1 Wednesday, 18 October 2023 2 (12.00 noon) 3 MR STEVENS: Good morning, about to be good 4 afternoon, sir. Can you see and hear me? 5 SIR WYN WILLIAMS: Yes, I can. Before you go any 6 further can I ascertain from you how we propose 7 the rest of the day should pan out? My kind of 8 provisional view was that we'd have a lunch 9 break at more or less the normal conventional 10 time and then an afternoon break does that 11 coincide with how you see it going? 12 MR STEVENS: Precisely sir, yes. 13 SIR WYN WILLIAMS: Fine. All right, thank you. 14 MR STEVENS: In which case, may I call Mr Alan 15 Lusher. 16 ALAN KENNETH LUSHER (affirmed) 17 Questioned by MR STEVENS 18 MR STEVENS: Thank you, Mr Lusher. My name is Sam 19 Stevens and, as you know, I ask questions on 20 behalf of the Inquiry. Please could I ask you 21 to state your full name. 22 A. Alan Kenneth Lusher. 23 Q. Thank you for giving evidence today and thank 24 you for the detailed witness statement which 25 you've already provided. I want to turn to that 1 1 now and I see you do have a bundle of documents 2 in front of you? 3 A. I do. 4 Q. Do you have your witness statement to hand? 5 A. Yes. 6 Q. For the purposes of the -- that's dated 10 May, 7 I should say, of this year. For the purposes of 8 the record it's referenced WITN05830100. Can 9 I ask you, please, to turn to page 49 of that 10 statement? 11 A. Yes, sir. 12 Q. You'll see it runs to 176 paragraphs. 13 A. Yes. 14 Q. At the bottom, do you see your signature? 15 A. Yes. 16 Q. Can I ask you to confirm that the facts stated 17 within that statement are true to the best of 18 your knowledge and belief? 19 A. Yes, they are. 20 Q. Thank you. That stands as your evidence to the 21 Inquiry. I'm going to ask you a few further 22 questions and I'm going to start with some 23 background, summarising your career at the Post 24 Office, before discussing some parts in more 25 detail. 2 1 It's fair to say, is it, that the majority 2 of your career at the Post Office was spent 3 either in the Audit Team or as a Contract 4 Adviser? 5 A. Yes, that's right. 6 Q. You joined the Post Office in 1982? 7 A. Yes. 8 Q. I think you initially started working in Crown 9 Office branches? 10 A. Yes, that's right. 11 Q. Then you became an Auditor at postal officer 12 grade conducting audits of sub post offices? 13 A. That's right, yes. 14 Q. Then you worked in the Audit Team with 15 promotions until around 2002, I believe? 16 A. Just referring to my statement there, it would 17 be around 2002, yes. 18 Q. Shall we bring that up. If we bring up your 19 witness statement at page 2, paragraph 5, 20 please. Thank you, at the bottom it's 21 an incomplete list but we have a list of roles 22 which was, I think, generated from an HR system 23 held by Post Office. We see you were Audit Team 24 Leader East until 2002. Then, below that, you 25 moved into the Security team as a Security Team 3 1 Manager. 2 A. Yes, that's right. 3 Q. My understanding is, while you were in the 4 Security Department in that role, you were 5 dealing with cheque fraud, predominantly? 6 A. It was product fraud with the overall remit of 7 the team and I specifically looked after cheque 8 encashment fraud at that time. 9 Q. That was presumably customers of Post Office 10 rather than subpostmasters themselves? 11 A. That's absolutely right, yes. 12 Q. If we can go over the page, please, subparagraph 13 (i), you refer to a role between 2003 and 2005: 14 RLM. Later in your statement I think you say 15 that was a sales role; is that correct? 16 A. Yes, that's broadly the role of the Retail Line 17 Manager. 18 Q. You pre-empted my question. Then we have 19 Manpower Planning, but at (k), from October 2005 20 the C&SM 16, does that stand for Contract and 21 Services Manager? 22 A. Yes, indeed. Really, the title Contract Adviser 23 or Contract Manager can apply from that date 24 onwards. 25 Q. I see. So right through until -- if we can go 4 1 down just slightly, please -- right down until 2 you finish at the Post Office in August 2019. 3 All of those, effectively, the role of 4 a Contract Adviser? 5 A. With some differences, from around 2010, the 6 line (p) there, Commercial Contract Adviser, 7 I was doing a slightly different job still 8 within the contracts role but not log after 9 subpostmaster contracts directly and, 10 thereafter, I was involved in looking after the 11 contracts for what we referred to the multiple 12 partners, partners such as Tesco, One Stop and 13 McColls, and so on, and those partners that 14 large numbers of post offices each and so the 15 means of managing the contract was somewhat 16 different. 17 Q. With these larger firms, from 2012 onwards, 18 presumably you'd have a contact at, say, Co-op 19 or whoever it is? 20 A. Yeah. 21 Q. You would deal with them and then that person or 22 someone within Co-op would deal with the 23 individuals at the -- 24 A. In general, that would be the way it went 25 forward, yes. 5 1 Q. That document can come down, thank you. 2 I'm going to focus primarily on your period 3 of dealing with subpostmasters when you were 4 a Contract Adviser and also when you were in 5 audit. Before then, I want to look at some 6 points on reliability -- perhaps we took that 7 document down too soon, if we could go back to 8 it at page 49, paragraph 175, please. Thank 9 you. 10 If we could start at 175. Thank you. This 11 is at the end of your statement and you say: 12 "At the time of the introduction of the 13 system and consistently throughout the time when 14 groups of SPMs were questioning the robustness 15 of the Horizon system, my colleagues and I in 16 the Contracts team were assured of its complete 17 reliability. I was assured that the Horizon 18 system was not capable of causing 19 discrepancies." 20 How often did you discuss the reliability of 21 Horizon or its ability to cause discrepancies 22 while you were an Auditor or Contract Adviser. 23 A. I think I'd be right in saying, sir, that, as 24 an Auditor, the matter never arose and, as 25 a Contract Adviser, I'd made -- the case 6 1 Rivenhall is mentioned in the documents and 2 I think that was the first case I came across 3 when the integrity of the Horizon system was 4 questioned. We were -- "we" being the team of 5 Contracts Advisers -- were repeatedly advised by 6 Post Office Limited that there was nothing to be 7 concerned about with the Horizon system and the 8 integrity was complete. 9 Q. When you say you were advised by Post Office 10 Limited, who in particular gave you that 11 assurance? 12 A. Well, the discussion came up in team meetings on 13 a fairly regular basis. Not exactly sure of the 14 dates because that's so long ago but from the 15 first inklings of difficulties in what 16 2004/2005, something like that, right through to 17 the end, there was kind of a continuum. Things 18 got -- the pressure increased, as it were. 19 Initially, there's not too much consideration 20 given to it but, latterly, the Post Office 21 issued us with a statement to read out at 22 application interviews, which the Legal team had 23 prepared, to assure people that the Horizon 24 system was sound. And so, you know, latterly, 25 given -- well, you asked me to speak up to 2012, 7 1 didn't you? 2 Q. Well, no, do go on for latterly, please? 3 A. Well, latterly, the concern obviously increased. 4 As just an ordinary member of the public 5 watching the BBC documentary on the case, and so 6 on, we became rather concerned and things 7 changed in the team, in that the decision-making 8 roles moved up the food chain, as it were, 9 senior managers had to make decisions which had 10 been previously made, perhaps, by Contracts 11 Advisers, and so concern grew for myself and 12 when I had the opportunity to leave the 13 employment of Post Office Limited, I therefore 14 took it. 15 Q. I'm therefore going to come back to that issue 16 of matters moving up the seniority in a moment. 17 A. Thank you. 18 Q. When you say this message of assurance came in 19 team meetings, where do you think the source of 20 it was from? Was it more senior management or 21 was it within your team? 22 A. Senior management. All the issues to do with 23 Horizon, to the best of my knowledge, were dealt 24 with by senior management. 25 Q. Again, are you able to identify anyone in 8 1 particular who was -- who passed the message on 2 to you that Horizon couldn't cause 3 discrepancies? 4 A. Well, my team leader in the final years was 5 Keith Bridges, before that Lin Norbury. 6 Q. Was that Steve Bridges? 7 A. Keith. 8 Q. Do forgive me. 9 A. Sorry. 10 Q. And Lin Norbury? 11 A. Yeah. 12 Q. This belief that Horizon was not capable of 13 causing discrepancies, how did it affect the way 14 you approached subpostmasters who said they had 15 a discrepancy that they couldn't explain? 16 A. Well, initially, it made it very difficult to 17 understand their point of view. We were given 18 the assurances that the system could not cause 19 errors and, when a subpostmaster came along and 20 said the system caused errors, obviously that's 21 very difficult to balance up, isn't it? So it 22 was difficult for us to hear and understand the 23 complaint of the subpostmaster but any such 24 complaint from my perspective would have been 25 passed to the accounting people in Chesterfield, 9 1 who would be able to help out with the details 2 of the Horizon implications. 3 Q. You've mentioned it earlier and you say in your 4 statement about SPMs complaining as to the 5 reliability of the Horizon IT System. 6 A. Yes. 7 Q. Did you ever have cause to doubt that Horizon 8 was incapable of causing discrepancies? 9 A. No, given the reassurances from the company 10 until much later, sort of 2015 onwards, then 11 I thought the Horizon system, the integrity, was 12 complete. 13 Q. The Inquiry has heard evidence that people 14 within Post Office were aware of bugs, errors 15 and defects within the Horizon IT System, for 16 example the Inquiry has heard evidence of Post 17 Office employees being aware of a bug, called 18 the Callendar Square bug, in at least 2006, that 19 caused regular discrepancies in branches for 20 years? 21 Do you think Contracts Advisers should have 22 been made aware of such bugs, errors and 23 defects. 24 A. I've never heard of that bug or defect before 25 and, yes, it would have been helpful to be aware 10 1 of that, yeah. 2 Q. Why would it have been helpful? 3 A. It would have been helpful because it would have 4 cast doubt on the integrity of the Horizon 5 system. 6 Q. In your statement, page 12, please, 7 paragraph 41, I should say as background, you 8 were asked -- as you say in your statement, you 9 were given two Rule 9 requests, one of which 10 asked open questions with very little, if any, 11 documents and the other one was more targeted, 12 providing further documents. Paragraph 41, 13 I believe, is a response to the first request. 14 You're asked about your recollection of 15 errors or issues within the Horizon system and 16 you refer to the Rivenhall branch, which you've 17 mentioned already just earlier? 18 A. Yes. 19 Q. What, in particular, stood out about this issue 20 and the Rivenhall branch as to why you 21 remembered it? 22 A. The subpostmaster was Mr Ward and I recall him 23 being quite clear in interview in saying that 24 the Horizon system -- or there'd been figures 25 input into his account, into the Horizon system, 11 1 therefore, which were not of his doing. 2 Q. Well, let's bring up a document related to that, 3 please. It's POL00117650 and if we could start 4 at page 2, please. You see there this is 5 an email from you, Alan Lusher, at the signature 6 at the bottom. If we could just go back up on 7 to page 1, sorry, to get the time -- thank 8 you -- 15 October 2008 to Andrew Winn, and then 9 back to page 2, please. 10 You say that you attach notes of the 11 interview to the email. We don't have copies of 12 those notes or the Inquiry doesn't have copies 13 of those notes but you set out two issues raised 14 by Mr Ward and the first is, as you say, a claim 15 that: 16 "... on a number of occasions figures have 17 appeared in the cheques line of his account. He 18 suspects these have been input to his account 19 electronically without his knowledge or 20 consent." 21 Was that the first time someone had made 22 an allegation like that to you or had you heard 23 something like that before? 24 A. As far as I can recall, that was the very first 25 occasion that I'd come across such a statement. 12 1 Q. Mr Ward gave evidence in Phase 1 of the Inquiry, 2 which looked at Human Impact, so the evidence 3 was going to how the scandal affected him. One 4 of the points he raised is about these repeated 5 discrepancies in the cheque line between April 6 2006 and September 2008. In his witness 7 statement, he said that you told him that he was 8 the only one experiencing these issues in his 9 interview. Do you think that's something you 10 would have said or do you recall saying that? 11 A. I don't recall saying that in 2008 but, given 12 that it was the first occasion that I'd come 13 across such a thing, it could have been the 14 case, though I think it rather unlikely, to be 15 honest. Could I also just say that, you know, 16 I read the statement that Mr Ward made and it's 17 very distressing, the results of the -- all 18 this, the results on him personally. I have 19 great sympathy towards Mr Ward. He suffered 20 quite a lot. 21 Q. Can we just go to page 1, please, now, of this 22 email. This is Mr Winn's response. To point 23 (1), he says: 24 "The only way [Post Office] can impact 25 branch accounts remotely is via the transaction 13 1 correction process." 2 That's something we'll come to cover briefly 3 later on. He goes on to say, towards the end of 4 that paragraph: 5 "Fujitsu have the ability to impact branch 6 records via the message store but have extremely 7 rigorous procedures in place to prevent 8 adjustments being made without prior 9 authorisation -- within POL and Fujitsu." 10 Was that the first time you were aware of 11 Fujitsu's ability to do as it says, to impact 12 branch records via the message store? 13 A. Yes, it would be the first time. 14 Q. What did you make of that at the time? 15 A. I'm pleased that you brought this document 16 forward because, essentially, it's me asking 17 an expert on the Horizon system how to proceed 18 with this unusual allegation and Andy Winn, as 19 the expert, has come back and said basically 20 that there are extremely rigorous procedures in 21 place to prevent adjustments being made and so 22 my reaction to that was, well, there must have 23 been some other cause because we really ruled 24 out the Horizon system as being the problem 25 here. 14 1 Of course, Andy then goes on to say that 2 such a casual accusation could be extremely 3 serious to the business, if there was, in fact, 4 changes to the Horizon system made without the 5 consent of the subpostmaster. 6 Q. What, if anything, did you do to investigate 7 whether, in this case, there had been use of 8 this remote access to affect Mr Ward's branch 9 accounts? 10 A. I don't believe I took any further action on 11 this, accepting the fact that the changes 12 couldn't have been made to the Horizon system. 13 Q. Did you tell Mr Forward about Fujitsu's ability 14 to insert data into the branch accounts without 15 his -- sorry, insert data into the branch 16 accounts? 17 A. I don't recall but probably not. 18 Q. Why not? 19 A. Because, at that stage, I would be content 20 myself that the changes couldn't be made to the 21 Horizon system and, therefore, there must have 22 been another explanation for the discrepancies 23 in the account. 24 Q. Well, what it says here is that changes could be 25 made to the system but there were rigorous 15 1 controls in place? 2 A. Indeed. 3 Q. So for cases such as Mr Ward's and any cases 4 going forward, did you consider it to be 5 important to ascertain whether those controls 6 were being upheld when there were unexplained 7 discrepancies? 8 A. No. I assumed that they were being upheld. 9 Q. In terms of this general knowledge of the 10 ability for Fujitsu to impact branch records, 11 was this common knowledge amongst Contracts 12 Advisers? 13 A. I don't know. 14 Q. Thank you. That document can come down. 15 I'm going now to go to audit and I want to 16 start broadly by looking at the role of the 17 Auditor. Is it a fair summary that an Auditor's 18 role was to check whether cash and stock 19 holdings in a branch matched the figures 20 recorded on the latest account? 21 A. Broadly, that is indeed exactly right. 22 Q. Leaving to one side the sources of information, 23 did that role remain the same before and after 24 the introduction of Horizon? 