testing phase or meant to be in production... d0 testing phase or meant to be in production- - -— testing phase or meant to be in production... testing phase or meant to be in -roduction... ,, , ., production... do you remember what our views production... do you remember what your views are? _ production... do you remember what your views are? i'm _ production... do you remember what your views are? i'm saying _ production. .. do you remember what your views are? i'm saying i - production... do you remember what your views are? i'm saying i don't - your views are? i'm saying i don't remember _ your views are? i'm saying i don't remember what _ your views are? i'm saying i don't remember what i _ your views are? i'm saying i don't remember what i might _ your views are? i'm saying i don't remember what i might have - your views are? i'm saying i don't| remember what i might have said, well i didn't say anything because i was knocked at the meeting but my first question would be is this something as a result of testing or something? it implies is a test results but i don't know. so i would have needed to follow that up. we will move on to a different topic, please. page 13.

if we go to the e—mail at the bottom, please. 11th of january 2006, to sean turner. over the page. it says that a sub—postmaster has reported that he again is experiencing problems of transfers, a 5th of january experiencing problems of transfers, a 5th ofjanuary 2006, which resulted in a loss of around £43,000, which has subsequently rectified itself. i know that there sub—postmaster has reported this to

horizon support you have said they cannot find any problem. page six. second e—mail in the chain. this is an e—mail the inquiry has seen before. it refers to the same issue. second paragraph says, i haven't looked at the recent evidence but i know in the recent evidence but i know in the past this site had hit the lock problem. this problem has been around for years and affect a number of sites most weeks. finally, they have and something about it. i'm interested in whether they really have fixed it, which is why i left the call open, to remind me to check

over of the whole estate once ace 90 is life. this is a problem that appears to have caused a significant discrepancy. these are both fujitsu people? discrepancy. these are both fu'itsu --eole? , these are both fu'itsu people? yes. do ou these are both fu'itsu people? yes. do you accept — these are both fujitsu people? yes. do you accept this _ these are both fujitsu people? yes. do you accept this as _ these are both fujitsu people? yes. do you accept this as a _ these are both fujitsu people? yes. do you accept this as a problem that caused a significant discrepancy? i don't know. i am just reading this. i assume it might have done. i never heard of the riposte lock problem before. let heard of the riposte lock problem before. , , ._ before. let me put it this way, if there was _ before. let me put it this way, if there was a _ before. let me put it this way, if there was a problem _ before. let me put it this way, if there was a problem which - before. let me put it this way, if there was a problem which had l before. let me put it this way, if. there was a problem which had the potential to cause discrepancy of over £40,000...— potential to cause discrepancy of over £40,000. .. because it relates to... if it has been around for a number of years and affects most sites, most weeks, that this is an ethic and concern? i most weeks, that this is an ethic and concern?— most weeks, that this is an ethic and concern? i don't know if that roblem and concern? i don't know if that problem is _ and concern? i don't know if that problem is the _ and concern? i don't know if that problem is the same _ and concern? i don't know if that problem is the same as - and concern? i don't know if that problem is the same as the - problem is the same as the discrepancy. it is the same e—mail. what i am

seeing as i don't know if that has produced the discrepancy. if you can go up in the chain, please. that e—mail is forwarded by mike stewart to lynn fallowfield, waiting for an update on calendar square, it goes on to say, i think i am inclined to wait and see if all these branches are ok after the s90. you said you were not aware of the riposte lock issue. were you ever and of an issue at callendar square

when you were director? don't recall. a board meeting on 20th of april 2006. get the entire attendance list and there, please. in terms of it people, you have identified rick francis. is there anybody else who had an it background they are? there doesn't seem to be anybody that worked for ric in the attendance list.

page ten. down to the operations report section. it says, horizon s90. in the last e—mail that said problem would be fixed with s90. it's as this release would, and at worst a number think it would do, transfer debit and credit card transactions, generic payments. and then, provide for a plethora of change requests across a variety of existing capabilities. did the board interrogate what those changes would be? i can't remember. that could be something i would normally challenge. a plethora of change

