In the Crown Court at Dudley
R -y- Carl Adrian Page
Expert Accountant’s Report of David Liddell
16 May 2005
Prepared by: David Liddell BSc ACA
Chartered Accountant
Position and firm: Partner
‘T.2004/7026
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Contents
Page
1 Introduction .
The Write:
Summary of the Case.
My Instructions .......
Documents on Which I Have Relied.
Other Matters ..
2 Summary of my Findings and Conclusions...
3 Foreign Currency Handling Procedures at Rugeley Post Office.........
4 My Analysis of The Evidence
S My Findings ..scsssscsssssssssesnes
6 Theft of £282,000..
Mr Page's explanation
My Investigation .
Key Findings...
7 Expert's Declaration.
Appendices
Curriculum Vitae of David Liddell
List of Documents
Commission and Revaluation Summary P4833
Spreadsheet of Euro transactions
POL audit report 15 January 2003
HORIZON snap-shot print 14 Jannary 2003
Foreign Currencies Discrepancies schedule (MP/6)
Analysis of Euro deliveries and sales
Sales of Euros per FM in the period 1 July 2002 to 13 January 2003
“QS OO ap
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1 Introduction
The Writer
Li Tam David Liddell. I am a Forensic Services Partner with PKF. I am an associate of the
Institute of Chartered Accountants in England and Wales. Full details of my qualifications
and experience entitling me to give expert evidence are in Appendix A. I have prepared this
report with the assistance of Konrad Rutkowski, a Chartered Accountant and manager in PKF,
who has worked under my direction and control. The opinions given in this report are my
own.
Summary of the Case
12 The two defendants, Carl Adrian Page (“Mr Page”) anc H
are charged jointly with conspiring to defraud Post Office Limited (“POL”)
etween March 2002 and January 2003. Mr Page alone is charged with theft within the same
period of £282,000.
13 Mr Page was sub-postmaster at Rugeley Post Office in Staffordshire which offered Bureau de
Change facilities on demand to customers.
Change and purchased significant amounts of Irish Punts then Euros. The allegation against
Mr Page is that he conspired to defraud POL by offering favourable exchange rates to his co-
defendant.
was a customer of the Bureau de
14 The charge of theft of £282,000 against Mr Page follows the conclusions of a POL audit on 14
January 2003 that a sum of £282,000 of foreign currency was missing from Rugeley Post
Office.
My Instructions
LS I have been instructed by Messrs Frisby & Co, solicitors for Mr Page, to review the
locumentation in this case and prepare a report on the Bureau de Change transactions with Mr
[GRO land to compare my findings with those in the Prosecution witness statements and
exhibits.
1.6 A considerable amount of evidence in this case comes in the form of printouts from the Forde
Moneychanger (a machine which performs currency conversions whilst also having an
accounting function) ("FM") and the Horizon computer system at Rugeley Post Office.
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18
19
1.13
Specifically, I am instructed to
(a) Examine all original documents used in the preparation of the Prosecution schedules;
(b) Examine FM documentation;
(c) Examine Horizon documentation;
(d) Compare our own calculation to those of prepared by the Prosecution;
(©) Examine the auditing methods used by the Royal Mail Group, in particular the audit
work carried out that concluded that £282,000 was missing at Rugeley Post Office;
(f) Review Mr Page’s personal accounts to show the extent to which he profited from the
alleged fraud.
Jn section 2 of this report I set out a summary of my comments and conclusions on the case. I
set out my detailed findings in sections 3 to 6.
Documents on Which I Have Relied
A list of the documents on which I have relied is in Appendix B.
Unless presented with evidence to the contrary, as there is no allegation of falsified or forged
documentation in this case, I am instructed to assume that the documents disclosed to me are
genuine.
Other Matters
Thave not carried out an audit, nor have I independently verified any of the information with
which I have been provided. This report should not be construed as expressing opinions on
matters of law, although it necessarily reflects my understanding thereof.
I understand that it is not part of my duties as an expert to make findings of fact and these will
be a matter for the Court in due course. I am aware that if the Court makes findings of fact
that are different from those I have assumed my conclusions may be invalid and may need to
be revised.
I understand that this report will be made available to the prosecution. It has been prepared for
use in this action. In all other respects, this report is confidential. It should not be used,
reproduced, or circulated for any other purpose, in whole or in part, without the prior written
consent of PKF. Neither PKF nor I accept any responsibility to third parties for breaches of
this obligation, or for any opinions expressed, or information included, within this report.
PKF Introduction 2
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21
2.2
23
24
25
2.6
Summary of my Findings and Conclusions
{ have examined the Euro transactions of the Bureau de Change at Rugeley Post Office
throughout the indictment period.
In total I have identified:
° 119 transactions confirmed on FM till rolls show that
12,209,600 Euros and US dolla
had been used,
(paragraph 5.6).
purchased
for £7,339,366. If the correct RETAIL SELL RATES
should have paid £7,988,957, a difference of £649,591
e An additional 20 cheques fro:
included above due to missing FM till rolls.
purchased with these cheques is not known (paragraph.5.8)
totalling £1,111,476 that are not
‘onsequently the precise number of Euros
The prosecution identify (on MP/S) 110 transactions witl
period, excluding the transaction dated 13 January 2003. The total of Euros purchased by Mr
with these transactions is €11,772,450 for which he paid £6,725,340. By my
calculation, if the correct exchange rates had been applied, GRO Iwould have paid
£7,318,142, a difference of £592,802 (paragraph 5.9).
In the majority of cases Euros were sold tof lat a rate just below the rate at
which they were booked into the FM (RETAIL BUY RATE), giving POL a small profit when
measured against the Retail Buy Rate (paragraph 5.10).
In my opinion it is possible that Mr Page was not aware that the Retail Buy Rate was itself a
6% devaluation from the Wholesale Buy Rate at which POL purchased the foreign currency,
details of which are set out in paragraphs 3.19 to 3.32 of this report. As such Mr Page might
have believed that the transactions with: generated a small overall profit for
POL.
On the matter of the theft charge, a key question is whether Mr Page could have built up a
significant ‘AM’ stock of Euros of around €456,000 (£282,000 converted at €1.62) which the
prosecution allege that he stole. I have examined evidence of the deliveries of Euros to
Rugeley Post Office throughout the indictment period and compared them to:
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@ the payments by:
sales; and
for Euros and a normal underlying level of Euro
Gi) the FM Command 10 printouts of all Euro sales by Rugeley Post Office.
2.7 Both these analyses indicate that a surplus of Euros of approximately €456,000 could not
physically have been built up in the ‘AM’ stock or elsewhere. All the Euros delivered to
Rugeley Post Office were entered into FM and my analysis shows that sales of those Euros
match, or exceed, the deliveries (paragraphs 6.45 to 6.49). This contradicts the findings of Mr
Manish Patel which form the basis for the theft charge against Mr Page.
2.8 I have also considered the possibility that timing differences account for the alleged shortfall
of ‘AM stock’ that is set out in Mr Patel’s schedule at MP/6 (Appendix G to this report). I
ave identified the possibility that a delay between the date that sales of Euros to Mr
ere entered on FM and the date he physically collected the cash could explain
‘the calculation of the alleged discrepancy.
29 The prosecution have relied on evidence of a difference between the amount of forcign
currency recorded on the Horizon system and the amount shown on FM in support of their
assertion that a surplus of £282,000 of Euros built up and was stolen by Mr Page from
Rugeley Post Office. It is my contention, based on my analysis of the deliveries and sales of
Euros, that no such surplus of Euros existed.
2.10 My examination of POL audit methods has been limited to the preparation of Mr Patel's
schedule alleging the £282,000 discrepancy.
241 [have not been provided with details of Mr Page's personal finances so I have been unable to
review the extent to which he may have profited from the alleged fraud. If I am provided with
this information before the trial date I may be instructed to prepare a supplementary report on
these matters.
