1 Tuesday, 21 February 2023 2 (10.03 am) 3 MR BEER: Good morning, sir, can you see and hear 4 me? 5 SIR WYN WILLIAMS: Yes, I can. 6 MR BEER: Thank you very much, may I call Philip 7 Boardman, please. 8 PHILIP BOARDMAN (affirmed) 9 Questioned by MR BEER 10 MR BEER: Thank you, Mr Boardman. As you know, my 11 name is Jason Beer and I ask questions on behalf 12 of the Inquiry. Can you give us your full name, 13 please. 14 A. Philip Kevin Boardman. 15 Q. Thank you very much for coming to give evidence 16 to the Inquiry today and for the provision of 17 two witness statements assisting us in our 18 investigation. Those two witness statements 19 should be in the hard copy bundle in front of 20 you. Can we look at the first of them, please, 21 which is dated 4 August 2022 and which, 22 excluding the exhibits to it, should be 12 pages 23 in length. 24 For the transcript the URN is WITN04790100. 25 If you go to the 12th page of the witness 1 1 statement, can you see a signature? 2 A. Yes. 3 Q. Can is that your signature? 4 A. It is. 5 Q. Subject to the corrections and additions you 6 make in the second witness statement, are the 7 contents of that first witness statement true to 8 the best of your knowledge and belief? 9 A. They are. 10 Q. Thank you. Can we go to the second witness 11 statement, please, that's dated 8 November 2022 12 and is two pages in length. For the transcript 13 the URN is WITN04790200. Is the signature on 14 the second page of that witness statement true? 15 A. It is. 16 Q. Sorry, is that your signature? 17 A. Yes, it is. 18 Q. Are the contents of that witness statement true 19 to the best of your knowledge and belief? 20 A. They are. 21 Q. Thank you. A copy of each of those witness 22 statements will be uploaded to the Inquiry's 23 website and thereby be publicly available, so 24 I'm not going to ask you questions about every 25 passage within them, instead just ask you 2 1 selected questions; do you understand? 2 A. I do. 3 Q. Thank you. I am only going to ask you questions 4 relevant to Phase 3 of the Inquiry, in 5 particular relating to the IMPACT Programme and 6 not ask questions that may be relevant to later 7 phases in the Inquiry, about which you may be 8 able to give evidence, in particular Phase 7 of 9 the Inquiry. 10 A. Okay. 11 Q. Can we start, please, with your background and 12 experience. I think you joined ICL Plc in 13 November 1989; is that right? 14 A. I did, in the manufacturing division, and I was 15 working there for -- developing systems to 16 support the planning and management of 17 manufacturing and logistics functions. 18 Q. You're still employed by Fujitsu at this present 19 time? 20 A. I am, yes. 21 Q. So you've been employed by Fujitsu and its 22 relevant predecessor companies or company -- 23 A. Yes. 24 Q. -- for about 33 years or so? 25 A. Indeed. 3 1 Q. You are presently the service architect for the 2 Post Office account; is that right? 3 A. That's right, yes. 4 Q. Just tell us briefly what does the service 5 architect role involve? 6 A. It involves defining the changes of services as 7 Post Office business changes and they -- more 8 recently -- I've been in that role since 2014, 9 and that -- since then, Post Office have been 10 changing the services, bringing on new suppliers 11 to get the services from other suppliers, other 12 than Fujitsu, at various times. 13 Q. Now, I want to ask you some questions about your 14 background and experience -- 15 A. Sure. 16 Q. -- because neither of those matters are dealt 17 with in either of your witness statements. 18 Firstly, do you have any professional 19 qualifications that are relevant to the issues 20 that we're considering, for example in computing 21 or information technology? 22 A. I have an MBA from Warwick University, and so 23 whilst back at ICL Manufacturing, the field of 24 business process modelling and analysis and 25 business process management support systems was 4 1 relatively new then and I got some training in 2 that there, and had opportunities to practice 3 that in some internal projects within ICL. 4 In 1995, I joined a newly formed consultancy 5 practice in ICL that was offering business 6 process modelling analysis, business process 7 redesign services to ICL's external clients, and 8 so, by the time I was doing work on the IMPACT 9 Project in 2002, I had had seven years' 10 experience of delivering business process 11 modelling analysis consultancy to a range of 12 clients -- 13 Q. I'm just going to come on to experience in 14 a moment. I'm just asking about qualifications 15 at the moment. 16 A. Oh, sorry. 17 Q. Have you got any qualifications in anything 18 relating to information technology or computing? 19 A. No, engineering mathematics degree. 20 Q. Sorry? 21 A. I have an engineering mathematics degree. 22 Q. Right. When did you take your MBA? 23 A. 2011, I finished that. 24 Q. Did you play any part in the procurement, 25 design, build, testing or rollout of the Horizon 5 1 System -- 2 A. None at all. 3 Q. -- between, say, 1996 and 2000? 4 A. None at all. 5 Q. When did you first become involved in the 6 Horizon System? 7 A. 2002, as part of the end-to-end project 8 programme that Post Office were running. 9 Q. That's the first date that's mentioned in your 10 witness statement. 11 A. It is. 12 Q. Autumn 2002, you mention in paragraph 9, is that 13 when you first became involved in the Horizon 14 System: autumn 2002? 15 A. That's right, yeah, I'd been contacted by Post 16 Office accounts within ICL at the time. Post 17 Office were intending running this end-to-end 18 programme and wanted to take a holistic 19 process/review approach to what they were doing. 20 Q. Between 1995 and autumn 2002, what jobs were you 21 doing within ICL or Fujitsu? 22 A. So I was -- like I say, I was working in ICL 23 Manufacturing. Other internal roles within ICL 24 generally, reviewing processes and defining new 25 processes, and starting to work with external 6 1 clients from -- sorry, to '95, did you ask? 2 Q. No, from '95 -- 3 A. Oh, from -- 4 Q. -- to sort of when Horizon -- 5 A. From '95 -- 6 Q. Hold on. It's better that we don't talk over 7 each other. 8 A. Okay, sorry. 9 Q. It makes it difficult for the transcriber to 10 transcribe and it makes it difficult for people 11 listening online to hear. 12 So between 1995, which is the birth of 13 Horizon, and autumn 2002, when you first became 14 involved in Horizon, I am asking what jobs you 15 did? 16 A. So I was working as a business process 17 consultant offering services to ICL clients in 18 -- you know, a set of industries, retail, 19 financial services, manufacturing, transport and 20 local and central Government; a variety of 21 different clients. 22 Q. Thank you. In that period, what knowledge, if 23 any, did you have of the Horizon System? 24 A. None, other than ICL internal announcements 25 about winning business and putting things 7 1 together of ICL Pathway. 2 Q. Did you know anything in terms of any issues or 3 problems with the robustness of the operation of 4 the Horizon System in that period before you 5 took up a role in the autumn of 2002? 6 A. No, I was working with other clients at that 7 time. 8 Q. When you became involved in the IMPACT Programme 9 in -- or what became known as the IMPACT 10 Programme -- 11 A. Indeed, yes. 12 Q. -- in autumn of 2002, I think you were 13 a business process consultant? 14 A. That's right, yeah. 15 Q. What is a business process consultant? 16 A. So I was -- like I say, Post Office wanted to do 17 a holistic review of their business processes 18 and look at the ways that their system, internal 19 systems, could support those better. So there 20 was a group of business analysts from Post 21 Office and I was supporting them in doing 22 business process modelling, capturing 23 information about the way their business 24 processes worked and helping them understand and 25 think about ways that things could be done 8 1 differently. 2 Q. To whom did you report in Fujitsu? 3 A. In Fujitsu, it would have been the chief 4 architect, Tony Drahota, and later Bob Gurney, 5 who was working for Tony. 6 Q. What was the name of the team, if you were in 7 a team, of which you were a part? 8 A. It was RASD, and what those letters stand for is 9 somewhere in my witness statement but I can't 10 recall. 11 Q. Requirements, Architecture and Systems Design? 12 A. Thank you. That's right. 13 Q. Who was the leader of the RASD team? 14 A. Tony Drahota. 15 Q. How many people were in the RASD team? 16 A. I think it would have been around about ten. 17 Q. Did you manage the team? 18 A. No. 19 Q. Who managed the team? 20 A. Tony Drahota. 21 Q. Where did you sit in terms of the team 22 hierarchy? 23 A. Probably fairly low down. 24 Q. What were the jobs of the other people within 25 the team? 9 1 A. Some requirements analysts, some architects, 2 yeah, mostly requirements analysts and 3 architects. 4 Q. Did you have an opposite number in the Post 5 Office? 6 A. A number, in particular, David Parnell, and 7 Karen Hillsden, Julie Pope and Karen White, at 8 various times. But, initially, Dave Parnell and 9 Karen Hillsden were the main contacts. 10 Q. Thank you. I want to turn to the feasibility 11 study and Fujitsu's input into it. You tell us 12 in paragraph 10 of your witness statement, 13 that's on page 3, that what began or became to 14 be known as the IMPACT Programme was initially 15 known as the "End to End Re-Architecting 16 Programme"; is that right? 17 A. That's right, yes. 18 Q. That it included a series of workshops and 19 analyses to produce a feasibility study 20 document; is that right? 21 A. That's right, yes. 22 Q. And that that document was called "End to End 23 Re-Architecture Feasibility Study Business 24 Requirements"; is that right? 25 A. Yes. 10 1 Q. And that document is dated 21 February 2003? 2 I just want to chase down that document to make 3 sure that we're talking about the same one. The 4 document, I think, is FUJ00098198. That will 5 come up on the screen for you, Mr Boardman. 6 A. Yes. 7 Q. You'll see this document has the same title as 8 the document you mentioned in your witness 9 statement "End to End Re-Architecture 10 Feasibility Study Business Requirements". 11 A. That's right. 12 Q. You'll see that it's -- the date on it is two 13 years out, in the top right-hand -- 14 A. That's a typo. 15 Q. I just want to check that. It's dated 16 21 February 2001. 17 A. Mm-hm. 18 Q. If we go to page 2 of the document, I think 19 under the document history, we can see that it's 20 dated as Version 0.1, 21 February 2003? 21 A. That's right. 22 Q. If we look at the foot of the page we can see 23 there's a Post Office copyright of 2003. So the 24 date of this document we should take to be 25 21 February 2003; is that right? 11 1 A. Yes. 2 Q. This is a Post Office document; is that right? 3 A. That's a Post Office document, signed off by Sue 4 Harding, I believe, yes. 5 Q. It's right, is it not, that Fujitsu jointly with 6 the Post Office, however -- that document can 7 come down -- identified the Post Office 8 requirements for this programme? 9 A. Well, yes, we were working as a joint team. 10 Q. Can we look at that connection at FUJ00098169. 11 We can see the title of the document is "Fujitsu 12 Services Input to Feasibility Study for End to 13 End Re-Architecting of Post Office Systems" and 14 it's dated 24 March 2003, so we're about a month 15 after the document that we have just looked at; 16 is that right? 17 A. That's right. 18 Q. You tell us in your witness statement that you 19 had input, as you describe it, into an earlier 20 version of this document; is that right? 21 A. That's right. So the End to End Feasibility 22 Document, effectively was the Post Office's 23 requirements specification. This was a proposal 24 made by Fujitsu of what could be done to try to 25 address some of those requirements. 12 1 Q. You had input into this document -- 2 A. That's right, yes. 3 Q. -- the one we're looking at on the screen? 4 A. But mostly the architects, the architect in the 5 system, were the key writers of that document. 6 Q. I missed what you said. You're dropping your 7 voice very slightly at the end of each answer? 8 A. The architects were -- had editorial control of 9 this document. I was inputting in terms of 10 requirements. 11 Q. To so you did have input into this document? 12 A. Indeed, yes. 13 Q. Thank you. You would have seen and approved the 14 document before it went to the Post Office, 15 presumably? 16 A. I'd have reviewed it, yes. I don't think I had 17 approval authority, but, yes, I -- I'd have 18 given my input. 19 Q. If there was anything in it that you thought was 20 wrong or shouldn't be said, you would have said 21 so? 22 A. I would have, yes. I would. 23 Q. Thank you. Can we just look at page 6 of the 24 document, please. Look under the heading 25 "Management summary". I'm going to take this 13 1 document quite slowly because this is the first 2 time we've really looked at what became the 3 IMPACT Programme and the reasons for it. Can we 4 read this together, just to get an outline of 5 the programme. Fujitsu here say: 6 "Post Office is experiencing a major change 7 in its operating and commercial environment. It 8 must transform its cost base, processes and 9 behaviours to meet the challenge. 10 "Embracing the Joint IS Landscape ..." 11 What does "IS" mean? 12 A. Information systems, I believe. I think there'd 13 been some sort of contract change before I'd 14 joined the Post Office account, and this process 15 of joint working had been agreed as part of 16 that, I believe. 17 Q. Okay, so: 18 "Embracing the Joint [Information System] 19 Landscape arrangements from the extended Horizon 20 agreement, Fujitsu Services has been working 21 with the Post Office analysing where cost 22 benefits could be realised through 23 re-architecting the current state of Post Office 24 systems and through adoption of new business 25 processes. 14 1 "This document sets at a blueprint for 2 a programme of migration to a coherent system 3 set which will deliver the target process 4 improvements as quickly as possible and at least 5 risk. It takes account of where natural process 6 boundaries exist to define the logical 7 demarcation lines between Fujitsu Services and 8 the Prism consortium." 9 That's the first we've heard of the Prism 10 consortium. 11 A. Indeed. 12 Q. Who or what was the Prism consortium? 13 A. As I understood it, before I'd joined the Post 14 Office Account and been involved in any of this 15 programme, Post Office's internal IT systems 16 department had been outsourced to a consortium 17 of companies, CSC and Xansa were two that I knew 18 of. I think there were others involved and they 19 were known as Prism consortium, or sometimes 20 Prism Alliance, in various documents. So this 21 is the key supplier of Post Office's other 22 systems that -- you know, all the systems 23 involved in this review other than Horizon. 24 Q. It continues: 25 "It contains proposals to deal with the 15 1 taking of contractual responsibility for 2 delivery and operations but also considers how 3 work might be shared in a controlled fashion 4 among the various parties. 5 "Fujitsu Services is pleased to submit this 6 document, developed as an input to the Post 7 Office [End to End] feasibility study and looks 8 forward to continued joint working in the 9 development of effective systems to support the 10 post Office business. All pricing and 11 timescales assume this approach. 12 "This paper sets out Fujitsu Services 13 approach to the systems re-architecture, 14 explains the design aims, outlines indicative 15 pricing and offers a proposed implementation 16 plan." 17 Then if we go to 1.1, please, underneath. 18 "Post Office requirements 19 "The analysis of the requirements has been 20 conducted as a joint activity with Post Office 21 IT Directorate, Business Systems and, 22 critically, Post Office business departments. 23 Business representatives contributed 24 significantly through workshops and meetings 25 with analysts and through validation and 16 1 verification of findings." 2 So this part of this paragraph is telling us 3 that the requirements of the Post Office were 4 not, in perhaps a more traditional way, set out 5 by the Post Office; they were jointly identified 6 between and in conjunction with each other, the 7 Post Office and Fujitsu; is that right? 8 A. Um ... Fujitsu were in the room. I don't think 9 any of the set of parties in that list includes 10 Fujitsu, does it? Are they -- Post Office IT 11 Directorate, that's -- business systems, that's 12 Post Office. Post Office business departments, 13 business representatives. None of those parties 14 are Fujitsu. Yes, Fujitsu were in the room -- 15 Q. So what were Fujitsu doing? 16 A. -- and listening in, in terms of understanding 17 requirements, but we weren't telling them what 18 their requirements were. That wouldn't make 19 sense anyway. 20 Q. So you were in the room and writing stuff 21 down -- 22 A. Indeed. 23 Q. -- and listening silently? 24 A. Obviously not silently, but, you know, yes, 25 asking questions, clarification questions, 17 1 discussing requirements that were being -- and 2 trying to ask questions to elaborate 3 requirements. 4 Q. So if I put it this way: Fujitsu were helping 5 Post Office to identify its business 6 requirements; is that right? 7 A. Indeed, yes. 8 Q. Is that a fair way of describing it? 9 A. I believe so, yes. 10 Q. That was done, it is said here, through meetings 11 between Post Office and Fujitsu and workshops, 12 and I think you were present at some of those; 13 is that right? 14 A. And facilitated some of them, and they're not 15 through -- between Fujitsu and Post Office but 16 between Post Office -- those sets of Post Office 17 representatives. At times, I would have been 18 the only Fujitsu representative in the room, and 19 there would have been 13, 14 people -- Post 20 Office representatives. At other times, 21 colleagues, including Gareth Jenkins, who was 22 the lead architect for this programme, and who 23 had a great deal of knowledge about Horizon, and 24 Luxmi Selvarajah, who was a consultant from 25 ICL's SAP practice, was in the room, clarifying 18 1 requirements in terms of, you know, 2 understanding what was it that Post Office were 3 trying to achieve. 4 It was identified pretty early on that Post 5 Office were likely to need to replace their core 6 financial systems and they had already invested 7 heavily in SAP for their cash stock management 8 system -- 9 Q. Tell the chairman what SAP is, please? 10 A. It's a large-scale system for managing accounts 11 and businesses generally and has a number of 12 areas of functionality. 13 Q. The paragraph continues -- sorry, I should just 14 ask you about the workshops and meetings. Who 15 from Post Office attended these workshops and 16 meetings? 17 A. So, as it says, Post Office business 18 departments. So the workshops tended to be 19 focused around particular areas of business 20 process, so if it was around settlement, client 21 settlement, then it might be with people from 22 Post Office account and their client managers 23 with -- for branch processes, there were some 24 people from Retail Line. I think there might 25 have been some representation, example 19 1 postmasters, but I don't think there were ever 2 any actual postmasters. 3 Q. What do you mean, "there might have been some 4 representation, example postmasters"? 5 A. Sorry, people who had been postmasters before, 6 who were then working in the Retail Line, 7 I believe. 8 Q. Did anyone suggest -- I'm sorry, I spoke over 9 you. 10 A. Sorry, I was going to say the two business 11 analysts, Dave Parnell and Karen Hillsden, that 12 were involved in these particular workshops, had 13 both worked in Post Office business, had risen 14 through the ranks to come and join head office 15 in Chesterfield. They were both Chesterfield 16 based. 17 Q. Was there anyone in the room that was actually 18 using Horizon in a Post Office? 19 A. I don't believe so. 20 Q. Why was that? 21 A. Post Office were identifying who should be 22 representing the various interests of the 23 requirements. 24 Q. Did anyone suggest bringing subpostmasters into 25 the workshops? 20 1 A. I did and at that -- when planning workshops, as 2 a -- you know, trying to facilitate workshops, 3 you'd talk about who should be involved and what 4 the various communities were going to be and the 5 answers that I got were that Dave Parnell, Karen 6 Hillsden were -- had used Horizon before 7 regularly, because lots of people in Post Office 8 then would also go off and work as either relief 9 managers on a basis, or work in branches during 10 peak times at Christmas. I seem to remember in 11 that time, 2002, we were back in a time when 12 there were such things as strikes, and they went 13 and gave -- did relief work in post offices 14 in -- during strikes, as well. So there were 15 people who occasionally used the system but they 16 weren't regular users. 17 Q. You suggested bringing some regular users in? 18 A. Asking about representation, at least. It's 19 very difficult when you've got, I think -- so 20 I think I've seen some of the Inquiry witness 21 sessions from people talking about earlier in 22 the thing. Initially there were about 19,500 23 branches. At this time, I think there were 24 around 17,500, so -- but you're still talking 25 about, you know, 30,000-odd users and so getting 21 1 full representation of systems is always 2 difficult, but -- 3 Q. What was the response to you suggesting that 4 some actual real -- 5 A. Post Office had -- 6 Q. Hold on, I hadn't quite finished yet. 7 A. Sorry. 8 Q. What was the response by the Post Office to your 9 suggestion that some actual real subpostmasters 10 who used Horizon on a day-to-day basis come into 11 the workshops? 12 A. They felt that they had sufficient 13 representation. 14 Q. Were helpdesk staff amongst those who were 15 present in the workshops? 16 A. I don't recall any. 17 Q. Did anyone suggest the helpdesk should be 18 present in the workshops? 19 A. I think the discussions were mostly around 20 Retail Line and -- 21 Q. Is that a no, that that wasn't suggested, that 22 people who were dealing on a day-to-day basis 23 with the problems that subpostmasters felt. 24 A. So when you say "helpdesk staff", do you mean 25 Post Office helpdesk staff at NBSC or do you 22 1 mean Fujitsu helpdesk staff? 2 Q. Any or all of the above. 