CEOInterviews.AIAlan Cook - Adam Crozier - Day 120 AM (12 April 2024) - Post Office Horizon IT Inquiry

C

Chair0:05

Good morning Sir, can you see and hear me? Yes, thank you very much. We're to hear from Mr Cook this morning. Before Mr Cook is sworn, can I thank him for agreeing to appear at 9:30 at very short notice. It's of help to the inquiry, Mr Cook, so thank you very much.

A

Alan Cook0:25

You're more than welcome, thank you sir.

C

Chair0:30

Like to stand and just repeat after me: I do solemnly...

A

Alan Cook0:32

I do solemnly, sincerely and truly declare and affirm that the evidence I shall give shall be the truth, the whole truth, and nothing but the truth. Thank you.

S

Sam Stevens0:50

Mr Cook, my name is Sam Stevens. I ask questions on behalf of the inquiry. Could I ask you to state your full name, please?

A

Alan Cook0:58

Alan Rald Cook.

S

Sam Stevens1:01

Thank you for giving evidence to the inquiry today. In front of you there should be a witness statement that runs to 106 paragraphs. Do you have that in front of you?

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Alan Cook1:14

I do.

S

Sam Stevens1:17

For the record, the document reference number is WN 00191 00. Could we please turn to paragraph 89 on page 30 of the statement?

A

Alan Cook1:44

Yes. I understand there's a point of clarification. I'd like to put on record my personal apology and sympathies with all subpostmasters, their families, and those affected. In paragraph 89, I cited letters from MPs which were correct at the time, but since then further documents show three more cases. I'm seeking to clarify that the statement was correct then but more cases have been identified.

S

Sam Stevens2:49

So at the time you signed the statement you believed paragraph 89 to be true, but you since received further documents that show there were further letters sent?

A

Alan Cook2:56

Correct. Subject to that, before we proceed, can I ask you to turn to page 36 for my signature? Are the facts stated true to the best of my knowledge and belief? They are.

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Sam Stevens3:18

Thank you. That stands as your evidence. I'm going to ask you about your background. You were appointed a non-executive director of Post Office Limited on 23 February 2005. You were also CEO of National Savings and Investments from September 2002. Is that right?

A

Alan Cook3:54

Correct. But in March 2006 I was appointed Managing Director and stepped down from National Savings.

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Sam Stevens4:04

As non-executive director, you say you had a duty to challenge management. To do that effectively, you'd need to know the business operations. How were you inducted?

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Alan Cook4:58

I had prior dealings with the Post Office through National Savings, but as a board member, they set up a programme visiting branches and heads of functions over several months. I can't recall specific sessions from the legal department.

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Sam Stevens6:01

Do you remember induction from the legal department?

A

Alan Cook6:04

I can't recall a particular event. I would have been updated by the finance director, Peter Corbett.

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Sam Stevens6:22

As non-executive director, did you apply corporate governance codes?

A

Alan Cook6:34

This was my first non-executive role. I was aware of my responsibilities to challenge management, but I am much more expert now. I believe I applied the Financial Reporting Council code.

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Sam Stevens7:18

Were your expectations for governance different in a publicly owned company like Post Office Limited compared to a listed company?

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Alan Cook7:46

Yes. At National Savings, the board had more non-executives, while Post Office Limited's board was mostly executives. The independence was greater at Royal Mail Holdings parent board. I think governance is better when non-executives outnumber executives.

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Sam Stevens9:15

To what extent were you involved with Royal Mail business as non-executive director?

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Alan Cook9:43

Very little. I didn't get involved in Royal Mail's business activities.

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Sam Stevens10:02

Do you agree the Post Office Limited board was responsible for oversight of operations, and identifying, analyzing, and managing risk?

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Alan Cook10:25

Indeed, correct.

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Sam Stevens10:42

Now, your evidence is that you were unaware that Post Office was involved in prosecuting subpostmasters until May 2009. Is that right?

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Alan Cook10:52

It's not quite right. I knew there were court cases, but I didn't realize that in about two-thirds of cases the Post Office had initiated the prosecution. I assumed it went to the police or CPS.

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Sam Stevens11:58

Do you accept that a company's involvement in prosecution creates risk?

A

Alan Cook12:14

Yes, it must. Independence in the decision to prosecute is important.

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Sam Stevens12:27

Would you have foreseen those risks if you had been aware as managing director?

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Alan Cook12:30

I would have been uncomfortable and would have probed the principle. I would have looked for sign-off from the operations area, not just legal. It's hypothetical, but I should have known.

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Sam Stevens14:05

In your witness statement you say to the best of your knowledge the risk and compliance committee was not given oversight of prosecutions. You were not aware they were taking place.

A

Alan Cook14:31

Correct, but I should have been more precise. I knew there were prosecutions, but I didn't know the Post Office was the prosecuting authority. The language used was 'going to court', and I assumed the police or DPP were involved.

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Sam Stevens15:12

So no one within Post Office Limited thought it necessary to tell you that they initiate and conduct prosecutions?

A

Alan Cook15:23

That's correct. It may be that they assumed I knew, but that's the state of my evidence. It's my regret that I didn't pick up on it.

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Sam Stevens15:50

Looking at the risk and compliance committee minutes from September 2005, it says 'Post Office Limited has a principle of undertaking criminal prosecutions for all cases where it is in the public interest.' That says in terms that the Post Office made decisions to prosecute.

A

Alan Cook16:28

I didn't read it that way. I thought it meant we agreed it should proceed, but someone else had to agree too. I had never encountered a trading entity initiating criminal prosecutions itself. I regret that misunderstanding.

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Sam Stevens18:00

Another risk and compliance committee meeting from September 2006 you attended as managing director. You saw an update on investigation activity, including a case of a subpostmaster pleading guilty to false accounting. Would you have been told a decision was made to prosecute?

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Alan Cook19:45

I don't think so. The reports said 'went to court', and I didn't realize we had the power to take it to court regardless of what others thought. I assumed we had wanted it to go to court but not that we decided alone.

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Sam Stevens20:30

How do you think prosecutions were overseen?

A

Alan Cook20:46

By the investigations team reporting up through the operations director. At board level, there was no oversight of individual cases.

Because the organization was just too large, you wouldn't be looking at individual cases if something notable happened. That Welsh one was notable and it got a whole paragraph. But when I would have read that, I would have seen that the postmaster pleaded guilty. My concern now is that postmasters were being advised to plead guilty even if they thought they weren't, in order to reduce... we're looking at the decision on prosecution.

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Sam Stevens47:48

Yes. Are you aware that the central legal department in Royal Mail Group provided legal advice on the prosecutions?

A

Alan Cook48:02

I assumed they would, yes. I took comfort from the fact they were there.

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Sam Stevens48:09

So you knew that Royal Mail legal had some involvement?

A

Alan Cook48:13

Yes. Well, they were... it's not an unusual governance structure to have a large central support function providing a service to two or three different business units in a group. For one of those business units there would be a more senior person – lawyer or accountant – who would establish a close relationship with the business unit, but their main boss would be the central function. If you're in that business unit you take some comfort from the fact that there's a more high-power individual in Royal Mail Group exercising technical oversight over what those people are doing.

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Sam Stevens49:03

But what did you think they were taking oversight of for you to gain any comfort?

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Alan Cook49:07

The quality of the legal decisions being made.

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Sam Stevens49:14

And what were the legal decisions being made?

A

Alan Cook49:17

Well, there was a whole variety of things. We had fraud on Post Office card account and there was loads of activity going on that was nothing to do with Horizon issues and subpostmasters.

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Sam Stevens49:32

So let's focus purely on the decision to prosecute. Did you realize... sorry, let's make it broader than that. The investigation of subpostmasters for theft, fraud, and false accounting and the subsequent prosecution. Did you think that the Royal Mail Group legal department had any involvement in that?

A

Alan Cook49:55

I would have thought they'd have oversight, yes.

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Sam Stevens49:58

Why did you think that?

A

Alan Cook50:02

Because they were responsible for the legal function. I'm going to go back to the hypothetical where we started earlier. If you were aware that Post Office Limited were making the decisions to prosecute, what would you have sought to get? A legal function within Post Office Limited?

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Sam Stevens50:43

Yes, yes.

A

Alan Cook50:49

Well, the latter wasn't an option because that had been debated when I was first offered the role. But I would have, if I had discovered that back then, I would have looked at how we could put safety checks in and whatever. But it would be something that I would have reviewed with the group legal director.

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Sam Stevens51:27

With hindsight, do you think relying on the group legal department was effectively putting that advice too high up the chain?

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Alan Cook51:39

Well, I think it was a mistake on my part. I shouldn't have allowed the organizational structure to give me any sense of less accountability because I was accountable. But I don't think this was quite a big deal. I think it would be right and justifiable for me to be talking to the group legal director and seeking personal assurance from him that he was comfortable with what they were doing.

C

Chair52:16

So I'm going to move on to another topic. I know it's slightly early but I wonder if it might be more sensible to have a break there and then have a longer break until we swap.

A

Alan Cook52:23

Yeah, however you wish to pursue it, Mr. Stevens. So what time should we start again?

C

Chair52:27

Um, 2:52 fine. Thank you.

S

Sam Stevens52:39

So can you see and hear me? Yes, thank you. Yes, thank you, sir. I apologize; I'm going to have to go back to the topic I was just covering. We've given a new document to Mr. Cook which he hasn't, I don't think, seen recently. Could I turn that up now please? It's WYN 0187 01... sorry, the seven should have been a two. My apologies. And could we go to page six, please?

Mr. Cook, this is a letter dated 3rd September 2008 to Mr. Sabott. Have you seen this recently?

A

Alan Cook53:32

Five minutes ago, yeah.

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Sam Stevens53:37

If we can go to the end of the letter, please. On the other page, it says "Yours sincerely" and then we've redacted that, but it says Alan Cook. Did you sign this letter?

