1 Tuesday, 1 October 2024 2 (10.00 am) 3 MR BLAKE: Good morning, sir. 4 SIR WYN WILLIAMS: Good morning. 5 MR BLAKE: This morning we're going to hear from 6 Mr Staunton. 7 HENRY ERIC STAUNTON (sworn) 8 Questioned by MR BLAKE 9 MR BLAKE: Can you give your full name, please? 10 A. My name is Henry Eric Staunton. 11 Q. Mr Staunton, you should have in front of you a witness 12 statement dated 6 September this year; do you have that 13 in front of you? It should be behind tab A of your 14 bundle. 15 A. Yes. 16 Q. Could I ask you, please, to turn to page 83? 17 A. Yes. 18 Q. Can you confirm that that is your signature? 19 A. It is. 20 Q. Can you confirm that that statement is true to the best 21 of your knowledge and belief? 22 A. It is true to the best of your knowledge and belief. 23 Q. Thank you very much. That witness statement has the 24 unique reference number of WITN11410100, and that will 25 be uploaded onto the Inquiry's website in due course. 1 1 By anyway of background, you qualified as 2 a chartered accountant; is that right? 3 A. Correct. 4 Q. You worked at Pricewaterhouse, PwC, for 23 years, 5 including as partner? 6 A. It was Pricewaterhouse all the time that I was there, 7 but yes. 8 Q. You became Executive Director of Granada Group and ITV 9 and, in that position, you worked for a further 12 10 years; is that right? 11 A. Correct. They were both FTSE 100 companies. 12 Q. You became a non-executive director and chairman of 13 a number of other companies thereafter. Just by way of 14 example, you were Chairman of Ashtead, a plant hire 15 company; is that right? 16 A. Correct. 17 Q. WHSmith, the well known retailer? 18 A. Correct. 19 Q. Capital & Counties, which was a property company? 20 A. Correct. 21 Q. And Phoenix, which was a life insurance company? 22 A. And I was also Deputy Chairman of Legal & General, which 23 is the biggest investor in British business. Can I just 24 say I am also Chairman of my old school and Chairman of 25 the Advisory Board of Exeter University Business School 2 1 where I was at. 2 Q. Thank you. Can you assist us with how you were 3 approached with the role as Chairman of Post Office, 4 please? 5 A. Well, I was looking forward to a happy and fruitful 6 retirement on the golf course and I was approached to 7 consider this, and I initially said no, but they said, 8 "Look, it's time for you to put something back, Henry, 9 please thank about this seriously", so I did, and I took 10 the role on. 11 Q. Who is "they"? 12 A. The headhunters liaising with DBT. 13 Q. Mr Parker had left on 30 September 2022, and I think 14 you've said in your statement that you began informally 15 shadowing Mr Tidswell from 1 October 2022; is that 16 right? 17 A. That's correct. I was leaving WHSmith at the end of 18 October and I didn't feel it was right to be -- it's 19 a strategic partner, WHSmith and the Post Office, and 20 I thought it was very unlikely there would be any 21 conflicts but, for the avoidance of doubt, I started two 22 months later. 23 Q. Thank you. It was nominally a role for two days a week. 24 Was that the amount of time you spent in that role? 25 A. It was considerably more. 3 1 Q. Did you anticipate that it would be considerably more? 2 A. No, I didn't. 3 Q. Was it simply because of matters relating to the 4 Inquiry, matters relating to the historic fallout from 5 the scandal that's well known to this Inquiry, or do you 6 think it's something more than that that would require 7 the time and commitment that you -- 8 A. It was more than that because I thought the place was 9 a mess and it required much more of my time. 10 Q. In terms of the briefings that you received when you 11 took on the role, did you receive briefings into the 12 historic actions against subpostmasters concerning 13 alleged discrepancies when you first joined? 14 A. Yes, I was. 15 Q. What was your initial impression of the attitude of the 16 business towards those matters? 17 A. My initial impression was -- and I'm no lawyer -- but 18 I thought it seemed obvious to me that the Horizon 19 system was completely and utterly unreliable and I was 20 staggered that the postmasters had had these issues to 21 deal with in respect of their relations with the Post 22 Office. That was my single biggest reaction from the 23 whole of my briefing of those two months. 24 Q. What was your initial reaction as to how seriously or 25 otherwise the business took that issue? 4 1 A. I felt that people thought Justice Fraser's analysis -- 2 they didn't fully accept it, was my impression. That 3 somehow the case hadn't been put well or whatever. 4 There wasn't a feeling this was absolutely wrong as to 5 what had happened. 6 Q. Where in the business was that impression coming from, 7 in your view? 8 A. Well, it was outside, it was not just within Legal or 9 Remediation, I think it was a feeling across the piste 10 with the team. 11 Q. We will get, in due course, to your meeting with the 12 Permanent Secretary but what was your initial impression 13 of the attitude of UKGI and the Department for Business, 14 in respect of those matters? 15 A. I couldn't say because I hadn't met anyone until I met 16 Ms Munby, and we didn't really talk about the sort of 17 issues that we're talking about here, in any length, so 18 I really -- it would be speculation on my part. 19 Q. You've addressed the Horizon system, what about 20 compensation and redress? What was your initial 21 impression of the business's attitude towards 22 compensation and redress? 23 A. My initial impression was that I thought the Post Office 24 and the Government were dragging their feet in terms of 25 making payments for remediation in the first place; and, 5 1 in the second place, I thought that, in respect of -- 2 there was no appetite at all for exoneration. Those 3 were the two things that came through strongly to me. 4 Q. What did you understand to be the role of the 5 Investigations Department when you first joined? 6 A. Well, my understanding was that they were very powerful, 7 that if you heard about some of the issues in respect of 8 how they dealt with postmasters, it came over to me as 9 quite brutal, really. 10 Q. We're talking about your initial impressions -- 11 A. Yes. 12 Q. -- at the very beginning? 13 A. Yes. 14 Q. You didn't have any background in, for example, liaising 15 with the law enforcement? 16 A. No, I've never been involved in -- I've got to be 17 honest, I've never had any involvement with a situation 18 like this before in my business life. 19 Q. Do you recall any discussions or briefings early on in 20 your time as Chair, with regard to the role of the 21 Investigations Department and, for example, criminal 22 prosecutions? 23 A. No, not in any great detail. I mean, there was 24 an overview to start with in those two months, if we're 25 talking about this two-month period, no, I would say 6 1 not. 2 Q. I want to move on to your initial tasks and initial 3 information that you became aware of and I'm going to 4 start with a letter to your predecessor from the 5 Permanent Secretary of the Department for Business and 6 Trade. Can we please turn to UKGI00044315. This is 7 a letter from Sarah Munby, Permanent Undersecretary of 8 State to your predecessor, Mr Parker, and that sets out 9 the strategic priority for 2022/2023. I'll just spend 10 a few moments going through some of the key points in 11 this letter? 12 If we scroll down, please, it sets out that at each 13 year there is a letter to the Post Office which sets out 14 the key priorities. First, it has a heading 15 "Shareholder priorities" and, if we keep on scrolling, 16 please, it says at the bottom: 17 "Specifically, I would like you to focus on the 18 following priorities: 19 "1. Maintaining and improving [Post Office's] 20 capacity, capability and resilience at all levels of the 21 organisation." 22 If we scroll down, we can see 2: 23 "Engaging with the Post Office Horizon IT Inquiry 24 and implementing change ... 25 "3. Resolving historical litigation issues." 7 1 I'll just read out some of those priorities that are 2 set out there in bullet points. It says, for the 3 financial year '22/'23, the Post Office should: 4 "Build on the successes of the [Historic Shortfall 5 Scheme] and the lessons learned to ensure effective 6 process of the other compensation areas; 7 "Deliver the [Historic Shortfall Scheme] timetable 8 with our ambition for 100 per cent of offers made by the 9 end of 2022 and progressing [claims] through to the 10 post-offer process; 11 "Continue to work closely with officials to progress 12 the timely delivery of compensation to postmasters with 13 Overturned Historical Convictions; 14 "Work with officials on issues relating to [Group 15 Litigation Order] compensation; 16 "Identify and deliver compensation to postmasters 17 that have suffered detriment not captured within the 18 other areas; and [finally] 19 "Challenge [Post Office] management so their 20 activities are reflective of our shared objectives for 21 compensation, to see postmasters are treated with 22 consistency and they receive swift compensation that is 23 fair for claimants and taxpayers." 24 If we scroll down, she continues: 25 "We acknowledge that the delivery of compensation to 8 1 claimants is raising a number of difficult issues, given 2 the challenging objective of balancing fair and swift 3 compensation consistently across the claimant groups 4 with making appropriate use of taxpayers' money. We 5 remain committed to working with you to resolve these 6 issues." 7 It then moves on to the fourth priority: 8 "Effective management of legal costs and settlements 9 with claimants." 10 If we scroll down, please, we see there the final of 11 those bullet points, it says: 12 "Work with officials to explore ways in which these 13 activities could be delivered differently, in particular 14 to deliver redress in a timely manner and at a lower 15 cost, alongside continuing to review legal costs and 16 controls." 17 Number 5, if we scroll down, "Effective financial 18 management and performance"; and number 6, over the 19 page, please, "Successfully delivering the Strategic 20 Platform Modernisation Programme". 21 She then says at the bottom: 22 "I look forward to discussing progress against these 23 priorities at our next meeting and in your exit 24 interview." 25 So this was a letter that was sent to your 9 1 predecessor. It seems as though it was soon before he 2 was leaving the business; is that right? 3 A. Correct. 4 SIR WYN WILLIAMS: Can you tell me the date, Mr Blake? 5 Sorry, I missed the actual -- 6 MR BLAKE: The letter itself is undated. I don't know if 7 Mr Staunton is able to assist. No. 8 On taking up the role, was this a letter that you 9 had sight of? 10 A. And I was also forwarded by Ms Munby. 11 Q. Thank you. Moving on, please, to POL00448680. 12 A. Sorry, if I could just interrupt for a second, I would 13 just like to highlight the fact that, on page 3, there 14 are three references to -- when it talks about 15 remediation, to "fair value for the taxpayer", to 16 "appropriate use of taxpayers' money", to "be fair not 17 only to the postmasters but also to the taxpayer", and 18 I thought -- that left me with the view -- this was not 19 a letter saying we want to make generous remediation 20 payments to postmasters, it was saying trim it to give 21 fair value for the taxpayers. I found that deeply 22 disturbing, those three references. 23 Q. Being deeply disturbed, was that one of the main things 24 on your mind at the time? 25 A. It was on my mind and certainly was on my mind when 10 1 I went to see her. 2 Q. It was a key priority for you to address when you 3 received that letter? 4 A. Correct. 5 Q. Can we please turn to POL00448680, 11 November 2022. 6 Here you are writing to the Secretary of State, this is 7 actually before you've taken up the role. 8 A. Correct. 9 Q. It says: 10 "I am writing to ask for your support in addressing 11 a significant risk to the reputation and success of Post 12 Office Limited, namely the retention of the Chief 13 Executive Officer, Nick Read. 14 "As you know I will become the Chair of Post Office 15 Limited on 1 December 2022. In preparing for that role, 16 I have identified what I believe to be a critical 17 situation regarding Nick's remuneration package which 18 I welcome your support to address. This will allow us 19 to mitigate against the risk of Nick leaving the Post 20 Office in the coming months and the significant 21 consequences this would have for the reputation and 22 future of the Post Office. 23 "My predecessor, Tim Parker, has raised the specific 24 issue of Nick Read's remuneration with both Paul Scully 25 and with Kwasi Kwarteng over the past year. On both 11 1 occasions the ministers declined to approve any 2 improvement in Nick's package, citing concerns over the 3 Inquiry and the context of the public sector pay freeze. 4 They indicated that the situation be reviewed again in 5 September 2022 once the Inquiry was concluded. However, 6 particularly in light of the extended Inquiry process 7 and the subsequent delay in any report being published, 8 which means that it may not conclude for at least one 9 more year, I believe that the risk to Post Office are 10 now even more present and that we need to take active 11 control of the situation. As incoming Board Chairman, 12 I have a responsibility to seek action without delay and 13 seek the invaluable support you can offer me." 14 If we scroll down, it sets out there Mr Read's 15 "Current Package and Remuneration History". We see 16 there the total maximum compensation as at that point in 17 time was £788,500. 18 Can we scroll down. It continues to assess the 19 market position and then, on page 3, sets out "Proposed 20 Action". We see there, just below paragraph 3, it says: 21 "These changes would result in total compensation of 22 £1,125,180 at target performance. This places Nick at 23 around lower quartile of target total cash once the cost 24 of benefits are factored in." 25 So the letter is essentially asking for Mr Read to 12 1 be paid from £788,000 presently, now to over £1 million 2 a year? 3 A. Correct. 4 Q. Was this the first communication between yourself and 5 the Secretary of State? 6 A. Correct. 7 Q. If we scroll over the page, we see it concludes: 8 "We also hope you will not reject the proposals in 9 this letter as your predecessors have done. In the, 10 hopefully, unlikely event that you do not feel able to 11 approve the proposal in full, we would urge you to 12 deliver as much of the proposal as possible." 13 Why was it so pressing at this time to address 14 Mr Read's pay? 15 A. Just by way of context, as you say, I hadn't been 16 appointed even as Chairman. Normally, in any corporate, 17 a letter like this would actually have gone from the 18 RemCo Chairman, unless it surely should come from the 19 RemCo chairman. But, as it was -- Ms Williams was the 20 CPO at that time, as she said and as Nick said, the 21 previous letter came from the Chairman, so it would look 22 weak if it didn't come from me, so this letter was 23 drafted and I signed it, there was nothing there that 24 was factually that was wrong. It was obviously just 25 a massive salary increase for -- in a company where it 13 1 wasn't a normal corporate. It's -- it was a public -- 2 owned by the public, paid for by the public purse. 3 Q. It might strike people as odd, of all the matters 4 affecting the Post Office and postmasters, that the very 5 first correspondence with the Minister is about 6 Mr Read's pay? 7 A. Astonishing. 8 Q. Mr Staunton, you sent that letter. 9 A. I did. As I said, I was asked to sign it. A similar 10 letter had gone by my predecessor. I signed it and I -- 11 as I say, there was nothing factually wrong with it. 12 I wasn't expecting to get approval because I could see 13 what had happened to the previous two letters and, of 14 course, I saw the Secretary of State in January and he 15 turned it down. And I would say, in my statement, 16 you'll see various -- a number of issues that arose in 17 respect of remuneration, even between the sending of 18 this letter and my meeting with the Secretary of State, 19 all involving remuneration. It was a very time 20 consuming part of the work: ridiculously time consuming. 21 Q. We've heard evidence from Amanda Burton last week, and 22 I think she identified that it was unusual, perhaps 23 problematic, to have to seek approval from governments 24 to increase the CEO's pay; what's your view on that? 25 A. I don't think it is. I think these are huge numbers, as 14 1 Grant Shapps said -- the then Secretary of State -- in 2 the context of what Secretaries of State earned, senior 3 people in Government; it was a huge amount of money so 4 I don't agree with Ms Burton. I think, actually, it's 5 quite right that she gets sign-off because I think, if 6 we hadn't had that, maybe this letter might have gone 7 through. So it was a useful buffer, I thought, for me 8 to hear the concerns, pass them on and, if they were 9 turned down, I thought, "Well, actually, if I'd been the 10 Secretary of State, I would have turned it down". 11 Q. Can we please turn to BEIS0000607, please. 12 That's perfect. Thank you. 13 This is your appointment letter from Ms Munby. I'll 14 just read a few parts of that, please. It sets out 15 three priorities. It says: 16 "Dear Henry, 17 "Congratulations on your appointment as Chair ... It 18 is a unique opportunity to make a nationally significant 19 contribution ..." 20 She sets out there three matters that she would like 21 you to focus your attention on: 22 "1. Effective financial management and performance, 23 including effective management of legal costs, to ensure 24 medium term viability; 25 "2. Maintaining and improving [the Post Office's] 15 1 capacity, capability and resilience at all levels of the 2 organisation; 3 "3. Engaging positively with the Post Office 4 Horizon IT Inquiry and implementing change, including 5 resolving historical litigation issues, successfully 6 delivering the Strategic Platform Modernisation 7 Programme, and reaching settlements with claimants." 8 If we scroll down, she says: 9 "Finally, Tim Parker wrote to me on [the Post 10 Office's] work to transform the cultural and process 11 aspects in response to the Inquiry shortly before his 12 departure. I will write to you on this matter 13 separately." 14 Did you get a response in relation to that matter? 15 A. I don't think I did. 16 Q. Can we please turn to the first Board meeting. 17 A. Sorry, could I just say -- 18 Q. Yes. 19 A. -- in respect of say, 1, "Effective management and 20 performance, including" -- regarding medium-term 21 viability, it was clear to any businessman that to 22 achieve medium-term liability (sic) you needed to 23 take -- you need to do radical restructuring of this 24 organisation in terms of reducing the cost levels, 25 et cetera. So it needed a huge injection of funds from 16 1 the Government if we were to achieve medium-term 2 viability. So you can't just write "medium-term 3 viability", unless you have the intention of backing the 4 Post Office in terms of investments. 5 I'm sorry to interrupt but that's a really key point 6 which you may come on to later. 7 Q. We'll come to the context of your meeting with Ms Munby, 8 in due course. Can we first though, please, turn to 9 POL00448621, please, and that is a first Board meeting 10 or the first Board meeting at which you have been 11 appointed, 6 December 2022. We see there you're listed 12 there as Chairman, "via Teams". If we scroll down, we 13 see there: 14 "It was RESOLVED that Henry Eric Staunton, having 15 consented to act, be appointed as a Director of the 16 Company ..." 17 Then: 18 "It was NOTED that the shareholder of the Company 19 had appointed Henry Eric Staunton as Chairman of the 20 Board." 21 If we could scroll down, please, I don't think you 22 made a significant contribution to the actual meeting? 23 I don't think your name is mentioned in all that many 24 places because, presumably, you had only just taken up 25 the role. But there is a CEO report, please, at page 3, 17 1 and it appears that Minister Hollinrake, the then Postal 2 Minister, attended the meeting; is that correct? 3 A. I guess so, I can't recall, but yeah. 4 Q. "The Chairman welcomed the Minister and passed over to 5 [Nick Read] to present the CEO Report. [Mr Read] spoke 6 to the report advising that the Company had had a very 7 good half year in terms of trade, and that the Company's 8 travel and bill payments businesses had continued to 9 perform well." 10 It then goes on to say that: 11 "... we were seeing a tightening in consumer 12 confidence, with a slowdown in banking and travel." 13 About halfway down that paragraph, it says: 14 "With the slowdown in the mails trade a shortfall in 15 our funding over the next few years was forecast. The 16 Inquiry, extending now potentially into 2024, was going 17 to cost the Company more, however we wished to support 18 the Inquiry to the best of our ability. One of the 19 implications of the Inquiry was in relation to the 20 rollout of NBIT [New Branch IT System]; the technology 21 needed to work first time, the rollout exercise was 22 vast, and the exercise was massively time bound. This 23 compression of activity within a very short time frame 24 would have many impacts." 25 "BT [I think that's Mr Tidswell] noted that parts of 18 1 the business were positive, however the Company had 2 significant issues to face including the Inquiry and 3 wider external factors. An issue of some urgency for 4 the Board was determining the optimal size and shape of 5 the network, which needed to be coordinated with BEIS 6 and the Minister." 7 If we scroll down there, we see "SI", that's Saf 8 Ismail, who we have already heard from last week: 9 "... detailed some of the headwinds for Postmasters 10 including an anticipated increase in minimum wage, 11 rising energy prices", et cetera. 12 "LH [that's Lisa Harrington] referenced the 13 strategic direction of the Company and that the Board 14 was interested to understand early ideas on the BEIS 15 policy review." 16 If we scroll down we then see that Minister 17 Hollinrake and assistant left the meeting at 2.07. You 18 don't recall? 19 A. No, I was getting confused with the date that the 20 Minister came but I recall now, he came on that date, 21 yeah. 22 Q. Thank you. There are no issues addressing compensation 23 being raising with the Minister on that occasion, are 24 there? 25 A. No. 19 1 Q. If we could turn to page 9, once the Minister has left, 2 we see the issue of historical matters being addressed, 3 if we scroll down, please. If we scroll over the page, 4 there's a section there that you have addressed in your 5 witness statement. I'd just like a little bit more 6 detail if I may. The minutes say: 7 "In respect of outstanding balance payments, BT 8 [Mr Tidswell] advised that this issue had been 9 considered many times at the HRC." 10 What was the HRC? 11 A. The Remediation Committee. 12 Q. Thank you: 13 "The quandary was that if we notified Postmasters 14 and requested they pause payments, were we inadvertently 15 stimulating claims against an unfunded position. [Nick 16 Read] queried whether there had been any communications 17 with the current 77 postmasters who were repaying. SR 18 replied [I think that's Mr Recaldin] that there had not 19 been. [Mr Recaldin] noted that 13 of the 20 cases in 20 this category that had been investigated had shown that 21 the repayments were in order. AC noted that we had not 22 investigated the balance of the other cases ..." 23 It then says: 24 "AC advised that he was not persuaded by the 25 argument against pausing repayments and his view was 20 1 that we needed to notify and speak to the postmasters in 2 question and investigate fully." 3 I think "AC" is Mr Cameron; is that right? 4 A. Correct. 5 Q. Thank you. Can I just clarify the issue here. Was the 6 concern that, by pausing repayments that were being made 7 by subpostmasters, it might actually mean that more 8 subpostmasters are claiming compensation or redress from 9 the Post Office? 10 A. Correct. I mean, I raised this, I put it in my 11 statement because I used the words that I thought the 12 process was bureaucratic, adversarial, unsympathetic, 13 and one or two other adjectives, and I thought I can't 14 just say that without giving some examples that came to 15 mind. And there were four examples I gave of which that 16 was one. 17 Moving to that one, what surprised me was that, you 18 know, we shouldn't be not doing something because it 19 would generate claims. You know, that's not the basis 20 on which the Remediation Committee should be working. 21 Q. Having received that letter, the strategic priorities 22 for 2022/2023, which you said caused you significant 23 concern, in respect of redress and compensation, having 24 then moved to addressing Mr Read's pay, is it not 25 surprising that nobody thought at the meeting with the 21 1 Minister on this occasion to raise issues of 2 compensation and redress? 3 A. Well, I'd only been in the job a few days, so I think 4 that's asking quite a lot when you're trying to find 5 your feet in what's going on. But, as I say, I formed 6 a view, over a period of months, regarding bureaucracy 7 and unsympathetic and adversarial approach, and that is 8 one example where we shouldn't be making that decision, 9 that it shouldn't be based on reducing -- not having 10 further claims. That's not a good reason for not 11 pursuing something. 12 Q. So the letter from Ms Munby to your predecessor that you 13 said, I think, shocked or concerned you, did that take 14 months to settle in, or was your shock and concern quite 15 instant? 16 A. It was quite instant, in terms of she didn't say, "Make 17 payments to postmasters that are either generous or, you 18 know, seen to be very fair". It was "fair but also make 19 it fair for the taxpayers", or, "appropriate use of 20 taxpayers' money", et cetera. So there was a balance 21 here, and I think that -- I think Mr Cameron said 22 that -- in a note of about 23 March, that the 23 Remediation Committee was perhaps too keen to follow 24 shareholders' interests and just that, and these four 25 examples I gave to show that's not, I think, the 22 1 priority for a Remediation Committee. 2 Q. So why, at your first Board meeting, when the Minister 3 was in attendance, were issues of redress and 4 compensation not raised? They were clearly raised 5 after -- 6 A. No, the fact is that, as I say, I'd been there a few 7 days. Mr Read addressed what he thought were key issues 8 for the Minister to hear and I think that all the things 9 he raised were perfectly fair. I think the feeling 10 among the Post Office is that, you know, "We're doing 11 quite well in terms of HSS, et cetera", in terms of 12 getting offers out. Clearly that's not the view of the 13 postmasters but, as I say, that was the view internally, 14 that "We're doing quite a good job and exonerations, and 15 that's -- it's not for us, and we don't believe in it 16 anyway". 17 So I think there's a balance here between what the 18 postmasters think -- that the Post Office thinks it's 19 doing a good job. That's not, clearly, the view of 20 postmasters but that was what I think drove them, "We 21 don't need to raise it with the Minister because things 22 are on track". 23 Q. Okay, so you had been shadowing since October, this is 24 now your first Board meeting -- 25 A. (The witness nodded) 23 1 Q. -- the company's view is things were going okay on 2 compensation. Presumably, that was something that you 3 shared at that occasion, then? 4 A. No, I didn't share it but I think the answer is, it's 5 very early. In your first Board meeting when you are 6 listening to everything, I mean as Chairman, you know, 7 if you're -- assuming you're in there for nine years, 8 you have to acclimatise yourself, work out what's 9 happening at a Board meeting, how things work. You 10 can't, at the first Board meeting, just make statements 11 when you're not really sure of all of the facts. Don't 12 forget, a lot of my other examples that I gave in terms 13 of really a priority that was not being given to 14 postmaster claims, were all after this Board meeting. 15 So this was the first one. So my thoughts were forming 16 but they weren't absolutely firm. 17 Q. Can we turn to POL00448676, please. We're now towards 18 Christmas 2022 and there's an email exchange between 19 Mr Read and yourself. If we could start, please, on 20 page 3., at the bottom of page 3., thank you. We don't 21 have the email below this in the chain, or we may have 22 it but it's not shown here, but this is a response from 23 Mr Read to yourself, and he says: 24 "Thank you Henry. 25 "This is part of the problem. [Non-Executive 24 1 Directors] attempt to play exec roles, dipping in and 2 out, which causes confusion amongst colleagues. 3 Unfortunately because Tom ..." 4 I think that's a reference to Tom Cooper, the UKGI 5 Non-Executive Director; is that correct? 6 A. Correct. 7 Q. "... works 4 days a week on [Post Office], he sets a 8 precedent. This needs to change." 9 Your response above is: 10 "In the past I have had a couple of [Non-Executive 11 Directors] who have struggled with understanding the 12 difference between [Executive Directors] and 13 [Non-Executive Directors]." 14 In the next paragraph, you say: 15 "Unfortunately Tom is not inexperienced; he feels he 16 has a special status; and I do not think he wants to be 17 'helpful'. He seems to want to undermine management and 18 to be antagonistic." 19 Can you expand on that, please? 20 A. Yes, I mean, it is a very different role, the UKGI 21 representative on this Board, compared to a normal 22 non-executive. One has to say that, on the one hand. 23 On the other hand, it is odd to spend four days -- that 24 much time, four days a week, you're neo-executive, and 25 that is why Mr Read felt that the UKGI representative 25 1 was dipping in and out. And, throughout my first year, 2 in all the surveys that we did of -- when people left -- 3 I don't know if we're going to come on to that -- but 4 when three directors left, I had an independent survey 5 done to find out their views, and the role of the UKGI 6 the director, was raised as an issue and it was raised 7 also in the Board Evaluation Report that came out soon 8 afterwards. 9 So there was some dissatisfaction on the Board, 10 I think there probably still is, in terms of the role of 11 the GI director and how much power they have. Equally, 12 it's a very difficult role for that UKGI director, and 13 I accept that. 14 Q. What do you mean by, "I do not think he wants to be 15 helpful"? 16 A. Well, I think he was making a number of points to the 17 management, which I think that they found weren't 18 helpful, that were perhaps off the mark, and I don't 19 think that Tom Cooper saw that as his job, that he 20 wanted to be helpful. 21 Q. If we scroll up, another response from Mr Read. He 22 says: 23 "That's a fair summary, Henry. 24 "My primary issue with Tom is that he fails to 25 fulfil his role, which is to act as an interface between 26 1 the company and Government and to act as a 'cheerleader' 2 for what we do, and the value we play in society." 3 Just pausing there, is that an accurate description 4 of the role of the UKGI shareholder or what it should 5 be? 6 A. I don't think it is the role of the -- of the UKGI -- 7 Q. What do you see as the role of the UKGI shareholder? 8 A. It's very difficult because, as I say, I've never come 9 across anything like it as a role, so I think almost, it 10 is what that UKGI director seeks to make it. But I 11 don't think it's just to act as a cheerleader or really 12 as a priority, it should be that. It should be, 13 I think, I think, to make sure that public monies -- and 14 they're very significant sums involved -- are well 15 spent. 16 Q. He then continues: 17 "Nothing about the way he conducts himself suggests 18 this happens. He has little or no influence in 19 Government and doesn't understand the politics. I am 20 consequently fearful for the next 4 weeks and how we are 21 being positioned in Whitehall." 22 What was the significance of the next four weeks, do 23 you recall? 24 A. I can't. 25 Q. No. If we scroll down those final two paragraphs on 27 1 that email, it says: 2 "At the Board he has asymmetric information and 3 therefore an undue influence over everyone, the Chair 4 included. He is simply much closer to the day-to-day 5 mechanisms of the business, has an army of analysts to 6 delve into his personal areas of interest and, 7 consequently, undue influence. 