1 Wednesday, 19 June 2024 2 (9.45 am) 3 MR STEVENS: Good morning, sir. 4 SIR WYN WILLIAMS: Morning. 5 MR STEVENS: Can you see and hear me? 6 SIR WYN WILLIAMS: Yes. 7 MR STEVENS: Thank you, sir. Before we hear from 8 Mr Christou, I should just say that we will be having 9 the usual fire alarm at 10.00. 10 SIR WYN WILLIAMS: Yes. 11 MR STEVENS: As usual, I propose we just sit through that. 12 SIR WYN WILLIAMS: Yes, of course. 13 MR STEVENS: If I can call Mr Christou. 14 RICHARD CHRISTOU (sworn) 15 Questioned by MR STEVENS 16 MR STEVENS: Please could you state your full name? 17 A. Richard Christou. 18 Q. Mr Christou, thank you very much for attending the 19 Inquiry today and thank you for the two witness 20 statements you have provided. I want to turn to those 21 first. You should have a bundle of documents in front 22 of you. Could I ask you to open that and have the first 23 witness statement in front of you. 24 A. I do. 25 Q. Thank you. Is that dated 20 March 2023? 1 1 A. Yes. 2 Q. For the record, that has Unique Reference Number 3 WITN03840100. Could I ask you please to turn to 4 page 29. 5 A. Yes. 6 Q. Is that your signature? 7 A. It is. 8 Q. Could I ask you then to turn to your second witness 9 statement, dated 9 May 2024. 10 A. Yes. 11 Q. For the record, that is reference number WITN03840200. 12 Now, before I ask to turn to your signature, there's one 13 correction I believe you want to make -- 14 A. Yes. 15 Q. -- which is at page -- bear with me sorry -- page 21, 16 paragraph 103. 17 A. That's correct. 18 Q. I'll just wait for that to come up on the display. 19 There we are. So, as I understand it, it's the last 20 sentence of paragraph 103 and the correction should be 21 in schedule A02 to change the paragraph number to 4.1.8. 22 A. That's correct. 23 Q. Is it the same for schedule A4? 24 A. Yes. 25 Q. Thank you. With that correction in mind, could I ask 2 1 you please to turn to page 27 of your statement. 2 A. The second witness statement? 3 Q. The second witness statement, sorry, yes, thank you. 4 A. Yes? 5 Q. Is that your signature? 6 A. Yes. 7 Q. Are the contents of both of those statements taken 8 together true to the best of your knowledge and belief? 9 A. Yes. 10 Q. Thank you very much. Now, those witness statements now 11 stand as evidence in the Inquiry. They will be 12 published on the website in due course. I have some 13 questions for you about them but not all issues that you 14 raise within them. I want to look at an exhibit in your 15 witness statement first, if I may, and that's -- if we 16 can bring up the first statement, please, and page 30. 17 A. I'm looking at the wrong statement. 18 Q. Yes, it will be on the screen shortly, as well. So this 19 is a CV that you've annexed to your witness statement. 20 If we could go to the bottom of the page, please, we see 21 that you qualified as a solicitor in 1969 -- 22 A. Yes. 23 Q. -- and, thereafter, from 1970 to 1990, you held various 24 roles in the companies listed in the middle column. 25 A. Yes. 3 1 Q. Now, of those roles were you acting as an in-house 2 solicitor for -- where it says legal adviser, is that 3 akin to in-house solicitor? 4 A. Yes. 5 Q. We see from 1982, the two roles you had with, first with 6 STC Telecommunications and then with Solaglas (UK) 7 Limited you acted as company secretary? 8 A. That's correct. 9 Q. Finally, from 1987 to 1990, it says, "Director, 10 Commercial & Legal Affairs" of STC Plc. Did you sit on 11 the Board of that company? 12 A. No, it was what I described as a courtesy title. 13 Q. I want to now look at your roles from 1990 onwards, and 14 from that point you worked within the ICL Group? 15 A. Yes. 16 Q. When you joined in 1990, I understand that Fujitsu -- 17 I'll just use the single term without going into the 18 precise legal entities -- was a majority shareholder in 19 the ICL Group? 20 A. Yes. 21 Q. ICL, at that time, continued to have its own branding as 22 ICL -- 23 A. Correct. 24 Q. -- but, in 2002, the brand changed from ICL to Fujitsu? 25 A. Yes. 4 1 Q. Could we look, please, in your second statement at 2 page 3, paragraph 10. 3 A. Yes. 4 Q. So it's been some time since the Inquiry has considered 5 the corporate structure for Fujitsu, so I think it's 6 helpful to go over it. You helpfully here set out the 7 key or relevant companies within the ICL Group, at 8 paragraphs (a) to (e), on the left, with the name before 9 the change of brand in 2002, and, on the right, when it 10 became a Fujitsu-branded company? 11 A. That's correct, yes. 12 Q. So at the top of the corporate pyramid, as it were, we 13 have ICL Plc, which was the ultimate holding company for 14 the group? 15 A. Yes. 16 Q. We see that became Fujitsu Services Holdings Plc in 17 2002. 18 A. Yes. 19 Q. Beneath that (b) there's International Computers 20 Limited, which was a wholly-owned subsidiary of ICL Plc? 21 A. Correct. 22 Q. International Computers Limited carried out ICL Group's 23 UK operations; is that right? 24 A. That's correct, yes. 25 Q. That became Fujitsu Services Limited -- 5 1 A. Yes. 2 Q. -- which from roughly 2002 onwards it became the 3 contracting party for the Horizon contract? 4 A. Yeah, precisely in April 2003 is when the change was 5 made but, yes, now it is, yes. 6 Q. Yes, 2003, sorry, you're quite right. What we see at 7 (c) is ICL Pathway Limited. Now, Pathway, when the 8 Horizon Programme was being tendered for, it was 9 referred to as the Pathway Programme? 10 A. Yes. 11 Q. ICL Pathway Limited was set up as a company in order to 12 tender for and deal with the Pathway Programme? 13 A. Yes, yes, that's correct. 14 Q. That, in itself, was a wholly-owned subsidiary of 15 International Computers Limited? 16 A. It started off as a consortium, there were two other 17 shareholders. From recollection, it was Girobank and De 18 La Rue but, shortly after, I think about a year after -- 19 1996 maybe -- ICL and the other two consortium members 20 parted company quite amicably and it then became 21 a wholly-owned subsidiary of ICL -- sorry, of 22 International Computers Limited. 23 Q. I think you're quite right, the De La Rue and Girobank 24 consortium was of sort of historic interest -- 25 A. Historic. 6 1 Q. -- for being a PFI deal, initially. For today's 2 purposes, from 1996 onwards, wholly owned by ICL -- 3 A. Correct. 4 Q. -- International Computers Limited? 5 A. Correct. 6 Q. Thank you. The final company we see there is (d), the 7 ICL Global Investments Limited. Now, I understand that 8 that was a subsidiary of the overall parent company ICL 9 Plc? 10 A. That's correct. 11 Q. ICL Global Investments Limited dealt with the ICL 12 Group's non-UK business? 13 A. That's correct. 14 Q. Let's turn, then, to look at your roles. You were 15 appointed as Director of Commercial and Legal Affairs of 16 International Computers Limited in 1990? 17 A. Yes. 18 Q. We don't need to turn it up but, in your first witness 19 statement, paragraph 5, page 2, you say that you were 20 responsible for the provision of legal and commercial 21 advice in connection with the participation of the ICL 22 Group in the tender for the Horizon IT System. 23 A. Yes, that's correct. 24 Q. So, in that role, and when dealing with the tendering 25 process and the Horizon IT System, which teams reported 7 1 to you? 2 A. Only legal personnel, no other persons at that stage. 3 There would have been some commercial people as well but 4 that's all. There were no operational people reporting 5 to me at all. 6 Q. Do you recall who operational people reported to? 7 A. They would have reported either directly or indirectly, 8 and I think directly, to Keith Todd at that stage. 9 Q. Could you explain where Keith Todd sat in relation to 10 you in the management structure? 11 A. I reported to Keith Todd. He was the Chief Executive. 12 Q. Now, at that stage, were you part of any management or 13 Executive Committee this within ICL -- sorry 14 International Computers Limited? 15 A. There was a Fujitsu -- sorry, it would have been ICL at 16 that stage -- ICL Management Committee, I suppose you'd 17 call it -- which met once a week, and we -- all of the 18 reports of the Chief Executive would sit round the table 19 and you'd discuss whatever matters came up. 20 Q. For the purposes of those management committees, was 21 there a hard line difference between, say, ICL Plc and 22 International Computers Limited? 23 A. I don't think people thought of it like that. 24 (Pause for fire alarm test) 25 Q. I say with trepidation that I think that's the end of 8 1 it. 2 A. We can carry on. 3 Q. Just for clarity, I was asking you about management 4 committees. 5 A. Right. 6 Q. The question I asked before we had the fire alarm was: 7 was there a hard line difference between the management 8 committees of, say, ICL Plc and International Computers 9 Limited? 10 A. As I said, I don't think people thought of it like that. 11 If you look at the composition of that management 12 committee, the people on it, of which I was one, were 13 probably called director of this and director of that 14 but none of them, except the Chief Executive, was on the 15 Board of ICL Plc. So, in that sense, yes, there was 16 a hard line, I suppose you could call it a hard line, 17 between them. But whatever went on there, it was the 18 Chief Executive's job, in due course, as a member of the 19 Board to produce his report to the Board. 20 Q. So in your role you would attend the Management 21 Committee -- 22 A. Yes. 23 Q. -- every week. You weren't a member of the Board of ICL 24 Plc -- 25 A. No. 9 1 Q. -- but would you be asked to attend on occasion? 2 A. I actually can't recall an occasion when I was asked to 3 attend. 4 Q. I've asked there about management committees of ICL Plc 5 and International Computers Limited; what about ICL 6 Pathway Limited: did that have a separate management 7 structure? 8 A. That had a separate management structure because, 9 obviously, it was originally set up as a consortium 10 agreement. They had their Board, and it was managed, 11 I suppose, quite a lot in the early stages, via the 12 Board. The Chief Executive would report to that Board 13 but, in practice, the Chief Executive reported to -- 14 well, he was called Managing Director -- reported to the 15 Chief Executive of ICL, who would have been Keith Todd. 16 Q. So would that mean the Managing Director of ICL Pathway 17 Limited came to the Management Committee meetings which 18 you attended for ICL -- sorry, International Computers 19 Limited? 20 A. Frankly speaking, I can't recall but I don't think so. 21 But I don't recall actually seeing him at a meeting. 22 Q. Whilst you were in your position as Director of Legal 23 and Commercial, did you attend the Board meetings of ICL 24 Pathway Limited? 25 A. Yes, I did. 10 1 Q. Can you recall who else attended those Board meetings, 2 in particular who from an IT background or an 3 operational background attended? 4 A. Let's think. The only one that springs to mind -- well, 5 of course, there was the Managing Director of Pathway, 6 who was then Mr Bennett, I think Mr Coombs attended as 7 well. I don't recall any other operational people. 8 Mostly, it was the Board originally, with some of the 9 representatives of Girobank and De La Rue, and they 10 actually stopped on for some time afterwards because 11 there were subcontracts with them. 12 Q. Let's turn then to your -- before I do that actually, 13 I should say, in your first statement, you go into, as 14 requested by the Inquiry -- an amount of detail in 15 relation to the Benefits Agency withdrawing from the 16 agreement. Those are Phase 2 issues that I don't 17 propose to cover with you today. 18 A. Right. 19 Q. You became Acting Chief Executive and, shortly after, 20 Chief Executive of ICL Plc in 2000? 21 A. That's correct, yes. 22 Q. Whilst you were Chief Executive, I understand you were 23 also a director of International Computers Limited? 24 A. When I was Chief Executive, I would have been a director 25 of ICL Plc in that sense. I mean, nobody really looked 11 1 at International Computers Limited as a separate 2 company, whether it's correct or not, it was, if you 3 like, all mixed together and the Board that, if you 4 like, was controlling the whole thing was the Board of 5 ICL Plc and yes, I would have sat on that when I was 6 Chief Executive as a Board member. 7 Q. In terms of the responsibility for overseeing the 8 Horizon IT System, at the time when you became Chief 9 Executive in 2000 at Board level, was that 10 a responsibility of ICL Pathway Limited, ICL Plc or 11 both? 12 A. I think at different levels it was both because, 13 clearly, ICL Pathway was executing the contract and 14 looking at it on a -- obviously, a day-to-day basis, 15 hourly, probably. But ICL Plc, obviously, as the 16 ultimate Board had responsible for the whole business, 17 including Pathway -- or Horizon, I'm sorry. 18 Q. This is quite a broad question but would you say that 19 the identification, analysis and management of risk is 20 important to the running of a company? 21 A. Of course it is. 22 Q. Would you accept that ICL Plc or the Board of ICL Plc 23 was responsible for overseeing how the Group or the 24 company, either ICL Plc or ICL Pathway Limited, 25 identified, analysed and managed risk? 12 1 A. Only in the broadest sense. 2 Q. Can you expand on that, please? 3 A. Yes, sure. If you look at a company the size of this, 4 it is not possible for every level of detail to be 5 surfaced to the Board. If every single document about 6 every single contract was surfaced to the Board, they 7 would not have time or capacity to understand it or to 8 consider it, even. So what is necessary is a filter 9 system, whereby overall the Board has to be satisfied -- 10 and this is what I've described in the second witness 11 statement, that there are flows of information in place 12 but one has to manage by exception, and people further 13 down in the organisation -- in this case the Managing 14 Director and the other responsible people in Pathway -- 15 had to deal with day-to-day matters. 16 And levels of a certain granularity, complexity, 17 would not come to the Board. The Board would have 18 certain reports and they would be satisfied with the 19 overall conduct of the business but precise details, no. 20 Q. The filters you've described, presumably the purpose of 21 those is to ensure that any serious matters that ought 22 to have the attention of the board, either of ICL 23 Pathway Limited or ICL Plc, ensure that those 24 significant issues make it to the Board? 25 A. Yes, I think that's correct. I'm saying ensure they 13 1 reached the Board provided people further down operate 2 the system properly, then they will reach the board. 3 They were issues that were serious -- in my second 4 witness statement, I refer to the red alert system -- 5 and those things did come to the Board. So details, 6 certain details, would not have come to the Board 7 because they were too complex, technical and too 8 detailed. 9 Q. Would you accept that, as Chief Executive, you had 10 a responsibility to exercise care to see that those 11 filters were working properly and people in lower down 12 executive levels were filtering information up 13 appropriately? 14 A. I'd accept that I had responsibility to set up the 15 systems, a lot of those systems were already set up 16 before I became Chief Executive. One has to delegate 17 and delegation in the organisation requires that people 18 further down make those decisions. It's necessary to 19 see that appropriate personnel are appointed and, at 20 various levels, that is always done. I should point out 21 that all of our employees are required, through the HR 22 system, to go through assessments as to capability, 23 et cetera, et cetera, on a regular basis and these are 24 filtered up and, if there were any concerns about the 25 competence of a person, the next level of management 14 1 would have dealt with it. 2 So I think, overall, I'm responsible -- and I accept 3 that -- for setting up the systems but it's people lower 4 down in the organisation who have to operate them. 5 Q. That's talking about responsibility for ensuring things 6 are working. I want to ask a slightly different 7 question about accountability. Would you accept that, 8 as Chief Executive, you were ultimately accountable for 9 the operations of the ICL Group? 10 A. I don't accept that. That's too broad. 11 Q. In terms of your accountability then, for the ICL Group 12 and its operations, what would you say your level of 13 accountability was? 14 A. What I was responsible for was that, as so far as 15 possible, to see that the operations of ICL were carried 16 out legally, were carried out profitably and to report 17 to my shareholders, Fujitsu Limited, various issues 18 insofar as it was necessary. 19 If you mean that I was responsible for the 20 miscarriage of justice then I don't accept that. It's 21 not to mitigate the miscarriage of justice, I hasten to 22 add, I think it's a gross miscarriage of justice, 23 I really feel for the subpostmasters and the postmasters 24 who are involved, but talking about accountability is 25 a different matter and, certainly, I knew nothing about 15 1 it. 2 Q. We'll come back to specific facts as we go. Before 3 moving on to look at the restructure, I just want to 4 ask, when you were Chief Executive, who did you report 5 to? 6 A. I will first have -- well, apart from the Board, in 7 actual fact, I reported to a Mr Naruto in Tokyo, he was 8 a very senior member of the IC -- sorry, Fujitsu Limited 9 Board, and he was the person who oversaw the purchase of 10 ICL by Fujitsu in 1990. After that, I reported to 11 a Mr Kurokawa, who was later president of Fujitsu, and 12 I reported to him for a long time, and following that 13 I would have reported to the next president and the next 14 president. 15 Q. In terms of as Chief Executive, your reporting lines, 16 who reported to you directly, who had responsibility for 17 the oversight of the Horizon IT System? 18 A. Very initially, and I'm talking about the 2000, Mike 19 Stares, I presume, would have reported -- he reported to 20 me. From July 2001, a Chief Operations Officer, 21 Mr David Courtley, was appointed and, from then on, he 22 was responsible for all of the operations within ICL, as 23 it was then, and all of the operation departments, 24 including Pathway, reported to him; he reported to me. 25 I kept the functional departments at that time, so 16 1 things like HR, Marketing and Legal. 2 Q. We, actually, I'll go slightly out of order, on the 3 matter of Mr Courtley. In April 2004, you became 4 Executive Chairman of what was then Fujitsu Services 5 Holdings Plc but had been ICL Plc? 6 A. That's correct, and he became Chief Executive. 7 Q. Now, you remained employed by the company on a full-time 8 basis, I understand? 9 A. Yes, that's why they called it "executive". I mean, we 10 know it has no legal significance, you're Chairman or 11 you're not Chairman, but that's what Fujitsu wanted to 12 use because that's what they thought it meant. 13 Q. Did your responsibilities change upon becoming Chairman? 14 A. Yes. They were much more focused outward, dealing, for 15 instance, with particular customers, a lot of them 16 overseas, because Mr Courtley had his hands full, 17 reorganising and dealing with the operating divisions 18 within what was then International Computers Limited. 19 So, to give you a small example, I went with the 20 president to Russia at one stage to look at their 21 operations there; I went to Finland; a bit later on, 22 I was on some Boards of Fujitsu America; and so on. 23 I mean the role grew, much more widely. 24 Q. The functional elements that you said you kept when 25 Mr David Courtley became Chief Operating Officer in July 17 1 2002, did you pass those functions down to 2 Mr Courtley -- 3 A. Yes. 4 Q. Yeah. 5 A. Sorry, I shouldn't cut you off. Yes, the answer is. 6 Q. I was going to say when you became Executive Chair? 7 A. Yes, yes, exactly. 8 Q. What was your working relationship like with 9 Mr Courtley? 10 A. Very good. I'd known him for some time, actually. He 11 worked previously for EDS and we first came across each 12 other in a kind of contract dispute, as it happens, 13 between ICL and EDS, and we had a great mutual respect. 14 I thought he was a -- first of all, he was more of 15 a technician than I. He actually had a degree in 16 mathematics. That's what you got in those days if you 17 were going to be a computer scientist. So he was much 18 more technically oriented than me and he was also what 19 I'd describe as better at growing the business than me. 20 I was, if you like, clinical and the turnaround 21 I did in ICL, during those first years, was something 22 that needed a really clinical, objective view of the 23 issues. He was concerned much more with growing the 24 business and this was one of the reasons why he was 25 employed. 18 1 We had our offices next door to each other. We'd 2 have coffee together and chat. If there was anything 3 that was concerning him, he would have raised it with 4 me. 5 Q. You say in your witness statement you had regular weekly 6 meetings with all your direct reports, including 7 Mr Courtley? 8 A. Yes, yes. 9 Q. Did that continue when you were Executive Chairman? 10 A. No, not in the same way. I would have had -- the weekly 11 meetings I would have had would have been with 12 Mr Courtley and with the functional people. But not 13 with the operational people underneath, that was for 14 Mr Courtley to deal with, including Horizon. 15 Q. Aside from the matters that you raise in your witness 16 statement, such as various red and amber alerts, can you 17 recall Mr Courtley expressing any concerns to you as to 18 the adequacy of the Horizon IT System? 19 A. No. 20 Q. I want to look at the restructure now, it's jumping 21 back, I appreciate. Please could we bring up 22 FUJ00003693. 23 A. Yeah. 24 Q. This is set of minutes for ICL Pathway Limited -- 25 A. Yes. 19 1 Q. -- so the specific company, 15 August 2000? 2 A. Mm-hm. 3 Q. At this time you were Acting Chief Executive, I believe? 4 A. That's correct. That -- just about, yes. 5 Q. We see you are chairing the meeting. 6 A. Mm. 7 Q. If we go down slightly, further down, please. Thank 8 you. 9 Sir, I should just say, at this point, when looking 10 at minutes, you may see the Post Office highlighted at 11 various points -- you'll see it there -- that wasn't on 12 the original minutes. That's something that's added 13 afterwards. 14 A. Okay. 15 Q. So just a point of clarification. 16 A. Yeah. 17 Q. So you've got various things of headcount requirements 18 for testing, and then we have the Managing Director's 19 report. 20 A. Mm. 21 Q. Go over the page, please. We see there quite a detailed 22 report from the Managing Director -- 23 A. Yes, yes. 24 Q. -- on various parts. 25 A. Yes. 20 1 Q. (b) CSR+ -- that's Core Systems Release Plus -- was 2 a significant issue? 3 A. Yes. 4 Q. It provides detail; (c) we have detail on the rollout; 5 and (d), weekly service performance is still a key 6 issue. 7 A. Mm. 8 Q. Was this typical of the type of oversight that the Board 9 of ICL Pathway Limited would give to the delivery of the 10 Horizon contract? 11 A. Yes, I think that's -- yes, I mean, obviously, it varies 12 with time but this is the sort of report that we got, 13 yes. 14 Q. In fairness, this is rollout, so it's a busy time for 15 the company? 16 A. No more busy than in the development. I think, in 17 a sense, once they got through the acceptance test, 18 which I'm -- they would have done by then, I think, 19 rollout is a logistics issue, rather than a -- it's much 20 more straightforward in a sense. There's a lot of 21 planning to do but it's a logistics issue, mainly. 22 Q. Can you recall how often the Board of ICL Pathway 23 Limited would meet? 24 A. No. 25 Q. Can we look at your witness statement now, please, 21 1 page 4, paragraph 15. So you discuss here part of the 2 restructure -- 3 A. Yeah. 4 Q. -- and say: 5 "In order to make Board meetings of all three 6 companies more efficient ..." 7 When you say "all three companies" there, you're 8 referring to the ultimate parent company, Fujitsu 9 Services Holdings, Fujitsu Services Limited, the sort of 10 intermediate company -- 11 A. Yes, there's those two. 12 Q. -- and then the other -- I think the third company is 13 the one responsible for non-UK business? 14 A. That's correct. It was all three of those. 15 Q. The Board decide to delegate the oversight of all of the 16 companies to a single management, known as the Fujitsu 17 Services Management Committee? 18 A. That's correct, it was a Fujitsu Limited decision. 19 Q. When you say Fujitsu Limited, can you just explain the 20 corporate identity of Fujitsu Limited? 21 A. Yes, Fujitsu Limited is the ultimate holding company of 22 Fujitsu. It's quoted on the Tokyo and, I think, the 23 New York Stock Exchanges. It's an interesting company 24 because it's not only a holding company but it also runs 25 all of the operations in Japan as well. 22 1 Q. Is it incorporated in Japan? 2 A. Oh, yes, yes. 3 Q. So do I understand you to say that this decision was 4 made by that company in Japan not an ICL Group or UK 5 Fujitsu? 6 A. No, no, they -- I mean, it's a practical matter that 7 they wanted to look at the business as a whole, and 8 there are a lot of Japanese directors and observers 9 coming in all the time and to have three separate 10 meetings just wasn't efficient. So we dealt with 11 everything at one meeting and the meetings would go on 12 all day. 13 Q. So when you discuss efficiency, you're using it in the 14 sense of the word from the holding company above Fujitsu 15 Services Holdings, their efficiency, really. 16 A. Yeah. 17 Q. -- they come in and have fewer meetings? 18 A. Well, yes, but it didn't impact on the consideration of 19 issues, it was just that we had a very long meeting on 20 one day. 21 Q. Could we just then turn to page 12 of your statement, 22 paragraph 55. Sorry, second statement. 23 A. Yes -- 24 Q. For context, in this you're talking about quarterly 25 business reviews, and you say: 23 1 "For a complete set of meetings comprising this 2 cycle [the corporate business review cycle, I think] see 3 the four FSMC [so Fujitsu Services Management Committee] 4 meetings in 2005 ..." 5 So do we take it from that that the plan was for the 6 FSMC to meet four times a year or quarterly? 7 A. That's correct. It fit in with Fujitsu's quarterly 8 reporting obligations as a quoted company, and I can 9 expand if you wish but that's the answer to the 10 question. 11 Q. So the follow-up question I have is: from the 12 perspective of, say, a director on ICL Plc, when this 13 change was made, did it result in fewer Board meetings 14 each year? 15 A. No. 16 Q. So before the change, it was -- 17 A. It was exactly -- it was following exactly the same 18 schedule from 1990 because, from 1990 onwards, Fujitsu 19 Limited had the same reporting requirements as it did in 20 2000. In fact, when ICL was taken over, it had to 21 change its accounting year to correspond with the 22 Fujitsu accounting year, so that the system would work. 23 So this is a long-established tradition. 24 Q. That document can come down, please. 25 Can we please look at FUJ00003704. We see these are 24 1 minutes of the Fujitsu Services Management Committee on 2 29 May 2002. 3 A. Yes. 4 Q. In your witness statement, you say that this is the 5 first meeting of the FSMC. 6 A. Yes, because it took place -- we switched the brand, if 7 you'll remember, on 1 April 2002, again to coincide with 8 Fujitsu's financial year. Everything happens at the 9 beginning of the financial year with Fujitsu, and that 10 was the first meeting that we held. 11 Q. We see that, at this point, that one of the companies 12 included in this isn't what was ICL Pathway Limited? 13 A. No, that's correct and it wouldn't be because it was 14 just an operation, just like a lot of other operations, 15 and you've got Mr Courtley there, who is responsible for 16 all those operations. So it wouldn't be appropriate. 17 Q. If we can go down, please, we see at the bottom we have 18 your CEO report, and you're talking about the financial 19 year and about the restructuring. 20 A. Yes. 21 Q. If we can go to page 3, please, the CFO report? 22 A. Yes. 23 Q. Just scrolling down, we don't need to read all of this, 24 but we see quite a detailed report which continues until 25 page 8 -- 25 1 A. Yes. 2 Q. -- and we have here Mr Courtley presenting the new 3 organisational model. 4 A. Yes. 5 Q. In terms of the new organisational model, and I'm only 6 really focusing on oversight of Horizon here, what 7 changes were made to the management structure that 8 affected the oversight of the Horizon IT System? 9 A. In actual fact, none at this stage. You see the one 10 that says, "Large projects, reporting direct to 11 Mr Courtley"? 12 Q. Yes. 13 A. Well, one of those large projects was, at that time, 14 Pathway -- I've forgotten what it would be called now, 15 ICL Pathway Limited, I suppose -- and what happened, 16 just to -- if I may, to finish it -- in 2003, when we 17 entered into the extension agreement, it was agreed with 18 the Post Office that we would shut down the actual 19 Pathway company, it would become dormant, and large 20 projects would then comprise a division within Fujitsu 21 Services Limited, which comprised the Horizon project, 22 and that division became one of the five large projects, 23 each of which had a division, if you like, reporting to 24 Mr Courtley. 25 Q. The only thing, I think, just to clarify there, when you 26 1 say the "extension", you mean the extension of the date 2 for termination of -- 3 A. Exactly. 4 Q. -- the Horizon contract -- 5 A. Yes. 6 Q. -- and it then extended to 2010? 7 A. Precisely. 8 Q. At this stage then, so we're in 2002, can you recall 9 what, if any, Board meetings were held by ICL Pathway 10 Limited? 