Former Post Office boss Paula Vennells has been accused of living in “la-la land” by a lawyer representing sub-postmasters.

Speaking at the inquiry into the Horizon scandal, Edward Henry KC grilled Ms Vennells on how much she knew about remote access to sub-postmasters’ computers.

He also pressed Ms Vennells on how fallout from the scandal could have upset the Royal Mail stock market flotation in 2013.

She said it would have done, but that she was not involved in the strategy around privatisation.

Friday was the third day that Ms Vennells gave evidence at the long-running inquiry into the Horizon scandal.

The room was packed with people, including many former sub-postmasters.

Their mood became more defiant as the day progressed, until at the end many booed Ms Vennells.

The question of remote access has been one of the themes of the inquiry.

The Post Office said in hundreds of wrongful prosecutions of sub-postmasters that they must have been to blame for money missing from accounts, which were calculated using the Horizon IT system.

Prosecutions between 1999 and 2015 meant some people went to prison, while many others were left financially ruined and lost their jobs, businesses and homes. Some died while waiting for justice.

On Friday, a landmark bill quashing the convictions of hundreds of former sub-postmasters received Royal Assent.

It was one of the final bills to become law ahead of the general election, and will apply to England, Wales and Northern Ireland. Scottish parliament will pass its own bill to overturn such convictions.

In certain key cases in the past, such as the landmark Bates vs Post Office in 2019, the organisation insisted that the Horizon software could not be accessed remotely by any other party.

But Mr Henry said that external lawyers acting for the Post Office knew about remote access earlier than that, during Ms Vennells time as chief executive between 2012 and 2019.

She denied knowledge, and said she did not think the board or the executive knew either.

Mr Henry said: “It is extraordinary, isn’t it, because Cartwright King, your external lawyers, know all about it, and yet you’re saying that you didn’t, the board didn’t – I mean, this is la-la land isn’t it?”

She said: “I don’t recall that at all from the time. If our external lawyers were aware of that, and that was shared within the Post Office at the time, it is completely unacceptable.”

Ms Vennells also conceded that Horizon fallout would have upset the Royal Mail stock market flotation.

Mr Henry said: “If it were to be established that the Royal Mail group had wrongly prosecuted dozens, hundreds of sub-postmasters who might sue them, it would have threatened to disrupt the flotation in October 2013, wouldn’t it?”

“I’m sure that would have been the case,” Ms Vennells said.

It would also have posed a reputational and financial risk to the Royal Mail group because until 2012 they were the prosecuting authority, he said – “they were responsible for the legacy of prosecutions.”

“Yes, that’s correct,” she responded.

In July 2013, the government announced the Royal Mail privatisation, and forensic accountants Second Sight presented their interim report, “which was a bit of a bombshell” Mr Henry said, because it indicated Horizon bugs.

“It must have been staring you in the face that if you had a blow up concerning the Second Sight report, the prospect of criminal convictions would have been challenged, this would have been hugely embarrassing politically, and potentially damaging to the flotation?” Mr Henry said.

Ms Vennells responded, saying: “I don’t believe I was involved in any of those conversations. The two organisations were now working separately, I had no conversations about any strategy around the Royal Mail privatisation.”

Mr Henry pressed Ms Vennells, saying she “wanted to keep a lid on this because you wanted to please stakeholders – the Post Office board, government, Whitehall.”

He said Ms Vennells was “anxious to please” the Department for Business, Innovation and Skills (BIS) at the time.

The Post Office is 100% owned by the UK government.

“I had no role at all in relation to the privatisation, I had no conversations with BIS with regards to the privatisation,” she said.

“My concerns at this stage were only about the Post Office, and as the inquiry has seen there were many conversations at this time about how we might find a way through this. I don’t believe I made any connection between this and the Royal Mail privatisation at all,” she said.

It also emerged that Ms Vennells made an amendment to the prospectus that was made available to potential shareholders before the Royal Mail stock market flotation.

“Why did you get involved in bowdlerising or amending the prospectus?” Mr Henry said.

She responded: “This was at the very last minute, I wasn’t involved in the prospectus at all, I can’t remember how it occurred, but it was flagged to me, which was complete news, that in the IT section of the Royal Mail prospectus, there was a reference to risks related to the Horizon IT system.

“The line that was put in said that no systemic issues had been found with the Horizon system. The Horizon system was no longer anything to do with the Royal Mail group”. So she had the reference removed.

“I felt it was an irrelevant statement about the Royal Mail IT system,” Ms Vennells said.