From: Paul Miele
Policy Division
9 September 2013
Stephen McGowan
CORRESPONDENCE FROM MR WILLIAM DORAN REGARDING POST
OFFICE LTD AND DEFECTS IN THE HORIZON COMPUTER SYSTEM
1. Mr Doran wrote to the Lord Advocate on the 24" July 2013 to
highlight concerns that his wife was wrongly reported by Post Office Ltd
for alleged embezzlement as a result of defects in the Horizon computer
system used by Post Office Ltd. The letter and enclosures are attached at
ANNEX A.
2. Post Office Ltd also contacted the Crown in late July to highlight
potential issues with Horizon and a meeting was held at Crown Office on
5‘ September 2013 to establish to what extent, if any, the defects in the
Horizon system are present in live or pending prosecutions in Scotland.
Background
3. Mrs Doran was reported in 2004 for allegedly embezzling £7583
whilst employed as a counter clerk by the Scottish Midland Post Office
Franchise (SCOTMID).
4. In brief the case hinged on the fact that the Post Office computer
system ‘Horizon’ recorded a shortfall of money which Mrs Doran could not
explain. Mrs Doran maintained the shortfall was due to an error with the
Horizon computer system. Ultimately the case was found not proven and
Mrs Doran was acquitted on 22™ March 2006.
5. The case papers are attached at ANNEX B and a report from the
local office including the procedural history of the case is attached at
ANNEX C.
Investigation into the Horizon Computer System
6. In the interim period a number of sub-postmasters/mistresses who
were prosecuted by Post Office Ltd, or required to repay monies, due to
shortfalls identified by Horizon have protested their innocence and have
blamed defects in the computer system.
7. A campaign from MPs representing said sub-postmasters/mistresses
and the Justice for Sub-Postmasters Alliance (an organisation setup to
raise awareness of potential problems with the Horizon System) led to
Post Office Ltd commissioning an independent investigation by an external
forensic accountancy firm “Second Sight” into the Horizon computer
system.
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8. The interim report from Second Sight has now been completed and
is attached at ANNEX D. As part of their preliminary conclusions Second
Sight found that:
a) We have so far found no evidence of system wide (systemic) problems
with the Horizon software;
b) We are aware of 2 incidents where defects or ‘bugs’ in the Horizon
software gave rise to 76 branches being affected by incorrect balances or
transactions, which took some time to identify and correct;
The report concludes on page 18 that:
“Further investigative work is needed to get to the bottom of this complex
matter”
9.) On the 9" of July 2013 a statement detailing the findings of the
Second Sight investigation was given to parliament by Jo Swinson,
Parliamentary Under-Secretary of State for Business, Innovation and
Skills. I The statement and connected debate is attached at ANNEX E.
10.) The statement given to parliament is referenced in Mr Doran’s letter
to the Lord Advocate and an enclosed letter addressed to Scotmid. It is
clear that Mr Doran believes that defects in the Horizon system were to
blame for his wife being reported to COPFS by Post Office Ltd.
Enquiry with Post Office Ltd in relation to live criminal
proceedings:
11.) Post Office Ltd have separately been in contact with Policy Division
to advise that the prosecuting solicitors representing Post Office Ltd in
England and Wales have as a matter of routine been disclosing to the
defence the aforementioned interim report by Second Sight and an
additional technical report (the “Helen Rose” report) which is attached at
ANNEX F.
Effect on Live Proceedings in England and Wales
11.) Post Office Ltd have also instructed the discontinuation of
proceedings in England and Wales only in cases where system failings
may have generated the incriminating evidence of a shortfall and there is
an absence of supporting evidence and/or admissions by the accused.
12.) Post Office Ltd are continuing to prosecute cases in England and
Wales where they have obtained an admission from the accused
notwithstanding that evidence generated by the Horizon system which led
to initial investigations may have been generated as a result of a system
error.
Effect on Live Proceedings in Scotland:
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13.) A list of all cases submitted for prosecution in Scotland since 2008
is included at Annex G.
14.) Post Office Ltd have carried out a review of all live Scottish cases
and consider that the system defects identified in the “Second Sight” and
“Helen Rose” reports do not play a part in any live Scottish cases.
