreement is in place until 2030. The
relationship with the NFSP lies with the Executive management team but the Board
is advised of any points of discussion that the Executive believes need Board
knowledge or decisions.
60.1 am aware that there have been concerns raised about the independence of the
NFSP. My view is that it can be difficult for a trade body to represent its members
when it is dependent upon funding from POL.
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61. My understanding is that in light of the ClJ, the POL Executive team has taken on
board the lack of independence resulting from the existing grant arrangement, and
has renegotiated the funding agreement to balance the need of the NFSP to be
seen and to act independently whilst also ensuring that POL money (which is
ultimately taxpayers’ money) is spent with appropriate oversight. For example, my
lay understanding (without having sight of the specific clauses) is that NFSP was
previously prevented from using funding for public demonstrations against POL or
to publicly challenge POL. POL could clawback funding where it deemed it be
inappropriate. Following recent negotiations between the Executive team and the
NFSP, I understand that the clawback has been removed, NFSP can now use
monies provided for public demonstrations and to challenge POL. I am not aware
of the specifics of the funding agreement, but this seems to me to be a sensible
change.
Fujitsu
62. The relationship with Fujitsu is largely managed by the CEO and the CTO, and I
do not have any direct involvement. Fujitsu are an ongoing supplier to POL, and
that relationship is key to the future migration from the existing Horizon system —
especially as the current service agreement for the ongoing maintenance of
Horizon terminates well before the ability of POL to provide an alternative IT
platform. Discussions about the extension of the Fujitsu contract are ongoing and
the Board is advised on this at regular intervals.
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UKGI
63.UKGI have a permanent representative on the Board and on each of the Board
sub-committees. They attend every meeting of the Board and sub-committees.
They provide guidance to the Board and Executive on working with Government,
particularly DBT. At times the relationship between the Board and the UKGI has
been difficult - less so since the appointment of Lorna Gratton who, after initial
clashes with the former chair Henry Staunton, has forged a collaborative
relationship with Board members.
Department for Business and Trade
64. There is no direct relationship with DBT as everything tends to be directed through
the UKGI representative. Since I have been on the Board, the Board has had visits
from the Minister for Small Business, Consumers and Labour Markets, Jane Hunt,
in July 2022, the Minister for Postal Affairs, Kevin Hollinrake, in December 2022
and July 2023, and from the Secretary of State for Business, Kemi Badenoch, in
March 2024. Ministerial attention has increased more recently as a consequence
of the ITV drama and the Select Committee review.
65.1 believe that it would be advantageous for DBT to have a more direct relationship
with POL particularly around strategy, and in helping POL to balance the competing
requirements it faces of trying to be a self-funding commercial business whilst
continuing to provide a social purpose for 11,500 communities in the UK.
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Current composition of the Board
66.As I have said previously, there is a good mix of experience now on the Board. I
would make the following additional observations on the changes since I joined:
a. The quality of governance by the Independent Directors is significantly
better than I witnessed when I joined the Board. The quality of diligence that
is now being applied to governance is much improved from 2022 and
Executive management are having to adapt to this.
b. As well as the purpose of ensuring good governance, the Board constituents
are also expected to provide sectoral knowledge and experience to assist
the Executive team in delivering improved business performance and,
consequently, improving SPM remuneration. I believe that this now exists
with sectoral representation across Banking, Insurance and Mails
supplemented by the two Postmaster NEDs who bring front line and
practical knowledge and experience to the debates. I do not believe that this
has been the case throughout my tenure.
c. The UKGI Board representative has changed and Lorna Gratton, the new
UKGI representative, has brought a much more collaborative approach to
the Board. This has helped the Board understand the need to build a better
relationship with its key shareholder through more effective and timely
communication. At the point of joining the Board, the relationship between
Tim Parker, the Chair, and Tom Cooper, the UKGI representative, was
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strained with frequent clashes on the direction of the business. The change
of both the Chair (with Henry Staunton’s appointment) and the UKGI
representative (Lorna Gratton), initially increased the tensions and there
were notable clashes between Mr Staunton and Ms Gratton which were not
conducive to the running of an effective Board. The clashes appeared to be
limited to their relationship, and the remainder of the NEDs have found Ms
Gratton to be engaging and professional, and an effective challenger of
ideas and decisions.
