Helen Rose giving evidence remotely at the Inquiry today
Helen Rose is a former Post Office auditor and investigator. Mrs Rose has no formal auditing qualifications or training, no training she can recall on the Post Office Horizon IT system and no formal training in investigation. She is also the author of the Helen Rose report, which provided some of the first concrete evidence that incomplete information was being used as the basis of Horizon prosecutions. More on that here.
Today at the Post Office Horizon IT Inquiry, Mrs Rose was asked about a witness statement she made during the trial of Lee Castleton, a Subpostmaster who was bankrupted by the Post Office at the High Court. In March 2004, Mrs Rose “audited” Lee’s branch and found a £23,000 discrepancy. Lee was immediately suspended, later sacked, and then taken to court over the allegedly missing money.
In Helen Rose’s contemporaneous audit report she notes that Lee was pleased to see the auditors turn up at his branch (he had requested the audit). Mrs Rose notes that Lee explained he had called the Post Office helpline “regularly” in an attempt to get the problems with his Horizon IT system fixed. Both these pieces of information were missing from her 2006 witness statement to the High Court.
In the first draft of her witness statement to the High Court, Mrs Rose also stated:
“As part of an audit, we have to complete a procedural security inspection… The inspection revealed that the safe was left open, the safe keys were left in the safe door and it was not secured, that cash and stock were not secured during lunchtime if the Sub-Postmaster was not on the premises, that Travellers Cheques were not kept in the safe and Foreign Currency was not held securely, that standard procedures for adjusting losses and gains were not adhered to (because losses were unauthorised) and personal cheques on hand had been incorrectly treated.”
This was not true. Mrs Rose, or someone on her behalf, had incorrectly transposed information from an incomplete generic report into her witness statement. In September 2006, Mrs Rose was asked by the Post Office legal team to carefully read her draft witness statement to the High Court. She did so, and raised the issue of the incorrect information above.
On 3 October 2006 Mrs Rose had a conversation with Stephen Dilley, the solicitor acting for the Post Office. The note of that conversation records she worked with him to clarify and correctly reflect the situation, which was that, at Mr Castleton’s branch, the matter of the discrepancy was raised first. This led directly to Castleton’s suspension, before the security checks could be properly completed.
On 4 October 2006 Mrs Rose was presented with a second witness statement, which inserted a new paragraph to state:
“As part of a normal audit, we have to complete a procedural security inspection. This was initiated by my colleague Chris Taylor. When a postmaster is suspended then any remaining compliance tests are not completed, because of the large number of compliance tests (including security compliance) that have to be completed for each audit. Accordingly although the procedural security inspection was started as a matter of routine, I do not recall it being completed because Mr Castleton was suspended prior to its completion, and it then became irrelevant.”
Nonetheless, the incorrect paragraph, stating (as quoted above) that “safe keys were left in the safe door and it was not secured… cash and stock were not secured… standard procedures for adjusting losses and gains were not adhered to (because losses were unauthorised) and personal cheques on hand had been incorrectly treated”, remained.
Mrs Rose had no explanation for this. The inquiry chair, Sir Wyn Williams, pointed out that she had signed a witness statement to the High Court containing information which she knew was wrong. He wanted to know why.
“I have no recollection of it. I’m sorry” said Mrs Rose.
Elsewhere in her 2006 witness statement to the High Court, Mrs Rose noted that during her audit, Lee Castleton went for lunch and came back “smelling strongly of alcohol”. This recollection was absent from her 2004 audit report. Asked why it was not in her audit report, but suddenly appeared in a witness statement to the High Court two years later, Mrs Rose said:
“I don’t know why that wasn’t in, or came later” said Mrs Rose.
Mrs Rose couldn’t explain why information which would have been helpful to Mr Castleton – his being pleased to see the auditors and his consistent raising of complaints about problems with the Horizon system – was missing from her witness statement to the High Court. Nor could she explain why an apparently invented (or, charitably, lately recollected) detail about Lee Castleton smelling of alcohol had found its way into her 2006 witness statement to the High Court, when there was no mention of it in her 2004 audit report.
By the time it got to trial, in December 2006, Helen Rose had adjusted her recollection about the alcohol matter to say “it was just a vague memory I had of the office”, and apologised to Lee Castleton for making the suggestion he did smell of booze.
It was interesting to note that whilst the Rose report was an exceptionally important document, and used to inform the Clarke Advice, which led to the cessation of all Post Office prosecutions, Mrs Rose had no information to offer the Inquiry on the recommendations in her report, nor its wider effect on the Post Office Security Team. Nor did she take any interest in the subsequent Postmasters’ campaign for justice. She also had little or no recollection of a Subpostmaster who took his own life after one of her investigations, nor the internal disciplinary process she was subject to afterwards.
The maximum number of people who qualify for the deal are the 86 Subpostmasters whose convictions have been quashed. I have asked if this includes Vipin Patel, Teju Adedayo and Parmod Kalia, three Subpostmasters whose convictions have been quashed, but who the Post Office/government is refusing to compensate because they believe Horizon evidence was not essential to their prosecutions.
There is more information from the government here. At the time the news broke I happened to be with Edward Henry KC who represents several Subpostmasters at the Post Office Horizon IT Inquiry. Ed called the offer “cruel”, suggesting the government was displaying “ruthlessness and expediency”. He told me the government should say: “you are guaranteed £600,000 – whether you accept this or not. We are not going to play raw claw litigation with you. If you take us to court or take the Post Office to court and you get more – great. If you take us to court and you don’t, that £600,000 is safe and it’s waiting for you.”
Edward Henry KC
Here’s my studio live report featuring that quote on ITV News last night. Just before I went into the studio I had a quick chat with the Post Office minister Kevin Hollinrake, who told me the sort of deal Ed Henry was espousing was something the Business Department was looking at, which, whilst I imagine it would be welcome, potentially adds to the confusion surrounding the compensation debacle.
I had various Subpostmasters contact me about the offer. One was delighted, telling me: “Just incredible… my heart is singing.”
Tim Brentnall
He was something of a outlier. Tim Brentnall, whose conviction was quashed in 2021 said:
“If this payment is available to all – then people with high claims should get it as an interim. Secondly – they have always taken the line that we have to fight and prove everything because it’s the “public purse”. Many claims will be below that figure so why has that now been abandoned? It’s not very “full and fair” for a lot of people! It’s also going to create pressure on the people who’s claims are just over that amount to settle for perhaps less than they are entitled to.”
TIm concludes: “It’s a good step that they’ve said they want to settle, but it sort of flies in the face of everything that’s gone beforehand.”
Janet Skinner, who went to prison, described the offer as a “complete and utter joke”. Seema Misra, who also went to prison, said “It might be okay for some. Some might be forced into it. [It’s] definitely not for me.”
Neil Hudgell, whose firm Hudgells represents the largest number of Subpostmasters with quashed convictions said:
“we are somewhat surprised by this sudden announcement. I expect the reaction of many of our clients will be that this move is another example of the Post Office trying to control the narrative. The Government has said these offers are optional, but my fear is that, due to the delays we have already faced, and the particular circumstances many Subpostmasters face, some may feel pressured to accept this offer even though their claims are worth much more. In isolation £600,000 may sound like a lot of money, and it is. But in many cases it is nowhere near enough to represent what has been lost over the last two decades.”