3 A. Well, because Retail Line -- as I understood it, 4 from Post Office explaining, Retail Line and 5 NBSC worked closely together, and so issues 6 around use of Horizon would mostly -- unless 7 there was a fault with the system, issues would 8 mostly be taken up with the use of the system, 9 they'd be taken up by NBSC. 10 Q. Can we look at the foot of the page: 11 "Post Office and Fujitsu Services have 12 identified the following as the key areas of 13 potential savings and operational 14 improvements ..." 15 We'll see there are six areas that are set 16 out where it is said that money can be saved. 17 There's a bullet point, a square box for each of 18 them, and then the saving or a range of savings 19 is set out in a circular bullet point 20 underneath. 21 So if we can just look at the second bullet 22 point which is, in fact, on the next page -- 23 thank you. 24 Under "Accounting", on the second of the six 25 bullet points, it is said that Fujitsu and the 23 1 Post Office had jointly identified 2 a £9.5 million annual saving in accounting, as 3 a result of, amongst other things, a decrease in 4 debt, lower write-offs. Can you explain what 5 that means, please, "lower write-offs"? 6 A. So, I think to explain that you need to 7 understand these back-end systems that are being 8 talked about in the last sub-bullet there, CBDB 9 was -- and CLAS(?) were the two financial 10 systems that Post Office ran at that time, had 11 been developed in-house by Post Office. OPTIP 12 was the system acting as the interface between 13 Horizon and those back-end accounting systems. 14 At this -- well, the CBDB set of systems, as 15 I understood it, had been developed in-house for 16 Post Office. They were batch system based, 17 overnight batch runs, lots of input put in 18 during the day and calculations done overnight 19 and they were built around weekly processes. 20 And in some respects they were legacy systems 21 that hadn't been able to be updated sufficiently 22 when Horizon started feeding daily information 23 into them, such that there were -- much of that 24 debt -- this is a summary of the requirements 25 and the cost savings identified in the End to 24 1 End feasibility document. Across there, it 2 talks about the issues around settlement, client 3 settlement. 4 By this stage, of course, those nightly 5 feeds were also going off to clients. So large 6 utility companies would be getting nightly feeds 7 of -- into their systems to say "This customer 8 has paid their gas bill -- this much of their 9 gas bill", and that would go into their account 10 systems and be managed in the accounts against 11 those people's accounts. 12 But that meant that those organisations, 13 utility companies that had invested in systems 14 that could cope with daily feeds, nightly feeds, 15 were coming to Post Office quicker than their 16 processes were working out what they owed those 17 utility companies. 18 In the times of those timing differences, 19 with clients invoicing and Post Office having 20 the data to be able to verify that that was the 21 correct amount, those amounts were held as debt, 22 and so there was those sorts of debt. That's 23 the majority, I believe. As we'll discuss 24 later, there were some in terms of postmaster 25 debt. 25 1 Q. Did this bullet point intend to address all 2 subpostmaster debt? 3 A. All of the above, yeah. All of those. 4 Q. Tell us in brief terms how this bullet point 5 relates to a saving by decreasing the amount of 6 written-off subpostmaster debt? 7 A. Because similarly, Post Office's central systems 8 were based on a weekly cycle and that caused 9 a large amount of the timing issues that, just 10 like with clients -- can I give an example, and 11 this is sort of an End to End life cycle of 12 a debt that isn't a debt. In the feasibility 13 study document, it refers to a -- how the aim is 14 to reduce 95 per cent of debt, but it then 15 says -- the next bullet says that only 10 per 16 cent of debt is real debt and that 90 per cent 17 of debt that isn't real debt, is not real debt, 18 is these timing mismatches. 19 So if I give an example -- I apologise, it's 20 a very low value example -- but back then, when 21 a clerk was selling a stamp, the majority of 22 stamps were sold from large books and torn 23 perforated sheets of stamps and a stamp would be 24 torn from the sheet. If that -- when performing 25 that transaction in the Post Office, a clerk had 26 1 accidentally ripped the postage stamp into two, 2 that postage stamp couldn't be sold but that 3 created a discrepancy because, at that point, 4 the stock had become obsolete but the stock was 5 held in the Post Office -- subpostmaster's 6 accounts as, let's say, it's a 10p stamp. 7 So what the process, as I understood it, as 8 explained to me, was that the subpostmaster 9 would take the two halves of that stamp and 10 stick it on a form because there was a form 11 especially for reporting obsolete and destroyed 12 stock -- 13 Q. Ruined stock? 14 A. Ruined stock, indeed. And the ruined stock, 15 they'd stick that stamp on there and asked for 16 the 10p of discrepancy, by passing 10p into 17 their suspense account. Obviously, it's more 18 than 10p. Over the course of the week, there 19 would be multiple stamps but let's follow the 20 End to End. 21 That suspense account would get added as 22 a 10p discrepancy into the suspense. The form 23 would get sent off. Apparently, it was quite 24 common for forms -- you know, subpostmasters 25 would wait until multiple stamps had been stuck 27 1 on and the form might sit in the Post Office for 2 weeks, but let's follow the rules. That week 3 they send that form off with their cash account 4 form. During that week, Post Office would then 5 verify that that 10p was destroyed stock, and 6 they could recredit the -- or write off that 7 stock and so Post Office would send an error 8 notice, a paper error notice, back to the 9 subpostmaster at the branch. That might arrive 10 within the week, it might arrive the following 11 week after the next cash account. 12 All the time that this -- eventually that 13 error notice allowed the subpostmaster to bring 14 the amount out of suspense and to write that 10p 15 off, but all the time that that 10p was in 16 suspense, that was classed as debt for Post 17 Office Limited accounts, but it wasn't debt: it 18 was known that it was going to be sorted out. 19 So much of this, in terms of subpostmasters' 20 debt, much of this is about allowing Post Office 21 to see the wood for the trees, for want of 22 a phrase. You know, they're getting rid of 23 all -- wanting to reduce that -- to sort those 24 debt that isn't debt out much quicker, so that 25 they can actually address the other debt in 28 1 a timely fashion. 2 Q. The explanation you've just given could be 3 summarised as swifter and easier 4 identification -- 5 A. Indeed. 6 Q. -- of debt, rather than lowering debt. This 7 appears to contemplate an actual monetary saving 8 rather than making the thing more visible, 9 doesn't it? 10 A. But I think the Post Office believed that the 11 two would go hand in hand, that by addressing 12 these things quicker, they would reduce it. 13 Q. How? 14 A. Because they could address it more swiftly. 15 Q. How? How, by making it more visible, do you 16 lower it? 17 A. Well, I presume they believe that there was some 18 that wasn't their debt, it was someone else's 19 debt. 20 Q. Whose debt? 21 A. Sometimes subpostmasters, sometimes clients. 22 Q. Is it actually about squeezing the 23 subpostmaster; is that a way of putting it? 24 A. I think they felt they weren't addressing things 25 correctly. 29 1 Q. The subpostmasters? 2 A. For any of the parties. Post Office Limited 3 felt that they weren't managing these things, 4 that things were being lost in the system. 5 Q. Can we look at the third bullet point, "Cash 6 Management, (£4 [million] annual saving)". 7 A £4 million annual saving in respect of cash 8 management, seemingly, would this be right, by 9 reducing the amount of cash centre write-offs; 10 is that right? 11 A. That's right, yes. 12 Q. What does that mean? 13 A. Again, I believe Post Office, in all of that 14 timeliness, there were -- cash was going 15 missing, that they couldn't account for it where 16 it had gone. 17 Q. Subpostmasters -- going missing with the 18 subpostmaster? 19 A. Sometimes with subpostmasters, sometimes with 20 cash centres, sometimes in delivery vans. 21 I don't know; it was a case of trying to tighten 22 up on where all that money was going. 23 Q. So out of the, I think, £21 million annually 24 envisaged saving that's mentioned in this paper, 25 the two things that we've looked at account for 30 1 about 13.5 million of them; is that right? 2 A. Indeed. 3 Q. Can we go over to page 8 of the document, 4 please, and look at paragraph 1.2, "Fujitsu 5 Services Response": 6 "This paper is Fujitsu Service's response to 7 the above requirements. The principles embodied 8 in this proposal are ..." 9 Then if we can just look at the four at the 10 bottom of the list, please. Thank you: 11 "The proposed solution minimises costs and 12 risks to Post Office by adopting optimum service 13 boundaries and an incremental, step by step, 14 approach to development, which moves the 15 business progressively towards Post Office IT 16 Directorate's strategic architecture; 17 "The sequencing of projects is devised to 18 deliver early benefits to support the Post 19 Office objective of early return to 20 profitability. We are however proposing 21 an urgent start to the design work to maintain 22 the proposed schedule ..." 23 Skip the next one. Then, lastly: 24 "The proposed commercial arrangements aim to 25 create the simplest possible structure within 31 1 which change can be managed without undue 2 contractual overheads." 3 So those three bullet points that I've read, 4 would this be fair, are Fujitsu emphasising 5 a swift turnaround and simplicity, in order to 6 maximise value for the Post Office? 7 A. That's right, yes. 8 Q. I think we can see this further in page 14 of 9 the document. Under 1.4, after the two bullet 10 points: 11 "Other timetable considerations are 12 considered in section 4." 13 Then this: 14 "It is important to note that delays will 15 result in release windows being missed and 16 consequently will delay the realisation of the 17 identified business benefits. Delays are also 18 likely to cause some of the dependencies within 19 the Horizon Agreement not being met in time for 20 the scheduled SI commitment fee reduction in 21 spring 2005. Such delays would increase the 22 future Horizon costs." 23 So, again, this is Fujitsu stressing to Post 24 Office that there are costs associated with 25 delay; is that right? 32 1 A. Indeed. 2 Q. Can we turn to what the document says about the 3 new proposed arrangements, including the new 4 financial system, and look at page 22 to start 5 with, please. At the foot of the page, under 6 paragraph 2.6, second sentence: 7 "The following arrangements ... are 8 proposed: 9 "New Financial System -- to be deployed 10 within the manned Horizon Data Centre and 11 operated alongside other Horizon central 12 systems. The co-location of the systems will 13 allow consolidation of audit, archiving and 14 back-up facilities and [over the page, please] 15 services as well as maintaining close proximity 16 of the Financial System to its main (volume) 17 source of data (ie the Transaction Management 18 System)." 19 Then this: 20 "The integration within expanded Horizon 21 enables Fujitsu Services to take responsibility 22 for the complete transaction processing activity 23 culminating in the ledger outputs, without the 24 need for mid-process reconciliation." 25 In what way did Fujitsu take responsibility 33 1 for the complete transaction processing 2 activities? 3 A. Um, as it happens, I don't think they did. 4 I think that was the proposal that wasn't taken 5 up. The system that we're talking about was 6 Post Office decided to -- that Prism Alliance 7 would develop that instead, and so -- 8 Q. Why was that? 9 A. I don't know. I believe there was a -- 10 I believe there was a competitive tender or 11 process to choose who would present that, and 12 Post Office Limited, as a customer, chose to get 13 Prism Alliance to do it. The proposal was to do 14 it, and that's one reason why Fujitsu at the 15 time felt that that would be a good idea. It 16 was a sales pitch. 17 Q. Can we go on to look at the projects that were 18 proposed and go over the page to page 24. I'm 19 taking this at some speed. This is a 109-page 20 document, so I'm going through it -- 21 A. Indeed. I think it's also important to 22 recognise that much of these proposals were sort 23 of -- weren't adopted and were taken and changed 24 by Post Office Limited later. 25 Q. We're going to come on and look at those. So 34 1 "Project 1 -- Better Overnight Cash on Hand 2 Data". This is described in paragraph 3.2.1 and 3 I just want to read this to understand what 4 might be the drivers for the adoption of this 5 process. It reads: 6 "Within the Cash Management function two 7 fundamental changes have made Post Office's 8 funding position a critical business survival 9 issue ..." 10 First: 11 "The business is trading at a loss." 12 Second: 13 "The migration of benefit payments from 14 order books to ACT will be accompanied by the 15 loss of pre-funding by government departments of 16 the necessary cash in the network. 17 "The business will have to borrow funds to 18 fund any trading losses and working capital 19 needed in branches. Such borrowing is limited 20 in availability and its costs reduce 21 profitability. From April 2003 the DTI will 22 provide a loan and will require a robust 23 statement of cash holding as security." 24 So is it fair to say that that, what is 25 described there, the business trading as a loss, 35 1 the move to ACT and the loss of pre-funding and 2 the need to take out loans, are an important 3 part of the background to the entirety of this 4 End to End project? 5 A. Absolutely. Key -- key. 6 Q. Key drivers? 7 A. Key drivers. 8 Q. So, to your knowledge, is this right, the Post 9 Office was trading at a loss at this time? 10 A. As I understood it, yeah, that's what I was 11 told. 12 Q. So was the Post Office, to your knowledge, 13 motivated principally by a means to ensure cash 14 flow and to reduce losses to the business to 15 offset the impact of the removal of Benefits 16 Agency's business to ACT? 17 A. I don't think so. So, again, having seen some 18 of the discussions around the early parts of the 19 Horizon project and implementation -- and I've 20 seen some of the witness statements that mention 21 some of the reluctance of Post Office to adopt 22 ACT -- by this stage, the conversations I was 23 having with Post Office seemed to be that they'd 24 become resigned to it, or embraced it even, and 25 were seeing that this was opening up other 36 1 markets as well, that, you know, in the same 2 timescales, branches were closing through -- 3 around towns all over the country at a rate of 4 knots. 5 Post Office had a very spread-out network, 6 and people would be able to accept, because as 7 well as benefit recipients being able to 8 withdraw funds from their bank accounts then 9 non-benefit -- you know, the waged other people 10 who couldn't access bank branches could access 11 post offices more easily. 12 So I think they were sort of trying to 13 embrace this but had other problems at the same 14 time, which reduced the amount of investment 15 that they could make. 16 Q. As a whole, the paper seems to have a couple of 17 overarching aims: (1) is to improve cash 18 management and (2) is to reduce debt. Were each 19 of those motivated by a need to plug and to plug 20 quickly a gap in funding caused by the removal 21 of the Benefits Agency business, caused by the 22 move to ACT? 23 A. Not that I was informed, but it could have been, 24 I don't know. 25 Q. This is described as a "critical business 37 1 survival issue". Did that accurately -- 2 A. As I understood it. I think, as much as all of 3 what you've just said, the things that have come 4 out of here to me are the additional costs that 5 Post Office were going to take on, in terms of 6 servicing this loan. They have a very broad 7 network that involves providing lots of cash to 8 lots of branches and so I think there's 9 a mention in here of £350 million of a loan to 10 be held, and this is new costs to Post Office. 11 So just holding that cash on a -- you know, 12 in order to run their business, was going to 13 cost them a lot more. They had previously been 14 having that cash pre-funded to them and they 15 were going to have to service that. 16 Q. Looking at the last sentence in that paragraph: 17 "From April 2003 the DTI will provide a loan 18 and will require a robust statement of cash 19 holding as security." 20 So to understand exactly what's being said 21 here, the DTI was going to provide a loan to the 22 Post Office, or loans to the Post Office. 23 A. Indeed. 24 Q. In order to provide the loan, the DTI needed to 25 know that the information that was being 38 1 provided to it, the DTI, by the Post Office was 2 robust? 3 A. That's right, yes. 4 Q. Was it not seen as robust at that time? 5 A. No. I think Post Office's requirements were 6 clear about that, that there was a lot -- you 7 know, all of the debt, and the timing debt that 8 wasn't debt, reduced the robustness of that 9 statement. And so -- and I can never -- I never 10 really got to grips with understanding when 11 Prism Alliance or Post Office's IT department 12 before then, had implemented SAPADS -- they may 13 have implemented it by then or it was a project 14 at this stage, I can't remember the details -- 15 but before IMPACT the SAPAD system which had 16 been developed mostly as a stock management 17 system and a distribution system for cash -- it 18 wasn't a cash management system, if I make that 19 distinction. It wasn't trying to manage the 20 overall holding of cash downwards. It was -- 21 which would have to happen in order to be able 22 to service this debt, I believe. 23 Q. Would this be a fair description: at the point 24 of this proposal, you understood that the data 25 produced by the Horizon System, together with 39 1 the Post Office's back-end accounting systems, 2 did not provide a robust statement of Post 3 Office's cash holdings? 4 A. Um, well, yes, that's true. But predominantly 5 the sources that they were looking for, for that 6 robust statement of cash holdings, was the 7 back-end accounting systems and SAPADS. 8 Q. Can we go over the page, please. 9 At the top of the page, the proposal reads: 10 "To support the business in managing through 11 this difficult situation, the business 12 requirements, detailed below, will be addressed 13 by this project ..." 14 First bullet point: 15 "To be able to accurately identify physical 16 cash at the branch rather than overall cash 17 which can include cash equivalents such as 18 cheques." 19 Then the third bullet point: 20 "Drive down cash holdings and therefore 21 reduce the DTI borrowing requirement which in 22 turn will reduce the level of interest paid." 23 Can we look, please, at Project 3 on 24 page 30. It's at the foot of the page, under 25 3.2.3, and this deals with the automatic 40 1 remittance of cash into branches. Can we look 2 at the business requirements being addressed, 3 last sentence on the page: 4 "The particular business requirements being 5 addressed by this project are ..." 6 Then over the page: 7 "To improve the financial controls for cash 8 remittances (where currently losses of 9 £5 [million a year]). 10 "Improve management information, linked to 11 financial statements, to support the management 12 of cash (funds). 13 "To enable cash holdings to be driven down 14 and therefore reduce the DTI borrowing 15 requirement, which in turn will reduce the level 16 of interest paid. 17 "To be able to forecast the managed cash 18 flow within the DTI target ..." 19 Then an explanation of the requirements is 20 given. At the very foot of the page, it reads: 21 "When the barcode on the pouch is scanned, 22 the Delivery Notification will be found and the 23 content can be used to Remit-In the content as 24 defined by the Cash Centre/Stock Warehouse. If 25 the Postmaster subsequently finds any errors, 41 1 then these can be recorded as Discrepancies. 2 "Note that the current system allows the 3 postmaster to Remit-In whatever value he likes 4 and it is left to some central processing to 5 identify any mismatches between what is 6 Remitted-In and what was Dispatched. Forcing 7 the Despatched values to be Remitted-In and then 8 highlighting any Discrepancies should simplify 9 the central processes." 10 Then under paragraph 3.2.3.1, the design 11 solution, the document goes on to explain that 12 -- and if we look at the bottom large bullet 13 point and then three in: 14 "The clerk will have the option to check the 15 contents (now or later) and a separate dialogue 16 will allow him/her to declare any discrepancy 17 between the amount Remitted-in and the actual 18 content. Any such discrepancy will then be 19 handled as a suspense item until the matter is 20 resolved. Note that the pouch number is used as 21 a 'link' for any such transaction to allow any 22 subsequent error correction to be managed." 23 Can you explain, please, what is being 24 described here? 25 A. Yes. It's a proposal, which I think -- yes, it 42 1 ended up being implemented. 2 Q. It did. 3 A. Probably best if I described the process before 4 and after. Before IMPACT, when a cash pouch was 5 being delivered from a cash centre, then there 6 was a barcode scan, and that would produce 7 a receipt which the subpostmaster could hand 8 over to the deliverer as their receipt for 9 having delivered the cash, but that made no 10 changes to the branch accounts. 11 In process discussion workshops, the 12 scenario was always described as there was 13 a queue of pensioners going outside the Post 14 Office. At busy times, the deliveries would be 15 made, the scan would happen and the pouch would 16 probably be put in the safe to be remitted in 17 later and the subpostmaster could go back to 18 serving customers. 19 When remitting in later, bearing in mind 20 that when it was remitted in, if that happened 21 on a Wednesday morning -- if that delivery 22 happened on a Wednesday morning, then the remit 23 in might not happen until after the cash account 24 had been produced, so that cash account wouldn't 25 reflect that delivery. When the remit in 43 1 happened, at whatever time that happened -- 2 sorry, if the cash account had been produced at 3 that time then that would result in 4 a reconciliation discrepancy in the Post 5 Office's systems, the cash centre had sent this 6 money, it hadn't shown up in the accounts, and 7 would take time to resolve itself through 8 various processes of error notices and things. 