. The Postmaster NEDs are only appointed for a 3-year term and both of the
current incumbents — Saf Ismail and Elliot Jacobs - were originally due to
stand down this year. The original process put in place for the election of
the Postmaster NEDs was clear that the term was for 3 years, in order to
allow the responsibility to be shared amongst other SPM representatives
who may wish to sit on the Board. The current Postmaster NEDs made it
clear at Board that they both felt that it would be the wrong time to make a
change as the learning experience that they had needed to embark upon to
be effective Board members had taken a significant amount of time. They
were both concerned that new appointees to the Board would be less
effective at a time when significant change was taking place in POL. Their
terms were initially extended for a further year in case of Mr Ismail and by a
further three months in the case of Mr Jacobs. Mr Jacobs has subsequently
had his tenure extended further. I believe it would be appropriate for both
Postmaster NEDs to have their tenures extended beyond this to continue to
maintain progress.
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67.In terms of the skillsets that I believe the Board should always have, I would
suggest:
a. The presence of at least one representative who is legally qualified and has
extensive legal experience is valuable, given the number of challenges
which require legal expertise. Whilst external legal advice can be (and is)
brought into the business, it requires someone on the Board to help the
Executive team by providing advice, guidance and challenge - particularly
with regard to the employment of external legal advisors and ensuring that
we obtain value for money. Currently, the Board has considerable legal
experience within its ranks.
b. Atleast one representative who is a qualified accountant and has extensive
experience of audit is always essential in order to have oversight on the
financial processes and to lead the Audit Committee.
c. Sectoral experience in, among other things, retail operations, the insurance
and banking sector, the mails sector, digital (online) services, and IT
software development and deployment, is also helpful. The categories are
not mutually exclusive and one Director may be able to bring experience in
more than one specialism. But it is helpful to have this expertise in order to
help the Executive develop POL’s trading proposition to its customers, and
to provide external challenge to strategic decisions.
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d. In terms of the need for IT experience, my view is that the Board does not
necessarily need an IT specialist as such i.e. someone with specific
experience in writing code or with a high degree of technical knowledge. I
believe the Board needs experience of significant businesses change and
transformation associated with a change in core IT systems and associated
operating processes. Currently, the Board has some of this experience
through Andrew Darfoor, Elliot Jacobs and myself, but requires more.
e. The presence of a UKGI representative is valuable in my view. Indeed, I
think more experience is probably required on the Board from individuals
who are experienced in managing Government. The appointment of Nigel
Railton as interim Chair should help significantly in this area.
f. Finally, for the reasons I have already set out, it is desirable to continue to
have Postmaster NEDs on the Board.
Whistleblowing
68. While I am aware that there are practices and policies in place now to encourage
whistleblowing, I have had no direct involvement in the development of these
policies. I also do not have any knowledge about how frequently it is used or how
it is perceived by POL employees.
69. In terms of what those formal structures are - there has been a Speak Up policy in
place for some time, which is updated annually to ensure it remains current. The
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latest version of the Speak Up policy is now at Version 9.0 and was updated in
May 2024.
70.The Speak Up policy is owned by the Director of Assurance and Complex
investigations with support from the Group Legal Counsel. The policy is reviewed
by the Executive team, and submitted to the Audit and Risk Committee for approval
on an annual basis. The Board has delegated responsibility to the Audit and Risk
Committee to oversee compliance with the policy and to report back on any issues
with its efficacy.
71. The Board does not hear about individual whistleblowing reports as this information
is confidential. The Board has appointed a Speak Up champion — Amanda Burton
-— who supports the Speak Up process and who advises the Board if there is
anything that she feels that requires their input or oversight. The SID, Ben Tidswell,
also acted on behalf of the Board as the first NED Investigations Champion — a role
which involves oversight over the Investigations Director and his team. This role is
now carried out by Andrew Darfoor.
72. Overall, there has clearly been some thought given to how to encourage whistle-
blowers to raise any concerns. In my experience, the structures in place are a lot
more thorough and robust than in a number of PLCs that I have worked in. The
appointment of a NED Speak Up Champion to encourage colleagues within POL
to use the process is a positive development, and adds a further layer of assurance
whilst helping to promote the opportunity to colleagues to call out issues that they
see or experience within the business.
