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Witness Name: HENRY ERIC STAUNTON
Statement No.: WITN11410100
Dated: 6 SEPTEMBER 2024
POST OFFICE HORIZON IT ENQUIRY
FIRST WITNESS STATEMENT OF HENRY ERIC STAUNTON
I, HENRY ERIC STAUNTON, will say as follows...
INTRODUCTION
1. I make this statement to the Inquiry in relation to my former role as chairman
of Post Office Limited (the “Post Office”), which I held between December
2022 and January 2024.
2. My evidence to the Inquiry will cover the following topics and themes:
a) My career and recruitment to the Post Office;
b) My role in chairing the Post Office’s Board, including how the business
interacted with the shareholder (the British government);
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c) They key topics addressed by the Board in my time as chairman,
insofar as these are relevant to the Inquiry (including the Horizon
replacement project, and the redress and compensation schemes);
d) The culture I observed during my time at the Post Office, including an
excessive focus on executive pay, clashes and unhappiness among
senior leadership, and lingering distrust of postmasters by
management; and
e) My departure from the Post Office and the personal repercussions from
my time at the company.
My role at the Post Office, as I shall explain, was one of oversight and
governance. It was not a day-to-day, operational role. I make that point as
context for the evidence I shall give. I had an overview of many of the matters
the Inquiry is examining and would interrogate and challenge management
decisions on these topics where I thought necessary. My interactions with
Post Office staff tended to be with those at a senior level, and it was through
that lens that I had a view of the culture of the organisation. By necessity
therefore, my evidence to the Inquiry touches on boardroom and executive
culture. I recognise — and completely agree — that these matters are much
less important than the plight of individual wronged postmasters. However, I
hope that my evidence on these matters will assist the Inquiry by shedding a
light on the culture and priorities of senior management during my tenure, and
on the areas where the Post Office still has room to improve.
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4. I have been assisted in preparing this statement by my legal advisers, Lewis
Silkin LLP.
CAREER BACKGROUND
5; My career began in accountancy, after studying at the Exeter Business
School. I spent 23 years at Price Waterhouse (now PwC), where I obtained
my chartered accountancy qualifications with the Institute of Chartered
Accountants of England and Wales. I left my role as a Partner at Price
Waterhouse for a role as Executive Director of Granada Group and ITV,
where I stayed for 12 years.
6. I have since had an extensive career as a non-executive director, serving as
chairman of four public companies: Ashtead (plant hire), WHSmith (retail),
Capital and Counties (property) and Phoenix (life assurance). I was also vice
chair of Legal & General, and a non-executive director of, amongst others, the
media companies EMAP, ITN and BSkyB; the gambling company Ladbrokes;
financial services provider Standard Bank; and the investment trust Merchants
Trust.
RECRUITMENT TO POST OFFICE
7. At the time I was approached to become chairman of the Post Office, I was in
my seventies and had been looking forward to a full and happy retirement.
With my chairmanship of WHSmith due to end on 30 November 2022, and my
term at Capital and Counties similarly coming to an end in March 2023, I had
no intention of taking up a further non-executive appointment. I initially
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demurred when approached about the Post Office chairmanship. However, I
was persuaded that by taking on the role of supporting a vital public institution
in its rehabilitation in the aftermath of the Horizon scandal, I would be doing a
public service and giving something back to the community. It was in that
spirit that, at the age of 74, I took on what I expected to be a challenging role
— although nowhere near as challenging as it in fact turned out to be.
The recruitment process for the role was thorough. It involved a series of
interviews with the Post Office’s appointed head-hunters, members of the
Post Office senior executive team and government stakeholders, including the
then Business Secretary, Kwasi Kwarteng, and representatives of UK
Government Investments (“UKGI”), which manages the government's
investments, including its Chief Executive, Charles Donald. I understood from
Mr Kwarteng that the government was hoping to draw upon my experience
over a lifetime of senior roles leading British public companies, many of which
had faced and overcome significant challenges to their business.
The previous chairman, Tim Parker, left on 30 September 2022. Since I was
still in my role as chairman of WHSmith until 30 November 2022, I did not
Officially take on the role as Post Office chairman until 1 December 2022.
However, from 1 October 2022 I was shadowing the role, with the Senior
Independent Director (“SID”), Ben Tidswell, officially chairing the board for
that interim period. This gave me the opportunity to get up to speed on the
key challenges facing the business and to “learn on the job” before my role
Officially began.
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THE ROLE OF THE CHAIRMAN
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In many ways, my role as chair of the Post Office was similar to other roles I
had performed elsewhere, which was primarily to lead the Board and work
with the CEO to improve our commercial position and review the business’s
long-term strategy. However, there was an additional public sector angle to
the Post Office role. There were of course also very specific challenges facing
the Post Office, not least the need to improve the organisation’s culture
including leadership's relationship with postmasters, to keep the Horizon
replacement project under review, and to review the position with regard to
wronged past postmasters. My role was one of corporate oversight; I did not
play an operational role in the business. While I could “nudge” the executive, it
was not my role to make day-to-day operational decisions for the business.
I was well used to the role of a chairman being demanding: I had experience
of dealing with major corporate transactions and with the significant regulatory
requirements of the insurance and banking sectors. However, somewhat to
my surprise I found the time commitment from being Post Office chairman
was at least 50% greater than the average of my other chair and deputy chair
roles. The role of chairman was nominally two days per week, although in
reality it demanded more of my time than that. I say this not to make any
complaint — I was happy to do the additional work necessary — but to
underscore the scale of the challenges that I came to understand were facing
the Post Office.
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In my time shadowing the role of chair in the autumn of 2022, I had the
opportunity to come up to speed on the key issues facing the business. My
initial assessment was that the Post Office needed to refocus its activities in
order to put its operations on a commercially viable footing. That would
include maximising the opportunity for the parcels business; delivering more
banking services as the big banks deserted the High Street; increasing the
online businesses using the trusted Post Office brand; and significantly
reducing the business's bloated cost base.
However, the business needed first to draw a line under two fundamental
issues it faced. These were, firstly, the legacy of the Horizon scandal, which
would require the full and speedy exoneration of all the convicted postmasters
and appropriate and rapid redress to the thousands of postmasters and their
families who had lost so much. Secondly, there was the need to replace the
discredited Horizon IT system. It was clear that both would require substantial
sums to be earmarked, but I assumed the case for doing so was so
overwhelming that the necessary funds would readily be set aside. It was
therefore a considerable surprise that when I met the civil servant overseeing
the Post Office early in my term as chairman, I was told that there would be
little appetite in government for the kind of decisive and morally imperative
action that I believed was necessary. Instead, the message I received was
that I was expected to fulfil a more limited caretaker role, overseeing a more
modest plan to “hobble” up to the next election. I address this meeting in more
detail below.
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Having been briefed on these matters ahead of my term as chairman
beginning, I had initial reservations that the scale of the Horizon challenge
was not fully appreciated when it came to the treatment of sub postmasters. It
was evident to me that Horizon had been completely unreliable as a system
and the 700 plus convictions of sub postmasters were suspect. As an outsider
coming into the organisation (with no prior experience of managing a
company involved in the prosecution of criminal offences), it seemed obvious
that exoneration was something that required proactive consideration. But it
became clear early on, that this was not on the agenda. Instead, there were
three complex schemes for redress, which only helped those whose
convictions had already been overturned or who had not been convicted but
nonetheless lost money (for example by ploughing their own savings into the
losses wrongly calculated by the Horizon IT system). These were
administered, it seemed to me, in a bureaucratic and unsympathetic way
(particularly in relation to overturned convictions), as evidenced by some of
the examples given elsewhere in this document.
It became apparent that there was a widespread view internally that those
convicted who had not come forward to appeal were “guilty as charged”. For
example, 39 former postmasters had their convictions overturned by the Court
of Appeal in April 2021. But when I joined the Post Office, the attitude of
senior management was not that those individuals should never have been
prosecuted in the first place. Rather, the view was that the majority of
convictions should still stand. I address that prevailing view further below. I
personally found it implausible that so many postmasters could have acted
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dishonestly, but I learnt quickly this was not the view of management. It
seemed to me that a change of mindset would be required but I had no
success on this point — it was not until the ITV Mr Bates vs the Post Office
programme aired that the dam broke.
LEGAL AND PROFESSIONAL PRIVILEGE
16. I have been asked about the application of legal and professional privilege in
my role as chairman. I understand that there is a concept of legal privilege but
would not pretend to be an expert and I am aware that there are
circumstances where it would be appropriate to limit circulation of privileged
legal advice however this did not arise as an issue during my time as chair.
Legal advice was regularly included in board papers, and counsel even
attended some board meetings to advise the board, which I understood to be
entirely proper and had I been told that advice affecting board decisions could
not be shared with the board, it is likely that I would have pushed back; but
that did not occur.
EARLY INTERACTIONS WITH GOVERNMENT
17. Shortly after my appointment as chairman, on 9 December 2022 the
Permanent Secretary to the Department for Business, Energy and Industrial
Strategy, Sarah Munby, wrote to me regarding the strategic priorities that the
government wanted the Post Office to focus on (BEIS0000622). These were
as follows:
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a) “Effective financial management and performance, including effective
management of legal costs, to ensure medium term viability
b) “Maintaining and improving POL’s capacity, capability, and resilience at
all levels of the organisation including the top team;
c) “Engaging positively with the Post Office Horizon IT Inquiry and
implementing change, including resolving historical litigation issues,
successfully delivering the Strategic Platform Modernisation
Programme (SPMP) [i.e. the plan for the replacement for the Horizon IT
system], and reaching settlements with claimants.”
Ms Munby also referred me to her letter to my predecessor Mr Parker, which
went into more detail on the strategic priorities (UKGI00044315). Likewise,
the priorities set out in the letter to Mr Parker (which were essentially an
expansion of the points above) were exactly what I would have expected the
key issues to be. On the point of resolving historical litigation issues, Ms
Munby said POL’s chairman should “challenge POL management so their
activities are reflective of our shared objectives for compensation: to see
postmasters are treated with consistency and they receive swift compensation
that is fair for claimants and taxpayers”. Certainly, I also wanted postmasters
to achieve compensation swiftly — although there is an inherent contradiction
in this goal that Ms Munby herself acknowledges in describing the
“challenging objective of balancing fair and swift compensation [...] with
making appropriate use of taxpayers’ money”. I think it was reasonable to take
from this messaging that the government did not want compensation for
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postmasters to be overly generous. It is worth noting that the equivalent letter
I received the following year from the minister, Kevin Hollinrake, on 29 June
2023, was no longer couched in the language of appropriate use of taxpayer
money (Letter from Kevin Hollinrake dated 29 June 2023, UKG100044317)
and gave a rather clearer message that the Post Office should “provide fair
compensation to those affected by its historical failures”.
When I met with Ms Munby on 5 January 2023. I took a file note of the
meeting, which I shared with the Post Office CEO Nick Read (Email: Fwd:
Note of meeting with Sarah Munby on 5 Jan 2023”, RLIT0000254). As my
note records, I was direct with Ms Munby about the challenges the business
faced, which I said were as great as I had seen at any corporation. We
discussed the financing and network challenges in the Post Office. We were
facing a deficit of £160m across the business, half of all post offices being
either loss making or earning less than £5,000 (which was a real concern
given a significant part of a postmaster’s remuneration is commission-based),
and a recent survey showing that a third of postmasters would hand back their
keys over the next five years. The Post Office needed a long-term plan to turn
things around, which I expected would take three to five years.
However, there was clearly little appetite for long-term thinking or to fund the
important issues that were facing the business. I was told that “politicians do
not necessarily like to confront reality”, that in the run-up to the election there
was no appetite to “rip off the band aid”, and that “now was not the time for
dealing with long term issues”. Instead, we needed a plan to “hobble” up to
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the election. She added that the Treasury could see any requests from the
Post Office as a “begging bowl’. I commented that, with respect to funding
issues, the costs related to poor decisions made many years ago with relation
to Horizon and related legal issues. It was clear to me that the challenging
state of the Post Office finances was inextricably linked to the Horizon project
and the cost of the litigation and redress schemes with postmasters. The main
cost challenges that we faced were: firstly, redress and compensation;
secondly, the replacement for Horizon; thirdly the costs of the Inquiry; and
fourthly operational costs. With the Inquiry, costs would be what they would
be, so this was not a lever we could pull. While there were significant
reductions we could make to overheads (which would require a major cash
commitment as we would be looking at a strategic reorganisation), the reality
was the two biggest “spend issues” at the Post Office were not operational
funding but the spend on a replacement for Horizon and remediation. While
Ms Munby did not say so in these terms, I was left with the clear impression
that Government wanted us to go slow on both fronts.
lam aware that Ms Munby has denied both using the language I have quoted
and giving the message that remediation for postmasters should be slowed. It
should be noted that her notes on our conversation (Letter from Sarah Munby
to Kemi Badenoch dated 21 February 2024, RLIT0000255) were written more
than a year after our conversation, whereas my note was contemporaneous,
shared with Mr Read the day after the meeting. My note was made without
any objective other than to record what was said at the time; hers was made
subsequently, after I had revealed what mine said. In her note she said that
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she was referring to “operational funding” and not to compensation for
postmasters, which was a ringfenced pot. In reality, even if the budget is
ringfenced, if the amount that has been ringfenced proves not to be enough
then it is inevitable that extra money would need to come from somewhere.
So, if a decision was made that compensation should be more generous, or if
wider exoneration were to be applied, then inevitably that would require an
injection of cash. Ms Munby made clear to me that money was tight and that
while she understood the seriousness of the financial position at Post Office,
politicians did not like to confront reality. Evidently, I was not to expect
significantly more money to be forthcoming from the government even if I felt
the remediation schemes required it.
I note that Ms Munby does not deny that she talked to me about “electoral
pressures”, and that she said “short term financial fixes” would be required in
the context of “the likely impact of the election on decision making”. Again, the
very clear message I received from the conversation was that the government
was not inclined to make a significantly increased outlay on the two biggest
cost bases for the Post Office — the Horizon replacement project, and
compensation for postmasters.
The Inquiry has also provided me with copies of civil service emails that
contain a contemporaneous note of our meeting (Email: “FW: [Briefing
Request — midday Friday 23/12] RE: Attached Letter from Henry Staunton
Chairman” 16 February 2024, BEIS0000752). I note that in many respects
this accords with my own note. Like my note, it records that I said the
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challenges facing the Post Office were significant. It also echoes the language
I recorded Ms Munby using, in particular the Treasury term “begging bow’’,
which she said was “a dynamic worsened by horizon/inquiry costs”. That
supports my impression from the conversation that any requests for further
cash — even Horizon-related — would be poorly received. The overlap between
the contemporaneous civil service note and my own should demonstrate to
any objective reader that my own note was a faithful summary of the
conversation.