Last night on The World Tonight on BBC Radio 4, Lord Arbuthnot, a member of the Horizon Compensation Advisory Board, called the offer “a choice”, saying that “for some it will be a good way of putting this behind them and getting on with their lives.”
“Any variable pay schemes going forward should not include any metrics relating to the Inquiry.”
So. On scrolling through the terms of the Senior Legal Counsel job (which closed on 31 August), I noticed that as well as a “Generous pension contribution” and “Car allowance”, the Senior Legal Counsel working on the Inquiry would also get an “Up to 18% on target bonus opportunity.”
The successful applicant would be working on the Inquiry team, “formed within Post Office to resolve certain legacy issues [that’s one way of putting it] facing Post Office in connection with its dealings with Postmasters”.
The specific job role involved: “working with the Head of Legal and a dedicated team of Senior Inquiry Counsel individuals supporting all legal work realting to the Post Office Horizon IT Inquiry.”
So very much an Inquiry-specific job. With a bonus opportunity attached.
I drew attention to this apparent anomaly on social media two days ago. The same day I asked the Post Office how the bonus offer for working on the Inquiry squared with its statement making clear that any “variable pay” schemes should not include any metrics relating to the inquiry. I asked for the bonus metric for this job and how it would be measured. I am still waiting for a response, however, I was intrigued to see it brought up by counsel to the Inquiry, Jason Beer KC, at today’s hearing into disclosure issues.
I suppose it was a good time to mention it. After all, Beer was cross-examining Diane Wills, who would be the new Senior Legal Counsel’s boss.
Beer noted the job role and asked: “Is that new post… as has been reported in the media, to be paid in part by reference to a bonus?”
“Yes,” replied Wills.
“And what is the bonus metric?” he asked.
Will replied: “Post Office like many organisations runs a bonus scheme to which its senior professionals and management are entitled to participate in which has business-wide objectives which are set for the whole organisation which include things like financial targets. The [Inquiry] team is entitled to take part in that in the same way that other parts of the Post Office are. In the current scheme and in any future schemes there are no metrics directly related to the Inquiry.”
Diane Wills
“So that lawyer and other lawyers – is this right – are not being paid bonuses that are related to their performance in inquiry work?” asked Beer.
There was a pause.
“I think we have to look at it at two levels.” Wills blustered. “First of all there is a decision which is taken by the remuneration committee as to whether or not the corporate-wide objectives have been met, and that triggers the entitlement in principle to payment of a bonus. At a team level… there are personal objectives for each member of the team which are focused on – in the inquiry team – support for the inquiry. Their performance is then looked at in the round at the end of the year, looking at what they’ve delivered in what context with what standards of behaviour etc. Higher levels of performance could lead to the achievement of a higher bonus award. But the decision has to be taken in the first place that it’s payable at all.”
In other words, yes. Despite the massive outcry, the questions in parliament, the publication of two formal reports, the Chief Executive being forced into a series of grovelling and humiliating apologies, the Post Office is still offering bonuses to its staff for their work on the Post Office Horizon IT Inquiry. Of course it is.
Information Commissioner’s decision, 29 August 2023
On 2 June 2023 I sent a Freedom of Information (FOI) request to the Metropolitan Police, London’s police force. I asked:
“Could you tell me when the police stopped using the word “negroid” in its racial identification codes? Please can you supply me with documentation supporting this?”
To give the Met’s FOI department some context, I wrote, as part of my request:
The same day, I received a generic acknowledgment from the Met to my request, giving me a reference: 01/FOI/23/030762
Every public organisation is expected to respond to an FOI request within 20 working days. The Post Office regularly struggles with this, but at least comes up with an excuse. For instance, I made one request on 12 November 2021. On 20 December 2021, I got this:
“As explained in our letter of 29 November, our view is that your request falls within the scope of the qualified exemption under section 42 FOIA. In that letter, we explained that we required an extension of time to provide a response and would aim to respond to you by 31 December 2021. While we have endeavoured to progress your request as far as possible, we consider that a longer extension is now required. We consider that a further extension of time is consistent with the FOIA Code of Practice which states that extensions to the initial 20 working days to provide a response to any request are permitted “until such time as is reasonable in the circumstances”. You will appreciate that the previous extension fell within the Christmas holiday period. In the circumstances, we consider that a further extension would be appropriate and will therefore aim to respond to you by 31 January 2022.”
The Met, however, did no such thing. It did not prevaricate, or play for time. It simply ignored my request.
On 6 July I wrote:
“Hi
Unless I’ve missed it, you’ve taken more than 20 working days to make a substantial response to my FOI request below.
Please let me know why this has happened and when I can expect to get a response to my question.
Many thanks
Nick”
Silence. On 13 July, I wrote:
“Please may I have a response to my email below.
Thanks”
Silence. On 17 July, I wrote:
“Please may I have an update on the status of my FOI request below and an acknowledgment that I have sent this request. My previous two emails (also below) have not even been acknowledged.
Thanks”
Silence. On 27 July, I wrote:
“I am a freelance journalist.
I don’t seem to have received a reply or an acknowledgment to my emails below since I initially made the FOI request referenced above on 2 June.
After a conversation with the ICO am cc-ing the generic casework email address I was helpfully given.
Please could you immediately acknowledge this email AND within the next 3 working days (ie by the end of Tuesday):
– provide me with a substantive response to my initial query
OR
– explain why you have not replied to my last three emails
– explain why you have not replied within 20 working days of my initial request
– tell me when I can expect to get a substantive response to my original request.
If I don’t receive a satisfactory response by the end of play on Tuesday I will make a formal complaint to the ICO.
If I have missed any correspondence, please accept my apologies and send it again as I can’t find anything in my inbox or spam folders.
Yours
Silence. On 1 August, I wrote to the Information Commissioners Office, cc-ing the Met Police and stating:
“For reasons I don’t fully understand, I have not received a response to any of my emails to the met FOI office (see below), beyond the response to my initial email on 2 June assigning me a reference number.
It is of course possible that my subsequent emails are not reaching the MPS Data Office, or that their emails are not reaching me.
Notwithstanding the possibility of some kind of innocent communication error, I would like to initiate a formal complaint against the MPS based on the apparent failure of their “data office” to substantively respond to my initial FOI request and my multiple communications since.
Please advise me as to how you would like me to proceed.”
The ICO gave the Met 10 working days to respond. Silence.
Today (29 August 2023) I received an adjudication from the Information Commissioner. It was addressed to me and the “Commissioner of Police of the Metropolis”. It said:
The Commissioner’s decision is that the public authority has breached section 10(1) of FOIA in that it failed to provide a valid response to the request within the statutory time frame of 20 working days
The Commissioner requires the public authority to take the following step to ensure compliance with the legislation.
The public authority must provide a substantive response to the request in accordance with its obligations under FOIA.
The public authority must take this step within 35 calendar days of the date of this decision notice. Failure to comply may result in the Commissioner making written certification of this fact to the High Court pursuant to section 54 of FOIA and may be dealt with as a contempt of court.
The clock is ticking. And I am very happy to take this to the High Court if I can get some help from m’learned friends.
I wonder if the Met Police is sitting on information about its racial identification codes that it really, really does not want to make public. Or perhaps mine and the ICO’s emails have been inadvertently overlooked.
In the course of preparing for a recent Sunday Times piece into the latest on the Post Office disaster, I spoke to a number of people. For reasons of space, many of their contributions were edited down to a couple of short quotes, or they simply didn’t make it into the piece at all. Nonetheless, what they had to say was fascinating and I remain grateful for their time.
