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Post Office : FUJITSU UK Page 1 of 2
FUjITSU THE POSSIOILITIES ARE THFIMITE
Back to the original page
Post Office Industries:
Retail/Wholesale
Post Office ne:
To cater for the needs of a small number of rural Post
Office branches that are only open for a few hours each
week, Fujitsu designed a unique mobile counter
terminal, as well as a trolley-based terminal for use by
sub postmasters who work from their own homes. A
satellite connection was also developed for Post Office
branches in locations without an ISDN service.
Customer's Challenge
Post Office® Ltd has some 17,000 Post Office branches, making it
Europe's largest and most accessible retail network. As such, it is
uniquely positioned to provide a wide range of value-added
services to the local community, including government information
and banking services. To achieve this aim and to pave the way for
the development of future product offerings, Post Office Ltd
needed a secure, networked counter system that would:
* Enhance the service provided to major clients
= Improve its competitive position
* Enable the development of new business areas.
Fujitsu’s Solution
United Kingdom
Challenges:
The design,
implementation and
operation of the new
infrastructure called
Horizon.
Benefits:
Horizon represents a
key step towards
modernisation bringing
greater efficiency
Significant cost savings
through the automation
of its trading
environment
Provides a faster and
more efficient customer
service
Reduced the risk of
fraud and payment
errors
Ability to develop new
revenue opportunities.
Working closely with Post Office Ltd on overcoming the many challenges presented by the project,
the contract to design, implement and operate the new infrastructure, called Horizon, was awarded
to Fujitsu in 1999.
The project, worth £1.4 billion over ten-years, began in mid 1999. It was the largest non-military
information technology project of its kind in Europe and was delivered on time, to specification and
within budget.
Using Horizon's easy to use touch screen technology, Post Office Ltd is now processing in excess of
£900 billion a year in over 2.4 billion transactions, which can be processed at a rate of up to 3,500 a
second.
To cater for the needs of a small number of rural Post Office branches that are only open for a few
hours each week, Fujitsu designed a unique mobile counter terminal, as well as a trolley-based
terminal for use by sub postmasters who work from their own homes. A satellite connection was
also developed for Post Office branches in locations without an ISDN service.
Benefits to our Customer
Horizon represents a key step towards modernisation, bringing greater efficiency to customer
service and a platform for building new products/services such as expanded banking facilities,
access to government information, bill payments, recharging smartcards and online verification.
Horizon is now enabling Post Office Ltd. to:
« Achieve significant cost savings through the automation of its trading environment
http://www. fujitsu.com/uk/casestudies/fs_postoffice.html 17/11/2005
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Post Office : FUJITSU UK Page 2 of 2
= Provide a faster and more efficient customer service, reducing paperwork and making
transactions simpler
= Reduce the risk of fraud and payment errors and develop new revenue opportunities.
Our Approach
Over 3.5 million lines of programming code were used to create Horizon's sophisticated
functionality. Its rollout involved installing nearly 38,000 counters in 17,000 branches throughout the
UK. On average, a terminal was installed every five minutes and a complete Post Office branch
every 12 minutes. Training was also provided for 63,000 Post Office workers, aged from 17 to 87
years old.
Alan Barrie said, “Now all our branches - no matter where they are or how small they are - are able
to offer this technology and deliver the sort of service our customers have every right to expect in
this day and age.”
Our Expertise
Horizon is the culmination of a long-standing relationship with Post Office Ltd, during which Fujitsu
has developed an in-depth understanding of its business and delivered a range of innovative and
flexible solutions to meet Post Office Ltd's evolving requirements.
All Rights Reserved, Copyright © FUJITSU 2001 - 2005
http://www. fujitsu.com/uk/casestudies/fs_postoffice.html 17/11/2005
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Stephen Dilley
From: john.hjones:
Sent: 17 November
To: Stephen Dilley .
Ce: mandy.talboti_.. cath.oglesby,_
Subject: Re: FW: Urgent The Post Office -v- Lee Castleton (Marine Drive Post Office, Bridlington)
Attachments: Marine Drive Appeal Case.doc
Marine Drive Appeal
Case.doc (...