8 "Tim [that's your predecessor, Tim Parker] did duck 9 it. He felt he could influence him ... sadly no 10 evidence of that. 11 "The opportunity and challenge for any incoming 12 [Non-Executive Director] will be corporate knowledge, 13 history and how Government works. Getting the selection 14 right of course will be important, but I am afraid you 15 will struggle to have an effective and most importantly, 16 independent Board, until you address the elephant in the 17 room." 18 What did you understand by that? 19 A. Well, there were a lot of issues within there. Starting 20 from the back, I realised that, fairly early on, this 21 was going to be an issue and, actually, setting up 22 an independent Board that wasn't overly influenced by 23 either UKGI or DBT or, indeed, the UKGI-nominated 24 director was very important to establish the 25 independence of the Board, and I'm not sure fully 28 1 succeeded but that was always my aim. 2 My predecessor did actually also -- Nick Read is 3 right -- did say "This is a huge elephant in the room, 4 Henry, and I just wasn't prepared to take it on and 5 you've got this problem to deal with". He did have 6 undue influence, that's fair to say. Equally, as I said 7 before, you could see, you know, he felt he had 8 a special role in terms of looking after public monies. 9 So I could see both sides of where people were. They 10 were both right. 11 Q. Was there considerable frustration at the role of UKGI 12 and it's Non-Executive Director as at Christmastime 13 2022? 14 A. Yes, there was and, as I say, I did do an independent 15 survey of the three directors who were leaving, two of 16 them who were leaving before their nine years were up, 17 and one of them said, "It seems like each director 18 around the table has one vote and it seems like the UKGI 19 director has ten votes. So, actually, you know, we're 20 nothing more than an advisory board, we have no power". 21 Words like "a puppet board" were used. 22 So, obviously, I was worried to hear that and that's 23 why I thought it's a priority to set this Board up as 24 an independent Board but, clearly, there was 25 dissatisfaction with -- from Nick Read and, indeed, with 29 1 quite number of the independent directors. 2 So I did actually go to UKGI and said, "Look it's 3 not working, I'm not blaming Tom but, actually, I think 4 we need to have a fresh start", and they accepted that 5 and said they would implement it. "It may take a month 6 or two", said Charles Donald, but they did. 7 Q. If we scroll up, we can see your response. You say: 8 "I think there is no getting away from the issue. 9 It was the pathway to getting the right result that 10 I was reflecting on and your email made good sense. 11 I am in on 3 January seeing Sarah Munby and will pop 12 into the office after that. If you are in we can 13 discuss in specific detail." 14 If we scroll up, please, you have then forwarded 15 that exchange to Mr Tidswell, and you say as follows: 16 "Ben, 17 "As the future [Senior Independent Director] I want 18 to copy you in on an email received from Nick today. 19 Removing Tom is very, very tricky territory, trickier 20 than Nick imagines. However, it needs to be done 21 I fear. We will then have a unified Board with the 22 execs and [non-execs] working together to sort out [Post 23 Office's] issues. 24 "We must get away from the carping, the undermining 25 of management and the disproportionate influence Tom has 30 1 over the Board." 2 What do you mean by carping and undermining of 3 management? 4 A. Well, I think -- I've talked about it, that he would 5 make his point, sometimes they were quite detailed 6 points, as a non-exec would see it and, I think, as the 7 execs would see it and, therefore, they felt he's not 8 running this company, we are, we don't agree with him 9 and we've got to spend all this time dealing with it. 10 So it was certainly a word used by me that that was his 11 approach, and I agreed with it, as I say, whilst at the 12 same time understanding the difficulties of the UKGI 13 director. 14 So I wanted a unified Board. I recognised how 15 tricky it was. Actually, it was a lot less tricky than 16 I thought. UKGI were very understanding when I said to 17 them we needed to change, not because I was being 18 critical of Tom, I just think we needed a change and 19 that would help steady the ship in terms of having 20 a unified Board. 21 Q. It says: 22 "Nick, you and I will have to work hard with our 23 three new [Non-Executive Director] colleagues and Brian 24 to have a proper functioning Board that knows the 25 difference between the [Executive Director] and 31 1 [Non-Executive Director] roles. I know I can rely on 2 you and think Brian can be won round. You will see that 3 Nick has other issues [with regard to] the role of the 4 UKGI [Non-Executive Director] which Tom does not fulfil. 5 "I am seeing Sarah Munby in early Jan -- will keep 6 you posted." 7 If we scroll up we have the response from 8 Mr Tidswell: 9 "I agree it will be very tricky but I also agree it 10 seems inevitable. 11 "My sense is that it will require firm engagement at 12 the highest levels, both within UKGI and BEIS. It 13 probably also fits quite naturally into the suite of 14 difficult subjects we have to broach in the next few 15 weeks, including the funding issues, the network and 16 Nick's pay. I suspect everyone feels that things aren't 17 working as they should." 18 So it seems there are four issues at the top of the 19 Post Office's priority list at that point in time. The 20 first is the replacement of the UKGI Non-Executive 21 Director, which we've seen in that email exchange, and 22 then we come to those three other issues: funding 23 issues; the network; and Nick's pay. Is that a fair 24 summary of the position, as at 23 December 2022? 25 A. No, I don't think it is a fair summary of the key issues 32 1 that we were facing but they were some of the issues we 2 were facing. 3 Q. Why don't you think it's a fair summary? 4 A. Well, I think a fair summary -- I referred earlier to 5 the fact that, when I took the business over, I thought 6 it was a mess, and the reason it was a mess was that it 7 was hugely unprofitable, with respect to remediation. 8 As I say, the Government and the Post Office were 9 dragging their heels. There was no appetite for 10 exoneration. We had costs that were completely bloated. 11 We had an issue with regard to cultures and how poorly 12 postmasters were viewed by the organisation. We had 13 a structure that was far too many layers of management 14 and yet everything came up to the top, no one was taking 15 a decision. We had an issue with regard to governance 16 and particularly remuneration governance, which we might 17 come on to. 18 So there were a string of priorities, all of them 19 very important, and when I say remuneration, one of them 20 obviously was the Nick pay issue. So funding was 21 important, the network was important, but there were 22 a string of others, and I wouldn't put the -- I would 23 put them -- all of the things I've mentioned were 24 massive issues. 25 Q. We still, by this stage, though, don't see 33 1 correspondence or communications with Government by 2 yourself in relation to remediation, do we? 3 A. No, I'd been in post less than a month. 4 Q. We then have the meeting with Sarah Munby, on 5 January 5 2023. That document can come down. Thank you. 6 You said in your statement, it's paragraph 14, that 7 you were aware in your words that "Horizon was 8 a completely unreliable system by that stage"; is that 9 right? 10 A. Correct. 11 Q. You've said that 700-plus convictions of subpostmasters 12 were "suspect", I think was the word you used; is that 13 right? 14 A. Yes. 15 Q. You've also said that the redress schemes at that stage 16 were administered in a bureaucratic and unsympathetic 17 way; is that right? 18 A. Correct. 19 Q. At that stage, what was your concern regarding the 20 bureaucratic and unsympathetic administration? 21 A. Well, as I say, you picked up one of the examples. 22 I also referred in my statement to a state duty where, 23 this is where there'd been a death in the family, and we 24 were talking about the principles, and the view was, if 25 we widened the principles, that we opened ourselves up 34 1 to more claims. So I thought that seemed pretty 2 unsympathetic to me. I thought, at that same meeting, 3 the legal counsel talked about the duty of care that we 4 owed postmasters and he said we owe a duty of care to 5 our employees but we don't owe the same duty of care to 6 postmasters, and I thought that completely mist the 7 point. 8 The postmasters are an integral part of this 9 organisation and, particularly, after all that had 10 happened to them over the last few years, to feel that 11 we didn't owe them the same duty of care as we did to 12 our employees, I thought was pretty unsympathetic. 13 I thought we owed them probably a greater duty of care 14 than to our employees. 15 Q. Will we find that reflected in the minutes? 16 A. No, I talked to -- my style as Chairman is not to pull 17 up people at Board meetings. I go and see them after 18 and say, "I just don't think that hits the mark, really, 19 does it?" That's what I've done in -- I've been the 20 chairman of a number of companies for many, many years. 21 That's my style, I think it works, and that's what I did 22 in respect of these issues, was chat to Simon, who ran 23 Remediation or Ben Tidswell, in terms of his comment 24 about opening things up to further claims, and to Ben 25 Foat, in respect of his comments about not having a duty 35 1 of care to the same extent for postmasters. 2 Q. We'll be hearing from Mr Recaldin in due course. Do you 3 think that he will give evidence that there was 4 a conversation between the two of you -- 5 A. Yes, yes. 6 Q. -- in which you said "We're not getting it right in 7 terms the attitude towards subpostmasters"? 8 A. In that particular issue, yeah. 9 Q. If we could take your statement onto screen, it's 10 WITN11410100, and can we please turn to page 6, 11 paragraph 13. Thank you. I'm just going to read 12 paragraph 13 out. You say: 13 "[There were], firstly, the legacy of the Horizon 14 scandal, which would require the full and speedy 15 exoneration of all the convicted postmasters and 16 appropriate and rapid redress to the thousands of 17 postmasters and their families who had lost so much. 18 Secondly, there was the need to replace the discredited 19 Horizon IT System. It was clear that both would require 20 substantial sums to be earmarked, but I assumed the case 21 for doing so was so overwhelming that the necessary 22 funds would be readily set aside. It was therefore 23 a considerable surprise that when I met the civil 24 servant overseeing the Post Office early in my term as 25 chairman, I was told that there would be little appetite 36 1 in government for the kind of decisive and morally 2 imperative action that I believed was necessary. 3 Instead, the message I received was that I was expected 4 to fulfil a more limited caretaker role, overseeing 5 a more modest plan to 'hobble' up to the next election. 6 I address this meeting in more detail below." 7 I'd like to take you to various notes that have been 8 taken of that meeting. Can we start, please, by looking 9 at RLIT0000254, please. Is this your note of the 10 meeting? 11 A. Correct. 12 Q. I think it's a note that you sent to Mr Read on 13 6 January in the morning, and it's a note of your 14 meeting the day before; is that right? 15 A. Correct. 16 Q. I'd just like to take you through the notes, if we start 17 with where it says, "Sarah": 18 "Sarah asked for first impressions, I said I had 19 been on over a dozen public company Boards and not seen 20 one with so many challenges. 21 "I focused on the financing and network challenges: 22 "On financing we had identified in [September] 23 a deficit of £210 million. After much effort we had 24 identified savings of £170 million (mainly out of the 25 change budget, cap exp and [exponentials]). However 37 1 since then extra costs of £120 million have arisen: from 2 Horizon £60 million (training needs [especially] with 3 Inquiry) ..." 4 Can you just assist us with what that issue was? 5 A. The training needs? 6 Q. Yes. 7 A. I can't remember the details of it, I'm sorry. 8 Q. Might it be that the earlier phases of the Inquiry had 9 identified issues with the training of subpostmasters, 10 and a decision was taken to invest an additional 11 £60 million in training? 12 A. That is my guess, but I didn't want to say for sure, but 13 that's my guess. 14 Q. "... Inquiry £30 million (taking longer); and 15 telephony/Internet £30 million. In total we have 16 a shortfall therefore of £160 million ... and this 17 before the deficit arising from the material downturn in 18 the parcels business, and to a lesser extent from the 19 implications for our cash business of the FCA Money 20 Laundering regs on deposits." 21 So the issues being raised there in terms of 22 spending appear to be related to Horizon training, costs 23 relating to the Inquiry and also additional costs 24 relating thing to telephony and Internet; is that right? 25 A. Yes, I mean, if I could just say, from my experience, if 38 1 this had happened in any other company I'd been chairman 2 of, I'd have blown a -- these are huge numbers swinging 3 around. I've never come across a company where you 4 would come across this. 5 Q. Where do you think responsibility for that lies? 6 A. I mean, you could say it was the chairman, but I'd just 7 been appointed -- 8 Q. What do you say -- 9 A. It's mentioned really, isn't it? Always is. 10 Q. Fundamentally, what do you see as the issue there? 11 A. It's a very good question. It's -- to be fair, this is 12 a very unusual situation but, nonetheless, I just didn't 13 feel that we really had enough of a grip on costs. 14 Q. But is that a problem with specific individuals? Is it 15 a problem with anything that you can actually put your 16 finger on or is it just a -- it's all a bit too 17 difficult? 18 A. I couldn't put my finger on it then, as I say, these are 19 huge numbers swinging round, massive numbers I'd never 20 seen before, and it has to come down to management. 21 I wouldn't -- I couldn't pinpoint a particular manager 22 but it has to be management. 23 Q. It then says: 24 "There was a likelihood of a significant reduction 25 in post offices if more funding was not required. Last 39 1 year half of all post offices were either loss-making or 2 earning less than £5,000 profit. The position would 3 have deteriorated substantially because of increase in 4 Minimum Wage and fuel/electricity prices. A recent 5 survey indicated that one third of [postmasters] would 6 hand back their keys over the next 5 years and that 7 figure would now be higher because of extra costs. 8 "The reputational consequences for [Post Office] and 9 for Government were fraught. 10 "Sarah was sympathetic to all of the above. She 11 understood the 'huge commercial challenge' and the 12 'seriousness' of the financial position. She described 13 'all the options as unattractive'. However, 14 'politicians do not necessarily like to confront 15 reality'. This particularly applied when there was no 16 obvious 'route to profitability'." 17 What do you understand by the comments being made 18 there? 19 A. I think it's a big point that she's making about no 20 route to profitability. I mean, I think, if I were 21 a minister, I'd be concerned about pouring good money 22 after bad, so I think it's a fair request to ask for 23 a route to profitability. But, as I said, the route to 24 profitability is a fundamental rationalisation of this 25 business, reducing the cost base and, in fact, also 40 1 attacking the income numbers, but it was not something 2 that would be achieved without big investment, and a big 3 reaction from management to get it right. 4 Q. It continues: 5 "She said we needed to know that in the run-up to 6 the election there was no appetite to 'rip off the band 7 aid'. 'Now was not the time for dealing with long-term 8 issues'. We needed a plan to 'hobble' up to the 9 election." 10 Now, those comments appear to be broad comments 11 about funding, not directed towards the matter of 12 redress; what do you say about that? 13 A. I think the comments about the funding that would be 14 required for the Post Office, the big spends were the 15 Inquiry, but I think the cost there would have to be 16 what they would be. The costs would relate to Horizon, 17 and, as I said to Nick Read afterwards, that is the one 18 where I think we're most exposed, we really do need to 19 be -- have a much better grip on what these costs are. 20 The third area was funding -- was remediation. And the 21 fourth area was just outflows out of the business. 22 And I said to Nick, of the last -- the last one 23 we've clearly got to get a handle on the costs situation 24 and, on the remediation, I said we should spend what it 25 takes and I'll take the consequences. 41 1 Q. Where in this conversation with Ms Munby, and your note 2 of the conversation, do we see the issue of remediation, 3 redress, compensation being raised with -- 4 A. This -- my filenote was not meant to be a full record of 5 what took place. I just wanted to, because we haven't 6 talked about -- my note didn't cover Horizon, for 7 instance, which we ought to talk about. I wanted to 8 talk about two things: one that I'd told the Permanent 9 Secretary that this business, in terms of commerciality, 10 was a problem child; and, secondly, to deal with the 11 other points that I raised. But it wasn't meant to be 12 a full record of everything she said. 13 Q. So aghast were you by that letter outlining the 14 strategic priorities for 2022/2023 and the references in 15 there to fair value for the taxpayer and compensation, 16 why do you think it is that you didn't note down any 17 references to compensation and redress in this note? 18 A. Well, it's because I just -- I thought there was -- 19 I was more interested in making the general points that 20 she made, which was there's no appetite to rip off the 21 band aid, the Treasury is finding money very, very tight 22 and, as I say, the tightness would be in those four 23 areas: which is Horizon, remediation, the Inquiry, and 24 trading. 25 Q. Where is remediation in the note? 42 1 A. The remediation is not in there, neither is Horizon. 2 Q. Horizon -- 3 A. As I said, it wasn't meant to be a full note, it was 4 meant to be just recording (a) the trading position to 5 let her know how precarious the position was in respect 6 of the network; and, secondly, I wanted to record her 7 overall comments that she made with regard to band aid, 8 hobbling into the election, restricting spend. 9 Q. It then says: 10 "Having said that, we and BEIS needed to do the 11 long-term thinking for a new Government of whichever 12 colour. This would include what is politically 13 acceptable [with regard to] the size of the network. 14 She also referred to 'operational' issues colouring [the 15 Treasury's] thinking. ('Trust' in the [Post Office] 16 Board and management has not been high). They could see 17 this as another 'begging bowl' request from [the Post 18 Office] I said the funding issues revolved around poor 19 decisions made many years ago [with regard to] Horizon 20 and related legal issues." 21 A. "Related legal issues", of course, I was referring to -- 22 that was my reference to Horizon and remediation, the 23 related legal issues. 24 Q. "With regard to the forthcoming meeting with the 25 [Secretary of State] she gave some advice. He's nice 43 1 and easy but not interested in meetings. He prefers the 2 written form. We should expect him to be 'pushy and 3 demanding' as he was with the train operators whilst 4 [Secretary of State] for Transport." 5 I think this is Grant Shapps by this stage; is that 6 right? 7 A. Correct. 8 Q. "He would 'hold us to account'. He will take a hard 9 time on pay. So far Sarah's efforts on pay have fallen 10 on deaf ears." 11 So it looks as though, again, there is discussion 12 here in respect of Mr Read's pay; is that right? 13 A. Correct. 14 Q. We then have a note that was taken by the Department for 15 Business. Can we please turn to BEIS0000752. Thank you 16 very much. We can ignore the top email because that, 17 I think, formed part of an investigation into what had 18 been said. So that's dated 2024 at the top but, looking 19 now at the emails we have at the bottom of the screen, 20 and if we scroll down, we can see that this was, in 21 fact, a note that was taken and circulated on 6 January 22 relating to that meeting and it says: 23 "Sarah met with Henry yesterday -- thanks very much 24 for the support on briefing. It was a fairly frank/open 25 conversation in general, I should flag that Sarah opted 44 1 not to write to Henry prior to the meeting. Readout 2 below, left longer as I think useful." 3 Let's go through the note that was taken by the 4 Department: 5 "Henry noted he has never seen a corporation 6 challenged on so many fronts ... don't have the luxury 7 of prioritisation as every issue is a big one." 8 That corresponds broadly with what was written in 9 your note: 10 "SM [Ms Munby] agreed that challenge is significant 11 and that politics around [the Post Office] make this is 12 an even trickier problem to solve, the timing of 13 agreeing a longer term solution this year is also very 14 difficult politically. Noted that we do need to be 15 ready for what that answer is though. 16 "[Ms Munby] flagged that the relationship on funding 17 [with His Majesty's Treasury] is difficult, their view 18 will always lean towards the 'begging bowl' type 19 scenario, a dynamic worsened by Horizon/Inquiry costs." 20 Again, that's consistent with your note: 21 [Mr Staunton/Ms Munby] agreed to having a frank/open 22 relationship on [the Post Office]. 23 "[Ms Munby] gave background to [the Secretary of 24 State's] ways of working -- noting fairly hard/pushy 25 with ALBs/Partner Organisations." 45 1 Again, that's a matter addressed in your note. 2 There's then a lengthy section on Mr Read's pay: 3 "[Sarah Munby] 4 "Sympathetic to case for [Mr Read] and have been 5 working hard to push this forward. 6 "[Secretary of State] is very hard line on executive 7 pay and haven't so far been successful in getting 8 progress but have postponed formal decision until 9 post-[your chat with the Secretary of State]. 10 "[The Secretary of State] understands risk of 11 [Mr Read] leaving." 12 By this stage, had Mr Read said he was going to 13 leave if he wasn't paid more? 14 A. I believe so. There was quite a delay between sending 15 this letter and the meeting of the Secretary of State 16 and I think it wasn't -- it wasn't eating away at Nick 17 but I think clearly it was important to him and, at that 18 stage, he was clearly wanting movement on his pay, and 19 I've set it all out in my evidence -- my witness 20 statement. I think by then he was already saying, "I'm 21 threatening to leave". 22 Q. "Balancing act in terms of [you] raising it at 23 [meeting] -- given its first discussion [with the 24 Secretary of State] so potential for getting off on 25 wrong foot combined [with] relative low chance of 46 1 success." 2 It records your response: 3 "[You] 4 "Can understand from [The secretary of State's] 5 perspective why it's difficult to approve and have 6 already flagged this to [Mr Read]. 7 "Reflected that if [Permanent Secretary] can't get 8 progress it's unlikely he will get much further and 9 questioned his worth in raising it. 10 "[Sarah Munby] if there is good point in 11 conversation to land the issue/argument, could still 12 consider raising it but he isn't going to agree to full 13 request, still worth trying to get what he can." 14 It records you as: 15 "... keen to be straightforward [with regards to] 16 Mr Read." 17 There is then a section on succession/management. 18 Ms Munby says: 19 "[The Secretary of State] knows problems with 20 internal succession and the [management] team isn't as 21 strong as could be so will likely raise this as 22 challenge to fix." 23 What was the issue there? 24 A. Well, as I said, when I ran through why the company was 25 a mess, I said that management was an issue, so I don't 47 1 disagree with Sarah's assessment. So it was a fair 2 point. But this company was in a state of some crisis, 3 so I think it's very easy to be critical of management 4 but, from the early days, I thought "My goodness me, 5 I've never seen a team having quite so much on their 6 plate, or anywhere near as much on their plate". So 7 I think it's easy to be critical about -- for Ms Munby 8 to say we need to strengthen the management and it'll 9 all go away. It needed something far more fundamental 10 than that. 11 Q. "[Ms Munby] ran through what [we've been] doing our side 12 to think about policy options and [presumably cost, 13 there's a pound sign]. Noted 3 difficulties on 14 [pounds]: 15 "1. We don't have it (will need to come from 16 elsewhere). 17 "2. In order to give any money it will need to be 18 approved by [His Majesty's Treasury] -- who won't allow 19 us to give until we had long-term plan, but the timing 20 doesn't work -- so trying to do something to bridge. 21 "3. Subsidy control -- without an excuse we can't 22 just lift cash over the wall -- have to be subsidy 23 compliant (but should be fixable and is our problem to 24 fix). 25 "[Ms Munby] We might end up doing something small to 48 1 buy space collectively to get to the longer term. 2 "[You both] discussed dynamics of policy options -- 3 [for example] difficulties in reducing networks." 4 It then says that you mentioned targets referred to 5 in Inquiry hearing: 6 "... wasn't looking for an apology but wider point 7 around being synced up and acknowledging where each 8 other's roles lie. Was keen him and Sarah strategically 9 aligned where [possible]." 10 Now, this does seem to be the first mention of 11 compensation or redress; do you agree with that? 12 A. To be honest, I can't recall quite what she meant about 13 targets in respect of the Inquiry hearing but I assume 14 it was remediation. 15 Q. I think the issue was we saw, in that very first 16 document that we have seen, that there is reference in 17 the original strategic priorities for the Department's 18 priority to be an ambition of 100 per cent of offers 19 made at the end of 2022 in respect of the Horizon 20 Shortfall Scheme? 21 A. That was the difficult -- that's where the apology was 22 sought from the Post Office Management, which was 23 actually they never said that they would get 24 100 per cent; they said they would get 95 per cent. To 25 me, it was quite a small issue but, clearly, this had 49 1 been blown up on both sides as to whether it was 2 100 per cent or 95 per cent. I wasn't interest in 3 getting into the middle of that skirmish. 4 Q. I think the skirmish related to whether it was a target 5 or an ambition? 6 A. Indeed. Indeed. 7 Q. As you say, a skirmish about what was said at the 8 Inquiry, rather than something more substantive? 9 A. Absolutely. Absolutely. 10 Q. We then get on to: 11 "[Ms Munby] also keen to be aligned as far as 12 [possible], though reflected that the level of trust in 13 [the Post Office] Board/[management] isn't that high and 14 that funding will come with conditions/scrutiny (that's 15 how HMT work) but agree with everyone playing in correct 16 lane." 17 Then, once again, it records: 18 "[Mr Staunton] queried [Mr Read's] bonus. 19 "[Ms Munby] noted in the same place as pay. 20 "[Ms Munby/Mr Staunton] agreed bad if they have to 21 repay and not worth it for the amount. 22 "[Mr Staunton] thought shouldn't have [gone] to 23 [Ms Munby] in the first instance." 24 Can you assist us with that discussion? 25 A. I can't remember what the issue was on the bonus. 50 1 I don't know if it -- and we may come to it -- but the 2 whole issue of the bonus that the Department were 3 wondering whether the senior management should repay, 4 because it had been paid before it had been approved by 5 the Department. I'm wondering if that's what it was; is 6 that what she meant? 7 Q. Well, we'll ask -- 8 A. We might come to it, I presume. Yeah. 9 Q. Why is it, throughout this discussion, we don't see any 10 significant discussion about redress and compensation, 11 certainly not in the note that was taken by the 12 Department. 13 A. I don't think it was discussed at length. I mean, this 14 was my -- she called me in for an introductory meeting 15 and, as I say, I'd been in post a month by then. 16 I think you're forming your views -- I hadn't made up 17 any -- you know, made any final views. This was very 18 early days. To walk in and start talking about that 19 remediation is going too slowly, at that stage, was too 20 big a call. 21 So I think I was there to listen to what she had to 22 say and, as I say, I mean, that filenote doesn't record 23 the key things, which was "Hold onto the purse strings; 24 don't spend any money; hobble into the election; don't 25 take any long-term conditions; don't rip off the band 51 1 aid". I mean, that was the message that I received from 2 this meeting; none of that, of course, has been minuted. 3 Q. If we scroll up, we see considerable time seems to have 4 been dedicated to the discussion of Mr Read's pay at 5 this meeting. It might be thought that matters of 6 redress, compensation and the detail of that is more 7 important than discussion of Mr Read's pay? 8 A. I think, if I were a postmaster, I'd be horrified 9 that -- when their remediation is going up 1 or 2 per 10 cent, and their costs are going up by more than that, ie 11 they're making less money and it's very marginal at 12 best, to see this sort of discussion of moving a pay 13 package to over £1.1 million, just for target, let alone 14 for good performance. 15 Q. Why were you personally dedicating so much time to that? 16 A. It was astonishing. I think -- firstly, I think Lisa 17 Harrington and Tom Cooper were very unhappy with what 18 was going on. As I say, we go back to the bonus that 19 had been unauthorised and paid up, and they were very 20 angry about it. They were very angry about the whole 21 way remuneration worked. So I talked to them and Tom 22 had a very good reading as to the Department, he said, 23 "Send it in, Henry, but you just get a refusal". So 24 Grant Shapps did turn me down and I can talk through the 25 events after that in due course. 52 1 Q. We started today with the strategic priorities for 2 2022/2023 and the evidence that you gave was to the 3 effect that you were horrified by the approach that was 4 taken in that letter to the need for value for money, 5 et cetera, in respect of compensation issues. 6 You're now meeting with the very person who has 7 responsible for those issues, the very person who wrote 8 that letter to your predecessor. Why don't we see, in 9 either your note or their note, any significant 10 discussion of that issue? 11 A. Well, as I say, I was called in. It was a listening 12 meeting to hear what she had to say. She didn't 13 specifically raise those issues of the taxpayers' money 14 and it -- but it was her meeting. I just felt that it's 15 a big issue to talk about the role of getting value for 16 money for taxpayers when it comes to the remediation for 17 postmasters. But I thought that was a matter we would 18 need to sort out in due course. It was way too early in 19 my tenure, after a month, to have formed firm views on 20 what was happening. 21 Q. To give an idea of the relevant timeline, so far as the 22 Inquiry is concerned, on 6 and 13 July 2022, there had 23 been an Inquiry hearing on compensation. On 15 August 24 2022, the Chair had published a progress report on 25 compensation. You had been attending the Board since 53 1 October that year. We're now in the New Year, your 2 first meeting with the Permanent Secretary: why is it 3 that Nick Read's pay seems to take a great deal amount 4 of space on the page, whereas compensation, redress for 5 subpostmasters, doesn't? 6 A. Well, it was taking up a disproportionate amount of 7 time. I mean, in my witness statement it took up 10 per 8 cent of my witness statement, talking about what was 9 happening on the Chief Executive's pay. That just shows 10 how the priorities in terms of pay were to the 11 management. 12 Q. What went wrong there? 13 A. Well, I think what went wrong was that the management 14 feel that this was meant to be more like a public 15 company than a company owned by the State and, 16 therefore, the remuneration levels should be closer to 17 that, than that of a public company. That, I think, is 18 what went wrong. And, to start with, I thought maybe 19 there's something in that but, you know, once I -- 20 almost once I'd seen Grant Shapps, I could tell that's 21 not the way Government looked at it. They didn't see it 22 as a company that was more like a public company; they 23 saw it as a company that was owned by the Government and 24 that's why the Secretary of State, Grant Shapps, pointed 25 me towards how much he might earn and how much Permanent 54 1 Secretaries might earn versus how much the executives of 2 the Post Office might earn. 3 Q. I'd like to move on, before we take our morning break, 4 to some early observations after that meeting. Could 5 we, please, first actually turn to POL00423699 and this 6 is Mr Cameron's email on "The robustness of our 7 governance", that was sent to Mr Read. We'll bring that 8 up on to screen. If we scroll over, please, to the 9 bottom of page 2, it's an email that the Inquiry has 10 previously seen in an earlier phase and no doubt it's 11 an email that we will see again this afternoon with 12 Mr Cameron. If we scroll down, thank you. 13 Did you see this email at the time or thereabouts? 