25 A. Yes, it did. 16 1 Q. Was the role of an Auditor to understand the 2 reason for why a discrepancy arose? 3 A. That's more difficult because there would be 4 some investigation by the Audit Team to 5 establish the reason for a discrepancy, 6 a discussion with the subpostmaster normally, 7 which may result in the fact that he had some 8 local knowledge, that the lottery scratch cards 9 are kept in a different drawer, or something 10 like that, which hadn't been disclosed to the 11 Auditor, which would resolve the problem -- nine 12 times out of ten would resolve the problem but, 13 occasionally, of course, that would be left in 14 the air. 15 So there was some discussion with the Audit 16 Team to understand the cause of an audit but 17 basically their role was to report on the facts. 18 Q. Going back quite a way now to when you started 19 as an Auditor, do you recall if there were any 20 minimum qualifications or minimum experience 21 required in order to be appointed as an Auditor 22 for Post Office? 23 A. A degree of experience in sub office -- in -- 24 Q. Sorry, I missed that? 25 A. Sorry, a degree of experience, perhaps, with 17 1 working with sub offices was desirable but there 2 were no formal requirements for qualifications. 3 Q. So working on the counter or as a manager in 4 a sub post office? 5 A. That would certainly help, yeah. 6 Q. Do you recall what, if any, training you 7 received? 8 A. The training would have been working with other 9 Auditors. 10 Q. In your statement you say in 1988 you were 11 promoted and took the role of Management 12 Accountant still within the Audit Team? 13 A. No. 14 Q. Sorry, was that -- 15 A. The Management Accountant role was separate to 16 the Audit Team. 17 Q. I see. My apologies. So what was a Management 18 Accountant's role? 19 A. The Management Accountant in the area that was 20 working at the time, I believe it was the 21 Norwich Head Post Office area, probably, or the 22 Anglia district -- it was the Anglia district. 23 The role of the Management Accountant there was 24 to do with budgeting, monitoring budgets, 25 producing performance statistics and 18 1 communicating those things to the budget holders 2 and probably not of interest to the Inquiry, to 3 be honest. 4 Q. So it's then you go back to the Audit Team as 5 a team leader? 6 A. Yes. 7 Q. Again, was there any particular qualification or 8 experience you needed to become a team leader? 9 A. No, there was no formal qualification required. 10 Q. I should just -- I think it's clear -- put it: 11 as a team leader you would supervise other 12 Auditors? 13 A. Yes. 14 Q. Very briefly, you've referred already to 15 regions, and the Inquiry has heard evidence that 16 in pre-'99, Audit Teams were organised 17 regionally. Then in 1999, following a review, 18 the service was effectively brought under 19 a national structure; does that ring true to 20 you? 21 A. I don't recall the dates very well, being so 22 long ago but, broadly, that is what happened, 23 yes. 24 Q. Can you recall whether that change, from 25 regional processes to national process, was in 19 1 any way linked to the introduction of Horizon? 2 A. I don't believe it was linked to Horizon. 3 Q. Were there any changes to the audit process, 4 from your region, when your region moved into 5 the national region? 6 A. No, there were no fundamental changes to the 7 audit process, apart, perhaps, from the way the 8 Auditors were planned -- the audits themselves 9 were planned; there was greater reliance on risk 10 management. 11 Q. The Inquiry has heard evidence that the number 12 of Auditors reduced, as well, following the 13 nationalisation; is that correct? 14 A. That was a steady reduction in the number of 15 audits from the time I joined until the time 16 I left the Audit Team, yes. 17 Q. To what extent, if at all, do you think that 18 affected Auditors' relationships with 19 subpostmasters? 20 A. Well, the audits became less frequent at offices 21 that were running without any difficulties and 22 more frequent at offices that did have some 23 degree of -- or high degree of risk, shall 24 I say, rather than difficulty. 25 Q. The reporting line for Auditors was moved into 20 1 the Security Department; do you recall that? 2 A. Yes. 3 Q. The Security Department was responsible for 4 investigating allegations of criminal conduct 5 within the Network? 6 A. Yes, I believe Tony Marsh was in charge of the 7 Security Department at the time, they were kind 8 of separate wings of operation that he managed. 9 Q. Please could you explain the difference in 10 practice between the role of an Auditor and the 11 role of an Investigator? 12 A. Yes. I think we've described the role of 13 an Auditor already, in that they produced the 14 facts, the numbers, resulting probably in 15 a discrepancy. The Investigation Team would be 16 looking at the result of the audit and 17 considering the possibility of a criminal 18 investigation, usually either concerning theft 19 or false accounting. 20 Q. So would it be fair to say that -- how the 21 system was designed at least, Auditors were 22 supposed to be doing a neutral fact-finding 23 exercise, whereas Investigators would be 24 evaluative in determining whether on the facts 25 they believed there was criminal conduct? 21 1 A. That's exactly right. 2 Q. Was there any difference in practice once 3 Auditors moved under the purview of the Security 4 team? 5 A. No. 6 Q. The Inquiry has heard evidence that 7 Investigators and Auditors would, on occasion, 8 attend branches together at the same time? 9 A. Yes. 10 Q. So you do recall that? 11 A. Yes. 12 Q. Why did that happen? 13 A. The Investigation Team would ask for an audit to 14 be completed at a particular branch because 15 there were concerns at that branch there may be 16 a shortage or something amiss. 17 Q. Do you see any problems with Investigators 18 attending with Auditors for what is 19 an apparently neutral exercise in an audit? 20 A. The Investigators wouldn't have had a role to 21 play in that visit to the office until 22 a discrepancy was discovered -- disclosed, 23 rather than discovered. 24 Q. I mean, in those circumstances, would 25 subpostmasters be aware that the Investigation 22 1 Team was there as well? 2 A. I can't recall any specific examples, I'm sorry. 3 Q. On times when Investigators weren't there, 4 please could you just summarise when an Auditor 5 would engage the Investigation Department? 6 A. Yes. Once a discrepancy had been confirmed in 7 the account, then the Auditor would normally 8 contact the Contract Adviser first, although 9 there would also be attempts to contact the 10 Investigation Department, possibly. So there 11 was three people involved there or three parties 12 involved and, if the Contract Adviser had 13 concerns had there may be criminal activity, 14 then the Investigation Team would be alerted. 15 Q. Was that for any discrepancy -- 16 A. No, no. 17 Q. -- or discrepancies of a certain level? 18 A. Generally, the Contract Manager wouldn't be 19 advised of discrepancies less than £1,000 or so, 20 unless there was an admission of falsification 21 of accounts or theft, and the Investigation 22 Team, their parameters changed over time, to the 23 extent wherein, latterly, there were far fewer 24 investigations and virtually no criminal 25 prosecutions with an emphasis on the recovery of 23 1 lost funds. 2 But if we go back to, I don't know, 3 2005/2010 then, if there was any kind of 4 admission or a larger loss with less likelihood 5 of recovery, then the Investigation Team would 6 be advised. On occasions, they would visit the 7 office there and then, if they were able to, so 8 that they were there while the Auditors were 9 still there, which enabled them to conduct 10 investigations very effectively. 11 Q. You said then in your evidence if there was 12 admission or if there was a large loss where 13 recovery may have been more difficult -- 14 paraphrasing you there -- why would the 15 difficulty of recovering the amount of money on 16 the discrepancy be relevant to whether or not 17 Investigators should investigate whether there's 18 been criminal conduct? 19 A. Yes, that's a very good point that you raise 20 there and perhaps I was wrong in saying that 21 that would be -- unless there was a very large 22 sum of money involved, in which case 23 an investigation would be worthwhile, even if 24 there was no criminal case to follow. 25 Q. Again, when you say you were wrong in saying 24 1 that, did that then actually reflect the 2 thinking at the time, though, that Auditors 3 would take into account the difficulty of 4 recovery as to whether or not they would refer 5 it on to the Investigation Team? 6 A. I believe I was probably wrong in saying that 7 a few moments ago. An Auditor would be 8 concerned if there was a large sum of money 9 involved, tens, hundreds of thousands of pounds 10 perhaps, and may, at that stage communicate with 11 the Investigation Department. 12 Q. Earlier you referred to £1,000, a number we'll 13 see and come to in respect of suspensions, do 14 you know where the figure of £1,000 being picked 15 as a relevant figure for referral was? 16 A. I don't know whether that was empirically based 17 or just a convenient figure, I don't know. 18 Q. But that was effectively what Auditors worked 19 to, was it? 20 A. Mm, yeah. 21 Q. Very briefly on the conduct of audits, we don't 22 need to turn it up, but in paragraph 91 of your 23 statement you say audits would generally be 24 performed when the branch was closed. I take 25 from that that sometimes they would be performed 25 1 when the branch was open? 2 A. Yes. The normal thing was to try to arrive at 3 the office before opening time and get access to 4 the cash and stock, so that an audit could at 5 least be started before the public had access to 6 the Post Office and, therefore, service 7 disruption was minimised. 8 Q. The Inquiry has heard evidence from 9 subpostmasters that some Auditors would carry 10 out audits while the shop was open -- 11 A. Yeah, yeah. 12 Q. -- which made them feel humiliated in public. 13 Are you aware of any complaints at the time made 14 by subpostmasters as to audits being carried out 15 in public while the shop was open? 16 A. I can't remember any specific examples but 17 I could understand a subpostmaster feeling like 18 that. 19 Q. We've mentioned earlier, looking at audits 20 again, that, pre-Horizon, the audit would be 21 done on a cash account that was done on 22 a paper-based system? 23 A. Yes. 24 Q. At an audit, the Auditor and the subpostmaster 25 could consult all the data upon which the 26 1 paper-based cash account was based. 2 A. Yes. 3 Q. The subpostmaster who did the analysis and put 4 together the cash account would be there to 5 answer any questions about how that account was 6 put together? 7 A. Not necessarily but, normally, that would be the 8 case, yes. 9 Q. Yes. But let me put it another way. If the 10 subpostmaster was there, they would be able to 11 answer questions on how the account was put 12 together? 13 A. Yes, that's right. 14 Q. Now, the introduction of Horizon, the cash 15 account was generated automatically by the 16 computer? 17 A. Yes. 18 Q. What training did you receive in Horizon as 19 an Auditor? 20 A. I honestly can't remember, it was so long ago. 21 There wouldn't have been very much training and 22 the Auditor wouldn't have to interact with the 23 Horizon system very much at all during the 24 process of an audit. It was the starting 25 figure, which was important, which would be 27 1 produced, presumably printed out on the last 2 account, which would be the starting point for 3 the audit. And so there wouldn't be very much 4 interaction between the Auditor and the Horizon 5 system. 6 Q. So the process we referred to before of when it 7 was a paper-based system, you may ask quick 8 questions of the subpostmaster as to how the 9 account was generated and questions here and 10 there about that. The Auditor couldn't do that 11 with the Horizon system, in that the Auditor 12 couldn't interrogate how the cash account was 13 generated; do you agree with that? 14 A. No, I don't think I can agree with that. The 15 basis of the account was still available on the 16 Horizon system or by talking to the 17 subpostmaster. I mean vouchers may still be on 18 hand, which can be checked; obviously the cash 19 and stock was still there under a manual system 20 before Horizon; then some of the vouchers would 21 have been sent away and so couldn't be checked 22 and, similarly, under the Horizon system. 23 The key difference, I guess, is that under 24 the Horizon system, many of the transactions or 25 increasing numbers of the transactions were 28 1 dealt with entirely electronically. 2 Q. Let's put it another way. As an Auditor, do you 3 recall what reports you had access to which 4 Horizon could generate? 5 A. My time as a hands-on Auditor was almost 6 entirely pre-Horizon and so I was managing the 7 Audit Team for much of the Horizon time and so 8 I didn't have that level of expertise within the 9 Horizon system itself. I can't recall the 10 reports that were called off. There was 11 an office snapshot, which was crucial to the 12 audit because that would highlight and list the 13 cash and stock on hand, enabling the Auditor to 14 check what was on hand against some figure from 15 the account. 16 Q. The Inquiry is very familiar with ARQ audit 17 data, which is data held by Fujitsu, which was 18 the basis for prosecutions in many cases and 19 shows activity on the Horizon system. As 20 an Auditor, your team wouldn't have had access 21 to ARQ data in the branch, would they? 22 A. As far as I can recall, I haven't heard of ARQ 23 data before. 24 Q. If there was a discrepancy in the set of branch 25 accounts that was caused by a bug, error or 29 1 defect in the Horizon IT System, do you accept 2 that, as an Auditor, you wouldn't be able to 3 determine that the discrepancy was caused by 4 a bug, error or defect? 5 A. Yes, that's true. 6 Q. This may not apply to you because of your 7 evidence that you weren't dealing hands-on with 8 audits at the time but I'll ask anyway in case 9 you have knowledge of it. When Horizon was 10 implemented, were you aware of a tool that would 11 allow Auditors to insert transactions into a set 12 of branch accounts without the subpostmaster's 13 knowledge? 14 A. Absolutely not. The Auditors would not be able 15 to amend the subpostmaster's accounts. 16 Q. If I say the words "global user rights", does 17 that mean anything to you? 18 A. Global user rights, that would mean that 19 somebody could access the system with presumably 20 a password and had rights to every aspect of the 21 system. 22 Q. Do you recall Auditors having -- sorry, I should 23 rephrase that question. 24 Do you recall, in your time as an Auditor, 25 when going into a branch, having global user 30 1 rights access? 2 A. No. 3 Q. No. Okay, I want to move on now to dealing with 4 contracts and your time as a Contract Adviser, 5 so this is 2005 onwards. Again, were there any 6 minimum requirements in respect of the 7 qualifications or experience required by someone 8 before being appointed as a Contract Adviser? 9 A. No, there were no specific requirements of that 10 nature. 11 Q. Did you receive any training upon being made 12 a Contract Adviser? 13 A. Again, it would be working with experienced 14 Contracts Advisers. There were -- there was 15 training during that time for all Contracts 16 Advisers, just to enhance skills. 17 Q. To what extent did you receive any training in 18 Human Resources? 19 A. I'm qualified as a Master of Business 20 Administration from the Open University and had 21 some experience of human resource management 22 through that but I can't recall anything 23 specifically from the Post Office. 24 Q. Did the Post Office provide any training on how 25 to conduct disciplinary procedures -- I should 31 1 say, sorry, to Contracts Advisers? 2 A. Disciplinary procedures? 3 Q. Yes, so if someone was accused of misconduct, 4 for example a subpostmaster is accused of theft 5 or false accounting -- 6 A. I think -- correct me if I'm wrong, but 7 I believe disciplinary procedures refers to 8 employment law. The subpostmasters weren't 9 employed by the Post Office; they were under 10 contract for services. 11 Q. There's no issue between us there. I take that. 12 It's just a question of whether or not, as 13 a Contract Adviser, you received any training on 14 how to handle a procedure where you were 15 determining whether a subpostmaster was 16 responsible for misconduct? 