Thread by @nickwallis

Welcome to the Post Office scandal's Hotel California. This is day 173 of the public inquiry into the various failings by multiple individuals who were either corrupt, incompetent or asleep at the wheel. Today we're going to hear from...

Neil McCausland - former Senior Non-Executive Director and Interim Chair of Post Office Ltd. It looks like Sam Stevens is going to ask the questions. McCausland is being sworn in. Live tweets to follow. You can also watch along here:

Here is McCausland

SS what was your time commitment as SID (Senior Independent Director) of the Non-Exec Directors (NED)
NM three or four days a month
SS were you doing more than that? and was that discussed?
NM yes I and all the NEDs were doing more than that

NM about two days a week
SS you say you were hired to assist with the development of PO strategy
NM yes
SS analysing and considering future direction of the PO
NM yes - the PO was badly run and messy. for 10 years previous it had a sharp decline in profitability...

... it lost £120m in the year before I joined which had been getting worse. It's infrastructure was old and creaky

SS what infrastructure
NM everything. IT, physical POs...
SS including Horizon system (H)
NM absolutely - it was 15 yrs old - it was a clunky, underinvested IT infrastructure - we put a lot of work during my tenure to replace H and Fujitsu
[reader, they failed]

SS why was H Online creaky, which was rolled out in 2010
NM it was pretty much the same as Legacy H - like the difference between iphone 15 and 16 - it wasn't easy to use, it wasn't intuitive

NB nothing I write is a direct quote unless it is in "direct quotes". My tweets are a summary and/or characterisation of what is being said.

SS now on to risk management - including risks arising from H system. Brings up par 9 of NM's Witness Statement (WS)
SS were all these NED roles you held whilst at the PO?
NM not sure...

SS during your time as SID - were you a NED at any other companies than those listed here
NM not sure - can't remember the dates as to when they overlapped
SS okay let's look at Skin Clinics, Joules and Create Fertitily - time commitment?

NM Joules was 3 days a month, Skin Clinics was 3 days a month, Create was barely 1

SS did you give enough time to the PO
NM yes - I was never constrained in the time I could give

SS takes NM to par 17 of his WS
SS does this refer to H?
NM yes
SS slow and clunky meant what - user interface?
NM yes - did not think data integrity was at issue

SS when did CFO, COO or CIO disco H with you
NM it was probably Susan Crichton at a board meeting before independence. At that board, Les Owen had asked SC about the Access Legal/Shoosmiths legal claims and SC reassured LO that the legal claims were weak and there had been...

... a positive audit reviewed by Deloitte and all previous prosecutions involving H data the PO had won. That was my first intro and it was an experienced RMG director talking to our GC who was robust in saying H was sound. First time it came into my mind, but that...

... reassured me. After independence (from RMG) we had our first meeting with Angus Young, those docs made it clear they weren't questioning integrity or controls, but the documentation of controls was not what it needed to be. E&Y said they could not rely on H documentation...

... so integrity not an issue, controls a small issue, documentation of controls a large issue.
SS takes him to par 181 of his WS

... and over the page...
SS I think this is what you've just been talking about...

SS are these the four matters you were referring to just then?
NM not quite - was not referring to ISAE 3402 - that came later as a consequence of the E&Y meetings

NM says they forced ISAE 3402 on Fujitsu (used to be SAS 70)
SS did Angus Grant say anything about data integrity at a branch level
NM no
SS Alice Perkins (former PO Chair - AP) says she spoke to Angus Grant from E&Y during her induction about data integrity

SS takes him to AP's notebook re PO driving a v hard bargain on price but took back on quality/assurance - ever see or hear of this?
NM there were problems for some customers with Fujitsu (F) dropping out and this was reported by Lesley Sewell (CIO - LS)

... as being something to do with moving from two data server centres to one as a cost-saving exercise.
SS points out more of AP's notes about H not being very good. Remember this
NM no not in his report nor communicated verbally

SS did AP mention this to you
NM no recollection of that
SS takes him to 12 Jan 2012 board meeting - [we've seen this many times]

