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Pack for meeting with James Arbuthnot and other MPs Meeting scheduled for 18" June 2012, 6pm, Portcullis House.
This pack contains:
1. Agenda 2
2. Key Messages 3
3. Potential Questions 6
4. Network Background 8
5. Horizon 9
6. Post Office Recruitment and Training Process for Sub Postmasters 10
7. Example Case 1 13
8. Example Case 2 17
9. List of MPs 21
10. Cases in MPs Constituencies 29
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1. Agenda
Attendees: James Arbuthnot Member of Parliament for North East Hampshire
MPs Final list to be confirmed
Alice Perkins Chairman, Post Office Ltd
Paula Vennells Chief Executive, Post Office Ltd
Alwen Lyons Company Secretary, Post Office Ltd
Angela Van-Den- Head of Network Services, Post Office Ltd
Bogerd
Agenda Item Lead b Duration (minutes)
1__I Overall Introduction James Arbuthnot 5
2__I Post Office Introduction Alice Perkins 5
3 Background Paula Vennells 5
4 I Two anonymous case examples Angela Van-Den-Bogerd 15
5 Discussion and Recommendations James Arbuthnot / Paula 25
Vennells
6 nclusio! ice Perkins
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2. Key Messages
Agenda Item Who
1 I Overall Introduction James
Arbuthnot
uration
5
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Key Messages
Introduce those round the table
Purpose of the meeting
2 I Post Office Alice Perkins
Introduction
eo ojo 0
Appreciate taking the time to meet us today
We take this issue very seriously. This impacts the lives of individuals,
public money is at stake, and so is our reputation
We are open to feedback and we will provide you the information we
have available, we want to work with you to address all your
concerns
Would rather be talking to you about the amazing things we are
doing at the Post Office, but we need to address this concern, so
today we will just focus on this.
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Background Paula Vennells
Confirm above
Sub Postmasters are key to our business and it is important to me that
we support them in every way we can
To support our branches we have a helpdesk that provides telephone
support 7 days a week, field support teams, and class room training for
new agents. We are constantly looking to improve, so any feedback you
may have from your constituents is welcome
The Horizon is the system used in branches to manage the branch
accounting. If a sub postmaster has any questions or concerns about
their transactions in Horizon the help desk is there to support them
lam confident about the integrity of Horizon; it was built on robust
principles of reliability and integrity. It has undergone and many external
audits and no problems of this nature have ever been raised. Ona
technically level:
o Anaudit trail is created for each transaction which means we can
look at all transactions done at the counter and see what happens to
them subsequently
© Each transaction is protected with a digital signature to prevent
change or tampering. Which means if someone was able to
penetrate the many layers of security — they wouldn’t be able to
unlock the seal that protects the transaction — this prevents any
malicious manipulation
o Reconciliation processes automatically detects any problems. Which
means if there is a problem, deliberate or otherwise, it would be
caught on the reconciliation reports
Occasionally we do get incidents of fraud. This is unfortunate, but as it is
public money at stake it is important that we protect it
Even in cases of fraud we do try to treat the agent with care and respect
throughout the process
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4 I Two anonymous case Angela Van-Den- 15 o. Describe high level process when fraud it suspected: Eg, P&BA
examples Bogerd phone call, audit, investigation, interview
o. Case 1 Key points
o. Case 2 Key points
5 I Discussion and James 25 © Opportunity for the MPs to express their thoughts.
Recommendations Arbuthnot / co JAto propose the idea of a “Forensic Audit”
Paula Vennells 0° PV to offer a review of the individual cases relevant to each the MP
and get view on the best way of doing this.
Gain consensus of views
Agree next steps
o. Finally, I’d like to offer an invite to visit our Model Office to
understand in more detail how things work and to learn about the
amazing things we are doing at the Post Office.
6 I Conclusion and next Alice Perkins 5
steps
oo
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3. Potential Questions
estion
1 I Why are crown staff and sub-post
masters treated differently if found
committing fraud
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Response
Post Office staff are expected to balance in the same way as sub postmasters. If a clerk misbalances resulting in a loss of
more than £30:
©. Three times in a three month period (or less) they receive an informal warning
o Six times in a six month period (or less) they are interviewed
© Nine times in a nine month period (or less) they are re-interviewed an put on an improvement plan which could
lead to dismissal if no improvement is forthcoming.
Criminal Investigation and Prosecution Process
Post Office applies consistent investigation and prosecution processes across our Sub office and our Crown estate.
Once any branch comes to our adverse attention we would raise an active investigation and proceed in a formalised
manner. Suspect offenders would be interviewed under the auspices of PACE (Police and Criminal Evidence Act) and
cases passed for advice to lawyers. The lawyers would apply the “prosecutors’ guidelines” (in reality CPS checks and
balances) to the matters in hand and advise prosecution, or not, accordingly dependant on evidence and not branch
type.
In terms of investigation and prosecution it is factually incorrect to state or infer that we treat the branch office staff
differently.
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What is our view of Computer Weekly
Computer Weekly is well respected within the IT industry and widely read in Government.
Computer Weekly does not have in-house experts; it relies on using expert consultants from the industry at large.
As we have external and internal experts available we don’t believe Computer Weekly can assist us in this specific case,
Although there is no evidence of problems with Horizon, as an assurance exercise we are considering a forensic audit of
the Post Office Horizon IT system. if we do proceed with this audit, itis likely that we will use an experienced audit
organisation.
We will, however, will be engaging Computer Weekly as part of our IT Transformation communication plan, and will pick
up any Horizon related matters through that forum.
If when suspected of fraud we bar sub-
postmasters from the system, how can
they be expected to prove their case?