requests, you get great detail on the first three, and i'm sure they are bigger, and i am sure those things would be individually smaller, but it is our plethora of them, to use the word, that suggests it would require something, but i don't recall the conversation, i am just reading it cold here. based on how the minutes were treated at post office limited, if there had been challenges, would they have been recorded in the minutes? i they have been recorded in the minutes? ., ., , minutes? i would hope so. do i take — minutes? i would hope so. do | take it _ minutes? i would hope so. do i take it from _ minutes? i would hope so. do i take it from that, - minutes? i would hope so. | do i take it from that, what minutes? i would hope so. i do i take it from that, what is minutes? i would hope so. - do i take it from that, what is your evidence? was it or was it not challenged?— challenged? well, there is no evidence of _ challenged? well, there is no evidence of it _ challenged? well, there is no evidence of it being _ challenged? well, there is no i evidence of it being challenged. challenged? well, there is no - evidence of it being challenged. why wouldn't it have been challenged? i don't know. there could have been some reassuring words when the thing

was presented that saw off challenge, and this is how the person doing the minutes chose to summarise the conversation, but i literally do not remember the conversation. but there is clearly no documentary evidence of that that fourth bullet was proved. do you think if there was a non—exec on the board with it experience that might have been challenged on a small likely to have been challenged?— challenged? yes. and. _ challenged? yes. i and, interestingly, challenged? yes. - and, interestingly, it has challenged? yes. _ and, interestingly, it has become much more common for it senior, or a recently retired senior it people, to join the boards of all sorts of businesses. i cheered a small bank and we had an it person on the board. it was always a struggle for him because he was not a banker stop that he was there because he was an

it person and provided useful independent challenge, but there was no such person on the board at this time, otherthan no such person on the board at this time, other than employees. executive members? yes. did you feel sick that did you feel able to challenge the executive? i felt able to challenge the executive that —— to a level compatible with my experience but i was not purporting to be an expert in every functioning activity. i had a bias in my personal background which said i was in operations type guy in my early years, not it, but processing operations. i had spent all my time in financial services. they were all the reasons why people felt i would be worth having on the board. but i wouldn't be able, and i did for a period at prudential, ran

responsible for it, but i had an it director that reported to me, so i would not have been a detailed specialist. fist would not have been a detailed secialist. �* . , would not have been a detailed secialist. �* ., , , ., would not have been a detailed secialist. �* ., , ., specialist. at any point did you ask for more support _ specialist. at any point did you ask for more support with _ specialist. at any point did you ask for more support with it, - specialist. at any point did you ask for more support with it, to - specialist. at any point did you ask for more support with it, to be - specialist. at any point did you ask| for more support with it, to be able to challenge the executive and a more adequate way? the point was that there wasn't an appetite to have other non—executives on post office limited board, and we did have the group it director sitting in the royal mail holding sport. what was happening was these things were going up to royal mail holdings board, and there was more challenge available there, a group legal director, a group it director, and whilst they were employees, they were not planned and just post office, so there was a level of independence in the interrogation. and i don't think, i have to say i

didn't ask, but i didn't ask as i didn't ask, but i didn't ask as i didn't expect the organisation would want me to be looking for independent and non—execs to go on the post office limited board. let as stand back a bit. horizon records transactions for the post office business? see that again. horizon records transactions for post office business? yes. it for post office business? yes. it provided — for post office business? yes. it provided the _ for post office business? yes. it provided the data _ for post office business? yes. it provided the data from - for post office business? yes it provided the data from which the statutory and management accounts would be compiled? yes. as a director you had to have confidence in that data to be able to sign off on the manager of statutory accounts?— statutory accounts? yes. it follows _ statutory accounts? yes. it follows that _ statutory accounts? yes. it follows that you - statutory accounts? yes. | it follows that you needed statutory accounts? yes. - it follows that you needed to be statutory accounts? yes it follows that you needed to be any position to satisfy yourself that the it system that generated the data was sufficiently robust and reliable? ., . �* .,

data was sufficiently robust and reliable? ., . ~ ., ., reliable? correct. and one of the race any of _ reliable? correct. and one of the race any of the _ reliable? correct. and one of the race any of the board _ reliable? correct. and one of the race any of the board we - reliable? correct. and one of the race any of the board we get - reliable? correct. and one of thej race any of the board we get that level of comfort was from the external auditors, and the external auditors with run software against the system that was the primary driver of the business, and would run their own reconciliations, to make sure, does it add up this way, doesn't add up that way, there is the answer can the same? it is proprietary software that is used by all it firms to validate financial integrity of a system that they are auditing. that type of audit has the concept of materiality? yes, it would. could you explain what that is? it would not have to reconcile to the penny, but it would have to... we are not talking about the penny in these instances here. it is a pretty reliable way of proving whether or not a system is reconciling.