Stephen
I have attached my appeal report at the end of this e-mail for your information.
All documentation proper to the Marine Drive appeal was returned to the Area Intervention Office at Crown Street
,Darlington DL1 1AB the contact at this office is the Contracts Manager , Lesley Joyce.
In answer to the questions you have directed to Cath here are my
responses:-
(i) The assumptions Mr Castleton makes, as well as those from his alleged ‘experts’ simply do not hold credence.
As part of the appeal investigation I reconstructed the branch accounts for seventeen weeks as well as examined
every transaction entry over the critical periods when the losses being incurred were at their greatest.
The reconstruction of the accounts and the analysis of cash usage against the actual transaction being performed
at the branch did not reveal any discrepancies , apart from incorrect cash declarations.
The reconciliation of these accounts, the evidence obtained from customers depositing cash at the branch
demonstrated that Mr Castleton was making repeated false cash declarations.
On a number of occasions it was demonstrated that the physical cash that was proven to be in the branch , was
different from the cash that was being declared onto the Horizon system.
Additional tracking of all increases in cash ordered by the branch , demonstrated that the branch did not need to
order excessive amounts of cash that were not required to service the transactions that were being performed.
The orders for extra cash were always in week where there was a reported significant loss at the branch.
(ii) The lists of documents that I examined included all the branches cash accounts, the daily balance snapshots
and evidence in the branch from a customer who frequently deposited large sums of cash into the branch.
It would be most unusual for Subpostmasters to perform frequent balance snapshots throughout the trading
week. In my experience of hearing appeals, this practice is quiet common in proven theft cases.
(iii) The main frame computers of Post Office Ltd handle on line transactions performed by twenty eight million
customers each week at around sixteen thousand post office branches. We will keep records of the total accounts,
however the costs of extrapolating low level data would be significant , for a case that has already been
established ‘on the balance of probability’.
(wv)
a) The extensive examination of the Horizon System at the time of the discrepancies, subsequent checks at
Fujitsu by myself as part of the appeal investigation as well as the examination of accounts of the system at the
branch have clearly demonstrated that there is nothing wrong with the Horizon system.
b) The transactions were entered into the Horizon system correctly, I conducted several searches with our error
resolution teams with only three minor errors being apparent over a significant period of time. This error rate was
significantly below what would have been expected at a branch that was recording significant account
discrepancies.
In summary, the decision to terminate the contract for services of Mr Castleton was sound and on the balance of
probabilities the cash was removed by a person or persons working within the branch.
(See attached file: Marine Drive Appeal Case.doc)
Hope this helps
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John
Area Development Manager
Network Change
Post Office Ltd
Sales and Service
Upper Floors, The Markets DMB, 6/16 New York Street, Leeds LS2 7DZ
External E -mail: john.h.jonesi_
Mobile:
Mobex::
“Stephen I oe
_<Ste
To
<mandy. talbot!
Office,
17/11/2005 15:22 Bridlington)
Dear Mr Jones,
lam a solicitor at Bond Pearce LLP and have recently taken over conduct of the Post Office's claim against Mr
Castleton. I understand form Ms Oglesby that you presided over his appeal against being dismissed in 2004. Is
this correct?
You will see the gist of Mr Castleton's defence from my email to Ms Oglesby below. In summary, he has obtained
2 expert's reports which state that the deficiencies have probably been brought forward despite the fact that they
have been entered onto the suspense account entry. They suspect this is because the Horizon system, despite the
suspense account entry, has failed to recognise the entry on the daily snapshot.
We need to obtain as much documentation as possible to ascertain whether there may be any truth in this
defence. Ms Oglesby believes that a full set of the documentation which was removed from the post office would
have been sent to you to deal with on appeal. Do you still have these documents? If so, please could you send
them to me?
Please could you also answer the questions that I have directed to Ms Oglesby below?
1 look forward to hearing from you as soon as possible.
Kind regards.
