Paula Vennells “likely” signed off on a trial bill of more than £300,000 after a subpostmaster was accused of having a £25,000 shortfall at his branch.
Former Post Office managing director Alan Cook told the Horizon IT inquiry that Ms Vennells, who was the organisation’s network director at the time the civil case was brought against Lee Castleton, was likely to be the “designated authority” who gave the go-ahead for legal costs.
East Yorkshire subpostmaster Mr Castleton was found to have a £25,000 shortfall at his branch and was made bankrupt after he lost his legal battle with the Post Office.
Questioning Mr Cook on the amount of money spent on the trial, inquiry chairman Sir Wyn Williams said: “I just want to ask you about the process of making decisions when the Post Office is involved in quite high-profile High Court litigation.
“Post Office instigated proceedings against Mr Castleton for approximately, the figure doesn’t matter, but approximately £25,000 – said to be a shortfall and evidenced by data from Horizon.
“Mr Castleton defended it on the basis that there was no shortfall and this was all the fault of the computer.
“It gradually grew from being what might be called a fairly conventional action for the recovery of a debt, to a potential large-scale argument about whether or not Horizon was reliable.
“This was all unfolding in the first eight, nine, 10 months of you being managing director – but none of this got to you from what you’ve told me.”
Mr Cook said: “No, the learnings from this are…”
Sir Wyn interjected: “Let me carry on. There came a point in time when the very experienced barrister who was acting for the Post Office told the experienced solicitor who had instructed him, who in turn told the legal department of the Post Office that the costs involved in this case were grossly out of proportion for what you were trying to get from Mr Castleton, and they ought to think seriously about whether it was worth spending all that money.
“But in the end all that money was spent so that the total amount of the debt and the cost came to well over £300,000.
“What I want to ask you is, what was the process back in 2006 for authorising the expenditure of those sums of money in the Post Office?”
Mr Cook said: “That was what I was about to prematurely talk about. There’s an irony isn’t there if somebody in the organisation wanted to buy a piece of equipment they’d probably have to get umpteen forms signed in order to be able to spend the money and yet somehow or other these spend decisions were being made in that prosecution.
“There should have been a set of delegated authorities that said you are authorised to spend up to this much money – because one of the issues is a case starts off modest and becomes big, so not only should they require sign-off from an expenditure perspective, there should be a cap on how far it can go without coming back and asking for more.
“Clearly, that was not in place – and they certainly did not come to me for approval.
“We had delegated authorities in place that would allow people below me, that would have probably lied with Paula Vennells as the network director, would have been able to sign that off.”
Sir Wyn then asked: “So what it amounts to is there would have been a person within the Post Office organisation who would have authority to sign off spending the money without talking either to you or to the board?”
Mr Cook said: “Correct”
The inquiry chairman continued: “So did you tell me the most likely person was Paula Vennells?”
Mr Cook replied: “Yes, I think so.”
During his questioning of the former managing director, counsel to the inquiry Sam Stevens said: “Did you not think to ask why there was such a significant spend on one case?”
Mr Cook said: “I just don’t recall… I can’t think why I wouldn’t and so either it was a mistake on my part or it wasn’t in the report, I don’t know.”