17 A. There was no initial training, other than 18 sitting with experienced Contracts Advisers, as 19 far as I can recall, but there was -- as I said 20 before, there was training on an ongoing basis, 21 and I can recall a session of training where the 22 Contract Adviser were all taken away for a few 23 days to, you know, a hotel somewhere and trained 24 in various aspects of interviewing, for example, 25 and probably dealing with discrepancies and 32 1 dealing with subpostmaster contracts in that 2 way. 3 Q. When you say interviewing in that context, is 4 that interviewing for the purposes of 5 determining whether a subpostmaster was 6 responsible for misconduct or for determining 7 whether to appoint a subpostmaster? 8 A. The latter, appointment. 9 Q. Was any training given in how to investigate 10 whether or not a subpostmaster was responsible 11 for misconduct? 12 A. Misconduct? 13 Q. Let me put it another way. One of the roles of 14 a Contract Adviser, which we'll come to, is to 15 determine whether or not a subpostmaster was in 16 breach of contract; would you accept that? 17 A. Yes. 18 Q. Was there ever any training given to Contract 19 Adviser on how to conduct an investigation into 20 whether or not a subpostmaster was in breach of 21 contract? 22 A. I don't recall any specific training, no. 23 Q. Let's look at the contractual position for 24 losses. Please can we turn to your witness 25 statement page 19, paragraph 66. Thank you. 33 1 Here you open by saying you've been asked to 2 confirm your understanding of the contractual 3 position for losses, and you quote: 4 "... 'the subpostmaster is responsible for 5 all losses caused through his own carelessness, 6 negligence or error and also for all losses 7 caused by his assistants. Deficiencies due to 8 such losses must be made good without delay'." 9 The first part of that is taken from the 10 subpostmaster's contract in force from 1994. 11 A. Indeed, and that statement is common to 12 a variety of contracts. 13 Q. There was a different type of contract, I think, 14 from 2011 onwards called the Network 15 Transformation Contract; do you recall that? 16 A. It'd be -- you had the main and local contracts, 17 yes. 18 Q. Precisely. Do you recall that that had 19 a different position for dealing with losses for 20 subpostmasters? 21 A. No, I can't recall the difference. 22 Q. Can we please just turn in your statement to 23 page 32, paragraph 116. You are here -- this is 24 just for context -- discussing the settling 25 centrally function, which was brought in by the 34 1 IMPACT Programme, and you refer to a document 2 dated 14 November 2008. 3 If we go over the page, please, you again 4 talk about the settle centrally facility. But 5 at 119, you say: 6 "At the time, the contractual position in 7 respect of losses was clear and the SPM was 8 responsible for all kinds of losses whether 9 caused by carelessness, negligence or error and 10 losses of all kinds caused by assistants." 11 That's not correct in 2008, is it? 12 A. That was my understanding when I put the witness 13 statement together. I stand to be corrected. 14 Q. Was that -- well, actually, we'll come to that 15 point now. Let's go back, please, to page 19, 16 paragraph 66. Thank you. So, again, the clause 17 is there in quotes. Can you explain what you 18 understood that clause to mean? 19 A. Yes. I see it as being fairly self-explanatory, 20 in that the subpostmaster was indeed responsible 21 for losses, as stated, caused by carelessness 22 negligence or error and for all losses caused by 23 the assistants, which, of course, means that 24 there are -- or there could be losses in the sub 25 office not caused by carelessness, negligence or 35 1 error, which would not be covered by this 2 statement. 3 Q. So if a loss was caused -- well, let's start. 4 Firstly, there has to be an actual loss. 5 A. Yes. 6 Q. Secondly, if an assistant is responsible for 7 that loss, the subpostmaster is liable for it? 8 A. Yes. 9 Q. But if the loss is the subpostmaster's, he or 10 she is only responsible for it if it is caused 11 by their own negligence, carelessness or error? 12 A. That's what it says, yes. 13 Q. So a loss caused by a computer error or 14 a fictitious loss would not be the 15 responsibility of the subpostmaster? 16 A. Logic demands that that's the case. The most 17 common cause of loss not caused by carelessness, 18 negligence or error was a loss caused by 19 a robbery or burglary, in which case the 20 Security Operations Manual would be sort of the 21 subsection of the contract which would come into 22 play. 23 Q. Let's look at some of the policies that derived 24 from this. If we could turn up, please, 25 POL00088904. You see the "Losses and Gains 36 1 Policy Within the Post Office Counters Limited 2 Agency Network". At page 2 we can see it's 3 dated 20 November 1998, so pre-Horizon. 4 Please can we turn to page 4. This is the 5 introduction, which says that it's a policy 6 document that has been developed: 7 "... under the auspices of the Counters Risk 8 Management Committee, in order to provide clear 9 and consistent guidelines about financial losses 10 within the agency network." 11 If we can go slightly further down, please, 12 thank you. At the start of the paragraph at the 13 bottom, you see it says: 14 "The general principles addressed by this 15 paper are, of necessity, mandatory upon 16 Regions." 17 Do you recall being given this policy and 18 using it in the Audit Department? 19 A. Yes. 20 Q. So the aim of it was, as it says, to be 21 a reference guide for Post Office employees on 22 how to deal with losses or gains in accordance 23 with the contracts between the subpostmaster and 24 Post Office? 25 A. The contract was very clear. I think the policy 37 1 was more to Do with the day-to-day deployment 2 where there may be occasions to deviate from the 3 contract, in cases of hardship, for example. 4 Q. Well, we see, it's the third paragraph down on 5 the page that's on the screen: 6 "From a purely contractual perspective 7 a subpostmaster or other agent is responsible 8 for all losses caused through his own 9 negligence, carelessness or error." 10 A. Yes. 11 Q. It goes on to say of the same with assistants. 12 So that's in accordance with the contract? 13 A. Absolutely right, yeah. 14 Q. This introductory section, is it fair to say 15 that an introduction to a policy document like 16 this, you may read it once but, when you're 17 going back to refer to it, you'll go to the more 18 substantive chapters later on? 19 A. That may be the case. The paragraph you're 20 referring to does go on to say that this stance 21 of the contractual position may be varied in 22 appropriate circumstances and -- 23 Q. Yes, and, as you say, it there talks about if 24 there's financial hardship, et cetera. 25 A. Mm-hm. 38 1 Q. That's working to the benefit of the 2 subpostmaster when considering mitigation? 3 A. Yes, absolutely. 4 Q. Can we turn to section 3, please, at page 14. 5 This section deals with "Accounting Losses", and 6 it says: 7 "The subpostmaster is required to make good 8 all losses however they occur (Subpostmaster's 9 contract Section 12 paragraph 12)." 10 That's not what the contract says, is it? 11 A. No. 12 Q. Do you know why this policy, on the section for 13 accounting losses, contained this statement? 14 A. I didn't put the policy together but it does 15 refer to the section of the -- the relevant 16 section of the contract, which you've referred 17 to. Perhaps that's just an inaccurate shorthand 18 to say "make good all losses". 19 Q. Well, it's not shorthand, is it? It's 20 materially different? 21 A. It is materially different, yes. 22 Q. Would you accept that Auditors or anyone using 23 this document would be misled if they read this 24 paragraph? 25 A. If they read the first part of the paragraph 39 1 without the reference to the contract and 2 without referring to the contract, they could be 3 misled, yes. 4 Q. If we turn to page 33, please. So this is in 5 an annex which deals with the detailed processes 6 for how to handle cash account discrepancies. 7 If we could just go slightly further down, 8 please, thank you. It says: 9 "If the discrepancy is a shortage, the agent 10 should be advised to make the amount good. If 11 the shortage is the result of a known error, or 12 if making the amount good immediately would 13 inflict financial hardship, the agent may be 14 allowed to hold the amount in the unclaimed 15 payments section of the cash account for 16 a period of up to eight weeks." 17 Could you assist us, what does it mean when 18 it's referring to a "known error" there? 19 A. If the subpostmaster had recognised the fact 20 that an error had been made and was awaiting 21 an error notice -- in this case, a transaction 22 correction -- to rectify that error, that would 23 be a known error. 24 Q. So it was for the subpostmaster to say there's 25 a known error here and effectively persuade the 40 1 Post Office that this would be corrected in due 2 course with, at that time, an error notice? 3 A. Yes. 4 Q. That document can come down. Thank you. 5 Does this policy or section 3 that we 6 referred to reflect the thinking of Post Office 7 Auditors and Contract Managers at the time that, 8 if there was a loss, the subpostmaster had to 9 make it good, unless they could establish 10 a known error? 11 A. Or unless there was financial hardship. 12 Q. Leaving financial hardship to one side, if there 13 was no financial hardship, was it on the 14 postmaster to show that there was a known error? 15 A. Yes. 16 Q. Are you aware as to why there was no discussion 17 in that policy of Post Office investigating the 18 cause of the discrepancy itself? 19 A. I'm sorry, I was drawing breath to add -- 20 I didn't wish to cross your speech then -- but 21 the unclaimed payments table could be used for 22 known errors or disputes, so there would be 23 a degree of softening around that and, 24 subsequently, in the Horizon days, then it would 25 be like the settled centrally process, would be 41 1 the same, you know. You can settle centrally 2 only if there's a known error or if there's a -- 3 you enter the dispute resolution process. 4 MR STEVENS: That, sir, is probably a good time to 5 pause and we'll come to the dispute resolution 6 process after lunch. 7 THE WITNESS: Thank you. I'll look forward to it. 8 SIR WYN WILLIAMS: I was just unmuting myself. 9 I agree, Mr Stevens. Thank you. 10 MR STEVENS: Thank you, sir. 11 SIR WYN WILLIAMS: 2.00? 12 MR STEVENS: Yes, sir, thank you. 13 (12.59 pm) 14 (The Short Adjournment) 15 (2.00 pm) 16 MR STEVENS: Good afternoon, sir. Can you see and 17 hear me? 18 SIR WYN WILLIAMS: Yes, I can, thank you. 19 MR STEVENS: Thank you, sir. I'll carry on. 20 Mr Lusher, we were just discussing the local 21 suspense account and you referred to dispute 22 resolution. I want to turn there now ask. 23 A. Mr Stevens, on reflection, I may be able to give 24 a slightly better answer to one of the questions 25 which you asked this morning. Would that be 42 1 helpful to the Inquiry? 2 Q. Yes, which question was that? 3 A. The question was about the global user 4 availability password for Auditors for the 5 Horizon system, and I wasn't quick enough at the 6 time but, on reflection, I just realised that if 7 there was an unfortunate circumstance of the 8 death of a subpostmaster, then the Auditors 9 would be able to gain permission to use the 10 system, in order to wrap up the accounts, do 11 whatever was necessary. 12 I don't know the protocols for that but it 13 would certainly be something which wasn't dished 14 out easily. 15 Q. I see. So the capability was there to have 16 these global user rights, as far as you are 17 aware. The circumstance you refer to is the 18 death of a subpostmaster but you can't assist us 19 with the control mechanisms in place for how 20 an Auditor would get access to those privileged 21 access rights? 22 A. That's quite right, sir, yes. I hope that's 23 helpful. 24 Q. Thank you, and repeating it to make sure I'd 25 understood, thank you. 43 1 Local suspense account, then. If we could 2 please bring up your witness statement, page 31, 3 paragraph 111. Thank you. You start the 4 paragraph by saying that you've been asked to 5 explain what role the local suspense account 6 played before its removal, and that was removal 7 in the IMPACT Programme. You say: 8 "The role of the local suspense account was 9 to account for any unclaimed payments or 10 receipts uncharged to the account. The suspense 11 facility would also enable shortages or 12 surpluses to be declared, but not made good or 13 withdrawn. For example, if the balance of 14 account showed a shortage, this could be entered 15 as an unclaimed payment, which would have the 16 same effect as adding it to the cash on hand, 17 negating the shortage. With permission, the 18 facility could be used legitimately to hold 19 discrepancies for up to 8 weeks, usually whilst 20 awaiting an error notice. The facility was 21 replaced by the debt resolution process." 22 Now, the debt resolution process, I think 23 we'll come to it in a moment but just to be 24 clear, are you talking about the process that 25 existed when transaction corrections came in and 44 1 there was the option to settle centrally? 2 A. Paragraph 111 refers to the process before, 3 before that -- 4 Q. Yes. 5 A. -- and then -- unclaimed payments and uncharged 6 receipts before and then the settle centrally 7 process after. 8 Q. After. So we're singing from the same hymn 9 sheet there. 10 A. Good. 11 Q. You say, as I said, the facility could be used 12 legitimately to hold discrepancies. Why did you 13 use the word "legitimately" there? 14 A. It wasn't uncommon to find the system used 15 without the permission which was necessary. 16 Q. In what circumstances would it be used without 17 permission? 18 A. We're talking before the IMPACT? 19 Q. Yes, before IMPACT? 20 A. So unclaimed payments, uncharged receipts 21 weren't -- I don't know the extent to which they 22 were monitored but the subpostmaster would have 23 the ability to use those, whether he had 24 permission or not, and so that was -- that would 25 be one of the things that the Audit Team would 45 1 be looking out for, unauthorised use of, almost 2 certainly, the unclaimed payments table, being 3 shortages rather than surpluses in the uncharged 4 receipts. 5 Q. Let's come to the permission aspect and we'll 6 turn to a document POL00088867. Thank you. 7 At the top of this document, we see it's 8 "Liability for Losses Policy", "Version Control" 9 says "1.7 September 2003" but, if we look over 10 the page, it appears that it was a later version 11 "2.0 July 2004", so this would have been in 12 place when you were Contract Adviser starting in 13 2005. 14 Could we turn to page 5, please. The first 15 two sentences: 16 "The subpostmaster's contract requires that 17 losses are made good without delay. Immediate 18 settlement is therefore the expected contractual 19 norm." 20 Do you accept that isn't strictly in 21 accordance with what the contract says? The 22 contract, as we covered this morning, it refers 23 to the subpostmaster's carelessness, negligence 24 or errors? 25 A. Yes, I do accept that. 46 1 Q. Again, this document would be used presumably by 2 Contracts Advisers when considering how to deal 3 with losses? 4 A. Yes. 5 Q. Paragraph 2 concerns the suspense account. It 6 says: 7 "Under circumstances where the exact cause 8 of the loss is known and a compensating error is 9 expected to be returned, losses may be held in 10 the suspense account, with authority, providing 11 that the agent has completed their own 12 investigation and is able to show that an error 13 notice is likely to be issued for that loss or 14 an element of the loss (ie the agent must be 15 able to detail a specific error that occurred 16 for a specific client on a specific date and be 17 able to provide documentary evidence eg from the 18 Horizon transaction log)." 19 So, in order for permission to be given 20 under this policy, would you accept that the 21 subpostmaster has to be able to prove, with 22 a significant amount of precision, that there 23 has been a known error in the account? 24 A. Yes. 25 Q. So earlier in your evidence, when you referred 47 1 to the suspense account being used for dispute 2 resolution, it's not the case that the SPM could 3 simply say, "Hang on a minute, I dispute these 4 figures, I want to use the suspense account 5 while this is being investigated"? In order to 6 get permission to use it, the subpostmaster has 7 to have had done a significant amount of 8 investigative work already? 9 A. There's a dichotomy there which I can't resolve. 10 Q. Sorry, what is a dichotomy? 11 A. The -- on the one hand, we're seeing here that 12 the error must be specified and, on the other, 13 I believe that the dispute resolution process 14 allowed for an investigation. An investigation 15 is not necessary if a loss can be proved. 