11 A. No, is the answer. I may have attended some but, 12 without you showing me documents at this minute, I don't 13 recall. 14 Q. Is it fair to say from your perspective at this stage 15 you saw the responsibility as being on Mr Courtley to 16 present any issues with the Horizon project to the 17 FSMC -- 18 A. That's exactly correct. 19 Q. -- or that -- 20 A. Well, or to me. 21 Q. Or to you in the -- 22 A. Yes, and then I would have presented it but that's 23 correct. 24 Q. That document can come down. Thank you. 25 Do you think the restructure had any effect on the 27 1 level of oversight that ICL Pathway, then Fujitsu 2 Services Holdings limited, had on the Horizon IT System? 3 A. I think it would have had a beneficial effect because 4 what you have now is Mr Courtley, who has great 5 experience in IT, he's much more technically oriented 6 than me, and I believe it would have been, let's say, 7 a more -- more piercing oversight is the word I would 8 use, yes. 9 Q. Before I move on to look at a couple of specific topics, 10 just for the purposes of the timeline, I want to 11 complete your sort of career history. In April 2007, 12 you became Corporate Senior Vice President and Head of 13 Fujitsu EMEA Regional Operations for Fujitsu Limited? 14 A. Yes. 15 Q. So that's the overall parent company incorporated in 16 Japan? 17 A. Yes. 18 Q. Did you remain a director or involved in Fujitsu 19 Services Limited or Fujitsu Services Holdings Plc? 20 A. I would still, from my recollection, be chairing the 21 FSMC. That's the limit of it. So, from that stage 22 onward, anything that I really knew about operations 23 within that group of companies would have come via the 24 FSMC meetings. 25 Q. And at that stage, would you have had -- sorry, I'll 28 1 rephrase that question. 2 Did Mr Courtley report to you directly or indirectly 3 once you became Corporate Senior Vice President? 4 A. I'm trying to think. I'm thinking very carefully about 5 the answer so I can give it to you. It would have been 6 directly, in a sense. There was still a line but that 7 line would have been fairly tenuous. I mean, at that 8 stage, he was acting like any Managing Director or Chief 9 Executive of a subsidiary, reporting to what I described 10 as a holding company. So there was a line but he was 11 running the business as he saw fit, I had confidence in 12 him and that was it. Yeah. 13 I was ultimately responsible, I think is the way 14 I will put it, for the way in which he managed the whole 15 of the business but that's like a normal Chairman of 16 a Board, in my view. 17 Q. What reporting line, if any, did you have to Mr Duncan 18 Tait? 19 A. Duncan Tait was -- I've got to think about this -- 20 I think -- and I'm saying I think -- that he came on 21 board -- he came from Unisys as a director -- courtesy 22 title -- of I think the commercial business unit in 23 those days, which I think had Pathway in it. He would 24 have reported to David Courtley. So it's a very 25 indirect line, as far as I'm concerned and, by the 29 1 time -- don't forget, by the time he came on board, 2 I was practically based in Tokyo. I mean, I went to 3 live in Tokyo in 2010 so, yes, I knew him. 4 I had a lot of respect for his competence. 5 Mr Courtley left in 2009, I think. There was a short 6 interim period when I just sort of held the reins. 7 I don't know if -- I wouldn't say I was overseeing 8 anything in particular. I appointed Roger Gilbert for 9 a short time as Chief Executive of what was then Fujitsu 10 Services Limited. We had broken -- I've got to go back 11 to this, but we broke up the original group once we were 12 reorganising as a global business group and what was 13 there was Fujitsu Services Limited. ICL Plc was -- it 14 was a legal entity but it was not really managing, in 15 any sense of the word. 16 So Duncan Tait was in charge of commercial unit. 17 Pathway was in it. There came a time in 2010 when we 18 wanted to make a more permanent Chief Executive for 19 Fujitsu Services Limited. There were two people who 20 were candidates and about my last executive decision, if 21 you like, was with the consent of Fujitsu Limited, my 22 colleagues on the Board as it would have been in these 23 cases, I appointed Duncan Tait as Chief Executive of 24 Fujitsu Services Limited. That's 2011. 25 At that stage, I retired, in effect, because, 30 1 frankly, at 67 this was becoming a bit too much for me, 2 and I spent a year -- Fujitsu Limited tends to give its 3 directors a kind of sabbatical before they retire, is 4 the way it works, and I took my sabbatical in Singapore, 5 I was kind of a corporate executive adviser but I didn't 6 really do anything much and then I left, returned to 7 England, and that was the end of it. 8 Sorry, I can stop. 9 Q. Before I -- 10 A. Yes? 11 Q. -- move on, do you recall at any point Mr Tait advising 12 you of any concerns he had about the Horizon IT System? 13 A. The only connection that I had with him in this issue is 14 the document which you showed me, I can't remember the 15 name of it, an exchange of emails, in which he wanted to 16 set up -- 17 Q. Well, if that's your only recollection -- 18 A. That's the only -- I can't remember whether it happened 19 or not, to be honest. 20 Q. We'll come to that shortly. 21 A. Yes, yes. But that's all. Nothing else. 22 Q. We're going to move to a different topic now. Can we 23 please bring up your first witness statement, at 24 page 22, paragraph 67, so you write at paragraph 67 25 that: 31 1 "I have been asked whether or not Horizon could be 2 considered a robust system. In all my experience of 3 over 40 years working in the Telecommunications and IT 4 industry I have never across the use of the word 5 'robust' as a contractual term. With respect, I think 6 it is a subjective term without any precise legal 7 meaning. I believe that the only pertinent questions in 8 relation to the Horizon system are, (a) did the system 9 pass the acceptance tests, and (b) was it delivered in 10 accordance with the contract. Both of these conditions 11 were satisfied at the end of rollout in 2002." 12 So, effectively, as I understand it, you're saying, 13 from your perspective, the key questions are: (i) the 14 product produced by Fujitsu and delivered to the Post 15 Office, did it pass the contractual acceptance test? 16 A. Yes. 17 Q. Secondly, in respect of the ongoing obligations, was 18 Fujitsu delivering those in accordance with the 19 contractual standards that had been agreed between the 20 parties? 21 A. Yes. 22 Q. Could we please look at page 26, paragraph 79. You say: 23 "My objectives in negotiating the Codified Agreement 24 ..." 25 Now, pausing there, the Codified Agreement was the 32 1 agreement entered into between Post Office -- then Post 2 Office Counters Limited -- and ICL Pathway Limited in 3 1999? 4 A. Yes. 5 Q. So the objectives in negotiating that were: 6 "... to create a detailed specification and precise 7 acceptance criteria." 8 When you say "detailed specification", is that 9 referring to a specification of the services that ICL 10 Pathway were to provide to Post Office? 11 A. That specification that I was focusing on was 12 a specification of the system. 13 Q. Okay. So -- 14 A. Because that's what's passing the acceptance tests. 15 Q. So, when we're seeing a detailed specification, is that 16 referring to a set of contractual clauses that set out 17 the specification for the system that ICL were supposed 18 to deliver to Post Office under the contract? 19 A. Yes, it was in a schedule to the Codified Agreement. 20 Q. You say you: 21 "... focused on the main provisions of the Codified 22 Agreement, in order to achieve the above objectives. 23 I had little involvement in the preparation of the 24 schedules and appendices of the Codified Agreement, 25 which I never read." 33 1 A. Yes. 2 Q. I want to look at the Codified Agreement now. 3 A. Okay. 4 Q. It's FUJ00000071. This is a document of over 900 pages, 5 so it may be we need to catch up a little bit with the 6 computer system but this is the Codified Agreement. Can 7 we turn to page 12, please. 8 SIR WYN WILLIAMS: I'm sorry, what's the reference for that 9 again: 71 at the end? Thank you. 10 MR STEVENS: Yes, FUJ00000071. 11 SIR WYN WILLIAMS: Thanks. 12 MR STEVENS: If we could go to clause 102.1, please. So 13 that's an interpretation clause, which is standard in 14 these contracts. 15 A. Yes, yeah. 16 Q. It says: 17 "As used in this Codified Agreement: 18 "the terms and expressions set out in Schedule A1 19 shall have the meanings ascribed [to them] ..." 20 A. Yes. 21 Q. As is standard, for example, at 103.3, we see -- no, 22 sorry -- 23 A. Which one? 24 Q. Sorry, if we could go up slightly. I misspoke, sorry. 25 101.3. 34 1 A. Sorry. 2 Q. We see defined terms, as is standard, are capitalised, 3 so things like Contractor -- 4 A. I'm sorry, I'm lost here. Just tell me again? 5 Q. I'm so sorry. It's 103.3 (sic). 6 A. I'm not seeing that on the screen. 7 Q. Ah, right. 101.3, I've done the same again. 8 A. You want me to look at 101.3? 9 Q. 101.3, yes? 10 A. Okay. 11 Q. Can you see that now? 12 A. Yes, now I can, yes. 13 Q. It would help if I said the right clause. That would be 14 of assistance. 15 For example, it says "The Contractor", capitalised, 16 and, throughout this agreement, defined terms tend to be 17 capitalised -- 18 A. Yes. 19 Q. -- as standard. 20 A. Yes. 21 Q. So, in order to understand this agreement, you would 22 presumably accept that you need to be familiar with 23 Schedule A1? 24 A. This is the interpretations? 25 Q. Yes. 35 1 A. Yes. 2 Q. So -- 3 A. In that sense, I did read it, yes. 4 Q. I was going to say, putting yourself back, whilst you 5 may not have been au fait with everything in the 6 schedules you well have had some familiarity? 7 A. That's fine but I'm talking about the whole 900 pages. 8 Q. Yes, of course. Could we go, please, to page 17. If we 9 could go down to the bottom there. Thank you. We have 10 "Part 2: Performance of [Post Office Counters Limited] 11 Services and Supply of Products". Clause 201.2 says 12 this: 13 "Subject to clause 201.6 the Contractor shall be 14 responsible for meeting the requirements specified in 15 schedule A15 in accordance with the Solutions specified 16 in Schedule A16 by performing the Core System Services 17 referred to in Clause 201.3." 18 So, breaking that down, what we have here is, 19 firstly, there was a schedule A15, which set out Post 20 Office, it says, requirements for the contract. 21 A. Well, those particular specifications with the solutions 22 specified, yes. 23 Q. Yes. 24 A. Mm. 25 Q. There were solutions specified, as you say, in schedule 36 1 A16? 2 A. Yes. 3 Q. Now, when you were involved in the negotiation and the 4 tender, would you have been involved in considering the 5 requirements and solutions for the products? 6 A. No. 7 Q. The clause here then says that, in order to meet the 8 requirements, ICL Pathway had to perform the Core System 9 Services referred to in Clause 201.3. So, if we could 10 look at 201.3, please, which is on the next page. Thank 11 you: 12 "Subject to Clause 201.6 the Contractor shall 13 perform the following Core System Services in accordance 14 with all applicable provisions hereof ..." 15 So this is essentially setting out what ICL is 16 supposed to do under the contract -- 17 A. Yes. 18 Q. -- or part of it, I should say? 19 A. Part of it, yes. 20 Q. So this is a very important clause in the contract; 21 would you agree? 22 A. Yes. Yeah. 23 Q. Would you agree that it's fundamental to the 24 specification of the product and services to be 25 provided? 37 1 A. Well, it describes what they are and then you have to 2 look at the definition. So I suppose so, yes. 3 Q. We'll look at two of them. Paragraph 201.3.1 says that 4 ICL were to provide the development services pursuant to 5 clause 403 -- 6 A. Yes. 7 Q. -- and 201.3.3, also the operational services pursuant 8 to clause 405. 9 Can we look, please, at page 26, and go to 10 clause 403. So this is the clause that defines the 11 development services? 12 A. Yes, yes, yes, and it has loads of schedules attached to 13 it, so far as I can see, which would give you the 14 specification of the development. 15 Q. Yes. 16 A. Yes. 17 Q. At 403.2, it says, "development of EPOSS", that refers 18 to the Electronic Point of Sale System -- 19 A. Yes, yes. 20 Q. -- "as described in the Schedule F1". 21 A. Yes. 22 Q. Then if we can go over the page, I think, to clause 405, 23 we have the "Performance of Operational Services", and 24 it says: 25 "Subject to the Release Authorisation Board 38 1 authorising commencement of National Rollout of the Core 2 System and subject to Clause 201.6, the Contractor 3 shall, from the date of [Core System Release] 4 Acceptance, perform the following operational Services." 5 Now, these obligations effectively kick in after 6 acceptance? 7 A. Yes, after acceptance, and the way I think of these are 8 service provision and service provision obviously can't 9 start until you've got something rolled out that you can 10 provide the service for. So it develops progressively 11 as rollout takes place. Yes, yes. 12 Q. You say that you were involved in drafting precise 13 acceptance criteria for the -- 14 A. When I say I was involved, what I was involved in was 15 ensuring that the technical people actually did it 16 because one of the biggest failings in IT contracts is, 17 when they come down to it, they end up without 18 a specification and without acceptance criteria, I was 19 taught this from 1975. 20 Q. As part of that, you would have presumably needed to 21 review the contract and see what services or what 22 specification was being agreed? 23 A. No. It's not something that I would have looked at 24 because this was dealt with by people who were 25 responsible providing it, and they will produce the 39 1 necessary services. I wouldn't want to go beyond what's 2 in clause 405, and even that needed input from, if you 3 like, technical people who knew what to write in 4 clause 405. What I was concerned with was that it 5 happened, not with its content, and I wouldn't pretend 6 to be competent to criticise that content. 7 Q. So is your evidence that, in terms of internal lawyers 8 within ICL at this point, was -- well, I won't say "is 9 your evidence", I'll ask you. In terms of internal 10 lawyers within ICL at this point, were there any 11 lawyers, that you're aware of, who were monitoring or 12 reading what was in the schedules? 13 A. This would have been done by Masons. I'm sorry if we 14 are -- they're now Pinsent Masons, I think. These were 15 long-time solicitors. First of all, for STC, actually, 16 I knew them, and there was a person called Iain Monaghan 17 who was the head of a team of lawyers who was looking at 18 all of this and working with the technical people. It 19 wasn't done by lawyers within ICL, as it was in those 20 days, I suppose, but it was done by a properly qualified 21 Legal Team and Masons were expert in dealing with IT 22 matters. I used them on many occasions. 23 Q. But, presumably, someone within ICL would want to know 24 precisely the nature of the obligations that ICL was 25 signing up to? 40 1 A. Of course they would but they will be the technical 2 people who would then consult on the drafting with 3 Masons. 4 Q. So your evidence is, in terms of the lawyers, the 5 lawyers wouldn't have read the schedule F1 -- 6 A. No, no, I'm not saying the lawyers wouldn't. Masons 7 would have done, people in Masons. They had a whole 8 team, and they would have worked with the technical 9 people in ICL. I was there with Stuart Sweetman to 10 oversee that things happened and to look at any real 11 points of conflict in the main agreement, and I don't 12 think there were very many, actually. 13 Q. Well, let's look at schedule F01, it's page 587. So 14 this is the "EPOSS Service Definition" to which those 15 clauses we just looked at referred. 16 A. Yes. 17 Q. It says: 18 "This schedule details all the requirements relating 19 to the EPOS Service which the Contractor shall provide." 20 A. Yes. 21 Q. So your evidence is, as I understand it, that -- did you 22 not consider this to be a document that someone internal 23 to ICL or a lawyer internal to ICL would need to read to 24 understand the specification of the product that was 25 being provided? 41 1 A. The point is that there had to be competent legal advice 2 surrounding it. This was done by Masons and it was done 3 in accordance with what the technical people were 4 negotiating on both sides, Post Office and ICL. So what 5 would happen is there would be a lot of technical 6 discussions, they would be writing it and Masons would 7 look at this and turn it into, if necessary, rather more 8 legal wording. But, at the end of the day, the 9 substance which is provided in these schedules has to 10 come from the technical people on both sides, this is 11 how they worked it out, and there's nothing that I could 12 personally add to that. 13 Q. If you look down we see "Scope", and then it sets out 14 the four service boundaries. Further down, please, it 15 says, "Constraints", and we've got various paragraphs 16 there. We see, in the brackets, "R808" referring to the 17 requirements which we went to earlier? 18 A. Yeah. 19 Q. Can we go, I think, it's two pages, I think there may be 20 a blank page on the next page. Thank you. Just further 21 down, please. 3.8 says: 22 "EPOSS shall be a robust" -- 23 A. Ah, well, there you are. 24 Q. -- "POCL Service, including features to", and then it 25 goes on to set that out. 42 1 A. Well, it's quite clear that I never saw that and I can't 2 comment further. 3 Q. Is your evidence that the -- well, let me ask it another 4 way. 5 What was your understanding of the adequacy of 6 the -- or let me rephrase, sorry. 7 What was your understanding of what Fujitsu were 8 required to provide to Post Office in terms of the 9 adequacy of the EPOSS product? 10 A. I don't think I had any particular understanding, I know 11 what an EPOS product, is, point of sale, basically. 12 I had assumed there would be a specification for it and 13 that it would be supplied to that specification. 14 Q. I take it from your evidence that these types of matters 15 of whether the product was robust didn't arise in your 16 management discussions with your reports? 17 A. No. 18 MR STEVENS: Sir, that's probably a good time to take the 19 morning break. 20 SIR WYN WILLIAMS: Very well. What time shall we resume? 21 MR STEVENS: If we could say 11.10, please. 22 SIR WYN WILLIAMS: All right, thank you. 23 THE WITNESS: Thank you. 24 (11.00 am) 25 (A short break) 43 1 (11.11 am) 2 MR STEVENS: Good morning, sir, can you still see and hear 3 me? 4 SIR WYN WILLIAMS: Yes, thank you. 5 MR STEVENS: Thank you, I'll carry on. I want to now look 6 at some specific examples of the management of the 7 contract. Please could we look at FUJ00080690. 8 This is a document the Inquiry has seen before, 9 particularly in Phase 2. The title is "Report on the 10 EPOSS PinICL Taskforce". 11 The date in the top, 14 May 2001, but we can see in 12 the abstract that it is referring to a task that 13 happened between 19 August and 18 September 1998. 14 A. Yes. 15 Q. Firstly, the distribution list: T Austin, M Bennett, 16 M McDonnell (sic); do you recognise those names? 17 A. Yes, both of them reported -- well, certainly Martyn 18 Bennett reported to the Managing Director of Pathway and 19 he was responsible for, I think, Quality and Customer 20 Services, from recollection. Terry Austin, I'm not 21 quite sure whether he reported directly to the Managing 22 Director or not. I don't really recall McDonnell. 23 Q. So did you ever have any direct interactions with 24 Mr Austin or Mr Bennett? 25 A. No, not that I can recall. 44 1 Q. If we turn the page, please, just for assistance with 2 dating the document, we can see version 0.1, 3 18 September '98 and then, on 14 May 2001, raised to 4 Version 1, "Administrative catch-up". 5 Could we go, please, to page 4., I'm just going to 6 go through a few bits of this document. I should ask 7 first, sorry: before you were sent this document by the 8 Inquiry, had you seen it before? 9 A. No. 10 Q. So in the "Introduction", it says: 11 "During the week commencing 17 August the EPOSS/ 12 Counter PinICL Stack Reduction Team, known as the 13 Taskforce, was established. The objectives, current 14 workload, composition, outline process and targets were 15 presenting to the team on Tuesday, the 18th with 16 a formal start date of Wednesday, 19 August." 17 It goes on to describe the presenting the outcome of 18 the activity and: 19 "... identifies factors which prevented the original 20 target (zero or near to zero residual PinICLs) being 21 met. During the course of the Taskforce it became clear 22 that there are significant deficiencies in the EPOSS 23 product, its code and design, and these are also 24 presented in this report." 25 Can we look then at page 7. There's a section on 45 1 the EPOSS Code. It says: 2 "It is clear that senior members of the Taskforce 3 are extremely concerned about the quality of code in the 4 EPOSS product." 5 We don't need to read it all but we see the last 6 paragraph in that section says: 7 "Lack of code reviews in the development and fix 8 process has resulted in poor workmanship and bad code." 9 Then if we could turn to page 17, please. At the 10 bottom, section 7.3., we see Example 1, and it gives 11 an extract of some code that's designed to reverse the 12 sign of a number and is equivalent to the command. 13 Fortunately, we don't need to concern ourselves with the 14 code itself, but over the page, it says: 15 "Whoever wrote this code clearly has no 16 understanding of elementary mathematics or the most 17 basic rules of programming." 18 So you say you hadn't read the document before? 19 A. I've never seen it. 20 Q. Never seen it. Were you made aware of the issues that 21 this document describes? 22 A. No. 23 Q. Do you accept that these are serious issues being 24 described by the document? 25 A. I'm not technically competent to say. I mean, for 46 1 instance, you say it's bad code: I've got no idea if 2 it's bad or good. 3 Q. Well, if you don't have technical competence, you 4 presumably need to rely on technical people? 5 A. Well, I would also point out to you that there's second 6 document which mentioned the CSR+, which you also sent 7 to me as the additional documents, and I looked at that, 8 and I can only give you my impressions because I've not 9 seen either of these documents, but I'm happy to do so: 10 the first is that was in 1998, before the Codified 11 Agreement. So water had flowed under the bridge for 12 almost a year in terms of the development. 13 And the second point is, if you look at the action 14 points in the CSR+ document, it talks about this, and -- 15 Q. We'll come to that shortly. 16 A. You'll come to that. 17 Q. Yes. 18 A. Okay, that's fine. I'm just saying you have to look at 19 both of them in context. 20 Q. I want to look at this one in context at the time that 21 it was drafted, as you say, in '98? 22 A. Yes. 23 Q. You've read this document, I've taken you to extracts 24 from it; do you accept that it's describing a serious 25 issue in the EPOSS code? 47 1 A. It's describing an issue which has got to be corrected 2 and that's what they're talking about. How serious it 3 is, I couldn't tell you. 4 Q. Why do you think that the issue being described in this 5 document was not raised with you at the time? 6 A. It's a technical issue and it's not something that would 7 have been raised at board level. That's what, I think. 8 I think this was too detailed for the Board. 9 Q. Well, this is going, really, isn't it, to the heart of 10 the product that's being produced by ICL. Do you accept 11 that? 12 A. I can hypothesise many reasons but I'm telling you that 13 it wasn't, and I can also say the reason that it wasn't, 14 so far as I understand these things, and I think 15 Mr Muchow -- I think he's called -- said much the same 16 thing in his evidence, not at that level of granularity, 17 and I'd agree with it. 18 Q. So your evidence is that this type of issue is something 19 that should be just dealt with at management level and 20 it shouldn't concern the Board? 21 A. It's a technical issue, which should be dealt with at 22 a technical level and, when we come on to the CSR+ 23 document, which you're coming on to, I think that's 24 clear to me. 25 Q. Well, let's look at that now. I think we're talking 48 1 about the same document. It's WITN04600104, please. We 2 have here a "Schedule of Corrective Actions, [Core 3 System Release Plus] Development Audit"; is this the 4 document you were referring to? 5 A. Yes, and you can see it's gone up to the Managing 6 Director, Stares, and Mike Coombs, and they're all down 7 here: Bennett, Jeram, Austin. Yes. 8 Q. Did you see this document at the time? 9 A. No. 10 Q. I think you said that you didn't? 11 A. No, I didn't. 12 Q. Can we please turn to page 4. The "Introduction" says: 13 "This document presents the Corrective Action Plan 14 that emerged from a post-audit meeting following the 15 audit of the operation of the CSR+ Development." 16 A. Yes. 17 Q. At page 6, we see the start of various report 18 observations and then, on the penultimate column, action 19 points -- 20 A. Yes. 21 Q. -- which I think you were referring to earlier? 22 A. Yes. 23 Q. Could we turn, please, to page 9. So we see in the 24 "Report Observation/Recommendation" it says: 25 "The audit identified that EPOSS continues to be 49 1 unstable. PinICL evidence illustrated the numbers of 2 PinICLs raised since the 1988 Taskforce and the rate of 3 their being raised. 4 "The EPOSS Solutions Report made specific 5 recommendations to consider the redesign and rewrite of 6 EPOSS, in part or in whole, to address the then known 7 shortcomings. In light of the continued evidence of 8 poor product quality these recommendations should be 9 reconsidered." 10 Now, before we look at the action points, can I ask 11 whether you recall any discussion that you were involved 12 with where management of ICL were considering or raising 13 rewriting the EPOSS application? 14 A. No. 15 Q. If we look in the "Agreed Action" points, 25/11 -- 16 A. Hold on, yes. 17 Q. -- it says, "Work on" -- sorry -- 18 A. The one above, isn't it? 19 Q. Yes, "Work on AI298", that's referring to an Acceptance 20 Incident, isn't it? 21 A. Yes, and it's something -- well, I understood this 22 because I've read the various documents. So far as 23 I can see, it's something to do with printer error and 24 printer handling, whatever that is, yeah. 25 Q. Well, 80 per cent of problems, this was saying, were to 50 1 do with error and printer error handling? 2 A. Yes. 3 Q. "Daily meetings instigated. TPA ..." 4 Does that refer to Mr Austin? 5 A. The answer is it might do or I don't know if he had 6 a "P" in his name. 7 Q. "TPA is of the view that while original code had not 8 been good it would be difficult to justify the case for 9 rewriting now." 10 There's then what appears to be copied from an email 11 from TPA: 12 "We have not formally closed down the recommendation 13 that we re-engineer the EPOSS application due to its 14 inherent instability." 15 It goes on in the final paragraph on this page: 16 "We will, of course, continue to monitor the PinICL 17 stack for the next few months and, if necessary, 18 re-evaluate this decision." 19 A. They say would -- close this issue formally, whoever Jan 20 is, "Would Jan please close this issue formally". 21 Q. Then if we turn the page, please, so that was 22 25 November '99. 23 A. Yes. 24 Q. We're now into December and then into 2000. On 10 May, 25 it says: 51 1 "Following response received from MJBC ..." 2 Is that Mike Coombs? 3 A. Yes, it is Mike Coombs. 4 Q. "As discussed, this should be closed. Effectively as 5 a management team we have accepted the ongoing cost of 6 maintenance rather than the cost of a rewrite. Rewrites 7 of this product will only be considered if we need to 8 reopen the code to introduce significant changes in 9 functionality. We will continue to monitor the code 10 quality (based on product defects) as we progress the 11 through the final passes of testing", and it continues 12 to closing the ticket? 13 A. Right. Yes. 14 Q. Now, there, when it says, "The management team", who is 15 being referred to there? 16 A. Mike Coombs would have been referring to all the people 17 that you saw on that CSR+ list, I presume -- the 18 management attempt within Pathway. 19 Q. Would you accept that what's being discussed here is 20 a significant decision as to whether or not to incur the 21 costs of rewriting the EPOSS application or accept the 22 costs of maintaining it in the state it's in? 23 A. I mean, I've seen this before but -- in some of the 24 witness statements or the questions. But I don't think 25 this is the issue. When you look at this, yes, there is 52 1 a cost to maintaining it and, if you like, there's 2 a penalty in that. But I've seen this many times with 3 software engineers. It's a bit like lawyers when they 4 review cases. Everybody has got their own opinion. 5 Software engineers always say -- some of them do -- 6 "Oh I could rewrite this and it's better". Well, maybe 7 they can and maybe they can't but, under the 8 circumstances of this contract, what the management team 9 decided -- and it's a technical decision, and they're 10 accepting, in my view, a cost penalty to do this because 11 it's safer to keep with the EPOSS, which is the thing 12 that you know, monitor it, and they say it's been 13 improved since 1998, we've moved on two years now, 14 nearly. It's a complete step into the unknown, to start 15 rewriting and if you rewrite a program from scratch, 16 you've got no idea is it going to work better; is it 17 going to work worse; will it fit in with everything 18 else? 19 From my opinion, it's a technical decision. Let's 20 suppose that they'd showed this to me or they'd showed 21 it to the Board. What would have been said was, "Well, 22 this is a technical decision, what do you advise?", and 23 that's what they advised. Nobody saw this outside of 24 them, but that's -- outside of Pathway but I don't think 25 it makes any difference. 