What follows is an interview with Edward Henry KC, who works with Flora Page and the solicitors Hodge, Jones and Allen.
Together they represent former Subpostmasters Teju Adedayo, Nichola Arch, Lee Castleton, Tracy Felstead, Parmod Kalia, Seema Misra, Vijay Parekh, Vipin Patel, Sathyan Shiju and Janet Skinner.
They, like the other former Subpostmasters and organisations and individuals represented by legal teams at the Inquiry, are known as Core Participants.
Ed has been busy of late. Whilst working on the Inquiry, he found time to successfully represent Andrew Malkinson in his appeal against a rape conviction, heard in front of Lord Justice Holroyde, who lead the panel of judges in Hamilton v Post Office. My interview with Ed took place before Mr Malkinson’s conviction was quashed, and we didn’t touch on it.
The document contained racially offensive classification codes for Subpostmasters (eg “Negroid Types”). Despite the document’s obvious significance, it had not been given to the inquiry.
It begged the question, what else was the Post Office keeping hidden? On instruction from the Inquiry, the Post Office did some more digging and found thousands of documents potentially relevant to the questioning of Gareth Jenkins and other witnesses.
On 11 July the Inquiry chair, Sir Wyn Williams, asked for submissions on whether he should bring a temporary halt to oral hearings so his team could examine these newly-disclosed documents. Sir Wyn decided on a two week break. Ed and I spoke the next day.
What on earth is going on?
Our core participants are terrified, that not simply the wheels, but the back axle has come off the Inquiry because the Post Office has failed miserably in its disclosure obligations. Our core participants are people who’ve gone to prison, been wrongfully bankrupted and had their lives destroyed by the Post Office. We have to try and reassure them that we’re actually going to reach a safe haven eventually, and that the truth will out. It’s become increasingly more difficult because of what we’ve now seen.
As of yesterday, the Post Office had absolutely no idea what quantity of documents was going to fall upon the Inquiry. And the inquiry, of course, acts as the filter. We don’t get the documents until the Inquiry has sifted it. They act as the first filter before our teams get anything. So I really want to pay tribute to Jason Beer KC and his team and give credit to them because they’ve taken on an absolutely Herculean task.
We are frustrated. We feel becalmed. The wind has been completely sucked out of the Inquiry by this. And whether it’s a cockup or conspiracy is not for me to say, but it bears all of the hallmarks of both. I mean, you couldn’t contrive a more ridiculous state of affairs. I’ve never been through anything like this. What a shambles.
At what point were you put on notice that you would be required to make a submission on potentially delaying the rest of the evidence due to a lack of disclosure?
Last week. Gareth Jenkins was due to give evidence on the Thursday and Friday, and we didn’t know until the Thursday that he was going to be pulled. There was a sense of grim determination that this must not be allowed to overwhelm us, but we had to reassure our clients, some of whom had travelled to the hearing so that they could actually see the person who had given evidence against them in a criminal court. There was a sense of impending doom because we thought, well, if this has happened with Gareth Jenkins, then what might happen with the rest of phase four? There’s a tremendous sense of frustration, and also powerlessness because again, it’s the Post Office dictating the timetable and dictating the narrative by their own failure.
When you had those conversations with your clients, and you had to find out whether or not they would prefer to push through with the evidence or to delay – I imagine that’s quite a difficult decision to put on them.
I have to be very careful, Nick, about dealing with discussions I have with my clients, but on an emotional level they’re bewildered. They’re wounded. They’re confused. They’re despairing. They fear the worst. They are perplexed at how the Post Office seems to get away with it.
During the oral hearing on 11 July, Ed did put on the record two responses from his clients:
Nichola Arch:
“The harm of non-disclosure and/or delayed disclosure cannot be underestimated when it comes to the victims of this nightmare. For some, it takes you straight back to the time when you tried to defend yourself but constantly hit a brick wall that is called the Post Office, knowing the truth is there, but you constantly have no access to it. This is what justice looks like to all of us, a one way-ticket to nowhere. The Post Office have said they’ve learnt lessons and they continue to do this. Is this lesson a conspiracy and disrespect for the whole of our legal system? Being the guilty parties, I do not understand why the Post Office have so much slack given to them. It’s almost like they continue to control the whole narrative. We are losing momentum in the Inquiry and changes have to happen now.”
Janet Skinner:
“I completely understand the chair is not happy with this disclosure process from the Post Office, so are we all. Moreover, I’m extremely concerned about this situation. Why is the Post Office able to do this after years of withholding information? Why is it allowed to continue? This isn’t the first time or the second time. I believe that there should be some sort of punishment for their behaviour and for their completely negligent behaviour towards this Inquiry. It’s becoming the Post Office show again. The Post Office are well aware of their actions. Are they not intelligent enough to understand the rules?”
How does the Post Office needs to be thinking about things going forward?
I think the Post Office is in a state of constant siege mentality. Whether it is acting in a cussed way, or whether it is panicked into error… its sense of judgment is completely gone. The mistakes that it makes and continues to make are utterly extraordinary. Conor Cruise O’Brien used this expression in respect of [former Irish Taoiseach] Charles Haughey: “GUBU”. We are in “GUBU” Land. Grotesque. Unbelievable. Bizarre. Unprecedented. I’ve never seen anything quite like this. The Post Office has been through the group litigation. It’s been through countless criminal appeals, and it is still getting things badly wrong.
You keep saying the Post Office, but who is it? Who is directly responsible?
You saw from his evidence how Ben Foat [Post Office General Counsel] was apparently distancing himself, saying that he was not directly involved but had commissioned others to perform the disclosure exercise. You’ve got the Post Office, you’ve got Herbert Smith Freehills, you’ve got a firm of accountants [working on the disclosure exercise], and I wouldn’t be at all surprised if they all start blaming each other because nobody has taken absolute control. You need to have accountability. You need to have somebody at the Post Office who knows that their head is on the block if this doesn’t come good. It’s the analogy with individual ministerial responsibility that used to be a convention in Parliament, but which has now long gone by the board, which was basically ‘whether I’m personally responsible or not, I am accountable, and if my team don’t get it right, then I’ve got to go’.
That has to be the Post Office Chief Executive, doesn’t it?
Well, it has to be really, has to be, unless the Chief Executive wants to use the General Counsel as a lightning conductor, but ultimately, it would have to be the Chief Executive.
If you’d like to contribute to my work on the Post Office scandal, please click on the widget you should be seeing to the right of this text (or below if you’re reading it on a mobile). To find out more before donating, please go to my tip jar web page. All contributors will be added to the ‘secret’ email newsletter, which offers irregular, and at times, irreverent insight into the machinations of the inquiry and the wider scandal. If you’d like to buy my book The Great Post Office Scandal, I would be thrilled – it’s available from all good outlets.
Following a Q&A with one member of the independent Horizon Compensation Advisory Board (Lord Arbuthnot) earlier this week, I am delighted to bring you another.
Richard Moorhead is Professor of Legal Ethics at Exeter University and a respected industry blogger. He has taken a close professional interest in the legal failings which contributed to the Post Office Horizon scandal. You can read his dedicated substack column here.
Prof Moorhead’s thoughtful and measured contributions brought him to the attention of the government, which led to his invitation to sit on the HCAB.
