Not waiving but drowning

Ben Foat's witness statement

What did we learn from Ben Foat’s sixth witness statement to the Inquiry (and the main one of interest to what has been going on in Post Office legal since the Bates case). I want to try and pick up some points in his oral evidence in a later post, so for now I will confine myself to a series of notes on what he says in this witness statement:

His evidence has been inhibited by a refusal to waive legal professional privilege (the general waivers of privilege being applied in the enquiry apply up until only February 2020 or so, I believe). Having seen what he says, I wonder if this position can continue, at least in respect of his evidence.

He’s not happy about that, he says, indicating he’s not been able to give the full picture on how he sought to advise on “improvement, conformance and transparency” once he was elevated to General Counsel.

Various changes were instituted after Jane Macleod was managed out from the Post Office. He instituted an "advise not decide" approach in legal for instance. More on that below.

The GC role became “more removed from” the Board, attending only by invitation. He was not consulted on board agendas and “certain papers” and has only “limited oversight” over the Company Secretariat Team. He says he has raised concerns about all of this with the Senior Independent Director, the CEO, Company Secretary and others.

He lost the risk team responsibility in 2019 and got it back again in 2024. This now “sits under the CFO”. It was not clear to me who is line manager was, but it sounds like it is the CFO. This is not an uncommon arrangement but it is usually thought to be a suboptimal one: the GC and CFO often have something of a constructive tension in their roles.

There has been a good deal of outside legal advice. Interestingly, Sir David Calvert-Smith “to provide assurance and advice in respect of the conduct of the criminal appeals including disclosure.” The issue of conflicts of interest comes up in the oral evidence and has piqued my interest.

In early 2020, the PO Board and Exec are said to have raised with the Government Shareholder Representative, Tom Cooper, and the Government compensation matters be taken away from the Post Office.  They were told, “the Government would not be amenable to that option.”

From Sept 2021 until July 2023 Mr Foat was “temporary sponsor” of the Remediation and Inquiry programs. He rather oddly describes this as being “backdated to June 2021”.

He felt the role undermined his ‘adviser not decider' role and he seems to think it has created a tension with his SRA obligations (but does not explain how). He complained to Nick Read about lacking “the requisite information, control or authority” to carry out the role.

As of 1 January 2024 he was informed, but not consulted on, removing the GC from the “proposed executive forum” (the senior executive group). He implies concern about how legal risks would be managed as a result and “queried whether the restructure had gone through proper governance”. GC attendance was reinstated in an advisory capacity.

Having recommended a Governance Review, one was eventually undertaken by Grant Thornton. “Over the course of several months, I asked a number  of times to see the draft Grant Thorton report but was refused.” It was raised with, “the CEO, Chief of Staff and Company Secretary”. And he says, “This is not intended as a criticism of the Company Secretary or Chief of Staff who I understand were acting upon instructions.” He does not say in terms it was Nick Read who so instructed them, but I assume that is what he means.

He describes the advise not decide policy in these terms, “In this way they can still advise the Board and Executive to make the good commercial decisions, but not decisions that may come into conflict with legal obligations and the SRA.”

He indicates a belief that the Post Office response to the Bates judgment has been a bit of a curate’s egg. There is better oversight of outside legal advice

“By way of example, in relation to a particular project, a third-party company was appointed to check the business' instructions and additional, specialist counsel was appointed to oversee and test the advice being given by POL's external lawyers to give POL assurance. Moreover, UKGI and the Government Shareholder Representative requested a third counsel to assure the position even further.”

One can see how the legal bills are so high.

“Moreover, multiple ethics training sessions have been given to the Legal team to ensure that they are aware of their regulatory obligations but also the broader ethical framework.”

A policy was drafted “to prevent POL from being able to engage in private prosecutions without the consent of the Government Shareholder.” An interesting use of everyone’s time: why would they have done that, I wonder?

He says various recommendations he made about the remediation unit (compensation payments) and the Inquiry programs were not accepted. Intriguingly this included,

“advice on the approach to be taken in respect of compensation. I understand that privilege over this advice has not been waived. However, the fact that compensation still has not yet been completed is of extreme concern and one which I repeatedly flagged.”

He also points the finger at, “some directors [who] were so focused on cost management that there was a risk around losing sight of outcomes in terms of quality and speed.” Points he said he raised thee years ago.

And he says

“I have challenged the approach taken by decision makers and or advisors in these matters in which I have encouraged them to consider the matter through the postmaster lens or be postmaster centric. Specifically in respect of my role as temporary sponsor I also flagged that delayed justice was neither just nor fair in reference to the pace of the compensation schemes.”

On the Inquiry program operational, “There are a number of issues I am not permitted to bring to the Inquiry's attention due to privilege not being waived.”

