POL00120471
POL00120471
Page I of 3
Mike Granville
From: Lynn Hobbs
Sent: 22 July 2010 14:50
To: ‘Sue Huggins; Nick Beal; pa J Wright
Ce: Paul Budd; Mike Granville
Subject: FW: Horizon - Urgent Please
Attachments: HorizonDefence.xis; HOL Incidents to 01072010.xis
Sue, Nick, Philippa
In the time available the info below is as comprehensive as it can be. Please come back to me if you fee!
what is here isn't sufficient to enable a briefing for Dave.
My thanks to a number of people who helped pull all of this together namely John Breeden, Adrian Wales,
Dave Pardoe, Sue Lowther, Gary Blackbur
lynn
qT
I spoke briefly to Nick about training and was hoping to see the comment included on this. In terms of
training at the initial rollout of Horizon branches had offsite training, onsite training and support and follow-
up support from Retail Network Managers. There has always been adhoc training available if a branch is,
having problems and currently this is available remotely as many issues can be resolved by someone
with the right level of knowledge and understanding talking the problem through, or by someone attending
the branch and providing some additional on-site training and coaching.
When a subpostmaster joins he/she receives a minimum of 1 week classroom training, 6 days on site
training, support for a follow-up balance and three post transfer contacts (two remote and one F2F) which
take place at one, three and six months. They are also in a ‘nursery group’ which means their calls are
tracked by NBSC and they receive extra calls from them.
Security
There is an email below from Dave Pardoe with an attachment and you'll see that there is potentially
more to come. I've now received an email from Sue Lowther which I am forwarding in it's entirety in the
next email
Horizon outages
There is an attachment above detailing all the outages to date
Contractual info
It simply isn’t possible to provide the data on terminations over the last 10 years without spending a huge
amount of resource and time and obtaining files from tron Mountain ~ none of which can be done within
the timescale.
There are a number of discrepancies P&BA are managing in line with a dispute process agreed with the
NFSP. Andy Winn has provided an extensive spreadsheet which I can send but I've gone back to him
and asked that he provided a short bullet point summary
In terms of subpostmaster terminations the detailed information relating to the reasons for the termination
of their contract is filed in their individual papers with an electronic copy on our EFC. To trawl this
information would require quite a lot of time so I've summarised the high level details below for the period
from March 2007 to date. My suggestion is that we go with an average number of around 100 contract
terminations each year the majority of which are because the agent has misused Post Office funds for
personal use.
Reason for Suspension
‘Other
(POCA! Res
Noof I Noof I Audit I Bankruptey/ Police Summary D
I agents I Branches I shortage I Administration I Property I Action) I Termination I Ten
190 198 184 4 3 2 94
229 258, 217 4 1 7 414
214 228 199) 1 3 44 94
a 43 7 0 3 i 7
{dealt with a case myself which came to Paula from Mark Baker, NFSP exec. The case was Westfield,
‘Yeovil and the subpostmistress was Julie Ford. Not sure if this is one of the cases being included?
Horizon Online
To date 18 subpostmasters have had their contracts suspended following cash checks carried out as part
‘of the Horizon Online migration. The fact that these are part of the migration activity inno way means
that shortages are related to Horizon and no-one has stated that as part of any of the subsequent
investigation. We do need to be careful that these are not being linked to Horizon or Horizon Online, they
are simply cash checks carried out because the opportunity is there to do so. To date we've terminated
five subpostmasters, reinstated one and the remaining 12 are being dealt with by Contract Advisors
Process for carrying out cash checks
All notes are counted using the following method:
‘* If note packets are sealed we open and count one of each denomination as a sample and take the
fest as correct
‘+ Ailloose bundles are counted but if there are excessive numbers of loose bundles of notes
(migration support office left to determine what is possible) the instruction given is to count the notes
10/01/2011
POL00120471
POLO00120471
Page 2 of 3
in up to a third of the loose bundles, weigh the remainder and fick through these to ensure the notes in the bundle are of the same denomination
* Coin — instruction is to count the face value of the coin in sealed cloth or large plastic bags as per the amount shown on the sealed bag e.g. £250 x S0p
coins, coin in plastic bags are counted as per the value shown on the bag e.g. £5 x 10p coin and the coin in the coin hoppers is assessed using the
‘amount indication marks on the actual coin hopper
+ Unusable notes e.g. mutilated notes are counted
+ ATMs ~if possible we count the cash in the ATM but this is only possible if the migration support person has the working knowledge of an ATM to
enable them to carry out a check of the machine, a note counter is available, access can be gained without breaching security and there is time to do so
without severely delaying the opening of the branch. Ifa check is carried out the cash in the ATM is balanced to the figure obtained from the ATM
printout. If not the cash in the ATM is assumed to be correct as per the ATM stock unit cash declaration from the previous evening.