53 1 Q. Well, let's stand back. ICL have contracted with Post 2 Office to provide a system on certain terms. 3 A. Yes. 4 Q. We saw earlier one of those terms was that it's robust? 5 A. Yes, we don't know -- and I insist on this -- we don't 6 know -- there's not a legal definition of robust that 7 I'm aware of. Maybe you have one, I don't know. But -- 8 whether it means -- comes, I think, from Latin, robur 9 strong, or something like that, able to withstand shots. 10 Q. Well, we'll come back to that point. The point is the 11 parties agreed that a robust system would be delivered; 12 is that fair? 13 A. It's in the contract. 14 Q. It's not for the technical people to determine whether 15 or not the ICL are acting in compliance with legal 16 obligations to Post Office, is it? 17 A. I think that's true but it's the technical people who 18 would, in the end, have to produce some opinions. 19 I think Adrian Montague did, at one stage, and said the 20 system was robust, whatever that means. But the 21 technical people would have to tell you. I can tell you 22 what definitions of robust -- I can look it up in the 23 dictionary but whether it applies to the system -- 24 Q. The technical people can provide you advice on the 25 application itself. 54 1 A. Right, and they advised that it was better to go ahead 2 with the -- not to go ahead with the rewrite but to go 3 ahead with that. I can't question that decision and 4 I didn't know about it. 5 Q. But would you not accept that the Board, in order to 6 understand whether or not its legal obligations are 7 being complied with, should be advised of serious 8 concerns in the product that's being delivered? 9 A. Not if the incident was closed. 10 Q. So is it your evidence that, once the technical people 11 have decided that this doesn't need to go to the Board, 12 that's it? 13 A. Yes. 14 Q. The end of it? 15 A. That's exactly what I think. 16 Q. In your view, what role, then, does the Board have in 17 overseeing the quality of the product that is being 18 produced or delivered to the Post Office in this 19 circumstance? 20 A. Right, the Post -- I'm sorry, not the Post Office. The 21 Board has to have overall responsibility for seeing that 22 there are properly qualified people who are doing 23 defined jobs in connection with the implementation of 24 the project. That's what I believe is the job. Their 25 second job is to trust those people and, when 55 1 appropriate, through the mechanisms that I talk about in 2 the second witness statement, to review progress on the 3 project, like all other projects. The Board is 4 dependent upon the reporting channels which provide 5 information to them, which, ultimately, via the QVRs and 6 all these other things we've described, turns up as the 7 Financial Officer's report and the Chief Executive's 8 report, which the Board considers. 9 I've also not talked about -- and I imagine you'll 10 come to that -- the particular Japanese oversight of 11 this but that's a different matter. It's in my witness 12 statement. 13 Q. So do I take it from your evidence that you're not 14 critical -- or, no, let me put it another way. 15 Are you critical of the management team for not 16 raising this with the Board? 17 A. No. 18 Q. What steps did you take, or the Board take, after 19 appointing the management team to monitor Pathway, to 20 ensure that they were doing a proper job? 21 A. I've told you. The reporting structures that I've 22 described -- 23 Q. Well, if you pause there. If the reporting structures 24 rely on the management team to flag problems to you, how 25 did the Board satisfy itself that problems were 56 1 appropriately being flagged? 2 A. Because they would question the Chief Executive. The 3 Chief Executive would, in the initial case, talk to the 4 COO and, later on, it would have been just the Chief 5 Executive. He would have had quarterly business reviews 6 with Pathway -- that's not Board meetings, this is 7 management meetings -- and those management meetings 8 would have surfaced to him anything that he thought 9 appropriate to report in his Chief Executive's report to 10 the Board. 11 And, I have to say, that when you talk about the 12 Board, you must remember that the Board is a majority of 13 Japanese directors, and I've talked -- I don't know 14 whether you want to come on to this -- about the flows 15 of information which actually existed outside of the 16 Board meeting reports to the Japanese directors in 17 Japan. And I can assure you, these were very detailed 18 dealt with by people who were on the ground within 19 Pathway. 20 I told you that we had a large team of software 21 engineers from Japan win the development at that time 22 that you're talking about. 23 Q. So that's a flow of information directly to Fujitsu 24 Limited? 25 A. The way it works -- and, if I may, I'd like to expand on 57 1 this because it is actually, in my view, really 2 critical -- the way Fujitsu worked was they had software 3 engineers embedded in the development, and there were 4 a large team of them. I can't remember the number. 5 There was actually a legal adviser from Japan. He was 6 a chap called Yasui, who I knew very well. He was 7 an interesting chap, he was qualified in the New York 8 bar and as an English solicitor. So you also had people 9 who -- well, there's the Chief Finance Officer, Adachi, 10 he reported direct to the Chief Finance Officer in 11 Japan. 12 All of this stuff is a huge amount of information, 13 which is what Japanese like, and it all went through 14 this overseas office, which is about 40 people in Tokyo, 15 and their job is to sit and collate all this information 16 and brief each Fujitsu director before that person gets 17 to the Board meeting. And I know this because when 18 I was in Tokyo, I was recipient of the same thing. 19 And I'll just tell you this and then I'll stop, I'm 20 sorry, but I talk too long -- they give you what's 21 called a "temochi" -- "te" means hand, "mochi" means 22 hold, and actually it means two things, something you 23 hold in your band, a handbook, or something that holds 24 your hand and looks after you, and what you get is an A5 25 book, about an inch thick -- it's literally like this -- 58 1 and inside it what you get is the answer to all the 2 possible questions that you could raise, or might raise, 3 when you go to a Board meeting. 4 Now, I'm not saying the English directors had this 5 but I'm saying that the Japanese directors, who were 6 a majority on the Board, who controlled the Board, had 7 it, and I can't believe that between all of this, if 8 there were serious issues that the Japanese were 9 concerned with, they would not have raised it through 10 that chain, as opposed to the standard reporting chain 11 that went up to the Board inside Fujitsu. That's all 12 I can say. But I know how detailed it is because I've 13 lived in Tokyo and I've been a recipient of it. 14 Q. So that's looking at a reporting line from what's 15 happening in ICL Pathway through to Fujitsu Limited, 16 incorporated in Japan? 17 A. Precisely. I mean, it was outside -- it's outside the 18 normal system. Nothing wrong with it. I'm not saying 19 it shouldn't have happened but I'm just saying it's at 20 least as important. 21 Q. I want to ask about -- we've discussed the Board of ICL 22 Pathway/ICL Plc. In terms of what sat below that -- so 23 the Management Committee, which we discussed 24 previously -- are you critical of the management team 25 that we referred to earlier in relation to the CSR+ 59 1 release, are you critical of them for not raising this 2 at the Management Committee? 3 A. You mean an FSMC, a Fujitsu Services Management 4 Committee? 5 Q. No, in the start of your evidence, we discussed the 6 Board and how often that met, and then I understood what 7 you said was there was a weekly Management Committee 8 meeting within ICL? 9 A. When it was -- and this is before my time, this 10 weekly -- let me be specific. In the times of ICL, 11 there was an ICL Management Committee. We talked about 12 that and I said that, at that time, the Pathway MD, or 13 whatever, did not attend that Management Committee. 14 When we are talking about my tenure, there was a weekly 15 management meeting. The Pathway would not have attended 16 that meeting, it would have been other people and, 17 particularly, once Courtley was there, no operational 18 people would have attended. 19 Where I could criticise -- and this is hypothetical 20 because I don't know -- is whether this was ever 21 surfaced during the preparations for the quarterly 22 business reviews and that I can't tell you but, 23 certainly, the quarterly business reviews that fed into 24 the board didn't contain that. I say maybe they should, 25 maybe they shouldn't, but I don't know. 60 1 Q. Let's break this down. 2 A. Yeah. 3 Q. Before 2000, so before you're Chief Executive, at ICL 4 Plc level, are there weekly management meetings? 5 A. No, these were -- there were operational meetings at the 6 Group level yes. I suppose you'd call it that. Nobody 7 really thought about ICL Plc; they just thought about 8 ICL. 9 Q. So at the Group level? 10 A. At the Group level, yes. 11 Q. Just to be clear on the timeline, at that point, was the 12 Managing Director of Pathway attending the group level 13 management meetings? 14 A. No -- 15 Q. How -- 16 A. -- not so far as I can recall. That's all I can say. 17 Q. From your recollection, so we're clear on this, how were 18 issues regarding Pathway raised at the ICL Group level? 19 A. They were raised by the Chief Executive -- Keith Todd, 20 in that case -- reporting to the Board. 21 Q. So the reporting line would be Managing Director of ICL 22 Pathway -- 23 A. Yes. 24 Q. -- reports to Keith Todd -- 25 A. Yes. 61 1 Q. -- and then it's Keith Todd's responsibility to consider 2 whether to pass that on to the Management Committee? 3 A. That's correct, yes. 4 Q. At that stage -- 5 SIR WYN WILLIAMS: Excuse me, rather than deal with this in 6 the abstract, can we just go back to this particular 7 issue relating to EPOSS, to which the Inquiry has 8 devoted a significant amount of time. 9 Is it your view, Mr Christou, that the issues 10 relating to EPOSS were appropriately -- in inverted 11 commas -- "managed" by the team that took the decision 12 or is it your evidence that the team that took the 13 decision should have reported it upwards to someone? 14 A. No, my evidence and my belief is that they took the 15 appropriate action, and that was the end of it. 16 SIR WYN WILLIAMS: Right. You would not have expected them 17 to have gone any higher than they did, in effect? 18 A. No, I wouldn't. 19 SIR WYN WILLIAMS: Right. Okay. I understand. Because it 20 seems to me, with respect to you both, that, whether or 21 not something goes higher, must relate to the specific 22 topic under consideration, rather than a general 23 discussion, if I can put it in that way. 24 MR STEVENS: Yes, sir, thank you. 25 A. Yes. 62 1 MR STEVENS: Let's look at another specific example, then. 2 It's FUJ00088036. It's another document the Inquiry has 3 seen. 4 A. I produced this in my second witness statement, I think. 5 Q. I think this was more recently provided to you. 6 A. Yes, I haven't seen it before, I actually asked Morrison 7 Foerster to give me some more information on this and 8 that's where I saw it. I didn't see it -- I haven't 9 seen it before. 10 Q. Didn't see it at the time? 11 A. No, no. No. 12 Q. So it's 2 August 2002 is the date. 13 A. Yes. 14 Q. At this point, you're Chief Executive? 15 A. Yes. 16 Q. If we look at the originator department and the 17 contributors, do you recall working with any of those 18 people? 19 A. They frankly -- let's have a look. No, none of -- 20 I don't recall knowing any of those people. 21 Q. This document describes -- let's look at page 9, please. 22 It says, "SFS", which I -- 23 A. I don't know who they are. 24 Q. The Security Functional Specification. 25 A. Okay. 63 1 Q. It describes there a form of remote administration, 2 a tool called Tivoli Remote Console? 3 A. Yeah. 4 Q. It goes on to say that: 5 "This has led over time to BOC [Belfast Operations 6 Centre] personnel relying heavily on the use of 7 unauthorised tools (predominantly Rclient) to remotely 8 administer the live estate. Its use is fundamental for 9 the checking of errors. The tool does not however 10 record individual user access to systems but simply 11 record events on the remote box that Administrator 12 access has been used. No other information is provided 13 including success/fail so it is not possible to simply 14 audit failures. The use of such technique puts Pathway 15 in contravention of such contractual undertakings to the 16 Post Office." 17 Were you made aware of that the concerns raised in 18 that in particular, that Pathway was in contravention of 19 contractual undertakings to the Post Office? 20 A. No, I've never seen this document. 21 Q. Is this a type of document, or maybe not -- let me 22 rephrase that. The issue that's being described, in 23 particular "the use of such technique puts Pathway in 24 contravention of contractual undertakings to the Post 25 Office", is that a type of issue that you would have 64 1 expected to be raised to you as Chief Executive? 2 A. It depends whether the Post Office had made any -- if 3 the Post Office had made a formal complaint, a breach of 4 contract notice, for instance, then I would have known 5 about it. 6 I read this in conjunction with another document, 7 which you showed me, which you may come to later, which 8 is Gareth Jenkins writing earlier about the Secure 9 Shell, whatever it is, the SSH, which is designed to, as 10 it says here, provide an acceptable and agreed level, 11 which I presume must be agreed with the Post Office, of 12 secure access. So reading this, what I see is, well, 13 there was a problem, maybe it was a breach of contract, 14 maybe it wasn't, I don't know. The Post Office appear 15 to have known about it because it says, "acceptable and 16 agreed", so it must be agreed with somebody or other, 17 and it was remedied with this Secure Shell. Whether 18 it's a correct remedy, again, I'm not competent to say, 19 but that's what it looks like to me. 20 Q. Well, let's look in more detail at the problem. It's 21 page 15, please, and it describes "Third line and 22 operational support"? 23 A. Yes. 24 Q. It describes controls, so: 25 "Individuals involved in the support process undergo 65 1 more frequent security vetting checks." 2 A. Yes. 3 Q. "Other than the above controls are vested in manual 4 procedures, requiring managerial sign-off controlling 5 access to post office counters where update of data is 6 required. Otherwise, third line support has: 7 "Unrestricted and unaudited privileged access 8 (systems admin) to all systems including post office 9 counter PCs ..." 10 The risks are highlighted further down -- sorry, if 11 you stay there, please -- sorry. It says: 12 "This exposes Fujitsu Services/Pathway to the 13 following potential risks: 14 "Opportunity for financial fraud; 15 "Operational risk -- errors as a result of manual 16 actions causing loss of service to outlets; 17 "Infringements of the Data Protection Act." 18 I mean, this, is, would you accept, a very 19 significant problem going to the heart of ICL's 20 contractual obligations? 21 A. No, I think all he's saying is we need to beef up our 22 security systems and we're doing it. That's the way 23 I read this. But, as I say, I'd never seen the document 24 but this is how I read it: yes, there is a risk. I'm 25 sure you understand that third line support are a few 66 1 specialists who are very carefully vetted, who are 2 system administrators, but there has to be somebody who 3 can be a system administrator and there aren't very many 4 of them. 5 Q. Would you accept that what this is saying is that some 6 people have unaudited, privileged access -- 7 A. Not -- 8 Q. -- with system administration access to all systems -- 9 A. What I'd accept is -- 10 Q. -- including Post Office Counters -- 11 A. I'm sorry, I beg your pardon. I beg your pardon. 12 What I would accept is that, at that time, there was 13 an issue and they improved the security systems, on the 14 advice of Gareth Jenkins on his previous document. And, 15 don't forget, we've only just, at this stage, got to 16 complete rollout. 17 Q. So here, where we have an issue that's being raised that 18 is said by the technicians to be -- it's warning of 19 a breach of contractual obligations, your evidence is 20 this didn't -- you're not critical of it not being 21 raised with you? 22 A. If there were no solution to it, or if there had been 23 a formal complaint by the Post Office, I would then have 24 been critical because, if there had been a formal 25 complaint, then that was something that definitely 67 1 should be looked at. What I'm seeing here is 2 a technical person who is identifying improvements in 3 the security which will prevent some issues, and every 4 contract for the development of software is always 5 trying to improve its security. We know nowadays that 6 the most important thing for fixes -- you know if you've 7 got your PC or your smart phone, every so often you get 8 a security update to protect it from outside 9 interference, and this is a more technical and more 10 sophisticated way of doing things with this system. 11 I don't -- I'm not critical of them. I would be 12 critical if the Post Office had sent a letter, that's 13 a different matter, and maybe that should have been 14 surfaced. But I haven't seen a letter. 15 Q. Why is it relevant or why should it come to you if the 16 Post Office raise it? 17 A. If the Post Office raised a formal breach of contract, 18 then that would become a matter that, certainly, we'd be 19 looking at because the first thing would be doing would 20 be going and talking to Stuart Sweetman to find out what 21 it was about. 22 Q. As part of the responsibility of the Chief Executive in 23 respect of the lawfulness of the company's operations, 24 do you not accept that, actually, where such a serious 25 contractual issue is raised, that should come to you at 68 1 the highest level? 2 A. No, I don't, because I think the problem has been solved 3 at a technical level. 4 Q. Could we move on to Horizon Online, please. It's 5 FUJ00095628. This is an email to which you referred 6 earlier. 7 A. Oh, yes, I know about this. 8 Q. If we can go to the second page, please. So it's 9 an email from Duncan Tait, you're not in copy. I assume 10 you wouldn't have seen this at the time? 11 A. No, no. Not at all. This is an issue for Duncan Tait, 12 not for me. 13 Q. It refers to meetings between Post Office and Fujitsu -- 14 A. Mm. 15 Q. -- and it talks about: 16 "Their confidence has been knocked due to: 17 "[Firstly] Ongoing issues with Oracle stability 18 impacting HNG-X stability ... 19 "[2] The data centre outage 20 "[3] An outage caused by 'Fujitsu operator error' 21 last week which caused a 45-minute loss of service." 22 We then get some requests from Post Office: (1) is 23 to look at P&L for the account to make sure it's 24 sustainable and asking for an open book arrangement; (2) 25 is for an independent review; and then (3): 69 1 "Finally, he wants Dave Smith to have some dialogue 2 with Richard C ..." 3 I assume that refers to you? 4 A. Yes, it does, yes. 5 Q. "... so they can test the Japanese Board's commitment to 6 the account and programme ..." 7 A. Mm. 8 Q. Firstly, can you recall whether you were aware of the 9 issues described in this email? 10 A. No, the answer is I wasn't and I've never seen the 11 email. I mean, it would be for Duncan to talk to you 12 about that. 13 Q. So you're saying then you can't recall Duncan Tait 14 passing on or discussing these issues with you? 15 A. No, well, let me be clear about this. The only one 16 I think he would have passed on to me was the dialogue 17 with Dave Smith about the Japanese Board. Remember at 18 this time I was living in Tokyo and I was responsible 19 for the global business group as a whole. I don't 20 remember whether we ever had that call, that's all I can 21 tell you. But if I had have done, I mean, what the 22 purpose was, to talk about the Japanese Board's 23 commitment; it wasn't about things like an Oracle 24 outage, or whatever it was. That's all I can say. 25 Q. I want to look at another document now, please. It's 70 1 POL00028838. 2 A. Yes. 3 Q. It's a document well known to this Inquiry. Firstly, 4 can I ask when you first saw this document? 5 A. When you sent it to me, which would have been some time 6 in May. 7 Q. So looking at the attendance list -- 8 A. Right, let's have a look. 9 Q. It's not dated but the Inquiry understands it's in 10 October 2010. Were any of those people in the 11 attendance list reporting directly or indirectly to you 12 at that stage? 13 A. No. Could I ask one question about this, please? When 14 I read it, I wasn't clear who originated the document. 15 It looked to me like the Post Office did, but they talk 16 about "we", and so on. Can you tell me that or? 17 Q. Well, I'll ask you questions about if you saw it or if 18 you didn't and -- 19 A. Oh, right, okay, but I never saw it, and the only name 20 I know, because of all the fuss about it, is Gareth 21 Jenkins. None of these reported to me. 22 Q. Do you know Gareth Jenkins when you were working at 23 Fujitsu? 24 A. Not that I can recollect. He wouldn't be somebody that 25 I would have had direct contact with. 71 1 Q. Now, this document describes what we now know as the 2 receipts and payments mismatch bug. 3 A. Yes. 4 Q. Were you ever given any information on the bug described 5 in this document that you've now read? 6 A. No. 7 Q. That document can come down. Thank you. 8 Just before this -- that was 2010 -- in May 2009, 9 Computer Weekly ran an article on the Post Office 10 prosecuting subpostmasters and allegations as to the 11 adequacy of the Horizon data to support those 12 prosecutions were raised. Were you aware of that 13 Computer Weekly article at the time? 14 A. No, I wasn't. 15 Q. I want to look now, then, at prosecutions, please. Can 16 we bring up your second witness statement, page 21, it's 17 paragraph 101. You say: 18 "As already stated in my first witness statement, 19 I had no knowledge of this issue, and I do not recall it 20 being raised at any Board meeting when I was present, 21 (see paragraphs 75 onwards)." 22 A. Yes. 23 Q. If we just scroll down slightly, please -- thank you -- 24 you say: 25 "I would now, however, like to comment more 72 1 specifically on this point, in the light of further 2 documents not known to me at the relevant time, which 3 have since been provided to me by Morrison Foerster (at 4 my request) for the purposes of completing this 5 statement." 6 So everything that follows, where, for example, you 7 say, "My understanding is that the requirement in the 8 Codified Agreement", that's your understanding today? 9 A. Now, yes. That's correct. 10 Q. Not at the time? 11 A. Not at the time. 12 Q. Could we please go to FUJ00000071, again, and could we 13 turn to page 196, please. We referred to this earlier, 14 it's schedule A15, setting out requirements, and we see 15 a number there of various requirements? 16 A. Yes, yes. 17 Q. If we turn, please, to -- apologies. 18 If we can go, please, to 291. 19 A. 291. 20 Q. Page 291, please. Thank you. Schedule A16 is the 21 "Solutions". So these are the response, in effect, from 22 ICL Pathway. Could we look, please, at page 363. If we 23 go down to that, please. 24 I think I may have an incorrect reference here, 25 sorry. If we can go up, please, to reference 393, 73 1 I think. 2 A. (Sotto voce) English and Welsh. 3 Q. Just bear with me, I will just find that reference. 4 393, please. Page 393, that's it. If you can go up, 5 I got my requirements and page numbers mixed up. 6 A. Ah, here we are, yes. 7 Q. If we could go up, please, so we can see the start of 8 the reference. You see there reference 829, and this 9 refers to Pathway. It says: 10 "Pathway confirms it will ensure that all relevant 11 information produced at the request of POCL [Post Office 12 Counters Limited] shall be evidentially admissible and 13 capable of certification in accordance with the Police 14 and Criminal Evidence Act 1984 and the Police and 15 Criminal Evidence (Northern Ireland) Order 1989 ..." 16 A. Yes. 17 Q. It goes on to say about data volumes. 18 When you were involved in the tendering process, 19 would you have been involved in dealing with this 20 response or -- 21 A. I've got no idea whether it was even in the tendering. 22 I mean, this is from the Codified Agreement and I never 23 read this. 24 Q. Could we look, please, at FUJ00001743. 25 A. Oh, yes. 74 1 Q. So this is a "Service Description for Implementation and 2 maintenance of security policy and procedures" dated -- 3 A. Yes. 4 Q. -- 6 January 2003. 5 A. Yes. 6 Q. In your statement, you say that, to the best of your 7 belief, this document contained the first contractual 8 requirement on Fujitsu to provide witness evidence in 9 litigation. 10 A. Yes. 11 Q. Again, I understand that's your knowledge now but not at 12 the time? 13 A. It's my knowledge now. Can I just amplify that. 14 I never regard PACE as necessarily requiring witness. 15 It required a certification with the potentiality for 16 a witness but, when I look at this, it seems to me 17 different to PACE. 18 Q. Well, let's -- at the time, did you have any awareness 19 of PACE certification -- 20 A. No, no. At the time, I didn't know about PACE -- 21 I mean, I've said that in my witness statement -- 22 because I didn't read that schedule. 23 Q. Can we turn, please, to page 17? 24 A. Yeah, the litigation. 25 Q. If we can have "Litigation Support", please. So we see 75 1 here that it refers to Post Office submitting Audit 2 Record Queries or Old Format Queries, essentially 3 a request for ARQ data, as we know it? 4 A. Yes. 5 Q. It says (a), to present the record of transactions but: 6 "b) subject to the limits set out below: 7 "(i) analyse: 8 "the appropriate Fujitsu Services' Helpdesk records 9 for date range ... 10 "branch non-polling reports for the branch in 11 question; and 12 "fault logs for the devices from which the records 13 of transactions were obtained ..." 14 A. Yes. 15 Q. Then, if we go down -- thank you -- we see: 16 "... request and allow the relevant employees of 17 Fujitsu Services to prepare witness statements of fact 18 in relation to that query ..." 19 A. Yes. 20 Q. Now, this contractual agreement for Fujitsu employees to 21 prepare witness evidence of fact, as a contractual 22 service being offered by ICL, or Fujitsu Services 23 Limited, do you consider that that should have gone to 24 the Board to determine whether it was something that ICL 25 or Fujitsu Services Limited wanted to offer or should 76 1 agree to provide? 2 A. I think this is a -- I think this is the most serious 3 question of all and it comes back to some of the things 4 that I said in my witness statement. There was no 5 requirement for this particular document to be approved 6 by the Board. If you look at the beginnings, I think it 7 goes as far as Martyn Bennett. When one looks at it by 8 hindsight -- and I'm not saying this to mitigate what 9 I think -- and I've said before -- is a miscarriage of 10 justice, it was not raised to the Board. 11 Should it have been raised to the Board? I think 12 the problem with this document is that the requirement 13 for witness statements shouldn't have been dealt with by 14 Security personnel and, in the midst of a security 15 document, should it have been raised to the Board? It 16 wasn't. 17 What I say in hindsight is I wish it had but that's 18 hindsight. There are many issues you could have raised 19 to the Board but it chose not to do so. 20 Q. Would you accept that this contractual service that's 21 being agreed in this document is outside of the normal 22 course of business for Fujitsu? 23 A. No, I wouldn't. No, I think that's not -- well, it's 24 not our business to provide witnesses, certainly we 25 don't provide, or we didn't, in my day, provide expert 77 1 witnesses. That's absolutely true. When I looked at 2 this, one of the problems, as I understand it, is, of 3 course, that PACE was repealed in -- Section 69 was 4 repealed -- 5 Q. I'll come back to the question, sorry. 6 A. Yes. 7 Q. Is what is being agreed here, the provision of witness 8 statements by Fujitsu employees, outside of the normal 9 course of Fujitsu's business at that time? 10 A. If it was only a witness statement of fact, that this is 11 a document that we've got off the computer, I wouldn't 12 have thought so. I mean, I'm sure that that was 13 something that happened in other contracts. I don't 14 know but, as long as it was a statement of fact, 15 I wouldn't particularly have had a problem with it, you 16 know, "This is the document, this what I took off, there 17 it is. Make of it what you will", as long as it was 18 fact. 19 Q. So is it your evidence that, if it's a witness statement 20 of fact, you didn't think it needed to come to the 21 board? 22 A. No, I wouldn't. If it was an expert -- let me be clear 23 about this: if somebody was saying, "We want a Fujitsu 24 witness to be an expert witness, speaking about all 25 sorts of things about the system", that was not 78 1 something that we would have provided to a customer. We 2 would have said, "Go and get an expert and get them to 3 do it". 4 So I don't think this is out of the ordinary course 5 of business but, if you went beyond a statement of fact, 6 here's the document, this is what I took off, and you 7 can examine it with all the bits and pieces that are in 8 the earlier section", but that's fact. 9 Expert opinion, no. That, definitely not. We're 10 not in that business. That's what I think. 