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Witness Name: William Gibson
Witness Number: WITN11740100
Dated: 14 November 2024
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF WILLIAM GIBSON
I, WILLIAM GILES GIBSON, will say as follows:
1. 1am a former Executive Director at the Shareholder Executive (“ShEx’), later UK
Government Investments (“UKGI”).
2. This statement is made to assist the Post Office Horizon IT Inquiry (the “Inquiry”)
with matters set out in the Rule 9 Request (the “Request”) dated 7 October 2024.
3. The contents of this witness statement are true to the best of my knowledge and
belief. I have referred to various documents in this statement. Where I have
referred to information from other sources, I believe that information to be true.
The matters referred to in this statement took place more than ten years ago, and
I have been assisted in my recollection of events by contemporaneous
documentation. I have sought to clarify where I directly recall an event and where
I have relied to a large extent on the documents provided to me.
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4. In making this statement, I have been assisted by Eversheds Sutherland
(International) LLP, the recognised legal representative for UK Government
Investments (“UKGI”), a Core Participant (as defined in paragraph 5(a) of the
Inquiry’s Protocol on Witness Statements) in the Inquiry.
BACKGROUND / CAREER HISTORY
5. On leaving university in 1998, I went to law school at the College of Law in
London, completing my Common Professional Examination qualification in
summer 1999 and my Legal Practice Certificate in summer 2000. After leaving
law school, I joined the London office of Norton Rose (now Norton Rose Fulbright)
as a trainee solicitor in January 2001. I qualified as a solicitor in January 2003
and continued to work for Norton Rose as a corporate lawyer (specialising in work
on mergers and acquisitions, equity capital markets and corporate restructurings)
until September 2005.
6. In January 2006, I joined the Government Legal Service as a legal advisor
working for the Department of Trade and Industry, now the Department of
Business and Trade (“the Department’). My job was to provide legal advice and
assistance to civil servants and Ministers working across the Department (and
sometimes more widely across Government) on competition and
communications law issues. My role covered a diverse range of matters, including
the application of European legislation in the telecoms and e-commerce sectors,
as well as working in Brussels as part of the team negotiating the third Postal
Services Directive. A major element of my role was advising the ShEx Royal Mail
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and Postal Services team on postal issues such as re-financing for Royal Mail
Group (“RMG”) and advising on the Government's 2006 consultation on the future
of the Post Office network and subsequent policy decisions, funding deals and
connected state aid processes. It was through this role that I became familiar with
ShEx’s work.
In December 2007 I was offered a role as an Assistant Director in ShEx (on
promotion from “Grade 7” to “Grade 6”). This was a move for me from providing
legal support to the ShEx team to being a member of the team itself, so to work
in a policy role as opposed to a legal advisory role. While my legal training and
experience continued to be very useful to me in the role, I was no longer
principally working as a lawyer. This was my first Assistant Director role. My role
focussed predominantly on strategy and funding issues for Post Office Limited
(“POL”). I was responsible for negotiating and agreeing POL’s strategic plans on
behalf of Ministers alongside the associated funding packages, monitoring POL’s
performance in delivering against those plans (both in terms of financial
performance and against performance indicators such as conversions of Post
Offices to new delivery models), and procuring state aid approval for POL's
funding arrangements from the European Commission. I led ShEx’s input into the
legislation providing for the separation of POL from RMG and its establishment
as an entirely separate business, as well as developing the Government's policy
around the potential for moving POL to a mutual ownership model at a suitable
point in the future. Besides my POL work, I also spent some time overseeing
Government ownership of other assets, such as Ordnance Survey and the Export
Credit Guarantee Department (now called UK Export Finance). For a period of
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time while I was Assistant Director, I also served as the secretary to ShEx’s
Advisory Group, which was a precursor to the ShEx Board. I deal with the role of
the ShEx POL team in further detail at paragraphs 13 to 17 below.
During the period I was an Assistant Director, the Chief Executive of ShEx was
Stephen Lovegrove, and the Executive Director with responsibility for the POL
team was initially Ruth Hannant, followed by Jo Shanmugalingam and then Oliver
Griffiths. Above the Executive Director role was a Director role, overseeing both
the Royal Mail and POL teams within ShEx, which during my time in ShEx was
held by Marc Middleton followed by Susannah Storey and Roger Lowe.
In September 2011, Oliver Griffiths moved on to a new role within ShEx and I
took over the leadership of the POL team from him and became an Executive
Director within ShEx. This role was a Senior Civil Service role and so the
appointment was initially temporary as I completed the independent assessment
process for promotion to the Senior Civil Service (this was confirmed a couple of
months thereafter). Stephen Lovegrove was still the Chief Executive at the time
of my taking on the role. I reported first to Roger Lowe, who had taken over from
Susannah Storey on her departure on maternity leave, and then, on separation
of POL from RMG, Anthony Odgers, who was the ShEx Portfolio Director.
As Executive Director of the POL team I had day-to-day responsibility for leading
the team that covered Post Office policy and discharging the Government's
ultimate shareholder function with respect to POL. The team advised Ministers
on POL network policy issues, POL’s financial performance and key strategic
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11.
12.
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initiatives and policy areas affecting POL (e.g. mutualisation or expanding access
to banking). I also led on stakeholder relations with key groups such as, among
others, the Communication Workers’ Union (“CWU”) and the National Federation
of SubPostmasters (“NFSP”). I was the principal (but by no means sole) point of
contact between POL senior management and the Department.
I remained in that post until December 2013, at which point I left the Civil Service.
From a government perspective, this was a convenient time for me to hand over
the role as we had just concluded a very significant POL funding deal for the
delivery of a strategic plan for the next three years. It also made sense to me from
a personal perspective, as my son was born in December 2013 and my wife had
accepted a role in Hong Kong to begin upon completion of her maternity leave.
We moved to Hong Kong in June 2014. Initially I was a stay-at-home parent until
autumn 2014, whereupon I began to build up a range of parttime consultancy
roles with small businesses and start-ups, advising on a range of strategic,
corporate governance, financial and administrative matters. In August 2017, I
took up a full-time role as a mergers and acquisitions underwriter for AIG’s APAC
M&A insurance team. In March 2021, after nearly seven years in Hong Kong, we
moved back to the UK. I continued to work in AIG’s UK M&A insurance team until
I left that role in mid-August 2024 to pursue a further period of time as a stay-at-
home parent.
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OVERVIEW OF THE SHAREHOLDER EXECUTIVE
13. ShEx was formed in 2003 and was originally part of the Cabinet Office. In 2004,
ShEx transferred from the Cabinet Office to the Department of Trade and Industry
(now the Department for Business and Trade), within which ShEx operated as a
Directorate. I understand that in April 2016 (a couple of years after my departure
from the Civil Service), ShEx transferred, together with UK Financial Investments
Limited, to UKGI, a newly formed limited company wholly owned by HM Treasury.
14. For the duration of my employment in ShEx, the role of ShEx was to operate as
an intelligent (which I understood to mean engaged, commercial and strategic)
shareholder of Government businesses within the policy framework that had
been set for those businesses by Ministers. The shareholder team for each ShEx
asset was responsible for carrying out the shareholder function in respect of that
asset, including advising Ministers on the implications of public policy objectives
set for the asset on its financial performance and commercial prospects, agreeing
key metrics (such as financial and strategic delivery goals) and monitoring
delivery against them, and agreeing strategy and concomitant funding packages.
ShEx’s role also involved overseeing Ministerial appointments to the
management of its portfolio assets and ensuring incentive structures in place for
them were aligned with key commercial and policy objectives for those assets.
15. By contrast, responsibility for the day-to-day operational management of ShEx
portfolio assets was vested not in ShEx but in the management teams of those
assets (i.e. the Board of Directors of such organisations, where they were, as in
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the case of RMG and POL, companies) and the staff they employed. During my
time in ShEx, POL operated approximately 12,000 branches throughout the
United Kingdom, employing many thousands of staff. Core revenue streams
came not only from providing access to mail services (principally from RMG) but
also the highly regulated and complex financial services sector, Government and
digital services and the telecoms sector. It had a complex stakeholder
environment including historically challenging industrial relations with the NFSP
and CWU and very active engagement from local communities as well as bodies
representing consumers, in particular vulnerable consumers. Running an
organisation such as POL on a day-to-day basis therefore involves myriad
decisions, which need to be taken by qualified people, working with suitably
resourced teams, based on the best information available to them.
