1 Wednesday 10 July 2024 2 (9.45 am) 3 MS HODGE: Good morning, sir. Can you see and hear us? 4 SIR WYN WILLIAMS: Yes, I can, thank you. 5 MS HODGE: Thank you, sir. Just to remind you, there will 6 be a fire alarm test today at 10.00 am. 7 SIR WYN WILLIAMS: Yes, I'll just remain online as usual. 8 MS HODGE: Thank you, sir. Please could the witness be 9 sworn. 10 THOMAS KNUT GLENN COOPER (affirmed) 11 Questioned by MS HODGE 12 MS HODGE: Please give your full name. 13 A. It's Thomas Knut Glenn Cooper. 14 Q. Thank you, Mr Cooper. As you know my name is Ms Hodge 15 and I ask questions on behalf of the Inquiry. Thank you 16 for coming to the Inquiry this morning to answer those 17 questions and for the detailed witness statement which 18 you provided in advance. You should have a copy of that 19 statement in front of you dated 13 June of this year; is 20 that right? 21 A. Yeah. 22 Q. That statement runs to 150 pages. I understand you'd 23 like to make some minor corrections to the statement; is 24 that right? 25 A. That's correct. 1 1 Q. The first of those, I understand, relates to 2 paragraph 69(i). It's a typographical error in the 3 third line from the bottom of that paragraph, where it 4 reads "making better informed contributions to the Board 5 decisions", should read "discussions"? 6 A. Correct. 7 Q. Thank you. The second correction you'd like to make is 8 at paragraph 75 of your statement. You refer to 9 an email from Rodric Williams to Richard Watson, and 10 Joshua Fox dated 12 February 2018. Should that in fact 11 be dated 2019? 12 A. Yes, it should. 13 Q. Thank you. Then dealing with some amendments to 14 document references, at paragraphs 238 and 239 of your 15 statement you refer to the minutes of a meeting of the 16 Post Office Board on 17 September 2019. The document 17 you cite as evidence of that meeting is POL00104327. 18 However, the relevant part of that document has been 19 redacted; is that right? 20 A. That's correct. 21 Q. You would therefore like to amendment the reference to 22 POL00103667, which contains an unredacted version of the 23 same meeting minutes; is that right? 24 A. Yes. 25 Q. Finally, at paragraphs 253 and 254 of your statement you 2 1 refer to the minutes of a further meeting of the Post 2 Office Board on 10 December 2019. The document you cite 3 as evidence of that meeting is UKGI00019332. Again, the 4 same problem arises in that some relevant parts of that, 5 those meeting minutes have been redacted; is that right? 6 A. Yes. 7 Q. You therefore would like to amend the reference to 8 POL00290368, where we can find an unredacted version of 9 the same minutes? 10 A. Yes. 11 Q. Thank you. Subject to those corrections, is the content 12 of your statement true to the best of your knowledge and 13 belief? 14 A. It is. 15 Q. Thank you. I'm going to ask you some brief questions 16 about your professional background, before you joined UK 17 Government Investments. You started your career in 18 accountancy; is that right? 19 A. Yes. 20 Q. Moving then to the investment bank UBS where you worked 21 for 21 years? 22 A. Yes. 23 Q. At UBS you were appointed as Head of European Mergers 24 and Acquisitions; is that correct? 25 A. Yes. 3 1 Q. You subsequently worked as Global Co-Chairman of Mergers 2 and Acquisitions at Deutsche Bank before joining UKGI in 3 November 2017; is that right? 4 A. Yes. 5 Q. Upon joining UKGI, you became a member of the 6 Shareholder Team for POL; is that right? 7 A. Yes. 8 Q. Did you immediately take up leadership of that team in 9 November 2017? 10 A. No, not until early 2018. 11 Q. Who was leading the team at the time when you joined? 12 A. It was Richard Callard. 13 Q. In March 2018, you replaced Richard Callard as the 14 Shareholder Non-Executive Director on the Post Office 15 Board and remained in that role until May 2023; is that 16 right? 17 A. Yes. 18 Q. Is it right that, whilst you were serving as the 19 Shareholder NED on the Post Office Board, the Post 20 Office was not the only Government asset for which you 21 were responsible? 22 A. That's correct. 23 Q. Of the various assets for which you had responsibility, 24 would it be right to say that the Post Office posed, or 25 was assessed to pose, the greatest risk to the 4 1 shareholder? 2 A. Oh, yes, easily, and it involved by far the greatest 3 part of my time. 4 Q. At paragraph 7 of your statement you say that you are 5 responsible for UKGI's risk reporting for its assets and 6 projects; is that right? 7 A. Yes. Something I took over when -- basically when Mark 8 Russell left UKGI, which I think was late 2020. 9 Q. Can you please explain in general terms how UKGI records 10 and reports on risks relating to its assets? 11 A. Yes. So this -- it's basically a bottom-up approach. 12 So each team involved in a project or an asset completes 13 a risk register and that then feeds up into essentially 14 two separate processes. The first is it forms part of 15 the reporting to the Board, so the Board receives 16 a summarised version of the risk registers from each of 17 the teams, and then it also feeds into our portfolio 18 review and project review processes, which are part of 19 our oversight of what our teams are doing in relation to 20 their assets and projects. 21 I'm speaking about how it works today, rather than 22 how it worked previously. 23 Q. My next question was: has there been any material change 24 in the way in which UKGI reports risk during the time in 25 which you've worked there? 5 1 A. Fundamentally, no. I don't think so. I mean, obviously 2 I wasn't responsible for this beforehand but I think 3 what's happened is it's -- the basic process is the 4 same, it's evolved and it's more -- I think it's more 5 mature and sophisticated probably than it was five years 6 ago. 7 Q. What do you mean by that: more mature and sophisticated? 8 A. I think it's more integrated than it was. So, for 9 example, I'm not sure, historically, that risk registers 10 were regularly part of the portfolio review and project 11 review processes and part of the papers that came to 12 those. Now, they are. So it's things like that. 13 Refinements, if you like, like that. 14 Q. Thank you. On joining the Shareholder Team, you were 15 informed that the Post Office was engaged in ongoing 16 litigation with the group of subpostmasters; is that 17 correct? 18 A. Yes. 19 Q. In your statement you describe receiving a high level 20 briefing about the litigation from your predecessor, 21 Richard Callard; is that correct? 22 A. Yes. 23 Q. This briefing was given to you orally; is that right? 24 A. Correct. 25 Q. From this briefing, would it be fair to say that you 6 1 understood that Post Office had, for several years, been 2 engaged in an intractable dispute with a group of 3 subpostmasters concerning issues with Horizon? 4 A. Yes. 5 Q. You also understood that efforts had been made to 6 resolve the dispute, which included an investigation by 7 Second Sight and the establishment of a Mediation 8 Scheme, but these had not been successful? 9 A. Correct. 10 Q. You were also told, were you not, that the Chairman of 11 Post Office, Tim Parker, had commissioned a review and 12 had reported back to the Minister in positive terms? 13 A. Yes. At least what I think the team took to be 14 reassuring terms. 15 Q. Did you request to see any of the material which 16 underpinned this briefing? 17 A. No. I didn't receive the material until later. 18 Q. Why did you not request to see any of the material 19 underpinning the briefing? 20 A. I think at that stage I was learning, it was obviously 21 the very start of my induction into Post Office and, you 22 know, I took what I was being told at face value. 23 Q. Having now read that material, do you think it would 24 have assisted you to have read the reports prepared by 25 Second Sight and the review commission by the Chair at 7 1 that time? 2 A. Very much so. I think the Swift Review in particular, 3 which I read in 2020, I think was a very key document, 4 and informed -- I think, with hindsight, would have been 5 hugely helpful with the litigation. 6 Q. Can you be a little more specific as to why you say 7 that? 8 A. Well, I think the main -- for me, the key thing were the 9 recommendations at the end, and I think when you read 10 the -- I think four of the recommendations relate to the 11 system, and the way I read it, when I did read it, when 12 you take those four together, it basically is saying the 13 company had never assured itself properly that the 14 system actually worked, and I think that would have 15 given me, you know -- so when the management team or the 16 lawyers were saying in the context of the litigation, 17 "Well, the system is fine, it works, you know, there's 18 no systemic problem", comparing that with the Swift 19 Review recommendations, it begs the obvious question, 20 "Well, how do you actually know that?" And I think that 21 would be the obvious question I would have asked, had 22 I had the Swift Review earlier. 23 Q. At the time that you received your briefing from 24 Mr Callard, did you understand that the Post Office had 25 assured itself that the system worked properly, or did 8 1 you not address your mind to the question at that stage? 2 A. It was expressed in many -- you know, in different ways, 3 but the consistent message from the -- I know you're 4 asking about Mr Callard but I think he said that -- and 5 I think his main source for this was the first Second 6 Sight Report, in saying no systematic errors had been 7 found. He used the term "smoking gun"; there was no 8 smoking gun in relation to the system. But this was all 9 reinforced very heavily by the management team in the 10 company, who consistently said the system is fine. 11 I mean, you know, I'm paraphrasing but there were 12 various forms of language that amounted to that. 13 Q. At this early stage in your tenure, what did you 14 understand the nature of the concerns about Horizon to 15 be? 16 A. Well, that the system had caused discrepancies in the 17 branch accounts which had caused losses for postmasters, 18 and then there was the question of remote access as 19 well. 20 Q. So at that time, you were alive to both of those issues; 21 is that right? 22 A. Yes, I mean, I had watched the Panorama programme which 23 had an impact on me. I remember watching it and feeling 24 that there was something real there. 25 Q. Did you give any consideration at this early stage to 9 1 the possibility of those issues, those questions about 2 Horizon, being resolved by means other than litigation? 3 A. I did, and I think, you know, particularly the Horizon 4 issues -- to me, and particularly with hindsight, 5 I think the litigation process was not a particularly 6 good way of resolving this or getting to the facts. 7 During the course of my introduction and learning about 8 the litigation, I did think about what alternatives 9 there might be and it seemed to me at that point -- 10 because it was only a matter of months before the 11 hearings were due to begin -- that any other process 12 would be -- wouldn't produce as definitive an outcome 13 any more quickly. 14 You know, the advantage at that point of the Horizon 15 Issues hearings, it seemed to me, was that both sides 16 were funded, they had expert witnesses, they would have 17 the benefit of discovery and, you know, a judge 18 overseeing it. And it seemed to me, at that point in 19 time, that was going to be the best way of getting to 20 the bottom of what had happened. 21 Q. When you say "at that point in time", are you referring 22 to early in 2018 -- 23 A. '18 -- yes, I mean, really during the first half of 2018 24 because during this period I was still sort of getting 25 up to speed with -- it's about to -- 10 1 (Pause for fire alarm test) 2 Q. I think we are now finished. 3 A. Okay, yes. 4 Q. The question I'd asked was in relation to your 5 perception that the litigation had become the fastest 6 way to resolve these issues, whether that was 7 a perception you had when you received this briefing in 8 early 2018? 9 A. No, not that early. It was -- it evolved over time. 10 I mean, I was learning about the litigation over the 11 first several months of being on the Board, so it was 12 later rather than earlier in that period. 13 Q. Do you consider that there was an opportunity in that 14 early phase to explore that option of an alternative to 15 litigation? 16 A. No, I think, even in March 2018 when I joined the Board, 17 I think the conclusion would have been the same. 18 Q. You've explained in your statement that it was apparent 19 to you from the outset that an important part of your 20 role would be to monitor the progress and conduct of the 21 Group Litigation; is that right? 22 A. Yes. 23 Q. Presumably the purpose of monitoring the litigation was 24 to enable you to identify any significant risks and to 25 take appropriate steps to mitigate them; is that right? 11 1 A. Yes. 2 Q. Would it be right to say that you initially felt 3 hampered in your role by the reluctance of the Post 4 Office to share with you and your colleagues in UKGI 5 information subject to legal professional privilege? 6 A. Yes, absolutely. I think it's worth sort of breaking 7 the role down into a couple of parts, so the first as 8 a Non-Executive Director, obviously the oversight of the 9 litigation was part of my role because I was on the 10 subcommittee. So I needed to understand it and, if you 11 like, monitor it from that perspective. But then there 12 was also clearly a need to inform -- keep the Department 13 informed as to what was going on, as well, through the 14 Shareholder Team, which I led, and the key element of 15 that was getting a protocol in place, 16 an information-sharing protocol, that was an agreement 17 that essentially enabled Post Office or gave them the 18 comfort, as it were, to provide the information to the 19 Department in a controlled way. 20 And that document didn't get agreed until June 2018, 21 you know, even though it had been agreed, I think even 22 before I joined the Board, that there would be 23 a protocol. 24 Q. So by June 2018, an agreement had been reached, in 25 effect, that enabled UKGI to obtain information and 12 1 documents from the Post Office relating to the substance 2 of the litigation; is that right? 3 A. Yes. 4 Q. Shortly after the agreement of the protocol, you 5 obtained a copy of the merits opinion produced by David 6 Cavender QC in relation to the Common Issues; is that 7 correct? 8 A. Yes. 9 Q. You also held a meeting with the Post Office's General 10 Counsel, Jane MacLeod, in which you discussed the Post 11 Office's approach in relation to the 23 contractual 12 issues in dispute in the litigation; is that right? 13 A. Yes, that was around July, if I recall. 14 Q. Would it be fair to say that you agreed at that stage 15 that there was an important point of principle at stake 16 in relation to the litigation, namely the nature of the 17 contract between the Post Office and its agents, the 18 subpostmasters? 19 A. Yes, but it wasn't just Jane's view that I took on this. 20 It was also Richard Watson, because we discussed the 21 merits opinion together. 22 Q. Sorry, could you just confirm his role, please? 23 A. Oh, Richard Watson was the General Counsel at UKGI. So 24 he was, really, apart from Post Office's lawyers, the 25 only source of other legal input I had and he and 13 1 I worked very closely together on the litigation all the 2 way through. But his, you know, obviously his views on 3 the merits opinion were important for me, and the point 4 about the relational contract and the good faith 5 elements that flowed from it were viewed, I think, 6 consistently, not just by Post Office's lawyers but by 7 all the other lawyers involved, including HSF when they 8 were part of the team and, actually, Slaughter and May 9 when they came in to pitch for the work. All of them 10 said that this point was unusual and would have 11 significant implications: effectively, an extension of 12 the law. 13 And my own experience in business is that, you know, 14 business contracts in this country are not good faith 15 agreements and the reason for that is that the lawyers 16 who draft them, the parties, want clarity about what the 17 terms are, and good faith obligations create uncertainty 18 for all the parties involved. So it was an -- my own 19 take on it was it was a very unusual thing to have in 20 a business context. 21 Q. So although you accepted or agreed that that was 22 an important point of principle, you felt, did you not, 23 that some of the points raised by the claimants were 24 reasonable and ought to be conceded by the Post Office? 25 A. Yes, absolutely. Not only -- well, certainly in respect 14 1 of some of them, and the liability clause I felt was the 2 standout example of that. But I felt, you know, 3 particularly in the context of a litigation and 4 a dispute that had been going on for so long, that on 5 a lot of these, the companies should be looking for 6 compromise, rather than disputing everything, just for 7 the sake of it, effectively. 8 So one of the 23 clauses was, for example, that Post 9 Office should agree to provide a computer system that 10 worked. Well, a working computer system was fundamental 11 to the whole relationship, so it didn't seem at all 12 unreasonable to me that Post Office should agree to 13 provide that. And I couldn't under -- Jane MacLeod's 14 initial response to this, when we had our first meeting 15 on it, was to say -- I did ask her, you know, "If Post 16 Office loses on these points, what's your response going 17 to be?", and she said, "Oh, we'll appeal everything". 18 So that didn't really make sense to me. It seemed 19 completely, you know, inappropriate for a situation that 20 the company found itself in. 21 Q. You've mentioned the liability clause. What was the 22 nature of your concerns about that clause? 23 A. Well, I thought it was completely unfair. I mean, that 24 the postmasters should be responsible for all the losses 25 whether they were responsible or not seemed, you know, 15 1 unfair, unethical and I think actually undermined the 2 basis of the partnership between postmasters and the 3 company because, in effect, it let the company off the 4 hook of doing what it should do in supporting the 5 relationship. So it just seemed completely at odds with 6 what the contract should be trying to do. 7 Q. In your discussions with the Post Office's General 8 Counsel and its lawyers, you described the position on 9 the liability clause as defending the indefensible; is 10 that right? 11 A. Yes. 12 Q. In your statement, you expressed a strong sense of 13 frustration by this stage about the Post Office's 14 conduct of the litigation. 15 A. Mm. 16 Q. I wonder, please, if we could look at what you say at 17 paragraph 119 of your statement, which bears the 18 reference WITN00200100. You say: 19 "[Post Office] was robust in its view that it should 20 continue to defend [the liability clause], arguing that 21 any other approach to liability was not operationally 22 possible. I recall feeling a significant degree of 23 frustration about this issue and thinking that if 24 I could not persuade [Post Office] on this 25 straightforward point (as I saw it), I would not be able 16 1 to persuade them of the need to compromise on any of the 2 other contractual issues on which [Post Office] was 3 vulnerable, such as training and providing 4 a fit-for-purpose computer system." 5 Were you concerned by the late summer of 2018 about 6 the quality of the legal advice which the Post Office 7 was receiving? 8 A. Yes, I was. Flowing directly out of the conversations 9 I'd had with Jane MacLeod, the very entrenched position 10 that the company was taking, both of those, it seemed to 11 me, were at odds with actually trying to reach 12 a resolution to the dispute, which in the end, one way 13 or another, would have to be solved. 14 Q. Is it right that your concerns about the conduct of the 15 litigation were heightened when Mr Justice Fraser, as he 16 then was, dismissed the Post Office's application to 17 strike out substantial parts of the witness evidence 18 adduced by the lead claimants? 19 A. Yes. It seemed obvious from his comments that Post 20 Office was not handling the litigation -- whatever the 21 rights and wrongs of it, it was handling the litigation 22 in a very cack-handed way. 23 Q. Could we please take a look at the update you received 24 from the Post Office's General Counsel, Jane MacLeod, on 25 16 October 2018. It is UKGI00008532. 17 1 If we could please scroll to the bottom of the page. 2 So at the bottom there, we can see an email from Jane 3 MacLeod addressed to Richard Watson -- you've confirmed 4 he was General Counsel at UKGI -- 5 A. Mm-hm. 6 Q. -- and Joshua Fox. What was his role, please? 7 A. He was a member of the UKGI Shareholder Team, he wasn't 8 a lawyer. 9 Q. Sorry, he was -- 10 A. He's not a lawyer. 11 Q. Not a lawyer? 12 A. Mm. 13 Q. The email is copied to you and Rodric Williams, a lawyer 14 at the Post Office. It reads: 15 "Richard, Josh, 16 "Further to Rod's emails on 9 and 10 October, the 17 Managing Judge Mr Justice Fraser has now ruled on our 18 application to strike out as inadmissible parts of the 19 claimants' evidence. We received the judgment late last 20 night. 21 "We were not successful on the application: 22 "The application was decided on case management 23 grounds which the Managing Judge has considerable 24 discretion; 25 "Applying that discretion, the Managing Judge set 18 1 a very high threshold for strikeout, and concluded that 2 we had not established to the necessary standard that 3 the claimants' evidence could never be relevant to the 4 case, given the number of Common Issues, the 5 'considerable legal analysis' each will require, and 6 what our case on those issues is. 7 "However he confirmed that he will apply properly 8 the law on admissibility when it comes to the trial, and 9 that the November 2018 Common Issues Trial will not rule 10 on matters which concern Horizon or whether Post Office 11 actually 'breached' its obligations to the claimants 12 (matters to which most of the disputed evidence goes and 13 which will be dealt with in later trials)." 14 If we could scroll down, please, a little further, 15 Ms MacLeod reported that: 16 "In deciding the application, the Managing Judge was 17 critical of our conduct of the case, including 18 intimating that we were not acting cooperative and 19 constructively in trying to resolve this litigation 20 (which criticism was levelled equally between the 21 parties); and that we had impugned the court and its 22 processes by making the application for improper 23 purposes. 24 "This response is extremely disappointing given the 25 approach we have been adopting, and his challenge as to 19 1 the purpose for which we had applied for strikeout is at 2 odds with comments he had made during various procedural 3 hearings over the past year. Nevertheless, we are 4 refining our preparation for trial -- including our 5 reactive communications plan -- in the context of the 6 judge's remarks." 7 In your statement you describe feeling surprised by 8 the judge's criticisms of the Post Office -- is that 9 right -- 10 A. Yes. 11 Q. -- and concerned by his reference to impugning the 12 court? 13 A. Yes. 14 Q. As a result of your concerns, you sought the opinion of 15 Richard Watson, the General Counsel at UKGI, who 16 requested a copy of the judgment from the Post Office; 17 is that right? 18 A. Correct. 19 Q. His response, having reviewed that judgment, can be seen 20 at the top of the page, please. So halfway down there, 21 from Richard Watson to you on 17 October, so the 22 following day. So his initial reaction: 23 "Tom 24 "You will see I have asked to see the judgment. 25 "I am concerned that the judge felt [Post Office] 20 1 had impugned the court and made the application for 2 improper purposes but need to understand the detail. 3 "I infer the judge is getting a little tired of the 4 satellite litigation and wants the parties to focus on 5 the trial and possible resolution of this case. 6 "His criticism of the [Post Office's] conduct in 7 their litigation tactics should not influence the legal 8 issues he has to decide but may be relevant in decisions 9 on costs, not only of the failed application (which 10 I assume they will have to pay) but also more widely. 11 "It is easy to be wise with the benefit of hindsight 12 but on the assumption that the [Post Office] were 13 concerned some witness evidence was not relevant to the 14 issues in the first trial I am a little surprised [Post 15 Office] were advised to make this application. Judges 16 are very used to disregarding irrelevant evidence and 17 submissions about that aspect could have been made at 18 the start of the trial so he was on notice as to the 19 [Post Office's] position." 20 Now, those are his initial thoughts before he has 21 read the judgment. 22 A. Mm. 23 Q. After reading the judgment, he reports to you feeling 24 very uncomfortable, from the Post Office's perspective, 25 about the comments made in it; is that right? 21 1 A. Yes. 2 Q. He said that it gave him very considerable cause for 3 concern about the Post Office's litigation tactics and 4 handling, not to mention the merits of the case itself. 5 You explain in your statement that you agreed with the 6 concerns which Mr Watson expressed; is that right? 7 A. Yes. 8 Q. So his very considerable concerns about the litigation 9 tactics handling and the merits of the case? 10 A. Yes. 11 Q. As a result of the concerns you both had, you invited 12 the Chair of Post Office, Tim Parker, to read the 13 judgment for himself; is that right? 14 A. Yes. 15 Q. And you raised the issue with the CEO, Paula Vennells; 16 is that correct? 17 A. Correct. 18 Q. You were assured by Ms Vennells that a change of tack 19 would be implemented but it was your perception that 20 this would likely result in a change of tone, rather 21 than substance; is that right? 22 A. Yes, I think you need to bear in mind that this was 23 mid-October and the hearings were due to start in early 24 November, and so this was sort of one minute to midnight 25 in relation to the hearings, so it didn't seem 22 1 realistic. To me, what this was signalling was that the 2 company needed to change. It should change the 3 substance of what it was doing -- and that goes back to 4 the discussions I'd had with Jane earlier in the 5 summer -- but I think realistically at this point, that 6 was -- it was too late. And so the best one could hope 7 for here was a change of tone or approach or the way the 8 hearings themselves were handled by the Legal Team. But 9 it was clear -- they needed to change what they were 10 doing. That's what Justice Fraser was communicating. 11 Q. You've just said now, and you said in your statement, 12 that you felt, really, a sense of resignation at this 13 stage -- 14 A. Mm. 15 Q. -- and a concern that your advice was falling on deaf 16 ears; is that fair? 17 A. Correct. 18 Q. Did you report your concerns about the Post Office's 19 conduct of the litigation to either the CEO or the Chair 20 of UKGI at that time? 21 A. I don't recall. To be honest, I doubt it, actually. My 22 main concern was that the Department should be sighted 23 on the litigation and the team and I had spent quite 24 a lot of effort trying to get this meeting for the 25 Minister and the Permanent Secretary on 17 -- which 23 1 finally happened on 17 October. So it was right on top 2 of the strikeout -- it was just before we knew about the 3 strikeout application. 4 And that was my priority -- was to get the 5 Department sort of properly involved, partly in order so 6 they understood what was going on but also so that they 7 could challenge the company on the issue of their 8 contingency planning, which I felt was, you know, very 9 inadequate, and that was, I think, the area where I felt 10 the Department, at that stage, could be most effective 11 in trying to get change. 12 Q. Did you communicate to the Department the extent of your 13 concerns about the Post Office's conduct of the 14 litigation by this stage? 15 A. Not in those terms. I mean, the Department, I think, 16 was kept updated as to what was going on. I mean, with 17 hindsight, one of the things I think was missing in the 18 preparation for the 17 October meeting was a pre-meeting 19 with the Minister and the Permanent Secretary and that 20 would have been my opportunity to talk about that issue 21 and, you know, I remain -- my memory is that we tried to 22 get a pre-meeting. I haven't been able to stand that up 23 from the documents but that was -- that is my memory. 24 But I think, you know, I'm still surprised that the 25 Minister and the Permanent Secretary went into the 24 1 17 October meeting without hearing, having a pre-meeting 2 discussion with the people handling it day-to-day, and 3 I think, you know, these concerns would have come out 4 then. 5 Q. When it became apparent that you couldn't have 6 a pre-meeting, in advance of the briefing on 17 October, 7 did you give any consideration to putting in writing 8 your serious concerns about the conduct of the 9 litigation so that the Department could go into that 10 meeting informed as to the nature of your concerns? 11 A. I didn't because it was so late. I mean, I think the 12 die was cast at that point, in terms of what was going 13 to happen in the hearings. And a lot of this, I think 14 you need to also bear in mind that the real levers for 15 change here, I think, was, as I saw it, given the 16 interactions we'd had with the Department, was at the 17 company level. 18 The company was running the litigation, the Board 19 was in control of it, and it was really through that 20 mechanism that, if change was going to happen, it was 21 going to happen in the time frame that was available. 