Tuesday, 11 August 2020

Did government officials collude in trying to remove a judge?

Alex Chisholm, former BEIS Permanent Secretary

The scale of collusion between government officials and the Post Office in the latter's appalling behaviour towards campaigning Subpostmasters is in the process of being properly and diligently exposed.

On 22 June, Lord (James) Arbuthnot asked the following written question:

"To ask Her Majesty's Government whether the Accounting Officer with responsibility for the Post Office has played any role in advising ministers on the Government’s policy in relation to:

(1) the faults in Horizon software; 

(2) the treatment by the Post Office of sub-postmasters in relation to allegations of alleged criminal behaviour by sub-postmasters; 

(3) the sub-postmasters’ litigation against the Post Office; and 

(4) the establishment of the review into the Horizon issues."

On 6 July, Lord Callanan, the BEIS ministry's representative in the upper house, replied:

"The Principal Accounting Officer (PAO) responsible for Post Office Ltd. (POL) is the BEIS Permanent Secretary.

Issues regarding POL’s IT system and its relationship with postmasters are operational matters in which the PAO and Ministers relied on information provided by POL senior management.

Following the Common Issues Judgment in March 2019, POL advised Ministers that it intended to change its approach to the litigation. This included changes to the POL legal team and strategy, and ultimately led to the successful mediation in December 2019.

The Independent Review into Post Office and the issues highlighted by the litigation was approved within Government at all levels, including by the BEIS Permanent Secretary."

The Common Issues trial judgment was handed down on 15 March 2019. The Post Office would have sight of it at least a week before that. On 21 March, six days after the trial judgment was made public, the Post Office applied to remove the judge from the litigation, adjourn and re-hear the Horizon Issues trial under a new judge

On 19 May (after it had failed to stop the Horizon trial or get the judge recused), the Post Office used its new legal team to try to reverse the Common Issues trial judgment at the Court of Appeal.

For Lord Callanan to say that the Post Office's decisions in the aftermath of the Common Issues judgment "ultimately led to the successful mediation in December 2019" is like saying Hitler's attempt to take Moscow ultimately led to Britain and its allies winning World War II. It did, but that wasn't quite the outcome Hitler was looking for at the time.

When Post Office execs trotted along to BEIS in the immediate aftermath of losing the Common Issues trial, a successful mediation was not on the agenda. They wanted to reverse a judgment they didn't like, stop a trial which was going badly and remove a judge using millions of pounds of taxpayers money. 

It was a spectacularly wrong-headed approach from any perspective, certainly morally, yet we see from Lord Callanan's reply above that Alex Chisholm, the Principal Accounting Officer at BEIS, nodded it through. 

Yes, ultimately, it did lead to the successful mediation in December 2019, but only because the strategy was a disaster on all fronts.

Mr Chisholm has never been held to account for his actions in monitoring or blessing the Post Office's behaviour since he was appointed BEIS Permanent Secretary in 2016.

We don't know what he advised ministers about the progress of the litigation or the post-Common Issues "changes" to "strategy". We don't know anything about the nature of his discussions with Tom Cooper, the Post Office's UKGI-appointed non-executive director, who Paula Vennells said was "was fully engaged on the Board, sub-committee and with ministers and lawyers at BEIS." 

Yesterday, Chi Onwurah, the shadow minister for Business, wrote an opinion piece in the Daily Express demanding a full inquiry into the Post Office Horizon scandal. It was echoed by several Labour high-profile Labour MPs.

A judge-led inquiry could compel Mr Chisholm, Mr Cooper et al to answer some pretty important questions. An independent review can't.

Unsurprisingly, the government has insisted there will be no judge-led inquiry. 

The current minister, Paul Scully, has said he hopes to announce who will chair his "independent review" next month. Mr Scully, is, of course, in the hands of the very government officials who have something to cover up. 

Indeed, as a senior government source told me earlier this year: "the officials weren’t happy... They didn’t want a review, they didn’t want an inquiry or anything. They wanted it all to go away."

On 7 September, Lord Arbuthnot will be in the House of Lords asking Lord Callanan "what progress has been made in the review into the Post Office Horizon scandal."

Let's see what insight the answer to that question brings.

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My thanks to Tony Collins for alerting me to Lord Callanan's reply to Lord Arbuthnot via his ever-excellent blog.

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This website is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.


Friday, 7 August 2020

Bates v Post Office settlement agreement revealed

The confidential and controversial Bates v Post Office settlement agreement, announced on 11 Dec 2019, has been made public

Responding to a persistent FOI request by Peter Bell, the Post Office decided to hand it over to him, publish it on its website and email me a copy, for which I am grateful.

The document brought to an end the epic High Court group litigation against the Post Office, and it is interesting precisely because it has been shrouded in so much secrecy. It was not sent to the claimants when the case was settled. Given the outrage expressed in some quarters at the paucity of sums paid to the claimants - it's possible the agreement might offer some insight into the dynamics at play. Let's have a look.

What's in the box?

The most striking characteristics of the settlement agreement to me are:

a) that the steering committee which made the decisions on behalf of 555 claimants comprised just two people - Alan Bates and Kay Linnell. 

b) the Post Office's insistence that they are not awarding a penny to any of the convicted claimants.

c) that Alan Bates has arguably done more to advance the cause of serving Subpostmasters in one single document than the National Federation of Subpostmasters has achieved in its entire existence.

Pilot and co-pilot make the decisions - the rest are passengers

I do wonder how Alan Bates and Kay Linnell allowed themselves to be solely responsible for making significant decisions about the future of the litigation and the outcomes for the claimants. 