Stephen Dilley
Solicitor
for ane on. Pehal FS Bond Pearce LLP
D
www. w.bondpearce. com
acca Original Message----~
From: Stephen Dilley
} 'mandy.talbot{”
Subject: Urgent The Post Office -v- Lee Castleton (Mariné Drivé Post Office; Bridlington)
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Dear Ms Oglesby,
I have tried unsuccessfully to speak to you today.
Mr Castleton's solicitors are seeking the return of documents that they say you removed from the Marine Drive
Post Office when you did an audit. I understand that not all those can be found.
l attach copies of the following:-
(a) A without prejudice letter dated 30 September from Mr Castleton's solicitors to Bond Pearce;
(b) Bentley Jennison's Report dated 23 September and attachments; and
(c) White & Hoggard's report dated 18 August.
Bentley Jennison state that the deficiencies have probably been brought forward despite the fact that they have
been entered onto the suspense account entry, They suspect this is because the Horizon system, despite the
suspense account entry, has failed to recognise the entry on the daily snapshot. They have drawn this conclusion
through looking at the discrepancy of £3,509.18 on Thursday 26 February 2004. They then suggest that this
double accounting could have continued over a number of weeks and that as such, Mr Castleton's Defence,
“appears to hold potential merit based on the limited documentation" they have so far reviewed. White & Hoggard
reach a similar conclusion in their report.
Bentley Jennison seek:
(i) A full list of all the transactions carried out within the Post Office (he says that it is not good enough that
management information is not available simply because the "month end has been closed down".
(ii) The actual audit report you prepared. He says that the actual report would have been a manuscript writing
document rather than a typed document.
(iii) P and A Reports for weeks 39-52.
(iv) Cash and stock counts for when Mr Castleton began trading and when he stopped being a Post Office Sub-
Postmaster.
(vi) The events log for weeks 39 to 52.
(vii) Transaction log.
(viii) The daily snapshots.
Mr Castleton believes that if he can get these documents, he will be able to undertake a manual reconciliation of
the cash account in order to substantiate his belief that the losses are not real but attributable to computer error.
1. Do you believe the suggestion put forward by the experts could (at least in theory) be correct? If not, why
not?
2. Do you have a list of what documents you removed to do the audit? Is it normal for sub post office masters to
do daily snapshots?
3. Would it be possible to regenerate the above missing records from computer records at the Post Office? If
computer records are not kept centrally, would they be stored on the hard drives of the computers at the Marine
Post Office? If so, could you obtain them?
4. In an email from Fujitsu to Richard Benton dated 5 May 2004, Fujitsu stated “It is possible that they are not
accurately recording all transactions on the system. “ If there have been human errors in recording the
transactions, could an explanation be that:
(a) there was nothing wrong with Horizon, because it simply reflected the information entered on to it; but
(b) if staff punched in the wrong numbers into Horizon, there may have been no real loss (even though Horizon
would show a loss) - it is simply an error in accurately recording transactions.
I look forward to hearing from you as soon as possible.
Kind regards,
Stephen Dilley
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Solicitor
for and_on_ behalf of Bond Pearce LLP
www.bondpearce.com
one Original Message~
From: cheryl.woodward.
[mailto:cheryl.woodwardi I
Sent: 17 November 2005 08:49
To: cath.oglesbyi_..
Cc: Stephen Dilley
Subject: Urgent Re: FW: The Post Office -v- Lee Castleton
Hi Cath
Could you please contact Stephen Dilley at Bond Pearce Solicitors in relation to Lee Castleton formally of Marine
Drive Po. iow what documentation was removed from the office.
Stephen [
Hi Stephen
As you can see I have asked Cath to contact you but here is her number anyway
Thanks Cheryl.
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Appeal against Summary Termination of Contract
Mr Lee Castleton Marine Drive
GRO
Date of suspension: 23 March 2004.
Date of termination of contract: 17" May 2004.
Details of charge: The branch incurred a twelve week period of large
unexplained losses, which were not made good, The Subpostmaster blames
the Horizon computer system for these losses, however no evidence has ever
been forthcoming to support such claims and the contract for services was
terminated on the 17" May 2004 under section 1 paragraphs 5 and 10 and
section 12 paragraph 12.