Another area he is unhappy about is that he strongly recommended, “to the Executive that external assurance and external audit over all changes [in response to the Bates judgment] ought to be conducted. Part of the rationale for this was the context generally and the findings of Lord Justice Fraser regarding culture.” But, “this was not universally accepted. This was another issue where cost management became prioritised over quality of outcome.”

He believes

“the GC [should] sit on the Board in an advisory capacity so that they can be privy to the full Board discussion and have oversight of all the principal issues such that they can spot legal risks. Alternatively, formally authorising the GC to be accountable and empowering the GC with information and the ability to direct governance issues could also improve governance.”

Indeed, on governance more broadly,

“There is not sufficient clarity around decision-making at the Board, SEG and organisational level — i.e. knowing which team is responsible for issues but also ensuring that where decision-making has been delegated to an Executive accountable business owner, that they have properly established decision-making forums to ensure effective and good decisions are made and that such material decisions are documented and reported back to the Executive and Board.”

This is corp-speak for: governance and accountability is a mess.

Having raised governance problems with the CEO and SID around the POL Inquiry team he says he was

“increasingly side-lined, not given access to information and certain meetings, my advice and recommendations not acted upon but when anything went wrong, I was left on paper as the accountable person when in reality I had little control over the RU and Inquiry.”

The, “ Executive … often prioritise cost management over quality and speed.” A plea for “transformational funding, in order to improve foundational issues including data, risk management and governance,” was made, apparently by the former [Audit and Risk Committee] Chair, “to the Shareholder Representative in December 2022 outlining the implications to risk management.” Foat “continued to raise it in the CEO report which goes to Board” saying he has, “consistently raised that there is inadequate operational resources and support to address the findings of Lord Justice Fraser and ensure proper risk management within the BAU parts of the business.”

So, if I understand him properly, Mr Foat does not think the Post Office are close to being sufficiently on top of their legal risk.

And then he says this:

“I recognise that this is an experience that is shared by many teams across the business, but POL needs to ensure that it has a "licence to trade" by complying with its legal, regulatory and governance obligations as expected of an organisation generally and especially as one owned by a Government Shareholder.”

Some on the Senior Executive Group “demonstrate a lack of maturity or lack of knowledge of governance and risk management, including compliance and assurance.” There is an indication that they do not understand some of the basic concepts and organisational documents on these matters.

Henry Staunton, the former Chairman, is criticised for what Foat describes as “his leadership approach and specifically unprofessional behaviours.” He says Staunton asked him to identify “a whistleblower and specifically whether it was a SEG member,” and on refusing “[Staunton] accused me of not "being commercial.”

Nick Read, “did not sufficiently prioritise critical issues and make decisions that I (and others) escalated to him to make.” Alistair Cameron’s, “approach to cost management from time to time has overly influenced the approach taken by other Executives.”

On the up side, the Board now, “get legal advice annexed to agenda items where necessary, but every six months they receive an overarching legal view of legal and regulatory risk”

Interestingly, “POL lawyers [contracts] were amended to formalise the position in respect of confidentiality, in particular where disclosures can and should be made, and an acknowledgement that they are regulated by the SRA or Bar Standards Board.”

The Bates litigation led him to the view that a third party needed, “to undertake factual assurance for material legal matters and litigation”. This involves, “business instructions as provided to the internal or external lawyers and/or Executive and/or Board” being checked to ensure they, “are factually accurate”.

“In or around the time I became temporary sponsor of the Inquiry,” so some time (about two years?) after he became GC, “it came to my attention that a legal hold notice had not been issued in respect of the Inquiry. In September 2021, a document preservation notice was issued across the organisation in my name. The GLO document preservation notice remains in place. Further communications reminding the business to continue to comply with the GLO, RU and Inquiry holds have been sent to the business.”

So it seems from this Mr Foat is saying neither Jane Macleod nor Herbert Smith Freehills, did this. Perhaps they ran into one of these problems:

In addition, continuous turnover of personnel including at the Board and the Executive has made the work environment challenging. At times, the over personalisation of issues has distracted from objective problem solving and collaborative working. Sometimes I have been concerned that perspectives are not necessarily evidence or fact based or brought about by due process but rather assumptions, immediate reactions without reflection, or prioritising areas of focus when Board members should look at matters through a broader lens. Conversely (in contrast to immediate reactions), there have been times when decision making has become paralysed. I have felt at times that some decision makers who are empowered to make decisions have not taken responsibility for matters within their remit.

Government Shareholder and UKGI  and DBT have been told their, “approach was delaying compensation with the impact ultimately on the Postmasters.”

And he thinks that, “the involvement of Government processes and ultimately control over the compensation scheme(s) significantly impacted the delivery of compensation, which is extremely regrettable and deeply disappointing.”

Apart from that, it’s been great.