14 A. I don't think I did, but I think Alisdair chatted me 15 through it, you know, as part of our conversations. 16 Q. I'll take you quickly through it, we've already seen it 17 with another witness, so I won't read it all out: 18 "We agreed to do a rapid, subjective assessment of 19 the issues around our governance, which we might want to 20 fix before we get an expert in." 21 Were you aware of an expert being brought in to look 22 at governance issues at this stage? 23 A. Yes, and I was aware that Alisdair wanted to have 24 a chance to fix them before we got an expert in who just 25 repeated the fact that we had a problem. 55 1 Q. "Board 2 "Membership. We need to get another accountant to 3 support Simon J. Sorry." 4 If we scroll down, "Group Executive", and there is 5 a series of issues regarding the Group Executive. If we 6 scroll down, (3) was "Decision-making". 7 A. If we could -- if I could just it's quite a big -- 8 important there. 9 Q. Absolutely. 10 A. He refers to CIJ and I think that's quite important to 11 touch on. 12 Q. Yes. 13 A. Will you come back to that? 14 Q. We can address that but there's a reference there to the 15 CIJ scorecard. What did you understand by that? 16 A. What we had was -- if I could just step back a moment, 17 Justice Fraser issued two judgments. One was the CIJ, 18 which was mainly around contractual issues but included 19 some other items, and the HIJ judgment was really 15 big 20 recommendations on how we should move forward. So these 21 were really important, and the scorecards were there to 22 try and tick off what was -- what Justice Fraser wanted 23 to make sure that we got there. 24 And Alisdair's comment here was actually that's not 25 what we're doing. We're not measuring the things that 56 1 Justice Fraser is really interested in, in terms of 2 losses, the rapid buttons for -- press if you've got 3 a problem, investigations, et cetera. So he was really 4 concerned that we were not moving in the right 5 direction. 6 Q. Were you aware at that time of what the CIJ scorecard 7 was? 8 A. No, I wasn't. I wasn't aware of it at all. I was 9 interested because I felt that it was -- we'll come and 10 perhaps talk about it later, as to the Board, as to 11 whether CIJ/HIJ was receiving the right priority, but at 12 that point I wasn't aware of the detail of what was in 13 the scorecard and what happened and that we weren't 14 measuring the correct things. It all came out from 15 talking to Alisdair. 16 Q. At this point in time, did you have a view as to whether 17 the business was appropriately addressing those issues 18 in the Historic Issues judgment and the Common Issues 19 judgment? 20 A. I didn't have a view. It was -- before I joined the 21 Board, there was a board meeting where they discussed 22 actually implementing the HIJ and CIJ judgments in 23 November '22, and Nick Read reported that we didn't have 24 sufficient funds to proceed both with the Horizon 25 replacement, and the CIJ/HIJ recommendations. 57 1 And Tom Cooper said "Well, they're both equally 2 important", but Nick said "If there's only room for one, 3 we should move forward with replacing the system". And 4 I said to him, "My view is, for what it's worth -- 5 I haven't even been here a matter of a few days -- 6 surely we should fix what Justice Fraser wants. You 7 know, an accountant starts -- with let's fix the basics 8 and spending £800 million on a new system, well, we 9 should get to that but let's do the basics that we can 10 because that will inspire confidence from our 11 postmasters that we have a system that they can rely 12 on". 13 But as a Chairman, you don't take the decisions. 14 The Chief Executive runs the company. That's very 15 important to understand. You're there to guide 16 thinking, nudge and, only in the last resort, overrule. 17 So I thought, "Well, I've raised it. I think it's for 18 Nick to think about" and, in the end, he thought about 19 it and, actually, the priority was the NBIT system. It 20 was not what I'd have done if I had been Chief Executive 21 but that was the view that was taken. 22 Q. So the decision was to prioritise the new Horizon 23 system -- 24 A. Correct. 25 Q. -- over implementing -- 58 1 A. Justice Fraser's recommendations. 2 Q. -- matters raised by Mr Justice Fraser? 3 A. Yes. 4 Q. Can you assist us with approximately what time period 5 was when that decision was taken? 6 A. That was at the Board before I joined. 7 Q. Thank you. We get to the NBIT system at point 4 of 8 Mr Cameron's email. He says as follows in respect of 9 NBIT: 10 "We have not had any formal governance of NBIT for 11 months and there is no date when we can expect it. 12 "The [Group Executive] has no idea, for example, why 13 R2 has been delayed ..." 14 Is that a second rollout of some sort? 15 A. Yes. 16 Q. "... or the extent to which it matters. 17 "No one is working on how we run [the Post Office] 18 after NBIT." 19 What was your understanding of the concerns 20 regarding the NBIT system at that stage? 21 A. They were very, very real. They were very, very real as 22 far as Alisdair Cameron was concerned. Normally, with 23 these big projects, you have an Executive Committee that 24 really gets into the detail and you have a Board 25 committee that looks at it more strategically in 59 1 governance terms, makes sure that the Exec Committee 2 know what they're doing. And the Executive Committee 3 was abolished in about November, as I recall, and that's 4 precisely why Alisdair raises the problem and it wasn't 5 set up for months. 6 And he says in a different memo that it's reckless. 7 And I said to Nick, "You know, we really ought to have 8 Executive Committee that runs this", but there was no 9 Executive Committee right the way through to the half 10 year and I was getting feedback from other people, of 11 Alisdair saying, "Look, there's a problem building up 12 here, the costs are out of control", and, sure enough, 13 in June we were informed as a Board that the project, 14 instead of costing 330 million-odd, it was going to cost 15 840 million. 16 I mean, that is an indication of how staggeringly 17 out of control this project was. So I think Alisdair is 18 probably not -- is being a bit kind to say what he said. 19 Q. You've mentioned a decision in June or information that 20 was provided to you in June. 21 A. Correct. 22 Q. In your statement, you also refer to an incident in May 23 2023 where you say Jane Davies had spoken to Mr Cameron 24 and there is an allegation there that the full exposure 25 had been hidden from the Board; can you assist us with 60 1 that allegation? 2 A. Well, only to the extent that I think Alisdair's view 3 was that the truth wasn't coming out and, at the same 4 time, shortly after we had that John Doe letter which 5 said exactly the same thing, and I guess none of that 6 would have transpired if we'd had an Executive Committee 7 that was meeting fortnightly astride this project. It's 8 normal basic project control of a big project like that. 9 Q. We'll get to the John Doe letter but, in your opinion, 10 is it your evidence that there was something intentional 11 about the lack of information being provided to the 12 Board? 13 A. Ah. That would be what was happening within the IT 14 Department. I think that there probably was 15 an intention for the picture not to emerge but I have no 16 evidence for that. That would be my gut feel. You 17 cannot have a project going from just over 300 million 18 to just over 800 million without some intention to hold 19 back that information. 20 Q. Thank you. We'll look at one more document before we 21 take our mid-morning break. That's POL00447866. This 22 is the Board evaluation report that you referred to 23 earlier. We're now at 28 March 2023. Was this a report 24 that you asked to be created? 25 A. No, it's a normal annual evaluation where we contact the 61 1 non-execs -- well, contact all the Board Directors, and 2 one or two others, to get their views on governance. 3 Q. Thank you. There are points raised or areas for 4 development set out there, the first is regarding Board 5 agendas. The second is: 6 "The relationship between the Group Executive and 7 the Board needs to be strengthened, and priorities 8 aligned. There was concern about insufficient 9 information flows between the two groups ..." 10 Briefly, what was the concern there and was it 11 a concern that you shared? 12 A. Yes, I think, to be honest, it's -- the real issue was 13 for the Directors, that we get these very lengthy 14 reports, which are difficult -- there's just too much to 15 read, and the main issue was that they were being asked 16 as Board Directors to take a decision, and that's very 17 unusual. Normally, in a Board, the Executives take the 18 decision and they bring it to the Board for approval, 19 which is very, very different. And I think that was the 20 issue about the information. It was information on -- 21 but not in the way they would have expected to receive 22 it. 23 Q. Thank you: 24 "3. The Board needs time to review and reflect on 25 its past decisions and customers' views need to be 62 1 considered further when the Board is making decisions. 2 "4. The Board would like clarity on the shareholder 3 representative's role on the Board." 4 Does that go back to the December 2022 discussion 5 that you were having regarding the UKGI Non-Executive 6 Director and the limits or extent of their role? 7 A. Partly. But it -- also, for me, it confirmed what had 8 happened from these three Directors, one of whom left 9 after nine years and the other two left before their 10 time was up, and I got an independent review done by 11 Ernst & Young as to their reasons for leaving, and they 12 said, "Look, we're about to leave, that makes it very 13 invidious for us". And I said, "Look, I'll tell you 14 what, talk to Ernst & Young and I will -- on a purely 15 private basis, because I need to know, as a matter of 16 record, why two of you are leaving early, really". 17 And one of the issues that emerged -- that -- the 18 key issue for me -- that mainly emerged actually after 19 talking to them about the report -- was the issue of the 20 UKGI Director. So it wasn't a surprise to see this 21 thing arising in this report. 22 Q. If we turn to page 3, it sets out there the lowest 23 scoring questions. There's also a section on the 24 highest scoring questions. 25 Let's, if we scroll down, look at the lowest scoring 63 1 questions: 2 "To what extent does the Board review past 3 decisions? 2.3." 4 So a score of 2 means that the area requires 5 development; 3 is good or at the required standard. 6 If we scroll down, please: 7 "How would you assess the Board's approach to 8 considering the following stakeholder needs/views when 9 taking decisions: 10 "Customers." 11 Again, 2.3. 12 "How seriously does the Board take the development 13 of individual directors and the Board as a whole, and 14 where it needs to improve? 2.5." 15 It's these last three that I'd like briefly to focus 16 on: 17 "How effective are the relationships between: 18 "Non-executive Board Members and Management (in 19 providing support and challenge)? 2.8." 20 What do you see as the concern there? 21 A. Well, as I said, I hadn't been there long but it clearly 22 came out that there -- relationships between the 23 non-exec and the management weren't quite as good as 24 they would be in any other company I'd been there. 25 Q. "The level of insight provided by the UKGI 64 1 representative into the strategic direction that the 2 shareholder aspires to. 2.8." 3 Is that much of the same that we've been 4 discussing -- 5 A. Yes. 6 Q. -- in relation to UKGI? 7 A. Yes. 8 Q. Yes? Finally: 9 "How would you rate the quality of papers and 10 presentations received by the Board?" 11 Again, 2.8. Again, was that a concern that you 12 shared? 13 A. It was the point I made. It was not so much the -- 14 well, it would depend, really, what you mean by 15 "quality". The issue was too much decision-making was 16 required by the Board and all of this should be done at 17 the top management level, if not below. 18 Q. Can we please turn to page 11. There are some open 19 comments there in response to the question: 20 "How effective do you consider past Board 21 Evaluations to have been and do you feel that 22 recommendations arising from past Board Evaluations have 23 been implemented with sufficient rigour?" 24 I would like to look at those last two bullet 25 points. First: 65 1 "With a new chair I expect there will be some shift 2 towards greater challenge and accountability of senior 3 management." 4 Was that a concern that you were aware of when you 5 joined, that there was a concern about the 6 accountability of senior management? 7 A. I don't want to be critical of my predecessor but I felt 8 that that was the case. I'm a fairly proactive chairman 9 in terms of getting things done and that's probably 10 fair. I saw that as an issue. 11 Q. "There is a concern that the [Post Office] Board lacks 12 independence from its shareholder. The shareholder's 13 views are ostensibly given more weight than other 14 [Non-Executive Directors] or directors. [The Post 15 Office] Board should act in the best interests of [the 16 Post Office] (and it may have regard to its shareholder 17 interest) but not at the expense of [the Post Office]. 18 It is not always clear this is being done." 19 Again, is this much of the same in terms of the -- 20 A. This is the ten votes versus one vote situation. 21 MR BLAKE: Thank you. 22 Sir, that might be an appropriate moment for us to 23 take our mid-morning break, please? 24 SIR WYN WILLIAMS: Certainly, yes. What time shall we 25 resume? 66 1 MR BLAKE: If we could take 15 minutes, so that's about 2 11.47. 3 SIR WYN WILLIAMS: All right, fine. 4 MR BLAKE: Thank you. 5 (11.33 am) 6 (A short break) 7 (11.49 am) 8 MR BLAKE: Still moving chronologically, can we please turn 9 to POL00448712. This is the Chief Executive's report to 10 the Board of 6 June. That will come up on screen in 11 a second. Thank you. The narrative states as follows: 12 "There can be little debate that the period since my 13 last Board Report has been one of the most challenging 14 for Post Office in its recent history. The combination 15 of the TIS submetric issue [that's the bonus issue that 16 we discussed with Ms Burton] combined with the racial 17 codification scandal as well as legal challenges to the 18 [Historic Shortfall Scheme], has put the organisation on 19 the back foot reputationally, as well as politically. 20 It is also unlikely that this will cease in the near 21 term. The Select Committee hearing at the end of the 22 month along with the publication of Amanda Burton's 23 Report will ensure we remain in the media spotlight. It 24 is as yet unclear what approach the Government propose 25 to take with their Remuneration Governance review, but 67 1 it is unlikely to be positive. The implications of all 2 of this should not be underestimated. A fragile and 3 brittle business is creaking. Morale is being severely 4 tested. A culture of fear is developing. It is this 5 final point that we should be especially concerned 6 about. Colleagues are fearful of putting their heads 7 above the parapet, of taking risks and soon, of 8 admitting mistakes. Risk aversion and paralysis is 9 setting in, which will not help our commitment to 10 transparency." 11 Was that a view which you shared? 12 A. Yes, it was. 13 Q. As at 6 June 2023 what, in particular, were you doing 14 about it? 15 A. I think just -- I think I ought to make plain the role 16 of the Chairman because you asked a lot of questions 17 about remediation: why weren't you doing something about 18 it? I just want to make sure it's fully understood that 19 the Chief Executive of any company runs the company, is 20 responsible for everything on a day-to-day basis, 21 everything comes up to him. The Chairman's role is, if 22 he's not satisfied that sufficient progress is being 23 taken, you challenge, you nudge, you try and clarify 24 thinking but, in the end, you're under no -- you fully 25 understand, as the Chairman, that the Chief Executive is 68 1 running the show and, if, in fact, you're unhappy with 2 the way he's running the show, there is only one option, 3 which is you find a new Chief Executive. 4 But you're not running it, and I just want -- you 5 indicated that somehow I was running the company. 6 That's not the whole of a chairman, just to be clear. 7 So on something like this, I was aware of it and we 8 talk about it, I understood what was happening and the 9 answer is what do we do about it, and that's what we 10 talked to the Chief Executive about. 11 Q. So you say the role of the Chairman is to talk about 12 a significant problem where there is a culture of risk 13 aversion and paralysis setting in, and your solution 14 about that is to talk about it? 15 A. No, that's not fair. The answer is that, if you're not 16 running the company, you make suggestions as to what you 17 might -- what you -- what Nick ought to think about 18 doing. But it's not a question of talking. You make 19 suggestions as to how you tackle the problem but it's 20 for the Chief Executive to tackle the problem and sort 21 it. 22 Q. What were the concrete suggestions that you made to Nick 23 Read to resolve the very serious issues that he 24 highlighted in his annual report to the Board? 25 A. Well, his monthly report to the Board. Yeah. Well, my 69 1 main concern -- and I touched on it right at the 2 beginning -- which is we have layers of management and 3 no one is taking a decision. Even before this culture 4 of fear, decisions were not being taken right at the 5 level. Everything was being passed up, and there was 6 this fear, possibly -- and this is what Nick said -- 7 possibly because of the Inquiry, you know, that they 8 were fearful of making decisions because they might be 9 up to give evidence. 10 I found that unlikely because we weren't talking 11 about a level of management where they would come before 12 the Inquiry, but that was his view and that was part of 13 the explanation: we've just got to get through the 14 Inquiry and things might normalise. I think that it 15 was -- it was more than that. 16 This business is not fleet of foot the way 17 I would -- other retailers, Granada, WHSmith, you know, 18 the way they would tackle it. It wasn't fleet of foot 19 in that sense and I wanted to talk to him about my 20 experience at Smiths and how we might make the business 21 more fleet of foot and, of course, a lot of this thing 22 comes back to, if you have commercial success, a lot of 23 bits fall into place. So I was actually very anxious 24 to -- if we are successful, people will confident about 25 what they do, they will feel they have a secure job, 70 1 because the business is expanding, and that actually is 2 also part of dealing with this culture of fear. 3 Q. Am I to understand from the answer you've given, then, 4 that your answer is that the way to address the problem 5 here is greater commercial success? 6 A. That's part of it. Without any question, that always 7 lifts morale in any company. If you're doing well, it's 8 amazing what difference that makes to people: taking 9 decisions, not being fearful, et cetera. It's not the 10 only reason but it's, without question, in my limited 11 experience, it's a factor. 12 Q. Are there any other concrete suggestions that you made 13 at that time in order to resolve the problem? 14 A. I can't remember the detail but there was no doubt it 15 was a big issue and I think that Nick, not unreasonably, 16 felt that this was not going to be solved immediately. 17 It needed a longer-term issue. It came out even in the 18 evaluations that we did -- staff surveys. I've never 19 seen even with top management, we did the survey, that 20 culture of fear and worry. So this was something that 21 was not going to be sorted without a lot of thought and 22 a lot of movement on all fronts. 23 Q. Is there anything over and above thought and movement 24 that you would suggest could resolve those problems as 25 at that time? 71 1 A. Well, I can't remember the detail of it but, you know, 2 the fact is it needed to be dealt with on a number of 3 fronts, and I didn't feel that the management were being 4 slow in that regard. I could quite see that, with the 5 lack of commercial success, with the Inquiry, et cetera, 6 why people were fearful. I understood that. 7 Q. Let's move to the John Doe letter that you've referred 8 to already in your evidence. It's POL00448689. It's 9 an anonymous email, subject "Whistleblowing", and it's 10 directed to you: 11 "I'm writing to you directly because I don't trust 12 the Post Office whistleblowing process and escalations 13 into Nick Read have not been dealt with. This email 14 will also be sent to Sir Wyn Williams and Darren Jones. 15 "The disaster of NBIT is well known across different 16 levels within the business. Recently a number of people 17 have raised concerns to Nick Read that have been 18 ignored. More than one individual is aware and has told 19 Nick the Board have been told untruths by the NBIT team 20 and CIO about the extent of defects and timescales for 21 R2 rollout that now won't be delivered until August, if 22 then." 23 Were you aware of those issues when you received 24 this email? 25 A. Yes, I think I explained before that we'd had -- I'd had 72 1 feedback from Alisdair in May that things were being -- 2 well, it goes right back to the fact that we didn't have 3 an Executive Committee for some months, so, you know, 4 that wasn't good project control. So when Alisdair said 5 there was a problem brewing in May, I fully expected 6 that -- I wasn't surprised, and then, of course, Nick 7 reported to the Board in June. This is when the project 8 moved from 340 million to over 840 million. 9 So it was all about this time. By the time of this 10 note, I was aware the project was looking at, with 11 contingency, over £1 billion. I mean, I was obviously 12 shocked by it and -- as you would expect. 13 Q. The next paragraph: 14 "There has been no governance in place for NBIT for 15 a long time and what has been in place hasn't done what 16 it's supposed to. Even the new steering group operates 17 on misinformation because no one really has a clue 18 what's going on, how long it will take to fix and can't 19 be open about how broken the programme is because it's 20 already gone too far." 21 Was there a feeling within the business that it was 22 now effectively too big to fail? 23 A. No, I don't think that was the case. I think my view 24 and the view of my fellow directors was that this was 25 an appalling situation to have, to suddenly, within 73 1 three months, have a project to be costing over 2 £1 billion when we thought it was going to be 3 300 million before. But I didn't think -- there was not 4 a feeling that it was too big to fail. As I put in my 5 witness statement, the answer is we needed to have a -- 6 at £1 billion, we needed to have a rethink about what on 7 earth was going wrong, and Nick Read and I agreed that 8 we would -- the monthly spend needed to be slashed while 9 we took stock of where we were. 10 Just to explain, if I could, with NBIT, there was -- 11 we had to -- well, the decision was taken before my 12 time, which was should we have a system built off the 13 shelf, or have it done specifically for us and then, if 14 it's done specifically, should we do that in-house or by 15 some experts? 16 And Post Office had taken the decision that we would 17 do a specific system built in-house. That was the most 18 risky route to take but that route had been taken by the 19 time I got there. Once we had this £1 billion number 20 thrown at us, we agreed that we would get Accenture in, 21 get them to do a review of what should take place, and 22 that's what happened. And Accenture felt that what the 23 Post Office were proposing, which was to have it built 24 in-house on our own, was actually the right decision, 25 although they recommended a partner, ie Accenture, 74 1 should hold our hands going forward. 2 As you'll see from my witness statement, I was a bit 3 sceptical because I said I was concerned that the 4 consultants were talking the project up and, to 5 a certain extent, the management, the IT management, 6 were influencing the consultants. So, even though I got 7 the Accenture report, I just had in the back of my mind 8 that they were just saying "Press ahead" and I just 9 wanted -- I wanted to know if there was a cheaper 10 solution, which I did talk to the CIO about at some 11 length. So it wasn't as if -- trying to explain to 12 you -- as if nothing was done when we saw this 13 £1 billion. The answer is quite a lot was done. 14 Q. Let's continue scrolling down. It says: 15 "The NBIT project team and RTP teams work in silo. 16 NBIT is secretive and told not to share updates or 17 information with anyone from the wider business. The 18 RTP team are being stood up to understand gaps in the 19 NBIT plan that should have been managed under the CIO 20 and NBIT Director ..." 21 Was anyone being held accountable at this stage 22 within that team? 23 A. Yes. The -- Mr Read felt that the NBIT Director 24 probably just wasn't coping and we needed to make 25 a change. 75 1 Q. Can we scroll over the page, please: 2 "Setting up two separate projects under different 3 leaders has been a colossal mistake from Nick which he 4 did despite being warned against it by the CFO and 5 others. It has led to infighting and openly combative 6 and negative behaviours from some of his [Group 7 Executive] and other senior leaders ..." 8 Were these kind of views isolated? Were they views 9 you were aware of more broadly? Did this take you by 10 surprise? 11 A. I'm not sure -- I didn't agree with the fact that it was 12 wrong to have two separate leaders, and I know we've now 13 gone to having one team but, actually, the RTP team 14 really was to take -- their responsibility was to take 15 a system developed by the IT Team and implement it 16 within post offices. It was a totally different set of 17 skills that were required. And we had a manager called 18 Kate Secretan, who was just fantastic but she couldn't 19 have written an IT program but she could really deliver 20 at what goes on at the Post Office. 21 So I didn't disagree with having two teams because 22 of the skill sets required. Equally, once you have two 23 teams, there's always a degree of bickering and you have 24 to make a management decision as to the pluses and 25 minuses of those two. 76 1 Q. Scrolling down: 2 "There is inefficiency in business but especially in 3 the Transformation, Retail, CIO and NBIT teams." 4 If we scroll down: 5 "The CIO is the worst leader I have experienced in 6 a long and successful career. He is open about 7 misleading the Board with inaccurate dates and cost for 8 NBIT and is incapable of making a decision or having 9 a difficult conversation." 10 Was that a view that you were aware of or that you 11 shared? 12 A. Well, clearly, when you see a project go up to 13 £1 billion from £300 million in the course of three 14 months, clearly something is being hidden from you. 15 Q. If we scroll down over the page, please: 16 "Retail path clearing is an expensive and time 17 consuming activity that needs to be delivered before the 18 new system can roll out but this is the day job of the 19 Retail Team and nobody with the ability to fix it seems 20 to be questioning why they've not been doing what they 21 should be or why the retail director isn't owning fixing 22 it now." 23 Then there's a section there that addresses Mr Read, 24 and it says: 25 "Nick Read has openly acknowledged and accepted the 77 1 failings of some of his [Group Executive] team to more 2 than one employee that's been to him to express 3 concerns, but has taken no action to deal with it. He 4 is also aware of toxic behaviour from senior leaders and 5 again does nothing to address it even when he's 6 witnessed it directly. He refuses to make the difficult 7 decisions and nods along when people raise concerns, 8 saying everything they want to hear, but then does 9 nothing to resolve it. He is aware he has senior people 10 in the role not doing what they should like Jeff Smyth 11 and again does nothing to manage or deal with it, even 12 though it's a waste of public money." 13 Was this a view that you were aware of or shared? 14 A. Yes, probably. Yes. 15 Q. Yes, to both: you were aware of it and you shared it? 16 A. Yes, yes. 17 Q. "The culture in the business is disgusting" -- 18 A. Although I say that, that is my perspective. It is fair 19 to say that this was an incredibly complex decision, the 20 Horizon decision. So it's -- I would put that in 21 mitigation in terms of my criticism. 22 Q. "The culture in the business is disgusting and starts 23 from the top with Nick and the [Group Executive]. More 24 than one person has heard comments from [Mr Read] about 25 public school education and there is a class, race and 78 1 gender divide at the top. We have [a Chief People 2 Officer] suddenly disappeared from the business who 3 happened to be the only female on his team." 4 Now, without identifying any individuals involved or 5 anybody who has been a whistleblower, broadly, looking 6 at that is paragraph, what is your view? 7 A. We had a huge cultural problem there. Certainly, even 8 when I joined, there was any one female in the Executive 9 Team, which I said to Nick, that's just -- doesn't fly. 10 Ethnicity was very poorly represented across the team. 11 You heard odd comments about "jobs for the boys". I'd 12 heard them and understood why those comments were made. 13 Q. What do you mean by that: you understood why those 14 comments -- oh, why these comments -- 15 A. Yeah, because we did have a problem with ethnicity, we 16 did have a problem with gender. 17 Q. "Nick made comments last week to the senior team about 18 the horrific behaviours of the people who were part of 19 the Horizon debacle especially if they are still in the 20 business. He doesn't seem to see how much of this is 21 still going on and it feels like he's doing exactly what 22 those people did before saying if you were here in the 23 past you need to go regardless of the situation." 24 Now, we've heard about Project Phoenix and the Past 25 Roles Project. In your view, as at this time, was the 79 1 business doing enough in respect of those people who 2 were involved in the underlying issues remaining in the 3 business? 4 A. The underlying issue, with regard to Horizon, was we 5 didn't have an Executive Committee managing in a normal 6 project control sort of way what was happening. That 7 was what was -- so there was no -- if we'd have had 8 that, these issues, no doubt in my mind, would have come 9 to light. So, you know, a lot of this would have been 10 dealt with -- most of it would have been dealt with. 11 Q. I know you don't like the question "What did you do 12 about it", but can I but that again: what did you do 13 about it? 14 A. No, well, I thought I'd said really, which is I said to 15 Nick, "Never in my experience have we not had 16 an Executive Committee running a project like this". 17 I did institute a Board committee, an Investment 18 Committee, so there was this overview of what should 19 take place, and Andrew Darfoor agreed to chair it, and 20 he's a very, very competent person. But the fact is 21 that a board committee doesn't work unless you've got 22 an Executive Committee reviewing these things on 23 a day-to-day basis. 24 Q. What about the fundamental cultural issues that are 25 addressed here? 80 1 A. Well, that's -- okay, so that's a different issue at 2 all, that's got nothing to do with Horizon. 3 Q. Yes. What were you personally doing in respect of those 4 fundamental issues? 5 A. Well, I think that you will have seen the evidence given 6 by Saf Ismail and Elliot Jacobs as to how hands-on I was 7 with regard to dealing with the issues of postmasters 8 and how we should treat them, and of course there's 9 a big ethnic issue within that. So I was doing a lot in 10 that area. 11 I think, with regard to Horizon, it is a project, 12 and really a project has to be managed by the Executive. 13 So, if there are issues that are being hidden, if 14 there's a feeling that it's -- there are too many public 15 school jobs for the boys, that's for the management to 16 sort out and, like I said to Nick, that's what we need 17 to do. And if we had a proper Executive Committee it 18 would get sorted out. 19 Q. Can we please turn to POL00448509. There's then 20 a discussion at Board level on 5 July about the letter. 21 If we scroll down, we can see there's a heading 22 "Speak-Up", and if we see below it says: 23 "The Chairman shared his view that some of the 24 allegations raised did not appear to be strictly 25 whistleblowing issues and that it may be in order for 81 1 the Board to consider a different approach to address 2 [those allegations]." 3 A. And that is because some of those issues were to do with 4 competence and management, rather than whistleblowing, 5 which is to do with more cultural type issues. 