In recent weeks we have had the Bonusgate revelations and serious Post Office failures when it came to disclosing documents to Sir Wyn Williams’ public inquiry into the Post Office Horizon IT scandal. On top of that, the various Subpostmaster compensation schemes set up by the Post Office and government have been accused of being unfair, overly complex, legalistic and far too slow.
Herbert Smith Freehills have been instructed by the Post Office since 2019, where they were brought in to (among other things) negotiate the Dec 2019 Bates v Post Office settlement, design and operate the Historical Shortfall Scheme (set up in 2020), negotiate settlements with those who’ve had their convictions quashed and to work on the inquiry. It was recently announced HSF would stop working on the Inquiry, but the Post Office has retained the City firm to deal with compensation settlements.
Professor Moorhead asked me to make it clear he is answering these questions in a personal capacity, not as a member of the independent Horizon Compensation Advisory Board.
Have Herbert Smith Freehills covered themselves in glory?
No. Disclosure has gone badly wrong. The Historical Shortfall Scheme was misconceived and should not have involved them. How much of this is their fault and how much the Post Office’s or the Government’s remains to be seen.
Given their prior role in the Bates case, it was always unwise for them to be involved in the Inquiry. Now their work for the Post Office has become a focus for the Inquiry, it is beyond embarrassing for them.
The possibility of conflicts, actual or perceived was always there and the problems were foreseeable. Even if these do not lead to professional misconduct concerns, and they might, they have caused reputational damage to themselves.
The rest of the firm must be raging at the embarrassment HSFs Post Office team have caused them; they make HSF look like they lack wisdom and competence. It will put other clients off.
What did they get wrong?
Getting involved post-Bates. The most sensible advice to the Post Office on a compensation scheme would have been to make it as independent of any of the history in this case as possible. That meant independence from the Post Office and from the lawyers who ran any parts of the cases for the Post Office, including HSF.
Running it on a lawyers’ litigation like model was also unwise. The HSS scheme they set up was legalistic, it lacked independence and there were errors of foresight (tax and insolvency being the obvious ones). The scheme suffered from a failure to think about fundamentals from the outset and relied on broken models of dispute resolution in a situation particularly unsuited for it.
I do not think unusual foresight was needed to see this would not work well and the forms they designed had the effect of minimising claims unfairly. Having an opaque, negotiation-based system, run by City lawyers whilst applicants (in reality, legal claimants) were denied any cash to instruct lawyers to help them complete their forms was also obviously unfair.
They should have said “you need a restorative and Ombudsman-style system which can be trusted by the victims and we and as far as possible, you, the Post Office, should be nowhere near it.” Instead, they went for something which looked like a re-run of Bates, with the Post Office and some of the Bates lawyers at the helm. Crass does not come close to describing how bad this idea was.
We should leave open the possibility that the Government prevented something more sensible, but that would not require HSF to be involved. They should have run away as fast as they could. And the Post Office Board should have spotted the problem too, and not instructed them. Bonusgate tells us a fair bit about the quality of the Board, though.
What do you think of Sir Wyn Williams’ interim report on compensation?
It’s a sensible ratcheting up of the pressure, which seems to be Sir Wyn’s modus operandi. Another way of looking at it is – he has, as with disclosure, said on each occasion: you are getting this wrong, here is some rope – then giving it a firmer tug at each stage. Right now he is giving the idea of fairness the firmest and hardest of tugs and saying to the government and the Post Office you have to be absolutely sure that you have given fair compensation.
Whilst I cannot speak for the Advisory Board, I can say without any doubt the HCAB is very firmly behind that aim and I believe the Minister is too.
What are your main concerns about compensation?
There is a big agenda:
have HSS cases been undersettled,
have public interest case claimants (Vipin Patel, Parmod Kalia and Teju Adedayo) been treated like second class citizens,
the tax and insolvency problems,
the size of awards for stigma,
with time being of the essence. None of us forget Sir Wyn Williams announcing each time someone has died.
When the dust settles I’d also like the Inquiry to stand back and think bigger picture about compensation and restorative justice schemes of this sort in the future, but that’s a point for down the track.
What lessons should the Post Office (and government) draw from the compensation debacle?
These are fragile, deeply-wronged people, subjected to a process similar to the one that violated them. You cannot have the wrongdoer, or their lawyers, administering reparation. And rule-based parsimony is money badly spent. You need some generosity, common sense, and institutional actors capable of building trust.
Start thinking properly about what it takes to make such schemes independent, fair, fast, efficient, and meaningful because these compensation schemes are not uncommon and they deal with real lives ruined by others.
HSF will soon cease work on the Inquiry, to be replaced by Burges Salmon and Fieldfisher. What do these incoming legal teams have to do to sort the disclosure mess out out?
The Post Office (and its General Counsel, Ben Foat) do not yet seem to have a full and accurate grasp of the disclosure problem. This is shocking. For the new lawyers, working out what went wrong, the scale of the damage and how to correct it will be fundamental.
I would expect them to engage very openly with the Inquiry and core participants on what they are doing, how they are testing what they are doing, how human insight is deployed to look for gaps and missing documents, and so on. They or the Inquiry need also high quality e-disclosure expertise at their fingertips
Their key task is to get it right and convince the Inquiry and the other participants that they are doing so. It is now an enormous ask.
Sir Wyn Williams (the inquiry Chair) has said he will attach a Section 21 notice to all future disclosure requests. How serious do you think the threat of criminal proceedings might be, and what effect will this threat have?
As things stand, lead counsel to the Inquiry, Jason Beer KC, thinks the Post Office will have a defence on their work to date (essentially incompetence, rather than criminal intent) which the Inquiry cannot yet argue with. That could change as they delve deeper into the history.
Now the Inquiry has laid the ground for criminal enforcement and will be keeping a detailed grip on what the Post Office are doing now, and what they have or have not got wrong hitherto, that may open up enforcement.
That said, I’d say the Inquiry will, if they can, and rightly, want to concentrate on ensuring disclosure is full and accurate from here on in rather than spending time and precious brainpower on enforcement.
My thanks to Professor Moorhead for his time.
If you’d like to contribute to my work on the Post Office scandal, please click on the widget you should be seeing to the right of this text (or below if you’re reading it on a mobile). To find out more before donating, please go to my tip jar web page. All contributors will be added to the ‘secret’ email newsletter, which offers irregular, and at times, irreverent insight into the machinations of the inquiry and the wider scandal. If you’d like to buy my book The Great Post Office Scandal, I would be thrilled – it’s available from all good outlets.
Lord Arbuthnot outside the Royal Courts of Justice in 2021
Last week the Sunday Times asked me to write a piece about the Post Office scandal. The result can be read here. In the course of researching the article I picked up a lot of interesting material which, for reasons of space, didn’t make the final cut. Rather than let some good stuff go to waste, I am going to publish it on this website. We’ll start with an interview with Lord Arbuthnot.
James Arbuthnot, formerly the MP for North East Hampshire, became the leading parliamentary campaigner for Subpostmasters back in 2010. He has continued to campaign from the House of Lords and was recently appointed to the Horizon Compensation Advisory board, along with his fellow campaigner Kevan Jones MP and two academics, the legal ethicist Professor Richard Moorhead and Chris Hodges, Emeritus Professor of Justice Systems at Oxford University, who chairs the group.
Does the Post Office chief executive, Nick Read, have your confidence?