1.Brief Case History
The Subpostmaster Mr Lee Castleton first reported that a large cash shortage
of approximately £1100.00 had occurred in week 39, although this loss was
made good prior to the cash account being produced. The next large shortage
of £4230.97 was reported in cash account week 43 and this was reported to
the Retail Line Manager.
Subsequently on each of the next three weeks the shortages in the account
are rolled over with each increasing loss being added to the rolling total. At of
cash account week 46 there was a total of £8243.10 in counter losses at the
branch.
This figure was then transferred to the suspense account for cash account
week 47. There were further losses in cash account week 48 of £3509.18 ,
this figure was added to the suspense account to give a total held in table 2a
of £11752.78.
The counter loss of £3512.26 in cash account week 49 was rolled over into
cash account week 50.
The final result in cash account week 50 produced another counter loss
£7140.85, which when added to the loss rolled over from week 49 gave a total
of £10,656.11.
The final rolling loss figure at the audit of the 23 March 2003 found there to
be £11,210.56 short in the accounts with £11,752.78 being held in the
suspense account. The final figure posted to the late account duty totalled
£25,758.75.
Despite receiving advice from the Retail Line Manager and from the National
Business Support Centre Mr Castleton did not implement the advice on
introducing tighter managerial controls to identify the source of the ongoing
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problems, he repeated states that the problems all the fault of the Horizon
computer system.
The balance results that have been recorded by the interim Subpostmasters
since the date of suspension on the 23 March 2004 have in every week
replicated the results that would be expected at a branch that transacted the
level of business of Marine Drive. There have been no issues identified by the
Horizon System Helpdesk, Fujitsu nor have there been any corresponding
transactional error notices that could explain the losses that were reported
over the period in question.
2. Enquiries Pre Appeal
a)
b)
c)
qd)
Enquires were made to Cheryl Woodward at Transaction Processing to
check on the volume of error notices recorded prior to the loss period
between weeks 42 and 51 as well as checking as the level of error
notices that had been received since the suspension on the 23”
March. Only one error notice of note had been received and this was
for the sum of £1256.88 to be charged to the late account. Two smaller
error notices totally £292.00 were also to be charged to the late
account.
An analysis of seventeen weeks cash accounts were undertaken to
establish the following: The arithmetical accuracy of those accounts,
the average volume and value of the transactions at the branch over
this period, the average cash usage, the cash ordering cycle as well as
identifying any transactional areas that were outside the mean average
value for the branch.
A visit to the Marine Drive branch on the 28" June 2004 to investigate
all those transactions that had been identified as being outside the
mean average value. The transactions were proved against the
Horizon receipts on hand in the branch. A number of further checks
were conducted across the receipts on hand to prove the final totals
that appear in the end of week accounts. Again these were proved to
be correct.
Enquires were conducted with the Retail Line Manager as to why the
advice she had imparted had not been followed by the Subpostmaster
and any reason as to why such losses were consistently dismissed by
the Subpostmaster as being proper to the Horizon System.
A daily transactional analysis could be conducted from balance
snapshots in the cash accounts of weeks 46, 47 and 50. The
transactional analysis and cash usage that was conducted indicated
that there were anomalies between the cash declared on each
Tuesday and the final cash declaration on the Wednesday at the final
balance.
A further visit to the branch was made on the 30™ June 2004 to track
the Girobank business deposits that the branch received to establish
the flow of cash into the office. The branch holds the account book for
a customer accoun and this customer regularly deposits
significant volumes of cash every Wednesday. Analysis of all the
customers’ deposits that had been made since November 2003 was
conducted to confirm the deposits had been brought to account. The
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cash account weeks of 46, 47 and 50 where daily transactional
analysis was being conducted were doubled checked to establish the
levels of cash that had been stated as being received from this
customer.
