Whistleblower told Post Office chairman ‘there is a class, race and gender divide at the top’

The former chairman of the Post Office was told “there is a class, race and gender divide at the top” of the organisation, with “jobs for the boys” and few women or ethnic minority executives at the company.

Henry Staunton, who was sacked by the former business secretary Kemi Badenoch in January, told a public inquiry that the Post Office “did have a problem with ethnicity and gender” after it emerged a whistleblower had raised concerns about the culture of the business with him over email.

He also denied being racist, saying that three of his former non-executive director colleagues had defended him against the claims.

In testimony to the inquiry on Tuesday, Mr Staunton painted a picture of an organisation that was failing to get on top of varying problems; including lack of oversight of the costs of bringing in a new IT system, continued vilification of wrongly persecuted postmasters, and lack of desire to pay proper compensation for their incorrect prosecutions.

A whistleblower contacted Mr Staunton in June 2023 about the rollout of a new IT platform called NBIT, which was due to replace the disgraced Horizon system that introduced errors into postmasters’ accounts.

The cost of NBIT had dramatically ballooned from over £300m to over £800m, something Mr Staunton said “shocked” him when it was first reported to the Post Office board. The whistleblower claimed in their email to Mr Staunton that the Chief Information Officer had been misleading the board over the costs and dates for the project’s completion, running the project “like the wild west”.

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They went on to claim that “the culture in the business is disgusting and this starts at the top with Nick (the chief executive) and the general executives. More than one person has heard comments from Nick Read about public school education and there is a class, race and gender divide at the top”. The email also claimed “sexism is rife”.

When asked about these claims, Mr Staunton acknowledged: “We had a huge cultural problem..you heard odd comments about jobs for the boys. I’d heard them and I understood why those comments were made.”

He added that the Post Office did “have a problem with ethnicity and gender”, adding: “The biggest cultural issue relates to how postmasters are viewed in this organisation”.

Mr Staunton said he had fought on behalf of the postmasters within the organisation and had been “horrified” when the Post Office continued to say that the majority of postmasters were “guilty as charged”.

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He told the inquiry he had tried to make sure wrongly convicted postmasters were rightfully compensated for this ordeal but he had faced opposition from government civil servants.

In a letter sent by the permanent secretary from the Department for Business and Trade Sarah Munby to Mr Staunton, which outlined the ‘strategic priorities for 2022/23’, Ms Munby emphasised that compensation for postmasters must be “fair for the claimants and taxpayers”.

Mr Staunton wrote in a note following a meeting with Ms Munby in January 2023 that “there was no appetite to rip off the bandaid” within the government. He added that the civil service view was that “we needed a plan to ‘hobble up to the election’”.

Mr Staunton was sacked as Post Office chairman in January by Ms Badenoch. Ms Badenoch had said that the former chairman was being investigated prior to his dismissal.

A report had found that he used derogatory language during a meeting about recruiting a board member. Mr Staunton had asked if the candidate was “coloured”. Mr Staunton said he “was seeking clarification in the context of our efforts to increase diversity”, adding: “I understand that the term I used has now fallen out of favour and is one I will not use again”.

He had also referred to women as “girls” and used the term “pain in the arses” in the conversation.

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In the inquiry on Tuesday, Mr Staunton denied being racist, saying that three of his former non-executive director colleagues had defended him against the claims. He told the inquiry: “"All three directors have said they thought there was not an ounce of racism in me and indeed I was a champion of greater diversity of ethnicity and gender on the board.

"Separately, the non-executive directors all expressed orally to me their concerns about the fact and process of the investigation itself, calling it variously ‘contrived’, ‘unfair’ and ‘bizarre’."

Mr Staunton also told the inquiry that people within the Post Office “didn’t fully accept” the rulings made by Justice Fraser, which found that the Horizon IT system had caused errors that led to wrongful prosecutions of postmasters.

Mr Staunton, who joined the Post Office at the end of 2022, said: “They didn’t fully accept it [that] was my impression. That somehow the case hadn’t been put well. There wasn’t a feeling that this [the prosecutions of postmasters] was absolutely wrong.”