I am sad to say that nobody in the Post Office has my confidence. I am suspending my judgement about Simon Recaldin [the Post Office’s Historical Matters Director], because he appears to be doing his best to put things right; but I remember believing that Alice Perkins [Tim Parker’s predecessor as Post Office Chairman], Paula Vennells [Nick Read’s predecessor as Post Office CEO] and others were also doing their best to put things right, and they made things worse. Nick Read paid himself a bonus for his Inquiry achievements – and only last week it was shown what a fiasco the Post Office has created in the Inquiry – and has paid back a few thousand pounds.
How do you feel, personally, about where we are now, given we are three and a half years into Post Office and government apologies?
Oddly enough, I feel we are heading in the right direction. We have the Public Inquiry and I have faith in Sir Wyn Williams [Inquiry Chair] and Jason Beer KC [lead counsel to the Inquiry]. We have several compensation schemes expressly aiming to put the subpostmasters back into the position they would have been in had the scandal not happened. We have an able Post Office Minister [Kevin Hollinrake MP] who, as a former campaigner for the subpostmasters, believes in their case.
Of course it’s all much too slow, and of course there is far, far more to be done. But whereas three and a half years ago nobody had heard of the issue, there are now hundreds of campaigners all doing different and valuable things to ensure that justice is done. We have lift off.
What should the Post Office minister be doing?
Kevin Hollinrake has my trust. He is working diligently and effectively to achieve justice. The key thing he needs to do is bring other government departments into his way of thinking. Those departments include the Treasury (as always) but also the Ministry of Justice. The subpostmasters have been failed by so many sectors of society, but the Courts have been a major part of that failure. The presumption that computers are working properly is ridiculous. The failure to properly police the disclosure of evidence is shocking. The length of time taken to consider the consequences of Mr Justice Fraser’s scathing judgement is unjustifiable. The fact that any Post Office convictions – not just those relating to Horizon – are regarded as safe is bizarre.
You recently said all Post Office post-Horizon convictions need to be revisited. Why?
The Post Office’s appalling behaviour towards the victims of Horizon was an infection which must have run through its entire legal department and cannot have been limited to the Horizon cases.
What do you hope to see in Sir Wyn’s final report?
Lots. But I would begin with an apology, on behalf of the nation, to the subpostmasters. We have been seeing formulaic apologies on an almost weekly basis from the Post Office, but I know of nobody who thinks those apologies are worth anything. The week after an apology something will happen that is even worse than has gone before. I hope Sir Wyn’s report will, first, set out clearly what happened and who knew what and when. It will presumably be for others to take action against individuals as a consequence, but it will form the basis of that action.
Second, I hope it will make any comments needed to ensure that proper compensation is paid to every single person who has suffered as a result of this scandal, including the subpostmasters, their families and their employees.
Third, I hope the report will highlight the failings in the courts and legal system, with a route to improvement. We smugly suggest that British justice is the best in the world. This has been a failure of justice on an epic scale. One such failing is the presumption that computer-based evidence is correct unless proven otherwise; another is the refusal of disclosure of evidence that might help to rebut that presumption.
Fourth, I hope it will set out how it was that corporate governance failed so badly at the Post Office and the changes needed to ensure that that does not happen in other organisations. Those changes need to be cultural and not box-ticking.
Fifth, I hope it will examine the failures in the introduction of complex computer systems. Fujitsu was permitted to bring into service a system that had already been rejected by the DWP, that was full of faults and under-tested. The Government has not learnt its lesson from this, as we see from the introduction of the Common Platform system in the Ministry of Justice. Yet the Government continues to assume that savings can be taken from computerisation before the benefits of that computerisation are clearly established.
I have faith in Sir Wyn. He is doing an extraordinary job in the face of the usual roadblocks being created by the Post Office. I am already disappointed that he has ruled out considering the role of the auditors in what the Post Office, the Government and Fujitsu have done. I believe the auditors too should be held to account. Sir Wyn said that to include their role in his Inquiry would be “disproportionate”. While I disagree with him, he may be making the valid point that the best must not be the enemy of the good.
I would also be disappointed if Sir Wyn did not address the issue of non-Horizon related prosecutions and litigation. I understand that he may feel constrained by the title of his Inquiry (“the Post Office Horizon IT Inquiry”) and by his terms of reference; but he dealt most effectively with the issue of compensation despite that being expressly excluded from his remit, and it is clear from the thrust of his questioning that the matter is far more than an IT inquiry but goes also to the behaviour of the Post Office arising out of the contracts it imposed on the subpostmasters. The general approach of the Post Office towards prosecution (an approach which I would describe as deliberately unjust) is a matter on which Sir Wyn should be able to comment and draw conclusions from.
Of course there are many other issues which, if left out of the report, would disappoint me (the role of Fujitsu, the individual responsibilities of the management personnel of the Post Office and of those civil servants and Government appointees to the Board of the Post Office, and so on and on) but I see no sign that the Inquiry will fail to deal with them.
All of this is a lot to ask of Sir Wyn Williams. While I believe he is up to the task, the Government’s response must reflect his own energy and integrity.
My thanks to Lord Arbuthnot for his considered responses to my questions.
The minutes from the most recent meeting of the Horizon Compensation Advisory Board can be read here and below:
Horizon Compensation Advisory Board
Report of fifth meeting held on 14 June 2023
Members present: Prof. Christopher Hodges (Chair); Lord Arbuthnot; Kevan Jones MP; Prof. Richard Moorhead.
Also present: Carl Creswell; Rob Brightwell; Eleanor Brooks; Beth White; Eleri Wones (first part of meeting) (all DBT).
Fairness of the HSS
1. The Advisory Board agreed that
· Fair compensation should be delivered that puts victims in the position that they would have been in if the scandal had not occurred and properly reflects the significant harms that had been visited on their lives and reputations.
· Legal or other related costs should be reimbursed in full, so that compensation payments were fully compensatory.
2. It recognised that Government already subscribed to those principles. Its concern was that they should be effectively implemented, and that postmasters and others should have confidence that they were being applied fairly. Officials informed the Board that Ministers would shortly be announcing their intention to fund top-ups to HSS payments to address the issue relating to tax. [Post-meeting note: announcement to Parliament is here].
3. The Board noted that offers had been made to 99.3% of postmasters who had originally claimed under the HSS, and that 82% of these offers had been accepted. However there had been public comment about the outcomes and handling of a number of cases perceived to have been unfair. Some of these had not yet completed the dispute resolution process within the HSS.
4. The Board have had a discussion with KCs from the HSS Independent Panel. The KCs had explained that the Panel had adopted a practice of ‘acting as advocates for claimants’ where it could see matters within a claim that were not addressed in the options presented by HSF, rather than as wholly disinterested arbiters, and had adopted a presumption in favour of applicants if there was a shortfall and no other explanation.
5. The Advisory Board believed that the Panel had been guided by principles of independence and professionalism, and by legal precedent so as to seek consistency between awards, in reaching decisions in individual cases.
6. The Board noted the difference in process between the HSS and GLO schemes. Under the HSS, the independent Panel recommended an offer. If the offer was not accepted there was a dispute resolution process managed by the Post Office, including referral back to the Independent Panel and then with independent mediation as a final stage. By contrast in the GLO scheme an initial offer was made by DBT followed, if necessary, by independently facilitated discussions. Only if these did not produce agreement was a case referred to an independent Panel. There was provision for review by a senior legal figure in the event of manifest error or irregularity. A broadly similar sequence was being envisaged for the new arrangements for compensation for overturned convictions.
7. The Board also noted the different remuneration arrangements for representation and the very high levels of cases without representation in the HSS scheme.