The analysis from ional cash deposits confirmed as being paid
in by the custome! _demonstrated that false cash declarations
were being made as the cash usage that occurred in each week
examined (46, 47 and 50) was not reflected in final cash declared upon
the completion of the balance. The cash that was received from this
customer was not reflected in the cash that was finally declared in each
of the weeks examined.
h) Enquires were made to NBSC and HSH to ascertain and verify checks
that had previously been requested and conducted on the Horizon
system to confirm the systems integrity.
i) Analysis of all the telephone records held by NBSC and the HSH to
ascertain the detail of the calls, check the instructions issued to Mr
Castleton as well as check that the branch did not close due to running
out of cash.
2
3. Appeal Hearing
Notes of Appeal
Mr Lee Castleton
Thursday 1°' July 2004 — Darlington Area Office
Present: Mr Lee Castleton (LC)
Mrs Julie Langham, Representative (JL)
Mr John Jones, Appeals Manager (JJ)
Miss Paula Carmichael (note-taker)
JJ made the necessary introductions and outlined the appeals process. He
explained that a decision would usually be made within seven days.
JJ began the interview by stating that LC’s contract had been terminated and
went on to ask him why he was appealing against this decision. LC replied
that he felt there had been computer errors at the branch and he wanted more
information.
JJ asked LC what cash declaration process he used. LC replied that he used
the cash declaration sheet and counted cash from the safe and drawers. JJ
asked if his cash declarations were accurate and LC replied that they were,
nine times out of ten. JJ asked about his process for ordering cash. LC said
that the car auction supplemented their cash requirement (garage which
makes a large daily deposit of cash) and he made sure they had enough cash
by placing an order before 2pm on a Tuesday. JJ asked LC how he knew
how much cash to order and LC replied that he based it on amounts
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previously used and Chrissie’s experience (assistant). JJ asked what he
would do if there was a discrepancy. LC said he would go through the usual
places to look such as Girobank cheques, re-check the cash and go through
all columns on the final balance.
JJ asked LC what his process was for dealing with error notices. LC replied
that he would work back through the paperwork and make it good before the
next balance.
JJ asked what action he took following the first discrepancy in Week 39. LC
said he made a call to the helpline to say he was short and began to work
through all the figures. LC stated he kept asking for help following
subsequent shortages, but his Retail Line Manager said it could be in the
system and would probably come back.
JJ asked if LC had taken any other action. LC said they had discussed
splitting the stock unit or running a manual week. LC said he had been in
favour of running a manual week to prove the system was wrong, but this had
not actually been done and he was then suspended.
JJ asked LC what system problems he thought were happening. LC said that
they constantly had to re-boot the system, the screen was freezing, ONCH
was quadrupling and there were so many other things. LC said he thought it
might be a software problem and at this point JL asked if it was not possible
for the hard disk from the computer to be taken away to be checked. JL went
on to say that she thought it appeared that there was no actual cash missing,
more that the figures had been misinterpreted on the lines.
JJ explained that the actual cash account adds up and that there was only
three things the computer could do:-
e Change balance forward figure
e Increase payments
e Increase receipts
JJ produced a report showing a 17-week cash analysis. He showed this to
LC and asked him if it surprised him. LC asked how the report was
generated, to which JJ replied that it was taken from the cash accounts. LC
then responded ‘no then’, indicating that the report didn’t surprise him.
JJ then produced a report showing a cash analysis for cash ordering which
showed rems inbound, average cash in hand, as well as tracking cash in and
cash ordered. JJ asked why extra cash had been ordered to which LC replied
‘I haven't got a clue’. JJ went on to talk about a figure from the report, which
showed that the branch already had £60K, but another £40K had been
ordered. JJ said there was a higher trend between weeks 42 and 49 of how
much cash had been ordered. The difference between payments and
receipts is around £25K-£35K, but the trend in weeks 42 to 49 still was that
significantly higher amounts had been ordered. LC said he only ordered what
he felt was required. JJ said that for the entire period they actually needed
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between £200K-£265K, but had ordered £305K, of which £20K had gone
back.
JL said at this point that she felt her branch would be similar and went on to
explain that because of pre-planning, she had had to ring up for extra cash in
fear of running out, which had happened a couple of times. JL said it was
difficult to gauge how much cash you would need.
