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Witness Name: Adam Crozier
Statement No.: WITN04390100
Dated: 28 February 2024
POST OFFICE HORIZON IT INQUIRY
4
FIRST WITNESS STATEMENT OF ADAM CROZIER
INTRODUCTION
1, ADAM CROZIER, WILL SAY AS FOLLOWS:
1. I held the position of Chief Executive Officer (“CEO”) of Royal Mail Group Ltd
and was a director of Royal Mail Group Ltd and Royal Mail Holdings plc from
February 2003 to April 2010.
2. I make this statement for the purposes of the Post Office Horizon IT Public
Inquiry (the “Inquiry”) and in particular, in response to the Inquiry’s request
for evidence under rule 9 of the Inquiry Rules 2006 in its letters to me of 31
August 2022 and 6 December 2023 (the “Requests”). I have received legal
assistance from Cooley (UK) LLP in the preparation of this statement.
3. This statement is divided into the following sections identified by the Inquiry in
its Requests:
3.1. Background;
* Unless otherwise specified, where I refer to “Royal Mail” in my witness statement, this is in respect of both Royal Mail Group
Ltd and Royal Mail Holdings plc.
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3.2 Corporate structure of Royal Mail;
3.3. Role as CEO of Royal Mail;
3.4. Government oversight;
3.5 Oversight of Horizon;
3.6 Bugs, errors and defects in Horizon;
3.7. Prosecutions;
3.8 Civil proceedings against Ms Wolstenholme;
3.9 The IMPACT programme; and
3.10 Reflections.
I have referred to documents disclosed by the Inquiry to me as part of the
Requests, in the manner prescribed by the Inquiry’s Updated Protocol on
Witness Statements. I do not personally hold any relevant documentation from
my tenure at Royal Mail, due to my obligations to return all IT and documents
on my departure. Therefore, all documents referred to in my statement are
documents already disclosed to the Inquiry and so I refer to their Unique
Reference Number as assigned by the Inquiry.
I have sought to respond to the Inquiry’s requests in the order they have been
raised. However, before turning to the specific questions, I would like to
express my heartfelt sympathies to the individuals and families of the
individuals who were so wronged and for whom justice has been denied for
so long. I can only imagine the immense and continued suffering they must
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have faced over many years. I feel deeply sorry for those whose lives were
ruined and I am grateful for the opportunity to assist in any way I can to help
ensure that vital lessons are learnt. As I explain in this statement, it is a matter
of huge regret for me that I was not aware of the tragic situation for Post Office
sub-postmasters and their families during my time at Royal Mail.
6. It is against this backdrop that I answer the Inquiry’s questions to the best of
my knowledge and recollection in light of the passage of time.
BACKGROUND
7. Prior to my tenure at Royal Mail, I held a number of senior roles at the
international marketing and advertising agency Saatchi & Saatchi Advertising
between 1988 and 1999, including that of Joint Chief Executive from 1995 to
1999. Following that, I served as Chief Executive of the Football Association
(the “FA”) between 2000 and 2003. In both these roles, I led major commercial
transformations which included stabilising and modernising the companies
during significant periods of change. I believe my roles at Saatchi & Saatchi
Advertising and the FA equipped me for my role at Royal Mail, in particular
this experience of managing challenging transformations in times of instability.
8. In 2003, I joined Royal Mail as CEO. I discuss my appointment and role further
below. I stayed at Royal Mail for seven years until April 2010, when I joined
the media group ITV plc as CEO. I left ITV ple in June 2017, retiring at that
stage from full-time executive roles.
9. Since leaving ITV plc, I have held various non-executive Chairman roles,
including with Stage Entertainment BV (until late 2018), Vue International
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(until 2020) and ASOS plc (until 2021). I was also a non-executive director of
The Sony Corporation in Japan between June 2020 and December 2021.
10. I am-currently the non-executive Chairman of Whitbread pic, Kantar Group Ltd
and British Telecoms Group plc. I have held these roles since April 2017,
February 2020 and November 2021, respectively.
CORPORATE STRUCTURE OF ROYAL MAIL
11. Whilst I have tried to address as best I can my recollection of the corporate
structure of Royal Mail and the separation of much of the Post Office Limited
(“POL”) governance within this, I must stress that my responses are not in any
way intended to detract from the fact that it is clear to me now that this
structure did not help facilitate vital information regarding Horizon and the
conduct of criminal proceedings reaching me or the board of Royal Mail as it
should have done.
Overview
12. Royal Mail Holdings pic, which was directly owned by HM Government (the
“Government’), was the ultimate parent company of Royal Mail Group pic
(the “Group”). Royal Mail Holdings plc was set up as a public corporation (a
form of “arm’s length body”), to ensure that the Royal Mail letters and parcels
business (“Royal Mail Letters”) could be transformed and modernised to
become a commercially focused company operating successfully in a
competitive market.
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13.
14.
15.
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As Royal Mail was state-owned during my time as CEO, it had a single
shareholder (the Government). For most of my tenure at Royal Mail, the
shareholder body was referred to as the Shareholder Executive.
Royal Mail was organised in a way which separated out parts of the business
as operating units. I recall that these included Royal Mail Letters, Royal Mail
Logistics (later subsumed into Royal Mail Letters), GLS, Parcelforce and POL.
These operating units were not all separate subsidiaries; for example,
although Parcelforce was a unit within the Group, it was not a subsidiary.