‘+All amounts are recorded on a proforma and checked against the cash declaration report from Horizon
* Discrepancies over £1k are referred to the migration support team leader who follows a number of checkstep questions to satisfy themselves that the
cash check has been carried out correctly. The team leader will then contact the Contract Advisors and if no immediate reason for the discrepancy is
identified e.g. large transaction correction in Chesterfield not yet notified to the branch, then the subpostmaster will be suspended pending a full audit.
‘Ifthe full audit verifies the shortage the subpostmaster will remain suspended and be invited to an interview with the Contract Advisor which may result
in the termination of their contract.
Dave King’s reply to date:
Ihave been involved in Horizon Security and integrity since 1996. Since then I have examined a number of allegations of integrity issues. I have found no
evidence of any integrity issues that might affect the balance of an office. All transactions and signed and sequenced such that the failure of any component
would result in a system alert As transactions are committed "atomically" the changes to the office accounts state would only be written to the system when
the transaction was completed and basket settled.
Will look in more detail and try to get you something later
Thanks
Dave King (CISSP, MSc)
ity Architect
Dave Pardoe’s email (attachment above)
From: Dave Pardoe
Sent: 22 July 2010 11:59
To: Lynn Hobbs
Ce: John M Scott
‘Subject: Horizon - Urgent Please
Importance: High
Lynn, you will have a number of mails, from me up to late lunch around this as I'm waiting from a more technical response from Dave King; in essence then:
‘Summary surrounding specifically mentioned enquiries from Rod Ismay
Alderley Edge:
Prosecution for theft of £44.5K. Theft charges reduced to false accounting and conviction on that basis and suspended sentence awarded. Theft charge
proved problematic as the paper Branch Trading statements were illegible due, seemingly, to printer quality. This failing lead to comments by the Judge
around evidencing Horizon losses and this seems to have been interpreted as a wholesale critique of Horizon efficacy.
Castleton
This is a Police liaison enquiry in relation to the apparent theft and renegotiation of DVLA tax discs; not sure whilst it is specifically mentioned as a potentially
contentious Horizon prosecution / loss.
Attached is a simple spread sheet whereby Horizon “issues” have been forwarding as a defence / potential defence to prosecuted losses. A number of these
remain ongoing with at least two due to be supported by expert witness (from our side) in regards to the efficacy of Horizon.
2
The picture at HNG Migration has been as follows:
4423 branches migrated
23 suspensions revealing deficiencies of £76K
5 formal investigation cases raised for £58.5K of the losses above
18 of the 23 dealt with by contract involvement
In essence the process for “at migration” deficiencies sees losses of >£1K raised to the Fraud Strand for discussion and intervention dependant on exact
circumstances and loss background / mitigation. As you are aware Lynn not every case would be taken to prosecution and in particular the lower level /Ioss
repaid instances.
a
‘The existing case recording system has been in play now for the last 5 years. Whilst it may be possible to interrogate historical records older than this the
task will be a long one and would not meet today's deadline:
Covering
2005 to
date
382 Cases
forwarded
for legal
advice to
prosecute
230 Cases
saw
prosecutions
brought
4 Case withdrawn
18 Cautions
169 Guilty
38 NFA
TN/NI1/9N11
POL00120471
POLO00120471
Page 3 of 3
1 Not Guilty
230
‘The figures above encompass all prosecution activity whether SPMR or employee (again due to limitations in the recording process); it's fair to say however
that the vast majority are for SPSO enquiries following a deficit. So, 230 prosecutions brought and the 1 not guilty verdict concerned a Postage Label enquiry.
‘As detailed a further more technical response will come from Dave King.
Clearly, a number of recoding processes have been of late improved given the types of Horizon challenges received and accompanying FO! requests.
If you require anything further please call.
Regards
Dave Pardoe
Senior Security Manager
10/01/2011
POL00120471
POL00120471