A

Alan Cook53:56

I would assume so, yeah.

S

Sam Stevens54:00

Could we go back to page one? I'm so sorry, it's page six. I went to page one of the letter; that's very misleading of me. Can we go to the bottom, please? Thank you. So it's referring to previous correspondence about disputed accounting errors. It refers to audits and identified shortages totaling £50,661.17 and an outstanding recovery. The last paragraph says: "In terms of the decision to issue court proceedings, the investigations undertaken by the Post Office security team are to decide whether there is a criminal case to answer. This is independent from any action that may be taken by the contracts team whose role is to focus on contractual related issues only. I believe that Carol Balon, contracts manager, has made this differentiation quite clear during one of the several conversations he's had with you over the past few months. It gives me no pleasure to write a letter such as this. I'm truly sorry for any impact this situation may have on your family. At the same time, I am mindful of the cash and stock we are accountable for, our public funds. The decision to issue legal proceedings is never taken lightly. The alleged offenses of fraud against you are, however, of a sufficiently serious nature to support that this is the correct course of action to take. That decision therefore remains unchanged." This shows, doesn't it, that you were aware that it was the Post Office security team that made decisions on whether or not there was a criminal case to answer?

A

Alan Cook56:01

Well, this is another example of the same thing. That is not how I read it. We wouldn't have wanted anyone prosecuted where we didn't believe we wanted to prosecute, but I didn't believe that we were the only party that made that possible.

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Sam Stevens56:19

Mr. Cook, before you sign letters, you presumably satisfy yourself that they're accurate.

A

Alan Cook56:24

Well, yes, it's how I read it at the time.

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Sam Stevens56:31

You satisfy yourself of the record. How did you do that in this case?

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Alan Cook56:34

There would have been a file of papers with this typically. There would have been his letter, a report from the relevant part of the organization, and this letter to sign. They would have drafted the letter. Over the course of working there for a number of years, in responding to this letter you would have known that Post Office Limited made the decision to prosecute in some cases?

S

Sam Stevens57:05

I didn't appreciate it was their sole decision. Clearly we would have to have decided it wanted to happen, but I still felt that it wasn't the Post Office's power to do so. So it's the same point that I was making before the break.

I'll move on. I want to look at knowledge of Horizon. Please could we take your witness statement at page 8, paragraph 27?

Paragraph 27 talks about knowledge of Horizon as a non-executive director. About eight lines down, you say: "I recall asking about reliability in terms of system availability and accuracy."

What do you mean by availability and accuracy?

A

Alan Cook58:28

In terms of was it there when it was meant to be there. When the day started, if you turn the thing on, was it available? Later on in my time there that did become an issue where the system wasn't available, and a lot of the subsequent development of Horizon was to make it run faster, more efficiently, and finish all its overnight processing before needed to come up in the morning. So that's availability. And then that it all worked, the screens didn't lock, and it produced accurate accounts.

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Sam Stevens59:05

Yes, but accuracy was a much broader term than just the accounts. It was obviously, did it perform correctly? If I'm doing a road tax disc, when I press this button does it produce the right road tax disc?

A

Alan Cook59:17

You go on to say: "Availability seemed to be good and I was assured at the time that there were no critical bugs or defects." Who assured you?

Well, I can't name individuals, but when I was doing my rounds I met with people in the operations area and got demonstrations. Certainly one of the two David Smiths would have been one of the people that I sat down with, the IT guy, to talk me through the system, its history, its current level of performance. This was in an environment where the accuracy of the system was not really in question, but there were issues about its overnight performance and its availability.

S

Sam Stevens1:00:17

Can we just go to page 15 please, paragraph 42?

There you say: "I've been asked whether I was ever told that there were no systemic issues with Horizon or problem with integrity prior to February 2009. I do not recall being told at any time whilst a non-executive director that there were or were not systemic issues with Horizon or problems with integrity." So are you talking about something different here to when you said earlier you were assured on its accuracy?

A

Alan Cook1:01:00

Well, no. This was about while I was a NED, so the first 12 months that I was involved in the Post Office. The level of briefing I got as a non-exec was less than I received when I became managing director. I think this paragraph is talking about whether I was told whether or not there were systemic issues. It was a problem that didn't come up in my briefing.

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Sam Stevens1:01:26

So you were told it was accurate? Is that right?

A

Alan Cook1:01:30

What I was saying there was that accuracy was not flagged as an issue.

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Sam Stevens1:01:38

So effectively accuracy and integrity when you were a NED were a non-issue, assumed to be okay?

A

Alan Cook1:01:51

Yes.

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Sam Stevens1:01:54

That document can come down. Thank you. Could we please bring up POL 30's 21487? This is a minute of the board meeting of Post Office Limited on the 23rd of February 2005, and that was your first board meeting you attended as a non-executive director, wasn't it?

A

Alan Cook1:02:24

Yes, it must have been.

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Sam Stevens1:02:30

Looking at the attendance list, who there was responsible or had expertise in IT?

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Alan Cook1:02:43

It would be Rick Francis as the operations guy. Yes, people like David Smith that I referred to a moment ago worked for Rick Francis. Also in the meeting was David Miller, Chief Operating Officer.

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Sam Stevens1:03:05

What did you know of his background?

A

Alan Cook1:03:07

Well, I'd never met him before I joined, and he'd been at the Post Office for many years and seemed to be the font of all knowledge. He seemed a respected guy. When I arrived as a non-exec, he was the Chief Operating Officer. By the time I was approached to join, he'd indicated his decision to retire, so I didn't really work with him as an executive, but I did work with him.

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Sam Stevens1:03:39

You said he was the font of all knowledge. Did that include on Horizon?

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Alan Cook1:03:41

Well, he wasn't an IT specialist, but he would have had all the history. He was a knowledgeable guy.

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Sam Stevens1:03:53

Were you aware he was heavily involved in the pilot of Horizon?

A

Alan Cook1:03:58

I wasn't specifically, no. It wouldn't surprise me, but I didn't know that.

S

Sam Stevens1:04:03

Could we turn, please, to page six? That's perfect, thank you. Now this is a discussion on Horizon Next Generation, which we've been calling Horizon Online. I don't want to cover Horizon Online now. I want to look at where it says: "Assurance was provided to the board that the new system would have at least a similar standard of current capability." Do you recall there being any discussion on the adequacy of what's called Legacy Horizon, the model of Horizon that was running at the time?

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Alan Cook1:04:58

No. This was my first meeting, but my impression was there was a level of contentment with the functionality of the system, but not its running cost, and occasionally its availability. So I believe this Next Generation proposal was about making it cheaper and faster to run. The guarantee being given was that it wouldn't reduce the level of capability. There'd be no point in making it run faster and cheaper if there were things we used to be able to do that we couldn't do anymore.

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Sam Stevens1:05:37

Was there anyone on the board asking probing questions as to the capability or the adequacy of the systems?

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Alan Cook1:05:45

My impression attending this board meeting, my very first one, was that we were treading ground that everybody in the room had already discussed apart from me. The vast majority of people on that meeting were the management team, so they would have debated it before it came in. If there was challenge within the management team, I didn't see it. That didn't mean it didn't happen at an earlier meeting. The only people I suspect that were looking at this for the first time would be myself and maybe M. Hodgkinson and Brian Goyn if he was there.

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Sam Stevens1:06:33

And was it not precisely your role as a non-executive director to challenge?

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Alan Cook1:06:37

It was. It was my first meeting; I can't remember what I asked. But I remember I've commented in my witness statement that one of the things I would have imagined I would have commented on is that if you're trying to make the system run faster and more slickly, it is quite dangerous to try and start changing the functionality at the same time, because the way you test it is to produce does this run faster, cheaper, and quicker, and does it give you the same answer. If you start changing the functionality at the same time, it makes interpreting the test results more difficult. That relies on the fact that you are comfortable with the functionality that is already in place. So any counsel I would have offered would have been on the assumption that the system functionality was sufficient, that we should try not to change the system functionality and focus on the real objective, which was to get the thing to run faster and cheaper.

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Sam Stevens1:07:43

Please can we turn to POL 30 21420? It's another risk and compliance meeting, 22nd of March 2006. So you would have been managing director at that point?

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Alan Cook1:08:04

By a few days, yes. The conversation about me being a regular attender took place between this meeting and the next one, and the next one is the one you've already shown us as me being present. But yes, I was not present at this one.

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Sam Stevens1:08:21

So you're not present, but again you would have read the minutes, I'm sure?

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Alan Cook1:08:25

Well, definitely because I was in post by then.

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Sam Stevens1:08:31

Could we turn to page eight, please? There's an appendix to this concerning the IMPACT program. It says: "IMPACT and the PULS accounting system has moved on significantly since the last report to the Risk and Compliance Committee. The system is not yet processing all transactions correctly and so the end state of the PULS ledgers, which automatically interface to the main business account, has not yet been achieved." Do you recall reading that and can you tell us what your views on it were?

A

Alan Cook1:09:20

I don't remember specifically. I can't interpret that. Is that something that's in a testing phase or is it something that's meant to be in production?

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Sam Stevens1:09:28

Well, if you remember what your views no, I'm saying I don't remember what I might have said. I didn't say anything because I wasn't at the meeting. But if I read that, my first question would be: I can't tell from that paragraph whether this is something that's in production and being used or it's results of testing that they're working on, because it talks about "it's moved on significantly since the last report." That sort of implies these are test results, but I don't know.

So you would have needed to follow up with further questions?

A

Alan Cook1:10:03

Yeah, yeah. I wouldn't have understood that.