Thereafter, I had limited interactions directly with the Department for Business
(and no further interactions with Ms Munby, who moved to a new department
not long thereafter). I should say that in general terms, after this point I felt
that the oversight by the Business Department with regard to Horizon and
remediation was good; we attended a quarterly meeting with the department
and in my view they were asking the right questions. I did not have
governance concerns from that perspective during my tenure as chairman. My
communications with the government as shareholder, to the extent I had
these directly, were largely conducted via UKGI, whose responsibility it was to
represent the government's interests as the Post Office’s shareholder. While I
did meet a couple of times with the Post Office Minister, Kevin Hollinrake, and
once each with Kwasi Kwarteng and Grant Shapps in their stints as Secretary
of State, most of the time it was the role of the UKGI non-executive director on
the Post Office board to keep government up to speed on the issues we were
dealing with. Alternatively, if I had comments to pass on to UKGI or
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government, I would usually make these to Mr Read as CEO to pass on,
rather than meeting with the shareholder directly myself.
HORIZON IT SYSTEM
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While I am not personally an IT expert, I do have considerable experience in
my career of overseeing new systems being implemented. The Boards that I
served on would have taken a view on the progress and funding of such
system changes. Having said that, the replacement of the Horizon system
was far larger than any other IT project I had previously encountered.
On joining the Post Office I had a full briefing on the Horizon system and the
plans for its replacement. The key decisions on this project had already been
made. Firstly, whether to patch it up or have a complete replacement.
Secondly, whether to purchase an off-the-shelf system or build a bespoke
system. The decision was to proceed with a bespoke system as a complete
replacement. This was obviously the most expensive and risky route but the
decision had been taken after a huge amount of work by IT experts within the
company and specialist IT consultants. I personally had reservations about
whether, especially given the spiralling costs, this was the right course of
action and whether we might have been better outsourcing or involving an
external partner in the project.
There seemed no doubt in the IT team that the current system was unreliable.
For that reason, quite rightly, no prosecutions of postmasters had been
pursued for some years. It was that acknowledged unreliability, as I describe
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above and explore in more detail below, that led me to believe the existing
convictions and levels of redress should be reconsidered.
The project to replace Horizon was known internally variously as New Branch
IT (‘NBIT”) and Strategic Platform Modernisation Programme (“SPMP”). For
ease, in this statement I mainly use the catch-all term “Horizon replacement”
project.
As a Board, we had oversight at a governance level of the Horizon
replacement project. We received reports from the executive steering
committees about the project. Towards the end of my time as chairman, we
also set up a new Board committee to evaluate major projects, including the
Horizon replacement. The new committee, the Investment Committee, was
chaired by a non-executive director, Andrew Darfoor, and brought
considerable clarity and improved information to the board. The role of the
committee was to provide a more detailed level of review and challenge than
the Board could when senior leaders appraised the Board of updates at our
normal meetings.
It was evident at the time I became chairman that we were not moving fast
enough on implementing recommendations arising from the High Court
judgments associated with the Group Litigation Order. The December 2019
judgement known as the Horizon Issues Judgment (“HIJ”) made 15 specific
findings of fact about how the Horizon system operated at the relevant time.
The Post Office had grouped these into five themes (Horizon Defects; Core
Horizon Data; Remote Access to Branch Accounts; Discrepancies and
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Shortfalls; and Reliance on Fujitsu) to allow remediation action to be tracked.
There was also the March 2019 judgment, referred to as the Common Issues
Judgement (“ClJ”), which had concluded that the Post Office had to provide a
Horizon system “which is reasonably fit for purpose” and also led to a plan for
improvements. However, the Post Office fell behind on implementing these
improvements. I know that the CFO Alisdair Cameron also raised concerns
with Mr Read about how we were tracking the ClJ recommendations arising
from Mr Justice Fraser's judgment in an email on 23 March 2023: “We have a
ClJ scorecard which we don’t understand or really discuss [...] The ClJ
scorecard completely ignores what we are worried about: losses;
investigations; stamp accounting; use of the retail button. In consequence it
looks alright, although there is no real communication of how much things are
getting better or if we are hitting what Fraser wanted.” (Email: “RE The
robustness of our governance” 26 March 2023, POL00423699).
Ahead of my first board meeting as chairman in December 2022, I saw the
minutes from the November 2022 meeting in which Mr Read said that the
Post Office did not have sufficient funds to attend to all HlJ items, and the
priority was on improvements to Horizon. At that meeting, the UKGI non-
executive director Tom Cooper expressed concern about funds being diverted
for HlJ activities if this took money away from other projects like NBIT (i.e. the
project to replace Horizon), when both projects were vital. He also said that
government did not have sufficient visibility in relation to HlJ deliverables. At
Board meetings (for example in January 2023), I sought assurances from
management on the progress of HlJ remediation. I also questioned Mr Read
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separately as it seemed to me that we would want to see basic controls in
place following the judgments as a priority over Horizon spend, and so would
the Inquiry in all likelihood. We owed this to current post masters who would
be nervous about the unreliability on their branch accounts.
At the time I joined, the level of spend on the Horizon replacement project was
significant. We received regular updates to the Board of the mushrooming
costs. By June 2023, we were told by the CEO that costs from end to end
were now projected to be £846m (up from £328m just three months prior) not
including contingency, meaning total costs could exceed £1bn. The business
was aware that such figures would not be welcomed by the government,
given the pressures on the public purse. The Chief Executive therefore
reported that a decision had been made to take a step back to look at options
that may be available to deliver differently (POL Board Meeting, CEO Report,
6 June 2023, POL00448711). Moreover, we were facing burnout and low
morale in the team delivering the Horizon replacement, which meant there
was a risk we would not retain crucial people. We were having to ask
fundamental questions about whether the strategy to develop and operate the
system in-house was still right.
As a result, work and spending on the Horizon replacement was drastically
cut back as the business took a pause and considered how to move forward.
We had Accenture carry out a short, sharp, six-week review of whether we
were on the right path in the Autumn of 2023. In the meantime, combined
monthly spending on the Horizon replacement projects came down from a
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high of £17,325,679 in September 2023 to more like £3million to £4million
from November 2023 until my departure. I thought this was the right thing to
do; the budget figures had reached a level that we could not keep blindly
pouring money in without stepping back to consider if we were still on the right
path. Accenture reported back in late October 2023. They endorsed the
decision to build in-house, on the basis that the core technology was now
approximately 50% built and in recognition that the decision not to buy off the
shelf was because of the Post Office’s “uniqueness”. They made various
recommendations, including in relation to the scope of the project, the
possibility of engaging a partner to assist with delivery, amendments to
timelines and — most importantly from my perspective — governance. I was
already on the case from a governance perspective, having established the
Investment Committee chaired by Mr Darfoor referred to above. The other
recommendations were in the process of being reviewed and implemented in
my final months at the Post Office.
We were also aware of funding pressures from the government. While the
Horizon replacement was a big project that needed funding, we were under
pressure from government to keep costs down. For example, when the Post
Officer Minister, Mr Hollinrake, joined a Board Meeting strategy session on 12
July 2023, he quite reasonably challenged the company to reduce its funding
request, naming specifically the NBIT costs. He said the appetite remained to
deliver the project, however “it was about delivering what we could and when
we could”. (Minutes of POL Board Meeting on 12 July 2023, POL00448715,
p1-3) I took this to be a “go slow” message from the government, but not one
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that I objected to as I also thought it was sensible to take time to evaluate our
position. Similarly, at the September 2023 Board Meeting, Ms Gratton queried
whether there was any element of spend on the Horizon replacement
between that time and March 2024 that could wait.
As the costs of the Horizon replacement project rose, I was beginning to ask
myself whether the strategy to develop and operate the system in house was
right. The project had nearly quadrupled in cost and it seemed to me there
were too many consultants with an interest in keeping the figure high and the
IT management similarly may have over-influenced Accenture. I noted there
were some aspects of Horizon that worked well but the systems and controls
over branch accounts with postmasters (including changes to branch
accounts by Fujitsu) were hopelessly inadequate. After projected costs rose to
over £1bn, I questioned with the IT Director about whether there was a lower
cost solution to dealing with the inadequacies of Horizon using those parts of
the system that did seem to work.
The backdrop to these decisions was discontent in the teams responsible for
the Horizon replacement project, of which I became aware. I refer below to
complaints raised by Katie Secretan, who had a senior role in NBIT.
Separately, in June 2023, I received an anonymous “John Doe”
whistleblowing complaint, relating to the NBIT element of the Horizon
replacement project (Email: “Whistleblowing” 27 June 2023, POL00448689).
It was sent directly to me because the sender said they did not trust the Post
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Office whistleblowing process, and escalations to Mr Read had not been dealt
with.
The email described NBIT as a “disaster” and said the Post Office was
repeating the mistakes of the past. The writer claimed that the project was
behind, defects were not in control and what had been built so far was “sub
par’ and had caused “issues that they don’t know how to fix’. It also made
claims that people were scared to speak up. The complaint was critical of Mr
Read directly for his alleged “unwillingness to deal with any sort of conflict or
make a difficult decision” and of the ClO, Zdravko Mladenov, for his
management style and level of experience. The author wrote, “The culture in
the business is disgusting and this starts at the top with Nick and the GE
[General Executive]. More than one person has heard comments from Nick
Read about public school education and there is a class, race and gender
divide at the top.” The complaint revealed the stress levels and dissatisfaction
within the teams responsible for the rollout of the Horizon replacement
scheme, which was a matter of concern both from a cultural and practical
perspective.
I took the complaint seriously and dealt with it appropriately, involving Legal
from the outset and bringing the complaint to the Board. I responded as
advised by our “Speak Up” team. The complaint was discussed at the next
Board meeting on 5 July 2023. It was apparent that many of the issues raised
by “John Doe” were already being addressed. From a governance
perspective, I was aware that Mr Read had already started a steering group
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on the project, and I had already asked Mr Darfoor to chair the Investment
Committee, which would monitor the implementation of NBIT. There was a
distinction between the whistleblower’s complaints about “competence” and
those about “conduct”, with the latter better fitting into the whistleblowing
category and requiring a conventional whistleblowing investigation bythe
investigations team. I was informed that the team was already investigating a
similar whistleblowing complaint, but that the investigation would need to be
widened and external support sought. The competence questions were
something that could be addressed internally. The result of those
investigations would then be brought back to the Board. To the best of my
recollection, this was not brought back to the Board in my time as chairman.
Concerns were also raised by the CFO Mr Cameron in relation to the
governance of the NBIT programme (part of the Horizon replacement
project). Up until January 2023, the Post Office had a monthly governance
meeting, chaired by Mr Cameron and attended by key executives, which
reviewed progress against key milestones, costs and risks. My understanding
at the time of joining the Post Office was that this process was working
well. However, in February 2023, Mr Read requested this governance
structure was to be abandoned, as he wanted to introduce a new governance
structure, which he headed. The new governance structure was not put in
place for some months, which caused huge frustration with the executive
team. Mr Cameron had reported to various executives that he felt the NBIT
programme was becoming “out of control” and that the costs were spiralling.
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40. I understand Mr Cameron wrote to Mr Read about the lack of robustness of
governance on 23 March 2023 (Email: “RE The robustness of our
governance” 26 March 2023, POL00423699). In that email, he made the point
that there had been no “formal governance of NBIT for months and there is no
date when we can expect it’. He also said to me that he thought Mr Read was
being “reckless” and there were insufficient controls over NBIT expenditure. I
suggested to Mr Read that we needed an executive committee to be formed
as soon as possible to again oversee this huge project. I also became aware
that Mr Cameron spoke to Ms Davies in May 2023, where he stated that he
felt the full cost exposure of the NBIT replacement was being hidden from the
Board and that the Board would have a huge shock later in the year, once the
true costs were revealed. Again I took this up with Mr Read who felt Mr
Cameron was overstating things. Mr Cameron went on long term sick in April
2023.
REDRESS AND COMPENSATION
41. I have been asked to comment on steps taken to ensure the delivery of
compensation to postmasters in a timely fashion. As chairman, I was not
involved in the day-to-day operation of the various remediation schemes for
wronged postmasters. My role, and the role of the board, was to oversee the
projects, to hear reports from the relevant senior leaders and to challenge
where we thought things could be done better. My impression was that there
seemed to be little recognition within the Post Office’s remediation team that
we were looking at injustice on an industrial scale and that lawyers (both
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42.
43.
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internal and external) made issues overly adversarial. That is why I suggested
to Mr Read while I was chairman that the process be taken out of Post
Office’s hands, which eventually did happen this year, only a couple of
months after I made that recommendation to the Chair of the Business and
Trade Select Committee.
Having met the Department for Business’s permanent secretary, Ms Munby,
as I describe above, I reported back to Mr Read my impression from the
conversation that the government wanted to “go slow” on compensation
schemes. However, when I spoke to Mr Read in person, I said to him that we
should nonetheless expedite compensation and that I would take the
consequences if there were any criticism from government for doing so.
The Remediation Committee reported at every board meeting so I hada
general overview of how the schemes were progressing. I also met on a
roughly monthly basis separately with the executive responsible for
Remediation, Simon Recaldin. It was the responsibility of the Remediation
Committee to consider each case individually before they were offered any
money. My attitude throughout was that we should expedite compensation,
and I encouraged the remediation team in that regard.
It was clear from early on in my term as chairman the extent of the disservice
we had done to postmasters. Some of the testimony reported to me was
harrowing. For example, the CEO's report of 24 January 2023 closed with an
account of Mr Read's meeting with I a former postmaster
who along with
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after their cases were overturned: = GRO_
Mr Read described her, G
tas being “still visibly distressed, unable to open
communication from POL”, with he having to open all emails and
post. She described the humiliation land the mental
stress that forced her to c he said the remediation process was
impersonal, and that the Post Office’s lawyers had demonstrated brutality and
lack of trust in the process of recovering compensation. For all this, she
received). in compensation. That seemed like rather a paltry amount
to me for a life overturned. Mr Read noted that, on this evidence, it would be
difficult to demonstrate to the Inquiry that our culture truly had changed. This
report and others brought home to me the depth of the trauma the
postmasters were facing. While it was good that Mr Read recognised that not
enough was being done, I knew it was important to keep the pressure up on
achieving swift and fair compensation for postmasters. It was something I
spoke to Mr Read about regularly, emphasising we needed to go faster and to
be more generous (POL Board Meeting Agenda, CEO report, 24 January
2023 POL00448708, p.45).
Throughout my time at the Post Office, I felt the tone of my colleagues could
be unsympathetic to postmaster claimants. By way of example, the Board
minutes from my time as chairman record the following:
a) At my first Board meeting on 6 December 2022, there was a discussion
regarding postmaster repayments for unreconciled losses. We were
told there were some 77 postmasters who were currently repaying
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unreconciled balances, despite advice that continuing to accept
repayment where cases had not been investigated was a breach of an
implied term in postmasters’ contracts. There was a concern from the
Remediation team that if we notified postmasters and requested they
pause payments, we may be “inadvertently stimulating claims against
an unfunded position”. The board rightly felt that we should do what
was right and pause repayments, but the fact that this was brought up
at all indicated to me that the culture of the Remediation team was to
try to minimise claims. (Minutes of POL Board Meeting on 6 December
2022, POL00448621, page 12)
The Board was updated at the 17 August 2023 Board Meeting about
the progress of the Historical Shortfall Scheme Fatality Claims process,
which related to claims where it was asserted that a postmaster’s death
had occurred as a result of Horizon shortfalls. The notes show that
when asked whether the principles and guidance for this scheme were
too narrow in specifying that claims had to be Horizon-related, Mr
Tidswell, chair of the Remediation Committee said that “we needed to
be very careful about setting estate claim parameters and
expectations”. That remark was representative of the focus being more
on managing costs than doing right by postmasters and their families —
even in these extreme and upsetting circumstances where the Post
Office’s conduct was being linked to the deaths of postmasters.