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34
3.2
3.3
3.4
3.5
3.6
3.7
Foreign Currency Handling Procedures at Rugeley
Post Office
I set out in this section my understanding of foreign currency handling procedures at Rugeley
Post Office which I have obtained from reviewing the Bureau de Change Counter Operations
Manual, witness statements and discussions with Mr Page.
The following descriptions are of the procedures for handling cheque and cash foreign
currency transactions. Transactions using Traveller’s Cheques and debit/credit cards are not
described below as these are not relevant to the charges against Mr Page.
Foreign Currency Orders
Orders for foreign currency are placed by a telephone call or fax from the branch post office to
the National Secure Stock Centre (NSSC). If a fax is sent, an order form P5056 must be
completed. My understanding, if the order is placed by 2p.m., it will be delivered to the post
office the following morning.
Foreign Currency Deliveries
When the post office branch receives foreign currency from the stock centre in Hemel
Hempstead, it does so via a special delivery pouch conveyed by secure transport. Each pouch
will contain a maximum of £2,500 in foreign currency.
A delivery advice note is enclosed within the pouch which provides a breakdown of each type
of currency enclosed, the volume of currency and its sterling value based on the exchange rate
shown on the advice note. The exchange rate is the previous day's RETAIL BUY RATE, the
day the currency was ordered.
Recording Foreign Currency Transactions
‘The post office branch is then required to input the volume and exchange rate of each currency
into the Forde Moneychanger (“FM”), as detailed on the advice note received with the pouch.
FM is a foreign exchange calculator that performs a variety of functions:
- It calculates the value of foreign currency in sterling
- It prints a customer receipt
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3.8
3.9
- It keeps a running check on currency stock levels at the Bureau de
Change
It provides information for full daily and weekly accounting
When rates of exchange are entered, the electronic rateboard on display
in the Bureau de Change is updated automatically
‘The branch is advised by fax of the foreign exchange rates applicable each day which should
be received by 9am each day. Saturday rates are advised on Friday afternoon by 4pm. The
rates should be entered into the FM before the post office branch opens or as soon as the
information is received. Saturday rates should not be entered until Saturday morning. Once
the rates are entered, they will be displayed on the electronic rate board.
‘The rate sheets show exchange rates for transactions up to the value of £5,000. A special rate
for transactions over £5,000 can be obtained by contacting First Rate Travel Services (FRTS)
by phone.
Sales of foreign currency to a customer are performed on the FM. The appropriate currency is
selected and the amount of foreign currency required by the customer entered. The FM then
calculates the amount charged in sterling. At this point the transaction can be cancelled or
confirmed. If the customer wishes to continue, payment in sterling is taken from the customer
who is then given one part of the FM till roll receipt along with the foreign currency
purchased, The other part of the FM till roll receipt is placed in the Bureau de Change till.
Acceptable methods of payment include cash, cheque, banker’s drafts and building society
cheques and debit/credit cards. Cheques should be accompanied by a valid cheque guarantee
card and the cheque amount should not exceed this value.
At the close of each day, a COMMAND 3 (“COMM 3”) is to be performed on the FM. This
prints a report showing the transaction summaries for the day and the closing rate balances of
all currencies. The ‘Sterling Till Balance’ should be checked that it agrees with any sterling
cash and cheques on hand. The ‘note balances’ total for each currency should be checked that
it agrees with the currency on hand.
If the daily totals are agreed it is recommended that the transactions are cleared using the
‘Clear Daily Total’ prompt. The COMM 3 report should then be filed in the Bureau de
Change till until the end of the Cash Account week.
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Weekly Accounting
3.14 The cash account week runs from Thursday to Wednesday.
3.15 At the end of the cash account week, weekly printouts of all totals must be obtained from the
FM by printing a COMMAND 10 (“COMM 10") weekly summary.
3.16 The COMM 10 summarises the :
- Total sterling value of foreign currency held
- Revaluation total
- Commission total
Breakdown of sterling value held per each individual currency
3.17 The commission and revaluation total are then entered onto a ‘Commission and Revaluation
Summary P4833’ form. For an example, see Appendix C.
3.18 The revaluation amount taken from COMM 10 printout should then be despatched to FRTS
team in Chesterfield.
Explanation of the Revaluation Total
3.19 Mr Page’s understanding of the “Revaluation Total” is relevant in this case. The witness
statement of Hugh Stacey gives an illustration of the different exchange rates and seeks to
explain the “revaluation total”. For ease of reference, I reproduce below a diagram which Mr
Stacey exhibits to his witness statement.
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RETAIL
RATES
BUY
Wholesale Rate £95
Sell
£9 4.00%
SPOT - £100 1.00%
cence ee nee en cence ee eee eee ee ee 2.00% 8%
1.00%
2.00%
£101
BUY
£103,
SELL
3.20 With regard to the diagram above, Mr Stacey states:
“In terms of the illustration if we were to buy £100 from FRCS/FRTS, Post Office Limited
would buy this for £101, Upon receipt of the Post Office Network (Cash Centre) the £101
would be converted in value to £95 which represents the retail buy rate, this devaluation
looses the Post Office £6 in value which is held on its books at the central cash centre. If the
currency being held in the Post Office outlet was subsequently sold to a customer this would
be done at the retail sell rate, which in the illustration would be £103. In terms of the outlet
the revaluation within their accounts should show the full difference between the retail buy
and the retail sell rates, which in the example is £8. The true income eared from this
transaction is the difference between the revaluation on sale and the initial devaluation,
which is £8 minus £6 giving £2 income generated.”
3.21 i set out my understanding of the revaluation total below.
3.22 In March 2002, POL, in partnership with the Bank of Ireland, formed a joint venture company
to fund foreign exchange dealing within the Post Office network, called FRTS. This joint
venture provides foreign currency to the PO network.
3.23 On a daily basis POL buys currency from FRTS. This currency is bought at the
WHOLESALE BUY RATE for that particular day, which has been contractually agreed
between POL and FRTS reflecting the rate that currency can be sourced from the wholesale
currency market.
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3,24
3.27
3.28
3.31
Upon receipt by POL, all currency is converted from the WHOLESALE BUY RATE to the
RETAIL BUY RATE. This conversion involves the currency being devalued, on average by
6% of the currency’s value.
‘When the currency is delivered to the post office branches, it is entered onto the FM at the
RETAIL BUY RATE,
Currency is sold to Bureau de Change customers at the RETAIL SELL RATE, details of
which are provided to the post office branches on a daily basis by fax. The difference between
the RETAIL SELL RATE and the RETAIL BUY RATE is known as the RETAIL SPREAD
and represents the gross profit on the currency dealings. The retail spread is approximately
8% of the retail buy rate.
This RETAIL SPREAD is what generates the revaluation figure when performing a COMM
10.
However, as the currency has already been devalued by approximately 6%, the true gross
profit generated for POL is the difference between the RETAIL SPREAD and the initial
devaluation.
The witness statement dated 4 September 2003 of Mr Raj Kalsi states, “My basic
understanding of the revaluation figure on the COMM 10 is the profit or loss made by the
buying and selling of currencies at different exchange rates and the fluctuations of the
exchange rates during that week”.
At the time of his witness statement, Mr Raj Kalsi had been employed as a Product Support
Manager by POL for approximately 8 years and had been employed by POL for
approximately 15 years. His role involved providing operational expertise to POL for counter
procedures. He also provided content for the ‘Counter Operations Manual for Bureau de
Change on Demand’ in 1998.
Lhave been unable to identify a clear explanation or definition of the Revaluation Total from
the ‘Post Office Operators Manual ~ Bureau de Change on Demand’, copies of which are
provided to the sub postmasters. Similarly I can find no explanation in the manual of the
Wholesale Buy Rate, the Retail Buy Rate and the differences arising between the two.
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3.32 Mr Page states that he understood a positive revaluation total on COMM 10 to mean that
income and profit was being generated for POL. He was not aware that an initial devaluation
had occurred which, if taken into account, could turn a positive revaluation total into a Joss to
POL.