22 And, you know, I was actually disappointed when I did 23 raise the liability clause issue, which I thought was 24 completely obvious, you know, I was -- it was 25 disappointing to me that I didn't get a lot of support 25 1 from -- or I didn't feel I got much support from my 2 colleagues on the Board. 3 Q. What did you understand your responsibilities to be 4 concerning the reporting of risk which you identified in 5 the Post Office's conduct of the litigation? 6 A. Internally, within UKGI? 7 Q. Internally and to the Department? 8 A. So within UKGI there was a risk register. It identified 9 the litigation as the top risk. And I think, if you 10 like, that was the responsibility of the team. I mean, 11 you know, I also had interactions, obviously, with Mark 12 Russell and Mark actually was very good in coming to 13 find me and asked me how things were going. So we did 14 talk relatively frequently. I have to say, I think 15 with -- my memory is that most of those conversations 16 really were about the relationship issues I was having 17 with the company at the time, rather than necessarily 18 the litigation. But I think, in terms of risk 19 reporting, you know, the main vehicle was the risk 20 register. 21 Q. Thank you. We will come on to that a little later. You 22 had been made aware, had you not, on joining UKGI, that 23 it had recently been involved in a non-statutory inquiry 24 into the award of the Magnox decommissioning contract? 25 A. Yes. 26 1 Q. Can you please briefly explain what you were told about 2 the background to that inquiry? 3 A. Yes, so I had a very good briefing from Elizabeth 4 O'Neill who was our General Counsel at the time -- she 5 was Richard's predecessor -- and, essentially, what 6 I was told was that there were some very significant 7 learnings from the Magnox Inquiry that UKGI was 8 implementing in relation to major bits of litigation, 9 where our assets were involved. 10 And the core elements of that were to make sure that 11 the Department was properly informed as to what was 12 going on and what the litigation strategy was, that the 13 Department would have access to the documents, even 14 privileged material, and the vehicle by which that would 15 happen would be the protocol, and that there was enough 16 communication going on, there was the opportunity for 17 the Department to have formed its own views as to how 18 the litigation was being approached, so that they could 19 express views where they had them. 20 Q. Do you recall whether your briefing with Ms O'Neill 21 covered the reporting of risk to the Board of UKGI? 22 A. No, I don't think it did. 23 Q. Were you aware that UKGI had produced a written report 24 into the lessons learned from the Magnox Inquiry? 25 A. I don't think I was. I had, I thought, a very 27 1 comprehensive -- I thought Elizabeth had communicated to 2 me what I needed to know and what I needed to take away 3 and actually put into action. So it was the protocol, 4 it was contingency planning, how do you resolve this 5 dispute, to get those things firmly on the agenda with 6 the company and make sure those issues were covered. 7 And then the merits opinion, as well, was I think the 8 fourth element, so that everyone was sighted on the 9 merits of the case. 10 Q. Could we please take a look at that report that was 11 produced by UKGI. It bears the reference UKGI00009275. 12 Its title is "Initial review into UKGI's role in the 13 competition, award and challenge of the Magnox/RSRL 14 decommissioning contract". It's stated to be a draft, 15 dated 25 October 2017. The section of the report which 16 is entitled "General lessons learned" commences at 17 page 26. Could we take a look, please, at some of the 18 recommendations on page 27 of the report. 19 Just pausing there, having seen the title to that 20 report, do you recall whether you were shown a copy of 21 it at around the time that you joined UKGI? 22 A. I actually don't think I've seen this report -- it's the 23 report itself -- until I received it from the Inquiry. 24 Q. Thank you. Please could we scroll to the bottom of 25 page 27, where we can see the final bullet point, which 28 1 reads: 2 "Use the Non-Executive Director appointed by 3 Government as a means of obtaining better quality 4 information." 5 So that's the recommendation. 6 "The forthcoming appointment of a UKGI Director as 7 an NDA NED is an opportunity for fuller feedback on 8 board discussions (and the performance of the NDA Board 9 members). To optimise this, specific guidance should be 10 provided to NEDs to enable them to fully inform the 11 shareholder in a way that remains consistent with their 12 obligations to the NDA." 13 This is obviously a recommendation specific to 14 Magnox. Did you receive any guidance when you first 15 joined UKGI about the sharing of information, which you 16 would have obtained in your capacity as Shareholder NED 17 on the Post Office Board? 18 A. Well, as I said, I think the main vehicle, as 19 I understood it, for providing information to the 20 Department was through the protocols. So that the 21 Department would get privileged material, the merits 22 opinion, and so forth. And, you know, Richard was 23 really my -- you know, I was reliant on Richard, 24 effectively, to -- as to how that operated. So he was, 25 if you look at the email chains, for example, usually it 29 1 was the lawyers in Post Office communicating with 2 Richard, who then passed things on to the Department. 3 Q. Sorry, just to clarify, Richard Watson? 4 A. Richard Watson, yes. Sorry. 5 Q. No, no, we've got several Richards at UKGI. 6 Did you consider that there were any obstacles to 7 you reporting risk you'd identified in the Post Office's 8 conduct of the Group Litigation. 9 A. No, absolutely not. No. 10 Q. Did you recognise that, in your role as Shareholder 11 Non-Executive Director and as a member of the Litigation 12 Subcommittee, that you would be a very important source 13 of information for UKGI and the Department about the 14 risks to the Post Office arising from the litigation? 15 A. Yes, and, as I say, I felt this at the time but I feel 16 it even more so now, that I think we would have 17 benefited by a lot more in-person contact. So things 18 like the -- 19 Q. With the Department? 20 A. With the Department, and I've given one example being 21 the pre-meeting -- the lack of a pre-meeting before the 22 October meeting with the company, and, you know, there 23 were times in 2019 when I tried to reach out to the 24 Department, particularly the Minister, to talk to her 25 about it. And, you know, they -- I don't think they 30 1 happened as frequently as they should have. It was 2 quite hard to gauge, to be honest, how interested the 3 Department was in this. You know, they'd received 4 briefings, quite fulsome briefings, actually, on the 5 background to the litigation, and no questions came 6 back. Nothing came back. So, you know, from my 7 perspective, the action was at the board level. The 8 action wasn't at the departmental level. 9 Q. On that topic, we can digress because you've raised it, 10 you suggest in your statement that, when you first 11 joined UKGI, there was an insufficient level of 12 engagement by the Department in matters concerning the 13 Post Office; is that fair? 14 A. Yes, it was partly structural because there wasn't 15 a policy team in the Department at that time. It's 16 something I raised with Alex Chisholm, I remember asking 17 him, you know, "Who do I talk to, Alex, if it's not 18 you?" And I think at that point the penny dropped and 19 he quite quickly got a policy team in place and I think 20 they were there from August. 21 Q. How did the BEIS policy team interact with the 22 Shareholder Team in UKGI? 23 A. It was an evolving picture because it was a small team 24 to start with, and so, I think, like all of us with Post 25 Office, there was quite a learning curve for them. It's 31 1 a complicated business and set-up. So -- but, you know, 2 there was clearly a much -- a big step-up in activity 3 and interest after the Common Issues judgment. 4 Q. What do you think were the practical consequences of the 5 Department not having a dedicated policy team in the 6 first half of 2018? 7 A. Well, I think it would have been -- you know, 8 realistically, access to ministers and Permanent 9 Secretary level is very hard to come by, they're very 10 busy people, and the discussions you have with them are 11 focused. We don't -- as UKGI, we don't have regular 12 touchpoints with them. So when you can drop in 13 a comment and say, "Oh have you seen that or seen the 14 other", the interactions we have aren't like that 15 because we don't see the ministers and Permanent 16 Secretary on a day-to-day basis. So a policy team does 17 have those interactions and so I think it would have 18 been an opportunity for us to talk through more of the 19 day-to-day concerns, you know, the things that were 20 perhaps of concern to us as a team, like some of the 21 issues around the handling of the litigation, that one 22 way or another the policy team could then have fed up 23 through their day-to-day interactions, in addition to 24 whatever they got formally. 25 Q. Would it be right to say that you saw the policy team as 32 1 a more effective channel of communication through to 2 the -- 3 A. Yes. 4 Q. -- Minister and senior officials in the Department? 5 A. Yes, that's, you know, part of what they're there for. 6 Q. So leaving to one side then reporting to the Department, 7 to whom within UKGI did you report your knowledge of 8 risks relating to the litigation? 9 A. That was primarily through the risk register. 10 Q. But to whom -- forgive me, are you saying that you 11 inputted your knowledge into the risk register? 12 A. Team -- the team did. 13 Q. So, sorry, to whom in the team did you report your 14 concerns? 15 A. So -- well, Richard, primarily. But members of the team 16 had signed the protocol, so Josh Scott, for example, Tom 17 Aldred, who was my number 2, were all quite heavily 18 involved in the litigation, so they knew what was going 19 on, and the team, you know, drafted the risk register. 20 I mean, I think, with -- again, with hindsight, there 21 would have been -- you know, I think I could have talked 22 more to Mark Russell about this, the fact that I thought 23 that they were -- I didn't agree fundamentally with the 24 way the company was approaching the common issues 25 hearing and its unwilling -- its unbending approach to 33 1 the 23 issues. I really don't think it would have made 2 any difference at that point. 3 The focus, I think, was -- in relation to the 4 Department and the Government side of this, to me, the 5 critical thing was the contingency planning. What would 6 happen if the company lost? You know, could branches 7 stay open, for example? I mean, these were quite 8 critical questions, not -- you know, setting aside 9 obviously -- the issues like compensation could be dealt 10 with afterwards but, if there would be real-world 11 impacts, potentially, on the provision of services to 12 the public if the litigation was lost. 13 So the best example is, if Justice Fraser had said 14 Horizon doesn't work, the current version of Horizon 15 doesn't work, what happens? Can the company actually 16 continue to operate? Will people be able to get money 17 out of branches? Those kind of things. 18 And I think, you know, those -- it was action on 19 that that I was trying to lever, to get the Department 20 to get the company focused on -- really focused on those 21 questions. That seemed to me the area where I could 22 get, if you like, most bang for my buck out of the 23 Government side. 24 Q. In terms of managing risk within UKGI, could we look, 25 please, at a further recommendation made in the Magnox 34 1 Inquiry report. So it's the second bullet point from 2 the bottom, which reads: 3 "In holding the NDA [I should have clarified, the 4 Nuclear Decommissioning Authority] Board to account, 5 UKGI should utilise its own board and its in-house legal 6 function on consideration of risks. To assist and 7 develop its role in holding [I think it should be 'an'] 8 asset's boards to account, UKGI could make more use of 9 the UKGI internal risk management process to encourage 10 discussion and debate of the major identified and 11 Horizon risks being faced by the assets it manages, 12 especially by drawing on the expertise of the UKGI Board 13 and UKGI in-house legal colleagues." 14 A. Mm-hm. 15 Q. Now, were you told, when you joined UKGI, that you 16 should escalate any major risks which you identified in 17 the Group Litigation to the Board? 18 A. Not in specific terms about the litigation but, I mean, 19 it's obvious as a general point that, you know, 20 whereas -- where the Shareholder Team has concerns about 21 a -- big concerns about an issue, you want your seniors 22 to be aware of it. That's clearly true. And, on this 23 recommendation, I think, obviously, the learning about 24 involving legal colleagues was absolutely implemented. 25 I mean Richard was fully involved. 35 1 Q. On the issue of reporting to the UKGI Board, is it your 2 evidence that, whether or not you'd seen this report, 3 you recognised that might be necessary when dealing with 4 a major risk? 5 A. Yes, yes. I mean, the specific benefit that the UKGI 6 Board brings is -- I mean, obviously the expertise that 7 the Non-Executive Directors bring and their experience 8 and they're very good sounding boards, and I did use -- 9 I did benefit hugely from Robert Swannell's input and 10 Jane Guyett's input during 2018. But I think the other 11 key element of the UKGI Board is, because we have 12 Treasury and, you know, in this case, fortuitously 13 BEIS -- we had BEIS on the Board through the Permanent 14 Secretary -- it's a very good vehicle for, if you like, 15 escalating issues that are of concern on the Government 16 side and, you know, I've used that vehicle as well, 17 subsequently. 18 Q. So you very much saw at the time that there was an open 19 channel of communication to the UKGI Board, where you 20 were concerned about a major risk; is that fair? 21 A. I felt comfortable reaching out to the Chair and the 22 Non-Executive Directors. I think I wasn't responsible 23 for reporting to the Board myself so, you know, the 24 chain of command, as it were, for that were the team 25 into the management at UKGI, obviously led by Mark 36 1 Russell, and, you know, they decided what should and 2 shouldn't be reported to the Board. So I can't really 3 speak to what was in the Board papers at the time 4 because I didn't see them and I didn't go to the Board 5 meetings. 6 Q. But you did on occasion reach out directly to Board 7 members; is that right? 8 A. Yes, and the particular issue I got the benefit of their 9 wisdom on was the relationship issues I was having with 10 the company. You know, I was getting complaints about 11 how, you know, intrusive I was being. 12 Q. Yes, thank you. We dealt with that in your statement, 13 unless there's anything you wish to add at this stage 14 about that? 15 Shortly after the dismissal of the Post Office's 16 strikeout application, you established a possible link, 17 did you not, between the unfairness of the liability 18 clause and the Post Office's conduct of past 19 prosecutions? 20 A. Yes. 21 Q. Please could we look at UKGI00008614. This is an email 22 from you to several colleagues in UKGI dated 6 November 23 2018, and it's addressed to Richard Watson and Joshua 24 Fox. You've explained already their roles. It's also 25 copied to Tom Aldred and Stephen Clarke. Could you 37 1 please confirm their roles within the Shareholder Team? 2 A. Yeah, so Tom, as I mentioned, was my number 2, he was 3 an Executive Director, and Stephen was a more junior 4 member of the team. Stephen was quite heavily involved 5 in working with Richard on communicating with the 6 Department about the litigation but, again, the only 7 lawyer on this list was Richard. 8 Q. Thank you. So it reads "Richard", it's addressed to 9 Richard Watson: 10 "Is it within the scope of the judge's remit in this 11 case to express a view that prosecutions for fraud or 12 false accounting were unsafe? Some of the press ([for 13 example] the Computer Weekly article) seem to be 14 pointing this way. 15 "I'm wondering about the relationship between 16 contract law (where postmasters take on the liability 17 for missing cash where there is a discrepancy between 18 the Horizon system and the actual cash in the till -- 19 this is the agency principle in the contract) and 20 criminal law (where there usually needs to be intent and 21 evidence that cash was actually stolen). I'm wondering 22 whether the complainants can argue that even though 23 contractually postmasters are responsible for missing 24 cash, prosecutions should not have been made without 25 actual evidence of theft (ie it is [sufficient] to 38 1 prosecute simply on the basis that some cash was missing 2 without having proof that it had been stolen). I also 3 wonder to what extent any coercive behaviour by POL 4 ([for example] in encouraging a guilty plea as 5 an alternative to a fraud trial) could be relevant to 6 this argument as well -- the judge in the last ruling 7 mentioned POL's style in previous correspondence as 8 being dismissive." 9 Just pausing there, from where had you obtained the 10 idea that the Post Office that acted coercively in its 11 conduct of past prosecutions? 12 A. I'm not sure -- no, I don't think I was talking about 13 past prosecutions here. I think I was talking about its 14 coercive behaviour generally, in relation to its 15 handling of postmasters. 16 Q. Well, you give an example of encouraging a guilty plea 17 as an alternative to a fraud trial? 18 A. Oh, I see, yes, sorry. Yes. I'm sorry. Where had 19 I got that from? I honestly can't remember. I'd have 20 to think about it but I can't remember off the top of my 21 head. 22 Q. The email goes on to read: 23 "Is there a risk that some of the implied 24 contractual terms being asked for by the complainants 25 could feed this argument [for example] the implied term 39 1 requiring losses to be investigated before deeming 2 postmasters liable." 3 So that's your email to Richard on 16 October. You 4 appear in this email to have identified not one but two 5 possible risks. First, that the complainants, by which 6 I think you mean the claimants in the Group Litigation, 7 their convictions might be unsafe because, absent data 8 from the Horizon system, there was no evidence that 9 money had been stolen. Would you agree with that? 10 A. Yeah, I mean in very simple terms, if you can't 11 establish a contractual claim, how do you establish 12 criminal -- a conviction? I mean, in very simple -- 13 much simpler language than this. That was what I was 14 trying to understand the relationship between those two 15 things. And it was a question -- I mean, this was very 16 much a question. I hadn't -- you know, this was me 17 trying to understand the consequences of the litigation 18 and adverse judgments in the absence of help on this 19 from Post Office because, you know -- and it 20 particularly struck me with hindsight that, in all of 21 the contingency planning conversations we had with Post 22 Office at this time, convictions never came up. 23 In other words, the risks they identified, one of 24 the risks they -- they didn't identify as a risk that, 25 if we lose the litigation, there will be unsafe 40 1 prosecutions. 2 Q. You say they didn't raise that with the Board? 3 A. Yeah. 4 Q. Does it follow that the suggestion that Post Office has 5 encouraged a guilty plea as an alternative to a fraud 6 trial was not something which had been suggested to you 7 by the Post Office -- 8 A. No, it -- this came from -- 9 Q. -- that there was a risk to that effect? 10 A. Correct, yes. This was something I'd extracted 11 essentially from commentary, I think external commentary 12 is my best guess as to where I got this from. 13 Q. I think, in fairness to you, you're making a connection 14 which many others hadn't yet made at that time? 15 A. Well, it certainly hadn't been made by Post Office 16 within my hearing, that's for sure. 17 SIR WYN WILLIAMS: Had it been discussed in any Litigation 18 Subcommittee, for example? 19 A. Not in these terms, Sir Wyn. I think the backdrop to 20 this on convicted postmasters was that it had very 21 little profile in any of the discussions we had -- in 22 the Board at this time or in my discussions with the 23 management team. There was a very strong sense, 24 I think -- two things I think I took away from it, and 25 I can't date when these -- when I got these impressions, 41 1 but the first was that the majority of people who'd been 2 convicted -- and we had no idea about numbers -- but the 3 majority had pleaded guilty to the offence concerned 4 and, secondly, that a guilty plea would, if you like, 5 trump anything else. 6 If a postmaster had pleaded guilty, they were guilty 7 of something and, you know, it didn't -- effectively, 8 what had happened to get you there and to get the 9 conviction in place, sort of didn't really matter. And 10 that view, I have to say, persisted for a very long 11 time. I remember, you know, when Brian Altman first 12 came to the Board in early 2020, that was my takeaway 13 from the first meetings we had with him. 14 So this was a very strong view. 15 SIR WYN WILLIAMS: Sorry to cut you off, I'm sure that these 16 issues became more and more prominent as the litigation 17 unfolded, and after it, but Ms Hodge is rightly pressing 18 you about your, if you like, perceptiveness in realising 19 this problem before the Common Issues trial had even 20 taken place and we were wondering how you were so 21 perceptive, in effect. 22 A. Well, to me, it was a logical question, and it was the 23 link. As I say, to me what was an obvious question, 24 which was, if you can't -- if the effect of the Common 25 Issues judgment would be that -- or an adverse Common 42 1 Issues judgment -- was that the company couldn't 2 establish a claim, a contractual claim, ie the money has 3 gone but it's not the postmaster's responsibility for it 4 missing, how can you prosecute them, on what basis? You 5 don't have the fact that the money is even missing, let 6 alone whether they intended to steal it. 7 SIR WYN WILLIAMS: Well, all right, fine. Back to you, 8 Ms Hodge. 9 A. I'm sorry, I'm possibly not answering your question very 10 helpfully here but I don't think it came from -- I mean, 11 this was just my thought process. 12 SIR WYN WILLIAMS: All right. 13 MS HODGE: You said, Mr Cooper, in your evidence just now 14 that the consistent advice you received, including from 15 Brian Altman QC was that a guilty plea really was the 16 end of the matter. 17 A. Yeah. 18 Q. But you seem -- you were raising here the possibility 19 that that might not be right, if the Post Office had 20 coerced a subpostmaster into submitting a guilty plea, 21 in return for dropping a more serious charge? 22 A. Well, even if they hadn't, I mean, the fundamental point 23 was, you know, if the money -- if the postmaster wasn't 24 responsible for missing money, then how could they be 25 guilty of a crime? 43 1 Q. Did it occur to you at the time that, if the points you 2 were raising in this email were correct, that a very 3 serious miscarriage of justice might have occurred? 4 A. I think so, but I -- this discussion I don't think 5 developed. From memory, I don't remember receiving 6 an answer to this email and I think I moved on because 7 there were other things going on. And I didn't really 8 come back to it until after the Common Issues judgment 9 and when we were discussing the appeals strategy. 10 Q. Does it follow that, when you first identified this 11 risk, you didn't therefore ask the Post Office for 12 information about the number of prosecutions which had 13 been brought against subpostmasters? 14 A. No. And I -- again, with hindsight, I don't think the 15 company would have been able to answer the question 16 because when we did get the information, it took months 17 to get that, the number. The number of 750, I think it 18 was roughly, Post Office prosecutions, and 950 in total, 19 it took the company months, and months, and months to 20 get that data. 21 Q. Did you take any steps to bring your concerns to the 22 attention of your colleagues on the Post Office Board? 23 A. I don't remember. Like I say, I think this discussion 24 sort of stopped. It didn't progress and I don't 25 recollect exactly why. 44 1 Q. Having raised your concerns with Mr Watson, the General 2 Counsel, what, if any, action did you expect him to take 3 to manage or mitigate the risk that you'd identified? 4 A. Well, I think, if we'd followed this on and if he'd 5 encouraged me, I think I would have raised it at the 6 Board and really tried to get the company's response to 7 this, the Legal team's response. 8 Q. In terms of your reporting internally within UKGI, did 9 you report your concerns about a possible miscarriage of 10 justice to either the CEO or the chair of UKGI at the 11 time? 12 A. I think it was identified in, you know, obliquely at 13 least, in the risk registers, but I didn't raise this 14 particular issue, as I say, because it didn't really go 15 anywhere at the time. 16 MS HODGE: Sir, that may be a convenient point to take our 17 first morning break. I've come to the end of that 18 particular line of questions. 19 SIR WYN WILLIAMS: Yes, can I just clarify with you, 20 Mr Cooper, my understanding of your evidence up to the 21 beginning of the Common Issues trial. Summaries can be 22 deceptively simple, so if you think I'm being too 23 simple, please say so. 24 But the impression, the strong impression, I have is 25 that in relation to what I'll call one of the central 45 1 issues in the Common Issues trial, namely whether the 2 contract with subpostmasters was relational, all the 3 legal advice that you had received, both from Post 4 Office's lawyers acting in the litigation and from UKGI 5 lawyers, was that the likelihood was that this was not 6 a relational contract? 7 A. Correct, and -- 8 SIR WYN WILLIAMS: But that could only be resolved by 9 litigation because the parties were so far apart. 10 A. Correct. I think from -- 11 SIR WYN WILLIAMS: Then, secondly -- 12 A. Sorry. 13 SIR WYN WILLIAMS: -- and then you can put your caveats, if 14 you may, but you thought that some of the issues which 15 were identified for resolution in the Common Issues 16 trial ought to have been compromised, in the sense that 17 the Post Office should have taken a different tack 18 towards certain specific points and the one you 19 highlighted is the liability clause? 20 A. Yes. I mean, I didn't take it to its logical conclusion 21 but it seemed to me where -- you could argue that where 22 the common issues should have ended up, and I think what 23 I was reaching for, was a scenario where the parties 24 could have agreed that it wasn't a relational contract, 25 because that wasn't necessary and was unusual, but that 46 1 the 23 implied terms, a compromise could have been 2 reached on those so that the liability clause would have 3 been, you know, fair, and the company would have agreed 4 to provide a computer system that worked. It seemed to 5 me those areas were entirely open to compromise and then 6 you wouldn't have needed the Common Issues hearing. You 7 could have just focused on the Horizon Issues. 8 SIR WYN WILLIAMS: Yes, all right. I understand fully. 9 Thank you, Ms Hodge, for delaying the break so that 10 I could clear my head. So what time shall we start 11 again? 12 MS HODGE: Shall we return at 11.15? 13 SIR WYN WILLIAMS: Fine. 14 (11.00 am) 15 (A short break) 16 (11.15 am) 17 MS HODGE: Good morning, sir. Can you see and hear us? 18 SIR WYN WILLIAMS: Yes, thank you, yes. 19 MS HODGE: Thank you, sir. 20 Mr Cooper, I'd like to ask you some questions now 21 about the risk register which was maintained by UKGI in 22 relation to the Post Office. You've said earlier this 23 morning that the risk register was the principal method 24 by which UKGI recorded and reported significant risks in 25 relation to each asset; is that right? 47 1 A. Correct. 2 Q. Is it right that there was a specific register 3 maintained in relation to each asset, including the Post 4 Office? 5 A. Yes. 6 Q. Did you have any direct input into the contents of the 7 register? 8 A. Yeah, as a team we were responsible for it. So I can't 9 say that I looked at it every word, every time but, you 10 know, collectively we were responsible for producing the 11 risk register. 12 Q. So it was a document that was held and controlled by the 13 Shareholder Team; is that right? 14 A. Correct. 15 Q. Therefore, circulated amongst the members of the team -- 16 A. Yes, usually. 17 Q. -- and from there, where did it go? 18 A. Then it fed up into the management at UKGI -- I can't 19 remember the individuals -- but it then informed the -- 20 the purpose of it -- you know, one of the main purposes, 21 as I said earlier, was to inform the Board report that 22 UKGI Board received, so certainly today, and I think it 23 was true then, the -- effectively, the risk registers 24 were summarised in the Board reports, so that the key 25 risks to the individual assets were brought out into the 48 1 Board reporting to the UKGI Board. 2 Q. Please can we take a look at a copy of the register 3 dated 29 June 2018, so this is about six months into 4 your tenure. It bears the reference UKGI00021096. 5 A. So this is June, you said? 6 Q. June 2018. 