16 That's the dichotomy. Is that helpful, sir? 17 Q. In terms of who would give the permission, that 18 wouldn't be you, would it, to give permission to 19 use the suspense account, as a Contract Adviser? 20 A. No. 21 Q. As we see in the next paragraph, it refers to 22 the NBSC, and the last sentence in that again, 23 it says: 24 "If there is no clearly defined evidence of 25 a known error (and, therefore, no error notice 48 1 likely to be issued), authority will not be 2 given." 3 A. That's very clear, isn't it? 4 Q. If we go just further down this page, it goes on 5 to say: 6 "To give authority to hold losses within the 7 suspense account, even with evidence of the 8 error, is against the principle of right first 9 time. Granting authority to hold amounts in 10 suspense should, therefore, always be considered 11 to be the exception rather than the norm. 12 Agents are expected to address the underlying 13 cause of misbalancing and must expect that any 14 subsequent errors of a similar nature will be 15 referred to the retail line for corrective 16 action." 17 Does that fairly summarise how the suspense 18 account was seen by the members of the Post 19 Office -- or its use, I should say, the use of 20 the suspense account? 21 A. Yes, and clearly "right first time" refers to 22 making no errors, that there should be no errors 23 at all and, if there are subsequent errors, then 24 a report for corrective action would be in line. 25 Q. Please turn to page 8 of the same document. 49 1 Thank you. It refers to "Horizon Issues": 2 "If an agent feels that an error has 3 occurred via the Horizon system, it is essential 4 that this be reported to the Horizon System 5 Helpdesk." 6 Pausing there, that's the Helpdesk that was 7 run by Fujitsu at the time; do you agree? 8 A. I don't know. 9 Q. "The HSH will only consider the incident for 10 further investigation if the branch has evidence 11 of a system fault. If no evidence is available, 12 the case will not be investigated and the agent 13 will be held responsible for making good the 14 loss. 15 "System faults are very rare and are 16 normally identified after a full investigation 17 has been undertaken. All known system errors 18 are managed through Network Support Problem 19 Management. Access to Problem Management is via 20 the NBSC. If the agent feels that the issue is 21 not being resolved, they should flag the issue 22 up with NBSC. If a known system error has 23 caused a shortage, the agent should be given 24 authority to hold the loss in suspense until the 25 system error has been reconciled and an error 50 1 notice issued." 2 The point that system faults are very rare 3 and are normally identified after a full 4 investigation -- or at least that they're very 5 rare -- that's consistent with your evidence 6 earlier that, as a Contract Adviser, you and 7 others didn't think it was possible that 8 discrepancies would be caused by Horizon; is 9 that fair? 10 A. Yes, that's correct. 11 Q. Did you have any involvement at all in how 12 Fujitsu -- sorry, I'll rephrase that. 13 Were you aware of how Fujitsu, through the 14 Helpdesk, investigated potential discrepancies 15 in branch accounts? 16 A. No, sir. 17 Q. So if there was a bug, error or defect in the 18 Horizon system, which wasn't a known error, not 19 known to the NBSC, do you accept that the 20 subpostmaster is effectively reliant on either 21 the Horizon System Helpdesk or the NBSC 22 identifying that error and they can't identify 23 it themselves? 24 A. Yes, that's what it says down here, yes. 25 Q. If they can't identify it themselves, the 51 1 subpostmaster can't prove that there's a known 2 error or an error and has to make good the loss 3 themselves? 4 A. That's correct too. I wasn't very involved in 5 this process but I'm just drawing the logic from 6 what you've read out there in section 6. 7 Q. You weren't involved in the process but, at the 8 time, did you consider that situation to be 9 fair? 10 A. My involvement was to report any issues with the 11 Horizon system. We looked at the case of 12 Rivenhall, where that's what -- exactly what 13 I did, to report the problem there to Andy Winn 14 and Andy, in NBSC, would have had access to the 15 Horizon System Helpdesk, and so on, to report 16 onwards. 17 So my involvement was very limited. As to 18 whether I think the system was fair, um ... 19 harsh but, in the light of information received 20 subsequently, like in the last few years, as 21 a result of the Inquiry, clearly it's not as 22 fair as I thought it was at the time. 23 Q. So we've discussed the Helpdesk and how, in some 24 ways, if you're relying on the Helpdesk to find 25 an error, or the subpostmaster is as well, 52 1 that's one element. You've also referred to 2 Andrew Winn, Mr Winn. In your statement -- 3 sorry, that document can come down now, thank 4 you. 5 In your statement, at paragraph 21, which is 6 at page 7, you say: 7 "When there were unexplained accounting 8 shortages, team members would often liaise with 9 the Accounting Department at Chesterfield, or 10 other departments to establish whether error 11 notices were due to be issued. The system of 12 rectifying errors could be slow and several 13 weeks may elapse before a discrepancy could be 14 corrected in the account. On occasions when 15 there were a number of errors in the system, it 16 became complex and sometimes almost impossible 17 to pinpoint the cause of a discrepancy." 18 Was it of concern to you that the Post 19 Office back office staff would sometimes 20 struggle to pinpoint the cause of a discrepancy 21 and yet the Post Office expected subpostmasters 22 to identify and evidence the calls themselves. 23 A. I don't think the Post Office staff had 24 difficulty in identifying individual errors. 25 The difficulty which I referred to here is when 53 1 there are number of errors in a sub office 2 account, it becomes -- it can become quite 3 a complex matter to unravel the situation. It 4 may take time to do that. 5 Q. We then come to the involvement of Mr Winn, as 6 you say, in paragraph 22: 7 "Either the Audit or the Contract Team could 8 refer disputed errors to the Accounting Team 9 based in Chesterfield who had access to the 10 Horizon system and were very helpful in 11 resolving errors and latterly had a champion for 12 difficult cases -- Andy Winn." 13 A. Mm. 14 Q. When you say Andy Winn was a "champion", what do 15 you mean by "champion"? 16 A. If there was a difficult accounting matter to be 17 dealt with, Andy Winn was the expert and had 18 access to all the systems available to resolve 19 any enquiries. 20 Q. So if there was an unexplained discrepancy and 21 a subpostmaster was suggesting that it was 22 related to Horizon or caused by Horizon, would 23 Andy Winn be the go-to man? 24 A. Yes. 25 Q. Did you see him as a safeguard to ensure that 54 1 discrepancies in difficult cases were fully 2 investigated? 3 A. I saw him as the expert. 4 Q. Sorry? 5 A. As the expert. 6 Q. The expert. 7 Did you hear the evidence of Andy Winn to 8 this Inquiry on 3 March? 9 A. No. 10 Q. When it came to discussing his time in the P&BA, 11 where he looked at these accounting problems in 12 branches, he agreed that his level of 13 understanding of the role was basic and 14 equivalent to an occasional end user. That's, 15 for the record, transcript page 26, line 8. He 16 further accepted that his role required a much 17 more detailed understanding of Horizon than he 18 had and his evidence was that he found 19 technology quite difficult even now. 20 You've referred to him as an "expert". Did 21 you understand him to have more than a basic 22 grasp of Horizon? 23 A. Yes, sir, I did. 24 Q. Did you continue to think that when you made 25 your witness statement? 55 1 A. Yes. 2 Q. What was the basis of that belief, that Mr Winn 3 was a champion for difficult cases? 4 A. I don't know. I don't wish to guess, sir, but 5 I think he was put forward at least as the 6 contact within P&BA to deal with these matters. 7 Q. Now, with hindsight, having heard what Mr Winn 8 said about his own experience, as I say, it was 9 described as basic and equivalent to 10 an occasional end user, do you have concerns or 11 do you see there being a problem with the way in 12 which Mr Winn was used by Contract Adviser to 13 deal with discrepancies -- unexplained 14 discrepancies, I should say? 15 A. The fault may be entirely mine but I am somewhat 16 shocked to find that Andy Winn didn't have the 17 expertise that I considered he had, and I don't 18 know how other Contract Adviser regarded Andy, 19 but it is a matter of concern to me now. 20 Q. Why is it a matter of concern to you? 21 A. Because I relied on his responses and the 22 information he provided. I, myself, am not 23 an expert in the Horizon system, I can find my 24 way around accounts quite well but the system 25 itself is not an area where I have expertise 56 1 and, therefore, I relied somewhat on Mr Winn to 2 provide that gap in my own expertise. 3 Q. So when we looked at the Rivenhall branch 4 earlier and I asked about remote access, and you 5 referred to Mr Winn and you didn't pursue it 6 further because of the information you were 7 given, if, at that stage, you were aware of what 8 Mr Winn now says of his level of expertise, 9 would you have done anything differently? 10 A. Possibly. 11 Q. What do you think you would have done 12 differently? 13 A. I would have looked for somebody who had 14 expertise in the system to give a definitive 15 answer. I thought that person was Mr Winn. 16 Q. Were you aware of anybody else at Post Office 17 who may have had such expertise? 18 A. I would have hoped and expected that the gateway 19 to that person would have been Mr Winn himself, 20 had he not got the expertise personally, yeah. 21 Q. Thank you. We then come to the IMPACT Programme 22 and this is where we deal with the introduction 23 of transaction corrections. The Inquiry has 24 heard a significant amount of evidence on how 25 that policy was developed and the settle 57 1 centrally for amounts over £150. 2 As I understand it, you were not involved in 3 how that policy was devised? 4 A. Not as far as I can recall, no. 5 Q. I'm not going to cover with you the settle 6 centrally issue which has been dealt with by 7 other witnesses. What I do want to ask is about 8 transaction corrections for under £150. So if 9 there was a transaction correction for less than 10 £150, the subpostmaster would simply have to 11 accept it and they didn't have the option of 12 settling centrally? 13 A. Yes, I believe that's the case. 14 Q. So a person could receive several of these 15 throughout a year, which, even though under 16 £150, could develop into quite a substantial sum 17 of money? 18 A. I believe that's the case, yes. 19 Q. What was the procedure for dispute resolution 20 for those amounts? 21 A. I'm not aware of a dispute resolution process. 22 The subpostmaster would always have the 23 Helpdesk, NBSC could make enquiries but I don't 24 believe, as far as I'm aware, there was a formal 25 process for errors under £150 or transaction 58 1 corrections under that amount. 2 Q. Can I turn to page 33 of your witness statement, 3 paragraph 118, just one further point on this 4 topic. 5 We were here, right in the morning, to look 6 at paragraph 119 but it's 118 now that I want to 7 look at. It says: 8 "There was not anything to distinguish 9 a disputed debt from an undisputed debt and 10 I cannot see that the policy or the contract 11 made any distinction." 12 I understand you there to be referring to 13 when a subpostmaster sought to dispute 14 a discrepancy or a transaction correction and 15 they settled centrally. The process is or was 16 said to be that the enforcement procedures for 17 recovering that debt would be paused, while the 18 debt was resolved. 19 A. If the dispute process was invoked, yes. 20 Q. In that context, could you please explain what 21 you mean at paragraph 118, that there was 22 nothing to distinguish a disputed debt from 23 an undisputed debt? 24 A. Can I just read the one or two points 25 beforehand -- 59 1 Q. Yes, of course. 2 A. -- to understand the context of this? 3 Q. Of course. I think it would help to start 4 probably at the bottom of the page before -- 5 there, I think from there. Do just say when 6 you're ready to read on? 7 A. Thank you very much. Can I enquire of the 8 question which was put to me to answer the point 9 118? 10 Q. Sorry, I misheard you? 11 A. I was responding to a question to give the 12 answer at 118 and I'm not sure what that 13 question was. 14 Q. Oh, I'm sorry. If we bring 118 back. 15 Apologies, I misheard. Could you please explain 16 what you mean here when you say there was not 17 anything to distinguish a disputed debt from 18 an undisputed debt? 19 A. I'm struggling to recognise the situation that 20 I had in mind when I wrote that but, in terms of 21 a settled centrally debt, then it could only -- 22 it was a figure. What it referred to, whether 23 it was disputed or undisputed, there was nothing 24 to distinguish between the two. 25 Q. That document can come down. Thank you. Was 60 1 there a risk of Post Office seeking to enforce 2 debt that was disputed, if there was no 3 distinction? 4 A. Under £150 definitely, and there would be 5 enquiries ongoing to establish the reason for 6 it, a debt in -- before enforcement. 7 Q. During your time as a Contract Adviser, were you 8 aware of any subpostmaster complaints about the 9 transaction correction process? 10 A. I can't recall any. 11 Q. Were you aware of the nature or volume of 12 transaction corrections? 13 A. Some awareness, yes. 14 Q. What was that awareness? 15 A. The transaction correction rates for some 16 products was higher than others. The lottery, 17 for example, attracted a lot of transaction 18 corrections. 19 Q. Were you ever concerned by the numbers? 20 A. In certain branches, it was certainly a matter 21 of concern. 22 Q. When you say in some branches, do you mean 23 concern for the way that branch was running, 24 rather than general concern across the Network 25 as to how many transaction corrections were 61 1 being generated? 2 A. Yes, that's what I meant initially but there was 3 concern in the Network about the number of 4 transaction corrections concerned with lottery, 5 probably the reason I remembered that one 6 specifically. The accounting process was 7 slightly more complex for lottery transactions. 8 Q. Was there any concern or discussion, that you're 9 aware of, that the volume of transaction 10 corrections was caused by the Horizon IT System? 11 A. No. 12 Q. I want to move on to look at suspension and 13 where I say suspension it's often referred to as 14 precautionary suspension of a subpostmaster. 15 Can you explain what the effect of a suspension 16 on a subpostmaster was? 17 A. Yes, when there was a suspension, then the trade 18 at the branch would stop, as would the 19 remuneration to the subpostmaster and, normally, 20 there would be a search for a temporary 21 subpostmaster to take over. If that was 22 possible, then it could be affect very quickly 23 so the customer base wouldn't be affected. But 24 sometimes it did result in the closure of 25 a branch for a period of time while 62 1 investigations proceeded. 2 Q. What effect did it have on a subpostmaster's 3 access to premises, documents or data. 4 A. The subpostmaster didn't have access to premises 5 or data. 6 Q. So the effect was significant? 7 A. Yes. 8 Q. We don't need to turn it up but at paragraph 145 9 of your statement you say that there was no 10 right to appeal against a decision to suspend? 11 A. That's correct. 12 Q. So would you accept that the decision on whether 13 or not to suspend a subpostmaster ought to have 14 been taken carefully and in accordance with the 15 contract? 16 A. Yes. 17 Q. I want to first look at who made the decision. 18 Again, we don't need to turn it up but, at 19 paragraph 135 of your statement, you say that: 20 "For a long time, the Contract Adviser would 21 consult with a senior manager before any 22 decision was made [as to suspension]. As 23 awareness of Horizon difficulties increased, any 24 such decision was taken at senior manager 25 level." 63 1 Let's start with awareness of Horizon 2 difficulties increased. Firstly, when did that 3 occur? 4 A. I don't know the date, sir, but I've referred to 5 a continuum earlier in the day, I believe, when 6 initially we came across the odd one or two 7 cases and it became public knowledge then as the 8 Inquiry started. And, somewhere along that 9 line, there was a stage where the Contract 10 Adviser were less involved and senior managers 11 took control of the whole decision-making 12 process in regard of suspension and termination 13 of contracts. 