Sub-Postmasters should be balancing their accounts at the end of every day. If there are any discrepancies they should
be investigated by the sub-postmaster with assistance from the help desk and P&BA. There should be no surprises at the
time of an audit.
In cases where an auditor has found evidence of fraud, the previous trial balance (which the sub-postmaster has
approved) will be the baseline record. If there are found to be any discrepancies with that Trial Balance the sub-post
master should have followed the standard process to resolve.
If discrepancies are found during the audit, the sub-postmaster will have the opportunity to explain any anomalies.
Does the system allow sub-postmasters.
to understand why errors occurred, eg
can they interrogate past transactions?
Yes, they can go back and look at past transactions
The help desk and P&BA can also provide assistance
Sub-postmaster should do a cash balance every day so, so should not be necessary for them to integrate vast quantities
of transactions.
Why are we considering Deloittes to
perform the audit?
KPMG are excluded as they are Fujitsus’ auditor
E&Y are excluded as they Post Office’s auditor
PWC are not recommended because not on Post Office’s supplier short list, although this could be bypassed if required.
Deloittes are on Post Office’s supplier short list and have proven experience in this area
The audit could cost in the region of £250-
£500k, why so expensive?
The audit envisioned is a thorough end-to-end review of processes, systems and data which not only could reveal
potential improvements but could be used as an assurance for court future cases. The cost is a result and thoroughness
of the audit and the expertise required. An alternative, reduced scope audit could also be considered.
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4, Network Background
The Post Office has a unique and valued place at the heart of communities across the UK.
A third of the UK population and half of all small businesses visit a Post Office each week which helps to make it one of the nation’s most valued and treasured
organisations.
It is seen as a vital public service but it faces a challenging commercial environment.
Over the last ten years footfall has dropped from 28 million customers a week to just under 20 million. This is largely driven by the reduction in government services and a
shrinking consumer mails market in an increasingly digital world.
Following the enactment of the reforms contained within the Postal Services Act 2011, Post Office Ltd is now (as of 1 April 2012) an independent company. It has its own
Chairman and full Board including non-executive directors. The Postal Services Act has made clear that the company will remain in the public sector — with the possibility of
mutualisation at a later date.
The company provides services to just under 20 million customers (and to half of all small businesses in the UK) per week
We have a network of over 11500 Post Office branches. 373 of these branches are operated directly by Post Office Ltd. All the others are agency branches operated by
independent business people or multiple retailers - typically as part of retail premises. There are over 10,000 agency branches.
The network carries out over 150 million transactions a month.
Post Office Ltd provides full infrastructure support to all branches with a UK-wide cash and stock distribution system, product and marketing support, a helpdesk who
provide telephone support for sub-postmasters, and field support teams who provide on site support.
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5. Horizon
Summary:
© Horizon designed with integrity in mind from day one
© Horizon has undergone external scrutiny
o Each transaction is audited and protected with a digital signature to prevent change or tampering
© Reconciliation processes automatically detects any problems
Background
o The Horizon computer system is used in all Post Office branches to process counter transactions and process all in-branch accounting processes. Horizon enables
sub postmasters to account accurately for each transaction they undertake in their branch.
o The system has been operating for over ten years. In that time around twenty thousand sub postmasters have used it in performing many millions of successful
weekly and monthly financial reconciliations between the cash they have in the office and the transactions they have handled.
© The National Federation of Sub Postmasters (NFSP), which represents sub postmasters throughout the country, has expressed its full confidence in the accuracy
and robustness of the Horizon system.
© In 2010 Horizon underwent an upgrade. The upgraded system was tested and has the full support of the NFSP
External Scrutiny
°
Horizon and Post Office Ltd systems environment have always been subject to external scrutiny for both assurance and accreditation purposes. Ernst & Young
carry out an annual financial systems audit; an independent auditor also carries out a yearly audit to maintain the system’s Payment Card Industry (PCI)
accreditation.
The system and its Data Centre are ISO 27001 accredited which requires an annual audit from an independent agency. Horizon is also accredited by HSBC
Payment Services and WorldPay (Post Office’s Merchant Acquirers) and must comply with the VocaLink standard for card payment transactions. In addition to
these regular audits, ad hoc independent audits of the system are initiated by Royal Mail Group and supported by Post Office Ltd.
Designed for Security and Integrity
°
Horizon was originally built to support benefit payments against requirements from Post Office Limited and the Benefits Agency. The need for security, integrity
and a strong audit trail has been emphasised since day one.
Horizon system keeps full audit records of all transactions undertaken by all log ins — so that it is always possible to track back anything that has occurred within
the system - or at an individual sub post office
The system is designed such that all data is sequentially numbered at the point of its creation and is separately stored in a secure tamper proof facility for 7 years
— so that recreation of situations and track back is always feasible
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© Horizon requires clerks to log on, using their own username and password before any transactions can be carried out.
© Horizon captures ‘baskets’ consisting of items sold and payments in or out at the counter. When the clerk settles a basket this is clearly shown on the counter
screen. Software at the counter digitally ‘signs’ each basket.
© Each basket is written to the audit trail where it is kept for 7 years. Data in the audit trail is cryptographically protected to ensure that its integrity can be asserted.
Reconciliation and Validation
© Each basket is checked to balance to zero at the data centre; if it did not (eg because of a bug in the software) it would be rejected. The signature applied by the
counter is checked before the data is written to the database.
The data centre also checks that each basket is the one expected (i.e. the count has gone up by exactly one). If it is not, then, if appropriate, the clerk is notified of the need
to recover.
Transactions are reconciled with all the banks and clients, any discrepancies are investigated and resolved.
