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CROWN COUNSEL INSTRUCTION
CASE NAME: Christine Gourlay
Reference Number: HM13003852
Date received : 11 December 2015
Charges: Embezzlement
Nature of Instruction Sought:
Crown Counsel’s instructions are sought as to further procedure in the above case.
Background
This case is a Sheriff & Jury case. Crown Counsel’s instruction is being sought as to
further procedure because of concerns that have been raised about the reliability of the
Post Office electronic system, Horizon. In October I was asked to meet with
representatives of the Post Office and their English and Scottish solicitors. As a result
of the discussions at that meeting, Stephen McGowan has asked me to report to Crown
Counsel all live and pending Post Office cases. Some of these cases have been
reported by the Post Office as a specialist reporting agency. These cases generally
arise from internal Post Office audits that show a discrepancy in branch funds. Other
cases are reported by the police.
The Gourlay case is the only one of these cases where proceedings have been initiated.
Mrs Gourlay appeared on petition on 30 January 2015 and, if she is to be indicted, the
case must be indicted on Monday 14 December. The case has been reported to me
today. The allegation is that Mrs Gourlay has embezzled some £45,000 of money from
a Post Office in Hamilton where she acted as manager.
Meeting with the Post Office
The purpose of the meeting with the Post Office in October was to receive from them
an update in relation to concerns that had arisen with their Horizon electronic system.
Horizon is the electronic system that records all transactions in Post Office branches
across the country. I attach a note of this meeting. In short the Post Office position
was that the independent body that had reported on the Horizon issues, Second Sight,
has said that Horizon was “fine” and that they had said as much to a Parliamentary
Select Committee and the BBC Panorama programme. (The Post Office relationship
with Second Sight broke down because they considered Second Sight had gone beyond
their remit in their reports.) Nonetheless the Post Office had decided to replace the
entire system in 2016. The Post Office had tried to identify a “subject expert” who
would be able to look at Horizon and be able to give evidence in criminal cases as to
Horizon being reliable. They have not been able to identify such a witness.
This meeting was slightly confusing in that the Post Office’s initial position was that
they had stayed all prosecutions in England and Wales and would not prosecute the
cases we have if they were in England and Wales. However they then went on to say
that they were in fact prosecuting 2 cases in “category 3” (which means the case does
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not relate to Horizon but it is possible that the defendant will claim Horizon was a
factor - it seems there are 4 categories of case) and are actively investigating a
“category 4” case (cases where there can be no suggestion that Horizon was involved).
In the end they said they are still making judgements on a case-by-case basis but I
had the strong impression that they are never going to prosecute any case based on
Horizon evidence. They were fairly tight-lipped about the position with cases reported
to the CPS by the police, saying they had met with the CPS and given advice but it was
for them to decide what to do.
Following the meeting the Post Office’s Scottish agents, BTO, emailed to say that the
Post Office “would be very uncomfortable if a policy decision was taken in relation to
Post Office cases not proceedings, which was then publicised throughout the service. I
am sure you picked up on the issues that could potentially cause for PO but I was
asked to confirm this in an email. I got the impression that was not your thinking
anyway”. This was slightly surprising as, effectively, the Post Office have made this
same policy decision about all of their England & Wales cases. The email may stem
from the Post Office’s worry that information is leaked and Post Office staff learn there
is no chance of prosecuting them for Horizon shortfalls and advantage will be taken. A
decision was made by Stephen McGowan that all Post Office cases sitting with COPFS
ought to be reviewed and Crown Counsel’s instruction sought.
Gourlay case
Mrs Gourlay was manager of the Hamilton Post Office branch. In June 2012 a Post
Office official based at Post Office headquarters at Chesterfield became aware that 2
“positive adjustments” had been carried out at the Hamilton branch on 20 June adding
to the Horizon system £48,300 worth of stamps. A positive adjustment is made when
the stock actually in the Post Office is greater than is recorded on Horizon. The official
rang the branch to query this and spoke to a “Christine” who gave 2 different
explanations as to why the adjustment had been made - firstly that the stamps had
been bought back from a customer and secondly that they had been purchased from
another branch. Mrs Gourlay was the only person called Christine who works in the
branch and there is evidence from other staff that she was very much in charge and
liked to take all telephone calls herself. Mrs Gourley does not admit that she was party
to this call.
Reading between the lines, this incident was the catalyst for an audit that was carried
out at the branch by Post Office officials on 11 July 2012. It was found that the stock
for which Mrs Gourlay had responsibility did not balance with what was shown on the
Horizon system. A relatively small dollar amount of cash was missing, though that was
soon explained; an amount just over £2,000 was missing, and £43,800 worth of
stamps shown on the system were missing. Mrs Gourlay was on leave at this time. The
practice in the branch was that staff would put their stock in a pouch and seal it and a
key was placed in a sealed envelope. A member of staff speaks to Mrs Gourlay’s key
being in a signed, sealed envelope. There is other evidence that the security of the
sealed pouches could be, and on occasion was, overcome using scissors.
Further enquiries showed that, earlier in the year, there had been questionable
transactions for stamps at the branch. The system showed these had involved
someone using Mrs Gourlay’s log-on number. The evidence generally is that members
of staff kept their log-on numbers to themselves though it has been suggested the
postmaster’s wife was aware of Mrs Gourlay’s number.