It is perhaps worth explaining this broad delineation between matters that were
for the shareholder and operational matters for POL’s management team in the
context of the Horizon IT system. Government (via ShEx) had an input into POL’s
IT strategy insofar as it was the funder of investment into the business, part of
which would be spent on developing POL’s IT capabilities. So at the “macro”
level, POL’s management would develop a business plan which would be
presented to and diligence carried out by ShEx (and its advisers) before it was
put to Ministers once it was suitably developed in the final stages of funding
discussions. POL management's business plan would include an IT strategy
strand in much the same way as it would set out plans for, for example, the branch
network, the Crown offices, the cash logistics business or the major revenue
strands of the business. Once a business plan and the associated funding
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package was agreed, within the parameters of that business plan, POL
management would then have responsibility for delivering any IT developments.
POL management, rather than ShEx, was responsible for procuring,
implementing and operating the IT solutions required to deliver on the agreed
strategy. All negotiations with IT suppliers such as Fujitsu were conducted by
POL rather than ShEx. The ShEx POL team had no access to the system and no
input into the technicalities of its design and development. The team comprised
civil servants, who were not IT specialists and did not have experience of
operating the system or running Post Office branches. Nor did the team have any
oversight of the IT structure and services other than in the strategy/funding sense
described above.
17. For the same reasons, the ShEx POL team had no involvement or operational
oversight of prosecutions brought in the name of RMG or POL, or of any civil
litigation brought by or against POL. These were considered to be operational
matters.
SHAREHOLDER EXECUTIVE ROLE AND RESPONSIBILITIES
18. Within ShEx, the POL team was part of the wider Royal Mail and Postal Services
(‘RMPS’) team until POL and RMG separated in spring 2012, when the POL half
of the team (which I led) separated out. Throughout the duration of my time in the
team, it also had responsibility for the policy function. This approach did not
change after separation. An overview of the team is shown at page 15 of a briefing
document prepared in February 2012 [UKGI00018222] and shows that we were
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19.
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asmall team, with three Assistant Directors and two other team members to cover
the full range of shareholder and policy issues. The ShEx POL team comprised
full-time civil servants rather than secondees or short-term appointments from the
private sector (though the new Assistant Director appointment on the
strategy/funding role undertaken by me prior to my promotion was a hire from an
investment bank on a fixed term contract).
The summary shows the range of work which we undertook as the ShEx POL
team and my recollection is that this was prepared for Norman Lamb when he
was appointed Minister. The work which the team undertook included monitoring
the Government's policy objectives and the Post Office network, funding,
separation from RMG and mutualisation.
The list of key objectives and immediate priorities illustrates well the dual
oversight (i.e. both shareholder and policy) function of the POL team within ShEx.
Our function was to support the company to achieve its agreed long term
commercial objectives but also to achieve Government's policy objectives. The
policy objectives for Government were particularly important in the case of the
Post Office, as is explained in the slide:
“Key elements of Government policy for the post office network are:
. To ensure no network closure programme and a minimum network of
11,500 branches
. To ensure the network access criteria are met
. To ensure key services are available across the network
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. To reduce government subsidy for the network over the long term”
We also had in mind the long term policy aspiration of a mutualised Post Office
once the organisation was successfully separated from RMG.
21. There are a number of different ways in which the ShEx team would work to meet
these oversight objectives, and I seek to summarise three that seem to me most
relevant to the Inquiry’s work below.
Briefings, submissions, correspondence and Parliamentary process
22. There was a high level of public and Parliamentary interest in the operation of the
network (compared with other ShEx portfolio assets). This generated significant
levels of correspondence to and requests for meetings with Ministers and/or ShEx
officials from stakeholders across a wide range of Post Office related issues from
organisations (e.g. the NFSP, CWU, Consumer Focus, LGA, Age UK) and
individuals (e.g. individual subpostmasters (“SPMs’), staff or customers). There
would also be regular Parliamentary engagement on Post Office issues (e.g.
Parliamentary questions, MP correspondence, debates, select committee
hearings) for which Ministers would require briefing, Q&A materials and press
lines. Important decisions in relation to Government's policy parameters for Post
Office (e.g. re the size of the branch network) or its shareholding in POL (e.g. in
relation to funding requirements) would also on occasion need to be taken by
Ministers and so these would require submissions which set out the decision to
be taken, the options available and the ShEx team’s recommendations.
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23.
24.
25.
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I would allocate responsibility for preparing these documents and would decide
who would be the most appropriate person for each pack based on the subject
matter. Generally, Mike Whitehead or Peter Batten would lead on Parliamentary,
branch network and SPM issues, such as in relation to the operation of the
Horizon system. Sometimes the relevant interest (for example correspondence
or a Parliamentary question) would relate purely to an operational matter, and so
this would be passed on to POL to prepare a response (with the Ministerial
response flagging this — see for example the Parliamentary Question to Ed Davey
on 27 October 2011 [UKGI00014000]). On other occasions the matter might
straddle the areas of responsibility of POL and the ShEx team, in which case the
ShEx team would generally take the lead in ensuring the Minister responded fully,
but with input from POL as appropriate (see below re. information) — see for
example the letter from Norman Lamb to Edward Garnier QC MP of February
2012 [UKGI00014057].
As team leader, I would review and sign off on most briefings/submissions to
Ministers before they were submitted (though I am sure there were exceptional
times when I did not, such as where the briefing was particularly urgent or when
I was on leave). Sometimes, submissions related to POL would need to go up
the chain for approval (for example anything related to funding would need to be
checked with the Permanent Secretary before it was signed off).
Throughout my time in the Civil Service it was stressed to me (and to staff across
the Department) that it was important to manage Ministerial time very carefully.
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Information put to Ministers was to be concise and as clear as possible in the
recommendations being made (and the rationale behind them). My recollection
is that the ShEx POL team was considered to be strong in this respect and I recall
we received positive feedback on our briefings and submissions from Ministers
and their private office staff.
Risk Assessment and Management
26. The ShEx POL team was also responsible on a continuous basis for the
consideration, monitoring and mitigation of key risks and issues for the
Government arising from its ownership of POL. We utilised several mechanisms
for managing risk, including:
a. Team Issues Log
The Team Issues Log was the tool we used to keep track of day-to-day issues
we were working on. It formed the basis of our weekly Monday morning team
meetings and enabled me to ensure that responsibility for issues that had arisen
was picked up by the appropriate team member, provided an opportunity for us
to discuss the matter concerned as a team, and also allowed me to ensure that
team workloads were suitably shared. Discussions of the Team Issues Log often
identified risks which would then feed into the Team Risk Register.
b. Team Risk Register
Once a month, the team meeting would consider and revise a Team Risk Register
which was essentially an Excel spreadsheet which set out the top 10-20 relevant
risks as we saw them. Each risk was given a “impact” and “likelihood” rating.
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Controls or mitigations in place to address a risk were identified and assessed
and any suitable further actions to be taken were noted. Team members
responsible for “owning” a risk were identified, as were team members
responsible for delivering on an action.
c. ShEx Risk Register
As the ShEx board became established, a more formulaic portfolio-wide risk
management plan was implemented and this continued to develop throughout
my tenure. Items from the Team Risk Register could feed into the ShEx Risk
Register as appropriate.
d. Portfolio Reviews
This was a more formal mechanism involving an annual review of the
performance, strategy and major risks facing ShEx portfolio assets. Although the
Portfolio Review was not formally part of the risk review process, risk was
assessed. The relevant ShEx asset team would make a review presentation to a
panel of ShEx executive directors who would test and develop the asset teams
findings in what could be reasonably robust discussions. When I first started, POL
portfolio reviews were conducted as part of RMG portfolio reviews. From 2010,
POL portfolio reviews were conducted separately.
Gathering information
27. Incarrying out all of the activity set out above, the ShEx POL team often needed
access to information that it did not directly hold. This occurred on an everyday
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28.
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basis in the ordinary course of our relationships with POL management. For
example, on Horizon matters it was necessary to engage with POL to get granular
details in relation to the briefings and Q&A prepared around the time of the
publication of the Interim Second Sight Report in July 2013. An example of the
team following this process is the email chain dated 9 July 2013 [POL00060683].
If we felt that we needed to, we would push back on POL to get greater clarity or
to query the information we were being given — as can be seen by the iteration of
questions referred to above. This was a regular occurrence.
There were also more formal arrangements for the provision of certain
information. For example, during my time as Executive Director, the ShEx POL
team monitored POL’s financial performance via a review of a monthly financial
data pack (see for example UKGI00001421), which was discussed monthly at a
meeting with POL’s Finance Director. A quarterly shareholder meeting (QSM)
was also held, generally attended by the entire SnEx POL team and relevant POL
management (generally including the Chief Executive) — the precise attendees
being driven by the agenda items. QSMs tended to be more forward-looking
meetings, looking at areas where POL’s strategy was developing rapidly.