6 Q. We see below that, if we scroll down the page, Mr Read 7 addressing the Board. Now, given that some of those 8 cultural issues were directed towards Mr Read's own 9 abilities, do you think that the Board at that point 10 scrutinised those cultural issues sufficiently? 11 A. Well, with regard to competence, the Board felt it was 12 up to them to form a view, after a review, as to whether 13 we felt the competence was right, and that is why we 14 agreed to appoint Accenture to give us a view on all 15 these things. So we didn't do nothing, we actually felt 16 that would deal with competence. If it was to do with 17 cultural, well, that should be part of the investigation 18 into Mr Read, which it was. 19 Q. We have KPMG involved by this point, Accenture involved 20 by this point. We're going to move on to Grant Thornton 21 also being involved by this point. What is your view as 22 to whether the Post Office farmed out these issues to 23 too many external agencies and didn't deal with it 24 themselves? 25 A. I think that's a really good question. In my 82 1 experience, I've never seen an organisation that uses 2 consultants so much, by a factor of five. It's just 3 very, very -- it's a really good question. It's very 4 unusual and it would not happen in a normal corporate. 5 That's absolutely right. 6 Q. You personally did instruct a number of those 7 organisations, or were involved in the appointments, 8 should I say? 9 A. Well, I didn't -- I was keen for Accenture to give the 10 Board an independent view and I was keen for Grant 11 Thornton to be involved on governance type issues, yes, 12 that's right. But I'm talking just more generally. 13 Q. If we could turn to the Grant Thornton report. That's 14 at POL00446477. We see over the page it was 15 commissioned in October 2023. So were you personally 16 involved in the commissioning? 17 A. Correct. 18 Q. Yes. If we turn to page 7, we see there the "Key 19 findings". The Inquiry has been through this report 20 already and the key findings: are there any in 21 particular there that stand out for you that you were 22 concerned about? 23 A. Yes. 24 Q. I appreciate that this wasn't published until a year 25 later? 83 1 A. Yes. Well, I think a key one is the first one, which is 2 actually everything stems from having a proper 3 group-wide strategy, and I think -- and my view for the 4 strategy, which I touched on with the Secretary of State 5 on the day she fired me, which was we needed to have 6 a far more postmaster-centric organisation, with more 7 postmasters on the Board, and it would change our 8 culture in terms of how much we spend, we would be 9 farming out a lot less to people and spending public 10 money in that area, and I think what I saw was a slim -- 11 this was only a viable business if we slimmed it down 12 significantly, but that would require funding. So it 13 was the key issue for me, without doubt. 14 Just looking down there, I think -- 15 Q. Could I ask you about number 5. 5 is: 16 "Culture -- a lack of trust, accountability and 17 performance management. [Post Office] is plagued by 18 a pervasive culture of reluctance to make decisions, 19 driven by fear of public scrutiny ..." 20 Now, this very much echoes the observations made by 21 Nick Read that we looked at earlier, that were made in 22 June 2023. 23 A. Yeah. 24 Q. It looks as though, by the time of this report of 25 25 June 2024, so a year later, that was still a problem 84 1 within the business. Do you think that under your 2 chairmanship, sufficient was done to address that issue? 3 A. Yes, I think we were trying to deal with it. I think, 4 as I said before, the management structure was all 5 wrong, and it just encouraged this reluctance to make 6 a decision and performance manage, and everything was 7 moved up in a business -- I'd never seen that in 8 a business before. 9 There are a number of cultural issues. The biggest 10 cultural issue, of course, relates to how postmasters 11 are viewed in this organisation. We could probably come 12 back to that, what is missing -- 13 Q. We will come back -- 14 A. What I thought was missing -- 15 Q. -- to that chronologically in due course. Let's stick 16 with the timetable. We're in October now when this 17 report has been commissioned. Let's move on now to 18 November. Can we please turn to POL00448694. We're now 19 in November. If we scroll down, actually, if we could 20 go to the bottom of page 2 into page 3, this relates to 21 something called Project Venus. 22 Briefly, do you recall Project Venus, as a name? 23 A. Is this -- I think is this to do with the postmasters? 24 Yeah? 25 Q. Yes -- 85 1 A. Postmasters -- 2 Q. -- so let's have a read of that, the bottom email. It's 3 an email from yourself to Simon Jeffreys, who was 4 a Board member. I think was he the Chair of the Audit 5 and Risk Committee? 6 A. Yeah. 7 Q. Actually, if we scroll down, we can see his email to 8 you, and he says: 9 "I was made aware of this project this evening. 10 "It would be helpful, please, if you could numbs 11 date me before [the Audit and Risk Committee] on Monday. 12 Happy to give you a call tomorrow if convenient." 13 Then we see your response and you address the 14 investigations into Mr Ismail and Elliot Jacobs. You 15 say: 16 "The balances with Elliot, as with so many 17 postmasters, is problematic partly reflecting the 18 complications with Horizon. A summary of the saga is as 19 follows. A detailed investigation was undertaken by the 20 Investigations Team and a balance of under £15,000 was 21 agreed as owing by Elliot. This built up over a period 22 of 6 to 10 years. Bearing in mind that about £1 million 23 a year goes through the intercompany account, the 24 difference built up over a period of years is 25 de minimis." 86 1 So, essentially, you're pointing out there that the 2 money owed by Elliot Jacobs was, in your view, 3 de minimis, given the period and given the amount of 4 money passing thorough his accounts? 5 A. No, these were not -- that's precisely the point -- 6 these were not loans to David Jacobs (sic). What we had 7 here, as with any retail organisation, we had 8 a difference on an intercompany account. Just as you 9 have with any supplier relationship. This did not -- 10 and it's £200,000, but even £200,000 is de minimis in 11 terms of the amount of business going through Jacobs' 12 account. 13 So it was, in any normal organisation, you've just 14 done a reconciliation of intercompany accounts, which 15 eventually we did, and we found that only £15,000 or so 16 was owed by Jacobs, which was infinitesimal in terms of 17 the business going through. 18 But what had happened was that the Legal Department 19 did a complete investigation into these two Postmaster 20 Directors. I think it was vindictive, I think it was 21 all to do with there were raising issues with regard to 22 postmasters generally, and it was completely out of 23 order, and what we had was a situation -- was, even 24 though when we found, I think Sir Wyn said it took 25 a year to get to do this investigation? And the answer 87 1 is: it took a year but actually it could have been done 2 in months but it was held over these two poor people for 3 a year. That's why I say it was vindictive. 4 Q. If I could stop you there. Were you surprised that the 5 Chair of the Audit and Risk Committee by this stage, 6 after a considerable period of investigation, wasn't 7 aware of this issue? 8 A. Well, it's because these investigations, as part of our 9 procedures, are not made public because, you know, these 10 people -- as it turned out, these people were completely 11 innocent. So we just wanted to find out what had -- 12 what the position was. 13 Now, what happened was, the Legal Department, as 14 part of this -- the word is not "vendetta", but as part 15 of this attack on the Postmaster Directors, were saying 16 these were loans to directors, when they clear weren't. 17 It was just intercompany trading. That's why I pulled 18 you up on the word "loan". This wasn't a loan; this was 19 intercompany trading and nothing more. And they said 20 somehow that the reduction from the £200,000 to the 21 £15,000 was a benefit in kind. 22 It wasn't. It was the fact is the Horizon system 23 was lousy and it was giving these wrong figures and we 24 could only prove £15,000 that was owed. So there wasn't 25 an issue. 88 1 Q. You then say: 2 "Foat spent a considerable amount on legal fees. 3 I asked a subcommittee of Lorna (as the Shareholder 4 Director) and Amanda (a lawyer) to look at legal advice 5 ... Saf and Elliot have a feeling that Foat will just 6 not let it go -- that he keeps raising the matter that 7 somehow Elliot and Saf had an undisclosed conflict of 8 interest (I gather he said that to you ...)." 9 A. Yes. 10 Q. "They deeply resent that. They say it shows the [Post 11 Office] has not changed in that they think that all 12 postmasters are crooks. It is getting heated now when 13 I thought he had cooled the situation weeks ago. 14 "I thought the whole matter had been finalised 15 following Amanda and Lorna's review but it seems that 16 Foat opened a second front with you! 17 "I have not seen the note that is being considered 18 so am unsighted on what is proposed. Saf and Elliot are 19 obviously concerned that a note will lead ..." 20 Is that a Freedom of Information Request? 21 A. Yes. 22 Q. "... which they think is Foat's aim. They think the 23 matter has been investigated fully and the balance found 24 to be owing is de minimis and [Freedom of Information 25 Act Request] will just allow Foat to pursue his 89 1 vendetta." 2 Very strong words at this point in time being used 3 in relation to Mr Foat. By this stage, November 2023, 4 were you aware of an investigation into your own 5 conduct? 6 A. No. 7 Q. If we scroll up -- 8 A. Can I just pick up on one thing, though, which was -- 9 and this was not just being 100 per cent supportive 10 towards the Postmaster Directors. When the £15,000 was 11 found to be owing, the Post Office agreed with Mr Jacobs 12 that he could just add that to the intercompany account 13 and deal with it that way, and I said no, I want you to 14 write out a cheque. So I don't want any doubt that 15 there's no loans to a director here, and they said, 16 "Well, we've agreed what we're going to do with the Post 17 Office". I said, "Nonetheless, I would like you to 18 write out a cheque". So it's not a question of just 19 siding with the postmasters; I took a firm line on that. 20 Q. If we scroll up, we can see that exchange of 21 correspondence with Mr Jeffreys, and he asks for some 22 more information on the top of page 2 because of the 23 difference in the figures. 24 Then, if we go to the first page, we can see you 25 give a more detailed explanation in respect of those 90 1 figures. 2 A. And you can see that the Chairman of the Audit Committee 3 agreed. 4 Q. Yes. Now, we do know that, by this stage, there was 5 an investigation into a whistleblowing complaint that 6 had been raised by Ms Davies, but can I confirm that it 7 is your evidence that, by this stage, you are not aware 8 that it concerned you? 9 A. Correct. 10 Q. You've suggested in your witness statement that the 11 investigation into the Subpostmaster Non-Executives may 12 have had some sort of ulterior motive. Can you just 13 assist us briefly with that, please? 14 A. Well, I believe, and so do the Postmaster Directors, it 15 was because of their comments about the unsatisfactory 16 cultural issues within the company, that the postmasters 17 have got their hands in the till, guilty until proven 18 innocent, you will have seen all of those issues raised 19 by them, and I think they felt that this was, in their 20 view, some sort of payback vendetta. 21 Q. As I've said, also at this time the company is dealing 22 with the allegations made by Ms Davies, the Chief People 23 Officer or the former Chief People Officer. The Inquiry 24 isn't investigating every aspect of that complaint, and 25 the reason the Inquiry has named Ms Davies is because 91 1 she has been previously publicly named in respect of 2 this issue. 3 In terms of timing, if it assists your answers, the 4 speak-up complaint from Ms Davies was made on 5 4 September 2023. Ms Davies is said to have named you 6 part of, albeit not the main complaint, but as part of 7 that -- 8 A. No, she didn't name me at all. I wasn't named in that. 9 Q. I'm coming to it. On 10 November, it is suggested that 10 she is subsequently said to have named you as 11 an individual who had made a discriminatory comment at 12 a meeting with external recruiters. As I say, we're not 13 addressing every single issue in today's hearing but, in 14 terms of timing, it does seem as though, by the time 15 this happened and the concerns that you've raised there 16 in vociferous terms regarding Mr Foat, she had, by that 17 stage, named you personally? 18 A. But I wasn't aware of that. Can I just say that 19 Ms Davies, as she said to the Select Committee, this was 20 a complaint by her into Mr Read and Mr Read alone, and 21 she has said in writing that she thought this 22 investigation was weaponised against me, following my 23 support of the postmasters. 24 Q. In terms of notification to you, then, when is it you 25 believe that you were notified that you were the subject 92 1 of that investigation? 2 A. I think sometime in December. 3 Q. Thank you. Looking at the timeline again, the ITV drama 4 was 1 to 4 January 2024. So we're now moving to early 5 2024, and there was a letter that was sent to the Lord 6 Chancellor. By way of background, can we please look at 7 POL00448701, please. This is a letter from Nick Vamos, 8 a partner at Peters & Peters solicitors. I think the 9 actual letter is undated, but it must be prior to the 10 letter to the Lord Chancellor, which is 9 January. He 11 says as follows: 12 "I wasn't sure who within [the Post Office] 13 currently is engaged on this issue but I assume you all 14 are." 15 Was this a letter that came to you at all? 16 A. No. 17 Q. Do you know who it went to? 18 A. I assume Mr Read and Mr Read alone. 19 Q. "I have been listening with growing concern over the 20 weekend to the report that Alex Chalk [who was then the 21 Lord Chancellor] is actively considering 'stripping [the 22 Post Office] of its role' in appeals and/or using 23 legislation to overturn every conviction. I assume he 24 is considering the HCAB [that's the House of Commons] 25 recommendations in their 14 December letter and 93 1 attachment. My concern is not that the Government will 2 implement any of the recommendations, but that it will 3 do so on a false basis because it does not have all the 4 relevant information and advice it needs to determine 5 whether it will increase the number of successful 6 appeals." 7 SIR WYN WILLIAMS: Sorry, Mr Blake, to interrupt, but isn't 8 HCAB the Horizon Advisory Board, not the House of 9 Commons? 10 MR BLAKE: Absolutely, my apologies, sir. 11 SIR WYN WILLIAMS: That's fine. 12 MR BLAKE: "The most significant issue is that all the HCAB 13 recommendations and the recent media and political 14 response is based on a false assumption that there are 15 700 wrongful convictions, therefore there are hundreds 16 of miscarriages of justice still out there whose route 17 to justice is somehow being thwarted by [the Post 18 Office] and 'the system'. In reality, it is highly 19 likely that the vast majority of people who have not yet 20 appealed were, in fact, guilty as charged and were 21 safely convicted. Unless this is made clear to the 22 Government, it risks making incredibly important and 23 expensive decisions on a completely false premise. I am 24 sure that this point has been or is being made to 25 whoever is briefing Alex Chalk, but I also know that 94 1 points can be misunderstood or watered down by the time 2 they reach a Minister, and this is one point that cannot 3 be made strongly enough." 4 He then identifies other issues. The second issue 5 relates to the Crown Prosecution Service unlikely to be 6 taking a more generous approach than the Post Office. 7 The third issue is that there are still many cases 8 that need to go via the CCRC and it has rejected 31 9 applications based on clear confessions and/or other 10 corroborating evidence of guilt. 11 "The fourth issue is the unspoken assumption that 12 the [Court of Appeal Criminal Division] would overturn 13 more convictions if only [the Post Office] would let it 14 ..." 15 Then if we scroll down over the page, please, the 16 letter ends as follows: 17 "Please let us know if you need assistance from 18 Peters & Peters in ensuring that the Government has 19 a clear and comprehensive picture of all the relevant 20 issues in its current decision-making process. If it 21 does not, or they are not presented clearly, I am very 22 concerned that the outcome of that decision-making 23 process will not be in the interests of justice, PFAs or 24 POL." 25 Were you aware of a request for this letter having 95 1 been made or do you know if it was volunteered; do you 2 know the background at all to production. 3 A. No, nothing of it. 4 Q. Was it something that you have discussed with Mr Read? 5 A. I hadn't discussed it at all. I was absolutely 6 horrified when I saw this because we were getting 7 absolutely nowhere on exoneration for postmasters based 8 on a very faulty system, and I was in some despair and 9 then the dam broke with the Mr Bates programme, and we 10 were getting somewhere, and you'll see I wrote to Nick 11 Read very early in January and said, "You know, there's 12 some progress happening here". 13 Nick was slightly more in the 'guilty as charged' 14 camp, whereas I was of a different view and I said, 15 "Well, let's just keep out of this, this is a hugely 16 difficult decision for the Government to make in terms 17 of exoneration, and let's let them make it". And 18 I thought we'd agreed that, so when I saw this letter 19 going to Alex Chalk, I just thought that's not -- that 20 should have gone to the Board because it was actually 21 expressing a view that I'm not sure that -- I didn't 22 share and I don't think most of the Board did. 23 I did write to the Minister and I said, "Thank you 24 for all the comments you made in Parliament the previous 25 day, in respect of exoneration and I'm hugely grateful 96 1 for your support". 2 Q. Let's have a look at of the ultimate letter that was 3 sent, the Inquiry has seen it before, it's POL00448381. 4 This the letter to the Lord Chancellor from Mr Read. If 5 we look at the second paragraph, it welcomes the 6 publicity generated by the ITV drama but it says: 7 "We also have a duty to the Court in respect of our 8 role as prosecutor in some 700 of those cases which 9 resulted in convictions." 10 The paragraph below says that they have carried out 11 an exercise to identify which would be highly likely to 12 concede in court: 13 "This has enabled us to write, proactively, to 14 a further 30 potential applicants in addition to the 142 15 resolved cases and the five awaiting consideration ..." 16 But then the paragraph below sets out the natural 17 corollary to the exercise, which has been to identify 18 those cases in which: 19 "... on the information available to us, and 20 following the judgment in Hamilton, we would be bound to 21 oppose an appeal. Typically, these cases involve 22 convictions obtained by reliance on evidence unrelated 23 to the Horizon computer system. The number of such 24 cases is very much more significant, at 369, with 25 a further 11 still under review." 97 1 So the suggestion being put there, between those two 2 paragraphs is that there are 30 potential applicants, in 3 addition to the 142, but the number that they would 4 oppose, significantly higher. Is that your 5 understanding of what was -- 6 A. Yes, about half is what they said. If I could just step 7 back a bit, at the January 2023 meeting, the KC acting 8 for the Post Office, Ms Gallafent, came to the Board and 9 I asked her specifically why are so few people coming 10 forward, and she said "Well, there are a number of 11 reasons, one of the reasons is that they may be guilty", 12 but she gave a whole lot of other reasons, which 13 I thought were perfectly reasonable, but it's 14 interesting that Mr Tidswell, who is the Chairman of the 15 Remediation Committee, said the reason they haven't come 16 forward -- "If they haven't come forward by now, they're 17 probably guilty, and the Post Office -- we as the Post 18 Office have a duty" -- that was the words -- "we have 19 a duty that those who are found guilty remain guilty". 20 And that sent a chill down my spine because that was the 21 beginning of the year. 22 That's why I was in despair. I thought, "How on 23 earth are we going to get exoneration back on the map", 24 and it only came with Mr Bates. 25 So it gives you some understanding of the feeling 98 1 within the Board, particularly the Chairman of the 2 Remediation Committee. 3 Q. Will we see in the minutes of meetings you voice that 4 concern? 5 A. No, but, again, as I said, my style was to say to Ben, 6 "Ben, that doesn't make any sense". They quoted 550 7 cases at that January Board, which they were looking at 8 in terms of exoneration, and they said there were only 9 12 per cent that might be considered. And I said, "That 10 doesn't make any sense that only 12 per cent were based 11 on Horizon". As you saw, they're now admitting that it 12 was up to half were based on -- so these quiet words do 13 make some progress in terms of moving the numbers. 14 Q. But you're Chairman of the company, you're chairing the 15 Board meeting. Isn't the Board meeting the time to say, 16 "Hang on a minute, we've got this approach entirely 17 wrong"? 18 A. The issue is manage. We have a separate Remediation 19 Committee, chaired by the Senior Independent Director. 20 He reports to the Board and we take a view on what he 21 said. He's got the feel for it. But I would say that 22 the majority of the Board probably shared my view that 23 this probably didn't make any sense but the detail was 24 being handled by the Remediation Committee, so I think 25 it's very difficult as a chairman, when you've got your 99 1 Senior Independent Director saying there's a duty for 2 them to be -- remain guilty, and -- 3 Q. Mr Staunton, this isn't a matter of detail; this is 4 a matter of fundamental -- 5 A. Absolutely. 6 Q. -- culture. 7 A. Absolutely. 8 Q. Why, as Chair of Post Office, were you not at this time 9 making the feelings that you have expressed today in 10 your evidence, why were you not making that known at 11 Board level? 12 A. This was in January '23, a month after I'd been on the 13 Board. As I said, that would have been ludicrous at 14 that point to have that firm a view. 15 SIR WYN WILLIAMS: Sorry, Mr Staunton. I'm getting confused 16 about dates. I assume that this discussion that 17 Mr Blake is suggesting to you that should have been 18 occurring at a Board meeting, was in 2024, just after 19 Bates v The Post Office had broken. 20 A. Yes, Sir Wyn, I was just trying to give some background 21 as to what was the position a month after I joined in 22 terms of -- 23 SIR WYN WILLIAMS: Yes, but we're a year on from that, 24 aren't we? 25 A. Okay, but I hadn't related to explain that situation -- 100 1 SIR WYN WILLIAMS: Sorry. 2 A. -- which was the feeling -- I was trying to give 3 a background to where people were coming from at that 4 point, which was the case in December. That's why. 5 MR BLAKE: Okay, but we're now in January 2024. We have 6 a letter from the CEO to the Lord Chancellor, almost as 7 high up as you can possibly go in terms of 8 correspondence. 9 A. Yes. 10 Q. What were you doing at Board to make known that you had 11 fundamental concerns with this approach? 12 A. I don't think there'd been a board meeting since the 13 letter from Nick Read, had there, to -- 14 Q. Did you send an email saying, "I totally disagree with 15 this letter, why did you send it?" 16 A. I did. I think it's on the email trail, isn't it, 17 "Nick, we agreed that this was not -- you're expressing 18 a view from the Post Office which you know is not my 19 view and this should have had Board approval". So I did 20 do that, precisely. 21 And there hadn't been a Board -- there was going to 22 be a Board the week after I was fired, where that was 23 firmly on the agenda. 24 Q. Looking broadly at the culture at the Post Office at 25 this particular time, can we please turn to POL00448699. 101 1 This is the same day as that correspondence. Can we 2 turn to page 6, please. There's an update on the 3 discussions in Parliament. 4 "As you may know, the Post Office Compensation Bill 5 is a short, fairly technical piece of legislation that 6 essentially looks" -- sorry, this is from December, 7 we're going to see in due course. It start with 8 an update on the Post Office Compensation Bill. 9 If we scroll, please, to page 4 -- 10 A. I don't think I was copied on this note, was I? 11 Q. No. I'd just like to ask you, really, about your -- 12 you're copied on the first -- sorry, this chain is 13 ultimately sent to you and we'll see on page 1 in due 14 course but, if we start on page 4, on 8 January, so the 15 day before that letter was sent, at the bottom of the 16 page, we see: 17 "As you will know, the Minister provided a statement 18 in the House of Commons this evening on the 'Horizon 19 Compensation and Conviction Update' following media 20 covering of [the Bates drama] and mounting pressure ..." 21 If we scroll down, we can see concerns being raised 22 there in the second paragraph: 23 "Although the Minister did not have a substantive 24 update on compensation, he did note that he had met with 25 the Lord Chancellor Alex Chalk today and together they 102 1 have 'devised options' to work through outstanding 2 convictions 'with much more pace', but noted the Lord 3 Chancellor would need to speak to senior members of the 4 judiciary for advice first ..." 5 So it looks as though there's movement towards -- 6 A. Absolutely. 7 Q. -- the exoneration? 8 A. And that's why I replied to the Minister thanking him 9 for his efforts. 10 Q. Thank you. If we scroll now to page 1, we see an email 11 from Mr Foat, which is copied into you, so that encloses 12 the entire chain. It says as follows: 13 "In addition to my note on Saturday setting out 14 a range of points on legal, governance and comms, I do 15 think it may be worthwhile that a one pager 'fact 16 checker' is drafted ... 17 "There are a number of facts that are actually 18 erroneous in the media, ie that all convictions are 19 unsafe etc. If it [sic] such matters are overtaken by 20 a political decision and legislation I believe it will 21 be important to have an accurate position of why it was 22 that the Government and [the Post Office] were in this 23 position, ie [Court of Appeal Criminal Division] not all 24 700 are unsafe convictions based on Hamilton; current 25 legal rules mean that the convict claimant must bring 103 1 the Appeal -- it is not up to [the Post Office] to just 2 overturn all of them etc ..." 3 In your view, what was the view of the Executive, 4 the Legal Team and the wider business at this point in 5 time in relation to the possible movement by Government 6 to provide a blanket exoneration? 7 A. Well, my view is there was no propensity -- no interest 8 at all for overturning convictions, I'm sad to say, 9 whereas that was not my view. I thought these 10 convictions of these poor postmasters and their families 11 were based on a completely unreliable system and it was 12 obvious to anybody -- I'm not a lawyer but it would be 13 obvious to anybody who is not a lawyer that that was 14 just an incredible decision. So we got to the right 15 decision eventually but it was not one that had much 16 support within the Executive of the Post Office, as you 17 see from Nick's letter and you see from Mr Foat's 18 letter. 19 Q. We then get to 13 January, and I think this is the email 20 that you're referring to, in which you express concerns 21 about the letter. Could we please look at POL00448703, 22 13 January. You say: 23 "Dear Nick, 24 "Thank you for forwarding your letter to Alex chalk 25 as requested. I was surprised to read it following our 104 1 conversations that we would not become involved in any 2 way in what is a very difficult decision for Government 3 and our justice system. 4 "You say that we are not making a value judgement 5 but then attach a letter from our lawyers which makes 6 the statement 'It is highly likely that the vast 7 majority (of postmasters) who have not yet appealed were 8 in fact guilty as charged'. If that is not a value 9 judgement I do not know what is. He also makes another 10 value judgement that no one would have a more generous 11 approach than [Post Office] -- a view I would not share 12 based on my assessment of our past behaviour. 13 "A third party would see this letter as Post 14 Office's lawyers 'continuing to defend the 15 indefensible', 'Post Office has not changed' etc. That 16 assessment of others would do a huge disservice to the 17 efforts of the current Board and management team as we 18 seek to accelerate justice and generosity for wronged 19 postmasters. 20 "Please ring me over the weekend to discuss." 21 So you do very clearly, as at Saturday 13 January -- 22 A. Crystal clear. 23 Q. Crystal clear. It might be said against you that, by 24 that date, you had an invitation to be interviewed in 25 relation to other whistleblowing complaints, the 105 1 Ms Davies complaint that we have referred to, and that, 2 in some way perhaps that played a role in you suddenly 3 reacting in this way with such a strong tone. What's 4 your view of that? 5 A. Well, you saw the evidence presented by the postmaster 6 NEDs who said that I was absolutely consistent. These 7 are absolutely consistent with my views explained 8 throughout this process. 9 Q. Could we please turn to POL00448302. We are now on 10 14 January and, as you say, we are now getting it to the 11 Project Pineapple incident and your involvement with the 12 Non-Executive Directors. Could we please turn to 13 page 4. This is an email exchange that we have seen in 14 the Inquiry. Am I right in saying, in fact, where it 15 says 10 January, it should read 14 January? 16 So it's the -- just after you've sent that email, 17 I think, to Mr Read, the day after, the Sunday after. 18 This notes your views -- 19 A. It's not mine -- 20 Q. Sorry, it records the views of Saf Ismail and Elliot 21 Jacobs: 22 "Saf said the views expressed by Richard Taylor, and 23 previously by management and even members of the Board, 24 still persisted -- that those [postmasters] who had not 25 come forward to be exonerated were 'guilty as charged'. 106 1 It is a view deep in the culture of the organisation ... 2 including that postmasters are not to be trusted. 3 SOMETHING NEEDS TO BE DONE." 4 What was your view on that issue? 5 A. I totally agreed. 6 Q. "Martin Roberts and certain members of his team were 7 singled out. There has been no feedback on the 8 investigation into Roberts (including for inappropriate 9 behaviour and lack of integrity). He was responsible 10 for the postage stamps debacle where changes were made 11 to accounts by his team just like Fujitsu. If Elliot 12 had not been on [the Audit and Risk Committee] the 13 controls would not have been strengthened. Roberts and 14 his team do not want any extension to their terms of 15 office as they believe new [postmasters] would not have 16 the experience to challenge them." 17 Again, what's your view on that? 18 A. That's slightly more detailed and I was much less aware 19 of these issues of postage stamps debacle, et cetera. 20 It was all news to me but Elliot said that, if he had 21 not raised them at Audit Committee, things would not 22 have been done. I did not understand the detail. I put 23 it in there because I wanted these two to know that 24 everything they'd said to me reflected their views. 25 Q. Thank you. Then we get onto a section on Mr Foat: 107 1 "Equally, Saf and Elliot are FED UP WITH THE AMOUNT 2 OF POWER WIELDED BY FOAT. He and other members of the 3 senior team act as if [postmasters] ARE GUILTY UNTIL 4 PROVED INNOCENT ... We must also part company with all 5 those investigators who behaved so terribly with 6 [postmasters]." 7 Again, at this stage, what were your concerns with 8 regard to Project Phoenix and the Past Roles Project? 9 A. There are these people called the untouchables who are 10 in the investigations team, or reds or whatever, and 11 they were involved in dealing with all these issues in 12 the past, sending -- finding postmasters guilty. 13 I think it's very important for the Inquiry to 14 understand this is not something that relates to the 15 past. This is something that relates to the future. 16 Before we implement Horizon, we will be doing 17 a path-clearing exercise. There are millions of pounds 18 in dispute between postmasters, what's on their records 19 versus what is in the Post Office's account, and I am 20 very afraid that, if they are investigated by the 21 so-called untouchables, we will have another debacle, 22 not quite to the same extent, but we could never have, 23 you know, hundreds of postmasters again having to pay 24 out monies. 