11 Q. Well, when it says, looking here, "Subject to the limits 12 below, analyse", it's analysing "fault logs for the 13 devices from which the records of transactions were 14 obtained in order to check the records of transactions 15 extracted by that query" -- 16 A. In order to check the integrity of records. 17 Q. Integrity of records. Where there's analysis of fault 18 logs, what's your view on that -- 19 A. Okay, I looked at this, and the fact that the fault log 20 is there is a statement of fact and, when you look at 21 it, you see that there are various faults, so you have 22 to describe them. I think it's important to talk about 23 checking the integrity of the records. I've -- you said 24 this elsewhere in my statement but, in my view, 25 integrity means uncorrupted, whole and complete, but it 79 1 doesn't mean accurate, which is what we're coming down 2 to: the question of whether there were discrepancies in 3 the cash account. 4 And I think this is the word that was used, 5 integrity, earlier on when they were in these this other 6 systems specifications, when they were talking about 7 security. It's all about security, not tampered with. 8 Q. I understand you've listened to some of the evidence of 9 the Inquiry? 10 A. Some of them here, not all, by any means, but I tried to 11 prepare myself as best I could. 12 Q. Have you heard, for example, of the Clarke Advice of the 13 15 July 2013 -- 14 A. No, I'm sorry, I haven't. No. 15 Q. -- referring to Post Office's use of Gareth Jenkins as 16 an expert witness? 17 A. Well, that surprises me and it's not something that 18 I would have expected Fujitsu to do. 19 Q. If a Fujitsu employee was being used to provide expert 20 evidence, my understanding is you think that something 21 like that should have gone to the Board? 22 A. Definitely, and I would have made sure in those -- or 23 me, but what I would expect is that that expert witness 24 would have been properly advised by an independent 25 solicitor. 80 1 Q. Can you explain why, in this case or in this time, the 2 use of Fujitsu witnesses, such as Gareth Jenkins, wasn't 3 raised at a Board level? 4 A. As I've said, because -- when you say "at this time" do 5 you mean 2013? 6 Q. No, I'm so sorry, at the time of this document, 20 -- 7 A. Right, what I'm saying is that I don't think that 8 witness statements of fact would have been necessary and 9 I don't think -- I'm not critical of that. I'm very 10 critical of the use of a Fujitsu employee as an expert 11 witness if they're not properly advised by 12 an independent legal counsel. 13 Q. Can you offer a view on why that latter issue didn't 14 come to the Board of Fujitsu? 15 A. Well, I don't know when it started, so I can't tell you. 16 But I suspect it's more ignorance than anything else. 17 I doubt that the Security people that you're talking 18 here really understood the difference. Their mind is 19 always on integrity, untampered with, not corrupted; 20 it's not about being an expert witness. 21 Q. Could we turn the page, please. It referred to 22 limits -- 23 A. Yes. 24 Q. We see at (iv) and (v): 25 "Fujitsu Services' obligations ... in (i) and (ii) 81 1 above shall be limited, in aggregate, to dealing with 2 a maximum of 150 (in aggregate) Record Queries ..." 3 A. Yes. 4 Q. The Inquiry has heard evidence about Fujitsu's 5 remuneration in respect of witness evidence produced. 6 Did you have any knowledge of that remuneration? 7 A. No. 8 Q. That document can come down. Thank you. 9 SIR WYN WILLIAMS: Well, just before we do, Mr Stevens, 10 I just want to be clear, Mr Christou, one can haggle 11 about the interpretation of contractual clauses, and 12 I would just like your help, as a very senior person in 13 Fujitsu, as to two matters. 14 First of all, in your opinion -- and I stress "in 15 your opinion" -- does the clause that we just looked at 16 oblige Fujitsu to provide a witness to give opinion 17 evidence? 18 A. No. 19 SIR WYN WILLIAMS: Right. So have you got any idea how it 20 came to be, if it is the case, that, from approximately 21 the mid-2000s, that is around 2004/2005, a Fujitsu 22 employee -- and we all know who it is, Mr Jenkins -- was 23 making witness statements which included opinion 24 evidence? 25 A. I do not know, sir. I do not know. 82 1 SIR WYN WILLIAMS: But I think you do agree with Mr Stevens 2 that such activity, if it were to be approved, should 3 have been approved by the Board? 4 A. I do, yes. 5 SIR WYN WILLIAMS: Fine. Thank you. 6 MR STEVENS: The matters to which the Chair was just 7 referring, who within your reporting line would have 8 been responsible for oversight of this Litigation 9 Support? 10 A. Martyn Bennett, I think, is the correct one. I mean, 11 he's a long way down because -- I don't know whether he 12 was still there in that time, 2005. 13 Q. In 2003, is the reporting line from either Martyn 14 Bennett or his replacement through David Courtley? 15 A. Yes, yes. Through the Managing Director of Pathway to 16 Courtley to me. Yes. 17 Q. Could we, please, look at FUJ00003534, and this is my 18 last topic. 19 A. Yeah. 20 Q. These are actually draft minutes but I want to take you 21 to a part of them. It's on 20 August 2002, a meeting of 22 the FSMC. Could we look at page 14, please. If we 23 could go down to "Relationship with the UK Government": 24 "Mr Christou reported that the Government was our 25 biggest customer and it was essential that we had a good 83 1 relationship with them. Renegotiating Libra had been 2 very stressful ..." 3 Just to pause there, that's nothing to do with the 4 Post Office, I understand, Libra? 5 A. No, this isn't. Nothing to do with the Post Office at 6 all. 7 Q. "... and all the Permanent Secretaries were aware of the 8 negotiation that had taken place. During the last year 9 we had, again, been the topic of conversation as the 10 Pathway and HMCE contracts were being renegotiated. 11 "While these negotiations were ongoing it was 12 important not to be too friendly or else we risked 13 weakening our position. However, we were now able to 14 build on relationships. Mr Christou had visited all the 15 permanent secretaries and he had also joined them on 16 a training weekend. Consequently, although there was 17 room for improvement, we are on good terms with them and 18 they are, by and large, all satisfied with the service 19 Fujitsu Services provide." 20 A. Yes. 21 Q. When you say "all the Permanent Secretaries", there is 22 that every Permanent Secretary to each Government 23 department or just those to which Fujitsu had contracted 24 with? 25 A. No, I mean the ones that we were dealing with, yes. 84 1 Q. You go on to say: 2 "Mr Christou added that the relationship with the 3 DTI was good. He was having talks with representatives, 4 both in his capacity as a member of various DTI 5 committees, and also as a service provider." 6 A. Yes. 7 Q. How often did you meet with representatives of the 8 Department for Trade and Industry? 9 A. Actually, quite often because there were various fora, 10 you know, they used to get all the IT people together 11 for instance, and we met on numerous occasions. I had 12 the Minister's name -- Patricia something, in those 13 days? I can't remember the last name but I used to 14 spent quite a lot of time with her. 15 Q. Patricia Hewitt. 16 A. That's right, Patricia Hewitt, and there was a Permanent 17 Secretary. I'm afraid I can't remember the name. But 18 we used to visit them quite regularly because we had 19 Elgar with them, which was a very large project. 20 Q. At any point when you met with representatives of DTI, 21 did you discuss the actual adequacy of the Horizon IT 22 System? 23 A. No, it was never the topic of discussion. We were 24 always talking about our contract with them. 25 Q. From 2003 onwards, did you ever meet with 85 1 representatives of the Shareholder Executive? 2 A. Could you be more -- the Shareholder? 3 Q. Sorry, the Shareholder Executive, a Government agency 4 that managed the Government shareholding interest in 5 companies, including Post Office Limited? 6 A. No, I didn't know anything about that. No. 7 Q. Standing back, having examined the documents that you've 8 seen today, do you consider there to have been, in your 9 view, any relevant management failings within Fujitsu 10 that was relevant to the prosecution of subpostmasters? 11 A. I think the issue comes down to this question of -- I'm 12 sorry to keep on mentioning Gareth Jenkins -- how he 13 came to be an expert witness and I can't answer that 14 question but I think that's the nub of it. 15 I've always felt that it was the processes of 16 information flow that led to the prosecutions that were 17 the cause to of the problem, rather than, if you like, 18 bugs in the system itself but I can't answer that. 19 MR STEVENS: Sir, those are all the questions I have. 20 Before I turn to see if there are any from Core 21 Participants, do you have any questions? 22 SIR WYN WILLIAMS: No, I'm fine, thank you. 23 MR STEVENS: Ms Page, I think that's it. Five or ten 24 minutes' worth of questions. 25 SIR WYN WILLIAMS: Well, then, can we ask the 86 1 shorthand-writer whether she'd like a break before 2 Ms Page asks questions, or whether she would prefer to 3 have a maximum of ten minutes and then have a lunch 4 break, in effect. 5 MR STEVENS: We're fine to continue, sir. 6 SIR WYN WILLIAMS: Fine. Then sorry to impose a ten-minute 7 time limit on you, Ms Page, but I think that's 8 reasonably fair in the circumstances. 9 MS PAGE: No difficulty at all, sir. Thank you very much. 10 Questioned by MS PAGE 11 MS PAGE: I want to ask you a few questions, please, about 12 whistleblowing. 13 The Bates litigation established as fact that there 14 were bugs, errors and defects in the Horizon system 15 which could and did cause errors in Post Office branch 16 accounts. Now, you don't appear to accept that that 17 means that Fujitsu failed to deliver a product to Post 18 Office, an accounting system, that was fit for purpose 19 but, nevertheless, there might be those who do. Do you 20 understand what I'm saying there? 21 A. I understand where you're coming from. I mean, what I'm 22 saying is not to mitigate. I've said this before but 23 I'll say it again. I do not mitigate the seriousness of 24 the miscarriage of justice; that's the first point. But 25 the issue to me is, first of all, fitness for purpose 87 1 was never part of the Codified Agreement; it was 2 specifically excluded. What we did was to agree 3 a specification, agree acceptance tests with the Post 4 Office, and that was the basis of the contract. 5 We accept -- I mean, I accept now, having heard 6 everything in the appeals against the cases, there were 7 bugs. I don't believe that it was the bugs that caused 8 the issue. The issue is that these discrepancies 9 weren't properly presented in evidence. That's what, 10 I think. Why it happened I'm not competent to say but 11 that's my view. 12 Q. All right, well, what I want to ask you about is 13 Mr David McDonnell, who gave evidence to this Inquiry, 14 about the shockingly bad development of the EPOSS code 15 and Mr Stevens this morning has taken you to the 16 documents dealing with how that was managed within 17 Pathway, both in 1998 and in 2000. 18 Now, I don't need to go back over what you've said 19 already. You don't criticise the way that, what you 20 say, the technical issue was managed. Nevertheless, at 21 the time and subsequently, Mr McDonnell was deeply 22 critical of the way that that was managed and he gave 23 evidence about the fact that he was sidelined, as 24 a result, moved into a different role. So what I want 25 to ask you about is what process was there for him to 88 1 blow the whistle at the time? What process was there 2 for him to take his concerns higher when the management 3 of Pathway refused to accept what he was saying? 4 A. Well, in those days, there was certainly no 5 whistleblowing procedure. That's the first thing, and 6 I don't think people thought about it in those days. 7 What I will say to you is that I never shut the door 8 to my office. If he had felt sufficiently strongly, he 9 could have come and seen me. That's all I can say. 10 I don't actually know him but, if somebody had come and 11 seen me, then I would have investigated, it might not 12 have meant a different decision, but he didn't. So 13 that's all I can tell you. 14 Q. A different area but still on whistleblowing. The 15 Inquiry has now seen ample evidence that Fujitsu support 16 teams were effectively able to tamper with branch 17 accounts, without the subpostmaster knowing, and that 18 wasn't for a short period, that was over many, many 19 years. So, in effect, the security designs put in place 20 just didn't stand up to the reality test: the support 21 teams were given privileged access on what we've seen 22 revved to as a needs-must basis and that continued not 23 only thorough your time, but also for many years 24 subsequently, really all the way through until the Group 25 Litigation. 89 1 It was really only the testimony of a Panorama 2 whistleblower, who then became a whistleblower in the 3 Bates litigation, Mr Richard Roll, that actually started 4 the process of finding out the truth. Obviously, in all 5 of that time, there were many employees within the 6 Fujitsu support team who knew what was going on and knew 7 about the ability to tamper with branch accounts and, 8 indeed, there were many concerns raised from the 9 mid-2000s onwards about it. 10 So, again, why were there no Fujitsu whistleblowers: 11 what happened; why did nobody come forward? 12 A. Well, I'll make two points to you. First of all, 13 I don't like the word "tamper", that's a pejorative 14 term. Secondly, my understanding is -- and I knew 15 nothing about this particularly at the time -- that 16 these alterations were made in conjunction with the Post 17 Office, in order to correct various issues. That's what 18 I saw coming out of the evidence. 19 Why were there no whistleblowers coming forward? 20 You'd have to ask the potential whistleblowers in 21 Fujitsu. All I'm saying to you is that nobody came to 22 me and blew any whistles. 23 Q. You don't take any responsibility? 24 A. No, I'm not -- 25 Q. So you don't -- 90 1 A. I'm not mitigating that there is a gross miscarriage of 2 justice and, if you think I don't feel for the 3 postmasters and the subpostmasters, you're wrong, I do 4 feel. And I also feel aggrieved that what I felt was 5 a good system has been put into such disrepute. But I'm 6 not responsible for it and I've told you before -- 7 sorry, perhaps I shouldn't say it like this, perhaps 8 with more respect -- I've said before that the real 9 issue is the way the prosecutions were handled and the 10 flows of information. 11 Why there were no whistleblowers and what they would 12 have told me if there were any, I don't know, and I'm 13 sorry about that but I can't help you further. 14 Q. Let me just ask you this final question: when concerns 15 first started to be raised about the possibility that 16 Fujitsu could insert transactions -- if you don't like 17 "tamper", that's what they were doing -- could insert 18 transactions into branch accounts without postmasters 19 knowing, when those concerns first started to be raised, 20 why was there no concerted effort by Fujitsu management 21 to find out the truth? 22 A. I don't know when they were raised and you're assuming 23 that there was none, and you're insisting on the word 24 "tampered", so I'm afraid my answer is I don't know. 25 MS PAGE: Thank you. 91 1 Those are my questions, sir. 2 SIR WYN WILLIAMS: Thank you, Ms Page. 3 Is that it, Mr Stevens? 4 MR STEVENS: Yes, sir, that's it. 5 Yes, that's it from the Core Participants and 6 Mr Christou's evidence. 7 SIR WYN WILLIAMS: Yes. 8 So Mr Christou, thank you very much for making two 9 statements -- written statements, that is -- and for 10 giving evidence to the Inquiry this morning. I'm 11 grateful to you. 12 I think we'll now adjourn, shall we, and take our 13 lunch break so what time shall we resume? 14 MR STEVENS: 1.30, please, sir. 15 SIR WYN WILLIAMS: Fine, see you all then at 1.30. 16 (12.30 pm) 17 (The Short Adjournment) 18 (1.30 pm) 19 MR BLAKE: Good afternoon, sir, can you see and hear me? 20 SIR WYN WILLIAMS: I can, thank you. 21 MR BLAKE: Sir, this afternoon we're going to hear from 22 Mr Tait. 23 SIR WYN WILLIAMS: Yes. 24 MR BLAKE: As we are starting at 1.30 we are likely to have 25 two afternoon breaks today. 92 1 SIR WYN WILLIAMS: Yes, certainly. 2 DUNCAN ANDREW TAIT (sworn) 3 Questioned by MR BLAKE 4 MR BLAKE: Thank you very much. Can you give your full name 5 please? 6 A. My name is Duncan Andrew Tait. 7 Q. Mr Tait, you should have in front of you a witness 8 statement dated 21 May 2024; is that correct? 9 A. That's correct. 10 Q. Can I please ask you to turn to page 67 and confirm that 11 that is your signature. 12 A. It is. 13 Q. Thank you. Is that statement true to the best of your 14 knowledge and belief? 15 A. It is. 16 Q. Thank you. That statement has a Unique Reference Number 17 of WITN03570100 and that will be uploaded onto the 18 Inquiry's website. Just to begin, by way of a little 19 bit of background, you started your career at BAE 20 Systems in around 1985; is that correct? 21 A. That is true. 22 Q. You worked for a number of different firms, largely in 23 IT related roles? 24 A. That is true. 25 Q. You joined Fujitsu in 2009? 93 1 A. I did. 2 Q. I think you came in straight at Managing Director 3 level -- 4 A. I did. 5 Q. -- in what was then the Private Sector Division? 6 A. Yeah. 7 Q. In very simple terms, where did that division fall 8 within the overall hierarchy of Fujitsu? 9 A. So the Private Sector Division reported directly to the 10 UK & Ireland's CEO, and there were a number of other 11 divisions, there was a Government Business Division, and 12 then I think there were two or three divisions that 13 delivered services into those so, for instance, there 14 was a CORE Division and an Applications Division, where 15 the bulk of the people in the business worked. 16 Q. I think you've said in your witness statement that the 17 Post Office business fell within the Private Sector 18 Division because the intention was for it to go private? 19 A. Yes, that was my understanding when I joined. 20 Q. Thank you. When you were Managing Director, you 21 reported directly to the CEO, who was, at that time, 22 Roger Gilbert; is that right? 23 A. That's true. 24 Q. In 2011, you became CEO? 25 A. I did, in April 2011. 94 1 Q. Thank you. From April, you were CEO for UK & Ireland. 2 Then, over time, you took more and more countries, 3 I think, in 2014, you were CEO for Europe, Middle East, 4 India and Africa -- 5 A. That's right. 6 Q. -- including the UK at that time? 7 A. Including the UK. 8 Q. 2015, you were appointed to the Board? 9 A. Of Fujitsu in Japan, yes. 10 Q. And 2016, you became responsible for the Americas. Is 11 that in addition to EMEIA and -- 12 A. That is in addition to those. 13 Q. So your portfolio expanded and expanded as the years 14 went by? 15 A. It did. 16 Q. When did you leave Fujitsu? 17 A. I left at the end of July 2019. 18 Q. Thank you. During your time at Fujitsu, how significant 19 was the Post Office as a customer? 20 A. Well, Fujitsu was one -- sorry, Post Office was one of 21 the larger clients within the Private Sector Division, 22 and formed a reasonable part of Fujitsu, UK & Ireland. 23 Obviously, the further you go up the company then it 24 becomes a smaller part but nonetheless important. 25 Q. Thank you. Perhaps we could start with a presentation 95 1 by your predecessor as CEO, if we could turn to 2 FUJ00116969. It is a business update that was produced 3 by Roger Gilbert. You would have been Managing Director 4 at the time that this was produced. 5 A. Okay. 6 Q. Do you recall this document from your time at Fujitsu? 7 A. I don't recall it precisely but some of the things -- in 8 reading it prior to arriving here today, some of the 9 concepts in there I'm familiar with. 10 Q. If we scroll down, please, and over to page 3. Thank 11 you very much. One of the objectives in 2011 seems to 12 have been to increase the number of 30 million plus 13 accounts, and we see there a chart separating out 14 private sector and Government. We see "RMG", would that 15 be the Royal Mail Group? 16 A. Yes. 17 Q. Would the Post Office fall within that category? 18 A. It would. 19 Q. So am I right to understand from this chart that, at 20 least as at 2011, the Royal Mail Group was one of the 21 biggest clients, one of the largest in terms of the 22 amount of money? 23 A. Yes, it would. This was a -- if I understand the chart 24 correctly, this is accounts with revenues of more than 25 £30 million per annum. 96 1 Q. There are a relatively small number, we see it separated 2 it by private sector and Government, so in the private 3 sector, there aren't that many? 4 A. Yes. 5 Q. They're not in alphabetical order. Are we to read into 6 that that the Royal Mail Group was the most significant 7 in terms of income, or is there some other reason, do 8 you think? 9 A. I don't know the reason for choosing the order of those 10 accounts, there would also have been one with Thompson 11 Reuters there, which also would have been very 12 significant at the time but I don't understand the order 13 of those. 14 Q. Thank you. Who were your main points of contact at the 15 Post Office, both when you were Managing Director and 16 then, subsequently, as CEO? 17 A. When I first joined, my main point of contact would have 18 been the Chief Operating Officer, who was Mr Mike Young. 19 Then, when I was promoted to become CEO of Fujitsu, UK & 20 Ireland then there would have been number of people -- 21 I think Lesley Sewell at some point, there would have 22 been Ms Vennells -- and, for a period of time after 23 that, there would also have been -- Mike Young would 24 still have been in the company for a period of time 25 after I became CEO. 97 1 Q. So was your liaison/your relationship when you were CEO, 2 largely with your equivalent CEO or perhaps COO? 3 A. I would say -- it wasn't that rigid from a hierarchical 4 perspective. I would have spoken to the CEO and to 5 other members of the Executive Committee. 6 Q. Thank you. That document can come down. Can you assist 7 us with the committees within Fujitsu that might look 8 into risks arising from your relationship with the Post 9 Office? What were the key committees that you would be 10 involved in? 11 A. In terms of formal statutory committees, there was 12 a corporate governance committee that I recall. There 13 was also an Audit and Risk Committee. Then there were 14 a number -- if you think about those being statutory 15 committees, those were the two. 16 Q. Thank you. Would the Post Office be a standing item on 17 those committees or would they just be raised on an ad 18 hoc basis? 19 A. Well, the process of managing risk in the company was 20 both top-down and bottom-up, so wherever there was risk, 21 you would have expected those to be reflected on the 22 risk registers. 23 Q. Who typically sat on those committees? 24 A. It would have been the chairman of whichever statutory 25 entity it was and key members of probably of the 98 1 Executive Committee, and I would imagine a member of the 2 legal community as well. 3 Q. Thank you. So likely a General Counsel or equivalent 4 would also attend those? 5 A. I think so. 6 Q. Thank you. Can we please turn to your witness statement 7 and paragraph 73, it's on page 24. There's no need for 8 you to turn to it; it should come up on the screen. 9 It's WITN03570100. Thank you. It's page 24 that I'd 10 like to start with. I'm just going to take you to two 11 passages from your witness statement. The first is 12 paragraph 73. You say there: 13 "I recall being made aware of subpostmasters' claims 14 regarding Horizon's lack of data integrity shortly after 15 joining Fujitsu. My understanding at the time was that 16 these claims were unfounded, that Post Office had been 17 involved in some proceedings against subpostmasters, and 18 that Fujitsu had assisted Post Office with these 19 proceedings on occasion. I do not know the details of 20 [those] proceedings." 21 Paragraph 75, please, which is on page 27. If we 22 scroll down, just to the next paragraph, please -- thank 23 you -- you say there: 24 "While I became aware of subpostmasters' claims 25 shortly after joining Fujitsu, I did not understand that 99 1 Fujitsu was assisting Post Office in proceedings against 2 its subpostmasters on a regular basis until later. 3 Indeed, I do not recall being aware that Post Office was 4 being assisted by Fujitsu until at a meeting Ms Vennells 5 asked me to thank my team for its assistance with the 6 prosecutions. I did not reveal that I was not aware of 7 this assistance. I do not recall the date of this 8 meeting." 9 You started in 2009, you left in 2019. 10 A. Yes. 11 Q. When, approximately, during that period did you become 12 aware, first of all, that any prosecutions were taking 13 place that Fujitsu had a role in? 14 A. I think the word "prosecutions" is very specific, as 15 I now understand, and I think probably around the time 16 Ms Vennells mentioned it to me, at the time you just 17 referenced a few moments ago. However, there is 18 a document from 2009 when I first joined, which I think 19 would also be quite useful to see. 20 Q. Yes. Well, we'll go to that document and I'm going to 21 take you chronologically. 22 A. Okay. 23 Q. But you say here, "I don't recall the date of the 24 meeting". So it seems as though it certainly became 25 prominent to you at a meeting with Ms Vennells, and 100 1 really my question is: when, approximately, would that 2 meeting have taken place? 3 A. I can't recall when that meeting -- I mean, clearly it 4 must have been after Ms Vennells was appointed CEO of 5 the Post Office but I don't recall exactly when that 6 meeting was. 7 Q. Very approximate? We've got a 10-year period to cover. 8 A. It must have been around 2012 or '13. 9 Q. Thank you. Do you recall when, if at all, the issue of 10 prosecutions was raised at Board level within your firm? 11 A. I'm not sure it was. 12 Q. Not even until 2019? 13 A. Do you mean Fujitsu Board in -- I'm know I'm not 14 supposed to ask -- 15 Q. You assist me. At any level of the various Boards that 16 we've already heard about, do you think that 17 prosecutions were raised? 18 A. I don't think so. 19 Q. Let's go chronologically and we're going to start with 20 your first few months at Fujitsu. Could we turn to 21 FUJ00174184, please. We're going to start in October 22 2009. I'm going to start with the bottom email. There 23 is an email from Suzie Kirkham, I believe she was the 24 Royal Mail Group Account Manager at Fujitsu; is that 25 something you recall? 101 1 A. I do. 2 Q. Gavin Bounds, can you assist us with who he because we 3 see his name on quite a few of these emails. 4 A. So Mr Bounds was a senior executive who was responsible 5 for the Post Office Account, he was what was known as 6 a Business Unit Director and would have worked directly 7 for me. 8 Q. What was your relationship with him? 9 A. I was his immediate line manager. 10 Q. In terms of your personal relationship; did you get on 11 well, did you have a free and frank exchange? 12 A. Yes, I would say so. 13 Q. She says as follows: 14 "I have detailed below a brief summary of 15 a subpostmaster claim that Horizon fails to maintain the 16 integrity of branch accounts if the branch experiences 17 technical issues. 18 "Horizon has been running ..." 19 She produces a response. We can see, in fact, the 20 subject is "Horizon Data Integrity publicity -- briefing 21 summary". She says: 22 "Horizon has been running for around 10 years, 23 during which time Post Office has had to handle a number 24 of legal cases surrounding system integrity, mostly from 25 apparently disgruntled or fraudulent subpostmasters. 102 1 Fujitsu has twice appeared in court to support Post 2 Office. Only once has Post Office conceded its case, 3 and this was at a time when the audit trails were too 4 short to positive sufficient evidence to refute 5 a subpostmaster's claims. 6 "In recent weeks a number of subpostmasters are 7 again querying the data integrity of Horizon and are 8 claiming that they are owed money by the Post Office due 9 to inaccurate branch accounts. These subpostmasters are 10 talking to the press (London News) and trying to gain 11 some momentum to support their case -- it's even 12 rumoured that the BBC is considering a Watchdog 13 programme on the subject. Post Office is trying to head 14 off this possible escalation of interest by preparing 15 a stock of simple responses to possible questions from 16 the media, or from interest groups. I have summarised 17 below the timeline that details when Post Office asked 18 Fujitsu for assistance in compiling this information." 19 She then goes on to give a timeline and we see there 20 the bottom two bullet points on the page, it refers to 21 a conference. She says: 22 "During the conference call [the Post Office] 23 requested from Fujitsu a short paper to describe how 24 Horizon maintains the integrity of the branch accounts 25 when certain issues affect the branch, [for example] 103 1 blue screen, hardware failure. Report requested to be 2 given to Dave Smith by 2 October." 3 Then it refers to Gareth Jenkins. Just pausing 4 there, was Gareth Jenkins somebody who you knew 5 personally? 6 A. No. I don't believe I've ever met Gareth Jenkins. 7 Q. Was he somebody who you ever emailed directly or 8 corresponded with directly? 9 A. I don't believe so, no. 10 Q. "[Fujitsu architect] spent the best part of one day 11 completing the report. The finished report was passed 12 [and it gives the name] before being sent to Dave Smith. 