JJ went on to ask LC what had happened to all the extra cash. LC replied
that he didn't know.
John then went on to talk about two snapshots from 10/2/04 and 11/2/04. On
11/2/04 there was £39K in receipts and £23K had been paid out. The cash
declaration from 11/2/04 stated £33K, when it should have stated £41K. On
that particular day, the auction had paid in £16.5K in cash. JJ asked LC to
explain these figures. LC said that it was a problem with Horizon not adding
up.
Looking at the cash declaration, JJ asked why this was not declared on
Wednesday 11/2/04. LC said that it must be within the paperwork. Declare
£68,163 on Tuesday, differential £16K receipts and pay out £12K. Should lock
up £72K — declare £81K in office. Declared false figure.
JJ asked why in Week 50 did he declare exactly the same figure of £3,500
each night on the snapshot. LC said it was all generated within the office.
JJ said that LC had told him he had declared accurate cash figures. LC said it
was generated from the system.
JJ said that £16.5K had physically come into the office in cash, but that the
cash declarations did not physically reflect this. LC responded that all figures
are generated from the machine that, in his view, is not working. JJ asked LC
what evidence he had of this and explained that the same Horizon kit was still
in the office. LC asked JJ what happened as part of the audit upon
changeover. JJ explained that they would transfer the difference out and that
the incoming subpostmaster does not carry any loss. A figure of £25K would
be transferred to Chesterfield. JJ stated that since LC had been suspended,
there had been no discrepancies over £22.00 at Marine Drive.
JJ said that Fujitsu had looked at the system on two occasions remotely and
have constantly said that the cash declared does not match. LC said that
checks had only been done going back to 1*' March 2004, whilst the problems
had started on 13" January 2004. LC asked why had they not checked back
to when the errors had first started. JJ said that Fujitsu cannot find any
problem with the system.
JJ went on to ask LC about his aversion to the possibility of theft when
mentioned by Cath Oglesby on a visit to his branch. LC said that he was
there most of the time and Chrissie was there all of the time. LC went on to
say that Chrissie had worked there for 17 years and there was no chance that
anyone was left unsupervised. JJ asked LC why he was averse to advice
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from Cath. LC said that in his opinion it was impossible for someone to steal
through that period of time. LC went on to say that he was averse to the
suggestion of theft after 8 weeks of reporting misbalances. LC said that all
figures are generated within the office and that they had been through all the
figures. He said he had tried to find the problem all along, but didn’t believe it
was due to theft as no one was left unsupervised. He said he had received
no support from Cath Oglesby from the start.
JJ said that checks had been done to test the integrity of the system. JJ
explained that Clear Desktop is an integrity system function that checks data.
LC confirmed he understood this.
LC said he could not understand why after week 1 or 2 someone couldn't
have come to support him. JJ explained that the Horizon system has to have
a high resolution of integrity.
JJ moved on to talk about snapshots taken on 9/3/04 (week 50) and asked
why the net discrepancy is the same throughout the week and different on the
final one. LC said it was because the machine is not working and that the
discrepancy should have showed on the top of the snapshot. At this point LC
handed JC the instructions manual.
Whilst JJ read this, LC said ‘John, you are a specialist aren’t you?’. ‘Are you
not paid separately for Horizon?’ LC specifically asked for his two comments
to be included within these interview notes.
JJ said he would have to take all the information away and look at it
thoroughly, as well as taking advice from the Horizon team. JJ said suspense
account checks had been done and this was just one issue in a whole set of
issues.
JJ asked LC to show him cash declarations for weeks 45 and 46 and asked
him why he was doing a cashflow before his cash declaration. LC said he
was able to have a look at how it was showing up cash. Again, JJ asked LC
why he was doing his cash declaration after producing a cashflow. LC replied
‘I haven't got a clue. NBSC said the facility was there’. LC said he didn't
know what it was for.
JJ then referred back to why larger amounts of cash had been ordered. LC.
replied that he must have needed it. JJ asked LC if he had taken the money.