14 Q. Let's look at a document which may assist. It's 15 POL00084002. This sets out for Auditors the 16 contact points for branch suspensions. We see 17 in the first paragraph it's 25 September 2006. 18 If we can go down, please. 19 So we see in the first column we have people 20 identified and their contacts in the next 21 columns, and you're identified as first contact 22 for Steve Gibbs and then as a "Buddy Contract 23 Adviser" for Peter Pycock. So, at this point, 24 would the decision here, be it that that's the 25 contact point as the Contract Adviser, so in 64 1 2006 is the decision with the Contract Adviser 2 with consultation of Senior Managers, rather 3 than it being the Senior Manager's decision? 4 A. I believe that was the case, sir, yes. 5 Q. Then there's a continuum, you refer to. Can you 6 recall a specific point -- for example in 2009 7 there was a Computer Weekly article. Did you 8 read that at the time, which -- 9 A. Not aware of that, sir. 10 Q. Can you help us place when you think that 11 Horizon difficulties increased such that senior 12 managers were involved in making the decision 13 rather than yourself? 14 A. I can share a little confusion, rather than help 15 you, but it may help if I do that, in that on 16 occasions when my line manager, in the period of 17 interest, was Lin Norbury, on occasions when she 18 was on leave, I would stand in for her and deal 19 with enquiries from Contracts Advisers 20 concerning suspensions. I remember being 21 surprised when a particular Contract Adviser 22 phoned in to question her or to bounce the ideas 23 around about a suspension and asked for the 24 opinion of that Contract Adviser and the 25 response was "Well, that's the decision at your 65 1 grade, not at my grade". So it was quite clear 2 that that Contract Adviser considered that the 3 decision was at senior manager level. 4 Q. So when do you think that conversation would 5 have happened? Was that in 2006 or later in 6 the -- 7 A. Later. 2008/9, something of that order. But 8 I was surprised by that. So it was clear that 9 there was some confusion. 10 Q. Why do you link a shift to Senior Management 11 making this decision to awareness of Horizon 12 difficulties? 13 A. It was at a time when there was a reduction in 14 the number of criminal prosecutions and the 15 business, in areas above my pay grade, were 16 concerned about the Horizon situation and, 17 therefore, decided to, you know, narrow the 18 field of decision making in any matters relating 19 to Horizon. 20 Q. So do you think that would have been around the 21 time of the Second Sight investigation, 2012 22 through to 2015, that period? 23 A. Yeah, could well be, yeah. 24 Q. Just to confirm I heard correctly, that was 25 a decision from senior management to 66 1 effectively -- 2 A. Yes. 3 Q. What did you think of that decision? Did you 4 think that you or Contract Managers were not 5 capable of making a decision on suspension? 6 A. Yes, there was an element of that, especially 7 Contracts Advisers, some of whom had been in 8 post for some considerable time and seemed 9 a little bit undermined. But, at the same time, 10 it is what the business decided, so the 11 decisions went to higher grade. 12 Q. When was the decision to suspend usually taken? 13 A. Normally it would be taken following an audit or 14 during the process of an audit. 15 Q. On the same day? 16 A. Yes. 17 Q. We don't need to turn it up but in paragraph 138 18 of page 39 of your statement, you say you don't 19 believe there was any process for the 20 subpostmaster to make representations about the 21 decision but it would often be the case that the 22 Contract Adviser would speak to the 23 subpostmaster at the time of the audit. 24 Is that based on your practice or -- 25 A. Yes. 67 1 Q. -- are you aware that -- sorry, was that 2 a "yes"? 3 A. Yes, that is what I would do, yes. I would 4 always try to speak to the subpostmaster to 5 establish the situation. 6 Q. Was there variance in that practice with other 7 Contracts Advisers? 8 A. Well, there may have been, I can't speak for 9 them all but it would seem sensible procedure to 10 me. 11 Q. At page 8 of your witness statement, 12 paragraphs 24 and 25, or paragraph 25 in 13 particular, you say towards the end: 14 "Suspension wasn't an exercise in assigning 15 blame, it was done simply to control risk and 16 gather information until such time as the issues 17 could be explained and rectified." 18 What do you mean by suspension wasn't 19 an exercise in assigning blame? 20 A. Perhaps we should regards suspension as 21 a stopping the risk to funds. It wasn't unknown 22 for a suspension to last for a very short period 23 of time. Investigations could be made and, you 24 know, within a day or two the contract could be 25 reinstated. And so the suspension itself was, 68 1 as you referred to earlier, a precautionary 2 suspension, pending investigation. 3 Q. When you say that it's to reduce risk, is that, 4 what, a risk of a subpostmaster absconding with 5 more money? 6 A. Yes. 7 Q. Are there any other risks? 8 A. Yes. We referred colloquially to office 9 accounts sometimes being in a muddle and 10 sometimes as a result of a fiddle. In other 11 words, an office account can quickly get into 12 a situation where nobody is quite sure 13 whether -- you know, whether further errors are 14 coming or whatever and they needed a little bit 15 of time, a breathing space, to resolve the error 16 notice coming through and it may be that what 17 appeared to be a significant audit shortage 18 could disappear because errors had been 19 identified, and so that was the -- one purpose 20 of a precautionary suspension. 21 And if things did resolve themselves, so 22 that there was no discrepancy left, then 23 a decision would be made on whether the 24 subpostmaster was sufficiently competent to 25 continue in office or whether the risk to funds 69 1 would be too great or whether this was, perhaps 2 with a new subpostmaster, a case where 3 additional training and support would resolve 4 the situation. 5 Q. So the question I asked was about risk, and one 6 of them was about absconding with money the 7 other you refer to the accounts themselves, 8 and -- 9 A. Yeah, one was about a fiddle, as I referred to. 10 Q. A fiddle, yes. 11 A. Which, obviously, I mean the various activity 12 within the accounts, perhaps, theft or whatever. 13 On the other was the muddle, which is where 14 investigations -- you know, that's a risk, 15 a muddle is still a risk because there may be 16 a loss of control of the accounts and displaying 17 incompetence of the subpostmaster. 18 Q. But at the time of the suspension, the audit has 19 been carried out so there's an independent 20 record of what's in the Post Office and the data 21 is, for all your concern, is on Horizon. So 22 what is the additional risk that you're trying 23 to identify that requires the suspension of 24 a subpostmaster in relation to a fiddle or 25 muddle of the accounts? 70 1 A. The risk is that there may be errors in the 2 system which are not apparent at the time of the 3 audit. 4 Q. Can we look at the contract, please, the 5 relevant contract. It's POL00082751, page 90, 6 please. This is, I should say, the 7 Subpostmasters Contract, as you'll see from the 8 screen. 9 A. Thank you. 10 Q. Thank you. If we could go to the bottom of the 11 page, please. It says that: 12 "A subpostmaster may be suspended from 13 office at any time if that course is considered 14 desirable in the interest of Post Office 15 Counters Limited in consequence of his: (a) 16 being arrested, (b) having civil or criminal 17 proceedings brought or made against him, (c) 18 where irregularities or misconduct at the 19 office(s) where he holds appointment(s) have 20 been established to the satisfaction of Post 21 Office Limited, or are admitted, or are 22 suspected and are being investigated." 23 So, as we see here, it says, 24 "A subpostmaster may be suspended". So do you 25 accept that the clause said that the Post Office 71 1 had an option to suspend, if suspension was 2 considered desirable for one of the reasons 3 stated? 4 A. Yes. 5 Q. It didn't have to do so? 6 A. I accept that, yes. 7 Q. So this clause envisages that, where there is 8 a discrepancy, for example, raised, someone at 9 Post Office will consider all the facts and 10 consider whether it is desirable to suspend the 11 subpostmaster? 12 A. Yes. 13 Q. That person should consider all the relevant 14 factors and dismiss or not consider any 15 irrelevant ones? 16 A. Logic would dictate so, yes. 17 Q. They should make that decision in good faith? 18 A. Yes. 19 Q. In this case, the Post Office entrusted that 20 decision -- well, it's unclear -- either to 21 Contract Managers or at some point a mixture of 22 Contract Managers and senior management? 23 A. Yes, that's right. 24 Q. Please can we bring up POL00089004. Thank you. 25 It's not necessarily easy to tell from this but 72 1 it's understood that this is a pocket-sized 2 booklet. You're nodding; do you recall being 3 given this? 4 A. Yes. 5 Q. At page 2, it's titled "Managing Agents 6 Contracts, Guidelines for the Line Manager". 7 Line Manager, we've been using the term 8 "Contract Adviser", would this be used by 9 Contract Advisers? 10 A. The booklet was designed for Contract Managers 11 or Contract Advisers or whatever they were 12 called at the time, yes. 13 Q. It's design is to be a reference book for 14 Contract Advisers to use in how to apply Post 15 Office policy? 16 A. Yes. 17 Q. Did you use it? 18 A. Yes, it was available to me, yes. 19 Q. It was available to you but would you use it as 20 a reference guide? 21 A. Yes, I would. 22 Q. Can we turn to page 67, please, towards the 23 bottom of the page. This a section on 24 "Precautionary Suspension", and it says that: 25 "This course of action is considered 73 1 appropriate in the interests of Post Office 2 Network when: 3 "(a) The subpostmaster is arrested. 4 "(b) The subpostmaster has civil or criminal 5 proceedings brought against them. 6 "(c) There are irregularities or misconduct 7 at the post office or where grounds exist to 8 suspect dishonesty." 9 There are two additional points there we 10 don't need to go into. If we can just go back 11 up to have the original part of the text on the 12 screen, please. This is different from the 13 contract, isn't it, because it's saying that 14 suspension is appropriate when one of these 15 factors is set out, not that it may be 16 appropriate if considered desirable? 17 A. If you -- you've displayed the two different 18 wordings there, yes. 19 Q. So did Contracts Advisers see suspension as 20 always appropriate when one of these conditions 21 was met? 22 A. I would have given them a suspension 23 consideration when -- and, obviously, if 24 a subpostmaster had been arrested then, yes, 25 a suspension would be necessary but, if there 74 1 were concerns -- please, can we go to page 68? 2 Would that be possible, please? 3 Q. Sorry, yes, of course. If we could go to the 4 next page, please. 5 A. Yeah, where there are -- suspecting dishonesty. 6 But I would give suspension consideration, 7 rather than saying "Yes, we will suspend". 8 Q. What would you take into account, then? If 9 you're making this decision, what would you take 10 into account? 11 A. The experience of the subpostmaster, the size of 12 the discrepancy, any admissions. Those are 13 examples that spring to my mind now. 14 Q. Would you ever consider if there was evidence of 15 actual theft or just if it was a discrepancy 16 enough? 17 A. A sizeable -- evidence of theft can only be 18 an admission, I think. I'm not sure what other 19 evidence of theft could be provided. 20 Q. We'll come to that when we look at 21 investigations in a bit more detail, what 22 evidence there could be. Let's have a look at 23 another document. It's POL00086116, please. 24 Now, in your witness statement, you describe 25 this as an aide memoire. Do you recall when 75 1 this document was made or when you started using 2 it? 3 A. No, I'm afraid I don't recall when the thing was 4 made but it was a useful document. 5 Q. If you can't remember when it was made or was 6 a useful document, assume it was -- let's just 7 take a hypothetical date and it was made in 8 2008. If it was made in 2008, would it 9 effectively set out what you would have done as 10 a Contract Adviser before that date? So it 11 wasn't setting new practice, it was just setting 12 down -- 13 A. No, not setting new practice. This was to bring 14 together the wisdom of the time, and the 15 information in the contract and other guidance 16 given. 17 Q. So when you say drew together the wisdom, this 18 was effectively the thinking of senior 19 management and Contracts Advisers? 20 A. Yes. 21 Q. If we could go down, please, towards the bottom, 22 under the bold text, it says: 23 "If in any doubt, make decision to suspend 24 and carry out further investigations." 25 So presumably you adopted that approach as 76 1 a Contract Adviser? 2 A. Yes, as I referred to earlier, reinstatement of 3 the contract could be swift if investigations 4 proved fruitful. 5 Q. Yes, but during that time, when this decision to 6 suspend is made, the subpostmaster is without 7 remuneration -- yes -- 8 A. Yes, yes. 9 Q. -- and locked out of the premises? 10 A. Yes, yes, yes. 11 Q. So is another way of saying this that a Contract 12 Adviser should suspend a subpostmaster unless 13 they are sure that the subpostmaster did no 14 wrong or that suspension was desirable? 15 A. That would logically follow. 16 Q. Why was the burden of proof put on the 17 subpostmaster like that? 18 A. The issue would only arise when a significant -- 19 normally when a significant audit shortage had 20 been identified, so that, at that stage -- and 21 surely it would be fair for the subpostmaster to 22 provide some kind of explanation. 23 Q. Well, earlier we referred to the fact that, if 24 a discrepancy had been caused by a bug, error or 25 defect in the Horizon IT System, the 77 1 subpostmaster wouldn't be able to show that? 2 A. Yes, I agree with that. 3 Q. The contract said that the subpostmaster was 4 only responsible for losses caused by 5 carelessness? 6 A. I agree with that too, sir. 7 Q. So, again, why did the fact that a discrepancy 8 may have been over a certain amount mean that 9 the subpostmaster bore the burden of proof in 10 persuading a contractor beyond doubt that they 11 hadn't done anything wrong? 12 A. Hadn't done anything wrong? I mean, it's 13 carelessness, negligence or error. The 14 suspension just allowed time for that 15 investigation to take place. 16 Q. If you could go up, please, to look at some of 17 these factors. The first refers to where 18 there's been an admission or suspected misuse of 19 funds or admission of inflation of cash or 20 stock; if misuse is admitted the amount is 21 irrelevant. 22 As a Contract Adviser, would you take into 23 account an explanation from the subpostmaster, 24 for example if they said, "Well, I've inflated 25 the cash or stock because I've got these 78 1 unexplained discrepancies for which I just have 2 no explanation, I think it's the Horizon IT 3 System"? 4 A. Yes, if there's no explanation and there's 5 a shortage in the account, then suspension, 6 I think, would be appropriate to enable 7 investigation to take place. 8 Q. So in those circumstances, just spend, okay. 9 We've then got (2) if there's a discrepancy 10 identified, and we're back to this figure of 11 £1,000 "a guiding figure for suspension is where 12 a discrepancy is in excess of £1,000". Again, 13 why was that seen to be a significant figure for 14 suspensions? 15 A. I think I said before that I'm not sure why the 16 figure of £1,000 was arrived at but a smaller 17 figure would -- you know, we need to recognise 18 that a suspension was an expensive process, as 19 well as causing great difficulty to the 20 subpostmaster. So for smaller sums, then 21 probably not appropriate. 22 Q. Well, when you compare a company the size of the 23 Post Office and what effect a £1,000 discrepancy 24 would have on it, compared to the effect of 25 a subpostmaster and effectively no remuneration, 79 1 do you think that £1,000 was too low, rather 2 than too high? 3 A. Certainly on the low side. But that's the 4 figure that was produced for us and that's the 5 figure we worked to. 6 Q. Why was the size of branch relevant? 7 A. Some of the branches of the Post Offices were 8 major high street stores with very high level of 9 turnover, and so on, and some of them were very, 10 very tiny sub offices in the countryside, 11 possibly only open for a few hours a week. So 12 that would certainly be taken into account. 13 Q. But in which way? So, if it was a smaller sub 14 post office, would that be more or less likely 15 to result in a suspension? 