POL, on the other hand, was a legally separate entity within the Group and it
was run in a “semi-detached” way from the rest of Royal Mail. In particular,
POL had a governance function that was largely separate to the Royal Mail
governance system, with its own:
15.1 Independent board (and its own non-executive directors) (the “POL
Board”);
15.2 Chairman (Sir Michael Hodgkinson until 2008, and subsequently from
2009 Donald Brydon, who became Chairman of the Group and also
took on the role of Chairman of POL, as I believe was agreed with the
Shareholder Executive);
15.3 Until 2005, CEO David Mills, who reported to Allan Leighton, and
subsequently Alan Cook who took over as Managing Director from
2006 to 2010;
15.4 Executive management team (the “POL Executive Team’);
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15.5 Risk and Compliance Committee;
15.6 Regular meetings and information-sharing with Government and the
Shareholder Executive; and
15.7 Annual Reports
16. Importantly, the POL Chairman and POL CEO/Managing Director both sat on
and represented POL matters at the Royal Mail Holdings plc board (the “Royal
Mail Board”). The POL CEO/Managing Director also sat on the Royal Mail
management board (the “Royal Mail Management Board”), given the
significant commercial agreement between Royal Mail and POL for the
services POL provided in respect of the Royal Mail letters and parcels
business.
17. As far as I can recall, there were no material changes to the corporate
structure of Royal Mail between 2003 and 2010.
The Royal Mail Board
18. As CEO, I was a director of Royal Mail Holdings plc, and attended all Royal
Mail Board meetings.
19. The Royal Mail Board comprised of non-executive directors including the
Chairman Allan Leighton, the Executive Deputy Chairman Elmar Toime,
myself as CEO, Group Technology Director David Burden, Chief Financial
Officer (CFO) Marissa Cassoni (and later, lan Duncan), Group HR Director
Tony McCarthy, POL Chairman Sir Michael Hodgkinson, and POL Managing
Director (David Mills and later, Alan Cook). Royal Mail Board members, as
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20.
21.
22.
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well as Company Secretary Jonathan Evans, attended all Royal Mail Board
meetings. Depending on the agenda item, direct reports and key team
members would also attend to present on particular matters.
The Royal Mail Board met roughly ten to twelve times a year. The agenda for
each meeting would be determined by the Chairman, Allan Leighton, with
input from me, the CFO and the Company Secretary. If the POL Chairman or
POL CEO/Managing Director had anything to raise, this would also be
included in the agenda, although I recall this was relatively infrequent, as most
decisions could be made by the POL Board under delegated powers of
authority without reference to the Royal Mail Board.
My recollection is that the Royal Mail Board was very inquisitive and given the
depth of knowledge and experience in corporate transformations, its members
were very action-orientated, keen to identify and resolve problems, and very
focused on improving compliance across the company. In preparing for this
statement, I reviewed the following Group Annual Reports:
21.1 Royal Mail Holdings pic Accounts 2002-2003;
21.2 Royal Mail Holdings plc Accounts 2004-2005;
21.3. Royal Mail Holdings ple Accounts 2006-2007; and
21.4 Royal Mail Holdings plc Accounts 2008-2009.
Whilst significant time has passed since I was involved with these processes,
the Annual Reports reflect my recollection of the corporate governance
processes in place at the time.
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23. The Royal Mail Board subcommittees included the Audit and Risk Committee,
the Remuneration Committee, the Nominations Committee and the Corporate
Social Responsibility Committee.?
24. The following would be considered by the Royal Mail Board:
24.1 Minutes of all the operating unit board meetings, including in no
particular order, POL, Royal Mail Letters, Royal Mail Logistics and
Parcelforée, the Royal Mail Management Board and from time to time,
the GLS Board;
24.2 The Group’s monthly financial reports; and
24.3 Other ad-hoc reports on various issues, such as on health and safety
and employee engagement.
25. In addition, all committee heads would provide verbal updates on any items of
note from the respective committee meetings.
26. I have been asked by the Inquiry about the level of technical IT expertise of
those attending the Royal Mail Board. The levels of expertise varied across
board members, but I recall that all board members had some experience of
the use of technology in modernising organisations they had led. David
Burden, as Group Technology Director, had particular in-depth experience of
transformations that involved technological modernisation and therefore had
a specific role in advising the Royal Mail Board on technology as a specialist
Post Office Limited Board
2 I do not recall the specific terms of reference for these subcommittees.
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27.
28.
29.
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The POL Board was chaired by Sir Michael Hodgkinson, Allan Leighton, Sir
Michael Hodgkinson, Elmar Toime (until 2004) and David Mills (until 2005) sat
on both the Royal Mail Board and the POL Board, and they would present
POL issues at Royal Mail Board level. This was also the case with Alan Cook
when he joined as Managing Director. Jonathan Evans also attended both the
Royal Mail and POL Board meetings. I did not attend POL Board meetings
(except for roughly two or three occasions) and at no time was I a director of
POL.
I believe the POL Board met around six to eight times a year. I expect that it
would have been David Mills, and later Alan Cook who determined the agenda
of the meetings. In addition to the POL Board, POL had their own Risk and
Compliance Committee, which I do not recall ever attending.
I have been shown various documents by the Inquiry where specific POL
items were brought to the Royal Mail Board. The key matters which would be
discussed at the Royal Mail Board level by the POL Executive Team or POL
Board typically related to POL funding arrangements or changes (see, for
example RMG00000032 — Royal Mail Holdings pic Board of Directors Meeting
Minutes of 10 January 2006 and RMG00000039 — Royal Mail Holdings pic
Board of Directors Meeting Minutes of 27 January 2010) including in respect
of updates on negotiations with WHSmith and the Bank of Ireland
(RMG00000029 — Minutes: Royal Mail Holdings plc Minutes of Board of
Directors meeting of 06 February 2007). This is because the strategy and
development of POL funding affected the solvency of the Group as a whole.