It's certainly something Alan Bates was uncharacteristically slippery about when I approached him recently. In putting together the script for the recent Radio 4 series I asked Alan who exactly was responsible for taking the decisions on the claimants' side. He replied:

"As with other large Group Actions, a Steering Committee is contractually appointed at the outset of the case by the Claimants, to make all decisions on behalf of the Group (and in the interests of the Group as a whole) based on the legal advice of Leading Counsel and the solicitors. That is what happened in this case.   

One of the main reasons for that structure in Group Actions is to ensure that confidential strategic decisions can be made without important strategic information about the strengths and weaknesses of the case getting into the opponent’s hands, as that would likely be very damaging to the Claimant Group’s case.

The Claimants have been advised of the detailed and complex legal and economic risks, issues and matters underpinning the legal advice that was given to the Steering Committee by Leading Counsel and Freeths, and Freeths will continue to speak directly to each of the Claimants who would like further clarity on any issue. 

Beyond that, you will appreciate that as with any legal case of this type, there are legal confidentiality constraints that we should all observe."

He could have just said "me and Kay". I'm not sure why he didn't. It's certainly there in black and white in the settlement agreement:

Confidential Settlement Deed, par 1.1

Kay and Alan may consider themselves uniquely qualified to fulfil such important responsibilities. They may feel they had earned the right to do so. They may not have thought that much about it, but a steering committee of two to decide the outcome for such a diverse group of claimants is arguably unfair on the claimants. It's also arguably unfair on Kay and Alan. 

Mediation is a high pressure environment. If they didn't feel that pressure, they were doing it wrong. Kay and Alan were entirely responsible for making a series of important and difficult decisions worth millions of pounds. Were they up to it? Would any two people be?

It might be that a steering committee of two was perfect for playing out the litigation (indeed, given the trouncing the claimants were giving the Post Office, it was something of a dream team). But when it came to negotiation, mediation and decision-making on a deal to tie the whole thing up, I would have wanted the insight and experience of more than one other claimant.

When I recently asked Kay Linnell, on the record, if she had any sympathy for the claimants who were complaining about the size of the awards they were receiving, she said "No", making that point that without Alan, they wouldn't be getting anything.

Convicted claimants = £0

On, then, to the startling revelation that the Post Office was very keen to ensure it was not seen to be giving any money to convicted claimants and to ensure that the convicted claimants agreed the value of their claim against the Post Office was nil.

To spell it out:

and...

This is the Post Office's way of making it abundantly clear that whilst the settlement agreement does not for one instant accept any liability for any wrongdoing against any claimant at all, ever...

... it is keen to ensure that on top of that, everybody knows not a penny of the settlement cash takes into account any aspect of the convicted claimants' case.

The barrister Paul Marshall (who is now representing several convicted claimants) has been dwelling on this. In a note released by the All Party Parliamentary Group on Fair Business Banking (read it here), Mr Marshall says:

"it struck me as intuitively strange that the claimants who had been convicted of criminal offences should have got nothing out of this enormously expensive large-scale litigation at all - except that they retained (i.e. had preserved to them under the settlement terms) a residual possible claim for malicious prosecution, contingent upon (i) the CCRC referring their case to the Court of Appeal and (ii) the Court of Appeal quashing their conviction. A rather rocky and uncertain road that starts, if at all, after the Court of Appeal.

... Put another way, the outcome of the Post Office litigation for the convicted claimants was... That the only thing they keep as a matter of right that has any value is a prospective possible claim for malicious prosecution that they shall have to pursue on their own without the help of Freeths as their solicitors. (I understand, but am yet to have final confirmation, that Tracy Felstead was prosecuted in 2002 by the Crown Prosecution Service – in which case I don’t think there is a single instance of a claim for malicious prosecution ever succeeding.) They of course had these contingent claims entirely independently of the litigation so claims for malicious prosecution cannot be said to be something “achieved” for them as a result of the litigation... A possible claim for malicious prosecution is all that is left – it’s a residue from their original claims.

That all their other potential civil claims, such as e.g. for damages for breach of contract and breach of the Post Office’s duty of good faith owed to them (one of the main issues of the earlier “Common Issues” trial was whether the Post Office owed the sub-postmasters a duty of good faith – an issue answered by Fraser J in the affirmative) were settled for nil value.

Receipt of an ex gratia payment (that is to say a gift) made by the ‘Claimant Steering Committee’ in their discretion out of monies paid in settlement of the non-criminal claims or the ‘Support Fund’ (i.e. out of sums paid by the Post Office other than to claimants convicted of offences)."

Mr Marshall goes on to say:

"It is, at any rate, now possible to understand why the convicted claimants such as Tracy Felstead (£17,000) and Janet Skinner (£8,400), who both were imprisoned as a result of their prosecution by the Post Office and conviction, have received such pitifully (some may think, shamefully) small payments following the settlement of their claims against the Post Office. The reason is, that it was expressly agreed that their claims had nil (strictly, were to be attributed nil) value and thus agreed that the Post Office would pay them no compensation. This appears profoundly unsatisfactory and remains troubling.

The overarching point is that, by participating in the litigation the convicted claimants have surrendered all their claims against the Post Office with the exception of a very uncertain claim for malicious prosecution and have surrendered those claims for no value. It appears to me that, on the face of it, each of the convicted claimants, but for their participation in the litigation, would now have individual claims of very considerable value – especially those who were imprisoned. Compare, for example, the compensation paid to those wrongly arrested by the police for the Gatwick drone episode – I understand Sussex Police paid out £200,000 for their wrongful arrest."