The ability to gather and test the information we received depended greatly on
the quality of the ShEx POL team’s relationships not only with POL management
but also with POL’s wider stakeholder community. The former were important to
ensure that we had access to the data we needed to do our job from the people
in the business with responsibility for the relevant issues. The latter were
important to ensure that we had access to diversity of opinion and information on
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relevant issues — which enabled us to apply a “sniff test” to information provided
to us (See paragraph 54 below re Horizon and in particular the NFSP’s stance on
it). In building all of these relationships, trust is crucial.
30. During my time leading the ShEx POL team, there were occasions when POL
would provide us with inaccurate data, or when it became clear that POL had not
itself been monitoring and capturing the relevant information. For example, a
significant amount of work was required to develop and monitor a dashboard of
data concerning POL’s “network transformation programme” after it became clear
there were early gaps in the data POL had been collecting which had made it
very hard for us to update Ministers adequately on its progress. When data gaps
or errors occurred I assumed they were problems of capability and rigour rather
than problems of integrity.
RELATIONSHIP BETWEEN RMG/POL AND SHAREHOLDER EXECUTIVE
31. The relationship between RMG/POL and ShEx developed considerably during
my time working at ShEx. Until 2012, POL was wholly owned by RMG, which was
owned by Royal Mail Holdings Ltd (“RMH”), the top company within the corporate
structure, which in turn was wholly owned by Government. This structure was put
in place following the reforms to the postal system implemented under the Postal
Services Act 2000 (the “PSA 2000”).
32. From my early engagements with RMG working as a Government lawyer advising
the ShEx team, I observed that there tended to be a culture within RMG where
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33.
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the management team questioned ShEx requests for information rather than
embracing transparency.
As POL was a subsidiary of RMG at that time, most communication between
ShEx and POL had to filter through RMG and the information that reached ShEx
was limited. While I understand that there was a Board for POL (in the sense that
appointments of directors for POL had been made), ShEx did not have full
visibility of POL’s corporate governance arrangements.
During the late 2000s the dynamic began to shift, as POL’s financial position
deteriorated and it became increasingly reliant on Government subsidy.
Throughout my time in ShEx, and as a result of the development, negotiation and
implementation of a number of business plans and associated funding deals
between POL and Government, relationships between Government and POL
management became deeper. The ShEx team gradually benefited from
increasing exposure to POL’s management team - from Managing Director level
down through the executive team and below. More formally, there were
information-sharing provisions in the legal agreements under which Government
funding was provided to POL, alongside POL’s legal obligations to implement
Government's policy objectives for the business (such as to maintain the network
above a certain minimum size and meet certain coverage criteria). I helped to put
these obligations in place, first in my role as a lawyer advising ShEx colleagues
on the agreements (from 2005 to 2007), and then as the Assistant Director with
day-to-day responsibility for negotiating them on behalf of Government (from
2007 to 2011).
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35. Ata more organic level, as a consequence of the interactions between POL and
Government, ShEx was also able to begin to introduce many of the governance
processes it operated for other assets in its portfolio with which it had a more
direct ownership relationship. For example, it was during my time as an Assistant
Director that ShEx began holding QSMs with POL management and monthly
financial performance meetings were held at which the monthly management
accounts were presented to the ShEx team (referred to above).
36. From 2010 to 2012, by which time I had been promoted to Executive Director,
work was underway to separate POL from RMG, in preparation for the
privatisation of Royal Mail. This was one of the major reforms under the Postal
Services Act 2011 (“PSA 2011”). Separation brought with it the opportunity for
the appointment and operation of a new POL Board, independent from RMG, with
the requisite skills and experience for POL to operate effectively as a stand-alone
business. Appropriate corporate governance arrangements (such as the
establishment of the relevant board sub-committees) focussed purely on POL
could be instituted. This benefit of separation of the two businesses was referred
to in the extensive debates in Parliament as the PSA 2011 was taken through its
legislative process, for example on 16 February 2011 during the House of
Commons Second Reading debate, where Baroness Wilcox, the responsible
Minister stated, “So we can be sure that the strong relationship between the two
companies will continue, but with the Post Office in an even stronger position with
its own fully constituted board and sole focus on what is best for the network’
[UKG100049076).
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THE POL BOARD
37. The establishment of the POL Board started in earnest in June 2011, with the
appointment of Alice Perkins as its first Chair. I may have been involved in
preparing submissions concerning Alice Perkins’ appointment as Chair, given
that my Grade 6 role included working on the governance of POL post-separation,
however my recollection is that it was Donald Brydon, Chair of RMG, who took
the lead on Alice’s appointment. Alice was formally appointed Chair on 22
September 2011. She was highly attuned to Whitehall, having previously held
very senior roles in the Cabinet Office. Neil McCausland, who was very
experienced in the retail sector, was subsequently appointed as Senior
Independent Director. We felt that Alice Perkins’ and Neil MCausland’s skillsets
were neatly complementary to one another. Alice Perkins then made subsequent
appointments of non-executive directors to the POL Board to ensure that it was
ready for the formal separation from RMG, which took effect from 1 April 2012.
38. On the executive side, Paula Vennells was appointed CEO, effective on
separation from RMG on 1 April 2012. She effectively held the same position
beforehand, as Managing Director of POL, having been promoted to that role in
October 2010. I was not involved in her appointment as CEO or Managing
Director.
39. Longer term, there was an aspiration within Government of mutualising the Post
Office, which was driven by a desire to change the culture of the Post Office, in
recognition of the commercial realities of government subsidy and also the
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40.
41.
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difficult industrial relations landscape. Decision-making in POL had historically
been highly centralised and there was a feeling among Post Office staff and
SPMs, recognised by Government, that they should have more input into the
strategic direction and structure of the business. Mutualisation was an
acknowledged long-term goal of Ministers, covered in Alice Perkins’ first meeting
with Ed Davey on 27 October 2011, which noted that a consultation document
had been published and that preparation for possible mutualisation was a key
role for Alice Perkins to take forward [UKGI00042604] and also referred to in
Vince Cable’s initial Chair's letter to her on 11 January 2012 [UKGI00041966].
I have been asked a number of questions about the responsibilities and operation
of the POL Board during my time with ShEx. I was not on the Board so am unable
to comment from my personal experience. The POL Board was still relatively
new when I left ShEx in December 2013 and my instinct was that the business
as a whole was still getting used to the scrutiny and discipline that the Board
demanded.
My understanding was that, in legal terms, the responsibilities of the POL Board
were no different to the board of any company, which stemmed from the
Companies Act 2006 and the Articles. However, I would also have expected the
directors of POL to be aware that they were also public servants and that this
brought certain responsibilities as well, for example to follow the Nolan Principles.
Alice Perkins had come from a very senior Civil Service background and would
have well understood the need to instil that approach in members of the Board.
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SHAREHOLDER NON EXECUTIVE DIRECTOR
42. I have been asked a number of questions about the nature and extent of my
relationship/interaction with the Post Office shareholder team; as that was in fact
my own team, I presume that the question should in fact refer to my relationship
and interaction with the Shareholder Non Executive Director (Shareholder NED).
So in order to assist the Inquiry I have done my best to address those questions
below.
43. After the separation of POL from RMG, ShEx was keen to ensure a further
element of ShEx’s preferred governance arrangements was established, namely
the appointment of a Shareholder representative on the POL Board. This mirrored
the approach at other businesses within the ShEx portfolio, such as the Land
Registry and Ordnance Survey. This model was preferred by ShEx given its
responsibility for managing the investments made into portfolio businesses on
behalf of Government. By having its own representative on boards, decisions
made by those boards would be informed by the Government's views and ShEx
could gain an understanding of what decisions were being made and what
information those decisions were based on.
44. Alice Perkins initially expressed reservations about the appointment of a
Shareholder NED but it was insisted upon by the Secretary of State, as explained
in a submission my team put to Ed Davey, as the responsible Minister, in advance
of his first meeting with Alice Perkins in October 2011 [UKGI00042604]. The
advice to the Minister said “The Secretary of State was firm with Alice that ShEx
should take a Board seat’ and that “we think it is very important to hold the line
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45.
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given the level of financial commitment the Government is making to the Post
office and the priority with which it is viewed.”
Consequently, Susannah Storey, who had been Director of the RMPS team, was
appointed as the first Shareholder NED on the POL Board from April 2012.
Susannah had relevant experience as a former investment banker and was more
senior than I was (I was not yet confirmed as a permanent member of the Senior
Civil Service at that point). At that time the Shareholder NED was not also the
head of the ShEx POL Shareholder team (which was led by me) although I
understand that after my and Susannah’s tenure, from early 2014, the two
positions of Shareholder NED and head of the ShEx POL Shareholder team went
on to be held by one person.