Moreover, head of Legal Mr Foat said that postmasters were not
employees, so the same duty of care did not apply to them. I recall
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saying to Mr Foat after the meeting that, after all that happened to
wronged postmasters, regardless of the technical legal position, I
thought for moral (and many other) reasons we should proceed on the
basis that we owed postmasters the same duty of care if not more
(Minutes of POL Board Meeting on 17 August 2023P0L00448716,
page 3).
While I wanted every compensation scheme to move faster, the Historical
Shortfall Scheme (HSS) — the scheme designed for sub-postmasters who
were not convicted nor were part of the Group Litigation Order — did seem to
be progressing at a reasonable rate and to the satisfaction of the government.
At the time that I joined the Post Office in December 2022, 95% of offers had
been issued under the HSS scheme, and 88% of those bad been accepted.
We received regular updates from the remediation team and the CEO to the
Board, which meant that we could continue to keep an eye on progress. For
example, by the end of March 2023 97% of outcomes had been issued (POL
Board Report “Postmaster Remuneration increases for 2023/2024” 28 March
2023, POL00448710). Rightly ambitious targets were set, for example for
95% of outcomes to be issued to late applicants received before 31 March
2023 by December 2023. I was, however, aware of criticism of the
Consequential Loss Guidance provided in relation to HSS, which has been
rightly criticised at the Inquiry for not giving postmasters sufficient information
to make a claim.
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The scheme for overturned historic convictions (OHC) was moving rather less
quickly. For example, the board was updated in July that OHC “was not
progressing swiftly’, partly because potential claimants wanted to see the
finalised pecuniary principles first, and partly because of “administrative
errors”. (Minutes of POL Board Meeting July 2023, POL00448717, p.3-4).
Historical convictions were where I had the most concerns, especially the lack
of emphasis on exoneration. The Board was updated on 24 January 2023 that
the triage process designed to look at material the Post Office had that may
make a Horizon case eligible for review had not yet completed its review. Of
the 552 cases to be reviewed, at that stage only 12% of cases had been
identified as cases the Post Office might concede. Given all Post Office
accounts relied on Horizon, I was surprised that the figure was so low. At that
stage, wholesale exoneration was not on the table. (POL Board Report —
“Historical Matters Programme Update” 24 January 2023, POL00448709,
p.54)
At the 24 January 2023 board meeting (Partial minutes of January Board
meeting, POL00448713; and Meeting minutes — Board of Directors POL,
POL00448620), we received an update from Post Office's counsel to the
Inquiry, Kate Gallafent KC. I made a point of asking her why more
Postmasters had not come forward seeking to overturn their convictions. Her
response was measured and reasonable — that while some may not come
forward because they were genuinely guilty, there were other potential
reasons that, namely: (i) the postmasters had put the matter behind them; (ii)
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they were too traumatised to approach the Post Office. As Mr Cameron noted
at that meeting, at that time for every appeal that was granted two were being
turned down, which likely had the effect of putting potential applicants off.
However, the Board’s Senior Independent Director, Mr Tidswell, voiced rather
less sympathetic view, that “if Postmasters thought their conviction could be
overturned then they may have already come forward”. He later said that “the
Company had a duty to ensure that people who were guilty remained guilty”.
Even as late as the 28 November 2023 Board Meeting, the Remediation
executive was still reporting some 333 cases where they thought the
conviction did not appear unsafe. I have to say, I found that apparent view
that the majority of subpostmasters were “guilty as charged”, and the
implication that we should not be doing more to encourage people to come
forward, to be utterly wrong. It was nonetheless a view held by senior
management at the Post Office, and in particular by its legal team. My sense
was that the Post Office still struggled to accept the unreliability of Horizon,
which explained their approach both to convicted postmasters and other
cases (Minutes of POL Board Meeting, 28 November 2023) POL00448614 -,
p.7-9) For example, I was shocked to learn on joining the Post Office that
while Horizon data was considered too unreliable for criminal cases, it was
still being relied upon in ongoing suspensions and disciplinary matters.
By September 2023, the Secretary of State had announced additional funding
such that the Post Office could make an up-front offer of £600,000 to
postmasters whose convictions had been overturned. At the Board meeting
on 31 October 2023 I queried the slow response rate to the offer, as I was
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keen to get things moving as quickly as possible. The upfront £600,000 offer
was a positive step, but I did say to the CEO — and I still feel today — that the
sum could be even more generous given how much people’s lives had been
ruined. I suggested a figure of £1 million (which I later reiterated in a letter to
the chair of the Business Select Committee). It was argued that this would be
too generous for the taxpayer. But I felt that the British public would be
supportive and wouldn't want the government or Post Office to be tight-fisted
on this matter.
EARLY GOVERNANCE ISSUES: CEO PAY AND OTHER REMUNERATION
51.
52.
Even before I had the opportunity to speak with the Department for Business
about the Post Office’s strategic priorities, and indeed before I officially
stepped into the role of chairman, I was drawn into the matter of the CEO’s
dissatisfaction with his pay. Quite aside from the other priorities facing the
business, I was to learn early on that a key priority for the CEO, Mr Read, was
his own remuneration. I should say at the outset that I recognise that the issue
of executive pay is a distraction from the Inquiry’s main area of concern,
which is justice for the postmasters — and I would agree. However, it may be
helpful to address the various issues that were distracting senior management
at the time of my chairmanship, to provide some context to the culture at the
top levels of the business in which decisions about historical injustices and
future remediation were being made.
During my time shadowing the chairman role in the Autumn of 2022, I was
appraised of the history of pay discussions involving the CEO and the failure
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to have a contingency plan for a potential successor to Mr Read from within
the management. Letters had been sent by the previous chairman Mr Parker
to Paul Scully, former Post Office minister, and Mr Kwarteng, then Business
Secretary, the previous year, requesting increased reward and retention
payments for Mr Read. Those requests were declined by ministers, who cited
concerns over the Inquiry and the context of the public sector pay freeze. His
existing remuneration package was already amongst the highest in the public
sector. It fell to me, as the new chairman, to try again. The Interim Chief
People Officer (CPO), Angela Williams, presented me with a letter to send to
Mr Shapps, the new Business Secretary. I considered that the appropriate
person, if any, to send such a letter was the Remuneration Committee chair.
However, Mr Read thought that it would carry more weight if the letter were to
come from me especially as the previous letter was from the previous
Chairman. I therefore signed and sent the letter on 11 November 2022 (Letter
from Henry Staunton to Grant Shapps dated 111 November 2022,
POL00448680).
The letter noted that the CEO’s current maximum compensation was
£788,500, and requested an increase to a total of £1,125,180 should Mr Read
achieve target performance. I explained the risk that, if Mr Read were to
resign, there was no suitable internal replacement. This was a very real risk
from my perspective at the time: I had not yet begun my term as chairman
and it would have been very destabilising to the business to lose the CEO.
However, I recognised that this was a public sector environment. I had my
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54.
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doubts that ministers would change their minds and be prepared to up Mr
Read's pay.
I was due to meet Mr Shapps on 10 January 2023. I wanted a more rounded
picture of the state of the business (three-year plans and so on) and
management's contribution and asked the new CPO, Ms Davies, to gather the
requisite information. She prepared notes for me to use in that conversation
and she included comments Mr Read had made to her that the business
would be “rudderless” without him, that his current bonus is “frankly
intolerable” and the lack of bonus scheme in place for financial year 2022/23
was “reckless” (“Request for approval to retain and seek an increase in
remuneration for Nick Read CEO Post Office Ltd”, POL00448675). Mr Read
had made corresponding comments in an email to Ms Davies on 16
December 2022, in which he said amongst other things, “the bonus situation
is intolerable” and “No reward, no incentive nor retention scheme...frankly,
this feels reckless” (“RE: 2022-11-11 POL CEO remuneration_HENRY
NOTES v1 Grant Shapps v1 —- CONFIDENTIAL” 16 December 2023,
WITN11410101). Ms Davies reported those comments back to me at the time.
There were numerous times in December 2022 and January 2023 when, just
as I was settling into my new role and assessing strategic priorities, Mr Read
raised his remuneration with either me or the Chief People Officer (who would
then inform me). Just before Christmas 2022, Mr Read came into my office
and threatened to resign with immediate effect over his pay. I remember the
moment well: I was about to leave the office but I took my coat off so that I
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could discuss his potential resignation there and then. It was a huge concern
to me as I had only just been appointed Chair and I was not clear about the
management bench strength below him should he leave immediately. I asked
him to give me some time to sort out his pay. Following this, I remember
contacting the CPO almost immediately to brief her, and to request that she
provide me with a succession planning update in the new year.
When I met with Mr Shapps in January, he was clear that our proposal would
not be entertained by government. When I reported that back Mr Read did not
respond well. He was very despondent and said he felt let down. This came at
a time when he was frustrated about a number of matters — the approach
taken by the UKGI non-executive director on the board (which I address
further below), surprise costs in the Horizon replacement programme, and the
way in which non-executive directors operated, among other things.
Mr Shapps had left the door slightly ajar, and given Mr Read’s suggestion that
he might raise a grievance or resign over his pay, I called a meeting with Mr
Cooper (UKGI member of the Board), Lisa Harrington (the Remuneration
Committee chair) and Ms Davies, the CPO on 11 January 2023. Mr Cooper
suggested a retention plan rather than a bonus and we agreed a figure of
£50,000. We put this to Mr Read but Ms Davies reported back to me on 13
January 2023 that he had responded badly. He told Ms Davies he thought the
proposal on his pay was “insulting/risible” and indicated that he was
considering a formal grievance and/or resigning (Email: “RE: CONFIDENTIAL:
CEO pay rise” 8 March 2023, POL00448682).
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59.
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Ms Davies and I exchanged emails over that weekend, and on Sunday 15
January I spoke to Mr Read myself. He was threatening to leave and I tried to
placate him. I told him I would speak to Mr Cooper again and asked him to
hold fire on any rash decisions. I held a meeting with Ms Davies, Mr Cooper
and Ms Harrington on Monday 16 January to relay my Sunday evening call
with Mr Read and outline his threats to resign. Mr Cooper took these threats
seriously and said he would take the matter away and discuss it with
Whitehall, which was relayed to Mr Read.
Mr Read grew impatient. Ms Davies shared with me a message he sent her
ona Sunday, 22 January 2023, saying: “Jane, This situation has now moved
beyond a Sunday evening chat. My patience has expired. There has been no
progress since we discussed the matter over Teams on 13/01. You have now
forced me to seek advice, which I have done this weekend. I think you and
Henry have some urgent thinking to do or, to quote Henry, ‘we will end up ina
real self-made mess’. Nick” (Email: “Re: Nick” 23 January 2023,
POL00448677). I understood the reference to seeking advice referred to legal
advice, and therefore to be an implied threat of legal action.
The three of us (the CPO, the CEO and myself) met on Monday 23 January
2023 to discuss the issue. Ms Davies took a note of that meeting, which
matches my recollection (Text message from Nick Read to Jane Davies &
notes of meeting between Nick Read, Henry Staunton and Jane Davies,
WITN11410102). The language used by Mr Read in that meeting was stark.
“Do I want drama ‘no’! do not, I am prepared to make a drama ‘Yes’! am,”
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the note records him saying. He said he was prepared to submit “a formal
grievance and or make a claim for constructive dismissal”. I asked him about
what it would take to keep him. His expectations were high — a 10% pay rise,
an increase in his bonus to 50%, and a meaningful retention award to 31
December 2023.
The next day, 24 January 2023, I met unofficially with the members of the
RemCo with the CPO present in an urgent meeting to ask for their approval
for Mr Read’s pay demands. In attendance were Mr Tidswell, Mr Gaunt, Mr
Cooper, Ms Harrington and Ms Davies. The CPO ran through Mr Read's
demands, reading from her notes of the meeting the day before, and
highlighted his threats to leave. Mr Cooper was sceptical that the package
would be acceptable, but the rest of the non-executive directors were
supportive. With the group’s approval, I took a lower proposal on an increase
to the CEO’s pay and bonus to the Secretary of State via UKGI’s Chief
Executive, Charles Donald and Director General, David Bickerton when I met
with them the next day (25 January 2023). Again at that meeting Ms Davies
read out the notes of our meeting with Mr Read, including his threats to resign
and claim constructive dismissal, and the pay package Mr Read was seeking.
As I suspected, Mr Read’s pay demand was rejected the same day. Instead,
the government's offer on pay was a 5% salary increase (aligned with
workforce pay) and approval of payment of a disputed bonus payment from
the previous year, which was itself a significant concession from government
(Email: ““BEIS / UKGI response” 25 January 2023, POL00448678).
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There was some delay in getting the pay deal through government and Post
Office systems. On 22 March 2023, Mr Read requested an urgent meeting
with me and Ms Davies. He was very frustrated about the delay to his pay
increase being agreed and threatened again to submit a grievance (a point
Ms Davies recorded in an email to UKGI the same day) (Email: “RE: SoS sign
off — POL STIP 2022/23” 22 March 2023 POL00448683). He was angry that
his bonus plan for the current financial year had not been confirmed and once
again threatened that if this was not sorted he would resign and claim
constructive dismissal. He said that no one understood the pressure he was
under, he had no support on the board, was holding the ship together on his
own and his pay should reflect that.
On 21 April 2023, Mr Hollinrake wrote to me to confirm that Mr Read would
receive a 5% pay rise, backdated to 1 April 2022, but that no further pay rise
would be considered. He also referred to the decision already made by Mr
Shapps in January 2023 to retrospectively approve the bonus paid to Mr Read
for financial year 2021/2022. He rightly shot a warning that there should be
“no further miscommunication” between the Post Office and the shareholder
regarding pay requests and approvals. Mr Hollinrake pointed to the
“challenging climate for significant pay increases in the public sector,
especially in the context of the Budget, cost-of-living pressures and
widespread disquiet around postmaster remuneration’ (Letter from Kevin
Hollinrake to Henry Staunton, 21 April 2023, POL00448706). It was clear no
further pay rise would be forthcoming.
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64.
65.