13 Report was sent to Dave Smith on 2 October late morning 14 just prior to the second conference call." 15 If we could scroll down, thank you very much: 16 "I spoke to Andy McLean on 5 October", et cetera. 17 That's where it ends, on 5 October. 18 The final paragraph says: 19 "In summary, our body of evidence is mature, so 20 we're well-placed to help Post Office today. But when 21 'Horizon Online' is installed in 2010, much of our 22 existing material will become irrelevant, so allegations 23 of system failures in the future may take more work in 24 preparing evidence or explanations." 25 So a body of work has been gathered and put together 104 1 in order, it seems, to rebut or answer allegations of, 2 for example, system failures. 3 We see, if we scroll to the top of the first page, 4 please, it's sent to you by Gavin Bounds, and he says: 5 "Duncan 6 "A heads up, in case questions from Roger and/or the 7 client: 8 "I asked Suzie, RMG [account manager], to summarise 9 our involvement insisting [the Post Office] rebut 10 subpostmasters' allegations (made public) of flawed data 11 integrity caused by Horizon -- leading to inaccurate 12 accounts and thus monies owed. Please see below." 13 Do you recall receiving this? 14 A. I don't recall seeing it, I recall some of the things 15 coming from it but I've largely relied on the document 16 provided to me by the Inquiry. 17 Q. Relatively early on in your time at Fujitsu, do you 18 recall somebody bringing to your attention concerns that 19 are being raised by subpostmasters about flawed data 20 integrity caused by Horizon? 21 A. Could you repeat the question again, please? 22 Q. Absolutely. Even if you don't remember this specific 23 email, the general topic, complaints from subpostmasters 24 relating to data integrity issues and Horizon, was that 25 something that you were aware of? 105 1 A. I must have been aware because I have this email in 2 front of me but it was not a topic of conversation in 3 the meetings I was involved with in my early days in 4 Fujitsu. 5 Q. I'm going to take you, very briefly, to the report 6 that's referred to from Gareth Jenkins in this email. 7 That's at FUJ00080526. This is the report that's 8 referred in to in that summary, it's entitled "Horizon 9 Data Integrity". It's by Gareth Jenkins, we see there 10 at the top it has both Post Office and Fujitsu logos. 11 Do you recall that being quite a common thing for both 12 parties' logos to be placed on documents? 13 A. I think it would have been normal practice for whichever 14 customer Fujitsu was engaging with. 15 Q. Thank you. If we scroll down to the bottom we can see 16 the date at the very bottom. It has there, this 17 particular version, 2 October 2009. If we turn over to 18 page 5, please, it explains the "Purpose": 19 "This document is submitted to Post Office for 20 information purposes any and without prejudice. In the 21 event that Post Office requires information in support 22 of a legal case Fujitsu will issue a formal statement. 23 "This document is a technical description of the 24 measures that are built into Horizon to ensure data 25 integrity, including a description of several failure 106 1 scenarios, and descriptions as to how those measures 2 apply in each case." 3 Were you aware that Fujitsu was providing 4 information to the Post Office that related to Horizon 5 data integrity? 6 A. I think I was generally aware that Fujitsu was assisting 7 the Post Office. 8 Q. Thank you. Page 7, we can see the "Scenarios" are set 9 out in this document. It says as follows: 10 "It should be noted that these scenarios are all to 11 do with equipment failures, and these will always be 12 visible to Fujitsu through the event logs which are 13 retained." 14 So it's not a document that, in any way, goes into 15 what we know as bugs, errors and defects; it only 16 relates to equipment failures at this particular time. 17 A. Okay. 18 Q. So this isn't a report that you were aware of? 19 A. No. 20 Q. No. Could we please turn to FUJ00156064. Can I just 21 clarify, in relation to your earlier answer, were you 22 aware that Fujitsu was at least providing some degree of 23 assurance to the Post Office with regards to the 24 reliability of Horizon data? 25 A. If I go to the email you showed me, the Suzie Kirkham 107 1 email, it is clear in there there is some type of 2 assistance being provided. 3 Q. Yes, relating to the Horizon system? 4 A. Yes. 5 Q. That is something that you would have been aware of in 6 your early days/months, as Managing Director? 7 A. I think, Mr Blake, having that -- I clearly received 8 that email, so I must have read that email. 9 Q. Thank you. If we could start on page 2 of this 10 document, please, the bottom email in the chain, this is 11 an email from Suzie Kirkham to Gavin Bounds. Now, this 12 is the same substance but is actually slightly updated, 13 so I think the first one we saw was called, I think it 14 may have been referred to as a draft, or something along 15 those lines. It's clear that, by 7 December, there has 16 been some small amendments to that form of words? 17 If we scroll down, please, over the page, you'll see 18 that I took you to the bullet points before and 19 5 October was the final bullet point. There's now one 20 more bullet point, which says as follows, it says: 21 "I spoke with Dave Smith on 3 December and he 22 mentioned that the Data Integrity issue had reappeared. 23 It has been taken up by a Welsh MP who also happens to 24 be a Barrister. He is threatening to bring an Early Day 25 Motion in the House. Dave is meeting him in Parliament 108 1 on Thursday, 10 December but at this stage didn't feel 2 he needed any attendance by Fujitsu. However, he was 3 alerting us to the fact that this has reappeared." 4 So in that timeline, amongst other things referring 5 to the Gareth Jenkins integrity report, we're now told 6 that issue has been raised, not only, I think, there was 7 earlier reference to newspapers but now also 8 Parlimentarians; is that something you would have been 9 aware of? 10 A. Could you just scroll back up, please? 11 Q. Absolutely. In fact, it may assist, if we go up 12 a little bit more, we can see the chain. So it seems as 13 though the same document, the same briefing has been 14 sent to you again, the updated version, because you 15 respond there on 9 December, saying: 16 "Okay, are you on top of this?" 17 So it seems as though you've been sent the updated 18 version and are following that up. 19 A. Yeah. 20 Q. Is that something you recall? 21 A. So I'm not sure I would have had read the email. It 22 looked like the previous email I've received, and then 23 I reply all on here to ask are they on top of it. 24 Q. Yes. Can we scroll up, please, and I'm going to read 25 you the rest of the chain. Ann Sinclair replies, 109 1 sending to you, and she says as follows: 2 "Gavin -- I'll brief the Press Office. We should 3 prepare an FAQ/statement to have in our back pocket if 4 required, and I also want to explore doing some 5 proactive work with them too, [for example] getting some 6 positive stories out there, building some bridges with 7 the journalists who might pick this up." 8 Then above that, Mr Bounds emails Suzie Kirkham and 9 he says: 10 "Suzie -- can you liaise with Ann please." 11 That's Ann Sinclair; who was Ann Sinclair? 12 A. I think Ann Sinclair was the Marketing Manager for the 13 Private Sector Division. 14 Q. Thank you. So within your division, you would have been 15 her ultimate manager? 16 A. She had a dotted line to me and worked a hard line to 17 the UK & Ireland Marketing Leader. 18 Q. Thank you. At this stage, you're now not copied into 19 this correspondence? 20 A. (The witness nodded) 21 Q. I'd like to read the above two emails, so the first one 22 directly above says: 23 "Ann. 24 "Can we also have our Press Office hook up with the 25 [Post Office] Press Office team on this too -- I think 110 1 this is hotting up -- so we need to be in sync and both 2 using aligned/supporting messages. Suzie -- can 3 facilitate your introductions here." 4 This is the response from Ann Sinclair, sent to 5 Gavin Bounds and also Suzie Kirkham. She says: 6 "Gavin -- following discussions with our press folks 7 and Suzie on Monday we have agreed that: 8 "We need to downplay this situation as much as 9 possible, we don't want to get too drawn in to the 10 debate as we are only a supplier. 11 "There is a document that addresses all the 12 technical questions that was produced for [the Post 13 Office] for a meeting with MPs last week. 14 "We should not contact [the Post Office] Press 15 Office. 16 "If press contact us, we will send them on to the 17 [Post Office] Press Office and not comment [but] 18 "We will flag to Grayling, (our Public Affairs 19 agency) to get them to keep their ears open for 20 Parliamentary questions etc. 21 "We'll keep an eye on this and if it looks like the 22 situation is changing and/or becoming higher profile 23 obviously we will review with you." 24 Was that approach something that you knew about at 25 the time? 111 1 A. No, it was not. 2 Q. Was it something, as the Managing Director of Fujitsu, 3 should have been run past you, that kind of a strategy? 4 A. Mr Blake, we put in place, to run each of these 5 businesses, senior executives and we expect them to be 6 able to run their businesses accordingly. 7 Q. Who is the senior executive that would be responsible 8 for this kind of a policy? 9 A. The Business Unit Director for Post Office was 10 Mr Bounds. 11 Q. Mr Bounds, Gavin Bounds? 12 A. Yes. 13 Q. He would ultimately report to you? 14 A. Indeed. 15 Q. But it's your evidence that, in terms of this kind of 16 a strategy, downplaying the situation, it would be him 17 who makes the call on that? 18 A. Indeed. I mean, I'm not copied so it's difficult to say 19 what they're trying to downplay here. 20 Q. Yes. The email to you, though, that additional bullet 21 point that I took you to, brings in a Member of 22 Parliament is now concerned. Wouldn't issues such as 23 that -- so matters affecting the press, Parliament -- 24 wouldn't they be matters to raise with the Managing 25 Director? 112 1 A. Probably. I'm not convinced I read that email as it 2 looked exactly like the first email that I'd received. 3 Q. Yes, but it's clear that Ann Sinclair has read that 4 email and come up with a strategy and discussed it with 5 Suzie Kirkham. Is that not something, given that it 6 related to, for example, a Parliamentarian, something 7 that -- involving one of your biggest customers -- that 8 should have reached your level? 9 A. I think it depends on the situation. 10 Q. Looking at this situation, what is your view? 11 A. The situation from reading the email is that there is -- 12 there are no hints in here that the data integrity 13 issues raised are real. There's a reference that 14 Ms Kirkham makes in her email to say that we have 15 a strong body of evidence and there is a document 16 produced to show how integrity is maintained in Horizon. 17 Q. Yes. We also have London News being interested, 18 a Watchdog programme potentially on the horizon and also 19 an MP interested. In those kinds of circumstances, we 20 have your evidence that it didn't ultimately go to you 21 in terms of the strategy but, in terms of whether it 22 should or shouldn't have gone to you, what is your view? 23 A. Depends on the situation, if the situation -- 24 Q. I'm telling you the situation. 25 A. If the situation is very, very serious and the team 113 1 believes that they need my involvement in that, then 2 I would expect them to escalate it. If they believed 3 that there was no integrity issues and that then 4 therefore this is something at play in the media but has 5 no substance, then I don't -- there would be no need to 6 involve me in that. 7 Q. Thank you. I'm going to move on now to early 2010, and 8 the Horizon Online pilot. In 2010 you were still 9 Managing Director? 10 A. Yes. 11 Q. Were you quite closely involved in the rollout of 12 Horizon Online and the pilots of Horizon Online? 13 A. There were several accounts that needed my attention 14 during that period when I joined as Managing Director, 15 and Post Office was certainly one of them. 16 Q. Yes, I mean, compared to, for example, being the CEO and 17 your increasing role in wider regions, when you were 18 just Managing Director, just of the private company 19 area, would you have been relatively involved in the 20 pilot? 21 A. Yes, I think that's fair. 22 Q. Could we, please, turn to FUJ00093031. We're going to 23 see that is a review that took place on the integrity 24 of -- we refer to it as Horizon Online, HNG-X. You're 25 not on the circulation list, you're not an author, but 114 1 I would just like to read some of the content to you and 2 see if you are familiar. Are you familiar with this 3 particular document it all, other than it being provided 4 by the Inquiry? 5 A. I don't think I've ever seen this but I can see it from 6 information you've provided. 7 Q. Looking at the circulation list, who is the person that 8 you would have liaised with the most out of all of those 9 people or perhaps who is the most senior of the 10 distribution list? 11 A. Maz Kostuch is probably the most senior person on that 12 list. 13 Q. Did they have a direct line of reporting to you? 14 A. I think Maz did at that time, yes. 15 Q. If we scroll down, I'm just going to read to you a few 16 paragraphs. So it begins with the terms of reference: 17 "Following the occurrence of a transaction being 18 duplicated on the HNG-X branch database, Stuart Rye and 19 Paul Roberts were asked to review the counter 20 application architecture and design and ensure that it 21 fully supports the need to protect the integrity of 22 financial transactions. 23 "The scope is focused on the integrity of the 24 Counter Application in relation to financial 25 transactions captured at the Counter. It does not 115 1 extend to data migration or other transient issues 2 caused by the switch from Horizon to HNG-X." 3 The "Background": 4 "The objective of the [Horizon Online] programme is 5 to develop a system with structural and operational 6 characteristics that substantially reduce ongoing 7 support and maintenance costs with respect to the 8 current Horizon system." 9 Just pausing there, were you aware that one of the 10 objectives, or a key objective, of Horizon Online was, 11 essentially, to save costs in the everyday operation? 12 A. Yes, I was. 13 Q. Thank you. 14 "A key component of Horizon Online is the Counter 15 Application. In [reference] to the Horizon Counter 16 Application, the [online] version retains operational 17 data, (eg Reference Data) and business logic, but 18 transactional information is stored directly in the Data 19 Centre." 20 I'll take you to the next paragraph, it says: 21 "It is currently in pilot with nine branches." 22 So, at this time, 2010, it was only in 12 branches. 23 A. Mm-hm. 24 Q. "On 28 January 2010, the Data Reconciliation Service 25 process detected an error in a banking transaction. 116 1 Subsequent investigations revealed that the branch 2 database had two transactions with different [Journal 3 Sequence Numbers] but the same [Session Sequence Number] 4 for a specific counter on that day but the third party 5 banking system only had one transaction. The clerk did 6 not know that a duplicate transaction had been created." 7 So reading that, it seems as though the person 8 operating the Horizon platform would not have known that 9 there was this error: 10 "An analysis of the database has revealed one other 11 occurrence, again at Derby, but on a different day and 12 involving a different clerk. This had not been detected 13 by the [Data Reconciliation Service] as it did not 14 contain a banking component and there there is no other 15 business reconciliation which might have spotted it. 16 "The net effect would be that the Post Office and 17 the branch records would not match. Where this happens, 18 the Post Office investigates the branch and postmaster, 19 with a view to retraining or even uncovering fraud. It 20 would seriously undermine Post Office credibility and 21 possibly historic cases if it could be shown that 22 a discrepancy could be caused by a system error rather 23 than postmaster/clerk action. [More] importantly, the 24 central database as the system of record would be called 25 into question." 117 1 Were you aware, in broad terms, of issues cropping 2 up in the rollout that had the potential to call into 3 account the accounting integrity? 4 A. No. 5 Q. Were you aware of the potential for an issue with 6 accounting integrity to affect, as we see there, Post 7 Office Investigations? 8 A. No. 9 Q. Again, as the new Managing Director, why wouldn't this 10 have been brought to your attention? 11 A. I don't know. What I do know is other issues were 12 bought to my attention during the rollout but this was 13 not. 14 Q. Reading that final paragraph, that is quite 15 a significant paragraph, isn't it -- 16 A. It seems to be. 17 Q. -- both for your relationship with the Post Office and 18 also in relation to those complaints that we had heard 19 about in that earlier correspondence? 20 A. So my understanding, Mr Blake, is this is about HNG-X 21 and not about Horizon. 22 Q. Yes. Irrespective of whether this relates to Horizon 23 Online or what we know as Legacy Horizon, the statement 24 that is contained in that final paragraph is quite 25 significant both for your relationship with the Post 118 1 Office but also for individuals, any individuals, who 2 are, for example, investigated by the Post Office? 3 A. Oh, without question, yes. 4 Q. Can we turn to FUJ00094392. If we start on the bottom 5 email, please, and if we go over the page slightly, we 6 can see this is an email from Jean-Philippe Prénovost; 7 were you aware of who that was? 8 A. No. 9 Q. So he was legal counsel, it seems, within Fujitsu, so 10 internal lawyer. He emails Alan D'Alvarez and he says 11 as follows: 12 "Hi Alan 13 "Further to our discussion of Friday, please find 14 below the two comments I had raised ..." 15 This is commenting on the document we've just 16 seen -- 17 A. Okay. 18 Q. -- and he says as follows: 19 "First paragraph, page 2 -- The following section is 20 potentially problematic [and he quotes there]: 'It would 21 seriously undermine Post Office credibility and possibly 22 historic cases if it could be shown that a discrepancy 23 could be caused by a system error rather than 24 postmaster/clerk action. Most importantly, the central 25 database as a system of record would be called into 119 1 question'." 2 So that's the bit I just took you to. He says as 3 follows: 4 "As discussed, there is no need to paint this in the 5 worst possible light. I would suggest the following as 6 being accurate without being unduly alarmist: 'If it 7 could be shown that a discrepancy could be caused by 8 a system error rather than a postmaster/clerk action, it 9 could potentially call into question the effectiveness 10 of the central database as a system of record'." 11 Quite significantly changing the meaning of that 12 sentence; do you agree with that? 13 A. Yes. I've not seen this document prior to being shared 14 by the Inquiry but -- 15 Q. Yes. You're not copied in. If we scroll up above, 16 there's an answer from Mr D'Alvarez and he says as 17 follows: 18 "After review with legal (see email below) two 19 amendments have been made to the documents and, in both 20 cases, the sections referred to have been removed as 21 they do not materially add to the primary purpose of the 22 review which is to determine whether the solution, as 23 designed would protect data integrity." 24 As I say, you're not on this email chain. 25 A. Mm-hm. 120 1 Q. Were you aware of a sensitivity within the business 2 about these issues? 3 A. No. 4 Q. Again, would it surprise you, as Managing Director, not 5 to be aware of these sensitivities? 6 A. With hindsight, yes, but that was not shared with me at 7 the time. 8 Q. Looking at the recipients here, who would you have 9 expected to have shared it with you? 10 A. So it's largely -- from what I can see -- I don't 11 recognise all of the names -- it's largely a technical 12 team. I would say probably Maz Kostuch, as I said 13 before, is probably the most senior person. 14 Q. Were they on any of the kinds of committees that we've 15 been speaking about? 16 A. Not to my knowledge. 17 Q. Could we please turn to FUJ00174290 and it's the bottom 18 email I'd like to take you to. We're still with the 19 pilot and rollout of Horizon Online, 6 April 2010. 20 Thank you. So it's the bottom half of page 1, please. 21 Mr Bounds sends you a list of issues arising at that 22 time. He says, as follows: 23 "Duncan, the new [Post Office] CEO, Dave Smith, 24 started today. Mike Young mentioned before he went away 25 that if/when the new CEO arrived he would likely be 121 1 reaching out to Richard in his first few days in the 2 role. 3 "By way of a briefing for Richard, please review the 4 following: 5 "[Horizon Online] pilot was progressing well and 6 moved into day 1 of high volume pilot (to 215 branches) 7 on Thursday, 25 March. 208 branches were successful 8 rolled out -- a good outcome." 9 It then says: 10 "Then began a catalogue of outages/issues as follows 11 ..." 12 It has a table of different issues: for example the 13 first one we see in that middle column: 14 "Two [Horizon Online] service outages affecting all 15 branches." 16 If we look at the bottom entry there, there's 17 reference to a client meeting: 18 "The client stated at a meeting on 1 April that they 19 would not allow High Volume Pilot to move ahead until: 20 "a. They had seen the findings of an independent 21 report on our CS operations -- giving them assurance 22 that we were correctly resourced and had our events 23 reporting under control [also] 24 "b. Fixes were deployed [for various issues]." 25 We see in the right-hand side of that, if we scroll 122 1 up slightly that, in terms of the report on operations, 2 you now have underway a report that's being written by 3 somebody called Rachel Daka. I think you've said in 4 your witness statement that she wasn't independent, in 5 the sense that she wasn't external to Fujitsu; you chose 6 to pursue that internally? 7 A. That's right. 8 Q. What was the reason for that? 9 A. My understanding was the Post Office Account team wanted 10 to bring someone in with experience in Fujitsu who was 11 independent of the team that was deploying Horizon 12 Online and Rachael was -- well, you can see here -- the 13 Operations Director for our Retail Business Unit. 14 Q. Number 3, there is reference there to Belfast data 15 centres suffering a power surge and then we come to 16 a list of things that are to be moved to red alert; can 17 you assist us with what red alert was please? 18 A. As I recall, red alert was an internal process that 19 account teams could engage with to bring more of the 20 company's resources to bear on the particular issue they 21 were facing. 22 Q. There's reference there to two major incidents, one with 23 Horizon Network banking issues, another with MoneyGram 24 issues. Below that, we also have other major incidents, 25 debit card authorisation agent failed in a resilient 123 1 pair; horizon Network banking issue; proxy radius server 2 issue affecting ISDN sites. 3 I just want to read to you the paragraph two 4 paragraphs below. He says: 5 "The above reflects significant issues we've 6 experienced over a short time span." 7 Just pausing there, were you aware of those kinds of 8 issues being experienced in relation to the rollout of 9 Horizon Online? 10 A. I would have been aware of, I think, most of these 11 issues. 12 Q. "Relationships with the Post Office leadership are tense 13 and we are clearly on the back foot. Dave Smith (as in 14 the CIO that has just retired from [the Post Office]) 15 takes with him a maturity of approach and firsthand 16 experience of the original rollout of Horizon, his 17 council to Mike Young and the [Post Office] ET was 18 [that's 'Executive Team', I think] was that there were 19 many large issues back then and that these should be 20 expected now ..." 21 Were you aware, we've had a whole phase looking at 22 the original rollout, were you aware of significant 23 issues during the original rollout of Legacy Horizon? 24 A. No. I was not. Not at this time. 25 Q. It looks as though Dave Smith was trusted because he had 124 1 experienced the first rollout and was likely to be more 2 accepting of issues this time round. Is that -- was 3 that your understanding? 4 A. I'd never met Mr Smith, no. 5 Q. I think this was an email sent to you; did you have any 6 thoughts on that at the time? 7 A. No, I did not. 8 Q. The reference to relationships with the Post Office 9 leadership being tense, what was your understanding at 10 that time? 11 A. I would -- I think that's about right. We were in the 12 middle of a major rollout. That rollout was already 13 significantly delayed and then we have all of these 14 technical issues. 15 Q. Then it says: 16 "However, we do have a strong supporter in Andy 17 McLean, the [Post Office] Service Director -- whilst not 18 pleased with where we are he advocates a logical 19 cooperative ethic to overcome issues and is concerned by 20 some of the more emotional reactions he is seeing within 21 [the Post Office]." 22 What did you understand by "Emotional reactions"? 23 A. Well, had I have sat in the shoes of either 24 a subpostmaster impacted by this, or on the Post Office 25 side, when the rollout is in progress, I would have -- 125 1 I would have had a similar emotional reaction to it. 2 Q. "Dave Smith (from Parcelforce) started today, and has 3 met with the [Horizon Online Post Office] team. Our 4 contacts tell us that he is likely to take a more 5 cautious stance towards restarting the pilot. The 6 National Federation of SubPostmasters will not allow any 7 more of their members' branches to be migrated to 8 [Horizon Online] for the time being. The likely way 9 forward is that [the Post Office] will look to deploy 10 [Horizon Online] to all their Crown Offices first, to 11 prove that the system works and to persuade the 12 Federation to continue." 13 So it seems as though there were real tensions at 14 this point about even whether Horizon Online was going 15 to be rolled out to various subpostmasters around the 16 country? 17 A. So I would agree with the significant tensions. I think 18 the question was, when do you -- at what point do you 19 roll out Horizon to branches, as opposed to do you only 20 partially roll out the new version of Horizon? 21 Q. Was that ever a threat from the Post Office, though, 22 that they wouldn't proceed full stop with Horizon 23 Online? 24 A. So I remember meetings and correspondence with Mr Young 25 and certainly some documents provided by the Inquiry, 126 1 that Mr Young did raise the view with us that he would 2 rather cancel the Horizon Online programme and he would 3 go back to the previous version of Horizon. He did not 4 want his operation messed up. 5 Q. Thank you. I'm actually going to take you to that 6 correspondence now. Could we start with the 7 FUJ00095628, please, and we'll start on page 2. Thank 8 you. There's an email from yourself to Roger Gilbert 9 and Gavin Bounds, and you say as follows: 10 "I spoke to Mike Young on Friday morning, he was in 11 good spirits but remains very concerned about [Horizon 12 Online]." 13 Mr Young has made two points. The first is: 14 "The programme was reviewed at Group level ... with 15 Mike Young, Dave Smith and the Group Legal counsel and 16 FD discussing options. The legal counsel admitted they 17 have few 'levers' to pull but want some reassurance. 18 The Group input was based on the issues and experience 19 they had with CSC." 20 Are you able to assist us with CSC? 21 A. That would be Computer Science Corporation, now known as 22 DXC." 23 Q. Thank you: 24 "Mike gave a balanced view of Fujitsu -- good 25 relationship, excellent track record of stability, 127 1 positively engaging with [Post Office] and made 2 a difference to the business making its numbers that is 3 years. However, he has doubts about our ability to 4 wrestle the programme to the ground and they remain 5 worried about the later releases of the software as they 6 relate directly to [Post Office's] ability to grow 7 revenue. His words to me were that he has pressure on 8 him to consider a plan B." 9 Is Plan B what you were talking about before that, 10 potentially, he may pull the plug on the whole thing? 11 A. He never made that clear. It was, I would say, a threat 12 that was left dangling in the air. 13 Q. "Their confidence has been knocked due to: 14 "Ongoing issues with Oracle stability ... 15 "The data centre outage. 16 "An outage caused by 'Fujitsu operator error' last 17 week ... 18 "Mike has asked for the following: 19 "1. Based on advice from Group Legal counsel Mike 20 feels he wants some assurance that the [profit and loss] 21 for the account is sustainable over the short and long 22 term so they can see what we invest and provide the 23 resources necessary to get the problems fixed. This 24 will look like some form of an 'open book' arrangement." 25 What do you understand by "open book arrangement"? 128 1 A. For Fujitsu to reveal every last cost item that there is 2 assigned to the programme, and I think to the whole 3 account. 4 Q. "2. He wants an independent review of the processes, 5 tools and resource on the programme to assure themselves 6 we are genuinely up to it. 7 "3. Finally, he wants Dave Smith to have some 8 dialogue with ..." 9 I think that's Richard Christou? 10 A. Yes. 11 Q. "... so they can test the Japanese Board's commitment to 12 the account and programme (conference call or [video 13 conference] would work). 14 "My view is it would be difficult, based upon where 15 we are now, for us to resist 1 and 2 although there is 16 some risk in those areas." 