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POLTD/1011/0164
OFFENCE (s)
1. Theft - Contrary to Section 1 (1) of the Theft Act 1968
2. False Accounting - Contrary to Section 17 (1) of the Theft Act 1968
3. Fraud by false representation (Fraud Act 2006 — Section 2)
4. Fraud by failing to disclose information (Fraud Act 2006 —
Section 3)
5. Fraud by abuse of Position (Fraud Act 2006 — Section 4)
Name: Joan Francis BAILEY
Rank: sub office assistant Identification 1
Code:
Office: Howey FAD Code 158 644
Age: ! GRO Hl Date of Birth:
Service: 5 years 5 Date Service 05 November 2005
months Commenced:
Personnel Printout: At Appendix: C
Nat Ins No:
Home Address:
Suspended: Suspended on the authority of Colin Burston -
Contract Manager
To be prosecuted by: Royal Mail Group (including Post Office Ltd)
Designated Prosecution David Pardoe, Senior Security Manager Fraud
Authority: Team
Discipline Manager: Colin Burston - Contract Manager
Corporate Security
Criminal Law Team
These papers refer to a shortage in the accounts at Howey Post Office
branch. Mrs Joan Francis BAILEY the identified person named in the pre
amble of this report is a sub office assistant. The sub postmaster is
Lawrence Glyn Bailey (her husband) and there are no other members of
staff employed.
The personnel file and P356 data was requested and can be found in
Appendix C at the rear of this file.
The stakeholder notification was prepared and sent to the Stakeholder. I
have also spoken with the Stakeholder and advised him of the current
situation.
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The branch is a small rural Post Office branch situated in mid-Wales and
the retail side consists of a small General Store. The branch also
operates an ATM machine.
An audit was undertaken at the branch on 5°? January 2011 and conducted
by Judy BALDERSON, Field Support Advisor of the Network Support Field
team. The purpose of the audit was to verify financial assets due to Post
Office Ltd®. At the end of the audit a report was produced detailing the
findings at Howey Post Office branch (JB/2).
The auditor arrived at the branch at approximately 08:15 am and
introduced herself to the sub postmaster who allowed her access to the
secure area. During the course of the audit either the sub postmaster, Mr
BAILEY or his wife Mrs BAILEY was present whilst the audit was carried
out.
The sub postmaster, Mr BAILEY was asked for the Post Office cash and
stock and he handed over a plastic crate from the safe. When Ms Balderson
commenced counting then notes, she became aware that there were
insufficient cash. Mr BAILEY asked how much the cash was short and was
informed approximately £11,700. He stated that he would go and fetch his
wife.
Mrs BAILEY admitted to Ms BALDERSON, that there was no more cash and she
knew it was short. She stated that she had found discrepancies when
balancing, which she could not find so had inflated the cash rather than
tell her husband. She said that she knew it was wrong and the cash had
been inflated over a period of several months. An account of this
conversation was written down and signed by Mrs BAILEY as a true record
(JB/1) .
The branch operates a single stock unit (AA) for counter services and
there is a stock unit for the ATM. The Office snapshot indicated cash of
£23,617.36 (SB/7) was in the branch and a copy of the last cash
declaration (SB/6) done by the branch showed £23,626.96 was the amount of
cash declared as being in the branch.
A P32 balance was constructed and the physical cash on hand was checked
against the declared cash on the Office snapshot.
The breakdown of the Audit findings is set in the table below.
Amount Comment
£ 12,756.62 (-) Identified as a shortage difference in the cash
figures
£ 50.99 (-) I Identified as a shortage difference in cheque
on hand figures
£ 652.37 (-) Identified as a shortage difference in the
stock figures
£ 7538.80 (+) I Identified as a surplus difference in the
postage figures
£ 78.05 Identified as a shortage difference in the
(-) foreign currency figures
£ 45.00 Other (Voucher to CRU no supporting
(-) documentation)
£ 13,044.23 Total Shortage
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The Contract Manager, Mr Colin Burston made a decision to precautionary
suspend Mrs BAILEY. No transfer to an interim sub postmaster was to take
place and the branch was closed pending defunding.