9 When the cash pouch was being remitted in, 10 the subpostmaster would open up the pouch and 11 either using the delivery note or counting the 12 cash, they would be presented with a form on the 13 Horizon System to enter how much in 10s, how 14 much in 20s, how much in 5s, et cetera, et 15 cetera, and that would then remit that in. But 16 by the nature of this, they would be remitting 17 in what they were reporting, and that was -- 18 that could happen that mistypes happened at that 19 point, typographical errors could come in. But 20 of course whatever was being reported would be 21 what the system felt. 22 So the system figure for cash hold in, if 23 the figures hadn't been entered correctly, the 24 system figure could be incorrect for the actual 25 cash holding and that might create 44 1 discrepancies. Also, depending on whether they 2 were checking against the delivery note and the 3 actual contents, then there may well have been 4 an error in packing. Because when people put 5 deliveries together, sometimes they don't put 6 all of what was ordered into the -- into the 7 delivery, and so there were various areas of 8 discrepancies that could occur at various times, 9 and because of the week-based processes, would 10 take, on average, three weeks to resolve. 11 What auto remittances was trying to do was 12 say that the cash pouch delivery would be 13 prepared the night before or the planned 14 delivery would be prepared the night before, and 15 passed to Horizon so that an electronic delivery 16 note would be delivered to the Horizon System. 17 When the cash pouch barcode was scanned, that 18 amount would be automatically remitted in, 19 according to the delivery note. But then later, 20 instead of the remit in process, there would be 21 the verify -- I can't remember what the function 22 was called but it verified a remittance process, 23 that allowed the subpostmaster to open up the 24 pouch and check its contents and report any 25 discrepancies. 45 1 Q. So cutting through it, this was intended to 2 reduce the possibility of mistakes or fraud by 3 subpostmasters? 4 A. Or at all of those different opportunities for 5 errors, it was trying to reduce them. Indeed. 6 Q. Can we look, please, at page 34, which is 7 "Project 4 -- Branch Liability Management". The 8 goals are identified under the bullet points 9 under the text there: to simplify the 10 identification of debt; to reduce the amount of 11 reconciliation; and increase the amount of debt 12 recovered. 13 The proposal, I think, is set out halfway 14 down the page -- it's towards the foot of the 15 page -- to refocus on debt recovery, financial 16 recovery of money, a target of 95 per cent, but 17 only 10 per cent of discrepancies are only debt, 18 and you explained that to us already, I think. 19 A. That's a restated of Post Office's stated 20 requirements of objectives from the feasibility 21 study. 22 Q. At the foot of the page, it records that: 23 "Branch Debt is currently identified within 24 the Transaction Processing system when the Cash 25 Accounts are being checked. Generally this 46 1 means that it is of the order of two or three 2 weeks after the original Debt was incurred 3 before it is spotted and investigated." 4 The debts believed to be owed here, they are 5 debts owed by subpostmasters, is that right, as 6 well as client debts? 7 A. These ones are subpostmasters, yes. 8 Q. So these are just talking about subpostmaster 9 debts, are they? 10 A. That's right, yes. Client debts would be a -- 11 client debts would be identified in the central 12 accounting system, CBDB, as well as -- 13 Q. So this is just subpostmaster debt? 14 Then if we go over the page, please. The 15 Fujitsu document goes on to describe how the 16 project will address discrepancies in stock or 17 cash declaration. So: 18 "The next (analysis) phase of the programme 19 will carry out a complete analysis of what 20 activities at the outlet can result in a need 21 for Debt Recovery. The following are 22 candidates ..." 23 The first bullet point: 24 "Discrepancies identified during a stock or 25 Cash Declaration process that the Postmaster is 47 1 not prepared to accept. 2 "As part of the Declaration process, the 3 Postmaster will be given the option of 'making 4 up the difference' when a discrepancy is spotted 5 (effectively selling him/her the stock if it is 6 a stock discrepancy or topping up the cash in 7 the till in the case of a cash discrepancy). 8 Alternatively he can refuse to make up the 9 discrepancy and force the discrepancy into 10 a 'suspense' account for later resolution." 11 So at this stage of the process, is this 12 right, that Fujitsu envisaged two possible 13 processes: forcing the postmaster to pay up or 14 refusing to make up the discrepancy and forcing 15 the discrepancy into a suspense account? 16 A. That's right, yes. Well, effectively, either 17 accepting that this was a discrepancy of the 18 branch's making, giving someone too much change 19 in a transaction, say, or disputing it with Post 20 Office by putting it into the suspense. 21 Q. Did you see or did Fujitsu see that second 22 alternative: disputing it as being catered for 23 by forcing the discrepancy into a suspense 24 account? 25 A. Yes. The word "force" there is an intriguing 48 1 word. I'm not sure what that was trying to say, 2 but -- 3 Q. Why is it intriguing? 4 A. Well, because transactions in systems can't 5 really be forced, you know, there's a -- you 6 know, you chose whether to do one or the other. 7 But yes, it's -- options would be given. 8 Q. Can we move to Project 5. We will come back to 9 this in a moment when we look at the removal of 10 the suspense account facility. Can we turn to 11 Project 5, please, on page 40 of the document. 12 The priorities of the project here are to 13 reduce the amount of reconciliation required; 14 put the emphasis on clients and customers to 15 validate data; and enable matching of cash at 16 branches with the settlement with the client; 17 yes? 18 A. That's right, yes. 19 Q. Then if we go to 3.2.5.4 on page 43, under the 20 heading at the top "Resilience requirements": 21 "The new Harvesting process will ensure that 22 no Transactions are lost and any duplicates ... 23 are eliminated." 24 Can you just explain in general terms what 25 that's referring to? 49 1 A. Not sure. Sounds too technical for me. I don't 2 know. 3 Q. Okay. Taking a step back from the document -- 4 and that can come down from the screen, thank 5 you -- would you agree that some of the 6 additional reconciliation steps that were being 7 removed from the process describe the role that 8 was previously played by a Post Office team at 9 Chesterfield? 10 A. That's right, yes. 11 Q. So IMPACT had the effect of essentially 12 automating that part of an accounting process 13 previously conducted at Chesterfield, error 14 reconciliation, I'll call it, by individuals, 15 humans? 16 A. Indeed. Automating much of it. I'm sure there 17 was still some left after IMPACT but, yes, there 18 were -- when I first went to Chesterfield to -- 19 for some of these initial meetings and 20 workshops, very, very large open-plan offices, 21 with huge numbers of people with piles and piles 22 and piles of paper, 17,500 cash accounts -- and 23 a cash account wasn't just as we've said, 24 there's all the forms and things that go with 25 a cash account -- 17,500 every week arriving in 50 1 Chesterfield. 2 I never really understood what was happening 3 there because we didn't fully analyse the 4 back-end systems, they'd already been decided 5 that they needed to be replaced. But there 6 seemed to be an awful lot of data entry 7 happening as well, so these physical cash 8 account forms would were being sent to 9 Chesterfield and data seemed to -- even though 10 all the data had previously been sent overnight 11 into systems that would be acceptable by those 12 individuals, there seemed to be an awful lot of 13 re-entry of data. I never really worked out 14 what they were trying to -- what they were doing 15 with that. 16 Q. One of the reasons for what became the IMPACT 17 Programme we've seen included decreasing 18 operational costs by the Post Office. 19 A. Indeed. 20 Q. To your knowledge, did that include reducing the 21 number of staff at Chesterfield previously 22 processing transaction corrections and sums held 23 in suspense accounts? 24 A. Yes. 25 Q. So were the processes -- looking at it 51 1 globally -- introduced by IMPACT designed in 2 part to shift the burden of and responsibility 3 for the identification and rectification of 4 errors onto subpostmasters? 5 A. Um -- 6 Q. It drove it towards them? 7 A. I don't think so. I think they already had 8 those responsibilities. The identification of 9 those errors were always going to happen in the 10 branch when they were performing their accounts. 11 Q. Well, to take an example, we've seen how the 12 rectification of errors in pouches remmed in 13 would be by the subpostmaster having to raise 14 an error for reconciliation or correction. So 15 it's placing the responsibility onto the 16 subpostmaster, isn't it? 17 A. Indeed. Just as whenever one receives 18 a delivery it's your responsibility to check it. 19 Q. But would the effect of this process mean that 20 it was very important that the manner in which 21 subpostmasters could raise errors with the Post 22 Office and then how those errors would be 23 addressed was going to be particularly important 24 for the accuracy of the data that was produced 25 by Horizon? 52 1 A. I agree. Yes. 2 Q. What steps were taken by Fujitsu and the Post 3 Office to ensure that any debt recovery against 4 subpostmasters was limited to what could 5 properly be described as true debt? 6 A. Um ... I think we just jumped a long way. We've 7 been looking at your proposals and -- but -- 8 Q. Yes. 9 A. I think -- well, so for example, in areas like 10 remittances, as I understood it, most of the 11 Post Office's, if not all of the Post Office's, 12 cash centres had invested in CCTV over the 13 packers and -- pickers and packers functions. 14 So they'd know -- be able to -- when errors were 15 reported, they'd be able to verify those things. 16 In terms of other areas, like burglaries, 17 fires, whatever, Horizon getting its sums wrong, 18 then you rely on people identifying what went 19 wrong where and how much it was impacted. 20 Q. Relying on the subpostmaster to identify it? 21 A. Ultimately, yes. 22 Q. Would this be right: that the safeguard that was 23 introduced was that the subpostmaster would have 24 to agree a discrepancy and any subsequent 25 transaction correction? 53 1 A. They'd -- yes, they'd have to agree that but 2 have to agree -- they had the option to not 3 agree. 4 Q. What happened if they didn't agree? 5 A. It would be further investigated, further 6 disputed -- 7 Q. By who? 8 A. -- like any -- by people in Chesterfield, as 9 I understood it. 10 Q. Did the system allow for a dispute to be raised? 11 A. Well -- so by posting into suspense, 12 effectively, yes, although that, as I understood 13 it, wasn't the method of raising a dispute. The 14 suspense account was the way you accounted for 15 sums that were in dispute, not -- the 16 subpostmasters would have to raise a call to 17 NBSC to get permission to enter amounts into 18 suspense, and that was the raising of the 19 dispute and the entering things into suspense 20 was the way of accounting for amounts in 21 dispute. That's my understanding of the Post 22 Office's processes. 23 Q. We'll come back to that in a moment later on. 24 Also dealt with in this document, although 25 rather briefly, is the subjects of data 54 1 integrity and financial integrity. If we can 2 look at page 87, please -- if we just look at 86 3 first, I'm sorry. Under 7.6, "Service 4 Boundaries": 5 "The service boundary is designed to enable 6 Fujitsu ... to take responsibility for the 7 integrity of complete business process 8 outputs ..." 9 Then, over the page, just after the bullet 10 points: 11 "The integrity of the financial and cash 12 information is achieved by applying best 13 practice perpetual inventory and double 14 bookkeeping methods and by ensuring that the 15 transactions always flow from the counter to the 16 financial system without manual intervention or 17 service boundary." 18 Does that description mean, in essence, that 19 the integrity of the accounting information 20 relied on the automated processes of Horizon 21 themselves being infallible. 22 A. No, the flows being talked about here are from 23 Horizon to a new financial system and a full 24 chart of accounts from the transactions in 25 Horizon, all the way up through to Post 55 1 Office's -- the corporate ledger, and that's 2 what that's trying to explain and describe. 3 Q. But it depends on the infallibility of the data 4 being produced by Horizon, doesn't it? 5 A. Correctness, yes. 6 Q. In order for such infallibility, ie genuine 7 integrity, it was essential that Horizon 8 contained no bugs, errors or defects, that 9 produced false data? 10 A. Um, well, I think realistically there was always 11 going to be bugs, errors or defects. So this is 12 trying to say that it's reducing keying errors, 13 reducing something other influences on the 14 correctness. 15 Q. If primary responsibility was being passed to 16 subpostmasters to spot errors and challenge 17 discrepancies, whose responsibility was it to 18 identify and investigate bugs, errors and 19 defects in Horizon as root causes of the 20 discrepancies? 21 A. That's a shared responsibility between Post 22 Office -- well, the postmasters or NBSC, 23 identifying those and Fujitsu investigating them 24 and resolving them. 25 Q. I've looked at the 109 pages of this document 56 1 carefully and I can't see any mention of that in 2 here. 3 A. Well, I guess it was taken as a given, because 4 all of this is within the context of the Horizon 5 contract. 6 Q. Was the reliability of Horizon taken as a given? 7 A. Um ... probably, yes. 8 Q. At the time that you were reading, contributing, 9 approving this document, had anyone drawn to 10 your attention a slew of issues that had arisen 11 with the integrity of the data that Horizon was 12 producing in its model office testing, its 13 end-to-end testing, in the acceptance phase of 14 Horizon and in the course of its rollout? 15 A. No. 16 Q. Did you work on the basis that the data produced 17 by Horizon was therefore reliable? 18 A. Yes, I -- it was being used on a daily basis, 19 Post Office weren't telling me that it had 20 problems. If it did have, I'd presumed that 21 they had been resolved by now. 22 Q. Was anyone in Fujitsu telling you that this was 23 a project that wasn't free from difficulty? 24 A. I don't think so. 25 Q. Can we look, please, at where the document deals 57 1 with data errors. Just under where we're 2 looking at: 3 "Data errors caused by system mismatches 4 should be eliminated ... by enforcing consistent 5 end of day cut offs and reversal rules." 6 Did that assertion that data errors be 7 eliminated itself rely on Horizon functioning 8 reliably? 9 A. Um, I'm sorry, I don't know this. This sounds 10 like a technical ... I don't know. 11 Q. The document continues: 12 "Reconciliation of online transactions as 13 between transaction logs and client/agent system 14 will identify transactions which broke or were 15 cancelled after NWB authorisation ..." 16 "NWB authorisation"? 17 A. NWB, I think, is network banking. 18 Q. "... (for example) ..." 19 A. Authorisation presumably is getting the message 20 back from the bank that the -- that it's okay 21 for the transaction to proceed but sometimes the 22 system can request funds from the bank. The 23 bank can authorise it but if the system then 24 doesn't get back to the bank to say, "We've now 25 taken it", then the bank don't process the 58 1 transaction but the system at this end might 2 think that it has successfully performed the 3 transaction. That's, I think, what's being 4 talked about by "broke" there. 5 Q. Then skipping a paragraph: 6 "Post Office personnel may inspect 7 transactions, which are found to have been 8 subject to EPOSS keying errors (where the value 9 of the transaction is not captured automatically 10 by the system from a token) and post messages to 11 postmasters to correct such errors. 12 "Post Office personnel may inspect 13 transactions subject to bad debts (eg bounced 14 cheques) and post messages to postmasters to 15 either recover or write off those debts. 16 Alternatively, these messages could be generated 17 automatically according to floor limits. Trend 18 analysis by Branch could be considered as 19 an additional aid to exception management. 20 "The need for reconciliation between TPS and 21 OPTIP is rendered redundant and is eliminated." 22 Again, did the system rely on the automated 23 reconciliation working effectively and 24 identifying where a discrepancy had arisen? 25 A. Sorry, could you repeat that question? 59 1 Q. Yes. Did the system that's described there rely 2 on the automated reconciliation process working 3 effectively and itself identifying where 4 a discrepancy had arisen? 5 A. It did. The whole system relies on 6 an end-to-end reconciliation, yes. 7 Q. Then it required, if a discrepancy arose, for 8 the subpostmaster to challenge the discrepancy? 9 A. Although this identifies -- so the paragraph, 10 three from the bottom: 11 "Post Office personnel may inspect 12 transactions, which are found to have been 13 subject to EPOSS keying errors ..." 14 So presumably -- "where the value of the 15 transaction is not captured automatically" -- 16 that paragraph is giving an example of where 17 errors might be spotted by Post Office Limited 18 personnel, people in Chesterfield. So that's, 19 I don't know, things like paying a utility bill 20 of £40 and the clerk has typed in -- has hit the 21 "00" button twice and then ended up keying 22 a transaction of £4,000 but not spotted that 23 it's gone through and accepted £40 in cash, and 24 that's created discrepancies. 25 Q. You told us already that you worked on the basis 60 1 that Horizon was operating reliably at this date 2 because nobody had told you otherwise. Do you 3 know on what basis the Post Office and Fujitsu 4 were satisfied that Horizon was operating in 5 a way which was sufficiently robust to introduce 6 these further automated measures, reducing the 7 number of personnel at Chesterfield and placing 8 the responsibility on subpostmasters? 9 A. I don't think I knew that. 10 Q. Was there any discussion that you were a party 11 to or you heard about the reliability and 12 robustness of Horizon at this date, early 2003? 13 A. No. 14 Q. It just simply wasn't a topic of conversation? 15 A. No. I think it was known that there were, you 16 know, like any other system it would have its 17 faults, but -- 18 Q. But nothing more than that? 19 A. Nothing more than that, no. 20 MR BEER: Sir, that's an appropriate moment, if it 21 suits you, for the morning break. 22 SIR WYN WILLIAMS: Yes, of course. What time shall 23 we resume? 24 MR BEER: Shall we say 11.45, please, sir? 25 SIR WYN WILLIAMS: Yes, by all means. See you then. 61 1 MR BEER: Thank you very much. 2 (11.32 am) 3 (A short break) 4 (11.45 am) 5 MR BEER: Sir, good morning, can you see and hear 6 me? 7 SIR WYN WILLIAMS: Yes, I can, thank you. 8 MR BEER: Thank you very much. Can we pick up with 9 page 71 of the document we were previously 10 looking at, please. 11 This sets out a series of assumptions that 12 Fujitsu made, principally concerned with 13 pricing. I just want to look at what some of 14 them are. If we look at the foot of the page, 15 please: 16 "It has been assumed that the existing links 17 between Horizon and Post Office data centres 18 have sufficient capacity to accommodate the 19 access requirements to the extended Horizon 20 estate ..." 21 Then over the page, please, two bullet 22 points -- sorry, four bullet points in: 23 "It has been assumed the End-to-End projects 24 are implemented without any requirement for 25 branch site visits by Horizon engineers ..." 62 1 Then two from the end: 2 "It is assumed that arrangements relating to 3 Post Office access to audit records are as 4 detailed in the existing agreement ..." 5 The suggestion that an assumption was made 6 that the solution can be produced without the 7 need for upgrading the correspondence servers or 8 the data network, does it follow that no 9 assessment or analysis of the underlying Horizon 10 network and its reliability had been undertaken 11 by Fujitsu before the IMPACT Programme? 12 A. Sorry, I don't know whether that had happened. 13 I think that is talking about links between 14 Horizon and replacing -- links between Horizon 15 and TIP or OPTIP, as it was known, and replacing 16 it with the new financial system, rather than 17 any significant changes in the Horizon branch to 18 data centre network. That set of links is 19 talking about -- 20 Q. So putting the document to one side, then, to 21 your knowledge was any analysis or assessment 22 made of the reliability three years into 23 operation of the Horizon network before the 24 changes that were proposed to be made by the 25 IMPACT Programme would take effect? 63 1 A. I don't think so, no. Not that I know of. 2 Q. Can we turn to page -- on this page, six bullet 3 points from the bottom: 4 "No increase in support for litigation 5 investigations has been assumed ..." 6 Then the bullet point I've just read: 7 "It is assumed that arrangements relating to 8 Post Office access to audit records are as 9 detailed in the existing Agreement ..." 10 Can you help us what consideration there was 11 of the level of litigation investigation support 12 that was being provided already by Fujitsu to 13 the Post Office. 14 A. No, I don't know. I don't think I was involved 15 in assessing that. 16 Q. Does the inclusion of these bullet points 17 suggest that Fujitsu and those working on 18 IMPACT, including you, must have been aware of 19 the role of Horizon in the potential liabilities 20 of subpostmasters and, therefore, the role in 21 Fujitsu in supporting litigation by POL? 22 A. I think that was known and what these 23 assumptions are saying is that that won't 24 change. 25 Q. What did you know about the role of Fujitsu in 64 1 the provision of evidence or data in litigation 2 by the Post Office against subpostmasters? 