When I approached the claimants' solicitors, Freeths, about Mr Marshall's comments, they became most exercised. I received the following statement:

"Following discussions today with Patrick Green QC, we have formally written to Paul Marshall to inform him that the Note he has produced contains a number of serious inaccuracies and  omissions.  

The content of the Note is defamatory.

The “convicted claimants” have received a compensation share that has been calculated on precisely the same basis as for all other claimants (with malicious prosecution excluded, as that remains to be pursued upon convictions being quashed) and that approach was factored into the assessment of the acceptability of the global settlement sum, in the interests of the Claimant Group as a whole."

Another very well-informed source I spoke to was unequivocal that Mr Marshall had managed to get completely the wrong end of the stick. They explained that a clause in the agreement which specifically precluded any credit being apportioned to the convicted claimants was a good thing for those claimants because it staved off the possibility of the Post Office trying to use the total settlement monies to reduce any damages claim which could arise as a result of malicious prosecution. 

This isn't apparently just a matter of delaying credit - it seals off any argument the Post Office could raise as to how much of the settlement could or should have been apportioned to convicted claimants whilst ensuring that the convicted claimants did get some money from the civil settlement. As my source says:

"The fact that the settlement deed records no payment being made to [the claimants] by the Post Office simply means that the Post Office cannot argue otherwise for the purpose of any credit against damages in any - carefully preserved - malicious prosecution claim."

There are ongoing communications between Freeths and Paul Marshall. I am sure it will result in an outbreak of peace, love and understanding. If it doesn't, I have my popcorn at the ready. 

By the way, Alan Bates has not responded to any of my multiple requests for comment save to say: "my focus remains on continuing to achieve justice for all of the claimant group, which has been my focus all along."

Serving Subpostmasters

Alan Bates is, of course, the hero of this story. It was his 17 year campaign which got us here and it is his relentless pursuit of the Post Office which continues. Earlier this year he made it quite plain to me that he was absolutely determined to get proper financial compensation for the claimants, and he has spent the last eight months manoeuvring his tanks from the High Court to the lawns outside the Palace of Westminster. He has raised more than £100,000 to bring a complaint to the parliamentary ombudsman and he continues to demand a full independent inquiry.

It's also worth noting that the conclusion of the litigation produced more media and parliamentary scrutiny of this scandal than at any stage over the last ten years. 

Which brings me, finally, to point c). When you read section 9 and schedules 5 and 6 in the annex to the settlement agreement, you can make a case for Alan Bates having achieved more to improve the lot of serving Subpostmasters than any other individual in the history of the Post Office. 

As a direct result of the litigation and settlement agreement the Post Office has committed to more training, more trainers, new business support managers, a new handover process, a new branch support model including new area managers, new branch support tools, increased Subpostmaster remuneration, better quality control on transaction corrections, a new team to deal with disputed transaction corrections, dedicated case handlers to investigate discrepancies, better access to Horizon data from Fujitsu, a completely different approach to "losses" (which suggests they won't automatically be treated as Subpostmaster debts), better audits, better phone support, etc etc. It's quite a list.

Now - it doesn't mean the Post Office is actually implementing any of this, or doing it properly. Given what I have learned about Post Office managers I wouldn't want them to implement the opening of a bottle of milk, but the point stands. 

The Post Office has committed, in a legally-binding document, to rolling out all the above improvements, and I am sure the NFSP and CWU, MPs and the government will be chasing them like rottweilers to ensure they come to pass.

The day the settlement was announced I asked who the winner of the litigation actually was. The publication of the settlement agreement does not make the answer any clearer, but it makes all the questions around it more pertinent than ever.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.

Monday, 13 July 2020

JFSA reach £98,000 crowdfunding target for parliamentary complaint

The Justice for Subpostmasters Alliance has reached the £98,000 crowdfunding target it wants to raise a complaint about the government to the Parliamentary Ombudsman.


In a message to supporters Alan Bates, founder of the JFSA said:
"On behalf of the group, many of whom have contributed to this fundraising, thank you for supporting us. It means we can now go on to expose those who were so determined to bury what happened in a whitewashed 'review'. 
The Common Issues and Horizon Issues trials in the High Court last year exposed revelation after revelation of the incompetence and mismanagement by Post Office which devastated hundreds of lives, and even now, there is evidence that this may well run into the thousands.  
They tried to cover it up year after year and they could never have done this without the support and collusion of government. 
Your support has enabled us to go on to expose the maladministration by the government departments charged with the oversight and management of Post Office. 
Once again, thank you... and don't forget to hold on to your payment receipts to recover your pledges when we've recovered the costs we are seeking - details will be on the jfsa.org.uk website at that time."
Bates launched the action back in June. Although a complaint to the parliamentary ombudsman is free Bates told JFSA members:
"the reason we will be incurring costs is for preparing the submission to the Ombudsman to ensure our documents focus on our strongest points in our claim of maladministration by BEIS, and in order to do that, we need to use a QC experienced in such matters.  But the costs involved are nowhere near the cost or time involved of bringing another civil litigation action against Post Office’s shareholder. 
I am sure you will agree that during the civil action the Post Office threw everything it could at us, including four legal teams, the Court of Appeal and trying to sack the judge.  Be absolutely certain that the Government will try every trick in the book to have our submission dismissed.  We will only have one chance of following this route and we need experienced legal representation."
As someone who has been delighted to raise nearly £20,000 in crowdfunding over the course of two years of covering this story, I thought the £98,000 target was ambitious.