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This brought to a close — for the time being — what had bee an extremely
time-consuming matter in my first few months of chairmanship. In all my non-
executive appointments, I have never had to grapple with pay demands,
bonus governance issues and threats of resignation to the exte! had to at
the Post Office. It did not sit comfortably with me in the context of
postmasters’ net income going backwards at the time (not to speak of the
others whose lives had been ruined as a result of the Horizon sandal). As I
had said to Ms Munby, in the previous year half of all Post Of€es were either
loss making or earning less than £5,000 profit In a recent update to the Board
on 28 March 2023, we had been told that postmaster profitabilit was set to
fall by around £29 million in 2023/24, which equated to a dropof around
£5,000 in margins for a typical Mains Post Office branch and o£2,000 for a
typical local branch As a result, we were facing a very real retention challenge
with our postmasters. That is the issue I wanted to be focusing on instead of
executive pay. The focus on pay meant that there was less time to focus on
the key issues facing the business, particularly the cost baseand the need to
increase the take of the current postmasters.
As long as I was at the Post Office, the issue of Mr Read’s pay never entirely
went away. I was always conscious of the importance of stability at a senior
level. With no succession plan, it would have been potentiallycatastrophic to
lose our CEO. I was, on the whole, supportive of the job Mr Red was doing
in extremely challenging circumstances. In the context of Mr Red’s threats to
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leave I felt obliged to do what I could to convey his requests for higher
remuneration. It was for similar reasons that I chose to grade Mr Read as a
“five” (the top score) when asked to review his performance (which affected
remuneration) as I thought it was important to motivate him and to keep him in
the business at a time of crisis. I knew that my predecessor had given Mr
Read a grade five and did not think it would be helpful to downgrade him. In
December 2023, Mr Read once again told me he felt he was being treated
unfairly with his remuneration and threatened to resign. I reported this back to
the UKGI non-executive director, Lorna Gratton. Unsurprisingly, she was
unsympathetic to Mr Read’s demands.
As further context to Mr Read’s pay demands, the ever-present issue of
executive remuneration was not only a problem in that it was an unhelpful
distraction, but also because it shone a light on historical governance issues:
a) In my time as chairman, the business was dealing with controversy
over a bonus scheme (“TIS”) that rewarded executives for cooperating
with the statutory Horizon Inquiry. The terms of that bonus scheme had
been formulated before my time at the Post Office, but unravelled
during my time as chairman. It was evidently wrong that executives
should be rewarded for complying with the statutory Inquiry, when of
course they were obliged to do so anyway. I should say that in this
matter, Mr Read was prepared to repay this element of his bonus and
accepted this was the right course of action.
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I had to deal with the issue of the disputed 2021/22 bonus for Mr Read
that I refer to above. We were in a position of asking for retrospective
approval from the shareholder for a bonus that had already been paid
out, when the business should have obtained the approval beforehand.
I was left to pick up the pieces. The issue here was that a “multiplier”
was applied to Mr Read’s bonus to uplift the overall amount, but it was
unclear whether that multiplier should have been applied to the whole
or just that part of the bonus that related to personal objectives. The
shareholder felt, not unreasonably, that the unapproved element
should be repaid. It was time-consuming for me to negotiate approval
of the full bonus (which the government was most unhappy to do) on
joining the Post Office, but I felt I had to push for it for the reasons I
explain above.
I know from discussions with the then chair of the Remuneration
Committee, Ms Harrington, that this was a committee that was not
functioning well when I joined the Post Office. Ms Harrington was
deeply frustrated by the poor information flows and the payment of
bonuses which were not approved and the constant demands for extra
remuneration by the CEO. She was displeased with the lack of due
process by management in relation to the “multiplier” issue described
above. Ms Davies had also commented on the poor governance
arrangements she inherited.
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EARLY GOVERNANCE ISSUES: EXITING NON-EXECUTIVE DIRECTORS
67.
68.
Another item in my in-tray on beginning my chairmanship was the departure
of three non-executive directors from the Board. Soon after I joined, three
women left the board: Ms Harrington, Carla Stent and Zarin Patel. Only one
had served a full three terms and, accordingly, I was alert to a possible
governance issue. I commissioned exit interviews by a third party (NED Exit
Interviews, POL00448681). Via the exit interviews, a number of concems
were raised:
a) That the board lacked real decision-making powers and can feel “like a
puppet Board”, as it just “rubber stamps” decisions made elsewhere
and is not properly listened to;
b) Doubts about the calibre of the team at executive level, with particular
criticism raised about the CFO, Mr Cameron, who was said to have an
“aggressive style” that had “forced out” a number of women in his team
and non-executives; and
Cc) That levels of respect and trust within the general executive (including
between Mr Read and Mr Cameron) and also between the Board and
general executive were a barrier to success.
Evidently, there was considerable work to be done to improve the morale and
effectiveness of the Board. I accordingly determined that in my time as
chairman, I would work to ensure every Board member felt they had an equal
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69.
70.
71.
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vote and that there would be no perception or reality of it being a “puppet”
Board. Whether I achieved that will be for others to determine.
Another issue that came to my attention early on was that my fellow non-
executive directors were unhappy with the power wielded by the UKGI non-
executive director, who at the time was Mr Cooper. The view expressed to me
was that it felt like Mr Cooper had ten votes to every one vote of the rest of
the directors. That is, that there was an unreasonable concentration of power
in the UKGI director and that he had too great a sway over decision-making.
With regard to the concerns about the UKGI non-executive director, I was
conscious of the comments from my fellow non-executive directors and also
from Mr Read, who wanted Mr Cooper to be removed. Mr Read felt that Mr
Cooper chipped away at decisions and over-scrutinised the executive (in
particular, his own pay as CEO, as recorded in Ms Davies’ note of our
meeting on 23 January 2024). He expressed to me that Mr Cooper had set a
precedent of non-executive directors attempting to play executive roles, which
caused confusion. In an email on 23 December 2022 he said that Mr Cooper
was not fulfilling his role, “which is to act as an interface between the
company and government and to act as a ‘cheerleader’ for what we do and
the value we play in society” (Email: “Tom Cooper: Strictly Private and
Confidential” dated 23 December 2022, POL00448676).
I recognised that removing Mr Cooper would be difficult and could not happen
immediately, but I felt it was the right thing to do to ensure we had a unified
Board working together to tackle the Post Office’s issues. Having only just
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72.
73.
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become chairman at this stage, and for the reasons set out above, I felt I
needed to keep Mr Read on board and engaged. I told Mr Read that it might
take a few months to resolve. Mr Cooper left the Board in April 2023 and was
replaced by his UKGI colleague, Lorna Gratton.
I continued to do what I could to maintain the Board’s independence and
ensure decision-making was not dictated by the shareholder. For example,
when we were visited by Mr Bickerton and Mr Donald of UKGI at the Board
Meeting on 11 July 2023, I made a point of saying that we must not get into a
situation where every major decision was taken by the Shareholder, and that
the Board must be allowed to function without undue interference. I made
these comments at the request of my fellow non-executive directors and the
CEO, Mr Read.
As I have already stated, these matters of non-executive politics may seem —
and indeed are — insignificant compared to the plight of postmasters.
However, from my perspective as chairman overseeing the board and
reviewing the work of the general executive, I knew how important it was to
have effective and cohesive governance at the top of the organisation, without
which redress and remediation for postmasters would be held back. The
Board that I joined was not in sufficiently good shape to be able to tackle
these important challenges.
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SENIOR MANAGEMENT CLASHES
74.
75.
76.
Another issue that hampered the performance of the Post Office’s executive
was the unusual number of people issues arising at a senior level.
I have already mentioned above some negative views among non-executive
directors and Mr Read about the CFO, Mr Cameron. Mr Read and Mr
Cameron did not have a good working relationship. At a meeting on 22 March
2023 with me and the CPO, Mr Read accused Mr Cameron of being
disruptive and undermining him at meetings, although I should say that this is
not something I witnessed myself. Like the exiting non-executive directors, Mr
Read felt Mr Cameron was aggressive towards colleagues. At the same
March 2023 meeting, Mr Read even said that he was not prepared to continue
working at the Post Office while Mr Cameron was there. Meanwhile, the CPO,
Ms Davies, informed me that Mr Cameron had told her he felt it was
impossible to work with Mr Read and his mental health was suffering. Mr
Read wanted the support of the government to pay Mr Cameron off. That was
something Ms Davies and I tried to achieve, although there was resistance
from UKGI to offering Mr Cameron anything more than his statutory
entitlement. In the end, Mr Cameron went on long-term sick leave and I
understand only recently left the business.
During my time at the Post Office I was also aware at a high level of
unhappiness amongst a number of the company’s senior women. Other than
Ms Davies all the senior executives were men and I said to Mr Read that this
was unacceptable. As I show below there was a pattern that appeared to
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show senior women not being supported in challenging roles. Ms Davies had
told me she had raised the issue of the “psychological safety” of women in the
organisation directly with Mr Read, but he was not prepared to take any
action. My role was not to manage operational matters, and therefore my
knowledge of these points is peripheral, however I know that the following
women raised concerns:
!, who held a senior role as retail transformation director,
with responsibility for implementing new systems across the Post Office
network as part of the Horizon replacement project.!. told
me that she felt unsupported by Mr Read. Mr Read complained to me
that she was too opinionated and too hard-driving. I thought her drive
was something that was needed to push the project along but I could
not persuade Mr Read that her huge positives outweighed any
concerns. I was informed that! GRO _ [broke down in tears in Ms
Davies’ office complaining of bullying. I also heard from others that/cro!
ad been excluded from the business after raising a
whistleblowing complaint that had been passed to the Central
Investigations Team. I was not involved at all in managing
ts complaint, so I cannot comment on the credence of the
matters raised, but I did raise with Mr Read my concerns about our “top
performers” being excluded from the office when they raised
complaints which made it difficult for them to return to the business. In
left having only been in her retail transformation
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c)
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role for a short period, which I felt was an unfortunate loss to the
company.
Kathryn Sherratt, who took on the role of interim CFO in Mr Cameron's
absence. I know that she felt unsupported and in my view she was set
up for failure. She was given far too wide a remit for a person newly
appointed to the role, including the responsibility to reduce costs which
I thought should be shared with the CEO. As a previous CFO myself I
know that without the CEO’s active participation a cost reduction
programme will not succeed.
Diane Wills, who was a very capable member of our legal team who
went on to be the Post Office’s Inquiry Director. I understand that Ms
Wills raised a complaint against the legal director, Ben Foat. Ms Wills
was only prepared to stay with the business if she did not have to
report to Mr Foat. I too was concerned about Mr Foat’s performance
(which I address elsewhere in this statement) and voiced those
concerns to Mr Read on multiple occasions, including at a private
meeting on 27 April ahead of the postmaster conference in
Birmingham, which was also attended by the CPO Ms Davies. I said I
thought the Inquiry should be removed from Mr Foat’s responsibilities.
This did indeed happen, with Ms Wills replacing Mr Foat in the Inquiry
role. I was sorry to learn that she too is due to leave the Post Office.
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Juliet Lang, a senior member of the HR team, raised a formal
grievance about IT staff being taken on as contractors and the potential
governance issue that gave rise to. She left the company not long after.
Ms Davies, the CPO. Ms Davies was the fifth CPO (all women) during
Mr Read’s tenure, which gave me some concern about his ability to
retain female talent. She joined POL at the same time as me and we
worked closely together in the first two months in relation to Mr Read’s
remuneration, as I describe in this statement. She was very open with
me about her experiences. She had expressed concerns over the ‘job
for the boys’ mentality within Mr Read’s team, as well as expressing
concerns over the governance and compliance of the Remuneration
Committee decisions, which I also acknowledged, but felt would be
resolved with a new RemCo Chair joining. Ms Davies told me her own
department had severe morale issues and had the worst engagement
scores in POL.
Ms Davies was put through a long investigatory process herself after
complaints made by members of her team. However, Ms Davies
expressed the view to me that she was being “reverse bullied” by those
below her in the organisation, and she did not feel supported by Mr
Read. In May 2023 I received a complaint from Ms Davies, which she
told me she had also sent to Mr Read and Mr Foat (Letter from Jane
Davies to Henry Staunton, enclosing letter from Mills & Reeve LLP to
Nick Read, 23 March 2023 POL00448687). The complaint alleged that
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she had raised issues of poor management, culture and compliance
and had been treated less favourably as a result. I was concerned by
those complaints and was conscious that Ms Davies may be vulnerable
because we had not achieved the increases in pay Mr Read had
sought. Initially, I did not perceive Mr Read’s conduct toward Ms
Davies as bullying, but as time passed I began to become more
concerned about the manner in which he treated her and excluded her
from meetings, which I found disrespectful. However, as chairman it
was not my role to become involved in operational matters and
therefore I left the complaints process to be dealt with by management.
It was also important that I did not interfere in these processes, as I
knew that there was a possibility I could be called upon for example to
manage an appeal in the future.
Ms Davies went on sick leave in May 2023 with stress and anxiety. In
June, Mr Read decided not to keep Ms Davies on beyond her
probation period. I remember him saying that she was “missing in
action” and was not culturally suitable. I found this worrying, as it was
not in line with my opinions. Ms Davies later raised a Speak Up
complaint predominantly about Mr Read, accusing him of bullying and
discrimination. I address the fall-out from that complaint later in my
statement.
77. These issues naturally led me to question whether we were doing all we could
to keep our brightest and best. The attrition rate among senior female staff
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was alarmingly high, and I was concerned that they were not being sufficiently
supported. Whilst it was my responsibility as Chairman to do what I could to
support the Chief Executive and the management team, I became
increasingly uneasy about an accumulation of evidence of issues stemming
from the top. There also seemed to be a culture of lengthy investigations of
both senior staff and postmasters (which I address later in my statement),
which led me to question whether, far from having dealt with the culture and
suspicion towards postmasters which lay at the heart of the Horizon scandal,
there was still a pervasive problem in that respect.
STAFF SATISFACTION
78.
79.
I have focused thus far on the experience of senior individuals in the company
and the cultural issues at the top of the organisation. I focus on those points
because those are the matters to which I had the most direct exposure.
However, I was also all too aware of cultural challenges throughout the
organisation.
On 27 April 2023, Ms Davies presented some figures from the most recent
engagement survey at the employee staff conference. While there were some
positives, the negative feedback was summarised as “bureaucratic,
fragmented and inefficient”. Only 39% of those who responded had
confidence in senior leadership and the same percentage felt that senior
leaders lead by example (Engagement Survey Presentation presented at Staff
Conference (27/04/2023) — “Overall results & themes”, Slide 100 of
POL00448707). A remarkable 70% of our people reported feeling under
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80.
81.
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constant strain, bureaucracy and inefficiency. The results highlighted
leadership behaviours that needed to change. Ms Davies told me that Mr
Read had asked one of her team members (Ms Lang) to amend her
presentation for the staff conference to “tone down” and remove the content
on the issues with leadership behaviours, as Mr Read felt uncomfortable.
I had pushed for a full copy of the staff engagement survey results, but did not
receive this from the CEO until July 2023. The document contained yet more
stark statistics. I was particularly struck by the results for the senior leadership
team. The report said that those senior leaders experience “fewer positive
cultural elements than average” and when asked to describe the Post Office’s
culture were more likely to choose words such as, “hierarchical, political,
overly risk averse, convoluted and fearful”. (Staff Engagement Survey — “Post
Office has a respectful, friendly and supportive culture, with pockets of
bureaucracy, fragmentation and inefficiency” POL00448635 page 13) That
reinforced my impression that we had a real problem with culture at the top of
the organisation.
