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Offender 1 SIMS/12986/6883
OFFENCE : Theft/False Accounting
Name: David Peter Yates
Rank: Subpostmaster Identification 1
Code:
Office: Walton on Thames MSPO FAD Code 090 023
73 Hersham Road
Walton on Thames
Surrey
KT12 1LN
Age: Date of Birth:
Service: 9 years Date Service
Office Printout:
Nat Ins No:
Home Address:
Contract for Services
Suspended:
Prosecution Authority:
Discipline Manager:
Commenced:
At Appendix: C
07 March 2003, by Elaine Wright, Retail Line Manager
John Legg (Agency Contracts Manager)
Elaine Wright (Retail Line Manager)
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Offender 2 SIMS/12986/6883
OFFENCE : False Accounting
Name: Lindsey Susan Smale
Rank: Counter Manager Identification 1
Code:
Office: Walton on Thames MSPO FAD Code 090 023
73 Hersham Road
Walton on Thames
Surrey
KT12 1LN
Age: i GRO \ Date of Birth: I GRO
Service: 9 years Date Service 13 September 1993
Commenced:
Office Printout: At Appendix: N/A
Nat Ins No: N/K
Home Address: N/K
Contract for Services N/A
Suspended:
Prosecution Authority: John Legg (Agency Contracts Manager)
Discipline Manager: Elaine Wright (Retail Line Manager)
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Legal Services
This case concerns an audit discrepancy at Walton on Thames Post Office, 73 Hersham
Rd, Walton on Thames, Surrey, KT12 1LN. The circumstances leading to the interviews of
those named in the preamble, and suspension for contract of services, are as follows.
On Friday 7" March 2003, I received a telephone call from Paul Dawkins, Investigation
Team Manager. I was informed that an audit was occurring at Walton on Thames Post
Office and the indications were that a substantial shortage within the accounts was going
to emerge. I then made arrangements to attend the office with Rob Fitzgerald,
Investigation Manager.
On arrival to the Post Office, I introduced myself and Rob Fitzgerald to the Subpostmaster,
David Yates, and informed him of the reason for our presence. I also explained that prior
to determining a course of action, I needed to speak with the Audit Manager, Paul Bosson,
in order to receive an appraisal of events thus far. Mr Yates agreed that a rest room within
the premises could be used to this effect.
Paul Bosson informed me that he had received a telephone call the previous day,
Thursday 6" March 2003, from Michael Dadra, Operations Manager within the Security &
Audit Team. The details of this call concerned discrepancies in post audit checks, relating
to Walton on Thames Post Office and an audit conducted on 15 November 2002. In
summary, part of the audit process involves the recording of remittances that have been
despatched from Post Offices. At some stage after an audit, checks are made against
figures that Subpostmasters claim to have been remitted out from their office, against
figures recorded as being remitted in by Cash Centres. It had been identified that the
alleged remittances on the audit of 15" November 2002 had not been declared as
received by the Cash Centre, or indeed recorded on the cash account submitted by
Walton on Thames Post Office. In effect, there was a discrepancy in the amounts sent
and the amounts received totalling £330,000.00.
Due to this discrepancy, Mr Bosson, accompanied by Sue Le May, Auditor, had attended
Walton on Thames Post Office on Friday 7" March 2003.
On commencement of the audit, Mr Bosson asked Mr Yates for a balance snapshot. This
document, obtained from the Horizon computer system, indicates the levels of cash and
stock that should be on hand. The snapshot was produced and a part copy is enclosed at
Appendix B. It can be seen that the cash figure is recorded as being £410,354.67.
Mr Bosson then asked Mr Yates to provide the office cash declaration from the previous
day, Thursday 6" March 2003. A cash declaration should be completed by outlets on a
daily basis, at the close of business, ensuring that the amount of actual cash on hand is
recorded. This document was located and provided to Mr Bosson. A copy is enclosed at
Appendix B. It can be seen that the total cash figure is recorded as being £43,566.00.
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Clearly, there was a difference in the amount of cash that should have been on hand
(snapshot) and the amount of cash actually on hand (declaration). Accordingly, Mr Yates
informed Mr Bosson that a remittance had been despatched the previous day, Thursday
6" March 2003, but it had not been entered onto the Horizon system. This would have
explained why the snapshot was showing a much larger cash figure than the declaration.
In order to verify what Mr Yates had said, Mr Bosson then requested the Cash In Transit
(CIT) receipt book. This book details outward remittances and a signature is obtained
from the CIT officer who collects the remittance. On examination of the book, Mr Bosson
pointed out that the last entry concerned a remittance on Wednesday 5™ March, not
Thursday 6" March. A copy of the last entry is enclosed at Appendix B.
For further verification, Mr Bosson asked Mr Yates for the P884 forms (subsequently
determined as being P5257MA forms). These forms are used by Subpostmasters to detail
a breakdown of all cash being remitted. The top copy of the forms are enclosed in the
relevant pouches and the undercopy of the forms are retained in the Post Office, for audit
purposes. It should also be noted that the maximum amount of cash, which can be placed
in a pouch, is £20,000.00 and a P5257MA should be completed for each pouch.