Mrs BAILEY was contacted on 24 January 2011 and agreed to attend a
voluntary taped interview under caution but wished to seek Legal
Representation. She said that she was seeing her solicitor on 9 February
2011.
On 11 February 2011 I spoke with Andrew TENCH of Terry Jones solicitors
of Shrewsbury and an interview was arranged for Wednesday 9‘ March 2011.
On 9" March 2011 I attended at Shrewsbury Mail Centre accompanied by my
colleague, Helen DICKINSON, Fraud Investigator. We introduced ourselves
to both Mrs BAILEY and Mr TENCH and our identity cards were shown. The
reason for the interview had previously been explained to Mrs BAILEY and
Mr TENCH.
Interview with Joan Francis BAILEY
At 12.32 I interviewed Mrs Joan Francis BAILEY at Shrewsbury Mail Centre
Castle Foregate Shrewsbury SY1 1AA. Present throughout the interview was
Mrs Helen DICKINSON Fraud Investigator. Mrs BAILEY requested the presence
of legal representation and Gareth BLAIR (Solicitor) attended on her
behalf. Form GS001 (Identifying Mark SB/1) was completed, signed and
dated by Mrs BAILEY and is associated at Appendix B. Mrs BAILEY declined
the offer of having a friend present. Form GS003 (Identifying Mark SB/2)
was completed, signed and dated by Mrs BAILEY and is associated in
Appendix C.
The interview was taped recorded, covered three tapes and sealed with
master tape seals 070837, 07838 and 070839 (SB/10, SB/11 and SB/12). A
typed tape summary (SB/13, SB/14 and SB/15) has since been prepared, a
copy of which is now at pages ..11 to 37.. The working tapes are associated
in Appendix B of this file. I have retained the Master Tapes. A notebook
entry of the interview was made and is associated in Appendix B of this
file (Identifying Mark SB/9).
At the beginning of the interview Mrs BAILEY was asked for an explanation
on what happened on the day of the audit. She explained tha
and her husband told her there was a problem in the Post Offi
that she went down to the Post Office and the auditor stated that there
was a shortfall in the cash. Mrs BAILEY then said that she admitted to
the auditor that she had been inflating the figures because she knew.
GRO
Mrs BAILEY said that at her interview with Mr Colin BURSTON, the Contract
Manger, she said they had been having losses in the Post Office since
early 2010 and that she had been putting money in to cover the losses but
had reached a point where her bank accounts had been drained.
The note made by Judy BALDERSON (JB/1) was read out and Mrs BAILEY
confirmed that it was her signature and that she had stated the cash had
been over declared for several months to cover balancing shortages and
the amount was approximately £11,700.
Mrs BAILEY was asked when she first experienced shortages and said that
they began in May 2010 and confirmed that she balanced the accounts at
the end of the Branch Trading Period rather than on a weekly basis.
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She said that her initial loss was approximately £1,300 but by July
it was £3,000. She then said that in August 2010, she borrowed money
r to make good discrepancies and the accounts were then
correct. Mrs BAILEY said that it was after this BTS is when the money on
hand was inflated. However she then said that the branch migrated onto
Horizon Next Generation in July 2010 and the accounts were straight. Mrs
BAILEY was asked to clarify which Trading period, July or August was the
last time the BTS was correct. She could not give definit Mrs
icitor then pointed out that she has!” i
Mrs BAILEY confirmed that she was saying that from August 2010 to the day
of the audit on 11 January 2011, just over £12,000 in cash has gone
missing from the Post Office.
Mrs BAILEY then explained that she was responsible for producing the
Branch Trading Statement (BTS) for Howey Post Office branch and her
husband looked after the satellite branch. She confirmed that she
physically counted the cash on a daily basis and declared it on the
Horizon system. She further explained that when performing the monthly
balancing, she would run off a balance snapshot and check the cash and
stock against the balance snapshot.
Mrs BAILEY then admitted that she produced a BTS by inflating the cash on
hand figures. She stated that she inflated the cash figures across all
denominations rather than just inflating the cash figure of one
denomination. She confirmed that she knew it was wrong to do this and
that she had falsified the accounts.