6. Post Office Recruitment and Training Process for Sub Postmasters
Prior to appointment
The key extracts of the contract are covered at the interview stage by the Contracts Advisor. One part of which is:-
Post Office cash & stock
e Balancing/branch trading.
© All discrepancies to be made good immediately.
e Fraud.
Cash for PO use only.
© Robbery/burglary,
© Error, theft by assistants, cashing personal cheques.
Following Appointment
A copy of the contract is sent to the agent.
An appointment pack is also issued to agents when they take over a branch and is explained by the trainer to the agent whilst on site.
The following is an extract from the document:-
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The Subpostmaster is responsible for all losses caused through his own negligence, carelessness or error, and also for losses of all kinds caused by his Assistants.
Deficiencies due to such losses must be made good without delay. Section 19:
Once the offer of appointment is accepted, training dates are then confirmed.
ining processes are under constant review with the delivery of the training being aligned to the type and size of branch and the number of people requiring training.
Training commences within a classroom environment for 6 days; this is extended to 8 days classroom training for those branches offering the full range of post office
products (eg DVLA, Passports etc). The classroom training is delivered in advance of the site transfer. Once the site transfer takes place the on site 6 day training
commences. The Ops Manual is used as reference document during training and all subpostmasters have a copy, although most of the Ops Manuals are now on-line in
‘Horizon on-line Help’ which is available at every branch.
Both the classroom and on-site training includes how to complete the office balance and the trainer is on site with the agent for the completion of the first office balance,
which is always a Branch Trading Statement.
Follow up support is provided to assist with balancing or any other training needs. This takes the form of:
Helpline support at NBSC. If unable to resolve the issue the agent is referred to the POLtd Branch Support team.
The Branch Support Team is made up of very experienced and knowledgeable Post Office employees (average length of service is in excess of 20 years) who
understand the post office product / service portfolio and ways of working exceptionally well. They provide telephone support to the agent. If this support doesn’t
fully resolve any issues (and in the majority of cases this does) then this is escalated to the Field Support Team. The Field Support Team is a well established and
experienced team (average length of service 25 years plus) with extensive hands on experience of post office products and services, in branch policies and
processes and the Horizon system.
¢ Amember (trainer/auditor) of the Field Team will also telephone the branch to assist and if necessary then visit the branch to provide face to face support.
Remedial training would be arranged following the face to face support if the Field Support Advisor felt this was necessary.
Is the training adequate?
Customer satisfaction with training is tested through independent research questionnaires collated by an independent research company. The field team leader receives a
copy of each branch feedback form and if any comments cause concern or if any Agent raises an issue regarding the quality of the training or lack of confidence this is
followed up by the team leader. There is currently a 95% satisfaction from a response rate of 69%.
Initial training
All new entrants to the business receive classroom training the length of which depends on the model of the branch, plus 6 days training on site. All new Agents also have
further follow-up contact to embed training, which includes:-
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* Atone month from appointment a follow up telephone call to check all is okay and they are confident;
© Atthree months from appointment a face to face visit to check all is okay and observe the branch operationally, provide a refresh and support as necessary;
© Atsix to nine months after appointment a face to face unannounced follow up which is unannounced and includes a procedural and compliance audit, an audit of
cash and stock
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7. Example Case 1
Date Action
24/12/2001 I — Josephine Hamilton (JH) begins working at the South Warnborough SPSO.
21/10/2003 I — JH appointed as subpostmaster (SPM).
* SPM assisted by Mrs Partridge. Mrs Partridge denies (in her statement dated 31/07/2006) having ever assisted with balancing or completed any
cash declarations.
1/12/2004 . Cash held increases from £15,000 to £35,000 (See Graph at 7.2)
to 1/4/2006
03/02/2004 I « Unidentified loss of £3,191.00. JH requested hardship payments to be set up to clear this loss. (Payment deducted from salary over a 12 month
period)
24/02/2005 I Unidentified loss of £750.00. JH requested hardship payments to be set up to clear this loss.
01/05/2005 I ¢ Warning letter sent to JH for rolling balance not made good (£724)
01/09/2005 I ¢ Second warning letter sent to JH for rolling balance not made good (£188)
05/10/2005 I « PO migrated to branch trading. (Formal balancing every month instead of every week). No onsite visit provided, but would have been provided with
an interactive training CD ROM, a Transition Guide, a Quick Reference Guide, a branch trading calendar and the relevant manuals. The SPM would
also have been invited to attend a number of face-to-face events explaining migration.
e Records indicate that no requests were made for replacement materials or that the CD-ROM be exchanged for a video.
08/02/2006 I e Branch Trading Statement for trading period 10 (13/01/06 to 08/02/2006) completed.
. Statement shows a shortage of £6.74 and cash on hand stated as being £35,515.83.
06/03/2006 I « Rebecca Portch (Retail Cash Management Support) contacted the branch regarding high levels of cash holdings. Branch paying out approximately
£2,500 on average per week, but declared cash holdings in excess of £20,000.
SPM requested by Ms Portch to return £25,000 by 08/03/2006.
SPM alleged to have advised a NFSP representative, Kam Matharu, that there were problems at this branch. The nature of the problems was not
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specified,
07/03/2006
SPM signed off on! GRO}
08/03/2006
Excess cash holding not returned by SPM as per request.
09/03/2006
Audit undertaken. Deficiency (including cash and stock) of £36,644.89 identified by the audit team.
Cash figure on Horizon stated to be £37,360.06. The cash physically verified as being n hand only £1,933.48 (a difference of £35,426.58).
SPM precautionary suspended as a result of shortfall. SPM requested to attend an interview under caution.