17 So the initial discussions have taken place and your 18 initial view is that, in fact, those first two would be 19 difficult to resist. So the open book and the 20 independent review; is that right? 21 A. That's fair, yes. 22 Q. If we scroll up, please, to the first page. The very 23 top of that at page, please. We see an email from Guy 24 Wilkerson. Who was Guy Wilkerson? 25 A. I think he was a hybrid legal commercial person on the 129 1 Post Office Account. 2 Q. He says and he's responding there to Vince Fullwood, who 3 I think has forwarded the earlier chain. He says: 4 "As discussed, this isn't really a great surprise 5 and I'm sure we'd be doing the same thing if things were 6 reversed. As they suggest, they are not entitled 7 formally to an Open Book Review in my opinion but this 8 would be a confidence measure rather than a contractual 9 arrangement on their part. 10 "They are hyper-sensitised to the stability issue 11 ..." 12 He then refers to the open book review wasting a lot 13 of time, and it's this final sentence that I want to ask 14 you about. He says: 15 "An independent review will throw up all sorts of 16 detail issues that can only delay the programme." 17 Were you aware internally of concerns about carrying 18 out an independent review at this stage? 19 A. So this is an independent review of the account's 20 financials, Mr Blake, if I read this email correctly. 21 Q. What do you think it's limited to that? I mean, if 22 I take you to the discussion -- in fact, I'll take you 23 to the actual correspondence of Mr Young, so we can look 24 at that. 25 A. Okay. 130 1 Q. But do you recall any reluctance to carry out any form 2 of independent review at that stage? 3 A. So -- well, I should be clear. My understanding of 4 this, it was an independent review of the programme and 5 not of data integrity, which I think is important, if 6 I understand this correctly. Then, in terms of our 7 concern, the concern would, certainly in terms of open 8 book, have been another opportunity for Post Office to 9 try to reduce Fujitsu's fees or costs into them, which 10 was a consistent theme of the conversations between the 11 two organisations. 12 The other risk, I think, for us at the time, was the 13 most important thing to do was resolve the Oracle issue 14 and, diverting resources from the programme, then into 15 an independent review, might have reduced their focus on 16 what was the most important thing, which was the 17 successful rollout, of the HNG-X programme. 18 Q. Let's look at the subsequent correspondence between you. 19 It starts at FUJ00095658. This is a letter to you from 20 Mike Young, 10 May 2010, I will read to you a few 21 passages. The second paragraph starts by saying: 22 "It was recognised during this review process that 23 our relationship with Fujitsu is of long standing, has 24 thus far proved fruitful to both parties and continues 25 to play a pivotal role in the successful delivery of 131 1 Post Office's products and services." 2 But he then goes on, in the next paragraph, to talk 3 about his requests in relation to the Horizon Online 4 programme. He says: 5 "We would very much like to see the executive 6 correspondence within Fujitsu related to the recent Red 7 Alert. This, we feel, would give us an understanding of 8 how the Executive Management within Fujitsu are aware 9 and responding to some of the problems we have seen in 10 rollout." 11 So one of his requests is a bit more transparency 12 from Fujitsu. The second, he says: 13 "Additionally, we would like you to consider 14 bringing in a qualified independent party and asking 15 them to review and audit how the current programme is 16 being run ..." 17 This last half of the sentence is important, in the 18 context of what you've just been saying: 19 "... as well as testing resource and skill levels 20 both on the programme itself and other key initiatives 21 that we have under way with Fujitsu." 22 So it's both looking at resources and skills of 23 those who are running the programme as well as the 24 overall programme itself; is that right? 25 A. That's fair. 132 1 Q. Yes. Then your response is FUJ00096312. If we start on 2 page 2, please -- thank you -- this is your response to 3 that letter. So "Thank you for your letter", it starts. 4 Three paragraphs down, it says: 5 "Since your letter, I am extremely pleased with the 6 progress that has been made. We have located the source 7 of the troubles and taken steps to rectify the issues 8 and we have now recommenced the pilot." 9 Next paragraph: 10 "The cause of the issues that delayed High Volume 11 Pilot was deficiencies with the Oracle product code." 12 You've explained a lot about the Oracle issue in 13 your witness statement, I'm not going to deal with that 14 today. You say, at the end of that paragraph: 15 "At this crucial phase of the programme, we can see 16 no benefit and will not be pursuing a third party 17 review." 18 So you are rejecting the proposal for an independent 19 review at that stage. 20 A. Yes, it is, and my understanding is, between Mr Young's 21 letter and this, that between Post Office and Fujitsu, 22 there had been an attempt to agree a review with a third 23 party but it had not come to conclusion. 24 Q. Was that because of concerns within Fujitsu that 25 an independent review would, in the words of 133 1 Mr Wilkerson, throw up all sorts of detail issues that 2 can only delay the programme? 3 A. I don't believe so. 4 Q. What was your belief as to the reason why an independent 5 review at that stage was not to be agreed to? 6 A. So during that period you have two things. You have 7 about six weeks period of time-ish -- you might correct 8 me -- where, between Fujitsu, Post Office and third 9 parties to agree a scope and terms of reference, and 10 that was not possible during that time. 11 I think the other thing, Mr Blake, is, by the time 12 that this letter goes back from me to Mr Young, it's 13 clear what the real issue with the programme was and the 14 real issue with the programme was the Oracle code, which 15 has since been fixed. 16 Q. You then continue in this email: 17 "You will have seen the tremendous effort from 18 Fujitsu. 19 "Thank you for your offer of assistance over Red 20 Alert ... that has now been lowered", et cetera. 21 So, effectively, trying to close off the issues that 22 Mr Young has raised in his letter is that a fair -- or 23 to say that they have already been addressed or don't 24 need addressing? 25 A. I think that we have taken measures to address the 134 1 concerns around the programme, including the Daka review 2 during that period of time, and that we're now back -- 3 and it was clear, the real issue with this is the Oracle 4 code and that's now resolved and we're able to deploy 5 the pilot -- sorry, deploy into high-volume rollout. 6 Q. Could we turn to page 1, please, and we have his 7 response. He says: 8 "It won't surprise you to learn that I am somewhat 9 disappointed that it took so long to formally reply to 10 my correspondence of 10 May and with the apparent 'sea 11 change' on approach to some of our concerns. As my 12 letter intimated, these letters of concern were brought 13 to the fore in a Royal Mail Group Review of the current 14 Horizon contract. My understanding from our weekly 15 calls was that you had taken advice from KPMG as to how 16 you could go 'open book' with us and therefore didn't 17 foresee a problem in doing so. On the issue of having 18 a qualified independent party audit to evaluate Fujitsu 19 Programme execution, along with staffing levels and 20 skills base, I had been briefed that you had spoken to 21 several entities to pursue this endeavour. Indeed, 22 I was told you were close to agreeing terms with one of 23 these. Additionally, in our calls you will recall I had 24 asked whether there was a possibility of the Post Office 25 'owning' the terms of reference and again, this was 135 1 something you were going to strongly consider. 2 "As it stands now, I feel I have been led down 3 a journey on a number of months, just so that you can 4 now say, 'no'. This does not reflect well on our 5 relationship and will not be well received in the next 6 review. I have as a matter of course, been keeping both 7 the Post Office Executive and the Group Executive aware 8 of the progress I was told we were making in these 9 areas." 10 Just pausing there, the evidence that you've given 11 in relation to your response was that things had 12 changed, problems were over by then -- 13 A. Mm-hm. 14 Q. -- and that they weren't necessary. It seems to have 15 come as quite a surprise to Mr Young; were you aware of 16 that? 17 A. I think -- well, you can see from his -- from his email 18 to me that he is disappointed that we have, at that 19 point, pushed back on his requests. 20 Q. There seems to be somewhat of a gulf between you as to 21 whether matters are resolved or not resolved? 22 A. I would say, Mr Blake, the matters were resolved because 23 the programme, at that point, was back up and running, 24 and, as I said, the key area that was causing the issues 25 in the programme here was the Oracle software code. 136 1 Q. He continues: 2 "It is now even more imperative that my Managing 3 Director gets a view from the Japanese Board on just how 4 they feel this relationship is progressing. We would 5 like to see if the meeting between Dave Smith and 6 Richard can be brought forward to a date closer than the 7 current August date. 8 "In the meantime can I suggest you and I get 9 together in person some time next week and talk thorough 10 where we are." 11 Were matters ever raised with the Japanese Board 12 along the lines proposed here? 13 A. My understanding is Richard was aware of the issues we 14 were facing with Post Office and was supportive of 15 a meeting with Mr Smith and Mr Young. 16 Q. Are you aware of that taking place? 17 A. I vaguely recall that it did. 18 Q. Can we, please, turn to FUJ00096238. If we scroll down, 19 please, thank you, we can see Andy McLean. Who was Andy 20 McLean? 21 A. I'm not quite sure. 22 Q. Okay. He is emailing Gavin Bounds and raises issues 23 with costs that are being incurred by the overrun. If 24 we scroll over to the first page, we're in the same time 25 period -- we're actually slightly back in time now. 137 1 A. Okay. 2 Q. We're on 18 June. This is American format, so it should 3 be 18 June 2010, and it's from Mr Bounds to you, and he 4 says: 5 "I will be sending this to Andy McLean at [the Post 6 Office] later today." 7 It's headed "Without Prejudice", and he says, for 8 example: 9 "We are greatly encouraged by the recent restart on 10 [the] pilot rollout and we are hopeful that the 11 programme will now move forward to a successful and 12 uninterrupted conclusion. Despite this, it is 13 acknowledged that getting to this point has caused us to 14 move beyond the period covered by the last arrangements 15 made regarding the schedule and, like you, we would like 16 to discuss this to ensure our financial position is 17 clear." 18 I just want to read to you that penultimate 19 paragraph there. He proposed to say: 20 "I have had confirmation from Duncan [regarding] his 21 and Mike Young's conversation, unfortunately no such 22 agreement was reached. Just to be clear, while I can 23 sympathise with the intention behind your suggestion, 24 Fujitsu is not contractually liable in any way, any 25 measures agreed without prejudice would have to be very 138 1 carefully considered -- [so] you know such a precedent 2 if set by [the Post Office] to its subpostmasters might 3 make [the Post Office] liable for compensation to 4 subpostmasters in all future cases where the service is 5 interrupted ..." 6 Just pausing there, it seems as though you've had 7 a conversation with Mike Young about potentially 8 providing some sort of compensation or money to those 9 subpostmasters who were affected by problems in the 10 rollout; is that right? 11 A. So my understanding is that Mr Young and I had 12 a conversation where we left with different views of the 13 same -- of the same conversation, and Mike was under the 14 impression that we would pay compensation directly to 15 subpostmasters. 16 Q. Yes. This draft being sent on a without-prejudice 17 basis, looking at this and looking at the earlier emails 18 that I've taken you to, it seems as though, in June of 19 2010, things were quite bad between yourselves and the 20 Post Office, potentially leading even to litigation. Is 21 that your recollection? 22 A. I don't know if, at that time, it would have been as 23 tense as earlier on in 2010. 24 Q. So there was a worse time in 2010? 25 A. I think the early part of 2010 was difficult for both -- 139 1 was difficult for both organisations and for 2 subpostmasters. 3 Q. Again, is that due to issues during the rollout -- 4 A. Yes. 5 Q. -- technical issues affecting subpostmasters? 6 A. (The witness nodded) Yeah. 7 MR BLAKE: Sir, I think that's an appropriate time to take 8 our first afternoon break. 9 SIR WYN WILLIAMS: Okay. 10 MR BLAKE: If it could be for ten minutes, please. 11 SIR WYN WILLIAMS: Yes. So where does that take us to? 12 MR BLAKE: 2.50, please. 13 SIR WYN WILLIAMS: Fine, yes. 14 MR BLAKE: Thank you very much. 15 (2.38 pm) 16 (A short break) 17 (2.51 pm) 18 MR BLAKE: Thank you, sir, can you see and hear me? 19 SIR WYN WILLIAMS: Yes, thank you. 20 MR BLAKE: Excellent. 21 Mr Tait, just to summarise where we are, we went to 22 a document in 2009 and I think the position was you 23 recognised that there were complaints from 24 subpostmasters relating to integrity and that you were 25 broadly aware of those, albeit not necessarily paying 140 1 much attention to the particular emails that I took you 2 to; is that right? 3 A. I think that's fair. 4 Q. Then 2010, we've seen issues with the pilot and the 5 rollout, and tensions between the Post Office and 6 Fujitsu in respect of that. 7 A. That's also true. 8 Q. Could we, please, turn now to FUJ00174378. We're still 9 in 2010 but now we're in the summer of 2010, 22 July 10 2010, so a month after the documents that we were just 11 looking at. You are sent an email from Gavin Bounds to 12 yourself and others, entitled "Channel 4 [documentary] 13 next week [regarding Post Office] and our Horizon 14 system -- heads up". It says as follows: 15 "[Post Office] has just informed us that they are 16 commenting back to Channel 4 on a documentary to be 17 aired next [Friday regarding] the plight of a few 18 subpostmasters who have claimed that Horizon (our 19 system) was the cause of financial irregularities that 20 led to them losing their jobs. This appears to be 21 related to Horizon and not HNG-X and also are not 22 related to the service interruptions we experienced 23 during March/April. 24 "[Post Office] will send us the comments they have 25 made tomorrow. Verbally [Post Office] has confirmed to 141 1 us that these cases are known to them and they see no 2 cause for concern. In case we are approached -- as 3 usual -- we should refer all questions back to the [Post 4 Office] PR team." 5 Do you recall receiving this email? 6 A. I do not. 7 Q. Do you recall, in general terms, there being a Channel 4 8 documentary in July 2010? 9 A. I didn't watch it. 10 Q. Do you recall there being a documentary at that time, 11 learning about it around that time? 12 A. I received the email, Mr Blake, so I must have been 13 aware at the time. 14 Q. Mr Bounds, he wasn't a technical expert at Fujitsu, was 15 he? 16 A. No. 17 Q. Could we, please, turn now to FUJ00156195. Very similar 18 time, we're now on 5 August. If you scroll down to the 19 bottom of page 2, please. Thank you. We have an email 20 from Roger Gilbert to you and Mr Bounds asking for you 21 and Gavin to provide a brief on what follows below. Can 22 you assist us with who is on the distribution list 23 below, please, where they are, which office they are in? 24 A. Sure. So Mr Kamata was essentially Mr Christou's Chief 25 Financial Officer; Brian Harris, I think was -- at that 142 1 point would have been a -- was previously Richard's CFO 2 and was now in some type of business assurance role; 3 I don't know who Matsuzawa-san is, Mr Matsuzawa. 4 Q. So are they based in the Japanese part of Fujitsu or are 5 they based in the UK? 6 A. I think, at that point, Mr Kamata would have been based 7 in London, Mr Harris would also have been based in 8 London, I don't know where Matsuzawa-san was, and the 9 others the other Japanese people I don't know, it looks 10 like they were based in London. Roger Gilbert was my 11 boss in London; Steve Clayton was, I believe, Roger's 12 CFO based in London; Richard Christou, at that point, 13 was probably on his way to Japan or already being in 14 Japan; and Philip Oliver, I believe, was also based in 15 London. 16 Q. Thank you. The author says: 17 "Although it is not clear if we are involved in this 18 matter at this moment, I would like you to work with 19 Roger and his team to clarify what is going on. This 20 article has been already picked up by [Fujitsu] Tokyo." 21 We will scroll down and see what the story is but, 22 when it says "picked up by [Fujitsu] Tokyo", typically 23 how would that happen? 24 A. I guess Fujitsu Tokyo would either have picked up 25 something in the media or would have been informed by 143 1 Fujitsu in Europe or very occasionally a customer might 2 have written directly to senior executives in Japan. 3 Q. Thank you, if we scroll down, we can see that it's 4 a news article, "Post Office faces legal action over 5 accounts IT", and it refers there to Accountancy Age. 6 It says: 7 "Accountancy Age has learned a group of 8 subpostmasters have joined together to bring legal 9 action against the Post Office. Court papers are 10 expected to be filed in the coming weeks. 11 "The action originates with the Justice for 12 Subpostmasters Alliance and is over the use of [Fujitsu] 13 accounting software made for the Post Office by Fujitsu. 14 "A number of subpostmasters have lost their 15 positions over alleged accounting irregularities, while 16 some have also faced fraud allegations in the courts. 17 "But the subpostmasters claim that errors in the 18 system software are to blame." 19 If we scroll down to the bottom of that page, it 20 says: 21 "The JFSA has expressed concern that the accounts of 22 any subpostmasters have not been examined for up to 23 eight years, which it believes would highlight the 24 system's problems." 25 At the bottom of the page, it says: 144 1 "Allegations about Horizon first appeared in October 2 last year when 30 subpostmasters came forward ..." 3 Then it has at the bottom, "IN OUR VIEW", so that's 4 in Accountancy Age's view, if we scroll down to the 5 bottom of the page, please: 6 "IN OUR VIEW 7 "Rarely has there been a more pressing need for 8 a forensic accountant to audit an accounting system. 9 With a High Court battle on the cards, and various 10 smaller courts around the country all calling for 11 an audit, the Post Office now faces compelling claims to 12 undertake a serious audit of its IT. The argument is 13 becoming almost impossible to ignore." 14 If we go back to page 2, please. Just below that, 15 we have the CEO of Fujitsu sending this to you and to 16 the COO, Gavin Bounds, asking for a brief. Then we 17 have, on page 1, the brief. I'm going to take some time 18 to take you through this email. So Mr Bounds has sent 19 it to you: 20 "Roger/Duncan ..." 21 So to the CEO and to you: 22 "Summary -- no cause for immediate concern, this is 23 the latest in a long line (even preceding automation) of 24 articles and/or challenges to [the Post Office] 25 regarding its accounting systems." 145 1 He sets out the Fujitsu position: 2 "Post Office owns relatively few of the actual post 3 office branches in the UK, most of the branches being 4 effectively franchises. Postmasters are mainly paid 5 based on the number of transactions of each type that 6 they perform. Post Office takes a fairly firm stance 7 with any accounting discrepancies to prevent fraud but 8 there is a steady stream of court cases and almost 9 weekly stories in the minor or local press covering 10 those cases. 11 "Fujitsu is obligated to support Post Office, where 12 requested to do so, by either providing system 13 information to support the cases or, in some cases, 14 expert witnesses to testify as to the measures within 15 the systems to ensure that the data being relied on is 16 as originally entered. This has been going on for 17 a number of years with little incident. 18 "As reported in the article, recently accused 19 postmasters have become more organised and a case in 20 West Byfleet is being used to test potential arguments." 21 That's the prosecution of Seema Misra. 22 A. Yes. 23 Q. "We have been providing information and an expert 24 witness at Post Office's direction. The outcome so far 25 is understood to be that neither Post Office nor Fujitsu 146 1 has been found to be at fault although the judge has 2 left open the possibility that if there is an error 3 anywhere, it is only likely to be in the processes which 4 are Post Office's. The defence counsel is currently 5 using this to request further system information but the 6 general view is that he is fishing for problems rather 7 than having any particular proof of error." 8 The next paragraph: 9 "Post Office is handling the case and all 10 communications with the public ... [Post Office's] 11 position (validated yesterday and today) is that they 12 are not going to respond to this article on the basis 13 that Accountancy Age only has a small circulation -- 14 although they are also aware that it is on the web. 15 Their view is that if they respond to every article on 16 this topic it only as credence to the claim. Post 17 Office also stated that they are confident that the 18 integrity of the Horizon system is secure. They will 19 always investigate every case that is raised by the 20 subpostmasters and to date they have never found the 21 system to be flawed. If necessary, Post Office will 22 fight each individual case through the courts. In all 23 formal responses to these allegations, Post Office never 24 mentions Fujitsu unless they are asked to provide an 25 expert witness." 147 1 I just want to read to you this final paragraph: 2 "They did recently issue a private statement to 3 Channel 4 ..." 4 So that's the Channel 4 programme -- 5 A. Okay. 6 Q. -- that was mentioned in that earlier email: 7 "... after which they withdrew a programme they were 8 planning on the subject." 9 So the Channel 4 notification on the 22 July seems 10 to have not have taken place -- 11 A. Okay. 12 Q. -- it seems to have been withdrawn: 13 "This is included below and has been released to us 14 on the basis that we do not circulate this beyond those 15 executives with an immediate need to know." 16 This the private statement that was released to 17 Channel 4: 18 "As discussed here is a copy of the statement that 19 was sent to Channel 4 News the other week. I am happy 20 for you to use this in order to address the concerns of 21 your executives in Japan ..." 22 Just pausing there, do you recall concerns being 23 raised by executives in Japan at this stage? 24 A. So I don't know. I'm assuming this refers to the 25 Japanese people referenced in the email or in 148 1 communication with the Post Office. I don't know. 2 Q. Did you at this stage have any communications with 3 executives in Japan about -- 4 A. I didn't, Mr Blake, but my reporting line was through to 5 Mr Gilbert, then he reported to Richard Christou and 6 Richard Christou was on the Executive Committee of 7 Fujitsu in Japan at that time. 8 Q. "... however, I need to ask that this doesn't get 9 circulated around Fujitsu or appear in any way in 10 internal publications -- this is because [Channel 4] 11 didn't run the article so our statement [hasn't] been 12 publicly released." 13 Their statement said: 14 "Virtually all the UK's 12,000 post office branches 15 operate entirely professionally, using the Horizon 16 system, without any accounting discrepancies and without 17 accumulating abnormal debts, and it is clearly in the 18 interests of both our customers and the vast majority of 19 subpostmasters that in the very few instances where 20 there is evidence that the finances of a branch are not 21 properly managed or where money has gone missing, Post 22 Office Limited must fully investigate, and take 23 necessary action, including legal action in the last 24 resort. The decision to prosecute is not taken lightly 25 and in every case where action has been taken no court 149 1 has found evidence to believe that the Horizon system's 2 integrity to be deficient." 3 Just pausing there, we're now in August 2010. By 4 that stage, were you aware that Post Office was 5 prosecuting subpostmasters based on Horizon data? 6 A. Yeah, I'm not sure I was. 7 Q. Even on receiving this? 8 A. Even on receiving this. 9 Q. I'll read to you the final paragraph of that statement, 10 they say: 11 "'We are continuing to upgrade the system to make 12 sure it meets the growing demands of the financial 13 services products provided by today's post offices. 14 Whilst implementing changes it will inevitably have 15 caused some inconvenience, it has not in any way 16 affected the integrity of the system, which is 17 fundamentally more accurate and less open to abuse than 18 the old-fashioned paper based systems it replaced'. 19 "Finally, Post Office does not publish details of 20 prosecutions of subpostmasters." 21 Mr Bounds continues, he says: 22 "It is also worth noting that Horizon is due to be 23 retired and replaced by [Horizon Online] in the next 24 month or so -- this is primarily for cost saving reasons 25 and was not driven by any technical problems with 150 1 Horizon. This is unlikely to prevent similar 2 investigations into the replacement system at a later 3 stage." 4 So bringing everything that we've been looking at 5 together, within your first year at Fujitsu, you were 6 aware of complaints from subpostmasters relating to 7 Horizon integrity, correct? 8 A. Yes. 9 Q. You were aware of publicity in trade magazines and in 10 other articles as well? 11 A. Yes. 12 Q. You were aware of Fujitsu providing some support to the 13 Post Office, albeit unclear the extent of that support? 14 A. Yes. 15 Q. It didn't register with you that that included 16 prosecution support at that stage; is that right? 17 A. Also true. 18 Q. I think in your witness statement, you've said that you 19 only vaguely recall this particular issue; is that 20 right? 21 A. That is also right. 22 Q. Given that it's been raised, picked up by Fujitsu in 23 Tokyo, given all of the details that we see here, why do 24 you think it was not a significant issue on your 25 particular agenda? 151 1 A. Because, if I go back to the emails when I first joined 2 the company, it's evident from the Chief Operating 3 Officer of the Post Office that he says Horizon is 4 great, stable and the users have nothing but praise for 5 it. You can see that in some of the documents you've 6 provided for me. The Suzie Kirkham note is clear that 7 we have -- that Fujitsu has a strong body of evidence 8 that there are no integrity issues. And then, when you 9 get each of these events, like the Channel 4 programme 10 you referred to and this, it's made clear by senior 11 executives inside Fujitsu, and I think, also as I said 12 from the customer, that there is no issue. 13 Q. In quite a few places in your witness statement you rely 14 on assurances from the Post Office that there aren't 15 issues. 16 A. Yes. 17 Q. Isn't that looking at it from the wrong way round? 18 A. No, I don't believe it is. 19 Q. We saw, for example, in 2009 Gareth Jenkins providing 20 that Fujitsu integrity report. So there's certainly 21 information going from Fujitsu to the Post Office to 22 reassure them about the integrity of Horizon. So isn't 23 saying Post Office didn't raise any problems, isn't that 24 the tail wagging the dog? 25 A. My view, Mr Blake, is system integrity relies on two 152 1 fundamental components: the first one is that the 2 supplier must do their utmost to make sure that system 3 works and to monitor it accordingly and, at the same 4 time, it is the responsibility of the customer also to 5 take seriously the issues that are raised by their 6 customers. And when you put those two things together, 7 as it did for the vast majority of customers that 8 I engaged with, that worked. 9 So it is the responsibility of both organisations to 10 make sure that this system works and to engage with each 11 other genuinely and openly when there are issues. 12 Q. In terms of your organisation, providing that 13 reassurance, where were you getting that from? 14 A. I was getting that up the line but, if I take a step 15 back, so I could have been made aware of integrity 16 issues in a number of ways: so our governance processes, 17 through escalations up through the line, either the 18 technical line or the business line that reported to me, 19 and I was getting blanks from each of those particular 20 lines, where I could have been alerted, or more to the 21 point, I was being given a reassurance. 22 Q. Who by? 23 A. Well, you can see some of the names we've discussed so 24 far, who have been referenced in the documents so far 25 today. 153 1 Q. We'll look at more but let's say at this stage who, in 2 particular, are you getting reassured by? 3 A. Well, I'd say, so far, principally, you can see two 4 people. You can see Mr Bounds and you can see Mr Young. 5 Q. So Mr Bounds from the Fujitsu side and Mr Young from the 6 Post Office side? 7 A. Yes. 8 Q. Could we please turn to FUJ00174417. We're now in 9 February 2011. You're still Managing Director, you 10 haven't yet become CEO at this stage? 11 A. That's right. 12 Q. An email from Mr Young to yourself and also to Stephen 13 Long and it says: 14 "Guys 15 I need you to take a look at this if you haven't 16 seen the programme already." 