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Management Boards
30. As referenced above, Royal Mail had its own Management Board which sat
under the Royal Mail Board. The function of the Royal Mail Management
Board was to oversee the day-to-day operation and execution of the business
plan as agreed with the Royal Mai Board, within delegated authority levels set
by the Royal Mail Board. It was also responsible for allocating resources
across the Group. The overall objective was to ensure that Royal Mail was
modernised to enable it to compete commercially in an open and competitive
market, improve quality of service for customers and meet the targets agreed
with the regulator at the time, Postcomm, and with Postwatch, and to ensure
that POL could become a sustainable public service. As part of the
modernisation, there was an inherent recognition that there was a need for
transformation and the Royal Mail Management Board was encouraged to
seek, identify and resolve issues.
31. POL had its own management team (the POL Executive Team, referenced
above) which sat under the POL Board in terms of structure. The POL
Managing Directors (David Mills and later, Alan Cook) were during my tenure
members of the POL Executive Team and also the Royal Mail Management
Board, as mentioned above.
ROLE AS CEO OF ROYAL MAIL
Appointment
32. I joined Royal Mail in February 2003, after my appointment as CEO by Allan
Leighton, the Chairman of Royal Mail. Both the Royal Mail Board and the
Government at the time approved my appointment. As background, at the time
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33.
34.
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of my appointment, Royal Mail had approximately 205,000 employees, and
POL had approximately 14,000 employees and approximately 14,000 sub-
postmasters (as set out in the respective Annual Reports).
The CEO appointment process itself was run by the international executive
recruitment firm Heidrick & Styuggles. The initial interview process was
conducted by Heidrick & Struggles, following which I was interviewed by Allan
Leighton. Part of the process included meeting with a Government panel
which had been set up to oversee the appointment, and current Group
executives, including Jonathan Evans (the Company Secretary of Royal Mail)
and Marissa Cassoni (the CFO of Royal Mail). I believe I also met Elmar
Toime, who had previously held the position of CEO at New Zealand Post
Limited from 1993 to 2003, and who was joining the company as Executive
Deputy Chairman at around the same time.
I invested the first months of my role as CEO in understanding both Royal
Mail's structure and also the postal industry itself. I spent time with key
personnel in the business as part of my induction. At the same time, I also
learnt from working with Elmar Toime, who had a wealth of experience in the
postal industry.
Upon appointment, and in line with the governance structure in place at the
time, Elmar Toime, David Mills and I split the role of our predecessor John
Roberts, in the following way:
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36.
37.
38.
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35.1. Elmar Toime was appointed as Royal Mail's Executive Deputy
Chairman and Chair of the Royal Mail Management Board. He was to
focus on the Royal Mail Letters division, given his experience of the
industry.
35.2 Iwas responsible for Group strategy and modernisation, the Royal Mail
subsidiaries, Royal Mail Logistics (later subsumed into Royal Mail
Letters), Parcelforce, and Group functions such as finance and
marketing. Initially, Allan Leighton chaired the board for GLS; I then
took over the chairing of the GLS board in around 2006 or 2007.
35.3 David Mills continued in his role as CEO of POL.
I believe the intention was that Elmar Toime would bring knowledge of the
postal industry to the role, and I would bring marketing, consumer and
transformation experience given my over eight years of experience at Saatchi
& Saatchi Advertising and the FA.
Elmar Toime, David Mills and I all reported directly to Allan Leighton. When
Elmar Toime left in October 2004, I took over responsibility for Royal Mail
Letters, and POL continued to be run by its then CEO, David Mills.
My role at Royal Mail was to ensure we transformed the way we worked at a
critical time for the company, with a particular focus on the modernisation of
Royal Mail Letters which accounted for the vast majority of the Group, as well
as introducing improvements in the way of working across the Group. Such
improvements included ways to:
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38.1 Develop, communicate and execute Group-wide strategy to modernise
and transform the business, in order to deliver a world class Universal
Service for post in the UK;
38.2 Automate and modernise the Royal Mail Letters business to improve
its efficiency; ‘
38.3. Transform the shape of the Royal Mail centre network;
38.4 Improve our operational efficiency, to deliver against the business's
Quality of Service targets in respect of the Universal Service Obligation,
which had not been met for many years, and return the business to
profitability (my focus in this regard was on Royal Mail Letters,
Parcelforce, GLS), while maintaining the strong social function of Royal
Mail;
38.5 Ensure that Royal Mail was able to build a parcel delivery business that
could successfully compete with existing market players as online
shopping increased and letter volumes declined;
38.6 Ensure that the Royal Mail Letters business was fit to compete in a
market that was being opened up to competition by the postal regulator
for the first time in its history;
38.7 On behalf of the Group, work with the POL Executive Team in respect
of securing government funding for the network in order to ensure that:
. The Group remained solvent and a going concern; and
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39.
40.
41.
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. The Government subsidy would support a network size that
allowed us to meet the regulatory targets for proximity to a Post
Office branch.
Additionally, when Elmar Toime left in late 2004, I took over the chairing of the
Royal Mail Management Board and, as mentioned, I also took on the role of
CEO of Royal Mail Letters, which at that stage was continuing to fail its Quality
of Service targets. Once we had addressed this and met the relevant targets,
I appointed lan Griffiths and subsequently Mark Higson to lead Royal Mail
Letters.