However, Post Office Ltd accept that a much more detailed forensic
analysis of the Horizon system is required in order to establish the full
extent of any system defects/bugs.
15.) It may be discovered in due course that system defects in the
Horizon system played a part in some of the shortfalls identified in current
live Scottish cases. According to Post Office Itd though that cannot be
said at this time and could only be determined at the conclusion of a
further independent forensic examination of the system which Post Office
Ltd are in the process of commissioning.
16.) Post Office Ltd met with Policy officials on the 5" September 2013
and confirmed that a full examination of the Horizon system will be carried
out and will be completed within 6-8 months. This examination was
already planned by Post Office Ltd as a result of the findings of the
“Second Sight” report and was not instructed by the Crown.
17.) I Post Office Ltd consider that a full examination would detail the
extent of any system defects in the horizon system and the author(s) of
the examination would also thereafter be in a position to provide expert
evidence in individual cases as to whether or not the shortages identified
by Horizon were attributable to system errors.
Conclusion and recommendations:
18. A draft reply to Mr Doran’s correspondence is attached for your
consideration and approval at Annex H. Mr Doran's wife was acquitted
after trial and it is not considered prejudicial to respond to Mr Doran in the
terms suggested in the draft.
19. In relation to the current live cases it is recommended that an
operational instruction is issued meantime advising offices that:
e Any Post Office Ltd cases which rely on evidence obtained from the
Horizon System for corroboration should be adjourned until such
time as the aforementioned full and independent investigation is
concluded by Post Office Ltd.
e No new Post Office Ltd cases, where corroboration is dependent on
evidence obtained from the Horizon computer system, should be
marked for proceedings until such time as the investigation is
completed.
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20.) It is recommended that proceedings are allowed to continue in
respect of any cases in which there is corroborated evidence of
Fraud/Theft from sources other than the Horizon system.
Paul Miele
Policy Division
9" September 2013
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ANNEX A
Letters and Enclosure from Mr William Doran
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ANNEX B
Report and case papers re c/a Elaine Doran — LN04003001
Doc 1.doc (70 KB)
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ANNEX C
Local Office’s report re procedural history of the case against Elaine Doran —
L104003001
I
Draft Report re
Baine Dorand...
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ANNEX D
Independent interim report by Second Sight into the Horizon
system
POLI
nterim_Report. pdf
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ANNEX E
STATEMENT TO PARLIAMENT
\
PDF
201308281348 pF
(67 kB)
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ANNEX F
Forensic report (“Helen Rose report”) into a specific case Post Office Ltd
case
HELEN _ROSE_REDA
(CTED_REPORT_FOR,
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ANNEX G
List of all live Post Office Ltd cases in Scotland
=)
Scottish Cases.xdsx
(@OKB)
ANNEX H
Proposed response to correspondence from Mr William Doran
Dear Mr Doran,
Thank you for your letter dated 24" July 2013 to the Lord Advocate
raising your concerns regarding the use of the Horizon system. I have
been asked to respond on his behalf.
I have read carefully both your own letter and the enclosed
correspondence addressed to the Scottish Midland Co-Operative Society
Limited. I am sorry to hear of your loss, please accept my sincerest
condolences.
I can confirm that the Crown Office and Procurator Fiscal Service (COPFS)
is aware of the recent publicity concerning the Horizon system, however I
regret to advise you that this is not a matter that COPFS can assist you in.
I appreciate the concerns you have in respect of the prosecution of your
wife, who was as I understand it acquitted. The status of the Horizon
system at the time of the prosecution, however, is a matter which you will
require to pursue directly with Post Office Ltd and I see from your letter
that you are already in the process writing to them in this respect.
As the public prosecutor in Scotland it would be not be appropriate for
COPFS to provide you with legal advice on how to pursue matters further
with Post Office Ltd should they be unable to provide you with the
answers that you seek. I would however recommend that you seek your
own independent legal advice or contact the Citizen’s Advice Bureau who
may be able to assist you further.
I understand that you may be disappointed with this response however
this is an issue upon which Post Office Ltd will require to respond to you
directly.
Yours sincerely
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