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4.1
4.2
4.3
4.3
4.4
4.5
4.6
4.7
My Analysis of The Evidence
To summarise and analyse the evidence of foreign currency dealings with
has been disclosed to me, I prepared a master spreadsheet of the transactions occurring during
the indictment period from March 2002 to January 2003.
A copy of the full spreadsheet is at Appendix D.
In the remainder of this section I describe in some detail the various columns and analysis
within the spreadsheet in Appendix D. In section 5 of this report I comment on key findings
arising from my analysis. In section 6 I comment on my analysis in relation to the alleged
theft by Mr Page of £282,000 from Rugeley Post Office. Column references below are to the
columms of data in Appendix D.
Column 1 ~ Delivery Date
This is the date of delivery of Euros to the Rugeley Post Office as per the prosecution schedule
LGH/04.
Column 2 ~ Euros delivered to Rugeley PO
This is the amount of Euros delivered to the Rugeley Post Office as per the prosecution
schedule LGH/04.
Colamn 3 — Wholesale Buy Rate
This is the rate at which POL has purchased the currency from FRTS and is obtained from
prosecution schedule LGH/05. The rate used is as per the delivery date in Column 1.
Column 4 — Rate transferred in per FM
This is the RETAIL BUY RATE, the rate at which the Euros have been entered in to the FM
once received at Rugeley Post Office.
Column 5 ~ Cheque Date
‘}for currency purchases from
The date entered onto the cheques written by!_
Rugeley Post Office.
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49
4.10
4ll
4.13
4.14
4.15
4.16
In certain instances, copies of the cheques were not available, or the photocopy was of a poor
quality and the date could not be recognised.
Column 6 ~ Transaction Date
‘The date of the sale of the currency to! These are taken from copies of the FM
till rolls, ‘The transactions were easily identifiable due to the large amount of currency
purchased.
Not all of the FM till rolls were however present, therefore there are several instances where
the information is not available.
Column 7 — Day
‘The day of the week applicable to the transaction date.
Column 8 ~ Time
The time of the transaction, as per the FM till rolls.
Column 9 — Cheque Number
The number of the cheque used in the currency transaction. If more than one cheque has been
used, these have been grouped together.
Column 10 - Amount
The amount of each cheque in pounds Sterling.
Column 11 - Euros Bought
The volume of Euros purchased in each transaction, taken from the FM till rolls.
Column 12 ~ Rate Applied to Mr Whitehouse
The rate at which Euros were sold tof in each transaction, taken from the FM
till rolls.
‘My analysis of the evidence 12
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Column 13 —Retail Sell Rate of £5K.
4.17 The rate at which the sale of Euros should have occurred. This information is taken from the
Prosecution schedule as no other evidence was available. Consequently I have been unable to
verify it. I have been provided with the daily fax sheets to Rugeley Post Office with the rates
for the various currencies, but this is only for transactions up to £5,000.
Column 14 - PO Euro Amount
4.18 This is the amount that would have paid if the RETAIL SELL RATE in
column 13 was used in the sale transaction i.e. Column 11 x Column 13,
Column 15 - Difference
4.19 This is the difference between Column 14 and the amount!”
(Column 10).
I actually paid
Column 16 - Cheque Sent
4.20 This is the date that Mr Page despatched +s cheques from Rugeley Post Office.
‘Mr Page has stated that he sent the cheques on a weekly basis following the end of the cash
week (Wednesday). I have assumed, therefore, that the cheques received cach cash week were
sent on the Thursday morning.
Column 17 - Cheque Cleared Bank
4.21 This is the date the cheques cleared the bank. The dates have been identified following a
review of the bank statements ot
Colomm 18
4.22 This is the number of days taken for the cheque to clear.
Column 19
4.23 ‘These are additional comments relating to each transaction.
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5.1
5.2
53
54
5.5
5.6
57
5.8
59
My Findings
Key Findings
In this section I set out my key findings and observations from my analysis at Appendix D.
The spreadsheet at Appendix D could not be completed fully due to the missing FM till rolis
for certain dates,
T have identified additional transactions with! GRO that were not identified by the
prosecution. [ have achieved this by reviewing those FM till rolls obtained from Mr
in person or from his vehicle or home following his arrest and by reviewing
copies of cheque payments to POL.
In total, in the period 9 March 2002 to 13 January 2005, I identified 119 transactions from the
FM till rolls.
I identified an additional 20 cheques frot ‘or the purchase of the Euros,
These cannot be matched to corresponding FM till roll transactions, as the till rolls are
missing. However these cheque payments are included on my spreadsheet.
The 119 transactions confirmed on FM till rolls show that [ I purchased
12,209,600 Euros and a small quantity of US dollars for £7,339,366. If the correct RETAIL
SELL RATES had been used, ould have paid £7,988,957, a difference of
£649,591.
For 7 of these transactions, the actual RETAIL SELL RATE is not known and, for the purpose
of this analysis, I have therefore assumed that the rate applied tof”
correct RETAIL SELL RATE. The volume of Euros sold during these transactions was
£411,500.
was the
The additional 20 cheques included above total £1,111,476. As the FM till rolls for these
transactions are missing, I do not know the precise number of Euros purchased.
The prosecution schedule (MP/S) identifies 110 transactions excluding the transaction dated
13 January 2003 and, over the indictment period, show th:
€11,772,450 for which he paid £6,725,340 to POL. By my calculation, if the correct exchange
rates had been applied,’ ‘would have paid £7,318,142, a difference of £592,802.
p KF Our findings 14
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SAL
In the majority of instances, the Euros were sold tt it a rate just below the rate
at which they were booked into the FM (RETAIL BUY RATE), giving POL a small profit
when measured against the Retail Buy Rate.
Example i On 19 March 2002, 50,000 Euros were booked into FM at a rate of 1.7075
(Sterling equivalent £29,282.58). These were subsequently sold to Mr
it a rate of 1.7 (Sterling equivalent £29,411.76), at a “profit” of
£129.18.
Example 2 On the 17 October 2002, 85,000 Euros were booked into FM at a rate of
1.6743 (Sterling equivalent £50,767.48). These were subsequently sold to Mr
I at a rate of 1.67 (Sterling equivalent £50,898.20), at a “profit” of
£130.72.
I note that on other occasions Euros were sold to!
it the RETAIL BUY RATE,
the same rate at which the curre: giving no “profit” to POL. I selected
31 sale transactions of Euros to! at random and compared them to the delivery
of the Euros to Rugeley Post Office and when they were entered onto FM. Out of these 31
transactions, Euros were sold to: } at the same rate as the RETAIL BUY RATE
on 3 occasions.
‘Transaction Date Retail Buy Rate Euros Sold to Mr
02 May 2002 1.7113 L713
24 October 2002 1.6725 1.6725
20 December 2002 1.65 1.65
l identified three instances where, following a purchase of Euros, additionally
purchased US Dollars. This occurred on the 28 May 2002 (purchase of $450), on 14 October
2002 (purchase of $1,500) and 19 September 2002 (purchase of $1,200).
received preferential rates for these US Dollar transactions, despite them not
value of £5,000.
Our findings 15
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5.13 On 2 occasions, the cheque provided by
£10,000 less than the transaction value per the
for the purchase of Euros was
till roles. These are summarised below.
Transaction Euros Transaction Value Cheque Value _—Difference
Date Purchased &® & ®
22/03/2002 43,200 25,411.76 15,411.76 10,000
28/03/2002 45,000 26,315.79 16,315.79 10,000
5.14 On 2 other occasions, the cheque provided b:
for the purchase of Euros was
greater than the transaction value for the FM till rolls. These are summarised below:
Transaction Euro Transaction Value Cheque Value Difference
Date Purchases (&) ® ®
41/11/2002 350,000 212,765.86 213,090,96* 345
17/12/2002 160,000 97,560.98 98,560.98 1,000
*Payment comprises of 2 cheques.
5.15 I identified 29 transactions where {paid for the Euros with more than one
cheque, Payment for these 29 transactions was made by 66 cheques. In each of these
transactions, only one entry was made on FM.