25 And I think I was referred to in some of the 108 1 correspondence that you may have seen with Elliot, but 2 this is not something that relates to -- this is a big 3 issue going forward, the involvement of the 4 untouchables. 5 Q. You refer to them as "untouchables". Is that a word 6 that you had heard used? 7 A. No, it was the -- I think it was -- it was used by Nick 8 to me privately and he did refer to it in a meeting we 9 had with all of the non-execs there, and that's why 10 I was slightly surprised when he said he didn't 11 recognise the term. 12 Q. What did you understand him to mean by that term? 13 A. I think I understood him to mean that these people that 14 were involved in prosecuting postmasters previously, 15 they were still in their roles and, therefore, would be 16 involved in any future investigations, and were under 17 the -- they were -- we classified all of these people 18 under various colours, and they were the same as the 19 so-called reds, ie would be involved in future 20 investigations, which just seemed utterly wrong. 21 Q. If we scroll down, we have the reference to a small 22 amount of £16 in compensation being paid to one 23 postmaster. It then refers again to the 48 people 24 involved in investigations, and I think you record being 25 told by Mr Ismail and Mr Jacobs that there were 40 just 109 1 like Mr Bradshaw. 2 It then says: 3 "As a Board, we need to send a signal to the 4 Executive providing guidance and improving the culture 5 significantly. The current culture was described as 6 toxic ..." 7 Again, this is your record of the note of that 8 conversation. 9 A. The most important one is the paragraph you've missed 10 out, which is they say "The postmaster is not the 11 enemy". That's vital to understand. 12 Q. So that's just above the highlight: 13 "The [postmaster] 'is not the enemy'. 'Only 14 [postmasters] can solve this' and tell us how to change. 15 JB [I think that's Mr Bartlett] is an ex-policeman. His 16 behaviour has been unacceptable and he needs to move on 17 to prove we have changed." 18 Now, I have to put it to you, because others have 19 made this suggestion, that your interest at this point 20 in time in these Pineapple issues, in the letter that 21 was sent by Mr Read, is prompted, in some way, because 22 at this stage, at this point in time, you yourself were 23 under investigation in relation to those allegations. 24 A. Well, let me -- this investigation was an investigation 25 primarily into Mr Read. There was one sentence that 110 1 referred to me. So I was absolutely very confident that 2 I had nothing to fear. It was a 12-page report by 3 Ms Davies and she had an 80-page dossier to back it up, 4 and the only sentence -- there was one sentence in it 5 with regard to me. So I wasn't concerned at all. 6 Moving on to the Project Pineapple report, it was 7 Sunday night, I was at home, I didn't prompt them to do 8 it. They rang me with their concerns, it was nothing 9 more. And I said to them, "Firstly", I said, "this is 10 very tricky for you chaps, you know the Post Office as 11 much as I do. This will be of -- have serious 12 consequences for you. They could end up -- you could 13 end up losing your businesses". And they said, "Henry, 14 we feel this is the right thing to do is to bring this 15 out into the open". 16 So it was their initiative and I think they were 17 very courageous to do it. So I said "I will send a note 18 the Board just highlighting your points, it won't be 19 a formal report but I'll just -- for discussion, and 20 I will want, if there's a single word in this note/email 21 that you don't like, I won't send the email haven't 22 I want both of you to agree to every single word". And 23 they both came back to me and said, "That's exactly what 24 we said". 25 Q. Thank you. If we go over the page, we can see the final 111 1 point there as well, regarding postmaster membership on 2 the RemCo. 3 One final document before we break for lunch -- 4 A. That's really important, sir, if I may say so -- 5 Q. Yes. 6 A. -- that the Postmaster Directors feel that they're 7 treated as second class citizens, so they're not on 8 important committees like Rem, and that's important. 9 You know, they refer to a two-tier board and when I've 10 said to them "Are you referring to the fact the two 11 tiers with regard to just the two of you not being 12 given -- treated with respect by the management, or is 13 it because you have this inner cabal of Ms Gratton, 14 Ms Burton and Ben Tidswell versus the rest of the 15 Board?", and they said, "Well, sometimes it's one and 16 sometimes it's the other". 17 So here is me desperately trying to keep this Board 18 together and yet there are these issues about some 19 people feeling not involved. But the fact is we need 20 postmasters on Boards like the Rem because it'll bring 21 a different perspective to what is a reasonable salary 22 to take, because postmasters think £800,000 is a lot of 23 money per year, let alone £1.2 million. 24 Q. We are going to look at one more document before we 25 break for lunch and I'm afraid we will go over lunch 112 1 today. Could we turn to POL00448381. 2 SIR WYN WILLIAMS: While that is coming up, Mr Staunton, can 3 you just tell me who decides which directors sit on 4 which subcommittee? 5 A. The NomCo decide, the Nominations Committee. The 6 Nominations Committee decides, but the Chairman also has 7 a view on it. I did actually talk to Mr Read about why 8 don't we have a member of the -- one of the Postmaster 9 Directors on it and he said, "Well, you know, they just 10 wouldn't take a commercial view of what is the right 11 salary because, of course, they come from the postmaster 12 environment". But I think -- 13 SIR WYN WILLIAMS: I wasn't delving into the merits of the 14 particular -- 15 A. It's the Nominations Committee, sir. 16 SIR WYN WILLIAMS: I guess I wondered who made the decision, 17 that's all. 18 A. The Nominations Committee. 19 SIR WYN WILLIAMS: Fine. 20 A. They would take some notice of the Chairman in terms of 21 that but it would be the Nominations Committee. 22 SIR WYN WILLIAMS: So the Nominations Committee but the 23 Chair can seek to exert influence, is that a fair -- 24 A. Yes, that would be a fair way of putting it. They would 25 listen very carefully to any views I had. 113 1 SIR WYN WILLIAMS: Yeah, okay. 2 MR BLAKE: If we can start on page 2, please. There's 3 an email from Mr Jacobs to Melanie Park, who was the 4 Central Operations Director. We've seen this email 5 before; he was waiting for his finalised report in 6 respect of the investigation that was going on into his 7 branches, and that's 16 January. 8 If we scroll up, we can then see that he sends that 9 concern to you. You say: 10 "Below you'll see correspondence from between myself 11 and Mel Park regarding the fact that [his] trading 12 account has [not yet been] updated with the removal of 13 the invalid claims of losses nor a letter of withdrawal 14 of the investigation to be issued. 15 "Who is responsible ... legal. Again. How are 16 legal in the way of all things progress and good in this 17 business? Proof, if proof was needed, that their 18 fingers are in every part of the pie affecting our 19 ability to get work done to such a level that it is 20 frankly beyond belief." 21 You then respond and it's your response that I'd 22 like to focus on. You say: 23 "This is completely unsatisfactory -- I was under 24 the impression after talking to one of the 25 [Non-Executive Directors] handling this ... that the 114 1 report was wrapped up many weeks ago. I understand the 2 tremendous upset you (and Saf in the case of his 3 investigation) have been subjected to. This requires 4 an investigation. I had sent a filenote of the views of 5 our [Postmaster Non-Executive Directors] with regard to 6 Ben Foat. We should see tomorrow whether our 7 [Non-Executive Director] colleagues should take action. 8 I told Andrew yesterday that all the [Group Executive] 9 and FOUR Main Board Directors had been investigated. He 10 was incredulous." 11 Can you assist us with that: at that point in time, 12 what were those investigations that were going on? 13 We've heard about the two non-executive subpostmasters 14 being investigated, the suggestion here is that all of 15 the main Board Directors had also been investigated. 16 A. No, there was the -- obviously, Nick was being 17 investigated, I was being investigated, you had the two 18 postmaster directors -- so that was the four -- and the 19 Senior Management Team, most of them had been subject to 20 investigation. This was -- it's difficult to 21 comprehend. This was completely and utterly unusual, 22 the power of the Legal Department to investigate people. 23 Q. So we have, by this stage, all of the Group Executive, 24 four board members. We also have, as a background, 25 a falling out in respect of that letter that we saw to 115 1 the Lord Chancellor. Everything that's going on at this 2 point in time, it looks like a bit of a circus, doesn't 3 it? 4 A. Well, the issues around the GE, that was all much 5 earlier in the year so this was not something that was 6 a circus at the time. This just shows the power that 7 the Legal Department had over months and months and 8 months. So it's not all happening in December. But the 9 fact is, there's no getting away from it, from January 10 following the Lord Chancellor letter, following the 11 Richard Taylor letter saying, you know, all the 12 postmasters have got their hands in the till, just 13 outrageous stuff. 14 The fact is that January was the most turbulent 15 month that I've had in my whole 50-year career in 16 business and particularly in all the man years I've been 17 a chairman. I don't deny that. 18 Q. What do you see as fundamentally having gone wrong by 19 that stage? 20 A. To have a position like that, there are all sorts of 21 strands, one, of course, is the role of GI and the UKGI 22 Director; there's the role of the Legal Department; 23 clearly there's an issue around Nick and I trying to 24 keep this show on the road, but I think we both were 25 working incredibly hard in that respect. Even three or 116 1 four days before I was fired, I wrote to Lorna Gratton 2 saying, "Look, Nick here just feels totally unsupported. 3 We do need -- this is a terribly turbulent time for the 4 business, we do need to give him some more support", 5 because a lot of these issues, you're saying it's almost 6 self-inflicted, but these were coming from out -- the 7 Richard Taylor thing was coming from left field, as it 8 were, as was, of course, the Lord Chancellor situation. 9 MR BLAKE: Thank you. 10 Sir, that is an appropriate time to take our lunch 11 break. Can I ask that we come back at 1.50? 12 SIR WYN WILLIAMS: How is the shorthand-writer with that? 13 MR BLAKE: Yes? 14 Yes. 15 SIR WYN WILLIAMS: Right, 1.50. 16 (1.01 pm) 17 (The Short Adjournment) 18 (1.50 pm) 19 MR BLAKE: Good afternoon, sir. Can you see and hear me? 20 SIR WYN WILLIAMS: Yes, thank you. 21 MR BLAKE: Can we turn to POL00448381, we are still in 22 January of this year, we are still on the subject of 23 Project Pineapple. 24 Now, before this email was sent, there was also 25 a meeting on Teams on that day, regarding the new Senior 117 1 Independent Director; do you remember that? 2 A. Indeed. 3 Q. The Inquiry has heard evidence that, by that point, you 4 were expressing a view that the appointment should take 5 place internally, rather than through an external 6 recruitment firm; is that right? 7 A. No. 8 Q. Can you assist us with that, please? 9 A. Yes, what happened was that -- let me put this thing in 10 context, which was that the existing SID was leaving to 11 go to the competition and markets authority. We needed 12 to find somebody else. UKGI, in the form of the Chief 13 Executive, rang me, absolutely properly, to say, "Look, 14 we're not telling you what to do, but actually, just to 15 let you know, the shareholder will have a strong 16 preference for a Whitehaller to be SID, Henry, but we 17 realise this is the Board's final prerogative", and 18 I said "Fine". 19 So we then did -- we went round each of the 20 non-executives, I did that with a phone call but with 21 the company secretary with me. We did a vote as to what 22 we should do, and four directors voted to go internally 23 and four voted to go with a Whitehaller. And I said, in 24 view of the shareholder's preference and a split vote, 25 we should go with the Whitehaller. Then, of course, 118 1 when we had all these issues arising during the early 2 part of January, other non-executives at the meeting -- 3 it wasn't me drawing -- I was just being a servant of 4 the Board -- other non-executives said, "You know what, 5 I voted to go to a Whitehaller, I think there's so much 6 happening that we should actually go internally". 7 So I said "That's a massive decision to take, I want 8 you all to go away and think about it, not just rush it 9 at this meeting", and I rang them all afterwards and 10 I said "Which do you want to do?" And a vote of six to 11 two came out to remain internally. So it was not my 12 view at all. I was being a servant of the Board trying 13 to work out what they wanted and of those two -- 14 Q. Were these votes taking place transparently? 15 A. Yes. 16 Q. Were they known to the other members of the Board? 17 A. Yes, the only two that voted against was Ms Gratton and 18 Ms Burton. The Chief Executive and everybody else voted 19 to go internally because one of them said "When the 20 facts change, you change your views". So it was not me 21 pushing this at all; it was the Board pushing for we 22 need a change of mind and I said to them "This is 23 a massive decision, we need to go through a proper 24 process of a NomCo and then a Board and Andrew will be 25 there for part of it", because then it emerged that 119 1 their choice was Andrew Darfoor, an internal director, 2 to be the NED, and I said we would then do a proper 3 process where Andrew would be there part of the time and 4 he would leave the room and we would discuss it and view 5 it. So it was not pushed my me at all. Absolutely not. 6 Q. We've heard evidence from Ms Burton. The suggestion 7 that you confirmed to the Board that Mr Darfoor would be 8 the Senior Independent Director and that you would 9 bypass the usual process? 10 A. Absolutely not. You'll see the email trail which says 11 that is the view, six to two, in favour of Andrew, but 12 we need to have a proper NomCo and then Board to discuss 13 that. So not at all. I was just reporting the vote. 14 Ms Burton happened to be one of the two that voted 15 against and the other one was Ms Gratton but, including 16 the Chief Executive, everyone else voted to stay 17 internally because of the view. And I should say that 18 I knew (unclear), it goes right back to his 2003 report, 19 the choice of a SID is a matter for the Board, not the 20 shareholder, and the shareholder has to approve it and 21 that's why we need to go through a process, but it's 22 a matter for the Board to decide and the vast majority 23 of the Board wanted to go internally and most of those 24 voted for Andrew. 25 Q. In your view, is there some sort of miscommunication 120 1 that's taken place here or something else? 2 A. Well, I think the fact that Ms Gratton and Ms Burton 3 voted against, and I don't know what they took exception 4 to it, and I think -- I mean, it was unfortunate that we 5 had to stop the process but that was -- you stop the 6 process if the Board has changed its mind and there was 7 nothing odd about this. But I think it was -- I can't, 8 I wouldn't like to put the motives as to what -- why 9 those two adopted the story but the vast -- and the 10 Board has since appointed Andrew Darfoor. The will of 11 the Board has eventually come through loud and clear but 12 we went through the hiccup of UKGI saying that this 13 somehow wasn't proper. 14 Q. Now, at the same meeting on 18 January, you also 15 discussed the Project Pineapple issue; is that right? 16 A. Yes. 17 Q. Can you assist us with the conversation as far as that 18 matter went on 18 January? 19 A. Well, I think I ask the two non-execs to outline their 20 views and, obviously, they did and I think most of the 21 directors were shocked they weren't that clear -- they 22 weren't so clear as to how bad the culture was. But 23 some of them had some sense of it. Those that went 24 around to talk to postmasters, et cetera, were more 25 aware of it. I mean, I was aware of it because I go to 121 1 postmaster conferences and they say to me, "Oh, I've 2 just been on the helpline and they've said 'There's 3 another Mohammed on the line'", and the answer was 4 I said, I'm -- "Does that happen often?", and they said, 5 "More often than you'd believe", and I just had to say 6 to postmasters, "I'm terribly sorry, that is not the 7 culture that we want to have". 8 So -- 9 Q. Mr Staunton, let's stick to this issue now, as at 10 18 January. Let's turn back to the email. This is 11 an email that you sent confirming that the confidential 12 note had been forwarded to those who had been named in 13 the Project Pineapple email. 14 A. Yeah. 15 Q. Can you assist us with your understanding as to why it 16 was forwarded on? 17 A. Well, this -- just for Sir Wyn's benefit, there was this 18 email that was the complaints about the culture within 19 the Post Office towards postmasters and, because we had 20 this meeting coming up, I said to Elliot, and he seems 21 to have forgotten about it, I said, "Look, I think it 22 would be a mistake to bounce this off Nick, I need to 23 send it to him. Are you okay?" And he said "Yes, he's 24 going to see it anyway". Initially, we said he wouldn't 25 see it, and I said "Fine". 122 1 So I sent it to Nick and then, during the course of 2 our meeting, Amanda Burton said, "You won't believe it 3 but Nick has copied that note to the Legal Director and 4 the Retail Director who are the subject of their 5 complaint." 6 Q. It appears that you've had a discussion with Mr Read 7 about it. What was your understanding from that 8 discussion as to why it had been forwarded? 9 A. Well, I think he was very busy and he said he was very 10 sorry, and I then wrote to the Board saying he was very 11 apologetic and he was going to apologise to Saf and to 12 Elliot subsequently. 13 Q. That's the email that we see on screen at the moment? 14 A. (The witness nodded) 15 Q. Looking at the timeline that we've been looking at 16 recently, we have the investigation into Mr Jacobs not 17 yet withdrawn. We have the investigation into Mr Read 18 and into you, relating from the Jane Davies complaints, 19 we have the here now Project Pineapple email being 20 disclosed and the fallout internally from that. We also 21 have a fight between at least you and two of the 22 non-executive directors in respect of the appointment of 23 the Senior Independent Director, and -- 24 A. It wasn't a fight. 25 Q. A dispute. 123 1 A. No, the Board -- 2 Q. Your accounts are fundamentally opposed to one another, 3 aren't they? 4 A. Yes, but that's not the -- I'm just telling you how it 5 was from the perspective of me and the six directors who 6 voted in favour of Andrew Darfoor. 7 Q. There was a dispute, therefore, between you and those 8 who had not voted in favour of the appointment of 9 Mr Darfoor, was there? 10 A. No, I don't think there was. I think it wasn't 11 a dispute either between the six and the two. The fact 12 is that you -- quite often the Board get a majority vote 13 and you should actually normally go with the majority 14 vote. 15 Q. So -- 16 A. It just so happened that one of them was the UKGI 17 Director. 18 Q. As far as you are aware, as at mid-January, there wasn't 19 in any way a falling out over the -- 20 A. No. 21 Q. -- appointment of a Senior Independent Director? 22 A. No. 23 Q. Putting that issue to one side, looking at those other 24 issues that I've just highlighted, we're a couple of 25 weeks now after the ITV drama. Who is focusing their 124 1 mind on compensation and the redress schemes at the Post 2 Office? 3 A. Well, the compensation redress scheme was handled by the 4 Remediation Committee and I don't sense that there was 5 any slowing up on that at all. We would be -- it was 6 going to be reported to us in the meeting the next week, 7 as to where they were, and I would have -- if I had not 8 been fired on the Monday, I'd have been in the office 9 getting a catch-up with the Remediation Committee before 10 the Board. 11 Q. There are lots of matters going on at Board level and 12 Executive level in terms of people being investigated, 13 people being upset by the circulation of the Project 14 Pineapple email. Do you think that there was sufficient 15 attention, at that point in time, to the issues facing 16 subpostmasters? 17 A. Well, I think you've heard from the two Postmaster NEDs 18 how much attention I gave that issue. They were very 19 complimentary about my efforts in terms of they said it 20 was my biggest priority, which it was. 21 Q. What about the business more broadly? 22 A. Well, that was also requiring quite a lot of my time but 23 it was -- I was -- 24 Q. Sorry, I meant what was the reaction or the efforts of 25 the business more broadly, the Executive and the Board, 125 1 in relation to the subpostmasters and focusing attention 2 on subpostmasters, rather than spats between themselves? 3 A. I don't think that the non-execs saw it as a spat. 4 I think the non-execs saw the fact that some people had 5 changed their mind, I think they were quite pleased that 6 the majority was six to two. If it had been five to 7 three or four all, it could have been more spiteful. 8 But I think -- I don't think it was a spat at the Board 9 level -- 10 Q. Putting aside the Senior Independent Director issue -- 11 A. Oh, sorry. 12 Q. -- I'm talking about the investigation into Mr Jacobs, 13 I'm talking about the investigation into Nick Read and 14 into yourself, Project Pineapple and the fallout there. 15 There seems to be a lot going on at this period of time 16 in relation to matters that don't directly involve 17 subpostmasters. Do you think the business was focusing 18 sufficiently on subpostmasters at this point in time? 19 A. The fact is that there was a huge attention towards the 20 subpostmasters and remediation. It may have been for 21 a few days we were focusing on some governance issues, 22 but the fact was that, certainly for me, giving 23 attention to not only our subpostmasters existing but 24 also remediation for subpostmasters who have suffered, 25 particularly for those who had had convictions, was my 126 1 top priority. 2 Q. We know at this period of time you were also being 3 investigated into the allegation relating to Ms Davies. 4 There are several allegations that follow that you tried 5 to change the scope of the investigation or stop the 6 investigation that was being carried out by 7 an independent barrister and that, separately, that was 8 in some way perhaps motivated by a desire to limit the 9 investigation into yourself. What's your account in 10 relation to that? 11 A. Well, I initially raised these points about limiting the 12 investigation well before I knew there was going to be 13 an investigation into me because the investigation into 14 Nick Read started months earlier and, actually, it was 15 a litany of complaints that were being made, and it was 16 very distressing for him. So I said we need to not stop 17 the investigation but to limit it to focus on the main 18 points, so that we could actually get to the truth of 19 the big issues, and that was agreed. 20 It wasn't agreed until January, I admit, but that 21 was what I was trying to -- I wasn't trying to stop it; 22 I was trying to limit it in respect of Nick Read and 23 I was doing that before I was even investigated, based 24 on one sentence in Jane's report, and she said it was 25 nothing -- she had no complaints about me. 127 1 But moving beyond that, the fact is I didn't try to 2 stop it, I tried to limit it, but only in respect of 3 Mr Read. 4 Then there had been some issues made that I didn't 5 cooperate. The fact of the matter is I was in Nick 6 Read's room we were talking about all the issues 7 relating to Mr Bates, and I said I'd done absolutely no 8 work yet to prepare for there is Tutin investigation, he 9 said, "Nor have I", he said, "I have asked for 10 a two-week extension", and I said, "Well, I shall ask 11 for that too because I haven't spent any time". 12 Nick Read was granted the extension; I was not. 13 So I think, and I still went ahead, completely 14 unprepared, into this investigation with Tutin. So the 15 fact that you say that people say I tried to not 16 cooperate, I cooperated fully, even though I wasn't 17 prepared, and I wasn't given due consideration of extra 18 time, when you think of all the things that have 19 happened. So it's a complete -- it's completely wrong 20 to say I didn't cooperate. 21 Q. It's suggested that you put Ms Burton and Ms Gratton 22 under pressure to change the scope or limit the scope of 23 that investigation; what's your view on that? 24 A. My main correspondence, all the time, was with the SID 25 because I think that was the right thing to do, and you 128 1 see that he wrote back to me saying, "Yes, we've agreed 2 to split these complaints and Nick into three 3 categories", so my main -- I may have told them what 4 I was talking to Nick about but I didn't put any 5 pressure on them. The discussions were between me and 6 the SID, as it properly should be. 7 Q. It is also suggested that you asked Ms McEwan and 8 Ms Sheratt to stop the investigation. What do you have 9 to say about that? 10 A. These are relatively less senior people, so, of course, 11 I wouldn't have done that. 12 Q. It's also suggested that you did the same to 13 Mr Tidswell? 14 A. Oh, I did talk -- not in my own case. No, I didn't in 15 respect of my own case. I was talking to Mr Tidswell 16 before it became into me, but my main conversations, if 17 not my only real conversations on this matter, were with 18 Ben Tidswell. 19 Q. Why do you think it is that allegations are being made 20 about you that you tried to stop or change the scope of 21 that investigation for your own benefit? 22 A. Well, I think I quoted the fact that this seemed bizarre 23 and weaponised -- the word "bizarre" about this 24 investigation was used by the current SID, Andrew 25 Darfoor, and the fact that this was weaponised against 129 1 me because my support for postmasters is my view. 2 And that was confirmed in the letter that you may 3 have seen that has been written by Saf Ismail. I was 4 approached by the institute, who said, "We're going to 5 strike you off after 50 years as an institute member". 6 So I rang the three of them up -- at this point, 7 I didn't know I was going to come before the Inquiry and 8 they very kindly issued references to say, "Actually, 9 there's not an ounce of racism in Henry, we don't 10 recognise any of this. If we'd been asked to sign the 11 report, we would not have done". 12 You asked me why. Saf Ismail said "I think that 13 Henry's paying the price for having supported 14 postmasters". You may have seen that, and the other two 15 also made comments, Elliot said it left a nasty taste 16 with him, he wouldn't have approved the report, had he 17 been asked to sign it and Andrew Darfoor said it was 18 bizarre and he said that one person involved with it has 19 been subject to some disciplinary, and he said others 20 have been discredited and he doubted the Secretary of 21 State would have said what she'd said if she'd have 22 known the true facts. 23 So the truth of the matter is there is another side 24 of the story you've been hearing. 25 Q. It sounds rather elaborate though, doesn't it? 130 1 A. No, it doesn't. That's exactly the case. This was 2 a report into Nick Read. I'm not saying -- forming 3 a view one way or the other but there was one sentence 4 on me and yet, because I'd taken the side of the 5 postmasters, this was weaponised, to use Jane Davies' 6 comment, and is not recognised. The charge of racism is 7 not recognised by the three -- and these three directors 8 that wrote those references for me, one is Jewish, one 9 is black and one is a Muslim, and all three of them said 10 how not only was I not a racist but, actually, I was the 11 biggest supporter of ethnicity on the Board. So, as 12 I say, there's a different story from the one which 13 you've heard from Amanda Burton. 14 Q. You're focusing on one particular aspect of the 15 allegations but the allegations against you included, 16 for example, that you attempted to change the scope or 17 stop the investigation into you? 18 A. I've dealt with that, which -- I've dealt with both the 19 fact that I didn't cooperate and tried to change it. 20 Q. The other allegation is that you improperly interfered 21 in the appointment of the Senior Independent Director? 22 A. And I've dealt with that too. Six to two of the Board 23 wanted to appoint an independent -- wanted to appoint 24 Andrew Darfoor. 25 Q. The suggestion, then, that I have to put to you, that is 131 1 said against you is that it would be a rather elaborate 2 plot to try to get rid of you because of your actions on 3 behalf of subpostmasters to invent those three matters? 4 A. Well, if, in fact, it's -- the SID issue is, as I've 5 said, which is I was acting as a servant to the Board 6 and the vast majority wanted to go internally. Those 7 are the facts. 8 Q. Moving to your dismissal. On 27 January this year, you 9 found out from a journalist that you were going to be 10 removed; is that right? 11 A. Correct. 12 Q. What were you told at that stage? 13 A. He said that I was going to be replaced and it was the 14 first thing I said to the Secretary of State: it's 15 astonishing that one finds out from the press. That 16 wouldn't happen in any normal business that that would 17 take place. 18 Q. Do you know where that information had come from? 19 A. No. 20 Q. Do you have a belief as to where that information came 21 from? 22 A. I wouldn't want to publicly speculate. 23 Q. So you have no information in that case? 24 A. I have no information, no, but the Secretary did say we 25 have a very big department so who knows where it came 132 1 from. That was in the bit of the conversation that 2 wasn't taped, unfortunately. 3 Q. So you don't wish to speculate but it seems as though 4 you had a conversation with the Secretary of State in 5 which it may have been suggested that it came from the 6 Department? 7 A. That would be tying two things together, and she didn't 8 admit that it came from her Department, no. 9 Q. Speculated? 10 A. I wouldn't want to speculate. 11 Q. Could we please turn to BEIS0000931. Now, this not your 12 note of the conversation but this is a note of the 13 conversation between yourself and the Secretary of 14 State. Some of it we have -- 15 A. Sorry, I'm -- 16 Q. It's going to come up on screen in a second. It's 17 BEIS0000931. Thank you. We have a recording, which is 18 obviously the best evidence, but the recording doesn't 19 start until slightly further down, so let's just go 20 through the first section of this recording to see your 21 view as to whether it's an accurate note of what was 22 said: 23 "KB [that must be Ms Badenoch, the Secretary of 24 State] started reading from the script: 25 "I'm sorry to be speaking to you under these 133 1 circumstances. I understand that given the increased 2 media scrutiny at the moment, these are difficult times 3 for the Post Office. I'm speaking to you today to tell 4 you that the Government, as sole shareholder, is 5 exercising our power, under the company's Articles to 6 remove you as Chair of Post Office Board. 7 "[Ms Badenoch] noted that she was sorry it was 8 coming at short notice -- the media have gotten hold of 9 the story and we've heard they will be breaking the 10 story. [The Secretary of State] noted she wanted to 11 speak to [you] first but officials will send a more 12 formal record of the decision shortly. 13 "[You] noted it was too late and was called by 14 a reporter this morning to comment on the story. [You] 15 noted how upset [You] were at this. 16 "[Ms Badenoch] started to note how important culture 17 is at the Post Office and concerns about [your] 18 behaviour had been raised. 19 "[You] then started to describe some of the events 20 over the last four weeks reflecting that the Post Office 21 as an organisation is operating in an extremely 22 challenging context." 23 Now, we're going to get on to the actual recording 24 but, so far, do you consider that to be an accurate 25 account of the discussion between yourself and the 134 1 Secretary of State? 2 A. Absolutely. 3 Q. Yes? 4 A. Yes, sorry. 5 Q. We'll now play the recording because, as I say, that is 6 better evidence than somebody's typed note, and we'll 7 just listen to that until the end. 8 (The recording was played) 9 MR BLAKE: That's why we hear the beep, contact details have 10 been taken out of the recording. But if we can carry 11 on. 12 (The recording continued) 13 MR BLAKE: That's just the provision of an email address. 14 (The recording continued) 15 MR BLAKE: Thank you. That's the end on the recording. 