7 A. Okay. 8 Q. Thank you, that's the covering page. If we could go to 9 the Post Office tab, please. Thank you. We can see 10 there, if we scroll to the top, please -- I'm 11 grateful -- we have the civil litigation risk there at 12 number 11. But if we just pause here, so there's 13 several columns. The risks are numbered in the 14 left-hand column, we can see there "Summarised" in the 15 next; a risk overview is provided; then an impact; the 16 type of risk identified; a RAG rating; mitigation; 17 overview; and mitigation rating; further mitigation 18 actions; and, finally, comments on the current status. 19 Can you see those at the top? 20 A. Yeah. 21 Q. If we scroll down then, please, to number 11. So this 22 is described as "Possible civil litigation against the 23 Post Office". That's not right, of course by this stage 24 we're in June 2018 so the litigation is well underway? 25 A. Correct. 49 1 Q. Your name is shown there. Do you know why that is? 2 A. Probably because I was the main person on the team 3 involved in the litigation. 4 Q. So would that mean that you were the primary source of 5 information or you, in fact, inputted the information 6 that we see here? Can you -- 7 A. No, I didn't input the information. I actually think 8 some of this -- a lot of this wording was inherited from 9 the previous team and then it evolved over time as there 10 were more developments in the litigation. 11 Q. What is the significance of the red text, please, do you 12 know? 13 A. I'm sorry, I've no idea. 14 Q. If we look, then, first under the column "Risk 15 overview", it reads: 16 "Civil litigation and/or Court of Appeal processes 17 judge that POL has acted inappropriately or illegally. 18 Even in the absence of such a finding ongoing risk that 19 they ..." 20 I think there's some text missing there. 21 A. There may -- it's in the top: 22 "... that they continued to be perceived to have 23 acted in that way." 24 Q. "In that way", thank you. 25 A. Yeah. 50 1 Q. So is it your understanding that text was inherited from 2 an earlier copy of the register? 3 A. I believe so. 4 Q. It goes on then, in the next column, in terms of the 5 impact of the risk, to say there's: 6 "Potential for significant compensation claims if 7 civil or criminal courts rule against POL. More likely 8 however, and certainly in the short-term, is that this 9 continues to be a significant distraction (and cost) to 10 the business as they defend their actions." 11 Now, you've said earlier this morning that you 12 believe that the risk of criminal convictions being 13 overturned had been flagged in the register. Is this 14 entry the one to which you were referring? 15 A. Yes, I mean, it says, "acted illegally", and it talks 16 about criminal courts. So, you know, it's not stated in 17 perhaps as clear a language as we might like, with 18 hindsight, but I think it's there. 19 Q. In relation to the RAG rating, please, this is said to 20 apply to the legal, reputational and financial risks. 21 Are you able to explain how the figures shown there were 22 calculated? 23 A. Well, shall I -- is it worth just using a stupid analogy 24 to explain the two sets of columns in grey? So if you, 25 for example, think about your house and the risk of why 51 1 fire in your house, the left-hand column is saying, 2 "What's the chance of my house burning down and what's 3 the impact of that?", yeah? And then on the right, it's 4 saying, "After I've taken mitigation", in this case 5 buying a fire extinguisher or a fire blanket, my 6 probability is reduced. But, in this case -- so 7 essentially this is what this is saying: if there wasn't 8 mitigation, the probability of there being serious 9 consequences from the litigation is high, that's what 10 the 4 means in probability, and that reduces to 3 as 11 a result of the mitigation. 12 The impact of the event is very high, that's 5, and 13 it's very high in both cases because the mitigation 14 doesn't -- in this case, with the litigation, doesn't 15 reduce the impact of the -- of a negative event. 16 Q. So far as you were concerned, did that accurately 17 reflect the impact risks that you perceived in relation 18 to this litigation? 19 A. Yes, I think it was always perceived that -- and if -- 20 perhaps we could scroll up to the -- would you mind 21 scrolling up to the top and to the heatmap? 22 Q. I don't think we have a heatmap on this version of the 23 risk register. 24 A. Oh, okay. 25 Q. I'll take you to another version -- 52 1 A. But I think it's important, if you do have another 2 version with it, it might be helpful to look at it. 3 The point I was going to make is that this was the 4 top risk. It was identified as the top risk affecting 5 Post Office at the time. It was in the top right-hand 6 corner, it was red, both in terms of probability and 7 impact and so I think, you know, from a team's 8 perspective it was clearly identified as, you know -- 9 and there were many risks attaching to this company. 10 I mean, as you've seen, there are 12 items listed but it 11 was the -- you know, it had the potential to be the most 12 significant issue. 13 Q. Now, the Inquiry has heard evidence from the chair of 14 UKGI, Robert Swannell, to the effect that the Board was 15 first alerted to the risks of the Group Litigation in 16 January 2019. 17 A. Mm. 18 Q. Given that this was recognised to be one of the greatest 19 risks relating to the Post Office why is it, do you 20 think, that it did not reach the Board of UKGI as 21 a significant risk until January of the following year? 22 A. It's very hard for me to say because I -- I think I've 23 explained this, there's a link in the chain, another 24 link in the chain between this document and what the 25 Board sees. So what the Board sees is a summarised 53 1 version of these risk registers and, obviously, my team 2 wasn't involved -- as far as I know, I don't think the 3 team was involved in preparing those summaries. 4 So I think what may have gone wrong here is that the 5 process of summarising these things didn't feed through 6 properly to the Board paper. 7 Q. Thank you. Then just before we move on to the next 8 register, just dealing then with actions taken to 9 mitigate risk, so in the column K, that is the 10 "Mitigation Overview", which identifies that the Post 11 Office have their own external legal advisers employed 12 on the civil litigation, including a silk, and they 13 continue to update UKGI. Now, were you -- this is 14 obviously late June. You began to have some quite 15 significant concerns, did you not, about the quality of 16 the legal advice that the Post Office was receiving? 17 A. Yeah. But this was before. I mean, if it's June, that 18 was before I really got into this topic. 19 Q. Then if we look at column P, which I think bears the 20 heading "Further mitigation actions", it confirms that: 21 "UKGI have briefed the Minister Andrew Griffiths and 22 will keep ministers, SpAds and the Permanent Secretary 23 update at key points through the new disclosure 24 protocol, with POL's legal counsel to provide an oral 25 briefing on 10 September." 54 1 That, in fact, occurred in October, is that right, 2 that meeting? 3 A. Well, the meeting with the company, as I think I said. 4 So a few points on this. So Andrew Griffiths was the 5 Minister at this time but, obviously, he left quite 6 quickly, I think, and then Kelly Tolhurst arrived in 7 July. She actually was the third Minister we'd had in 8 a period of some months. So that changed and then the 9 briefings we'd provided, we'd provided a briefing, 10 I think, by this point, to the Permanent Secretary, 11 possibly to Andrew Griffiths, as well, I don't recall 12 but Kelly Tolhurst received the briefing papers, 13 I think, later on after -- in advance of the October 14 meeting. 15 Q. Was the turnover of ministers an issue for UKGI in 16 relation to its communication reporting of risk? 17 A. It's always an issue because you don't have continuity 18 and, you know, naturally it takes them time to get 19 appraised of what's going on. They have to do their own 20 priorities. I mean, you know, it's not -- it really 21 isn't helpful to try and get good decision making. 22 Q. The final column, Q, this concerns the current status, 23 so would be the most sort of up-to-date information as 24 at June 2018, presumably. 25 A. Mm-hm. 55 1 Q. It reads: 2 "POL preparing for the first main hearing in 3 November to determine scope of contract between Post 4 Office and postmasters and concurrently the second main 5 hearing on the integrity of the Horizon IT System. UKGI 6 has put in place a disclosure protocol with the Post 7 Office to keep the Permanent Secretary, BEIS and the 8 Minister updated at key stages while protecting legal 9 privilege integral to the Post Office's defence. Post 10 Office's counsel to give a briefing, as we've discussed, 11 particularly to cover contingency planning." 12 That's a matter you've raised in you evidence this 13 morning: 14 "No inherent increase in risk in this case at this 15 stage." 16 Does that reasonably fairly summarise where you were 17 in late June 2018? 18 A. I think so, and I think what -- perhaps we'll talk about 19 this in the later versions of this, but I think it's 20 important to understand that this risk register at this 21 stage, given the information we had, could only 22 articulate the risks at quite a high level. If you -- 23 another word for contingency planning that we were 24 asking the company to do is identify the risks, "Please 25 tell us what the risks are of this going wrong and what 56 1 the consequences are"; it's another version of a risk 2 register. And that would have -- I think, had we had 3 good contingency planning from the company, it would 4 have informed and allowed us, enabled us to produce 5 a much better risk register that was, you know, 6 particularly with the benefit of hindsight well 7 articulated. 8 Q. Can we please take a look at a later copy of the 9 register, dated 31 December 2018. So about six months 10 later. It bears the reference UKGI00015921. So this 11 register contains the heatmap to which you referred. 12 A. Mm-hm. 13 Q. Was there a particular point you wish to raise in 14 relation -- 15 A. I'm hoping, given what I've said, that number 9, which 16 is in the top right, is the litigation. 17 Q. I believe it bears the same reference, if we scroll 18 down, please? 19 A. Yeah. 20 Q. So you're saying here, really it's been flagged on the 21 map as the most serious risk? 22 A. Yeah. 23 Q. If we look at the summary, beside the register, 24 please -- sorry, besides the heatmap, it contains an 25 overview at point 1; at point 2, an overall delivery 57 1 risk; and at point 3, a summary of the reputational 2 risk. That's registered to be high, and it reads: 3 "There is significant political risk in the Post 4 Office Network and there are a number of clear policy 5 objectives. Risk is mainly centred on these areas but 6 it can also be linked to executive management and 7 remuneration issues." 8 It then deals with the ongoing litigation. 9 "There is an ongoing [Post Office] litigation case 10 which could potentially generate a high level of 11 negative coverage. The UKGI [Post Office] team are 12 aware of the pressures and are working [collectively] 13 with Post Office Limited to manage the risks away." 14 Do you think that accurately reflected the level of 15 risk at that time; is that a fair summary, do you think? 16 A. No, I don't think so. I think the sentence I would 17 rewrite or should have rewritten at the time, was one 18 about there is an ongoing litigation case which could 19 potentially generate a high level of negative coverage. 20 I mean, I don't think I or the team were thinking about 21 this from a coverage point of view. What we were 22 thinking about was the consequences. As I've said, the 23 primary focus, certainly with the Department, was to get 24 the contingency planning done. It was what are the 25 consequences of a negative judgment? 58 1 Q. You've said earlier in your evidence that you're not 2 sure why the risks relating to the litigation didn't 3 penetrate up into the UKGI Board until January 2019. Do 4 you think that the practice of pithy summaries like this 5 might explain why it didn't necessarily register, absent 6 a heatmap, as a very serious risk? 7 A. Possibly. Possibly. But I think, you know, given that 8 it's number 9, it's in the top right and there's a much 9 better explanation below, I don't think it's much of 10 a leap to identify what's really going on from this. 11 Q. If we scroll down, please, to page 4, we see the detail 12 there in relation to risk number 9. So now described as 13 "Civil litigation against the Post Office". You're no 14 longer named underneath, it's Stephen Clarke who's 15 named. Do you know why there was a change of the guard? 16 A. I don't. 17 Q. So the first column is substantially the same as it 18 appeared in the risk register to which we referred in 19 June. There's an additional entry under the impact 20 column, where it reads: 21 "Even a positive legal outcome is likely to have 22 considerable comms fallout for Post Office and UKGI. 23 The complainants have a track record of successfully 24 airing their grievances through the media." 25 So picking up again on that interest in the press 59 1 reporting, rather than the substance of the litigation; 2 do you know why that is? 3 A. Actually, yes, and I -- again, I repeat what I said 4 earlier. I think there's too much focus here on 5 communication, relative to actually what the team was 6 doing. I also think the word "distraction" in here is 7 inappropriate as well. I mean, the point that was 8 trying to be made here is that the absorbed -- it was 9 absorbing a significant amount of management time, which 10 obviously diverted them away from doing other things. 11 But it -- the implication here is that the word 12 "distraction", I think, has connotations, which I think 13 again weren't in our mind at the time. 14 Q. If we go on, the RAG rating remains the same, as it did 15 in June. We can see there the rating of 20. In the 16 previous version, I think that wasn't visible, but it is 17 the same, so 4 for probability; 5 for impact; an overall 18 rating of 20. 19 Under column K, the "Mitigation Overview" repeats 20 that Post Office have external legal advisers including 21 a silk: 22 "They continue to update UKGI through the Board 23 where UKGI's Non-Executive Director [you] sit and 24 directly to UKGI's legal counsel, under the disclosure 25 protocol." 60 1 Now, by this stage, we are now in December 2018, 2 it's right, is it not that you had lost confidence in 3 the Post Office's Legal Team? 4 A. Yes, yes. But I don't think that -- again, I think it's 5 easy to conflate my personal views with what we were 6 still hearing from the company, so in December, which 7 obviously was after the hearing had started but before 8 the judgment arrived, the company was still, you know, 9 expressing great confidence in the outcome of both 10 hearings. So I think it's -- you know, it's important 11 that one person's perspective doesn't necessarily colour 12 what goes into these things too much because, you know, 13 I might have been right, I might have been wrong. And 14 I think the important thing was to -- here, was to try 15 to convey, you know, if you like, the expert, the expert 16 view, as it then was. 17 Q. Well, starting with you've accepted, I think, that you, 18 as Shareholder NED, was the primary source -- 19 A. Yes. 20 Q. -- of reliable and accurate information about risks 21 relating to the civil litigation? 22 A. Yeah. 23 Q. This is a register maintained by UKGI of the risks that 24 it has identified -- 25 A. Mm-hm. 61 1 Q. -- in relation to the civil litigation and it puts 2 forward, as positive mitigation, that the Post Office 3 have an external Legal Team and advice from a silk -- 4 A. Mm-hm. 5 Q. -- in whom you had, by this stage, lost confidence. Is 6 that not somewhat inaccurate and misleading and not 7 reflecting your views as Shareholder Non-Executive 8 Director about the concerns you had? 9 A. I actually think, to bring that out, you would probably 10 have changed the probability. I'd have -- you know, we 11 would have probably tried to stay, instead of a 3, it 12 should be a 4 for probability of losing and, you know, 13 we've put it as a 4 because Tom Cooper thinks, you know, 14 the lawyers have got it wrong. Again, I think I -- 15 I don't think that's, you know, yes, that is a possible 16 argument. 17 Q. Under column P, this relates to "Further Mitigation 18 Action" and initially repeats what was recorded in the 19 earlier risk register in June, in that: 20 "UKGI is keeping ministers, SpAds and the Permanent 21 Secretary updated at key points through the disclosure 22 protocol and POL's legal counsel provided an oral 23 briefing on 17 October." 24 It goes on to say: 25 "BEIS Legal are also up to speed and contributing to 62 1 any advice to ministers, maintaining a position that 2 Government will not comment on an ongoing legal issue 3 and will work with POL and the Post Office and BEIS 4 Policy/Comms to review this depending on outcome. First 5 judgment on first trial expected in January." 6 So that appears to acknowledge, does it not, that by 7 this stage BEIS are quite closely involved, in the sense 8 that their own Legal Team are receiving advice and input 9 and they're feeding that advice up to their ministers? 10 A. Yes, and I mean that had been true for some time, at 11 this stage. 12 Q. Because you, I think you expressed earlier in your 13 evidence a concern about a lack of engagement on the 14 part of the Department until after the Common Issues 15 trial. What this appears to be suggesting is that the 16 Department was already quite actively engaged. 17 A. I think what this is conveying is that the Department 18 was receiving the information. What I was trying to say 19 earlier was that we weren't getting a lot back. There 20 weren't many questions coming out of that information. 21 So we'd provide a briefing, and there was no -- it was 22 noted or received and -- but we wouldn't get questions 23 back or we wouldn't say, "This is important, you know, 24 or interesting, please can we have a meeting to discuss 25 it?" That was the bit that was missing. So, yes, they 63 1 were informed but the point I was making earlier about 2 engagement was there wasn't much coming back. 3 Q. Under the final column Q, which is "Current Status", 4 a slightly lengthier entry this time, it reads: 5 "POL awaits judgment on the first trial to determine 6 scope of contract [so as previously expected], which is 7 expected mid to late January and is making contingency 8 and Government arrangements to deal with a 'bad 9 judgment' and taking a decision on whether to appeal 10 such a judgment. At the same time POL is preparing for 11 the second trial in March 2019 on the integrity of the 12 Horizon IT System. UKGI has put in place a disclosure 13 protocol with POL to keep the Permanent Secretary, BEIS, 14 and the Minister updated at key stages whilst protecting 15 legally privileged information." 16 It goes on to confirm that: 17 "POL's legal counsel briefed the Minister and the 18 Permanent Secretary on 17 October. UKGI continues to 19 forward legal updates from POL's counsel to the 20 Minister." 21 Forgive me, there's two separate -- thank you: 22 "POL's Group Communications Director has met BEIS, 23 (Policy and Comms) and UKGI on 3 January [sorry, will 24 meet, presumably] to discuss comms ahead of the judgment 25 and will keep in regular touch. There has been 64 1 considerable media interest so far, Daily Mail, 2 Telegraph, Financial Times, Computer Weekly, in 3 particular, while Nick Wallis, freelance journalist with 4 crowd funding responsible for a Panorama feature in 2015 5 is covering the case every day through a dedicated 6 website and regular Tweets. At the request of the 7 Permanent Secretary, UKGI's legal counsel briefed Her 8 Majesty's Treasury on the case on 13 November and 9 discussed the settlement process should this be 10 required. UKGI will comprehensively review both risk 11 and mitigations once the first judgment is handed down." 12 Would you agree that this was quite a process-driven 13 factual update, which did not offer any real insight 14 into your own thought processes as shareholder on the 15 Post Office Board? 16 A. Correct. Yeah. 17 Q. It's right, is it not, that your understanding of the 18 risks relating to the Group Litigation had changed quite 19 significantly in the period between June and December 20 2018? 21 A. Yes, from a personal perspective, yes. I was quite 22 gloomy about the way Post Office was handling it. 23 I mean, I think -- but, you know, I'm not a lawyer, and 24 I think you need to just bear that in mind: that my own 25 personal views were not -- were never the best informed, 65 1 because I'm not a lawyer, and so what this is trying to 2 be is an objective description of what was going on, and 3 so on. But I was -- you know, effectively, I was in 4 a minority of one, here, in terms of -- you know, in 5 relation to the Post Office. I was the only person on 6 the pitch who was -- at least it felt that way -- who 7 was questioning, you know, the litigation and how it was 8 being handled, and so on. 9 So I think, you know, if you're going to put in 10 something that's seeks to be reasonably objective there, 11 it can't -- you can't colour it too much by the opinions 12 of one person who's not objective -- or sorry, not -- 13 I don't mean not objective -- is not an expert. 14 Q. It's right, is it not, that the very purpose of your 15 role as a Shareholder Non-Executive Director on the 16 Board was to provide oversight -- 17 A. Mm-hm. 18 Q. -- and to report back any risks you identified -- 19 A. Yes. 20 Q. -- to UKGI and the Department? 21 A. Yes. That's right. But what was the risk I'd 22 identified? The risk I'd identified was that Post 23 Office had was -- would -- had missed an opportunity to 24 solve the Common Issues hearing in a consensual way. 25 But the -- you know, there were two parts to this 66 1 litigation. One was Common Issues the other was Horizon 2 Issues, and the Horizon Issues, at least to my way of 3 thinking, was, in a way, more important than the 4 contractual issues. 5 And no one was -- I had no view, and no one was 6 telling me that -- at that stage, that Post Office was 7 going to lose on the Horizon Issues. So the fact that 8 I had strong views about the way the Common Issues was 9 being handled didn't impact on -- actually, particularly 10 strongly on the bigger issue, which was what's the 11 Horizon Issues judgment going to be? 12 So I don't think -- I mean, this picture and this 13 scoring, I don't think would change -- even if my views 14 had been fed in here about the way the Common Issues had 15 been handled, I don't think actually it would change the 16 picture in an overall sense in a substantive way, 17 because the big issue was, you know, whether Horizon 18 worked or not. 19 Q. You suggest that was the principal issue. But you had 20 already established, had you not, a concern about the 21 liability clause and its link to a potential miscarriage 22 of justice. So the Common Issues trial itself 23 potentially gave rise to very, very significant risks, 24 didn't it? 25 A. I agree with that and I had figured that out but, as 67 1 I said earlier, it kind of -- it didn't go anywhere, and 2 again, had I -- had that topic been followed up, 3 particularly with Richard, if I'd got support and 4 encouragement for that from Richard, it might well have 5 appeared in here but, more importantly, it would have 6 surfaced at the Board, I'd have raised it at the Board, 7 which is, you know, the place where change could be 8 affected more quickly than through the UKGI channel. 9 I'm not saying the UKGI channel didn't matter but 10 what I'm tying to say is, if you actually want stuff to 11 change, the place that it was going to happen was at the 12 Post Office Board. 13 Q. Is that entirely right? Is it not right that UKGI, 14 through the Department, had the power to effect change 15 in the way in which the Post Office was conducting its 16 litigation? 17 A. Yeah, but it's all -- you know, it's slower, for 18 a start. You need to persuade lots of people. You've 19 got to persuade your CEO, you've got to persuade your 20 Board, you've got to persuade the Department, all of 21 which takes time. It can be very effective but this 22 is -- you know, this is all happening in short -- 23 a short timescale. 24 Q. Looking back, do you think that your senior colleagues 25 in UKGI and the Board of UKGI would have benefited from 68 1 knowing a bit more, or indeed at all, about the very 2 strong subjective views you had about the conduct of the 3 Group Litigation? 4 A. Possibly, yes. But I -- what the consequences of that 5 would have been, it's very hard to say. I think it's 6 very speculative to say that that would have made 7 a difference. I mean, remember, this is December now. 8 So it's all happening. It's all happened, you know, the 9 hearing has started. 10 Q. I mean, looking back, do you consider that the Post 11 Office risk register was an adequate tool for recording 12 and reporting the risks relating to the civil 13 litigation? 14 A. No, I don't agree with that, I'm sorry. I think it's -- 15 we can discuss the wording and whether it could be 16 worded better but I think the critical thing, which is 17 this risk was identified as the key risk, it was in the 18 top right, it was red, on all counts, I think that 19 conveyed the key issue. It has the key issue. 20 Q. I'd like to move on to another topic, please, concerning 21 your reaction to the Common Issues judgment. You 22 received an update from the Post Office's General 23 Counsel on 8 March 2019, in which she confirmed the 24 outcome of the Common Issues trial; is that right? 25 A. Yes. 69 1 Q. Please could we look at that email, which bears the 2 reference POL00103411. If we scroll to the bottom of 3 page 1, please. Thank you. We can see there the very 4 start of an email from Jane MacLeod on 8 March 2019, and 5 it reads -- and just to confirm we don't have the 6 recipients there. To the best of your knowledge, was 7 the email addressed to the same individuals we see 8 copied in to your email of 8 March at 4.28 pm? 9 A. Yeah, I think this would have been a reply all from me. 10 Q. Thank you. So if that's the case, it's an email to the 11 members of the Post Office Board? 12 A. Yeah. 13 Q. It says: 14 "All 15 "We received the judgment this morning in the Common 16 Issues trial. It's 325 pages and very detailed, and as 17 a result, we've not yet read it completely or fully 18 understood all the arguments. However a high level 19 review indicates: 20 "We have lost on all material points 21 "The judge has criticised Post Office 22 comprehensively -- both as to our historic operations 23 and behaviours and our conduct of the case 24 "The judge accepts the evidence of the lead 25 claimants but is sceptical of our witnesses who he 70 1 characterises as 'extraordinarily partisan' 2 "He struck out the key contractual provisions which 3 require postmasters to account to Post Office, and 4 "He has stated that the Branch Trading Statement -- 5 which is the key document on which Post Office relies 6 for postmasters to account for cash and stock in 7 branches -- cannot be relied on as a statement of 8 account." 9 She goes on to say that the judgment will be handed 10 down later in the week, possibly the following week, 11 and, in the meantime, the Post Office are working on 12 grounds for appeal. 13 She confirms: 14 "[The Post Office has] activated contingency 15 planning in order [to have] communications and detailed 16 plans available and ready to launch at the point the 17 judgment is formally handed down." 18 On receiving this update from the General Counsel, 19 you requested to see a copy of the draft judgment, did 20 you not? 21 A. Mm-hm, yes. 22 Q. In your statement, you describe feeling shocked when you 23 learned the basis on which the Post Office had pursued 24 certain arguments in the Common Issues trial; is that 25 right? 71 1 A. Absolutely, yes. 2 Q. You also state that you agreed with the judge's 3 characterisation of the Post Office's position in the 4 litigation as being unrealistic; is that right? 5 A. Yes, yes. 6 Q. Please can we take a look at what you say at 7 paragraph 167 of your witness statement, please. It's 8 at page 79. Paragraph 167, thank you. This paragraph 9 reads: 10 "I was also shocked by some of the flaws pointed out 11 by the judge in [Post Office's] processes, including for 12 example the inability of [subpostmasters] to effectively 13 dispute items, the unfairness and oppressive effect of 14 having to 'settle centrally' before disputing an item 15 and the inadequacies of the branch trading statement. 16 I thought POL's Legal Team would have been more fully 17 aware of these points in the run-up to the Common Issues 18 hearing. There were major defects in [the Post 19 Office's] processes and therefore in [Post Office's] 20 case. But none of these issues had been brought to the 21 attention of the subcommittee nor, if they were ongoing 22 in [Post Office's] business, the [Audit and Risk 23 Committee] and the Board. I also reflected that these 24 flaws did not seem to have been brought to light in the 25 past by any of the safeguards that the company had in 72 1 place, including internal and external audit. It was 2 also shocking to learn that some of [the Post Office's] 3 witnesses, particularly Angela van den Bogerd, had been 4 heavily criticised. Justice Fraser said she had not 5 been frank and had sought to mislead the court. My 6 view, which I believe was shared by other members of the 7 Board, was that the Legal Team had comprehensively 8 mismanaged the litigation." 9 Does that accurately reflect your response at the 10 time to reading the Common Issues judgment? 