LC replied ‘no, absolutely not, 100%’. LC said that two tests had been done
throughout this period and found nothing wrong, but obviously there was.
JJ asked LC if he wanted to add anything further. At this point LC handed JJ
a log of phone calls to the helpline etc. JL said she thought it had took a long
time for Cath Oglesby to get involved, especially as they were new to the
office. JJ explained that the role of a Retail Line Manager has changed and
they are now not the first point of contact for subpostmasters, the helpline is.
JL asked JJ if he personally felt that LC had had enough support and JJ
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confirmed he felt the support he had been given mirrored the support given to
every subpostmaster in Post Office Ltd.
JJ closed the interview.
4. Post Appeal Enquiries
a)
A further check was made to Transaction Processing late account duty
to confirm that there were no other outstanding errors notices in the
system.
The Horizon final account declarations were handed to Network
Development Manager, Anita Turner who has no knowledge of the
case to conduct an analysis of the losses and the movements into the
suspense account between cash accounts weeks 45 and 50. The
results of this analysis were communicated in a letter to Mr Castleton
on the 8" July 2004.
5. Factors affecting the decision
a)
c)
&
fy
The branch incurred unprecedented declared losses over a twelve
week period , for which Mr Castleton could only offer the explanation
that it was the Horizon System that was causing the errors.
The Subpostmaster has not during any period both prior to his
suspension on the 23% March 2004 and the appeal hearing on the 1°
July 2004 provided evidence that could be used to further investigate
or corroborate the allegations that he continually makes.
The checks that have been conducted by Fujitsu indicate that the
branch makes false cash declarations, this analysis was further
corroborated with the daily account analysis that was conducted as
part of the pre appeal enquiries. Mr Castleton was unable to offer
explanations for this, other than it was a fault on the system.
The weekly analysis that was conducted identified that the branch
required approximately £265k to meet its transactional requirements
between weeks 42 and 49, however the cash remittances were
increased outside the normal previously ordered remittances. This
resulted £305k being ordered over the same period, with only £20k
being returned. In each case the additional cash is ordered prior to a
subsequent cash discrepancy being declared. Mr Castleton could offer
no explanations as to why such sums of cash had been ordered that
were in excess of what was actually required.
That no error notices are evident through Transaction Processing to
provide an explanation to the counter losses that have been declared.
The daily cash transactional analysis that was conducted identified in
cash accounts week 46,47 and 50 that there was clear evidence of
false cash declarations being made as the cash received from a giro
customer was not reflected in the final cash declaration at the branch.
Mr Castleton was unable to offer any explanation for such
discrepancies, other than it ‘was the system’.
g) That the branch has never incurred such large losses since the
suspension of Mr Castleton, despite a number of interim
Subpostmaster operating the branch. Mr Castleton could offer no
explanation as to why accurate balances are being recorded on the
system that he repeatedly alleges is corrupt.
h) That Mr Castleton when questioned denied ever taking the cash
himself.
i) The account declarations and movements into the suspense account
have been extensively examined by both the Retail Line Manager and
colleagues as well as an experienced manager in London to confirm
that the accounts declared by the Horizon system and the suspense
account are functioning correctly.
j) That the branch never ran out of cash and subsequently closed, if the
system was declaring spurious entries in the account there would
always be sufficient cash in the branch to meet its requirements. The
excess ordering of cash ensured that the branch always remained
trading, however Mr Castleton was unable to explain as to why the
additional cash was required in the branch if it was a system error as
any such system error would not affect the cash on hand as this was a
physical entity.
k) The accounting practices of Mr Castleton indicates that he chooses to
declare losses, make good error notices and declare the true position
of his accounts as he pleases. The evidence suggests that the
continuing practice of rolling losses together without seeking authority
to carry them even after the first amalgamated losses are introduced
into the suspense account in week 47, this practice continues from
week 49 until 51.
6. Conclusion
The case has a number of facets interrelated to the branches accounts apart
from the immediate headline issue of the large and unprecedented counter
losses declared at the branch.