Susannah and I worked hard to ensure that our channels of communication were
open. We emailed frequently and met up often, usually before POL Board
meetings, even while Susannah was out of the office on maternity leave during
the first year of her acting as Shareholder NED. I would brief her on issues that
were of particular interest to her (or that were areas of concern to me) and she
would provide feedback on any key issues she thought it important for me to hear
about (subject to the information sharing parameters referred to below), for
example the email chains dated 2 July 2012 [UKGI00017340] and 5 July 2012
[UKG1I00017341]. I felt comfortable sharing information with Susannah. There
were no restrictions in terms of what I could share with her.
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47.
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While information flow was two-way, there was more information flowing from me
to Susannah than the other way round. This was primarily because Susannah
was not able to share board papers with me, which I understood was one of the
conditions which Alice Perkins insisted on when Susannah was appointed. The
ShEx POL team therefore did not get a full de-brief regarding all discussions
which took place at POL Board meetings, although I felt we were generally aware
of the key issues being debated by the Board. Information flow remained
something of a bone of contention as can be seen from my exchange of emails
with Susannah in November 2012, where she remarks that Alice Perkins was still
unhappy about the extent to which Susannah shared information with ShEx,
[UKG1I00017356]. In the same email, Susannah said that she had explained to
Alice Perkins that as the Shareholder’s representative on the Board, “it is
unrealistic to imagine there wouldn't be a dialogue” between her and me, and that
she was “well aware of [her] duties re board and conflicts etc and perfectly
capable of managing them’. She was also clear that she would not agree a more
detailed protocol about what she spoke to me about and when.
I was therefore keenly aware that information was being provided to the Board
which was not being shared with the ShEx POL team but I took the view at the
time that the Board needed space to operate and that, having achieved the
appointment of a Shareholder NED to the Board, we should “pick our battles” and
let the relationship evolve over time. I also had (in retrospect, perhaps misplaced)
confidence that my team was able to obtain sufficient information from POL to
effectively exercise our shareholder function through other means (e.g. directly
from the executive team).
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49. Asa matter of routine, any contact Susannah had with the ShEx POL team over
this period was largely through me, though on occasion on particular issues
Susannah might communicate directly with other members of the ShEx POL team
if more practicable. I understand that Susannah would also talk to people more
senior than me, such as Stephen Lovegrove.
50. In terms of ShEx’s oversight of the matters I have discussed at paragraphs 16
and 17 above, Susannah’s appointment as NED did not alter my team’s oversight
of those matters.
HORIZON
51. Paragraph 16 sets out an overview of my knowledge of the Horizon IT system.
My recollection is that we first began to hear about allegations of possible issues
with the Horizon system in around 2009/10 (prior to my taking on leadership of
the team). We began to receive correspondence on the issue from the JFSA and
Alan Bates, and we were aware that there had been press reports in Computer
Weekly and Private Eye [UKGI00001482].
52. As the situation developed, we began to see Parliamentary Questions and
correspondence coming in (for example the Parliamentary Question to Ed Davey
on 27 October 2011 [UKGI00014000] which required ShEx’s input). At this stage
we were of the opinion that the answers to these questions fell within the
operational responsibility for Horizon which rested with POL and therefore asked
the business to respond directly. Although we thought it was right for the response
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to come from POL, we would still have had sight of POL’s response and satisfied
ourselves that the questions had been answered appropriately and
comprehensively. If it did not, we would have challenged the response and
requested further information. ShEx continued to have sight of POL’s responses
throughout this period which allowed us to remain apprised of the arguments
being used by the business to rebut the claims (for example, [POL00417081
POL’s statement to the BBC Inside Out Programme”).
During this time we continued to receive updates directly from POL about the
developing situation. The principal channels of communication would
predominantly have been Mike Whitehead and Peter Batten receiving information
through POL staff such as Mike Granville, but I also recall conversations with
Paula Vennells. The Inquiry has drawn to my attention POL briefing notes for a
meeting between Paula Vennells and me on 23 November 2011 [POL00338507],
which suggest she intended to provide me with an update about the receipt of
five letters before claim from Shoosmiths, a number of FOIA requests and the
Inside Out BBC regional documentary. While I do recall being aware of the
Shoosmiths letters before claim, my general understanding of the threatened civil
litigation was only in the context of wider discussions in relation to Horizon. I have
no specific memory of this meeting taking place but in general this accords with
my recollection of one of the ways information was shared. Given the range of
topics on the briefing note for Paula Vennells, the meeting would not have been
solely about Horizon matters and looks to have been one of our regular catch-
ups, which occurred approximately once a month (generally in person but
sometimes by phone).
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The Horizon issue grew in significance over time. It was clear to me that there
was a difference of opinion between the JFSA and POL about the cause of the
losses in the cases being raised by the JFSA, but it was not clear what the cause
of the problem was. Throughout the period, POL was steadfast in its position to
us in Government and more widely to the public that the Horizon system was
robust. To support the argument, the following broad arguments were advanced
by POL: (i) every keystroke on the Horizon system could be traced to the user,
thereby enabling transactions to be comprehensively audited before any
enforcement or prosecution action was taken; (ii) the SPMs concerned had been
through appeals processes within POL where contracts were terminated and/or
had been through the criminal justice system where prosecutions had been
pursued (generally pleading guilty and where they had pleaded not guilty the
court had not accepted their arguments); and (iii) the “fraud” losses in the network
were by percentage consistent with what you might expect ina comparable retail
business. This trio of arguments was advanced consistently over a relatively long
period of time for example in emails between POL and the ShEx POL team in
2010 [POL00417081, POL00120478], and letters from the Minister to MPs such
as the letter to Edward Garnier MP in 2012 [UKGI00014057], and Graham Stuart
MP in 2011 [UKGI00013859]. These assurances seemed plausible, even
compelling, to the ShEx POL team and at the time we did not have any basis on
which to refute them. While we had heard accounts and received correspondence
suggesting that Horizon might have been the cause of shortfalls, these had been
raised after the event of the relevant prosecution/contract termination and it was
not clear what specific problem with Horizon was being alleged. It appeared to
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55.
56.
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me that POL was taking the concerns seriously. I took confidence from the
support the NFSP was giving to POL’s position, where the NFSP had flagged that
a systemic issue would have been much more widespread than appeared at the
time and would likely have caused overages as well as shortfalls. As a lawyer, I
also had a confidence that where the criminal justice system had been involved
it would have reached reliable conclusions (or that unreliable conclusions would
have been amenable to appeal).
I have subsequently reflected on the reliability of the arguments set out above
and the scrutiny we applied to them. Across a wide range of workstreams, my
team was used to robustly challenging POL where we were unsatisfied with
information that they provided. I do not recall receiving any technical reports on
the operation of Horizon nor would I have expected to, given our roles. However,
to the extent that I or other members of the team needed to clarify any technical
aspects of the operation of Horizon, we would have done so to ensure we
understood it. POL executives were used to receiving such challenge from us.
For example every month the Finance Director was quizzed by ShEx on financial
performance. We had also raised concerns with the monitoring of the Network
Transformation Programme and worked to improve it. We were beginning to
develop concerns about the performance of the CEO (see below). While we
sought to work collaboratively with POL, we were a critical friend and if need be
could be very critical.
While I now plainly wish we had challenged POL’s position and the steps they
were taking to properly investigate the concerns more robustly during 2011/12,
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with the information available to us, I am not sure what else we could reasonably
have done at the time. The developing Horizon issues were only one, at the time
(and regrettably) relatively minor, workstream among many being addressed by
the ShEx POL team.
57. While at the time I accepted POL’s robust defence of the Horizon system, the
concerns being raised by the JFSA and through Parliament seemed genuinely
held. It also seemed to me perfectly possible for example that there may have
been an underlying issue with the Horizon training POL were providing to the
SPMs or the operation of the helpline made available to SPMs and their staff by
POL. We were keen for a resolution to the matter. If there was an issue with
Horizon then it would be much better from a Government perspective that it was
identified and addressed promptly. If there was not an issue with it, then it was
much better for everybody’s confidence in the system that it be robustly
demonstrated.
Second Sight Interim Report
58. By the summer of 2012, as the number of Horizon complaints grew, the ShEx
POL team was increasingly of the opinion that an external review was required.
In June 2012, I was informed that a firm of forensic accountants called Second
Sight had been instructed by POL to conduct a review into the claims around the
Horizon system. ShEx fully supported the decision. Although POL did not take
this decision in a vacuum, the ShEx POL team was purposefully not involved in
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59.