SS shows him Les Owen's q re Private Eye - you were aware of this litigation via the significant litigation report,
NM yes
SS but you hadn't seen the letter of claim
NM correct
SS so you didn't know F were being claimed to have remote access
NM no

SS notes the concern to get the report covered by privilege. Did you ever see this?
NM no - I don't believe there was one
SS had you seen the RMG internal audit?
NM no
SS the assurance review and a series of slides showing the assurance
NM correct

SS did you ask any qs about this?
NM no I was new, I was observing. Les was asking SC about it - I was listening, absorbing, assimiliating. I came out reassured that the H system was good, good integrity and the claims against us were weak.
SS comment re criminal prosecution...

SS... who said that?
NM SC to Les - didn't query it. If SC says something to an experienced NED, I believed her.
SS did she say anything else than what we see written here?
NM probably, but I can't remember it. A board meeting lasts all day and the minutes are 8 to 10 pages long

NM so they do not capture everything said
SS takes him to Audit Risk and Compliance Committee (ARC) - NM is there with Angus Grant from E&Y (AG)

SS reads that AG sets out the audit approach for the coming year

... SS reads down and over the page to the end of point g
SS was there a discussion about integrity of data at branch level.
NM can't remember. E&Y would have spent a lot of time at Chesterfield [PO financial hub] and would have checked integrity of accounts

NM is telling SS that E&Y's audits of H from 2011 to 2014/5 got progressively better till they were complimentary about the controls.
SS lets move on to the hiring of Second Sight (2S) - you were not involved
NM correct

SS AP told us she spoke to you about the appointment of 2S - recollect that?
NM no but it's possible she did. She did tell me she was getting pushback from Mike Young and SC so it's possible she said James Arbuthnot is asking me to do this I'm getting pushback from MY and SC

... what do you think and i would have said do it - if you upset MY and SC, so be it.
[lengthy hypothetical conversation]

SS takes NM to 23 May 2012 board meeting note about hiring of 2S
SS you say you recalled querying 2S were competent enough and had enough manpower to do a comprehensive view
SS what type of review was being proposed
NM not sure of scope of this review

NM but I have asked myself about this - they seemed to be a 2 man band and this was unusual. Normally we would appoint people with large resource. Memory was vague but I was reassured they were not going to do a code-based review, but forensically understand the MPs' cases

SS takes NM to an email chain between NM and Paula Vennells (PV)

NM's email reply...
SS asks him what he meant by "control of that process" in his reply

NM less about "that process" and how AP and I were trying to manage PV - she had presided as MD over the sharp deterioration in PO's profitability. We needed to turn the business round in revenue, profit, cost-control - everything. We thought PV and Chris Day were okay...

... but we needed someone great - I was sending emails every time to PV saying she needed to get traction, control and make progress.
[it seems everyone on the board thought she was crap around this time]

SS this has nothing to do with profit
NM this was about leadership - I wanted the CEO of the business to lead properly and this was about taking control of things.

SS goes to 1 July 2013 board meeting

SS we see PV gives an update on H - remember this
NM only from the minutes - this was a meeting about network subsidy onto which H issues were tacked on at the last minute with no warning

SS what did you understand systemic issues to mean
NM software code - was there a problem with the software which would show a flaw in H
SS did you know how many cases 2S had looked at
NM knew they were looking at 47 - didn't know how many they'd seen by then

SS what did you understand by "anomalies"
NM a flaw
SS were you told about when the anomalise were discovered
NM can't remember. This was a board phone call and it was about a totally different issue. H was just dumped on us on this call with no notice or papers

NM it was a v short disco
SS the minutes note concerns with inaccuracies in the 2S report - did you get examples of this
NM no recollection. Doubt it
SS view of the way it was presented to the board
NM I was upset. Upset that we were being told a week before the report...

... was coming out that it was coming out. We'd asked many times about the 2S progress and then suddenly the report is coming out, and it's inaccurate and there are H bugs and flaws. I and the NEDs were not happy. It's not a good way to run a board.
SS disco this with AP?