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Sam Stevens1:10:06

We'll move on to a different topic, please. POL 30 81928. If we could turn to page 13, please, and if we could go to the email at the bottom. Thank you. So it's one of these very unhelpful email print-offs. We see that it's to Sha Turner on the 11th of January 2006, subject "Calendar Square over the page." It says that a subpostmaster has reported that he is again experiencing problems with transfers on 5th January 2006, which resulted in a loss of around £43,000, which has subsequently rectified itself. I know that the subpostmaster has reported this to Horizon Support, who have come back to him stating they cannot find any problem. If we could then turn to page six, please. Can we go down to the second email in the chain? Thank you. This is an email the inquiry has seen before, it's from A. Chambers to Mike Stewart, both within Fujitsu, and it refers to the same issue, Calendar Square. Second paragraph says: "I haven't looked at the recent event evidence but I know in the past this site had hit the repost lock problem two or three times within a few weeks. This problem has been around for years and affects a number of sites most weeks. And finally, Fujitsu say they have done something about it. I'm interested in whether they really have fixed it, which is why I left the call open to remind me to check over the whole estate once S90 is live."

So this is a problem that appears to have caused a discrepancy of a significant discrepancy, and these are both Fujitsu people. You accept it's a problem that caused a significant discrepancy?

A

Alan Cook1:12:52

Well, I don't know. I'm just reading this. I assume it must have done. I've never heard of the repost lock problem before.

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Sam Stevens1:13:01

Let me put it this way: if there was a problem which had the potential to cause a discrepancy of over £440,00...

A

Alan Cook1:13:10

Oh, I see, because it relates to the email. Okay, yeah. And it has been around for years, affects a number of sites most weeks. That's a significant concern, isn't it?

Yeah, but I don't know if that problem is the same as the discrepancy. The email at the top says Calendar Square. All I'm saying is I don't know if that is produced the discrepancy.

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Sam Stevens1:13:34

If you can go up in the chain, please. Just to the top, if you can go down a little bit, perfect. Thank you. That email is forwarded by Mike Stewart to Lynn Fallfield who's at Post Office. It says: "Lyn, I was waiting for an update on the Calendar Square issue. See the email chain below. I think I'm inclined as per this issue to wait and see if all these branches are okay after the S90 counter roll starts, after the pilot this week." That document can come down for the moment. We were aware... well, you said you weren't aware of the repost lock issue. Were you ever aware of an issue at Calendar Square when you were managing director?

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Alan Cook1:14:23

No. Well, I don't recall. I don't recall.

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Sam Stevens1:14:31

Could we please bring up POL 30 32210? It's a board meeting on the 20th of April 2006. If you could just get the entire attendance list there, please. So looking down, in terms of IT people, you earlier identified Rick Francis. Is there anyone else who had an IT background?

A

Alan Cook1:15:16

There doesn't seem to be anybody that works for Rick that is in the attendance list, so no, I don't think so.

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Sam Stevens1:15:28

Can we go to page 10, please, and down to the operations report section? It says "Horizon S90 release." So we saw in the email that the problem will be fixed with S90. Yes, it says this release would, and lists a number of things it would do: transfer bureau debit/credit card transactions, some generic payments, and "provide for a plethora of change requests across a variety of existing capabilities." Did the board interrogate what those changes would be?

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Alan Cook1:16:19

Well, I can't remember, but that would be something I would normally challenge. A plethora of change requests... you get great detail on the first three, and I'm sure they're bigger, and I'm sure those things will be individually smaller, but if it's a plethora of them, that suggests it would require probing. But I don't recall the conversation; I'm just reading it cold.

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Sam Stevens1:16:48

Based on how the minutes were created at Post Office Limited, if there had been challenges would they have been recorded in the minutes?

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Alan Cook1:16:56

I'd have hoped so.

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Sam Stevens1:17:05

So do I take it from that... well, what is your evidence? Do you think that it was challenged or it wasn't?

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Alan Cook1:17:17

Well, there's no evidence of it being challenged.

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Sam Stevens1:17:20

Why wouldn't it have been challenged?

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Alan Cook1:17:23

I don't know. There could have been some reassuring words when the thing was presented that sort of off-challenge, and this is how the person doing the minutes chose to summarize the conversation. But I literally do not remember the conversation. There is clearly no documentary evidence that that fourth bullet was probed.

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Sam Stevens1:17:51

Do you think if there was a non-exec on the board with IT experience that might have been challenged or it's more likely to been challenged?

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Alan Cook1:18:01

Yes. And interestingly, in roles more recently, it has become much more common for senior or recently retired IT people to join boards of all sorts of businesses. So I chaired a small bank and we had an IT professional on the board. It was always a struggle for him because he wasn't a banker, but he was there because he was an IT person and provided useful independent challenge. But there was no such person on the board at this time other than employees, executive members.

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Sam Stevens1:18:38

That's right.

Did you feel sufficiently able to challenge the executive?

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Alan Cook1:18:45

I felt able to challenge the executive to a level that was comparable with my experience. But I wasn't purporting to be an expert in every functional activity. I had a bias in my personal background that said I was an operations type guy in my early years, not IT, but processing operations. I spent all my time in financial services. Those were the reasons why people felt I would be worth having on the board. But I wouldn't be able to, and I did actually for a period at the Credit Union run IT, but I had an IT director supplied by Accenture that reported to me, so I wouldn't have been a detailed specialist at any point.

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Sam Stevens1:19:42

Did you ask for more support with IT to be able to challenge the executive in a more adequate way?

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Alan Cook1:19:53

Well, the point was that there wasn't an appetite to have other non-execs on the Post Office Limited board, and we did have the Group IT Director sitting on the Royal Mail Holdings board. As I said, these things were going up to Royal Mail Holdings board and there was more challenge available there. There was a group legal director and a group IT director, and whilst they were employees, they weren't branded just Post Office, so there was a level of independence in their interrogation. I didn't ask because I didn't expect the organization would want me to be looking for independent non-execs to go on the Post Office Limited board.

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Sam Stevens1:20:40

Let's just stand back a bit. Horizon obviously records transactions for the Post Office business, yes?

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Alan Cook1:20:52

Yes.

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Sam Stevens1:20:57

And it provided the data from which the statutory and management accounts would be compiled. As a director you had to have confidence in that data to be able to sign off on the management and statutory accounts.

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Alan Cook1:21:09

Yes.

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Sam Stevens1:21:14

So it follows, is it not, that you needed to be in a position to satisfy yourself that the IT system that generated the data was sufficiently robust and reliable? And one of the ways any board would get that level of comfort is from the external auditors. And they would run software against the system that was the primary driver of the business and run their own reconciliations to make sure does it add up this way and that way, and they would run it's sort of proprietary software used by all auditing firms to validate the financial integrity of a system. That type of audit has the concept of materiality, doesn't it?

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Alan Cook1:22:05

Yes, it would.

S

Sam Stevens1:22:06

Could you explain what that is?

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Alan Cook1:22:08

So it wouldn't have to reconcile to the penny, but it would have to... but we're not talking about the penny in these instances. So it's a pretty reliable way of proving whether or not a system is reconciling.

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Sam Stevens1:22:28

That works as you said for statutory accounts. In terms of a subpostmaster who may be facing...

A

Alan Cook1:22:35

I was just answering your question.

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Sam Stevens1:22:36

No, I'm asking another one.

A

Alan Cook1:22:39

Yeah, okay, I agree. It doesn't help the postmaster if you're the rounding error, right? So every single one needs to work, because there could be compensating errors for example.

S

Sam Stevens1:22:55

Was anyone on the board thinking of the reliability of the Horizon IT system from that perspective, the subpostmaster's perspective?

A

Alan Cook1:23:03

I think Rick Francis was focused on his user community. He wouldn't have been thinking just about subpostmasters; he'd have been thinking about all people, all types of branch that used Horizon to process transactions. There were two audiences: what did Horizon feel like for the person on the counter performing the transaction, and also what did it feel like for the customer on the other side of the counter. In terms of you as managing director, did you think about from the subpostmaster's perspective?

Yes, I had... it's only a slight digression. When I arrived, I felt the subpostmaster community felt unloved to a degree by Post Office Limited. One of my early objectives was to get close to the subpostmaster community and try to resolve that. One of the first things I did was establish a strong relationship with the federation's top guy, Colin Baker, and I started a program of visits. I did that for the entire three years and 10 months I was there. On a Friday, I would pick a part of the country and say to the federation and the regional manager, "I've got time to visit five branches; give me a list." I went and randomly visited them. That was the biggest source of information. And it wasn't just subpostmasters; I visited Crown offices and franchise branches as well. That was my attempt to keep my feet on the ground as to what the organization was thinking and worrying about. For those subpostmasters in the room, I got plenty of feedback.

S

Sam Stevens1:25:35

You say in your statement you think you visited about 250 branches over a period of years. Without criticizing the effort, in terms of getting feedback from how users found the Horizon IT system, that was a very small proportion of the number using it, wasn't it?

A

Alan Cook1:25:54

Well, all the numbers in the Post Office are very large, so you do what you can do. I found the visits illuminating. I can remember being in one village where the subpostmistress took me back into her kitchen and went through the process of how car insurance was sold and why she couldn't be bothered to sell it because of the torturous process, following which we changed it.

S

Sam Stevens1:26:24

Well, let's... was there anything else you did other than those visits to try to understand how subpostmasters found the Horizon IT system?

A

Alan Cook1:26:34

I wasn't just talking about the Horizon IT system; I was talking about the business as a whole.

S

Sam Stevens1:26:42

My question is about just the Horizon.

A

Alan Cook1:26:44

My primary focus was on the Federation. I used the Federation as the mouthpiece of postmasters to provide input. And on the staff there was someone that ran the Crown offices, so I looked at the Federation, the Crown offices, and the franchise branches.

S

Sam Stevens1:27:06

So during your period as managing director, you had your 250 or so visits to branches, and then further subpostmaster feedback was effectively filtered through the NFSP?

A

Alan Cook1:27:21

Yes, yes. "Filtered" sounds a bit harsh, but yes, it came through the NFSP. They were always forthright. Colin Baker in particular went out of his way to welcome me into the family. My wife and I used to go to Federation dinners and all that sort of stuff. It was important to me to get close to the community that was servicing our customers.