Similar messaging had come out from our annual board evaluation earlier that
year. The results showed that board members felt the business was risk
averse, with one commenting that management “need to feel they can make
decisions without looking over their shoulder at the possible ramifications
should they make an error of judgment’ (POL Board Report — “Board
Evaluation Report 2022/23” 28 March 2023, POL00447866). That view was
echoed in the CEO’s update to the Board on 6 June 2023, in which his
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language was striking: “A fragile and brittle business is creaking. Morale is
being severely tested. A culture of fear is developing. It is this final point that
we should be especially concerned about. Colleagues are fearful of putting
their heads above the parapet, of taking risks and soon, of admitting mistakes.
Risk aversion and paralysis is setting in, which will not help our commitment
to transparency”. (POL Board Meeting, CEO Report, 6 June 2023,
POL00448712 p.37) Mr Read’s summary was a fair reflection of the position
and we were agreed on this point, that there was an issue which needed
tackling. As my later experiences with the business, which this statement will
go on to describe, demonstrate, there was a culture of constant investigation
(and the resulting sense of inquisition hanging over people’s heads, at times
for long periods), which did not help morale.
Similar statistics were reported in the postmaster survey that the CEO
reported back to the Board on 6 June 2023. The results were eye-opening.
Only 34% of postmaster respondents felt like a valued and equal business
partner (down from 43% the year before), and only 40% felt well supported by
the Post Office (down from 54%). Moreover, we were performing badly on
trust metrics. There was a 12% reduction in the number who felt the Post
Office was genuinely trying to improve the relationship, and a 9% reduction in
those who felt that the business interacted in a purposeful and engaged way.
Evidently, we were going backwards in our relationship with postmasters.
(POL Board Meeting, CEO Report, 6 June 2023, POL00448711 p.41).
Although the results came out after my time at the Post Office, I understand
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that the April 2024 survey showed the relationship between postmasters and
the company continued to decline.
ATTITUDE TOWARDS POSTMASTERS AND INVESTIGATION OF
POSTMASTER DIRECTORS
83.
84.
One hugely positive development in the culture of senior leadership that had
been implemented before I became chairman was to have two active
postmasters on the Board as non-executive directors. These were Saf Ismail,
who operates Post Offices in the northwest of England, and Elliot Jacobs,
whose Post Offices are in London and Hertfordshire. It was a great benefit to
the Board to have their direct operational experience. However, from speaking
to them directly I was aware that they sometimes felt like “second class
citizens” on the Board, whose voices were not taken as seriously by
management as others. They felt discriminated against in the sense that they
were not listened to or respected in the same way as other non-executive
directors. For example, they were excluded from committees such as the
Remuneration Committee (which I knew Mr Read did not want them to be on,
because he thought they would take an “uncommercial” approach to pay).
What is more, in a situation I found utterly unconscionable, both Mr Ismail and
Mr Jacobs were subject to investigations themselves during my time on the
Board (see below). The process was very poorly handled and showed the
Post Office still had some way to go in correcting the poor culture of resorting
to heavy-handed investigations as the kneejerk reaction to any issue. If we
could not even treat our non-executive director postmasters with respect and
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85.
86.
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openness in such a situation, it raised questions about how the general
postmaster populations were treated. I could not but wonder if the
investigations into the postmaster non-executive directors were because they
had been critical about the Post Office’s culture, and that was also why it was
left open for months, seemingly being held over their heads deliberately.
The investigations related to discrepancies in the postmasters’ trading
accounts. In my long experience in business, particularly in retail, these sorts
of thing are not at all uncommon and can be resolved through a simple
process of reconciliation with intercompany accounts. I felt in Mr Jacobs and
Mr Ismail’s cases, a mountain had been made out of a molehill by bringing in
the Post Office’s investigations team to institute lengthy and bureaucratic
inquiries into the issues. I was astounded by how little seemed to have been
learned from past experience of investigating postmasters.
The situation with Mr Jacobs was the more involved of the two. On 23
January 2023 I was informed by Mr Foat, who led the legal function and the
investigations team, of a plan to send auditors to pay an unannounced audit
to all seven of Mr Jacobs’ Post Office branches and to invite him to an
investigation interview. Initially I said I was happy with the proposed action,
because I understood it was standard procedure and trusted the legal function
to be handling these things properly. However, on reflection I felt that we
should not be rash in launching into an investigation. As Mr Read said at the
time, this was not a “normal situation” with Mr Jacobs being a board director,
and it did not sit well with our discussions of culture at board meetings to then
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87.
88.
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“spring an unannounced audit’ on one of our own non-executive directors. I
agreed that it was a “delicate situation” and asked for a “forensic briefing” if
the audit were to proceed, because I was unaware of the reasons for the
investigation and the evidence currently available. I was keen that the Post
Office did not repeat the mistakes of its past.
Despite those reservations, the Post Office’s investigation team was
commissioned by Mr Foat to investigate Mr Jacobs’ contract to run Post Office
branches and whether he was suitable to remain a non-executive director. I
could not understand why this was the course of action rather than having an
open dialogue with Mr Jacobs.
In Mr Jacobs’ case, the difference on the intercompany account was in the
region of £200,000 (Email: “RE: PM NED matter” 1 March 2023
POL00448679). Although this may sound like a large number, it was across
seven premises and over a period of at least four years. I was also conscious
of the ongoing use of the Horizon system which had of course proved to be
extremely unreliable in its branch accounting. I was informed that Mr Jacobs
had made a commitment to resolve any established discrepancies on the
account (Email: Fwd: Discrepancies in postmaster branches — IN
CONFIDENCE” 29 April 2023, POL00448684 and Email: “Commitment” 28
April 2023, POL00448685). In fact, as I explain below, the proven amount
proved to be much lower than the initial figure I was told about. In Mr Ismail’s
case, the initial figure under consideration by the legal team was even
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89.
90.
91.
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smaller, just £32,000, of which he was eventually required to repay only
£26,558.46.
When I saw the investigation report into Mr Jacobs’ position as a director on 5
February 2023 I was frank with Mr Read that I thought it was dreadful:
legalistic and uncommercial (Email: “Fwd: Diary — w/c 1st May 2023” 2 May
2023, POL00448686). It focused on the legal position as to whether Mr
Jacobs should have made declarations to the board, but not the fundamental
matter of whether the sums were genuinely owed to the Post Office.
It was not until many months later, in late September that it transpired that
only £16,977 of the original alleged circa £200,000 figure had been found to
be an established loss that could be recoverable from Mr Jacobs. This was
truly a negligible figure in the context of the over £1 million of funds handled by
his branches per week (Email: “Fwd: Project Venus — Privileged and
Confidential — Draft Note of Advice” 24 September 2023, POL00448691 ). The
business was lacking perspective over what were small trading balances. The
discrepancy between the original figure and the amount that could actually be
established I also saw as an indication of the ongoing unreliability of the
Horizon system.
Given the history of unduly harsh investigations into postmaster shortfalls, I
thought the handling of this matter showed a real lack of judgment. It also
revealed a surviving inclination in the legal team to “over-investigate” every
matter rather than deal with matters openly and transparently via dialogue
with postmasters. I told Mr Read that I did not think the Inquiry would look
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kindly on the Post Office taking this matter any further with Mr Jacobs. To give
him his credit, Mr Read agreed with me that the matter should not be taken
any further and should be brought to a conclusion quickly. In the end it took
until the end of October (Email: “Project Venus” 27 October 2023
POL00448692) for the legal team to close the matter and much later for the
postmasters involved to be informed that it was resolved.
Mr Foat and his legal team seemed overly concerned about whether Mr
Jacobs and Mr Ismail should have declared conflicts of interest in relation to
their non-executive director roles and the debt they owed the company, and
whether the trading balance discrepancies were undisclosed bans to
directors and/or needed to be declared in the company accounts. From my
perspective, I did not consider this to be a big issue. I felt the conflicts were
obvious and acknowledged: it was, of course, well-known that they were both
postmasters (indeed, that was the whole point of having them on the board)
and therefore there may be conflicts arising from their day-to-day running of
Post Office branches. To my mind, that encompassed the risk of occasional
discrepancies arising in a trading account, which is quite normal in any retail
business. Mr Jacobs and Mr Ismail deeply resented the accusation that they
had an undisclosed conflict of interest. They felt that view showed the Post
Office has not changed, that it was acting like the “old Post Office” with a view
from senior management that all postmasters are “crooks” (Email: “Re: Project
Venus” POL00448695). They came to me on 24 November 2023 and told me
how upset they were over the way things had been handled and how their
personal integrity was being questioned.
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93.
94.
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I voiced those concerns to Simon Jeffreys, non-executive director and chair of
the Audit, Risk and Compliance committee. By this stage we were in late
November and, like the postmaster non-executive directors, I was frustrated
that this matter was still hanging over them. We knew Horizon was a mess
with regard to branch accounting and could not be relied on — that was what
the Inquiry was about. And yet we were still taking what seemed to me to be
an unsympathetic approach to shortfalls in Post Office accounts, which still
relied on the Horizon system. I cannot put it better than how I expressed my
views to Mr Jeffreys at the time: “We have an Inquiry for not treating Post
Masters fairly. We must have a culture that does not assume that Horizon is
right and our Post Master Main Board directors are wrong” (Email: ““Re:
Project Venus” 25 November 2023 POL00448694). I raised similar concerns
directly with Mr Read (Email: “Re: Today” 24 November 2023 POL00448693).
The debacle left me with very little confidence in Mr Foat and the legal team. I
told Mr Read as much. I said someone needed to get a grip on the way Legal
operated, and that “/ have never had a Legal Counsel in whose judgement I
have so little faith - and I have been on 20 plus PLC Boards” (Email: “Re: ARA
Update — 1/12/2023” 3 December 2023, POL00448697).
In the event, we were advised that there was no obligation to disclose the
trading balances in the accounts. I passed that message on to Mr Jacobs on 2
December 2023, with apologies for the upset to him and Mr Ismail. He
thanked me for “letting common sense prevail”. I was also tasked with
communicating to Mr Jacobs the outcome of the investigation, of which he
said he knew nothing. He told me: “The entire process from start to finish has
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been far from optimal and an experience that feels like a guide to how not to
treat postmasters rather than the progressive, lessons learned organisation
we are supposed to be working on becoming” (Email: “Re: The Investigation”
02 December 2023, POL00448696). It would have been difficult not to agree
with that view.
I also received negative feedback from Mr Ismail about the culture of the
investigations team. He felt that investigations needed to be removed from the
remit of Legal, headed by Mr Foat. He said Mr Foat and Legal were still
treating postmasters “as guilty unless proved otherwise”. His suggestion was
that postmasters could be involved in investigations, for example with an
advisory council of four or five postmasters as the final arbiter. I thought Mr
Ismail’s feedback was striking and I took a note of it for my own records on 7
December 2023 (Email: “Saf feedback - CONFIDENTIAL” 7 December 2023,
POL00448698).
SPEAKING UP ON BEHALF OF POSTMASTERS
96.
As the Inquiry will be aware, the treatment of postmasters reached the top of
the public agenda when the ITV drama Mr Bates vs The Post Office aired at
the turn of the new year in 2024. Not long afterwards, the story broke that the
Post Office’s communications director Richard Taylor had said some
postmasters caught up in the Horizon scandal had “downright stole” the
money. Those words came as little surprise to me, given I was by then familiar
with the views in the upper echelons of Post Office management that most
convicted postmasters were “guilty as charged”.
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97.
98.
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Now that the case had caught political and media attention in the way it had
not before, I was confident that finally justice could start to be done. I wrote to
Mr Read on 9 January 2024 to say that things were moving “very quickly
thankfully and in the right direction. A blanket overturning of convictions looks
quite possible. As we discussed ten days ago that would be welcome.” But I
noted that the tone coming from Legal was still disconcerting. I had seen a
note from Mr Foat that had worried me. Mr Foat had written to various senior
people to say that the media was reporting “erroneous” facts, for example
“that all convictions are unsafe” and that we should prepare a “fact checker’ to
use in communications to explain that not all the hundreds of convictions were
unsafe, and that legal rules meant the claimant had to bring the appeal and it
was not up to the Post Office to overturn the convictions (Email: “RE: Post
Office Compensation Bill I Debate Summary” 9 January 2024,
POL00448699). I felt this was a rigidly legalistic view that struck completely
the wrong tone. I warned Mr Read that I thought it would be a mistake if
anything came out of the Post Office that looked to be negative or slowing the
process (Email: “Fwd: Post Office Compensation Bill I Debate Summary” 9
January 2024, POL00448700).
Yet Mr Read had expressed essentially the same point in a letter to the Lord
Chancellor on 9 January 2024. His letter indicated that there were only 35
potential prosecutions that were potentially appealable and had not yet been
resolved. There was a “very much more significant number”, he said, where
the Post Office “would be bound to oppose an appeal”. He put that number at
369, plus another 11 still under review, and a further 132 where the Post
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Office could not determine the sufficiency of evidence without more
information. Mr Read also enclosed the advice of the Post Office’s solicitors
Peters & Peters, which said in terms that “the majority of people who have not
yet appealed were, in fact, guilty as charged and were safely convicted”. The
advice said that the recent media and political response was “based on the
false assumption that there are 700 wrongful convictions, therefore there are
hundreds of miscarriages of justice still out there whose route to justice is
somehow being thwarted by POL and ‘the system’.” I was dismayed to read
that advice. I could not believe that, with all we knew about how unreliable
Horizon was, that the view from our Chief Executive and key advisors
remained that the law could not have got it wrong. (Letter from Nick Read to
Alex Chalk 9 January 2024 POL00448381; Letter from Nick Vamos (Peters &
Peters Solicitors LLP) to POL, POL00448701).
I challenged Mr Read on the language used, saying I was “surprised to read it
following our conversations that we would not become involved in any way in
what is a very difficult decision for Government and our justice system”. I went
on: “You say that we are not making a value judgement but then attach a
letter from our lawyers which makes the statement ‘It is highly likely that the
vast majority (..... of Post Masters ) who have not yet appealed were in fact
guilty as charged’. If that is not a value judgement I do not know what is. He
also makes another value judgement that no one would have a more
generous approach than POL - a view I would not share based on my
assessment of our past behaviour. A third party would see this letter as Post
Office’s lawyers ‘continuing to defend the indefensible’, ‘Post Office has not
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100.
101.
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changed’ etc. That assessment of others would do a huge disservice to the
efforts of the current Board and management team as we seek to accelerate
justice and generosity for wronged Post Masters.” (Email: “Fwd: Documents —
confidential and legally privileged” 13 January 2024, POL00448703). I stand
by what I said then. I thought it was extraordinary that the CEO had decided,
without consulting me as chairman or the board, to write such a letter.