16 Now, tracking back to where we started this morning, we 17 had, even before you became Chairman, that letter to the 18 then Secretary of State regarding Mr Read's pay, 19 followed by the meeting with Sarah Munby in the January, 20 a year before this conversation that we've addressed at 21 length today. We then have a Board meeting where the 22 Minister attends and, as we saw, very little discussion 23 about matters such as compensation, et cetera. 24 Why is it only when you are being dismissed that you 25 are raising the issues we've heard being raised directly 135 1 with the Secretary of State regarding UKGI, regarding 2 culture, regarding the CEO? 3 A. Well, as I've said to you before, you've heard the 4 postmasters' evidence, and they told you how much it was 5 the front of my priority right throughout the year. So 6 that's the first thing. Secondly, in respect of my 7 contact with the Secretary of State, I had some contact 8 with Mr Hollinrake, who was the Minister. In fact, in 9 corporate land, just to be clear, the contact always in 10 a business is between the Chief Executive and the 11 shareholder. 12 Because I was involved -- with all four of my 13 companies we were quite active in acquisitions, 14 et cetera, and I was known to have some expertise in 15 that area, I would quite often go to shareholders on 16 very special deals, particularly if they were putting up 17 new money. But the day-to-day contact with the 18 shareholders, in the corporate world, it's always done 19 by the Chief Executive. Now -- so that's what I was 20 completely used to. 21 The Secretary of State now says, "Oh, you should 22 have seen me". If she'd wanted to see me, of course 23 I would have gone but, for me, coming from the corporate 24 world, that was the normal way things were done and 25 Mr Read saw the shareholder on a regular basis, reported 136 1 back to me what was said, which is exactly what would 2 have happened at any of the companies where I was 3 a chairman of. 4 Q. The Post Office isn't like WHSmith -- 5 A. No. 6 Q. -- or another company -- 7 A. No. 8 Q. -- it's a very different type of company that is owned 9 by the shareholder, the Government. You're expressing 10 very strong feelings in this meeting about UKGI and 11 about culture, matters that go to the very core of 12 issues that you're saying -- 13 A. Absolutely. 14 Q. -- have occurred at the Post Office. 15 A. Absolutely. 16 Q. Why leave it until your dismissal to raise those 17 directly with the Secretary of State? 18 A. No, because you've seen that Nick Read was also aware of 19 them and he was talking to the shareholder about them. 20 So it wasn't being held back from the shareholder but 21 the relationship between -- at the Post Office, the 22 relationship between the shareholder and the Chief 23 Executive was always with the Chief Executive -- that's 24 what the previous Chairman said to me was the way it was 25 done and it didn't surprise me because that's what I was 137 1 used to in the corporate world. So it was nothing to do 2 with me; it was the way the relationship that the 3 shareholder had with the Chairman of Post Office, both 4 me and before me. 5 Q. Could we please turn to RLIT0000256, please. Now, after 6 your dismissal on 18 February 2024, you had had 7 an interview with The Sunday Times; is that correct? 8 A. Correct. 9 Q. We see here the reporting of that interview. Could we 10 scroll down, please, and focus on page 3. Thank you. 11 The first bullet point says: 12 "He was instructed by a senior civil servant to 13 stall on compensation payments to Horizon victims so the 14 government could 'limp into the election' with the 15 lowest possible financial liability." 16 Is that an accurate recording of the information 17 that you provided to the newspaper? 18 A. I did use the word "limp" and, of course, when I found 19 my filenote, I found that the word was "hobble" so that 20 was factually -- because The Sunday Times said, "Look, 21 the Government are saying this is all wrong, so can you 22 find your filenote", which I did, because, by that 23 stage, the Secretary of State has said, "He lied in 24 Parliament". That was never repeated once I found my 25 file note. 138 1 So I did say that the civil -- secret civil servant 2 had asked me to "hobble" into the election and I think 3 I -- it's not reported there, but to stall on cash 4 payments generally, including compensation and Horizon, 5 and the business. 6 Q. The reporting there is "compensation payments to Horizon 7 victims". That's obviously significant for the 8 Inquiry's purpose and for the public's purpose? 9 A. No question. 10 Q. Did you say that you had been told, instructed by 11 a senior civil servant, to stall on compensation 12 payments to Horizon victims because of, in some way the 13 next election -- 14 A. Stall on payments inter alia, including compensation. 15 Q. We saw the discussion earlier today -- 16 SIR WYN WILLIAMS: Sorry, can I be clear about that. 17 I appreciate that newspapers -- this is a newspaper 18 report of what you had to say but I would like you to be 19 as precise as possible, Mr Staunton. Did you say words 20 to the effect that you were instructed by a senior civil 21 servant to stall on compensation payments to Horizon 22 victims? 23 A. To stall inter alia on payments. 24 SIR WYN WILLIAMS: Well, I doubt whether you'd have said 25 inter alia to the newspaper. 139 1 A. No, on all payments including compensation, yeah. 2 MR BLAKE: Perhaps we could turn to page 5 which -- 3 A. If I could just say, sir -- 4 Q. No, I'm going to ask the question and then you can 5 address the Chair but let's look at page 5, please, and 6 the bottom of page 5 because it has words in quotation 7 marks. It says as follows: 8 "'Early on I was told by a fairly senior person to 9 stall on spending on compensation and on the replacement 10 of Horizon, and to limp, in quotation marks -- I did 11 a file note on it -- limp in the election', he said. 12 'It was not an anti-postmaster thing, it was just 13 straight financials. I didn't ask, because I said, "I'm 14 having no part of it -- I'm not here to limp into the 15 election, it's not the right thing to do by 16 postmasters". The word "limp" gives you a snapshot of 17 where they were'." 18 Is that a direct quotation from you to the 19 journalist? 20 A. It would be words to that effect. 21 Q. It appears that you had told the journalist that the 22 words "limp into the election" related to compensation 23 and the replacement of Horizon, not broader matters 24 relating to the Post Office; is that correct? 25 A. No, I would have said on all payments, including 140 1 compensation and Horizon. There was only the other one 2 which was operational costs because the Inquiry was -- 3 obviously would be what it would be. It -- 4 Q. We saw earlier today the note of the conversation that 5 you had and in neither your own note or the Department's 6 note was there any reference to compensation. 7 A. The -- there were -- there -- you saw from my note that 8 there were huge pressures on the Government, you saw 9 from my note that she wanted to -- that I was instructed 10 to hobble into the election, that all costs had to be 11 strenuously considered, and the only costs that we had 12 were Horizon, remediation and operational, and the 13 Inquiry and so all of those were included. So I put 14 compensation in Horizon, maybe I should have said "and 15 operational costs". 16 Q. The suggestion may be made in due course that you're 17 only belatedly raising compensation because you knew 18 that that, in particular, would embarrass the Secretary 19 of State and the officials who work underneath her? 20 A. No, it wasn't. If it -- you must -- my strength of 21 feeling for the postmasters, if I haven't got that 22 across to you now, I have clearly failed. But you heard 23 it from the Postmaster NEDs how strongly I felt about 24 it. You're hearing a story from other people in the 25 Post Office and you're clearly providing more credence 141 1 to that. I think you should give some credence to what 2 the Postmaster NEDs are saying. 3 Q. I rudely interrupted you before. There was something 4 that you wanted to say to the Chair? 5 A. I've totally forgotten, Sir Wyn. I was distracted. 6 SIR WYN WILLIAMS: Well, what was happening, Mr Staunton, 7 was, in effect, I was pressing you to say whether or not 8 what you are reported as saying by the journalist was 9 accurate, and I think, essentially, you've answered that 10 question in your answers to Mr Blake. But if there is 11 anything you wish to add, then please do so. 12 A. Well, I think you made a really good point, which of 13 course I kind of assumed that I would see his draft 14 before it was published, to make finer corrections. 15 But, as you say, you lose control over it, and I was 16 never given any opportunity to look at this in detail. 17 I think I would have -- I might have used the words 18 inter alia or I would have -- in the first comment, I'd 19 have put compensation, Horizon and operational costs 20 because all of those were to be dealt with, and held 21 back on. 22 SIR WYN WILLIAMS: All right. Thank you. 23 MR BLAKE: While we're still on this article, if we could 24 turn back to page 3, please, there is a second bullet 25 point that I just wanted to ask you about. It says 142 1 there: 2 "The government body that manages taxpayers' 3 ownership of the Post Office told its Chief Executive to 4 write to the Lord Chancellor stating the reasons so few 5 subpostmasters had come forward to have their 6 convictions overturned was because they were 'guilty as 7 charged'." 8 I don't think we've heard in your evidence today 9 that the origins for that letter from Mr Read lay with 10 UKGI or the Department for Business. Can you assist us 11 with that bullet point? 12 A. Yes, because, of course, this letter was so unusual to 13 come from the Post -- particularly after the discussion 14 Nick and I would have, which is we're getting progress 15 for the exoneration but I think the Post Office -- I was 16 keen for the Post Office to pursue the point on 17 exoneration and maybe have some publicity on it. But 18 Nick was more in the 'guilty as charged' mode. So 19 I thought we'd agreed to keep it quiet, to not take 20 a side either way. As I'd said in a note, that actually 21 this was a terribly difficult decision for the 22 Government to take and I was not saying anything 23 I thought was helpful. 24 So I said, "Having had all of that conversation, why 25 on earth did you issue this note when you know that was 143 1 not my view when we agreed to keep it quiet and surely 2 you should have involved the Board?" 3 And he said -- I know it's been denied by him and by 4 UKGI -- he said, "I was asked by UKGI to do it", and 5 that made sense to me because we'd agreed we wouldn't 6 say anything, so why did he suddenly, a day later, write 7 that letter? So ... 8 Q. Can we please turn to page 9, one final -- 9 SIR WYN WILLIAMS: Sorry, again, I want to be precise about 10 these things. The suggestion at the time -- 11 Sorry. No, forget it. I was confusing two 12 documents. Never mind. Carry on Mr Blake. 13 MR BLAKE: Page 9, please, underneath the photograph, you've 14 referred in this interview to the term "untouchables", 15 it says there: 16 "A source close to the Post Office said it was not 17 true that they continued to employ 40 investigators 18 involved in the Horizon scandal and that it did not 19 recognise the 'untouchables' tag." 20 Now, without going into matters of Parliamentary 21 privilege, matters that were discussed in front of 22 Parliamentary Committees, what is your view of what is 23 said by the source close to the Post Office? 24 A. Well, I think you've heard that Nick said he didn't 25 recognise the word "untouchable". I think you've heard 144 1 from the Postmaster Directors, one of them said to Nick 2 "It's your words"; Amanda Burton said "It's your words"; 3 Andrew Darfoor has confirmed to me that they were Nick's 4 words. So the fact that he did not recognise the 5 untouchables tag seems strange. 6 Q. I've already used the word "circus" in a question 7 earlier. January/February of this year, it seems the 8 circus is continuing. Would you agree with that? 9 A. Yes, to a certain extent. I think the untouchable thing 10 is a really odd one because, actually, I think, as 11 I say, it is a really serious point with regard to when 12 we do path clearing. This is -- I think we need to 13 recognise what we have here in terms of the 14 untouchables, it's not some sort of academic exercise; 15 this is really fundamental to what happens next time 16 round to avoid another crisis for postmasters. That's 17 why I feel the untouchables thing is important, not so 18 much the word or who said what to whom. 19 Q. Is there anything that you would like to say to 20 subpostmasters in relation to these events, as we've 21 seen them play out in January and February of this year? 22 A. Absolutely. I think it is -- for a start, I think it's 23 absolutely appalling what's happened to them but, in 24 fact, the Post Office makes all these fine words up but, 25 actually, deeds count far more than words, and we have 145 1 a tragic situation here, and I've given those examples 2 where, you know, words are used that show clearly no 3 sympathy at all for subpostmasters who are subject to 4 litigation, and I would say to them, "Hang in there" 5 because we've got to accelerate this process. I wrote 6 to the Select Committee and I said, "This process must 7 be taken out of the hands of the postmasters, we should 8 give a six-month deadline" -- 9 Q. Post Office, I think you mean? 10 A. Sorry? 11 Q. Taken out of the hands of the Post Office? 12 A. I'm sorry, taken out of the hands of the Post Office -- 13 "and we must get this thing sorted in the next six 14 months". And I know that every six months elapses and 15 somebody says, "Let's do it in the next six months", 16 which is exactly what Alan Bates has done, but the fact 17 is, I would say, don't be discouraged, it must be coming 18 to the end, there is a lot of pressure being put on, 19 have faith. 20 Q. One final document that I would like to take you to is 21 BEIS0000753. It's a note after your time at the Post 22 Office. It's, I think, from Minister Hollinrake's 23 private office and there's a discussion there with 24 Mr Read and others, and I'm just going to read to you 25 a section of it, "Kevin", that's Minister Hollinrake, 146 1 says: 2 "... fair to say, at a certain point in time have to 3 take the gloves off and try to manage the info. I think 4 the Select Committee were weak with him, apart from 5 Antony Higginbotham. Sorry it was so messy. Keen to 6 support in any way we can, to make sure we get past 7 this. Hope he's discredited. Anything else you think 8 we need to do to make it easier?" 9 From what you understand, is that a conversation 10 about you? 11 A. I assume so, to discredit me, certainly. It's circling 12 of the wagons and anyone that's supporting the 13 postmasters, as the Postmaster Directors themselves have 14 found, as I warned them would happen, that's what 15 happens. 16 Q. Then: 17 "[Mr Read]: Look to Lorna on this. 18 "[Lorna Gratton from UKGI says]: Need as much 19 support as you can get from Ben Tidswell to try and get 20 the Board functioning properly. We need to try and find 21 a way through the Project Pineapple memo. 22 "[Mr Read says]: We'll have a Board meeting tomorrow 23 and we'll see where we can get to. [Postmaster 24 Non-Executive Directors] may use tomorrow as 25 [an opportunity] to criticise on funding and 147 1 anti-postmaster sentiment. Need to avoid tomorrow 2 morning being a proper road crash. 3 "[Kathryn Sheratt, the interim CFO says]: Had a bit 4 of a flavour of it on Monday, they think it did not do 5 enough for postmasters. Elliot mentions where the 6 investment for the future of the business and postmaster 7 rem is front and centre, costs are rising, and this has 8 been a theme of theirs for quite a while. 9 "[Nick says]: This goes back to whether the 10 postmaster directors are playing a role of a director, 11 or of a trade union rep. I don't know where that is 12 going to go. They're extremely exposed as a result of 13 Project Pineapple. Not sure how to patch this up. In 14 a slight stand off. 15 "[Lorna Gratton says]: They are not in a good place 16 and aren't operating in a way appropriate for the 17 business. 18 "[Mr Read says]: How can they ensure their own 19 self-interest doesn't cut across their role in support 20 [the Post Office] as a business." 21 What are your views as to the discussion that's 22 taking place here? 23 A. I think it's absolutely appalling. 24 Q. Why do you say that? 25 A. It's absolutely appalling because the Postmaster 148 1 Directors were making some -- this is a terrible issue 2 in terms of our culture, in terms of how postmasters, 3 the regard in which they're held, you know, guilty as 4 charged, I won't repeat it all. And they have cried 5 foul, and then for the word to be used twice that they 6 are now exposed, as if they're some sort of shooting 7 gallery, that's just not the way they should be treated. 8 They've taken a huge risk. I told them it was 9 a huge risk, I said, "You will lose your businesses if 10 you're not careful", and they were still extremely brave 11 to proceed with this route, and they should be 12 congratulated and to be spoken of in these terms, as 13 I say, is appalling. 14 MR BLAKE: Thank you. 15 Sir, those are all the questions that I have. We do 16 have a small number of questions from Core Participants, 17 mindful, of course, that we have Mr Cameron on this 18 afternoon as well. 19 SIR WYN WILLIAMS: Fine. Well, let those questions be put. 20 MR BLAKE: Mr Jacobs. 21 Questioned by MR JACOBS 22 MR JACOBS: Thank you, Mr Staunton. I have some questions 23 for you. I represent a large number of subpostmasters. 24 At 11.45 this morning you referred to the importance 25 of greater commercial success at the Post Office and, in 149 1 your witness statement, you say that your initial 2 assessment was that Post Office needed to refocus its 3 activities in order to put its operations on 4 a commercially viable footing. Then, on the other hand, 5 you say at paragraph 7 of your statement that the Post 6 Office is a vital public institution and you took the 7 position because you were doing a public service in 8 giving something back to the community. Then at 2.30 9 this afternoon, just now, you agreed with Mr Blake that 10 the Post Office isn't like WHSmith, it's a very 11 different type of company owned by the shareholder, the 12 Government. 13 So with those statements in mind, my question is: 14 should the Post Office really be a business in the 15 strict commercial sense? 16 A. That's a very good question. I think we should be 17 commercial. I think we should reduce the costs because 18 I think that gives us more profitability to pass down to 19 postmasters, so I think it's in postmasters' interests 20 for us to be a commercial success and, if I may, I'll 21 just draw attention to that memo that we've just seen, 22 where the Minister said, even after Horizon -- certainly 23 after Horizon, this business is bust. 24 He's wrong. This business if we take -- I do this 25 all the time in my business career: I looked at the cost 150 1 base and I thought we could take 100 million out of the 2 cost base and we could do much more in terms of income, 3 in terms of banking framework too, and we could have 4 an extra 150 million of income. We would have 5 a thriving business here which would be much more money 6 for postmasters, which is absolutely fair because they 7 don't get nowhere near the right rate for the job. 8 So, actually, I think, on the one hand, it needs to 9 be as profitable as possible. Equally, there are a host 10 of post offices which are not profitable, whichever 11 way -- and perform a public service and, for that, 12 I think you need to get a grant from the Government, 13 a bigger one than it's got now because this grant 14 doesn't really do it for the postmasters but, if you've 15 got a decent grant for those postmasters who are in 16 areas where they're just performing a public service, 17 get the Post Office with a much better cost structure, 18 we would have a business which would be better for all 19 postmasters, including the small ones who are benefiting 20 from a grant. 21 Q. The Post Office has been propped up by the Government in 22 the past. We know that in 2010 that there was 23 a £1.3 billion investment as part of the Network 24 Transformation Scheme. We know that part of this 25 propping up is to keep post offices going in rural 151 1 communities where perhaps businesses might not be 2 viable. 3 A. Absolutely. 4 Q. Should the Post Office need to make a profit if it is 5 largely a public institution entrusted to give public 6 services to communities? 7 A. Well, the reason I would like to have a lower cost base, 8 so that it was profitable is that I think I have 9 a slight worry that the Government, if they thought that 10 they were just throwing good money after bad, they might 11 not support the Government. So I think it's incumbent 12 on the Post Office to be as efficient as possible, and 13 to have as much income as possible, still have a subsidy 14 for the other postmasters, but I think if you did that 15 there would be actually more income for postmasters, 16 which is -- which they're crying out for because it's 17 not a profitable business. 18 Q. Exactly, and on the subject of income for 19 subpostmasters, we've been told by many of our clients, 20 that large numbers -- 21 A. Oh, I'm so sorry. 22 Q. I do the same sometimes! 23 A. Sorry. 24 Q. That large numbers of subpostmasters received 25 remuneration that's below the minimum wage -- 152 1 A. No question. 2 Q. -- and that very many of them -- and these are people 3 that are at the heart of the business -- are struggling 4 today to make ends meet and you accept that's the 5 position? 6 A. I go to postmaster conferences. These people are 7 working 70/80 hours a week and when you see the 8 profitability of their businesses, it's outrageous. So 9 we -- that's why I'm anxious to have a successful, 10 thriving postmaster providing more income for 11 postmasters because it's absolutely necessary. 12 Q. There's a disconnect, isn't there, between the drive to 13 profit and the pay of senior executives and the reality 14 of how some subpostmasters are remunerated -- 15 A. No question. No question. I think I said that when 16 I was talking about remuneration levels for executives. 17 Q. Was that something that was at the forefront of the 18 thinking during your time as chairman? 19 A. Absolutely. I mean, I spent a lot of time with the 20 postmasters and I could see how hard they worked. 21 I mean, they were reconciling these balances into the 22 night. I mean it's every night, I mean, you -- I was 23 going to say you wouldn't believe it. Clearly, you do 24 because you represent so many and you talk to them. 25 I don't need to tell you. 153 1 Q. What do you think the Post Office can do now to improve 2 the dire financial positions of subpostmasters? 3 A. Right, well, there's no getting away from it. We need 4 to get an investment to get a proper system like Horizon 5 because, at the moment, it is -- if I were a postmaster, 6 I'd be terrified that they've got this system that is 7 unreliable and what does that do for me, particularly 8 when it comes to path clearing? I won't repeat my 9 points there. So the Government has to make 10 an investment to get Horizon -- the replacement of 11 Horizon up and running. 12 The second thing we need to do is reduce the costs 13 base of this business, increase the income, particularly 14 in terms of Banking Framework 4, and then you would have 15 a business -- I mean, I spent two days -- I was -- 16 I went -- I looked at the structure, what we would have 17 done at Smiths; what did we do here? Every time I take 18 over a company that's the exercise I do. 19 So I'm convinced we could have a profit in this 20 business and more money for postmasters as well, and 21 that's the short term solution. But I did mention that 22 I -- my personal view is that we need to have this 23 business owned by the postmasters but it's only worth 24 demutualising it -- mutualising it, if it's profitable, 25 and can stand on its own two feet. And I think, if we 154 1 did that, actually, the cost structure would come down 2 even more because postmasters wouldn't allow -- there 3 would be no bonuses, there would be no long-term 4 schemes, no short-term schemes. They just turn up for 5 work and get a salary and they would expect the 6 management of the Post Office to do exactly the same, 7 and that would make huge inroads into it, on top of the 8 £100 million-plus cost reduction I'm talking about. 9 But that isn't for tomorrow, that is for two and 10 three years away, but I think that would benefit them 11 too. 12 Q. Thank you. I have one other very, very short topic and 13 I'm conscious of the time. 14 We have three of our clients here and many of them 15 are watching from home and we've had a number of 16 messages from them today while you've been giving your 17 evidence, and the general view is that they all note 18 that you were supportive of the Subpostmaster 19 Non-Executive Directors, and they feel that you were 20 badly used by the Post Office. 21 A. Thank you. I feel that too. 22 Q. Who do you think is responsible for this weaponising 23 against you, throwing you under the bus, so to speak? 24 Are you able to give any names? I know you've said 25 earlier that you don't want to speculate. 155 1 A. Well, you can see how some of the cases have been 2 influenced by the postmasters -- it is outrageous and 3 anyone can look through all of that and see what has 4 happened. 5 Q. Well, very briefly, was it within the Post Office that 6 this was going on against you? 7 A. I think it was driven, actually, a bit by the UKGI 8 Director influencing the UKGI, and huge pressures put on 9 one or two of the non-executives, particularly those 10 that voted against the internal SID. So it was the 11 minority but it was, it was -- it just was not good 12 governance. 13 MR JACOBS: I'm going to ask if I have any more questions 14 for you. 15 I don't, thank you very much. 16 A. Thank you, and thank you for your supportive comments. 17 I really value that. Would you thank -- 18 MR BLAKE: Thank you, sir. Mr Henry has some questions. 19 I may have a follow-on question at the end. 20 Questioned by MR HENRY 21 MR HENRY: Mr Staunton, you were appointed, of course, in 22 December 2022. There was a Board meeting, which took 23 place on 24 January 2023, which you refer to at 24 paragraph 49 of your witness statement, and I don't want 25 these put up on the screen but, for the benefit of 156 1 referencing, the Board minutes, partial, and supposedly 2 full, are POL00448620 and POL00448713. 3 At that Board meeting, apparently the Senior 4 Independent Director, Mr Tidswell, said the following: 5 "If postmasters thought their conviction could be 6 overturned, then they may have already come forward." 7 And: 8 "The company had duty to ensure that people who were 9 guilty remained guilty." 10 Now, Mr Staunton, having looked at both of the 11 documents that I've cited, the full minutes and the 12 partial minutes, I haven't been able to locate, if 13 postmasters thought their conviction could be 14 overturned, then they may have already come forward. Do 15 you distinctly recall Mr Tidswell saying that? 16 A. I think -- Mr Henry, I think I did mention that in this 17 presentation earlier, which is that it sent a chill down 18 my spine. I remember even now as I sit here him saying 19 that: that it's the duty of the Post Office to ensure 20 that these people who were found guilty remain guilty, 21 and that's the Chairman of the Remediation Committee. 22 So you can see what I was battling against. And that 23 was in January. Similar sort of comments were expressed 24 by the remediation right the way through my time, 25 through to December, when the letter went to the Lord 157 1 Chancellor. So I couldn't agree with you more. I was 2 chilled by it. 3 Q. Now, there's nothing in those minutes, Mr Staunton -- 4 and I think you've already dealt with this, but I just 5 want to develop it with you -- nothing in those minutes 6 that suggests that you confronted it. Did you address 7 him, as it were, collegially afterwards? 8 A. I did. I just said, "I cannot feel you feel that". The 9 truth of the matter is that Ben Tidswell felt that right 10 the way through. It's a view and I think -- I hate to 11 say it in this room -- but it seemed to be more a view 12 held by the lawyers on the Board than others. 13 Q. In fact, you addressed that in your statement: that the 14 view was, as it were, egged on by the lawyers? 15 A. Yes. 16 Q. But I want to come now to 28 November, so it's 11 months 17 into your tenure, and could this please be put up on to 18 the screen. It's in our Rule 10, so it's should be. 19 POL00448614. Could we go, please, to page 12 of 21. 20 I want to concentrate on paragraph 8.4, "Disclosure of 21 Potential Future Appellant(s)". "SR", that's 22 Mr Recaldin, is it? 23 A. Yes. 24 Q. "SR spoke to the PFA exercise and what had been 25 achieved. SR outlined the identification of 333 cases 158 1 [that's November 2023] where the conviction did not 2 appear unsafe although further information could change 3 that position, however, on the evidence held, the 4 Company could not properly concede these appeals. This 5 information had been shared with the DBT Advisory 6 Committee and the RU team were working with the 7 Communications Team as to how this information might be 8 communicated." 9 So, therefore, they would have been working with 10 Mr Richard Taylor, correct? 11 A. Yes. 12 Q. Yes. Now, there is no evidence in these notes, 13 Mr Staunton, of any trenchant challenge by you, no 14 confrontation by you, "This is wrong, we shouldn't be 15 doing this, we're defending the indefensible". Do you 16 accept that this was a missed opportunity for you to 17 leave your mark and, you know, impress your views very, 18 very clearly in that meeting? 19 A. Well, I would say -- I would say that the position 20 was -- I quoted the position in January, where it was 21 550 cases, and Simon Recaldin said only 12 per cent 22 might be appealable. So I just didn't accept that and 23 I said that, and I did say to Simon afterwards, this, if 24 it goes back to this culture -- 25 Q. No, Mr Staunton, I'm trying to explore with you. There 159 1 is no doubt at all that you were supportive but what I'm 2 tying to suggest to you is that you did not clearly 3 message your concerns, they were not clearly documented 4 and so, therefore, you did not confront the culture that 5 confronted you, a culture of denial and they must be 6 guilty. You didn't do it effectively. That's what I'm 7 asking you. 8 A. There is a -- there was a culture of denial. As I've 9 said to you, my style is to say to people outside the 10 Board meeting that -- if you keep challenging people in 11 the Board meetings you end up with -- you can end up in 12 a bit of a mess. I did actually did consult -- did 13 contest this, the comments about Ben Tidswell, you 14 referred to earlier, with him, and I also contested the 15 333, as well as the 550 with Simon because, clearly, 16 this is based on the Horizon system, which is completely 17 inappropriate. 18 So the answer is I did confront Simon outside the 19 Board and said, "This doesn't make any sense, Simon, to 20 me". You must remember we have a Remediation Committee 21 that goes through it in detail, which is chaired by Ben 22 Tidswell, so there's an element of process about it, and 23 as the Chairman, all you can do is say, "Guys, that 24 surely doesn't make any sense, can't we look at it 25 another way?", or whatever. 160 1 So the answer is I did challenge -- I did challenge 2 them both, and you can hear from the Postmaster NEDs how 3 much I challenged on behalf of particularly those people 4 that were convicted, which are the numbers we talk about 5 here, but also the whole -- the thousands of postmasters 6 that lost so much, even if they weren't convicted. 7 No one did more to try and change things within the 8 Post Office than I did, and that would be confirmed by 9 the two Postmaster NEDs. 10 Q. But, Mr Staunton, you accept, don't you, that you had 11 a specific role in determining whether the 12 communications as Chairman were effective and supported 13 the achievement of the organisation's objectives, and 14 one of the most important objectives was the proper, 15 full and fair compensation and exoneration of the 16 postmasters; you must accept that? 17 A. Yeah, and no one was more acutely aware, particularly of 18 exoneration. As I say, you saw -- you heard my horror 19 at the exoneration comments made previously by 20 Mr Tidswell throughout 2003 (sic), and no one could have 21 been more questioning of him than I was. 22 Q. But it's unfortunate, isn't it, that -- we don't need to 23 go to it but, obviously, there was the CEO, Mr Read, on 24 9 January, sending that unfortunate letter, together 25 with the Peters & Peters advice, and there was Mr Taylor 161 1 suspended on 12 January, who was basically saying, 2 "Well, some of them downright stole it", and even 3 disputed the findings of Mr Justice Fraser's judgment in 4 the Horizon Issues trial, quote/unquote, because when he 5 was caught out on tape, he said, "It's never been proven 6 that there was a link between the computer glitch and 7 anybody actually losing any money". 