S

Sam Stevens1:27:57

While we're on this, I want to come to what the inquiry has termed as responding to the emerging scandal. Can we please look at POL 000000 27890? This is a letter you've described as the "Porous letter." It's sent to Pat McFadden MP, then Minister for Employment Relations and Postal Affairs, and it includes correspondence from Brian Binley MP, who in turn includes an email from Rebecca Thompson. Can we look at the email, please? It's page three. This is an email dated 10th February 2009, but you only received it on 7th May. It refers to speaking to several current and former postmasters who say that random flaws in the IT are causing deficits in their weekly accounts, sometimes thousands of pounds at a time. The complaint is that instead of listening to their problems and investigating the software equipment, the Post Office is making them pay back this money without any investigation into what is going wrong. Do you recall receiving this and reading it?

A

Alan Cook1:30:04

Oh yes, this was the moment. Strangely, I saw the article from Computer Weekly before I saw this, only because the letter was date-stamped 7th May. It went out with a deadline; if anything came in from Pat McFadden it was dealt with quick for me to reply about a week later. But in that week the Computer Weekly article came out, so we're only talking a couple of days. The reality is I saw the Computer Weekly article before I saw this correspondence, and I didn't particularly put the two together because my head was full of the Computer Weekly article.

S

Sam Stevens1:30:50

Yes, we'll come to that shortly. That email can come down. Paragraph 79, page 27 of your witness statement. You say that when you received that letter, you indicated to Michelle Graves, Executive Correspondence Manager, that you would like the matter thoroughly investigated.

A

Alan Cook1:31:26

Yep.

S

Sam Stevens1:31:30

Okay, can we look then at the Computer Weekly article now, please? That is POL 30 41564. This is from, as you say, the article is by Rebecca Thompson in Computer Weekly. If we could go down slightly, please. Thank you. It refers to the case of Lee Castleton. Were you aware of Lee Castleton before reading this article?

A

Alan Cook1:32:26

No.

S

Sam Stevens1:32:30

It states that he was declared bankrupt after he refused to pay the Post Office £27,000. Castleton insists he did not owe the money, although it showed as a loss on the Post Office's Horizon system, which is used by postmasters to do their accounting. He is one of several postmasters to come across losses they could not explain. If we could turn over the page, please. The second paragraph says: "Having lost the case, Castleton was left with costs of £321,000. In 2007 he filed for bankruptcy. I was in too deep; I see that now. The whole thing has been heartbreaking." The trial of Castleton, Post Office v Castleton, was heard while you were managing director. You say you were unaware of it?

A

Alan Cook1:33:29

I was unaware.

S

Sam Stevens1:33:31

£321,000 or money of that amount is a significant debt to be owed, isn't it? The legal cost the Post Office spent in pursuing that claim was significant.

A

Alan Cook1:33:47

Just to be clear, when I say I was unaware about this particular case, we have seen earlier the reports that were being issued, but they were summarized reports with totals on them. So I'm sure this case would have been in there, but it might not have been separately identifiable, so I might not have known the name.

S

Sam Stevens1:34:13

But there was reporting, which we've seen already this morning. Did you not think to ask why there was such a significant legal spend on one case?

A

Alan Cook1:34:22

I just don't recall. I can't think why I wouldn't. Either it was a mistake on my part or it wasn't in the report. I don't know. This article was a shock to me.

S

Sam Stevens1:34:48

Should it have been a shock?

A

Alan Cook1:34:49

No, it shouldn't have been, but it was.

S

Sam Stevens1:34:56

Okay, that can come down. Thank you. So the 11th of May, you say in your statement and you've already alluded to it. We can bring it up. Please can we go to page 28, paragraph 85 of the statement? At the bottom you say: "At the time I did not connect the Computer Weekly article to the complaint raised in the Porous letter."

A

Alan Cook1:35:35

Yes, and if I could just expand there, when I wrote that I hadn't worked out that overlap. I hadn't spotted the date stamp on the letter. So the reason I didn't connect it was because the Computer Weekly article was the first thing I read, not the complaint.

S

Sam Stevens1:36:02

Is there your evidence now that you did connect the two?

A

Alan Cook1:36:04

I connected it afterwards. I'm saying that when I saw the Computer Weekly article, I hadn't seen the complaint case.

S

Sam Stevens1:36:11

So do you think when you read the complaint after the Computer Weekly article, you would have connected the two?

A

Alan Cook1:36:18

I can't remember. It seems likely.

S

Sam Stevens1:36:28

But can we turn please to POL two 14142? And if we can go to page two, please, to the bottom. So this is an email from Dave Posnett. Now we see there that the email looks to be dated 05/10/2009. Immediately above it's...

C

Chair1:37:38

20/10 2009. If we can go to the next slide, please. A bit more. Please, I think there should be a date stamp. It might be on the other page. Sorry, can we go to the bottom of page one, please? It gets quite confusing because we've got 05, SL10, and then further up 0210.

The question I have is: in October 2009, are you aware of any investigation that was requested into Horizon integrity issues?

A

Alan Cook1:38:46

Yes, because it post-dates the Computer Weekly article, so you think this all leads from the computer. Yes, I would have thought so. I don't equally understand the dates because they appear to be in the wrong order, but it's October, so it doesn't really matter.

C

Chair1:39:00

I suspect if we can now please turn to page 2158 368, and could we go to page 23, please, down to the bottom, please. Thank you. Just slightly up, please. Perfect. Thank you. It's an email from Michael Rudkin. Do you remember Michael Rudkin?

A

Alan Cook1:39:54

Yes, I recognized the name. Obviously I've read this stuff, but before that I recognized his name. I think he was Federation connected in some way.

C

Chair1:40:06

It says 'C attachment. I presume you've already seen the article in the Convenience Store magazine.' And then there's a bullet point, and the next paragraph goes on to say: 'This should also minimize adverse publicity to our industry, which is already receiving enough bad press at the moment. Currently the BBC Panorama and Watchdog researchers are digging the dirt here in Leicestershire.' If we can then go up to see the forwarding email, please. I think it's on the beginning of the next page. Thank you. If you could go to the – sorry, that was my fault. Yes, there we go, the Alan Cook email. Thank you. So this is the 15th of October. You send an email to Mary Fagan. Do you remember who Mary Fagan was?

A

Alan Cook1:41:14

I definitely do. I definitely remember this email. Who's Mary Fagan? She was the PR officer for the Royal Mail Group.

C

Chair1:41:24

It says in the second paragraph: 'For some strange reason there is a steadily building nervousness about the accuracy of the Horizon system, and the press are now on it as well.' Were you seeing this as a significant and escalating issue?

A

Alan Cook1:41:45

I was then, yes. Hence my – well, I then express in the next sentence my confusion as to why, but yes, I accepted that we had an issue.

C

Chair1:42:02

And were you connecting the various Horizon challenges at that point – the Post Office letter, Computer Weekly – yeah?

A

Alan Cook1:42:10

Yes, that's right. This was around that time that it came to the fore for me, if you see what I mean.

C

Chair1:42:17

You go on to say: 'My instincts tell me that sub-postmasters with their hand in the till choose to blame the technology when they are found to be short of cash.' Why was your instinct to think that sub-postmasters who alleged that Horizon caused shortfalls were stealing from the Post Office?

A

Alan Cook1:42:40

Well, that's an expression I regret for the rest of my life. It was an inappropriate thing to put in an email, not in line with my view of sub-postmasters. But one of the often-cited problems at this time was the financial challenges the Post Office had faced. The danger is that we only think about the profit the Post Office Limited is making, but I always used to say we haven't got one bottom line here, we've got 12,001 bottom lines. If the Post Office isn't working, then it isn't working for sub-postmasters. They've probably got a shop with a sub-post office in it, and that sub-post office needs to produce enough profit for them to make it worth having it there at all. Getting the business profitable again meant getting it profitable again for sub-postmasters. We had been through a few years when I joined when I don't think the Post Office earnings for sub-postmasters were worth the effort they had been putting in. I think a number of them were struggling. When we ran the branch closure programme, the aim was to reduce the number of offices so that the same traffic would come through a smaller number of post offices and they would be more profitable, which is what happened.

C

Chair1:44:20

You're talking in a different context. Yes, I digressed. Because what's happened here is you faced challenges by sub-postmasters saying that the system is faulty and saying that it's caused shortfalls. Correct. And in perhaps an unguarded comment, you've put that the instincts were for it to effectively be the sub-postmasters were stealing and then blaming the technology. Does that represent your actual views at the time?

A

Alan Cook1:44:49

No, but it was said. It was – why did you say it if it wasn't your views? Well, I had a friendly informal relationship with Mary Fagan, and it was just an email I shouldn't have written. But it was important to me that she understood exactly where we were at. She was a Royal Mail person, and I was very happy with the support I got from Royal Mail. She was very helpful to me, a sounding board, and I was probably more open and frank with what I was thinking with her than many other people. She was also in a different building, which meant we swapped emails a lot. That sentiment was expressed. What I wrote in that email was unacceptable.

C

Chair1:45:45

It wasn't just to her, was it? It was to Mr David Smith as well. Yes, quite. Was it your view at the time that he would have shared your view?

A

Alan Cook1:45:57

I don't know, to be honest. It was regrettable. I was just chatting to her in the corridor, but as you say, there were other people on the copy list.

C

Chair1:46:19

You said earlier that you were very shocked when you read the Computer Weekly article. Correct. You'd received several letters from MPs making the same complaints afterwards. Yes, yes. But there was a body of opinion growing here, or at least a body of complaints. And you say at this point you saw it as escalating and significant. Why didn't you arrange for an independent investigation at this point into the allegations?

A

Alan Cook1:46:57

Well, the first step seemed to be to investigate it ourselves. That was what we did. We referred to the correspondence a few minutes ago where that process of integrity or whatever was used. We needed to examine it ourselves and ask ourselves what could be wrong.