PKF Ourfndings 16
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6.1
6.2
6.3
64
65
6.6
6.7
Theft of £282,000
Mr Page alone is charged with the theft within the indictment period of £282,000. The charge
of theft against Mr Page follows the conclusions of a POL audit on 14 January 2003 that a sum
of £282,000 of foreign currency was missing from Rugeley Post Office. I summarise below
the prosecution evidence in support of this alleged offence.
Prosecution Evidence
“lon 13 January 2003, Mr Manish Patel (“Mr Patel”) an
Investigation Team Manager for POL, requested that one of his team members, Mr Colin
Price, make arrangements with the Post Office Audit Section to have Rugeley Post Office
audited on Tuesday 14 January 2003.
On the evening of 13 January 2003, at approximately 20:50 hours, Mr Patel attended the
premises of Rugeley Post Office along with a member of his team and a number of Police
Officers. A search of the branch was conducted by the Police, including the contents of the
Bureau de Change till.
Five cheques were found in the till, drawn from account 71392875, RPX Recycled Plastics
Limited. These are exhibited as item number NJW/S and are summarised as follows:
Cheque Number Cheque Date Amount (£)
1. 100148 02/01/03 278,181.82
#2. 100159 13/01/03 100,000.00
*3, 100160 13/01/03 100,000.00
*4, 100161 13/01/03 100,006.00
*S. 100162 13/01/03 60,493.83
The four cheques marked * amounted to a Sterling value of £360,493.83, which matches the
value of the Bureau de Change receipt found on Jat the time of his arrest. This
was payment for €584,000. All five cheques listed above were seized by the Police.
On Tuesday 14 January 2003, Mr Patel attended Rugeley Post Office and met up with 4
members of the Post Office Audit Team who commenced a full andit of the branch.
Following the audit, Mr Glynn Burrows of the audit team completed a written report of the
audit which is summarised below. The report is shown in Appendix E.
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Summary of Audit Report
6.8 A shortage of £645,345.18 at Rugeley PO was identified by the audit team. The reason for the
shortage is explained by:
(a) 5 cheques seized by Police on 13 January 2003 £638,675.65
(b) Differences in the currency and Sterling on hand £ 3,583.14
(c) ‘AM? stock unit shortage £_ 3,086.39
£645,345,18
69 The report states that part of the ‘AM’ stock shortage relates to postage being sold on credit to
a number of firms. The ‘AM’ stock is a term used to describe the stock of currency held
within the branch but outside the Bureau de Change stock. In other words, it includes currency
that has been received by the branch but not entered into FM.
6.10 Traveller’s Cheques on hand were unable to be verified as the Police had taken away the
Bureau register containing details of the cheques on hand.
6.11 The difference of £282,000 and subsequent theft accusation against Mr Page arose during
investigations following the audit. Mr Patel came to the conclusion that cheque number
100148 should not have formed any part of the accounts at Rugeley Post Office on 14 January
2003 and that there was an unidentified loss of £282,000 in the 'AM! stock unit.
6.12 The HORIZON snap-shot in Appendix F (exhibit KO/01), identified foreign currency with a
sterling equivalent of £282,000. However, during the Post Office audit on 14 January 2003,
the auditors did not find any currency heid in the 'AM’ stock unit.
6.13 Cheque number 100148, for £278,181.82 had originally been assumed to be payment for the
alleged missing 'AM' stock. This was later disregarded, as cheque number 100148 had
actually been given to Mr Page to cover three cheques given by!”
2003, which may have potentially ‘bounced’ due to insufficient funds in the bank account.
6.14 An unexplained difference of £282,000 is therefore identified and this forms the basis for the
theft charge.
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Mr Page's explanation
6.15 Mr Page has stated that cheque number 100148 was indeed given by!
three cheques potentially ‘bouncing’. Mr Page states that he was given this cheque at the start
of January 2004.
My Investigation
6.16 I reviewed the prosecution schedule, MP/6 (Appendix G). This is a schedule illustrating how
the difference of £282,000 was built up on a weekly basis. The schedule covers the period 7
March 2002 to 14 January 2003. I identify the potential for timing differences to build up
between the amounts of cash recorded on the Horizon and FM systems that form the basis for
this schedule (see paragraphs 6.26 to 6.43 below).
6.17 I also investigated whether the £282,000 actually existed by comparing the number of Euros
delivered to the Rugeley Post Office with the Euros sold per the COMM 10 print outs. That
is, I sought to establish whether a surplus of Euros had built up in the ‘AM’ stock in the
manner alleged in MP/6. My detailed analysis of the delivery and sale of Euros is attached in
Appendix H. The process that I followed is described below.
6.18 First, I listed all the Euros delivered to Rugeley Post Office in the period 8 March 2002 to 13
January 2003, as per the prosecution schedule LGH/04. The information is taken from column
2 of my spreadsheet at Appendix D.
6.19 I then compared this to the number of Euros bought by “lin the same period.
The information is taken from column 11 of my spreadsheet at Appendix D. There are 25
instances where the amount of Euros purchased is unknown due to missing FM till rolls. In
these instances [ hi imated the amount of Euro deliveries by reference to cheque
converting the amount of payment from Sterling to Euros
i the transactions before and after
by taking the average rate used for sales
the missing FM till rolls.
6.20 There were a further two instances where US Dollars and not Euros had been purchased and I
have therefore removed these from my calculations.
6.21 By comparing the two columns I assess the amount of Euros delivered to Rugeley Post Office
‘This is shown in Appendix H.
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6.22 The second method I applied was to consider deliveries of Euros to Rugeley Post Office from
31 July 2002 to 13 January 2003 and to compare those amounts with the amount of Euros
sold. 31 July 2002 is the date when an earlier audit of Rugeley Post Office was conducted and
also the date that the prosecution allege the surplus of Euros began to accumulate and the theft
commenced.
6.23 I again used information from column two of my spreadsheet in Appendix D to identify the
Euros delivered from 31 July 2002. Additionally, I reviewed the COMM 10 printouts and
noted the total Euro sales for each week commencing 1 August 2002 to 13 January 2003. As
this is recorded in Sterling, I converted this to Euros using the average rate used for sales to
I for each particular week. The result can be seen in Appendix 1.
6.24 In three instances, no COMM 10 printouts were available due to missing FM till rolls. In
these instances I assume that the sales of Euros to in that particular week
account for all Euro sales by Rugeley Post Office.
6.25 There were a further two instances where the COMM 10 printouts were not complete because
only a portion of the printout had been photocopied. In both cases, the total sales of foreign
currency by Rugeley Post Office can be identified although sales by individual currency
denominations cannot. In these cases I assumed that all foreign currency sales in that week
were sales of Euros.
Examination of Prosecution Calculation of the Aleged Discrepancy
6.26 The prosecution have alleged that Mr Page has inflated the AM stock figure. A schedule
prepared by Mr Patel, called the ‘Foreign Currency Discrepancies Schedule’ (Appendix G,
exhibit MP/6), illustrates how the difference of £282,000 has built up on a weekly basis.
6.27 This schedule identifies the following:-
(a) Cash account week number,
(b) Cash account period.
(©) Cash on hand declared, i.e. what cash was physically on the premises in sterling.
(@) Foreign currency on hand declared, ie. the sterling equivalent of foreign currency
physically on the premises.
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(e) Forde Money Changer figure - this is taken from the FM Comm 10 print. It is the cash
held figure which indicates the sterling value of foreign currency held.
(f) Inflation ~ this is the difference between c) and d).
(g) Remarks - additional comments by Mr Patel.
6.28 Ihave checked the detail / figures entered in columns (a) to (e) and confirm that the figures in
MP/6 are correctly transferred from Horizon Cash Accounts (columns (c) and (d) above) and
COMM 10 printouts (column (e)). I make the following observations.
6.29 In the twenty-one week period from 7 March 2002 to 24 July 2002, only six differences have
been identified between the foreign currency figure declared and what was on the FM Comm
10 print out. These have been extracted and are summarised below.