that works for statutory accounts. in terms of the sub—postmaster who may be facing... i in terms of the sub-postmaster who may be facing- - -_ may be facing... i was 'ust answering i may be facing... i was 'ust answering your * may be facing... i wasjust answering your question . may be facing... i wasjust| answering your question on may be facing... i wasjust _ answering your question on accounts. i am asking another man. i answering your question on accounts. i am asking another man.— i am asking another man. i agree. it doesnt i am asking another man. i agree. it doesn't help — i am asking another man. i agree. it doesn't help the _ i am asking another man. i agree. it doesn't help the sub-postmaster. .. | doesn't help the sub—postmaster... if you have a rounding error that is no joke. if you have a rounding error that is nojoke. every single if you have a rounding error that is no joke. every single when needs to act. there could be compensating errors, for example. was anyone on the board thinking of reliability of horizon it system from perspective of sub—postmaster is? from perspective of sub-postmaster is? w' from perspective of sub-postmaster is? ., . , ~' from perspective of sub-postmaster is? ., ., ,, from perspective of sub-postmaster is? ., ., ~' , is? rick francis i think was focused on his user — is? rick francis i think was focused on his user community. _ is? rick francis i think was focused on his user community. he - is? rick francis i think was focused on his user community. he would l is? rick francis i think was focused l on his user community. he would not have been thinking just about sub—postmaster is, he would be looking that all people, all types of branch, that used horizon to process transactions. there were two audiences. what that horizon file for the person on the counter that was performing the transactions, that might actually work for the

sub—postmaster, but also what did it feel like for the customer on the other side of the counter receiving whatever it is they are purchasing? that is rick francis. in terms of us managing director, did you think about it from the perspective of the sub—postmaster is? about it from the perspective of the sub-postmaster is?— sub-postmaster is? yes, i did. it is onl a sub-postmaster is? yes, i did. it is only a slight _ sub-postmaster is? yes, i did. it is only a slight digression, _ sub-postmaster is? yes, i did. it is only a slight digression, but - sub-postmaster is? yes, i did. it is only a slight digression, but when i j only a slight digression, but when i arrived ifelt only a slight digression, but when i arrived i felt the sub—postmaster iiiilt unloved 7 felt unloved to a degree community felt unloved to a degree by post office limited. one of my early objectives was to dry and get close to the sub—postmaster community, and dry and resolve that. one of the first things i did was establish a strong relationship with the chap who was then the federation's top guy, and the top team, and i started... can federation's top guy, and the top team, and i started...— federation's top guy, and the top team, and i started... can you give a name? colin baker. then i started a

programme of visits, which in the end i did for the entire three years and ten months that i was there, of going out, on a friday, and i would pick a part of the country, and then i would see to fade and the regional manager in the area, i've got time to visit five branches, give me a list of five that i can visit. and i went randomly and visited them. that was the biggest source of information. it wasn'tjust sub—postmaster i visited franchise branches as well. that was my attempt to keep my feet on the ground as to what the organisation was thinking and worrying about. for those supposed matters in the room, you will guess, i got plenty of

feedback. on that, you see in your statement you think you've visited about 250 branches over the period of years? without criticising, i am not criticising the effort, but in terms of getting feedback from how users found the horizon it system, that was a fairly small proportion of the number of users using it? shall was a fairly small proportion of the number of users using it?- number of users using it? all the numbers in _ number of users using it? all the numbers in the _ number of users using it? all the numbers in the post _ number of users using it? all the numbers in the post office - number of users using it? all the numbers in the post office are i numbers in the post office are very large. you do what you can do. all i can say is that i found, i can remember being in one village that will be nameless, and the sub—postmistress took me back into her kitchen behind the shop, and went through the process of how car insurance was sold, and why she couldn't be bothered to sell it, because of the tortuous process that was followed, following which we change that. was there anything else instead

other than those four sets to try to understand how cyprus masters found the horizon it system? i understand how cyprus masters found the horizon it system?— the horizon it system? i wasn't 'ust talkin: the horizon it system? i wasn't 'ust tatktng about — the horizon it system? i wasn't 'ust talking about horizon i the horizon it system? i wasn't 'ust talking about horizon hi the horizon it system? i wasn'tjust talking about horizon it system, - the horizon it system? i wasn'tjust talking about horizon it system, i l talking about horizon it system, i was talking about the business as a whole. my whole. my question is about horizon it system. my system. my primary focus was on the federation. i use the federation as the mouthpiece of the supposed matters to provide input, and then, on the staff there was someone that ran the crown offices, so i looked at federation crown offices and franchise branches. just so i have got this clear, during your period as managing director you had 250 or so but to badges themselves, and then in terms of further sub—postmaster feedback, that was effectively filtered through? that was effectively filtered throu t h? , ., , that was effectively filtered throuth? ,., , ., that was effectively filtered throuth? , ., , through? filtered sounds a bit harsh, through? filtered sounds a bit harsh. but _ through? filtered sounds a bit harsh, but yes. _ harsh, but yes. it came through n f s b. the were

forthright, vociferous, friendly. it was not antagonistic. colin baker in particular went out of his way to welcome me into the family, if you see what i mean. my wife and i used to go to federation dinners, all the sort of stuff. it was important to me to get close to the community that was servicing our customers. while we are on this, i want to come to what the inquiry has termed as responding to the emerging scandal.