The extensive analysis that has been conducted through the accounting
documentation made available for the appeal case as well as the cross
examination of transactional records at the branch indicate that the
transactions performed on the whole are done so accurately and in
accordance with operational guidelines.
This fact is corroborated by Transaction Processing who do not have
outstanding or waiting system adjustment error notices that could other wise
explain such discrepancies. There are only three error notices, and all of
these are to charge that have been added to the late account of the branch
and in each case they relate to a period immediately prior to the suspension
of Mr Lee Castleton.
The cash usage analysis and tracking of transactions that fall outside the
mean average value for the branch however indicate another factor to the
case. The cash that is ordered for the branch requirements is systematically
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increased on four occasions, following the increases in the branch remittance,
their occurs a large cash discrepancy. Such trends are not in keeping with a
computer system error as Mr Castleton maintains, although he is unable to
provide any form of satisfactory answer as to why there is a need to keep
ordering extra cash for the branch.
The normal process for ordering cash at the Marine Drive branch is that the
branch contacts the Cash Centre prior to 14.00pm on a Wednesday to place
an order that will be delivered a day later on a Thursday. At this point of the
week the branch should be able to accurately estimate the actual cash the
branch requires. However in the weeks 42 through to 50 this appears not to
be the case.
The daily cash usage from cash accounts weeks 46, 47 and 50 present
another anomaly when the actual cash usage is compared with the actual
cash received from a Giro business customer, then the cash declarations
made on the Tuesday and Wednesday of each of these weeks has been
demonstrated to be false. Mr Castleton was asked on several occasions to
explain why such entries have been made and he was unable to offer any
reason other the same ‘it’s the system’ fault.
The printouts from the snapshots and final balances have been examined by
numerous managers all who have extensive experience in the use of the
Horizon accounting system as well as the functionality of the suspense
account, all have arrived at the same conclusion independently that the
system is functioning and not creating spurious entries.
Mr Castleton was given advice as to effective management of his accounts as
well as applying a proven methodology to identify either the losses or in the
event of misappropriation the person perpetrating such activity, it is
concerning that he chose to ignore such advice and blindly blame everything
on the computer system. Such an approach by Mr Castleton gives me cause
for concern as he is a relatively new Subpostmaster and is making definitive
statements about a computer system with out even considering any other
case for the account discrepancies.
To summarise, when Mr Castleton was presented with the factual
occurrences from the accounts he has produced that indicate that false
declarations and practices that do not equate to the normal running of his
branch he is unable to offer any explanation other than blaming the Horizon
system.
Mr Castleton has however failed to provide any evidence nor show any from
of trend within the branches accounts that would indicate that there was a
problem with the computer system.
He has spent much time and effort in asking irrelevant and unrelated
questions to the case and these I can only conclude are borne out of a wish to
distract away from the actual facts of the case and the unexplained counter
losses.
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It is my opinion that the losses incurred at the branch are genuine and that the
decision to initially suspend Mr Castleton as a precautionary measure and
ultimately terminate his contract for services were soundly based and
warranted in the circumstances.
7. Decision
Appeal Dismissed.
8. Recommendation
The case in respect of the losses was not investigated by Security and
Investigation, however I have considerable co in payment
practice operated by the Girobank customer! 4
The customer leaves the in payment book in les and
apparently entrusts the Subpostmaster to complete the deposit entry and
process the transaction following their cash deposit.
No customer receipts are ever handed back to the customer as these are left
with the in payment book.
I was able to establish that all the deposits entered into the customers in
payment book from November 2003 until June 2004 were processed through
the Horizon system.
What I was unable to establish was whether the amounts the customer
deposited at the branch were the same amounts that were entered into the
customers deposit and processed in the same time window.
I would request Security and Investigation to check this customers actual
deposits for the period 42 to 51 as I have already established that the cash
declarations made where the daily analysis in week 46, 47 and 50 does not
match the cash that should have been declared.
I believe that there may be a case to answer in respect of Giro account
suppression.
John Jones
Appeals Manager
Post Office Ltd
Calthorpe House
15-20 Phoenix Place
London
WC1X ODG