My view was quite different, and is reflected in a letter I sent myself to the
Post Office Minister Mr Hollinrake on 11 January 2024 (Letter from Kevin
Hollinrake, POL00448702). I thanked him for his role in leading the
government's response. I said that I looked forward to continuing to work with
him to “expedite even faster the exoneration and compensation that those
wrongly accused deserve”. I was glad that the ITV drama had caused more
victims to come forward, and I was hopeful that this would be the catalyst to
see justice done and internal attitudes in the Post Office change. That is why I
found Mr Read’s own messaging to government so disappointing.
It was around this time, on Sunday 14 January, that Mr Jacobs and Mr Ismail
phoned me to express their views on the treatment of postmasters. I greatly
valued their perspective as postmasters themselves. I took a detailed note of
our conversation (Email: “Project Pineapple” 14 January 2024,
POL00448704) I would encourage the Inquiry to read that note in full, but I
summarise their key concerns below:
a) They felt that the view that postmasters who had not come forward to
be exonerated were “guilty as charged” persisted and was embedded
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“deep in the culture of the organisation”, leading to a view that
postmasters are not to be trusted;
b) Too much power was wielded by Mr Foat and the investigations team,
whose starting point is a presumption of postmaster guilt;
c) That Post Office staff involved in investigations in the Horizon scandal
era should go. They pointed in particular to Stephen Bradshaw, the
investigator who had been accused of acting like a “mafia gangster’
and who at an earlier phase of this Inquiry admitted that his style of
interviews was “not nice”. They also named John Bartlett, whose
behaviour they said was “unacceptable” (Mr Ismail reported Mr Barlett
having come into one of his branches some years ago and saying “we
are closing you down” — he felt little had changed since);
d) They criticised Martin Roberts, who ran the network of circa 12,500
postmasters, in particular the lack of feedback from an investigation
into Mr Roberts’ alleged inappropriate behaviour and lack of integrity;
e) The difference between head office pay and benefits compared to
postmasters. Postmasters were unhappy at the level of executive
bonuses and the generosity of sick leave, when postmasters received
none.
102. Their personal views coincided with a press release from the Voice of the
Postmaster (the collective group for postmasters) which made a number of
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demands as part of a call for “a complete overhaul of the organisation”. They
asked for:
a) Justice for former postmasters with compensation as soon as possible;
b) Action on pay citing no pay increase in real terms since 2015;
c) The removal of any employees who were employed during the Horizon
scandal period;
d) The removal of Mr Read as CEO;
e) Involving postmasters in a material way at all levels of Post Office
management;
f) Linking pay and bonuses for Post Office staff with network
sustainability and branch profitability;
g) An overhaul of branch remuneration to provide fair pay.
(Press Release — Voice of the Postmaster (15/01/2024), POL00448537 )
Mr Jacobs and Mr Ismail were worried, quite reasonably, about the potential
repercussions on them personally of raising their concerns. It was important
that the Board understood these issues and I thought that it was right that I be
the person to raise them. I believed that by virtue of my role and seniority I
had a degree of protection from potential blowback (an assumption that
proved unfortunately mistaken). I wanted to make sure I properly and
precisely reflected their views, so I got Mr Ismail and Mr Jacobs’ approval
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before I passed their comments on to the Board. Mr Ismail suggested also
sharing the Voice of the Postmaster press release, which I did. He described
my support as “refreshing to see and much appreciated’. The praise was
rather disheartening, as I felt I was only doing what all those at the top should
be doing. I told Mr Ismail, “I am determined to get it right for existing PMs and
past wronged PMs”. (Email: “RE: Project Pineapple” 15 January 2024,
POL00448302)
104. I also shared the note with Mr Read to ask him to organise a response. I was
horrified that Mr Read went on to share the note with Mr Foat and Mr Roberts
— precisely the individuals who had been singled out for criticism by the
postmasters (Email: “RE: Future of Post Office branches” 18 January 2024,
POL00448564). While Mr Read said that this was an accident resulting from
the huge pressures on him, and was apologetic, I was worried about the
potential consequences for Mr Jacobs and Mr Ismail. I thought it could expose
them to further investigations from Mr Foat in the future (Email: “Project
Pineapple - STRICTLY CONFIDENTIAL” 18 January 2024, POL00448301).
Mr Jacobs and Mr Ismail were incandescent that this should have happened,
and also rather frightened about the consequences. They both wrote to Mr
Read on 18 January 2024 to emphasise the gravity of the situation and the
compromising position they had been put in. Mr Jacobs referenced Mr Read
having referred to Mr Bartlett, Mr Foat and Mr Roberts as “untouchable”,
which only served to reinforce his concerns about the power that the
investigations team wielded, and his fear of retaliation in the form of further
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105.
106.
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investigation of his businesses. (Email: “Re: Project Pineapple - STRICTLY
CONFIDENTIAL” 18 January 2024, POL00448383)
Mr Jacobs shared with me a draft email that he intended to send to Mr Read
(and I believe he did indeed send, although I was not copied) on 24 January
2024 (Email: “CONFIDENTIAL draft for discussion” 24 January 2024,
WITN11410103) He confirmed that everything I had included in my note was
true and reflected his experience and the feedback of other postmasters. He
reiterated that there is a culture embedded in the Post Office that Postmasters
are “guilty’ and “on the take” and that the culture will never change whilst Post
Office continues to employ 40 plus people (i.e. investigators) who found
innocent people guilty. This was a matter the Board had been informed of the
previous year, when we were told that the Post Office had recruited into its
Historical Matters Unit employees who had previously worked in the auditing,
investigation and suspension or termination of postmasters connected to the
historic Horizon shortfall cases. Those individuals had been risk assessed on
a traffic light scale, with those categorised as “Red” being people who had
held senior and/or long-held roles directly related to historic Horizon shortfall
cases (of which there were 16 people employed in the Historical Matters Unit).
Mr Jacobs added that the “untouchables” (Mr Read’s words) who work in the
investigations department investigate everything and everyone, something Mr
Jacobs described as “not a normal approach to governance and oversight”. I
had made the same points to Mr Read previously but to no avail. It was
deeply disappointing and alarming that Mr Jacobs felt that “nothing had
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107.
108.
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changed” and the approach to the investigation into his branches, described
above, was “precisely how we treated PMs back in the day’. It was also
troubling to see that Mr Read had suggested to Mr Jacobs that Mr Foat and
Mr Roberts may have claims for “constructive dismissal’ on the basis of the
concerns raised by Mr Jacobs and Mr Ismail. While I cannot profess to be an
expert in the area, that suggestion seemed baseless to me and a fairly
transparent effort to supress the voice of whistleblowers.
I too had heard Mr Read using the term “untouchable” on a number of
occasions, including at a private meeting in January 2024, which was
attended by all the non-executive directors other than Ms Gratton and Mr
Tidswell. By “untouchable” I understood he meant that the people in the
investigations team were immune from the consequences of the poor
decisions of the Horizon scandal. To my mind, no one was (or should have
been) truly “untouchable” and if anything this language betrayed Mr Read’s
own reluctance to fire people who had behaved poorly in the past with regard
to postmasters.
Mr Ismail went on to prepare a note to the Board, which he shared with me,
reinforcing his concerns. He noted that, more than a week after his email of
18 January 2024 questioning why the note of our conversation had come to
be shared with the very individuals being criticised, Mr Read had still not
replied. I felt it was little wonder that Mr Jacobs and Mr Ismail felt like “second
class citizens” if they were not given the same attention and courtesy of an
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email response from the chief executive as other non-executive directors
might expect (Note from Saf Ismail to the POL Board POL00448714).
APPOINTMENT OF SENIOR INDEPENDENT DIRECTOR TO BOARD
109.
110.
The other issue on my plate at the time of the above developments, was the
need to appoint a new Senior Independent Director. As was recommended by
the Higgs review in 2003, the Post Office board includes a senior independent
director (SID). The SID position is a point of contact for the Chairman, the
non-executive directors and also the executive directors. The role of the SID
is to be a sounding board for the Chair and act as an intermediary for other
directors. A board’s SID should have independence of character and
judgment, and should not have any conflict of interest. It was and has
remained the case that the SID appointment was not the preserve of the
shareholder but of the Board and particularly the non-executive directors. Itis
important to understand the context of what is accepted as good governance
and the role of a SID within a properly run Board, particularly as I have been
accused, despite my considerable experience on corporate Boards, of flouting
basic governance principles.
At the time I joined the Post Office, the SID was Mr Tidswell. By late 2023, Mr
Tidswell wanted to step aside following a new appointment he was taking up
at the Competition and Markets Authority. As a board, we therefore had to
decide on his successor (POL Board Report — “Senior Independent Director
role” 26 September 2023, POL00448714, p.188). I repeat below the
explanation of the process that I gave to Liam Byrne, the Chair of the
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111.
112.
113.
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Business and Trade Select Committee (Letter from Henry Staunton to Liam
Bryne dated 15 March 2024, WITN11410104).
I was contacted early in the process by Mr Donald, the CEO of UKGI, to
suggest that the Board consider the benefits of a SID with Whitehall
experience. I felt this was a perfectly proper request and I relayed it to the
Board. There was some suggestion at Board level that I, as Chair, could make
a recommendation on whom I thought was the right candidate for the SID
role. However, my previous methodology had been to speak to every director
and I told the Board that is how I would proceed. My role as chairman was to
ascertain what the view of the Board might be and to ensure it was properly
communicated.
I contacted each director with the Company Secretary sitting in on all the
calls. I was absolutely scrupulous with regard to the process. The voting was
split within the Board with four Directors voting for an internal appointment
and four voting for an external appointment. I relayed this back to the Board. I
recommended that in view of the preference of the shareholder, we should go
externally for an individual with Whitehall experience. Head-hunters were
appointed on that basis.
However, as more and more issues surfaced in the following months, the
views of Directors changed. Not least, the ITV drama and the justifiably bad
press around the Post Office’s former Communications Director's derogatory
remarks about postmasters, which I describe above, and Mr Read's letter to
the Lord Chancellor attaching the advice that the majority of postmasters were
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“guilty as charged”. It was against that backdrop, that I was due to meet with
UKGI (the CEO, Mr Donald, and the Chair, Vindi Banga on 23 January 2024).
Prior to that meeting, I called a meeting of the directors of the Board
(excluding the UKGI appointed Director, Ms Gratton) to review any issues
they wished me to raise with the UKGI team. As I said in my email to them it
was good governance to meet once a year without the UKGI director present.
At that meeting with the directors (Mr Tidswell was not available) I received a
clear message from the directors present that we were facing so many
problems that it would be far better to have a SID from within our number. It
was felt by the majority of the Board that familiarity with our business
problems was more of a priority than Whitehall experience. I asked the Board
to take the time to have another think about the issue, as this was a serious
change of course. I agreed that I would contact them again within a couple of
days. This I did, and six directors (including the CEO) voted to go with an
internal appointment. Two directors voted against. The most adamant of the
two dissenters was the UKGI Director, Ms Gratton, which was unsurprising
given she represented the shareholder view. I wrote to the directors
confirming that their preference, on further reflection, was to have an internal
appointment. The majority view was to appoint Andrew Darfoor. Mr Darfoor,
an experienced businessman, had joined the board as a non-executive
director the previous year so already had an understanding of the company
and could hit the ground running.
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I took care to explain that we had to go through a process with the
Nominations Committee and particularly the full Board, and that we would
have to explain our decision to our shareholder (Email: “SID” 20 January
2024, POL00448673). I had in mind that we would need to meet as a Board
both with and without Mr Darfoor present. I was not pushing a personal view; I
was merely acting as a servant of the Board throughout the process, as a
Chairman properly should. I understand that the process may have been
moving in a direction which might have displeased UKGI and, by implication
the Government. However, at the point at which I was dismissed, that process
was still ongoing. In the event, since my departure Mr Darfoor has indeed
been appointed as SID and the wishes of the majority of the non-executives
have been accommodated. It is utterly wrong to suggest — as the former
Secretary of State did — that I was trying to bypass the process when I was
insistent to the Board that correct procedure be followed. To suggest, given
my record during my long career of punctilious observance of governance at
the highest level, that I was cavalier about governance is personally very
wounding as well as self-evidently wrong.
INVESTIGATION INTO THE CPO’S “SPEAK UP” COMPLAINT
116.
As I alluded to earlier in my statement, after Ms Davies’ employment as CPO
was terminated by Mr Read, on 4 September 2023 she submitted a further
“Speak Up” complaint under the Post Office’s whistleblowing policy (Letter
from Jane Davies to Ben Foat POL00448690). The letter reiterated
complaints she had made previously and accused Mr Read of bullying her
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117.
118.
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and not acting on whistleblowing concerns she raised. In the course of the 12-
page letter, there was a one sentence reference to having once heard a
Board member refer to women in a derogatory way. Although I was not
mentioned by name in the letter (other than in the context of my having a
good relationship with Ms Davies), I was to learn later that the reference to the
nameless board member was to me.
The Post Office appointed a barrister, Marianne Tutin, to conduct an
investigation into Ms Davies’ “Speak Up” complaint. She wrote to me on 27
October 2023 to ask me to participate in the investigation (Letter from
Marianne Tutin to Henry Staunton dated 27 October 2023, WITN11410105).
At this stage, there was no suggestion that any of the allegations were directly
about me. It was not until December that I was provided with the Terms of
Reference which, for the first time, referred to specific allegations about me.
The allegation was that I had made inappropriate comments with regard to
gender and race at a meeting about candidates to be chair of the Post Office's
Remuneration Committee.
I deny those allegations completely, and felt deeply stung by them. At the
Post Office, as in my career previously, I was a champion of diversity. I find
racism and misogyny utterly abhorrent. This was well-known to my colleagues
at the Post Office. By way of example only, I responded strongly when I
became aware that the Post Office had used racist terms to categorise
postmasters. I told senior leadership that I was “furious” on behalf of our
minority ethnic staff, and indeed on behalf of all our colleagues. (Email:
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120.
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subject “Re: Summary of this morning’s FOI response press coverage”
POL00448688). In the subsequent board meeting when we discussed this
matter, I said the company’s employees felt let down and questioned how we
had managed to score “this huge own goal’.
The allegations about me have caused me both personal anguish and
professional difficulties; I was forced to respond to questions from the Institute
of Chartered Accountants about the investigation. I was very grateful that
three of my former non-executive director colleagues, all of whom come from
minority ethnic backgrounds, as well as Ms Davies, the former CPO wrote in
my defence to the ICAEW to put on record that I had never exhibited any
racist or sexist behaviours. All three directors have said they thought there
was not an ounce of racism in me and indeed I was a champion of greater
diversity of ethnicity and gender on the Board. As was appropriate to the
context, the letters to the ICAEW focused on providing character references
only. Separately, the non-executive directors all expressed orally to me their
concerns about the fact and process of the investigation itself, calling it
variously “contrived”, “unfair” and “bizarre”.