15/03/2006
Izzy Hogg, solicitor acting for the SPM, contacts POL and offers to provide a written statement. Ms Hogg informed that an interview under caution
will still need to be conducted.
12/04/2006
Second letter sent to SPM regarding interview.
21/04/2006
Agreed interview will take place on 05/05/2006.
05/05/2006
Interview conducted by POL under caution at offices of the SPM’s solicitors.
POL provided disclosure of documents to be put to the SPM in the course of the interview. Includes cash declarations and branch trading
statements.
SPM provides a pre-prepared written statement. The statement states that the SPM did not receive adequate training and that the operation
manuals provided were out of date. Statement also makes reference to an error for £1,500 which is alleged to have doubled to £3,000 when
attempts were made to correct it. The SPM was invited to confirm when that error is alleged to have occurred, but the SPM declined to comment.
Statement also contains a denial that the SPM has ever stolen monies.
Taped interview commenced at 12:13pm. The prepared statement was read and the SPM then gave “no comment” responses to all the questions
raised by the interviewing officers.
Interview concluded at 13.32pm.
11/10/2006
Decision taken to prosecute for theft.
30/10/2006
Summons issued requiring the SPM to attend before the Aldershot Magistrates Court.
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09/10/2007 Defence offers pleas to false accounting by way of mitigation.
19/11/2007 Hearing before Winchester Crown Court.
SPM pleads guilty to 14 separate counts of false accounting. This is accepted by POL on the basis that the losses are repaid in full by 25/01/2008.
Count of theft to remain on file until payment made in full.
04/02/2008 SPM sentenced to 12 month Community and Supervision Order.
18/02/2008 Cheque for £37,644.89 received from the SPM.
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South Warnborough - Cash Declarations
40,000
35,000
30,000
25,000
20,000
15,000
£Cash
10,000
5,000
01-Dec-04 '
01-Feb-05
01-Jun-05
01-Dec-05
01-Feb-06
01-Apr-06
01-Jun-06
01-Oct-06
01-Dec-06
01-Feb-07
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8. Example Case 2
The defendant Tracey Ann Merritt (D.0.B
operated an outreach Post Office at Chetnole.
had been employed as a Post Mistress for over four years. Ms Merritt worked at the Yetminster Post Office, but also
An audit was conducted at the Yetminster Post Office on the 29" September 2011 following concerns raised by a former holiday relief worker at the Yetminster branch in
August 2011 over alleged cash shortages.
Mr Constant and Mr Gilding arrived at Yetminster Post Office at 8:30am and introduced themselves to Miss Lisa Porter, the daughter of Ms Merritt who was sitting behind
the counter having already logged on to the Horizon system and accepted the Transaction Acknowledgements.
Mr Constant asked Miss Porter when she expected her mother to arrive, Miss Porter informed the auditors that she would be in later on as she had gone to the cash and
carry. Mr Constant asked Miss Porter if she would allow him access to the secure area, which she did, and also to inform her mother that the auditors were at the Post.
Office. Ms Merritt allegedly told her daughter to ask the auditors to wait until she arrived at the branch before they continued, Miss Porter remained quiet until her
mother arrived.
Whilst waiting for Ms Merritt to arrive, Mr Constant logged onto the Horizon system for the Yetminster branch using the Global User name and password as Miss Porter did
not have Manager Access to the system. Mr Constant then created user ID BC0003 and logged on to the Horizon system, using that ID to produce audit reports.
Mr Constant also logged on the Outreach Horizon system for the Chetnole branch, using the user ID BCO001. No other action was taken until Ms Merritt was presents in
the branch.
Ms Merritt arrived at 09:15am and Mr Constant advised her that they were there to perform an audit.
Before t he audit commenced Ms Merritt advised Mr Constant of a cheque for £9500 and explained that she had removed cash to that value the previous evening after she
had declared her cash onto the Horizon system. The cheque appeared to be with her outstanding daily documents, when questioned about this, Ms Merritt stated that she
meant to put the cheque through the system the evening before but hadn’t done so, and was intending to process it that morning. Ms Merritt explained that the cheque
was to pay for ‘something personal’ that had nothing to do with the shop. She explained that she had needed the cash urgently but was unable to get to the bank(s). Ms
Merritt explained that she thought she was allowed to use Post Office cash as a cheque had already been put in to cover it. She expressed that she did not intend to steal
the money and that the cheque, if banked would be honoured.
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Ms Merritt confirmed that this was t he first time that anything like this had happened. However the audit team noted that the date on the cheque had appeared to have
been altered from what appeared to be ‘5’ (May) to a ‘9’ (September). When asked, Ms Merritt said that it was due to a writing error. There were no details recorded on
the reverse of the cheque and it had not been date stamped.
Mr Constant confirmed with Ms Merritt that he should expect to find the cash at least £9500 short when it was counted, she confirmed that was correct.
Yetminster Audit findings:
£8546.17 (-) Difference in cash figures
£404.74 (-) Difference in stock figures
£518.24 (+) Difference in postage figures
£17.40 ) Difference in foreign currency figures
£8415.27 Total Shortage
Chetnole Outreach Branch Audit findings:
£3517.96 (-) Difference in cash figures
£46.71 (-) Difference in stock figures
£933.17 (+) Difference in postage figures
£17.40 (+) Difference in foreign currency figures
£ 3471.55 Total Shortage
The total audit revealed a shortage of £11,886.77 at the two branches under the control of Ms Merritt. The event log balancing printout showed shortages were apparent
during August 2011.
Ms Merritt was issued with a without prejudice receipt for the £9500 cheque and a further without prejudice receipt for a second Santander cheque for £2386.77 that
together made up the discovered shortages on the day. Both cheques later returned not honoured.
