Review calls out ‘clear governance failing’ in Post Office bonuses over false claim

An independent review commissioned by the government has asked Post Office to undertake a review of its governance structures, processes and systems in relation to remuneration after the company paid tens of thousands of pounds to its senior executives based on a false claim over the Post Office Horizon IT Inquiry.

The report by the international law firm Simmons & Simmons said the approval of bonuses by the Post Office board’s remuneration committee has a ‘justifiable basis’ as there was ‘more than one way’ to interpret the remuneration metric known as the Inquiry Support Target.

But the review added that the Post Office has not been able to evidence the basis on which the committed awarded bonuses under the metric as “there are no written records of the rationale for its decision and the recollections of those involved are inconclusive,” making it “practically impossible to ascertain the basis” for the committee’s decision in respect of the Inquiry Support Target.

“The fact that [the committee’s] decision-making was not better recorded is a clear governance failing, including on the part of [the committee] members who should have identified that the minutes were deficient,” the review noted.

Post Affairs Minister Kevin Hollinrake announced the review on May 10, days after Sir Wyn Williams, chair of the Post Office Horizon IT Inquiry, published a statement seeking clarification on the Inquiry Support Target which he considered to be ‘misleading and inaccurate’ because its presentation suggested that a ‘metric had been set and achieved with confirmation given from him and his team, which was not in fact the case’.

Post Office, in its Annual Report and Accounts for the financial year 2021-2022, published on 1 March, stated that the Inquiry Support Target, part of the executive transformation incentive scheme, has been achieved. But the metric required ‘all required evidence and information supplied on time, with confirmation from Sir Wyn Williams and team that Post Office’s performance supported and enabled the inquiry to finish in line with expectations’.

Following Sir Wyn’s intervention, Post Office has issued an apology and the Post Office chief executive and chief finance officer have returned the remuneration associated with the Inquiry Support metric.

The findings of the report have sparked renewed calls for heads to roll at the top of the organisation, with Kevan Jones MP demanding that the Post Office board and chief executive ‘should take responsibility and resign’.

“It was obvious from the outset that these extortionate bonuses were unjustified,” he said, adding that the failings cited by the review had “caused anguish amongst all those wronged by the Horizon Scandal.”

If the chief executive and Board refused to resign, the North Durham MP continued, “then it falls to the Government, as the Post Office’s single shareholder, to act.”

Darren Jones MP, the chair of the Business & Trade Select Committee said “there are still questions to be answered about what led to false accounts being presented to Parliament, and bonus payments being made to executives based on false information.”

“It is unacceptable that the independent review was unable to conclude what had happened, based on a lack of documentary evidence and board members not remembering clearly what they discussed.”

He added that the committee will consider the report closely and follow up in due course.

The Communication Workers Union (CWU) has written to Kevin Hollinrake, terming the report a whitewash.

“This report and its findings is yet another in a long line of monumental insults to subpostmasters who strive daily to fulfill their obligations and social purpose,” Sean Hudson, CWU Subpostmasters Branch Secretary, wrote in the letter.

“Postmasters who are required to keep accurate records of all their actions in business and face heavy consequences for any failure to do so - the complete opposite of what appears to be the culture within POL.”

Post Office has welcomed the ‘comprehensive’ report, adding that it has already put in place significant steps to improve its governance mechanisms surrounding the remunerations further.

“I am writing to the board today to recommend that Post Office approves all of the recommendations in the report and that Post Office incorporates their implementation into further improvements we are making to our governance structures, processes and systems in relation to remuneration,” Henry Staunton, the new chairman of Post Office Limited, said.

“I want to reiterate the apology we made when the error in the Annual Report & Accounts for 2021-2022 first came to light.”

Post Office said it will update on the progress of the implementation of the recommendations, which be led by Amanda Burton, the new chair of the remuneration committee, at the release of the 2022-23 Annual Report and Accounts.

The company added that it will soon appoint a new chief people officer to ensure the timely and effective implementation of further improvements to its remuneration governance and structures.