I have exhibited these statements to my witness statement (I should say that
the individuals concerned are aware that I have done so), and I encourage the
Inquiry to read those in full]. To give some brief excepts, the character
references include the following:
a) Mr Ismail said that during my tenure as chairman I was professional,
committed to addressing the institution’s challenges, and “consistently
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demonstrated strong values”. He said I did not exhibit any racist or
misogynistic behaviours and as a Muslim, he could attest that I was
accommodating and respectful of his religious practices. He voiced
concerns that the investigation may have been engineered to remove
me from my position, and that I may have been targeted because of my
defence of convicted postmasters and their families (Letter from Saf
Ismail to ICAEW dated 26 June 2024, WITN11410107).
Mr Elliot said I am “not a racist if anything quite the contrary”, referring
to my tireless efforts to achieve better ethnic and gender representation
on the Board. He said I had sought to tackle the huge issues facing the
Post Office and had displayed “complete integrity and exemplary
behaviour’. He expressed surprise that he had not been approached
during the investigation, and that if he had he would have disagreed
with its findings (Email: “Henry Staunton” dated 24 June 2024,
WITN11410108).
Mr Darfoor, the Senior Independent Director, said he had no
reservations whatsoever about my character and did not consider me
in any way to be racist or misogynist. He said that he had never heard
me express any racist or misogynist comment or heard anyone else
alleging racism on my part. He said I was a huge champion of diversity
at the Post Office generally and on the Board specifically. Mr Darfoor
said he knew that his views were shared by Mr Ismail and Mr Jacobs,
the three members of the Board “who would be most sensitive to any
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racist issues”. He too was not asked his views on the report before or
after it was written, and said it was “strange” that the report was issued
after my departure. In his view, the report was “based largely on
unsubstantiated hearsay and there was no formal complaint ever made
by anyone regarding Henry.” (Letter from Andrew Darfoor to Michael
Burd dated 24 June 2024, WITN11410109).
Ms Davies, whose own complaint had been the trigger for the
investigation, said the manner in which the investigation was
conducted raised serious questions about its governance, the process
and the reliability of any conclusions. She vouched personally for my
character and asserted categorically that I was in no way racist or
misogynist in my attitudes or conduct. She felt her complaint had been
“spun” and that any reference she made to me had been taken out of
context. She said she never saw any problem with my attitudes to
women or with colleagues of ethnic minority heritage, and that in fact I
was an advocate of putting more talented women and people of ethnic
minority heritage on the Board (Letter from Jane Davies to ICAEW
dated 3 July 2024, WITN11410106). Ms Davies also wrote separately
to Mr Byrne, chairman of the Business Select Committee, to explain
she felt her “Speak Up” complaint had been misrepresented by the
Post Office and widened to include myself, even though she intended it
to “be concerned with Nick Read and Nick Read alone” (Letter from
Jane Davies to Liam Byrne dated 18 March 2024, RLIT0000327).
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121.
122.
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On 10 January 2024, Ms Tutin wrote to me again to request a meeting with
me in the week of 22 January. It should be said that this is at a time when all
of my time, including weekends, was being taken up with Post Office matters
following the fall-out from the ITV Mr Bates drama. This left me no time to
prepare for my meeting with Ms Tutin. Nonetheless, I went ahead and met
with Ms Tutin as requested. On 23 February I supplemented the interview with
written responses.
I was therefore deeply surprised when a suggestion was later made that I
tried to block or not cooperate with an investigation into my own conduct
(something said by the Secretary of State in the House of Commons, and my
former non-executive director colleague Mr Tidswell before the Business
Select Committee). The above shows that is demonstrably not the case.
Insofar as the investigation into my conduct, it is utterly false. In terms of the
investigation into the CEO, it is true that I was conscious of the stress Mr
Read was under and thought it would be sensible to review the numerous
allegations with a view to deciding which were truly necessary to put to Mr
Read. This is something Mr Tidswell was supportive of; on 16 January 2024
he wrote to me to say that it would be sensible bearing in mind the “intense
pressures on Nick” to categorise the allegations to limit the scope of the
investigation process such that Mr Read was only interviewed about matters
that were sufficiently significant (Email: ““Confidential” POL00448674). Quite
properly, I said that I was happy for the board to decide how the allegation of
Mr Read bullying Ms Davies with regard to his salary should be dealt with,
given I had been involved in that matter myself. It is worth bearing in mind that
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123.
124.
125.
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my foremost role as chairman was to act in the interests of the company, and
I considered it was in the interests of the company to steady the ship at this
time and ensure that Mr Read stayed in position. The last thing the Post
Office needed at this time of intense pressure was an overhaul in senior
leadership. I had very real concerns that Mr Read would resign or need to
take sick leave as a result of the pressure.
When Ms Tutin’s investigation concluded (long after I had left the Post Office,
in circumstances I describe below), I was surprised that, contrary to well-
established practice, not to mention the principles of natural justice, there was
no process of “Maxwellisation” before her report was released. I was not
shown, either in whole or part, the report before it was sent to the Post Office.
I was given no opportunity to comment on its findings. Indeed, to this day I
have still not been provided with a copy of that report, nor even a summary of
its findings.
Nor was I given any advance notice of the press statement that the Post
Office released about the report. That statement made no mention of me.
Instead it referred, rightly, to a number of misconduct allegations having been
made against Mr Read. The statement said, somewhat surprisingly, that Mr
Read had been exonerated of all misconduct allegations. I have never seen a
copy of the report, so I am unable to comment on the findings.
Alongside the formal statement, shortly after it was released, it appears that
newspapers were given an anonymous briefing and leaked selected extracts
of the Tutin report. As a result of that anonymous briefing, a “government
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source” was quoted attributing malicious and racist motivations to my decision
to go public about my concerns about the Post Office executive management
and culture. I found those allegations appalling. I can categorically state that
my reasons for going public had nothing to do with the Secretary of State
being “black and female”, as the newspapers reported. I was deeply
aggrieved that I had been made a “fall guy” for failings that I myself had been
struggling to get the Post Office to address. I felt I had a duty to go public
because I believe in the importance of integrity in public life. The public were
owed the truth. Moreover, the anonymous “government source” sought to
draw a link between my dismissal (which I describe below) and the findings of
the Tutin investigation, which was not concluded until several months after I
was removed as chairman. To say the least, it is highly irregular to have been
dismissed and then some months after that dismissal an investigation
allegedly finds the grounds to justify that dismissal. It is hard to avoid the
feeling that, faced with a serious complaint against its CEO, and with a
chairman who was increasingly critical of the approach to convicted
postmasters, the Post Office chose to deflect attention away from Mr Read
and towards me instead.
MY REMOVAL AS CHAIR OF THE BOARD
126.
Shortly after I raised the concerns above on behalf of my postmaster Board
colleagues, relations between me and Mr Read and Mr Foat began to
deteriorate. I cannot say how much of what was to follow could be put down to
that deterioration.
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127.
128.
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On 27 January 2024, I found out quite unexpectedly from a journalist that I
was going to be removed from my position as chairman by the government. I
subsequently received a call from the Secretary of State. There is an official
note of this call, which does not fully reflect my own recollection of the brief
conversation (Note of call between Kemi Badenoch and Henry Staunton
dated 27 January 2024, WITN11410110). I was given no clear reason for my
removal and expressed my dismay at the decision and the way it had been
communicated. As the note records, the most I was told was that Ms
Badenoch had “received a briefing on the governance issues at the Post
Office and that the complaints against [me] are so serious that the
government need [sic] to intervene”. I was not told what the alleged
governance issues were, but I suspected it related to the “SID” issue I
describe above. Certainly I was subject to no proper process where I could
respond to the allegations before the decision was made. I did not attempt to
argue or ask questions as it was clear the decision had been made. The
impression I had from the call (which was not recorded in the official note)
was that I was being held to account for the failings at the Post Office.
After my departure from the Post Office, I was approached by the Sunday
Times, which published an article on 18 February 2024. This was the only
interview I gave, despite many, many requests from other newspaper and
television journalists. The full article can be seen at RLIT0000256. I will not
repeat the matters contained in it as they are covered elsewhere in this
statement.
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129.
130.
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The next day, 19 February 2024, Ms Badenoch made a statement to the
Commons where she said I had been dismissed because of “serious
concerns about [my] behaviour as chair”, citing the senior independent
director appointment process. In a complete mischaracterisation of the
situation, she said that I had tried to bypass due process to appoint someone
from the board. She went on to say — although she did not say it had any
bearing on my dismissal — that a formal investigation had been launched into
bullying allegations against me and that concerns had been brought to her
department's attention about my willingness to cooperate with that
investigation. I was shocked that she would say that, as it was in fact Mr
Read, not me, who was being investigated for bullying. There was, in truth,
never any allegation of bullying by me from anyone in the Post Office. It was
truly shocking that she would convey this false allegation in an official
statement. I have already addressed the baseless allegations about my
cooperation with the investigation made about me earlier in this statement. I
had been more than willing to cooperate with the investigation as it was
important to me to clear my name in the face of these smears.
On 27 February 2024, I had the opportunity to speak to the Business and
Trade Committee, chaired by Liam Byrne MP. My comments at the
Committee are a matter of public record and I will not repeat them in full. I
reiterated my own views on the remediation schemes, and that I had been
determined to do the right thing by postmasters. I also set the record straight
that it was Mr Read who was being investigated (including for alleged
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131.
132.
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bullying) as a result of Ms Davies’ “Speak Up” complaint, and that my
involvement was comparatively peripheral.
I followed up twice in writing with the Select Committee on 1 March 2024 and
15 March 2024. I urged the government to stop ducking responsibility to
compensate wronged postmasters, promptly and generously. I repeated my
view that £1 million would be fair compensation for convicted postmasters. I
said the Post Office should be removed from the process of administering
compensation and responsibility handed to a fully independent body. I argued
for a firm deadline, of no more than six months, for compensation to be
administered. Once again I voiced my opinion that the Post Office should be
taken out of arms-length government control and put into the hands of the
postmasters themselves. (Letter from Henry Staunton to Liam Bryne dated 1
March 2024, WITN11410111) On the matter of the investigation into Ms
Davies’ “Speak Up” complaint, by this time she herself had confirmed to the
Committee herself that her concerns were focused on the alleged bullying of
her by Mr Read and the culture she said he was perpetuating. Nevertheless,
the Terms of Reference of the Tutin Investigation included separate
allegations effectively of racism and misogyny on my behalf — allegations that
I found deeply distressing and knew would be contested by everyone who
knows me. I have been a champion of diversity in all the organisations I have
worked for, including the Post Office.
I have been asked by the Inquiry whether I think the culture in the Post Office
encourages whistleblowers to speak openly and honestly about their
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concerns. I should think that the experiences of both myself and others that I
describe above answer that question: based on my own experience I do not
think the culture has encouraged people to be able to speak up safely and
without repercussions. While I was not given reasons for my termination, it
seems likely that my willingness to contradict the Post Office orthodoxy on the
treatment postmasters meant my card was marked. I subsequently suffered
the public trashing of my reputation. I have described how the postmaster
non-executive directors were frightened to learn that their complaints had
been divulged to the investigations team. Their experiences showed they
were right to fear the power of the Post Office investigators. I have also
described how a series of women who were unhappy with Post Office culture
left the organisation rather than stay to see it change from within, which I
suspect reflects a lack of confidence that their concerns would be taken
seriously and addressed.
PERSONAL IMPACT
133. I do not wish to dwell on the personal impact on me from my time at the Post
Office, which is insignificant compared to the experience of the thousands of
affected postmasters. I say only briefly that the whole process of my removal
from post and the Tutin investigation has taken a considerable toll physically,
mentally and financially. I took on the role of chairman of the Post Office out of
a sense of duty. I did not expect it to be, in the words of the Sunday Times
columnist Oliver Shah, “like switching from rugby to a bar room brawl’. I admit
I was ill-prepared for the highly politicised world of the Post Office. Nothing in
Page 79 of 100
134.
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my previous career had prepared me for a world where in seeking to apply the
normal rules of good governance, honesty and integrity which I have sought
to promote and uphold, would lead to me being vilified, ttaduced and my
reputation trashed publicly.
I hope that my statement sheds a light on the fact that there is some way to
go in changing the culture of the Post Office. However, my hope is that
through the work of the Inquiry and the tireless campaigning of postmasters,
those individuals who were so wronged will finally see justice. I have every
hope that a change in culture can be achieved relatively quickly with new
management and I have every confidence in the new chair.
MY VISION FOR THE FUTURE GOVERNANCE OF THE POST OFFICE
135.
136.
In my time at the Post Office I had been developing my thoughts on the right
strategic direction for the organisation and I concluded that that the Post
Office needed root and branch reform. The postmaster non-executive
directors had been a valuable addition to the Board. My vision for the future of
the Post Office was to make the business and the board more postmaster-
centric. I wanted more postmaster non-executive directors (four on the board
at any one time), and to be able to make the most of their experience.
The original idea had been for Mr Jacobs and Mr Ismail to join for a term of
three years which meant that both were coming near the end of their terms
when I was chairman. Although they would be replaced with other
postmasters, I thought it would be a waste to lose their accumulated
Page 80 of 100
137.
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experience so abruptly and at a time of huge problems for the Post Office. I
thought the better path would be a “staggered roll-off’ whereby they would not
both leave the Board at once. Instead, one of them could extend their term by
a year to allow for more continuity. I made that suggestion to the Chief
Executive of UKGI in September 2023, and he was supportive (Email: “Re:
Quick call this week?” 21 September 2023 POL00448672). I therefore moved
forward with putting this in place; on 26 September 2023 I reported back to
the Board that the Nominations Committee had decided that one postmaster
non-executive director would step down in June 2024 and the other would
stay in place until June 2025. This was a compromise position and took some
effort on my part, as at the Nominations Committee meeting management had
argued strongly against any extension (Minutes of POL Board Meeting 26
September 2023, POL00448718 p.4).
Mr Ismail and Mr Jacobs had raised with me the possibility of having a Board
committee on culture, consisting of the postmaster non-executive directors
and others. They also suggested having postmaster non-executive director
membership on all board committees, including the Remuneration Committee.
These initiatives would likely need new postmaster recruits to the Board to get
off the ground. I was supportive of those ideas and was looking forward to
staying in place as chairman to help shape the new culture of the Post Office.
Unfortunately, I was not afforded that opportunity. (Email: “Project Pineapple”
14 January 2024, POL00448704).
Page 81 of 100
138.
139.
140.
WITN11410100
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WITN11410100
When the Secretary of State terminated my chairmanship, she asked me my
recommendations for the future of the Post Office. As the note of that meeting
records, I advised extensive work to ensure the culture is overhauled. I said I
strongly disagreed with the disparaging views of postmasters and called for a
more postmaster centric approach. I suggested an oversight committee
chaired by two postmaster directors, with the possibility of appointing a further
postmaster director in the future (WITN11410110). These were exactly the
ideas I had discussed with Mr Ismail and Mr Jacobs and advocated for as
chairman.