Mr Adderley, Contracts Manager precautionary suspended Ms Merritt’s contract for services on the 29"" September 2011. Ms Merritt admitted to Mr Adderley on the day
of t he audit that she had taken the money from the Post Office on the evening of the 28" September 2011 for a personal matter, confirming what she had advised the
auditors at the office that day.
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On Monday 3" October 2011 Ms Merritt was contacted by Mr Thomas to informing her that he needed to interview her and explained her legal rights and the Post Office
Friend rule. Ms Merritt confirmed that she was receiving legal advice and that she would contact him once she had done this.
On the 5" October 2011 Mr Thomas requested and received a personal printout from HR for Ms Merritt.
Whilst awaiting to hear from Ms Merritt, Mr Thomas continued to progress aspects of the case such as PNC results etc. Following a further telephone conversation, Mr
Thomas wrote to Ms Merritt again confirming that e still needed to conduct an interview with her under caution. Mr Thomas was eventually contacted by Mr Mike
Robinson of Morton Law Solicitors in Yeovil and an interview was arranged at their offices on Wednesday 9°" November 2011. Mr Thomas and Lisa Allen attended the
offices at 12:30hrs where disclosure was given from Mr Robinson.
Interview
The caution was explained to Ms Merritt and the interview commenced at 13.18 hrs in accordance with PACE. During the interview Ms Merritt said the following:
1 That she denied having taken the money the night before the audit as she had previously advised the auditors, and now produced a large document regarding
on-going litigation by Shoosmith Solicitors over the reliability of the Horizon system.
2. She only admitted taking the money during the audit because she was upset and would have said anything at the time, when shut in a room with two men
that she did not know. She went on to say that she felt intimidated and would have done anything to get herself out of that situation. Mr Thomas confirmed
that at no point was she locked in a room, but was in fact in a secure area in full view of customers who were being advised that the Post Office was closed
whilst the audit was being undertaken. She was only present to monitor the audit taking place. Her daughter was also present.
3, Mr Thomas referred to an ‘Event Log Balancing’ printout which identifies an entry made by TMEOO1 (Ms Merritt) on the 17" September 2011 at 12:36 hrs that
identifies a substantial discrepancy that was immediately followed by a re-entry increasing the cash on hand by some £14,400 and resulting now in a surplus
of £245.45. (This was not posed to Ms Merritt at the time of the interview).
4. When asked, Ms Merritt denied taking any money but blamed the Horizon system. Mr Thomas then advised her that it was her responsibility to arrange an
audit following information received from the holiday relief Catherine Early which appeared to be true. Ms Merritt denied that she had asked Catherine to
inflate the cash on hand by £12,000. She stated that there had been occasions where she needed to take money to Chetnole from Yetminster and had not
been able to officially transfer the money as she had no barcodes to do it. Ms Merritt conceded that even if that was the case, the two branches would not
balance and t he amount still would have been short. Mr Thomas asked why would Catherin Early advised POL about the shortages if they were not true?
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And was she, therefore suggesting that Ms Early was lying? To which Ms Merritt could not say if she was lying, but only that she had not asked her inflate the
cash declaration.
5. At the end of the interview, Ms Merritt stated she would be willing to allow searches of her home to be conducted. A search was conducted at 16:27hrs and
concluded at 16:41hrs. Three items were seized that related to various bank statements, copies of which were forwarded to Dave Posnett.
The loss to POL was £11,886.77and Ms Merritt gave a signed undertaking to repay £9,500 within 14 days of her interview on the 9" November 2011.
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9. List of MPs
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Title FirstName Surname Party Constituency Correspondence Shoosmith Case Case
Mr Andrew Bridgen Conservative North West Leicestershire No
Mid Dorset and North
Mrs Annette Brooke Liberal Democrat__I Poole No
Newcastle upon Tyne
RtHon_I Nick Brown Labour East No
Rt Hon _I Simon Burns Conservative Chelmsford No
Mr Dan Byles Conservative North Warwickshire No
Rt Hon
Sir Menzies Campbell I Liberal Democrat I North East Fife No
RtHon I Greg Clark Conservative Tunbridge Wells No
Mr David Crausby I Labour Bolton North East No
Mrs Jenny O'Dell at Great Staughton
Mr Jonathan Djanogly_I Conservative Huntingdon 2010 PO
Mr Richard Drax Conservative South Dorset No
Labour/Co-
Mrs Louise Ellman operative Liverpool Riverside No
Mr Paul Flynn Labour Newport West No
Mr Edward Garnier Conservative Harborough No
Mrs Mary Glindon Labour North Tyneside No
Merthyr Tydfil and
Mr Dai Havard Labour Rhymney No Y. Lynne Prosser at Merthyr Tydfil PO
Mr Stephen Hepburn I Labour Jarrow 2011 Mrs Carol Ridell at East Boldon PO
Rt Hon _I Nick Herbert Conservative Arundel and South Downs No
Ms Glenda Jackson I Labour Hampstead and Kilburn No
Mr David Jones Conservative Clwyd West 2009 Alan Bates at Craig-y-Don PO
RtHon_I Greg Knight Conservative East Yorkshire No
Mr Edward Leigh Conservative Gainsborough 2009 Shirley Rayner at Glentham PO
RtHon _I Oliver Letwin Conservative West Dorset 2011 Tracey Ann Merritt at Yetminster PO.
Mr Jonathan Lord Conservative Woking 2010 Mrs Seema Mishra at West Byfleet PO.