NM can't remember - pretty sure we would have done.
SS takes him to 2S's Interim Report (IR)
SS you say you read this between 8 and 16 July
NM correct
SS reads IR par 6.4

And over the page...

SS remember what you thought
NM not as worried as I should have been. we had been told by PV that these bugs were not linked to the 47 cases that 2S were reviewing. 2S say there are no systemic problems - no huge red flags

NM An amber flag.
SS you'd known for 18 months there were challenges to H and you'd be assured by members of the business that data integrity was not an issue. Did it not concern you there were issues with data integrity through these two bugs?
NM I was not overly worried...

... about the bugs - from this and from PV's briefing. What did worry me was the way it was being communicated to the board was "poor" the phone call on 1 July was "unacceptable". I wanted info to come to the board freely and quickly and it wasn't.

SS should it not have concerned you?
NM the report was not that concerning on bugs - but more troubling on training, support issue
[neatly missing the real problem in the IR in black and white which was that its investigators may have gone after innocent people]

[here was my reaction after reading the IR back in 2013 - red flags all over it - ]…whatyouwishfornickwallis.blogspot.com/2013/08/post-o…

[we are having a short break]

[we are back]
SS moves on to mediation scheme - takes NM to par 166 of his statement
SS is your view the IR had not given you assurance over weakness or points of malfunction in the system

NM I was pleased with it - I thought we had id'd the problem - as we went into the Mediation Scheme (MS) - that's good. The SPMs had come into the MS saying they had problems with training, ATMs etc
SS you knew the MS applicants were alleging H flaws
NM yes, but I wasn't aware...

... of the individual cases. Not aware of the specifics.
SS were you aware as a matter of generality that some of the MS applicants were alleging problems in the H system
NM in the generality yes. the broader system. we had a team of 20 people working through the case reports

NM and the message we were getting back was that these were consistent with the 2S reports
SS takes him to Linklaters advice

And the very reassuring point 1.4

SS Alwen Lyons told us you would think this par was good as you could put a list back on the can of worms - and keep the compensation costs down is that right?
NM no that is her view of what I might have been thinking as the "pragmatic" one on the board - I actually sent...

... and email to PV and said we needed to pay significant compensation to get us out of this. Alwen is right in saying I was the pragmatic one, but this was a potential one-off cost - we swallow £15m - it's chicken feed by comparison to the £1.5bn the PO was dealing with.

[McCausland's WS is up btw - ]postofficehorizoninquiry.org.uk/evidence/witn1…

SS so you disagree with AL's characterisation
NM yes
SS takes him to another par in the Linklaters report
SS this says there is no report into H - did that surprise you
NM 2S told us that would be difficult almost impossible

SS was it troubling - there was no proof there was no problem with H
NM that's what we got 2S in for

SS takes him to a later par in the Linklater report - this says 2S were here to chase the money
NM initially, but then it morphed
SS at this point did you think it was right to follow Linklater's advice and get a report into H
NM yes

SS hence the Deloitte commission - let's look at the board minutes where this was disco'd

And a presentation from Deloitte which criticised 2S

SS takes him to point k) - why did you need "comfort".
NM we'd had a disco in Feb that year in which we disco'd compensation and there was a big disagreement as to how much that should be...

NM between £6m and £100m - I was going for a larger sum. Others said no. Linklaters said the way to define how much we would be in for was to have another report which told us how robust H was and we could scope compo on that basis
SS why "comfort"
NM Lyons wrote that...

... all the NEDs ever wanted to do was get to the truth. There's no benefit in doing anything else.

SS takes him to the board desire for a "response" to 2S - why does an objective report need a "response"
NM no idea - can't remember any disco about that
SS is this inaccurate?
NM no - just don't remember why it was decided

SS takes him to a Project Sparrow subcommittee meeting [PS was about H issues] in

SS you weren't at this meeting but the minutes went to the board - did you read them?
NM yes
SS discuss them with anyone?