C

Chair1:47:23

What steps did you take to oversee that investigation?

A

Alan Cook1:47:28

I asked for the investigation to be done. I was keen to know who would do it. Andy McLean, who reported to Rick Francis. The reason I wanted to know who would do it was to assess the person. Andy was a no-nonsense, knowledgeable guy who would speak out if he needed to. I suspect one of the problems is that we were still investigating the cases that had been highlighted, as opposed to the whole thing. I still thought we've got these cases that have gone wrong, we've got to find out the answer.

C

Chair1:48:25

What stopped you from getting an external body to do that?

A

Alan Cook1:48:30

Nothing stopped me. I felt we should do the internal review first. It is complicated by the fact that I left the business a few months afterwards, but at that stage you wouldn't get in an external review until you'd asked your own people to investigate.

C

Chair1:48:50

Was your thinking that you do the internal review first and then from there determine whether an external review was necessary?

A

Alan Cook1:48:56

Yes, but I had no particular expectation of what would be found. At that stage I thought we were talking about a handful of cases, and it could have been a different problem for each one. By the time it all came out, I don't know what the problem was, but it was clearly wider than the cases that had been highlighted to me.

C

Chair1:49:25

Could we bring back up please POL 001? 41142. Thank you. And see that's an email from Dave Posnet on the 20th of October 2009, so five days after your email which we were just – you're not in copy. No. It refers to some conference calls. Says: 'Dave Smith phoned me last week, asked me a few questions, and indicated that Alan Cook is asking for a more robust defence of Horizon.' Were you asking for a defence of Horizon rather than an investigation into its integrity?

A

Alan Cook1:50:26

Definitely not. Looking for a robust defence? Just looking for answers. One of the perils of being the boss is that people use your name to get things done. I would have responded to that if I'd been copied, but that's not what we're after. Dave Posnet could have used your name and said 'Alan Cook is asking for an independent review of Horizon' or 'Alan Cook is asking for a review into its integrity.' What was put was 'Alan Cook is asking for a more robust defence of Horizon.' Are you saying those words didn't come from you?

I wouldn't have said that. I would have said 'robust' was a word I used, which I meant thorough and vigorous, but 'defence' wouldn't have been a word I used. 'Robust' to mean thorough, yes, but 'defence' is a different point. At this stage, there was the Computer Weekly article and a few complaints on specific cases, and I was more than prepared to believe that the answer would be different to each of them, and that the answer wasn't that there's nothing wrong. But obviously that's the stance that the organization took then.

C

Chair1:52:01

Was the manner of your investigation or how you chose to respond to these allegations influenced by your instinctive view which we went to earlier about the sub-postmasters?

A

Alan Cook1:52:21

No, it wasn't. My belief would be that we would find things that were wrong – I'll put it the other way – we would find things that were not the fault of the people running those post office branches. It could have been the procedures they were required to follow, it didn't necessarily have to be the technology, but it seemed to me unlikely to have that many cases – seven, nine, or ten – all coming to my attention at the same time sounded like there was a problem.

C

Chair1:53:01

So what happened to the review?

A

Alan Cook1:53:05

I have difficulty remembering. I think it went on past my departure.

C

Chair1:53:17

Could we go back then please to page 2158 368, and I think it's page 22? No, sorry, the next page, my apologies. So we've got the Michael Rudkin email we went to at the start at the bottom there. That was the response we referred to, and you're forwarding it saying: 'We should therefore be careful of approaching for further info without talking to Paula first.' Who are you referring to there? Paula Vennells?

A

Alan Cook1:54:38

Paula Vennells, yes.

C

Chair1:54:40

And why did you need to talk to Paula Vennells first?

A

Alan Cook1:54:44

I'm not sure really. I obviously thought it was a good idea at the time. This was a network issue, and she was responsible for the network. I didn't want to – there were two lines I could go down: the operations director line responsible for the technology, or the network line which was Paula. We were focusing too much on the operations line, and Paula needed to be brought into the picture.

C

Chair1:55:22

Could we go to the page before please, just to see the email chain? Thank you. If you just carry on going up, please. So that email which was on the 15th of October is forwarded by Ruth Barker to Paula Vennells on the 5th of November. We then see the next day Paula Vennells replies to Ruth Barker and you're in copy. Yes. It says: 'Ruth, the attachment needs to be in email format please. Alan and I are out of the office and so need to view it on BlackBerries. Also we need the original email. What was attached looked more like a PowerPoint of a press cutting.' Do you recall what conversation you had with Paula Vennells about this email?

A

Alan Cook1:56:12

I don't actually know. Sorry.

C

Chair1:56:15

Do you remember discussing anything to do with an investigation into these issues with Paula Vennells?

A

Alan Cook1:56:23

I issued the investigation request down the operations line. Because I was seeing it as a technology issue, the reference to the Federation meant I felt Paula should be in the loop, plus it was her branches that we were dealing with questions from.

C

Chair1:56:47

In your statement, at paragraph 101, you say: 'I gave notice of my resignation to Adam Crozier around late October or early November of 2009 and it was accepted.' So around the time that you forwarded this email – sorry, not you, the email was forwarded to Paula Vennells – yes, it would have been that sort of time. Do you think at that time you had resigned or were thinking about it?

A

Alan Cook1:57:28

It's embarrassing that I can't tell you the actual date. I kept all the correspondence for seven years for tax purposes and then binned it all, so I can't remember the exact date. I would have said it was late October or early November that I went to see Adam and said I'd like to resign. I said I'd like to see out the financial year because one of my criteria for success was whether the business would get back into profit, and we wanted the end of the year. He asked me not to say anything until the new year. Following that, I realized that if I said something at the beginning of the new year, Parliament would be in recess, and Pat McFadden, the minister, was very supportive. So I rang Adam and said can I tell Pat before Parliament recesses. I rang Pat McFadden in December and told him, then I told my top team on the 4th of January. That was the public position effectively. Yes, it did go public. I told the top team, there was an internal communication, and we told the world that I was going.

C

Chair1:58:55

Why do you think you were on the 6th of November speaking about your email of the 15th of October with Paula Vennells? Let's bring the email back up. I wasn't planning on leaving until the end of March, that's not how it transpired, so resigning wouldn't change my behavior. Page 20, I think it's 22. Thank you. So we have the email at the bottom on the 15th of October 2009, and then at the top is Paula Vennells on the 6th of November in which you're copied. It says: 'Ruth, the attachment needs to be in email format please. Alan and I are out of the office.' It's implying that the two of you are together?

A

Alan Cook1:59:58

Not necessarily, but we didn't go out together. We'd have been in different parts of the network, would be my guess.

C

Chair2:00:14

But it does imply that you were working on it together or discussing it together?

A

Alan Cook2:00:27

Yes, I'm sure we would have done.

C

Chair2:00:33

So my question is: why at this stage were you discussing it with Paula Vennells?

A

Alan Cook2:00:40

For the reasons I said: this was an important issue and she needed to be aware of it.

C

Chair2:00:46

I leave that. That can come down. I'll move on. I'm going to go back in the chronology slightly as our last topic on the IMPACT programme. Do you recall what the IMPACT programme was?

A

Alan Cook2:00:57

Yes. It was a major change to the accounting procedures.

C

Chair2:01:02

Correct. And before the IMPACT programme, sub-postmasters would balance a cash account. Correct. And that cash account would be completed at the end of a Wednesday on a weekly basis. Yes. Do you remember the change that came about because of the IMPACT programme?

A

Alan Cook2:01:35

I probably don't, to be honest. You have a point, but I'll – well, before the IMPACT programme, if a sub-postmaster balanced their books and had a discrepancy which they couldn't explain, they were able to ask for authorization to put it in a suspense account. Yes, correct. I've learned this since by reading all correspondence. And then roll over into the next trading period while it was investigated. Following the IMPACT programme, rather than weekly, the sub-postmasters had to balance every four or five weeks. Yes. And if there was a discrepancy they couldn't explain, they no longer could keep it in a suspense account and roll into the next trading period. Correct. And they had to – the Post Office sought debt recovery from them at the end of the trading period, or it could be settled centrally and paid off in due course.

C

Chair2:02:43

Could we turn please to POL 30's 32147? This is a board meeting on the 17th of August. I see third line down you're there as a non-executive director. We turn to page seven please. And if you could go down to the IMPACT programme. Thank you. B: 'The objective of the programme was to save costs, replace back office systems, improve branch and client accounting, improved debt recovery.' When it says debt recovery, from whom were those debts being recovered?

A

Alan Cook2:03:44

From sub-postmasters, Crown offices, franchisees. I assume that's what it meant. This was a finance function in Chesterfield, and in my head when we were in this meeting, this was new technology for Chesterfield which flowed out into the branches. The board is effectively discussing how it can get improved debt recovery from sub-postmasters amongst other things. Yes. And notice 'save time in branches' as well. It was a very labour-intensive process, so this was for the benefit of Post Office Limited and saves time in branches, which is of benefit to all branches.

C

Chair2:04:40

But at E, Mr Corbett speaks: 'The roll-out was not expected to be noise-free, and one of the risks was concern regarding debt recovery.' Do you remember what that concern was?

A

Alan Cook2:04:57

No, I don't. I remember the higher call volumes. This was about the Chesterfield operation and that new procedures would generate a lot more phone calls from people coming to terms with the different procedures. As is often the case, you introduce a labour-saving device but there's a bump to get through when people are coming to terms with new procedures or different buttons to press. It produces more activity, more mistakes for a while, and then things settle down. I think what Peter was highlighting in general is this was quite material change and there would be disruption as a result. He then goes on to outline what risk mitigants he had in place to counter it.

C

Chair2:05:55

If we can turn over the page, please. Thank you. At the top in F: 'Planned completion of the new finance system was 24th August 2005. A branch trading pilot would commence 14th September, and full branch rollout was planned on 30th November.' Those words 'branch trading pilot' – branch trading is the specific terminology used for balancing and trading periods, isn't it?