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Mrs Karen Lumley Conservative Redditch No Julian Wilson at Astwood Bank PO
Ms Anne Milton Conservative Guildford No
Ms Tessa Munt Liberal Democrat__I Wells No
Mr Walters at Hockley PO
RtHon I George Osborne I Conservative Tatton 2010 Scott Darlington at Alderley Edge PO
Ms Priti Patel Conservative Witham No
Mr David Ruffley Conservative Bury St Edmunds No
Mr Keith Simpson_I Conservative Broadland No
Mr lain Stewart _I Conservative Milton Keynes South No
Mrs Christine Johnson at Withemsea
Mr Graham Stuart Conservative Beverley and Holderness 2011
Mr Andrew Tyrie Conservative Chichester No
Mr Ben Wallace _I Conservative Wyre and Preston North No
Miss Jenny Willott Liberal Democrat I Cardiff Central No
Mr Mike Wood Labour Batley and Spen No
Mr lain Wright Labour Hartlepool No
Temp Grand
MP Constituency Sub Type I Open Closed Total
Bridgen, Andrew North West
(Con) Leicestershire Outreach I 2 1 3
Sub PO 19 1 20
North West Leicestershire Total 21 2 23
Brooke, Annette Mid Dorset and North
(LD) Poole Sub PO 14 14
Mid Dorset and North Poole Total I 14 14
Brown, Nicholas Newcastle upon Tyne
(Lab) East Franchise I 1 1
Local 1 1
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[SubPo [6 6
Newcastle upon Tyne East Total 8 8
Burns, Simon (Con) I Chelmsford Franchise I 1 1
Local 1 1
Sub PO 8 8
Chelmsford Total 10 10
Byles, Daniel (Con) North Warwickshire Local 1 2
Outreach I 1 1
Sub PO 18 18
North Warwickshire
Total 20 21
Campbell, Menzies
(LD) North East Fife Franchise I 1 1
Local 1 1
Outreach I 4 4
Sub PO 27 28
North East Fife Total 33 34
Clark, Greg (Con) Tunbridge Wells Crown 1 1
Local 2 2
Outreach I 1 1
Sub PO 16 16
Tunbridge Wells Total 20 20
Crausby, David (Lab) I Bolton North East Crown 1 1
Sub PO 10 10
Bolton North East
Total 11 11
Djanogly, Jonathan
(Con) Huntingdon Franchise I 2 2
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Local 3 3
Sub PO 16 16
Huntingdon Total 21 21
Drax, Richard (Con) I South Dorset Franchise I 1 1
Outreach I 3 3
Sub PO 18 19
South Dorset Total 22 23
Ellman, Louise (Lab) I Liverpool, Riverside Crown 2 2
Franchise I 1 1
Main 1 1
Sub PO 6 9
Liverpool, Riverside
Total 10 13
Flynn, Paul (Lab) Newport West Crown 1 1
Sub PO 15 16
Newport West Total 16 17
Garnier, Edward
(Con) Harborough Franchise I 3 3
Sub PO 11 11
Harborough Total 14 14
Glindon, Mary (Lab) I North Tyneside Franchise I 2 2
Local 1 1
Sub PO 18 18
North Tyneside Total 21 21
Merthyr Tydfil and
Havard, Dai (Lab) Rhymney Crown 1 1
Sub PO 22 23
Merthyr Tydfil and Rhymney Total I 23 24
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Hepburn, Stephen
(Lab) Jarrow Franchise I 1 1
Sub PO 13 13
Jarrow Total 14 14
Arundel and South
Herbert, Nick (Con) I Downs Outreach I 1 1
Sub PO 27 28
Arundel and South Downs Total 28 29
Jackson, Glenda Hampstead and
(Lab) Kilburn Crown 3 3
Main 1 1
Sub PO 7 7
Hampstead and Kilburn Total 11 11
Jones, David (Con) Clwyd West Franchise I 1 1
Outreach I 10 10
Sub PO 21 22
Clwyd West Total 32 33
Knight, Greg (Con) East Yorkshire Crown 1 1
Outreach I 7 7
Sub PO 24 25
East Yorkshire Total 32 33
Leigh, Edward (Con) I Gainsborough Franchise I 2 2
Outreach I 12 12
Sub PO 26 27
Gainsborough Total 40 41
Letwin, Oliver (Con) I West Dorset Franchise I 1 1
Local 1 1
Outreach I 7 7
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[SubPO [31 4 35
West Dorset Total 40 4 44
Lord, Jonathan
(Con) Woking Franchise I 1 1
Sub PO 9 1 10
Woking Total 10 1 11
Lumley, Karen (Con) I Redditch Crown 1 1
Sub PO 9 9
Redditch Total 10 10
Milton, Anne (Con) I Guildford Crown 1 1
Local 1 1
Sub PO 15 15
Guildford Total 17 17
Munt, Tessa (LD) Wells Franchise I 2 2
Outreach I 3 1 4
Sub PO 21 2 23
Wells Total 26 3 29
Osborne, George
(Con) Tatton Franchise I 1 1
Outreach I 1 1
Sub PO 15 15
Tatton Total 17 17
Patel, Priti (Con) Witham Local 1 1
Outreach I 1 1 2
Sub PO 18 18
Witham Total 20 1 21
Rutley, David (Con) I Macclesfield Crown 1 1
Sub PO 12 2 14
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Macclesfield Total 13 2 45
Simpson, Keith
(Con) Broadland Outreach I 1 5 6
Sub PO 31 5 36
Broadland Total 32 10 42
Stewart, lain (Con) Milton Keynes South Franchise I 1 1
Sub PO 12 12
Milton Keynes South
Total 13 13
Stuart, Graham Beverley and
(Con) Holderness Crown 1 1
Outreach I 2 2
Sub PO 28 1 29
Beverley and Holderness Total 31 1 32
Tyrie, Andrew (Con) I Chichester Crown 1 1
Local 1 1
Outreach I 4 1 5
Sub PO 23 3 26
Chichester Total 29 4 33
Wyre and Preston
Wallace, Ben (Con) I North Crown 1 1
Outreach I 2 2
Sub PO 16 3 19
Wyre and Preston North Total 19 3 22
Willott, Jenny (LD) Cardiff Central Crown 1 1
Main 1 1
Sub PO 8 1 9
Cardiff Central Total 10 1 11
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Wood, Mike (Lab) Batley and Spen l Sub PO 12 1 13
Batley and Spen Total 12 1 13
Wright, lain (Lab) Hartlepool Crown 1 1
Sub PO 11 11
Hartlepool Total 12 12
Grand Total 732 45 777
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10. Cases in MPs Constituencies
10.1 Shoosmith Cases
3 of the 5 Shoosmith cases formally notified to POL fall within the constituencies of one of the 37 MPs due to attend the meeting:-
Branch iSubpostmaster IConstituency IMP. Party
lAiderley Edge PO Scott Darlington fratton George Osborne _Iconservative
IAstwood Bank PO julian Wilson Redditch Karen Lumley [Conservative
Merthyr Tydfil PO Lynne Prosser Merthyr Tydfil and [Dai Havard Labour
Rhymney
Scott Darlington
SPM was appointed on 25 March 2005.