11 A. Yes. 12 Q. You make reference in the final sentence to 13 mismanagement of the litigation by the Legal Team, is 14 that intended to be a narrow reference to the Post 15 Office's Legal Team or are you referring more broadly to 16 the Post Office's wider team of external solicitors and 17 independent counsel? 18 A. Oh, all of them collectively. 19 Q. A meeting of the Post Office Board was convened on 20 12 March 2019 to discuss the judgment; is that correct? 21 A. Yes. 22 Q. That meeting took place by telephone and was attended by 23 David Cavender QC; is that right? 24 A. Yes. 25 Q. When he advised the Board that the Post Office had 73 1 strong grounds of appeal, you questioned that advice; is 2 that right? 3 A. Well, I think, if I recall, the preamble -- there was 4 important preamble to understand what had gone wrong and 5 I remember challenging Jane MacLeod, for example. 6 I mean, one of the things that horrified me about the 7 ruling was the argument that Post Office's counsel had 8 put forward that -- in relation to contracts, that even 9 if a subpostmaster had not signed their contract, they 10 were somehow meant to be bound by a contract that was 11 left in a cupboard somewhere in the branch by their 12 predecessor. And I thought this was risible as 13 an argument. 14 And I challenged Jane on this in the meeting and 15 said, "Who advised us -- who advised the company to 16 argue this?" And she said something like, "Well, if we 17 hadn't done that the whole Post Office edifice would 18 have crumbled", and it was at that point that I thought, 19 you know -- I'd completely lost confidence in the Legal 20 Team at that point. 21 So before we got to the appeal part of the 22 discussion, you know, there was a short post mortem on 23 the hearing itself. 24 Q. So far as Mr Cavender's advice is concerned, to the 25 effect that there were strong grounds to appeal the 74 1 judgment, you say in your statement that you considered 2 that he was not considering the judgment sufficiently 3 objectively; is that right? 4 A. Yes, I mean it struck me that there were significant -- 5 on a reading of it, a lot of what Justice Fraser was 6 saying, it seemed to me, made total sense and I thought 7 it -- personally, I thought it was premature to talk 8 about appeal when we hadn't actually evaluated the 9 judgment itself and worked out which parts of it the 10 company actually agreed with and which parts they really 11 disagreed with and on what basis they disagreed with 12 them. 13 It seemed to me that was an important exercise to go 14 through first before you started talking about appeal. 15 Q. So, in a nutshell, your concern was that there was 16 a knee-jerk reaction -- 17 A. Yes. 18 Q. -- by the Legal Team that the judgment needed to be 19 appealed in its entirety? 20 A. Yes. 21 Q. You received an update from the Post Office's General 22 Counsel on 15 March, so three days later, concerning 23 further advice which the Post Office had sought on 24 bringing an appeal against the judgment; is that 25 correct? 75 1 A. Yes. 2 Q. Could we take a look at that update, please, which can 3 be found at POL00103438. If we could scroll to the 4 second page, please. Thank you. We see an email from 5 Jane MacLeod to you and Tim Parker, Chair of Post 6 Office. It reads: 7 "Dear Tim and Tom 8 "As flagged on the Board call on Tuesday, we have 9 sought further advice on appeals and as to whether we 10 have grounds to request the judge to recuse himself on 11 the grounds of bias." 12 Under the heading "Advice", it reads: 13 "We have sought advice from Lord Neuberger who 14 stepped down last year as the President of the Supreme 15 Court (and as such was the highest judge in the UK). We 16 sought his views as to whether the draft judgment 17 demonstrated the following grounds for appeal: 18 "Whether the judge has correctly interpreted and 19 applied the law ... 20 "[Secondly] Whether there are grounds to argue that 21 findings have been made as a result of serious 22 procedural irregularity ... and 23 "(Most urgently) Whether Mr Justice Fraser 24 demonstrated grounds on which we could apply for him to 25 recuse himself. 76 1 "The test for recusal is 'whether the fair-minded 2 and informed observer, having considered the facts, 3 would conclude that there is a real possibility that the 4 [Judge] was biased'. 5 "Attached is Lord Neuberger's preliminary advice ... 6 as you will see in paragraph 5 [he] states that although 7 he has only looked at the issues very cursorily, 'at 8 least some of them raise quite significant points on 9 which the [Post Office] has a reasonable case, and at 10 least on the face of it, some points on which the [Post 11 Office] has a pretty strong case'. 12 "Further however, he suggests ... that if we wish to 13 rely on the ground of procedural unfairness at 14 an appeal, then '[Post Office] has little option but to 15 seek to get the judge to recuse himself at this stage' 16 and ... that if we fail to act promptly during the 17 Horizon trial we 'risk being held to have waived [our] 18 rights, or at least weakened our position on the recusal 19 [application]'." 20 In your statement, you describe your reaction to 21 reading this email as being one of astonishment. 22 A. Yes. 23 Q. Why is that? 24 A. Well, as I said just now, there hadn't even been 25 a proper post-mortem on the judgment itself and, you 77 1 know, the company's Legal Team were talking about taking 2 very extreme action, in my view, without having 3 considered it properly. 4 Q. Shortly after receiving the update from Jane MacLeod, 5 you sought advice from Alex Chisholm, the Permanent 6 Secretary at BEIS; is that right? 7 A. Correct. 8 Q. I think your request to Mr Chisholm prompted Richard 9 Watson, General Counsel at UKGI, to send you some advice 10 about your involvement in the decision as to whether the 11 Post Office should apply to recuse the judge? 12 A. Correct. 13 Q. Now, you say in your statement that Mr Watson advised 14 you that it would be inappropriate for you, as 15 a representative of the Government, to participate in 16 a decision concerning the recusal of a member of the 17 judiciary. 18 A. Correct. 19 Q. Is that how you recall? 20 A. Yes. 21 Q. Can we take a look, please, at the email to which you 22 refer in you statement. It bears the reference 23 UKGI00009208. If we scroll to the very bottom of that 24 document, please. We can see your original email to 25 Alex Chisholm, you say: 78 1 "Alex 2 "The judgment in the first trial is out and it is 3 adverse to POL. You'll get the briefing by 3.00 pm. 4 "There are a couple of things I need to brief you on 5 and on which POL is asking for a quick decision. It's 6 a high profile decision to do with handling the case 7 with significant implications for BEIS. 8 "Do you have time for a call later today or over the 9 weekend?" 10 The response you receive back -- so forgive me, 11 before we look at that, you've obviously copied this 12 email to Richard Watson, Mark Russell and Gavin Lambert, 13 and if we scroll up, please, we see a response from 14 Richard Watson, he's not copied Mr Chisholm or 15 Mr Lambert. He says: 16 "Tom 17 "Not including Alex or Gavin in this email but 18 copying Patrick and Gareth from BEIS Legal with whom 19 I have raised the issue about a possible recusal 20 application on the grounds of bias. I shared with them 21 Jane's email and the accompanying note from Lord 22 Neuberger and they have engaged on this issue at a high 23 level in the Government Legal Department. 24 "The particular concern here is anything that could 25 be seen as [Her Majesty's Government] not upholding the 79 1 independence and integrity of the judiciary. 2 "While we think it is okay for Alex to be informed 3 we don't not [presumably we've got a double negative 4 there] consider the shareholder should be involved in 5 a decision whether or not to make a recusal application. 6 That is probably a matter for the [Post Office] Board. 7 I am, of course, happy to assist you as a Director on 8 the Board in carrying out your role." 9 Now, just pausing there, we'll come on, because 10 you've received several pieces of advice, but this first 11 chain is not concerned with your involvement, is it, 12 strictly speaking? The advice you're receiving here is 13 that it wouldn't be appropriate for the Permanent 14 Secretary or the Department to be involved in the 15 decision? 16 A. No, I didn't read it that way and I don't think that's 17 accurate. I think the bit -- the bit that I think 18 matters here is the bit that says, "We don't consider 19 the shareholder should be involved in a decision whether 20 or not to make a recusal application", and, you know, 21 I was the shareholder representative on the Board, so 22 anything I said in the Board meeting was likely to be 23 interpreted as the shareholder's view. I mean, 24 obviously, as Board member, you have two hats, as it 25 were: one is as the shareholder representative and then 80 1 you're there in your personal capacity as a Director. 2 But, you know, as you'll see from the subsequent 3 emails -- and I hope we'll get to it -- this was a case 4 where there was -- the two would -- were bound to get 5 conflated. 6 I think it was, in this situation, impossible for me 7 to distinguish my personal views from those of the 8 Department because of the significance, and you'll see 9 an email that addresses that later on, hopefully. 10 Q. If we scroll up, please. The next email in the chain is 11 from Mr Watson to Mr Evans and Mr Kilgarriff. You're 12 not copied into this email but it is forwarded to you 13 later in the chain, so it is relevant to you. It reads: 14 "Gareth, Patrick, 15 "Would you agree that the UKGI director on [Post 16 Office's] Board should not be involved in any decision 17 by the company about a recusal application? 18 "While I'm not convinced that there is a conflict of 19 interest I think that given the concern, rightly, that 20 [Her Majesty's Government] should not be seen as 21 questioning the independence and integrity of the 22 judiciary it feels presentationally difficult for 23 a Director appointed by the shareholder to be involved 24 in the decision. Put another way it seems preferable 25 that the UKGI Director is not involved." 81 1 So the concern which Mr Watson articulates here is 2 not that the application would give rise to a conflict 3 of interest for you as a Non-Executive Director of the 4 Board; is that fair? 5 A. Correct, I don't think it was ever seen as a conflict 6 issue. It was seen as, if you like, a policy issue 7 around relationships within the overall context of 8 Government. At least that was the way Richard saw it 9 and he's articulated it here. I'm not sure whether -- 10 you know, how far that was discussed in those terms in 11 the Department. I haven't seen, either then or now, 12 seen how that issue was discussed in the Department. 13 But certainly in the Legal Team, in the Department, they 14 seemed to share that view, and that's what I took away 15 from these emails. 16 Q. The concern he articulates here and which he returns to 17 in a later advice is that it feels presentationally 18 difficult for you to be involved in that decision; what 19 did exactly did you understand him to mean by that? 20 A. I have no idea, to be honest. I didn't really 21 understand the word "presentationally". To me, the key 22 points I took away were, you know, the -- one branch of 23 Government, ie in this case the Department, should not 24 be undermining the judiciary, and any action I took in 25 the Board of supporting such a decision was wrong, from, 82 1 if you like, a policy, broad policy perspective, and so 2 I took that away as the first message. And the second 3 message was the last sentence, which is "you shouldn't 4 be involved". 5 Q. So far as you were aware, had the Department ever 6 brought a recusal application before; did you make any 7 enquiries as to that? 8 A. No, I mean, again, for -- again, remember there was very 9 little time here. I mean, this was 15 March and this 10 debate was -- the decision itself was taken on the 20th, 11 I think there was a weekend in between, I'm not sure. 12 So I -- I was reliant on the legal input here. How 13 branches of Government interact with each other was way 14 out of my field. 15 Q. If we scroll up, please, we can see the response that 16 Mr Watson received from Patrick Kilgarriff, he says: 17 "Richard, Gareth 18 "I don't think I would want to say Government NEVER 19 consider a bias challenge -- but inns sense of never say 20 never. 21 "I would have thought the function of the UKGI 22 Director might be to ensure the Board fully realised the 23 seriousness of what was proposed including the impact on 24 the shareholder (and the difficulties of distinguishing 25 between strategic direction and the operational matters 83 1 in Parliament and the media) as well as the wider 2 litigation strategy on Horizon, that the Board had taken 3 and properly considered legal advice -- not a step to 4 take on finely [balanced] merits, and finally had 5 reflected properly on whether there was a bias or 6 (painful as it is) inferences drawn ultimately properly 7 from hearing the evidence expressed in pithy and robust 8 language. If the UKGI Director has done that, I would 9 agree that s/he may stand back from the decision to take 10 the challenge or not." 11 So it was not suggested by Mr Kilgarriff that you 12 must not take part in the decision, was it? 13 A. Not explicitly, no. 14 Q. His email suggests that it's a matter of discretion for 15 the UKGI Director? 16 A. Yes, but I think I mentioned earlier there was another 17 email exchange. 18 Q. I'll come to that one. So there's one a little later. 19 In fairness, I think we should look at Mr Evans' 20 response as well. He expresses himself in slightly 21 stronger terms. 22 Well, sorry, before we do that, Mr Watson forwards 23 on that advice to you from Mr Kilgarriff, and he says: 24 "I think Patrick's view is a sensible one, ie flag 25 the things the Board need to be cognisant of but not to 84 1 be part of the formal Board decision." 2 So Mr Watson seems to read Mr Kilgarriff's email as 3 suggesting that, although you have a discretion, the 4 sensible course to take is not to take part in the 5 decision. 6 A. Correct. 7 Q. Now, Mr Evans' response is at UKGI00009211. His email 8 is dated 15 March, we can see Mr Watson forwards that to 9 you the same day but, in the middle of the page there, 10 Mr Evans' email to Mr Watson and Mr Kilgarriff, 11 following on from the email we've just seen, the advice 12 from Mr Kilgarriff, who says: 13 "I agree. Government has to give [the Post Office] 14 the wider context of any application. That could come 15 from Alex [Alex Chisholm, the Permanent Secretary] or it 16 could come from Tom. Tom would be best to deliver that 17 view but having delivered it he should withdraw. 18 Crucially, it would be painful if Tom was the casting 19 vote either way. And that suggests he should not 20 participate in the decision." 21 What did you understand Mr Evans to mean when he 22 said it would be painful if you were the casting vote 23 either way? 24 A. Well, it comes back to this one branch of Government 25 undermining another, and his point is that, if the 85 1 decision swung towards recusal because of my vote, there 2 will be a clear -- you know, it would be clear that it 3 wouldn't have happened, had it not been for the 4 shareholder representative on the Board and, 5 effectively, the actions of the Department, and that 6 would create the opposite intent of what the -- what was 7 intended here, of me not participating. 8 Q. What would be the problem with your vote: tipping the 9 balance the other way, namely in stopping the Post 10 Office from making the application? 11 A. Well, what this exchange is saying is that I shouldn't 12 cast -- the previous sentence, if I was casting the vote 13 either way -- I mean, to be honest, I didn't focus on 14 that bit. You know, I felt very strongly that this was 15 a very rash thing to do and I think everyone's instinct 16 here was to try to avoid it happening. 17 So the idea of me voting in favour of recusal, you 18 know, at this time, I think, was not in contemplation. 19 I have thought about -- I mean, we might come on to 20 that, you might ask me the question: what would I have 21 done as a Director if I had been in the meeting and 22 heard all the arguments? But I don't think that was 23 relevant to this, to this email exchange. 24 I mean, it was clear to me, and it's clear from this 25 email and the subsequent one, that the right course of 86 1 action was not to participate. 2 Q. You make it clear in your statement that you always 3 thought it was a bad idea for the Post Office to apply 4 to recuse the judge -- 5 A. Yes. 6 Q. -- and you explain that you had a discussion about the 7 recusal application with Alex Chisholm on 15 March -- is 8 that right -- 9 A. Yes. 10 Q. -- prompted by your email that we saw a short time ago. 11 Please can we look at what you say in your statement 12 about that discussion. It's at paragraph 185 of 13 page 88. So it reads: 14 "In addition to discussions that Richard Watson was 15 having with BEIS Legal, I had discussed the recusal idea 16 with Alex Chisholm on 15 March. It was clear that UKGI 17 and BEIS were both deeply uncomfortable with the 18 application being made. But it was considered 19 inappropriate for me, as the Government's representative 20 on the Board of an arm's-length body, to be party to 21 a decision that sought to challenge the judiciary." 22 You say: 23 "In essence, this was the 'presentational' concern 24 referred to in Richard Watson's email of 18 March." 25 Can we take a look at that email, please, 87 1 UKGI00009273. 2 By this stage you had canvassed the opinions of 3 Mr Chisholm, that's correct? 4 A. Yes. 5 Q. It was your understanding that, like you, he was opposed 6 to application; is that right? 7 A. Yes. I think it was clear from his email that he had 8 reservations but I think he set out -- because I'd 9 forwarded to him Lord Neuberger's note, which he read, 10 and I think it was -- he also knew, because I think I'd 11 told him that Lord Grabiner's view was even stronger at 12 that time. We hadn't heard his advice but it was 13 reported that his advice was even stronger than Lord 14 Neuberger's. So that was part of Alex's email. 15 So I think perhaps it's worth reading it but, you 16 know, he set out, I think, why the Board might 17 reluctantly come to a decision to support recusal but 18 then went on to say it was clear in his mind that the 19 Department should -- I think he used words like maintain 20 a distance from this, which clearly supported -- in my 21 view, was totally consistent with the views of the Legal 22 team that we've just looked at, that I shouldn't 23 participate. 24 Q. So, obviously, there's a difference between, on the one 25 hand, the Department expressing a view, or becoming 88 1 involved, and you as a member of the Board? 2 A. Correct. 3 Q. Those are distinct. In terms of your involvement, you 4 received some further advice from Mr Watson on 18 March. 5 Can we look, please, at the top of page 2. This is in 6 response to a request from you for a script to explain 7 why it is that you're proposing not to participate in 8 the decision. He says this: 9 "I have discussed this with the BEIS Legal Director. 10 I should be clear that the [Secretary of State] does not 11 have the power to direct you not to participate in the 12 actual Board decision and I do not consider you have 13 a conflict of interest. So in fulfilling your role as 14 a Director you could properly reach the view that you 15 should participate in the actual decision. However, the 16 reason we are suggesting that you follow something along 17 the lines of the above script is because of the 18 presentational concerns that may arise if it transpired 19 that the shareholding appointed Director participated in 20 the actual Board decision." 21 So here, Mr Watson reiterating the advice that 22 there's no legal barrier to your participation in the 23 decision; do you agree? 24 A. Correct. 25 Q. He states -- 89 1 A. But I think the word "presentational" here actually 2 makes, you know, makes a lot of sense because what 3 I think he's communicating was that it would be very 4 hard, I think, for anyone in the outside world to 5 understand the distinction between my role as the 6 departmental representative on the Board and my own 7 personal view. This is the point I was making earlier. 8 I think the two would get conflated and, you know, if -- 9 let's say I voted in favour of the recusal and that was 10 criticised, and the Department then had to say publicly, 11 "Well, you know, Tom was just expressing his personal 12 view". Nobody would believe that. 13 And I think this comes out quite clearly in a later 14 email which talks about engineering an outcome which is 15 where the decision effectively gets thrown back to the 16 Department. So I don't know if you've got that 17 available but I think it's worth looking at. 18 Q. We'll have a short break and I'll see if we can find 19 that one to which you're referring. 20 A. Yeah. 21 Q. Before we do, is it not right that what's being 22 expressed here is a concern about style over substance, 23 namely that you're being advised that Mr Watson from 24 UKGI, as UKGI General Counsel, and his colleagues in 25 BEIS, with whom he's consulted, they're really concerned 90 1 about how it's going to look, rather than the actual 2 decision that you need to make; is that fair? 3 A. Well, I think I've tried to explain what I think 4 "presentational" means in this context and I don't think 5 it's just a style point or a form over substance point. 6 I think it's a real concern about, you know, how the 7 decision would be interpreted and how my action on the 8 Board would be interpreted by the outside world in this 9 particular, very special, context. 10 Q. Given the strength of feeling that you had about the 11 merits of the recusal application, and the feelings 12 articulated to you by BEIS, did you consider whether you 13 had a duty to vote against it in your capacity as 14 Shareholder Non-Executive Director? 15 A. I did but it seemed to me that I -- the proper thing to 16 do here was to take -- to follow the legal advice, and, 17 you know, if we could come back -- if we can find the 18 engineering and outcome email, I think I can -- that 19 would help. 20 Q. Is that an email from Alex Chisholm to which you're 21 referring? 22 A. No, this is an exchange between Richard Watson and 23 Gareth Evans in the Department. It's between the 24 lawyers in the Department. 25 Q. We'll see if we can find that. 91 1 A. Thank you. 2 MS HODGE: Thank you, sir. This might be a convenient time 3 to take our second morning break. 4 SIR WYN WILLIAMS: Yes, certainly. 5 MS HODGE: Shall we -- 6 SIR WYN WILLIAMS: Yeah, what time, please? 7 MS HODGE: Shall we resume at 12.35? 8 SIR WYN WILLIAMS: Yes, fine. 9 (12.24 pm) 10 (A short break) 11 (12.35 pm) 12 MS HODGE: Hello, sir. Can you see and hear us? 13 SIR WYN WILLIAMS: Yes, thank you. Yes. 14 MS HODGE: Thank you. 15 Mr Cooper, just before the break you mentioned 16 an email chain containing some further commentary about 17 the recusal application. 18 A. Yes. 19 Q. We've managed to locate that, that bears the reference 20 UKGI00009308. Now, this is an email chain, it 21 originates with an update from the Post Office's General 22 Counsel, and you explained earlier in your evidence that 23 you forwarded some legal advice to Alex Chisholm. So we 24 see his email at the start of the chain. We can go to 25 that if you wish but I think the part to which you were 92 1 referring earlier in your evidence can be found at 2 page 2, please. It's at the middle of the page. 3 A. Would it be possible just to look at Alex's sort of 4 punchline at the end? 5 Q. Yes, by all means. 6 A. That would just be helpful. 7 Q. So at the middle of page 3, please, we can see Alex's 8 email to you of 19 March. So if we scroll down to 9 page 4, please, I think it's fair to say that you've 10 already summarised the gist of what he said. In the 11 final paragraph, please, nearer to the bottom of 12 page 4 -- thank you -- is this the one to which you were 13 referring: 14 "The Department should maintain its clearly distinct 15 and detached position, so that it is free and credible 16 for dealing with the consequences as they unfold. 17 Ministers may want to show appropriate concern about the 18 criticisms and may express a desire for [Post Office] to 19 act appropriately but should not comment substantively 20 in ongoing litigation in which the Department has 21 a clear interest but no direct involvement." 22 A. Yes. Can I just say, this email was very important for 23 me, and the key bit of this is the first sentence in 24 that paragraph that says, "maintain a clearly distinct 25 and detached position". And I do understand what you're 93 1 going to say, you're going to say "Yes, but this doesn't 2 talk about you, Tom, it talks about the Department", and 3 I get that but I think -- and we'll come on to that with 4 this other email -- but I think this totally reinforced 5 the view I was getting from the Legal Team in UKGI and 6 BEIS, in other words from everything I knew, all the 7 bits of the Department were saying the same thing, which 8 was "Stay out of this thing", yeah? 9 Q. In your mind, are you saying that you are unable to see 10 any material distinction between the Department's 11 position and your casting a vote as a shareholder 12 representative on the Board? 13 A. No, I'm not saying that. I understand that distinction 14 very well. What I'm saying is in this particular 15 situation, it would be impossible to separate the two 16 and this other email, I'm trying to -- I'm pointing you 17 to, is -- I think highlights that quite well. 18 Q. If we scroll up, please -- sorry, to page 2, I think, is 19 the email from Richard Watson. Yes. 20 A. Yeah, okay. 21 Q. Thank you. This is 20 March, two days later: 22 "All 23 "Are we agreed that we stood not try to engineer 24 a position today whereby if the Board decides to proceed 25 with the recusal the Minister is given a chance to 94 1 object ie some sort of conditional Board approval. As 2 shareholder I don't consider she has the legal power to 3 prevent this even if it was an appropriate thing for her 4 to express a view on, which I think we agree it isn't 5 but instead is properly a matter for the Board. 6 "It is of course proper for the Minister to 7 understand [Post Office's] decision and why their 8 position might have changed since her call with the 9 Chair on the weekend. I understand that might be the 10 subject of a call with the Minister later today." 11 A. Okay. So the key bit of this is "are we agreed that we 12 should not try to engineer a position today whereby", 13 et cetera, "ie some sort of conditional Board approval", 14 and I say "I have no intention of engineering such 15 an outcome". 16 And what this is saying is that, if I had to express 17 comments here in the Board of saying I really don't 18 think we should be doing this or, in the opposite 19 direction, I really think we should be, there would have 20 been a very high chance -- whatever I'd said about this 21 being my personal opinion, nothing to do with the 22 Department, I think other members of the Board would 23 interpret it as informed by the views of the Department 24 and that would increase the risk that Board would say, 25 "Well, we've received legal advice that says we should 95 1 go for recusal, we think reluctantly that's what we 2 should do but we'll only do it if the Department agrees 3 that that's what we should do", and that's the 4 conditional approval, yeah? 5 And so my concern, which I believe is totally valid, 6 is that any view I expressed to the Board was likely to 7 increase the chance for the conditional approval or 8 rejection which was exactly what the Department didn't 9 want. The Department did not want this decision to come 10 back to them. That's, I think, very clear, from all the 11 emails and also the subsequent actions of the Minister 12 because you'll see, in the second paragraph of this, it 13 says it's proper for the Minister to understand and -- 14 since her call at the weekend, and she might have a call 15 later today. She did want to have a call, there's 16 an email chain to that effect, but then decided against 17 it. 18 So I think everything in these exchanges was telling 19 me that I should not take any action that would increase 20 the chance of this decision coming back to the 21 Department. 22 Q. What you appear to be saying, is it right, is that, so 23 far as you were concerned, the Department didn't want to 24 make this difficult decision? 25 A. Correct. 96 1 Q. You didn't want to make this difficult decision? 2 A. I don't think it was -- I think in this situation, my 3 personal views, I think, were overridden by my 4 principal, by the Department. I didn't feel -- I don't 5 feel I could have explained afterwards, if I -- let's 6 say I had spoken at the meeting and the result of that 7 would have been that it came back to the Department, 8 I think I would have had a very difficult job to explain 9 why I'd done what I'd done. 10 Q. Are you saying, therefore, you felt constrained by the 11 position that the Department took, in expressing your 12 own personal views to the Board about the merits of the 13 application? 14 A. Absolutely. I felt I had very clear -- the sum of all 15 of this is I felt I had instructions not to participate. 