3 A. Then? I think I knew that Fujitsu could be 4 asked to provide evidence of transaction streams 5 and accounts, and I think that was probably it 6 at the time, that I knew of. 7 Q. Given that knowledge, what steps were taken, to 8 your knowledge, by Fujitsu or the Post Office to 9 consider how the automation of the process of 10 reconciliation might impact on the potential 11 civil and criminal liabilities of 12 subpostmasters? 13 A. I don't know. 14 Q. You're not aware of that having been considered? 15 A. I don't know whether it was or wasn't. 16 Q. We are introducing a more automated process of 17 reconciliation -- 18 A. Indeed. 19 Q. -- that may have consequences for the civil or 20 criminal liability of subpostmasters. 21 A. Yeah, as I understood it. 22 Q. What steps must we, Fujitsu and Post Office, 23 take to ensure that people are not investigated, 24 audited or prosecuted on a false prospectus? 25 A. And I don't know. I wasn't involved in that 65 1 aspect of this solution. 2 Q. Did you know that subpostmasters were being 3 prosecuted at this time on the basis of data 4 produced by Horizon? 5 A. I don't think I did. 6 Q. Was the use of data by Horizon in criminal or 7 civil litigation against subpostmasters 8 discussed ever, to your knowledge, as part of 9 the IMPACT Programme? 10 A. Explicitly as part of the IMPACT Programme, no, 11 I don't think it was. I think, you know, I knew 12 that those reports were being produced for such 13 purposes but I didn't know what was then done 14 with them. 15 Q. Were you aware, at the very least, that 16 subpostmasters had a contractual liability to 17 make good shortfalls shown by the Horizon 18 System? 19 A. Yes, that was discussed. I'm sure we'll come on 20 to the changes that were made. 21 Q. Where did you get that knowledge from? 22 A. From Post Office representatives. 23 Q. What did they tell you about the contract? 24 A. Sorry, which -- between Post Office Limited and 25 the subpostmasters? 66 1 Q. Yes, as to the liability to make good 2 shortfalls? 3 A. Um, so as I understood it, ultimately, in order 4 to operate a Post Office branch, Post Office 5 gave the subpostmaster an amount of money and 6 an amount of stock and had to account for that, 7 was liable for accounting for that through the 8 transactions and by producing a balance sheet 9 which, in practice, was a cash account. 10 Q. What were you told as to the liability or the 11 contractual liability of the postmaster to make 12 good shortfalls? 13 A. That they had that contractual liability. 14 Q. Any shortfalls; any shortfalls for which they 15 were at fault; any shortfalls for which they 16 negligence could be shown; any shortfalls for 17 which fraud could be shown; any shortfalls where 18 the system showed a shortfall, irrespective of 19 the cause of the shortfall? 20 A. So many of those, if the system could be shown 21 to be doing it, no. 22 Q. Sorry, if the system? 23 A. If the system could be shown to be having got 24 its sums wrong, if the system was getting those 25 sums wrong but, you know, those had to be 67 1 identified, investigated, verified. 2 Q. Did you understand that to be written into the 3 contracts for subpostmasters? 4 A. I didn't ever see a contract and I didn't know 5 the details of the contract. It was just 6 a statement that, you know, shortfalls. So if 7 a clerk were to tender incorrect change, give 8 out change for a £20 note when only a £10 note 9 had been tendered, that would be a discrepancy 10 of £10 that the subpostmaster would be 11 responsible for making good. 12 Q. Yes, I'm exploring what your knowledge was of 13 the extent of the liability to make good 14 shortfalls. Was it to that obvious example or 15 was it any shortfall shown by the Horizon 16 System? 17 A. I think it was most -- my understanding was it 18 was the obvious examples that -- the things that 19 were -- 20 Q. Who did you get that understanding from? 21 A. From the Post Office representatives who were 22 telling me about -- I'd never run a Post Office, 23 I'd never worked in a Post Office. I had to 24 rely on their information. 25 Q. Can we turn, please, to POL00038878. You tell 68 1 us in your witness statement -- it's 2 paragraph 13, no need to turn it up -- that 3 although the substantive delivery of the project 4 may have been undertaken by the Prism Alliance, 5 your team was responsible for the conceptual 6 designs which underpinned the project; is that 7 right? 8 A. No, ultimately, Post Office were responsible for 9 the conceptual -- the conceptual designs were 10 design -- were requirements documents. Design 11 proposals were -- are still -- design documents 12 in response to those requirements. So this is 13 a requirements document and -- 14 Q. This is a requirements document, is it? 15 A. This conceptual design is Post Office's business 16 design for specifying their requirements. 17 Q. It's written by you. 18 A. I am named as an author, I think, because I -- 19 I helped Dave Parnell put together the -- 20 there's lots of business process models in there 21 and documentation behind the business process 22 models, and so I had experience of extracting 23 the business process diagrams out of the tooling 24 that we'd used as part of this process and the 25 documentation behind those -- in those models, 69 1 and so I assisted in authoring this document but 2 editorial control was Dave Parnell's and was 3 Post Office's -- 4 Q. So really -- 5 A. -- Post Office requirement document. 6 Q. -- where it says "Authors" -- 7 A. Sorry. 8 Q. -- you and Dave Parnell, that's not entirely 9 correct? 10 A. I'd say this was Dave Parnell's document. 11 I helped him with some of the -- I just -- you 12 know, the typing. This -- at one stage -- 13 Q. Couldn't he type? 14 A. 19 years ago, collaboration systems weren't as 15 advanced as they are today and, in practice, 16 typing things into documents would involve one 17 author at a time editing. So he would send me 18 the -- give me the control of the document to 19 type editing, add in the things like -- that 20 I added in, the process diagrams, that he'd 21 asked me to put in. I think I might also have 22 edited some of this in terms of Fujitsu feedback 23 because we had feedback from a number of 24 reviewers in Fujitsu who were asking elaboration 25 questions, "Can you explain what this means? 70 1 What are we trying to get at here?" and so I'd 2 done those. 3 And I think at one stage I must have had 4 control like that, of typing it into the 5 document, and because I think I've seen some in 6 the pack here, some minutes to documents saying, 7 you know, "Dave Parnell to verify this, Phil 8 Boardman to type it into the document". 9 Q. Okay. Can we look, please, at pages 13 to 14, 10 bearing in mind what you said as to your role in 11 this document. So page 13, please. This sets 12 out the "Business Proposition", and then under 13 3.1.1.2, which is about halfway down the page, 14 the "Key Priorities" are set out, and these echo 15 some of the issues that we have seen in the 16 document that we looked at before the break: 17 "Make the identification of debt easier ... 18 "Increase the amount of debt recovered ... 19 "Put the emphasis on clients and customers 20 to validate the data." 21 "Clients and customers" there, that's 22 including subpostmasters? 23 A. Yes, I think it will be. 24 Q. So it's putting the emphasis on, amongst others, 25 subpostmasters to validate data, yes? 71 1 A. Indeed. 2 Q. That was a key priority. Then under 3.1.1.3, 3 "Business Drivers", we can see again 4 a repetition of some of the things we saw in the 5 earlier document: 6 "Refocus on Debt Recovery (financial 7 recovery of money), target of 95% 8 "Only 10% of discrepancies are actually 9 a debt 10 "Establish a central debt monitoring 11 environment to enable the identification of debt 12 with a high degree of accuracy ... 13 "Accounting and settlement on our data, not 14 clients 15 "Manual journal documents and human 16 intervention produce errors ... 17 "Settlement estimating can produce positive 18 or negative interest [situation] ..." 19 Would you agree overall that the principal 20 justifications for change were the recovery of 21 debt and the shifting of responsibility in 22 respect of reconciliation? 23 A. Yes, yeah. I think somewhere in this document 24 this section explains that it's effectively 25 a restating of the -- a section from the 72 1 end-to-end requirements feasibility document, 2 and so the document we were looking at earlier 3 and this have derived from the same source. 4 Q. The Inquiry has heard evidence of a number of 5 bugs, errors and defects, which arose during the 6 development testing and rollout of Horizon. To 7 take an example, the Inquiry has heard evidence 8 that there was a document produced called the 9 "EPOSS Taskforce Report", which recommended that 10 the whole of the EPOS System be rewritten. Were 11 you and your team made aware of documents such 12 as that? 13 A. The first I heard of that was through the -- 14 listening to -- seeing some of the evidence 15 from -- at this Inquiry. 16 Q. Was that information which you think ought to 17 have informed the work you were now undertaking 18 in 2003? 19 A. I don't know whether it would have changed 20 anything. Ultimately, I was helping Post Office 21 with their requirements. 22 Q. You don't think it would have changed anything? 23 A. I don't know. 24 Q. Can you think about it and help us? So we've 25 heard -- if you have been following, as it 73 1 seemed to be the case, the Inquiry, quite 2 carefully -- 3 A. No, I watched some witness evidence sessions 4 because I was prepared preparing. I've now 5 prepared to come to the Inquiry three times 6 because the Inquiry postponed twice, so each 7 time I've watched some more, I've ended up 8 watching a lot more than I ever intended to and 9 I just wanted to prepare myself. So I've seen 10 some of the evidence but I haven't really been 11 following it. 12 Q. Do you know that the Inquiry has heard evidence 13 of the existence of a series of recurrent bugs, 14 errors and defects in the testing, rollout and 15 acceptance phase of Horizon that led to data 16 integrity errors? 17 A. Now, yes. 18 Q. Do you think that's information that you should 19 have been aware of when assisting with the 20 typing of a document like this? 21 A. Like I say, I don't know whether it -- 22 I think -- I presume that other people that were 23 involved -- that knew about that because 24 I hadn't been involved before 2002 but other 25 people had been around, and they would have 74 1 known about those sorts of things and would have 2 presumably -- 3 Q. Piped up? 4 A. Well, and come to the conclusion that those 5 issues had been resolved by that stage but 6 I don't know whether I'd have -- 7 Q. Who are the people that you've got in mind that 8 had that continuity of knowledge? 9 A. Well, people in Post Office, who probably were 10 involved. 11 Q. Who have you got in mind? 12 A. Well, Dave Parnell, Sue Harding, Clive Read, who 13 was IT director at the time, and people in 14 Fujitsu like Gareth Jenkins, like Tony Drahota. 15 Q. What did you know about Gareth Jenkins' 16 involvement in the development, acceptance and 17 rollout phase of Horizon? 18 A. My understanding was that Gareth had been around 19 for a long time and was very knowledgeable. 20 Q. Can we turn to page 14 of the document, please, 21 and turn to paragraph 3.2.1. Underneath the 22 diagram there's a helpful overview of the system 23 that is proposed and, if we can just go on -- so 24 it says: 25 "The specification of the requirement 75 1 detailed in this document, including the 2 descriptions of the new Branch Trading 3 processes, where relevant and practical, have 4 taken the following principles into account ..." 5 Then if we go over the page, please, to 6 page 15 and look at paragraph 11: 7 "Within the monthly trading period, branches 8 should have facilities to identify and the 9 flexibility to manage local variances between 10 system generated and actual cash holding 11 positions, in line with Principle 1 above. 12 These variances will be identified through one 13 of three mechanisms ..." 14 Then four mechanisms are set out: 15 "A cash declaration ... 16 "A stamp declaration 17 "A stock check or declaration 18 "Balancing the SU." 19 The stock unit, yes? 20 A. Stock unit, yes. 21 Q. "All local variances identified at the branch 22 must be actioned within the monthly trading 23 period (ie Stock Units should not be allowed to 24 roll over at trading period end with 25 an outstanding local variance. Prior to 76 1 balancing the Stock Unit at the period end, any 2 outstanding variances should be forwarded to the 3 branch manager/supervisor's Stock Unit as local 4 suspense items that should be addressed locally 5 at branch level before the branch rolls over 6 into next trading period." 7 Then at 12: 8 "By the end of a monthly trading period, 9 branches should be required to make good 10 discrepancies between Horizon generated cash and 11 stock positions and the actual physical position 12 determined by branch office staff. To help 13 facilitate this, existing Horizon facilities 14 that permit branch staff to post cash 15 discrepancies to a cash suspense account will be 16 removed. Remaining branch suspense accounts 17 should only be used following prior 18 authorisation via Post Office central processes 19 and will be restricted to use by branch staff 20 with Horizon manager/supervisor roles." 21 The document goes on to explain that 22 suspense sums could be cleared in several ways, 23 including to cash or by transaction, or by 24 a subpostmaster paying from their salary or from 25 a credit card and that, by contrast, in directly 77 1 managed branches, supervisors would be able to 2 clear values into a central write-off. 3 What provision was made here for 4 subpostmasters to challenge a discrepancy as 5 having been caused by a Horizon error? 6 A. I think two facilities there. So at the time of 7 initially identifying the discrepancy -- and can 8 we go back up to the top of 12 there. So this 9 idea of by the end of the monthly trading 10 period, in practice, I believe the weekly cash 11 account cycle meant that very little 12 investigations of accounts, where they were, 13 what was happening, whether they were correct, 14 was happening within the week, and so this idea 15 of by the end of the monthly period the branch 16 should be required to make good, but -- sorry, 17 actually go to the top of 11. I misremembered. 18 "Within the monthly trading period, branches 19 should have facilities to identify and the 20 flexibility to manage local variances ..." 21 So the idea was here that instead of always 22 being found at the point of rollover of the cash 23 account or the trading period, as it would be, 24 that variances would probably be identified more 25 often between times. So as part of another 78 1 change, there was a nightly process of -- the 2 (unclear) process of declaring a total amount of 3 cash held in the branch, which had been 4 instigated purely to feed SAPAD's data so it 5 could do its planning. But then this was 6 changed to a cash declaration which would 7 compare the amount entered against the 8 system-generated figure and tell you on 9 a nightly basis, if that was operated, that -- 10 you'd identify variances within the month, 11 rather than at the end of the month. 12 The other variation, I don't think it's 13 really brought out in here but during the 14 conversations, I think, Post Office were 15 anticipating giving advice and guidance that the 16 post offices would use balance periods between 17 trading periods more than they had done 18 previously with balance periods and cash account 19 periods. 20 Have people explained the difference between 21 balance periods and cash account periods to -- 22 Mr Cipione? 23 Q. Yes. 24 A. So you understand that. 25 But the expectation was that the branch 79 1 wouldn't go a whole month without doing the 2 balance but they'd only rollover balance periods 3 so they'd do maybe weekly or fortnightly balance 4 periods. So it was to try to make it much more 5 likely that those discrepancies would be 6 discovered within the month rather than at the 7 end of the month. 8 When they were discovered -- 9 Q. So far, all of the things you've described are 10 processes put in place that might make it -- 11 might make the identification of a discrepancy 12 more timely. 13 A. Indeed, and so -- 14 Q. So what happens -- 15 A. -- once they were identified, then the options 16 were to dispute that with NBSC and put it into 17 suspense, or -- and if, having done that, the 18 transaction -- sorry, can we scroll down again? 19 We're just on the edge of a page. The 20 transaction correction option there, if it had 21 been raised into suspense and raised as 22 a transaction correction, if Post Office had 23 investigated and decided or felt that this 24 should be pushed back from suspense back to the 25 postmaster, they had an option within the 80 1 transaction correction processing dialogues to 2 dispute that again. 3 Q. You said "if Post Office investigated" and then 4 you corrected yourself to "if Post Office felt"? 5 A. Well, having investigated, if they felt that 6 they needed to -- that the transaction 7 correction was to bring the sum back from 8 suspense on to the postmaster's liability, if -- 9 Q. Where's the -- 10 A. If the transaction correction were taking the 11 suspense and writing it off, I think it would be 12 unlikely that the subpostmaster would challenge 13 that. 14 Q. Would complain, yes. 15 A. But they might. But transaction corrections 16 could be challenged. That's the -- 17 Q. Where's the description of that in here? 18 A. I'm not sure it's there. 19 Q. You see, in paragraph 12 -- 20 A. I think that was elaborated further in the later 21 discussions. 22 Q. You see in paragraph 12, it's in the second 23 sentence, it says: 24 "To help facilitate this, existing Horizon 25 facilities that permit branch staff to post cash 81 1 discrepancies to a cash suspense account will be 2 removed." 3 But then: 4 "Remaining branch suspense accounts should 5 only be used", et cetera. 6 A. Yeah, there's some really confused writing in 7 here. 8 Q. So that appears to be in the one hand saying 9 that a suspense account facility is going to be 10 removed but then the remaining suspense account 11 facilities have to go through a process, managed 12 by managers and supervisors. Can you -- 13 A. So -- 14 Q. -- explain what that attempting to describe? 15 A. -- I think the first element of trying to 16 explain this is that the term "branch staff" 17 here is used to be two different things. In the 18 first instance, I think it's meaning anyone who 19 worked in a branch, anyone who had a username 20 and log-in into the system, and in the second -- 21 sorry -- 22 Q. The same word is used -- 23 A. The second it's using that -- in the first it's 24 trying to say those that aren't managers and 25 supervisors. 82 1 That way round, isn't it? 2 Q. I see. So it's a narrowing of the facility of 3 posting discrepancies to a suspense account 4 rather than the removal of a suspense account 5 facility? 6 A. That's the first element of reading that and 7 correcting its language. The second bit is the 8 cash discrepancies thing here and posting cash 9 discrepancies to cash suspense account. So when 10 posting -- the phrase "post" or transfer 11 discrepancies to suspense is used, but when 12 performing that, what's actually happened is 13 a transaction. 14 Everything in Horizon is performed as 15 a transaction and so what's actually happening 16 is that a transaction is happening to -- is 17 being created that takes liability out of the 18 branch accounts and puts it into the suspense 19 account. There were a number of suspense 20 products that could do those things, that were 21 seen as generic products. I think we might see 22 a document later where it talked about loss A to 23 table 2A, loss B to table 2A, loss C to table 24 2A, et cetera. 25 Q. Sorry to cut through you, it's just a short 83 1 point that the use of the word "cash 2 discrepancies" is too narrow a description of 3 the species of discrepancy? 4 A. Indeed, because, ultimately, all discrepancies 5 were cash, the cash account was accounting for 6 cash. Everything was turned into cash 7 whenever -- so if stock was lost, removed, as we 8 discussed earlier, then it would be turned into 9 cash to be accounted for. So all discrepancies 10 were cash discrepancies. I think this is 11 talking about a very specific set of cash 12 discrepancies. 13 Q. So was the primary safeguard that this system 14 adopted against subpostmasters being saddled 15 with debt for which they were not responsible, 16 that they were required to agree debt or post it 17 to a suspense account? 18 A. Yeah. Yes. 19 Q. Without doing either of those things, though, 20 they weren't allowed to continue to trade in the 21 next trading period, were they? 22 A. Yes, they were, and this is something you -- 23 I heard you say in the opening statements to 24 Phase 2, and -- 25 Q. You're going to correct me? 84 1 A. -- I think that's incorrect. If you didn't roll 2 over -- so in terms of -- these checks, you 3 couldn't roll over without balancing the last 4 stock unit, and you couldn't roll over the 5 branch without balancing the last stock unit and 6 ultimately coming to a balance, but the net 7 effect of not rolling over wasn't to stop you 8 trading. The net effect was that on the day 9 after not rolling over into a period when the 10 calendar said you should have rolled over, you 11 would get a warning that you should have rolled 12 over yesterday, which you could accept and carry 13 on using Horizon -- 14 Q. So you could just carry on -- 15 A. Yes, indeed. 16 Q. -- and just accept these warnings for months and 17 years? 18 A. Well, indeed not. 19 Q. So what would happen if you just ignored these 20 warnings? 21 A. Well, messages were created when rollovers 22 happened and when they are not, when they didn't 23 happen, and Post Office would monitor that, 24 and -- 25 Q. And do what? 85 1 A. -- and go and send Retail Line, NBSC to talk to 2 the subpostmaster, as I understood it. 3 Q. To do what? 4 A. To ask them why they hadn't rolled over. 5 Q. And let them carry on trading? 