Mrs BAILEY confirmed that she did not contact anybody about these losses
and did not want to tell her husband. She also confirmed that she did not
mention anything when the branch transferred onto Horizon Next generation
(HNGX) .
Mrs BAILEY was asked how she balanced between May 2010 and August 2010.
She explained that she made good any losses by using the money from her
own accounts and money she borrowed
Mrs BAILEY confirmed that she was forewarned that the cash would be
checked by the HNGX team and this is why she borrowed £9,000 from her
daughter. She said that she put approximately £6,000 back into the Post
Office accounts.
Mrs BAILEY was asked to clarify what amounts she had put in to make good
losses from May 2010. She explained that for the approximate shortage of
£1,300 in May 2010, she put in £300 and carried £1,000 over to the next
balancing period. In effect she was “rolling” all or part of the losses
each month. She said that she could not account for the sudden increase
in the losses in July 2010. However stated when the branch migrated onto
HNGX, the cash was correct.
Mrs BAILEY was asked if she had received any Transaction Corrections
(TC's), she replied that she had quite a few the previous year but could
not recall any large amounts.
It was at this point that she said that she believes there may be
problems with the Horizon system and then went on to explain in detail
how she wrote out a cheque for £59.95 to “make good” a discrepancy, it
did not show up on the system, but she sent the cheque away but never
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received a transaction correction. Therefore as she had sent off two
cheques she knew there was a glitch with the system.
The merits of the Horizon system were discussed and it was explained that
in a number of court cases the integrity of the Horizon system had been
questioned, however nothing had been proven in court by expert witnesses
that any of the discrepancies were as a result of failings within the
Horizon system.
Mrs BAILEY confirmed that she had worked in the Post Office for five and
a half years and believed that she was competent in performing all duties
and transactions required to run the Post Office branch.
The tape came to an end and new tapes were inserted and the interview
continued.
GRO
Mrs BAILEY stated that she had always managed the Post Office throughout
her Jand had had no time off since 2009. She also said that her
husband was not interested in the Post Office and she also believes that
her problems were a combination of tiredness and stress.
Mfrs BAILEY was asked why didn’t she report the losses or ring the help
desk. She replied that if she rung the helpdesk, she would have to tell
her husband. She then went on to explain that two years previously she
had lost a remittance of £11,000. She said that she was on her own that
day and put the remittance under the counter and she had her basket that
she put the scrap paper in and that she must have thrown the money out
with the waste paper. She said she contacted the helpdesk on this
occasion and they had finished repaying the money in November 2010.
The interview was recapped to Mrs Bailey.
Mrs BAILEY denied using any Post Office Ltd money to repay the loan back
to her daughter. She then went on to explain why £ ent her
the money and also said they had put the Post Office up for sale last
year (2010).
Mrs BAILEY was asked about the Transaction Corrections and said that they
mostly related to cheques that had either bounced or had not been
received for clearance.
Mrs BAILEY still maintained that it was a system fault. A discussion took
place stating that every key stroke is recorded and if the person
operating the system fails to conduct the transaction correctly then it
cannot be a system fault.
Mrs BAILEY then said that she printed Horizon transaction logs but could
not identify any possible errors. She then confirmed that each time that
she was short in the balance, she printed a transaction log. She checked
these logs and could not identify any transactions that stood out as not
being “normal”.
After a further discussion concerning the checking of transaction logs
and no mis-keyed amounts had been entered onto the Horizon system, Mrs
BAILEY confirmed the system had recorded whatever key strokes that she
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had made, for example if £600 had been entered, then £600 appeared on the
transaction log, it had not increased to £6,000 or decreased to £60, nor
had any fictitious entries been identified.
The tape came to an end and new tapes inserted and the interview
continued.
Mrs BAILEY was then shown a Horizon print out cash declaration (SB/6)
this was the amount of £23, 7626.96 was the cash declared by her on the
4 January 2011. She admitted that this was not a true amount and the
figures had been inflated.
Mrs BAILEY was then shown a balance snapshot (SB/7), that was printed out
by the auditor on 5° January 2011. This showed the amount of cash that
should be in the branch as £23,617.36 and there were no discrepancies.