Given what he has achieved against incredible odds over the years, I should not have underestimated Alan Bates. It's a huge sum of money, and he's done it. Again.
Alan Bates

I do wonder to what extent this will set a cat amongst the pigeons and whether or not this will get taken up by my colleagues on the Westminster beat, but whatever media coverage it attracts, it certainly puts the government on notice.

The JFSA now has leverage inside the political machine. The government (and civil service/UKGI sorts who want the Post Office scandal to "go away") will have to find a way of responding to a high profile complaint to the parliamentary ombudsman.

They know that whatever they do, campaigning MPs and journalists will be watching.

Game on.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.

Monday, 6 July 2020

The Post Office cover up, part 2: They wanted it all to go away

For part 1 of this article, click here.

I think it is essential to know the identities of the people who took one look at the can of worms Second Sight had opened and decided the best course of action was to spend millions trying to bury it.
Chris Aujard
In between Second Sight publishing their interim report in July 2013 and a Post Office board meeting in September 2013 there appears to have been a realisation that the scale of the scandal Second Sight were methodically uncovering had the potential (at the very least) to halt the continuing trajectory of the Post Office and put an end to its aims of becoming profitable.

Up to September 2013 the Post Office General Counsel (also known as the GC - the top company in-house lawyer) was Susan Crichton, who had helped set up August 2013's Complaint and Mediation Scheme.

In September 2013, there was a Post Office board meeting. Ms Crichton left the organisation shortly after that meeting. Ms Crichton has not responded to my request for an interview over what happened.

In October 2013 a new interim general counsel appeared. On his LinkedIn page Chris Aujard describes himself as a "seasoned and commercially focussed GC... comfortable... managing major disputes and litigation."
But what was he at the Post Office to do? Perhaps we can get some kind of idea from a revealing article in General Counsel magazine in the Autumn of 2015. The article does not mention the Post Office, but it was published shortly after Mr Aujard left the organisation.
"The bigger the corporation, the more likely the crisis" hoots the article's anonymous author "what they don’t see is the general counsel busy behind the scenes with the mop and bucket."
Oh, do go on:
"There’s no hard and fast rule as to who takes the lead in a crisis, of course. The clean-up team will depend on the nature of the emergency and company protocols, not to mention the judgement of the CEO. But usually, says veteran general counsel Chris Aujard, ‘at some point, no matter where the crisis enters the organisation, the GC gets involved.’"
In the magazine piece, Aujard comes on strong as the go-to man, especially when the brains of the executives around him are falling apart like wet cake: 
"‘They tend to go down the route of denial" he says, "“This can’t be happening, you’ve got it wrong, everyone’s got it wrong”. They might go through the process of grudging acceptance: “Well, ok, maybe there is something in it.”"
So where next? Aujard again: 
"There’s a skill that general counsel typically have, which is to turn around to the C-suite and say, “look, this is not something that you should push to one side and deal with tomorrow. This is today’s issue and it’s pressingly urgent – and by the way, it could cost some of you your jobs.”
Ah yes. Self-preservation. Always a way to motivate people. But what about the public-facing response to a crisis? How does Aujard recommend addressing that?
"‘You can’t send stuff out saying, “it’s all our fault, terribly sorry, we’ll pay you any compensation you ask for!”’
Of course not. 

Given the period Aujard was at the Post Office almost exactly matches the birth and sad, quiet death of the mediation scheme (Autumn 2013 - Spring 2015), and given what we know about his experience, it seems reasonable to assume one of his jobs was making the growing Horizon scandal go away. 

This he temporarily did, infuriating MPs, prolonging the agony for people whose lives had been ruined and setting things up for a future High Court case which was to shred the Post Office's reputation and cost it more than £100m.

Mr Aujard might be pleased with what he achieved (I've asked him for a comment and have so far received nothing), and it may be that he did lead the way with his mop and bucket, but in terms of executive responsibility he was very much a monkey to the Post Office board's organ-grinder.

In her evidence to the BEIS Select Committee, former Post Office CEO Paula Vennells reveals that:
"Post Office decisions in relation to the [Complaint and Mediation] Scheme were discussed in the first instance by an ad hoc Board sub-committee, consisting of the then Chair (Alice Perkins), myself, and two non-executive directors. Meetings were attended by, among others, the General Counsel and the company secretary."

Alice Perkins, CB
We have already met Mr Aujard, and we know Ms Vennells of old. What of the other characters mentioned in the above statement?

Alice Perkins seems to have ghosted around the upper echelons of the civil service for most of her career. A former underling from the Cabinet Office who got in touch recently described her as "patronising... wooden and inarticulate", complaining she "couldn't connect with people at all... we used to see her about twice a year and she would give speeches that made you numb with boredom."

Ms Perkins was the first to become aware of the parliamentary interest in the Horizon scandal when James Arbuthnot MP buttonholed her at a function in 2011. 

He said that as the new Chair of the Post Office, she really ought to do something. 

To her credit, Ms Perkins set in chain the conversations which let to Second Sight's 2012 investigation, and by all accounts she was very keen to get to the truth. At first. Then she sort of drifted away from things, and left the Post Office in December 2015. 

When I contacted her, she replied: "Thank you for the suggestion you might interview me. I won't be taking up your offer." 