16 Q. I'd like to address one final topic with you, please, 17 Mr Cooper, before I hand over to the recognised legal 18 representatives of the Core Participants. This relates 19 to the Department's oversight of Post Office in the 20 litigation. Now we covered that a little earlier in 21 your evidence this morning when we discussed the policy 22 team, the late establishment of the policy team, and 23 communications between UKGI and BEIS. You said in your 24 evidence that you felt there was a lack of engagement on 25 the part of the Department and ministers. I think you 97 1 explained that, so far as you were concerned, UKGI were 2 feeding information to the ministers but you weren't 3 getting much back. Is that a fair summary of your 4 evidence? 5 A. Correct, yeah. 6 Q. Now, you also referred to a meeting you attended with 7 the Minister, Kelly Tolhurst, on 17 October 2018; that's 8 correct, isn't it? 9 A. Yes. 10 Q. Do you recall, as part of the outputs of that meeting, 11 the Minister requesting access to more information and 12 the advice that the Post Office was receiving in 13 relation to the litigation? 14 A. I actually don't recall that. I think the first time 15 I recall that was in the immediate aftermath of the 16 Common Issues judgment, and there was a phone call on 17 16 March, in the afternoon, with Tim Parker and others 18 from the Post Office, which Kelly Tolhurst was on, and 19 I recall her asking for more information then. And it 20 may be in the record, I don't know, but I don't remember 21 it in the aftermath of the 17 October. 22 Q. It might refresh your memory, if we could take a look at 23 UKGI00008608. 24 Sir, we unfortunately don't have those documents to 25 hand at the moment. It may be that we can take the time 98 1 that I believe the recognised legal representatives 2 would like to use to ask questions to see if we're able 3 to upload them for Mr Cooper to consider them. 4 In terms of timings, sir, I think the indication is 5 that there may be about half an hour, possibly slightly 6 more, of questions, cumulatively from Core Participants. 7 If you're content for those questions to be placed now, 8 we can take a slightly later lunch break and hopefully 9 enable Mr Cooper to finish his evidence this morning -- 10 SIR WYN WILLIAMS: By all means, yes. 11 MS HODGE: -- in this session. 12 SIR WYN WILLIAMS: Yes, let's do that. 13 MS HODGE: So I think we're hearing first from Hudgells. 14 Questioned by MR MOLONEY 15 MR MOLONEY: Thank you, sir, and thank you Ms Hodge. 16 Mr Cooper, in your witness statement -- and if we 17 could please go to it, it's page 112 and paragraph 242, 18 if possible. Just whilst that's coming up, you 19 addressed the late disclosure of KELs before judgment in 20 the Horizon Issues trial, at a time when POL was 21 considering settlement. 22 A. Yes. 23 Q. You explain in paragraph 242 -- and it's magically there 24 now -- that: 25 "The Board was advised of the steps that were being 99 1 taken to address the disclosure failure, including work 2 to assess the evidential significance of the new 3 material and whether the errors by Fujitsu might give 4 rise to a cause of action against Fujitsu in relation to 5 this specific incident." 6 Then you carry on to discuss about whether or not 7 there might be further evidence. 8 You return to the topic when dealing with 9 post-settlement events at paragraph 256, which is 10 page 117, if we may. So we can see there, it's under 11 "Post-settlement", and if we scroll down to 12 paragraph 256, it reads -- if we could just go perhaps 13 a few more lines so we can see the top of 118: 14 "The subcommittee had previously requested advice 15 about whether POL had an action against Fujitsu so that 16 it could recover at least part of the settlement cost 17 from Fujitsu. Ben Foat reported that initial advice had 18 been received but a final advice was awaited. My 19 recollection is that POL was ultimately advised that any 20 claim it wanted to make against Fujitsu would almost 21 certainly be time-barred." 22 So just, as it were, considering both of those 23 paragraphs together, at paragraph 242, you talk about, 24 as it were, the origins of the advice, or the request 25 for the advice and, in respect of that advice, on 100 1 whether any errors by Fujitsu might give rise to a cause 2 of action. Was that advice sought following 3 encouragement by the Board and/or the subcommittee or 4 was it initially sought simply on the initiative of 5 POL's lawyers? 6 A. My recollection is that Ken McCall asked this question 7 in the subcommittee or in the Board, I'm not sure which. 8 Ken was, I think, rightly interested to know whether 9 Post Office could recover anything against Fujitsu. And 10 I think there were actually two -- twice it came up 11 during my tenure that the Board asked about this and 12 wanted it reconfirmed, and the answer basically came 13 back the same both times that -- and I am probably 14 expressing this in too simplistic a term for the 15 lawyers -- but, essentially, it's that Post Office knew 16 or should have known, more than six years before, that 17 there were problems with the system and that, therefore, 18 you know, any claim would be time-barred. 19 Q. Right, okay. Just to move away from the terms of the 20 advice but you sought the advice in order to see whether 21 POL, and ultimately the public purse, could recover at 22 least part of the settlement cost? 23 A. Correct. 24 Q. It would clearly be important because it would help in 25 working at what would be a reasonable settlement and 101 1 when to make the settlement during the negotiations? 2 A. Yes, and I don't think it -- yes, it wasn't totally 3 financially driven. I think there was a real sense of 4 culpability here, that both -- I mean, obviously, Post 5 Office itself was culpable but I think there was also 6 a very strong feeling that Fujitsu was culpable here and 7 that they should be, you know, part of the resolution 8 and remediation process. 9 Q. There was initial advice reported by Ben Foat, you say, 10 at paragraph 256, and then you refer to, as it were, POL 11 being ultimately advised on any claim it wanted to make. 12 So two stages to this, as you've just outlined to the 13 Chair. 14 A. Yes. 15 Q. The initial advice reported by Ben Foat, did you 16 actually see any documents relating to that advice or 17 was it just reported by Ben Foat? 18 A. I think there was a document that we were shown, that we 19 received, yes, but I can't pin -- I couldn't pin down 20 for you when or in what forum. 21 Q. Then in terms of the final advice, did you, as a member 22 of the Board, then see that final advice? 23 A. It was probably in that context that we got the final 24 advice. 25 Q. Yes. 102 1 A. It was not -- I -- well, just a bit more context for 2 you. I think one of the things that hampered -- it was 3 HSF who were giving the advice here and I think one of 4 the things that hampered them -- and this issue also fed 5 into the whole discussion about malicious prosecution 6 that happened later, and Limb 2 abuse, is that their 7 visibility -- Post Office's visibility on events 8 pre-2010 particularly was very limited, and so the 9 advice they were giving here was very -- was hampered by 10 that or constrained by their lack of knowledge of the 11 history -- complete knowledge of the history. 12 So I think HSF's advice was always -- on this topic 13 of what could be recovered from Fujitsu was always 14 caveated by "Well, we don't have the whole story but 15 this is what we think you can't claim". 16 MR MOLONEY: All right. Thank you very much, Mr Cooper. 17 Questioned by MR HENRY 18 MR HENRY: Mr Cooper, I ask questions on behalf of number of 19 subpostmasters, including Mrs Seema Misra who sits 20 beside me. 21 Common Issues judgment, 15 March 2019. Obviously 22 a watershed for you personally. 23 A. Yes. 24 Q. By 15 November 2019, the Horizon Issues trial had been 25 and gone and you were awaiting a judgment, weren't you? 103 1 A. 15 November? 2 Q. 2019, you were awaiting a judgment? 3 A. Awaiting the Horizon Issues judgment? 4 Q. Yes. 5 A. Yes. 6 Q. By this time, again, you must have been thoroughly 7 disenchanted by the brief you'd been given? I mean, the 8 Common Issues judgment was a disaster and, so far as the 9 Horizon issues, the prospects looked grim, didn't they? 10 A. Well, the advice we were receiving then from Tony 11 de Garr Robinson had changed a lot. It had moved from 12 great confidence to gloom about the prospects. So 13 I think at that time the expectation was that the 14 Horizon Issues judgment would be negative as well, and 15 I think, yes, I think that's clear from the minutes too. 16 Q. So I'm going to be probing how you personally responded 17 to that and I'm going to take you now to UKGI00010737. 18 Could we just scroll further down, it's from Joshua 19 Scott, "Hi Toms", that's to you and Tom Aldred: 20 "You both tasked me with doing some research on the 21 convicted claimants in the GLO so I have decided to lump 22 them together in one document. 23 "Tom A in relation to how they were treated in the 24 last mediation and Tom C in how their stories are 25 portrayed in the public domain. 104 1 "Please see attached an initial draft of what I've 2 done so far. Let me know if this ticks the boxes or 3 not. 4 "I've looked specifically at 5 of the convicted 5 claimants, 2 of whom (Jo Hamilton and Seema Misra) 6 feature quite prominently in multiple media releases and 7 the [Nick Wallis] blog." 8 That must be a reference to Nick Wallis, "NW": 9 "I have to say it has been a little harrowing 10 reading up on the stories but I think a useful exercise 11 to understand some of the convict claimants' positions." 12 Now, Mr Cooper, I suggest there that Josh Scott is 13 going a little off piste, over emotional or seeking to 14 distance himself from what was your ulterior purpose, 15 because I suggest you wanted to know how, there, the 16 convicted claimants' stories were portrayed in the 17 public domain, to see if you could undermine them, 18 didn't you? 19 A. Um, with respect, that is completely the opposite of 20 what I was trying to do. So if I could give you a bit 21 of background. 22 Q. Of course. 23 A. You'll see from my witness statement that I spent quite 24 a lot of time talking about my attempts to get 25 an understanding of the lead cases and the 105 1 understanding, a real -- a proper understanding of the 2 facts in the lead cases, and I was frustrated in that. 3 I actually tried to Google the lead cases in the Common 4 Issues judgment and found very little in the public 5 domain. I'd made at least two attempts to try and get 6 an understanding and the claimants' perspective and Post 7 Office's response to individual cases, the lead cases, 8 in the Common Issues judgment, and didn't get 9 satisfactory -- I got fobbed off both times. 10 So by the time we reached this point, I was 11 expecting the same thing to happen again and what 12 I wanted -- what I was asking the team to do here was 13 to -- let's see what's in the public domain. I can't 14 trust the Post Office to give me a proper description of 15 what the claimants are saying because of the history 16 here, and so let's research what we can and if the Post 17 Office don't address them in the information we get, we 18 can cross-check against the two. And I think there's 19 an email I sent Josh Scott, actually, that says it in 20 pretty much those terms. 21 Q. We'll come to that in due course but I want to go now to 22 POL00337435. 23 Now, this is a consultation with Mr Altman, Rodric 24 Williams, Nick Vamos of Peters & Peters, and others. 25 You are not present but want to ask you about some 106 1 matters that refer to you within this note. We know 2 that this note was composed, because we can see from the 3 first line, on 24 January 2020 and, in the course of 4 this note you are reported, together with Tim Parker, 5 wanting to know if you can take pot shots at Seema 6 Misra, who sits beside me, whilst telling the lawyers 7 not to consider safety. So I want to go, please, to 8 page 3 of this document. 9 Now, do you see there: 10 "Horizon training -- [Rodric Williams] -- leave that 11 with me." 12 I'm going to assume, because there doesn't appear to 13 be any further initial before "CCRC agenda", that it is 14 Rodric Williams speaking: 15 "CCRC agenda -- want to make sure got [documents], 16 got right people, bow around it to give to counsel. 17 Need to start reading CCRC files now. Feel from Board 18 that they will go with wide review. We have material 19 for 34 [applications] to CCRC [including] Misra/ 20 Hamilton/Thomas/McDonald. Board's concern is that there 21 is a narrative and we're just letting it go. Board 22 desperate to decide whether to take pot shots at Misra." 23 What do you say to that, Mr Cooper? 24 A. First of all, I'd like to say sorry to Mrs Misra that 25 she would have read this. I'm sure it's one of many 107 1 things she'd have found very insulting in this whole 2 saga. 3 All I can say to you is that I have no idea where 4 this came from. At this point in time, I was 5 actually -- as you'll see, my attempts to look at the 6 press coverage of Mrs Misra's case and others was to 7 actually challenge Post Office's description of events, 8 and I was -- I hadn't -- I was not in a position at this 9 point in time to decide -- I mean, if I was ever going 10 to take pot shots at anyone, whatever that means -- 11 Q. Well, you know what pot shots means? 12 A. Well, yes, but I mean the key meeting here was 13 28 February, which was our first meeting with Brian 14 Altman on the convictions. So my research on the 15 history of these cases was in the run-up to that. I had 16 no view about Mrs Misra's case at that point in time. 17 Q. I'm going to put it to you straight. What do you say, 18 "Board is desperate to decide whether to take pot shots 19 at Misra"; are you saying that Williams just invented 20 that? 21 A. As far as I'm concerned, yes. 22 Q. Let's go to the next immediate paragraph below. Brian 23 Altman, Queen's Counsel: 24 "... did Board suggest about whether we should 25 review safety or just disclosure? [Rodric Williams] -- 108 1 no just on disclosure. Not opining on safety." 2 Did the Board fetter the lawyers, "Don't advise on 3 safety, just advise on disclosure"? 4 A. No, absolutely not. I mean, the Board's perspective on 5 this was that, clearly, as far as the company could 6 possibly do so, this situation of the postmasters 7 concerned, who had been convicted/terminated/harmed in 8 any way, needed to be compensated/resolved/apologised 9 for in every way -- you know, in every way possible and 10 this was the opposite of what the Board was trying to 11 do. 12 Q. Can we go to the last two lines on this page, please. 13 Here you are mentioned in the same breath as Tim Parker. 14 It's unattributed who is speaking. But it says: 15 "Tom Cooper/Tim Parker -- need to say 'Misra has 16 been saying x in the press, what our actual review of 17 her case is x'." 18 A. Yeah. 19 Q. Then Mr Altman says, "Know Misra well", in other words, 20 the case. 21 It suggests, doesn't it, that you wanted to impugn 22 the credibility of the claimants, including, amongst 23 them, Seema Misra, that you were asking Mr Scott to 24 trawl for inconsistencies in their account. 25 A. That is what it suggests. What I was trying to do was 109 1 the opposite, which was find inconsistencies in Post 2 Office's account. As I say, there's an email I sent 3 Josh Scott to that effect. 4 Q. Well, let's go to that email because I apprehend we're 5 going to be thinking about 11 February 2020, and it's 6 UKGI00011190. But before it's put up on the screen, you 7 appear to be suggesting that you are saying, "Stop", but 8 Williams is saying, "Go". In other words, you are 9 saying, "Black" and he is saying, "White"; you were 10 saying "Night", he is saying "Day"; in other words, the 11 instructions that the Board are giving are, as it were, 12 totally reversed -- 13 A. Correct. 14 Q. Well, I suggest -- 15 A. Does that surprise you? 16 Q. I suggest that's not credible. 17 A. Well, I'm sorry, in that case but I am being entirely 18 truthful when I'm talking about this. 19 Q. Let's go to this email and, if we could scroll up 20 a little bit, and this is from you: 21 "We have a meeting on [the] 28th with the lawyers to 22 go through some of the criminal cases in detail. 23 "Josh has a list of the cases that have been covered 24 publicly. I'd like to have a dossier of these cases 25 which includes the claimants' side of the story as 110 1 a check against what POL will show us." 2 A. Yes. Yes, I wasn't trying to check what the claimants 3 were saying; I was trying to check what Post Office was 4 saying. I mean, you have to remember, I had -- Post 5 Office's record in providing me with accurate 6 information about individual cases was woeful and 7 I didn't trust what I was hearing. 8 Q. Did you think that the Misra case was particularly 9 important? 10 A. Everything we'd been told by the Legal Team was, yes, 11 that her case in some -- many respects was a watershed 12 case. 13 Q. It was the paradigm case of the Post Office's 14 misfeasance towards the convicted claimants, wasn't it? 15 A. Correct. 16 Q. That is why, presumably -- and there's no need to get it 17 up -- but it's UKGI00038672, you're writing to somebody 18 called Tasila; do you remember? 19 A. Yes, Tasila Banda, yes. 20 Q. You say: 21 "I think it would be worth asking HSF to take you 22 through some of the history of the prosecutions and 23 maybe some typical examples. There was a pattern to 24 many of these cases which might help the team understand 25 what the issues might be from a malicious prosecution 111 1 perspective. Also the Misra case, because it's so 2 important." 3 Because it was a quintessential malicious 4 prosecution, was it? 5 A. Yes, I don't know if we knew that then. I can't 6 remember -- what's the timing of this -- if I knew? 7 Q. That's 30 March 2021? 8 A. Oh yes, we knew by then. 9 Q. Right. My final question to you arises out of your 10 answers to Ms Hodge earlier today, and could we go to 11 UKGI00027113. 12 Now, this is you writing to Mr Scott again, together 13 with Shanice Swales, Richard Watson, Carl Cresswell and 14 it's the debate pack. I want to concentrate on three 15 references: page 10, page 16 and page 24: 16 "[Page] 10 should refer to previous management as 17 well given that Horizon was introduced in [year] and the 18 claims in the GLO relate to events going back to the 19 late 1990s in some cases. The claims predate Paula 20 Vennells' involvement in the company -- we should not 21 mention her by name except in response to a specific 22 question. Should also mention that POL was part of the 23 [Royal Mail Group] when Horizon was introduced." 24 Dealing with the last point first, of course that 25 was a reference, was it not, to the fact that the Royal 112 1 Mail Group, before separation was responsible for 2 prosecutions, correct? 3 A. Correct. Well, sorry, correction. I don't think I knew 4 then that Royal Mail -- actually, their Legal Team did 5 the prosecutions at that stage. So I don't know if it 6 was exactly the point you're making lay behind what 7 I was saying. 8 Q. But we can agree that there was an insistence -- or not 9 an insistence but a suggestion by you -- that Paula 10 Vennells is not to be referred to unless there's no 11 alternative? 12 A. Well, no. Not unless there's no alternative. 13 Q. Well, unless there is a specific question? 14 A. Correct. 15 Q. Yes, which would leave no alternative. By that time, 16 I suppose, she was damaged goods? 17 A. Sorry, is that a question? 18 Q. Yes. Why the insistence or the suggestion, rather, 19 don't mention her by name? 20 A. This isn't specific to Paula. I think my comment would 21 have been the same in respect of any individual that (1) 22 you don't need to mention people's names. I didn't feel 23 that it would be appropriate to mention anyone's name in 24 this context. If I actually had the draft, I could 25 probably explain it to you better. 113 1 Q. So be it. 2 A. But I haven't looked at that document but I think this 3 was a general point I would have made irrespective of 4 whether it was Paula Vennells or someone else. 5 Q. It's now 2 March 2020, and you say: 6 "[Page] 16. References to change/culture 7 improvement are well under way is premature (couple of 8 similar references elsewhere). Better to use the 9 language about Nick Read being committed to 10 an overhaul." 11 So would that reflect, essentially, that the 12 culture, the toxic culture was deep rooted? 13 A. Yes. 14 Q. Yes. 15 A. And I think what I didn't want anyone -- I felt it would 16 be wrong and misleading for the Minister to give the 17 impression that everything had been fixed. Absolutely, 18 the opposite was the case. It was still huge amounts of 19 work to do. 20 Q. Then page 24, you say: 21 "Do we want to say this? 'On the litigation, 22 following the critical Common Issues judgment, UKGI 23 challenged the Post Office Board's strategy and approach 24 and supported on activities to enable the successful 25 mediation to take place in December 2019'." 114 1 Your response to that is: 2 "Nothing wrong with it but it rather begs the 3 question about what happened before." 4 The answer to the question it begs is that, 5 effectively, you were supine, weren't you? 6 A. Me, personally? 7 Q. ShEx oversight was essentially -- 8 A. Oh, I see. 9 Q. -- supine? 10 A. Oh, you're talking about ShEx. 11 SIR WYN WILLIAMS: I think, Mr Henry, it's not realistic to 12 expect a meaningful answer about things before the 13 witness joined the organisation, which was 2017/18, 14 wasn't it? 15 MR HENRY: 2018, sir. 16 March, I think, was it? 17 A. Yes. 18 Q. Yes, March. 19 Well, then, if I rephrase it in this way. 20 Mr Swannell yesterday summed it up when he said "When in 21 curiosity meets a toxic culture bad things happen"; do 22 you agree with that diagnosis? 23 A. I can understand why he said that. I wouldn't quote it 24 as a generalisation but I can understand why in the 25 context of the Post Office he said it. 115 1 Q. Were you reassured by the constant mantra and refrain, 2 "It's not systemic, it's not systemic"? 3 A. I took it at face value to start with. But I think over 4 time -- you know, it became very clear, over time, and 5 again, I can't pin down a date of when exactly, but this 6 case wasn't about systemic problems. 7 Q. Exactly. 8 A. This was about the system causing problems for 9 individual postmasters -- 10 Q. Precisely. 11 A. -- and their balances and it was -- if you articulate it 12 in that way, which is, in my view, the correct way, it's 13 a very different question from systemic issues. 14 Q. So the question was being phrased wrongly. Horizon's 15 failures did not have to be system-wide, the problems 16 could be sporadic, intermittent, random but capable of 17 causing losses as claimed by the victimised 18 subpostmasters? 19 A. Correct. 20 Q. When did you get that? 21 A. Well, I've just said, I can't pin it down to a date. 22 But I think in the -- it was after the summer of 2018. 23 Probably before the Common Issues judgment. 24 Q. Well, then, if so, why didn't you do something about it, 25 if you saw the questions so clearly that the question or 116 1 the mantra that they were espousing was wrong, why 2 didn't you do something about it? 3 A. Because I think, to the earlier question, the approach 4 I took to the Horizon issue was that that was a matter 5 for the experts. The experts who were far better 6 qualified than I to resolve this question were going to 7 do so in the Horizon Issues judgment. I am not 8 a lawyer, I'm certainly not an IT expert, and they were 9 the people who were best qualified to do it. And I felt 10 confident that we would get the answer to that question. 11 Q. But did you make your concern known, even if you felt 12 "It's not a matter for me but my concern at least should 13 be relayed to the lawyers so that it can then be 14 forwarded to the experts"? 15 A. I don't recall what I said, but my -- dealing with the 16 Legal Team at that point in time was dealing with 17 a brick wall. I might be exaggerating slightly but that 18 was how it felt. They were completely -- you couldn't 19 get any traction with these people on anything. 20 MR HENRY: I've nothing further to ask you, Mr Cooper. 21 Thank you. 22 SIR WYN WILLIAMS: Thank you. Are there any other 23 questions? 24 MR STEIN: Sir, yes, I have questions for Mr Cooper. 25 Sir, I will be five minutes, possibly six or seven 117 1 minutes. 2 SIR WYN WILLIAMS: On this occasion, I will hold you to 3 that, Mr Stein. 4 MR STEIN: Sir, given the timing, I'm not surprised. 5 Questioned by MR STEIN 6 MR STEIN: Mr Cooper, my name is Sam Stein. I represent 7 a large number of subpostmaster/mistresses, if you like, 8 and people who worked in branches. I'm instructed by 9 a firm of solicitors called Howe+Co, who have had a very 10 long engagement with these issues with the Post Office. 11 Can I take you straightaway, please, to your 12 statement, paragraph 118. That's page 57. 13 So paragraph 118, page 57, please. Now, here 14 Mr Cooper what you're referring to is a clause that you 15 felt particularly strongly about, that's the liability 16 clause. Now, you've given evidence about this in part 17 today and you've said to Ms Hodge, who was asking you 18 questions earlier today, that you felt this clause was 19 completely unfair. That's at 16.1 on the [draft] 20 transcript. What you're saying here is this: 21 "I understood that in 2012, the liability clause had 22 been changed by POL to say that [subpostmasters] were 23 liable for losses regardless of fault." 24 About seven lines down from there, same paragraph, 25 you say this: 118 1 "I considered this to be a wholly unreasonable and 2 untenable position to maintain in general, but 3 particularly in the litigation." 4 Okay? Right, so this is a matter that you in your 5 statement referred to very strongly; in your evidence 6 today you've repeated your strong concerns about this 7 particular issue. 8 Now, my questions are these: were you told that 9 before 2012, this liability clause had been differently 10 worded but, nevertheless, the Post Office had 11 consistently always imposed liability regardless of 12 fault, going right the way back to the beginning of the 13 Horizon time? 14 A. No, I hadn't. I'd been told that it had changed so, in 15 the July 2018 meeting, around about then, I had with 16 Jane MacLeod, both versions of the liability clause were 17 discussed. So -- but I was not told about how it was 18 applied in practice in the past. 19 Q. Right. So at the time we're looking at this -- we can 20 see the bottom of that particular paragraph there's 21 reference to a date in October 2018. So around this 22 sort of a time, quite close to when you joined as a NED 23 the POL Board, you're learning about this liability 24 clause which you really dislike? 25 A. Yeah. 119 1 Q. Right, okay. You don't know that before 2012 the same 2 interpretation had been placed upon it, going back for 3 12 years before that? 4 A. Correct. 5 Q. Right. At this point, though, you're learning that this 6 is the way that matters are dealt with, with 7 postmasters, postmistresses and people in branches. 8 What happened? Did you say, "Hang on are we still doing 9 this to people, right now? Forget about the litigation, 10 is this still going on"? 11 A. No, I think the message we received from the management 12 team at Post Office was any bad practices that existed 13 in the past, for example, investigations, you know, 14 asking for money that wasn't owed, that had been -- bad 15 training had all been remedied. 16 Q. Okay, so you were being reassured about that. Who told 17 you, as you say at the beginning of that paragraph, 18 "I understood that in 2012 the liability clause had been 19 changed"; who told you that? 20 A. Jane MacLeod. 21 Q. Right, paragraph 119 over the page, please, to page 58. 22 Now, that says: 23 "However, POL was robust in its view that it should 24 continue to defend it, arguing that any other approach 25 to liability was not operationally possible." 120 1 A. Mm-hm. 2 Q. Then you talk about a feeling of a significant degree of 3 frustration. Wasn't that telling you that this was 4 still going on, that this is the way POL looked at its 5 world view regarding the Horizon system? 6 A. I didn't interpret it in that way. But I can 7 understand -- 8 Q. That's what you appear to be saying? 9 A. Perhaps, with hindsight, I should have interpreted it 10 that way but that wasn't what I was hearing from the 11 management team. 12 Q. Okay. Right, now see what's happening from the POL 13 perspective, its response. Now, equally, you've got 14 an entire team working with you in relation to your 15 responsibilities as the NED for UKGI. Yes? 16 A. Yes. 17 Q. What did you do about the other way, so going to the 18 owners, the shareholders that own POL, the Post Office, 19 what did you say to them? "This can't go on, we've got 20 a real problem with a liability clause I utterly 21 disagree with"; what happened woman that perspective? 22 POL's no good, they're batting you away. What did you 23 do about going back to Government and saying, "We've got 24 to stop this"? 25 A. Yeah, I think we talked about that earlier. 121 1 Q. A bit but this is rather (unclear). 2 A. So my -- the point at which I raised this with -- you 3 know, my, if you like, most significant engagement, 4 because there was more than one -- with the Legal Team 5 and the Board was on 30 October. It's also important to 6 understand that I was actually on a journey of actually 7 understanding this stuff. I'd only got involved in 8 March. My first meeting on the 23 implied terms was in 9 July. So this was quite quick, I think, in -- I hope 10 you'd agree, in sort of legal time frame. 