16 A. All the factors have to be taken into account, 17 not just the size of the branch. 18 Q. Well, is it the fact that the size of the branch 19 was taken into account for the Post Office 20 considering its own turnover, in the sense of 21 a bigger branch being suspended would result in 22 Post Office's turnover -- 23 A. Yes, that would certainly be a consideration. 24 There would be more inconvenience to the public 25 and, as you say, less turnover for the Post 80 1 Office than a larger branch. So one would want 2 to avoid termination of a large branch if 3 possible. 4 Q. So a smaller branch would be more likely to be 5 suspended on these guidelines? 6 A. Yes. 7 Q. What was the relevance of settling the debts 8 centrally, both the proportion and frequency? 9 A. I referred to a model before and, if 10 a subpostmaster was incompetent, then it could 11 result in frequent debt being settled centrally 12 and frequent transaction corrections, as stated 13 here. So it would be an #indication that 14 something was not quite right with the 15 accounting at the branch. 16 Q. The final one, the subpostmaster's ability or 17 willingness to make good the loss. Well, 18 firstly, why was the subpostmaster's ability to 19 make good the loss relevant to whether or not 20 they would be suspended? 21 A. Well, again, if there was a question of 22 incompetence, then the debt could increase over 23 a period of time and a suspension would prevent 24 that increase in debt. 25 Q. The willingness, would someone who was more 81 1 willing to make good the loss be less likely to 2 be suspended? 3 A. Yes. 4 Q. So does that mean someone who was disputing the 5 loss be more likely to be suspended? 6 A. Yes. 7 Q. There's no reference here to whether or not 8 there was evidence of the subpostmaster calling 9 the NBSC or the Fujitsu Helpdesk. Was that ever 10 considered by Contracts Advisers? 11 A. Just the frequency of calls to the NBSC for 12 help, do you mean? 13 Q. Well, if they were calling for help with Horizon 14 saying, "I've made regular -- each week I'm 15 getting problems and I'm calling the Helpdesk 16 and I'm not getting any assistance", would that 17 be taken into account? 18 A. Yes, I recall information being available which 19 indicated the number of calls to the Helpdesk. 20 I think that information was generally used for 21 risk analysis to decide for which branches to 22 audit, one of the elements there. 23 Q. So that's used for audit but, when you're 24 considering whether or not to suspend someone, 25 would you -- 82 1 A. If that information was available, that's 2 certainly something that would be taken into 3 account, yes. 4 Q. So why isn't it written in this list? 5 A. I can't answer that. 6 Q. Number 3 concerns absentee subpostmasters, which 7 we don't need to consider. Then we've got 4: 8 "Gain opinion from auditor." 9 Could you just flesh that out for us? 10 A. Yes. 11 Q. What would be being sought? 12 A. In principle the Auditor was there to provide 13 the numbers and purely the facts. But they were 14 at the office and they may have gained an 15 impression that the subpostmaster was, for 16 example, trying to cover something up or being 17 difficult in one way or another. So the Auditor 18 may think "Oh, there's something really wrong 19 here", or they may equally find that the 20 subpostmaster was floundering in a muddle and 21 indicate that way. 22 And that would just be a bit of helpful 23 information in decision making. 24 Q. Finally: 25 "Consider potential future risk to Post 83 1 Office Limited funds if the subpostmaster is 2 left in post." 3 What sort of points would you be considering 4 there, as distinct from what's gone before? 5 A. I think it refers to the level of competence of 6 the subpostmaster. So if the subpostmaster is 7 incompetent, then Post Office funds would be at 8 risk if allowed -- if the office was allowed to 9 continue. 10 Q. Did you ever consider alternatives to 11 suspension, such as more frequent visits or 12 advice and input from the -- 13 A. Oh, yes. 14 Q. -- Network Support Agents? 15 A. Yes, definitely, and, even after suspension, 16 then reinstatement would, you know, often then 17 require additional training, additional support 18 of one way or another. 19 Q. Can you ever recall a time when you didn't 20 suspend a subpostmaster and, instead, put in 21 place an alternative in place of suspension? 22 A. I can't recall a specific occasion, sir. 23 Q. Can you recall an occasion when you were faced 24 with a subpostmaster who had a discrepancy in 25 excess of £1,000 and you decided not to suspend 84 1 them? 2 A. Well, again, I can't remember a specific case 3 but we are dealing with more than 10 years ago. 4 MR STEVENS: Thank you. 5 Sir, that's probably a good time to take the 6 afternoon break as I'll be going on to another 7 topic. 8 SIR WYN WILLIAMS: Again, I was struggling to unmute 9 myself but I agree. 10 MR STEVENS: Thank you, sir, would 3.20 work? 11 SIR WYN WILLIAMS: Yes. Sure. 12 MR STEVENS: Thank you, sir. 13 (3.04 pm) 14 (A short break) 15 (3.20 pm) 16 MR STEVENS: Good afternoon, sir, can you see and 17 hear me? 18 SIR WYN WILLIAMS: Yes, I can, thank you. 19 MR STEVENS: Thank you. 20 Mr Lusher, I'm now going to go on to discuss 21 termination. We discussed the effect of 22 suspensions before the break. The effect of 23 termination is obvious. It brings, well, the 24 post office element of the subpostmaster's 25 business to an end. So, again, presumably you 85 1 accept that that is a very significant decision 2 to make? 3 A. Absolutely. 4 Q. The difference between the precautionary 5 suspension and the termination is you have time 6 to investigate? 7 A. That's right. 8 Q. Who carried out that investigation? 9 A. If there was a potential for a criminal 10 investigation to take place, then the main 11 investigation was taking place -- took place by 12 the Investigation Team themselves and, if not, 13 the Contract Adviser would interview the 14 subpostmaster and establish -- well, that was 15 before termination, clearly -- establish whether 16 to terminate, or reinstate, or reinstate with 17 conditions. 18 Q. Right at the beginning of your evidence, when we 19 discussed when an Auditor might involve the 20 Investigation Department, you referred to the 21 £1,000-figure as being indicative of whether it 22 may be referred to the Investigation Department 23 or not and we went to the Suspension Guidelines, 24 which use the same figure. 25 In most cases that you dealt with of 86 1 suspension and termination, was the main 2 investigative work done by you or someone in the 3 Investigation Team? 4 A. The Investigation Team made their own decision 5 as to whether they would be involved in the 6 investigation, with a view of criminal 7 prosecution and, if they did, then they had the 8 trump card. And so the Contract Adviser 9 would -- if there was a criminal prosecution to 10 take place, then the Contract Adviser would 11 terminate the contract. 12 Clearly, the business wouldn't want to 13 reinstate a contract when the business was going 14 to proceed to prosecution. If the Investigation 15 Department decided not to investigate, looking 16 for criminal prosecution, then the Contract 17 Adviser would conduct the full investigation. 18 Q. I want to look at one of the situations where 19 there was an investigation, one of the case 20 studies that the Inquiry will be looking at in 21 much more detail in due course. It's involves 22 the prosecution of Suzanne Palmer, who is a Core 23 Participant and sits within this room. Can we 24 go to the investigation report that was 25 prepared, it's POL00053007. Can we zoom out, 87 1 thank you. Do you recognise this type of 2 document? 3 A. Yes, this is a report from the Investigation 4 Department. 5 Q. When would you come across these in your 6 practice as a Contract Adviser? 7 A. It would be presented probably to the 8 termination of the contract and after 9 suspension. 10 Q. Would this be a significant document that you 11 would take into account as part of the decision 12 as to whether or not to terminate the contract? 13 A. Yes, that's right. 14 Q. We see designated prosecution authority towards 15 the bottom, Tony Utting. Did you work often 16 with Mr Utting? 17 A. Mr Utting was part of the Investigation Team. 18 I wasn't but I certainly recognised the name and 19 I believe Lisa Allen produced this report and, 20 again, she was an Investigator who produced this 21 and a number of other reports which I saw. 22 Q. You're referred to as the "Discipline Manager". 23 A. Mm, odd title. 24 Q. Sorry, I spoke over you, then? 25 A. I spoke over you, sir, but just to say it's 88 1 an odd title, "Discipline Manager". We talked 2 about employment law and contract law before. 3 Q. Yes, we said exactly that, disciplinary 4 procedures. The fact your title was Discipline 5 Manager suggests that this was seen as 6 a disciplinary procedure; do you agree? 7 A. It was a contractual matter that I was dealing 8 with, it was a criminal matter that the report 9 was dealing with. 10 Q. Can we go to page 6, please. We see this is 11 a document by Lisa Allen, so she's the 12 investigation manager, on 20 February 2006. To 13 what extent, if at all, would you have had any 14 input into Lisa Allen's investigation? 15 A. I believe on this occasion the auditors found 16 a discrepancy, a deficiency, in the office 17 accounts and it just happened that on the day 18 Lisa Allen, the Investigator, was available, and 19 so -- I believe she went to the office on the 20 day and completed the report. I can't be 21 certain it was on the day but I think it was or 22 possibly the next day. 23 Q. In preparing this report and you made the 24 decision to suspend on 3 February and 25 subsequently made the decision to terminate, as 89 1 part of the process of determining whether or 2 not you would terminate Mrs Palmer's contract, 3 how often, if at all, did you speak to Ms Lisa 4 Allen? 5 A. The information that I would need from the 6 report was whether there was going to be 7 a criminal prosecution. I don't recall speaking 8 to Lisa Allen in 2006. I may or may not have 9 spoken to Lisa about the report. 10 Q. So what you said there was "The information that 11 I would need from the report was whether there 12 was going to be a criminal prosecution". 13 A. Yes. 14 Q. If there was going to be a criminal prosecution, 15 would you effectively see that as it has to be 16 a termination? 17 A. Yes. 18 Q. Why? 19 A. It would be -- for Post Office Limited to be 20 pursuing a criminal prosecution and then 21 reinstating a contract, would seem to be 22 incongruent, silly. 23 Q. Did you ever question decisions as to whether or 24 not to prosecute? 25 A. They were made at a very high level and 90 1 I wouldn't have questioned them, no. It 2 wouldn't be Lisa's decision. 3 Q. It says, the third paragraph up: 4 "A discipline report has been forwarded to 5 Alan Lusher." 6 What was a discipline report? 7 A. I believed that refers to this report. 8 Q. That document can come down. The Inquiry has 9 seen evidence of very significant discrepancies 10 being reported and investigated, upwards of 11 £100,000. As part of your investigation, did 12 you ever investigate whether there had been 13 an actual loss, such as by trying to trace where 14 allegedly lost money had gone? 15 A. We're not talking about Suzanne Palmer -- 16 Q. No, sorry, I'm talking generally. 17 A. -- because her's were nothing like so large. 18 You're asking if investigations were made when 19 very large sums went missing? 20 Q. No. Well, let's not limit it to large sums. As 21 part of your investigation, did you ever try to 22 trace where allegedly lost money had gone? So 23 there was a discrepancy on Horizon but did you 24 try to see if, for example, you could trace 25 where the money had gone, maybe into the 91 1 subpostmasters's bank account or into a safe at 2 home? 3 A. Limited attempt. The investigation Team would 4 go into much more detail. 5 Q. When you say "limited attempts" by yourself, 6 what would those limited attempts be? 7 A. It would be asking the subpostmaster where the 8 sums of money had gone. There wouldn't be any 9 detailed investigation beyond that, I don't 10 believe. 11 Q. What if they said, "I don't know because 12 I haven't stolen them?" 13 A. I wouldn't be in the business of accusing 14 anybody of stealing money. I would be in the 15 business of finding that there was a deficiency 16 in the account, which could possibly warrant 17 suspension and/or termination. 18 Q. As part of your investigation, would you ever 19 request audit data or ARQ data from Fujitsu? 20 A. You referred to ARQ data this morning. I can't 21 quite remember what it was because I'd never 22 heard of it before. But no, is the answer to 23 the question, I would never refer to Fujitsu for 24 information. 25 Q. Why not? 92 1 A. I didn't have the avenue through which to do 2 that. 3 Q. Did you think it would have helped you, if 4 you're trying to determine the cause of 5 a discrepancy, to be able to see the more 6 detailed audit data collected by Horizon? 7 A. Yeah, potentially could, yes. 8 Q. In relation to who made the decision to 9 terminate, you say a similar thing, that 10 initially a Contract Adviser with input from 11 a senior manager, and over time that changed; 12 are the timings the same as for with suspension? 13 A. The Contract Advisers had a monthly appraisal 14 meeting with the Senior Managers and, on each 15 occasion, any cases such as these suspensions, 16 terminations, would be discussed, and so the 17 opinion and guidance of the senior manager would 18 always be in the decision-making process. 19 Q. But in terms of when the actual decision making 20 went to the senior managers, rather than in 21 consultation with, did that transfer about the 22 same time as for suspension? 23 A. Probably yes, possibly earlier. 24 Q. We've discussed that subpostmasters aren't 25 employees but, often in an employment context 93 1 where there's an allegation of misconduct of 2 some sort, you may expect to see 3 an investigating officer and a separate decision 4 maker; would you agree with that? 5 A. I don't know, I haven't dealt with such things. 6 Q. Can we please turn in your witness statement to 7 page 39, paragraph 141. Thank you. You say: 8 "At interview, evidence would be heard from 9 the SPM and the Contract Adviser." 10 Who would hear the evidence? 11 A. The Contract Adviser would put forward the 12 evidence that they had, the subpostmaster would 13 put forward evidence that they had, and the 14 Contract Adviser, often with the assistance of 15 the friend, member of the Federation of 16 SubPostmasters, normally very helpful -- then 17 the Contract Adviser would arrive at a decision 18 jointly or with senior management, subsequently. 19 Q. So the Contract Manager does the investigation 20 or it may be the Investigation Department, 21 there's then the meeting, the Contract Manager 22 puts forward all the evidence and then the 23 Contract Adviser again or Manager makes 24 a decision. There's no separation between 25 investigation and decision making? 94 1 A. That's right. 2 Q. Do you see a problem with that? 3 A. The Senior Managers are always involved in that 4 decision-making process. 5 Q. How does that address the problem with the 6 Investigator making a decision on their own 7 investigation? 8 A. I didn't say I found that to be a problem, did 9 I? 10 Q. Okay, you don't consider it to be a problem; is 11 that your evidence? 12 A. No, I don't see that as a problem. 13 Q. So during an interview were there ever occasions 14 when a subpostmaster may criticise the extent of 15 the investigation and say more evidence is 16 needed? 17 A. It may have been the case, I can't recall. 18 Q. If such a criticism was made, would you feel 19 that you, as a Contract Adviser who's done the 20 investigation, would you feel that you would be 21 able to impartially assess that, whether the 22 investigation itself was adequate? 23 A. If there was something specific that the 24 subpostmaster wished to raise, then that could 25 be a new avenue of investigation, which the 95 1 Contract Adviser could then explore. 2 Q. How often in your experience did a subpostmaster 3 raise a new area of investigation and that was 4 then followed, following an interview? 5 A. Can't recall any specific occasions, sir. 6 Q. I want to briefly look at appeals and at 7 paragraph 146 and 147 of your statement, please 8 it's page 40, you say that: 9 "The SPMs did, however, have the right to 10 appeal a decision to terminate their contract. 11 Appeals were heard only by especially trained 12 senior managers." 13 You say you recall taking notes but you 14 didn't actually conduct an appeal yourself. 