A

Alan Cook2:06:31

I would assume so. There might be a word missing – it might have been 'branch trading statement' or something, I don't know.

C

Chair2:06:43

But in your statement – we don't need to turn it up, but it's page 13, the top paragraph. You refer to the IMPACT programme. My understanding of your evidence is that you weren't told that the ability to put discrepancies into the suspense account was taken away. Is that no?

A

Alan Cook2:07:18

No, we didn't. I didn't know that then. No.

C

Chair2:07:23

And is your evidence it wasn't discussed at that board meeting?

A

Alan Cook2:07:27

Yes, I certainly don't recall it. I was just a non-exec, so it was an item of detail which they probably felt they didn't need to share. Subsequent knowledge indicates that was quite an important development.

C

Chair2:07:47

Could we look please at POL 3 Z 21419? It's another risk and compliance note. Your apologies, so you're not in attendance. This is the non-exec period. Yes, but you would have read the minutes. Yes, I would have hoped so. Can we turn to page five, please. Talks about the IMPACT programme status: several problems but workarounds are in place for servicing clients, and there are issues with system response times, mapping, and systems. And if we go down please to 3.4 Branch audit findings: 'Positive action has been taken through branch control since last year. This has reduced the incidence of suspense accounts being abused to conceal fraud. However, there is an increase in the numbers of losses covered by inflating cash figures. IMPACT will in the longer term improve cash MI – management information – but short-term action is needed between teams involved in cash to improve the analysis and clean up of data.' Was the board implementing the IMPACT programme precisely in order to avoid postmasters using the suspense account?

A

Alan Cook2:09:36

Oh no, no. This was a major piece of expenditure. This was about upgrading the financial – obviously it was all initiated before I joined, but it was about equipping Chesterfield correctly to do the finances and how that flowed through into branches of all types. There was nothing that would have been the motive.

C

Chair2:10:10

Did anyone, whenever you were in any discussion about the IMPACT programme, question how it would affect sub-postmasters?

A

Alan Cook2:10:28

I don't recall a conversation like that. Interestingly, the way I'm talking, I had this impression it was more about computerizing Chesterfield, but not without consequence in branches because that's where the money was coming from. But it wasn't the objective, you see what I mean.

C

Chair2:10:53

Sir, that's my questions. If I may just take a moment to confirm – Miss Price on a matter.

Yeah. Thank you, sir. I understand that two sets of core participants wish to ask some questions. I'm told that there will be five minutes each. Okay, let them ask their questions.

S

Sam Stevens2:11:35

Mr Cook, my name is Sam Stevens. I represent a large number of sub-postmasters and mistresses. I'm instructed by a firm of solicitors called Howlett Clarke. Did you watch the evidence of Mr Hodkinson yesterday? Sorry, Michael Hodkinson. I did, yes. You seemed to use the term 'prosecuting authority', which I assume you took from the evidence of Mr Hodkinson yesterday. You understood the word 'prosecuting authority' from his evidence? Yes, the term you used. And you were aware that later on in your term as managing director, you were the prosecuting authority for the Post Office. Is that correct? Well, as I've already explained, my view of that changed during my time. Right, well let's have a quick look at that then. Please can we go to the document which is POL 0 48361, first page. Thank you. If we look please at the very top of that document, we see it says 'Post Office Limited Investigation Team Monthly Report'. We get from that that you got these monthly – it says confidential and it then goes on to say to whom it is written: Paul – let's move on from that for the moment. Director Security, Corporate Head of Investigations, Corporate Head of Criminal Law, Head of Security, Post Office Limited. So let's just go through that. At that time, the Head of Criminal Law was Rob Wilson, a solicitor. Do you remember him? No, I don't, I'm afraid. What do you think the criminal law team did within the Post Office? Well, it looks like it's at Royal Mail, isn't it? It says corporate. What did you think the criminal law team did? Royal Mail or Post Office? They would have been involved with these prosecutions, I guess. Involved with the prosecutions? Yes, yes. So this document in 2006, in reference to you, because you were part of looking at this sort of material – Head of Criminal Law Rob Wilson still doesn't ring a bell? No, it doesn't, I'm afraid. And the investigation team – clearly this is in relation to this monthly report. Should we have a quick look at what's going on with that? Middle of the page there, you see in the document we've got on the screen: 'Investigation Team Report Period 9 December 2006. The principal aims of the investigation team are to stop criminal offences taking place, apprehend and prosecute those who commit offences against us, in order to maximize our recovery and reduce loss to POL and its clients through the identification of areas of weakness throughout the business both operationally and within our product offerings.' But it does appear on the face of this document that you've got information that there's a criminal law team operating within the business, and secondly an investigation team with aims of stopping criminal offences, apprehending and prosecuting people. Yeah, well look at item one: it's all about postal order cash back offers and the fraud losses we were experiencing. That was nothing to do with sub-postmasters. What do you think when it refers – it's customer fraud. What do you think? We call them scams today, but this is what it was there for. There's always going to be lots of criminal activity around an organization that creates a lot of money. That doesn't mean it's the sub-postmasters. So you had reports in relation to sub-postmasters that were being prosecuted and that there was involvement of an investigation team. That correct? Yes. So you had oversight of an investigation team that investigated sub-postmasters. Is that correct? It is right. And we can now see that there was a criminal law team engaged as well. Yes, yes. But it's broader than just sub-postmasters. Well, let's stay with sub-postmasters for the moment, because you may have noticed that this inquiry is about sub-postmasters. Yes, I have noticed that. Right, well let's then move on and have a look and think about what was happening to sub-postmasters being investigated by the investigation team operating under your managing director directorial responsibilities. Yes, okay. Did you, as an example, consider the numbers of cases that were being prosecuted? I didn't have the total number that was being pursued. Now, let's go to the bottom of page two please of the same document, and look please at 2.0. Yes. 'Investigation operations: this month's recovery figure is £63,000. Period nine case figures for deficiencies at audit alone were £140,000.' Where it says 'raise figures for deficiencies at audit', what do you think that meant? Yeah, you're right, we did have the numbers in that report. And then it goes on to say: 'In total, 31 new investigation cases were raised during the period with a current loss of £245,000.' That's not the same as prosecutions obviously, but there were cases that were being looked at. 'At present the team is dealing with 248 ongoing investigations with a loss value of in excess of £9 million. Of these, 80 are currently going through the courts.' So you're getting these sorts of reports monthly. There are discussions involving the investigation operation, discussions and information regarding cases being prosecuted and losses. You had all of the information that was possible to have to actually have governance over this area, didn't you, Mr Cook?

A

Alan Cook2:17:26

I had the relevant information. I certainly – well, I've already said that I could have done more.

S

Sam Stevens2:17:34

Well then, let's go over the page. We can see that at the bottom of page two, sorry, it says 'Also provided as a summary of major inquiries ongoing.' Top of page three, please, same document. Now we can see across that there are Excel documents being referred to. Ignore the first one: 'Over 100k live cases' which appears to be a list of the cases worth over £100,000. And then underneath that you've got references to 4.0 Financial investigations in relation to Post Office branches. So the information you were getting was pretty comprehensive regarding the ongoing investigation and conduct of prosecutions as they were going onwards under your time at the Post Office, wasn't it, Mr Cook?

A

Alan Cook2:18:29

It was, but I don't wish to let the impression be created that this was there to chase sub-postmasters. This was there to chase fraud in general.

S

Sam Stevens2:18:42

Okay, well let's just say – as I've said before, we'll stick with postmasters if you don't mind. Yes, but I need to make sure that context is understood. Paragraph 59 of your statement – do you say? Yes, Mr Cook. I say – thank you for acknowledging my comment. Paragraph 59 of your statement, you say this: 'To the best of my knowledge, the Risk and Compliance Committee was not given any information or reporting, nor did I have any oversight of the prosecution of sub-postmasters. As a result, I did not take any steps as a member of the Risk and Compliance Committee to ensure that POL was acting in compliance with its legal obligations in relation to those prosecutions and civil proceedings against sub-postmasters. I was not aware they were taking place.' It's just a straight-out lie, isn't it, Mr Cook?

A

Alan Cook2:19:26

The point I was trying to make was about the initiation of prosecutions. I have repeatedly acknowledged that there were cases under investigation and that I was aware there were cases under investigation.

S

Sam Stevens2:19:41

What you're saying in your statement is this: you did not take any steps as a member of the Risk and Compliance Committee to ensure that POL was acting in compliance with its legal obligations in relation to those prosecutions and civil proceedings against sub-postmasters. 'I was not aware they were taking place.' Well, first of all, you do agree you were aware they were taking place, and secondly, in your statement you're pretending that you weren't aware to avoid the implication that you needed oversight of these things. No, just simply not true, isn't it, Mr Cook?

A

Alan Cook2:20:11

That was not my intention.

S

Sam Stevens2:20:13

Then why did you write that in your statement, Mr Cook?

A

Alan Cook2:20:17

I believed it at the time, certainly.

C

Chair2:20:25

One moment. Thank you, sir. Right, who's next?

H

Henry2:20:34

I am Henry. Hello, Mr Cook. 17 years ago, on the 12th of April 2007, you were the managing director of the Post Office, weren't you? I was. And you probably have no idea what you were doing that day, I suppose. No, I'm sure not. But Mrs Janet Skinner, who sits to my right whom you can see here, knows exactly what was happening to her that day. Because on the 12th of April 2007, she was being released from prison having served a nine-month sentence for false accounting. She'd been jailed on the lie, Mr Cook, that Horizon was infallible. But you say you had no idea that these prosecutions were being instituted in your name. Is that right?

A

Alan Cook2:21:26

No, well, I knew there were prosecutions.