11 So I -- you know, my, if you like, point of maximum 12 exasperation on this was on the 30 October meeting, 13 which was only a few days before the hearing was due to 14 commence. And I think, in practice, the die was cast. 15 In terms of what -- the way Post Office were going to 16 deal with this in court, was, you know, were they going 17 to concede the liability clause -- 18 SIR WYN WILLIAMS: I think, if I may say so, we all know 19 that they defended that clause in court. 20 A. Yes. 21 MR STEIN: The question, actually, Mr Cooper, is not about 22 that: it's about what the owner did when you were saying 23 to the owner, as part of that team, "Look, there's 24 a real problem here. They're getting this utterly 25 wrong. This is morally indefensible". What did the 122 1 owner do about it? 2 A. Nothing, but I think, in fairness, I don't think -- to 3 them, there was no -- they didn't -- I hadn't 4 communicated to them how strongly I felt about it. Why? 5 Because where I felt I could make -- get the most out of 6 the Department at that time was on the contingency 7 planning. 8 Q. Right. Well, you anticipated my next question, this is 9 therefore my very last question, you said the reason, 10 the why you didn't press this harder with, as I put it, 11 the owner is because you felt you could get more on 12 other issues. 13 Now my last question therefore is this: is that 14 something that you thought of at the time? Did you sit 15 there at your desk or at your laptop and go "Hang on, 16 whilst I'm really frustrated about this issue I don't 17 think I should raise it because it's like a seesaw, I'll 18 get better traction on something else", or is that 19 a post-event rationalisation as to what's happened, 20 Mr Cooper? 21 A. No, it's at the time. I'm not sure I thought about it 22 exactly the way you've described but I -- you know, you 23 have to prioritise what you can get out of senior people 24 and, to me, that was the one where I thought they would 25 engage the most. 123 1 SIR WYN WILLIAMS: Right, thank you very much. 2 MR STEIN: Thank you, Mr Cooper. 3 SIR WYN WILLIAMS: Now, then, Ms Hodge, is there anything 4 you want to ask in terms of having found a document or 5 not, so to speak? 6 MS HODGE: Sir, the NFSP would like five minutes to ask 7 questions. Obviously, I'm conscious we've run quite -- 8 SIR WYN WILLIAMS: I don't think I'm going to carry on 9 indefinitely. We are going to stop now. We just need 10 to decide when we start again. 11 MS HODGE: If we were to return at 2.15, the NFSP could put 12 their questions for five minutes and, if I needed to, 13 I could put any outstanding matters for five minutes. 14 That would take us to around 2.30. I think that would 15 leave sufficient time in the afternoon for Mr Stevens, 16 as I understand it, with our next witness. 17 SIR WYN WILLIAMS: Well, can I take it clear to everyone 18 that today is a day where I cannot sit beyond 4.30 19 because I've arranged a meeting relating to the next 20 phase of this Inquiry, which I need to have promptly 21 after 4.30. So I'm just warning people that that is the 22 cut-off point today. All right? 23 MS HODGE: Thank you, sir. 24 SIR WYN WILLIAMS: So we'll start again at 2.15. 25 MS HODGE: Thank you. 124 1 (1.29 pm) 2 (The Short Adjournment) 3 (2.15 pm) 4 MS HODGE: Good afternoon, sir, can you see and hear us? 5 SIR WYN WILLIAMS: Yes, thank you. 6 MS HODGE: Sir, there will be some short questions from the 7 NFSP. 8 SIR WYN WILLIAMS: Yes. 9 Questioned by MS SHAH 10 MS SHAH: Can you see and hear me now? 11 Good afternoon, Mr Cooper, my name is Rohini Shah 12 and I represent the National Federation of 13 SubPostmasters. I'm going to refer to some sections of 14 your witness statement. There is no need to turn it up 15 unless you wish to review them. At paragraphs 13 to 14 16 of your witness statement, you refer to your role on the 17 Nominations Committee and explain that this committee 18 dealt with senior appointments at the Post Office. As 19 a member of the nomination committee and given what 20 you've said today about the conduct of the litigation, 21 did you or anyone within UKGI suggest that any board 22 member or senior management members of the Post Office 23 resign following the judgment of Mr Justice Fraser? 24 A. Yes. Absolutely. Yes, I mean, Jane MacLeod was asked 25 to leave the company. 125 1 Q. Other than Jane MacLeod, was anybody else discussed? 2 A. No. I mean, the priority then was to change the Legal 3 Team, and get new advisers on board. 4 Q. Okay. At paragraph 252 of your witness statement, you 5 refer to a Board meeting on 26 November 2019 at which it 6 was confirmed that the Common Issues appeal decision had 7 gone against POL and that it was now necessary to 8 implement the findings of the Common Issues judgment in 9 full, including asking subpostmasters to sign new 10 contracts. 11 However, postmasters were never asked to sign new 12 contracts and the NFSP were never informed that it was 13 considered that postmasters should sign new contracts. 14 Could you explain why that was? 15 A. Yes. I can. So I think the initial advice that Post 16 Office got and the Board got was that postmasters would 17 need to be asked to sign new contracts. I think the 18 team led by Nick Read considered that and I think the 19 practical answer that they came up with was for the 20 company to restate all its policies in relation to how 21 the contract would -- the existing contract would be 22 interpreted. 23 So there were new policies issued around things like 24 terminations, suspension, investigation and disputes, 25 those kind of -- all those issues that came out of the 126 1 Common Issues judgment and so, effectively, Post Office 2 said unilaterally "We are going to interpret the 3 contract in a way that's compliant with the Common 4 Issues judgment", and that avoided then the need for 5 subpostmasters to sign new contracts. 6 Q. Finally, in terms of finances in the future would you 7 accept that Post Office will likely never be able to 8 afford the costs involved of the Horizon scandal, in 9 terms of administration and redress without ongoing 10 financial support from the Government? 11 A. Well, never say never. But I think, certainly at the 12 time I left the Board, which was over a year ago now, 13 I think it's clear that Post Office would not be able 14 to -- it's abundantly clear it wouldn't be able to 15 afford the cost of the compensation and the ongoing 16 business model was unsustainable, financially. Yes. 17 MS SHAH: Thank you very much, those are my questions. 18 SIR WYN WILLIAMS: I'm very sorry that -- hang on, I seem to 19 have disappeared. No, here we are. 20 I'm very sorry that I asked you to wait for 21 45 minutes for delivering those. If I had thought that 22 you'd have been as short winded as that, I would 23 certainly have permitted you to ask the questions before 24 lunch. So my apologies. 25 MS HODGE: Thank you, sir, I have some very brief follow-up 127 1 questions, please, if I may. 2 Further questioned by MS HODGE 3 MS HODGE: Mr Cooper, I would like to briefly revisit the 4 issue of the Department's level of engagement in the 5 Group Litigation. Could we look, please, at what you 6 say about that at paragraph 80 of your witness 7 statement. It's page 39, please. Thank you. 8 You explain in the preceding paragraph, 9 paragraph 79, that the Department had the same rights as 10 UKGI in relation to receiving information and reports 11 from the Post Office, concerning the litigation; is that 12 right? 13 A. That's what I believe the protocol said, yes. 14 Q. You go on to say at paragraph 18: 15 "In practice, however, it was made clear by the 16 Department that it expected UKGI to take the lead on 17 monitoring the litigation and keeping the Department 18 informed. As I explain below, the Department was 19 provided with regular updates throughout the litigation. 20 My perception was that the Department was interested in 21 the progress of the litigation, and wished to be 22 updated, but did not envisage playing an active role in 23 the oversight of the proceedings. This is reflected in 24 the read out from the UKGI quarterly portfolio meeting 25 on 5 July in which it is record that whilst it was 128 1 UKGI's view that the Department's Legal Team should be 2 involved at every stage of the litigation, securing such 3 a level of engagement 'may be a challenge'." 4 Do you consider that you were hampered in your 5 oversight of the Group Litigation by the Department's 6 refusal to engage more meaningfully, as you saw it? 7 A. Sorry, was my effectiveness hampered? 8 Q. By your perception that the Department were not engaging 9 more meaningfully? 10 A. I think the Department could have been more effective on 11 areas where I had thought it would matter to them, yes, 12 had they been more involved. And, as I said earlier, 13 I think the absence of meetings to talk about this, the 14 litigation, was, you know, regrettable. 15 Q. You go on to say in the same paragraph that: 16 "As I explain below, there was a step-change in the 17 active interest from the Department following the 18 handing down of the Common Issues judgment and the 19 subsequent progress towards settlement, but, with the 20 exception of the meeting between [Post Office] the 21 Minister, the Permanent Secretary and others in October 22 2018, prior to that point the model was largely one of 23 UKGI providing the Department with progress updates." 24 I just want to test with you briefly whether your 25 recollection in relation to the timing of the 129 1 Department's intervention is quite right. Can we look, 2 please, at UKGI00008656. This is a summary of a meeting 3 you attended with Kelly Tolhurst on 19 November 2018 4 produced by an official in UKGI. It reads: 5 "All, 6 "We had a meeting with Kelly Tolhurst this 7 morning -- Tom C [presumably a reference to you] dialled 8 in, whilst Sam W, Sam R and I were in attendance. 9 It goes on to say: 10 "Kelly had concerns over [Post Office's] potential 11 liabilities over the court case. 12 "She was sorry to hear Paula is leaving but 13 suspicious about the timing given the ongoing litigation 14 case and asked about the process for getting her 15 replacement." 16 It says: 17 "Keen to be properly briefed as the litigation case 18 progresses and would welcome both verbal and written 19 updates on a biweekly basis ... 20 "She would also welcome a face-to-face meeting with 21 Tom C ..." 22 A. Thank you, yes, so I understand what you were saying 23 earlier now. So I think, firstly, my witness statement 24 is accurate because the period I was addressing in my 25 witness statement was up to October 2018, this email is 130 1 in November. So I think that meshes, that's consistent. 2 But you're right, I had said earlier I had no 3 recollection of Kelly asking for more information until 4 March 2019, and you're right, there's evidence here that 5 she was asking for it earlier. 6 Q. Thank you. Finally, I'd like to ask you some brief 7 questions about the Department's reactions to the Common 8 Issues judgment. You address these at paragraph 170 of 9 your statement on page 80. That reads: 10 "The Common Issues judgment was formally handed down 11 on 15 March 2019. On the same day there was a meeting 12 for [Post Office] to brief Departmental officials. The 13 ministerial briefing to which I referred in my email to 14 the Board took place on 16 March, the day after the 15 judgment was handed down. I recall the Department being 16 very concerned about the judgment and what could be said 17 publicly in response. During the course of the briefing 18 ... I recall the Secretary of State, Greg Clarke MP, 19 making a comment to the effect that he had always 20 believed the [subpostmasters] were right and that it was 21 now important that these cases were resolved as quickly 22 as possible." 23 You then go on to say: 24 "I had not previously heard those views previously 25 expressed by the Secretary of State (or anyone else in 131 1 the Department)." 2 You appear to be suggesting at various points 3 throughout your statement that the handing down of the 4 Common Issues judgment marked a turning point in the 5 Department's engagement in the litigation; is that fair? 6 A. Yes. 7 Q. Were you emboldened by the intervention of the Minister 8 to take more decisive action in your oversight of the 9 litigation? 10 A. Not really. I felt I was engaging with the litigation 11 in the way I thought it was appropriate for 12 a Non-Executive and a member of the Shareholder Team. 13 I don't think I was particularly -- I mean, the Common 14 Issues judgment was massive event, and it needed to be 15 fixed. I don't think I needed Greg Clarke's views about 16 the litigation to change how I approached that. 17 My point in relation to his views were that I think 18 they -- had I known, it possibly might have made 19 a difference before the Common Issues judgment and 20 I think it might have made me more challenging in terms 21 of what I was hearing from the postmasters. I mean, it 22 would be good to know why he thought the postmasters 23 were always right and, perhaps, you know, that would 24 have been good to get, to help me. So my point was in 25 relation to pre-Common Issues, rather than post. 132 1 Q. His intervention coincided, did it not, with your 2 decision to initiate discussions with the Chair about 3 the replacement of the Post Office Legal team? 4 A. Yes, but they're not connected. I formed my own -- 5 I think I explained earlier the first Board meeting 6 after the Common Issues judgment was handed down, and 7 the interaction I'd had with Jane MacLeod at that 8 meeting, and I said earlier that I -- something to the 9 effect that at that point I'd lost all faith, whatever 10 faith I had left in the Legal Team, and it was off the 11 back of that that I felt it was imperative that the 12 Legal team was changed, and that prompted me to discuss 13 it with Tim Parker and we got on quickly with making 14 that change. So that would have happened independently 15 of whatever Greg Clarke had to say on the topic or not. 16 Q. Do you consider the Department was in any way 17 instrumental in bringing about a change in strategy 18 within the Post Office in respect of the litigation? 19 A. No, because I think everyone was completely aligned. 20 I mean, the Department was -- and the Board were in the 21 same place. You know, something had gone badly wrong, 22 it needed to be fixed as a matter of urgency. 23 Where I think -- had the Department said, "Hang on 24 a minute, we don't want you to settle with the claimants 25 or, you know, spin this out as long as you keep -- as 133 1 long as you can", whatever, if they'd had a different 2 motive or agenda from the company, then the Department's 3 views would have made a difference but I think all of us 4 were completely aligned in what we wanted to happen 5 afterwards. 6 Q. To whom, therefore, do you credit the significant change 7 in litigation strategy which resulted in a settlement of 8 the Group Litigation later in 2019? 9 A. Sorry, say that again? 10 Q. To whom do you credit the change in litigation strategy, 11 which resulted in the settlement in late 2019? 12 A. The Board. The Board. This had gone badly wrong, it 13 needed to be solved and the claimants were right, the 14 Post Office was wrong. It had to be settled and the 15 people affected had to be compensated. 16 MS HODGE: Thank you. I've got no further questions. 17 A. Thank you. 18 Questioned by SIR WYN WILLIAMS 19 SIR WYN WILLIAMS: Just before you finish, Mr Cooper, at 20 various points in your witness statement, you suggest 21 that Post Office Executives thought that your approach 22 to your role as a Non-Executive Director was a bit too 23 enquiring and a bit too interfering. 24 Can I just try and get some detail of that? First 25 of all, was that something you felt almost from the 134 1 beginning of your role as a director or did that sort of 2 emerge as time went by, so to speak? 3 A. No, it was pretty early on, Sir Wyn, and, you know, the 4 kind of formal feedback I got through Tim Parker to Mark 5 Russell came, I think, in the summer of 2018, but it was 6 clear earlier on that some of the individuals we'd dealt 7 with in the company were not happy with the way -- with 8 what we were trying to do. 9 SIR WYN WILLIAMS: All right. Can you actually pinpoint any 10 individuals who made that clear to you? 11 A. I think, if I can say, the communication of it came more 12 through actions than words, or responses to requests, 13 and I think that the issues we had were with the -- 14 predominantly the Legal team, with Jane MacLeod and Rod 15 Williams primarily, and, you know, there were specific 16 issues with the Finance Team, with Al Cameron. 17 SIR WYN WILLIAMS: All right, thank you very much. 18 Well, thank you, Mr Cooper, for your detailed 19 witness statement and for giving evidence interesting 20 the course of this morning and into this afternoon. I'm 21 grateful to you. 22 THE WITNESS: Thank you. 23 SIR WYN WILLIAMS: So, Ms Hodge, I won't disappear. I don't 24 think I need to disappear. I'll just wait for the 25 handover. 135 1 MS HODGE: Thank you, sir. 2 SIR WYN WILLIAMS: I see Mr Stevens is in pole position next 3 do you so -- 4 MS HODGE: Ready to go. Thank you. 5 (Pause) 6 MR STEVENS: Good afternoon, sir. Can you hear and see me? 7 SIR WYN WILLIAMS: Yes, thank you very much. 8 MR STEVENS: Thank you, sir. We'll be hearing from 9 Mr O'Sullivan. 10 PATRICK HENRY PIERCE O'SULLIVAN (sworn) 11 Questioned by MR STEVENS 12 MR STEVENS: Thank you. Please can you state your full 13 name. 14 A. Patrick Henry O'Sullivan. 15 Q. Thank you, Mr O'Sullivan, for giving evidence to the 16 Inquiry and thank you to you for producing a written 17 witness statement, which should be in front of you. Is 18 that in front of you? 19 A. Yes. 20 Q. For the record that witness statement is reference 21 number WITN11000100. Before I take you to your 22 signature, I understand there's a correction to be made. 23 Please can we bring up page 2 of the statement, 24 paragraph 5. So in paragraph 5, there are two 25 corrections to your qualifications in the second 136 1 sentence. I believe the first is that the words "arts 2 in" should be removed so it just says, "bachelor's of 3 business studies"; is that correct? 4 A. Correct. 5 Q. Secondly, the words "master's of economics" should be 6 removed and in place it should read "MSC in accounting 7 and finance"? 8 A. Correct. 9 Q. Thank you. That statement can come down now. Thank 10 you. Can I ask you, please, in your hard copy to turn 11 to page 23. 12 A. Yes. 13 Q. There should be your signature or a Docusign version of 14 it; do you see that? 15 A. I do. 16 Q. It is your signature, is it? 17 A. Yes. 18 Q. Can you confirm, please, that the facts stated in that 19 witness statement, subject to the corrections you've 20 just made, are true to the best of your knowledge and 21 belief? 22 A. They are. 23 Q. That now stands as your evidence to the Inquiry. The 24 statement will be published on the Inquiry's website 25 shortly. I am going to ask you some questions about it. 137 1 I'll start with your background. You trained as 2 a chartered accountant; is that right? 3 A. Correct. 4 Q. During your career, you worked in a number of executive 5 positions at various financial institutions? 6 A. Correct. 7 Q. You began to undertake Non-Executive roles in 2007? 8 A. Correct. 9 Q. I think your last executive role was as Vice-Chairman of 10 Zurich Financial Services, which you resigned from in 11 2009? 12 A. Correct. 13 Q. Since then you focusing on non-executive roles. 14 A. (The witness nodded) 15 Correct. 16 Q. Thank you. 17 You became Non-Executive Chairman of the Audit 18 Committee of the Bank of Ireland in 2009? 19 A. Correct. 20 Q. You became Deputy Governor of the same institution in 21 2011? 22 A. That's correct. 23 Q. You stayed there until 2015? 24 A. Yes. 25 Q. In your witness statement, you say that the time 138 1 commitment for the role of Deputy Governor was one day 2 per week? 3 A. That expanded, depending on the need at the time. It 4 could have been -- 5 Q. You anticipated my next question. In practice, how 6 often did you, on an average week, spend working as 7 Deputy Governor? 8 A. Two days a week. 9 Q. Two days a week. You were appointed as a Non-Executive 10 chair of Old Mutual Plc in 2010? 11 A. Correct. 12 Q. In your witness statement, you say that the time 13 commitment for that was four days a week? 14 A. That is correct. 15 Q. In practice, how much time did you need to spend on 16 that? 17 A. Three days a week. 18 Q. So less time than -- okay. From 2013, you were Chair of 19 Lloyd's Syndicate 218? 20 A. Correct. 21 Q. Do you remember roughly when in 2013 you started that 22 role? 23 A. I believe it was September. 24 Q. September 2013? 25 A. (The witness nodded) 139 1 Q. What was the time commitment for the Lloyd's Syndicate 2 role? 3 A. One day a month. 4 Q. Did that translate into how much time you actually spent 5 on it? 6 A. It did, except for the occasional phone call, et cetera. 7 Q. So you were appointed to become the Chair of the 8 Shareholder Executive Board -- well, you were appointed 9 on October 2011 but you started that position in March 10 2012? 11 A. That's correct. 12 Q. In your witness statement, if we could bring it up, 13 please, paragraph 6, page 2, so in the middle, we see it 14 says -- sorry, before there we see you refer to the 15 Deputy Governor role. Then you say: 16 "The Secretary of State appointed me as Chair of the 17 [Shareholder Executive] Board in October 2011, with 18 a start date of March 2012. The time commitment for 19 each of these roles was one day a week." 20 Pausing there, I think in practice you said that was 21 two days -- 22 A. (The witness nodded) 23 Q. -- and then two days a month respectively. So what 24 you're saying in the witness statement is the Chair role 25 took up two days a month; is that right? 140 1 A. Excuse me, that's technically incorrect. It was one day 2 a week. 3 Q. One day a week. That statement can come down. Thank 4 you. Did you have sufficient time to commit to 5 Shareholder Executive, given your other commitments to 6 Old Mutual and the Bank of Ireland? 7 A. Yes, in -- I put in the extra time to the extent that it 8 was required, at weekends, evenings, or whatever. 9 Q. At any point did you feel that you were in conflict, in 10 the sense that you had too many tasks for different 11 companies? 12 A. Well, jumping ahead, that was one of the major reasons 13 that I did not extend beyond September '14 because the 14 intensity of the work with Old Mutual was exceptional at 15 that point. 16 Q. Did you feel you were able to honour your commitment and 17 the time required to the role as Chair of ShEx? 18 A. Yes. 19 Q. Let's look, then, at the role of ShEx, please. 20 Actually, if we can bring back up the statement, 21 page 10, paragraph 26. It says that: 22 "I am asked to address matters that go to reporting 23 and risk structures within ShEx. These evolved over 24 time, and I understand the evolution of these matters 25 will be addressed fully by other UKGI witnesses to the 141 1 Inquiry." 2 I think you may be referring to Mr Russell, who 3 appeared yesterday, and the witnesses next week; is that 4 right? 5 A. That's correct. 6 Q. Would you agree that one of the core roles of the 7 Executive of any body or company or Government 8 department is to identify, analyse and mitigate risk? 9 A. Yes, it's among the important governance requirements of 10 any Executive Team. 11 Q. In respect of ShEx, the Executive were required or 12 needed to take steps to identify, analyse and consider 13 mitigation for risks of its assets, such as Post Office 14 Limited; would you agree? 15 A. I do. 16 Q. Whose responsibility was it to carry out that risk 17 management? 18 A. That was the responsibility of the team specifically 19 within ShEx reporting to the CEO. 20 Q. I want to look at the ShEx Board now, of which you were 21 the Chair and look at what its role was in respect of 22 risk management whilst you were there. Please could we 23 bring up UKGI00041953. 24 This is a paper on the ShEx Board's remit, which 25 I understand was prepared by your predecessor as Chair; 142 1 is that right? 2 A. That is correct. 3 Q. We don't need to bring this up but, at paragraph 18.2 of 4 your statement, you say that you think this document 5 fairly reflects the role of the Board of ShEx? 6 A. That is correct. 7 Q. In particular, you refer to paragraphs 6 and 7 of some 8 terms of reference which are appended to it. If we 9 could look further down the page, please, paragraph 7 is 10 quoted there, and it says: 11 "... of the existing Terms of Reference sets out the 12 Board's overall remit: 'The Board has an advisory role 13 in relation to the work of the Shareholder Executive as 14 a whole. This will include setting strategic direction 15 in the light of Ministerial objectives, periodically 16 reviewing the delivery of objectives as set out in the 17 business plan and considering any specific issues 18 referred to it by the Executive Committee." 19 It says: 20 "This holds true but, more specifically, the Board 21 should expect to ..." 22 Then if we turn the page, thank you, we see some 23 other points there. One of them is: 24 "Review the progress and status of big projects ..." 25 "Projects", is that referring or will it include 143 1 assets such as the Post Office? 2 A. Yes, but it's important to remember that the Post 3 Office, when this was written, of course, was such 4 a division of Royal Mail. 5 Q. Yes. Until April 2012, when it became under direct ... 6 A. Correct. 7 Q. We're going turn to that shortly, but do you agree with 8 the suggestion here that this also formed part of the 9 Board's responsibilities? 10 A. Absolutely. 11 Q. That document can come down, thank you. 12 At the Board level, what role did you see the ShEx 13 Board as having in respect of risk management? 14 A. Well, as I think has been pointed out by Mark Russell 15 yesterday, it was an evolving process but it was very 16 clear that the experience level of the Shareholder 17 Executive at the time that I assumed my position did not 18 have, at that point, the benefit of current risk 19 management, as practised in most major corporations that 20 I was part of. And it became our objective to begin to 21 improve that process and, as you heard, a Risk Committee 22 was established under Fiona MacGregor, and then, later 23 on, the RAG or Red, Amber and Green analysis process was 24 commenced and then refined in 2014. 25 Q. You say that it evolved. When you started in your role 144 1 as Chair, what steps did you take as chair, or did the 2 Board take, in respect of improving risk management? 3 A. We spent quite a bit of time discussing the process as 4 currently practised at that point in the corporations 5 that I happened to be involved with, with Mark, and he 6 duly took up the cudgel and went to work on applying 7 those standards, taking advice from some of the 8 corporations that I worked with. 9 Q. In order for the Board to properly carry out its role, 10 did it need to satisfy itself that the executive had 11 identified the appropriate risks for each asset? 12 A. Well, as I indicated, it was an evolving process and 13 just the number and size and complexity of what was 14 being looked at and reviewed at that time was, by any 15 standards, very heavy. Particularly in the light of the 16 fact that Royal Mail was being floated and all of those 17 issues around the impact on the shareholder's investment 18 in Royal Mail, nuclear decommissioning, which was 19 costing hundreds of millions of pounds a year, the 20 establishment of the British Business Bank, the Green 21 Investment Bank, so in the context of looking and 22 reviewing the risks around those investments, it 23 depended on the size and scope of the particular 24 investment. 25 And at that point in time, at the beginning in 2012, 145 1 Post Office would have been well down the list in the 2 context of the perceived levels of risks. 3 Q. I'm asking you questions generally there but we'll test 4 that as we go through the chronology. I'll stick with 5 a few other general questions first, though. The first 6 is: did anyone on the ShEx Board have expertise in the 7 legal function of a corporate body? 8 A. Not specifically. 9 Q. Why not? 10 A. We were not a corporation that was constituted under the 11 Companies Act. We were an advisory board and, as 12 judged, I think, by my predecessor and subsequently 13 reinforced by me, the key was to get a skillset around 14 that board table of great experience, which would 15 complement and supplement some of the lack of experience 16 within the Shareholder Executive. 17 Q. Two points, there. Firstly, in terms of identifying the 18 skills required at the ShEx Board meetings and who was 19 a member of the Board, was that your responsibility as 20 Chair? 21 A. I inherited a Board from the outset and changes to that 22 Board were my responsibility. 23 Q. When we consider that one of the assets that ShEx was 24 overseeing, Post Office Limited, we consider that it was 25 prosecuting subpostmasters, which was a legal function, 146 1 do you think it would have assisted the ShEx Board to 2 have someone with experience of the legal function of 3 a corporate body? 4 A. Well, in the context of the Board's knowledge or indeed 5 the Shareholder Executive's knowledge of what the 6 prosecutions were being -- what the impact of those 7 prosecutions were at the time, it was very, very 8 limited. In fact, I cannot remember a discussion at any 9 point in time in my tenure on the Post Office 10 prosecutions issues. There was a discussion which was 11 between myself and the Chairperson of the Post Office 12 around the key issues that were concerning her at the 13 time. This was the standard type of questioning that 14 I had for each Board member that I interacted with, and 15 her response was that it was just some challenges 16 dealing with the subpostmasters and their union. 