NM doubt it - rare to do so.
SS any problem with the plan not to go forward with Deloitte's part 2 work?
NM - no
SS you read this - you're there as SID to advise on strategy
NM yes
SS part of that is how to respond on H integrity and how PO relies on it to prepare its accounts

NM yes
SS so Linklaters tell you it would be a good idea to do a proper review, the board agrees, and yet PS Subcommittee doesn't
NM it's not stopping it - it's doing part 1 and then we can think about part 2 - which may be very difficult.
SS so p2 had not been written off...

... we would decide after p1
[NM calls the PS subcommittee "SSC" - causing momentary confusion with the Fujitsu SSC where Richard Roll (Horizon Whistleblower) worked]

SS takes him to Deloitte's desktop review oral briefing to the board by Gareth James

NM calls this somewhat misleading in his WS

[This board meeting was April 2014. ]
SS any recollection of this board meeting beyond minutes?
NM no - I think I would remember if I had a big worry, but I have no recollection of a big worry

SS so you were reassured that Deloitte were going to be able to write a report giving H a clean bill of health?
NM yes
SS reads the point e) - was this about remote access
NM yes

SS [reads point f above] why was the board concerned about pre-2010
NM majority of prosecutions were about old H - it was going to be difficult, but if we could get assurance on old H as well as legacy H

SS so prosecutions was an issue then?
NM it wasn't high in the mind - it was more about H data integrity
SS so in background and made the work all the more important
NM yes

SS takes him to an internal PO email attaching the H Deloitte report

SS "emerging findings" - remember this
NM no
SS you didn't have this when you wrote your WS either...

SS reads the bottom par of the first page of "overall comments".
SS you dont' remember reading this - but you say it would have made you feel reassured
NM yes

SS moves on to another iteration of Deloitte's Project Zebra Pt 1 report - remember reviewing this?
NM no but if it was sent to me for a board disco, I would have read it
SS was this doc in the boardroom at the time when the disco was taking place
NM can't remember - guess it was

SS Goes to body of report to show how it is set up

SS reads out 4 d)

SS reads recommendation of audit store examination
SS recall any of this being discussed at board meeting
NM no
SS what would this have told you when you read it at the time
NM it's saying a lot more work needs to be done at F

... to understand how it works. They're saying we need to look more at the audit store.

SS takes him to a Chris Aujard briefing on the Deloitte report sent to NM via covering email

SS reads the highlighted par out. What did you take from CA's summary
NM a good affirmative briefin saying that H was in good shape so I did not feel overly worried - when i read the board summary of the Deloitte report I was worried

... and there were questions which needed answering
SS such as
NM they have not found documented controls which give H the protection it should have. The email from CA is overly positive and the report itself still has some questions to answer

SS reads out all the assumptions in Deloitte's work - this is not what Linklaters recommended is it?
NM no
SS remember thinking that at the time
NM it was an incomplete piece of work and sometimes quite hard to read
SS this was a desktop exercise
NM yes we knew that

SS so it wasn't telling you anything new
NM no there were things in this report had not previously been brought to my attn - the business might have had this info, but I'm not sure it had been pulled together

[sorry here are the disclaimers]

SS so this report was going to collate existing assurance to the mediation scheme?
NM no not for use in the MS - it was to understand the integrity of H online
SS takes him to p7 of the report

... and the controls of access to the audit store par

SS did these reports of balancing transactions worry you.
NM honestly can't remember

SS remote access was a core issue - why didn't this set off alarm bells
NM cos it said any changes would be visible - matter 3 suggested "if if if" then theres a risk - there are questions which need answering, but if answered the transactions are visible.

SS why was the Deloitte report not discussed at the board.
NM never due to be - it was the sparrow subcommittee's work - they'd commissioned and discussed it and we the board had been told it was going to be considered by sparrow - it would be pointless to have a a subcommittee

... set up and do all the work and then give it all tothe board.
SS hang on - you got Gareth James in to speak to the board. The subcommittee considered it - but that doesn't stop the board - why did this never come back to the board to discuss what's next?
NM it should have...