6 A. Well, no because -- 7 Q. What would they do, then? 8 A. Sorry, I don't know. That's something you'd 9 need to -- as Post Office held, they'd get 10 someone to do this. There were technical 11 limitations that the Horizon counter had that 12 meant that it could only, I think -- I think it 13 ended up being at 45 days, so it could only 14 store, retain data for 45 days -- we saw 15 earlier, that it was assumed that no branch 16 visits would be necessary. No engineering would 17 -- you know, they wouldn't have to -- no one 18 would have to go out and install a larger hard 19 disk into the counter PCs. 20 So I think, as part of these discussions, 21 the trading period, the length of the trading 22 period was set for the 4-4-5 calendar, as it 23 was, and it was agreed that the data retention 24 would be 45 days, and so Post Office would need 25 to start doing -- take actions pretty soon after 86 1 a cash account didn't roll to try to make sure 2 that we didn't get into the situation where data 3 in the branch had been lost. 4 Q. So you followed the Phase 2 opening carefully. 5 That was one of the things that you looked at, 6 did you? 7 A. I downloaded the transcript and searched for 8 "IMPACT" because I thought it would be pertinent 9 to what I was going to be talking about. 10 Q. Your evidence is that a subpostmaster is, in 11 fact, not prevented from trading if they don't 12 either accept a debt or put it in a suspense 13 account -- sorry, pay off the debt? 14 A. They wouldn't be able to roll over the last 15 stock unit and they wouldn't be able to roll 16 over the trading period. 17 Q. So what effect would that have on them? 18 A. Like I say, they'd get a warning the next they 19 when they logged on. 20 Q. What, they can just ignore that warning, can 21 they? 22 A. Well, no, because Post Office would manage that 23 situation but, like I say, you'd need to talk to 24 Post Office as to how they'd manage that and 25 what they'd do, but there's an investigation. 87 1 Q. Can we turn to page 18 of the document, please. 2 Look at 4.2, under the heading "Legal & 3 Regulatory". The document states: 4 "It will be verified that branch processes 5 and reporting changes meet legal and regulatory 6 financial reporting constraints (eg auditors) to 7 ensure that there is sufficient information from 8 the new system to support regulatory reporting, 9 litigation and criminal prosecution." 10 What steps were taken by Fujitsu and, to 11 your knowledge, the Post Office at this stage to 12 consider how data produced by Horizon was 13 capable of supporting these legal and regulatory 14 obligations? 15 A. I don't think any particular work was done by 16 Fujitsu. You can see there the second column in 17 that table -- 18 Q. Allocates it to POL? 19 A. -- allocates it to Post Office Limited. 20 I remember there being long conversations around 21 this. 22 Q. Between who and who? 23 A. Between Post Office mostly, like I say, we were 24 in the room listening to them talking, rather 25 than actually being actively involved. 88 1 Q. Names, please? 2 A. Sorry, can't remember. But -- 3 Q. Can you try a bit harder -- 4 A. Well -- 5 Q. -- if you wouldn't mind. 6 A. I guess the Retail Line ops, I think was Ruth 7 Holleran, and so there was a key sort of 8 stakeholder there but, you know, some of this, 9 a lot of the hoped-for -- we talked about the 10 huge amount of paperwork going backwards and 11 forwards to Chesterfield, and so there was this 12 requirement to try to truncate the branch trades 13 and statements as it became, no longer having 14 17,500 cash account forms arriving in 15 Chesterfield every week. 16 At the start of this morning's session, you 17 asked me to look at a particular page of this 18 thing, and you said is that my signature, and 19 I said yes, and you were happy to accept that 20 response. But you and I know that that isn't 21 actually my signature; it's a printout of 22 a digital image of my signature that we 23 separately and via the Fujitsu counsel have 24 agreed to accept as my signature, because that's 25 the way the world's moved on since then. But 89 1 back in 2002/3 periods, Post Office were getting 2 17,500 signed forms, actual signatures -- 3 Q. Just incidentally, pulling you up on that, 4 I accepted your signature because you told me 5 so, having affirmed. 6 A. Well, it is a representation of my signature but 7 like René Magritte's painting of a pipe, it's 8 not a pipe. I didn't sign this piece of paper. 9 Q. I didn't ask you that. 10 A. I know. But the point I'm trying to make is 11 that this is -- that Post Office were receiving 12 17,500 signed cash account forms in Chesterfield 13 every week and, as a result this, they weren't 14 going to be receiving those, and they needed to 15 try to work out whether they needed -- what 16 evidence of the subpostmaster accounting for 17 their branch liability was likely to be 18 sufficient. 19 Q. You said a moment ago that you remember a lot of 20 conversations around this. 21 A. Yeah, because -- 22 Q. What were the conversations about? 23 A. Well, ultimately, about the text that would have 24 to be on a screen that would then get accepted, 25 something about a true reflection of trading and 90 1 remaining liability or whatever it was, I can't 2 remember the text -- 3 Q. Text on whose screen? 4 A. On the Horizon screen that would be presented to 5 the subpostmaster that that would then -- they 6 would confirm that this was their branch trading 7 statement and that they were happy to roll over. 8 Q. This looks to be looking at a different issue, 9 namely the production by the system of data to 10 support litigation and criminal prosecutions. 11 So not a screen that a subpostmaster signs off 12 but branch processes and reporting changes that 13 will support civil litigation and criminal 14 prosecutions. 15 Were there discussions about those issues? 16 A. No. 17 Q. I'm sorry? 18 A. No. 19 Q. So you're referring to discussions about what 20 the SPM screen looked like when they were 21 certifying something? 22 A. How confirmation of a set of accounts would 23 happen. 24 Q. Can we look at that, please, at page 69 of the 25 same document, at the foot of the page under 91 1 "Discrepancy Management". So this section of 2 the design proposal concerns circumstances where 3 an error has been identified in a transaction, 4 correction is generated; correct? 5 A. Sorry, I can't -- I'm not working out which bit 6 of the page are we looking at? 7 Q. We're looking at 10.1.4, "Discrepancy 8 Management". 9 A. Right. 10 Q. We're in the arena of an error has been 11 identified and a transaction correction is 12 generated. 13 A. Indeed. 14 Q. Yes? 15 A. Yes. 16 Q. Then if we go over the page to page 70, please, 17 and look at 10.1.4.2, handling of transaction 18 corrections. The "Automation" described: 19 "There will be a button for Transaction 20 Correction Management within the menu hierarchy 21 which is only accessible by users with the 22 appropriate role. This will provide the user 23 with a list of the unprocessed Transaction 24 Corrections displayed in date/time order. 25 "Having selected the Transaction Correction 92 1 to process, the system will display text making 2 clear what will happen when they select any of 3 the options presented. 4 "For each Transaction Correction the user 5 will have up to three options -- Each option, 6 when selected, will perform an identified set of 7 transactions, defined within the Transaction 8 Correction (which may include an option to Do 9 Nothing -- requesting further investigation)." 10 A. Ah, so when you asked earlier where is this 11 specified in this document, it's there, about 12 transaction correction. Effectively, that's 13 requesting further investigation. 14 Q. So was this button put in to effect a third 15 button: "Do nothing, I request further 16 investigation"? 17 A. I believe so. 18 Q. On what basis do you believe so? 19 A. Because it says so there. I don't know what was 20 fully implemented into the system. 21 Q. The Inquiry has heard evidence that there was in 22 fact no means to roll over until transaction 23 corrections had been processed, and the 24 subpostmaster was required either to make good 25 or accept the shortfall, and that there wasn't 93 1 a third option of "Do nothing, I request further 2 investigation". 3 A. Well, I don't know why that didn't happen. 4 Q. Can you help the Inquiry as to any discussions 5 that you were a party to as to why that option 6 wasn't implemented? 7 A. I really don't know. I don't think I have -- 8 I can't recall anything of discussing that not 9 happening. 10 Q. Whose responsibility would it be to carry that 11 into effect? 12 A. It would be between the architects, designers, 13 and Post Office, accepting the design. 14 Q. Just look at the table underneath 10.1.4.2. Do 15 you see in that next box, "There will be 16 a button", et cetera? 17 A. Yes. 18 Q. That seems to be allocated in that second column 19 to Fujitsu Services, doesn't it? 20 A. Yeah, so that would be implemented in the 21 system. That's the requirement was to implement 22 that into the system. 23 Q. You can't help us as to if it's right that that 24 was not implemented, why that wasn't so? 25 A. No. I really don't know. 94 1 Q. Can I turn to the issue of the removal of the 2 suspense account. Can we look, please, at 3 FUJ00126036. 4 Can we look at page 3 of this email chain, 5 please. I should just look at page 4 to see who 6 this email is signed off by. 7 A. This one is Clive Read. 8 Q. I just want it to be on the record so we can see 9 it. 10 A. Sure. 11 Q. You may know the documents inside out -- 12 A. No, no, this -- 13 Q. -- but I've just got to make sure that it's on 14 the record. 15 A. I haven't seen this until -- for 19 years until 16 last week. But, yes, I've read it. 17 Q. So it's signed off by Clive Read, the Chief 18 Systems Architect within Post Office. If we go 19 back to page 3, please. This email -- I'm not 20 going to go to the previous page -- is addressed 21 to Ruth Holleran. What did you understand her 22 job to be? 23 A. I believe she was director of the Retail Line 24 branch network. 25 Q. Tony Marsh, what did you understand his job to 95 1 be? 2 A. I think he responds to this, so I think he 3 worked for Ruth. 4 Q. And copied to Sue Harding. What did you 5 understand her job to be? 6 A. Sue was programme manager for the IMPACT 7 Programme. 8 Q. If you look at the email, Mr Read says: 9 "... we are currently in the middle of 10 requirements workshops on the final phase of the 11 IMPACT Programme. Although we have a scheduled 12 Stakeholder meeting early in February, given the 13 tight timescales there are some emerging 14 concerns which I think I need to flag up." 15 Then the first of them under "Suspense 16 Account Threshold" essentially saying that 17 the -- well, you can read what it says: 18 "The current assumed position is that 19 a single threshold of £250 will be applied by 20 Horizon below which variances cannot be placed 21 into Suspense Account ... This is a new system 22 control which does not currently exist." 23 Can you recall what this was about, what the 24 idea of an introduction of a floor of £250 was? 25 A. I never really fully understood this but this 96 1 was -- Post Office seemed to have this idea that 2 they would give a threshold that anything under 3 £250 would be at the subpostmasters' liability 4 and would be -- anything above that would be -- 5 could go into the suspense account for disputes, 6 discussions, investigation. 7 So this idea of the single threshold and the 8 different ones for different -- because they 9 talk here about different branch types, rather 10 than -- or office types, rather than different 11 suspense products. So they appear to be 12 treating all suspense products as the same 13 thing. So, again, I don't fully understand how 14 you wouldn't be able to raise a dispute about 15 a discrepancy of the cash pouch was £50 short 16 if, you know, investigations showed that the 17 packer had not picked that pack of -- those 18 packs of 50p pieces, or whatever it is that came 19 up to 50p -- £50, then clearly that would be 20 a reasonable dispute to hold. 21 But this is eventually, in the email trail, 22 I get -- 23 Q. We're going to work back in -- 24 A. No, I know but I'm just going to say I get 25 copied on this but I think this is effectively 97 1 internal discussions with Post Office that we'd 2 expect them to resolve between them to decide. 3 But both of these things, it's also important to 4 say, are things that Post Office had complete 5 control of, that this threshold would be 6 specified if it was to be implemented by Post 7 Office reference data. The product -- a product 8 can have minimum, you know, any product that 9 could be traded in Horizon that you could 10 specify amounts of the transaction for, it was 11 possible to specify minimum -- maximum, so 12 that -- and that would be used, say, in the 13 utility bill example that I've used before, to 14 try to stop the miskeying -- so you might say 15 back then, paying £1,000 on a gas bill was very 16 unusual. Nowadays it might be more reasonable. 17 But you might, say, expect a maximum of 18 £1,000 and any key-ins of a large transaction 19 like that would probably be typographical error, 20 hitting the "00" key too many times. 21 Q. Anyway, cutting you short -- 22 A. But this -- sorry, I'm just going to say but 23 that that is something that the Post Office had 24 to decide what -- 25 Q. So this is an internal discussion within Post 98 1 Office of whether there should be a single 2 threshold of £250 -- 3 A. Or a variable threshold -- 4 Q. -- or a variable threshold. 5 THE COURT REPORTER: Sorry, you'll have to go one at 6 a time. 7 MR BEER: We're being reminded to go one at a time. 8 A. I apologise. 9 Q. The second thing in the list, "Suspense Account 10 Authorisation": 11 "The current assumed position is that 12 subject to the threshold control above, the 13 requirement to seek telephone authorisation for 14 posting variances to Suspense would cease, on 15 the understanding that improved timeliness and 16 visibility of office liabilities (next day, 17 single view of office cash and liability) would 18 provide sufficient control (given that currently 19 there is a two-week lag between suspense 20 postings and visibility of these centrally). 21 "The Operations and Security view was that 22 removal of this control would declare 'open 23 season' on the use of Suspense postings, leading 24 to loss of financial control, spiralling 25 non-conformity, etc ..." 99 1 Yes? 2 A. And so -- 3 Q. He raises his concerns: 4 "While we can discuss and take a view on 5 these issues on isolation, my preference is to 6 assume that we can define new back office 7 controls which fully leverage the timeliness, 8 accuracy and completeness of the new systems, 9 and therefore challenge any (understandable) 10 reluctance to 'give up' controls that are 11 already in place. The danger is that we spend 12 significant amounts of time and money while not 13 bringing about the fundamental changes the 14 programme was given the mandate for. 15 "I think this is an important position to 16 take in our approach, to underline our objective 17 to simplify and leverage new capability but 18 recognise the challenge is therefore to define 19 a 'fit for purpose' control framework which 20 tackles these fears head-on." 21 So is this a discussion within Post Office 22 which essentially involves the author 23 recognising an operations and security view that 24 pushes back against a greater use of a suspense 25 account. 100 1 A. Indeed. It would appear so. I think the other 2 element of this, that this way forward area is 3 really talking about -- the feeling that the 4 IMPACT Programme would take an approach of 5 empowering. You've used the phrase earlier of 6 making responsible for, but you can also look at 7 it from the positive spin point of view of 8 empowering postmasters to manage their 9 businesses for themselves, and only get involved 10 in -- or Post Office only needing to be involved 11 in this when, you know, disputes were raised 12 and, at this point, this appears to be possibly 13 proposing that what I said earlier about 14 disputes, that the suspense account wasn't the 15 mechanism of raising a dispute; it was the way 16 of accounting for a dispute that you had raised. 17 This appears to be potentially proposing 18 that a dispute could be raised by the posting of 19 an amount to the suspense account and because 20 Post Office had capable new financial systems, 21 they would know about that within 24 hours and 22 they would be able to do something about it. 23 Q. Anyway let's look at the response from Mr Marsh, 24 on page 2. Can we just go up to the top. Thank 25 you. So this is an email from Mr Marsh back to 101 1 Mr Read. Then in the second paragraph, he says: 2 "On the suspense account issue, I'm afraid 3 I share the same beliefs as mine and other Ops 4 reps, if there is no independent control and 5 authorisation process for the use of suspense 6 accounts then postings will rapidly increase to 7 unacceptable levels. Irrespective of our 8 aspirations for a simplified process to support 9 commercially minded agents I believe that many 10 of those of a more historic mindset will exploit 11 the facility ..." 12 That's referring to subpostmasters of 13 "an historic mindset", isn't it? 14 A. I believe that's who we would be talking about 15 there, yes. 16 Q. "[they'll] exploit the facility, creating 17 a large parcel of manual work for someone, NBSC 18 or Retail Line, to do to agree terms to reduce 19 each individual posting." 20 A. Sorry, can I just make a comment about that, 21 then? So what I said earlier about this 22 approach that is being suggested in the first 23 email about a sort of empowered management 24 approach of managing the Retail Line, in this it 25 appears to be a much more sort of command and 102 1 control approach being proposed. 2 Q. In his third paragraph, he says: 3 "Given that the overall project should 4 simplify reconciliation and settlement 5 significantly and should therefore mean that 6 errors will be identified more rapidly and will 7 be even more clearly the fault and 8 responsibility of the agent, is there any reason 9 to have a suspense facility at all? This might 10 mean that in extreme cases the agent would need 11 to contact the Retail Line or NBSC and negotiate 12 a 'loan' (at some level of interest?) to cover 13 very high values of loss but in most cases the 14 agent should be sufficiently capitalised to 15 cover ordinary variations ..." 16 Do you understand that to mean -- "in most 17 cases the agent should be sufficiently 18 capitalised" -- that, in most cases, 19 a subpostmaster should have sufficient money in 20 his or her pocket. 21 A. To accept the liability. 22 Q. Yes. 23 A. Indeed, that seemed to be what that's saying. 24 Q. "... particularly if the opportunity were 25 offered to make losses good via credit card ..." 103 1 So that's the parties borrowing money on 2 their credit card to make good a loss? 3 A. Indeed. 4 Q. "... thereby enabling them to tap in to up to 56 5 days of interest free credit ..." 6 Then he says: 7 "... (a facility favoured by the NFSP 8 despite my early misgivings)." 9 In the meetings and workshops that you 10 attended, can you assist as to whether the NFSP 11 was involved in any discussions or negotiations 12 as to IMPACT? 13 A. I -- people mentioned them every now and again, 14 in particular from this area of the business, 15 the Retail Line, but I don't think I ever met 16 anyone from the Federation. 17 Q. So far as you can recall, in the workshops and 18 meetings that you attended, was anyone from the 19 Federation present? 20 A. I don't think so. I can't recall that. 21 Q. What this appears to suggest is the Federation 22 suggesting that its members or some of them 23 should have a credit card -- should use their 24 credit cards to borrow 56 days of interest-free 25 credit in order to make up losses? 104 1 A. Indeed. I don't think I ever found out fully 2 whether -- is this Tony Marsh, by the way, 3 sorry -- whoever it was, the author of this, was 4 intending for this sufficient capitalisation to 5 cover whilst a dispute was resolved or just full 6 stop. "Sufficiently capitalised to cover it"; 7 I don't think I ever found that out. This sort 8 of conversation happened not in my presence, to 9 my knowledge. 10 Q. What this is mooting is the getting rid of the 11 suspense account entirely. The SPMs are to bear 12 the responsibility for any variances or 13 discrepancies. Why do we need a suspense 14 account at all? They can use their credit cards 15 after all? 16 A. Like I say, I think next in the chain I'm trying 17 to wonder what the implications are for 18 requirements, and whether -- like I say, is 19 this -- whilst the dispute -- so if in the other 20 side of the subpostmaster's business, most 21 subpostmasters being franchisees and most of 22 them running other businesses in their 23 convenience store or whatever, if a delivery had 24 arrived short of, you know, some quantity of 25 things that had been delivered but that they'd 105 1 already paid for because, being a small, single 2 outlet business, they wouldn't necessarily have 3 good payment terms, then they would be liable 4 for the shortfall of the non-delivered stock 5 until they'd raised the dispute with the 6 provider. 7 And so I think this was trying to suggest 8 this, but then I'm not sure whether it was, like 9 I say, just, full stop, they should be liable 10 for it or whether they should be liable for it 11 until the discrepancy was resolved, and whether 12 what he's also then proposing is that 13 transaction corrections, that some sort of 14 dispute resolution -- dispute raising and 15 resolution process would then be able to do 16 a transaction correction, to resolve those 17 things. But, like I say, I don't know where 18 this was going. 19 Q. Would you agree that this appears to be proposed 20 on the assumption that the system produced 21 accurate data and was infallible and, therefore, 22 discrepancies must be the result of the 23 subpostmaster? 24 A. Like I say, I don't know what the intention of 25 this was. Whether it was to make them liable 106 1 full stop or to make them liable until the 2 dispute had been investigated and resolved. 3 But, you know -- but there is a proposal here, 4 like you say, to fully remove the suspense 5 account facility. 6 Q. That seems to be based on the assumption either 7 the data that Horizon is producing must be 8 accurate or, even if it's not accurate, we don't 9 care, it should be the responsibility of the 10 subpostmaster to make good the loss, if you're 11 removing the suspense account? 12 A. Like I say, I don't know where this was going. 