A senior civil servant said non-executive directors at the Post Office felt “blindsided” by the way the company rushed out a 2013 report by forensic accountants which was highly critical of the state-owned body.
Susannah Storey, who is now permanent secretary at the department for culture, media and sport, sat on the Post Office board between 2012 and 2014 as a non-executive director and the first shareholder representative of the UK government.
She testified on Wednesday to a public inquiry, which is examining the Post Office IT scandal that led to hundreds of people being wrongly prosecuted for theft and false accounting due to financial shortfalls in their branch accounts. It has since emerged that these discrepancies were caused by IT bugs within the Post Office Horizon computer system.
Storey told the inquiry that in July 2013, non-executive directors at the Post Office felt “blindsided” after a key interim report by the forensic accountants Second Sight looking into issues around the Horizon IT system was suddenly presented to the Post Office board “in a rush” ahead of its publication.
The report, which ultimately became crucial for the branch owner-operators’ campaign to clear their names, found that two IT bugs had affected 76 branches.
Storey told the inquiry: “I was very concerned to discover that a report was shortly to be presented to MPs containing significant criticisms, the detail of which the board had received no prior notification.”
She said there was “a rush of communications”, “late night emails” and “weekend emails” to the board in a “very rushed” week ahead of the publication of the report.
“I think we had been blindsided … and we were irritated … we felt we had been bounced by the Second Sight interim report,” she said.
The board later raised questions about whether the findings left the Post Office open to claims of wrongful prosecution.
“No surprises is a really big thing. You do not want to be surprised. I think at that time I felt that it had not been well handled,” Storey said.
“My own view was that the executive [team] had mishandled the interface between the board and the whole of this Second Sight interim report, and I held Paula Vennells responsible for that as the chief executive … My recollection is there was a groundswell of discontent.”
The report was the first time Storey was aware that the Post Office was able to criminally prosecute individuals and she felt “uncomfortable” about this.
“We felt frustrated that after over a year of work there was suddenly this very rushed week, the report had been published and I would have felt that the minister had been put in a difficult position having to make a statement to parliament … Some of my concerns about the chief executive were starting to crystallise.”
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She told the inquiry in her witness statement that with the benefit of hindsight “it is now apparent to me that my ability, and that of my fellow NEDs [non-executive directors] to maintain effective oversight of POL [Post Office] in relation to Horizon was hampered by the lack of reliable and objective information we were given as to the nature and extent of the issues.”
She said the board was “given repeated assurances from the executive and the business that turned out not to be entirely correct, and we were also given incomplete information by the executive team at critical points in this process”.
Storey also said there was “a serious failure” to provide the board with key documents relating to past criminal prosecutions including a review by an independent barrister which cast doubt on the reliability of Gareth Jenkins, a Fujitsu engineer who acted as a prosecution witness in a number of criminal trials.
Storey said she wanted to acknowledge the “devastating hardship and injustice suffered by so many sub-postmasters”. The inquiry has now held its final evidence session in its sixth phase of hearings and a further set of hearings will begin in the autumn.