H

Henry2:21:29

She pleaded guilty to false accounting only because she'd been told that if she did not, the Post Office would prosecute and pursue her for theft. She hadn't stolen a penny, Mr Cook. All of this was being done in your name, and yet you claim you didn't know.

A

Alan Cook2:21:50

I just can't be more apologetic. It just – Mrs Skinner was the mother of two young children, wrongly accused of theft. She was told that if she pleaded to false accounting as an alternative to that baseless theft charge, she wouldn't go to prison. Now this was common practice by the Post Office: charge theft and accept a plea to false accounting. Were you aware of that strategy, Mr Cook?

No. In fact, worse than that, when I had reports about them and the individual had pleaded guilty, then I thought we must have been in the right. I did not appreciate what was going on.

H

Henry2:22:35

So this strategy was reinforcing your ignorance and the general prejudice that these sub-postmasters had their hand in the till. Is that right?

A

Alan Cook2:22:47

In the particular cases where the individual pleaded guilty, I had assumed that they believed they were guilty. It didn't occur to me at the time that that was recommended to them by their lawyers. It was the most profound structural injustice. I agree. An unmeritorious charge of theft was being used as a sledgehammer to force a plea or to crush sub-postmasters into submission. I don't know if that was a deliberate strategy by the Post Office, but that's how it manifested itself, and it's unacceptable.

H

Henry2:23:27

It was a strategy, and you ought to have been aware of that strategy. Do you accept that now? Not with hindsight, but you ought to have known at the time.

A

Alan Cook2:23:36

I did not know that at the time. But you ought to have known it at the time, Mr Cook. Do you accept that? Yes, I do accept I ought to have known it. I didn't know it. It would be nothing that I would ever willingly want to do. Yes. Now, of course, it didn't do Mrs Skinner any good because she was sent to custody all the same – nine months imprisonment. But before she was imprisoned, like so many sub-postmasters, she'd suffered fictional Horizon shortfalls and had made 116 calls to the National Business Support Centre helpline complaining about balancing faults in the 18 months before she was dismissed. Wrongly dismissed, Mr Cook, because your auditors thought she'd had her hand in the till. Are you proud of presiding over that culture?

Definitely not, no.

H

Henry2:24:32

Do you accept that the ultimate responsibility for her torment lay with you as managing director of the Post Office?

A

Alan Cook2:24:39

It did. I was the managing director, so I was ultimately accountable. Whether I was aware is another matter, and if I wasn't aware, I should have been aware.

H

Henry2:24:51

But as you have claimed, you maintained that you had no idea that these prosecutions were actually being instituted in your name.

A

Alan Cook2:25:01

No, I – well, nearly correct. What I was saying was that I had no idea, up until the Computer Weekly article, that the Post Office could initiate those without having to seek approval from any other party or body. So there was no moderating influence. That is what I was not aware of.

H

Henry2:25:24

Now, those prosecutions, the Court of Appeal Criminal Division stated, should never have been brought because they were an affront to the conscience of the court. What do you have to say for yourself about that, sir?

A

Alan Cook2:25:40

All I can do is repeat what I said at the beginning: I just apologize unreservedly. I'm not the sort of guy that is malicious or would want to do harm to anyone, but it was – and I was not aware – but that is not an excuse, it's an explanation. There's no excuse for the fact that this happened and it was on my watch. This is what this inquiry is about: to establish how that could have happened. I've tried my honest best to portray exactly what I recall happening many, many years ago. But it's not acceptable.

H

Henry2:26:21

Finally, do you have anything by way of a personal direct apology that you would like to say to Mrs Skinner?

A

Alan Cook2:26:28

I would love to talk to her afterwards, but you may not want to. I can only apologize on behalf of the whole organization for the way that you were treated. It was disgraceful. I can only apologize personally that whilst I had not heard of your case, I'm nevertheless –

I have an accountability that I should have been on top of it and I wasn't. This will be with you for the rest of your life; it will be with me for the rest of my life.

C

Chair2:27:10

Thank you, Mr Henry. I've just got a few questions, Mr Cook, yes.

J

Jason Beer2:27:14

I'd like to go back to the instruction you issued to Mr Mclean to carry out an investigation. Could we put paragraph 79 of your witness statement on the screen?

A

Alan Cook2:28:03

Yes, I have scanned it.

J

Jason Beer2:28:16

You told me that in early May 2009, the possibility of a number of cases challenging Horizon came as a bolt out of the blue. Your first reaction was to instruct Mr Mclean to investigate. But reading the rest of that paragraph, it seems this inquiry just petered out. What do you recall?

A

Alan Cook2:29:52

I agree sir. I wouldn't have settled for everything's fine, but I haven't been given any documentation that shows what he produced. I can't remember the response, but I believe there was still activity later. That was the moment the organization started examining itself.

J

Jason Beer2:30:47

You left Post Office in early 2006, approximately 7 to 8 months after instigating the investigation. There doesn't appear to have been any urgency on your part to get an answer.

A

Alan Cook2:31:20

We've seen evidence of activity still going on in October and November. I cannot recollect seeing a final report. I only say what I clearly remember. The Computer Weekly letter was a moment, but without evidence I can't point to what happened next.

J

Jason Beer2:31:56

You have no memory of Mr Mclean producing a written report before you left as managing director? I find that difficult to believe.

A

Alan Cook2:32:34

I find it difficult to believe there wasn't one, but I can't remember it and I haven't seen anything.

J

Jason Beer2:32:48

Now, sorry to prolong it, but another short series of questions about the Castleton case. You said you had no idea of Mr Castleton's case until you read the Computer Weekly article. Can I ask about the process for making decisions when Post Office was involved in high-profile litigation?

Post Office instigated proceedings against Mr Castleton for approximately £25,000 shortfall evidenced by Horizon data. He defended on the basis that there was no shortfall and it was the fault of the computer. This grew into a potential large-scale argument about Horizon's reliability, all unfolding in the first 8 to 10 months of your tenure. But none of this got to you, from what you told me.

A

Alan Cook2:34:40

Came a point when the experienced barrister told the solicitor the costs were grossly disproportionate, but in the end total costs came to well over £300,000.

J

Jason Beer2:35:27

What was the process in 2006 for authorizing expenditure of those sums?

A

Alan Cook2:35:41

There's an irony ― to buy equipment you need forms signed, but somehow spend decisions were being made in that prosecution. There should have been delegated authorities with caps. That was not in place. It certainly did not come to me for approval. The person likely was Paul Aenos, the network director, who could sign off.

J

Jason Beer2:36:52

So there would have been a person within Post Office who had authority to sign off spending without taking it to you or the board?

A

Alan Cook2:37:04

Yes, most likely Paul Aenos.

C

Chair2:37:26

Thank you very much, Mr Cook, for providing your witness statement and for giving evidence this morning. I'm grateful to you.

A

Alan Cook2:37:39

Thank you, sir.

C

Chair2:37:42

So, Mr Stevens, how are we proceeding next?

S

Sam Stevens2:37:46

I think Mr Beer's preference is to switch witnesses immediately if we can and make a start now.

C

Chair2:37:50

Certainly, by all means. We may need a short break for the transcriber.

S

Sam Stevens2:38:01

Yes, the transcriber needs a short break.

C

Chair2:38:03

All right, so 25 to 1, 10 minutes. That's fine. Thank you.

Good afternoon, sir. Can you see and hear me? Yes, thank you. May I call Adam Crozier?

A

Adam Crozier2:38:26

I do solemnly, sincerely and truly declare and affirm that the evidence I shall give shall be the truth, the whole truth and nothing but the truth.

C

Chair2:38:44

Thank you.

J

Jason Beer2:38:46

Good afternoon, Mr Crozier. My name is Jason Beer and I ask questions on behalf of the inquiry. Can you tell us your full name, please?

A

Adam Crozier2:38:53

Adam Alexander Crozier.

J

Jason Beer2:38:55

Thank you very much for previously providing a witness statement to the inquiry and for giving evidence today to assist us. Can we start with your witness statement, reference WIN4 39100? You should have a hard copy. It's 34 pages excluding exhibits, dated 28 February 2024. Turn to page 34. Is that your signature?

A

Adam Crozier2:39:21

It is.

J

Jason Beer2:39:25

And are the contents true to the best of your knowledge and belief?

A

Adam Crozier2:39:27

They are indeed.

J

Jason Beer2:39:28

Thank you. I'm not going to ask about all elements; it stands as your evidence. Can I start with your background? Between February 2003 and April 2010 you were a director and CEO of Royal Mail Group, and a director of Royal Mail Holdings. Is that correct?

A

Adam Crozier2:39:56

That's correct.

J

Jason Beer2:39:59

And a director of Royal Mail Holdings, the first being a limited company, the second a PLC?

A

Adam Crozier2:40:02

Yes.

J

Jason Beer2:40:04

Before joining Royal Mail, you held senior roles at Saatchi & Saatchi from 1988 to 1999, the last four years as joint chief exec?

A

Adam Crozier2:40:19

I started there in 1988, yes, all the way through to 1999. The last four years as joint chief exec.

J

Jason Beer2:40:25

And then you served as chief executive of the Football Association from 2003 onwards until immediately before joining Royal Mail?

A

Adam Crozier2:40:41

Correct.

J

Jason Beer2:40:44

Can I start looking at the corporate structure of Royal Mail? I'll try to summarize and see whether you agree. At first, there was a parent company, Royal Mail Holdings PLC, wholly owned by the government. It had its own board and management board. You attended all Holdings board meetings and sat on the management board?

A

Adam Crozier2:41:13

That's correct.

J

Jason Beer2:41:19

The chairman of Holdings PLC was initially Alan Leighton from 2002 to 2008, then Donald Brydon from 2009. The Holdings board had its own audit and risk committee, which you attended. Were you a member or an attendee?

A

Adam Crozier2:41:54

I think I was an attendee. The members were all non-executive directors.