I was conscious at all times of my responsibilities as set out above at
paragraph 38. I appreciated that whilst I could not have direct involvement in
the day-to-day operations of the Group and functions would be delegated out
to key individuals who I trusted were competent and responsible, these
functions would need to be suitably supervised by me and by the Royal Mail
Board. The same applied to the delegated responsibilities of the Board
committees.
As we were ultimately responsible for supervision, each of the directors had
clear responsibilities for the area which they held expertise in, as well as
objectives that were set and agreed by the Royal Mail Board every year. As
far as I can recall:
41.1 Oversight for criminal prosecutions and civil proceedings brought by
POL would have sat with the POL legal team, and oversight for
prosecutions brought on behalf of the rest of the Group would have sat
with the Group legal team. I believe both legal teams would have
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42.
43.
41.2
41.3
41.4
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ultimately been under the supervision of the Company Secretary,
Jonathan Evans;
Oversight of Group IT would have been under the supervision of the
Group Technology Director, David Burden (who was already in the role
when I joined Royal Mail) and from 2007, Robin Dargue;
Oversight of any accounting system would have been under the
supervision of the Group CFO and Group Technology Director for any
Group-wide systems, and the POL Technology Director, POL
Operations Director and POL CFO for any POL-specific systems such
as Horizon;
Oversight of the Group's compliance with the Race Relations Act 1978
would have been under the supervision of the Group HR Director, who
was a member of the Royal Mail Board. I have also been specifically
asked about compliance with the Equality Act 2010, but as this did not
come into force until after I left Royal Mail, I am unable to confirm.
The Group Technology Director and the Group CFO both sat on the Royal
Mail Board, and the Company Secretary attended these meetings and
produced the minutes of these meetings. My oversight of the Royal Mail legal
department and investigations undertaken by Royal Mail would have been
through the reporting of the Royal Mail Company Secretary, and similarly, my
oversight of IT was reliant on reporting by the Group Technology Director.
POL had their own legal and technology directors and teams. I fully trusted
David Mills and subsequently Alan Cook, as well as other POL Executive
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44.
45.
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Team members including Sir Michael Hodgkinson, to raise any significant
systemic or reputational issues relevant to POL that would have had an impact
on the Group at either the Royal Mail Management Board meetings or at the
Royal Mail Board meetings.
Overall, the Royal Mail Board had to satisfy itself each year, through a skills
analysis, that it had the knowledge, talent and experience required to run the
business. I recall that, in addition, the Royal Mail Board’s performance, as well
as the performance of its committees was appraised annually, and feedback
was given on areas for improvement. Alongside this, I (or the appropriate
Royal Mail Board member) assessed each member of the management
team’s performance. The Royal Mail Board also appointed a number of
independent non-executive directors. The Royal Mail Board was supported by
external specialist advice and, as I set out below, there was regular
communication with the Shareholder Executive.
It is fair to say that there was a recognition by the Royal Mail Chairman and
the Royal Mail Board, as well as the Shareholder Executive, that Royal Mail
was in need of significant reform and that the plan for transformation was not
without difficulty due to the lack of modernisation and investment in the
institution over many decades. Given this major transformation and the
relationship with the Government as sole shareholder, I was very cognisant
that openness and accountability were key.
The Royal Mail Board was used to receiving and dealing with difficult issues
on a fairly regular basis as a result of the constant encouragement across the
Group to openly and transparently raise issues as they arose; I encouraged
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all our leaders at every level to be open and transparent about the issues they
faced in trying to deliver the Group transformation plan, as I considered this
necessary and was keen to emphasise that issues should be identified,
quickly communicated and directly confronted. This was so we could ensure
our focus was on resolving matters to enable us to improve the performance
of the company, particularly for ‘consumers. For example, along with Allan
Leighton, I regularly met with all Royal Mail Letters front line managers
(approximately 2,500 individuals). We would use these sessions to get
detailed feedback on what needed resolving or improving in our operations,
and also to update our teams on strategy, changes and improvement on
issues previously raised.
Group objectives
47. Whilst there was a need for cashflow and profit to maintain the viability of the
Group, there was recognition by the Royal Mail Board that this was not the
Group’s sole objective. It had a mixed set of objectives to be delivered in the
Group's best interests, which I was mindful of. For instance, it was critically
important that we delivered on the Universal Service Obligation and met our
Quality of Service targets; similarly, Post Office branches across the country
had a social purpose and were critical to local communities, and there was a
clear intention for there to be a branch within distance of every member of the
public. While there was of course a need for efficiency in order to future-proof
the company, particularly during a time when mail volumes were decreasing
year on year (and the market was being opened up to competition for the first
time), I did not consider there to be tension between objectives: it was not
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possible to invest in the network (and deliver on the Universal Service
Obligation) without the generation of profit, but the generation of profit was
precisely for this purpose.
48. That is not to say that there were not a huge number of key priorities to be
executed — as with any company, particularly one going through a major
transformation, there was an extensive list of priorities. However, my firm
understanding was that the central objective at all times was to deliver a better
Group for all stakeholders.
GOVERNMENT OVERSIGHT
49. Royal Mail (through myself as CEO, along with the CFO and Company
Secretary) met with the Shareholder Executive on a roughly quarterly basis.
During my tenure, there were also various meetings and interactions with
other members of the Government. I believe Allan Leighton, as Chair of the
Group, had meetings with the Shareholder Executive and various ministers
from time to time, as well.
50. The regular meetings with the Shareholder Executive involved Royal Mail
receiving feedback and providing thorough reviews and updates on a variety
of matters, including:
50.1 Financial performance;
50.2 Quality of Service performance;
50.3 Progress on programmes of modernisation;
50.4 Relationships with the unions; and
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51.