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the establishment of the review. This remained an operational matter for POL
which we continued to monitor.
I understand from the documents provided by the Inquiry that, on 28 June 2012,
I attended a meeting with Alan Bates and Norman Lamb MP. Mike Whitehead
had prepared a briefing for the Minister in advance [UKGI00017936]. I have no
recollection of this particular meeting. As usual, the briefing provided the Minister
with the background to the issues and any new developments. We would have
relied upon information from POL to prepare the document. My general
recollection is that Norman Lamb MP was very open to listening to the SPMs’
concerns.
ShEx and Ministers did not have any direct involvement in the selection of Second
Sight or the terms of their appointment, and our expectation was that the review
would remain independent of Government. At the time of their appointment, we
were clear that the review was commissioned by POL and to maintain that
independence, we developed lines in case there were demands that Government
should undertake the review [POL00143205]. In my view it was entirely sensible
for POL to lead on instigating the review rather than ShEx. POL and not ShEx
had access to all of the information which Second Sight would require to conduct
the review. We also understood POL to have the necessary IT expertise. I also
understood that the JFSA and James Arbuthnot were supportive of the approach
being taken, which was important to me and provided confidence that this was
the correct approach.
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61. I learned about Second Sight's instruction following the event and understood
from informal discussions that Susan Crichton had previous positive experience
of working with Second Sight in their capacity as forensic accountants. I was
satisfied with this explanation for their appointment. Once Second Sight had been
appointed, I had a sense that there was a proper process in place for the SPM
concerns to be properly considered.
62. I did not consider that any further active involvement from my team was
necessary at this stage. We awaited the conclusion of the independent review
and were ready to react in an appropriate way to the review’s findings, but we did
not prejudge what those findings would be. Our objective was simply that the
review should find clarity on the position.
63. On 19 June 2013, we became aware via a news article in Computer Weekly that
Second Sight may have been intending to release an interim report on Horizon
on 8 July 2013 [UKGI00001638]. The ShEx POL team was not aware of the
contents of the report at this time but we knew that it was going to be of interest
to Ministers and to various members of Parliament, in particular James Arbuthnot
MP.
64. Between 2 and 4 July 2013, there was a flurry of exchanges between ShEx and
the Minister's office prior to the Interim Report's publication including a briefing
for the Whips [UKGI00001674] [UKGI00001673]. We found ourselves in a
difficult position as the ShEx POL team had intentionally remained at arms-length
from the review process. This had created an information asymmetry between
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65.
66.
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James Arbuthnot and the then Minister, Jo Swinson. Although we still did not
know at that point what the Interim Report would say, we prepared a short note
to ensure that the Minister had sufficient information to respond to any informal
or formal questions from James Arbuthnot [UKGI00001649].
On 3 July 2013, POL provided us with a Briefing Note [POL00297101,
POL00297104]. We understood from the Note that the Interim Report showed
that Second Sight had found no evidence of systemic problems with Horizon, but
it did find that there had been two instances of “anomalies” or bugs in Horizon
which had given rise to incorrect balances at a number of branches but had been
detected, resolved and communicated to the SPMs affected. While my initial
reaction to the Interim Report was broadly positive, I was disappointed to hear
for the first time of the existence of the two bugs, as this was inconsistent with
what we had been told by POL up until this point. For me, this was something of
an inflection point as it was the first time I realised that POL had been aware of
any bugs, contrary to the accepted narrative which they had maintained until that
point.
I can see from the email chain provided by the Inquiry [POL00297126] that
following a suggestion from James Arbuthnot to the Minister, I asked Paula
Vennells if it would cause any issues if Mike Whitehead or I called lan Henderson
of Second Sight. I have no recollection of making this request, whether I spoke
to lan Henderson and if so what was discussed. I think it is possible I would have
asked Mike Whitehead to do this as he was closer to the detail at the time. Given
that Jo Swinson had requested one of the team to speak with lan Henderson then
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it would have been extremely unlikely that we did not. We were not in the habit of
ignoring Ministerial requests.
On 5 July 2013, a meeting took place with Alwen Lyons, Martin Edwards, Mark
Davies and Nina Amott (of POL), and Peter Batten and Mike Whitehead (ShEx
POL team) [POL00296917]. I believe this was a meeting to discuss the upcoming
publication of the Interim Report and that the document was first shared with us
on that occasion. I can see that I was on the invite list for this meeting, although
I have no recollection of attending in person. In any event I would have received
the actual Interim Report at the meeting or shortly thereafter.
Because of the short notice that the ShEx POL team received of publication,
Peter Batten, Mike Whitehead and I took urgent steps to ensure that the Minister
was properly briefed and we worked at pace to pull together a summary of the
Interim Report and lines to take for the Minister [UKGI00001692] which we sent
to her office alongside the draft Interim Report on Friday 5 July 2013
[UKG1I00001693]. I also sent an email on the same day with bullet points for the
Minister regarding POL’s meeting with James Arbuthnot MP and lines for a call
the Minister had with Mr Arbuthnot the following Monday morning
[UKG1I00001711]. I understood that Mr Arbuthnot was particularly concerned
about the SPMs with convictions and, while I understood his concerns, I was also
keen to ensure that what would have appeared to me to be, at that stage,
unfounded rumours did not start about the reliability of those convictions. There
was nothing apparent from my reading of the Interim Report which linked the two
identified bugs to any prosecution.
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69. The Interim Report was published on 8 July 2013. The ShEx team provided
further briefing to the Whips in preparation for a possible Urgent Question in
Parliament on the same day [UKGI001743]. We also updated the Minister's office
about three new initiatives, proposed by POL in response: setting up a working
party to review the remaining 43 cases; a review to determine how to adjudicate
future disputed cases; and a Branch User Forum [UKGI00001745]. We provided
a further briefing to Jo Swinson for her statement at the debate on 9 July
[UKG100001817, UKGI00001818] and lines for Prime Minister’s and Deputy
Prime Minister’s Questions on the same day [UKGI00001811, UKGI00001812].
70. On Q July 2013, I briefed Jo Swinson in Parliament. During the course of the
briefing I wanted more detailed information from POL about the cases raised by
MPs which had resulted in a conviction [POL00060683]. From Hugh Flemington’s
response I was able to ascertain that one of the convicted SPMs had not entered
a guilty plea. This struck me as inconsistent with my previous understanding that
convicted SPMs in Horizon cases had pleaded guilty and so I asked for follow-up
information about what evidence had been relied upon to convict. This was the
first time I had clearly understood that Horizon evidence had been used in a
criminal trial against an SPM, Ms Misra. I also asked for clarification about the
legal avenues open to an SPM to review/appeal their conviction. My
understanding from Hugh Flemington’s response was that any appeal would
need to be actioned by the SPM.
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71.
72.
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While the publication of the Interim Report had prompted a sense of unease
(because it revealed the existence of two Horizon bugs of which we had
previously been unaware), I took comfort from it too. It appeared to me that the
Second Sight review process was doing what it was supposed to do, which was
to shine a light on any issues with Horizon to get to the bottom of SPM concerns
about it. I saw the Interim Report as precisely what it was called — interim -
addressing findings from only 4 spot reviews and flagging further significant work
to be done. I saw it as a step forward in the process and I looked forward to the
completion of their review and their full findings in due course (though in the event
this came after I had moved to Hong Kong). At that time, given the Interim
Report's findings, my understanding of the extent of the developing risks and/or
compliance issues was not clear. In hindsight, these were plainly far greater than
appeared to me at the time.
We had also been informed by POL that there were joint discussions with the
JFSA to establish a Horizon “User Forum’ to identify improvements and that POL
had commissioned external lawyers to review all the cases where legal action
against a SPM was initiated by POL since separation [UKGI00001691]. So it
appeared that POL were taking additional pro-active steps to address the
developing concerns and manage the risks as I understood them to be at the
time.
In November 2013, I recommended that the then Minister, Jo Swinson, meet with
Fujitsu [UKGI00042076] because it was a useful opportunity for her to put SPMs’
concerns to them directly and for Jo to hear Fujitsu’s position directly from Fujitsu.
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PROSECUTIONS
74. Many of the issues relevant to this topic have been addressed elsewhere in this
statement. As previously described, the ShEx POL team had no specific oversight
of RMG/POL’s prosecutions as this was an operational issue. To the extent I
became aware of any criminal prosecutions, it was after the event, in the context
of our developing understanding of the position which I have described above,
and was prompted at first by the press reports and Parliamentary interest. While
I cannot now be certain as to the precise timings, I believe that as the Horizon
issue took on greater prominence at some point in 2010 or 2011 I would have
become aware that RMG/POL had been conducting such prosecutions
themselves (i.e. as opposed to via the police and CPS),
75. I have been asked to consider [POL00104899] (the Separations Project
document). I was not aware of this document before my preparation for the
drafting of this statement. It looks like an internal POL document which would not
have been shared outside the business. I do not know why I am named as the
liaison point of contact for POCA recoveries. This might be a reference to a
previous role I had, in which I led on the Post Office elements of the Postal
Services Act which might have touched on these issues. For the avoidance of
doubt, I had no role, responsibility or involvement in POL prosecutions or POCA
recovery.