this is a letter, in your statement you described it, it is sent, pat mcfadden mp, it includes correspondence from brian binley np, and includes an e—mailfrom rebecca thompson. can we look at the e—mail? page three, i believe. an e—mail dated tenth february 2009. you only received it on 7th of may.

according to the stamp. it refers to speaking to several current or former sub—postmaster to say that random flaws in it are causing deficits in their weekly accounts, sometimes thousands of pounds at a time. the complaint is that instead of listening to their problems and investigating soft where equipments post office is making them pay back this money without any investigation into what is going wrong. i do continues as such. do you recall receiving this and reading it?— do you recall receiving this and readint it? , ,, ., , reading it? yes. strangely, i saw the article _ reading it? yes. strangely, i saw the article from _ reading it? yes. strangely, i saw the article from computer - reading it? yes. strangely, i saw| the article from computer weekly before i saw this, only because the letter was date stamped on 7th of may, it went out with a deadline if anything came in from pat mcfadden it was dealt with quick, for me to reply about a week later, but in

that week computer weekly article came out. we are only talking a couple of days but the reality is i saw the computer weekly article before i saw this correspondence. and actually i did not particularly put the two together as my head was full of the computer weekly article. we will come to that shortly. paragraph 27. sorry, paragraph 79 a. page 27 of your witness statement. it does not need to be turned up. uc —— you said that when you received that letter you indicated to michelle greaves, executive correspondence manager, that you would like the matter thoroughly investigated.—

investigated. yes. can we _ investigated. yes. can we look - investigated. yes. can we look then l investigated. yes. | can we look then at investigated. yes. - can we look then at the investigated. yes. _ can we look then at the computer weekly article? the articles by rebecca thompson in computer weekly. it refers to the case of lee castleton. were you aware of lee castleton. were you aware of lee castleton before reading this article? ., article? no. it states - article? no. | it states that article? no. - it states that he was

article? no. _ it states that he was declared bankrupt after she refused to pay post office £27. lee castleton insists he did not all that money although it showed as a loss on the post office horizon system which is used by postmasters to do their accounting. he is one of several postmasters to come across losses he could not explain. if you could turn over the page, please. having lost the case lee castleton was left with costs of £321,000. in 2007 he filed for bankruptcy stop i was into deep, the whole thing has been heartbreaking, i see that now, he said. the trial of lee castleton, post office versus lee castleton, was heard whilst you were managing director. you see were not aware of it. i director. you see were not aware of it. ., , ., .,

it. i was unaware. £321,000, - it. i was unaware. - £321,000, significant debt it. i was unaware. _ £321,000, significant debt to be old, isn't it? in £321,000, significant debt to be old, isn't it?— £321,000, significant debt to be old, isn't it? ., ., , old, isn't it? in other words, their letal old, isn't it? in other words, their legal costs _ old, isn't it? in other words, their legal costs that _ old, isn't it? in other words, their legal costs that post _ old, isn't it? in other words, their legal costs that post office - old, isn't it? in other words, their legal costs that post office spent l legal costs that post office spent in pursuing that claim was significant? just to be clear, when i said i was unaware that this particular case, but we have seen earlier of the reports that were being issued, but they were summarised reports, with totals on them. so i am sure this case would have been in there, but it may not have been separately identified. so you might not have known the name lee castleton? that so you might not have known the name lee castleton?— lee castleton? that is right. i can't remember, _ lee castleton? that is right. i can't remember, but - lee castleton? that is right. i can't remember, but there i lee castleton? that is right. i l can't remember, but there was reporting, which we have seen already this morning. did you not think to ask why there was such a significant legal spend on one case? i was such a significant legal spend on one case?—