... been. a summary could have been articulated to the board.
SS was it because the board did not want to dive into the unanswered qs
NM no - the NEDs always wanted the truth - no benefit in not wanting the truth. Can't explain why it didn't come back to the board.

SS Linklaters brief the board, the work is commissioned, the work is done, Deloitte brief the board then it falls off the radar - why not disco it with anyone - even PV informally
NM the board was told the Sparrow Subcommittee would disco it - senior people - legal, IT, exec...

... and that was the right place for it.
SWW (Sir Wyn Williams inquiry chair) - the obligation to disco the report - who bore that at subcommittee level? Who should have insisted that it was done.
NM AP with help from AL who determined all agenda

SWW so failure in process in ensuring it was not on the agenda for the next Subcommittee meeting, but even so the five members of the Sparrow Subcommittee should have discussed it.
NM correct
[we have a break]

[we're back]
SS wants to talk about Clarke Advice and review of disclosure to SPMs who had been convicted - goes to email from PV two days before 2S IR is published

... reads on...

SS what did you understand about this
NM v little - didn't see what was in the 2S IR which raised the issue, didn't know much difference between civil and criminal courts, didn't know we proesecuted - wanted to know more.

SS you received the IR and read it before 16 July - chat to any NED or exec about the email on past prosecutions.
NM no, but this was a live issue, and I am sure we would have disco'd it - would have been worried about concept of wrongful prosecutions and responsibility for them

SS SC was kept out of that board meeting - were you told about that
NM no sure AP would have briefed me about the NED breakfast and the reasons for SC to be kept out of the meeting
SS unusual
NM yes - very

SS did you speak to SC about why she was excluded from the meeting
NM no
SS takes him to what PV said in SC's stead

SS either before the meeting or after it were you given any info as to whether there had been any likely or unlikely unsafe prosecutions? was the risk explained
NM yes - around that time I was informed by SC that in her view or in the view of the external lawyers it might be...

... 5% of cases
SS what was your view of that risk
NM doesn't matter how many. If there's one, that's serious. I would have been worried about this
SS so something the board needed to grapple and maintain oversight of.
NM yes

SS no subcommittee convened to look at past prosecutions
NM no
SS because it was important for the board
NM yes - at this stage there was no sparrow subcommittee

SS did point c) resonate
NM yes - it had taken too long, was taking too long, sprung upon the board in the margins of another meeting... not a well-managed process. we were disconnected from what 2S were doing

SS we know the Clarke Advice was delivered to the PO on 15 July 2013. A day before this board meeting. You say in your statement you only saw or heard of it in prepping for the inquiry and you were never told about a discredited witness
NM correct

SS takes him to NM's explanation for the board's complacency of H issues

contd.

SS asks how he knew about F expert witnesses
NM came to know around then
SS when
NM early-mid July 2013
SS when exactly
NM don't know - wasn't told it was Gareth Jenkins either - just told we need a new expert witness

SS did anyone discuss with you the use of expert evidence orally
NM no not that I can recall
SS following the 16 July 2013 board meeting and a review of past prosecutions - what were you told about that review or look-back?

NM around 12 July 2013 letter and subsequent minutes that SC had commissioned an external firm - Cartwright King (CK) and to ascertain whether we needed to disclosed the 2S IR to those cases. Brian Altman got added into that as a review of CK

[someone is drilling on the floor below the hearing]

SS takes him to an email from Alasdair Marnoch

... reads on.