15 A. Appeals had to be heard by Senior Managers and 16 I never achieved that status, sir. 17 Q. In paragraph 150, you refer to being consulted 18 on revisions to appeals policies and to 19 arranging training. 20 A. Yes. 21 Q. Why were you consulted on appeals policy if you 22 weren't running appeals yourself? 23 A. I think for a time -- this was when I was 24 termed, I believe, a Commercial Contract Adviser 25 and not doing the ordinary role of a Contract 96 1 Adviser. But, at the time, the appeals were 2 almost all heard by just one Appeals Manager, 3 Andy Bayfield, and the decision was taken that 4 a panel should be established, as had previously 5 been the case, I believe, some years prior. 6 Is the connection satisfactory, sir? 7 MR STEVENS: I think -- 8 Sir, can you see and hear us? 9 SIR WYN WILLIAMS: Yes. 10 MR STEVENS: I think it may have just been the 11 screen. 12 THE WITNESS: The screen went off. 13 SIR WYN WILLIAMS: Currently on my screen, I've got, 14 just so everybody knows, I've got the witness 15 statement at paragraph 150. 16 MR STEVENS: Yes, sorry, that can come down. Thank 17 you, sir. 18 A. Sorry, the question was why did I become 19 involved in a revision of appeals process when 20 I wasn't involved in appeals. 21 Q. Yes. 22 A. And the answer is that, at the time when I was 23 a Commercial Contract Adviser, just one person, 24 Andy Bayfield, was concerned with conducting all 25 appeals throughout the country and the decision 97 1 was taken to form a panel of Appeals Manager 2 with specific training, in order to alleviate 3 the workload. And I was asked, really -- 4 I think the policy was just a question of 5 pulling together whatever had been there before 6 into a consolidated piece of work and then 7 assisting with the training of the new Appeals 8 Managers. 9 I think my experience as an auditor was 10 quite useful in that, just to help to train the 11 Appeals Managers. 12 Q. Are you aware of how frequently appeals would be 13 allowed? 14 A. Yes, I think there was -- in the pack, there was 15 some statistics which indicated in the order of 16 35/40 appeals a year, if my memory serves me, 17 but that was from the pack which was provided to 18 me. 19 Q. Well, if it's from the pack, we can consult the 20 documents in due course but, from your memory, 21 you don't have a recollection of how many 22 appeals were allowed, as in initial decisions 23 overturned? 24 A. Oh, I see what you mean. Decisions overturned, 25 I don't really recall that number. There were 98 1 some but not very many. 2 Q. In practice, was allowing an appeal frowned upon 3 within the Post Office? 4 A. Oh, no. 5 Q. Why do you say that? 6 A. From a Contract Adviser perspective, the -- 7 an appeal would be welcome because that would 8 give the -- somebody else the opportunity to 9 review the entire case. The appeal was not 10 based on the Contract Adviser's investigations, 11 or findings but there was a completely fresh 12 rehash of the case from stage one, always 13 conducted by a Senior Manager. 14 Q. I've got three disparate topics now. One of 15 them is back to the prosecution of Mrs Palmer. 16 There's going to be more questions coming but 17 I'm only going to focus on one particular 18 element. Firstly, could you just briefly say 19 overall what your role was in that prosecution? 20 A. I had no role in the prosecution, sir. 21 Q. If we can turn, please, to POL00052988. This is 22 a letter dated 8 November 2006. It's from 23 Miss J Andrews in the Criminal Law Division, and 24 addressed to, we see, Investigation Team but 25 "cc Lisa Allen". It refers to Post Office v 99 1 Palmer with a pre-trial review on 8 December. 2 If we could just move down slightly, please. 3 Thank you. 4 The third paragraph says: 5 "The witnesses required to give evidence at 6 Trial are Peter Riches, Alan Lusher, Anil 7 Chowdhry and Nick Kerr." 8 Do you recall giving evidence in the trial? 9 A. No. I did not give evidence at the trial. 10 Q. Did you give a witness statement? 11 A. I may well have done. I cannot recall. 12 SIR WYN WILLIAMS: I think the reality is that you 13 must have done because a witness order or 14 a request that somebody gives evidence must be 15 preceded by a witness statement in a criminal 16 case. 17 A. Thank you, sir. In that case, I must have done. 18 MR STEVENS: That document can come down. Can we 19 please then go to POL00052997. It's a letter 20 dated 19 January 2007, again to the 21 Investigation Team, cc Lisa Allen, but at the 22 bottom, we see that it's from Jarnail Singh. 23 Did you work with Jarnail Singh at all or do you 24 know who he was? 25 A. I may have been aware of him at the time, sir, 100 1 and it's clear that he's on the Criminal Law 2 Division, so not really closely related to the 3 contract issues. 4 Q. The letter refers to receiving: 5 "... a letter from the Defence Solicitors 6 with regard to disclosure of any Post Office 7 accounting records that show Mrs Palmer did 8 periodically repay the Post Office large sums of 9 money representing scratchcard receipts. They 10 inform me that Prosecution Counsel gave 11 an indication on 8 December 2006 at Court and we 12 asked the Investigation Officer and his 13 understanding was that such records did exist. 14 However no such records have been disclosed. 15 Could you please look into this and let me have 16 your response urgently." 17 Can you recall ever being approached to 18 provide documents in relation to this case, in 19 particular, accounting records? 20 A. No, I can't, and the request would have gone to 21 the Accounting Department, rather than to 22 myself, I believe. 23 Q. Thank you. Now, the second topic I had, if you 24 bear with me, sir, I need to open the [draft] 25 transcript. 101 1 Thank you, yes, this morning, I asked you 2 questions about where assurance came in respect 3 of Horizon's reliability, and we had 4 a discussion and you referred to senior 5 management, et cetera. Reading from the [draft] 6 transcript, the question I asked was: 7 "When you say you were advised by Post 8 Office Limited, who in particular assured -- 9 gave you that assurance?" 10 I'll then read your answer back to you. You 11 said: 12 "Well, the discussion came up in team 13 meetings on a fairly regular basis, not exactly 14 sure of the dates, but the first inklings of 15 activity in 2004/2005, something like that, 16 right through to the end there, was kind of 17 a continuum of all things. The pressure got 18 increased, as it were. Initially there's not 19 too much consideration given to it ..." 20 This is the part I want to ask you about: 21 "... but latterly the Post Office does 22 [inaudible] a statement to read out with 23 application interviews which the Legal team had 24 prepared to assure people that the Horizon 25 system was sound, and so, you know, latterly, 102 1 given ..." 2 Then it breaks off. Your reference there to 3 a statement to read out with application 4 interviews, which the Legal team had prepared to 5 assure people that the Horizon system was sound, 6 could you please just expand on what that was? 7 A. One of the key jobs of Contract Adviser was 8 application interviews for new subpostmasters 9 and, as part of the interview process, 10 a document had been prepared by the Legal team 11 either to read out to refer to or I believe to 12 actually hand to the applicant at some stage 13 during the interview process. 14 Q. Do you recall what that document said? 15 A. Not specifically but it was to give assurance 16 that the Horizon system was sound. 17 Q. Do you remember when that was -- can you be 18 precise as to when that document was brought in? 19 A. I can't be precise but on the continuum we've 20 referred to it as, you know, 2012 or thereafter. 21 Q. Can you remember who precisely instructed you to 22 use that document? 23 A. Well, the instruction came through my line 24 manager but it was produced, I believe, by the 25 Post Office solicitors. 103 1 Q. Who was your line manager at that time? 2 A. Lin Norbury. 3 Q. It was Lin Norbury. Thank you. 4 The final question then I have, please, or 5 set of questions sorry, could we turn up 6 POL00041476, and if we could go to the last 7 page, please, page 4. So this is an email from 8 you to Paul Inwood on 14 June 2017. We don't 9 have the attachment but it says: 10 "Hi Paul 11 "I would appreciate advice on the best way 12 to proceed with this case." 13 Why would you have approached Paul Inwood in 14 these circumstances? 15 A. The email is copied Lin Norbury, my immediate 16 line manager and Paul Inwood was, I believe, 17 involved in putting together contracts but also 18 had a close interest in the Horizon Issues. We 19 note that this is much later in 2017, much later 20 on my continuum -- 21 Q. Continuum, yes. 22 A. -- when there was general concern in the 23 business about the Inquiry and Horizon 24 difficulties. 25 Q. Could we go over the page, please, to 104 1 Mr Inwood's response -- thank you. Just to see, 2 for the chronology purposes, he responds asking 3 for more information. The actual content of 4 advice is not necessary for the question I'm 5 going to ask. What I want to ask is your email, 6 which is immediately above. This is from you 7 back to Paul Inwood on 31 August. You say you 8 have made enquiries with Angela van den Bogerd, 9 having no recollection, et cetera. Your 10 penultimate paragraph says: 11 "Please advise whether I should proceed with 12 this case differently in any way because of the 13 implication of problems with the Horizon 14 system." 15 Now, were you requesting whether you should 16 do something differently because of the ongoing 17 litigation concerning Horizon at that point? 18 A. Yes. 19 Q. Why did you think it necessary to ask whether 20 you should proceed with the case in a different 21 manner? 22 A. You'll forgive me if I pronounce the name wrong 23 but Pentyrch is an office, I believe, in Wales 24 and I live in Norfolk. The case was passed to 25 me to deal with, kind of specially, because 105 1 there was concerns around the Horizon system, 2 I believe, which had been brought up by the 3 subpostmaster in this case. So, in a way, I was 4 just the lowly Contract Adviser dealing with the 5 regular letters to be sent in this case but took 6 advice from, you know, very senior managers, 7 obviously Paul Inwood carried the case forward 8 to a senior legal expert in the business, and so 9 I was just merely doing, as it were, the donkey 10 work to start the process on this case. 11 Q. So, in practice, around this time when the Group 12 Litigation was ongoing, if you had a query as 13 Contract Adviser which raised a Horizon issue, 14 it would be normal practice to raise that up to 15 senior management for guidance on what to do? 16 A. I do want to say I wasn't working as a kind of 17 ordinary Contract Adviser in that time from -- 18 it was about 2010 onwards but, on odd occasions, 19 was asked to deal with specific cases and when 20 Horizon was mentioned as an issue, then, 21 certainly the matter would be referred to senior 22 managers and lawyers. 23 MR STEVENS: Thank you. That concludes all the 24 questions that I have. 25 Sir, there are questions from two Core 106 1 Participants. 2 Firstly, Mr Enright for Howe+Co. 3 SIR WYN WILLIAMS: Over to you, Mr Enright, and 4 I can see that Mrs Palmer is with you so give 5 her my regards. 6 MR ENRIGHT: I will do, sir, thank you. 7 Questioned by MR ENRIGHT 8 MR ENRIGHT: Mr Lusher, I am David Enright and I'm 9 the recognised legal representative for 156 10 subpostmasters and managers, including Ms Palmer 11 who sits beside me. I saw you looking earlier. 12 Do you remember Ms Palmer? 13 A. I do indeed. 14 Q. You were Ms Palmer's Contract Manager? 15 A. I'm not certain -- 16 Q. You were Ms Palmer's Contract Manager, correct? 17 A. I'm not certain whether I was her designated 18 Contract Manager but I definitely dealt with the 19 case. 20 Q. You dealt with the case? 21 Ms Palmer appeared before the Inquiry on 22 23 February 2022 and she referred to you in her 23 evidence. Did you watch her evidence then or 24 later? 25 A. No. 107 1 Q. Did you watch the evidence of any of the 2 postmasters who gave Human Impact evidence? 3 A. No, I haven't done so, sir. 4 Q. Okay. Ms Palmer also produced and provided 5 a witness statement to this Inquiry, and I'd 6 like to take you to two paragraphs of that 7 statement. I'd be very grateful if we could 8 bring up WITN02240100. This is the witness 9 statement of Ms Palmer. If you'd be kind enough 10 to take us to page 12, I'm looking at 11 paragraph 55, Mr Lusher. Ms Palmer said in her 12 statement: 13 "I also attended an interview with Alan 14 Lusher (Contracts Manager) in or around March 15 2005. I went through everything with Alan, and 16 explained my accounting process. He could see 17 that had done it incorrectly but this was 18 naivety of the system rather than malicious. 19 Alan tried to stop the prosecution but explained 20 that the decision to prosecute most made by 21 a separate team." 22 So Ms Palmer says that you understood her 23 position and tried to help her. Do you remember 24 this? 25 A. I certainly remember the interview, specifically 108 1 because Ms Palmer was extremely upset at the 2 time, at the prospect of losing the office. 3 Q. So you met her because you remember her being 4 deeply upset? 5 A. Yes, yes, yes. 6 Q. Did you promise to help her in any way? 7 A. I would have promised to do anything that was 8 within my power to assist her and ensure that 9 justice was carried out fairly. 10 Q. Do you recall saying to her that you understood, 11 you could see there was a muddle here, there was 12 naivety here, there was not criminality here? 13 A. I wouldn't go that far, sir, no. 14 Q. Okay. So you didn't do anything to try to stop 15 her prosecution then, I take it? 16 A. The decision on whether to prosecute or not was 17 not at all within my remit, sir. 18 Q. All right. You'll, of course, recall, certainly 19 having heard the evidence, that Ms Palmer was 20 prosecuted by the Post Office, was tried on 21 three counts of false accounting? You shake 22 your head -- 23 A. Yes, I've seen the evidence. Yes. 24 Q. Do you recall that a jury acquitted her on all 25 counts in January 2007? 109 1 A. I have heard that that was the case, sir, yes. 2 Q. Okay. I'd like to go to paragraph 14 of her 3 witness statement, it's at page 14 of that 4 statement I'm looking at paragraph 68, and this 5 what Mrs Palmer says she did immediately after 6 being acquitted: 7 "I called Alan Lusher the day that the 8 verdict was handed down and told him that I was 9 found not guilty. He was really pleased with 10 this. However, I had been through months of 11 hell, and even though I was proved innocent the 12 Post Office took away my job, my income, my 13 business and my future." 14 So the questions I have for you are these: 15 were you happy that Mrs Palmer was acquitted? 16 A. Yes, sir, I was. 17 Q. Do you remember that phone call when she rang 18 you to tell you? 19 A. Yes, I do recall. 20 Q. Given that, did you escalate Ms Palmer's 21 position with Post Office after her acquittal to 22 see what could be done about reinstating her 23 after she had been acquitted of any wrongdoing? 24 A. Did I escalate? 25 Q. Yes. 110 1 A. Yes, I referred the matter to my line manager. 2 I believe when I first hesitated, when you asked 3 me if I was Ms Palmer's Contract Manager, it's 4 because the branch is quite a long way from 5 where I live and was most probably within the 6 area of another Contract Adviser, but we worked, 7 you know, in teams, so if the other Contract 8 Adviser's workload was heavy, I would take on 9 a case, and my line manager at the time, Lin 10 Norbury, I believe, referred the matter after 11 we'd heard about the not guilty verdict to 12 a Contract Manager who looked after the area, 13 Carole Ballan. 14 Q. What was the name of that person? 15 A. Carol Ballan. 16 Q. Thank you. Did you discuss this matter with 17 Carol? 18 A. Um -- 19 Q. You must have, obviously because you raised it 20 with her. 21 A. I raised it with Lin Norbury, my line manager, 22 who was also the line manager of Carol Ballan. 23 Q. Did you give a recommendation about what should 24 be done after she had been acquitted of all 25 charges? 111 1 A. The criminal case had been put forward, been 2 challenged in court, clearly found not guilty, 3 but the contract had already been terminated at 4 that stage. 5 Q. We're not entirely clear whether you were her 6 Contract Manager or not. It does appear that 7 you were. Wasn't it part of your job as 8 a Contract Manager to intervene when the Post 9 Office got it wrong? Shouldn't you advocate for 10 someone who had been wrongly prosecuted and 11 found not guilty? 