Audit carried out on 12 February 2009. SPM suspended for inflating on-hand cash declarations by c.£44k.
Pleaded guilty to 5 counts of false accounting based upon cash declarations made between September 2008 and February 2009.
Debt of c.£44k remains outstanding in full.
Letter before action sent by Shoosmiths on 16 August 2011. It is alleged by the SPM that he was compelled to make the false declarations by virtue of economic duress and
that the offences resulted from the unfairness of the system devised for use by SPM’s and/or as a result of errors generated by the Horizon system itself. As a result, the
SPM claims that POL was not entitled to terminate his appointment and consequently POL is liable for the wrongful termination of his contract. The SPM claims damages of
c.£150k.
It is alleged that (a) the training provided was inadequate, (b) the helpline provided by POL was unfairly difficult to access due to both its hours of operation and the
insufficiency of operators to deal with the level of demand placed on the service, (c) the Horizon system suffers with inherent defects and/or an unfair system of operation
and (d) the standard operating procedures used by POL make it impossible to properly reconcile errors.
Liability has been denied on the basis that the SPM can have no claim for wrongful termination in circumstances where he has committed fraud. POL has not responded to
each individual allegation.
There has been no correspondence on this matter since December 2011.
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There are no live court proceedings in play.
Julian Wilson
- SPM was appointed on 6 November 2002.
- In or around May 2003 an audit took place. A small discrepancy was found and made good.
On 11 September 2008 a further audit took place. The auditors were advised that there would be a shortfall of c.£27k. A shortfall of £27,811.98 was identified and the
SPM was suspended.
+ On 15 June 2009 the SPM pleaded guilty to two charges of false accounting. He was made subject to a confiscation order and the debt has been paid in full.
- Letter before action sent by Shoosmiths on 23 August 2011. The issues raised in that letter are more or less identical to those set out in Darlington.
+ Liability has been denied on the same basis as in Darlington.
- There has been no correspondence on this matter since December 2011.
: There are no live court proceedings in play.
Lynne Prosser
+ SPM between June 1997 and 7 July 2005. Prior to this she had been an employee of POL working as a cashier and substitute / relief manager in a Crown PO.
It appears that the branch was audited on 23 September 2004. The total amount of the discrepancies stood at £425k. She was suspended and ultimately terminated by
letter dated 19 January 2005.
+ The SPM was interviewed under caution in respect of allegations of theft. It does not appear that any criminal proceedings were commenced.
- The SPM appealed the decision to terminate her contract and it appears that she was re-instated, albeit she remained on suspension. It also appears that POL wrote to
her on 30 June 2005 inviting her to resign, which she did on 14 July 2005.
- Court proceedings were commenced in June 2011 and served on POL in October 2011. A letter before action was served on 23 December 2011. The allegations made are
in almost identical terms to the claims made in both the Darlington and Wilson cases.
This claim has been struck out on the basis of procedural error and the SPM is now time barred from bringing any future claims.
10.2 MPs Correspondence Cases
Edward Leigh MP re Shirley Rayner at Glentham
o Mrs Rayner was appointed on 27 September 2007
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She received five days classroom training and six days on-site support
Mrs Rayner wrote to Lynn Hobbs on 15 April 2008 regarding 3 x Transaction Corrections she had received for £100 each and provided evidence to support these
She also alleged that there was a lack of support when challenging TCs — no mention was made about the Horizon system at this time
Her letter was passed to Shaun Turner in the Network Coordination Team who passed the matter to Chesterfield for resolution
Mrs Rayner wrote in again in July 2008, December 2008 and February 2009 to say that she hadn’t received a response
Sarah Howard contacted Mrs Rayner in December to apologise as Shaun Turner had been led to believe that the matter had been resolved when it had first been
raised
© A full response was sent to Mrs Rayner on 27 March 2009 along with a cheque for £100 as a refund of one of the TCs (she admitted the other two were probably
her error)
© Further letters were sent to Mrs Rayner by P&BA in May 2009 regarding £150 in missing Savings Stamps; the letters imply that Mrs Rayner was abusive during her
phone call which was then terminated by the operator
Mrs Rayner was precautionary suspended on 17 August 2009 due to a £2,132.68 shortage at audit
We were unable to appoint a temporary subpostmaster therefore the office remained closed
Mrs Rayner admitted inflating the cash on hand figures at the time
Mrs Rayner resigned to avoid termination on 23 August 2009; Karen Arnold was the Contracts Manager dealing with the case
In Mrs Rayner’s resignation letter she stated that she had a lack of confidence in the Horizon system; that requests for assistance with discrepancies & TCs had
been refused and she had been told to sort matters out herself; requests for additional training had been turned down and that a lack of ongoing support from
POL had caused her considerable stress and had a detrimental effect on her business and family life. Mrs Rayner asked that all the equipment be removed as the
premises were not available for continued use as a post office®
© Mrs Arnold acknowledged the resignation letter on 25 August 2009
The branch was closed and defunded on 27 August 2009
© Afurther letter was received from Mrs Rayner on 8 September 2009 stating her disappointment with Mrs Arnold’s response as it did not address the reasons for
her resignation; nor any reference to the hard work she had put in at the branch. Mrs Rayner also claimed that she was entitled to a three-month notice period;
she also requested a breakdown of the auditor’s findings, particularly in relation to the missing cheque and stock.