8 I mean, obviously, reflecting on your efforts -- and 9 I don't doubt you attempted to do something -- but you 10 were not able to change the culture, were you, if that's 11 the way your CEO was approaching things and your 12 Director of Communications? 13 A. Everything that Taylor said, that was widely held, not 14 just by Taylor, widely held within the Company. That's 15 absolutely right, and I don't disagree. That's why it 16 was such a big battle, to change the culture. It was my 17 top priority, as Ish and Elliot said -- Saf and Elliot. 18 Q. My closing issue for you is this and, obviously you 19 don't subscribe to it, but the idea is that "Well, if 20 they haven't come forward by now, they must be 21 guilty" -- 22 A. I don't agree with that all. I totally -- 23 Q. Yes, you disagree with it vehemently. The firm that 24 instructs me represented Mrs Kathleen Crane. Her appeal 25 came before the Court of Appeal on 25 January 2024, so 162 1 a little more than two weeks after Mr Read sent that 2 letter to the Justice Secretary. In its judgment, the 3 Court of Appeal noted the profound fear which had 4 prevented her from pursuing any challenge to her 5 conviction which had dated back 14 years, and they had 6 no hesitation in granting her appeal. 7 They granted a lengthy extension of time and, even 8 on the morning of her appeal before it was heard, when 9 it was even known that the Post Office would not contest 10 it and her case fell squarely within the Horizon cases, 11 she was terrified that her appeal would nevertheless be 12 rejected. So that fear, that profound fear, was how she 13 felt after 14 years of suffering in silence. 14 Now, we know that you were addressed -- 15 SIR WYN WILLIAMS: So what's the question, Mr Henry? 16 MR HENRY: Yes, sir. 17 We know that you have addressed why people don't 18 come forward and you received a very measured and 19 balanced briefing on the subject from no less than 20 Ms Gallafent King's Counsel, who said that some might 21 have been traumatised and afraid but, given what the 22 Court of Appeal held in Mrs Crane's case, how many of 23 your former colleagues at senior Board level or senior 24 Executive level, how many of your former colleagues 25 actually shared that view, or are they still unable to 163 1 understand that people might not come forward because 2 they are terrified and scarred by their experience? 3 SIR WYN WILLIAMS: I'm sorry, Mr Henry, but he can't answer 4 for his senior colleagues who have not been his 5 colleagues for at least, by my reckoning, eight/nine 6 months. 7 MR HENRY: Well, could I just deal with it in this way, 8 then, sir: 9 When you were recorded speaking to the Secretary of 10 State, and we've heard the recording, and you actually 11 mentioned Mr Taylor saying that he thought that most 12 people were guilty as charged, et cetera, et cetera, you 13 said this to the Secretary of State: you didn't think 14 that most of the Board held that view. But how many of 15 the Board, at that time, when you were speaking to the 16 Secretary of State, held the view that the postmasters 17 were guilty as charged? 18 A. I think it was widely held amongst the management team 19 and I've said that before, so I hear what Sir Wyn has to 20 say, but I was around the block enough to know that; and 21 it was held by some on the Board but a minority. 22 I would say that I've read the testimonies of these 23 postmasters who have been -- had lost everything, had 24 convictions, et cetera, and the evidence is absolutely 25 heartrending, and it's -- if you have any sort of heart 164 1 you feel awful for them, and I felt that. 2 They talk about the brutality of the Post Office's 3 lawyers, both internal and external. This has been dire 4 and it's all over the papers, whatever you read in terms 5 of the interviews. So I understand where you're coming 6 from, trust me. I think you're absolutely -- 7 I absolutely agree with you. 8 MR BLAKE: Thank you, sir. Those are all of the questions. 9 Do you, sir, have any questions? 10 SIR WYN WILLIAMS: Just one or two, Mr Staunton. 11 Questioned by SIR WYN WILLIAMS 12 SIR WYN WILLIAMS: Can be I take you back, hopefully without 13 putting it on the screen, to the letter which Ms Munby 14 sent to your predecessor, Mr Parker, some time in 2022 15 before your appointment. You'll remember the letter? 16 A. Yes. 17 SIR WYN WILLIAMS: Because you said that a particular 18 sentence, in effect, had a profound effect on you, which 19 was to the effect that compensation was to be fair to 20 the postmasters but also fair to the taxpayer. 21 A. And there were three comments in that regard, it had to 22 be fair value for taxpayers and a third one, it had to 23 be appropriate use of taxpayers' money. So if it had 24 happened once -- 25 SIR WYN WILLIAMS: Hang on, let me ask the question. I was 165 1 just putting the context. 2 A. Oh, I'm sorry. 3 SIR WYN WILLIAMS: So with that in mind, I want to ask you 4 about your knowledge of various things. Firstly, did 5 you know that in, I think, three documents which 6 I issued, I quoted Government ministers as saying that 7 compensation for postmasters should be full and fair? 8 A. I didn't know that, sir, I'm sorry. 9 SIR WYN WILLIAMS: Well, that's question number 1. 10 Question number 2 is: in the time that you were 11 Chair of the Board of the Post Office, were any of the 12 documents which I issued about compensation discussed by 13 the Board? 14 A. I don't think -- when it was reported back by the 15 Remediation Committee, I'm sorry to say I don't recall 16 much feedback, sir. 17 SIR WYN WILLIAMS: All right. Fine. Thirdly -- 18 A. Sir, I could say the minutes of the -- I'll focus on the 19 remediation -- 20 SIR WYN WILLIAMS: All right -- 21 A. There may be something in the Remediation Committee, 22 sir. If I've got that wrong -- 23 SIR WYN WILLIAMS: All right. We'll find out. I'm asking 24 about your knowledge. I'm not saying this is unkindly. 25 Whatever I may have said in those documents, clearly 166 1 didn't make much impression on you, since you can't 2 remember it. 3 A. I don't think it was -- I don't think it was presented 4 to the Board, sir. 5 SIR WYN WILLIAMS: Fine, all right. That's fine. 6 Then the third question I want to ask you is this: 7 you obviously saw a distinction between compensation 8 which was full and fair to the postmasters, and 9 compensation which was fair to them but which took 10 account of other factors, such as the public purse. 11 Yes? 12 A. Absolutely. 13 SIR WYN WILLIAMS: Presumably you did so because you 14 realised that compensation which took account of 15 factors, such as the public purse, might be less 16 generous than compensation which was full and fair? 17 A. Absolutely, sir. Absolutely. 18 SIR WYN WILLIAMS: Right. 19 A. That's -- 20 SIR WYN WILLIAMS: Can you tell me whether you know which of 21 those approaches was adopted by the Post Office in 22 making offers of compensation? 23 A. I think it was the taxpayers' -- in fact, I think 24 Alisdair Cameron is coming on later and you'll see that 25 when he talks about -- he issued a note in March '23, 167 1 where he says the same thing: that he said that the 2 Remediation Committee wanted to please the shareholder. 3 So you might be asked about -- 4 SIR WYN WILLIAMS: So in your time as Chair, so far as you 5 were aware, the actual approach of those who were making 6 offers of compensation was to make them taking account 7 of what was in the interests of the public purse? I'm 8 putting that in a general sense. 9 A. That would be my view, sir. 10 SIR WYN WILLIAMS: Is that because you were party to 11 discussions to that effect, or is that something which 12 you have inferred from your general knowledge, so to 13 speak? 14 A. Yes, it's because, before the Board meeting, I would 15 have a meeting with the remediation management as would 16 with the Horizon management and everybody else, and it 17 was based on those discussions that I thought it was -- 18 SIR WYN WILLIAMS: Right. So far as you are aware, if you 19 are aware, was the approach, which you said was the one 20 which was taken in terms of making offers, 21 a continuation of what had happened before you became 22 Chairman or was there some change when you became 23 Chairman? 24 A. I'm afraid I couldn't say, sir, because I wasn't around 25 and -- 168 1 SIR WYN WILLIAMS: That's fair enough -- 2 A. -- no one said to me "We're taking a different 3 approach", sir. I can't answer it, I'm afraid. 4 SIR WYN WILLIAMS: All right, well thank you very much. 5 Those are my questions. 6 Thank you very much, Mr Staunton, for your very 7 detailed witness statement and for all the time and 8 trouble you've taken in answering questions today. I'm 9 grateful to you. 10 THE WITNESS: It's a pleasure, sir. 11 MR BLAKE: Thank you, sir. Could we now take our 12 mid-afternoon break until 3.30. With a fair amount of 13 cooperation with all Core Participants, we will be fine 14 to finish Mr Cameron's evidence this afternoon as well. 15 SIR WYN WILLIAMS: Jolly good. Thank you very much. 16 MR BLAKE: Thank you. 17 (3.15 pm) 18 (A short break) 19 (3.29 pm) 20 MR BLAKE: Good afternoon, sir. Our second witness of today 21 is Mr Cameron. 22 ALISDAIR CHARLES JOHN CAMERON (affirmed) 23 Questioned by MR BLAKE 24 MR BLAKE: Thank you. Can you give your full name, please? 25 A. Alisdair Charles John Cameron. 169 1 Q. Mr Cameron, you should have in front of you a witness 2 statement dated 8 August this year. 3 A. Yes. 4 Q. Could I ask you to turn to the final substantive page. 5 That's at page 24. 6 A. Yes. 7 Q. Can you confirm that is your signature? 8 A. Yes. 9 Q. Can you confirm that that statement is true to the best 10 of your knowledge and belief? 11 A. Yes. 12 Q. Thank you very much. That has a unique reference number 13 of WITN09840200, which will be published on the 14 Inquiry's website shortly. 15 As we know, you have previously given evidence to 16 the Inquiry on 17 May 2024 -- 17 A. Yes. 18 Q. -- and you've given quite a great deal of evidence, so 19 we can take things pretty quickly this afternoon. 20 Relevant for today's purpose is that you were the 21 CFO at the Post Office up until 23 June 2024; is that 22 correct? 23 A. Yes. 24 Q. Although, as we'll see, there was a period prior to that 25 in which you were not attending meetings and not -- 170 1 A. Yes. 2 Q. First, I'd like to just clear up a loose end in relation 3 to Phase 5 and 6. Can we please look at UKGI00048147. 4 Thank you. We'll start with the bottom email. It's 5 an email from Mr Foat of 30 April 2021, in respect of 6 the Simon Clarke Advice. It's an email to, Ken McCall 7 and others, and he says: 8 "The Simon Clarke was sought following the Second 9 Sight Report which contained information that Horizon 10 may not be 'bug free' and Post Office may have been 11 aware of this. The Second Sight Report identified two 12 bugs with Horizon (receipts and payments mismatch and 13 local suspense account) which had been highlighted to 14 Second Sight by Gareth Jenkins. In the advice dated 15 8 July 2013 he advised on the need to conduct a review 16 of all Post Office prosecutions (and a small number of 17 current cases) to identify those in which the material 18 ought to be disclosed. This post conviction exercise 19 was referred to as the Cartwright King Sift Review. On 20 15 July 2013, Simon Clarke provided advice to Post 21 Office as to 'the use of expert evidence in support of 22 prosecutions of allegedly criminal conduct. This advice 23 is referred to in the [Court of Appeal Criminal 24 Division] judgment as illustrating [the Post Office's] 25 poor investigation procedures." 171 1 In your view as at this time, were the Board 2 sufficiently informed of the significance of the Clarke 3 Advice? 4 A. I didn't think so and I think my response was to say we 5 could really do with, as a Board, a clear setting down 6 of exactly what happened, in what order, through this 7 period because it wasn't at all clear to me, and 8 obviously this would have been happening well before 9 I joined, and so I certainly felt I didn't understand it 10 and I suspected the rest of the Board didn't either. 11 Q. In your view, is that description, in the final couple 12 of sentences there sufficient or a sufficiently accurate 13 characterisation of the Simon Clarke Advice on the use 14 of expert evidence? 15 A. I'm not sure I know. 16 Q. If we scroll up we can see a response to Mr Foat from 17 you, and you say as follows: 18 "Ben, it would ... be helpful to do a high level and 19 simple timeline of the Second Sight activity, the 20 different reviews like SC ..." 21 So that's Simon Clarke is it? 22 A. Yeah. 23 Q. "... Brian Altman's review, disclosure exercises, 24 Deloitte H reviews so we can see how it pins together. 25 2013 does seem to be the pivotal year when [the Post 172 1 Office] doubled down." 2 A. Yeah. 3 Q. Can you assist us with what you meant there by "doubled 4 down"? 5 A. So my sense of it -- and again, well before I joined -- 6 was that -- and this may not be right, but my sense at 7 the time was that the Post Office Board, as it became 8 independent, seemed to be engaging sort of more openly 9 it what became the claimant population, and there seemed 10 to be some dialogue between Lord Arbuthnot and, you 11 know, Post Office, and then that seemed to stop 12 relatively suddenly. 13 And what I meant by doubling down is Post Office 14 retreated into "Well, we'll do the Mediation Scheme, but 15 ..." you know, and to become much more defensive again, 16 and that is what I meant, and that seemed to be around 17 2013. 18 Q. Thank you. 19 Moving now to a different topic, and that is your 20 email that we've seen already today and previously 21 entitled "The robustness of our governance"? 22 A. Yeah. 23 Q. The email you sent on 23 March 2023. Can we bring that 24 up on to screen. That's POL00423699. Can I also ask if 25 you could give your answer perhaps slightly louder or 173 1 come slightly closer to the microphone, please -- 2 A. Okay. 3 Q. -- or maybe both. Thank you. 4 If we could look at the bottom of page 2 into 5 page 3, you've addressed this email in your latest 6 witness statement at paragraph 22, and there are just 7 a couple of matters that have been identified today as 8 potential significant issues that I'd just like to ask 9 you about. If we scroll down, the first is the CIJ 10 scorecard and your views on that. Are you able to 11 expand on your views as set out there, regarding the 12 Common Issues judgment scorecard? 13 A. So one of the roles that GE should have been playing and 14 my contention is that it wasn't playing, was to provide 15 oversight of what was happening through the business as 16 the senior executive group, and there was some reporting 17 developing, so there was a scorecard, and I can't 18 remember how much of that was Operations or how much of 19 that was Legal who put that together at this stage, but 20 it was about whether we had done the things that we were 21 required to do in the Common Issues judgment and whether 22 they were being maintained and monitored. 23 And the fact is, we never discussed it, and I don't 24 think -- the trouble with scorecards is you really do 25 need to understand what the underlying data is doing, 174 1 and I didn't think we did, and I didn't think that we 2 understood what the performance of operations was. 3 I don't think it was coming up to the Group Executive 4 and, within the scorecard, they may well have been 5 measuring some very sensible things but they weren't 6 measuring the things that I thought were critically 7 important, one of which is the shortfalls, the losses. 8 One of which was investigations, where they had really 9 lost all the data on what was happening and weren't 10 completing very many investigations, and there were -- 11 a couple of my obsessions through these years was that 12 in getting to clarity on branch situations, there were 13 two things that weren't operating effectively, and we 14 just weren't getting done: one is stamp accounting. 15 So unlike the cash, where everything was remmed in 16 and remmed out of the branches on barcodes and, you 17 know, was checked at either end, the stamps hadn't been 18 invested in like that, and there hadn't been the 19 procedures in place to make sure that end-to-end stamp 20 numbers were right and people were putting them in 21 manually. That's what postmasters had to do. 22 And, absolutely, we have to get that process 23 automated and it was supposed to be part of the Horizon 24 replacement and then that wasn't happening, and so that 25 was one. 175 1 And the other was: you couldn't put -- shouldn't put 2 retail sales through a post office till. They weren't 3 retail products and people, rather than moving between 4 tills, postmasters were using something called the 5 retail button, or the stamps button, I can't remember, 6 but they were putting it through, and then reconciling 7 it later, sort of changing it later, which created 8 confusion and noise. And I'm just saying, look, these 9 are important parts of whether the operations are 10 working and they're not even on the scorecard. 11 Q. We heard evidence this morning about a point in time at 12 which a decision was apparently taken to prioritise the 13 new Horizon system or the NBIT system over and above 14 addressing issues to do with the Common Issues judgment 15 or Horizon Issues judgment; is that something you're 16 aware of at all? 17 A. I think -- I mean, yes. So, at some point, if you've 18 got expensive time-consuming, difficult IT changes to 19 do, and Horizon is incredibly expensive and difficult to 20 change because it's so old and we don't manage it, then 21 you have to decide, are we fixing Horizon, and then 22 flowing that into NBIT, or are we just creating this 23 capability in NBIT? 24 So those were choices that were happening 25 progressively but, of course, the NBIT timetable kept, 176 1 and has kept, going backwards and, therefore, you might 2 have made a different decision. 3 Q. We see below there, there's a section number 4 on NBIT. 4 A. Yeah. 5 Q. You raise concerns there about the governance of NBIT. 6 Briefly, what were your concerns here? 7 A. So the sort of steering group governing NBIT wasn't 8 working particularly well and the project wasn't getting 9 the input from operations, thinking about how you roll 10 NBIT out, that it needed. And the team had asked if 11 I would chair the steering group, and Nick thought that 12 was a bad idea, and then a year later -- so I think 13 we're probably autumn '22 now -- had asked me to do 14 that. And my view by the January was that it really 15 needed fairly fundamental reworking, and said that, and 16 Nick asked me to stand it down because he had other 17 ideas. 18 And so what he then set about creating was 19 a completely different operating model with Katie 20 Secretan leading it from Martin Roberts' team, and that 21 took some time to set up. So, between me being asked to 22 sort of stop and the new arrangements coming in, was 23 a space of several months, which this was in the middle 24 of, and I thought, "Well, there is just no formal 25 governance now over the NBIT programme for this period". 177 1 Q. The Post Office doesn't yet have a new system in place 2 that's been rolled out to subpostmasters. At 3 paragraph 58 of your witness statement, you say that 4 Fujitsu's relationship with the Board has never been 5 satisfactory and you suspect that both parties would 6 like to end that relationship. 7 A. Yeah. 8 Q. Was there discussion at Board level about ending the 9 relationship with Fujitsu? 10 A. No, because it was very hard -- although it was 11 discussed over the years, it was very hard to really 12 conceive that anyone other than Fujitsu could manage 13 Horizon, and so you would only end the relationship with 14 Fujitsu when you were really confident that NBIT was 15 going to go in on a certain date, and you were expecting 16 it to work. And that date has never -- or certainly 17 wasn't visible when I stopped working. 18 Q. Can we turn to POL00448793. This is back in time now to 19 8 April 2020, and there was a Board meeting on that date 20 where there's a potential alternative or addition that's 21 being discussed. So this is a Board meeting at which 22 you were, at that time, Group Chief Finance Officer. If 23 we could turn to page 9 and have a look at the middle of 24 that page. If we stop there, we can see there's 25 discussion of the Group Litigation Order, and then the 178 1 post-GLO implementation plan. If we scroll down, 2 please, over the page, I'm just going to read to you 3 a paragraph there. It says: 4 "We needed to reach a better position on the Branch 5 Trading Statement where we had been heavily criticised 6 by the Judge. If the Branch Trading Statement could not 7 be replaced it needed to be supplemented by other 8 information that made it fit for purpose. 9 Communications to postmasters on the status of the 10 Branch Trading Statement contractually would be needed. 11 It was noted that there had been a significant amount of 12 communications about this. We were considering whether 13 we could move the Branch Trading Statement off Horizon 14 but migrating to another IT system could take a number 15 of years. However, we were also looking at all the 16 different parts of the accounting system and what our 17 options were. If we had a running account with 18 a Postmaster we would settle that account for 19 remuneration and that would be transparent. We did not 20 know yet if we could separate accounting from the 21 Horizon system and place it elsewhere." 22 Were there meaningful attempts to try to improve the 23 Branch Trading Statement while you were in post? 24 A. There was a lot of work going on in 2020 and, specific 25 to the Branch Trading Statement, I cannot remember how 179 1 far we got or what changes were made by the team. So 2 I'm afraid I'm unable to answer your question. But 3 I think we obviously had done work on back office 4 systems and so I think the question we're trying to get 5 at was, within the SAP CFS accounting system, was there 6 enough information coming through from Horizon and 7 elsewhere that we could have tried to create a Branch 8 Trading Statement, put it on Branch Hub, so it was 9 available electronically, and I don't think that ever 10 happened. So my recollection, it was probably too 11 difficult. 12 Q. Can we please turn to POL00021583, on a similar subject, 13 looking at the Board minutes on 26 May 2020. Thank you. 14 So these are the Board minutes of 26 May. If we 15 could please turn to page 4, about halfway down, under 16 the topic of Telecoms, the second bullet point, it says 17 there, if we scroll down, please: 18 "Carla Stent noted that the Fujitsu relationship had 19 been raised at the [Audit and Risk Committee] on 19 May 20 2020 and that Jeff Smyth, CIO, would be preparing 21 a paper for the Board on this issue. The Fujitsu CEO 22 had recently indicated that they would like to explore 23 a structured early exit agreement. A principles 24 document was being drawn up ..." 25 Are you aware of any progress insofar as that was 180 1 concerned? 2 A. So I don't particularly remember this conversation but 3 I assume they are talking about the Fujitsu relationship 4 around the telecoms business, rather than Horizon, which 5 obviously we went on to sell the business relatively 6 soon after, and so I think it was that they were talking 7 about. 8 Q. Thank you. Moving on to a different topic and that is 9 UKGI. You had raised, in a number of places, I think, 10 in that email, the governance email that we've already 11 turned to, concerns relating to UKGI's role as 12 a Non-Executive Director, I think you've said performing 13 a quasi-executive role. Can you assist us with your 14 view on that, please? 15 A. So I think the UKGI relationship and their role across 16 the Government to Post Office has never worked properly, 17 as far as I can tell, and certainly didn't in my time. 18 And I think it just -- so the first problem is it just 19 complicates the flow of information because you've got 20 to discuss everything with UKGI, and then it goes to 21 brief DBT and sometimes they brief and sometimes we 22 brief and we don't necessarily know what the flow of 23 information is. So I think that doesn't work. 24 But I felt, you know, strongly that it's an odd and 25 equivocal role being shareholder representative, because 181 1 the authority for that role comes from being the 2 representative of the shareholder of the Secretary of 3 State. But, often, it seemed to me that the issues that 4 were of concern to UKGI were their personal opinions on 5 things. So they wielded the authority of being 6 a representative of the shareholder to pursue things 7 that were of interest to them, but which the 8 shareholding wasn't particularly engaged with, and 9 I thought that was consistently unhelpful. 10 Q. Did that remain the case throughout your time? 11 A. Yes. 12 Q. You've said at paragraph 62 of your statement that many 13 decisions were made by or were significantly affected by 14 the Treasury? 15 A. Yeah. 16 Q. Can you assist us with that, please? 17 A. So I think anything which requires money being spent 18 requires Treasury approval, unless it's so small that 19 DBT can do it themselves, and so all the major funding 20 decisions, all the major compensation decisions, are 21 done, I think, through a negotiation between DBT and the 22 Treasury. And the Treasury often sets conditions. 23 So there were really detailed operational agreements 24 that DBT had to make sure Post Office operated around 25 HSS, around the overturned convictions compensation, in 182 1 order for Treasury to confirm that they were willing to 2 fund the compensation. 3 And so all of these decisions were, you know, 4 negotiated between DBT and the Treasury and, often, Post 5 Office wasn't in the room for that at all. And so you 6 got -- I mean, there was a very odd funding round 7 I think it was towards the end of 2021 when Post Office 8 was asking for £400 million over three years, and then 9 we were told we would get 200 million, and our view was, 10 well, we couldn't, therefore, maintain 11,500 branches 11 and we couldn't afford to replace Horizon, and DBT were 12 just completely astonished. And they just hadn't, you 13 know, through UKGI, or whatever, they had not understood 14 the financial position, and found another 100 million, 15 you know, but we hadn't asked for enough and it wasn't 16 enough. 17 But they clearly didn't understand all the papers 18 that were being written, and, you know -- so there was 19 a final discussion between DBT and Treasury without any 20 of them really understanding Post Office. 21 Q. Moving on to the NFSP. I think you've said that you 22 don't agree with the idea of an oversight committee. 23 A. No. 24 Q. Can you briefly expand on that? 25 A. Post Office needs to be owned by postmasters. I mean, 183 1 there is a fundamental conflict of interest between Post 2 Office Limited and postmasters, and it plays out really 3 simply and financially, which is: if Post Office wants 4 to meet a financial target, the easiest way it can do 5 that is not pay as much money to postmasters. And what 6 you have seen was -- I mean, a deliberate and, you know, 7 I can explain it -- attempt to reduce the overall 8 postmaster remuneration between 2012 and 2018, which is 9 all disclosed, and that was done through largely Network 10 Transformation. 11 And then following that, we agreed postmaster 12 remuneration had to increase and we had been very 13 aggressive with the banks around Banking Framework 2, we 14 probably added 90 million to the Post Office bottom line 15 overnight, and that in able to two increases in 16 postmaster remuneration, so that by 2021, postmaster 17 remuneration had gone up, and the total amount paid, 18 which no one ever talks about, had actually gone up for 19 two years in a row. And then, since then, it's gone 20 down, bubbled around, and it's still less than it was 21 and it's still far less than it was in 2012, and yet 22 postmasters have had to bear huge inflation through 23 energy costs, minimum wage, and all the rest of it. 24 And so, you know, we had this conversation often 25 but, I mean, Nick was very clear about we should be 184 1 putting postmasters first, at the beginning of 2021, and 2 that was a rallying cry. And by the autumn, you know, 3 I said to him that I was uncomfortable using that phrase 4 because, if you looked at the way we were divvying the 5 money up, we put hitting our financial targets first and 6 postmaster remuneration second, and he said that he 7 hadn't been using that phrase for some months at that 8 time. 9 Q. Were you aware during your time of whether compensation 10 or redress was being sufficiently addressed at Board 11 level; do you have any views on that? 12 A. I think the Board spend an awful lot of time on the sort 13 of legal mechanics of it all and the processes around 14 that, and they certainly did review it. I think once 15 you accepted that the Court of Appeal had set a process 16 and our job was to legally follow it on overturned 17 convictions, and that we were complying with the 18 operational agreements that the Treasury and DBT had set 19 for both OHC and HSS, then there was relatively little 20 influence we could have, other than, you know, pushing 21 Simon Recaldin to do the delivery of it as fast as 22 possible, and he accelerated it. 23 But I didn't think we were really making the 24 decisions. 25 Q. It has been suggested earlier today that one of the 185 1 considerations was the taxpayer, rather than simply 2 whether it was full and fair compensation; do you have 3 a view on that? 4 A. So the Treasury set aside funding for HSS, for OHC and 5 other schemes later. Now, that process was slow and 6 painful. But if you take overturned historical 7 convictions, they set aside a very significant amount of 8 funding with a time limit to use that funding and, from 9 memory, it's over 700 million. And the Court of Appeal 10 set the process, and the reason why our estimates at 11 that spending actually reduced over time was because we 12 just thought more people would come forward and they 13 didn't. But I've never understood, you know, and I do 14 say this in my statement, why Henry thought why anyone 15 would have asked him to slow down the compensation. 16 I can absolutely understand the Government saying, 17 "Look, you've got to cut investment spend in the 18 business, you've got to manage the cashflow", but the 19 money for the compensation was there. It was set aside. 20 If we followed the process and the compensation was 21 paid, we would recover it from the Treasury and the 22 Treasury had already set it aside, and so there was no 23 advantage to anyone in slowing down compensation. And 24 to be honest, if, you know, Henry really thought he was 25 being asked to slow down compensation, you know, he 186 1 should have threatened to leave. I mean, it would have 2 been outrageous. 3 Q. In light of that, do you have a view as to whether it 4 was or was not likely that pressure was put on him? 5 A. I've always -- so I'm sure there was lots of pressure on 6 him to all sorts of things. I've never understood why 7 they would be pushing him on compensation payments. 8 Nick told me at one point that what the Treasury had 9 said, I think, but I am repeating conversations, is 10 that, if Post Office was going to get more money, which 11 we were clearly going to need, that they wanted 12 a strategic review of Government's requirements of the 13 network. And so Nick and others were pushing very hard 14 for that review to be done because it should unlock the 15 door for more funding. 16 And what Nick told me, so I guess it would have been 17 late 2022, was that the then Secretary of State had 18 said, no, they weren't going to kick this off and could 19 Post Office sort of the limp through to the next general 20 election as best it could? 21 Now, obviously when Nick gives testimony he can say 22 whether that's what his recollection is but that's my 23 recollection, and so I assume there's been a muddling 24 between not doing the strategic review, not getting more 25 funding, although in, fact some, I think has been 187 1 provided, and the actual compensation itself. 2 Q. Thank you. 3 My final topic is departures. Departures in general 4 first. I think you've highlighted issues with Chief 5 People Officer and that there were a number of 6 departures. Can you think of any reason why that 7 particular role is one that's subject to such a churn in 8 who fulfils the role? 9 A. I'm not sure I can. I think all the individual 10 circumstances were different. But, I mean, if you look 11 at the churn of Post Office executives since 12 independence, I mean, Paula replaced her entire team at 13 least once and, you know, I replaced one member of that 14 team very quickly and was working on another, and, you 15 know, Nick obviously replaced, you know, a relatively 16 new CIO and Retail Director, within a few months. And, 17 you know, it does seem to have been a theme overall, not 18 just Chief People Officer. 