J

Jason Beer2:42:04

Can we move on? There were a range of separate businesses within Royal Mail, some subsidiaries. Post Office Limited was one, a separate legal entity with its own board and chairman. In your tenure, Sir Michael Hodin until 2009, then Donald Brydon. Post Office had its own managing director/CEO: David Mills until 2006, then Alan Cook. That person sat on both the Royal Mail Holdings and management boards?

A

Adam Crozier2:43:39

Yes, that person sat on both.

J

Jason Beer2:43:42

Post Office Limited had its own risk and compliance committee?

A

Adam Crozier2:43:49

That's right.

J

Jason Beer2:43:54

Taking all those points together, are you effectively saying that Post Office had a relatively high degree of autonomy from Royal Mail group?

A

Adam Crozier2:44:21

Yes, under its delegated powers of authority. Among business units, Post Office enjoyed the greatest level of autonomy. It was the only one with its own governance setup.

J

Jason Beer2:44:50

Why did it enjoy the greatest level of autonomy?

A

Adam Crozier2:44:56

It goes back to the 2000 Postal Act. The government set up the company with two very different objectives: Royal Mail was to modernize and become a commercial company in a competitive market; Post Office was to become a sustainable public service. That separate governance ran through to them having their own direct relationship with the shareholder and a different team within the shareholder executive.

J

Jason Beer2:45:41

Thank you. Did the result of that mean that you as CEO of Royal Mail placed very substantial reliance on the Post Office board and executive team?

A

Adam Crozier2:45:54

I did indeed. It's partly why both the chairman and CEO of Post Office sat on the Holdings board, the chairman of Royal Mail sat on Post Office board, and the company secretary sat on both. Through those delegated authorities, Post Office largely went about its business without reference to Royal Mail board except on two key things: funding and certain major multi-year contracts. The Fujitsu contract was one of those.

J

Jason Beer2:46:46

Looking back now, do you think there should have been a third thing added to that list: the conduct of investigations and criminal prosecutions?

A

Adam Crozier2:47:13

Not at the time, no. I thought all the correct checks and balances were in place: internal and external audit, legal advice, the Post Office risk committee, exec committee, and board. No one in that chain expressed any concerns about the conduct.

J

Jason Beer2:47:50

If Royal Mail was reliant on Post Office to represent its matters, and they did not raise issues, was there any mechanism by which you could find out about such issues?

A

Adam Crozier2:48:24

There were constant one-to-one meetings with the CEO. Both myself and the board placed a high burden on them to be open and transparent. Because Royal Mail was a broken company, there was no option but total transparency. We set up a properly functioning internal audit unit, created a risk agenda, and the risk register was debated.

J

Jason Beer2:50:16

Can you recall whether the conduct of prosecutions and the possibility of imprisoning sub-postmasters was on the Royal Mail Holdings risk register?

A

Adam Crozier2:50:41

I don't believe so, and I don't recall seeing it on the Post Office register either.

J

Jason Beer2:50:50

Is that a failing with hindsight?

A

Adam Crozier2:50:56

Yes. Conducting an activity unusual for a company, carrying unusual risks, would require different supervision and oversight. That's why there were checks and balances around internal and external legal advice.

J

Jason Beer2:51:38

What do you mean by that?

A

Adam Crozier2:51:50

We had lots of external lawyers involved. We also had prosecutions on the Royal Mail side, with multiple interactions with police and prosecution services.

J

Jason Beer2:52:10

What external lawyers gave comfort in the prosecution of sub-postmasters?

A

Adam Crozier2:52:18

I don't recall which ones the Post Office used at the time.

J

Jason Beer2:52:22

Did you think at the time that prosecutions were conducted by external lawyers?

A

Adam Crozier2:52:32

I believe they had a big role.

J

Jason Beer2:52:37

By 'conducted' do you mean the person standing up in court, or inducting the whole thing?

A

Adam Crozier2:52:49

I'm not sure.

J

Jason Beer2:52:56

Was there a way for people within Post Office to report issues to you without going through the Post Office MD or CEO?

A

Adam Crozier2:53:09

Yes, through a whistleblowing function and an anonymous survey called 'Have Your Say'. A team ran both. The results were reviewed by business units, management, audit committee, and board within Royal Mail. I'm not sure if Post Office did their own or if it covered agents.

J

Jason Beer2:55:10

I'm looking for something that jumped from sub-postmasters to you without going through those mechanisms.

A

Adam Crozier2:55:29

I don't believe there was.

J

Jason Beer2:55:31

You made limited appearances at Post Office board meetings ― only two?

A

Adam Crozier2:55:37

Yes, both between David Mills leaving end 2005 and Alan Cook arriving in March/April 2006. Those meetings were about negotiations with government on subsidy to sign off the company as a going concern.

J

Jason Beer2:56:14

Why did you attend only two board meetings in seven years?

A

Adam Crozier2:56:29

When I arrived, David Mills reported directly to Alan Leighton, so I wasn't involved. When Alan Cook came, he had a dual reporting: to the Post Office board and chairman, and to me regarding interface with Royal Mail group on funding and commercial relationships. I was advised by the company secretary that the shareholder and board wanted the two kept separate, so I shouldn't be on that board.

J

Jason Beer2:57:30

We've spoken about the responsibility to refer things up. Were there mechanisms for other main board members to go into the Post Office board to see what was going on?

A

Adam Crozier2:57:59

Yes. Because of the transformation, we had group HR director and group technology director on the Royal Mail board, who also had tentacles into Post Office. Alan Leighton was on both boards, and company secretary Jonathan Evans attended all Post Office boards. They were the principal links.

J

Jason Beer2:58:47

Can we look at POL 036 235, page 20? This is a diagram from before 2006. It shows you, Elmar Toime, and David Mills all reporting directly to Alan Leighton.

A

Adam Crozier3:01:46

Yes, and Elmar was effectively first among equals.

J

Jason Beer3:02:18

So issues from David Mills came through you?

A

Adam Crozier3:02:29

Not at all. He reported directly to Alan Leighton. All three of us reported directly to him.

J

Jason Beer3:03:02

So you had no role regarding Post Office; nothing passed through you except via the chairman?

A

Adam Crozier3:03:19

Correct.

J

Jason Beer3:03:21

Is that a reflection of the great autonomy Post Office enjoyed?

A

Adam Crozier3:03:33

Yes.

J

Jason Beer3:03:35

You told us you attended two board meetings. Did you receive minutes of the Post Office board?

A

Adam Crozier3:03:45

Yes, Royal Mail Holdings received minutes from each operating company, included in the board pack.

J

Jason Beer3:03:56

Did you personally receive the minutes of Post Office Limited?

A

Adam Crozier3:04:01

Yes, as a director of Royal Mail Holdings.

J

Jason Beer3:04:04

Did you receive minutes of Post Office committees?

A

Adam Crozier3:04:09

No, I don't think so. Not the audit and risk committee minutes.

J

Jason Beer3:04:44

Can we look at an example of a board meeting you did attend: POL 3021 1492, 20 April 2006. You were in attendance.

A

Adam Crozier3:05:29

Yes.

J

Jason Beer3:05:38

On page 4, the solvency of Post Office was addressed. Does that reflect the point you made?

A

Adam Crozier3:05:50

It was. It impacted the solvency of the whole group and the ability to sign accounts as a going concern. Mr Corbett outlined that the company was insolvent and without support would be unable to meet debts. The government agreed to provide a letter acknowledging solvency issues.

J

Jason Beer3:07:00

So that was why you attended ― the solvency issue?

A

Adam Crozier3:07:02

Yes.

J

Jason Beer3:07:15

On page 10, there's an operations report summarizing the Horizon S90 release and an issue of network resilience. Would you have picked these up by chance because you were at this meeting?

A

Adam Crozier3:08:13

That's correct. And save for such chances, I was reliant on information pushed up from the MD or CEO, or from the group technology director. But the IT director in Post Office reported to the CEO, not to me. I don't recall the Post Office IT team ever raising issues. I would have expected them to raise with the Post Office executive team first. If real issues, the CEO and chairman were on the group board to relay.

J

Jason Beer3:10:28

In paragraph 11 of your witness statement, you say: 'I must stress that my responses are not intended to detract from the fact that it's clear to me now that this structure did not help facilitate vital information regarding Horizon and the conduct of criminal proceedings reaching me or the board as it should have done.' Before getting into detail, what in the corporate structure prevented or did not facilitate that?

A

Adam Crozier3:11:50

At the time, it made sense because of the different objectives. The issue was the impact on cultures. In Royal Mail, total transparency was necessary; in Post Office, that transparency didn't flow up. The separation aided and abetted people not getting at that information.

J

Jason Beer3:13:56

What about the corporate structure itself as opposed to culture?

A

Adam Crozier3:14:10

Just that it was clear people worked for different companies, generating a sense of two different companies. The structure didn't allow for easy flow of information.

J

Jason Beer3:14:35

What was the vital information about Horizon that the structure prevented you from being told?

A

Adam Crozier3:14:43

I don't recall anyone in the Post Office governance system flagging concerns. It never reached the Holdings board.

J

Jason Beer3:15:21

What about the conduct of criminal proceedings?

A

Adam Crozier3:15:32

Central is the issue of disclosure. The appeals court judgments showed material deficiencies in the disclosure process.

J

Jason Beer3:16:14

What about the structure that prevented information about the conduct of criminal proceedings from reaching you?

A

Adam Crozier3:16:18

The proceedings were pursued by a legal team that sat within Royal Mail Holdings, not Post Office. I don't recall Jonathan Evans talking about it at Holdings board meetings.

J

Jason Beer3:16:46

That's a separate issue. What about the structure?

A

Adam Crozier3:17:00

I'm not sure I mentioned structure specifically regarding that. I think I was meaning more with regards to Horizon than the proceedings themselves.

J

Jason Beer3:17:33

That's an appropriate moment to break. Pass now. I wonder whether you mind breaking until 5:02?

A

Adam Crozier3:17:42

That's fine.