8. In the Board’s view, having an independent Panel (and, if necessary, the Reviewer) in place at the end of the process to make final decisions on individual claims increased the trust which could be placed in the final settlement.
9. The Board noted that given the history of mistrust in the Horizon scandal born of adversarial litigation, many postmasters would lack confidence in the fairness of any compensation delivered under the auspices of the Post Office or its legal advisors. They also noted concerns about the administration of HSS, including issues in respect of the application form.
10. They concluded that if the Scheme was to be seen to be fair, individuals who were unhappy about the settlements which they had received needed to have recourse to an assessment which was wholly independent of the Post Office. This should come at the end of the process, on similar lines to the role of the GLO Independent Panel. They recommended that the Minister should consider how such an appeal process could be introduced. It should focus on assessing whether settlements were fair based on the evidence provided, whilst allowing consideration of elements of a claim which had been missed or not included on the original form.
11. The Panel discussed the differences in the extent and timing of legal advice in the schemes, which tended to suggest there may be merit in the concerns that unrepresented claimants have been disadvantaged under the HSS scheme. The Board noted that the HSS had been established under schedule 6 of the agreement between the Post Office and JFSA which had settled the GLO case. DBT’s understanding was that, in the light of their members’ difficult experiences in the High Court and elsewhere, the JFSA had argued for a process which did not expect postmasters to take legal advice in making applications. The Post Office had, however, provided support with the costs of legal advice to help claimants consider compensation offers. The HSS Panellists had also explained that they took the approach of scrutinising HSS applications with a view to identifying any heads of loss that had not been explicitly included. Nonetheless, claimants’ lawyers had suggested that claimants who were unrepresented may have received smaller awards than those who had engaged legal advice.
12. The Board noted that many of the concerns about the fairness of settlements related to the overall treatment of individual postmasters by the Post Office over many years. They noted that the HSS had paid careful attention to legal principles and precedents in respect of loss of reputation, stigma, distress and inconvenience and related heads of loss, but that this had led to potential differences between different claimant groups. However they believed that the facts of some Horizon cases went beyond those of precedents, for instance in respect of damage to reputation irrespective of prosecution given the impact of any branch intervention or civil action, the prominence within the community of many postmasters, the length of time during which the individual suffered damage, and the consequences for family members and family unity. If such cases were decided by the Courts, there were good reasons for thinking that judges may well create new, more generous precedents, especially given the egregious and bullying behaviour of the Post Office during the course of the scandal – behaviour whose impact was increased by virtue of the Post Office’s credibility as a Government-owned organisation. They were also concerned that the operation of some rules of thumb in the scheme (such as the 26 month guideline on termination and the starting points for assessing reputational harm) risked unfairness to some claimants.
13. The Board was therefore not convinced that the application of existing principles and precedents would lead to consistently fair results. They noted that postmasters who had been prosecuted by the Post Office would receive exemplary damages. Whilst such damages were intended to punish the Post Office, they also had the effect of acknowledging the sustained personal impact which its actions had had on individuals. They recommended that the appeal process recommended above should put particular weight on securing a fair outcome in respect of the issues described in the preceding paragraphs.
Overturned convictions
14. The Board noted that of about 900 people prosecuted by the Post Office in 2000-2015, to date only 86 convictions had been overturned. More were in the process of appealing and the Post Office had recently written to a further group to indicate that it would not oppose their appeals.
15. In the Board’s view, postmasters would inevitably distrust any action of the Post Office or its advisors in reviewing cases, even if this were done with the utmost professionalism.
16. The Board believed that the criteria set by the Court of Appeal for Horizon cases were too tight, and that a significant number of miscarriages of justice could be outstanding. They also believed that the Court of Appeal’s judgment was based on a limited understanding of the extent of problems with financial systems in the Post Office and with the extent of wrongdoing lying behind the “affront to public justice” finding. This led to a much wider and higher level of concern about Post Office prosecutions (and their review) with a number of critical documents not apparently disclosed and available to the Court.
17. The Board recognised that Government cannot challenge the decisions of the Courts. They agreed that their Chair should write to the CCRC and its equivalents in other nations to strongly encourage it to propose a wider set of criteria in the light of the full range of cases prosecuted by or on behalf of the Post Office.
18. They also agreed to recommend that the Minister should
a.consider whether the Government or Post Office could do more to encourage postmasters to appeal their convictions;
b.arrange that a review of all Horizon prosecutions be undertaken, by a team independent of the Post Office and without any prior involvement, to identify appeals that should be reviewed as unsafe, based on a presumption of innocence; and
c.encourage the Post Office, when considering which potential appeals meet the Court of Appeal’s criteria, to only resist appeals in which there remained substantial evidence wholly free of taint.
19. They agreed to look further at the issue of cases not yet appealed.
If you’d like to contribute to my work on the Post Office scandal, please click on the widget you should be seeing to the right of this text (or below if you’re reading it on a mobile). To find out more before donating, please go to my tip jar web page. All contributors will be added to the ‘secret’ email newsletter, which offers irregular, and at times, irreverent insight into the machinations of the inquiry and the wider scandal. If you’d like to buy my book The Great Post Office Scandal, I would be thrilled – it’s available from all good outlets.
On 20 June I was waiting outside Committee Room 6 at the Houses of Parliament, waiting to hear Post Office CEO Nick Read and his fellow execs grilled by Darren Jones MP and various members of the Business Select Committee.
I was in the process of putting together Episode 12 of The Great Post Office Trial. My producer Robert and I had already bid for an interview with Mr Read, but we were cannoning towards our deadline and time was running out. The day before we had been told that despite initially positive soundings, the CEO was unlikely to be able to accommodate us in his schedule.
Mr Read arrived in good time for the meeting, tracked by his “Group Corporate Affairs, Communications & Brand Director”, Richard Taylor. I introduced myself and asked Read if he would do an interview after the session – pointing out we had a bid in and we were up against a deadline. He agreed.
This is the first time in my thirteen years of covering the story that a Post Office Chief Executive has agreed to be interviewed by any journalist about the scandal. I am grateful to him for his time.
If you’d like to contribute to my work on the Post Office scandal, please click on the widget you should be seeing to the right of this text (or below if you’re reading it on a mobile). To find out more before donating, please go to my tip jar web page. All contributors will be added to the ‘secret’ email newsletter, which offers irregular, and at times, irreverent insight into the machinations of the inquiry and the wider scandal. If you’d like to buy my book The Great Post Office Scandal, I would be thrilled – it’s available from all good outlets.
UPDATE: The inquiry’s hearings have now been postponed at least until 25 July, possibly until after summer.
ORIGINAL COPY: The statutory public inquiry into the Post Office Horizon IT scandal is looking very wobbly. Last month’s hearings were postponed as the Chair, Sir Wyn Williams, was ill. Last night we heard Sir Wyn is considering postponing most of this month’s hearings until after summer because of the Post Office’s failure to properly disclose documents to the inquiry, which might be of relevance to this month’s witnesses.
We’ve already seen the second postponement of Gareth Jenkins’ evidence (the Fujitsu engineer under criminal investigation), firstly because he wasn’t prepared to give full evidence without immunity from prosecution (refused), secondly due to a lack of Post Office disclosure.