Accordingly, there should have been a number of P5257MA undercopies to reflect the
alleged remittance of the previous day
Mr Yates claimed he could not find the forms. At this stage Mr Yates also informed Mr
Bosson that no remittance had been despatched the previous day and that the audit would
probably result in a shortage of some £350,000.00.
A report detailing the events so far was written by Mr Bosson and he and Mr Yates signed
the report. A copy of the report is enclosed at Appendix B. The matter was then referred
to the Investigation Team.
I then spoke to Mr Yates, inviting him to attend a tape-recorded interview and explaining
his legal rights and his right to have a friend present during the interview. I also cautioned
Mr Yates. Rob Fitzgerald made a notebook entry, detailing this conversation. A copy of
the notebook entry is enclosed at Appendix C. Mr Yates agreed to be interviewed.
At 12.10 hours I commenced a tape-recorded interview with Mr Yates. Also present was
Rob Fitzgerald. Mr Yates declined the right to seek legal representation or advice and a
copy of form CS001 is enclosed at Appendix B to this effect. He also declined the offer of
a friend to be present during the interview and a copy of form CS003 is enclosed at
Appendix C to this effect.
The interview consisted of one tape (seal ref 046861) and was concluded at 12.54 hours.
A taped summary has been prepared and associated at pages to of these papers.
Mr Yates admitted to inflating his cash figures for the past 3 to 5 years in order to conceal
an ever-increasing shortage. Given the length of time of this activity, he could not recall,
specifically, when this falsification of his accounts commenced or the amounts, specifically,
that had accrued over the period. He was aware that when completing the last cash
account, on Wednesday 5" March, he inflated the cash by £350,000.00.
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With regards to why this activity had been occurring, Mr Yates claimed, at various points
during the interview, that cash was used to pay for losses, error notices, staff wages,
personal bills and repayments on loans. He further claimed that expenditure associated
with the Post Office and the retail area was exceeding his income, and that over time the
amount had ‘mushroomed’, culminating in a deficiency of £350,000.00.
Mr Yates claimed no one else was aware of what he was doing and that he had completed
the accounts each and every week over the past few years. He also admitted to falsely
claiming outward remittances at two previous audits (now known to have been 15
November 2002 and 23" May 2002).
A number of cash accounts were shown to Mr Yates during interview. Two of these
related to weeks 9, ending 29" May 2002, and 10, ending 5 June 2002. The signatures
on these accounts appeared to be different and Mr Yates claimed that his colleague,
Lindsey Smale, had signed the account for week 10. He further claimed that he trained
her on how to prepare the accounts and whilst she hadn’t physically completed the
account, she had signed it.
Following the interview, I spoke with Elaine Wright, Retail Line Manager, who indicated
that Mrs Smale was making her way to Walton on Thames Post Office. I was informed
that Mrs Smale might be considered with regards to running the outlet on a temporary
basis, until the final outcome of the investigation had been determined. I was also
informed that Mrs Smale had claimed to have completed the cash accounts in May/June
2002, when Mr Yates took a vacation in the United States.
This obviously implicated Mrs Smale in the investigation, as Mr Yates claimed to have
falsified his accounts for the past 3 to 5 years and it therefore required an explanation as
to how a balance was achieved during these 2 weeks. It was decided that Mrs Smale
would be invited to attend an interview on her arrival to the office.
In the meantime, a search of the Post office was instigated. Mr Yates provided consent for
the search and a copy of forms CS005 and CSOOS5iii are enclosed at Appendix B. A
quantity of documents were seized as detailed on the forms. The search commenced at
14.00 hours and concluded at 15.15 hours. Paul Dawkins, Investigation Team Manager,
had also arrived by this stage.
Mrs Smale arrived and following introductions and the reason for our visit, I invited her to
attend a tape-recorded interview. I explained her legal rights and right to have a friend
present during the interview. Rob Fitzgerald made a notebook entry, detailing this
conversation. A copy of the notebook entry is enclosed at Appendix C. Mrs Smale agreed
to be interviewed.
At 15.38 hours I commenced a tape-recorded interview with Mrs Smale. Also present was
Rob Fitzgerald. Mrs Smale declined the right to seek legal representation or advice and a
copy of form CS001 is enclosed at Appendix B to this effect. She also declined the offer of
a friend to be present during the interview and a copy of form CS003 is enclosed at
Appendix C to this effect.
The interview consisted of one tape (seal ref 046862) and was concluded at 16.00 hours.
A taped summary has been prepared and associated at pages to of these papers.
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On examination of the cash accounts for weeks 9 and 10, and in particular the signatures
on them, Mrs Smale agreed that they reflected Mr Yates period of absence and that she
had completed and signed them. She further claimed that Mr Yates informed her that
there was £250,000.00 within the safe, relating to a closed Post Office that was being held
by Walton on Thames Post Office. This figure was incorporated into the cash account for
both weeks, in addition to the other cash physically on hand. Mrs Smale stated she did
not have any concerns over this as she had known and worked with Mr Yates for many
years and she took what he had said to be true.