13 I didn't. 14 Q. Can we look -- the email was forwarded on 15 page -- let's just go to the top of that page, 16 first. Clive Read forwards the email -- if we 17 just go a bit further up the page, please, thank 18 you -- to Dave Parnell, and we go to the top of 19 the -- or the bottom of the next page. You can 20 see it's forwarded to Dave Parnell, copied to 21 Sue Harding, and then Dave Parnell sends it to 22 you "for info ... and we probably need to 23 discuss". 24 Then -- 25 A. I forward it to Bob Gurney, don't I? 107 1 Q. You forward it to Bob Gurney. What role did Bob 2 Gurney perform? 3 A. He was my manager by this stage? 4 Q. And you add Gareth Jenkins into the chain. 5 A. Indeed because it appeared to be a big change in 6 requirements -- or could be. You know, I didn't 7 know what -- what the consequences of this might 8 be. 9 Q. Then, if we keep going up, Bob replies to you: 10 "Phil -- shouldn't it get reported as 11 an interim response to the first part of action 12 56 so the workshop would then decide how it 13 needs to be reflected in the process 14 models/principles/etc. We will need to follow 15 up with Clive to adjudicate if there is any 16 difference in opinion expressed by Ruth. We 17 also need to encourage Dave to chase people up 18 so that we can get the actions closed down." 19 Can you help what happened next? 20 A. As I understood it, there was a series of 21 meetings next, and I still don't know whether, 22 when Clive Marsh said "remove the suspense 23 account", what he really meant was remove some 24 of those suspense account products with the more 25 generic names: loss A to table 2A, loss B to 108 1 table 2A, et cetera. I don't know what those 2 were used for, but they appeared -- they were 3 ones that Post Office eventually decided to 4 remove. 5 So I don't know whether, when he said 6 "remove the suspense account", he meant 7 particular suspense account products that he 8 felt might be being used generally, or whether 9 he meant fully remove the suspense account, and 10 the outcome was some sort of compromise 11 situation of removing some of the suspense 12 account product and leaving others. But -- 13 Q. Did you work with the Post Office subsequently 14 to ensure that the view expressed by Mr Marsh 15 that the suspense account should be removed, 16 which was the means by -- the facility by which 17 subpostmasters might previously challenge 18 discrepancies, was carried into effect? 19 A. Um, I don't recall doing any of that. I don't 20 think so. 21 Q. Can you recall whether you were informed of any 22 further National Federation consultation or 23 participation in the process about what should 24 happen to the removal of the suspense account 25 suggestion? 109 1 A. No, I don't think so. 2 Q. Can you recall any participation, other 3 participation, other than through the Federation 4 of some Subpostmasters, in relation to this 5 proposed change? 6 A. No, I wouldn't have -- wouldn't have been 7 involved in that at all. But I don't think 8 I heard anything about it, either. 9 Q. Can we go, please, to FUJ00126038. Ah. Good. 10 So we were previously looking at an email 11 exchange that ended on 23 January 2004, and 12 we're now looking at what appears to be an 13 invitation to a meeting sent on 12 February 14 2004, the meeting being on 18 February 2004. 15 Can you see all of that detail? 16 A. Yes. 17 Q. So the sent, time and date, second line. The 18 subject matter in the fourth line. It's 19 an invitation to a meeting about branch trading, 20 the treatment of suspense, at 1.00 on 21 18 February. We can see the invitees were Ann 22 Clarke, Ben Gildersleve, Clive Read, Gareth 23 Jenkins, Philip Godden, you -- and it's copied 24 to Dave Parnell and Julie Pope? 25 A. Yes. 110 1 Q. You see that it says, "Two issues to be 2 considered". Was this effectively a rough 3 agenda for the meeting? 4 A. I believe so, yes. 5 Q. "Two issues to be considered: 6 "Daily cash declaration 7 "The issue is whether to keep the daily cash 8 declaration as now, or discontinue it." 9 Then the part I'm interested in, "Suspense 10 Account Manual Authorisation process": 11 "Previous discussions on if to keep the 12 manual authorisation process for Branches 13 wanting to carry items in suspense, and whether 14 to have one universal limit of something like 15 £250 for items in Suspense. 16 "The decision reached yesterday by key 17 senior stakeholders to remove the Suspense 18 Account altogether. This would force Branches 19 to make good all losses immediately. This needs 20 to be considered in terms of how Branches can 21 adjust figures, hardship cases, how [Branches] 22 will be corrected with errors, etc." 23 So this is an email sent on 12 February, and 24 it says that a decision was reached "yesterday" 25 by key senior stakeholders to remove the 111 1 suspense account altogether. 2 Were you present at the meeting the previous 3 day, if there was a meeting, at which senior 4 stakeholders decided to remove the suspense 5 account altogether? 6 A. No. 7 Q. Do you know who the key senior stakeholders 8 were? 9 A. I don't think I do, no, I don't think. And this 10 is an invitation to a meeting that happened on 11 the 18th, I believe. 12 Q. Yes. 13 A. Yes. 14 Q. Yes. 15 A. But are we going to go on to talk about what 16 happened at the meeting at the 18th? 17 Q. No at the moment I'm asking you -- 18 A. I wasn't involved, no, I don't know anything -- 19 Q. Do you know who was involved, who the key -- 20 A. I would assume the people in the -- in that 21 email chain earlier but I don't know. 22 Q. So amongst Clive Read, Ann Clarke -- 23 A. Ruth Holleran, et cetera. 24 Q. -- Ben Gildersleve, Gareth Jenkins, Clive Read, 25 Phil Godden, Dave Parnell and Julie Pope? 112 1 A. Sorry, can we go back up? 2 Q. Yes. 3 A. Amongst that set, I think possibly only Clive 4 Read, I think would have been, you know -- the 5 other people in the -- sorry, in the previous 6 email trail that we'd looked at, in the previous 7 document, Clive Read, Ruth Holleran, Tony Marsh, 8 those people would have been involved in making 9 that decision. This -- 10 Q. Were you told when you got to the meeting on the 11 18th why the decision had been taken to remove 12 the suspense account altogether? 13 A. So my recollection of this, I think, by the 14 18th, the -- that removal of the suspense 15 account was elaborated to removal of some 16 products and so, by that stage, it wasn't 17 removal of the suspense account. It was 18 a reference data change that would be made by 19 the Post Office. 20 Q. Who explained that to you? 21 A. Sorry, can't remember, but one of the Post 22 Office representatives in that list, one or 23 more. 24 Q. Thank you. 25 Sir, that's -- 113 1 A. Possibly Chris Allen at that stage. 2 MR BEER: Thank you. 3 Sir, that's an appropriate moment to take 4 a break, if it's convenient for you. 5 SIR WYN WILLIAMS: Yes, of course. Yes, so we'll 6 start again at 2.00, yes? 7 MR BEER: Yes, please. Thank you, sir. 8 SIR WYN WILLIAMS: All right, see you all then. 9 MR BEER: Thank you. 10 (1.03 pm) 11 (The Short Adjournment) 12 (2.00 pm) 13 MR BEER: Good afternoon, sir. Can you see and hear 14 me? 15 SIR WYN WILLIAMS: Yes, thank you. Yes. 16 MR BEER: Mr Boardman, can we move on. We were 17 looking at an email exchange in readiness for 18 a meeting that was slated to take place on 19 18 February 2004. Can we look at a document 20 that I think was produced on 27 February 2004. 21 The reference is FUJ00126053. 22 Thank you. You'll see the heading of the 23 document "IMPACT R3"; is that Release 3? 24 A. That's Release 3, I believe so, yes. 25 Q. "Branch Trading Issues". You'll see the date at 114 1 the bottom right-hand side of the document, 2 27 February 2004. 3 A. Yes. 4 Q. This is version 9 of the document. This is 5 a Fujitsu document; is that right? 6 A. I don't know who was producing the minutes of 7 these meetings. It's come from Fujitsu, but we 8 may have just had copies or we may have produced 9 it. I don't know. 10 Q. You said you don't know who was producing 11 minutes of these meetings; do you treat this as 12 a minute of a meeting? 13 A. Well, I think there's a series of actions to -- 14 and the branch trading issues thing here, 15 I think, is -- I think issues for clarification, 16 things that hadn't been resolved in that Branch 17 Trading Conceptual Design document that we were 18 looking at earlier, that we were, I think, at 19 this stage tying to get that to an agreed 20 approved state, and this is unresolved issues 21 with producing that. So -- 22 Q. We've got a series of these with different 23 version numbers -- 24 A. Indeed. 25 Q. -- and successive dates going on after 115 1 27 February. What tends to happen is the first 2 column and the second column stayed the same and 3 in the right-hand column there's additional 4 information added in the status -- 5 A. Indeed. 6 Q. -- column. So they're not minutes of meetings 7 as such; is that right? 8 A. Well, so the outcomes may be minutes of meetings 9 or they might be from phone calls or email 10 conversations or whatever but they're trying to 11 drive down the number of uncertainties in the 12 conceptual design document. 13 Q. Yes. So there might be the outcomes of meetings 14 or there might be content of meetings -- 15 A. Indeed. 16 Q. -- included in these. So can we look at the 17 third page of this document, please, at 18 paragraph 2.4. You'll see it's the second row, 19 the second populated row, 2.4: 20 "Following discussions between Tony Marsh 21 and Clive Read, a review meeting has been 22 arranged for [18 February] ..." 23 We looked at that before lunch. 24 "... to examine a proposal to remove the 25 current method of posting discrepancies into 116 1 a branch Suspense account." 2 Then the status is: 3 "To be addressed at Stakeholder review on 4 [26 February]. 5 "Action: Clive Read to confirm the 6 requirement [I think on 27th February]." 7 A. Yes. 8 Q. Can you help with what stakeholder review was in 9 fact conducted in relation to the removal of the 10 suspense account? 11 A. I don't know. I don't know. 12 Q. Can you help with whether one was conducted? 13 A. Presumably. Is there a later one of these that 14 says the outcome of this, that stakeholder 15 review? I presume that there is. We were 16 discussing earlier -- sorry, before lunch -- 17 that my understanding at the meeting of the 18th 18 was around the -- by that stage, it was about 19 removal of products in the suspense account. 20 It's still being talked about as removal of the 21 suspense account here but I don't know whether 22 that's just terminology and the documentation. 23 Q. Can you remember attending any stakeholder 24 review? 25 A. I don't. I'm pretty sure I wouldn't have -- 117 1 I can't remember and I'm pretty sure I wouldn't 2 have attended any. 3 Q. What would you understand a stakeholder review 4 to consist of? 5 A. It would have been key people in Post Office's 6 business to make decisions on their 7 requirements. 8 Q. Would it have included subpostmasters? 9 A. No idea, but, as we've discussed previously, not 10 much of this included any subpostmasters so 11 I doubt it. I would assume not. 12 Q. Can we look at the next iteration of this 13 document at FUJ00126056. You'll see in the 14 bottom left that this is now version 10, whereas 15 previously we were looking at version 9. This 16 is dated 2 March 2004. 17 A. Indeed, which I think is very close to the date 18 of approval of that branch trading. So I think 19 we're getting really close to the end of this 20 process now. 21 Q. Yes. Can we look, please, at the second page. 22 2.4 is the last row. You'll see that the first 23 and second columns are the same, the number 24 and -- 25 A. Indeed. 118 1 Q. -- what the issue is. Then what's written is: 2 "Stakeholder review on [26 February] ..." 3 Remember that was the date that it was said 4 to be taking place in the previous document: 5 "... did not appear to address all issues. 6 Review with DP ..." 7 Can you help us, would "DP" stand for Dave 8 Parnell? 9 A. Dave Parnell. 10 Q. Thank you. 11 "... proposed that working assumption for 12 CD ..." 13 Conceptual design? 14 A. Conceptual design. 15 Q. "... should be that [the Post Office] will 16 withdraw Suspense products that enable cash 17 discrepancies to be posed to Suspense requiring 18 branches to make good or obtain 19 pre-authorisation for discrepancies that special 20 treatment. It is assumed that this requirement 21 will be met by existing Horizon functionality 22 and POL will revise reference data to obtain 23 required effect. 24 "Action: [Dave Parnell] to review/confirm 25 wording of working assumption. 119 1 "Action: PB ..." 2 I think that's you. 3 A. That's me. 4 Q. "... to incorporate working assumption in 5 [conceptual design]." 6 A. I think at this stage I had the pen on this 7 document, because I was updating it presumably 8 with diagrams and things, but as it highlights 9 there, Dave Parnell was to tell me what to 10 write. 11 Q. Okay, so you think you're the now author of this 12 document we're looking at? 13 A. I had the pen, yes. 14 Q. Can you recall whether this accurately confirms 15 or sets out the information that you were given, 16 namely that a decision had been made to withdraw 17 the suspense account facility, despite the 18 stakeholder review not really addressing the 19 issue? 20 A. No, my understanding of this was very much that 21 the -- as it says here about suspense products, 22 it's to remove suspense products but not the 23 whole of the suspense account. So the working 24 assumption will be that there will be 25 a rationalisation of suspense products, and that 120 1 but -- where is the thing here -- the 2 stakeholder review didn't address all issues. 3 I don't know what all the other issues were but 4 presumably some people felt strongly that this 5 didn't go far enough. I think I mentioned 6 earlier, it feels to me or it always felt to me 7 like this was some sort of compromise. 8 Q. Why was it a compromise? 9 A. So we saw the email trail earlier and the 10 opposite arguments about empowered -- leaving 11 subpostmasters to their own devices, sort of 12 management approach, and a command and control 13 management approach. This is a neither/nor. 14 But that's what Post Office, it would appear, 15 seem to have decided to do, and from looking at 16 later documents, I believe that's what got 17 implemented. 18 Q. Was there a working assumption by you that 19 Horizon had any errors, bugs or defects in it? 20 A. I think, I believe, all IT systems have bugs, 21 errors and defects. 22 Q. Did you have a working assumption that Horizon 23 would identify its own bugs, errors and defects 24 or there was a process in place to do so? 25 A. For Horizon itself? 121 1 Q. Yes. 2 A. I don't think the system could know -- be 3 self-aware like that. But there were processes 4 in place, in -- within Post Office and within 5 the support structures and processes to try to 6 identify those. 7 Q. Were those, all of those, required to be 8 triggered by a subpostmaster raising 9 a discrepancy? 10 A. I don't know. I mean, we talked about less 11 reconciliation earlier but I don't think 12 anything ever suggested that there would be no 13 reconciliation. It was reducing the numbers of 14 points of reconciliation, and so there were 15 still opportunities for Post Office to find 16 bugs, errors and defects. 17 Q. On the evidence that the Inquiry has heard so 18 far, both Post Office and Fujitsu were aware 19 that there were a range of circumstances when 20 Horizon operated when it was compromised by 21 a bug, error or defect, where the system itself 22 did not identify the fact of a bug, error or 23 defect, and indeed where bugs, errors and 24 defects had occurred and no root cause of them 25 had been identified. Were those three pieces of 122 1 information things that you were aware of? 2 A. No. 3 Q. Does it follow that others involved in the 4 development process for IMPACT, for example 5 Gareth Jenkins and Ruth Holleran, did not raise 6 any of those issues with you? 7 A. Yes. Of course. 8 Q. In the process of the discussions that led to 9 the partial removal of the suspense facility, 10 were you aware if the proposal was ever checked 11 in any legal teams operated by Fujitsu or the 12 Post Office? 13 A. No, no, I wasn't. 14 Q. Can I turn, please, to a little later than this. 15 This is 2 March 2004. Can we turn to an email 16 chain on 4 March 2004. That's FUJ00126061. 17 Thank you. 18 This is a nine-page email thread 19 communicating information between a range of 20 people at Fujitsu and POL in March 2004. Can we 21 turn to page 9, please. Thank you. If we just 22 scroll up a little bit. Thank you. 23 We'll see that this is the start of the 24 chain. It's from Gareth Jenkins addressed to 25 "All", and he says -- he start the conversation. 123 1 "I've put together a note on events 2 generated within Horizon and those currently 3 sent to OPTIP." 4 The document is attached. 5 "I'd appreciate some feedback as to what is 6 required from the MIS system ..." 7 Can you explain what that is, please? 8 A. Management information system. 9 Q. "... for inclusion in the [conceptual design] so 10 that we can include the necessary work in the 11 S80 developments." 12 Can you recall what the S80 developments 13 were? 14 A. Also known as Release 3. 15 Q. If we go to the foot of page 8, we can see who 16 that was distributed to. From Mr Jenkins, at 17 the end of February, to Daniel Hawthorne. Can 18 you help us with who he was? 19 A. I think -- so I mentioned various business 20 analysts within Post Office earlier and, by this 21 stage, others had got involved, so Daniel 22 Hawthorne was one of them, Ben Gildersleve was 23 another. 24 Q. To Clive Read, copied to Dave Parnell, you and 25 Bob Gurney? 124 1 A. Yes. 2 Q. Then if we scroll up the page, please, keep 3 going on to page 7. Mr Jenkins sends out 4 a further email, this time to Ben Gildersleve, 5 copied to you Bob Gurney, Clive Read again and 6 adding Tony Utting. Who was Tony Utting? 7 A. I think another of those business analysts that 8 I mentioned earlier, Daniel Hawthorne, Ben 9 Gildersleve, Tony Utting. I think Tony may well 10 have had have come from Retail Line but still 11 have some reports into Retail Line. 12 Q. Are you saying that from memory or? 13 A. From the way -- I've read this conversation, so 14 from the style of -- where he takes this 15 conversation suggests he was probably more 16 interested in Retail Line management process. 17 Q. Do you think he might have come from security in 18 fact? 19 A. Maybe, yes, Retail Line or security. I'm sorry, 20 I don't -- I'm not really sure of the full 21 distinction that Post Office made of those 22 processes -- those functions, rather. 23 Q. In any event, Mr Jenkins said: 24 "Following our conversation [Ben 25 Gildersleve]. 125 1 "You have indicated that there is 2 a requirement to reprint old reports, so we 3 potentially need to either store the raw data 4 for a sufficient time to do this, or change the 5 mechanism by which we produce reprints such that 6 we store the original report and reprint the 7 report rather than regenerate it. It is 8 proposed that we do the latter." 9 Can you help us with the context here, what 10 the issue was and what was being asked? 11 A. So I think that what was being asked for was 12 reprints of reports from -- because the trading 13 period was going to a 4-4-5 monthly period, 14 the -- and I mentioned earlier about the -- it's 15 a retention limitation of the -- within the 16 branch. If you wanted to reprint previous 17 branch trading statements, then they would -- 18 depending on -- we're trying to work out what 19 the requirement is for how far back we need to 20 go, and if it goes back more than one previous 21 branch trading statement or possibly two, 22 depending on the time of the trading period that 23 you ask for, then unless we were to -- the 24 Horizon System were to store the reports, it 25 wouldn't have the data to recreate the report. 126 1 Q. What are the reports being referred to? 2 A. I think the well, there's the list there: cash 3 account reprint; office weekly counters revenue 4 schedule reprint; office weekly Inland Revenue 5 Tax Credits reprint; all of those, Track and 6 Trace -- 7 Q. Why was there a requirement to reprint old 8 reports? 9 A. Well, so whether it was security or Retail Line, 10 when someone like Tony went along to the branch 11 to discuss, presumably, on the basis of some 12 sort of perceived problem, they'd want to go and 13 review what actions had been done to manage the 14 accounts. So these -- the requirement had come 15 out that these needed to be reprinted as part of 16 those review discussions. 17 Q. Mr Jenkins says underneath the bullet points, if 18 we scroll down a little bit: 19 "I've copied this to Tony ..." 20 That must mean Tony Utting. 21 A. I believe so, yes. 22 Q. "... in case he has any input to the 23 requirements here from the security viewpoint." 24 Can you recall, in the course of this 25 discussion, were any of the legal teams from POL 127 1 or Fujitsu involved in the discussion as to what 2 documents ought to be retained or reprinted, as 3 it's described, for the purposes of audit 4 investigation or prosecution? 5 A. No, I can't recall any involvement. 6 Q. You can't recall any such involvement? 7 A. No, I can't recall any involvement. 8 Q. What is clear here though is that POL is saying 9 that it needed to be able to access some raw 10 data after the completion of a branch trading 11 statement. 12 A. Well, now I think this is for getting reports 13 from previous periods. So it's not the raw data 14 that they're wanting access to; it's the reports 15 of -- if you're there in March you might want to 16 go and look at February and January's trading 17 statements. 18 Q. But, okay, put my use of the phrase "raw data" 19 to one side. Some previous data. 20 A. Indeed, yes. 21 Q. Does that mean that anyone copied in on this 22 chain or reading this chain would know that the 23 data produced by Horizon could be used to 24 investigate the potential liabilities of 25 subpostmasters to repay it? 128 1 A. I suppose so, yes. 2 Q. And their potential for civil or criminal 3 proceedings to be taken against them on the 4 basis of such data. That's why you want to look 5 backwards? 6 A. Yes, or, like I say, I wasn't sure whether Tony 7 was -- when you referred to as security or 8 retain line, whether that's about going and 9 helping the subpostmasters or investigating 10 them. 11 Q. I think we'll, in the -- 12 A. In some respects it doesn't matter. I agree. 13 Q. When we go up the chain we'll see whether his 14 viewpoint was to help them. 15 Two options are identified in this email, is 16 that right: either keep the data for 17 a sufficient time or create a process where 18 reprints are stored rather than regenerated from 19 the original; is that right? 