Labour MP corners Post Office bosses over dodgy bonus culture in fiery Select Committee exchange

it seems to me that in the annual accounts of post office reported to Parliament there was false or misleading information presented that did lead to the financial gain of you Mr readers chief executive officer and some of your senior colleagues you went through the process presumably of uh getting metrics against the kpis for the bonus scheme going through the Assurance of that data getting externalification verification of that data reporting it to the remuneration committee discussing it at board level getting sign off from the government then producing your annual accounts having those checked and Reporting them to Parliament and through that whole process you didn't know that there was false information in that under pendulum bonus payment I really want to know whether the post office is a corporate body or any individual knew that the information that made it through to the awarding of balance payments and presentation in the annual accounts was either misleading or false and I just want to start because I think I think it will be important in the context of how the post office wrongly prosecuted victims over many years to just read out section 17 of the Theft Act about false accounting which reads that we're a person dishonestly with a view to gain for himself or another conceals or falsifies any account or record or document required for accounting purposes or in Furnishing information produces or makes use of any account record or document which to his knowledge is or may be misleading or false on conviction can be imprisoned for up to seven years and that where a company commits that offense with the consensual cooperation of the chief executive manager or office holder that both the individual and the company may be liable and prosecuted by the course now this was the basis on which many subpostmasters were prosecuted and we are not a cause we're a commission of parliament but it seems to me that in the annual accounts of post office reported to Parliament there was false or misleading information presented that did lead to the financial gain of you Mr reader's chief executive officer and some of your senior colleagues the question I therefore want to know the answer to Is who knew about that and in knowing was the post office or any individual acting dishonestly did you know that 25 percent of the bonus scheme that you presented to the board it was your idea I understand it the 25 of your bonus was rated on getting approval from the statutory inquiry chairman sir when Williams I mean you knew that didn't you um well first and foremost let me let me apologize for the uh for the error and for the mistake that has been made in the uh with the submetric in our transformation incentive scheme there were 17 what went wrong there were 19 metrics in total and one of them we made the error of identifying that's a win would effectively authorize this not wood but did presumably and and I think it's important I think just to provide a bit of context for this certainly when the the scheme was established which was part of the uh transformation of the post office we wanted to emerge from covid and transform the post office um we had an independent non-statutary inquiry of four months duration which was very much focused on making sure nothing like this could happen again and it was in that context that we established the transformation incentive scheme and it was for that purpose that we believed that we would be through uh the four-month independent inquiry now clearly the independent inquiry became a statutory inquiry up halfway through the scheme term and the mistake was that we didn't go back and revisit that particular incentive and that was an error and I apologize unreservedly for that and that was certainly something that we should have identified at that point you went through the process presumably of uh getting metrics against the kpis for the bonus scheme going through the Assurance of that data getting externalification verification of that data reporting it to the remuneration committee discussing at a board level getting sign off from the government then producing your annual accounts having those checks and Reporting them to Parliament and through that whole process you didn't know that there was false information in that under pendulum bonus payment we did we had both internal and external uh assurance and obviously we provided information to the remuneration committee for them to make their decision I don't make those decisions I don't decide how and who determines what bonus scheme I get or indeed what that payment is yours it was your recommendation wasn't it that this scheme was put in place um absolutely I I agree that in terms of the uh the incentives themselves and in terms of the suggestions and the proposal for how we should motivate and uh and uh incentivize the senior team that's what I present to the the remuneration committee and of course the remuneration committee then determines and decides how the scheme should operate many of the victims will be I think confused about why post office Executives needed a bonus intensification to just do their day job for which you already get paid handsomely why on Earth was this in the bonus scheme in the first place I think it's a very a very fair question and firstly I would say that there will be no inquiry incentives going forward but when we look back two years ago it was very important for me that we transformed the post office and we had a range of very complex and difficult priorities to address whether that's getting off Horizon whether that's ensuring that we redress the past whether that's dealing with compensation whether that's making sure the recommendations of the common issues judgment are put into place addressing the issues with Royal Mail there are a range of priorities and it was very important from my perspective that rather than just be transparent and open with the independent inquiry as was I wanted people to get above and beyond I know that we cannot move on as a post office until such time as we've addressed the issues of the past and so there was a range of different incentives as I just mentioned there were 19 in total to motivate and incentivize the senior team to go above and beyond I'm just saying there's a comment I've got a question but Executives shouldn't have needed to be incentivized to go above and beyond to rectify the mistakes of the post office from The Horizon Scandal um Lisa Harrington I want to come to you next because you'll mentioned quite frequently in Mrs Burton's report and I want to go back to my initial question I I really want to know whether the post office is a corporate body or any individual new that the information that made it through to the awarding of bonus payments and presentation in the annual account was either misleading or false first of all I'd also like to reiterate my personal apology that apology on behalf of the post office and the remuneration committee debated long and hard each of the metrics in the case of the inquiry metric we actually used an