Image source, Post Office inquiry

Inquiry counsel Jason Beer KC moves onto the findings of the Second Sight report and asks Vennells how she defines the term "systemic issues".

Vennells says that her understanding was that Second Sight "had found no systemic issue with the technology" and that "systemic" meant "something that was wide-ranging and across the system...or a scale of branches".

She adds that Second Sight had also found some issues with "processes, support and training".

Beer asks if an issue with balances at 500 branches was a "systemic issue".

Vennells says she accepted Second Sight's definition of systemic from an earlier piece of work where "they talked about system-wide or something like that".

Beer clarifies that the term would be something that affected all of the estate or a very large part of the estate and would "systemic" have referred to something that affected 500 branches?

"That would be a serious issue," Vennells replies.

The inquiry is now focussing on Paula Vennells' understanding of the phrase "systemic issues".

We're seeing a transcript of a call from July 2013 between Susan Crichton, the Post Office’s former top in-house lawyer, and other executives. Vennells was not involved in this call.

In it, Crichton said she had spoken with Vennells on whether systemic issues caused a miscarriage of justice or suspension of a sub-postmaster.

Beer asks if she thought the Second Sight report should have focused on systemic weaknesses in Horizon's system.

"I wouldn't have expected forensic accountants to be working on issues of justice and law," she says, adding miscarriages of justice were legal issues and not for forensic accountants to work on.

Beer asks why a mediation scheme for sub-postmasters was set up instead of an investigation into the systemic Horizon system issues,

"I don't know," she says.

Vennells admits the Post Office could have done a separate investigation with Second Sight's involvement, but says it could not have instigated that process.

The inquiry has now resumed after breaking for lunch.

Stay with us as we'll bring you updates, analysis and reporting from inside the inquiry room.

And remember you can press "play" at the top of the page to follow the inquiry live.

Sam Hancock
Reporting from the inquiry

An exchange between Jason Beer KC and Paula Vennells, just before the lunch break, is a good snapshot of today's hearing - it's technical but filled with crucial detail.

Beer shows an email, from May 2013, in which former Post Office secretary Alwen Lyons writes to Vennells to say the company needs to be able to explain its move from "there are no bugs in Horizon" to "there are known bugs in every computer system this size, but they are found and put right and no sub-postmaster is disadvantaged by them".

He then reminds Vennells that in her witness statement, external, she says repeatedly that she didn't know about bugs and defaults in the system until this exact time period - mid-2013. So surely, he puts to her, this should've been "world changing information" as the Post Office's CEO.

Vennells acknowledges that it was indeed a big moment - but that she was assured bugs were being dealt with. She says she wanted to "demonstrate leadership" on this issue, but can see now that she should've asked Fujitsu for assurances there were no bugs.

This theme of when Vennells knew about Horizon's bugs, errors and defects isn't going away, despite her insistence that it was in 2013 and not before. It's one of many points sub-postmasters have said they find hard to believe.

During this morning's session, inquiry counsel Jason Beer questioned Vennells on how many cases Second Sight were supposed to review as part of their investigations into possible "systemic defects".

Several documents showed that Vennells wanted the review to look at two or three cases.

When Beer questioned how a systemic failure could be demonstrated from only a few examples, and Vennells went on to say: "I was not trying to close anything down."

Image source, PA Media

It's been a technical morning where inquiry counsel Jason Beer has delved into a series of documents while questioning ex-Post Office boss Paula Vennells. Here are some of the key moments:

• Vennells denied trying to close down a review into the Horizon software that led to wrongful convictions of sub-postmasters, saying executives instead felt the review by Second Sight was becoming too expensive and not meeting its objectives
• She said she didn't receive legal advice that an independent review into convictions of sub-postmasters could open up the Post Office to lawsuits
• Vennells rejected that the scope and extent of the review was shaped by fears of negative media coverage
• She also denied limiting the scope of Second Sight's review into the Post Office to just two or three cases
• She claimed she did not make the link between Post Office executives urging her not to re-investigate old convictions and the issues with expert evidence given by a Fujitsu employee

Vennells will resume giving evidence from 13:50 BST. Stay with us for live updates.

After showing Vennells a series of documents, Beer confirms that by May 2013 she and other Post Office executives knew that there were bugs in the Horizon system.

He then brings up a press statement which quotes Vennells, issued in July of the same year, about the findings of the interim report completed by Second Sight.

Vennells is quoted within the statement as saying "the review underlines our cause of confidence in the overall system".

Asked if she approved the statement, Vennells says this is likely, as she would not usually allow attributed quotes to run without her sign off.

Beer says the statement did not acknowledge the bugs but instead concentrates on the number of people using the system, the number of branches and the number of transactions.