52.
53.
54.
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50.5 Group funding and solvency issues.
As Royal Mail was state-owned, operating in a competitive and regulated
industry and undergoing substantial modernisation, there was understandably
considerable Government oversight and a need to ensure compliance with
relevant legislation and guidafice. During my tenure I considered the
Government's oversight of the business to be sufficient and certainly (and
understandably)-more than that of shareholders of a commercial public limited
company.
The Shareholder Executive rarely attended Royal Mail Board meetings save
for when particular topics needed their specific input or approval as
shareholders. These were generally focused around two key matters:
52.1 Funding of POL (and related size of the network) and the impact on the
solvency of the Group as a whole; and
52.2 Future ownership structures (including potential employee ownership,
which was at one stage mooted).
1 do not recall discussing Horizon, or any problems with it, during my meetings
with Government, or during meetings which were attended by the Shareholder
Executive.
My recollection is that the POL Board, through the POL Managing Director
and POL Executive Team, met with Shareholder Executive and various
departments and teams within Government even more regularly than the
Royal Mail team did, given the importance of the Post Office network to
Government policy and the services POL provided on behalf of Government
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agencies. Of the subsidiaries of the Group, only the POL team met separately
with Government and the Shareholder Executive (the remainder of the Group
was represented by the Royal Mail management team alone).
55. I do not know whether Horizon was ever discussed in these meetings.
OVERSIGHT OF HORIZON
56. To the best of my knowledge, I believe the Horizon system was first piloted in
1995 and rolled out in 2000 with ongoing development thereafter. The system
was therefore relatively established when I arrived in 2003
57. I recall this relationship would have been run by the POL Operations Team,
supported by the POL IT Team. The Operations Team was led by Dave Miller
(followed by Ric Francis and then Paula Vennells who joined the POL Board
in early 2007), and I think that the IT Team was led by Dave Smith. I recall
that the POL Finance Director, Peter Corbett, was also very involved in the
business case for Horizon.
58. It made sense therefore that the ongoing relationship with Fujitsu was owned
and led by POL. All operational, development and execution meetings were,
as far as I am aware, jointly held between POL management and the relevant
Fujitsu team, and I was not involved in the implementation of the system or its
operation or development.
59. I do not recall receiving any training or instruction on how to use the Horizon
system, and I would not have expected to have been involved in this level of
detail. I was of course aware that the system was an accountancy tool for POL
branches, but I did not have any meaningful understanding of the detail of its
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technical operation, nor the detail of any of the specific software releases.
Were there to be a need for any technical input generally during my time as
CEO, I understood that that would have been requested from and given by
David Burden, who was the Group Technology Director (and in later years, by
his successor, Robin Dargue).
‘4
60. I have already described in brief the corporate governance structures that
were in place at POL, and that there were specific teams at POL who took
ownership of the implementation and operation of the Horizon system. I would
have relied on these structures for information to reach me.
The Horizon contracts
61. I believe the contract itself was negotiated and run by POL teams, who had
ownership of the system itself, and I do not recall being briefed on the terms
of the contract between POL and Fujitsu.
62. I have been asked by the Inquiry to consider the Second Supplemental
Agreement between POL and Fujitsu, dated 24 September 1999
(POL00090428). This preceded my tenure at Royal Mail by over three years,
and I am not aware that this was ever brought to my attention. Similarly, the
Inquiry has asked me to consider clause 5.3 of the Third Supplemental
Agreement, dated 19 January 2000 (FUJ00118186). I was not aware of this
clause or what it provided for in the relevant circumstances.
Operation of Horizon
63. I was not aware that there were any widespread issues of any kind with the
system, and I had no sense at that time from anyone involved with the Horizon
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system, or the oversight of the system, that they believed there were any
significant issues with its functionality. Whilst it has been over 13 years since
I left Royal Mail, I certainly do not recall any such issues with Horizon being
brought to my attention during the course of my time as CEO, by the POL
Executive Team, POL Board, POL Risk and Compliance Committee or the
National Federation of Sub-postmasters.
64. I do not recall being briefed on issues with the Horizon system when I arrived
at Royal Mail in 2003, and I was also not engaged with the detail of any
upgrades to the Horizon system during my time at Royal Mail.
65. I would have expected at the time that overall monitoring of Horizon and any
issues raised by users during roll-out and implementation would be
investigated and discussed by the joint working groups from POL and Fujitsu,
with oversight from the POL Executive Team and POL Risk and Compliance
Committee. Similarly, I believe the relevant POL teams would have met with
the National Federation of Sub-postmasters on a reasonably regular basis and
had the opportunity to discuss any relevant matters raised by its members
during these meetings.
Working with Fujitsu
66. The Inquiry has referred me to slides of a PowerPoint presentation titled “The
Story of Horizon and Horizon on line” which appear to be authored by a Dave
Smith (FUJ00098040). I had not seen these slides before their disclosure to
me by the Inquiry and I note that they are dated September 2010 (some
months following my departure) and also that they refer to a large period of
time that preceded my tenure at Royal Mail.
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67. I appreciate that this is a substantial slide deck, and that the Inquiry has
directed me to a short subset of the same (in particular pages 107 to 112). I
have outlined the context behind this set of slides to the best of my ability
below, and I would be happy to assist should the Inquiry have any further
specific questions.
‘
67.1 Relationship with Fujitsu: Whilst it is possible I may have come across
some of the individuals from Fujitsu who are named in the slides, I do
not recall doing so and therefore I am not in a position to comment on
their relationship with POL. As to whether the slides provide an
accurate representation of the Horizon project, given I was not involved
in the project’s implementation, roll-out or any subsequent upgrades, I
am similarly unable to comment.