12 A. The Investigation Team would be at least as 13 responsible to admit that they'd got it wrong, 14 if that was the case. 15 Q. I appreciate what they may or may not have done 16 but I'm talking about you, as her Contract 17 Manager. You know, a manager is not all about 18 negative, a manager is also about positive -- 19 A. Yeah, of course. We're dealing with 2006 and 20 I don't recall the specific conversations around 21 this part. I mean, there are elements of the 22 case -- you know, I was asked to deal with 23 another case with Ms Palmer, so I've been 24 familiarised with the case over the recent 25 years. But I don't recall specific detail from 112 1 2006. 2 Q. I want to ask you one further question on that 3 because you have said you remember the name of 4 the person who you raised it with it, so you do 5 remember Ms Palmer being acquitted. You do 6 remember raising it with your line manager. 7 A. Yeah, yeah. 8 Q. Did you advocate for Ms Palmer? Did you suggest 9 she should be reinstated? 10 A. I wouldn't have suggested that she be 11 reinstated. 12 Q. Well, Ms Palmer was acquitted of all charges 13 bought against her by the Post Office and yet 14 she lost her livelihood, her home and her 15 reputation. Is there anything you'd like to say 16 to her today? 17 A. I'm very, very sorry that things have panned out 18 how they have for Ms Palmer. I certainly 19 remember her being a particularly pleasant 20 person, easy to deal with and I also remember 21 thinking specifically that the interview which 22 we referred to, had that been an application 23 interview, she would have been a very good 24 candidate to be a subpostmistress, and that's 25 the truth, sir. I'm very sad for the way things 113 1 have turned out for you. 2 MR ENRIGHT: Thank you very much, Mr Lusher. 3 SIR WYN WILLIAMS: Who else wants to ask Mr Lusher 4 questions? 5 MR STEVENS: Ms Page from Hodge Jones & Allen. 6 Questioned by MS PAGE 7 MS PAGE: Thank you, sir. 8 Mr Lusher, I ask questions on behalf of 9 another group of subpostmasters and there's just 10 one document that I'd like to take you to. It 11 is POL00029677. While it's coming up, 12 Mr Lusher, it is a -- well, here it is. It's 13 the Detica NetReveal review of "Fraud and 14 Non-conformance in the Post Office". This took 15 place on 1 October 2013. Did you hear anything 16 about that or know anything about that? 17 A. I've read this report and I can't be sure. 18 I believe I was invited to give information to 19 one of the researchers before the report was 20 produced. 21 Q. You didn't read it at the time, though, or did 22 you? 23 A. Oh no, this wouldn't have been presented to my 24 level. This would have been for board level, 25 I guess. 114 1 Q. What I'd like to do is just look at the bottom 2 of page 33 and going into page 34. So just 3 pausing there, this the bottom of page 33, and 4 this is about sub post office branch behaviour 5 in relation to what the report terms 6 non-conformance, and we can see that there's 7 a breakdown of various different types of sub 8 post offices and the percentage of them which 9 fail audits. 10 So we can see there that offices with no 11 DVLA applications failed 23 per cent of the 12 time, which is relatively high but, if we go all 13 the way down to the bottom where they have no 14 additional services, no ATM, no Camelot, no 15 DVLA, no automated payments, et cetera, there's 16 just a 1 per cent failure rate; do you see that? 17 A. Yes. It would be helpful if we could decide 18 what a failed audit means. 19 Q. Well, it says here at the top: 20 "SPMR failure rates appear to be very much 21 determined by which services they do not offer. 22 Removing the ATM reduces the risk of SPMR being 23 suspended, as does the presence of Lottery 24 tickets ..." 25 So I think what it's referring to is when 115 1 an audit leads to suspension. 2 A. Okay. 3 Q. Does that make sense? 4 A. Yes, it does, yeah. 5 Q. We then go over the page and it talks about 6 multiple sub office behaviour, and what it says 7 is: 8 "Multiple sub post offices are by far the 9 weakest performers in terms of conformance. 10 Once again, the absence of the ATM appears to 11 reduce the risk, however, the failure rate is 12 still considerably above the average, which is 13 about 14%." 14 Then it says that there's, in the -- 15 A. Ah -- 16 Q. Sorry. 17 A. May I just interrupt? 18 Q. Certainly. 19 A. Sorry to interrupt, but the title of this 20 paragraph is "Multiple sub post office 21 behaviour" and multiple subpostmasters, to me, 22 means the branch is operated by the Co-op or One 23 Stop. 24 Q. Exactly. 25 A. But the cluster name is MSPO_3 and that's 116 1 a modified sub post office contract and I wonder 2 whether we could just clarify whether we're 3 referring to the post offices under the modified 4 contract or multiple sub post offices. 5 Q. In the context of the report it's pretty clear 6 they're talking about multiples, which is really 7 why I draw it to your attention because it is 8 one of the areas where you ended up doing a lot 9 of work, isn't it? 10 A. Indeed, yes. 11 Q. We can see that because below there's also 12 a reference to chain franchise behaviour and so 13 that's a different form again, isn't it, where 14 you have chain franchise; is that right? 15 A. Yes, that's something different. 16 Q. So just to return back to the paragraph dealing 17 with multiples, we can see that there's 18 a description of "High stock discrepancy, Unpaid 19 cheque [transactions]", and that's, I think, 20 a type of failure and we see that 50 per cent of 21 the multiples are failing in that regard. 22 Then when we have multiples which do 23 everything, 36 per cent are failing; and then 24 when we have no ATM, 21 per cent are failing; 25 all of which are higher than the failure rates 117 1 that we saw with reference to single 2 subpostmasters. 3 Were you aware that multiples were much more 4 prone to non-conformance and failure of audits 5 than single subpostmasters? 6 A. No, I wasn't aware. Multiple sub post offices, 7 if there was an audit discrepancy, then with 8 an independent subpostmaster, we follow the 9 procedure which we have discussed at length 10 today of suspension and interviews and 11 terminations, and so on. But with the multiple 12 partners, then they themselves would deal 13 internally with issues at branch, so they may 14 choose to terminate the employment contract of 15 their manager, for example, and replace them 16 with somebody else, or come to whatever 17 arrangement they chose. So that the issue 18 wouldn't be so onerous on the Contract Adviser 19 to deal with. 20 Q. No. It appears, doesn't it, from what Detica 21 NetReveal have found, is that multiples were 22 given really rather more latitude than single 23 subpostmasters in terms of non-conformance? 24 A. By the Post Office. 25 Q. Yes? 118 1 A. Yes, I'd say that's the case. But by the 2 operators themselves, the multiple partners, 3 then they dealt with matters in their own way. 4 Q. Well, yes, they did, and what it looks like is 5 that they didn't deal with it in a way that 6 produced the same levels of conformance that 7 subpostmasters produced? 8 A. From these figures, it would seem that what you 9 say is correct. 10 Q. So what we perhaps might draw from this is 11 a culture in the Post Office which took 12 advantage of a power imbalance between the Post 13 Office and the subpostmaster, in comparison to 14 a more bilateral less imbalanced relationship 15 between the Post Office and chains like the 16 Co-op. 17 A. I accept that the -- because of the figures in 18 front of me, the effect of action taken by the 19 multiple partners was less effective, can't be 20 disputed because of the figures you present or 21 the figures that are presented in this report. 22 But, in terms of favouritism or a different 23 approach from the Post Office, the mechanisms of 24 the approach were different, as I explained, but 25 not a matter of favouritism, I wouldn't have 119 1 said. 2 Q. Can I just ask, very briefly, one more thing. 3 That document can come down. This is just 4 a question that arises from the document you've 5 seen already, on a different subject, the emails 6 about the Post Office at Rivenhall and the 7 exchange that you had with Mr Winn, who informed 8 you that Fujitsu had the ability to impact on 9 branch records via the message store. Were you 10 aware that that email exchange became a point of 11 focus during the Second Sight investigation? 12 A. I haven't followed the investigation closely. 13 Q. Did anyone talk to you about it during the 14 Second Sight investigation? 15 A. No. 16 MS PAGE: Thank you. Those are my questions. 17 Questioned by SIR WYN WILLIAMS 18 SIR WYN WILLIAMS: Thank you, Ms Page. 19 I do have a few questions to ask you, 20 Mr Lusher. 21 Could we have Mr Lusher's witness statement 22 on the screen at paragraph 66, just so we can 23 look at the contractual provision again. 24 Paragraph 66 is on page 19. If you scroll up, 25 there we are, that's fine. 120 1 You've very properly set out in paragraph 66 2 that your understanding is summed up by the 3 contractual provision which you then cite, yes? 4 A. Yes, sir. 5 SIR WYN WILLIAMS: Mr Stevens showed you a number of 6 documents or at least some documents -- don't 7 let's exaggerate it -- which tended to suggest 8 that the subpostmaster was responsible for all 9 losses, full stop, so to speak, and so there was 10 a difference between the strict contractual 11 provision and some of the documents produced by 12 the Post Office, yes? 13 A. Yes, that's quite true, sir. 14 SIR WYN WILLIAMS: Right. Now, what I want to ask 15 you about is your knowledge of what happened in 16 practice. Can I take it -- and we'll pick up 17 the train, so to speak, when the Auditor has 18 reported to the Contract Adviser that there's 19 a loss showing at a particular branch, all 20 right? 21 A. Mm-hm. 22 SIR WYN WILLIAMS: So a decision has to be made by 23 the Contract Adviser as to suspension or not, 24 and I take it that the Contract Adviser would be 25 asking himself the question: is the 121 1 subpostmaster responsible for this loss? There 2 might be two ways of looking at that: (1) 3 strictly in accordance with the contract; or (2) 4 in accordance with what some policy documents 5 might describe as the responsibility for loss. 6 So two questions. First of all, when you were 7 a Contract Adviser, did you address that issue? 8 A. It's difficult to remember any specific 9 examples, sir, but my intention would always be 10 to be as fair and as just as possible with 11 a subpostmaster. It was rare, in the 12 circumstance that you referred to, an audit 13 taking place, it was rare to come across a loss 14 which wasn't caused by carelessness, negligence 15 or error, or by an assistant. The only examples 16 I can usually -- I could usually remember would 17 be in terms of robbery and burglary. 18 SIR WYN WILLIAMS: Yeah, I understand that, but what 19 I'm trying to get at is: were you applying 20 a test, which, in effect, was the postmaster is 21 responsible for all losses or were you applying 22 a test which was that he was responsible for 23 losses if he was careless, negligent or in 24 error? 25 A. The second is definitely the case, sir. I would 122 1 refer to the contract: carelessness, negligence, 2 or error. 3 SIR WYN WILLIAMS: So you personally would always go 4 on the contractual basis? Is that what you're 5 telling me? 6 A. Yes, sir, it is. 7 SIR WYN WILLIAMS: Right. Now, the other question 8 I want to ask you in relation to that is, in 9 your mind, was it for the Post Office to prove 10 that he was careless, negligent or in error, or 11 was it for the subpostmaster to prove that he 12 wasn't? 13 A. The Post Office would go some way to investigate 14 the situation, so that the Contract Adviser -- 15 me myself, sir -- would be confident, to some 16 degree at least that there was carelessness, 17 negligence or error. The case would then be 18 rest to the subpostmaster for him to prove 19 otherwise. If the investigation revealed that 20 there was -- the loss was not caused through 21 carelessness, negligence or error, then there 22 would be a reinstatement. 23 SIR WYN WILLIAMS: Yes, but we haven't got to that 24 point yet because I'm talking about the 25 situation where you know from the Auditor that 123 1 there is a loss and now you're deciding whether 2 to suspend or not. 3 A. Okay. 4 SIR WYN WILLIAMS: My understanding is this all 5 happens very quickly -- on the same day, 6 usually. So there hasn't been an investigation; 7 there's simply been an audit. So in your mind, 8 if you can try and think back and be as 9 objective as possible, to repeat, were you 10 thinking to yourself "Well, the Post Office has 11 got to prove that he was careless, negligent or 12 in error", or were you thinking, "It's for him 13 to establish that in any subsequent 14 investigation?" -- (Audio disruption) -- I'm 15 sorry, in any subsequent investigation? 16 A. Yes. When the auditor would phone through with 17 the information that a loss had been discovered, 18 then that loss would be taken as a true 19 situation of accounts. 20 SIR WYN WILLIAMS: Yes. 21 A. And a suspension would, you know -- could follow 22 at that stage. 23 SIR WYN WILLIAMS: Right. 24 A. And, thereafter, that's where I described the 25 investigation taking place and then the 124 1 subpostmaster, often with a friend from the 2 Federation, and the Contract Adviser getting 3 together to establish facts. 4 SIR WYN WILLIAMS: Yes, but so that I understand the 5 nature of that subsequent investigation, you 6 would be provided with what? That's not really 7 helpful to you. 8 A. Well -- 9 SIR WYN WILLIAMS: You, first of all, get what sort 10 of documentation relating to the loss as found 11 by the Auditor? 12 A. Certainly, the audit report would be a key part 13 of the documentation received and then there may 14 be subsequent enquiries made to establish, for 15 example, were accounting documents relevant in 16 the particular case, training records and -- I'm 17 just trying to think -- any other information 18 that was available from the office records at 19 the time? 20 SIR WYN WILLIAMS: Right, but am I correct in 21 thinking that the first time you get the 22 subpostmaster's full explanation of why he 23 thinks that a loss has occurred is at the 24 interview that you've described occurring? 25 A. At the time of the audit, I would always want to 125 1 speak to the subpostmaster to establish whether 2 there was an immediate response to that 3 question. 4 SIR WYN WILLIAMS: So are you saying that you would 5 speak to the subpostmaster, if you could, on the 6 day of the audit -- 7 A. Yes. 8 SIR WYN WILLIAMS: -- to get an explanation and 9 then, subsequently, he having been suspended, 10 there then will be what I'll call a secondary 11 process, in which you're deciding, in effect, 12 whether to lift the suspension or terminate the 13 contract and, at that stage, he would have 14 another opportunity to give his version of what 15 he thinks had occurred? 16 A. Yes, that's quite right, sir. The initial 17 questions would be over the phone at the time of 18 the audit and the secondary investigation you 19 referred to would be after there'd been time to 20 gather together documents, information, and so 21 on. 22 SIR WYN WILLIAMS: Right. So at that secondary 23 investigation -- let me ask you the same 24 question that I asked you in relation to the day 25 of the audit. At that secondary -- or at that 126 1 meeting or following that meeting, when you were 2 making a decision, were you saying to yourself 3 "It's for the Post Office to demonstrate that 4 this postmaster had been careless, negligent or 5 in error", or were you saying to yourself, "He's 6 got to demonstrate that he hadn't been careless, 7 negligent or in error"? 8 A. The second, sir. The subpostmaster would be 9 required to come up with evidence that he hadn't 10 been careless, negligent or in error. 11 SIR WYN WILLIAMS: Thank you. Yes, that's very 12 helpful. Thanks very much. 13 Sorry for prolonging your stay in the 14 witness box but thank you for making your 15 witness statement and thank you for giving 16 evidence before me today. 17 THE WITNESS: Thank you very much, sir. 18 SIR WYN WILLIAMS: So Mr Stevens, we recommence 19 tomorrow morning at 10.00, yes? 20 MR STEVENS: Yes, for Alison Bolsover. 21 SIR WYN WILLIAMS: Thank you very much. 22 MR STEVENS: Thank you. 23 (4.22 pm) 24 (The hearing adjourned until 10.00 am 25 the following day) 127 I N D E X ALAN KENNETH LUSHER (affirmed) ................1 Questioned by MR STEVENS ......................1 Questioned by MR ENRIGHT ....................107 Questioned by MS PAGE .......................114 Questioned by SIR WYN WILLIAMS ..............120 128