Vennells says this was the truth but that she now accepts it was an explanation that was overused.

The inquiry is now taking a break for lunch till 13:50 GMT.

We'll provide a recap of the key moments from this morning shortly.

Image source, Post Office inquiry

Beer now asks for a clarification on Vennells' witness statement (see above).

In one sentence, she said in the statement that she did not know of any bugs in Horizon until early 2012. But in the next, she states that the first time she became aware of the bugs was in mid-2013.

"When did you first know of any bugs, errors or defects," Beer asks, to which Vennells replies "2013".

So then why did you say that it was early 2012 that you were made aware of bugs, errors or defects in Horizon, Beer asks.

"I don't know," Vennells replies. "I suspect this is just a mistake."

Sam Hancock
Reporting from the inquiry

The reaction in the room a little earlier to that email between Paula Vennells and the Post Office's former PR chief Mark Davies has to be one of the most dramatic yet at the inquiry.

Audible groans turned into full-on jeers and laughs, with some people calling out "oh come on" as Vennells was asked about taking Davies' "steer" in Horizon matters. It went on for long enough that Sir Wyn Williams cut in to ask people to quieten down.

Vennells looked frustrated but carried on after a lengthy pause, which are happening more and more in her evidence.

The calmer atmosphere of this morning vanished - if only for a time.

Here's the email in question:

Image source, Post Office Inquiry

Beer is now trying to pin down when Vennells had knowledge of issues with the Post Office's expert evidence from a former senior Fujitsu engineer.

After a long pause, Vennells says it is difficult to say when she discovered issues with the witness.

She says she learned from the Post Office's IT boss Lesley Sewell that this witness hadn't revealed the bugs in certain specific cases.

Beer points out that there had already been prosecutions in 2013 which were based on that expert's testimony. Were you concerned when you found out there were issues with what he had said, Beer asks.

"Yes," replies Vennells, but she adds that Sewell had already begun a review of cases at the time.

Asked about whether she "joined the dots" between this revelation about issues with the expert evidence and discussions with executives about reviewing past cases, Vennells says she did not.

Were you told he was an unsafe witness, Beer presses.

"No," she says.

Beer pulls up an email from Vennells later that year where she mentions an "unsafe witness". Is that the same person the executives were talking about earlier, Beer asks.

Vennells fumbles, and says: "I only saw this disclosure recently."

"Unsafe witness is not a term I would have used," she says.

But you did use it, Beer says.

Sam Hancock
Reporting from the inquiry

Image source, PA Media

During the short morning break I chatted to former sub-postmaster Lee Castleton, who says he thinks today is all about the finer detail.

He calls it "refreshing" that Paula Vennells is able to "admit not doing something, misreading or misrepresenting something" when she's shown paperwork and correspondence by the inquiry.

"I respect that, I really do," he tells me. "We all make mistakes - but I still feel let down by the fact she didn't act."

Going into the afternoon session, Castleton says the big question is whether Vennells truly made mistakes in her handling of the Horizon scandal, as she claims, or if she was part of a cover-up.

"And those people that were complicit in that, if that was the case, need to named."

He adds that the mood in the room is "a lot more relaxed" than yesterday, Vennells' first day of evidence.

Beer is suggesting that the exchange of emails indicates that Vennells took the views of her media adviser when deciding whether to review five to 10 years' worth of past prosecutions.

Vennells denies this, saying she was trying to "find a way forward through the cases that had come into the Post Office which would have enabled any case to go through normal legal routes".

"So I absolutely don't accept that I took a decision to not review past criminal cases based on media outcome."

The inquiry is now looking at an email exchange between Paula Vennells and former PR chief Mark Davies in which he advises her on her media strategy.

Her response - in which she says she would “take your steer” - is shown just after Vennells says that she would not have taken action just based on one colleague’s opinion.

Beer then asks “you did take the advice of the PR guy, didn’t you”?

Vennells starts answering by saying “I really don’t remember it relating to…” but is interrupted by groans from the audience, which are in turn interrupted by inquiry chair Williams.

Vennells says she understands how it reads, but that she doesn't recall making any conscious decision “not to go back and put in place a review of all past criminal cases”.

The email shows Vennells wrote that the most urgent issue was media management.

Beer asks hers whether that was what she thought at the time, that media issues were more important than the "actual substance" of the case.

Vennells says she recalls the media issue to be related to the Second Sight interim report and that was about to be released, which is why it was the top issue.

Beer says that Vennells' initial email had asked why they were not reviewing past cases going back several years. Davies' reply said that if the Post Office went back that far it would end up on the front page.

"That's a grossly improper perspective, isn't it?" says Beer.