17 Q. We're going to come to that. I assume you're talking 18 about a meeting with Alice Perkins? 19 A. Correct. 20 Q. We'll come to that shortly. Can we please bring up 21 UKGI00045855. This is a letter to you dated 4 October 22 2011, it's your letter of appointment. If we could turn 23 to page 3, please, to paragraph 3b. It says: 24 "As Chairman, your key role will be to provide high 25 level strategic direction to the Shareholder Executive." 147 1 We don't need to go through all of them. One of 2 them is to: 3 "develop a constructive, frank and open relationship 4 with the Chief Executive, holding him/her accountable 5 for the effective implementation of decisions ..." 6 Did you consider that to be a personal 7 responsibility, to hold the Chief Executive to account, 8 in respect of his duties in relation to risk management? 9 A. Most certainly. 10 Q. That can come down. Thank you. My last sort of general 11 topic on Post Office Limited as an arm's-length body. 12 Please could we bring up your witness statement at 13 page 3, paragraph 10. Thank you. You say at 14 paragraph 10: 15 "The Secretary of State for [the Department of 16 Business, Innovation and Skills], at the time, had 17 ultimate responsibility for the ... shareholdings in 18 Royal Mail Group and [Post Office Limited]. The 19 Secretary of State could not delegate his 20 responsibilities." 21 When you refer to the Secretary of State's 22 responsibilities here, what are you actually referring 23 to? 24 A. In respect of arm's-length bodies. 25 Q. Could you define precisely what the responsibilities 148 1 are? 2 A. We did not, no, those were defined either in practice, 3 or -- 4 Q. Sorry, what I mean is when you're here in your witness 5 statement saying "had ultimate responsibility", and 6 you're saying the Secretary of State could not delegate 7 his responsibilities, my question is: precisely what 8 responsibilities are you referring to when you write 9 these sentences? 10 A. I can't recall the distinction between whether they were 11 actually delineated in writing but, obviously, the rules 12 and the overview of how an arm's-length body, such as 13 the Post Office would have been run and managed would 14 have been set out either in emails or statutorily. 15 Q. Let me ask it another way: when you were writing this 16 part of your statement, what did you think was required 17 of the Secretary of State when you said that the 18 Secretary of State could not delegate his 19 responsibilities? 20 A. Well, I believe that the Shareholder Executive was 21 acting as his agent, if you like, that may be the wrong 22 legal term, in ensuring that he was -- he or she, but it 23 was a he -- were aware of all of the key issues that 24 needed to be elevated to his level, so that issues that 25 were important, either politically or in the context of 149 1 funding, et cetera, were made very clear to him. 2 Q. If we look, maybe, at UKGI00044314, please. You refer 3 to this in your witness statement as the ShEx Handbook. 4 At page 2, please, right at the bottom, so "The 5 Shareholder Executive model of corporate governance": 6 "The Government intends to operate as an intelligent 7 and informed shareholder." 8 Then, if we go over the page, please. "How the 9 Government intends to operate as a shareholder", it 10 says: 11 "The basic shareholder model as set out below 12 summarises the key actions of the shareholder ..." 13 Then in the box, we don't have to read it all but 14 you'll see it there, the final one is: 15 "The shareholder monitors the performance of the 16 business to satisfy itself that the strategic plan is on 17 track and ensure that any interventions required are 18 well informed and appropriate." 19 Are these the responsibilities you were referring 20 to? 21 A. Yes, they certainly were among the key responsibilities. 22 Q. If we can turn the page, please, we have what the 23 Government expects of its businesses: 24 "Principle 1. Businesses should seek an honest, 25 open and ongoing dialogue with the Government as 150 1 shareholder. 2 "Principle 2. Businesses should operate a 'no 3 surprises' policy ensuring that the Government as 4 shareholder is informed well in advance of anything 5 potentially contentious in the public arena." 6 As an intelligent and informed shareholder, should 7 the Government have taken steps to satisfy itself that 8 the businesses it owned were following these principles? 9 A. Well, the Government was -- through Martin Donnelly, the 10 Permanent Secretary, was assured on an ongoing basis as 11 to where we might or might not have been performing 12 under these requirements, these principles. 13 Q. Let's frame it in another way. If the Shareholder 14 Executive is, I think using your words, acting as an 15 agent of Government -- I think that's what you said 16 earlier? 17 A. Yes. 18 Q. You're nodding. Yes. When it says, "What government 19 expects of its businesses", let's consider "business" 20 there to be Post Office? 21 A. The business to be? 22 Q. The Post Office? 23 A. Yes, correct. 24 Q. Do you think, as the Shareholder Executive in managing 25 the Government's shareholding function, that the 151 1 Shareholder Executive should have taken steps to see 2 that, for example, the Post Office was complying with 3 principles 1 and 2? 4 A. There was no reason to doubt that an honest, open and 5 ongoing dialogue was not taking place between Post 6 Office Executives and the Shareholder Executive. 7 Q. That's a slightly different answer. That's to whether 8 or not what actually happened. I'm asking as a matter 9 of principle whether you accept that the Shareholder 10 Executive, as acting as an agent of government, as you 11 said, owed steps to satisfy itself that principles 1 and 12 2 were being complied with? 13 A. I agree completely. 14 Q. That can come down. Thank you. Can we go back, please, 15 to your witness statement, page 3, paragraph 11. You 16 say that: 17 "The Secretary of State, in my view, cannot have 18 been expected to have taken any more of an active role 19 in overseeing the day-to-day operations of Royal Mail 20 Group and/or [Post Office]. This reflects usual 21 practice -- the role of a shareholder is not to manage 22 the operations of the company." 23 There's a difference, isn't there, between managing 24 the operations of a company on the one hand and 25 overseeing the management of a company's operation on 152 1 another? 2 A. There is. 3 Q. You go on. You say: 4 "Nor was it the function of [the Department for 5 Business, Innovation and Skills] (or ShEx, as 6 an organisation within [that Department]) to be 7 responsible for the operations of Royal Mail Group 8 and/or [Post Office Limited]. Responsibility for the 9 company's operations was with the [Post Office] Board, 10 comprised of senior management and independent 11 Non-Executive Directors, including a representative of 12 the Secretary of State, through ShEx, the Shareholder 13 NED." 14 Breaking that down, you say it wasn't the 15 Department's role to be responsible for the operations 16 of Royal Mail or Post Office. Is that your evidence? 17 A. Correct. 18 Q. You then say that the responsibility for the company's 19 operation was with the Post Office Board? 20 A. Yes. 21 Q. You say that the Post Office Board was comprised of 22 Executive Directors and independent Non-Executive 23 Directors -- 24 A. Yes. 25 Q. -- and the responsibility for the company's operation 153 1 therefore lay with those Directors? 2 A. Yes. 3 Q. One of those Directors was the Shareholder Non-Executive 4 Director, correct? 5 A. Correct. 6 Q. That was a Shareholder Executive official, correct? 7 A. Correct. 8 Q. You describe that person as the Secretary of State's 9 representative? 10 A. Yes, correct. 11 Q. Why, then, do you say that ShEx and the Secretary of 12 State did not have responsibility for the day-to-day 13 running of the company? 14 A. Well, what I said was they don't get involved on 15 day-to-day decisions nor the normal requirements of 16 management in deciding on investment policy, et cetera. 17 This is an issue where the Secretary of State, through 18 the full time appointment of a ShEx representative of 19 the Board, ensured that adequate oversight and review 20 was happening. 21 Q. Yesterday, the Inquiry heard evidence from both Mark 22 Russell and Robert Swannell. They agreed that, as 23 an arm's-length body, the Minister was ultimately 24 responsible and accountable for the operations of Post 25 Office; would you agree with that? 154 1 A. I would. 2 Q. I want to look at some of the specifics now in the 3 oversight of Horizon. Could we look at page 20 of your 4 witness statement, please, paragraph 45. Thank you. At 5 45, you say that you've been asked -- that's asked by 6 the Inquiry -- whether the ShEx Board was informed or 7 had knowledge of the following matters and in the 8 subparagraphs there's listed various matters, including 9 some documents that the Inquiry sent you. You see 10 there's the Second Sight Interim Report at 45.3; then 11 the Clarke Advices; and 45.7 there's Deloittes Project 12 Zebra Report. 13 If we turn over the page, please, and have 14 paragraphs 46 and 47 on screen, if we can. Thank you. 15 You say: 16 "The matters and documents referred to at paragraph 17 45 ... were not raised with the ShEx Board." 18 A. That's correct. 19 Q. Now, in paragraph 47, you refer to a conversation with 20 Richard Callard about the instruction of Deloitte. I am 21 going to come to that later. Excluding that, were any 22 of the matters or documents referred to in paragraph 45 23 raised with you personally outside of the Board? 24 A. No, they were not. 25 Q. At 46, if we can just go back up, please, you say: 155 1 "What information is passed to the ShEx Board is 2 dependent on what ShEx Team and the ShEx CEO deem to be 3 an issue that required the attention or advice of the 4 ShEx Board. It is now clear that the documents referred 5 to raised serious issues in relation to the functioning 6 of the Horizon system, and the prosecution and treatment 7 of subpostmasters. I think that both ShEx and the Board 8 should have been made aware of these very significant 9 matters." 10 That can come down. Thank you. 11 It may seem an obvious question but can I ask you 12 why you believe that the ShEx Board should have been 13 made aware of those documents and matters? 14 A. It became clear, in hindsight, reading the documents 15 now, that there was a lot of -- there were many issues 16 happening in the context of that relationship with the 17 subpostmasters and, indeed, although not in absolute 18 volume terms, a huge number of issues being raised in 19 Parliament. Though we should have had a mechanism that 20 would have allowed us to be aware of just those factors. 21 Whether it would have led to a different advice is 22 something I couldn't comment on. 23 Q. I mean, is it the fact that the matters raised go to the 24 heart of the operations of Post Office Limited? 25 A. They -- 156 1 Q. The significant issues, for instance. 2 A. Yes, they do. 3 Q. On that basis, they posed a significant risk to the 4 business? 5 A. Yes, and that's only evident on hindsight. For example, 6 the Linklaters report, which mentioned a risk of 7 100 million, 0 to 100 million in settlement risk, which 8 was a significant number in reference to the P&L of the 9 Post Office. That should have been flagged. 10 Q. Can I ask you how often would you meet people from the 11 Post Office team within the Shareholder Executive? 12 A. My role was to meet with the Chairperson, which would 13 be, at most, twice a year. 14 Q. Let me clarify the question, sorry. I'm talking about 15 within the Shareholder Executive those persons working 16 on the Post Office as an asset? How often did you -- 17 A. Most of my time was spent with the Chief Executive, 18 Stephen Lovegrove, followed by Mark Russell, and the 19 individual team members only as issues arose. So the 20 leader of the team, Susannah Storey or, in later cases, 21 Roger, the -- it was more frequent but on, I should say, 22 an unplanned basis. 23 Q. When you say "as issues arose", what issues are you 24 referring to? 25 A. Well, I'm referring in the main to Royal Mail issues at 157 1 the time. 2 Q. So Royal Mail issues, so the company had separated in 3 April 2012 -- 4 A. Correct. 5 Q. -- is that correct? 6 A. Correct. 7 Q. The Secretary of State maintained a shareholding until 8 I think it was the next year; is that right? 9 A. Correct. 10 Q. Is your evidence that the Post Office team were dealing 11 with Royal Mail issues still? 12 A. The -- no. I'm misleading you. The issue was that the 13 dominance of the Royal Mail issues in the context of 14 what the Shareholder Executive was reviewing and 15 following up with, it became a major exercise. 16 Q. For example, you mentioned Susannah Storey earlier. 17 What issues did you discuss with Susannah Storey? 18 A. Well, things were discussed, really, through the Chief 19 Executive as to her experience on the Royal Mail Board 20 and the Post Office Board, and I believe Mark referred 21 to it yesterday, Mark Russell, when he said it was not 22 an easy relationship. 23 Q. Can you recall any issues relating to the Post Office as 24 a business, which you were aware of through Susannah 25 Storey? 158 1 A. No. 2 Q. Let's look at your first Board meeting as Chair, please. 3 It's UKGI00045852. We see 7 March 2012, you're listed 4 as in the Chair. If you could go to the bottom, please, 5 of the document. There's an introductory paragraph, and 6 it says: 7 "Patrick informed the Board that he would step out 8 if there were any discussions on the Royal Mail side 9 relating to Bank of Ireland as he was Deputy Governor." 10 Did you ever have to do that: step away from 11 a discussion on Royal Mail because of your ongoing 12 relationship with the Bank of Ireland? 13 A. Yes, of course it should say Post Office, because the 14 relationship between Bank of Ireland on the Financial 15 Services side was with the Post Office, and I do recall 16 at least on one occasion recusing myself. 17 Q. Do you recall what the issue was about? 18 A. The financial arrangements of the transaction. 19 Q. When you say "the transaction", is -- 20 A. The agreement between Post Office Limited and Bank of 21 Ireland to supply certain Financial Services products. 22 Q. If a person was raising with you an issue about Horizon, 23 which was the system that generated the data on which 24 Post Office put together its accounts and which it 25 provided information to its clients, would you have been 159 1 able to deal with that or consider it without being in 2 conflict? 3 A. Yes, indeed. I don't think it would have been in 4 conflict at all. 5 Q. Why do you think that? 6 A. Because the system -- the operation system through the 7 Post Office was not really related to the services 8 provided by Bank of Ireland. 9 Q. Are you aware of there being any reluctance or reticence 10 within the team to discuss issues with you regarding 11 Post Office because of your relationship with the Bank 12 of Ireland? 13 A. None. 14 Q. We mentioned earlier Susannah Storey and the appointment 15 of the Shareholder Non-Executive Director. Are you 16 aware how Susannah Storey was selected for that role? 17 A. That was the choice of the Chief Executive. 18 Q. Are you aware of whether anyone -- well, let's say the 19 Chief Executive considered her suitability for the 20 appointment, or what consideration he applied? 21 A. It had already occurred by the time I started so 22 I didn't -- it didn't arise. 23 Q. Could we look, please, at page 19 of your statement, 24 paragraph 43. You say: 25 "Following [Post Office Limited's] separation from 160 1 Royal Mail its status was raised to priority level. 2 [Post Office Limited] had been a division of a major 3 asset, and now it was a major asset in its own right, 4 receiving substantial levels of funding from the 5 government and so it was wholly appropriate for ShEx to 6 take a more direct role in its governance." 7 When you say it was raised to priority level, what 8 did that mean in practical terms? 9 A. In practical terms, it probably meant that it was more 10 visible within the portfolio -- 11 Q. Visible to whom? 12 A. Visible to the Shareholder Executive management and, in 13 respect of peer reviews, for example, within the 14 Shareholder Executive, it would have been under much 15 greater scrutiny than it had been as a division of Royal 16 Mail. They're the points that strike me most of all, 17 I think. 18 Q. Was it raised as a priority for the Board? 19 A. No. 20 Q. Why not? 21 A. Because -- in the sense that it was reported on 22 occasionally in the time that I was in charge, it -- 23 there was no change in intensity, in the sense that Post 24 Office was not perceived at that time to be an issue of 25 concern, of great concern. 161 1 MR STEVENS: Sir, that's probably a good time for the 2 afternoon break. If I could ask that we come back at 3 3.30, I'd be grateful. Thank you, sir. 4 (3.20 pm) 5 (A short break) 6 (3.30 pm) 7 MR STEVENS: Sir, can you see and hear me? 8 SIR WYN WILLIAMS: Yes, I can, thank you. 9 MR STEVENS: Please can we bring up UKGI00036711. It's 10 minutes of a Board meeting on 8 May 2012. You say in 11 your witness statement that you're satisfied that these 12 minutes accurately record the discussions at the various 13 meetings. 14 A. Correct. 15 Q. This is the first meeting after Post Office Limited 16 becomes independent of Royal Mail; is that right? 17 A. Correct. 18 Q. So in terms of, as we discussed before, the governance 19 shifted in that, for the first time, the Shareholder 20 Executive and the Secretary of State were directly -- 21 had a direct line, essentially, into Post Office 22 Limited? 23 A. Correct. 24 Q. And is it fair to say that, previously, as Royal Mail 25 Group, as part of Royal Mail Group, the Shareholder 162 1 Executive's visibility of the risk to Post Office 2 Limited were not clear, shall we say? 3 A. That would be absolutely a fair description. 4 Q. If we turn to the page 2, please. If we go down to 5 Royal Mail, thank you, item 4, we see Royal Mail is 6 discussed. Over the page, please. It talks about State 7 Aid approval for Post Office funding. Then 4.2: 8 "Board members discussed a transaction, specifically 9 points around a trade sale [versus] IPO; employee shares 10 and the mutualisation consultation for the Post Office; 11 and union interest." 12 It doesn't appear that there was any discussion, or 13 a deep dive, as it were, into the risks of Post Office 14 Limited as an asset in itself -- 15 A. Correct. 16 Q. -- or in fact to the corporate governance of Post Office 17 now as an asset? 18 A. It would have been too early in the life of the Post 19 Office as an independent business to do that, at that 20 time. 21 Q. Do you think, at some stage, that should have been done 22 by the Shareholder Executive -- 23 A. Yes. 24 Q. -- and by the Board? 25 A. Yes. 163 1 Q. How long should it have waited until it -- 2 A. Oh, only 18 months after establishment. 3 Q. Why at this stage, when it was a business that had been 4 running for a while, in terms of the actual business of 5 the Post Office, why was then not the ideal time to 6 analyse what the risks were to the business? 7 A. The structure of the spin-off of the Post Office from 8 Royal Mail was one where it was business as usual for 9 the Post Office. There were no major changes in its 10 operating procedures. 11 Q. Wasn't this a time when, after not having visibility of 12 the Post Office, ShEx now had visibility and could 13 understand the risks that that business had? Why didn't 14 it do that? 15 A. Well, as I said, I think some period of time after its 16 official foundation would have been more appropriate. 17 Q. Would you accept that the Board should have done risk or 18 a deep dive of a risk assessment of Post Office Limited 19 within the first six months, say, of separation? 20 A. There were no reasons at that point of time, visible to 21 the Board or to the ShEx Executive, that would suggest 22 that such a deep dive was required. 23 Q. How could the Board satisfy itself that that was an 24 appropriate course of action without having done a deep 25 dive of what was effectively a new relationship with 164 1 an asset? 2 A. Well, you'll have seen the split of the categorisation 3 of the various parts of the portfolio and, at that point 4 in time, we had just appointed the first Shareholder 5 Executive representative to the Post Office Board. That 6 person and the whole organisation needed time to bed 7 down. 8 Q. On that point, can we look, please, at UKGI00019348. 9 These are minutes of the Post Office Limited Board 10 meeting on 23 May 2012. Can we turn, please, to page 4. 11 If you can go down, thank you. 12 The Inquiry asked you to consider the entry at 13 POLB12/60 and your evidence was, or is, that you didn't 14 see these Board minutes at the time. 15 A. Correct. 16 Q. If we look, it says Susannah Storey here is outlining 17 the reasons for representation of ShEx on the Board of 18 Post Office Limited and we see that she says at the end 19 of paragraph (a): 20 "She clarified that she would not be sharing the 21 Board papers with her colleagues at [Shareholder 22 Executive]." 23 Was that something you were aware of? 24 A. No. 25 Q. Given the role of the Shareholder Non-Executive Director 165 1 was so important in oversight of Post Office Limited, 2 should the Board of ShEx have been aware of this 3 position? 4 A. It would have been perfectly reasonable for the 5 Chairperson to have requested that Board papers did not 6 go outside the Boardroom whether it was for the Post 7 Office or any other public company. However, there was 8 nothing to prevent Susannah from communicating the 9 essence of what the Board meeting and what the Board 10 papers were saying. 11 Q. But why wasn't you, as chair, and the Board aware of 12 what appears to be quite a significant self-imposed 13 restriction on sharing Board papers? 14 A. This is nothing unusual in the context of normal Board 15 practice. 16 Q. So is it your evidence that the Board of ShEx didn't 17 need to know about this? 18 A. At that point, no. 19 Q. So how could the Board understand the flow of 20 information from its assets, such as Post Office 21 Limited, to the Board? 22 A. Through Susannah as the representative. 23 Q. What steps did you take to satisfy yourself that 24 Ms Storey was discharging her role as Shareholder NED 25 effectively? 166 1 A. She was highly regarded within the Shareholder 2 Executive. She was one of the most experienced members 3 of staff at that level and, of course, much of this too 4 would have been a learning experience for her, as well 5 as everybody else appointed to such positions. 6 Q. Shortly after that meeting, Second Sight were instructed 7 to address concerns raised by Members of Parliament in 8 June/July 2012. Were you aware of that at the time? 9 A. No. 10 Q. The MPs represented subpostmasters, some of whom had 11 been convicted on the basis of data generated by the 12 Horizon IT System; were you aware that there were such 13 convicted persons? 14 A. I was not. 15 Q. Second Sight's terms of reference were to consider and 16 to advise on whether there are any systemic issues 17 and/or concerns with the Horizon system including 18 training and support processes, giving evidence and 19 reasons for the conclusions reached, so effectively 20 an investigation into Post Office's front-end accounting 21 system; do you agree? 22 A. Yes. 23 Q. If Second Sight had found any issues with that, any 24 problems, that would have been significant to the Post 25 Office? 167 1 A. It would. 2 Q. Firstly, there would have been, or there could have 3 been, unsafe convictions if they'd found issues; do you 4 agree? 5 A. With the benefit of hindsight, absolutely. 6 Q. Secondly, the data on which Post Office produced its 7 accounts would possibly be unreliable. Would you agree? 8 A. There's always a possibility. That depends on the 9 impact of what the judgment was in the context of the 10 financial impact on the balance sheet and P&L of the 11 Post Office. 12 Q. At paragraph 31 of your statement you refer to meetings 13 of the Board on 11 July 2012 and the 12 September 2012 14 and you say there was no -- well, there was no reference 15 in those meeting minutes to the launch of the Second 16 Sight investigation. Why was such a significant issue 17 not raised with the Board; can you assist us with that? 18 A. Well, as I -- as I think -- again, with hindsight, it is 19 clear that these matters were believed to be business as 20 usual, and it was an internally sponsored inquiry. 21 Q. It might be a surprise to some that the Chair of the 22 body of ShEx with responsibility for overseeing Post 23 Office wasn't aware of the Second Sight review. With 24 hindsight, where do you think the problem lay in this 25 not being raised to the Board? 168 1 A. I believe that the modus operandi of the Post Office 2 Management team was the assumption that the system was 3 adequate and did not have systemic issues. It may have 4 been a self-reinforcing view that they took and their 5 approach to any review of the system as a consequence. 6 Q. Do you think you should have taken more interest in the 7 Post Office itself as an asset? 8 A. I think that interest grew significantly as time 9 progressed. But perhaps, with hindsight now, the answer 10 is probably yes. 11 Q. When did it grow, your interest? 12 A. It grew over the two years that I was -- two and a half 13 years that I was Chairman. 14 Q. What caused your interest to grow? 15 A. The size of the request for Government funding, the 16 nature of the political decisions around, sadly, not the 17 ones we're discussing here, but rather the issues of 18 Post Office representation around the country, the 19 ownership of last mile in delivery and postcodes. Those 20 issues became very important. 21 Q. So as you gained more interest and became more involved 22 can you help us with how you, as you say, in your 23 statement, remained unaware of issues such as the 24 prosecution of subpostmasters? 25 A. Can you say the question again, please? 169 1 Q. Yes, so as your interest grew and you took more of 2 an interest in Post Office Limited, can you assist us 3 with how, when you were discussing Post Office with 4 people, you apparently remained unaware of issues such 5 as prosecution of subpostmasters? 6 A. I think I said at the beginning that these issues were 7 regarded as business as usual, by Post Office 8 Management. In that sense, there was no evidence or 9 urgency around it, nor that indeed it might be severely 10 damaging. 11 Q. You referred to, in your statement, biannual meetings 12 with the Chair of Post Office, yes? 13 A. Correct. 14 Q. What was the purpose of those meetings? 15 A. My role in taking over the chairmanship was to bring 16 corporate experience to bear on the review of portfolio 17 companies. I'd had a lot of that experience in prior 18 roles as Chief Executive and subsequently Chief 19 Financial Officer of financial institutions. 20 We instituted what was called a fireside chat review 21 with the Chairpeople, where there was an attempt to 22 create an atmosphere that was non-threatening, so that 23 they could express, without fear of retribution, any 24 issue around their major concerns. The question 25 normally phrased was "What keeps you awake at night?" 170 1 It never came up in that context. 2 Q. Just to be clear, when you say concerns, is that 3 concerns in relation to the business or concerns in 4 relation to Post Office Limited or concerns in relation 5 to how ShEx was overseeing the business? 6 A. All of the above. 7 Q. You say -- we don't need to bring it up -- that in one 8 of the meetings with Alice Perkins -- sorry, sir, it's 9 page 14 paragraph 31.2, if you want to review it -- you 10 say that you remember Alice Perkins mentioning, almost 11 as a passing comment, that there was a small segment of 12 difficult subpostmasters and ongoing difficulties with 13 the union? 14 A. That's correct. 15 Q. Did you ask any questions about those difficulties? 16 A. I can't recall what the substance of the conversation 17 was but it was very much in the vein I've mentioned of 18 this is just business as usual, we're getting on with 19 it. 20 Q. Did you discuss, though, those issues with anyone at 21 Shareholder Executive? 22 A. Mark Russell and I had some conversations about the 23 effectiveness of the Post Office Management, which 24 was -- some of my concerns were that they could have 25 been doing a better job. 171 1 Q. Who within Post Office Management? 2 A. That's the chairperson and the CEO. 3 Q. So you had a conversation with Mark Russell about 4 whether they could have been doing a better job? 5 A. We -- and that is normal. We did this with all the 6 portfolio management team. 7 Q. What were your concerns with the Chair and the CEO? 8 A. I -- in particular in the context of the Chair, 9 an appointment which preceded my time in ShEx, I had 10 a concern that Alice's experience was not particularly 11 suitable to the role of chairing a business of this 12 nature. 13 Q. What were the basis for those concerns? 14 A. My personal experience. 15 Q. What about Paula Vennells? What were your concerns with 16 her? 17 A. No, those were more in the nature of the points raised 18 which led to a review of her performance later on. 19 Q. What were they? 20 A. I can't recall. 21 Q. When you were having meetings, these fireside chats, as 22 you described them, were you briefed by anyone at 23 Shareholder Executive prior to the chat? 24 A. Yes, by the portfolio responsible -- portfolio 25 individual responsible. 