on one case? i 'ust don't recall. can ou on one case? i 'ust don't recall. can you think— on one case? ijust don't recall. can you think why _ on one case? ijust don't recall. can you think why you - on one case? ijust don't recall. can you think why you would i on one case? ijust don't recall. | can you think why you would not on one case? ijust don't recall. i can you think why you would not ask that? i can you think why you would not ask that? .., ., ~ , can you think why you would not ask that? ., ~ , ., �* that? i cannot think why i wouldn't. either it was _ that? i cannot think why i wouldn't. either it was a _ that? i cannot think why i wouldn't. either it was a mistake _ that? i cannot think why i wouldn't. either it was a mistake my - that? i cannot think why i wouldn't. either it was a mistake my part, i that? i cannot think why i wouldn't. either it was a mistake my part, or| either it was a mistake my part, or it was not in the report. but i don't know. put it this way, this article was a shock to me. should it have been a shock to me? no, it should not, but it was. that is the 11th of may. you say in your statements, and you have really alluded to, page 28, paragraph 85 of the

statement, at the time i did not connect the computer weekly article to the complaint raised in the porteous letter. if to the complaint raised in the porteous letter. it i to the complaint raised in the porteous letter.— to the complaint raised in the porteous letter. if i could expand it, when i wrote _ porteous letter. if i could expand it, when i wrote that _ porteous letter. if i could expand it, when i wrote that i _ porteous letter. if i could expand it, when i wrote that i hadn't i it, when i wrote that i hadn't worked out that overlap, i hadn't spotted the date stamped on the letter, the reason i didn't connect it was when computer weekly article was the first thing i read, not the complete. it was the first thing i read, not the com . lete. . was the first thing i read, not the com-lete. . ,, . ., complete. it is your evidence now that ou complete. it is your evidence now that you did _ complete. it is your evidence now that you did connect _ complete. it is your evidence now that you did connect the - complete. it is your evidence now that you did connect the two? i i that you did connect the two? 1 connected it afterwards, when that you did connect the two? i connected it afterwards, when i saw computer weekly article i had not seen the complete. did computer weekly article i had not seen the complete.— seen the complete. did you think when ou seen the complete. did you think when you read — seen the complete. did you think when you read the _ seen the complete. did you think when you read the complaint i seen the complete. did you think| when you read the complaint after computer weekly article you would have connected the two? n computer weekly article you would have connected the two?— have connected the two? i cannot remember- _ have connected the two? i cannot remember- i _ have connected the two? i cannot remember. i cannot _ have connected the two? i cannot remember. i cannot claim - have connected the two? i cannot remember. i cannot claim things | have connected the two? i cannot| remember. i cannot claim things i cannot remember but it seems likely.

can we turn to page two, please? this is an e—mail, it looks to be

dated fifth october 2009. just go up slightly, please. a bit more, please. there should be a date stamp, it might be under the page. sorry. page one, please. it gets quite confusing because we

have 05— ten, then further up 02 — ten. the question i have, in october 2009 are you aware of any investigation into horizon integrity issues? . investigation into horizon integrity issues? , �* , investigation into horizon integrity issues? , ., , issues? yes. because it post dates com-uter issues? yes. because it post dates computer weekly. _ issues? yes. because it post dates computer weekly. do _ issues? yes. because it post dates computer weekly. do you - issues? yes. because it post dates computer weekly. do you think- issues? yes. because it post dates| computer weekly. do you think this all leads from _ computer weekly. do you think this all leads from computer _ computer weekly. do you think this all leads from computer weekly? i computer weekly. do you think this i all leads from computer weekly? yes, i would all leads from computer weekly? yes, i would have — all leads from computer weekly? yes, i would have thought _ all leads from computer weekly? yes i would have thought so. i all leads from computer weekly? 123 i would have thought so. i do not equally understand the dates. but it is october. if we can now please

turn to page 23, please? this is an e—mailfrom michael rudkin. do you remember michael rudkin? . . rudkin. do you remember michael rudkin? , , , ., rudkin? yes, i remember his name. i think he was — rudkin? yes, i remember his name. i think he was federation _ rudkin? yes, i remember his name. i think he was federation connected i rudkin? yes, i remember his name. i think he was federation connected in| think he was federation connected in some way. it think he was federation connected in somewa. ., some way. it says the attachment. i resume some way. it says the attachment. i presume you _ some way. it says the attachment. i presume you have _ some way. it says the attachment. i presume you have already - some way. it says the attachment. i presume you have already seen i some way. it says the attachment. i presume you have already seen it i some way. it says the attachment. i presume you have already seen it in convenience store magazine. there is a bullet point in the next paragraph goes on to say you should almost minimise adverse publicity to our industry which is already receiving

a lot of bad press at the