Following the interview of Mrs Smale, arrangements were made to attend the home
address of Mr Yates, in order for a search to be carried out. Mr Yates provided consent for
the search and a copy of forms CS005 and CSOOSiii are enclosed at Appendix B. A
further quantity of documents were seized as detailed on the forms. The search
commenced at 17.30 hours and concluded at 18.30 hours.
It can be seen against entry 13 (item RF/16) on the CSOOS5iii, that in relation to the
passport seized, there is an immigration stamp indicating that Mr Yates was in the United
States from 25" May 2002. Mr Fitzgerald pointed out that during interview, Mr Yates
claimed he had not been away. Mr Yates stated he wasn’t really thinking straight. A part
copy of the passport is enclosed at Appendix B.
Since the interview, I have examined all documentation in this case. Further
documentation has been identified as relating to the two audits in 2002.
Audit 23 May 2002 - Within the cash account file, was a quantity of P5257MA forms,
datestamped 23 May 2002. There are 15 such forms and the amounts on them total
£285,000.00. Copies of these and part of the relevant cash account for week 9, ending
29"" May 2002, are enclosed at Appendix B. There is no outward remittance for the
amounts on the P5257MA’s. A copy of the diary entry of 24"" May 2002 (item RF/10) is
also enclosed at Appendix B, annotated ‘David off 2 weeks USA until 12 June’.
Audit 15" November 2002 — On examination of the CIT book, there are 2 pages
datestamped 15" November 2002, detailing 16 pouches for collection. Copies of these
and a further page datestamped 13" November 2002, and the cash account for week 34,
ending 20" November 2002, are enclosed at Appendix B. It can be seen that the
signatures on the CIT book appear to be in the name of Peter Rodriguez, though the
signatures are different. There is no outward remittance for the pouches indicated.
In addition, Elaine Wright, Retail Line Manager, has found Horizon printouts, whilst
subsequently clearing the office with Mrs Smale. These printouts detail a remittance of
15'" November 2002, totalling £330,000.00, and the subsequent reversal of this remittance
on 20" November 2002. A copy of the printouts are enclosed at Appendix B.
The final audit result was a shortage of £359,325.71. A report and breakdown of this
figure has been prepared by Mr Bosson, Audit Manager, and a copy is enclosed at
Appendix C.
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In respect of Mr Yates reasons for falsifying his accounts, it should be noted that due to
shortages being covered up, by the inflation of his cash, a true picture of actual shortages
accrued will be impossible to determine. In respect of error notices, 2 schedules are
enclosed in Appendix C. The first details all error notices since January 2000. The
amount of charges is indicated as £9,089.23 and the amount of claims is indicated as
£12,293.73, thus implying that Mr Yates has actually gained financially from the error
notices. The second schedule , Holding Account Analysis Report, details error notices
since 1997, which, for various reasons, have been written off by Post Office Ltd.
These figures suggest that the financial difficulties cited by Mr Yates, in these areas, do
not equate to the amount of the loss in this case. Additionally, given that his Post Office
salary is £70,000.00 per year and the retail area of the Post Office provided £40,000.00
per year, the loss seems significantly larger than it already is.
There are no indications, within the items seized on the searches, that large funds have
been deposited into accounts or savings plans and Mr Yates does not appear to be ‘living’
beyond his means. Bank disclosure authority has been granted by Mr Yates, though this
information will take a while to obtain. In the meantime, it should be noted I am liasing with
Joe Ashton, Head Of Civil Litigation, with regards to the recoveries of monies owed.
It may be agreed that Mr Yates has clearly committed criminal offences during his period
as Subpostmaster. You will no doubt advise on possible charges in due course. I have
enclosed part copies of a selection of cash accounts at Appendix B. It should be noted
that these reflect cash accounts referred to during interview, the first account within the
cash account file obtained (week 30, ending 20" October 1999), other cash accounts over
the past few years and the last cash account produced by Mr Yates (week 49, ending 5"
March 2003). These may be of use if a selection of specimen charges are drafted in
relation to theft and/or false accounting, as the cash on hand figures are detailed within the
information.
In my opinion there are insufficient grounds to pursue a prosecution against Mrs Smale.
She made no incriminating admissions during interview, was only involved solely with 2
accounts, and whilst the amount of the loss is significant, there is no evidence to dispute
her version of events or that she was aware of the situation.
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In accordance with Casework Management guidelines, a copy of this report, the taped
summaries and a revised/factual report, for the attention of the Discipline Manager, Elaine
Wright, have been emailed to S&A Casework, for distribution as appropriate.
The Working Tapes of the interviews are enclosed at Appendix B. The Master Tapes have
been retained by me.
All original exhibits in this case have been retained by me with photocopies, where
applicable, being enclosed at Appendix B.
This case is submitted for the current position to be seen and noted and for consideration
to the prosecution aspects of this case.
Dave Posnett
Investigation Manager
Post Office Ltd
Investigation Team
Market Square
Woking
GU21 6DG
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