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76.
77.
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During my time at ShEx, I was not aware of any issues with the behaviour of the
investigation or the prosecution department at POL. As detailed above, I had not
fully appreciated that Horizon evidence had been used in criminal trials following
not guilty pleas. It would never have crossed my mind that individuals at POL
might create a situation to encourage guilty pleas. In light of what we now know,
I realise that there were issues and find it unforgiveable that POL was
institutionally aware of information that would have had a material impact on the
prosecutions and failed to disclose that information to the defence. With hindsight
I can also see a clear conflict in POL being the beneficiary of civil recoveries at
the same time as being the prosecutor of the same issues.
I do not recall seeing any of the advices received from Simon Clarke or Brian
Altman KC which I have been pointed to by the Inquiry [POL00006357,
POL00006799, POL00006583, POL00006581] while at ShEx, nor do I recall any
discussion about these documents. The first time I saw these documents was
when the Inquiry provided me with copies as part of its Request. I do recall a
conversation with Susan Crichton in the second half of 2013, in which she told
me POL was stopping all prosecutions reliant on Horizon data. In light of the
information available to me at the time, it did not occur to me that I needed to take
any further steps to satisfy myself that POL had acted in compliance with its legal
obligations in bringing past prosecutions. I was not aware that any doubts had
been raised at all about POL’s compliance with such obligations.
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MEDIATION SCHEME
78. In response to the Second Sight Interim Report, POL initiated its Complaint
Review and Mediation Scheme (the “Scheme”). While the process was led by
POL, ShEx wanted to understand it clearly. Peter Batten asked for information
about the scheme from POL on 12 August 2013 [UKGI00001929], including
asking questions as to whether SPMs would have enough time to access the
scheme. I was not close to the detail of the Scheme as I was heavily involved in
negotiating the funding deal at the time.
79. I did not have any involvement with the appointment of Sir Anthony Hooper as
the Chair of the Working Group. I did have an exchange of emails with Susan
Crichton on 14 August [UKGI00042024] in which I provided the names of two
possible candidates who might be suitable (the individuals having been
suggested by Mark Russell) and offering to approach Sue Gray at the Cabinet
Office to find out others. I do not recall whether I eventually had any discussions
with Sue Gray or the outcome of any discussions. I note that POL were still
considering options for the Chair on 22 August 2013 from an internal POL briefing
for my regular meeting with Paula Vennells [POL00381573], which I have been
shown, but it seems that they had settled on Sir Anthony Hooper by the time of
the briefing for my meeting with Paula Vennells on 7 October 2013
[POL00381810]. I do not know if we were told of the appointment of Sir Anthony
before that meeting. This was the appropriate approach so far as I was concerned
— the Scheme was being set up and run by POL, and so it was not for Government
to dictate the choice of Chair.
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80. The Scheme had only just been set up before I left SnEx in December 2013. I did
not have any concerns at that point. Given the timings and the fact that I did not
sit on the POL Board, I am unable to comment on the POL Board's supervision
and oversight of the Scheme.
81. I did note that the numbers of cases in the Scheme were to my mind surprisingly
low — only 46 as at October 2013 [UKGI00042040] - though I was aware that
certain cases had been excluded. The numbers seemed to be lower than had
been intimated previously, for example, Shoosmiths’ evidence to the Select
Committee suggested that they had been contacted by almost 100 postmasters
[UKGI00017936]. Therefore, the overall number of requests for compensation
made to the Scheme did not raise particular concerns for me nor did it cause me
to reflect further on the information I had been given about the integrity of Horizon.
In addition, I was aware that the range of issues which were being brought up in
those initial cases were wider ranging than solely complaints about the accuracy
or otherwise of Horizon data and included issues such as the call centre operation
or training.
PAULA VENNELLS AND SENIOR EXECUTIVES
82. I have been asked if I had any concerns about Paula Vennells ability as CEO
and whether I supported ShEx’s view to remove her from the position in early
2014. During my tenure heading up the ShEx POL team I did develop some
concerns about Paula’s capabilities in the role of POL CEO. I have flagged at
paragraph 15 above how complex POL’s business is, and I would like to preface
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my remarks here by acknowledging that fact. Given the range of abilities required
to do the job there is no perfect candidate for POL CEO and we all bring areas of
relative strength and weakness to our roles. My specific concerns centred around
Paula Vennells’ command over detail when it was necessary. During the
development of POL’s 2013 strategic plan and the associated funding
discussions, I increasingly developed the view that she was either not able or did
not consider it necessary to do this. Her command over, and consequently her
ability to communicate, the details of the strategic plan we were finalising was
insufficient. This made reaching an agreement more difficult and time-consuming
and led to lower levels of confidence in the deliverability of the plan than perhaps
we (ShEx and Ministers) would otherwise have had. My concerns about her
capabilities did not stem from my views on how she was addressing Horizon
issues (though in retrospect I can now see the read-across).
While I was concerned about Paula Vennells’ performance as CEO, my concerns
were only just formulating in the second half of 2013. I do not recall explicitly
raising my concerns with Susannah Storey though I suspect it is likely that at
some stage in late 2013 I may have expressed some frustrations to her. Equally,
I would have thought that the person with the principal responsibility for assessing
the performance of the CEO was Alice Perkins. As Chair she was responsible for
managing the CEO, and she would have been developing a much more rounded
view of Paula Vennells’ performance than I would have had given the broader
range of perspectives she would have had access to.
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84. I was not involved in producing the Risk and Assurance Committee document
from February 2014 [UKGI00042677] (as I had left my position with ShEx in
December 2013). I note that the document sets out options around POL’s
management structure rather than recommending a specific action to change
CEO. My instinct is that it should be seen as an initial scoping document intended
for internal consideration within ShEx, rather than a reflection of a sufficiently
considered view.
85. I am asked about the nature of my working relationship with Paula Vennells. I
had a business-like relationship with her and we met approximately monthly ona
formal basis, such as the meeting referred to in the email which the Inquiry has
shown me [POL00381680]. I would usually come with a list of 4-5 things to
discuss with her at those meetings. We also had frequent calls or ad hoc
discussions if, for example, an urgent update was needed. The conversations
were generally open and friendly and I did not get the sense that any information
was being deliberately withheld from me. I do not recall any specific conversation
I had with Paula Vennells in relation to the complaints from SPMs about the
Horizon system and mediation scheme. In hindsight, I clearly received a partial
picture on Horizon but I did not get that impression at the time.
86. I am also asked to describe the attitude of senior executives within POL to ShEx.
While I cannot with any certainty know the feelings senior POL executives had
for ShEx, I felt throughout my tenure leading the ShEx POL team that
relationships between senior POL executives and my team were professional,
cordial and constructive. We worked closely with all of them as needed and I was
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confident that I or any member of my team would be able to pick up the phone to
a member of the POL executive team to talk through any issue. I felt that we
worked collaboratively and generally towards shared objectives. There were
undoubtedly moments where the ShEx POL team would have frustrations that
information was slow to come out from POL or that it might not be complete when
it came. But on the whole I felt they understood ShEx’s role and were keen to
help us to accomplish it.
RMG PROSPECTUS
87. I am asked about concerns that I had in relation to the IT sections of RMG’s
prospectus. The final RMG prospectus contains extensive risk factors relating to
the relationship between RMG and POL covering matters to do with the ongoing
commercial relationship between the businesses, inter-reliance on each other’s
IT systems and separation complexities (see pages 23 to 26 of the final
prospectus at paragraph 1.18 of the risk factors section [UKGI00049075]). The
concerns discussed in the correspondence flagged by the Inquiry should be seen
in that context —- they were concerns about how risks should accurately be
characterised and the tone adopted in communicating them.