Week No Week Cash on Foreign FM Inflation
ending hand currency Comm
declared declared 10
® &) @) ®
vy Si 13.03.02 145,919.89 6,962.38 6,962.38 1,307.06
2) OL 03.04.02 279,571.16 6,341.77 6,341.77 0.40
3) 10 05.06.02 304,899.72 38,175.59 39,689.27 1,513.68
4) 13 26.06.02 211,286.54 85,179.00 31,800.97 53,378.03
5) 14 03.03.02 412,439.56 36,233.90 41,117.68 (4,833.78)
6) 16 17.07.02 461,032.55 2,138.74 52,032.33 (49,893.59)
6.30 Numbers 1) and 3) have remarks by Mr Patel that the inflation figure matches the revaluation
figure. Number 6) has a remark that the revaluation figure (£2,138.74) has been used as the
foreign currency in hand, resulting in a large difference. Number 2) is only a 40p difference.
These four can therefore be seen to be human error, when inputting the figures onto the
Horizon Computer system.
631 In week 13 (w/e 26 June 2002) there was an audit carried out at Rugeley PO and the audit
team actually completed the office accounts for that week. An explanation as to the inflation
is not evident.
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6.32 An explanation for the difference in week 10 is also not evident.
6.33 Schedule MP/6 then shows a further difference of £85,636.65 between the foreign currency
declared and FM Comm 10 in week 19, followed by two weeks where the amounts matched
and there was a nil difference.
6.34 From week 22 onwards, the difference of £282,000 starts to build. It starts with an initial
difference of £188,000 in week 22, followed by a series of smaller increases of £94,000 to a
total of £282,000 by week 41.
6.35 Within the period, Schedule MP/6 shows that Margaret Pearce had signed the Horizon Final
Cash Account, verifying the amount disclosed, on six occasions.
6.36 These six instances are summarised as follows:-
‘Week No Week Cash on Foreign FM Inflation
ending hand currency Comm 10
declared declared
&) &) &) @
13) 23 04.09.02 120,232.12 196,292.24 7,292.24 189,000
2 25 18.09.02 82,139.54 299,754.23 102,754.23 197,000
3) 26 25.09.02 106,212.68 297,790.91 100,790.91 197,000
4) 29 16.10.02 91,595.99 319,841.32 104,841.32 215,000
5) 32 06.11.02 111,374.55 373,929.97 148,929.97 225,000
6) 38 18.12.02 78,177.38 370,591.17 100,591.17 270,000
Timing Differences
6.37 T note that there is no automatic link between FM and Horizon systems. Data transferred from
FM to Horizon therefore has to be manually input. Clearly this gives increased capacity for
human error and for incorrect totals to be entered on the Horizon system,
6.38 I note also that the data on Horizon is a "snap shot" of the position at the end of the cash
account week. It includes a physical count of all the currency in the branch. Whereas the FM
figure is the balance arrived at after taking into account the transactions in the week.
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6.39 Accordingly, it is possible that timing differences could arise between the FM and Horizon
systems that might explain the discrepancy or "inflation" in MP/6 (Appendix G of this report).
I refer in particular to instances where_ purchased a large quantity of Euros
before the end of the cash account week, so the sale was entered in FM, but where Mr
did not physically collect the cash until the beginning of the following cash
account week. In these instances the Horizon figure would differ from FM by the amount of
Euros sold
6.40 T understand from Mr Page that!
after Mr Page had put the entry through FM.
ould regularly collect the Euros a day or so
6.41 As noted above, the amount of the discrepancy or “inflation” on MP/6 increases on 14 August
2002 from nil to £188,000 on 28 August 2002 and £282,000 on 8 January 2003. Given the
timing difference explained above, one explanation for this increasing figure is that the weekly
increased over this period as shown by the graph below.
‘This graph also plots the increasing amount of the alleged discrepancy for comparison.
‘and the Build up of £282,000
900,000
800,000
eae Euros sold
Euros
—o— Alleged
discrepancy
sk soning
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6.42 The 14-day rolling average of daily Euros purchased by
increasing trend over this period. The dip at the end of December and the beginning of
January is caused by the absence of sales around the Christmas and New Year periods.
14 Day Rolling Average Daily Sale
Euros
PP LL PEE CELL
Day
6.43 In conclusion, the discrepancy or “inflation” of £282,000 could have been caused by timing
~_i were recorded on FM and the date
Did the £282,000 exist as a surplus of cash?
6.44 Results in Appendix H show that a comparison of the Euros delivered in the period 8 March
2002 to 13 January 2003 to those sold to:
The surplus will consist of Euro sales to customers other thi
include the £160,000 of foreign currency that was removed by the Post Office on 31 July
2002. This period covers 259 trading days after accounting for bank holidays which indicates
that on average 2,635 Euros per day that were sold to customers other than!
{after deducting the £160,000 converted at a rate of €1.62 = €259,200 (€941,’
= €682,517 / 259 days = €2,635)).
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6.45
6.46
6.47
6.48
A detailed review of the FM till roles for 19 trading days from 19 December 2002 and 13
January 2003 shows that in this period an average 3,002 Euros were sold to customers other
than [7 On the basis that the Christmas and New Year trading period is
representative o} id 3,
would appear to be the normal level of trade excluding sales to}_
e general level of Euro sales then sales of Euros per week
The second set of results in Appendix I shows that in the period from 31 July 2002 to 13
January 2003 there was a small excess of Euros sold via the FM, compared to the amount
delivered to Rugeley Post Office. This deficit is 144,476 Euros (Euros delivered =
(€10,867,600) - Euros sold (€11,012,076) = (€144,476)).
‘The deficit may be explained by an opening stock of Euros at 31 July 2002 (when my analysis
commences) which is why sales exceed deliveries in this period.
in conclusion, both these analyses indicate that a surplus of Euros of approximately €456,840
(£282,000 converted at €1.62) could not physically have been built up in the ‘AM’ stock or
elsewhere. All the Euros delivered to Rugeley Post Office were entered into FM and my
analysis of sales shows that they match, or exceed, the deliveries.
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72
Expert's Declaration
I declare that:
*® Tunderstand that my duty in providing written reports and giving evidence is to help the
Court, and that this duty overrides any obligation to the party who has engaged me. I
confirm that I have complied and will continue to comply with my duty.
* I confirm that insofar as the facts stated in my report are within my own knowledge I have
made clear which they are and I believe them to be true, and that the opinions I have
expressed represent my true and complete professional opinion.
* [have endeavoured to include in my report those matters, which I have knowledge of or of
which I have been made aware, that might adversely affect the validity of my opinion.
* Ihave indicated the sources of all information I have used. L enclose as Appendix B to my
report a schedule of documents on which I have relied.
¢ Thave not without forming an independent view included or excluded anything which has
been suggested to me by others (in particular my instructing lawyers). In carrying out my
instructions I have been assisted by colleagues in PKF. It would not have been practical or
efficient to carry out all the detailed work involved without assistance. I have reviewed
and discussed with them the work that they have performed under my direction in
accordance with the quality control standards imposed by my firm. For the purposes of
this report, I refer to all of PKF’s work as if performed by myself.
* 1 will notify those instructing me immediately and confirm in writing if for any reason my
existing report requires any correction or qualification.
Tunderstand that:
® my report, subject to any corrections before swearing as to its correctness, will form the
evidence to be given under oath or affirmation;
® [may be cross-examined on my report by a cross-examiner assisted by an expert;
* Tam likely to be the subject of public adverse criticism by the judge if the Court concludes
that I have not taken reasonable care in trying to meet the standards set out above.
j f fF Expert's Declaration 26
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13 I confirm that I have not entered into any arrangement whereby the amount or payment of my
fees is in any way dependent on the outcome of the case.
ent co wsensrnnvoresoorsenecesszsntsee —— DAECS —sevvunnevvessven
David Liddell
Forensic Accounting Partner
PKF
PKF Expert's Declaration 27
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in the Crown Court at Dudley
R -v- Carl Adrian Page
Expert Accountant's Report of David Liddell
Supplemental
17 June 2005
Prepared by: David Liddell BSc ACA
Chartered Accountant
Position and firm: Partner
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Contents
I
Page
a
al 4 Introduction...