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Active complaints
73. In my two and a half years on the Board, I have been made directly aware of one
formal Speak Up allegation in June 2023, one complaint letter in August 2023, and
one anonymous email in May 2024.
a. The Speak Up allegation (dated 27 June 2023) and associated remedial
actions were discussed at an additional Board meeting called specifically for
that purpose by Mr Staunton on 5 July 2023. The minutes of this meeting
were included for approval in the pack of documents for the Board meeting
of 26 September 2023 [POL00448509]. In terms of matters relevant to the
Inquiry, the allegations referred to defects within the code being constructed
within NBIT, the timeline for roll-out of the new software, and the alleged
poor governance being deployed by Executive management. Additionally,
there were complaints about the conduct of some members of the Executive
management team including Mr Read, albeit this has not been reflected in
the minutes. The allegations regarding NBIT were responded to by the CEO,
Nick Read, at the Board meeting. Mr Read advised the Board of his intention
to appoint Accenture and KPMG to review the NBIT programme including
the delay in delivery, and to understand the nature of bugs and defects
within the software. He also indicated the need to appoint a CTO (Chief
Transformation Officer) to bring together NBIT, retail transformation and
“path clearing” (a programme of work designed to prepare SPMs for the
introduction of new processes and dealing with stock balances). Additionally,
he recommended the appointment of Owen Woodley, an existing member
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of the Executive group, to the role of Deputy CEO with the remit to manage
the review of NBIT and the transformation project with immediate effect -
with the intention of transferring these responsibilities to the CTO at an
appropriate time. Mr Read also recommended that Andrew Darfoor be
asked to assume the responsibility of chairing a new Board committee to
oversee the NBIT programme. These recommendations were accepted by
the Board and subsequently implemented. This allegation also precipitated
the appointment of Amanda Burton as the Speak Up Champion.
b. It was agreed that the allegations contained within the note regarding
conduct concerns would be investigated by the Head of Assurance and
Complex Investigations, with support from Ben Tidswell and Amanda Burton
if required.
c. The Board papers relating to the meeting of 5 July also refer to two other
whistleblowing allegations that were made in emails of 30 June. The emails
were not shared with me, but the Board papers show that one of these
related to NBIT testing and the Board agreed for this complaint to be
included in the review of NBIT by KPMG and Accenture.
74. In August 2023, there was a complaint letter from POL's former Group HR Director,
Jane Davies. The letter made allegations about Mr Read’s conduct and suggested
that he was trying to redirect her purpose from transforming POL culture and
supporting SPMs, to a personal agenda of securing an enhanced remuneration
package and the removal of Alisdair Cameron as Group Finance Director. I believe
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that this matter was initially referred to the Head of Assurance and Complex
Investigations, John Bartlett, for investigation. Subsequently an external
independent barrister from Devereux Chambers was appointed by the SID, Ben
Tidswell, to conduct an inquiry into the allegations concerning the conduct of Mr
Read. The findings of this report were presented to the Board on 8 April 2024 and
exonerated Mr Read of the allegations.
75.A further anonymous email was addressed to Nigel Railton, the interim Chair, on
28 May 2024, which made various allegations against Nick Read and other senior
executives of POL. The Board discussed the letter on 4 June 2024 and agreed that
Ben Tidswell should investigate the content of the letter to establish whether these
issues were new or whether they had already been covered in the investigation
into Nick Read’s conduct arising from the allegations made by Jane Davies. Having
reviewed the allegations, Ben Tidswell recommended to the Board that the
allegations added nothing further, and that no further action needed to be taken.
76. For completeness, I note that I have only identified what I consider to be complaints
through the whistleblowing processes within POL, rather than grievances that may
have been raised separately through the usual HR processes.
77.The Board has been made aware through a recent briefing paper titled “Out of
Cycle — A&C reporting” that there are a number of investigations that are ongoing
across the business, one of which may have been raised through the
whistleblowing process. This investigation is ongoing and the names of the
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individuals being investigated have rightly been shielded from the Board to protect
them until the outcome of the investigation is complete.
Legal Professional Privilege
78.The Inquiry has asked me about the extent to which I understand issues of legal
professional privilege and the extent such information may be shared with the
Board of a company.
79. The starting point is that I am not legally trained. My layman’s understanding (albeit
as someone who has extensive experience of working on and with Boards) is that
legal privilege is used to allow discussion/communications between legal
representatives and their clients without having to be disclosed to any other parties.
80.In POL, the decision to categorise whether or not material being presented is
subject to legal professional privilege is taken by the Company Secretary who is
legally qualified. The majority of papers enclosed within the Board reports whilst
confidential are not subject to legal privilege (the exception being papers
predominantly concerned with the Inquiry or with commercial trading negotiations).
I also sit on the Remediation Committee and all papers are subject to legal
professional privilege. I am unaware of papers that may be circulated which I have
not been able to see due to the use of legal privilege.