She admitted that this was also a fictitious figure.
Mrs BAILEY was then shown a balance snapshot (SB/8), that was printed out
by the auditor on 5‘* January 2011 showing the cash on hand is
£12,608.04, with a discrepancy in the accounts of £13,044.23.
Mrs BAILEY was then shown the BTS for TP 06 (SB/3), TP 07 (SB/4) and TP
08 (SB/5). She admitted the cash on hand figures of £28,997.68 (TP 06),
£20003.26 (TP 07) and £18,497.89 (TP 08) were all inflated figures and
had been inflated to achieve a balance,
The interview was summarised to Mrs BAILEY and she agreed that by
inflating the cash to create an incorrect impression of the balance she
had benefited by the fact that she was able to continue with the business
and the Post Office for longer than she would have otherwise expected to
have.
Mrs BAILEY was asked when the money could be repaid and replied that she
had not idea and that she would have to discuss it with her husband.
Mrs BAILEY was informed that she may have rendered herself liable to
prosecution and was given the second caution. She was also given the
opportunity to clarify anything that she had said during the interview or
add anything, but declined the offer.
The tape machine was switched off.
A search was not undertaken as prior to the interview Mrs BAILEY
requested a change of location for the interview due to the cost involved
for her in having legal representation at the original location. The
matter was discussed with David PARDOE, Senior Security Manger and due to
the increased travelling costs, time and the amount of time elapsed since
the audit, permission was give for a search not to take place.
Mrs BAILEY did give permission for Authority for Bank Disclosure of
Information and completed the relevant Gs045 forms.
To summarise:
> Mrs BAILEY has admitted inflating her cash to cover the
discrepancy.
Mrs BAILEY has admitted falsifying the branch accounts.
Mrs BAILEY denied stealing any funds belonging to Post Office Ltd.
Mrs BAILEY co-operated throughout the interview.
VVV
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NPA and antecedent forms have been completed and copies are associated at
Appendix C.
Business and Procedural weakness’
“ Accounts were not kept in the form prescribed by the Operation
Manuals.
“ BTS Shortages were rolled over from one balance / trading period to
the next balance / trading period.
Since the interview, Mrs BAILEY has sent a letter dated 14 March 2011. In
this letter she states they are beginning the process of selling their
house and will repay the outstanding amount when they have sold the
IRRELEVANT
_ Copies oF the
letters can be found in Appendix C of this file
In Conclusion
Mrs BAILEY is a married woman living with her husband who is the
nominated sub postmaster of Howey Post Office branch. Her husband became
sub postmaster in November 2005 and Mrs BAILEY ran this branch whilst her
husband looked after the satellite
Mrs BAILEY made admissions that she had inflated the cash for a five
month period but denied theft. She could not explain the shortfall in the
cash on hand at the branch but thought the losses were linked to faults
within the Horizon system; however she could not produce any evidence to
satiate her claim.
Mrs BAILEY completed the bank authority forms (GS045) and since the
interview has sent a letter outlining her proposals for repaying the
outstanding amount.
Copies of all documents or exhibits mentioned in this report can be found
contained within the appropriate Appendix of this file, the originals are
held at this office. This report in addition to the summary tape
transcripts has been sent electronically to Casework Management Team.
An abridged version of this report has not been produced for the
discipline manager. Mr BAILEY the sub postmaster resigned to avoid
termination by letter on 11 March 2011
Whilst a Prima Facia case for False Accounting - Contrary to Section 17
(1) of the Theft Act 1968 or Fraud by false representation (Fraud Act
2006 - Section 2) could be established against Mrs BAILEY it may be
prudent that when all circumstances are considered and the explanation
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offered by Mrs BAILEY at interview that if all monies are repaid to Post
Office Ltd then consideration may be given to issue a caution in this
instant.
This report is submitted for the present position to be noted and for
consideration as to whether the evidence is sufficient to support a
prosecution. No doubt the file will be returned in due course with the
next appropriate course of action to be taken.
Stephen Bradshaw
Fraud Investigator
Post Office Ltd Security Team
11 April 2011
Ds Royal Mail House 3" Floor Clippers Quay Salford M50 3NW
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