Not at all patronising.
Alwen Lyons, OBE
Alwen Lyons OBE was the company secretary between 2012 and 2018 and a Post Office lifer, starting as a graduate trainee in 1984. Ms Lyons has proved impossible to track down, though several people have left me in no doubt as to where her loyalties lay. I am told by a former Post Office senior insider, that by the summer of 2013, she was highly attuned to the concern at exec level about how much the complaint and mediation scheme could end up costing the Post Office.

Vennells, Aujard, Perkins and Lyons know everything. But it's not just them.


Short arms


The government has always distanced itself from the Post Office's handling of the Horizon scandal, repeating the tedious mantra that although the Post Office is publicly-owned, it: 
"operates as an independent, commercial business within the strategic parameters set by government.”
But that's not all the story. The mask first slipped on 23 May 2019 at the High Court when the Post Office tried to delay paying legal costs to the claimants after losing the first trial. The Post Office QC gave as a reason
"It is a question of arranging the funds...  and talking to our shareholder about it."
This contrast baldly with a government statement statement issued in January this year:
"government did not play a day-to-day role in the litigation or on the contractual and operational matters that were at the heart of it."
Talking to the government about the timing of a litigation payment is precisely a day-to-day operational matter.

When I presented this "arm's length, independent" plop to the senior Post Office insider who helped inform my work on this year's File on 4, Private Eye and Radio 4 series, they nearly spat out their drink with laughter. 

The insider told me that whilst they were there, Post Office staff with varying levels of seniority were running in and out of BIS the whole time. They also told me that culturally, within the Post Office, senior management priorities revolved around what the government wanted. What the government wanted, I was told, to the exclusion of almost anything else, was for the Post Office to become profitable.

The shareholder's eyes and ears

Another thing which gives lie to the government's position is that there has been a government representative sitting on the board of the Post Office as a non-executive director since it split from Royal Mail eight years ago. 

First was Susannah Storey (April 2012 to March 2014), second was Richard Callard (March 2014 to March 2018). The third and current incumbent is Tom Cooper. I met Mr Cooper last year. He told me he was a reader of this blog. Hello Tom.
Susannah Storey and Richard Callard
Although the Business Department (formerly BIS, now BEIS) technically "owns" the Post Office - which means it is the responsibility of the Secretary of State for Business, Storey and Callard came from an outfit called ShEx or SharEx, which was short for Shareholder Executive. 

ShEx was a group of supposed industry titans who were brought in to oversee the government's interest in publicly-owned bodies (eg Highways England, Nuclear Decommissioning Authority), many of which were being run as quasi-autonomous companies.* 

In 2015 ShEx became part of UKGI - United Kingdom Government Investments. UKGI is a company wholly owned by the Treasury, and it is there Mr Cooper comes from.


They wanted it all to go away

Whilst it would be fascinating to if know Storey and/or Callard were on the "ad hoc Board sub-committee" dealing with Second Sight and the complaint and mediation scheme between 2013 to 2015, it doesn't really matter. Vennells' evidence to the BEIS select committee is that this sub-committee only took decisions "in the first instance".

This suggests everything around the mediation scheme - including the Post Office's "duplicitous" reining back on its promises to MPs and Postmasters - was approved by the board, on which sat a government representative. 

Now, thanks to Paula Vennells' evidence, we finally have confirmation of the government's closeness to the Post Office:
"UKGI directors were fully engaged in the discussions and Post Office (including myself and each subsequent Chair) had conversations with their senior line director and the Chief Executive of UKGI too from time to time. The present UKGI incumbent director [Tom Cooper] joined the Board in 2018 with a fresh pair of eyes.... He was fully engaged on the Board, sub-committee and with ministers and lawyers at BEIS."
Tom Cooper
Vennells' statement is clear. She is saying our elected Ministers knew what the Post Office was up to. Government lawyers knew what the Post Office was up to. Civil servants and business experts like Susannah Storey, Richard Callard and Tom Cooper knew what the Post Office was up to. And they, at the very least, let it happen.

Incidentally Vennells' description of Tom Cooper's effect on Post Office thinking contains the single worst sentence of lawyer-approved drivel in the history of writing:

"His questioning was challenging and because of that it was helpful; it did not lead to any different outcomes."

Ms Vennells appears to be suggesting that Mr Cooper was challenging, useful and completely ineffective all at the same time. The genius responsible for this screed ought to take a good look at themselves. 

Vennells' shareholder-knew-everything take contrasts starkly with Business Minister Lord Callanan's recent suggestion that the government was "misled" by the Post Office. According to Ms Vennells, the government knew and knows everything. 

It is no wonder backbench MPs and campaigners are demanding a judge-led inquiry rather than the current proposed "independent review". From Vennells' letter it's obvious responsibility for the Post Office's decisions over the last ten years goes deep into the government machine. The current terms of the independent review would not begin to touch it. 

Shortly after the Panorama on 8 June 2020 I got a call from a senior person within government who wanted to talk about this proposed review. They told me:
"we are limited in what we can do - the terms of the review were kicked between BEIS and No 10 before they finally reached an agreement on what the terms should be and how it should be structured, but the officials [civil servants] weren’t happy with anything. They didn’t want a review, they didn’t want an inquiry or anything. They wanted it all to go away."
That is a wholly irresponsible position for anyone in government to take. It'll be interesting to see if parliament is capable of doing anything about it, or if the existing proposed terms of the review win out. 

I'm off to get a tattoo of "His questioning was challenging and because of that it was helpful; it did not lead to any different outcomes". It's a good epitaph for a journalist.