81. Overall, I believe that we are kept fully abreast of legal developments and I would
say that we are provided with more than adequate legal documentation. A periodic
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report is prepared for our benefit, which is talked to by the chairs of different
committees, and we are provided with supporting papers. I have never felt that I
do not have the legal information that I am required to know. I also now have access
to meeting minutes of various committees, which gives me more detail on particular
legal issues if that is ever necessary.
Key events
82.1 have been asked to consider and comment on the matters raised in the Times
article of 19 February 2024 [RLIT0000201].
83. The first time I became aware of the concerns of Mr Jacobs and Mr Ismail (the
Postmaster NEDs) that they “were ignored and seen ...as an annoyance” by other
members of the POL Board was when I was sent a written record of a discussion
that had taken place between the then-Chairman Henry Staunton, Mr Jacobs and
Mr Ismail [POL00448300]. This written record (titled “Project Pineapple”) was sent
as an attachment in an email to the Board on 16 January 2024 [POL00448503]
titled “Future of Post Office Branches”. Project Pineapple was a code name given
by Mr Staunton to a communication between the two Postmaster NEDs to Mr
Staunton in which the Postmasters complained that the Executive team were
dismissive of them, and had failed to take action in response to feedback that they
had given. They also complained about the central operations team and the way
in which investigations into individuals were still being carried out. The email also
included a note that had been sent to Mr Staunton on 15 January by a group called
the Voice of the Postmaster, a small collection of SPMs who appeared to be
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unhappy that their views were not being relayed to the Board by the NFSP
[POL00448504]. The note and covering letter [POL00448505] called for a meeting
between Mr Staunton, the Postmaster NEDs, the Government, UKGI and DBT to
discuss a number of matters.
84.Mr Staunton requested that the Board discussed the content of the two notes at an
extra Board call that he set for Thursday 18 January 2024. I could not attend the
Board call as I had a previous engagement to chair the board meeting of another
business that I work with.
85.On the evening before the meeting (17 January), Mr Staunton and I had a
telephone call. The purpose of the call was to persuade me to take up the role as
Chair of the Remediation Committee, but we also briefly discussed the meeting
scheduled for the next day and the “Project Pineapple” note. Mr Staunton went on
to complain about the decision to bring in a SID replacement with experience of
Whitehall and Government, and that the Board lacked commercial expertise
beyond Andrew Darfoor and myself. Mr Staunton felt that UKGI were exerting too
much control over POL’s operations and that they were trying to stop him from
managing the business. He also mentioned that both Nick Read and himself were
under investigation by the General Counsel (Ben Foat), although we did not
discuss why. Throughout the call, I listened to him, but made no comment.
86. On the night of 18 January (after the meeting), Mr Staunton sent me a direct email
regarding the appointment of a new SID. He added a post-script to the email
relaying the fact that Nick Read had forwarded the Project Pineapple note to Ben
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Foat (the General Counsel) and to Martin Roberts (the COO), both of whom were
subject to criticism within the content of the note. He claimed that the Postmaster
NEDs were very worried because of the power that Mr Foat wielded in his role as
General Counsel with responsibility for investigations of SPMs.
87.At some point over the next week, I received a call from Mr Ismail. Unfortunately,
my call log has not retained the date and time of this call. Mr Ismail asked me for
my opinion on Project Pineapple and the leaking of the note by Nick Read. I told
him that I thought that Mr Read had betrayed his and the Board’s confidence, and
that he needed to be reprimanded. Mr Ismail informed me that Mr Read had not
made any attempt to contact him and that he had not received any form of apology.
I suggested to Mr Ismail that he made the Chair aware of this and that Mr Read
give a personal apology to him before the next Board meeting and that Mr Read
should apologise at the meeting to the whole Board for his action.
88.1 have personally never subscribed to the suggestion that the Postmaster NEDs
are “ignored and unwanted”, nor have I seen any behaviour from my NED
colleagues that would suggest this. I know that I have valued the input of the
Postmaster NEDs.
89. This may have been the case with the Executive directors who sat on the Board as
there were times when the Postmaster NEDs brought knowledge of the business
in post offices to the Board that cut across the briefings that Executive Directors
were providing, and in doing so, caused embarrassment to the Executive Directors.
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90.My one observation would be that the lack of experience of working in a board
setting occasionally led the Postmaster NEDs to criticise relatively junior people in
the organisation who were presenting to the Board. In my opinion, this was never
done through malice but through a lack of experience. Both Postmaster NEDs
through their time served on the Board have moderated this approach and now
take detailed matters up outside of the meeting with the Executive team if they
believe that this is merited.