20 A. Yes, that's the potential options for the 21 solution that Gareth is identifying. 22 Q. If we go to page 5 of the email, please, and 23 look at the foot, we'll see a reply from 24 Mr Gildersleve to Mr Jenkins and we'll see the 25 copy list is the same, I think. 129 1 A. Mm-hm. 2 Q. Then scrolling down to see the body of the 3 email. 4 "Gareth 5 "My requirements are to keep all the reports 6 below with reprint facilities, except perhaps 7 the redeemed savings stamps, depending on what 8 happens with the remittance transaction for 9 dockets and vouchers. Also, I assume the Cash 10 Account reprint will become the Branch Trading 11 statement reprint? I would also like copies of 12 the Cash Variance report to be available as 13 well. You've picked out the reports with the 14 reprint in their title, but are there any 15 others? I've checked with John and he can't 16 think of any. 17 "I would like reports to be available from 18 Period 1, until the end of Period 2. Then when 19 the Branch rolls into Period 3, the reports for 20 Period 1 become unavailable. I would like the 21 reports to be available quickly and easily, so 22 whichever is the best solution to do this is 23 fine with me. If the idea of storing the report 24 is the best for speed of production, but is 25 hugely expensive then come back. I'm sure Dave 130 1 and Clive will have a view on this. 2 "If you want to check anything today come 3 back to me, but next week I'm off", et cetera. 4 A. Mm-hm. 5 Q. So this is essentially Mr Gildersleve indicating 6 to Mr Jenkins his requirements. 7 A. And presumably the requirements that he's found 8 from other parties in Post Office. 9 Q. It appears that the priority here for the Post 10 Office appears to be speed of production, yes? 11 A. Yes. 12 Q. But costs as always may be playing a role in 13 decision making? 14 A. Indeed. And, as we discussed earlier, there's 15 a potential very large cost if large numbers of 16 counters have to be -- have their disks 17 upgraded. 18 Q. There doesn't appear to be a discussion in this 19 thread as to whether retention of data itself 20 may be a preferable option over reprints of 21 earlier reports? 22 A. I think that discussion was going on separately 23 at the same time. I think there were, you know, 24 how long can this be -- this be? 25 Q. Again, there doesn't appear to be any discussion 131 1 here about what might happen if there were 2 defects, errors or bugs in the system that led 3 to errors in the original report, which is now 4 being kept as a reprint? 5 A. Indeed not. 6 Q. Again, in the context of this discussion, did 7 anyone turn their mind to the potential for the 8 system to have bugs, errors or defects within 9 it? 10 A. Not to my knowledge. 11 Q. If the system did have bugs, errors and defects 12 within it, would the raw data, as I've called 13 it, been a useful tool to have retained in order 14 to be able to investigate that issue, as opposed 15 to a reprint of a report produced on the basis 16 of flawed data? 17 A. This is a requirement for reprints in the 18 branch. The raw data was being retained back at 19 the data centre. 20 Q. But for the subpostmasters -- 21 A. But for the subpostmasters, yes. 22 Q. Can we turn to page 3 of this document or this 23 chain. Halfway down, we can see an email from 24 Bob Gurney to John Dutton. Can you help us what 25 Mr Dutton did? 132 1 A. I think -- sorry, I don't know. I think he must 2 have been -- well, does it mention Ben's on 3 leave? He must have been standing in for Ben 4 whilst he was on leave. 5 Q. So an equivalent? 6 A. Presumably, yes. 7 Q. He says, if we scroll down a little bit, we're 8 to come to you, essentially, for guidance. Then 9 topic 1, "Horizon Events to be Accessible", I'm 10 going to skip over that, and go over the page 11 topic 2, "Branch Reporting". At 2.1, "Reporting 12 on 'Previous' Trading Periods": 13 "Ben's email below confirms the requirement 14 to be able to produce reprints of the following 15 reports relating to the previous trading 16 period ..." 17 Then they're listed. 18 "We understand that these are the only 19 reports that are required to relate to 20 a 'previous' trading period. We are currently 21 investigating how we can cost effectively meet 22 this requirement, given that the underlying 23 transaction data will no longer be available to 24 recreate the reports." 25 What does that mean, "the underlying 133 1 transaction data will no longer be available to 2 recreate the reports"? 3 A. I presume he's replaying the options that Gareth 4 outlined at the start of the thread, where data 5 for previous trading periods will have been 6 purged from the system, and so -- and this -- 7 "currently investigating" is effectively saying 8 we're thinking about the second option, the 9 storing of reports for reprinting. 10 Q. It appears to confirm, does it not, that there's 11 no plan to retain the raw data from which 12 a branch trading statement could be produced, 13 correct? 14 A. Yes. Well, yeah. I think the "currently 15 investigating" is, it's not definitive, is it? 16 Q. Would you agree that it also suggests that the 17 retention or creation of this kind of audit 18 trail data wasn't accounted for or budgeted in 19 the initial contracting and negotiations over 20 the IMPACT Programme? 21 A. I think so. I think the IMPACT Programme -- the 22 expectation in those initial was that Horizon 23 would be changed to support the other system 24 developments but the main investments were to be 25 other system developments, the financial system, 134 1 upgrading SAPADS, MI system and updates to the 2 reference data systems. 3 Q. Can you help, to your knowledge, did it remain 4 a responsibility for Fujitsu that the system 5 should be able to produce reliable audit data 6 for production to POL so that it, the Post 7 Office, could comply with the evidential 8 requirements of the criminal law? 9 A. Not to my knowledge. I don't know whether that 10 was -- I've seen from previous parts of the 11 Inquiry that that was something originally 12 there. I don't know whether it was still there 13 then. 14 Q. Was it a discussion within the context of this 15 conversation? 16 A. No, it wasn't. 17 Q. So the requirement on Fujitsu, if it still 18 existed, to produce material to a sufficient 19 evidential standard for use in criminal 20 proceedings wasn't a discussion that occurred 21 in, to your knowledge, in the context of the 22 IMPACT Programme? 23 A. No. 24 Q. Can we turn to page 2 to of the email chain, 25 please. We can see that Mr Utting reduces the 135 1 distribution list to just Bob Gurney and John 2 Dutton. So that's essentially cutting out 3 Fujitsu; is that right? 4 A. No, Bob Gurney's Fujitsu -- 5 Q. I'm so sorry, but cutting out number of people 6 including you? 7 A. Indeed, yes. 8 Q. He says, Mr Utting: 9 "I am a little unsure about the query around 10 interim trading statements. 11 "In the case of an investigation, we would 12 need to be able to go into an office and 13 complete a full office balance which in the 14 absence of a cash account would mean a Trading 15 Statement would be required to provide a full 16 office view. 17 "If we then close the office down having 18 removed an offender ..." 19 The offender being the subpostmaster; is 20 that right? 21 A. Presumably, yeah. 22 Q. "... and the Retail Line replace the 23 subpostmaster and this happened mid-period, then 24 the office would need to produce another Trading 25 statement as usual at the end of the trading 136 1 period. 2 "I am not sure that the second Trading 3 statement would need to have the data from the 4 first included in this case, but we would need 5 to be able to produce the two statements within 6 the same period. 7 "I believe we also discussed doing something 8 similar for office where there was a large 9 variance, in order that the postmaster was able 10 to get a view of his office situation after 11 checking his stock and cash, but this could be 12 achieved through balancing all of the individual 13 stocks and then doing an office snapshot 14 presumably." 15 "If I am confused and have got this all 16 wrong, please let me know." 17 Does that help you to remember the role that 18 Mr Utting had, perhaps part of the security team 19 within the Post Office? 20 A. Perhaps. Like I say, I wasn't sure whether that 21 was security or Retail Line, but ... 22 Q. Now, although you're excluded from this chain at 23 the moment, you're then copied back in to the 24 chain which included this email. Mr Utting is 25 here spelling out the need for the Post Office 137 1 to have access to the data he's talking about in 2 order to support his investigations of 3 subpostmasters; isn't he? 4 A. Well, I think he's moved the conversation on, 5 actually. So rather than -- 6 Q. He's talking about whether there's 7 a replacement? 8 A. Well, where he's sort of describing his process 9 for putting in a replacement would be to roll 10 over previously a cash account, to give the 11 replacement a clean start, a balanced office to 12 begin with. So -- 13 Q. So the offender has been removed. 14 A. It would appear to be the process that Mr Utting 15 is describing, yes, and the process at that 16 stage was to run a cash account but with 17 lengthened trading periods, then running 18 a mid-period trading statement had the potential 19 of causing problems with when the next trading 20 statement was required. 21 Q. To your knowledge was there any discussion over 22 what data do security need when they conduct 23 an audit or an investigation in order to 24 establish whether a subpostmaster has committed 25 any wrong or not, or was the focus on how do we 138 1 clean the slate for the new guy that's being 2 brought in, which is what this email tends to 3 suggest. 4 A. I presumed that the emails -- the previous 5 emails in this email chain was looking at the 6 former but that's a presumption from reading 7 between the lines in the email chain and this -- 8 like I say, this has moved on to talking about 9 the latter, the creating a clean slate. 10 Q. On page 1 of the email, if we scroll right up -- 11 sorry, a little bit towards the bottom, my 12 mistake, thank you -- Mr Gurney -- 13 A. Forwards that to Gareth and myself. 14 Q. -- sends it to Gareth Jenkins but copies you in. 15 Please could you cast your eye over the 16 following draft response to Tony [Utting]." 17 So this is an intra-Fujitsu conversation? 18 A. I think so, yes. 19 Q. Is that right? 20 A. Yes, it is. Yes. There's only -- 21 Q. There's only three of you party it to -- 22 A. There's only -- 23 Q. -- all Fujitsu. 24 A. -- Fujitsu involved in this conversation and it 25 looks like Bob is coming to ask Gareth and 139 1 myself to check a response to Tony Utting's 2 email to him. 3 Q. He says the draft response could be: 4 "The production of the Branch Trading 5 Statement takes place following successful 6 completion of all of the 'end of trading period' 7 activities required before the branch rolls over 8 to the next trading period, eg [stock unit] 9 balancing activities, resolving variances, 10 making good, clearing dockets, etc. On 11 completion of the statement, all trading across 12 the branch is performed in the next trading 13 period. 14 "We had understood that Ben's requirement 15 for an 'interim' Branch Trading Statement was to 16 obtain a local branch management view of the 17 branch trading position during a branch trading 18 period, ie not to roll over to the next trading 19 period. Currently the Office Snapshot Report is 20 used for this purpose and there is no 'interim' 21 Cash Account facility. 22 "So, if I have understood your concern 23 correctly, I suggest we need to consider what 24 your current process is. If you currently 25 produce a Cash Account and roll the branch over 140 1 to a new [cash accounting period], then you will 2 be able to do the equivalent with the Branch 3 Trading Statement, ie this is not the situation 4 we had assumed was meant by Ben's 'interim' 5 statement. If, however, you currently use the 6 Office Snapshot to assess the branch position, 7 then you would continue to do so at S80. 8 "So in summary, I suspect that your 9 requirement will be met by producing additional 10 Branch Trading Statements. This will have no 11 effect on the back-end accounting system which 12 will run from the daily trading summaries 13 produced by Horizon and not the trading 14 statement which is different from the current 15 situation where CBDB is driven directly from the 16 Cash Account. The daily trading summaries used 17 by POL-FS will include the results of any 18 changes needed to balance the branch, address 19 variances, processing of Transaction 20 Corrections, etc." 21 Can you decode what he is suggesting, 22 please? 23 A. Um, so I think Tony had moved the conversation 24 on from reprints to an interim branch trading 25 statement. Bob had explained -- Bob's trying to 141 1 explain here how an equivalent to an interim 2 branch trading statement, without rolling the 3 branch, could be performed, but pointing out 4 that the alternative is to roll over the branch. 5 And I think he's looking to try to elaborate 6 Tony's requirement further and give Tony options 7 for what he might want -- Post Office might 8 want. 9 Q. Was it the case that daily summaries were fed to 10 POL-FS by Horizon? 11 A. Would be, POL-FS didn't exist by this stage, but 12 it would be. That's the design, yes, I think. 13 Q. So the daily trading summaries fed back to the 14 back end accounting systems in POL -- 15 A. Effectively, that's -- 16 Q. -- hold on -- 17 A. Sorry! 18 Q. -- could be providing different figures to those 19 in the branch trading statements? 20 A. Sorry, which -- the daily trading summaries that 21 would go to POL-FS would be the same daily 22 trading summaries that would previously go into 23 OPTIP and I don't know where you -- which bit of 24 this that you're meaning how it could be 25 different to ... 142 1 Q. Well, Mr Gurney is suggesting, isn't he, that 2 the production of additional branch trading 3 statements ought not to affect the process of 4 altering the summaries by including changes 5 needed to balance the branch? 6 A. Sorry, I don't -- 7 Q. You don't read it that way? 8 A. -- understand what he's trying to say there. 9 I think the next thing is that Gareth explains 10 why this isn't a good idea to propose this. 11 Q. Let's look at the top of page 1, then, and see 12 Mr Jenkins's reply. Again it's a conversation 13 between the three of you. Mr Jenkins, Mr Gurney 14 and you: 15 "I'm happy with the proposed response to 16 Tony, however this raises some interesting 17 questions: 18 "Consider the following scenario: 19 "A branch is considered by Tony to be 20 'Dodgy' and he goes in there one week into a 5 21 week trading period (say period 2). Then roll 22 the branch into period 3, which is a 4 week 23 Trading Period. For the next 4 weeks, the new 24 staff will get a warning message at each log-on 25 indicating that they are running in the wrong 143 1 Trading Period (is that acceptable?). At the 2 real end of the Trading Period, there is no need 3 to roll over the branch since it is already in 4 Period 3, this makes Period 3 an 8 week Trading 5 period. After 6 weeks we start losing 6 Transactions!" 7 Just asking a few questions about that 8 paragraph there and your knowledge of it. The 9 "After 6 weeks we start losing Transactions", to 10 what is that a reference? 11 A. That's a reference to the changed data retention 12 policy that had been specified somewhere in some 13 requirements. 14 Q. Within IMPACT? 15 A. Within IMPACT, yes, and so -- which I thought 16 was 45 days, but I guess that's six weeks and 17 a bit. 18 Q. So his concern is what happens if there's 19 a problem, transactions are lost because of the 20 disruption policy and the trading period 21 continues on rolling on for a number of weeks? 22 A. Indeed. And, as he indicates there, in the 23 meantime, users will be warned that they're 24 running in the wrong trading period. They've 25 rolled over too soon. 144 1 Q. Now, despite saying that it raises some 2 interesting questions and posting a scenario, 3 Mr Jenkins says that he's happy for the response 4 that had been drafted to go to Post Office; yes? 5 A. Yeah. 6 Q. So what happened next? 7 A. Um, I think it was raised to Clive and as -- one 8 of the email chains that you sent me last week 9 has some level of resolution, I think, where 10 I proposed that that these interim trading 11 period -- interim cash account things could be 12 performed by some rewriting of procedures. 13 Q. The last line there: 14 "Is it one for Clive? (It clearly isn't one 15 for Tony -- unless we have to constrain what he 16 does!" 17 What did you understand that to mean, the 18 constraining what Tony Utting might do? 19 A. Presumably it's a case of feeling that this had 20 to be raised to the appropriate level of 21 authority, and I don't know why constrain Tony, 22 but I think it might well be something to do 23 with the fact that to any appears to be coming 24 out with new requirements, and new requirements 25 at this stage, close to finalisation of the 145 1 conceptual design document, where once we'd got 2 to an approved conceptual design document, we'd 3 turn that into a proposal or a design proposal 4 against it, new requirements are, you know, 5 dangerous with -- you know, represent scope 6 creep. 7 Q. You've rightly mentioned that this email chain 8 progresses and ends up with a discussion about 9 the implications for a new subpostmaster 10 installed in a post office when the previous 11 offender had been identified as "dodgy" and has 12 been removed, using the language of the email 13 chain -- 14 A. Indeed. 15 Q. -- and the implications for them of the loss of 16 transaction data. Was there ever any discussion 17 about the implications of the loss of 18 transaction data that might be important for the 19 investigation of the offender in the dodgy Post 20 Office? 21 A. I don't think so. I don't recall any. 22 Q. We need to retain some data in order properly to 23 be able to investigate a person who has been 24 suspended, had civil proceedings taken against 25 them or is criminally prosecuted: was that ever, 146 1 in the many months that you were involved in 2 this project, the subject of discussion? 3 A. I don't believe so. 4 Q. Can we move forwards, please, to the IMPACT 3, 5 Release 3 design proposal, and look at 6 POL00038903. Thank you very much. 7 You'll see the title to this document 8 "Fujitsu Services IMPACT Release 3 -- Balancing 9 and Trading Statement Production User Interface" 10 and the date of the document, it's version 1 11 dated 18 August 2004. 12 So this is a design proposal for the user 13 interface; is that right? 14 A. A part of the user interface, yes. 15 Q. Thank you. Part of the user interface involved 16 in balancing and producing a branch trading 17 statement under the revised IMPACT Release 3? 18 A. That's right. 19 Q. Now, it's a very detailed document, it's 20 72 pages, and includes descriptions of the 21 changes to the processes and the screens that 22 would be seen by a subpostmaster under the new 23 design, under of the new process? 24 A. Mm-hm. 25 Q. Now, I think we can see from this page that 147 1 there were a number of people involved in the 2 design, but that you, along with Peter Jobson -- 3 Pete Jobson -- were the contributors; is that 4 right? 5 A. We were the contributors, Roger Donato was the 6 author. 7 Q. What role did Pete Jobson perform? 8 A. So I think Pete may well have been -- provided 9 knowledge of the existing flows and interface. 10 So that -- we'll see, I'm sure, in the rest of 11 the document, there is a lot of flow diagrams 12 and a lot of screenshot images with notes around 13 them saying, "This needs to change to this and 14 that should change to this", that sort of thing. 15 I think Pete will have provided those screenshot 16 images and may well have provided the flows for 17 the -- the flow diagrams of the existing user 18 interface for producing cash accounts, rather 19 than trading statements. 20 Q. Can we look at page 71 of the document, please, 21 which deals with "Local Suspense" under 22 paragraph 4.7.4. If we just read it together: 23 "One of the steps in the rollover process is 24 to check the variances (discrepancies) and to 25 warn the clerk of their value. There are 148 1 various ways he may be able to correct them but 2 if all else fails he will commit the 3 discrepancy ... 4 "When the stock unit is rolled over into 5 a new Trading Period any discrepancy is written 6 as a transaction to one of two new products Gain 7 to Local Suspense or Loss to Local Suspense. 8 (This will later appear on the Branch Trading 9 Statement as Discrepancy OVER Transferred or as 10 Discrepancy SHORT Transferred for that stock 11 unit). 12 "When the last stock unit is rolled over 13 into a new Trading Period the system will 14 calculate the net figure for local suspense 15 across all the stock units in the Branch. Only 16 if this value is zero will the clerk be able to 17 roll this stock unit over into the new Trading 18 Period. Otherwise, if the value is not zero the 19 clerk will be warned of the amount and whether 20 it is a gain or a loss on the screen shown in 21 [a figure]. 22 "The Manager/Supervisor may choose to 23 investigate further by printing the suspense 24 report but if he is prepared to accept the 25 figure then he can clear the local suspense 149 1 immediately by using the screen in Figure 13 -- 2 Settle Local Suspense Screen: the value will be 3 moved automatically from Local Suspense into his 4 stock unit. (This will then appear on the 5 Branch Trading Statement as Discrepancy OVER 6 Resolved or as Discrepancy SHORT Resolved for 7 that stock unit)." 8 That I think involves the subpostmaster 9 making a payment; is that right? 10 A. So far we've only got to the subpostmaster 11 accepting a discrepancy from other stock units 12 posted into local suspense into their stock 13 unit, where they may then take action to resolve 14 it. 15 Q. I'd understood he can clear the local suspense 16 immediately by using the screen "Settle the 17 local suspense" as meaning settle by paying? 18 A. No, it then says, "Moved automatically from 19 local suspense into his stock unit". So what 20 that's doing is -- local suspense was really 21 just a convenient way of moving discrepancies 22 around from stock unit to stock unit. 23 Ultimately, the intention was that the last 24 stock unit would take that into the stock unit 25 and resolve it in whichever method was chosen, 150 1 make good, move to suspense or choose not to 2 roll over, as we discussed earlier. 