88. I believe that the specific drafting concerns about the risk factors in the
prospectus related to the Mails Distribution Agreement, the modernisation of POL
and the inclusion of detail about the Second Sight report in relation to Horizon
[Extracts of the draft Prospectus for POL UKGI00002062]. In the case of the first
two matters, I think that the concerns raised with us were in relation to the tone
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of the drafting, which POL felt reflected the business in a negative light (in that
they were risk factors which went to POL’s capabilities in delivering its obligations
to RMG). I recall that the concern about the risk factor language about Horizon
was more around whether it was necessary at all. The point of a risk factor in a
prospectus is to draw to the attention of potential investors any factors which
might adversely impact the value of their investment. In this situation RMG and
POL had been separated as from March 2012, and the statutory transfer scheme
under which the separation was effected had placed any legacy liabilities that
pertained to operations now sitting with POL (such as any potential Horizon
issues arising from the ongoing Second Sight review) with POL. So for the
purposes of the RMG prospectus any reference to the Second Sight work was
not relevant.
My comments about whether we had “made clear to RM our concerns on the
Horizon point in particular’ and “leaving us to do their dirty work’ in my email of
20 September 2013 [UKGI00042027] were a recognition that POL, as a recent
subsidiary of RMG, seemed to be seeking to rely on the weight of Government
and its assistance if they were to get the best response from RMG. My comment
about “dirty work’ was a frustrated comment that I felt that RMG and POL had
been unable to come to a sensible landing on appropriate language for the risk
factors between themselves without feeling the need to come into Government
to help to make their case. The email thread at [UKGI00042027] shows that I had
had a discussion with Rachel James (the ShEx Executive Director who was my
opposite number leading the Royal Mail team) and evidently had conveyed our
concerns and thought our involvement had reached the end of the road. I advise
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Tim Mcinnes that POL should take up any ongoing concerns with Jon Millidge
(who I believe was the RMG company secretary and was leading on prospectus
matters).
2020 COMMENT RE FUJITSU
90. I have also been asked about my comment “Although maybe Fujitsu have made
it disappear’ in my email of 15 October 2020 [UKGI00032554]. This was a
comment made in relation to trying to find ShEx documents several years after
the event (and several years after I had left ShEx) on the BIS information storage
system (to which I therefore had no access). Throughout my Civil Service career
in the Department our (very cumbersome) document management system was
called Matrix. It was supplied by Fujitsu.
91. I had been contacted in the wake of Justice Fraser's judgments in the Horizon
litigation, when it became apparent that some form of independent review would
be undertaken into how the Horizon scandal had come about. It was apparent
that BIS/UKGI were struggling to locate my emails and documents on the Matrix
system — I believe because they had migrated off Matrix and on to a new
system/systems sometime prior to 2020. I had been contacted with a view to
providing any steers I could as to how we had filed our documents (which we had
done at the time, assiduously) to assist with their recovery and disclosure.
92. My comment referred only to a search for ShEx documents which had been held
on the Fujitsu-supplied Matrix system. Although the comment took its context
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from the Horizon scandal and the then recent court findings in relation to it, I was
not in fact referring to the Horizon system at all. Nor was I intending in any way
to belittle the hideous experiences that SPMs, staff and their families had been
put through.
MARTIN GRIFFITHS
93. Iam also asked about my recollection of an email exchange of 24 September
2013 relating to an email forwarded on from Alan Bates about the tragic case of
Martin Griffiths [POL00299899]. My immediate reaction to this email was one of
horror and sympathy which can be seen from my response, and I asked to see
further information. I urgently wanted to understand the circumstances and what
POL was going to do to support Mr Griffiths and his family. I would have expected
to be kept up to date.
94. I have seen from documentation disclosed to the Inquiry that Mark Davies from
POL was intending to follow up with a phone call to update me on the latest
position, on the same morning [POL00116133]. While I do not specifically recall
receiving the phone call, I would have been expecting to hear from POL and I
think I would have reached out again, had I not heard anything further. It seems
that Mike Whitehead from the ShEx POL team was in contact with POL to get up
to date information on the condition of Mr Griffiths to reply to a letter from Mr
Griffiths’ MP some weeks later [POL00196405], on 16 October 2013 and also
asked for a conversation on 23 October 2013 [UKGI00002118]. I would have
been surprised if there had not been further communication between ShEx and
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POL during the intervening weeks as we would have wanted to be kept up to date
on Mr Griffiths’ condition, the steps POL was taking and to understand fully the
background to this tragedy.
DEPARTURE FROM ShEx
95. Richard Callard took on my role of head of the Shex POL Shareholder team
following my decision to emigrate. I was due to leave my role when my paternity
leave began in December 2013. My son was due in mid-December 2013 but in
fact did not arrive until the end of December 2013. This meant Richard and I were
able to spend a reasonable length of time on the handover process, which
covered the full range of POL issues including Horizon. Richard spent two to three
weeks attending meetings with me before my departure. I made it clear during
my handover with Richard Callard that the Horizon issue needed careful
management.
96. When I left, I believed there were appropriate processes in train to properly
consider and address the SPM concerns about Horizon (via e.g. Second Sight’s
ongoing review work and the Mediation Scheme). I also believed that POL had
stopped all prosecutions reliant on Horizon data and there had been no further
activity on the threatened civil litigation beyond the letters before claim. I thought
that the risks had been identified and were in the process of being mitigated or
addressed as appropriate. With hindsight, if I had been aware of the legal
opinions POL had commissioned and received, this would have had a material
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impact on my view of what the appropriate course of action to be taken was at
the time.
REFLECTIONS
97. It is self-evident that by the time I left my role at the end of 2013 we had been
unable to fully identify and therefore to get to the bottom of what is an appalling
scandal, which continues to have serious ramifications to this day. I feel that there
are three principal contributory factors to this that I would like to draw to the
Inquiry’s attention.
98. Firstly, ShEx (and thereby Ministers and the wider public) was provided with a
profoundly misleading explanation as to the “robustness” of the Horizon system.
We found that explanation to be plausible, and we also took confidence from the
fact that key stakeholders such as the NFSP did too.
99. Secondly, ShEx had not fully appreciated the significance of and perverse
incentives at play in POL’s dual function of running prosecutions itself while being
the beneficiary of recoveries from SPMs (though once this had become slightly
clearer to us over the course of 2012/13 we took comfort from having been
informed by POL that prosecutions reliant on Horizon data were to cease).
100. Thirdly, ShEx was not made aware of POL’s legal advice on the reliability or
otherwise of Horizon evidence in prosecutions and on flaws in disclosure to
accused SPMs.
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101. I have considered what ShEx could have done differently in the light of the
information that was provided to us. Could we have challenged the information
that was provided to us more rigorously? Knowing what I now know, I certainly
wish that we had. We were well used to robustly scrutinising and challenging POL
- whether about overly optimistic assumptions about revenue growth, poor data
gathering on network transformation or foot-dragging in progressing the
mutualisation agenda. But on Horizon, as discussed at paragraph 54, we
accepted the explanation that POL gave and, as a result, inadvertently provided
insufficient and/or inaccurate information to Ministers and other officials. At the
time we believed that the information we were providing was accurate. I would
never have knowingly put misleading information to Ministers or other officials. It
was inconceivable to me that we would be actively misled by POL. In any
professional or personal relationship, trust is paramount. We trusted POL’s
management to tell us the whole truth.
102. If we had found out about problems with the reliability of Horizon evidence in past
prosecutions or other legal proceedings, or any failures by POL to comply with its
disclosure obligations, we would have taken this extremely seriously. As a matter
of great urgency, we would have alerted Ministers and taken steps to ensure POL
met its legal (and ethical) obligations. I find the actions (or rather inactions) POL
took in the light of the advice they had received to be utterly inexplicable.
103. Could we have had better structures and processes in place to ensure the
Horizon risks were more accurately assessed? Information flow to ShEx and
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POL's own corporate governance structures improved significantly over the
period, at first slowly and then more rapidly once POL separated from RMG and
its own Board was put in place. When I left ShEx at the end of 2013, while POL’s
corporate govemance structures were evolving, they were significantly better
than they had been just a few years before. I do not think it is a coincidence that
concerns about Horizon issues began to be much more closely examined at
around the same time POL and RMG were separated and better governance
processes began to be implemented at POL. Sadly, this was far too late for the
affected SPMs and their families.
104. But structures and processes are one thing. To be effective they rely on both the
quantity and the quality of information that comes to them from within the
business. Establishing a shared culture of responsibility and accountability to
provide that data is quite another thing. My sincere hope is not only that the
Inquiry process and POL’s response to it will ensure that such a scandal can
never be repeated but also that in part this will have been accomplished by the
development of such a culture of accountability.
Statement of Truth
I believe the content of this statement to be true.
Signature
Date 14 November 2024
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Index to First Witness Statement of William Gibson
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No.