91.From a personal perspective, I have always made myself available to support Mr
Jacobs and Mr Ismail through the experience of being on a board and have taken
calls and emails from both of them asking me for my opinion and advice on various
matters. I feel certain that they would endorse this.
Mr Staunton’s dismissal
92.While Mr Staunton had mentioned that he was under some sort of investigation, I
was not aware of the detail. News of his dismissal therefore came as a surprise to
me.
93. After my exchange with Mr Staunton on 18 January, I heard nothing further from
him until 17.33 on Saturday 27 January when I received a call from him.
Unfortunately, I could not take the call at that time. We ended up speaking later that
evening, when he told me that he had been removed from his role by the Business
Secretary, Kemi Badenoch. I asked why and he suggested that an investigation
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had been opened into his conduct and that allegations had been made against him
with regard to racist comments and behaviour. I expressed surprise at this as I had
never seen Mr Staunton display behaviour that could be described as racist. He
went on to say that he felt that this had been instigated by UKGI as they felt that
their control of the business was coming under pressure.
94. Following Mr Staunton’s call, I took a call from Mr Ismail as well and we discussed
the news and the reasons for Mr Staunton’s dismissal. Mr Ismail indicated that he
had not seen any racist behaviour from Mr Staunton either.
95.A Board call was scheduled by Ben Tidswell (the SID at the time) on Sunday
afternoon (28 January) to discuss Mr Staunton’s departure, and a broader
explanation for Mr Staunton’s departure was shared with the other NEDs. Mr
Tidswell made it clear that Mr Staunton’s actions had become increasingly erratic
in the last few weeks, that he was under investigation and had tried to close the
investigation down, and that in an organisation under justifiable scrutiny, it was not
acceptable behaviour (particularly given whistleblowing had previously been
disregarded within the organisation). He explained that he had not been in a
position to share the nature of the investigation with the rest of the Board because
of its confidential nature.
Alisdair Cameron’s resignation
96.1 have limited knowledge of the circumstances leading up to Mr Cameron's
resignation. Mr understanding is that he fell ill around the end of April / start of May
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2023. The last time I saw him at a Board meeting was in March 2023. As his illness
continued, a member of his team was asked to carry out his duties on an interim
basis. Mr Cameron remained absent due to his illness and never returned to work
before stepping down in June of this year. My understanding is that a compensation
package was subsequently agreed with Mr Cameron.
General
97.1 believe I have set out my key comments, reflections and concerns about
experience on the POL Board in the preceding paragraphs, and do not have any
general observations to add beyond those. I also do not consider there to be any
other matters that the Chair of the Inquiry should be aware of.
STATEMENT OF TRUTH
I believe that the facts stated in this witness statement are true.
_GRO I
Signei...
Name: Mr Brian Gaunt
Date: 29 August 2024
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Index to First Witness Statement of Brian Gaunt
No I URN Document description Control Number
1 POL00448506 I Email from Veronica Branton to Brian POL-BSFF-WITN-015-
Gaunt on 21 January 2022 attaching a 0012902
briefing note
2 POL00448507 I Document titled “Briefing Note for Brian} POL-BSFF-WITN-015-
Gaunt, Non-Executive Director — January I 0012903
2022”
3 POL00446477 I Post Office Limited Governance Review I POL-BSFF-099-0000003
by Grant Thornton — Final
4 POL00448508 I Note titled “Update on the Improvement I POL-BSFF-WITN-023-
Development Group” in Board pack in I 0000002
advance of 29 March 2022 meeting
5 POL00448509 I Minutes of 5 July 2023 Board meeting I POL-BSFF-WITN-023-
contained in Board pack in advance of 26 I 0000003
September 2023 meeting
6 RLIT0000201 I Times article “Postmasters on Post RLIT0000201
Office board ‘ignored and unwanted” (19
February 2024)
7 I POLO0448300 I Email chain of 14 and 15 January 2024 POL-BSFF-WITN-005-
between Postmaster NEDs and Henry
Staunton
0010720
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8 POL00448503 Email of 16 January 2024 from I POL-BSFF-WITN-005-
Henry Staunton to various board I 0010721
members attaching Project
Pineapple note
9 POL00448504 Voice of the Postmaster note titled I POL-BSFF-WITN-005-
“Press Release — Voice of the 0010722
Postmaster 15.01.24
10 I POLO0448505 Voice of the Postmaster letter to POL-BSFF-WITN-005-
Henry Staunton
0010723
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