3 Q. Continuing, then: 4 "If the Manager/Supervisor decides to 5 investigate further he delays rollover until his 6 investigations are complete." 7 This is still in branch; is this right? 8 A. Indeed, yes. So the roles in -- because it sort 9 of uses the term "clerk". 10 Q. On one hand, and manager/supervisor on the 11 other; is that right? 12 A. So users when they're created in Horizon can be 13 given one of either manager/supervisor or clerk 14 user access set of permissions. I think, in the 15 previous uses of "clerk" they mean clerk or 16 manager or supervisor. The last stock unit 17 could only be rolled over by the manager or 18 supervisor. 19 Q. So: 20 "If the [Manager] decides to investigate 21 further he delays rollover until his 22 investigations are complete. He may decide to 23 use other options on the Housekeeping menu to 24 process the suspense or he may decide that he 25 wants to settle some local suspense via cash 151 1 payment and the remainder by some other option. 2 Two new buttons 'Gains from Local Suspense' and 3 'Losses from Local Suspense' will appear on the 4 Housekeeping menu which can be used by the 5 Manager to clear amounts of local suspense for 6 the whole branch: (these will be done by 7 clearing to cash). These buttons will return 8 a screen similar to that in [a figure]. 9 "If the Manager processes the Branch local 10 suspense via the Housekeeping menu the clerk 11 will have to redeclare his cash before rolling 12 over the stock unit." 13 This mentions a manager deciding further to 14 investigate. 15 A. Indeed. 16 Q. Can we go to paragraph 4.2.11, please, which is 17 on page 50, "Local Response Outstanding for 18 Branch": 19 "This is a new screen for IMPACT Release 3, 20 which may be returned if the clerk touches the 21 Next [Trading Period] [F1] button on the screen 22 in Figure 9 ..." 23 Then if we scroll down underneath the 24 figure: 25 "There will be alternative ways to resolve 152 1 the Suspense total ..." 2 The first: 3 "If user is a Manager/Supervisor who wants 4 to resolve it immediately he may touch Continue 5 to return the screen in Figure 13 ... Local 6 Suspense ..." 7 Then option 2, over the page, please: 8 "Alternatively, further investigation may be 9 required; so the clerk touches Cancel to cancel 10 the rollover and the counter returns to the 11 Stock Unit Balance Menu. (Two new buttons, 12 'Gains from Local Suspense' and 'Losses from 13 Local Suspense' will appear on the Housekeeping 14 Menu and can also be used to process the Local 15 Suspense)." 16 The evidence that the Inquiry has heard from 17 a range of subpostmasters in Phase 1 of the 18 Inquiry was that there was effectively this 19 choice available to them and an inability to 20 challenge any discrepancy through the use of the 21 system. They were forced, whether effectively 22 to continue trading or not, by settling. Does 23 this design proposal broadly reflect that 24 position? 25 A. I don't think so, but I think it depends on how 153 1 this was presented to subpostmasters, I presume. 2 But I think the intention was that this was 3 a convenient way of -- so local suspense was 4 a convenient way of moving any discrepancies in 5 stock units from stock unit to stock unit. 6 I think -- can we scroll up so we can see the 7 screen? 8 Q. Yes, figure 12. 9 A. Indeed, figure 12. So in order to get to that 10 screen, you will have to have -- in this last 11 stock unit, to rollover, you'll have to have 12 performed all the actions of balancing that 13 stock unit, which would have involved printing 14 all of the reports, performing a stock, which 15 included the suspense account report, which 16 included the local suspense element so that you 17 would know whether there was something in local 18 suspense at this point. You'd have done your 19 stock unit -- stock declaration for the stock 20 unit, you'd have done a cash declaration for the 21 stock unit, both of which would have told you 22 whether there were any discrepancies in that 23 stock unit, which may or may not have cancelled 24 out the discrepancy in the local suspense by 25 this stage. 154 1 So if you got to this screen -- sorry, and 2 before you got to there, you'd have selected to 3 roll over the suspense account, and so if you 4 got to that screen and didn't know that there 5 was something in local suspense, then you ought 6 to have done, I think, is the -- 7 Q. But on the face of it, this presents you with 8 a binary option, this screen, doesn't it? 9 A. If you get there. 10 Q. You can either pay up -- 11 A. Well, although there's always the -- 12 Q. Hold on. 13 A. Sorry. 14 Q. You either pay up, touch "Continue" to settle 15 local suspense or you "Cancel", in which case 16 you cannot roll over? 17 A. Well, you can cancel, in which case you can then 18 go to post to suspense or one of the suspense 19 products that are still remaining after this. 20 But ... 21 Q. This appears to present a binary option: pay-up 22 or don't rollover? 23 A. Well, "Cancel" takes you back to the 24 housekeeping menu on which there are buttons for 25 suspense account, rolling over, making good. 155 1 Q. How could you roll over if this is preventing 2 you from rolling over? 3 A. Well, you'd have to resolve the discrepancy 4 first, but -- 5 Q. By paying up -- 6 A. By cancelling and -- either choosing to pay up 7 or transferring to suspense, contacting NBSC and 8 saying -- raising -- 9 Q. Getting on the phone? 10 A. Indeed. 11 Q. Saying, "There's a discrepancy I can't explain"? 12 A. Indeed. 13 Q. What was the procedure provided for in this 14 document for the investigations that then would 15 to be conducted? 16 A. I don't know. That's Post Office procedures. 17 Q. Do you know what investigations managers were 18 expected to conduct if they believed that 19 a failure to balance was the result of an error, 20 including an error caused by Horizon? 21 A. No, I don't. 22 Q. What was to happen to trading at the branch 23 whilst any such investigations were conducted? 24 A. Well, depending on what those investigations 25 were, either the -- this discrepancy would have 156 1 been transferred to suspense and trading would 2 carry on or the -- that last stock unit wouldn't 3 roll over but all the other stock units would 4 have rolled over and trading would carry on in 5 those stock units and whoever was logging on to 6 this stock unit would have been warned that they 7 were trading in the wrong trading period. 8 Q. We saw that I think this document had been 9 approved by Mr Jenkins. 10 A. Mm-hm. 11 Q. Maybe if we just go back to the beginning. 12 Page 1, sorry. I may not have highlighted it at 13 the time. If you just scroll down, please. 14 Approval authorities, Gareth Jenkins. Can you 15 see that? 16 A. Yes. 17 Q. In the approval process, to your knowledge, did 18 Mr Jenkins raise any concerns about 19 discrepancies or variances that might be caused 20 as a result of any bugs, errors or defects 21 within Horizon itself? 22 A. I don't know. I wasn't involved in the review 23 process of this. I'm marked as a contributor 24 but don't believe -- I'm not one of the 25 reviewers, so I think I had conversations with 157 1 Roger Donato and Pete Jobson to put input into 2 this document but I'm not on the review list. 3 I didn't review it or -- I think I may, because, 4 like I said, there are flow diagrams and 5 screenshots of -- I may well have arranged 6 because I was the sort of key link to Post 7 Office. 8 So I may well have arranged meetings with 9 Post Office business analysts to review early 10 drafts or -- you know, or review the content to 11 go into this document, but I don't think 12 I reviewed this document. I don't think, you 13 know. 14 Q. Just help me: you contributed to it? 15 A. I think I may well have, you know, reviewed some 16 of the input into the flow diagrams, the -- 17 possibly the screenshots, but I don't think 18 I would -- I didn't review the document. 19 Q. But more generally, when we've gone through each 20 of the documents, I've asked you at each stage 21 whether anyone raised the issue: Horizon has 22 historically had some problems in its operation; 23 it may create data that can't always be relied 24 on; we ought to take account of that in the 25 systems that we're now designing so that harm 158 1 isn't caused to people. 2 A. It wasn't raised, wasn't discussed. 3 Q. Do you know why? 4 A. I don't. 5 Q. You've said that all systems have errors, bugs 6 and defects? 7 A. I believe so. 8 Q. And all systems have errors, bugs and defects 9 that are capable of producing faulty data? 10 A. Probably, yes. 11 Q. Was even that level of consideration, never mind 12 the actual knowledge that some people had as to 13 the difficult birth that Horizon had had, was 14 even that level of consideration brought into 15 account in the design of these new systems? 16 A. Well, yes, like I say, I believe there were 17 always options there in terms of going back and, 18 you know, raising this as a disputed 19 discrepancy. 20 Q. How would the subpostmaster effectively do that? 21 A. I don't know. That would be -- that would rely 22 on Post Office's processes. 23 MR BEER: Sir, that might be an appropriate moment 24 for the afternoon break. Could we take just ten 25 minutes, please? 159 1 SIR WYN WILLIAMS: Certainly, yes, ten minutes. 2 What time is that, so we're going by the same 3 clock? 4 MR BEER: Say 3.20, please, sir. 5 SIR WYN WILLIAMS: Fine. Thank you. 6 (3.09 pm) 7 (A short break) 8 (3.23 pm) 9 MR BEER: Good afternoon, sir can you see and hear 10 me? 11 SIR WYN WILLIAMS: Yes, I can. 12 MR BEER: Thank you very much, can we turn to 13 a different topic now, Mr Boardman, please, and 14 look at POL00038866. You'll see this is 15 version 2 of the conceptual design document for 16 Release 1 of the Accounting & Cash Management 17 Programme. Could I invite you just to look at 18 the bottom of the page. You'll see the authors, 19 the sign-offs and the delivery manager. Is this 20 a POL document, a Post Office document? 21 A. Yes. 22 Q. Would it have been shared with Fujitsu at the 23 time? 24 A. Did it say Release 1? 25 Q. It did. 160 1 A. Probably not. It may have been but I can't 2 recall it particularly. I think Release 1 was 3 mostly Post Office things. There were some 4 changes to SAPADS. Oh, Release 1 may well have 5 included auto remittances, so it may well have 6 been but -- 7 Q. Just have look at the fourth page, please. If 8 you look at the top box, the contributors 9 include you. 10 A. Indeed. 11 Q. So does that mean you would have had sight of 12 the document at some point? 13 A. It may have done, I may have contributed, 14 because there was an accounting in cash 15 management but not for Release 1, general 16 conceptual design, I believe, that this may have 17 come from, that I was involved in, so -- 18 But I don't have a recollection, if you -- 19 but if there are particular things you'd like to 20 discuss, I'm quite happy to. 21 Q. I just want to understand, to start with, where 22 this document sat between the Post Office, on 23 the one hand, and Fujitsu and the other, and 24 whether it was a Post Office creation or 25 a Fujitsu creation or a joint production? 161 1 A. So we talked earlier about the end-to-end 2 feasibility study, and we talked at length about 3 the Fujitsu proposal to that. At some point -- 4 sorry, I've got a reference. This was 3886 5 something, did you say? POL000388 -- 6 Q. 66. 7 A. So there's a POL00038870 document that was 8 accounting and cash management programme, but 9 not just for Release 1; it was a generic 10 conceptual design for the entirety of the IMPACT 11 Programme at that stage, which was then -- so 12 this presumably has been split out from that, 13 and but also -- so that's something that Post 14 Office were producing at that stage. And then 15 later, the two documents, the ones that we -- 16 POL00038878, that's the Branch Trading 17 Conceptual Design, and the reference -- 18 Q. For the moment, Mr Boardman, all I'm trying to 19 establish is whether, at the time, anyone in 20 Fujitsu would have seen this document? 21 A. I'm sure someone in Fujitsu saw it. I just 22 can't recall whether I did. 23 Q. When you're listed as a contributor, how would 24 you contribute to the document without seeing 25 it? 162 1 A. So because I was involved in the programme 2 before this was produced. 3 Q. So if you're generally involved in a programme, 4 you could be listed as a contributor to a 5 document, could you, even if in fact you made no 6 contribution to it? 7 A. I'd have to see the document. I can't recall 8 the document in particular. 9 Q. Can we approach it from a different angle, then. 10 You see underneath the contributors, in terms of 11 distribution of the document, there is "Post 12 Office distribution" and then "supplier 13 distribution". The supplier would be Fujitsu; 14 is that right? 15 A. Well, if this is Release 1, I think the main 16 changes there were in SAPADS, with some changes 17 in Horizon. 18 Q. Would Fujitsu be a supplier? 19 A. A supplier, yes. 20 Q. If we go over, it says, "As per review details". 21 If we go over two pages to the review details. 22 The top box, please. "Supplier Review" is 23 listed Gareth Jenkins, Bob Gurney and Bob Cragg. 24 Does that suggest that somebody within Fujitsu 25 reviewed the -- 163 1 A. Gareth Jenkins, Bob Gurney -- 2 Q. Hold on. 3 A. Sorry. 4 Q. Does that suggest that somebody within Fujitsu, 5 namely at least Mr Jenkins and Mr Gurney, 6 reviewed the entirety of the document? 7 A. Yes. 8 Q. Right. Good. We can now look at the document, 9 then. Can we go to page 24. This is part of 10 a list of the programme requirement 11 descriptions, and I think that's what "RD" 12 stands for; is that right? 13 A. I don't know. 14 Q. Requirement description? 15 A. I don't know. So the other document that I was 16 referring to earlier, that also had "accounting 17 and cash management programme" but not 18 "Restricted to release on conceptual design", 19 had a number of requirements in there which had 20 different starts. So they weren't all RDs; they 21 were all -- so, I don't know whether RD is 22 something to do with this area or whether RD is 23 just generally a requirement description. 24 Q. Well, I'll just call it number 38, then? 25 A. Indeed, yes. 164 1 Q. Rather than Requirement Description number 38. 2 Number 38: 3 "Operation staff need to have direct access 4 and visibility to the system to enable them to 5 maintain network records." 6 Can you help; what would "operation staff" 7 mean for these purposes? 8 A. Without context, could be anything. It could be 9 people in -- like I say, I think this is to do 10 with -- this particular area is mostly to do 11 with SAPADS, and so it could be people in cash 12 centres. We were never really involved in 13 making changes to SAPADS, and so these could 14 well be requirements for SAPADS. 15 Q. Can we look, please, at page 25, and look at the 16 foot of the page and look at number 59: 17 "Remote access for data entry is required." 18 Do you know what that refers to? 19 A. No, I don't think so. 20 Q. Page 26. Number 64: 21 "Both internal and external access will be 22 required, eg POL and Fujitsu." 23 Do you know what that refers to? 24 A. I don't know what access is being talked about, 25 which system it's -- so, for example, you can 165 1 see just at the bottom of the page there, you're 2 asking me about RD64, that's fine, but MIH, 3 that's not an RD. That's talking about -- 4 I think that -- I'm guessing that would be about 5 the management information system. So these are 6 requirements for different systems, I think, is 7 what RD -- but I don't know which system RD is 8 asking a requirement about. 9 Q. Maybe if we just go back, then, to page 23. The 10 reason I suggested that RD might refer to 11 requirement description is that the heading -- 12 A. It's reference data. 13 Q. Sorry? 14 A. It's the first one, RD001, it's reference data. 15 Q. So it's not the requirement description at the 16 top there? 17 A. No, it's talking about -- these are requirements 18 for the updated, changed, new Reference Data 19 System, which Post Office were specifying for 20 Prism Alliance. 21 Q. So operation staff would need to have direct 22 access to reference data; is that right? 23 A. I presume that's what that is saying, yes. 24 I think -- 25 Q. And -- 166 1 A. Sorry to interrupt, but as you scrolled back 2 past there, it said something about NBSC 3 requiring data as well. So reference data, 4 amongst all of the information about products, 5 also had all sorts of information about 6 branches, branch data. So Subpostmaster contact 7 details, and things like that, and that's 8 presumably the sort of thing that NBSC would be 9 looking for. 10 Q. Looking at the question more broadly, then, what 11 remote access to reference data did you 12 understand Fujitsu had? 13 A. I'm sorry, I don't know. I thought our only 14 access to the Reference Data System was via an 15 interface. So Post Office managed the reference 16 data in their reference data systems, and we had 17 an interface to feed the data to our reference 18 data management system that was used to -- or 19 still is used, actually -- to verify the 20 reference data. And when I say verify, we can't 21 verify that the data is correct, but we can 22 verify that it's formed in the correct way. You 23 know, that it will work as reference data. That 24 it's not badly specified reference data. So we 25 can test it and then deploy it out to branches. 167 1 Q. We saw that you were working and exchanging 2 emails with Mr Jenkins in the course of the 3 development and implementation of the IMPACT 4 Programme. How long did that working 5 relationship last? 6 A. All the time I was working with Post Office 7 Accounts. 8 Q. When did that end? 9 A. 2007. 10 Q. So for five years or so? 11 A. Yes. 12 Q. In that five-year period, how well would you say 13 you knew Mr Jenkins? 14 A. He was a colleague. We had a good working 15 relationship. 16 Q. Did you work in the same building? 17 A. No, he was -- well, he was originally at 18 Feltham, I think, and then Bracknell. I was 19 based at Crewe. 20 Q. You exchanged emails on a relatively frequent 21 basis and attended meetings? 22 A. Indeed. 23 Q. In the course of that five-year period, did he 24 ever discuss with you the provision, by him, of 25 evidence as an expert witness in criminal 168 1 proceedings? 2 A. No. 3 Q. Were you a party to any discussion over the 4 provision by Mr Jenkins of expert witness 5 evidence in criminal proceedings? 6 A. No. 7 Q. Were you ever party to a discussion as to who 8 was best within Fujitsu to provide expert 9 evidence as to the existence or non-existence, 10 as it turned out, of any errors, bugs and 11 defects in the Horizon System? 12 A. No. 13 MR BEER: Thank you very much, Mr Boardman, for all 14 the help you've given us. 15 Sir, they're the only questions I ask. 16 I think Ms Page has some questions, not 17 Mr Stein, not from Mr Moloney and not from any 18 other person. So it's just Ms Page. Thank you. 19 SIR WYN WILLIAMS: All right, over to you, Ms Page. 20 Questioned by MS PAGE 21 MS PAGE: Thank you, sir. Mr Boardman, can I talk 22 to you about the case of Lee Castleton. Over 23 a nine-week period in early 2004 -- so we're 24 talking about before the rollout of Release 3 or 25 S80, thousands of pounds went into his suspense 169 1 account. The reason for that was that his 2 counter went haywire, and week after week he 3 experienced very large discrepancies. 4 He kept meticulous records and he would not 5 sign off on incorrect accounts. So by the end 6 of that nine-week period, £23,000 had built up 7 in his suspense account. 8 Now you've told us that you don't recall -- 9 this was in your witness statement -- you don't 10 recall why the "yes/cancel" screen was decided 11 upon. Does that maybe jog your memory at all? 12 A. Sorry? 13 Q. Does that account of Mr Castleton's experience 14 jog your memory of yes/cancel screen was decided 15 upon as a way of dealing with suspense accounts? 16 A. I don't understand the question. The yes/cancel 17 was about choosing whether to roll over or not, 18 and options that were to be presented to the 19 subpostmaster as part of rolling over. 20 Q. Were your POL counterparts keen to ensure that 21 sums like that, £24,000, didn't build up over 22 weeks in suspense accounts? 23 A. I'm sure they would have been keen for that not 24 to happen, but it was never discussed. 25 Q. Was it not discussed, perhaps, by those 170 1 advocates of the 'command and control' way of 2 doing things? 3 A. When I discussed -- when I described that 4 approach that was internal to Post Office, those 5 discussions -- and I didn't really witness them, 6 by the time decisions -- 7 Q. Not in any of those workshops that you held? 8 A. I don't think so, no. 9 Q. How would the yes/cancel screen have empowered 10 Mr Castleton? 11 A. So, like I say, the idea was that the 12 subpostmaster would be given some facilities for 13 managing their accounts, accounting for the 14 transactions, and facilities for reviewing and 15 investigating discrepancies, and ultimately 16 mechanisms then for either agreeing them or 17 posting them to suspense. 18 Q. Once the posting to suspense was no longer 19 an option, as it was for Mr Castleton, how would 20 he have been empowered if his position had been 21 replicated after S80 had rolled out? 22 A. So I'm not sure that -- I don't know, for 23 Mr Castleton, did you say, sorry? How Network 24 Business Support Centre/Retail Line were 25 managing that situation, but I would expect, by 171 1 that stage, for it to get to that situation, 2 they would have been, you know, very heavily 3 involved, and those facilities were not 4 changing. 5 MS PAGE: Thank you. Those are my questions. Thank 6 you. 7 SIR WYN WILLIAMS: All right. Well, I think that 8 concludes the questioning, does it not, Mr Beer? 9 MR BEER: Yes, it does. Thank you, sir. 10 SIR WYN WILLIAMS: Thank you very much, Mr Boardman, 11 for spending the day at the Inquiry answering 12 very many questions. I'm grateful to you. 13 MR BEER: Sir, 10.00 am tomorrow, please, with Susan 14 Harding. 15 SIR WYN WILLIAMS: Yes, of course. 16 MR BEER: Thank you very much. 17 (3.42 pm) 18 (The hearing adjourned until 10.00 am 19 the following day) 20 21 22 23 24 25 172 1 I N D E X 2 PHILIP BOARDMAN (affirmed) ...........................1 3 Questioned by MR BEER .........................1 4 Questioned by MS PAGE .......................169 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 173