17 He forwards you the link to the Inside Out South 18 programme. He says this: 19 "Undoubtedly, Horizon integrity remains a core to 20 our safe operation and, to date, nothing has surfaced 21 that suggests there is any evidence that the system is 22 flawed in any way. Can we briefly just talk through 23 these latest developments." 24 Now, first of all, "Guys", quite an informal, close 25 relationship, it seems? 154 1 A. I'm not sure I would call my relationship with Mr Young 2 close in a chummy way, and you can see from some of the 3 documentation this morning that it was the opposite of 4 that at times. 5 Q. Who was Stephen Long? Can you remind us? 6 A. So if my memory serves me correctly, at this point, 7 Mr Bounds has moved off the Post Office Account, 8 post-the successful deployment of Horizon Online, and is 9 doing another role inside the Private Sector Division, 10 and he has been replaced by Mr Stephen Long. 11 Q. Thank you. The Inside Out South report is the Nick 12 Wallis report where it begins with looking at Seema 13 Misra's case, so the case that we've already seen 14 referenced in that email. 15 A. Yes. 16 Q. She was in prison at the time, it has her husband crying 17 in that programme; it then moves on to Jo Hamilton's 18 case and interviews her; complaints about your product, 19 the Horizon system; also interviews with Parliamentarian 20 James Arbuthnot expressing his concerns. I think you've 21 said in your statement that you don't recall watching 22 that programme; is that right? 23 A. That is right. 24 Q. Again, the Managing Director of a company that provides 25 a system that is at the centre of the complaints linked 155 1 to a BBC article -- so not just now a small trade 2 magazine of any sort, a respected national 3 broadcaster -- 4 A. Yes. 5 Q. -- why is it that you wouldn't have looked at that? 6 A. I think it's in that the paragraph, just underneath the 7 link to the iPlayer, in the second line, you can see -- 8 well, sorry, let me read: 9 "... nothing has surfaced to suggest there is any 10 evidence that the system is flawed in any way." 11 Mr Blake, this isn't from someone relatively junior 12 in the Post Office; this is the Chief Operating Officer 13 of the Post Office. 14 Q. But the reporting is about your product. How is it that 15 you don't have curiosity about what the BBC are saying 16 about your own product, irrespective of what the client 17 is saying? 18 A. Mr Blake, I think I showed curiosity in my job day to 19 day and had this have had a sense in here that I should 20 have dug further, after being reassured now on several 21 occasions there were no issues, this does not tell me, 22 "Duncan, you need to take a deeper look into this". 23 Particularly, I am being reassured by a very senior 24 customer. 25 Q. We saw at the very beginning that chart that showed the 156 1 important customers for Fujitsu, the £30 million plus 2 customers: a very small number of customers. Was there 3 regular reporting about your other customers that's 4 critical of your product? 5 A. I would have issues raised to me quite regularly and, 6 depending on how they came to me and my assessment then 7 from what I saw, I would intervene. I intervened during 8 this period of time, personally, on a very serious issue 9 with Thompson Reuters, which meant that we ended up 10 between the two of us cancelling our agreement. 11 I remember another issue with a customer where 12 there'd been one issue in an account balance in about 13 10 years that was escalated to me and that was one issue 14 in 10 years, and we resolved that issue within about 15 three weeks. 16 Q. Had those been raised by Computer Weekly, you being 17 a computer firm; had they been raised by the BBC, the 18 national broadcaster? 19 A. On the second example I gave to you then, no, it hadn't, 20 because the customer had spotted the issue with 21 an account balance and brought it to Fujitsu's 22 attention. On the first matter, I believe the Thompson 23 Reuters issues were in certain trade press, but I can't 24 recall. 25 Q. Here we are, the BBC having an entire episode dedicated 157 1 to the cases of subpostmasters, including one who was 2 currently in prison. On reflection, was that not a link 3 that you should have pressed, not just in hindsight, but 4 simply knowing what you knew at the particular time? 5 A. I wished I had looked at this. It might have given me 6 a different perspective. But, at the time, both through 7 my -- the line through to me and the line from the 8 customer to me, and our business assurance systems, 9 there were no red flashing lights that said I should get 10 involved any more than I did. 11 Q. Do you not see that as a lack of curiosity at this time, 12 given that you were sent that link? 13 A. No, because of the sentence that's immediately 14 underneath the link. 15 Q. I'm going to take you to some documents that are around 16 the same kind of time, so we can see what was going on 17 at Fujitsu around that time. Can we start with 18 FUJ00081527. So this is 11 February. It's a report 19 that has been written by Gareth Jenkins on what is known 20 as the receipts and payments mismatch bug, 21 "Introduction": 22 "The purpose of this note is to document a request 23 we have had from Post Office in terms of presenting 24 details of what happened as a result of a bug in 25 [Horizon Online] in September 2010 which caused 158 1 a receipts and payments mismatch and also resulted in 2 discrepancies being lost." 3 Just pausing there, before you made a distinction 4 between issues relating to Legacy Horizon and Horizon 5 Online, now we have an issue with Horizon Online. 6 A. Okay. 7 Q. Rollout has taken place by this time: 8 "The background to this is the fact that there was 9 a BBC documentary broadcast on Monday, 7 February 2011 10 reporting on postmasters being unhappy about being 11 pursued for losses by postmasters on Horizon. 12 "It should be noted that the issues described here 13 relate to [Horizon Online] and that the implementation 14 of the accounting mechanisms in the two systems is 15 totally different (but they do produce the same reports 16 and support the same business process)." 17 If we go over the page, there is a summary of what 18 the receipts and payments mismatch is. The first bullet 19 point says: 20 "There will be a receipts and payments mismatch 21 corresponding to the value of discrepancies that were 22 'lost'. 23 "Note that if the user doesn't check their final 24 balance report carefully they may be unaware of the 25 issue since there is no explicit message when a receipts 159 1 and payments mismatch is found on the final balance ..." 2 Then three bullet points: 3 "The local suspense will have no knowledge of this 4 specific discrepancy. 5 "The opening figures for the discrepancies in the 6 new period will be zero rather than the actual value of 7 the discrepancy. 8 "[Third] The data used for the BTS will also have 9 a zero value for discrepancies at the end of the period. 10 When the BTS is produced, this will result in a similar 11 receipts and payments mismatch." 12 At the bottom of the page here, it says: 13 "The problem appears to have affect 62 branches and 14 details have been provided to Post Office Limited of all 15 the BTS and SU Rollover Reports for these branches until 16 they were clear of the issue." 17 Looking at this, it seems as though certainly 18 Fujitsu were aware of a bug that affected accounting 19 integrity in 62 branches; would you accept that? 20 A. Yes. 21 Q. Was this something that you were aware of at the time? 22 A. I was not. 23 Q. Could we please turn to POL00028838. This is an earlier 24 report from 2010 on the same issue: the receipts and 25 payments mismatch issue. Can you assist us, in terms of 160 1 the attendees, were there any there who were 2 sufficiently senior to report to you? 3 A. No. 4 Q. We can see for example, Mike Stewart, "Fujitsu SDM"; can 5 you assist us with what the "SDM" might be? 6 A. That I believe stands for Service Delivery Manager. 7 Q. Thank you. So none of those people would report to you. 8 Would they in some way be in the reporting line to you, 9 though? 10 A. This is in 2010, I think you were saying. 11 Q. Yes. 12 A. No, the way Fujitsu UK were structured then was that the 13 technical resources worked for outside of my line, so 14 they reported -- there were two divisions that I think 15 were relevant to Post Office. There was the 16 Applications Division and there was a division called 17 CORE. This where all the technical and monitoring 18 people who run the services, they were based in those 19 two divisions, I run private sector, and those three 20 divisions report directly to Mr Gilbert. So the 21 technical people would not report to me until I was made 22 CEO of Fujitsu. 23 Q. So up until April 2011, they wouldn't report to you but, 24 by April 2011, they would all report to you. 25 A. That is true. 161 1 Q. Yes. This is detailed in the other note that I've taken 2 you to, the later note, but I'll just go through a few 3 points in this, and this is a document the Inquiry is 4 very familiar with, "What is the issue?": 5 "Discrepancies showing at the Horizon counter 6 disappear when the branch follows certain process steps, 7 but will show within the back end branch account. This 8 is currently impacting ... 40 branches." 9 So in 2010 it was only 40 branches and then the 10 number seems to have grown on the -- 11 A. Yes, okay. 12 Q. Can we go over the page, please, "Impact": 13 "The branch has appeared to have balanced, whereas 14 in fact they could have a loss or a gain. 15 "Our accounting systems will be out of sync with 16 what is recorded at the branch. 17 "If widely known could cause a loss of confidence in 18 the Horizon system by branches. 19 "Potential impact upon ongoing legal cases where 20 branches are disputing the integrity of Horizon data. 21 "It could provide branches ammunition to blame 22 Horizon for future discrepancies." 23 If we scroll down, we see there various solutions 24 that are proposed, and one that the Inquiry has looked 25 at in quite a lot of detail is that first solution, 162 1 Solution One, and that was: 2 "Alter the Horizon branch figure at the counter to 3 show the discrepancy. Fujitsu would have to manually 4 write an entry value to the local branch account. 5 "Impact -- When the branch comes to complete next 6 trading period they would have a discrepancy which they 7 would have to bring to account. 8 "Risk -- This has significant data integrity 9 concerns and could lead to questions of 'tampering' with 10 the branch system and could generate questions around 11 how the discrepancy was caused. This solution could 12 have moral implications of Post Office changing branch 13 data without informing the branch." 14 Now, this is the 2010 document, and we've also seen 15 the 2011 document. 16 A. Yes. 17 Q. As Managing Director in 2010, or as CEO in 2011, would 18 you have expected that the receipts and payments 19 mismatch issue would have been brought to your 20 attention? 21 A. I would expect discrepancies of this nature to have been 22 raised up the line inside Fujitsu, yes. 23 Q. Would you have been expecting them to be raised along 24 the line to you? 25 A. Yes. 163 1 Q. Is that both in 2010 and in 2011? 2 A. Yes. 3 Q. Why do you think it was that it wasn't raised with you? 4 A. I do not know. And it looks -- and Mr Blake, I can -- 5 just to make sure I understand the document correctly, 6 this also looks like this is Post Office personnel on 7 here as well as Fujitsu personnel -- 8 Q. That's correct. 9 A. -- and that could have triggered an escalation, either 10 up the customer organisation or up the Fujitsu line. 11 Q. Yes, and doesn't appear to have? 12 A. No. 13 Q. We're still looking at exactly the same time period. 14 Could we please turn to FUJ00156432. You'll recall the 15 receipts and payments mismatch document from Gareth 16 Jenkins was 11 February 2011. 17 A. Yes. 18 Q. The first one that I took you to. I'm going to be 19 sticking to 11 February 2011, and we have there another 20 report that has been drafted by Gareth Jenkins and this 21 is in relation to an ongoing court case. It says: 22 "I have been asked by Post Office Limited to produce 23 a [report] to 'Technical expert's report to the court 24 prepared by Charles McLachlan, a Director of Amsphere 25 Consulting Limited', which I received on Thursday, 164 1 11 February 2011." 2 I think it is your evidence that you had no idea, at 3 this time, that that was going on, that Mr Jenkins was 4 at assisting in court cases providing evidence, 5 responding to, in this case, an expert's report. 6 A. Yes. 7 Q. That was the case of McQue. Could we please turn to 8 POL00329433. We're still on 11 February. It seems 9 quite a busy day. POL00329433. This is a letter 10 produced by the Criminal Law Division of the Royal Mail 11 Group to a defendant in a criminal case, so that's 12 Ms McQue, Carlisle Crown Court: 13 "As you are aware when the matter was last before 14 the court the court ordered a final defence expert 15 report", et cetera. 16 If we go down to the bottom of the page, it makes 17 clear in this letter that: 18 "Although the prosecution and defence experts have 19 endeavoured to produce a joint report this cannot be 20 agreed." 21 So the experts have produced their reports and 22 they're in disagreement about the Horizon system? 23 A. Yes. 24 Q. Could we please turn to FUJ00156443. We're still on 25 11 February. I'm not suggesting you saw this particular 165 1 document at all. This is Post Office -- 2 A. Okay. 3 Q. -- correspondence, a Royal Mail correspondence. 4 Again, more Royal Mail correspondence, this time in 5 the case of Humphrey, same date. The letter says as 6 follows: 7 "Both defendants pleaded guilty on 11 December 2009, 8 however the calculation of the total loss was disputed 9 and the case proceeded to a Trial of Issue ..." 10 That finally came before the court and it outlines 11 there the sentence that was imposed. So Mr Humphrey was 12 sentenced to 27 months' imprisonment; Mrs Humphrey was 13 sentenced to 18 months' imprisonment. If we scroll down 14 please, we can see in the letter the lawyer from Royal 15 Mail says: 16 "This is another case where Horizon was challenged 17 which resulted in a considerable amount of additional 18 work by Gary Thomas. His efforts, together with those 19 of Gareth Jenkins (Fujitsu), are evidenced by the 20 successful outcome in this case." 21 So it's very clear that on 11 February, or on or 22 around 11 February, there is direct assistance from 23 Fujitsu -- 24 A. Yes. 25 Q. -- in relation to criminal prosecutions, and I think 166 1 it's your evidence that you weren't aware of that? 2 A. That is also true. 3 Q. Could we turn to FUJ00153750. This is all -- even this 4 email, the end of this chain, is the same date -- 5 11 February 2011. 6 A. Okay. 7 Q. So this is still while you are Managing Director of the 8 private part of Fujitsu -- 9 A. Yes. 10 Q. -- with Post Office as one of your main clients? 11 A. Yes. 12 Q. If we please turn to page 3., back to 7 February, so the 13 day of the BBC broadcast, and this Penny Thomas; did you 14 know Penny Thomas? 15 A. No, I did not. 16 Q. No? She, if we scroll down, was a Security Analyst at 17 Fujitsu. She is emailing colleagues. If we scroll up 18 we can see to Gareth Jenkins, and others. We have 19 already seen Jean-Philippe Prénovost's name, I think he 20 was a lawyer. Do you recognise any of those names at 21 all? 22 A. I think the only name that would have been somewhat 23 familiar at the time would be Guy Wilkerson. 24 Q. Why would his name have been familiar? 25 A. I think he was based in London. 167 1 Q. Penny Thomas says as follows, she says: 2 "All 3 "There was an interesting article featured on the 4 local radio station, BBC Surrey, this morning and 5 I listened while travelling to work. 6 "Misra, a convicted subpostmistress, now pregnant 7 and serving a jail sentence in Bronsville [sic] Prison 8 for theft and false accounting from the West Byfleet 9 Post Office and 55 other subpostmasters/mistresses are 10 planning to take civil action against the Post Office 11 because of the flawed accounting system used at the Post 12 Office outlets. There are to be 6 test cases, South 13 Warnborough was identified as one. 14 "There was an emotional interview with Davinder 15 Misra (the husband) who stated that the system was 16 losing money right from the beginning, they couldn't 17 find the problem, and neither could the auditor who was 18 sent from the post office. 19 "A spokesperson from the Post Office stated that the 20 Horizon system was 'absolutely accurate and reliable and 21 all times'. Robust testing procedures had been 22 undertaken. 23 "Jonathan Lord, MP for Woking is concerned and will 24 ensure a full financial investigation, absolutely 25 independent, is carried out. He stated that the 168 1 processes which the Post Office employed where 2 discrepancies arose should be fair, and conducted in 3 a prompt and proper way; these Post Office procedures 4 are to be looked at closely." 5 If we scroll up we can see that Jean-Philippe 6 Prénovost has sent that on to David Jones, who was, 7 I think, the Head of Legal at Fujitsu; is that right? 8 A. I think the Head of Legal at that time would have been 9 David Roberts and Mr Jones would have reported directly 10 to him, I think. 11 Q. Thank you. He says: 12 "Further to Penny's email below, we've been informed 13 that [the Post Office] are making noises about 14 commissioning an independent evaluation of the Horizon 15 system with a view, presumably, to putting all integrity 16 issues to bed once and for all. 17 "The team is not at all inclined to accept this 18 request (especially bearing in mind that the system is 19 now defunct) but they have sought official guidance on 20 how they should deal with the request. Given the link 21 with ongoing/potential litigation, are there any 22 particular issues you will be concerned about and would 23 like to raise at this stage?" 24 So Penny Thomas, from this, a security analyst, has 25 heard the BBC report. 169 1 A. Yeah. 2 Q. I think you said you weren't even aware of the report, 3 other than the link being sent to you; is that right? 4 A. That is right. 5 Q. Were you aware, at this stage, of the Post Office making 6 noises about commissioning an independent evaluation of 7 the Horizon system? 8 A. I was not. 9 Q. Is that surprising, given that you were the Managing 10 Director of a division where Post Office was one of your 11 key clients? 12 A. I had regular meetings with Post Office, as I think the 13 Inquiry can see, and I would have imagined they would 14 have brought that up with me. 15 Q. Is it strange that a lawyer within Fujitsu would be 16 aware of that but you would not be? 17 A. I just -- I don't know, Mr Blake. You'd have to ask 18 them. 19 Q. If we scroll up, please, email from David Jones, saying: 20 "Hi -- have you looked at the contract and our 21 security service obligations? I expect there will be 22 some cooperation obligations ... 23 "Who is making the request from [the Post Office] 24 and is it at the right level of engagement?" 25 If we scroll up above: 170 1 "Hi David, 2 "The suggestion (I understand it has not been 3 officially requested) has come directly from Mike Young 4 (the highest level of engagement). 5 "We are of course aware of the contractual 6 obligations and, as this does not form part of them, the 7 team would be more interested in any other 8 considerations." 9 So it seems as though the request has come directly 10 from Mike Young, he was one of your direct liaisons, 11 wasn't he? 12 A. Yes. 13 Q. So how is it that you were not aware of that at this 14 time? 15 A. I don't know. 16 Q. I mean, something seems to have gone fundamentally wrong 17 at Fujitsu for this level of information not to be 18 provided to you, hasn't it? 19 A. I would have expected Mike to come to me or the then 20 leader of the Post Office Account from Fujitsu with that 21 request. 22 Q. Is it likely that he did go to the leader of the Post 23 Office Account and it simply hasn't, for some reason, 24 been raised with you? 25 A. There is a possibility of that but I just don't know. 171 1 Q. If we scroll up, the response is: 2 "You are aware that we have or had a banking 3 indemnity in place that would mean, if I recall it 4 properly, that if the outcome of the investigation were 5 adverse that Fujitsu might have some liability to [the 6 Post Office]." 7 Pausing there, as Managing Director, would it not 8 have been important for you to have been aware that 9 potentially Fujitsu was on the line for some liability 10 in respect of these issues? 11 A. I think our view, or certainly my view, would have been, 12 if there was an issue with the software that's causing 13 counter balance issues, which then leads to people being 14 prosecuted, it didn't matter what the consequences were; 15 we should have got to the root cause of that. 16 Q. Why, as at 11 February 2011, do you think that wasn't 17 happening? 18 A. I do not know. 19 Q. Then he raises clause 16, and 16.3, says: 20 "Fujitsu Services shall offer all reasonable 21 assistance to Post Office in preventing fraudulent use 22 of the services, the HNG-X development, the Associated 23 Change Development, the Horizon Service Infrastructure, 24 and the PostShop infrastructure by Post Office's 25 employees and agents. 172 1 "Surely this means we can't refuse their request in 2 any event ..." 3 So it certainly looks as though, within the Legal 4 Team, they think that if the Post Office are requesting 5 an independent investigation, you couldn't refuse that 6 request. 7 If we scroll up, there's just a discussion of 8 whether or not that means that Fujitsu can refuse. 9 A. Okay. Mr Blake, I think around this time, if I may, 10 I was also involved in a negotiation with another 11 customer that did involve Fujitsu exiting an account, 12 and cost about £38 million. It was the right thing to 13 do for both the customer and for Fujitsu. It generally 14 takes a more rounded view to come up and -- to 15 a conclusion on a purely legal view. 16 Q. What is the relevance of that? 17 A. Well, the relevance of that is that, where there were 18 issues, Fujitsu faced up to them. 19 Q. But it seems, from your account, you weren't aware of 20 the issues? 21 A. I was not aware of -- I was not aware of this -- 22 Q. I mean, we've seen -- 23 A. -- on Post Office -- 24 Q. -- article, after article, after article, how can it be 25 that, at this stage, you weren't aware; what went wrong? 173 1 A. It is difficult to -- it's difficult to say -- for me to 2 comment. We had good governance in place, we had good, 3 open lines of communication with the customer, we had 4 the opportunity to escalate up and down the 5 organisation, so difficult for me to say. 6 Q. You've got here people who were actually involved in the 7 prosecution of subpostmasters, so we've got Gareth 8 Jenkins, Penny Thomas, all in this email chain, all 9 aware of the BBC reporting. So they had been involved 10 in Seema Misra's case, as an example? 11 A. Right. 12 Q. How can it be that somebody from that team didn't raise 13 it up to the Managing Director? 14 A. I do not know how it did not come to my attention, nor 15 up the other line to the then CEO of Fujitsu, to Roger's 16 attention either. 17 Q. We've looked at a lot of correspondence from 18 11 February. I'm going to stay with 11 February and 19 I want to look at correspondence that was actually going 20 to Paula Vennells at the Post Office. 21 A. Okay. 22 Q. So could we start with FUJ00174418. All this is is 23 a covering email. You've seen the draft letter to Paula 24 Vennells, you address it in your witness statement. 25 A. Okay. 174 1 Q. FUJ00174418 is simply a covering email from Charles 2 Matcham, who was within your division; is that correct? 3 A. Yes, he was. 4 Q. "Draft Letter to Paula": 5 "Needs work but you get the idea ..." 6 It was sent to you and others. I'd like to take 7 you -- so that's same day, 11 February 2011, so the same 8 day as all of these other things that I've been showing 9 you -- 10 A. Yes. 11 Q. -- were going on. A day when Gareth Jenkins wrote those 12 two reports that we've seen? 13 A. Yes. 14 Q. A day when there's various discussions going on about 15 an independent investigation being carried out and 16 whether that has to take place. The day when Royal Mail 17 is drafting memos about success being down to, amongst 18 other things, Gareth Jenkins' efforts from Fujitsu. 19 A. Okay. 20 Q. Let's look at the draft letter. That's FUJ00174419: 21 "Dear Paula, 22 "I thought the timing was appropriate to write to 23 you and inform you of our plans and objectives for the 24 account and take the opportunity to introduce the two 25 senior executives appointed to support your business and 175 1 lead on behalf of Fujitsu." 2 It continues, I won't read it all, but perhaps we'll 3 look at the paragraph that begins: 4 "Back in August 2010 I attended a video conference 5 with your predecessor ... Amongst other important 6 matters, a paper previously submitted to David was 7 discussed and endorsed. The brief document set out the 8 principles of working jointly to explore the mutual 9 benefits of developing our existing Horizon Online 10 contract to ensure future alignment to Post Office 11 strategic plan." 12 So discussing potential future avenues of business. 13 A. Yes. 14 Q. "... Fujitsu has proactively invested in the development 15 of a compelling proposal through a dedicated team 16 working out of our Centre of Excellence in Slough. Our 17 intention is to present our proposition to you in early 18 March and gain your agreement ... 19 "To facilitate this Fujitsu has assigned two senior 20 executives ..." 21 Then it goes into or proposes a brief summary of 22 their experience and expertise, as set out. 23 If we scroll over the page you can see it's been 24 drafted in your name. 25 I think you say in your witness statement that you 176 1 recall sending a letter along these lines. 2 A. I do. 3 Q. Yes. The focus in that letter is on future work 4 together, isn't it? 5 A. It is. 6 Q. There's nothing in there about recent press reporting of 7 the type that we've just been seeing? 8 A. I agree. 9 Q. There's nothing in there about complaints from 10 subpostmasters about accounting integrity or anything 11 along those lines; is that right? 12 A. That is right. 13 Q. Nothing in there about prosecution support? 14 A. That is also right. 15 Q. Could we please turn to POL00017555. I'm sticking now 16 with what you might call general picture at the time. 17 You're not copied into this email, this isn't something 18 you would have seen at the time, but just to see the 19 kind of work that, on 14 February -- so a few days 20 later -- Gareth Jenkins was involved in. We're still on 21 the case of McQue and he is referring to the expert 22 reports. He says: 23 "That is the information I have given to Charles 24 about Callendar Square." 25 Were you aware of the Callendar Square bug at this 177 1 time? 2 A. No. 3 Q. "I have not sent him anything further since it is 4 irrelevant to this case (as he accepts). However his 5 point is that if we had an accounting discrepancy in 6 Callendar Square, then that implies that it is possible 7 to have an accounting discrepancy in Rinkfield", which 8 is the particular branch. 9 A. Okay. 10 Q. "I have to accept that that is possible. However the 11 Callendar Square issue as such is irrelevant in 12 Rinkfield and this is accepted by Charles." 13 So an acceptance there by Mr Jenkins that the bug in 14 Callendar Square is essentially relevant, insofar as it 15 implies that it's possible to have an accounting 16 discrepancy elsewhere, even if that particular bug is 17 not the one in play. 18 A. Okay. 19 Q. Okay. But these weren't issues that you were in any way 20 aware of in 2011? 21 A. You are right. 22 Q. Could we turn, please, to POL00017555. 23 Sorry, actually, I'm going to move on to -- so you 24 became CEO in April of that year? 25 A. Of 2011, yes. 178 1 SIR WYN WILLIAMS: Mr Blake, I'm getting a bit anxious about 2 when the second break is -- 3 MR BLAKE: Yes, that is actually a convenient time. So we 4 could take it now. 5 SIR WYN WILLIAMS: Yes. 6 MR BLAKE: Could we come back just before 4.00? 7 SIR WYN WILLIAMS: Yes. 8 MR BLAKE: Yes, 3.57, please. I need those three minutes, 9 if that's okay. 10 (3.47 pm) 11 (A short break) 12 (3.57 pm) 13 MR BLAKE: Thank you. 14 Mr Tait, I'm going to move to 2012, so about a year 15 into your time as CEO. Could we please look at 16 FUJ00168511. 13 April 2012. Gavin Bell, who is, 17 I think, a member of the client Executive Team; is that 18 right? 19 A. Yes. 20 Q. He has met Paula Vennells on the train and spoke about 21 number of points and it's the third point I'd like to 22 draw your attention to. He says: 23 "She then asked about some of the recent systems 24 incidents and transaction integrity. I have provided 25 a very high level response of how the Reconciliation 179 1 Service we provide catches any issues and offered her 2 and Lesley Sewell a visit to Bracknell to meet [the] 3 team. She then went on to say that she has had 4 enquiries from Oliver Letwin MP ... and James Arbuthnot 5 ... about system outages and a [Freedom of Information] 6 request on a particular subpostmaster. She said that 7 she might invite Duncan to a meeting with these MPs when 8 she meets them next." 9 Do you recall that, within that time during the 10 first year of your time as CEO, the key client was 11 raises issues to do with Horizon integrity? 12 A. If that question, Mr Blake, is do I recall this 13 conversation with Mr Bell, I do. 14 Q. Did that make you take any additional steps? We've 15 heard that no investigation had taken place at Fujitsu 16 up until that point. Did that trigger any particular 17 investigations? 