19 Q. In terms of your own departure, 7 May 2023 was your last 20 working day, I believe; is that correct? 21 A. Yes. 22 Q. You formally ended your time at the Post Office on 23 23 June 2024 and you've addressed that, I think, at 24 paragraph 72 of your witness statement. In summary, can 25 you assist us with what happened between you and Mr Read 188 1 at that point in time? 2 A. So, in summary, Nick told me in 2021 that I was leaving 3 the business, he didn't give a reason, and I thought it 4 was the Chief Executive's right to choose their team but 5 I thought I ought to be compensated because he wasn't -- 6 he was absolutely clear he wasn't firing me, he wasn't 7 making me redundant, and so I thought it was reasonable 8 and he thought it was reasonable that he settled the 9 contract. And I suspect he can tell you that he had 10 some encouragement from DBT that they would support that 11 position, which is why he had talked to me, and then 12 they changed their mind, or made up their mind, and 13 refused to do so. 14 So in May of that year he asked me to stay on and 15 I agreed, and we agreed a modus operandi. Now, I don't 16 know what happened after that. I think I read somewhere 17 that Jane Davies was saying that getting rid of me was 18 an objective for her and her predecessor but I don't 19 know if that is true or not. 20 I was finding it increasingly stressful for two 21 reasons: one was to work in an atmosphere where I didn't 22 feel welcomed or, you know, able to fulfil my full role; 23 and the other was, through 2022, we seemed to have given 24 up trying to run the business and it was just 25 deteriorating on a whole range of fronts, a lot of which 189 1 I talk about in there, and I was very stressed by what 2 I call the pause payments issue, and if I could just 3 touch on that for a moment. 4 So Post Office used to recover money from 5 postmasters through deductions from their remuneration 6 over an agreed term, which might go on for years, and 7 what Lord Justice Fraser said in the Common Issues 8 judgment, I think, was that Post Office couldn't take 9 money off postmasters unless a proper investigation had 10 been done. 11 And the legal advice, therefore, was we should -- 12 there were existing sort of deduction arrangements still 13 going on from before 2019, and the Legal Department said 14 it should stop, and the HRC refused to stop it, and it 15 was still going on in 2022. So I made a, you know, had 16 a sort of a bit of a tantrum about this at the Board in 17 December 2022, and it was agreed to stop -- 18 Q. What was your concern about it? 19 A. Well, I thought it was both wrong and illegal. So we 20 were recovering money from postmasters where we hadn't 21 done an investigation. So it seemed to me that was 22 a clear breach of the Common Issues judgment and it was 23 indefensible. And so they stopped the existing ones, 24 which were almost at an end anyway, but I had just 25 assumed we would then do a process to return the money 190 1 that we had taken since 2019, and they weren't prepared 2 to do that. 3 Q. Who is "they"? 4 A. The Historical Remediation Committee, Ben Tidswell and 5 Tom Cooper, at the time. And I thought that was just 6 wrong. So things like that, I was finding incredibly 7 stressful, as I did, you know -- we did, genuinely, 8 I think, the business -- I'm not talking about what had 9 happened with postmasters, but the commercial business, 10 I think, did get a lot stronger between 2015 and 2020, 11 and it was just deteriorating visibly in front of us. 12 And I got very upset by the shortfall investigations 13 because what we were seeing was the -- after two months, 14 if we thought a postmaster owed us money and the 15 postmaster didn't pay it then we wrote that off to the 16 P&L, and so you could see the scale of that very quickly 17 through the P&L, and it had been, I think 2 million 18 a year when I joined, it went up to 5 million a year, 19 and suddenly it was 12 million a year. It was 20 £1 million a month. 21 And through 2022, I was saying, "Look, we've got to 22 understand this". So by 2020 we had a lot of data on 23 this stuff, we were helping people avoid problems, what 24 has happened? And I was being told, "Oh, all of these 25 after being investigated", and eventually had to put -- 191 1 I couldn't get sensible data out of it so I had to put 2 an EY team in there to get sensible data out of it. And 3 it was perfectly clear that they were hardly 4 investigating any of them, and it just wasn't a basis to 5 be asking people for money at all. And that -- there 6 was a lot of resentment that I was asking those 7 questions out of the Operations Directorate. So all of 8 that was very stressful. 9 Q. Can I just pause you there: who was responsible for that 10 and where was the resentment, in your view? 11 A. I felt a lot of resentment from Martin Roberts, who was 12 telling me I ought to, you know, mind my own business. 13 And, you know, I did speak to Nick about it but I had to 14 carry on, it was too big an issue not to. So I went on 15 holiday in April 2023 for two weeks, and I said to my 16 wife while we were away that I really wasn't sure 17 I could go back, it was just too difficult, and Jane 18 Davies had asked me if it was making me ill and it made 19 me reflect on that. 20 My wife was very clear it was making me ill, so 21 I didn't come back immediately. I went to see my GP 22 because I didn't really know, I'm not a doctor, and it's 23 me, and -- 24 Q. You've addressed those matters in the statement, we 25 didn't need to go into any further detail, as far as 192 1 that's concerned. 2 A. Fine. 3 MR BLAKE: Thank you very much. Sir, those are all of my 4 questions. There are a small number of questions from 5 Core Participants. 6 Before we turn to Core Participants, do you, sir, 7 have any questions? 8 SIR WYN WILLIAMS: Well, I think I will wait to see what 9 they ask. 10 MR BLAKE: Thank you very much. Perhaps we could start with 11 Ms Watt for the NFSP. 12 Questioned by MS WATT 13 MS WATT: Good afternoon, Mr Cameron, I'm over here, thank 14 you. 15 I ask questions on behalf of the National Federation 16 of SubPostmasters and I've got couple of questions for 17 you regarding some financial changes that I understand 18 took place while you were the Chief Financial Officer. 19 I'd like to discuss the concept of Hard to Place 20 postmasters, and I'm going to summarise. If you bear 21 with me, I'm going to speak for a little bit and then 22 I'll ask you some questions. 23 So in summary, under Hard to Place since 2018, if 24 a postmaster wanted to leave the network but a potential 25 new postmaster could not be located, then the Post 193 1 Office places them on a Hard to Place register and, if 2 a potential new postmaster is found, the exiting 3 postmaster will get a leaver's payment. 4 Post Office originally offered 26 months' 5 compensation to the Hard to Place postmasters, but this 6 has been reduced unilaterally by the Post Office to 7 12 months, which is an average loss of around £43,000 8 for a postmaster. It's a significant decrease in the 9 return the subpostmaster will get from their investment 10 in the business, and they will have all the costs 11 associated with closing down their business and adds to 12 the significant difficulties with remuneration that 13 postmasters have been facing. 14 Now, turning to Nick Read telling you that you would 15 be leaving the Post Office, you say at paragraph 70 of 16 your witness statement: 17 "In my experience it's not unusual in the commercial 18 world for CEOs to want to recruit their own teams. 19 Indeed, even within POL, many executive colleagues had 20 previously received settlements to leave the business." 21 You go on at paragraph 80 to set out your financial 22 settlement, which you say is two years' salary at 23 £245,000, so just under £500,000. 24 Would you agree that it is not fair that postmasters 25 who have invested their money, time and lives in their 194 1 business are having their compensation -- modest 2 compensation -- for leaving the network cut, especially 3 considering that the network relies on their investment 4 and work, when at least some senior departing Post 5 Office officials can negotiate large settlement 6 packages? 7 A. So a number of thoughts. I mean, fundamentally, yes, 8 and often there are relatively few people getting senior 9 remuneration. There are an awful lot of postmasters 10 and, therefore, the overall cost to the business gets 11 very disproportionate which is why it's easy to end up 12 in these places. I didn't get financial settlement; 13 I got retired on ill health, which was not my judgement, 14 so I think that is different and it followed the Post 15 Office's policies, I think, to the letter under those 16 circumstances. There were no special favours. 17 Nonetheless, your point is well made. On Hard to 18 Place -- and I'm not the world's greatest expert on 19 it -- I think this came out of the Transformation 20 Programme, and the rule was we couldn't pay compensation 21 at that point unless there was a replacement Post 22 Office. We couldn't pay understanding the rules of the 23 Network Transformation Programme to shut a Post Office, 24 and I think that was the rule that it originated with. 25 It's then being debated, at least once a year, and 195 1 the decision to reduce it was taken quite reluctantly 2 but we just weren't being funded in the way we had been 3 under Network Transformation. So it was, you know, one 4 of those difficult financial trades but is it unfair? 5 Yes, it is. 6 Q. So, and just to tie off that point, notwithstanding what 7 you've said about your own particular circumstances. So 8 you would agree that there's a disparity between how the 9 Post Office treats its senior employees, as compared to 10 how it treats postmasters and, would you agree, this is 11 just one of many issues that reflect badly on the Post 12 Office of today, in the way it continues to treat those 13 investors in the business, the postmasters? 14 A. So I agree it's unfair, absolutely. The Post Office 15 does have to meet the budgets agreed with Government or 16 the Government has to pay us more money. So Nick 17 campaigned quite hard, I would guess, sort of 2022, to 18 increase postmaster remuneration but it required more 19 money from Government. We didn't have that money and 20 anything we could do ourselves would have been a drop in 21 the ocean of making a really material difference to 22 postmasters, and the Government said no. 23 So it's not that Post Office Limited is sitting on 24 a huge pot of gold and arbitrarily chooses, Post Office 25 Limited is bust. It's been bust for years. It has 196 1 700 million of net liabilities and we've disclosed this 2 in excruciating detail for ARA after ARA. So I take 3 your point about the fundamental unfairness. 4 If you wanted another example, you know, all through 5 my time, Post Office employees got pay rises -- I mean, 6 I didn't, but Post Office employees got pay rises to 2.5 7 per cent most years; postmasters didn't, their 8 remuneration fell. So yes, it is absolutely an unfair 9 structure. 10 MS WATT: Thank you. 11 MR BLAKE: Mr Henry? 12 Questioned by MR HENRY 13 MR HENRY: Mr Cameron, you wrote a document that nobody will 14 forget, the "What Went Wrong" document, and you wrote 15 that in 2020. But I want to just explore with you 16 another document that you wrote back in 2018, and it was 17 entitled "Sparrow Narrative"; do you remember it? 18 A. I've read it in my papers for this. 19 Q. Now, the former document was premised on the basis, "We 20 did not sufficiently challenge and test our legal advice 21 until it was too late". Do you accept that in the 22 "Sparrow Narrative" document, there is nothing in the 23 mindset of senior management in 2018 about testing the 24 legal advice? 25 A. Absolutely, and I think that was precisely the sort of 197 1 basis of my apology when I was last here, which was to 2 say, up until 2019/2020, I simply hadn't challenged 3 enough the very clear sort of statements of the Post 4 Office leadership, and I'm sorry for that. 5 Q. Now, just concentrating, however, on the "Sparrow 6 Narrative". I want to ask you about this passage, and 7 if it needs to be put up on the screen it is 8 POL00253410. While it is being put up on the screen, 9 you're familiar with it, so I'm just going to read out 10 something you wrote verbatim: 11 "After its independence in 2012, the new leadership 12 team of [the Post Office] who were not accountable for 13 how the business had been run in the period under 14 debate, sought to ensure a full, open and fair 15 resolution of these issues, including a mediation 16 scheme, investigations and an independent review by 17 a third party." 18 Do you remember writing that? 19 A. I don't remember writing that but it was absolutely the 20 position of the Post Office as I set out in my first 21 witness statement from 2015, and I accepted at the time 22 it clearly was wrong. 23 SIR WYN WILLIAMS: Sorry, could we have the relevant passage 24 on the screen, so I can follow it? 25 MR HENRY: Of course, sir. Forgive me, I don't have the 198 1 page number. 2 A. It would be towards the bottom because I think it 3 started with me. 4 SIR WYN WILLIAMS: So we're looking for something from 5 Mr Cameron, is that it? 6 MR HENRY: Yes, sir, I'm so sorry, it's -- if we could go up 7 to the next page. 8 A. No, down. 9 MR HENRY: Further down, please. 10 A. Yes, it's the section in italics. 11 Q. Yes, exactly. I'm very grateful. I'm sorry for not 12 giving you the precise reference, Mr Cameron, and you, 13 sir. 14 So: 15 "After its independence in 2012, the new leadership 16 team of [the Post Office], who were not accountable for 17 how the business had been run in the period under 18 debate, sought to ensure a full, open and fair 19 resolution of these issues, including a mediation 20 scheme, investigations and an independent review by 21 a third party." 22 Does that reflect the mindset that the Senior 23 Management Team, maybe even the Board, felt that the 24 Post Office was not accountable for how the 25 subpostmasters had been treated or prosecuted under the 199 1 previous Royal Mail Group regime? 2 A. No, I think the point I was absolutely making there -- 3 which was also probably wrong, but my understanding at 4 the time -- is that a new Board had been created, 5 largely, and there were a lot of new people who came in 6 and so they weren't at fault for what had happened in 7 the past. Were they accountable for resolving the 8 situation? Absolutely, but they couldn't be accountable 9 for what had happened before they formed. 10 Q. I see. So it's not a sense of resentment, "Oh, well, 11 we've been landed with this, and this all happened when 12 we were under the aegis of the Royal Mail Group"? 13 A. No, I don't think so. 14 Q. Then, if we scroll further down, we can see the view of 15 the team at the time, which was what's been called the 16 mantra. You have put in square brackets: 17 "[99%] have managed to conduct their business 18 without an issue or loss. Out of a total trading of 19 some £60 billion a year, with 10.5 million customer 20 sessions a week, we only have to correct [approximately] 21 100,000 transactions a year, a process that is 22 transparent to Postmasters and [is supported by their 23 National Federation]." 24 This, effectively, was a defence of the entire 25 litigation strategy, wasn't it? 200 1 A. It was my understanding at the time, it was wrong but my 2 reason for writing this, and it is consistent with 3 a number of things that came out in my first witness 4 statement, is I consistently felt that, if we believed 5 this -- and everyone seemed to -- we should be saying so 6 out loud and in public, and explaining and defending 7 what we were doing because my feeling was that would 8 help everybody. And, in fact, it would have helped 9 everybody if we had done that more because people could 10 point out where we were wrong. 11 And, actually, what happened -- sorry, but what 12 happened was that, you know, Paula would look interested 13 and then Mark Davies and Jane MacLeod would shut it 14 down. And it happened, if you read my first witness 15 statement, several times like that. I thought we should 16 be more open; they didn't. 17 Q. There's no doubt, sir -- and this is my last point to 18 you -- that that is precisely the advice that Jane 19 MacLeod gave Ms Vennells -- 20 A. Yet again. 21 MR HENRY: -- at the beginning of the document. Thank you 22 very much. 23 MR BLAKE: Thank you, sir. 24 Mr Stein has a short matter. 25 Questioned by MR STEIN 201 1 MR STEIN: Mr Cameron, just picking up on some of the 2 questions asked by Mr Blake earlier regarding the way 3 that the Post Office is looked at by Government and 4 Government preparedness to invest in the Post Office. 5 You say in your statement, paragraph 84, that the 6 Post Office business is capable of supporting a national 7 network of post office branches. 8 A. Yes. 9 Q. You say that Horizon must be replaced -- 10 A. Yes. 11 Q. -- and, if the Government wants a sustainable national 12 set of post offices, it will have to finance the complex 13 multi-year set of challenges and then arrange for 14 postmasters to own the network long-term. 15 Now, let's just go back to that. That's 16 paragraph 89: 17 "If HMG wants a sustainable national set of post 18 offices, it will have to finance the complex multi-year 19 set of challenges." 20 A. Yes. 21 Q. Right. Now, that position -- the Government need to set 22 out its agreement to finance the Post Office into the 23 future -- has remained the same for now a number of 24 years; do you agree? 25 A. We get, as does the rest of Whitehall, you know, funding 202 1 settlements which might be for one year or might be for 2 three years, but that isn't a brilliant way to fund 3 a trading business where circumstances can change 4 radically. It's really designed to say, "Well, you'd 5 like to spend 10 billion on green technology, we're only 6 giving you £1 billion, do what you can", and it doesn't 7 really work. 8 And I think we have -- I'm not suggesting for 9 a moment that Post Office hasn't muddled some of this. 10 So we simply didn't ask for enough money for the Horizon 11 replacement, I mean, nowhere near enough. And the more 12 we got into it -- it was very early stage, and it was 13 a sort of budget for software -- the more difficult, 14 complex and expensive the actual rollout looks like it's 15 going to be. 16 This is a software and a hardware change; it's the 17 first one for 20 years; the last one went 18 catastrophically badly. So there is no trust in the 19 system, and so -- you know, I remember being part of 20 a software rollout in a commercial company as 21 an employee and, at one point, they just said, "Look, we 22 cannot cope with being on two systems at the same time. 23 So we know it's not working brilliantly, we're just 24 going to push everything onto the new system and we'll 25 fix it later". 203 1 Now, as an employee, that was fine. It is utterly 2 inconceivable that you could talk like that to 3 postmasters because they're running their own 4 businesses, and Horizon was a catastrophe. So the 5 actual rollout, how you resolve shortfalls, all of that, 6 is going to be very, very difficult; and we simply 7 hadn't done of the work to appreciate that properly when 8 we first asked for money, and we just didn't ask for 9 enough. 10 Q. So Government needs to provide long-term settled 11 commitment to funding the Post Office for the future, 12 not just one year -- 13 A. Yeah. 14 Q. -- but for the future -- 15 A. I agree. 16 Q. -- including the replacement of the Horizon system. 17 That is obvious to you and anyone else that has paid 18 attention to this scandal; is that right? 19 A. No one else is going to do it. So if Government doesn't 20 do it, it doesn't get done. 21 Q. Understanding the effect: you said in your evidence that 22 it isn't a brilliant way to fund a trading business, but 23 the real effect on the postmasters running a small 24 branch office in a rural part of this country, whereby 25 there is no way that it would make business sense to 204 1 open up a branch, means that those branches are left in 2 limbo, not knowing what the future is, not knowing 3 whether they have an asset within the business, not 4 knowing whether they can continue to operate for the 5 interests of the people around them or for their 6 families; do you agree? 7 A. I do. What the Government has done to address that was 8 the network subsidy payment. So this was different from 9 investment funding, and it was specifically designed to 10 enable Post Office to keep open post offices that 11 weren't financially viable and which you would shut if 12 your only issue was commercial questions. 13 And that dropped to -- I mean, it was 200 million 14 a year at one point -- it dropped to 50 million, which 15 was, in part, because we had improved commercial 16 performance but that is less than it costs, or certainly 17 when I was there it was less than it cost. And of 18 course, again, it only goes for a maximum of three years 19 into the future, and often it's two or one, or it's 20 uncertain, and so I agree with you. 21 And this is why I think the strategic work around 22 the network, which has been so postponed, actually does 23 need to be done because the Government either needs to 24 say, "Yes, we do want you to keep all those uncommercial 25 post offices open", in which case it has to pay for them 205 1 because there is no one else, or it doesn't, in which 2 case they'll go. 3 Q. Thank you, Mr Cameron. 4 Just one further point. Can I take you, please, in 5 your statement, the second statement, you talk about 6 when you joined the Post Office in January '15: 7 "The Post Office's position was that there was no 8 evidence of any faults with Horizon or unsafe 9 convictions." 10 I'm going to take you to one document, POL00142856. 11 It should come up on the screen now. Can we go to the 12 last page, that's page 3, please, and down to the last 13 couple of lines, please. Now, this is signed by Mike 14 Young, Chief Operating Officer, March 2012. So this 15 pre-dates you joining the Post Office. 16 A. Yes. 17 Q. Just as a reminder, Mike Young was an individual who was 18 discussed by Paula Vennells as being one of the people 19 who she relied on to tell her, "Look, there's no problem 20 in the system", okay? 21 A. Okay. 22 Q. So my question about this document is whether this 23 document was a document that was drawn to your 24 attention. So, briefly, we can go back to page 1, 25 please. Then, under the heading "Background", 2.1, if 206 1 you could highlight that, please: 2 "Last week's major incident on Horizon was the 3 fourth significant service failure of the system in nine 4 months." 5 Then there's a recitation of those failures: in July 6 2011; December 2011; February 2012; March 2012. 7 Now, interestingly, in relation to this document, 8 there's no mention of the mismatch bug or any other 9 bugs. If we drop down, then, to the paragraph at 2.3, 10 I'll summarise this: it says there that, as part of the 11 move to Horizon Online, the contract was renegotiated. 12 One of the design changes which contributed 13 significantly to a reduction in Post Office operating 14 costs, circa 5.5 million per annum to the savings, was 15 moving to an active/passive data centre arrangement. 16 Then I'll read the next bit: 17 "Consequently the resilience is now housed in one 18 data centre with the second data centre primarily being 19 used as a test environment, but available for disaster 20 recovery if required." 21 So setting out those issues. The proposal is set 22 out by Mr Young at page 3, paragraph 6.2. So under 23 "Proposal", 6.2. Highlight that, please: 24 "In recognition of the recent performance history, 25 the media attention this has drawn and our business 207 1 transformation plans, we have proposed a fundamental 2 review of the service. Within this review we will draw 3 out whether the current technical design is correct for 4 our future business needs and plans. The review will 5 run in conjunction with the operational investigations." 6 6.4: 7 "The review will as a minimum cover: 8 "The technical design of Horizon 9 "All forms of testing 10 "Monitoring and alerting 11 "Best practice in retail and financial service 12 markets 13 "Future requirements of our business strategy that 14 may influence the technical environment of which Horizon 15 is a critical part." 16 Okay? Now, I've shortened my examination in 17 relation to that but just to give you the flavour of 18 what that document was saying. So in March 2012, some 19 time before you joined the Post Office, this document 20 was sent to the Board and it was discussing, 21 essentially, a full-out review of the Horizon system. 22 Was that brought to your attention when you joined the 23 POL Board? 24 A. I believe, to the best of my knowledge, that this is the 25 first time I have seen that document and, indeed, 208 1 I don't think I particularly knew who Mike Young was. 2 I don't remember ever seeing this document at any stage, 3 and it was nearly three years before I joined. It's 4 hard to be definitive; I don't have access to POL emails 5 and things any more, but I don't remember ever seeing 6 that before. 7 Q. Should it have been brought to your attention? 8 A. Yes, I think it would have been helpful. I mean, there 9 were things I certainly learnt reading it. So 10 I understood how we used the data centres in 2015 but 11 I didn't know that the history was that they had been 12 used differently previously. And this is one of the 13 reasons why, whether people like it or not, Horizon has 14 to go: because we were doing -- I mean, going back four 15 or five years, we were doing kind of business continuity 16 disaster recovery tests, where we would shut down, you 17 know, the primary data centre having moved all the stuff 18 over to the secondary to proved it worked, and then move 19 it back a week later. And that -- there hasn't been 20 a full sort of disaster recovery business continuity 21 test of Horizon for years because no one is that 22 comfortable that it will work. 23 And so this is a really serious challenge, and it's 24 one of the reasons why, you know, you either get Horizon 25 onto the Cloud, which the business has absolutely failed 209 1 to do, or you're going to have to rebuild data centres 2 at a prohibitive cost using very old technology. 3 MR STEIN: Thank you, Mr Cameron. 4 Questioned by SIR WYN WILLIAMS 5 SIR WYN WILLIAMS: Mr Cameron, in the aftermath of the Bates 6 litigation, HSS came into existence, yes? 7 A. Yes. 8 SIR WYN WILLIAMS: Presumably at or about the same time, the 9 Remediation Committee came into existence? 10 A. I think it was a little bit later, sir, but yes. 11 SIR WYN WILLIAMS: Yes. Were you on the Remediation 12 Committee from the outset? 13 A. I don't think I was. So one of my -- apologies if this 14 is wrong -- one of my agreements with Nick was that 15 I was -- there was -- as soon as -- straight after the 16 litigation, so I'm thinking sort of late-ish 2019, one 17 of the points I made was that the committee then 18 managing these matters was essentially exactly the same 19 people who had managed the litigation, other than Nick 20 swapping in for Paula. And I felt that was wrong and 21 hard to defend, and I thought -- and then it moved to 22 the whole Board. And in 2020, I think, sort of 40 Board 23 meetings or something. I mean, it was a huge increase 24 in work. And then the HRC was formed. 25 Largely, my recollection of it -- and it may have 210 1 been different right at the beginning -- was that I had 2 the right to attend meetings and I was sent papers, but 3 certainly in the later phases I was not a member; it was 4 the Shareholder Representative, Ben Tidswell, and one 5 other non-exec. There were no executives on the 6 Committee. It might have been different right at the 7 beginning and, apologies, I can't remember. 8 SIR WYN WILLIAMS: No, that's all right. 9 Just so that I can be clear, then, about the extent 10 of your knowledge, how much did you know of what was 11 being discussed at that Committee? 12 A. So I would only -- there were usually calls -- I would 13 only usually attend the meeting if there was 14 a particular subject of interest or concern to me, but 15 I always looked at the papers. So I had a reasonable 16 idea of what was going on, which was why I was so 17 exercised about the paused payments issues. 18 SIR WYN WILLIAMS: Right. Mr Staunton has recently told me 19 that his understanding was that, in overseeing what went 20 on in HSS and then the Overturned Conviction Scheme, the 21 Remediation Committee proceeded on the basis that 22 compensation offers would take account not just of what 23 might be full and fair for the postmaster but also what 24 was -- and these are my words, not his -- acceptable 25 given the need to have value for money and taxpayers' 211 1 money was being used; is that your understanding as 2 well? 3 A. I never heard it expressed like that but I think there 4 are a couple of things. The fact that there were 5 detailed Treasury/DBT signed-off operational agreements 6 of how the HSS and OHC schemes had to be operated in 7 order for Treasury to fund the compensation meant that 8 that must have been built in to the process, I think. 9 And there was, I felt -- and apologies to all the 10 lawyers in the room -- an excess of lawyers in the 11 process. I mean, I think at one point there was so much 12 opinion checking that three different QCs or four 13 different QCs were used for one question. 14 So it was a very bureaucratic process, which Post 15 Office -- and obviously Simon Recaldin would understand 16 this much better than me -- but Post Office had to 17 follow. 18 And I think -- I mean, I did find the paused 19 payments issue pretty incomprehensible as to why Post 20 Office or the HRC was taking the stand it did. So it 21 does feel like maybe it was a value for money thing. 22 SIR WYN WILLIAMS: I asked the question, amongst other 23 reasons, because in documents which I have issued, 24 I have drawn attention to the fact that lawyers are used 25 to an adversarial system -- 212 1 A. Yeah. 2 SIR WYN WILLIAMS: -- in which defendants "get away with as 3 little as they can", in inverted commas. 4 A. Yeah. 5 SIR WYN WILLIAMS: Claimants try to "get as much as they 6 can", in inverted commas. 7 A. Yeah. 8 SIR WYN WILLIAMS: At least some of the public utterances 9 from both Government Ministers and Post Office 10 representatives suggested that this was to be somewhat 11 different, in that the aim was to provide full and fair 12 compensation promptly, and I drew attention to all of 13 this in progress updates that I wrote. What's your 14 impression about what actually went on, on the ground? 15 A. So I think, if you go back to the setting up of the HSS, 16 the decision was made for Herbert Smith Freehills to run 17 the scheme, and they got that because of their role in 18 the settlement, which was effectively them negotiating 19 with the claimants from the GLO. 20 So it was set up on the basis of a negotiation 21 between lawyers and, essentially, there was an element 22 of that in the way that HSS was constructed. And 23 I think that was a mistake -- and Simon Recaldin, again, 24 will talk about this, I'm sure -- but my recollection of 25 him coming in was challenging everyone to say: should 213 1 this be a negotiation between lawyers or should this be, 2 you know, a genuine attempt at remediation, that people 3 feel, at the end of it, that they're satisfied, justice 4 is satisfied, we can move on, and that they've been 5 properly compensated for everything that's happened to 6 them? 7 And I think that did conflict with the sort of legal 8 advice, committees, you know, bureaucracy of the 9 schemes, you know, quite badly. 10 SIR WYN WILLIAMS: All right. Thank you very much, 11 Mr Cameron. 12 Thank you for coming for a second time. I trust you 13 won't have to come again. 14 THE WITNESS: Thank you very much, sir. 15 SIR WYN WILLIAMS: So 10.00 tomorrow morning, Mr Blake? 16 MR BLAKE: Thank you very much, sir. 17 (4.38 pm) 18 (The hearing adjourned until 10.00 am the following day) 19 20 21 22 23 24 25 214 I N D E X HENRY ERIC STAUNTON (sworn) ...................1 Questioned by MR BLAKE ........................1 Questioned by MR JACOBS .....................149 Questioned by MR HENRY ......................156 Questioned by SIR WYN WILLIAMS ..............165 ALISDAIR CHARLES JOHN CAMERON (affirmed) ....169 Questioned by MR BLAKE ......................169 Questioned by MS WATT .......................193 Questioned by MR HENRY ......................197 Questioned by MR STEIN ......................201 Questioned by SIR WYN WILLIAMS ..............210 215