external source which was an hsf a Herbert Smith freehill report that had been presented to the board in January to give us confidence that the inquiry was being supported of course it was inappropriate to have an inquiry metric at that point there was a debate on whether or not actually the achievement had been reached or not in the annual accounts yeah 25 of the bonus scheme a quarter of the bonus scheme had its own box with the sub metrics in and then the top of the box it says very clearly that for that whole 25 percent to be awarded it needed the approval of serwin Williams and the statutory inquiry are you really telling me that that wasn't something that the remuneration committee understood was required for that to be awarded for one of the submetrics Ms Harrington is at the top of the whole box in the annual report so there are a number of submetrics under the in relation to the um statutory inquiry that was for 25 of the bonus scheme and at the top of that box in relation to all of the submetrics it said that it needed to sign off of the statutory inquiry it was an absolute error to present it in that way didn't somebody know that that was a mistake that that was false that it could be misleading somebody must have known that somebody should have many people who reviewed us and it wasn't picked up as a specific issue but I absolutely agree it should not have been presented in that way the intention was to bring external scrutiny so that we weren't it's telling ourselves we were doing a good job when in fact we needed somebody external to help us validate that I did a very hard argument to understand I mean as I said originally I was a lawyer in my past life if you look at a set of requirements you go through and you say this is the requirement that is required it's the job of compliance of assurance of audit to look at these things and to make sure that it is absolutely robust and yet you're telling me that nobody knew that this requirement had not been met nobody picked up on the wording needing to be updated I think it's more than just the wording sorry Amanda Burton can I just come to you actually before I do forgive me Mr Cooper on the screen um you were in these meetings when this metric was being discussed when the awarding of this bonus payment was made and according to Amanda Burton's report you asked the pertinent question how would we know if senior executives had delivered against this metric and how you would know based on the reporting of your own bonus scheme was that so when Williams would have told you but that was never true was it no um and I too want to apologize it's um this should never have happened and it's clear that errors were made and um I apologize for my part in those errors so I think the starting point is that the paper that was presented to the remuneration committee was flawed it should have said that the um the metric had not been met and it should have made clear that there was no letter from the inquiry that um addressed the point in the in the form that was required to meet the metric that was the starting point but then I think the from my perspective the era that I regret is that that I did not pick up that there was no letter I should have asked the question I think any of us on the remuneration committee could and and should in my view have asked the question do we have this letter or not and I think had we asked that question this would have been flushed out and it would have been fixed it's just remarkable isn't it the remuneration committee aboard your internal audit Financial risks Assurance teams your senior leaders your external advisors your lawyers this is just not not picked up and you know the interesting question for me having read out the definition of false accounting the key word here is whether anybody was dishonest because it is right that somebody did gain a number of people gained on the basis of false information that was in an accounting document and the only word that hangs that we don't know the answer is whether somebody knew that and then dishonestly allowed it to go ahead that would meet this statue definition of false accounting which many subpostmasters were prosecuted under I mean I suspect many of the victims of the Scandal will be looking today and hearing your apologies and saying well they weren't allowed to apologize for something that turned out to not be their fault what are the consequences for any of you Nick Reed as I say I I do think it was a mistake I don't think there was anything dishonest I think the intent of the metric was appropriate in the sense that we wanted to mobilize people incentivize people to do the right thing to get us um through the in the inquiry in the most appropriate way as in above and beyond the the mistake was quite clear and the errors were made there was there were many people who oversaw this and many people who missed it and I I really do think it is um it's very disappointing and it's a clear error um but as I say I don't think the intent was in any way malicious okay I'm conscious of my own time so I just want to make a little bit of progress and another person page eight of your report I mean you say quite frankly it's difficult to understand why the inquiry submetric was not questioned by anyone and yet seen by so many people but you then go on to say that having taken into account the discretion available to the remuneration committee that it was probably okay what does discretion mean Amanda person thank you I I'd also like to um reinforce the apologies that have made made and clearly there was a mistake um throughout the setting of this Target and the meeting of it so and I also apologize um in terms of discretion the remuneration committee did have discretion as was set out in the terms of the scheme and also in the terms of the letter that was sent to um DBT and um It's Perfectly Normal for remuneration committees and other committees to exercise discretion and clearly they have to look at all the facts and it's very unfortunate that the discretion wasn't recorded properly it was recorded for other parts of metrics but not this particular one which is extremely unfortunate because I would expect when a rumination committee is going through that thought process they make sure it is properly documented so that people looking back can see why that decision was made you would I mean discretion is the freedom to decide what should be done in a particular situation which implies knowledge and if the discretion on this metric was not recorded in the minutes we're left asking the question whether that's because members of the remuneration group is he knew that they didn't have the sign off with Williams in the inquiry but decided to use their discretion to just ignore that point and look at whether the performance of post office more generally had been okay and therefore awarded at the bonus was there any evidence of that no there was absolutely no evidence of that I found absolutely no evidence of anyone trying to mislead anyone or any dishonesty

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Length: 14min 22sec (862 seconds)

Published: Wed Jun 21 2023