18 A. Again, I think if you read the second sentence in that 19 paragraph, it's "I provided a very high level response 20 about how the Reconciliation Service catches any 21 issues". So I think, from reading that, that sentence, 22 that doesn't say to me that we need to take any further 23 investigation. 24 Q. But, if your key client raises in that particular 25 conversation, issues to do with transaction integrity, 180 1 was that not something, given all the history we've been 2 through already, something to look into a bit further at 3 that stage? 4 A. If Ms Vennells was not satisfied with Mr Bell's response 5 to her questions, I believe they were on the train, then 6 she could have come directly to me. 7 Q. Can we turn to FUJ00168523. We're in June 2012 at the 8 bottom email, please. "Urgent Post Office BBC". You 9 email Simon Carter; who was Simon Carter? 10 A. By then, I believe Simon Carter would have been the head 11 of marketing for Fujitsu UK. 12 Q. "... there's an article on BBC regarding Post Office and 13 concerns over the Horizon system. It's an old 14 allegation which I believe is totally false, however, it 15 is on the news. 16 "Can you alert the IB ..." 17 What was IB? 18 A. That was the -- Fujitsu was split in -- essentially 19 then, into Japan and outside of Japan, and the bit 20 outside of Japan was called International Business or 21 IB. 22 Q. "Can you alert the [International Business] and Japanese 23 teams please. I suggest we ensure that we are aligned 24 with [Post Office] press team and also have a drawer 25 statement ready to go." 181 1 Drawer statement, is that not suggesting something 2 new, but a standard statement? 3 A. I think it is a pre-prepared statement, is the way 4 I understand drawer statements. 5 Q. "It is an old allegation which I believe is totally 6 false ..." 7 Did you, at that point, instigate any new 8 investigations internally? 9 A. I don't believe, as a result of this, no. 10 Q. That's another BBC report, national report, on Horizon 11 integrity. I'm going to take you to another report, six 12 months later. Can we please turn to FUJ00174576. News 13 Summary, if we scroll down, sticking to that page, 14 Wednesday, 2 January: 15 "Computer Weekly -- Post Office admits that the 16 Horizon system needs more investigation. 17 "... Years of struggle from campaign groups has 18 forced the Post Office to look again at a computer 19 system which has been blamed for subpostmasters being 20 wrongly accused of false accounting. Despite numerous 21 complaints the Post Office has consistently stated that 22 there is no fault with the Horizon system. But 23 [subpostmasters] claim problems with the technology 24 could be generating unexplained losses." 25 We see at the top of the page, please, an email from 182 1 you to Helen Lamb. Who was Helen Lamb? 2 A. Helen Lamb, at that point, would have been running 3 a division called Business and Application Services, 4 which is where the Horizon code would have been run out 5 of. 6 Q. "Helen, what's this POL stuff about please?" 7 Do you recall the answer to that? 8 A. I don't recall the answer. I vaguely recall sending the 9 email but don't recall the answer. 10 Q. In your statement, and today, I'll read a few passages 11 from your statement. 12 A. Okay. 13 Q. You know the evidence you've given today but you said, 14 for example, "I received repeated assurances", Post 15 Office was confident internally, and Post Office 16 reassured you? 17 A. Yes. 18 Q. We've seen here article, after article, after article, 19 mentions of Members of Parliament, BBC, Computer Weekly, 20 you being a computer company. Did you ever, in that 21 period, seek to investigate whether there was any 22 substance in those reports: a significant investigation, 23 not just reassurance from an individual? 24 A. Yes. Mr Blake, I'd go back to what I said before, that 25 when I joined, I had the Kirkham email that brought -- 183 1 stated no issues. The recollection -- the email from 2 Mr Bounds after his meeting with Mr Young, that said 3 Horizon was great, stable and that the users only had 4 praise for it. And then when each of these media events 5 happened during 2010/early 2011, you can see in those -- 6 in each one of those, it is no cause for concern, no 7 cause for immediate concern, no flaws in the software 8 from Mr Young's email to me in early 2011. It would 9 have been unusual, I think, to have conducted further 10 research at that point when you had that level of 11 reassurance. 12 Q. Why would the national media be so wrong about it? 13 I mean it's like Groundhog Day. It's year, after year, 14 after year, exactly the same thing comes up. There's 15 a national report about Horizon integrity, and all there 16 is is an email with a line that says everything is okay. 17 Why wouldn't you, as Managing Director, and then CEO, 18 not actually put in place a significant investigation 19 into that issue? 20 A. Mr Blake, we had good governance in place. We had 21 delivery assurance in place. We had assurance teams to 22 govern new customer opportunities and the extensions of 23 Horizon over time. We had Audit and Risk Committees in 24 place and each one of these could have brought to the 25 attention of the -- to Fujitsu's CEO prior to me and 184 1 during my period, that we needed to do something about 2 it. Now, with hindsight, we absolutely should have done 3 something about it because the media were absolutely 4 spot on. 5 Q. Could we please turn to FUJ00168649. That summer, there 6 was a meeting with Paula Vennells: 7 "Detailed below is a readout from the meeting 8 between Duncan and Paula last night." 9 I don't need to take you into any detail in that. 10 I mean, there's no mention there of Horizon integrity 11 issues. Is that likely, is that your recollection of 12 those kinds of discussions you had with Paula Vennells? 13 A. Yes. Yes, what you're saying is true. 14 Q. Again, it's very much focused on new initiatives, 15 looking forward, rather than looking back at past 16 problems. 17 A. Pretty much. I think in the operations section, you can 18 see that Paula praised the high quality of our 19 operational performance, so that is a here-and-now 20 comment, not about the future. 21 Q. Can you turn to FUJ00174662, and this the briefing note 22 for that meeting. There's a section on business as 23 usual operations. If we scroll down, new initiatives, 24 scroll down, CSR. There's a section on risk over the 25 page. Priorities and then risks. Nothing in the risks 185 1 section about issues with Horizon integrity or 2 complaints from politicians or the media. The only 3 point in this that relates to those kinds of concerns is 4 the very bottom. We can see at the bottom of the page 5 there is reference to Second Sight: 6 "A number of queries have been raised, all of which 7 have been answered and no irregularities identified. 8 One allegation is proving more challenging relating to 9 a suggestion that alterations to the branch database 10 holding subpostmaster balances could be made on Fujitsu 11 premises." 12 So that's the remote access issue: 13 "We have been asked to provide further details 14 related to systems controls/access and audit records for 15 balance corrections. This will be available next week." 16 So, again, no significant issues being raised in 17 that meeting. Do you recall any meeting between you and 18 Paula Vennells at which serious issues relating to 19 complaints from subpostmasters or relating to the 20 integrity of Horizon were raised? 21 A. The time I recall would have been when Ms Vennells said 22 that she would -- she had had complaints around 23 integrity and would have to commission an independent 24 review. 25 Q. What was your response to that? 186 1 A. This goes back, Mr Blake, to what would have happened 2 with other customers, that if they'd had concerns over 3 integrity that would have been a very sensible thing to 4 do. I mean, I don't recall the exact details of the 5 conversation but that Fujitsu would provide assistance 6 as necessary. 7 Q. Can we turn to FUJ00174708, please. It's the bottom of 8 the page. We're now in July 2013, and there is a report 9 from your meeting, it says: 10 "Duncan met Paula Vennells this morning to discuss 11 the role of Horizon in [the Post Office]'s future 12 strategy and the IPR issue. 13 "As part of that Duncan shared the contents of his 14 brief [including]: 15 "Horizon is an invested and stable platform 16 "Very low cost ... 17 "Second Sight has shown it to be safe, secure 18 "Benchmarked 19 "We have an industry littered with disasters of 20 service outages, programmes taking twice as long as 21 planned with massive costs where organisations have 22 replaced systems ... 23 "There was quite a lot of discussion around this and 24 Paula said ... 'that all sounds good but why do my team 25 tell me that working new reference data through the 187 1 system take a long time and the platform is not agile'." 2 Then it sets out some responses. Just pausing 3 there. Do you recall ever giving bad news to Paula 4 Vennells about the integrity of the Horizon system or 5 bugs, errors and defects with the Horizon system? 6 A. I don't think any of my briefs gave me data that that 7 would have pushed back on Ms Vennells in that regard. 8 I think you can see, Mr Blake, in other conversations 9 that Ms Vennells and I had, that they were robust. 10 Q. As robust as the system? When you say they were robust, 11 I mean, let's look at that penultimate sentence: 12 "I'm not sure if this is a difficult task or not but 13 as you well appreciate we have to respond to this with 14 some urgency and the story needs to be good." 15 The suggestion being that one of your most important 16 clients needs to be told a good story and that there is 17 some reluctance within the company to share bad news. 18 Was that something you experienced or not? 19 A. No, we had very robust conversations between the two 20 organisations and my understanding is this here refers 21 to the agility of the system. 22 Q. We can see the response. That's at FUJ00174721: 23 "Paula 24 "Thank you for taking the time to meet me on 25 Thursday [this is 8 July] ... 188 1 "Overnight pricing changes are now possible ... 2 "We also have made good progress 'opening up 3 Horizon'." 4 Then I'll take you to the final paragraph: 5 "As I followed up on the questions you raised it 6 became evident to me that close collaboration between 7 our teams is working well. Horizon is evolving at pace 8 to better position the Post Office for [enhancing] 9 agility and growth. Therefore, it might be worth 10 organising a briefing for your key executives on 11 Horizon's new capabilities and planned enhancements." 12 It's again looking to the future and what can be 13 achieved from Horizon. 14 Given all the things that we've discussed, all those 15 newspaper articles, media reports, why do you think it 16 is that we don't see those kinds of matters being raised 17 in depth and discussed between you, real concerns, you 18 reassuring Ms Vennells, for example, about issues of 19 system integrity; do you think those exist, those 20 emails? 21 A. I don't know, Mr Blake. Can I just check the date of 22 this exchange, please? 23 Q. This is 8 July 2013. 24 A. 8 July 2013, and the Second Sight investigation is up 25 and running at this time? 189 1 Q. Yes. 2 A. And I have the previous month had an email from a James 3 Davidson, the talks about the initial findings from 4 Second Sight, and it is another reassurance for me about 5 how Horizon is working. 6 Q. But these are all external reassurances. Nothing within 7 Fujitsu. Nothing has been set in train within Fujitsu 8 to investigate those various complaints, and nothing 9 being passed from you to Ms Vennells about reassurances 10 regarding the system. 11 I mean, let's look at the response. If we turn to 12 FUJ00174724. 8 July, this is the response at the bottom 13 that's been sent on Paula Vennells' behalf. The series 14 of emails that the Inquiry has seen to date are all 15 looking at small improvements perhaps, looking at future 16 work together but there doesn't seem, certainly from 17 what we've seen so far, to be any detailed 18 correspondence between you and your equivalent at the 19 Post Office about these Horizon integrity issues. 20 Is that, do you think, because they don't exist or 21 because we haven't yet seen them and do they exist? 22 What is your recollection of this period of time? 23 A. I don't believe there is email correspondence between 24 Ms Vennells and I regarding integrity issues but I don't 25 know. 190 1 Q. What about the media reporting and those issues that are 2 raised there, complaints from subpostmasters? Do you 3 think that was ever discussed in-depth with your -- with 4 Ms Vennells? 5 A. I don't believe that was discussed between me and 6 Ms Vennells. 7 Q. The various emails we've seen today about bugs, errors 8 and defects, you've said you weren't even aware of them, 9 let alone being able to pass those on to Ms Vennells? 10 A. I agree. 11 Q. Two very quick topics, the first is prosecution support. 12 SIR WYN WILLIAMS: Before we get there, Mr Blake, the 13 8 July, actually, Mr Tait is the date that Second Sight 14 published its Interim Report. Was that sent to you on 15 or about that date? 16 A. I've never seen the report, sir, only a feedback from 17 members of my team based upon what Post Office 18 personnel -- I think Ms Sewell -- had given them. 19 SIR WYN WILLIAMS: Right. All right, thank you. 20 Sorry, Mr Blake. Carry on. 21 MR BLAKE: Not at all. 22 Prosecution support. Did you know that Fujitsu 23 provided what we know as ARQ data, audit data, to the 24 Post Office? 25 A. Not until after I left Fujitsu. 191 1 Q. What was your understanding of the role of Gareth 2 Jenkins while you were at Fujitsu? 3 A. I was not aware of Mr Jenkins' role while I was at 4 Fujitsu. 5 Q. Could we turn to POL00382242, please. This is a Post 6 Office document, so I don't expect you to have seen this 7 document but it is a brief for a meeting with yourself 8 on 11 November 2013. I believe you've only seen it very 9 recently. 10 It's the final page I'd like to take you to and the 11 last two paragraphs. Were you aware of something called 12 Project Sparrow at the Post Office? 13 A. I don't believe so. 14 Q. Within this brief, it says: 15 "The Post Office Criminal Law Team needs to find 16 an independent expert to give evidence about the Horizon 17 system which was previously provided by Fujitsu's Gareth 18 Jenkins. 19 "Lesley and Susan Crichton have raised this with 20 Fujitsu. The Legal Team have a meeting arranged with 21 Fujitsu to discuss this requirement, this will happen on 22 21 November. Following this we will have a better 23 understanding of Fujitsu's view, any impacts and what 24 the next steps will be." 25 First of all, do you recall a meeting on 11 November 192 1 2013? 2 A. I don't, no. I do remember, at the time, we had 3 an issue with this home phone and broadband contract 4 that was causing a great deal of tension between Post 5 Office and Fujitsu. 6 Q. I think you've said you don't even recall any issues 7 with Gareth Jenkins. Do you recall, at a meeting, 8 anybody raising with you the need for a new independent 9 expert? 10 A. I do not. 11 Q. Remote access, and I can deal with that very briefly. 12 You address it at paragraph 102 of your witness 13 statement. I'm not going to turn to that. 14 A. Yes. 15 Q. When did you first become aware of the ability for 16 Fujitsu to remotely access subpostmasters' branch 17 accounts? 18 A. Mr Blake, I would say, in systems like this, having 19 a facility called "remote access" or "privileged access" 20 would have been necessary because problems can occur in 21 systems like this that would need fixing. So I would 22 say generally aware from when I first became involved in 23 Fujitsu. 24 Q. Can we turn to FUJ00174422. I'm just going to take you 25 to two documents from 2011. 193 1 A. Okay. 2 Q. This email is 1 June 2011. Do you recall, in 2011, 3 Ernst & Young recommending a review of what was called 4 privileged access? 5 A. I recall Ms Vennells asking me for our organisation to 6 take action against the EY audit in preparation for the 7 next Board meeting. 8 Q. Yes. So we have, in this email that's sent to you: 9 "The audit referred to in Mike Young's mail was part 10 of the annual audit carried out on Post Office by Royal 11 Mail Group auditors Ernst & Young." 12 It sets out the main points. It says: 13 "In general, Ernst & Young were satisfied with the 14 robust user management processes for HNG-X system 15 access. However, observations were made of the user 16 management processes, specifically with regard to the 17 segregation of duties between developer and system 18 administrator roles. It was recommended that a review 19 of privilege access is undertaken and that the processes 20 around user management are strengthened." 21 In your statement, you then refer to another 22 document, and I'll just take you to that. It's 23 FUJ00174428, and it's a reference to a meeting with 24 Paula Vennells. It says, "Info". If we scroll down 25 slightly, it says: 194 1 "DT is meeting Paula Vennells and Mike Young on 2 18 August -- the agenda is the Ernst & Young audit. It 3 was a key challenge for [Ernst & Young] to audit 4 a shared service generally. We were really proactive in 5 helping them through this." 6 You recall having a meeting with Paula Vennells to 7 discuss this issue? 8 A. I'm not sure I do but I do recall Ms Vennells raising 9 the EY audit with me and asking Fujitsu to resolve the 10 issues prior to her next Board meeting. 11 Q. I think you say in your statement that you tasked 12 Mr Bounds with this; is that right? 13 A. Yes. 14 Q. Were you aware of that review actually taking place? 15 A. The EY review, or the consequent Fujitsu review? 16 Q. No, the consequent Fujitsu review. 17 A. My understanding is that that review and the actions 18 were put in place and successfully executed. 19 Q. Who do you recall carrying out the review? 20 A. I do not know who conducted the review. 21 Q. Did you see the review once it had been completed? 22 A. I did not. 23 Q. Did you check to make sure that it had been undertaken? 24 A. I did. 25 Q. You did? 195 1 A. I believe so. I would have managed this by exception 2 and, if Mr Bounds or the team had not -- had had issues, 3 then they would have spoken to me about it. 4 Q. So is it likely that there will be a document in 5 existence that is around this time, reviewing the issue 6 of privileged access? 7 A. My understanding is there should be some documentation 8 that shows Fujitsu taking action based upon the EY 9 report, though I'm not sure I've seen it, Mr Blake. 10 Q. Thank you. One final document. It's POL00024828. If 11 we could start on page 5, please. The Inquiry has seen 12 quite a lot of correspondence about the issue of remote 13 access in 2014/2015 and we can see, on page 5, 14 a response from 2014 that had been provided by Fujitsu. 15 The summary is set out just below. I'll just read out 16 the first bullet point and that's a summary of Post 17 Office's understanding of the position based on the 18 responses that had been provided below from Fujitsu: 19 "There is no ability to delete or change records 20 a branch creates in either old Horizon or Horizon 21 Online. Transactions in both systems are created in 22 a secure and auditable way to assure integrity, and have 23 either a checksum ... or a digital signature ... are 24 time stamped, have a unique sequential number and are 25 securely stored via the core audit process in the audit 196 1 vault." 2 Were you aware of a dispute between the Post Office 3 and Fujitsu about the information that Fujitsu had given 4 relating to remote access? 5 A. I was not. 6 Q. If we scroll up, we can see there's an email, 7 an internal email within Post Office, so, again, you 8 wouldn't have seen it. It's page 4, the bottom of 9 page 4. It's an email from Jane MacLeod to Andrew 10 Parsons, so internal lawyer to external lawyer. She 11 says as follows: 12 "Separately, Paula has suggested that she speaks to 13 the UK CEO of Fujitsu (Duncan Tait), and my suggestion 14 would be that she: 15 "Alerts him to the fact and timing of the response 16 letter ..." 17 This is a response letter in the litigation. 18 A. Okay. 19 Q. "Notes that the question of remote access is still 20 a live issue and major concern to the claimants 21 "Notes the work being undertaken by Deloitte to 22 review access rights and controls 23 "Expresses the desire that [Fujitsu] (continue to) 24 work constructively with Deloitte and flags that if the 25 Deloitte work uncovers a different position to that 197 1 which [Fujitsu and Post Office] have publicly stated 2 over the years, then we will need to consider carefully 3 how to manage the impact ..." 4 A. Okay. 5 Q. Did a conversation ever take place with Paula Vennells 6 relating to remote access? 7 A. I've no recollection of that conversation. 8 Q. Were you aware at all of the issue of the Post Office 9 placing blame on Fujitsu for giving an incorrect answer 10 in relation to the issue of remote access? 11 A. Not to my recollection. 12 Q. My final couple of questions. 13 The litigation, more broadly: were you aware of 14 Gareth Jenkins' role in the civil action and the Group 15 Litigation? 16 A. No, I was not. 17 Q. Did you ever have any discussions with anybody about 18 whether he should or should not be, for example, 19 a witness in that litigation? 20 A. I did not. 21 Q. Have you experienced Fujitsu employees being concerned 22 about being used to give evidence in that Group 23 Litigation? 24 A. No. 25 MR BLAKE: Thank you. Thank you very much, Mr Tait. Those 198 1 are all of my questions. 2 A. Thank you. 3 MR BLAKE: There are ten minutes of questions from Mr Stein. 4 Thank you. 5 Questioned by MR STEIN 6 MR STEIN: Mr Tait, I'm going to take you to a document 7 which is FUJ00080526. Can we go straight to page 5, 8 please, of that document. Thank you. 9 Now, this document is dated 2 October 2009. It's 10 drafted by Gareth Jenkins, entitled "Horizon Data 11 Integrity". Okay? 12 A. Okay. 13 Q. It's a document we know you're familiar with, as you 14 dealt with it, as you were asked to look at it by the 15 Inquiry, and you refer to it at page 13, paragraph 36, 16 of your statement. Okay? 17 Now, this document had a circulation list that 18 included Suzie Kirkham who you've mentioned a couple of 19 times. She's someone that, when you came into your 20 role, she drew to your attention the fact that there 21 were issues that were ongoing in the press in relation 22 to claims -- 23 A. Yes. 24 Q. -- about the integrity of the Horizon system. Okay? 25 A. Okay. 199 1 Q. We also know it's a document that is shared between 2 Fujitsu and the Post Office. All right. 3 Now, this document, I'll summarise it. At no part 4 of this document is a mention of software bugs, errors 5 or defects. It pretty simply says things along the 6 lines of: if you turn off the system and bring it back 7 on, what happens. It is very technical in that sense. 8 A. Okay. 9 Q. It doesn't deal with software issues or bugs. Now, did 10 you notice that when you read through this document 11 after it had been brought to your attention? 12 A. So, Mr Stein, you're right: I only saw this in 13 preparation for the Inquiry, and it seems to be quite 14 a technical document that describes how integrity is 15 ensured in Horizon Online. But I had no other 16 recollection than that. 17 Q. Right. Well, take it from me: it doesn't refer to 18 software bugs. 19 Now, your background work has been in relation to IT 20 systems; do you agree? 21 A. Yes. 22 Q. Sometime ago, but that's what you've done in the past. 23 A. (The witness nodded) 24 Q. Now, all large-scale systems, such as Horizon have 25 software bugs, don't they? 200 1 A. They do. 2 Q. Right. In relation to the Horizon system, Fujitsu 3 operated a service line at four levels. Part of those 4 levels were to do with the fixing of software bugs, 5 issuing patches, notifying the Post Office of those bugs 6 as it went along; do you agree? 7 A. I agree. 8 Q. Right. So why do you think that this report from 9 Mr Jenkins does not mention bugs? 10 A. I have no idea, Mr Stein. I think it would be 11 a question for Mr Jenkins. 12 Q. Right. Well, let's go to the mismatch bug document, 13 please. The document is familiar to this Inquiry. 14 POL00028838. Can we go to the bottom of page 3 of that 15 document. Can we have a look at Solution One. Can we 16 just refer to that, please. 17 Now, you'll see it's being said here that there are 18 three potential solutions to apply to the impacted 19 branches and then the recommendation is that Solution 20 Two should be progressed. Now, this is a joint meeting, 21 as you pointed out to Mr Blake, between the Post Office 22 and Fujitsu, all right? 23 A. Yes. 24 Q. It's not, as an example, a note of a meeting in a pub 25 after a few drinks, okay? 201 1 A. Okay. 2 Q. It's a proper meeting between two large organisations: 3 one a worldwide brand and the other one is a very 4 well-known UK brand. So let's have a look at the 5 solutions: 6 "Solution One -- Alter the Horizon branch figure at 7 the counter to show the discrepancy. Fujitsu would have 8 to manually write an entry value to the local branch 9 account. 10 "Impact -- When the branch comes to complete next 11 trading period they would have a discrepancy which they 12 would have to bring to account. 13 "Risk -- This has significant data integrity 14 concerns and could lead to questions of 'tampering' with 15 the branch system and could generate questions around 16 how the discrepancy was caused. This solution could 17 have moral implications of Post Office changing branch 18 data without informing the branch." 19 All right? 20 So we can see what's being said here. Let's put it 21 fairly crudely, if you don't mind. This basically says 22 one of the possible solutions could be, "Let's fix the 23 branch accounts without telling the branch subpostmaster 24 and see if we can get away with it". Now, is that what 25 you expect of Fujitsu staff members, to even consider 202 1 this as being an option? 2 A. No, it is not. 3 Q. No. Try it the other way round. Are you slightly 4 surprised about the Post Office considering this as 5 a possible option in relation to fixing a branch account 6 for one of their subpostmasters? 7 A. I would give you the same answer. 8 Q. Let's move further up the page, please, to the bottom of 9 page 2, I think it is, "Impact". Now, let's have 10 a quick look at the impact section. So this is the 11 impact of this branch. Now, the mismatch bug, we all 12 know -- I've described it in earlier questions for other 13 witnesses -- being a submarine bug. What I mean by that 14 is it can affect branch accounts and it doesn't appear 15 to be apparent to the subpostmaster/mistress. So 16 "Impact": 17 "The branch has appeared to have balanced, whereas 18 in fact they could have a loss or a gain. 19 "Our accounting systems will be out of sync with 20 what is recorded at the branch. 21 "If widely known could cause a loss of confidence in 22 the Horizon system by branches ..." 23 So this is not good news. Do you agree? 24 A. I agree. 25 Q. All right. It then goes on to say: 203 1 "Potential impact upon ongoing legal cases where 2 branches are disputing the integrity of Horizon data 3 ..." 4 Now, given what we know about this document, which 5 appears to include a possible fix which, unless I'm very 6 wrong, would lead to a conspiracy to false account 7 between two large organisations, what this is saying is 8 this, isn't it: that, if this gets out, it's going to 9 muck up legal cases where branches are correctly saying 10 there's a problem with the system? "We'd better not 11 tell them", in other words. That's what's being 12 considered between two important, well-known brands. 13 How did that happen, Mr Tait, under your lead? 14 A. I have no idea, Mr Stein, but this is not how I would 15 expect either organisation to work. 16 Q. You've been asked question after question by Mr Blake 17 here, who has been saying, "Well, what happened? What 18 happened? Why weren't matters dealt with by your 19 office? Why didn't you take notice of what was going on 20 under your leadership?" 21 Now, there are two answers to this. Either you 22 failed utterly in your leadership or the staff beneath 23 you failed utterly to tell you what was going on. Which 24 answer would you prefer: your failure or your staff's 25 failure? 204 1 A. I don't think it's a question of which I would prefer. 2 Q. Well, which was it, Mr Tait? 3 A. I think, from the documents that were given to me, I was 4 reassured about Horizon. 5 Q. Reassured by the same people, at least some of the same 6 people, that were involved in relation to the mismatch 7 bug and what was going on? 8 A. I think Fujitsu Executives and Post Office Executives. 9 MR STEIN: Thank you, Mr Tait. 10 THE WITNESS: Thank you. 11 SIR WYN WILLIAMS: Is that it, Mr Blake? 12 MR BLAKE: Yes. Yes, it is. 13 SIR WYN WILLIAMS: Then, thank you very much, Mr Tait, for 14 providing your written evidence and for giving oral 15 evidence during the course of the afternoon. I'm 16 grateful to you. 17 THE WITNESS: Thank you, sir. 18 SIR WYN WILLIAMS: So tomorrow we have a potentially busy 19 day again, Mr Blake. I think Mr Ward is first up, and 20 he is remote; is that correct? 21 MR BLAKE: That's correct sir, yes. 22 SIR WYN WILLIAMS: Oh, it is correct. Right. All right, 23 then. 9.45 in the morning. 24 MR BLAKE: Thank you very much, sir. 25 (4.35 pm) 205 1 (The hearing adjourned until 9.45 am the following day) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 206 I N D E X RICHARD CHRISTOU (sworn) ......................1 Questioned by MR STEVENS ......................1 Questioned by MS PAGE ........................87 DUNCAN ANDREW TAIT (sworn) ...................93 Questioned by MR BLAKE .......................93 Questioned by MR STEIN ......................199 207