I This report.
My Instructions.
I Documents on Which I Have Relie
Other Matters.
a
a 2 Summary of my Findings and Conclusions ......
pert's Declaration...
a 3 Expert's Deciarati
a Appendices
a
a A Calculation of profit on transactions with
B Audit schedule at 14 January 2003
g c Audit schedule at 27 June 2002
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4a
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4 ecco Contents
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41.2
14
15
16
Introduction
This report
This report is supplemental to my report dated 16 May 2005 and should be read in conjunction
with that report.
My Instructions
I have been instructed by Messrs Frisby & Co, solicitors for Mr Page. My initial instructions are set
out in Section 1 of my report dated 16 May 2005. I am further instructed to:
{@) Prepare a schedule covering the indictment period showing the profit level to Post Office
Limited (“POL”) when measured against the Retail Buy Rate;
(b) Consider evidence in the statement of Mr Hugh Stacey about a payment of £241,194.62
from POL to First Rate Travel Services (“FRTS");
(c) Comment on the auditing methods used by Royal Mail in relation to Rugeley sub post office.
My findings are set out in Section 2 of this report.
Documents on Which I Have Relied
I have not relied upon any additional documentation in the preparation of this supplemental report.
As before, unless presented with evidence to the contrary, as there is no allegation of falsified or
forged documentation in this case, I am instructed to assume that the documents disclosed to me
are genuine.
Other Matters
I have not carried out an audit, nor have I independently verified any of the information with which {
have been provided. This report should not be construed as expressing opinions on matters of
law, although it necessarily reflects my understanding thereof.
I understand that it is not part of my duties as an expert to make findings of fact and these will be a
matter for the Court in due course. I am aware that if the Court makes findings of fact that are
different from those I have assumed my conclusions may be invalid and may need to be revised.
PKF
Acsoucints 8
Soares acters
introduction 7
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I understand that this report will be made available to the prosecution. it has been prepared for
use in this action. In all other respects, this report is confidential. It should not be used,
reproduced, or circulated for any other purpose, in whole or in part, without the prior written
consent of PKF (UK) LLP. Neither PKF (UK) LLP nor { accept any responsibility to third parties for
breaches of this obligation, or for any opinions expressed, or information included, within this
report,
peenetart &
Pisones advaers
Intreduction 2
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2.2
23
24
2.5
26
27
Summary of my Findings and Conclusions
I set out my findings under the following headings:
(a) The profit level to POL;
(b) Evidence of Mr Stacey about a payment of £241,194.62 to FRTS;
(c) Auditing methods used by Royal Mail,
The profit level to POL
In order to calculate to profit level to POL on the sales of Euros t
against the Retail Buy Rate, I referred back to my master spreadsheet which is included in
Appendix D to my report dated 16 May 2005. From the data in that Appendix, I produced a
calculation which is included in this supplementary report at Appendix A.
My calculation shows that during the indictment period, the profit achieved by POL on sales of
“I when measured against the Retail Buy Rate was £24,505. This means
that over the period, Euros had been sold from Rugeley Post Office tol” at a value
greater than they were initially booked into the Forde Moneychanger (“FM”) system in the Bureau
de Change, to the value of £24,505.
In order to arrive at this figure, I compared the sales vaiue (in Sterling) of all Euro sale transactions
‘with the purchase “cost” of those Euros to Rugeley Post Office, as calculated at
the Retail Buy Rate. Due to gaps in the information provided to me, as set out in my report dated
16 May 2005, I have had to make some assumptions in arriving at this figure, as set out below.
J have ignored 20 sale transactions that were included on Appendix D, but for which the FM till rolls
are missing. Without these till rolls, I am unable to verify the number of Euros sold, the precise
transaction date or the Retail Sell Rate applied t
in some instances, I do not have a Retail Buy Rate for the Euros sold. On those occasions, I
applied the Retail Buy Rate that was most recently available prior to the transaction date.
For example, { did not have details of the Retaii Buy Rate on 10 August 2002 but used the Rate
@pplicabie for 9 August 2002 instead.
PKF
Accoucarte &
Stiher aaa
Summary of my findings and conclusions 3
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29
2.10
2.42
2.13
2.44
My only departure from this method was for the period 24 July 2002 to 5 August 2002 where there
are substantial numbers of FM till rolls missing. For this period of twelve days, I applied a Retail
Buy Rate of 1.6659, this being the average of the Retail Buy Rates on the 23 July 2002 (1.6477)
and 6 August 2002 (1.6841).
These assumed Retail Buy Rates apply to 25 transactions and affect my estimate of the profit by
reducing it £757. The profit of £24,505 is net of this reduction.
Evidence of Mr Stacey about a payment of £241,194.62 to FRTS.
According to Mr Stacey, in March 2002, the POL in partnership with Bank of Ireland formed a joint
venture company called FRTS to provide wholesale currency to the Post Office network. Under
the contractual arrangements, all income generated from foreign currency transactions is paid to
FRTS which then pays a rebate to POL based on transactions carried out on its behalf. POL also
receives 50% of dividends declared by FRTS.
Mr Stacey states that a sum of £241,194.62 had been paid in income to FRTS in relation to the
but which represented income that had not been generated at the
time the transactions had taken place. Mr Stacey goes on to state that this amount has since been
repaid to POL by FRTS.
I set out firstly below comments on the losses incurred by POL and the effect on those losses of
the repayment of £241,194.62 by FRTS. I then comment on the overall loss to POL.
At pages 5 and 6 of his statement, Mr Stacey takes a transaction with I
exampie to illustrate the loss incurred by POL.
iS an
For each transaction with “ithe loss to POL may be considered as arising in two
parts: the actual cash loss; and the loss of opportunity to make a normal levei of profit. By
reference to the transaction cited by Mr Stacey I examine each of these loss calculations.
The actual cash loss is the amount that POL pays FRTS for the currency, less the amount for
which that currency was sold to!” in Mr Stacey's example the actual cash loss is:
Amount paid to FRTS (€150,000 @ Wholesale Buy Rate, 1.5520) £96,949
Less: Amount received fro “"}(€150,000 @ 1.65) £90,909
Actual cash loss £5,740
PKF
Acsourearty 8
Screed
Summary of my findings and conclusions 4
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2.16
2.17
2.18
2.20
2.24
2.22
2.23
It is alleged that POL also lost the opportunity to make a normal level of profit on the sale of the
€150,000, which is calculated as
Normal sales value (€150,000 @ Retail Sei! Rate, 1.5117) £99,226
Less: Amount paid by POL to FRTS (€150,000 @ Wholesale Buy Rate, 1.5520) £96,649
Loss of opportunity to make a profit £2,577
The total loss to POL, on the above caiculations, is therefore £8,317 (£5,740 + £2,577), the same
figure that Mr Stacey calculates.
In fact, POL has not lost the opportunity to make a profit of £2,577 as a result of the alleged
conspiracy betwee: and Mr Page. In my opinion the opportunity did not exist to
sell the Euros to! it the Retail Sell Rate in the first place; he would not have
purchased thern at that rate.
The actual loss suffered by POL is therefore the cash loss element only. Further, on Mr Stacey's
evidence, the actual cash loss is reduced by the repayment from FRTS that he has identified. in
total this was £241,194.94, but in relation to the particular transaction of €150,000 the repayment
is £2,577,
Therefore, in my opinion the loss to POL on the €150,000 example in Mr Stacey's statement is
£3,163 (£5,740 cash loss less £2,577 repaid by FRTS).
I have not seen a detailed calculation of the £241,194.94 repaid to POL by FRTS, so! am unable
to comment on whether that figure is correctly calculated.
This reasoning that I set out above has a bearing on the overall calculation of the loss to POL,
which should be stated after deduction of the loss of opportunity to make a profit and after
deduction of the £241,194.94 repaid to POL by FRTS.