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Part 1 of this article: How and when the cover-up happened


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At the time, the Post Office was officially a government-owned Arm's Length Body. Confusingly, responsibility for Arm's Length Bodies lay not at the Treasury, nor the sponsor department (in this case BIS/BEIS), but with the Cabinet Office.

Some time between 2016 and 2019, though no one has explained why, the Post Office ceased to become an official government Arms Length Body and turned into a Public Non-Financial Corporation.

If this sort of thing makes you want to cry with boredom, wait till you start digging into Accounting Officers and Framework Agreements.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.

Saturday, 4 July 2020

The Post Office cover up, part 1: How and when it happened

There are, arguably, three Post Office scandals:

1) Why an organisation saw fit (and was allowed) to criminally prosecute 900 people over two decades.


2) How the UK justice system abetted this.

3) The Post Office and the government's attempt to cover it up.

I want to focus on point three. 

In July 2012, forensic accountants Second Sight were invited by the Post Office to investigate the growing number of complaints about the Post Office's Horizon IT system. 

The Post Office knew there were a number of former Subpostmasters campaigning for justice well before then (the Justice for Subpostmasters Alliance had been around since 2009), but now a number of MPs had got involved, led by James Arbuthnot.

In Sep 2013, the Post Office board and/or the government realised the information Second Sight had begun to uncover - about the Horizon IT system and the Post Office's business practices, investigation and prosecution strategy - had the power to potentially bring the organisation down and damage a lot of reputations within government. 

Somewhere, a political decision was taken that it was "better" to cover up the truth (or, technically,  make it almost impossible to uncover), than to bite the bullet and deal with the fallout. 

The consequences of that decision were horrendous. It allowed the Post Office and specific individuals within it to behave abominably towards Subpostmasters well into 2019. 

Take a look at the cases of Chirag Sidphura or Pete Murray, or read what Mr Justice Fraser had to say about the treatment of Liz Stockdale in the Bates v Post Office first trial judgement (see par 517). For many years after the cover-up, the Post Office continued to arbitrarily remove people's livelihoods, destroying their businesses and reputations.

Paula Vennells, Post Office CEO from 2012 - 2019, may well believe she was a good Christian woman running an organisation with a community-minded purpose, but she was at best deluded, and at worst, complicit. Her organisation crushed people. And then tried to cover it up. On her watch.

Let's take it chronologically

In July 2012, Second Sight were promised unfettered access to everything. It was Second Sight's stated condition for taking the job. Director Ian Henderson said on Panorama: Scandal at the Post Office: "The phrase was 'seek the truth at all costs'". 

The Post Office agreed to this and acknowledged it in a statement to campaigning former Subpostmasters, dated Dec 2012, stating:

"Second Sight will be entitled to request information related to a concern from Post Office Limited, and if Post Office Limited holds that information, Post Office Limited will provide it to Second Sight."
An unequivocal promise made to everyone, whether they had criminal convictions or not. 

In July 2013, Second Sight produced their interim report, which made it clear there were serious problems at the Post Office. Still at that stage being helpful, the Post Office published the report and took steps to set up a truth and reconciliation programme in August 2013, known as the Complaint and Mediation Scheme.

As that scheme progressed, when Second Sight requested certain documents which could explain the criteria by which prosecution decisions were made, they were refused. The change in attitude from the Post Office began in September/October 2013.

Why would the Post Office want to withhold documents from Second Sight? As well as being forensic accountants, they were experienced fraud investigators. Having eyes on the methods, evidence and the communications between Post Office prosecutors and security team - the internal prosecution files -  would go a long way towards knowing whether the campaigning Subpostmasters had any grounds for complaint, and would have certainly helped inform the individual Subpostmasters whose cases were being investigated.

"The decision that was made... was that Second Sight would not be given access to the... files." 
The body making this decision was:

"an ad hoc Board sub-committee, consisting of the then Chair (Alice Perkins), myself, and two non- executive directors. Meetings were attended by, among others, the General Counsel and the company secretary."
As to why...

"Firstly because the documents were legally privileged and, as I understood it, it had never been agreed that Second Sight would be given access to privileged material. Secondly, it was the view of Post Office that the conduct of prosecutions was outside the scope of the Scheme. Thirdly, Second Sight, as forensic accountants, had no expertise to consider legal matters."

Firstly - so what? Just because a document is legally privileged, it doesn't mean it has a witchy spell on it. If the Post Office wanted Second Sight to see those documents all it had to do was waive legal privilege by handing them over.

Secondly - so what? You either want your independent investigators to see and report the truth or you don't. You don't start arguing about scope.

Thirdly - Second Sight were immensely experienced investigators. They were perfectly capable of making pronouncements on internal prosecution files which were within their area of expertise and either recommending or commissioning further specialist legal interpretation as required.

None of the above reasons wash, independently or collectively. Try it the other way round - if you were a powerful CEO and you did want your independent investigators to see your own internal files, because you knew getting to the truth was essential, you would simply task your General Counsel to find a way to deal with issues of privilege, expertise and scope.

The Post Office decided it did not want Second Sight to see those internal files and trotted out a number of fig-leaf justifications for its decision.

That's your cover up, now admitted by the former Chief Executive.
Rev Vennells

The smoke and mirrors act

Before we get to part 2, let's quickly look at Vennells' attempt to re-write history.

The shift in the Post Office's position from "all documents for everyone" to "no internal files will be examined and we're not dealing with anyone with a criminal conviction" has been completely unacknowledged by the Post Office and isn't touched by Vennells' letter to the BEIS Select Committee. 