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It is difficult to be clear about exactly what these transactions involved. The original
precognoscer of the case had meetings with the Post Office reporting officer and may
have gleaned from him a clearer picture of what took place. Unfortunately she is now
on sick leave. Theresa McConologue, who took over the precognition at a late stage,
also discussed this with the RO. I have spoken with Theresa and I know that despite
her conversation with the RO she considers the picture is a confusing one.
At the end of April 2012 the Horizon system shows that someone logged on with Mrs
Gourlay’s number conducted 12 transactions for the sale of stamps with a total value
of over £45,000. Most of the transactions are recorded as taking place after hours.
When she was interviewed by the Post Office Mrs Gourlay suggested that these
transactions would have been adjustments as opposed to real sales. There was also a
suggestion that they could have been quotes. Generally, Mrs Gourlay speaks of there
being an element of confusion about stock levels and being advised by HQ to make
various adjustments to balance stock. It seems to me that she does not accept that
the fact that her log-in number was used to make a transaction means that she made
the transaction. In a meeting with the Postmaster she blamed the Horizon system for
the deficit in stock identified during the July 2012 audit.
There are a series of transactions involving stamps on 12, 13 and 20 June 2012. The
transactions involve stamps worth £30,000 and £48,000 respectively being “reversed
out” of the system and then being sold to cash. What this means practically is unclear.
In terms of her own auditing responsibilities Mrs Gourlay said that she had not checked
her stock balance before she finished for her holiday on 30 June and accepted that this
was not good practice. She said she had not checked this for 2 or 3 weeks. I am told
there is evidence that she signed a Final Balance sheet for her stock on 6 June which
recorded that the Post Office held only 13 sheets of first class stamps and 7 sheets of
second class stamps. This accords with the amount of stamps found in the Post Office
when the audit was carried out. Her signed Final Balance for 13 June showed that
there were 567 sheets of first class stamps and 307 sheets of second class stamps. At
the time of the audit Horizon recorded that there were 565 sheets of first class stamps
and 307 sheets of second class stamps (though of course this was completely
inaccurate). It seems to me that Mrs Gourlay does not accept that she must have
checked the numbers of stamps actually held in the Post Office when she signed the
sheets off.
An inference can be drawn that the large number of stamps that seem to have been
taken out of, and added back into, the Post Office system never existed in the branch.
They do not appear to have been supplied by HQ. Staff have commented that it would
not have been possible to fit these numbers of sheets of stamps into the stock pouch
and that there was no need for the office to have had that amount of stamps. Excess
stock of stamps would be remitted to HQ.
The explanation offered up by the Post Office is that Mrs Gourlay embezzled money
and inflated the amount of stamps held in stock to disguise the missing money. Mrs
Gourlay suggests that sales have not been real sales but have represented
adjustments to the system that HQ recommended to deal with difficulties in balancing
the system. She also suggests that the missing stamps could have been remitted back
to HQ without a remittance form identifying them as having come from the Hamilton
branch. She denies having stolen money. The precognoscer considers that there ought
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to have been a more complete accounting exercise done following the audit to show
what the position was in the branch as a whole. I think that a key element that is
missing in this case is any evidence that Mrs Gourlay was enriched. I cannot see that
any financial investigations have been done to trace whether Mrs Gourlay received
large sums into her bank account or was spending large amounts of cash. There is also
no evidence from her colleagues that Mrs Gourlay acted in a suspicious or underhand
way: on the contrary they seem to have regarded her as zealous and hard-working.
In my view the circumstances here are suspicious, particularly the evidence from
Rachelle Shimwell that she enquired about large adjustments and was given conflicting
accounts for what had happened by “Christine”; and the evidence (from Horizon) of
the similarity of sums involved. Mrs Gourlay’s various explanations are not wholly
convincing. I agree, however, that there is insufficient credible and reliable evidence
on which to found a prosecution.
The main difficulty is with the Horizon system. From Mrs Gourlay’s remarks to the
Postmaster it can be anticipated that she would challenge the admissibility of evidence
drawn from this system. There is no witness to speak to Horizon being reliable. All of
the evidence that there was a deficit and about the transactions involving stamps
comes from Horizon.
Recommendation
It is respectfully recommended that Crown Counsel instructs that no further action is to
be taken in this case on the basis that, given the difficulties with the Horizon system,
there is not sufficient reliable evidence against the accused.
Mairi Boyle, Legal Assistant to the DSC
Ext{"""GRO I
Daté! 11 Décéimber 2015
Advocate Depute : Richard Goddard
Date:13.12.15
CC Instructions :
IT agree with the recommendation in this case.
It appears that any prosecution would be wholly reliant upon evidence
gleaned from the Horizon system. There appear to have been fundamental
problems with the reliability of the system in England and Wales. Further,
there is no witness available from the Post Office to explain the workings of
the system or vouch its reliability.
There are further difficulties in addition; there is no evidence beyond the
Horizon records of the accused being suddenly enriched or otherwise ever
having received such a significant sum of money. There is no positive
evidence to demonstrate that the stamps were not returned as the accused
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claimed. The stock unit was demonstrably inaccurate in relation to the five
hundred dollars, which casts further doubt upon the reliability of the system.
Whilst the circumstances as a whole can be said to be suspicious, it would not
be in the public interest to proceed in the absence of other reliable supporting
evidence.