The prosecution have caiculated the loss of profit to POL at £393,881.54 (effectively the cash loss
described above; being the difference between the amounts paid by POL to FRTS and the
amounts paid by } and £592,802.74 (effectively including the alleged loss of
opportunity to make a normai profit; that is, stated at the normal ievel of profit that would have
been achieved if all th ransactions were sold at the Retail Sell Rate). In my opinion,
based on the reasoning above, the loss of profit to POL is £152,686.60 {£393,881.54 less
£241,194.94).
PKF
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Summary of my findings and conclusions 5
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2.25
2.26
2.27
2.28
2.29
2.31
Auditing methods used by Royal Mail
Reference is made throughout prosecution witness statements to audit work carried out at Rugeley
sub post office by Royal Mail staff.
I have serious reservations that the work carried out did not constitute an audit in the sense that
data was not verified back to source documentation nor critically examined before conclusions
were drawn.
I have carried out only a limited review of the audit schedules disclosed to me but I have identified
two serious shortcomings that indicate the work carried by Royal Mai! was more akin to a stock
take than an audit. As such, the findings of that work cannot be relied upon to the same extent as
if they were derived from audited figures. I set out below two examples.
Firstly, I attach at Appendix B a copy of the audit schedule dated 14. January 2003. This contains
the “Audit result” of an alleged discrepancy of £645,345.18,
Examination of Appendix B reveals that the calculation of this alleged discrepancy is dependant
upon the accuracy of a “balance brought forward” of £553,429, which is itself dependant upon a
total of “cash and stock” balances at 8 January 2003.
I have seen no indication in the witness statements in this case that any audit or verification work
was carried out on the balances at 8 January 2003, If that is the case, then the Royal Mail cannot
be certain that those balances are correct and consequently cannot be certain of the amount of the
overall “audit result”.
Secondly, I note that mid-way down the right-hand “Receipts” column is a figure described as
“Bureau de Change — Revaluation”, £1,296.52. I understand that this is equivalent to the
“Revaluation Total” on Forde Moneychanger and represenis the profit to Rugeley sub post office
on its foreign currency sales. I consider that an audit would have critically evaluated this figure by
reference to the amounts of foreign currency soid in the period,
i calculate the profit percentage to be only 0.2% against an expected profit of around 8%, as
follows (taking figures from the spreadsheet):
Opening stock of foreign currency £389,005.30
Foreign currency remitted £279,746.83
Less closing stock £(22,938.72)
Total currency sold £645,813.41
Therefore, the profit level is only 0.2% (£1,296.52 / 645,813.41)
PKF
oats &
irae ters
Summary of my findings and conclusions 6
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2.32 I attach at Appendix C the equivalent audit schedule dated 27 June 2002. I calculate the profit
percentage to be only 2.8% against an expected profit of around 8%, as follows (taking figures
from the spreadsheet):
Opening stock of foreign currency £7,102.62
Foreign currency remitted £107,927.35
Less closing stock £(31,893.54)
Total currency sold £83,136.43
A “profit” to POL of 2.8% (£2,313.58 / £83,136.43).
2.33 These profit levels are much lower than would have been expected {as a result of the transactions
"___). Lhave seen no evidence that this fact was identified at 27 June 2002 and
brought to anyone’s attention, not least to Mr Page.
2.34 In conclusion, if the work carried out by Royal mail constituted an audit, more would have been
done to check and substantiate the “opening balances” at 8 January 2003 before seeking to rely
upon them and the dramatic lack of profitability in the foreign currency transactions would have
been identified at 27 June 2002.
PKF
aosourits 8
‘int ware Summary of my findings and conclusions 7
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I
x 3 Expert's Declaration
BS I 3.4 I declare that:
A » understand that my duty in providing written reports and giving evidence is to help the Court,
a and that this duty overrides any obligation to the party who has engaged me. I confirm that I
have complied and will continue to comply with my duty.
a
s * I confirm that insofar as the facts stated in my report are within my own knowledge I have
3 made clear which they are and I believe them to be true, and that the opinions I have
a expressed represent my true and complete professional opinion.
a
a * I have endeavoured to include in my report those matters, which I have knowledge of or of
a which I have been made aware, that might adversely affect the validity of my opinion.
D ] « I have indicated the sources of all information I have used. I enclose as Appendix B to my
a report a schedule of documents on which I have relied.
ay * [have not without forming an independent view included or excluded anything which has been
suggested to me by others (in particular my instructing lawyers). In carrying out my
a instructions I have been assisted by colleagues in PKF (UK} LLP. It would not have been
a practical or efficient to carry out all the detailed work involved without assistance. I have
reviewed and discussed with thern the work that they have performed under my direction in
a accordance with the quality contro! standards imposed by my firm. For the purposes of this
PI report, I refer to ail of PKF’s work as if performed by myself.
D> I * I will notify those instructing me immediately and confirm in writing if for any reason my
a existing report requires any correction or qualification
5 I 3.2 understand that:
a « my report, subject to any corrections before swearing as to its correctness, will form the
D I evidence to be given under oath or affirmation;
a ® I may be cross-examined on my report by a cross-examiner assisted by an expert;
a
* I am likely to be the subject of public adverse criticism by the judge if the Court concludes that
I I have not taken reasonable care in trying to meet the standards set out above.
a
a
4 fesuntrn 8 , .
linc ers Expert's Declaration 8
]
¢
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R -v- Page 17 June 2005
3.3 I confirm that I have not entered into any arrangernent whereby the amount or payment of my fees
is in any way dependent on the outcome of the case.
David Liddell
3 Forensic Services Partner
ay
> I PKF (UK) LLP
PKF
Aourtarin A
Sooae sere
Expert's Declaration 9
POL-0058680
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R-v- Carl Adrian Page 17 June 2005
Appendix Contents
A Calculation of profit on transactions with
B Audit schedule at 14 January 2003
c Audit schedule at 27 June 2002
PKF
‘Asoountants &
‘business advisers Contents
POL-0058680
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R -v ~ Carl Adrian Page 17 June 2005
Appendix A
Calculation of profit on transactions with
‘Accountants &
business advisors Appendix A
POL-0058680
Appendix A
Calcultaion of Profit to POL when Comparing Sale Transactions to’
‘Transaction
Bate
ogroar2002
1200872002
149312002
s4e32002
4aoaiz002
veoaiz002
2oroasn002
‘2210872002
2ammsrecn2
22032002
2603/2002
arioai2002
2803/2002
o2/oar2002
oxvoar2002
‘0604/2002
‘osiosr2002
0104/2002
‘oro4s2002
2104/2002
secar2002
sens2002
sevo4ra002
2370472002
2510472002
2riaai2002
28/04/2002
somsrec02
c2insr2002
0210512002
oviosvza02
osiosva002
ograsva02
16/0520
zansi2002
23/0512002I
25y05:2002I
23/08/2002
2410672002
2810572002
2808/2002
2a¥0672002
310572002
7106/2002
o7iesr2002
o71a/2002
“1oe2002
sevoera002
anoer2002
ovra7/2002
13,900
+000
40090
48000
50000
40000
43200
000
27500
44000
45000
37500
sc000
57000
37000
‘35000
36000
62500
0000
20000
‘93600
116000
128000
Rate
Apglled Transaction
1s
on
wn
ra
1.707
47
17
Ww
ww
WwW
a7
a7
1.4
wn
aw
1
Ww
4715
1718
Ws
1m
18
471
1116
4.718
17
1718
an
412113
1”
4m
1.80
1.69
1.89
1.85
1.85
1.85
1.88
187
1.89
189
1.89
183
186
161
Amount
23,323.62
39,988.33,
8,128.65
6432.75
29,452.92
28,470.56
23,411.76
23,829.44
25,411.78
2,961.18
16.081.87
25,882.95
28,315.79
21,929.82
29.230.77
28315.79
37,647.96
23,923.82
93,296.15
26,822.16
21,678.24
31,370.26
20,487.84
37,900.87
46,647.23,
23,828.41
23,923.62
43,274.85
20,217.85
15,588.24
92,601.68
42,603.55,
21,303.78
36,902.25
30,303.03,
10,748.44
137277
s2azi2t
26,506.02
92,984.13
300.00
97,575.76
38,181.82
45,852.99
11,834.32
11,834.32
41,287.94
5742331
9,756.10
20,124.22
Retail buy
Rate
1.7166
1.767
s707
+707
07
4.7075
4.7079
17081
7081
+7055
4.7098
1.719
172
1724
1.7288
17212
‘art
1.7206
1.7286
4.7288
17212
1.789
4.7202
47261
1.78201
1.75201
417192
13
Sear
17149
1.6998
1.8998
1.702
1.6761
4.8761
16761
18083
18764
16764
16784
1.8545
1.6428
1.9428
4.6429
15396
118485
1.6998
1804
73,204.59
39,203.24
8142.94
6444.08
23,482.82
26,354.32
29,275.72
23,459.03
25,336.76
2,932.28
16,085.63,
25,596.28
26,362.78
21,751.74
28,913.43,
26,144.55
17,370.16
73,128.73
32,985.60
28,611.19
21,424.95
31,118.08
20,386.47
37,724.80
46,347 28
22,890.92
22,830.92
43,194.02
29,217.55
15,485.30
32,538.34
42,982.91
2158145
36,721.50
23,601.16
11,902.48
11,992.48
26,374.15
22,808.40
268.43
37,008.09
38,077.97
47,172.68
12,173.60
12,173.60
42,693.34
56,982.41
9608.:5
76,947.37
POL00062201
POL00062201
414)
aay
41,320)
839)
638)
(1,398)
544
177
POL-0058680
I
Ewe ey eee ee eee ee ee eee ee ee ee
x
we
x Po ayetay!