172 1 Q. As part of that briefing, did no one raise with you the 2 Second Sight review? 3 A. No, they did not. 4 Q. Let's move forward in the chronology. We have the 5 Second Sight Report that's published, the Interim Report 6 on 8 July 2013. My understanding of your evidence is 7 that this wasn't discussed at Board level? 8 A. That's correct. 9 Q. Your evidence is that you weren't made aware of it? 10 A. Correct. 11 Q. Were you made aware of the involvement of the CCRC in 12 investigating past convictions of subpostmasters? 13 A. I was not. 14 Q. I want to look at one matter in particular where you say 15 you do have some knowledge. Can we bring up, please, 16 page 20, paragraph 45 of your statement -- sorry, 17 page 21, paragraph 47. So we've been to paragraph 46 18 already, that's where you discuss your knowledge of 19 various documents. Paragraph 47 says: 20 "... I should add that I recall a conversation with 21 Richard Callard in which he referred to Deloitte having 22 been instructed to conduct a review to give assurance in 23 respect of concerns raised in Parliament. I recall 24 saying to him that I had experience of Deloitte, and 25 would recommend them." 173 1 In what context was that conversation with Richard 2 Callard? 3 A. He was the head of the team at the Shareholder Executive 4 with responsibility for Post Office and, in my normal 5 occasional conversation with those positions, those 6 people in those positions, I tried to impart some of my 7 knowledge of who would be the best people in the context 8 of an external review. It was at that point -- I had 9 never heard of Second Sight, never -- had no experience 10 of them. So I tried to press on him that the Deloitte 11 team would be best equipped to do the kind of deep dive 12 required to determine what the issues were. As it 13 turned out, they did a desktop review. 14 Q. Did you ask what the issues were, that were to be 15 investigated? 16 A. He mentioned they were around the Horizon system at that 17 time, the "systems", quote/unquote. 18 Q. Did he refer to the fact of subpostmasters being 19 prosecuted? 20 A. No, he did not, to my memory. 21 Q. You say that he was -- he said it was to review to give 22 assurance in respect of concerns raised in Parliament. 23 Did you continue to believe that it was business as 24 usual at this stage? 25 A. Yes, I did. 174 1 Q. Would you consider to be business as usual for 2 a business to face concerns raised in Parliament about 3 its accounting software? 4 A. It's highly unusual and, looking back on it with 5 hindsight, there was a level at which the inquiry, the 6 inquiries, or rather the issues, being raised by MPs, 7 had risen to a volume that should have been brought to 8 the attention of the Shareholder Executive in the first 9 place, and possibly to the Board after that. 10 Q. Well, if we bring up your witness statement, please, at 11 page 22, paragraph 50. 12 SIR WYN WILLIAMS: While that's being done, can you give me 13 some indication of the year in which you had the 14 conversation with Mr Callard, ie was it towards the end 15 of your period or some other time? 16 A. Yes, sir, it was towards the end of my period about 17 April time. 18 SIR WYN WILLIAMS: Yes, April 2014, yes. 19 A. Yes. 20 SIR WYN WILLIAMS: Fine. Thank you. 21 MR STEVENS: In these paragraphs, you're saying, you're 22 commenting, on things you would have handled differently 23 and giving reflections. In paragraph 50 you say, as 24 a leader point, you say: 25 "I believe that it could have been helpful for ShEx 175 1 board packs to have a schedule of significant issues 2 raised in Parliament relating to Government assets where 3 ShEx handled the shareholder role." 4 Well, the fact that Parliament was -- concerns had 5 been raised in Parliament was raised directly with you 6 by Richard Callard, why did that not set alarm bells 7 ringing as to the significance of this issue with Post 8 Office Limited? 9 A. Most probably because of the timing. In other words, 10 the reviews were just, in the case of Deloitte, 11 beginning, rather than at the end, and I had not had any 12 knowledge of the Second Sight Interim Report. 13 Q. Do you think, at this stage, you should have asked more 14 questions on the background to the issue? 15 A. With perfect hindsight, absolutely. 16 Q. Well, not with hindsight. If you're told that there are 17 concerns raised in Parliament about a business that the 18 Shareholder Executive is overseeing, do you think, with 19 the information you had at the time, you should have 20 asked more questions about it? 21 A. I think the level at which the number of questions being 22 raised -- it started in the single figures, and then 23 eventually rose to 47, I believe, by about this time; 47 24 is certainly a number that should have been raised. 25 Q. 47 what, sorry? 176 1 A. 47 specific questions in Parliament from different MPs 2 about the Horizon system. 3 Q. That's a slightly different question. I'm asking: at 4 the time, with what you knew, should you have asked more 5 questions of Richard Callard or the Shareholder 6 Executive Team, once you'd been told that Deloitte were 7 involved and there were concerns raised in Parliament? 8 A. At the time, I felt I addressed the issue 9 satisfactorily. 10 Q. Let's look at the Board Briefing, please. It's for the 11 Deloitte report. It's POL00028069. You've had a chance 12 to read this in preparing for your witness statement and 13 the Inquiry has seen it several times. I'll whistle 14 through the key points. Can we look at page 3, please, 15 and at the bottom, "Limitations and Assumptions". As 16 you said earlier, it's a desktop report. It says: 17 "... we have not validated whether Horizon has been 18 implemented or operated as described in the 19 documentation reviewed." 20 Second bullet point refers to "significant gaps 21 existing in the information available". 22 If we go over the page, please, you see it says that 23 the assumptions include that: 24 "The documents proffered are a complete and accurate 25 representation of the Horizon design." 177 1 Then, finally: 2 "Assertions made by [Post Office Limited] and 3 Fujitsu staff have been accepted as accurate without 4 corroboration or verification." 5 Those are quite significant assumptions, aren't 6 they? 7 A. They are. 8 Q. Can we turn to page 7, please. If we go down -- sorry, 9 stay there for the moment. Matter 3, the issue is: 10 "Baskets of transactions recorded to the Audit Store 11 are complete and 'digitally sealed', to protect their 12 integrity and make it evident if they have been tampered 13 with." 14 We don't need to go through all the detail but, if 15 we see the third bullet point down, the final sentence: 16 "This could allow suitably authorised privileged 17 staff in Fujitsu to delete a sealed set of baskets and 18 replace them with properly sealed baskets, although they 19 would have to fake the digital signatures ... 20 "We have not identified any document controls 21 designed to: 22 "Prevent a person with authorised privileged access 23 from deleting a digitally sealed group of data and 24 replacing it with a 'fake' group within the Audit Store 25 ..." 178 1 Then over the page at 8, please. Down to Matter 5, 2 "Balancing transaction process", it says: 3 "... an emergency process, accessible only to 4 restricted individuals in Fujitsu, which can create 5 transactions directly in Branch ledgers. This process 6 creates an identifiable transaction in the ledger, 7 verbally asserted by [Post Office Limited] staff to be 8 visible to subpostmasters in their branch reporting tool 9 but does not require positive acceptance or approval by 10 the subpostmaster. The use of the process has a full 11 audit trail, monitored by Fujitsu." 12 It goes on to say some various assertions. Then 13 finally, over the page, please, it refers again to the: 14 "Balancing transaction processes [that] are 15 controlled by Fujitsu via formal change control and 16 monitoring processes. An audit trail is retained over 17 the use of this process and, since 2008, when reporting 18 became easier, it is asserted by Fujitsu staff that the 19 audit trail is monitored by a Fujitsu department 20 independent of those with access to the function also in 21 Fujitsu. The degree of formality over this monitoring, 22 and its frequency, is unknown." 23 It goes on. 24 If this report had been put before the Board as, in 25 your evidence, you say it should do, what action do you 179 1 think would have been taken by the ShEx Board? 2 A. We would have pointed out that a desktop review in the 3 context of everything that had been written warranted 4 a full blown analysis of what was going on with the 5 system. 6 Q. When you say it warranted a full belong analysis, what 7 precisely do you mean? 8 A. It would mean going into a deep dive and audit of 9 transactions from start to finish, and the fallout or 10 implications of those actions, where there were, for 11 example, discrepancies. 12 Q. If the report was before the Board, we've heard from 13 witnesses -- I think you listened to yesterday's 14 evidence about the degree by which oversight was 15 exercised by the Shareholder Executive, I think people 16 referred to arm's lengthening or shortening, would this 17 report have led to a shortening of the arms, in terms of 18 oversight of -- 19 A. It most likely would have. 20 Q. I'll move on and look at a matter in your statement 21 about Shareholder Executive, page 12, paragraph 30, 22 please. You set out, in paragraph 30, the various 23 structures that were in place to oversee Post Office 24 which we turn to. I don't need to read out. 25 You say: 180 1 "... I believe that there was a governance structure 2 in place that provided an appropriate level of oversight 3 of [Post Office]." 4 Does that remain your belief? 5 A. It does. 6 Q. How do you reconcile that with the fact that you say the 7 Board weren't aware of the significant issues referred 8 to, that you say it should have been aware of? 9 A. Because the oversight function is a two-way process, 10 it's both bottom-up and top-down. We were in the 11 top-down role as the Shareholder Executive. The 12 bottom-up process of understanding the risks, the 13 importance of those risks, the significance of them, and 14 bringing them appropriately to the Post Office Board, 15 failed. 16 Q. Could we look, please, at UKGI00016718. This a Board 17 meeting on 16 July 2014 of the Shareholder Executive. 18 You're in the Chair and Robert Swannell, who gave 19 evidence yesterday, who became Chair in September, was 20 also in attendance, marked as RS, you're POS. If we go 21 down to "Risk Registers": 22 "The Board agreed that the revisions to the risk 23 register were a significant improvement." 24 It says at the end that: 25 "[You] summarised that the key aim of the risk 181 1 registers should be to provoke questions and cautioned 2 against further significant changes." 3 What significant changes were you cautioning 4 against? 5 A. I can't recall what was being proposed at the time but, 6 at this point, we had implemented the colour-coding and 7 the heatmap and that was best practice in industry at 8 the time. 9 Q. Were you satisfied with the process of risk management 10 in ShEx at this point? 11 A. At that point, yes. With hindsight, clearly there were 12 some shortcomings. 13 Q. Please can we bring up your witness statement at 14 paragraph 50. I want to look at some of the 15 recommendations that you suggest. It's page 22, sorry. 16 I should have said. We've been to paragraph 50 already. 17 This is where you say you believe it would be helpful 18 for the ShEx Board pack to have a schedule of 19 significant issues raised in Parliament. Do you think 20 that would add anything additional to a well-run risk 21 management process where risks were identified and 22 brought to board level? 23 A. It might. It may not. In the context of a risk 24 management system which cascaded the key issues to the 25 correct levels, it might have been an extra, additional 182 1 burden on top of that process, if it was working 2 effectively. However, here we have a situation where 3 the Government is at arm's length from the shareholder, 4 in other words is arm's length from the business, but we 5 have a responsibility on behalf of the owners of that 6 business, who are the citizens of this country, and 7 their representatives in Parliament, who, when they 8 raise issues of significance -- and that's the key 9 difficult item to define, what is significant and what 10 is not -- that process should -- the full circle should 11 occur, which brings it back into the realm of the 12 Government bodies charged with looking after those 13 investments. 14 Q. Does there need to be better communication between the 15 Department and -- sorry, let me rephrase that. 16 When you were there, did you think there needed to 17 be better communication on issues like that between the 18 Department and ShEx? 19 A. I never that the impression that I wasn't -- didn't have 20 sufficient time, or not discussing the right issues with 21 both the Permanent Secretary and the ministers. 22 Q. At paragraph 51, you -- 23 SIR WYN WILLIAMS: Before we get to 51, Mr Stevens, in terms 24 of the schedule of significant issues raised in 25 Parliament, I suppose the advantage of that is that it 183 1 takes away judgment about risks, ie if something is 2 significant enough to be raised in Parliament, it's 3 significant enough for you to pay attention to it. 4 A. Well, sir, I would expect there would be a healthy 5 tension between the risk register in Parliament and the 6 risk function in the underlying businesses. 7 SIR WYN WILLIAMS: Exactly so. Yes. Sorry, Mr Stevens. 8 MR STEVENS: Not at all. Thank you, sir. 9 Paragraph 51, you say: 10 "In addition, I would like to have raised as a query 11 at ShEx board level the way in which ShEx Teams received 12 and challenged information received from Government 13 assets, as I believe it is now clear that there were 14 deficiencies in information flow within [Post Office 15 Limited] and up to ShEx." 16 What type of queries did you have in mind when you 17 were drafting this statement? 18 A. Well, I'm referring to the risks, the whole Horizon 19 issues, and whether these were being surfaced at the 20 right levels in the underlying asset, in this case Post 21 Office. So corporate practice, I might add, was in 22 constant change in the previous 10 years to this, where 23 a lot of risks were inadequately addressed in many 24 corporations. You only have to look at the failures, 25 but we won't go there, of public corporations. This was 184 1 an ongoing exercise to improve how you raised the issues 2 and who signed off on raising those issues, so there was 3 accountability for raising the issue and being held 4 accountable that the issue was properly addressed in due 5 course. 6 Q. So if you were thinking about what chairs of businesses 7 or bodies should do in future, what type of queries they 8 should be asking, what springs to mind? 9 A. Well, Boards are entirely dependent on management, and 10 the experience of the Board members. It becomes 11 a really critical issue, in the case of the Post Office 12 Board, whether they had the right mix of skills to 13 properly challenge internal audit, legal, risk 14 management, on the issues, and that is, of course, where 15 some of the weaknesses can appear. 16 Q. The Inquiry will hear in the coming weeks from witnesses 17 who make other recommendations. One suggestion that 18 will be made is that there should be a change in the law 19 to empower a minister to become directly involved in the 20 decision making of the board of a company, such as Post 21 Office. What would your view of that be? 22 A. I think my view is that ministers have total authority 23 right now to investigate anything they wish to look at 24 and it might be superfluous. 25 MR STEVENS: Sir, that concludes my questions. I think 185 1 there are two sets of Core Participant questions, one 2 from -- how long? 3 Five minutes from Howe+Co and ten minutes from Hodge 4 Jones & Allen. That should bring us to a close within 5 time. 6 SIR WYN WILLIAMS: Good. So I shall look forward to the 7 discipline of the advocates in ensuring that, 8 Mr Stevens. 9 Questioned by MR JACOBS 10 MR JACOBS: We act for Alan Riddell, who is a subpostmaster 11 from Sunderland, and he has travelled down here today 12 with Jean Smith. His wife Carol, who is watching, 13 I understand, remotely is unable to attend today. Now, 14 they were involved with the East Boldon Post Office, and 15 their member of Parliament, Stephen Hepburn, wrote to 16 Ed Davey as a minister in February 2012, and they say 17 they never received a proper reply beyond simple 18 acknowledgement. 19 Now, you say at paragraph 36 of your statement that 20 you had no involvement in this particular case. At 21 paragraph 38, you say: 22 "The messaging from Post Office through the ShEx 23 Team was that Horizon was robust, POL was addressing 24 matters including by way of the Second Sight Review and 25 the ShEx team considered that this was an operational 186 1 matter for POL." 2 Is that your understanding of where we were -- 3 A. That's correct. 4 Q. -- at the time. So it follows then, doesn't it, that it 5 was your understanding that the ShEx team was informed 6 and instructed by POL, Post Office, in relation to 7 complaints that were escalated, or being attempted to be 8 escalated, to ministers through MPs? 9 A. I would not have had any sight of those issues. 10 Q. Yes. But what you've said is that it was because of the 11 messaging from POL, which was being communicated to the 12 Minister via ShEx. So you were aware of the messaging 13 from POL, weren't you? 14 A. Yes, that was a normal -- this is, in effect, a sort of 15 dual mandate for the Shareholder Executive to 16 communicate back to the Minister and to help assist the 17 arm's-length business with that exercise. 18 Q. What I want to ask you then is, in relation to 19 paragraph 37, Mr O'Sullivan you say: 20 "If the issues being raised by subpostmasters with 21 Horizon and the associated ministerial complaints had 22 been flagged as significant or as a significant issue by 23 the ShEx team, I would have expected to have had sight 24 of it." 25 Is that your understanding? 187 1 A. That's correct. 2 Q. So what sort of complaint made by a subpostmaster or 3 subpostmistress communicated through a Member of 4 Parliament would have amounted to a sufficiently 5 significant issue for you to get involved, 6 Mr O'Sullivan; what would it have taken? 7 A. The reality in these situations is that it might have 8 been communicated on the basis of complaints about the 9 effectiveness or rather the usefulness of the IT system. 10 That would be a normal operating issue, not one for the 11 Board. 12 Q. So that sort of complaint would get through to you? 13 A. It would not, normally. 14 Q. What would get through to you, was my question? 15 A. Well, it's very clear now, with hindsight, that, as the 16 issues of complaints arose about the process used with 17 the subpostmasters to prosecute them and to prosecute 18 them as part of the Post Office's remit, which was 19 different than handing to it an external counsel to do 20 it, that sort of issue would have been -- should have 21 been raised. 22 Q. Should have been. But what you said in your statement 23 is that complaints, ministerial complaints, if they were 24 flagged as a significant issue by ShEx, those are the 25 ones you would have expected to have sight of. I'm not 188 1 talking about with hindsight; I'm talking about back in 2 2012 -- 3 A. Yes. 4 Q. -- and thereafter. What was a significant issue that 5 would have led to you having sight -- 6 A. At that time, a threat to the financial performance of 7 the Post Office. 8 Q. So there's nothing, really, it seems, that 9 a subpostmaster could have done to have gone over the 10 heads of the Post Office, to the owner of the company, 11 to the Minister, there's nothing that really would have 12 got to your attention; is that what you're saying? 13 A. It's difficult to see how that might have happened but 14 that's hence my recommendation that there would be 15 a risk register within Parliament to -- back to the 16 owner. 17 Q. Do you accept, then, I think it follows, that when 18 subpostmasters such as my clients who sit behind me, 19 when they sought to escalate their cases to the 20 Minister, via their Members of Parliament, through the 21 democratic process, it was the Shareholder Executive who 22 blocked those attempts, wasn't it? 23 A. No, I would not agree with that. 24 Q. Well, your statement says that these were considered to 25 be operational matters because of the messaging from 189 1 POL. So they didn't get through. 2 A. But in the context of the Post Office Board, who had the 3 responsibility to determine the significance of these 4 issues, along with management, executive management. It 5 was not ShEx's role to second guess at that point what 6 the POL Board was doing. 7 Q. You will no doubt have been following the evidence in 8 the Inquiry -- 9 A. Correct. 10 Q. -- and you will have heard perhaps the evidence in the 11 Human Impact hearings from subpostmasters? 12 A. Yes, and like everybody else, I regret them deeply. 13 Q. These are all significant matters, aren't they, that 14 everybody has raised, all the subpostmasters? 15 A. They are indeed. 16 Q. So these issues were in the public domain. Do you 17 accept that, when subpostmasters tried to use the 18 democratic process -- MP, Minister -- to escalate their 19 complaints, the Shareholder Executive should have let 20 them do that, should have let the Minister -- 21 A. The Shareholder Executive did not stop the complaints 22 from Parliament reaching either the ministers or the 23 Post Office Board. 24 Q. Well, they advised ministers that these were contractual 25 and operational matters? 190 1 A. Contractual in the context of the day-to-day operations 2 of the business. As the significance of them grew, 3 based on the circumstances, independent judgement at 4 that time might have judged differently as to how 5 operational they were or how significant they were. 6 Q. Isn't the reality of the matter that, if the Shareholder 7 Executive had said, "Our advice is these are probably 8 contractual matters, probably operational matters, but 9 these appears to be significant matters and the Minister 10 should look at them if the Minister feels that that 11 would be the right thing to do", that's the advice you 12 should have given, isn't it? 13 A. If we had had the information, absolutely. 14 Q. You no doubt accept, then, that the Shareholder 15 Executive, in not giving that advice, failed 16 subpostmasters who tried to escalate their cases to the 17 Minister? 18 A. I respectfully disagree. I repeat that the issue is 19 what information the Shareholder Executive had to be 20 able to make those judgements as to complexity, 21 importance or significance from a Post Office 22 perspective. 23 MR JACOBS: Thank you. I don't have any further questions 24 for you. 25 Questioned by MR HENRY 191 1 MR HENRY: Mr O'Sullivan, you were appointed in 2011. Can 2 you help us when that was? 3 A. I believe it was October. It's on the appointment -- 4 the appointment letter from my predecessor. Let me have 5 a look. 6 Q. Let's take it as October, then, Mr O'Sullivan. So that 7 would be October 2011. 8 SIR WYN WILLIAMS: I think, Mr Henry, just to help, his 9 witness statement says appointed October 2011, started 10 March 2012. 11 MR HENRY: Thank you very much, sir. 12 So October 2011, coincidentally, there was 13 an article in Computer Weekly which said 85 14 subpostmasters seek legal support in claims against the 15 Post Office computer system. 16 Throughout this Inquiry, we have seen, from inside 17 the Post Office -- and obviously not necessarily ShEx 18 because that was different -- but inside the Post 19 Office, an obsession with the media and how the plight 20 of the subpostmasters is being portrayed in the media. 21 Were you aware of that background? 22 A. No, I was not. 23 Q. So it follows that, before your appointment, the six 24 stories in Computer Weekly -- I can go through them, if 25 you like -- the BBC News programmes, et cetera, 192 1 et cetera, none of that permeated your consciousness? 2 A. Correct. 3 Q. During your tenure, which was from March 2012 to 4 September 2014, we've got ten stories in Computer 5 Weekly; you were presumably not made aware of those 6 either? 7 A. That's correct. 8 Q. Right, could we go to UKGI00016739, and while that is 9 being put up, you would accept, sir, would you not, that 10 the vital thing in any flotation is that the listing 11 particulars in the prospectus are completely accurate, 12 that you get a warts and all -- forgive that 13 expression -- but a warts and all picture of the 14 business so that anybody who wishes to subscribe or take 15 up shares is fully acquainted with proper risk? 16 A. I agree. 17 Q. Right. So this is a ShEx Board meeting of 13 March 2013 18 and at page 17 of 39 we go to the proposed flotation of 19 RMG, and it's noted that: 20 "A number of critical transaction 'enablers' have 21 been confirmed in the last two months." 22 I omit words, and then further down we can see, if 23 we go to number 3: 24 "On the basis of this work we are now in a position 25 to recommend that: 193 1 "We should pursue a sale of shares. 2 "We should prepare for an IPO in autumn 2013." 3 Then over the page at page 18 we have "Key risks" 4 and we've got "Industrial relations", this is under 5 paragraph 5, "Financial performance"; "Investment 6 appetite"; "Market Economic Conditions"; "Regulation". 7 Then going over to page 19 internally but 18 on the 8 document itself, we've got at paragraph 6 at the top of 9 the page: 10 "These risks are significant and there remains 11 a strong possibility that one or more could materialise; 12 we are continuing to assess contingency options should 13 this be the case. However, at this stage we (and [the 14 Union Bank of Switzerland]) remain of the view that 15 a sale should be feasible from autumn 2013." 16 Now, the position, as you say, however -- if I may 17 be forgiven for making an observation -- improbable it 18 is, that you had no idea about the noise, as it has been 19 contemptuously described, generated by the 20 subpostmasters, but the position is that the risk of 21 historical prosecutions, of sending innocent people to 22 prison, appears nowhere in this document. 23 A. That's correct. 24 Q. You would surely agree with me that, if that had been 25 a known risk, it would have killed the flotation 194 1 completely? 2 A. I couldn't -- I couldn't necessarily agree with that 3 because -- 4 Q. Why not? 5 A. -- the analysis would and the counter -- the rebuttal 6 might have been sufficient to mitigate what was 7 perceived at that time as an unlikely event. 8 Q. So, in other words, it would be compounded because there 9 would be, therefore, a false denial of accountability 10 and, down the line, there would be, when this all blew 11 up, there would no doubt be recriminations that it had 12 been wrongly priced? 13 A. If you -- the Board was entitled to look at the 14 Linklaters, I believe, review, which categorically 15 stated that the probability of loss from the 16 postmasters' actions was low, although it could be 17 100 million, was the number. That should have been 18 stated. 19 Q. Categorically is somewhat overstated. It was a very, 20 very highly caveated report, was it not? 21 A. Well, in reading it post-the event, yes. 22 Q. Yes. May I ask you, were you aware that people from 23 your Department, people from ShEx, were trying to remove 24 what were perceived to be adverse or critical remarks 25 about Horizon from the prospectus? 195 1 A. I was not. 2 Q. So, therefore, it follows that you cannot have been 3 aware that the Chief Executive Officer of the Post 4 Office, when the officials at ShEx had failed, 5 intervened and actually had what was perceived to be 6 damaging and critical material of Horizon removed from 7 the prospectus? 8 A. I was not aware of that. 9 Q. That would be, on any view, given what we now know, 10 contrary to the whole principle of candour and 11 transparency so far as risk; do you agree? 12 A. You could reach that conclusion. 13 MR HENRY: I'm grateful. Thank you. 14 SIR WYN WILLIAMS: Thank you, Mr Henry. 15 Thank you to everyone for bringing this afternoon's 16 proceedings to a timely close. I'm grateful to you. 17 I'm also grateful to you, Mr O'Sullivan, for making 18 your witness statement and for coming to answer 19 questions at the Inquiry this afternoon. 20 THE WITNESS: Thank you, sir. 21 SIR WYN WILLIAMS: Right. So we won't sit tomorrow and we 22 will resume on Friday -- 23 MR STEVENS: That's correct, sir, yes. 24 SIR WYN WILLIAMS: -- I take it, Mr Stevens? 25 MR STEVENS: Sorry, sir. Spoke over you, then. 196 1 SIR WYN WILLIAMS: No, no. I take it at 9.45 on Friday? 2 MR STEVENS: Yes, 9.45, thank you. 3 SIR WYN WILLIAMS: Fine. Thank you all very much. 4 (4.27 pm) 5 (The hearing adjourned until 9.45 am 6 on Friday, 12 July 2024) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 197 I N D E X THOMAS KNUT GLENN COOPER (affirmed) ...........1 Questioned by MS HODGE ........................1 Questioned by MR MOLONEY .....................99 Questioned by MR HENRY ......................103 Questioned by MR STEIN ......................118 Questioned by MS SHAH .......................125 Further questioned by MS HODGE ..............128 Questioned by SIR WYN WILLIAMS ..............134 PATRICK HENRY PIERCE O'SULLIVAN (sworn) .....136 Questioned by MR STEVENS ....................136 Questioned by MR JACOBS .....................186 Questioned by MR HENRY .....................191 198