67.2 Use of screens: I note that there is a reference to a request from Allan
Leighton (the Royal Mail Chairman), supported by me, to put in place
screens to communicate with our people. I found this to be a sensible
way of reaching our people; Allan, as an ex-retailer, was leading on this
issue and I had no reason not to be supportive, particularly having seen
its effectiveness in various other contexts.
68. My involvement with individuals at Fujitsu was very limited and I only recall
meeting Simon Blagden (non-executive Chairman at Fujitsu) on one occasion
for a relationship building meeting. Given my involvement with Fujitsu
personnel was so limited, I am not able to comment on the nature of the
relationship between Fujitsu and POL.
POL Board minutes
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69.
70.
71.
72.
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The Inquiry has provided me with minutes of a POL Board meeting on 20 April
2006 (POL00021492). I believe that throughout my years at Royal Mail, I
attended in total around two or three POL Board meetings. In this instance, I
believe I would have attended as there was to be an update on solvency and
funding issues, which were relevant to the Group as a whole.
I can see that during this POL Board meeting, a “Horizon $90 Release” was
discussed (“POLB06/46”). I note that the minutes state that “The release
continued to make good progress. There had been a number of issues in the
pilot but these had been quickly diagnosed and resolved”, which I expect
would have suggested to me that the issues had been dealt with, although I
do not recall the particular discussion that took place on this item.
I have also noted that a further item relating to Horizon was discussed:
“Horizon Next Generation” (“POLB06/52”), by Ric Francis and Dave Smith.
Given the passage of time, I cannot recall the paper presented here by Ric
Francis but the minutes would suggest that the business case appeared to be
one in which Fujitsu offered cost savings and improved system efficiency in
return for an increased length of contract. This would be reasonably normal
practice and, given the level of investment involved, it appears that the POL
Board was required to approve further investment to deliver the system and
that Ric Francis had ownership of this item as the POL Operations Director.
The Inquiry has also disclosed to me a number of minutes of Royal Mail Board
meetings (RMG00000033 - Royal Mail Holdings plc Board of Directors
Meeting Minutes of 27 April 2006; RMG00000030 — Royal Mail Holding Board
of Directors Meeting Minutes of 2 August 2006 and RMG00000029), which
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show that the Horizon contract was brought to the Royal Mail Board, too. I
believe it would have only been necessary for the Horizon contract to be
presented to the Royal Mail Board and approval sought from the Royal Mail
Board for delegated authority because of the size of the investment (this was
normal practice for multi-year contracts that exceeded a certain level of
investment), which was beyond the levels POL could approve (due to the
financial position of the Group). This is reflected in the minutes.
BUGS, ERRORS AND DEFECTS IN HORIZON
Correspondence from Mr Bilkhu
73. I have been shown correspondence by the Inquiry from Mr Bilkhu, who I
understand was a sub-postmaster of Browburn Post Office (POL00001304 —
Correspondence between POL and Mr Bilkhu between 15 November 2007
and 1 December 2008). I understand from that correspondence that Mr Bilkhu
wrote a letter addressed to me in June 2008 in respect of numerous significant
issues he was experiencing with Horizon.
74. By way of background, I should clarify that in any given week I would receive
hundreds of letters, and as a result I could not read every letter, and inevitably
I would have to promptly pass on correspondence to others. My team would
assist me with this. The letters would typically be split between:
74.1 Customer complaints, which would be directed to the Customer
Services team to be investigated and then responded to; and
74.2 Correspondence or complaints that were relevant to other teams and
functions, which would typically either be brought to my attention if
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75.
76.
77.
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serious, or sent directly to the most relevant teams within Royal Mail. If
the question or matter related to POL, it would be passed on to the
Managing Director of POL’s office and ask them to ensure their teams
investigated fully and responded directly to the person or group who
had raised the issue. I trusted the team and fully expected that my
direction would be followed and any investigation would be carried out
fairly.
The team with responsibility of the issue would set up a case file and would
track the issue’s progress up until its resolution.
I have read the correspondence provided by the Inquiry from Mr Bilkhu. Given
the passage of time, I have no recollection of reading this correspondence at
the time, however I appreciate it is possible I may have done so. I expect that
given its nature, it would have been passed on to the office of the POL
Managing Director (at the time, Alan Cook), who will have been asked to look
into Mr Bilkhu’s matter comprehensively and to provide Mr Bilkhu with a
response as soon as was possible. The same approach will have been
followed as with any such correspondence. It would have been the POL team
who assigned the case to Michele Graves.
I do not believe I would have seen the response at the time, as POL was
dealing with it. I did not typically get involved in responses that were sent:
given my role, it would not have been possible for me to review each response
prepared and sent to customers or partners. However, I would have certainly
fully expected the respective teams to get to the bottom of any issue and that
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those who raised any issues, such as Mr Bilkhu, would have been treated
fairly.
78. Reading this correspondence now in the context of recent judicial findings and
with a greater understanding of what happened, I offer my utmost sympathy
to Mr Bilkhu for the serious injustice I now understand he must have endured
over a substantial period of time, and the impact it must have had on his life
and that of his family.
79. 1 do not recall receiving other letters from sub-postmasters on this topic.
80. I note that the Inquiry has also separately asked that I consider a document
titled “Initial Complaint Review and Mediation Scheme” which relates to Mr
Bilkhu (POL00034875). I am not able to comment on this as I was not involved
in the mediation scheme which it appears to relate to.