SS any idea why this was going to be post 2010
NM no
SS any disco about the issues in this email
NM might have had a disco with AP
SS when?
NM after the 16 July board meeting

SS what did you disco
NM won't have been very different from the board minutes
SS takes NM to an email from SC and his reply
SS why avoid talking to SC
NM up to date from AP

NM she's not saying she has really important info to tell me - she's asking if I want an update. i believed I was up to date from speaking to AP
SS at this point - 13 August - your information is a board paper from SC, two convos with AP, the email from AM and another board paper

NM yes
SS anything else
NM not to my knowledge
SS takes him to ARC meeting 11 feb 2014

And a prosecution policy paper signed off by Chris Aujard

SS reads point 4.5 - is this where you learned the expert can no longer be used?
NM think I found out earlier
SS did you ask why the previous expert could not by used

NM I'd been told the old F expert had moved on -
SS who by
NM can't remember - told me in such a way that suggested he had retired or resigned got a new job and we need to find someone new - certainly no hint he had been discredited - that was 100% not known by me or the NEDs

SS when did you get this info - Feb 2014 or summer 2013 - or in between
NM didn't know it in July 2013, pretty sure I did know it by Feb 2014 - can't remember how or when I got to know this
SS there was a board disco in Nov 2013 about the PO's prosecuting role - then?
NM poss

NM I should have got told by Nov 2013, but I'm pretty sure I didn't find out about it at the ARC meeting -
SS at or before Nov 2013 - what other way you might have got this info
NM either through SC, PV or LS prob at a board meeting... that's the most likely way

SS you say you were not given Simon Clarke's appt or the reports he provided - but not your fault - no oversight without knowledge - what would you have done if you got this info
NM the 2S IR pleased me - we seemed to be finding some reasons for the unexplained losses -

... it gave us something to do. We also reviewed past prosecutions from the lens of should we disclosed the 2S IR? Had we known about the Clarke Advice and Helen Rose report we would have approached the subsequent period very differently.

NM we thought we might have to disclose info to a small number of prosecutions and give them the IR. The real problem was that we'd been using a tainted witness and therefore the Clarke Advice would have made us take a very different tack

SS what recollection do you have of the way the board conducted oversight of the process from August onwards
NM we were concerned about wrongful prosecution, impact on individuals, company's risk, individual risk and therefore we wanted more than just SC because she might be...

... implicated and we wanted Brian Altman to give us a layer of assurance.
SS did you know CK was involved in prosecuting SPMs when they were instructed to review their prosecutions
NM no - didn't put it together
SS you refer to Brian Altman's advices - did you ever see them?

NM no - we got an anodyne positive report saying our approach was sound - which was not correct
SS do you think the board should have asked to see Brian Altman
NM I wish we had, but if we had a GC backed up by a law firm, backed up by a QC I am not expecting the GC to be...

... lying or misleading me.
[SS ends]
SWW from your general experience as a NED and therefore what you would expect to happen as a NED of the PO - is there any good reason why the substance of Mr Clarke's advice would not have been disco'd at board level.
NM cannot think of...

... any good reason. Would expect that info to come to the board in a very untainted way to be rigourously disco'd. SC being left out is a red herring. It was clumsy. But it was SC's job as GC to inform us as to what was going on. It was hugely important.

NM this would have fundamentally changed the way we operated. It's not a case of doing it on a phone call. it's a really important piece of paper and for it not to be in a board not. It's wrong it wasn't shared. It didn't go to the CCRC - it was airbrushed from history v...

... consistently and there is no reason that that should be acceptable.
[we break for lunch]
Quick summary then - a) NM was keen to settle "generously" to the SPMs on the MS and there was lively debate at board about what that looked like and he was in for £100m

b) despite the bullying of Susan Crichton by AP, PV and her fellow execs - Crichton had a duty to tell the board about the Clarke advice somehow and she didn't. More on Crichton's evidence here postofficescandal.uk/post/the-bleat…

[we're back]
SS wants to discuss how and why Susan Crichton (PO GC - SC) came to be resigned.

SS you say you weren't aware of why SC resigned
NM correct
SS we've shown you two docs this morning which might help - remember this
NM vaguely, now

SS can you now remember what this was about
NM PV came to me because there was an issue between SC and AP and that's appropriate - wanted my guidance and counsel

SS takes NM to PV's famous note of SC's Costa Meltdown (which SC claims no memory of)

SS notes PV sent it to Neil for background

SS notes par where SC refers to a cover-up

@threadreaderapp unroll pls

@threadreaderapp unroll again pls