oaio7r2002
0810772002]
05/07/2002
osi07/2002
09/07/2002
srorrecoa
“suo7re002
ran72002
4870712002
1607/2002
yevo7i2002
sore
2svo7roce
evorr2002
‘0072002
aovo7izo02
a1v07i2002
‘o6roe72002
oriereoce
avoerz002
sommevzo02
royosr2002
‘2ype2002
+082002
woe
soe2009
zaroarz0
‘7i0erg002
23/08/2002
7390872002
29¥08/2002I
sence
ald
97052002
190812002
s9mardo2
zayosy2002
267082002
artav2002I
corr]
soa
48000
1780
74000
54800
80000
72300
36000
42800
98080
s9000
81009
61000
14800
a7%0
‘e000
‘80000
80000
s7180
70000
80000
81000
147000
80000
86000
448000
185000
7000
4200
23375
1153000
160000
280000
481
4.625
1.628
182
129
163
1.635
184
1.985
185
16437
164
1.85
1.88
1.885
1.88
1.888
187
1.87
1.87
187
1.87
1.85
187
4.87
4.84
187
185
1.88
1.85
1.87
1.83
1.87
187
1.87
1.87
187
49,689.44
9,985.34
10,238.73
21,405.70
28,307.68
38,117.28
45,298.77
33,619.63
48,928.86
44,085.31
1972727
33,900.39
25,956.30
42,957.32
40,009.00
35,757 58
48,795.18
36,858.01
44,973.52
22,241.99
41,916.17
47,904.19
47,904.19
47,904.18
47,904.18
34,636.28
41,916.17
47,904.4
49,390.24
44,000.00
44,000.00
48,486.85
51,515.46
51,515.15.
140,000.00
47,878.49,
60,000.00
43,999.39
45,208.28
80,000.00
52,006.81
738.20
13,997.01
$0,000.00
41.8167
‘50,000.00
45,908.98
47,904.19
79,664.67
50,000,00
38,000.00
89,285.71
70,000.00
44,000.00
44,009.00
1.8308
18665
4.6817
18437
18137
16073
1.9858
41,9859
1.9859
1.6659
1.8844
1.885
+8836
1.8685
1.8885
1.6722
1.8586
1.8483
41,8593,
1.857
16518
1.6518
1.8811
4.6547
1.8783
1.8008
1.8876
49,085.68
48,408.57
27,634.93
37,481.93
M6 T1.13
33,222.26
48,514.25
43,646.24
19,588.37
34,069.48
25,856.90
2,509.69
35,416.29
48,622.37
36,616.84
44,720.57
22,510.38
45,565.23
AT ATT T4
4781722
47,987 28
47,987.28
34,176.53,
4220427
48,226.69
49,121.74
98,591.57
49,280.02
8:,459.01
51,488.01
o7.820.24
99,672.57
95,505.28
51,934.08
718.29
19,982.72
91,326.93
5,181.44
47,590.72
166,280.68
199,412.40
88,883.62
POL00062201
POL00062201
ann
173
2a
180
(26a)
(43)
3)
(289)
(422)
(692)
8
B88
303
165
20
313
873
POL-0058680
POL00062201
— POL00062201
Lol
me
\J
1,820.00
vane 150000 1.67 40,000.00 16743 69,589.60 2
49,820.36
stisorgon2 85000 1.67 60,698.20 4743 80,767.48 131
44,000.90
2rsor2002 210000 1.675 44,000.09 49769 125,281.08 1az
37973.13
zavtorzc02 85500 168 50,882.86 46725 51,121.08 228)
2anioro0e 120000 18725 71,748.88 49725 74,748.88 °
aanocn 230000 67 81,724.55 1981 196.28.32 sot
70,000.00
sured} 295000 11676 70,000.00 4001 130,872.53 ue
70221480
! arte 20000 4.87 70,000.00 1600: 119,080.53 10
49,780.48
I orrt*raac 230000 4.672 70,000.00 46554 138,900.23 (178)
67 553.81
t } 19712009 260000 eas 11276598 seers 212.48889 622
100,325.00
44,000.00
1611 2002] 450000 1.98 44,000.00 16817 270,807.00 ar
83,004.36
400,000.00
} 2ers2002 400000 1.68 150,000.00 6625 240,601.80 362
20,985.88
} 2arr+s2002 400000 1965 142,428.24 49518 242,180.07 2
+00,000.00
asi 2r2009 300000 4.65: 81,708.08 s96o7 19042042 4278
190,000.00
osii2r2002 444000 41855 97,000.06 e627 89,008.12 403
sorr2r200nI 298000 1.652 100,000.00 1.852 17957143 °
7971.43
rair2re002I 292000 4.645 100,000.00 165 176,959.70 838 i
1750789 I
sarrzra002 148000 1645 008,145.90 185 87,878.79 287
sryvarzoa2 192.178 183 99,358.90 sess 92,682.28 on
sree 460000 464 97,500.98 seme 9744808 13
19 290000 4.64 199,000.00 year t78077.72 752
76,829.27
zomareoca 144000 485 8727273 165 87,272.73 °
zarareo0 ‘0000 165 90,908.09 19508 90,876.08 Ey
2arn22002 290000 165 121,212.12 e485 121,822.41 “0
fovelt 200000 1828 100,000.00 116285 178,296.96 55
79,951.78
orros2003 150000 163 9202454 161s 91,938.98 8s
oniw003 150000 165 7,875.48 16015 91,990.93 68
04,992.18
+90,000.00
1301/2000) 584000 4.62 100,000.00 ye2t8 960,083.72 400
00,000.00
60,493.83
12659600 7es0450.82 7,605,945 24,508
POL-0058680
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R-v- Carl Adrian Page 47 June 2005
Appendix B
Audit schedule at 14 January 2003
PKF
‘Sine ates Appendix B
POL-0058680
POL00062201
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[tie tal accent
POL00062201
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POL-0058680
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mesma POL00062201
i
R-v- Carl Adrian Page 47 June 2005
Appendix C
Audit schedule at 27 June 2002
PKF
Sieinees advisers Appendix C
RO ee ee
POL-0058680
POL00062201
POL00062201
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