MPs have criticised the government for not acting over the Horizon IT scandal through its representative on the Post Office board, with one calling it a “fatal flaw” in the way it handles the governance of companies over which it has oversight. The head of UK Government Investments (UKGI) – the body responsible for managing the portfolio of wholly or partially state-owned companies such as NatWest and Channel 4 – admitted the Post Office board needed to be questioned over its lack of “curiosity” about the scandal, which resulted in wrongful prosecution of more than 900 subpostmasters. Last week the government dismissed Henry Staunton as Post Office chairman, saying there was a “need for new leadership” before the public inquiry into the Horizon affair reconvenes in April to interrogate current and former executives over the governance of the company. The Treasury select committee questioned executives from UKGI, which maintains one representative on the Post Office’s 10-strong board, on Tuesday about why the government did not take action sooner given it had a shareholder representative with direct access to the governance and running of the company. Keir Mather, the Labour MP for Selby and Ainsty, questioned whether the lack of action showed “insufficient robustness” by the Treasury-owned UKGI and whether the existence of a shareholder representative undermined the government’s argument that it “couldn’t exercise oversight” of the Post Office. He asked: “Is there some sort of fatal flaw in the character of how the shareholder role was carried out? Did they have the opportunity to say there are some inconsistencies here? “Subpostmasters consistently raised these concerns; we are not digging into what the detail is and getting to the truth of these matters. There was somebody on that board who had a responsibility to give the government’s perspective on decisions that were made at the Post Office.” The UKGI chief executive, Charles Donald, said its representative was just one of the board members and it had provided the inquiry with 96 pages of “reflections” in an opening statement on themes such as governance. “I think there were questions to be asked,” Donald said. “Collectively I think there are questions to be asked about the curiosity of the board. “We have to slightly leave the inquiry to ask what questions may have been asked and not asked. There are a whole set of questions the inquiry will answer best.” Angela Eagle, the Labour MP for Wallasey, pointed out that the UKGI non-executive director was on the board at the crucial moment in 2019 when a group of subpostmasters won a high court case quashing their convictions. She said: “Surely the non-executive director should have alerted the government at the time to the gathering problem?” Donald said the then non-executive director, Tom Cooper, “pushed” the board to set up a separate committee to look at the litigation the Post Office was involved in and that information was being “fed back”, adding that the Post Office was in regular contact with the Department for Business and Trade at the time. Eagle asked why the government did not do more at the time, given it knew it was such a serious issue. “There was a set of actions the department took to look at compensation and the overturning of convictions,” Donald said. Eagle has asked UKGI to respond to the committee by letter setting out exactly what actions Cooper took and what the government was told “with respect to the person you had on the board”. Cooper, who joined the Post Office board in 2018, resigned last year less than two weeks after it admitted it had approved a target for executive pay based on a statement saying that the company had helped the inquiry to “finish in line with expectations”, even though the hearings had only just begun. Nick Read, the chief executive of the Post Office, subsequently apologised and handed back part of his bonus. At the time UKGI said Cooper’s departure was a “move planned for many months”. Harriett Baldwin, the chair of the Treasury select committee, said she had been left “concerned” by answers given to questions about some of the companies covered by UKGI, which also include the government’s controversial investment in the satellite operator OneWeb and the British Business Bank.