MPs, the Justice for Subpostmasters' Alliance and Second Sight have all told me that at the beginning, the Complaint and Mediation Scheme was designed to try to help former Subpostmasters with criminal convictions as much as those who hadn't. Indeed it is a fact that convicted Subpostmasters were accepted onto the scheme in 2013. 

By 2014 the Post Office was trying to exclude those who had pleaded guilty and by 2015 the Post Office was refusing to mediate with any former Subpostmasters who had a conviction. 

"The Post Office agreed to a mediation scheme that was to include those who had pleaded guilty. It is almost too obvious to say this, but in view of what the Post Office has been doing I have to do so: I would never have agreed to a mediation scheme that excluded people who pleaded guilty, such as my constituent, Jo Hamilton... 
In the working group for the mediation scheme, the Post Office began this year to argue that the issues of concern that were identified by Second Sight should be excluded from mediation—for example, the absence or ignorance of contracts, and the failure of audits and investigations—despite its agreement with Members of Parliament that the scheme would cover the issues in the interim report. 
I understand that the Post Office has been arguing in recent months at the working group stage to exclude 90% of the cases coming before the working group, despite everybody’s understanding that exclusion from mediation was to be the exception, not the rule. 
Extraordinarily, the Post Office argued to exclude people who had pleaded guilty, despite its express agreement to the contrary with me and other right hon. and hon. Members, and despite the fact that it knew that we would not have agreed to a mediation scheme otherwise."
In the same debate Arbuthnot called the Post Office's behaviour "duplicitous." The same duplicity is apparent in Vennells' evidence to the BEIS Select Committee. First she says:
"We... spent a great deal of time investigating the non-criminal historical complaints relating to Horizon... and hoped that these could be resolved through the Scheme. Criminal cases were referred to the Criminal Cases Review Commission (“CCRC”)."
Not in 2013, they weren't, they were accepted onto the scheme. Later in her letter Vennells says:
"In March 2015, Post Office took the decision to end the Complaints Review... and to push all cases in the Scheme through to mediation, apart from where there had been a conviction: in those cases, Post Office took the view that the CCRC was the correct route, indeed the only possible legal route."
Again, no explanation of how or why the Post Office, so keen to get to the bottom of things in 2013, had spent 2014 trying to argue Second Sight were out of scope, applicants who pleaded guilty should be excluded from the scheme and in 2015 binned off any Subpostmaster with a conviction, whichever way they had pleaded.

Part 2 deals with the other individuals involved in this.

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Monday, 29 June 2020

Nick Read's selective awareness

Nick Read, Post Office CEO
Nick Read has had nine months to find out what on earth the Post Office has been up to over the last twenty years, or at least ask some questions about the worst of it.

His first job was to stop the litigation, which he did. His second job was to, in his words, "reset" the Post Office's relationship with Subpostmasters.

In a letter to the BEIS Select Committee, Mr Read explores that theme a little further, stating:
"As Chief Executive, ensuring that the business conducts itself with integrity is of upmost [sic] importance to me. That requires addressing the issues of the past... with energy and transparency. Bluntly, there can be no new beginning without an appropriate reckoning with the past."
So how much reckoning with the past is Mr Read prepared to do?

The appendix to the letter contains answers to questions posed to Mr Read by Darren Jones, the chair of the BEIS Select Committee inquiry. The very first answer is disingenuous by omission.

Mr Jones asks: "Do you now accept that there was a major problem with Horizon and, if so, when did Post Office Ltd identify this problem and what was the nature of that problem?"

Mr Read replies:
"Post Office accepts that there were deficiencies in previous versions of the Horizon system." However: "the judgment did not determine whether bugs, errors or defects did in fact cause shortfalls in the individual claimants’ accounts but it found that they had the potential to create apparent discrepancies in postmasters’ branch accounts."
The judgment did not determine whether bugs, errors or defects caused shortfalls in the individual claimants’ accounts because the trial was specifically set up not to look for them. It was set up to see if there was the potential for Subpostmasters' branch accounts to be affected by bugs errors and defects. This is the exact text of the judge's finding
"It was possible for bugs, errors or defects of the nature alleged by the claimants to have the potential both (a) to cause apparent or alleged discrepancies or shortfalls relating to Subpostmasters’ branch accounts or transactions, and also (b) to undermine the reliability of Horizon accurately to process and to record transactions as alleged by the claimants. Further, all the evidence in the Horizon Issues trial shows not only was there the potential for this to occur, but it actually has happened, and on numerous occasions." [my italics]
Mr Read chose to leave the information in italics out of his response to the select committee.

In 2015 the Post Office told the BBC's Panorama that remote access to Subpostmaster accounts simply could not happen without the Postmaster being aware of it. This was later revealed to be untrue.

In his letter, Mr Read says: "As I was not involved at the time, I do not wish to speculate how Post Office’s knowledge of remote access issues evolved over time."

Mr Read thinks the Post Office should be "addressing the issues of the past", but he's not going to address this one.

Nor is he going to address the issue of who at the Post Office was telling porky pies to the government about what they'd been up to. Lord Callanan told peers the government had been "misled". Mr Jones wants to know more:

"Are you investigating which advice was misleading or flawed and who gave it?" he asks, "Will there be any sanctions for those who may have given misleading or flawed advice?"

Mr Read replies: "I am not able to comment on matters before my time."