oA full response was sent on 23 September 2009
oA further letter was received by Mrs Rayner on 14 October 2009 stating that she had called the NBSC and had been told to sort things out herself. Mrs Rayner also
reiterated that she should receive a three-month notice period and was, therefore, entitled to three months’ pay
o Aresponse was provided on 28 October 2009
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Rt Hon George Osborne regarding Mr Walters at Hockley
o Mr Walters took over Hockley Post Office® branch on 4 May 2004 but didn’t open until the following morning
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Mr Walters had five days classroom training and six days on-site support
A post appointment visit conducted on 10 June 2005 identified a gap in the spmr’s knowledge regarding balancing
Ad hoc training was arranged to cover balancing and cash accounts
Delivery staff at the office raised security concerns in August 2005 due to the numbers of remittances being received via special delivery
Janet Walters confirmed that this was due to the office being a pre-order office for currency so they were having a few special deliveries coming through for this;
she also said the office had ordered additional cash due to making more cash payouts
The office was advised to check their planned orders and increase the delivery amount this way
© Asecond post appointment visit on 1 August 2005 stated that the cash and suspense accounts were ok and that the person visiting had shown the subpostmaster
the correct way to declare cash each night and instructed him on dealing with error notices
© Spmr placed a contact request with the NBSC on 15 November 2007 to discuss discrepancies on his balance from June 2006. The BDM, Julie Pollard, had already
sorted the matter out when the branch was contacted
Mr Walters was suspended on 29 November 2007 and a suspension letter was sent to him on the same day by Paul Williams, Contracts Manager
Mr Walters was suspended due to a £14,136.47 shortage at audit
The branch re-opened on 30 November 2007 with a temporary spmr
Michael Haworth, Contracts Manager, was asked to take on the conduct case on 11 December 2007
Aletter was sent to Mr Walters on 15 January 2008 asking Mr Walters if he wanted a personal interview to discuss the issues — a response was required by 25
January 2008
Mr Walters replied on 18 January 2008 requesting an interview
co A further letter was sent to Mr Walters on 22 January 2008 inviting him to interview on 1 February 2008 at Stockport Area Office; Mr Walters confirmed he would
be attending on 30 January 2008
© Mr Walters made a contact request via the NBSC on 23 January 2008 saying he needed to check some figures that Michael Haworth had given him; this was sent
to Michael for response
© Mr Walters returned a signed copy of the interview notes on 7 February 2008
© Aletter was sent to Mr Walters on 14 February 2008 terminating his contract on the grounds of falsifying post office accounts and failing to make good losses. Mr
Walters was given the opportunity to appeal the decision but had to do so by 29 February 2008
© Asno appeal request was received Michael Haworth sent a letter to Mr Walters on 6 March 2008 advising him that he had lost his right to appeal and asking Mr
Walters his intentions regarding the use of his premises
©. Mr Walters wrote to Michael Haworth on 8 March 2008 saying that he disagreed with the decision to terminate his contract and that when he took over the
branch he was vetted and found to have no criminal record; he also sent a list of grievances and disputes
o Michael Haworth replied on 17 March 2008 stating that Mr Walters’ case had been dealt with in line with NFSP procedures. Mr Haworth also stated that an
independent investigation was being conducted, separate to the conduct case, by Steve Bradshaw, with regard to the criminal issues and outstanding monies
0 The branch closed on 17 September 2008 under the Network Change Programme
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o Arequest was made on 29 September 2009 by Clive Burton, Former Agents Debts, for a copy of the “acknowledgement of employment” slip signed by Mr Walters.
at the time of his appointment. Clive’s email stated that the matter had been referred to Legal Services due to a large deficiency in Mr Walters’ accounts and the
fact that no proposal for repayment had been made
o The letter sent by Michael Haworth on 15 January 2008 states that Mr Walters “admitted inflating the cash on hand figure by £3,400 for the previous two trading
periods, and entering a fictitious £5,500 outward rem onto Horizon on 7 November 2007”. Mr Walters had also been charged with declaring his stock incorrectly
in his 28 November 2007 trading statement and had made 63 entries for spoilt postage
© Issues were raised in July 2006 regarding the mails integrity letter that was sent out; the spmr made a contact request for someone to explain the letter to him.
The Helpline subsequently talked him through how to do the mail compliance and print off the relevant receipts
o The BDM, Julie Pollard, had concerns about the temporary spmr and terminated his contract when he went on holiday on 22 February 2008. As no other
temporary spmr could be found at the time the office was due to be temporary closed and defunded on this date
© Atemporary spmr was found to run the branch and transferred to him on 22 February 2008
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