Today the inquiry will hear from lawyers for the Subpostmasters. The chair wants to know if they are happy to plough ahead, aware that the Post Office still has not disclosed all the relevant documents, or if they want to punt the next two weeks’ witnesses back to the other side of summer. It’s a tricky one to call, as the chair has made it plain that if a relevant document comes to light then witnesses can be recalled.
Reverberations and ramifications
Eleanor Shaikh
Whilst the lawyers for the Subpostmasters have complained about the Post Office’s manner of disclosure to the inquiry in the past, the reason the Inquiry knows the Post Office has not been disclosing relevant documents to it is entirely down to Eleanor Shaikh’s FOI request which revealed the Post Office Security Team Compliance document’s racist classification codes for Subpostmasters.
You may remember Post Office execs awarded themselves bonuses for their brilliant work on the Inquiry and then falsely stated why the bonuses had been approved. They said it was because Sir Wyn Williams had signed off their target metric. This was completely untrue.
What had happened was that the Post Office, in the absence of getting approval from Sir Wyn (who didn’t know anything about the bonus scheme), asked its own lawyers to the Inquiry if it had been doing a good job. Amazingly its lawyers, Herbert Smith Freehills (HSF), told the Post Office it had been doing a grand job and should award itself 100% of the bonus metric (see Q7 here). Which it did.
Darren Jones MP
The Chair of the Business Select Committee, Darren Jones MP, believes there is the possibility that the person at the Post Office who decided it was fine that HSF had signed off on the bonus metric rather than Sir Wyn (whilst stating in the PO’s annual report that he had), may have committed the crime of false accounting (see Qs 7, 10, 13, 55 here).
The Post Office commissioned the incoming chair of its remuneration committee, Amanda Burton, to find out how it managed to put a falsehood in its annual report. Burton wrote an awful review which not only failed to find out how it happened, she couldn’t even identify who at the Post Office made the decision to use HSF rather than seeking sign-off from Sir Wyn. I am of the view that neither the Post Office, nor the Post Office minister should accept this report. It’s not even semi-competent.
Don’t forget the Post Office executives who handed back their bonuses after this was all exposed, only handed back a quarter of their bonuses relating to work on the inquiry, despite stating in their annual report that to qualify for their inquiry bonuses all the work had to be approved by Sir Wyn (see page 39 here).
Darren Jones has asked the Post Office execs to consider returning all of the money awarded to them for their work in the inquiry, given they patently failed to meet the target they set. When I asked Post Office CEO, Nick Read if he was prepared to do that, he said: “I don’t think so.”
This disastrous sideshow is distracting from the key job of the inquiry, which is to find out which individuals were responsible for the potential criminal conspiracy to pervert the course of justice which came about when the Post Office realised it had been prosecuting Subpostmasters on the basis of flimsy evidence.
My work on the Post Office Horizon IT inquiry is largely crowdfunded. If you’d like to contribute, please click on the widget you should be seeing to the right of this text (or below if you’re reading it on a mobile). To find out more before donating, please go to my tip jar web page. All contributors will be added to the ‘secret’ email newsletter, which offers irregular, and at times, irreverent insight into the machinations of the inquiry and the wider scandal. If you’d like to buy my book The Great Post Office Scandal, I would be thrilled – it’s available from all good outlets.
When it transpired the Post Office had chosen to award itself bonuses for co-operating with the public inquiry into the Horizon IT scandal, it caused something of a storm.
The somewhat crass idea that the Post Office should reward itself for co-operating with the inquiry was bad enough. Even worse was the fact the bonus metrics were said to have been met with approval from Sir Wyn Williams, the inquiry chair.
This was entirely false. Sir Wyn Williams had done no such thing. He wasn’t even aware the Post Office had a bonus scheme related to his inquiry.
To compound matters, the Post Office stated in its annual report that the inquiry was over, when it wasn’t.
Once this latest scandal broke, the incoming chair of the Post Office’s remuneration committee, Amanda Burton, was tasked to write a report detailing how the inquiry bonuses came about and why the false statement about them ended up in the Post Office annual report.
I’ve read the report a number of times. In short, Burton believes that it was fine for the Post Office to offer incentives to its executives for their work on the inquiry, but she (says she) was unable to get to the bottom of how the falsehoods about the inquiry metric being achieved found their way into the report.
Burton did not explain how the Post Office came to believe Sir Wyn Williams had signed off the metric, nor did she really get to the bottom of how the idea the inquiry was already over ended up in the PR’d, legalled and signed annual report.
Burton also failed to mention that the external agency the Post Office used to assure itself that the bonuses for work on the inquiry were deserved, was Herbert Smith Freehills, the Post Office’s lawyers to the inquiry.
In fact Ms Burton was so incurious, or just inept, that whilst she identified that each bonus metric had an “owner”, she failed to find out who at the Post Office was responsible for monitoring the inquiry bonus metric, something picked up in a recent hearings (see Question 64), by the Chair of the Business Select Committee, Darren Jones MP.
It is, in my view, a desperately inadequate piece of writing, which fails to properly articulate what happened or single anyone out for getting things wrong. Burton is not, apparently, an idiot, so it must be deliberate. Or maybe I’m wrong.
In order to get a secondary view, I asked Heather Rogers to give the Burton report a fisking. I have never met Heather, but I am aware she a) a corporate type and b) takes a keen interest in the Post Office scandal. Heather is a director, accountant and tax practitioner with nearly 40 years’ experience in her field. She is a member of the Expert Witness Institute and the Institute of Directors as well as being the current Tax Expert for This is Money. She has worked in the corporate world for national and international companies, and has run her own company – Aston Accountancy – for nearly 30 years. She tells me she has reviewed countless board reports, minutes and financial statements in her long career.
When I asked her to take a considered look at the Burton report, she very kindly agreed. What follows is a slightly edited version of what she sent back to me, with apologies to Heather for taking so long to post it up.
Heather Rogers’ view of the Burton Report.
Heather Rogers
“There was outrage when the Post Office board paid itself bonuses relating in part to its co-operation with the Public Inquiry into the Post Office Scandal. A review into this was conducted by Amanda Burton, a former General Counsel and COO at Clifford Chance LLP as well as, according to her Linked-In page, an experienced Chair and Non-Executive Director. She also lists corporate governance as one of her skills.
The review into the bonus scheme is extremely badly-worded, lacks sense and would’ve been better written by ChatGPT. If you want to know how bad it is, just read the paragraph “terms of reference.” It is without a doubt the worst review into any corporate document I have ever read. It belongs in the Post Office’s shredder.
By the way, none of the appendices to which her review refers “as attached”, have been published, including the terms of reference for the report she has written. Always a bad sign. If they are part of the report, they should have been published with it. Why haven’t they been? [good question. I have asked the Post Office for them and I know they have been FOI’d. Hopefully they will surface soon – ed.]
In 2020/2021 the Post Office suffered such a reduction in profits and a downturn in its business, the normal bonus schemes to “incentivise” its execs were not going to be payable. These were: annual bonus scheme and long-term bonus scheme. The Post Office therefore needed a new way to calculate bonuses to pay its execs to incentivise them to work.
It came up with the TIS, (Transformation Incentive Scheme) which is not based on profits but non-monetary results. There were several designs of the scheme but the board and the Remuneration Committee eventually settled on four (to use Ms Burton’s words) “metrics”, the second being cooperation with the Inquiry. They were as follows:
(1) Delivery of a step change in Postmaster engagement through delivery of key milestones and metrics aligned as part of the culture change programme. Measure the effectiveness through delivery of top priority areas identified from the feedback and ensure this represents a significant change by January 22 vs. the existing feedback from the Postmaster Consultation with Quadrangle.