In response to Mr Jones' question on the Post Office's prosecution function, Mr Read replies:
"I believe that the last private prosecution of a postmaster or branch assistant was brought by Post Office in 2015 but there have been very few since 2013." 
That was also before Mr Read's time, but he managed to find the answer to that question.

CWU take

I am grateful to serving Subpostmaster and "redoubtable" Communications Workers Union Branch Secretary Mark Baker for running his eyes over the other answers Mr Read gave. I asked him to do this as he uses Horizon daily. The Post Office refuses to accept the CWU as a representative body for Subpostmasters and Mr Baker's answers should be seen in that context.

Mr Jones asks: "Can sub-postmasters now park significant shortfalls in suspense accounts and can they expect that Post Office Ltd’s first response will be to assist them in identifying possible errors?"

Mr Read replies: "A postmaster can put a shortfall into their suspense account, trade normally and ask for our help and investigation if they do not understand the reason for the discrepancy."

Mr Baker says:
"This is not an entirely accurate reply. The reality is that a Postmaster can only put a discrepancy into local suspense for the amount of left in his/her trading period. Trading Periods, or TPs, last for four weeks. On TP day the Postmaster is forced by the system to accept the discrepancy. This is done by pressing an option called Settle Centrally. This allows the Postmaster to complete that TP and roll over into the next TP. 
What happens next is that the PO financial HQ gets in contact with the Postmaster to ask them how they would like to pay the discrepancy... the PO open up a debtors account in the Postmasters name and the discrepancy is treated as a debt owed.  
Only if a Postmaster knows that they can dispute the discrepancy will the PO commence further investigations as alluded to by Mr Read. Currently I have several members of my Branch that have raised a dispute over discrepancies but the disputed amount seems to get parked as it would appear that the Post Office can’t prove any fault on the Postmasters part but do not know what to do next. 
Discrepancies below £150 still cannot be disputed there is no option to park these smaller shortages."
Mr Jones asks: "What mistakes did Post Office Ltd make?"

Mr Read replies with some monumental guff which doesn't answer the question, but instead talks about "significant lessons to be learnt... undertaking wholesale reform... better training and continuing dedicated support..."

Mr Baker writes:
"In our opinion the Post Office is only tinkering around the edges of trying to change its relationship with Postmasters. It is our belief this can only be achieved if Mr Read adopts a more inclusive approach to finding the solutions for a successful working relationship...
We have made several attempts to engage with Nick Read and he has rebuffed all approaches. Nick Read's approach appears to be to select small token groups of individual Postmasters to consult with and base his polices on those limited perspectives. 
This was also Paula Vennells' approach and it failed."
Mr Read tells the inquiry: "We have increased [Subpostmasters'] remuneration by £20 million a year on top of the £17 million increases secured for banking services through our new framework with the High Street banks."

Mr Baker notes:
"Most of the £20m allocated last year as fees increases were on Banking transactions and the £17m that Nick Read alludes to was also on Banking fees and travel products. It is important to highlight that both sets of fee increases are funding allocated, not deployed. 
I mention this because the Covid crisis has wiped out all Banking and Travel related products. Therefore it is misleading for Nick Read to imply that Postmasters are in receipt of £37m worth of fee increases."
I have asked the National Federation of Subpostmasters - the only representative organisation the Post Office will recognise - for their thoughts about Mr Read's submission to the inquiry. I will publish them if they respond.

Number crunching

In terms of new information from the Post Office in Nick Read's letter, there are a few interesting numbers.

The Post Office says it has now received 560 applications to its Historical Shortfall Scheme. These are completely separate from the 555 people who took part in the Bates v Post Office group litigation and also separate from the "around" 500 people whose convictions are being independently reviewed by Peters and Peters, as convicted Subpostmasters are barred from the Historical Shortfall Scheme (their only chance of compensation is getting the Criminal Cases Review Commission to review and refer their case to the Court of Appeal, have the Court of Appeal quash their conviction and then attempt a malicious prosecution claim against the Post Office at the High Court). This means there at least 1600 people who claim to have lost money via Horizon.

The Post Office has also confirmed it has spent "approximately" £43m during the civil litigation on trying to fight the idea it had any responsibility towards its Subpostmasters, which, when you add it to the £57.75m settlement fee, just tops £100m.

This figure includes "expenditure on legal and professional consultancy fees connected with the litigation and other costs indirectly related to the litigation". It's not clear whether it includes the Peters and Peters review of the Post Office's 900 prosecutions using Horizon data, and it doesn't include any sums related to the Historical Shortfall Scheme. This by itself will cost a few million to operate and could end up making individual compensation payments running into thousands.

Responsibility

Finally, as to whether anyone has been sacked or is going to take responsibility at the Post Office for ruining so many lives, Mr Read plain refuses to answer the question, stating:
"The original Horizon system was introduced from late 1999 and there have been considerable changes, including of personnel, over subsequent decades. 
A number of the management team have left Post Office in recent years. As the Committee will appreciate, I am not at liberty to reveal the circumstances or terms of their departures."
Further reading:

My fisking of Paula Vennells' letter to the select committee inquiry. Ms Vennells is Mr Read's predecessor.
My take on Fujitsu's letter to the select committee inquiry. Fujitsu operate the Horizon system for the Post Office.

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This blog is entirely funded by donation. You can donate any amount through the secure payment portal I have set up for this purpose (click here for more info or to donate).

If you contribute £20 or more you will be added to the secret email list. This alerts you to the latest developments on this story before they happen, as well as links to new articles and stories, whether posted here on this blog or elsewhere. Thank you for your support.