The Post Office has the potential for a good future. This witness statement
addresses various issues, which the organisation must still address. Inter alia
the need for a better culture with regard to how postmaster directors and
postmasters generally are treated; the advancement of women in the
organisation; and a less obsessive focus on remuneration (perhaps with
bonuses being scrapped altogether). With new management, these could be
dealt with in short order, leading to a dramatic increase in the engagement
scores for postmasters, the senior leadership group and staff in general. The
new well-respected chairman and the team he has introduced, alongside the
Senior Independent Director will, I am sure, attend to that.
In my view, the best path for the Post Office to take now would be
mutualisation. As well as suggesting this route with Board colleagues, I raised
it with the Secretary of State in our conversation at the end of my
chairmanship, and to Mr Byrne when I wrote to him on 1 March 2024. My
Page 82 of 100
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vision was that the company should be owned by the postmasters: something
akin to the John Lewis or old building society model. A more postmaster-
centric organisation would help considerably reduce our overheads and be a
counter to the bonus and remuneration culture that I have touched on in this
statement. It would lead to better remuneration for postmasters and put the
organisation on a sound financial footing. A major reduction in the cost base
would eradicate the losses but more importantly allow for a significant
increase in remuneration for postmasters. There would be a cost associated
with such a reorganisation, which would require funding, but would be
worthwhile long-term. I have every hope that this future for the Post Office can
be achieved with the right leadership.
Statement of Truth
I believe the content of this statement to be true.
Dated: 06 September 2024
Page 83 of 100
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Index to First Witness Statement of Henry Staunton
Document Description
Control Number
BEIS0000622
Letter from Sarah Munby to Henry
Staunton (09/12/2022)
VIS00014237
UKGI00044315
Letter from Sarah Munby to Tim
Parker, subject “Strategic Priorities
for 2022/23” (Undated)
UKGI052977-001
UKGI00044317
Letter from Kevin Hollinrake to
Henry Staunton, subject “Strategic
Priorities for 2023/24” (29/06/2023)
UKGI052979-001
RLIT0000254
Email from Henry Staunton to Nick
Read, subject “Fwd: Note of
meeting with Sarah Munby on 5
Jan 2023” (06/01/2023)
RLIT0000254
RLITO000255
Letter from Sarah Munby to Kemi
Badenoch (21/02/2023)
RLITO000255
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BEIS0000752 Email chain ending with email from I VISO0014367
Rebecca Stockbridge to Ed Baird
and others, subject “FW: [Briefing
Request — midday Friday 23/12]
RE: Attached Letter from Henry
Staunton Chairman” (16/02/2024)
POL00423699 Email chain ending email from POL-BSFF-
Alisdair Cameron to Nick Read 0238490
and others, subject “RE The
robustness of our governance”
(26/03/2023)
POL00448715 Minutes of POL Board Meeting POL-BSFF-
(12/07/2023) WITN-035-
0000020
POL00448689 — Email from “John Doe” to Henry aT Te
Staunton, subject “Whistleblowing” eee
(27/06/2023)
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10.
POL00448708 POL Board Meeting — CEO Report I POL-BSFF-WITN-
(24/01/2023) 035-0000001
(p.45)
11.
POL00448621 Minutes of POL Board Meeting POL-BSFF-WITN-
(06/12/2022) 021-0000005
(p.12)
12.
POL00448716 Minutes of POL Board Meeting POL-BSFF-WITN-
(17/08/2023) 035-0000021
13.
POL00448710 POL Board Report —- “Postmaster I POL-BSFF-WITN-
Remuneration increases for 035-0000005
2023/24” (28/03/2023) (p.62)
14.
POL00448717 Minutes of POL Board Meeting POL-BSFF-WITN-
(07/2023) 035-0000022
(pp.3-4)
15.
POL00448709 POL Board Report — “Historical POL-BSFF-WITN-
Matters Programme Update”
(24/01/2023)
035-0000002
(p.54)
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6 POL00448713 Minutes of POL Board Meeting POL-BSFF-
(28/11/2023) IWITN-021-0000006
POL00448614
POL-BSFF-
POL00448620 IWITN-035-0000011
POL-BSFF-
WITN-021-0000015
17.
POL00448680 Letter from Henry Staunton to POL-BSFF-WITN-
Grant Shapps, subject “Request 021-0000015
for approval for an increase in
remuneration for Nick Read Chief
Executive Officer Post Office Ltd.”
(11/11/2022)
18.
POL00448675 Notes prepared for Henry Staunton I POL-BSFF-WITN-
in advance of meeting with Grant 006-0005386
Shapps on 10/01/2023, subject
“Request for approval to retain and
seek an increase in remuneration
for Nick Read CEO Post Office
Ltd”
19.
WITN11410101 Email chain ending email from WITN11410101
Nick Read to Jane Davies, subject
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WITN11410100
WITN11410100
“RE: 2022-11-11 POL CEO
remuneration. HENRY NOTES v1
Grant Shapps v1 —
CONFIDENTIAL” (16/12/2023)
20.
POL00448682
Email chain ending email from
Jane Davies to Lisa Harrington
and Henry Staunton, subject “RE:
CONFIDENTIAL: CEO pay rise”
(08/03/2023)
POL-BSFF-WITN-
006-0010310
21.
POL00448677
Email chain ending email from
Jane Davies to Henry Staunton,
subject “Re: Nick” (23/01/2023)
POL-BSFF-WITN-
006-0007793
22.
WITN11410102
Text message from Nick Read to
Jane Davies (23/01/2023) and
notes of meeting between Nick
Read, Henry Staunton and Jane
Davies (23/02/2023)
WITN11410102
23.
POL00448678
Email from Henry Staunton to Nick
Read, subject “BEIS / UKGI
response” (25/01/2023)
POL-BSFF-WITN-
006-0007946
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2. POL00448683 Email chain ending email from POL-BSFF-WITN-
Jane Davies to Tim Cooper and 006-0010973
Lorna Gratton, subject “RE: SoS
sign off - POL STIP 2022/23”
(22/03/2023)
25.
POL00448706 Letter from Kevin Hollinrake to POL-BSFF-WITN-
Henry Staunton, subject “POST 016-0000001
OFFICE: CEO REMUNERATION”
(21/04/2023)
26.
POL00448681 EY Report — “Confidential — for the I POL-BSFF-WITN-
attention of the Chairman and 006-0010030
GCPO: NED Exit Interviews —
Written Summary”
27.
POL00448676 Email chain ending email from POL-BSFF-WITN-
Benjamin Tidswell to Henry
Staunton, subject “Re: Tom
Cooper — STRICTLY PRIVATE
AND CONFIDENTIAL”
(23/12/2022)
006-0006021
Page 89 of 100
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28.
POL00448687 Letter from Jane Davies to Henry I POL-BSFF-WITN-
Staunton, enclosing letter from 006-0014682
Mills & Reeve LLP to Nick Read
(23/05/2023)
29.
POL00448707 Engagement Survey Presentation I POL-BSFF-WITN-
presented at Staff Conference 018-0000107
(27/04/2023) — “Overall results &
(slide 100)
themes”
30.
POL00448635 Staff Engagement Survey - “Post I POL-BSFF-WITN-
Office has a respectful, friendly 015-0013255(p.13)
and supportive culture, with
pockets of bureaucracy,
fragmentation and inefficiency”
31.
POL00447866 POL Board Report — “Board POL-BSFF-106-
Evaluation Report 2022/23” 0000106
(28/03/2023)
32.
POL00448712 POL Board Report — “Chief POL-BSFF-WITN-
Executive’s Report” (06/06/2023)
035-0000007
(pp.37)
Page 90 of 100
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8. POL00448711 POL Board Meeting - CEO Report I POL-BSFF-WITN-
(06/06/2023) 035-0000006
(pp.37 & 41)
34.
POL00448679 Email chain ending email from POL-BSFF-WITN-
Rachel Scarrabelotti to Henry 006-0009711
Staunton, subject “RE: PM NED
matter” (01/03/2023)
35.
POL00448684 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Diane 006-0013133
Blanchard, subject “Fwd:
Discrepancies in postmaster
branches — IN CONFIDENCE”
(29/04/2023)
36.
POL00448685 Email from Elliot Jacobs to Tracy POL-BSFF-WITN-
Marshall, subject “Commitment” 006-0013134
(28/04/2023)
37.
POL00448686 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read,
006-0013215
Page 91 of 100
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subject “Fwd: Diary — w/c 1S May
2023” (02/05/2023)
8. POL00448691 I Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read, 006-0024471
subject “Fwd: Project Venus —
Privileged and Confidential — Draft
Note of Advice” (24/09/2023)
39.
POL00448692 Email from Ben Foat to Henry POL-BSFF-WITN-
Staunton, subject “Project Venus” I 006-0025808
(27/10/2023)
40.
POL00448695 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Simon Jeffreys, I 006-0026931
subject “Re: Project Venus”
(25/11/2023)
41.
POL00448694 Email chain ending email from POL-BSFF-WITN-
Simon Jeffries to Henry Staunton,
subject “Re: Project Venus”
(25/11/2023)
006-0026929
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“2. POL00448693 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read, 006-0026917
subject “Re: Today” (25/11/2023)
43.
POL00448697 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read, 006-0027540
subject “Re: ARA Update —
1/12/2023” (03/12/2023)
44.
POL00448696 Email chain ending email from POL-BSFF-WITN-
Elliot Jacobs to Henry Staunton, 006-0027442
subject “Re: The Investigation”
(02/12/2023)
45.
POL00448698 Email from Henry Staunton to POL-BSFF-WITN-
Diane Blanchard, subject “Saf 006-0027941
feedback —- CONFIDENTIAL”
(07/12/2023)
46.
POL00448699 Email chain ending email from Ben I POL-BSFF-WITN-
Foat to Nicola Munden and others,
subject “RE: Post Office
006-0029147
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WITN11410100
Compensation Bill I Debate
Summary’ (09/01/2024)
“7. POL00448700 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read, 006-0029169
subject “Fwd: Post Office
Compensation Bill I Debate
Summary” (09/01/2024)
48.
POL00448381 Letter from Nick Read to Alex POL-BSFF-WITN-
Chaulk, subject “Post Office 012-0000019
Convictions and Compensation”
(09/01/2024)
49.
POL00448701 Letter from Nick Vamos (Peters & I POL-BSFF-WITN-
Peters Solicitors LLP) to POL 006-0029319
50.
POL00448703 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read,
subject “Fwd: Documents —
confidential and legally privileged”
(13/01/2024)
006-0029518
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ot. POL00448702 Letter from Henry Staunton to POL-BSFF-WITN-
Kevin Hollinrake, subject 006-0029405
“Government response to Mr
Bates v Post Office” (11/01/2024)
52.
POL00448704 Email from Henry Staunton to POL-BSFF-WITN-
Henry Staunton, subject “Project 006-0029639
Pineapple” (14/01/2024)
53.
POL00448537 Press Release — Voice of the POL-BSFF-122-
Postmaster (15/01/2024) 0000002
54.
POL00448302 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Saf Ismail and 006-0029777
Elliot Jacobs, subject “RE: Project
Pineapple” (15/01/2024)
55.
POL00448564 Email chain ending email from POL-BSFF-122-
Martin Roberts to Ben Foat and
others, subject “RE: Future of Post
Office branches” (18/01/2024)
0000029
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8. POL00448301 Email from Henry Staunton to POL-BSFF-WITN-
Amanda Burton and others, 005-0010781
subject “Project Pineapple —
STRICTLY CONFIDENTIAL”
(18/01/2024)
57.
POL00448383 Email chain ending email from POL-BSFF-WITN-
Elliot Jacobs to Saf Ismail and Nick I 012-0000021
Read, subject “Re: Project
Pineapple —- STRICTLY
CONFIDENTIAL” (18/01/2024)
58.
WITN11410103 I Email from Elliot Jacobs to Henry =I WITN11410103
Staunton and Saf Ismail, subject
“CONFIDENTIAL draft for
discussion” (24/01/2024)
59.
POL00448305 Note from Saf Ismail to the POL POL-BSFF-WITN-
Board 006-0030696
60.
POL00448714 POL Board Report — “Senior POL-BSFF-WITN-
Independent Director role”
(26/09/2023)
035-0000015
(p.188) =
Page 96 of 100
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WITN11410100
WITN11410100
St. WITN11410104 I Letter from Henry Staunton to WITN11410104
Liam Byrne, subject “Post Office
and Horizon: Ensuring full and fair
redress” (15/03/2024)
62.
POL00448673 Email from Henry Staunton to POL-BSFF-WITN-
Benjamin Tidswell and others, 004-0055742
subject “SID” (20/01/2024)
63.
POL00448690 Letter from Jane Davies to Ben POL-BSFF-WITN-
Foat, subject “SPEAK UP 006-0023470
COMPLAINT”
64.
WITN11410105 I Letter from Marianne Tutin to WITN11410105
Henry Staunton, subject “Speak
Up’ Complaint Investigation”
(27/10/2023)
65.
POL00448688 Email chain ending email from POL-BSFF-WITN-
Henry Staunton to Nick Read and
others, subject “Re: Summary of
this morning’s FOI response press
coverage” (27/05/2023)
006-0015128
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WITN11410100
66.
RLIT0000327
Letter from Jane Davies to Liam
Byrne, subject “Post Office and
Horizon: Ensuring full and fair
redress” (18/03/2024)
RLIT0000327
67.
WITN11410106
Letter from Jane Davies to Ms Ho
(ICAEW), subject “Re Case
reference 074941/MATT”
(03/07/2024)
WITN11410106
68.
WITN11410107
Letter from Saf Ismail to ICAEW,
subject “FAO: ICAEW — Henry
Staunton” (26/06/2024)
WITN11410107
69.
WITN11410108
Email from Elliot Jacobs to Michael
Burd, subject “Henry Staunton”
(24/06/2024)
WITN11410108
70.
WITN11410109
Letter from Andrew Darfoor to
Michael Burd, subject “STRICTLY
PRIVATE AND CONFIDENTIAL —
CHARACTER REFERENCE
WITN11410109
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WITN11410100
WITN11410100
(HENRY STAUNTON)”
(24/06/2024)
71.
POL00448674
Email from Benjamin Tidswell to
Henry Staunton, subject
“Confidential” (16/01/2024)
POL-BSFF-WITN-
005-0010731
72.
WITN11410110
Note of call between Kemi
Badenoch and Henry Staunton
(27/01/2024)
[WITN11410110
73.
RLITO000256
The Sunday Times — “Post Office
boss: I was told to stall
compensation to help Tories”
(18/02/2024)
RLITO000256
74.
WITN11410111
Letter from Henry Staunton to
Liam Byrne, subject “Post Office
and Horizon: Ensuring full and fair
redress” (01/03/2024)
WITN11410111
75.
POL00448672
Email chain ending email from
Henry Staunton to Charles Donald,
POL-BSFF-WITN-
004-0047750
Page 99 of 100
WITN11410100
WITN11410100
WITN11410100
subject “Re: Quick call this week?”
(21/09/2023)
76.
POL00448718
Minutes of POL Board Meeting
(26/09/2023)
POL-BSFF-WITN-
035-0000023 (p.4)
Page 100 of 100