(2) Delivery of all the required information and support for the Horizon inquiry satisfying the requirements of Sir Wyn Williams, ensuring that there is a clear measurable plan created to demonstrate action on improving the overall culture to be Postmaster centric and to ensure processes for Postmasters are addressed in line with recommendations from the inquiry. Any actions or plans must have been endorsed by the inquiry and the Board.
(3) Create a Board approved SPM plan and business case to move off Horizon dependence (first version by March 21, final by December 21) and deliver a prototype to operate an ‘express’ proposition fully outside Horizon by 31/12/22 with ability to subsequently scale across the POL network.
(4) Delivery of an improved organisational design and lower cost operating model through the successful implementation of Tranche 1, 2 and 3 of the organisational change plans. Measured by improving metrics on spans and layers (in accordance with the McKinsey key metrics on spans and layers and best practice), making the organisation flatter and more aligned to the Postmaster.
The original cost of all this “incentive” was expected to be £3.56m for 52 people. There was also an additional 5% funding (amount unspecified), to be made available for consistent high performers, those rated 4 and 5 on their assessment. The scheme would be available for those rated 3 or above. This changed later to 41 eligible employees “bringing the total to £1.97m.” However, in the end the amount accrued in the accounts, according to her report, is £2.5m for 47, including two who left. Burton states: “I have not been able to establish why the numbers of recipients changed, as the relevant HR people have left the Company.” Really? Do they not have records? Perhaps the shredder has been active again.
Burton further states:
“The original estimate of £3.56m (discussed in November 20) presumably included the 5% “pot” and also presumably included NICs. Perhaps this is a question she should have asked. Oh and also the pension contributions which would have gone along with this payout, no doubt. She continues:
The actual base awards made totalled £1.66m, with an additional £144k paid out for the “pot” plus £249k NICs (a total of £2.05m) so well within the accrual of £2.5m. I have not been able to determine the original amount of the “pot” as the Reward Director at that time has left . Did he take his calculations with him?
The Remco minutes do not show any discussion as to the modelling but they did approve the multipliers of 1.75 for the CEO and 1.5 for the other high performers, which was disclosed in the paper tabled at that meeting. The CEO was not present when his performance ratings were discussed.”
It seems that written records aren’t a thing at the Post Office.
The scheme was the brainchild of Nick Read, the Post Office CEO, presented as a paper written by the Pension and Rewards Director, although he is not mentioned by his actual name in the report. Burton gives the names of the directors who have left the Post Office:
“I have sent the final draft of the review to Ken McCall, (Chair of Remco until December 2021), Tim Parker (Chair of POL at the relevant times), Lisa Cherry (CPO who went on maternity leave in May 2021 and chose not to return) and Angela Williams (Interim CPO from May 2021), all of whom have left the Company as they are specifically mentioned in this report.”
But there is no mention of the name of the apparent author of the bonus scheme in the report, other than to advise us that he’s also left the Post. Office, so presumably they’ve lost his employment file as well.
The TIS took so long to draw up, that the bonuses calculated under it were not paid until March 2022. These were paid alongside the normal bonuses which came back into force in 2022, the annual and long term bonuses. So the board received in March 2022, three bonuses: the normal two for 2021/22 and the “one off” – TIS from 2020/21. This gave the CEO Nick Read a whopping £455K in bonuses which is more than his salary of £415K for the 2021/22 year. The CFO received bonuses of £238K.
According to Burton’s report, the TIS was approved by not only the government representative on the board, Tom Cooper, but also by the then minister for BEIS [now DBT], Paul Scully. Considering the number of people under whose eyes this scheme passed, it’s hard to understand how it wasn’t picked up, or if it was, why someone didn’t raise hell.
All this against a backdrop of the fact that so many of the postmasters affected by the egregious scandal, are still waiting for their compensation and also disclosure documents from the post office to assist them in their claims.
Some of the conclusions drawn by Burton’s report are eyewatering. Amongst her conclusions;
“TIS was a one off scheme. This wasn’t unusual during 2020, many organisations felt they could not put in place sensible targets as there was so much that was unknown. At the same time, POL was facing a great deal of public scrutiny as a result of the Inquiry, and was directed by Government to move away from dependency on Fujitsu. The CEO had been appointed in September 2019 and needed to motivate his immediate team against a background where previous scheme awards had been reduced. I therefore can understand why a Transformation Incentive Scheme was proposed.”
It sounds from her interpretation that, as it was a “one off” scheme, that makes everything fine. It doesn’t seem to occur to Ms Burton that the investigation is into the terms of the scheme itself – the fact it was devised in the first place. The fact it is a “one off”, is quite simply irrelevant. Her phrasing concerning “public scrutiny” of the Post Office is also rage-inducing, as is her attempt to defend the bonus scheme further, by saying that the CEO needed to motivate his team. These people are employed to do a job. The team is there to steer the company through rocky times and to expect to have to take appropriate action to respond to the needs of the business. That’s their collective responsibility. This can include taking a pay cut, never mind a bonus.
“The Remco was mindful of corporate governance best practice and as far as applicable aimed to follow the UK Corporate Governance Code issued by the FRC (which is applicable to public companies). Many aspects of the TIS followed the Code eg predictability, proportionality, alignment with culture and shareholder engagement. However, there were issues with clarity and simplicity.”
If Ms Burton thinks the only thing wrong with this bonus scheme is the “clarity and simplicity” then she needs to go back to college. I also doubt that anyone with any idea of corporate governance would think that the bonus scheme aligned with any of the code given the circumstances the Post Office has created.
“In hindsight it was clearly inaccurate to suggest that Sir Wyn would be in any way involved in determining whether any part of the bonus had been achieved. There was no deliberate intention on anyone’s part to mislead the role of Sir Wyn in this matter. Having said that, numerous people both inside and outside POL saw the wording over many months, and no one questioned it”
Why was this included in the accounts and annual report? Can incompetence alone cover it? I feel even Ms Burton has doubts here and struggles to continue what I see as a thread throughout this report, to defend, rather than criticise, and to excuse rather than investigate.
“In conclusion, the rationale for the TIS looks sound”
Of course it doesn’t. How can she even write this?
“…I will be recommending that Remco exercises its discretion not to award the element of bonus specifically relating to the Inquiry. Any variable pay schemes going forward should not include any metrics relating to the Inquiry.”
She is just recommending it exercises its discretion. That’s all. I had to read this sentence twice. There really is no sense here by the new Chair of Remco and author of this review that such an award is so palpably insulting to the postmasters and the public and so completely at odds with good corporate governance, that this should have been condemned in the strongest terms possible and struck from scheme with immediate effect.
Ms Burton’s review of the TIS is like all matters relating to the Post Office, deplorable in its attempts to defend its behaviour, to excuse and justify its actions with no sense of shame or wrongdoing and refusing to learn anything from its recent history. It is quite simply a moral vacuum, a company that seems to put the needs of the few over and above its responsibility to act with good governance, to accept its responsibilities and to work to improve. It is a stark reminder of what can happen when people who do not have the company’s best interests at heart are allowed free reign with no one to challenge them.
No further bonuses should be paid until the postmasters compensation is fully paid out. There’s an incentive for the Post Office’s senior executives.”
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Of course it’s outrageous that even though Teju, Parmod and the others have had their convictions set aside, they are…