"Yes it is, yes it is," Vennells replies.

Following a short break, inquiry counsel Jason Beer KC continues to present Paula Vennells with documents showing internal communications around the time of the Second Sight interim report.

They are currently looking at an email, in 2013, which discussed how the organisation might move forward after the publication of Second Sight's report.

One email they're looking at is sent by Vennells and refers to external lawyers reviewing cases from the preceding 12 to 18 months.

Beer asks Vennells where the 12-18 month timeframe came from. She can't remember and adds that this email was her pulling together a number of suggestions from different colleagues.

She insists that she wasn't proposing the 12-18 month timeline but that she had been given that information by someone else.

Vennells adds that she is not sure why this timeframe was suggested.

Inquiry focuses on scope of Second Sight's reviewpublished at 11:49 British Summer Time 23 May

11:49 BST 23 May

Emma Simpson
Business correspondent

We’ve spent a lot of time on the appointment of independent investigators Second Sight.

What were they exactly being asked to do?

How did they start with looking at a broad sample of cases to ending up with just a handful for the interim report?

Inquiry counsel Jason Beer KC asked how one case could highlight "systemic issues" - to which Paula Vennells said she didn't know if she could answer that question.

Second Sight played a key role in uncovering the scandal. We’re slowly building up to the forensic accountants' report being published and then hopefully on to how and why they ended up being sacked.

Image source, Post Office inquiry

Inquiry counsel Jason Beer continues to probe Vennells on how many cases Second Sight were supposed to look into.

Vennells is shown a briefing document for a meeting with Lord Arbuthnot indicating that she wanted to ask him for a review of "systemic defects" by using two or three cases.

After being pressed on whether such a systemic failure can be demonstrated from only a few examples, Vennells concedes that this isn't possible - but adds that Second Sight's report was only an "interim" one.

Beer displays a number of emails on the screen highlighting that Second Sight should only look at a few cases, and asks her a series of questions about whether the Post Office was trying to restrict the scope of Second Sight's investigation.

Was it your view that the investigation should end after 2 or 3 cases? Beer asks.

"I was not trying to close anything down, it's really important that I say that," Vennells says.

Still on the email, inquiry chair Sir Wyn Williams interjects to say the email reads as if the request had been made on her behalf by Simon Baker.

Vennells pauses before saying she doesn't recall having this conversation with Baker - she adds that she rarely met with him - but she acknowledges it does sound as though, at some stage, a conversation between them took place.

The email could have been produced in multiple ways, Vennells insists.

She says that she could have said "this is what I want" or Baker's email might have been saying to Vennells "this is where we are at".

Sam Hancock
Reporting from the inquiry

After a fairly slow start to this morning's evidence, an exchange between Jason Beer KC and Paula Vennells about a May 2013 email has animated some of those watching.

The email in question - sent by the Post Office's Simon Baker to other employees - sets out the points Vennells wanted to make to MPs at a meeting about the progress of the Second Sight interim report.

Image source, Post Office Inquiry

Despite Vennells' insistence that she wouldn't have thought looking at two to three cases involving sub-postmasters could answer the question of whether "systemic defects in the Horizon system resulted" in their "wrongful conviction" or "suspension", Beer and even inquiry chair Wyn Williams argue that's not what the email suggests.

Williams even intervenes to say the email (pictured above) reads as though Baker is saying that's exactly what Vennells wanted to say.

When the former CEO says she can't recall any meeting with Baker, there's a collective groan in the room and lots of headshaking. One man laughs and puts his head in his hands.

Perhaps the tension that defined yesterday's session is making a comeback.

Inquiry counsel Jason Beer is going over an email from the Post Office to forensic accountants Second Sight about what had been agreed upon for the investigation.

He highlights a bullet point that states that Second Sight would use two to three cases to answer whether systemic defects in the Horizon system resulted in the wrongful conviction or suspension of sub-postmasters.

Why did you only ask the forensic accountants to look at two to three cases? Beer asks.

"I don't know, I wasn't involved in the conversation," Vennells replies.

How could Second Sight answer such a big question by only looking at two to three cases, Beer presses.

"They could not possibly do that," Vennells replies, adding again that she did not know about the conversation.

Beer highlights a sentence at the top of the email in which the Post Office executive writing the email says Vennells was involved.

Vennells fumbles in response, but says again that she can't recall ever saying that.

Could it be that the Second Sight interim report, after addressing a small set of cases, found that no systemic defects were found in Horizon and then "forever after the Post Office paraded that conclusion?" Beer asks.

"There is no way that I would have wanted to persuade Second Sight on something they were not prepared to say," Vennells replies.

Image source, Post Office inquiry