Computer Weekly article of May 2009
81. I have been asked to consider an article titled “Bankruptcy, prosecution and
disrupted livelihoods — Postmasters tell their story“ published in Computer
Weekly on 11 May 2009 (POL00041564). While I did of course do my best to
monitor press updates in the national media, I do not believe I read this article
at the time I was at Royal Mail.
82. As outlined above, I was not aware of any widespread issues with the
functionality of Horizon during my tenure.
PROSECUTIONS
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83.
84.
85.
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Generally speaking, responsibility for criminal prosecutions which POL
brought would have sat under the relevant POL Executive Team members
under the oversight of the POL Executive Team as a whole, the POL Risk and
Compliance Committee and POL Board. Were there any major or systemic
concerns, I would have expected these bodies to have reported or highlighted
any such issues to all of the following: the Royal Mail Board, the Company
Secretary, the Royal Mail Management Board and the Shareholder Executive.
As far as I am aware, I was not alerted by any party in the POL governance
system that there was a concern over a high number of prosecutions against
sub-postmasters, the conduct of civil proceedings relating to sub-postmasters
or any widespread concerns over the performance of the Horizon system.
In response to the questions I have been asked by the Inquiry, I should add
that I do not recall having involvement in or knowledge of the oversight of the
investigations and prosecutions brought by POL against sub-postmasters,
either for theft, fraud and false accounting for alleged shortfalls in branch
accounts, or for the recovery of such alleged shortfalls through the use of civil
proceedings.
As far as I can recall, I also did not have knowledge of or involvement in the
policies, guidelines and practices followed by POL when pursuing a civil action
against a sub-postmaster or in the investigation of alleged offences and
bringing of criminal prosecutions. The same is true for the conduct of audits of
the sub-postmasters’ branch accounts, and the practices and policies which
POL adopted in respect of suspending or terminating sub-postmasters’
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contracts. I was not aware of any systemic issues in respect of these matters,
and I cannot recall these being brought to my attention.
86. The Inquiry has also requested that I clarify the extent to which (a) I passed
on information about any concerns as to the reliability of data produced by the
Horizon IT system and (b) I managed or arranged the distribution of
information relating to the reliability of the Horizon IT system within POL. I was
not aware of any widespread concerns regarding the reliability of the Horizon
IT system, and therefore was not in a position to manage any information in
respect of it.
87. To the best of my knowledge, I do not recall reports of the number of
prosecutions being brought by POL against sub-postmasters being escalated
to me, nor the fact that there were systemic issues impacting the Horizon
system. I similarly do not recall hearing from any level of the organisation that
there were prevalent concerns with either such prosecutions, or any
widespread issues with the Horizon system.
Inquiry Disclosure
88. I was directed by the Inquiry to consider the Royal Mail Holdings plc Report
and Accounts for the year ended 29 March 2009 (the “Report’)
(FUJ00116857).
89. I would have considered the contents of the Report carefully and would have
believed that there were no material omissions or misleading statements
within it. I would have also been fully aware that before the draft version of the
Report was shared with me, the CFO’s team, supported by the Corporate
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90.
91.
92.
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Affairs team, would have gone through a number of iterations, including
reviews by the senior management team to ensure that their views of risk were
being properly expressed.
The “Principal Risks and Uncertainties” included in the Report would have
been carefully assessed (both ir’ scale and impact), by all relevant parties, to
represent the key risks for the Group, following a carefully formulated risk
framework. -
The Report outlines how risk was controlled internally (see page 35 of
FUJ00116857). This aligns with my recollection of the risk management
controls in place during my tenure. For example, a key way in which risk was
controlled was through the work of the Audit and Risk Committee, which was
assisted by internal and external auditors. It was in this forum that auditors
would report any Group risks. The Audit and Risk Committee also regularly
reviewed the Group’s risk profile to ensure the Royal Mail Board spent
sufficient time considering major risks facing the Group and the procedures in
place for managing them.
The Inquiry has also provided me with meeting minutes of the Royal Mail
Holdings ple Audit and Risk Committee on 10 November 2008
(RMG00000001). I note that there is a reference within it to the “POL Risk &
Compliance report” (ARC08/41), presented by Peter Corbett (POL Finance
Director) and Keith Woollard (POL Head of Compliance). In particular, at point
(e), the following is noted: “Losses: POL’s forecast for losses from controls
and compliance failures for 08/09 was £17.25m. This was broadly in line with
previous years and in our plan for this year, but within that losses through
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physical crime (robberies etc) were down whilst the discovery of sub
postmaster fraud had increased”.
93. The item says that losses were “broadly in line with previous years” and
importantly, that steps had been taken to address conformance and
compliance (at point (f), in fespect of the “POL Network Efficiency
Programme”). I would have therefore had no reason to believe that this was
not being sufficiently addressed within the POL governance structures and
that it required intervention at the Group level, from the Royal Mail Board
CIVIL PROCEEDINGS AGAINST MS WOLSTENHOLME
94. I have been asked by the Inquiry to consider three documents relating to the
civil proceedings against Ms Wolstenholme who I now know was the sub-
postmaster at the Cleveleys Post Office (POL00142503 - Email
correspondence from Rod Ismay to Donna Parker and others between 2 April
2004 and 26 July 2004; POL00118229 — Advice on Evidence and Quantum
by Mr Brochwicz-Lewinski dated 26 July 2004; POL00120833 — Sheet on
“Risk-Opps” in Excel spreadsheet). I do not recall being aware of these
proceedings at the time or having seen the documents which the Inquiry has
now provided to me.