Inquiry URN
Document Description
Inquiry Control
Number
UKGI00018222
Post Office Ltd — Shareholder
Executive: POL — Summary
UKGI028229-001
UKGI00014000
Parliamentary Question to Ed
Davey on 27 October 2011
UKGI024793-001
UKGI00014057
Letter from Norman Lamb to
Edward Garnier QC MP of
February 2012
UKGI024850-001
POL00060683
Susan Rudkin Case Study -
Email chain from Hugh
Flemington to Will Gibson — RE:
Will — Intel on MP cases — JFSA
case intel to follow
POL-0057 162
UKGI00001421
Post Office Limited -
Performance Report — Produced
by Central Reporting Finance
Team — May 2012
UKGI012235-001
UKGI00049076
Postal Services Bill - Hansard —
UK Parliament
UKGI057834-001
UKGI00042604
Meeting Minutes — Meeting with
Alice Perkins, Chair — POL
12:45-13:30 - Thursday 27
October 2011
UKGI051499-001
UKGI00041966
Chair's letter to Alice Perkins on
11 January 2012
UKGI050861-001
UKGI00017340
Email thread from Will Gibson to
Susannah Hooper - RE: Building
a Mutual Post Office government
response 29.6.12
UKGI027347-001
10.
UKGI00017341
Email from Susannah Hooper to
Will Gibson - RE: Re
UKGI027348-001
11.
UKGI00017356
Email correspondence between
Susannah Hooper and Will
Gibson - RE: Our favourite
subject in relation to POL
UKGI027363-001
12.
UKGI00001482
Email from ShEx to unknown
(redacted), copied to ShEx and
Will Gibson RE: JFSA and
Private Eye
UKGI012296-001
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13.
POL00417081
Email from Katherine Wilson to
Will Gibson, Mike Whitehead and
others Re: Horizon Computer
system
POL-BSFF-
0237232
14,
POL00338507
POL briefing notes
POL-BSFF-
0164228
15.
POL00120478
Email thread from Mike Granville
to Mike Whitehead RE: JFSA -
audit files and clearance
processes
POL-0126170
16.
UKGI00013859
Letter from Edward Davey MP to
Graham Stuart MP ®Re:
response to email regarding
constituent Mrs Christine
Jonhson referring to 'robustness'
of system
UKGI024652-001
17.
UKGI00017936
Meeting with Alan Bates:
Chairman of Justice for
Subpostmasters Alliance (JFSA)
Agenda
UKGI027943-001
18.
POL00143205
Email chain from Susan Crichton
to Alice Perkins and Paula
Vennells, copied to Alwen Lyons
and Mike Granville — RE: Post
Office position
POL-BSFF-
0002370
19.
UKG1I00001638
Email chain from Mike
Whitehead to Will Gibson, Tim
McInnes, Katrina Lidbetter and
others Re: Google alert - post
office
UKGI012452-001
20.
UKGI00001674
Email chain from Will Gibson to
Roger Lowe - RE: Whips briefing
(Arbuthnot)
UKGI012488-001
21.
UKGI00001673
Whips briefing: Post Office Ltd
‘Horizon’ accounting system
UKGI012487-001
22.
UKG1I00001649
Email from Claire Rannard (PS
to Jo Swinson) to Will Gibson,
Peter Batten cc Mike Whitehead
re: potential Arbuthnot encounter
this evening
UKGI012463-001
23.
POL00297101
Email chain from Martin Edwards
to William Gibson Mike
Whitehead Peter Batten RE: JA
meeting brief
POL-BSFF-
0135151
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24.
POL00297104
Second Sight Review Into
Horizon: Briefing note on Interim
Report
POL-BSFF-
0135154
25.
POL00297126
Email from Paula Vennells to Will
Gibson RE: Catch-up
POL-BSFF-
0135176
26.
POL00296917
Email from Sarah Paddison to
Alwen Lyons, Martin Edwards,
Will Gibson and others — RE:
PO/BIS Meeting on Second
Sight Investigation
POL-BSFF-
0134967
27.
UKGI00001692
Email from Peter Batten to Mike
Whitehead and Will Gibson —
RE: lines
UKGI012506-001
28.
UKGI00001693
Email from Peter Batten to
Swinson MPST cc Will Gibson,
Mike Whitehead and others —
RE: Draft Second Sight report
into POL Horizon system
UKGI012507-001
29.
UKGI00001711
Email from Swinson MPST and
Will Gibson, copied to Mike
Whitehead, Peter Batten — RE:
Arbuthnot
UKGI02525-001
30.
UKGI00001743
Email from Mike Whitehead to
Swinson MPST, copied to Will
Gibson, Peter Batten and others
— RE: Horizon: James Arbuthnot
MP — Response to Post Office’s
Horizon Computer System
UKGI012557-001
31.
UKGI00001745
Email from Mike Whitehead to
Swinson MPST, copied to Will
Gibson, Peter Batten and others
— RE: Horizon: James Arbuthnot
MP — Second Sight Report
UKGI012559-001
32.
UKGI00001817
Email from Peter Batten to Will
Gibson, Mike Whitehead and
Swinson MPST re: JFSA Q&A
UKGI012631-001
33.
UKGI00001818
JFSA Q&A Document re Horizon
UKGI012632-001
34,
UKGI00001811
Email from Will Gibson to Mike
Whitehead and MPST Swinson —
RE: Horizon lines for DPMQs
UKGI012625-001
35.
UKGI00001812
Statement and Horizon Lines for
DPMQs to House
UKGI012626-001
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36.
UKGI00001691
Email from Mike Whitehead to
Peter Batten, Will Gibson re: SS
- report highlights
UKGI012505-001
37.
UKG1I00042076
Email from Will Gibson to MPST
Swinson, Claire Hobson, copied
to Richard Callard and others —
RE: Ria - meeting request
UKGI05097 1-001
38.
POL00104899
Separation project - criminal
investigations policy for Post
Office Ltd
POL-0080531
39.
POL00006357
Advice on the use of expert
evidence relating to the integrity
of the Fujitsu Services Ltd
Horizon System
POL-0017625
40.
POL00006799
Advice on Disclosure and the
Duty to Record and Retain
Material
POL-0017591
41.
POL00006583
Interim Review of CK Processes
by Brian Altman QC
POL-0017668
42.
POL00006581
Review of PO prosecutions by
Brian Altman QC
POL-0017666
43.
UKGI00001929
Email from Peter Batten to
Susan Cricton, cc Martin
Edwards, Simon Baker — RE:
FW: Horizon review workflow
UKGI012743-001
44.
UKGI00042024
Email from Mike Whitehead to
Susan Crichton = — RE:
Independent Chair
UKGI050919-001
45.
POL00381573
Email from Alwen Lyons to Paula
Vennells re: Alice meeting Will
Gibson
POL-BSFF-
0208460
46.
POL00381810
Email from Alwen Lyons to
Martin Edwards — RE: Paula’s
next session with Will Gibson,
BIS
POL-BSFF-
0208697
47.
UKGI00042040
Email chain between Martin
Edwards and Mike Whitehead —
RE: Horizon Review and
Mediation Scheme
UKGI050935-001
48.
UKG1I00042677
PowerPoint presentation — RE:
Post Office Ltd Senior
Management - Risk and
Assurance Committee -
February 2014
UKGI051572-001
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49,
POL00381680
Email from Theresa lles to Martin
Edwards and Susan Crichton —
RE: Paula’s next meeting with
Will Gibson, BIS
POL-BSFF-
0208567
50.
UKGI00049075
Extracts of the Prospectus for
POL
UKGI057833-
001
51.
UKGI00002062
Extracts of The Prospectus For
POL
UKGI012876-001
52.
UKGI00042027
Email from Will Gibson to Tim
Mclinnes — RE: RM Prospectus
UKGI050922-001
53.
UKGI00032554
Email from Peter Batten to
William Gibson, Richard Callard,
Tim Mcinnes and others - RE:
Sparrow
UKGI041449-001
54.
POL00299899
Email from Will Gibson to Susan
Crichton, copied to Mark R
Davies, Angela Van-Den-Bogerd
and others — RE: POST OFFICE
READ THIS — Martin Griffiths
former SPM
POL-BSFF-
0137949
55.
POL00116133
Email from Mark R Davies to
Paula Vennells, Susan Crichton,
Angela Van-Den-Bogerd and
others — RE: Martin Griffiths
POL-0117132
56.
POL00196405
Email from Whitehead Mike to
Mark R Davies, Martin
Humphreys, CCing Batten Peter
and others re: Stephen Mosley
MP: Martin Griffiths - attached
letter concerning sub-postmaster
case
POL-BSFF-
0034468
57.
UKGI00002118
Email from Mike Whitehead to
Martin Edwards, Angela Van-
Den-Bogerd, Mike Granville and
others — RE: Horizon: Review
and Mediation Scheme
UKGI012932-001
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