Tom Espiner,Business reporter
Former postmaster general Paula Vennells has been accused of living in a “dream world” by lawyers acting for sub-postmasters.
At the Horizon scandal inquiry, Edward Henry grilled Vennells about how much he knew about remote access to subpostmasters' computers.
He also pressed Mr Vennells about the impact of the scandal on Royal Mail's share market float in 2013.
She said that it would have been, but she was not involved in the strategy around privatisation.
Friday was Vennells' third day of testimony at the long-running inquiry into the Horizon scandal.
The room was filled with people, including a former subpostmaster general.
Their mood grew more defiant as the day progressed, with many booing Vennells by the end.
The issue of remote access has been one of the topics of investigation.
The Post Office has filed hundreds of false charges against sub-postmasters, arguing that they should be held responsible for money disappearing from accounts calculated using the Horizon IT system.
Prosecutions between 1999 and 2015 have sent some to prison, left many financially ruined and losing their jobs, businesses and homes, and some have died before justice was served.
In several key cases, including the landmark Bates v. Post Office case in 2019, the organization argued that Horizon's software could not be remotely accessed by any other party.
But Henry said outside lawyers representing the Postal Service knew about the remote access before that – between 2012 and 2019, when Vennells was chief executive.
She denied knowing and said she did not believe the board or senior executives knew either.
Mr Henry said: “It's astonishing because Cartwright King and the outside lawyers know all about this and you're saying the board didn't know either. This is a pipe dream, isn't it?”
“I have no recollection of that at all. If outside lawyers knew about it and it was shared within the Ministry of Posts and Telecommunications at the time, that is completely unacceptable,” she said.
Vennells also acknowledged that the impact of the Horizon affair would have had a negative impact on Royal Mail's share market listing.
“If it had been proven that the Royal Mail Group had wrongfully prosecuted dozens or even hundreds of sub-postmasters who had potential litigation, they would have threatened to block its share market listing in October 2013,” Henry said.
“It certainly was,” Vennells said.
He also said it would have posed reputational and financial risks to the Royal Mail Group as it was the prosecuting authority until 2012, and “they were responsible for the legacy of the prosecutions”.
“Yes, that's right,” she replied.
In July 2013, the government announced it would privatise Royal Mail and forensic accountants Second Sight delivered an interim report which Henry said “came as a bit of a shock” because it identified the Horizon bug.
“It should have been clear by now that any uproar over the Second Sight report would have raised questions about possible criminal convictions, would have been very embarrassing politically and could have damaged the listing,” Henry said.
Mr Vennells replied: “I don't believe I have been involved in any of those conversations. The two organisations currently operate separately and we have not had any discussions about strategy in relation to the privatisation of Royal Mail.”
Henry pressed Vennells, saying: “You want to keep this secret to please stakeholders – the Post Office board, the Government and Whitehall.”
He said Vennells was “eager to please” the Department for Business, Innovation and Skills (BIS) at the time.
The Post Office is 100% owned by the UK Government.
“I have no involvement in privatization and have never had any discussions with the BIS about privatization,” she said.
“My concerns at this stage were solely about the Post Office and, as the investigation revealed, there was a lot of discussion at the time about how to resolve this matter. I don't think I made any connection at all between this matter and the privatisation of Royal Mail,” she said.
It also emerged that Vennells had amended the prospectus provided to potential shareholders ahead of Royal Mail's IPO.
“Why would you engage in falsifying or amending a prospectus?” Henry said.
She replied: “This happened at the last minute, I had no involvement in the prospectus at all and I can't remember how it happened, but the fact that in the IT section of the Royal Mail prospectus there was a reference to risks associated with the Horizon IT system was completely foreign information to me.”
“The line added said that no systemic issues were found with Horizon Systems, which no longer has any connection to the Royal Mail Group,” so she removed the reference.
“We felt it was an irrelevant comment about Royal Mail's IT systems,” Mr Vennells said.