95. To provide context, individual legal cases from any business unit would not
have been escalated to the Royal Mail Board level, unless the matters in
question represented matters which the respective heads of teams considered
to be systemic or wider issues that the Royal Mail Board needed to be
appraised of.
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THE IMPACT PROGRAMME
96. I have been asked to confirm my involvement with the design and
implementation of the IMPACT programme. I do not recall having any
involvement with this, and I also cannot recall the Royal Mail Board (or the
POL Board) discussing the fact that sub-postmasters would no longer be able
to place disputed discrepancies in a local suspense account and roll into a
new trading period as a result of the IMPACT programme.
REFLECTIONS
97. I have been deeply concerned by what I have read regarding the findings of
wrongful convictions by POL and the immense struggle so many have
endured in seeking justice.
98. I have sought to be as helpful as possible to the Inquiry in reflecting on what
could have been done differently and have shared my insights below.
98.1 Corporate structure: I did not have cause to question the corporate
structure of Royal Mail during my tenure. As context, this was a
challenging time during which Royal Mail (including Royal Mail Letters,
Parcelforce and GLS) needed to adapt to become a commercial
company in a market that was rapidly being exposed to competition on
all fronts. It therefore seemed appropriate to me that this required
commercial leadership from individuals with in-depth experience of
transformations and modernisation. POL had a different set of
objectives and priorities, given its recognised role as the “front window”
of Government services. Additionally, this explained why POL was
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funded by Government subsidies to support the network and therefore
why there was a need for the Shareholder Executive to be kept
informed by the POL team on how this public funding was being utilised
and how network changes were progressing. It made sense at the time
that POL had a largely separate governance function, and that those
on the POL Board had particular expertise and capabilities in working
with the Shareholder Executive to deliver the recognised objectives.
With hindsight, however, I believe that the corporate structure in place
at the time did not encourage the escalation of key information on
Horizon and prosecutions reaching me or the Royal Mail Board as it
should have done.
98.2 Transparency and due process: During my tenure, the Group was
undergoing a major transformation and consequently, there was a clear
understanding from the Royal Mail Board downwards that there was a
lot to be addressed, and that this would require openness and
transparency about any problems that existed or that arose. My view
was and has always been that the more openly problems are raised
and confronted, the better chance we have of fixing them. While the
culture improved over time within Royal Mail Letters, Parcelforce, GLS
and the Group generally, it is now clear that there must have been a
marked lack of transparency within POL which meant that serious
failings at POL took far too long to surface to senior management.
98.3 Horizon system: As I mentioned above, during my time at Royal Mail, I
do not recall any evidence being raised at the Royal Mail Board level
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that suggested a widespread issue with Horizon was impacting the
POL network and sub-postmasters. In the absence of such evidence,
it would therefore have been difficult for the Royal Mail Board to
challenge POL’s decision-making. However, over the last decade, it
has become reasonably standard practice, or at least common, to
introduce third party validation partners to assess the performance of
largescale IT programmes. With hindsight, this is something that POL
should have done at an earlier stage.
99. If there are any additional documents that shed any further light on the issues
the Inquiry is reviewing, I would be very willing to review correspondence and
assist the Inquiry further in that regard.
Statement of Truth
Dated: 28 February 2024
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Index to First Witness Statement of Adam Crozier
No. URN Document Description Control Number
1. I RMG00000032 Royal Mail Holdings plc Board of I VISO0007440
Directors Meeting Minutes of
10/01/06
’
2. I RMG00000039 Minutes: Royal Mail Holdings pic I VISO0007447
Board of Directors Meeting
Minutes of 27/01/10
3. RMG00000029 Minutes: Royal Mail Holdings ple I VISO0007437
Minutes of Board of Directors
meeting of 06/02/2007
4. I POL00090428 Annex to Second Supplement POL-0087397
Agreement
5. I FUJ00118186 POCL and ICL Pathway 'Third I POINQ0124350F
Supplemental Agreement’
6. I FUJ00098040 Presentation on Horizon and POINQ0104211F
Horizon Online
7. I POLO00021492 Minutes: Minutes of POL Board I POL0000025
meeting on 20th April 2006
8. I RMGO0000033 Minutes: Royal Mail Holdings ple I VIS00007441
Board of Directors Meeting
Minutes of 27/04/06
9. RMG00000030 Minutes: Royal Mail Holding VIS00007438
Board of Directors Meeting
Minutes of 02/08/06
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10.
POL00001304
Documents consisting of 'tab 3' -
possibly part of wider bundle -
relating to Bowburn Post Office
VIS00002318
11.
POL00034875
Post Office Initial Complaint
Review and Mediation Scheme
Investigation report (Mr Rajinder
Bilkhu)
POL-0031810
12.
POL00041564
Bankruptcy, prosecution and
disrupted livelihoods -
Postmasters tell their story;
reported by Rebecca Thomson
POL-0038046
13.
FUJ00116857
Report and Accounts Year
ended 29 March 2009 including
Post Office revenue
POINQ0123028F
14.
RMG00000001
Minutes: Royal Mail Holdings pic
Audit and Risk Committee
minutes of 10/11/08
ViIS00007409
15.
POL00142503
Email from R Ismay to D Parker,
M Talbot and others; 'Legal
case - Cleveleys PO 153 405
Mrs J Wolstenholm'
POL-BSFF-
0001779
16.
POL00118229
Advice on Evidence and
Quantum by S.A Brochwicz-
Lewinski in POCL v Julie
POL-0120149
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Wolstenholme, Case No.
CR101947
17. I POL00120833 IT Spend - P12 Reconciliation POL-0126849
with Next Steps; Risk-Opps and
Forecast Analysis.
7
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