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Thomas Penny
From: Jenkins Gareth GI
Sent: 06 October 2010 12:47 — =
To: Wamick Tatford; jarnail.a.singht GRO
Ce: Thomas Penny former
Subject: Draft Witness Statement
Attachments: * 0a06.Witness statement Gareth Jenkinsv0.1.doc
All,
It was good to meet you last night and put some faces to names and voices. Following that I've now attempted to draft
a Witness Statement as discussed.
0a06.Witness i
statement Gareth ... ~
Here is a first draft, and I'd appreciate feedback as to whether I have captured your requirements as to style and
pproach. I appreciate that you probably cannot comment on the factual content.
As agreed,-I need to do two further pieces of analysis and I've indicated with highlighted comments in boxes where I
should include these. However I thought it was worth getting‘a first draft of the witness statement to you before doing
that so you have a chance to review the Witness Statement in parallel.
I’ve heard nothing further from Charles McLachlan regarding an updated version of his Report. Clearly, should such a
report appear;‘I may well need to update the Withess Statement to reflect any changes.
7
Regards
Gareth
Gareth Jenkins
istinguished Engineer
Applications Architect
Royal Mail Group Account
FUJITSU
Lovelace Road, Bracknell, Berkshire, R612 8SN
te yeaa 12, SN. 4
Mobile: i -
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Royal Mail Group
Witness Statement
(CJ Act 1967, s9; MC Act 1980, ss
5A(3)(a)
and 5B, MC Rules 1981, r 70)
Statement of Gareth Idris JENKINS
Age if under Over 18 (If over 18 insert ‘over 18')
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This statement (consisting of 13 pages each signed by me) is true to the
best of my knowledge and belief and I make it knowing that, if it is tendered
in evidence, I shall be liable to prosecution if I have. wilfully stated in it
anything which I know to be false or do not believe true.
Dated 6th dayof October 2010
the
Signature
Further to my statements of 2nd February, 8th February 2010 and 9" March
2010! would like to add the following. ‘
I have examined the “Technical expert’s report to the Court prepared by
Charles Alastair McLachlan, a Director of Amsphere Consulting Ltd” which I
received on 1“ October 2010. I have been asked by Post Office Ltd to
provide a statement regarding to my views on the report with regard to the
Horizon system and also about my analysis of the data regarding the
transactions carried out in Branch 126023 which I understand to be the
‘Branch that the defendant managed.
Signatur Signature witnessed
e by
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Witness Statement
(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
I would like to re-iterate that my expertise relates to the Horizon system only
and not to Post Office Ltd’s Back end systems. However such systems are
irrelevant to the Branch accounts that are produced on Horizon since any
externally initiated transactions (such as Transaction Corrections and
Remittances which will be discussed later) must be authorised bya User of
the Horizon system in the Branch before they are included in the Branch’s
accounts.
In Section 1.2 of his. report, Professor McLachlan lists a number of
“Hypothetical issues” with the Horizon system. However there doesn’t
appear to be a thorough justification as to why these might be relevant.
Specifically, in section 1.2.1 he hypothesises that “The User. Interface gives rise to
incorrect data entry: poor user experience design and inadequately user experience testing can
give rise to poor data entry quality.”.. Although I was not responsible for the Design
and development of the Horizon user interface, I do know that one of the
key goals of the User Interface was that it would be easy to use and that it
could be used by Users with no IT experience.
In Section 1.2.2 there is the hypothesis that ‘The Horizon system fails to properly
process transactions: accounting systems are usually carefully designed to ensure that accounts
balance after each “double entry” transaction. Horizon is indeed designed to use
“double entry” transactions. Further Professor McLachlan refers to the need
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 58, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
for database systems to use “‘two-phase’ commit” technologies. Again, Horizon
is designed using such concepts. However in a distributed environment :
with multiple systems it is not possible to handle all failure scenarios through
2-phase commit mechanisms. What has to be included in the design is
what happens when the outcome of a 2-phase commit is indeterminate and
Horizon’s design does that.
Finally, in Section 1.2.3 there is the Hypothesis that “External systems across the
wider Post Office Limited Operating Environment provide incorrect externally entered
information to the Horizon accounts through system or operator error outside Horizon.”. I am
not quite clear what Professor McLachlan is referring to here. However
what I can say is that any transaction that is recorded on Horizon must be
authorised by a User of the Horizon system who is taking responsibility for
the impact that such a transaction on the Branch’s accounts. There are no
cases where external systems can manipulate the Branch’s accounts
without the Users in the Branch being aware and authorising the
transactions.
In Section 2.2.1 of his report, Professor McLachlan outlines a number of
limitations in the scope of his investigation. In some of these cases, they
are irrelevant to the processing of transactions in Horizon.
Specifically, the report states “It was not possible to examine the process for introducing
Transaction Corrections that can give rise to changes in the cash that Horizon records at the
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Continuation of statement of Gareth Idris JENKINS
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branch”. As I have stated earlier in this statement, any Transaction -
Correction that has been generated by the external Post Office Ltd systems
must be explicitly accepted into the Branch’s accounts by an appropriate
User. In many cases there is the opportunity to reject the Transaction
Correction allowing a separate process to agree whether or not it is valid
before it is accepted into the accounts. Therefore, I would say that it is not
necessary to examine the process for generating Transaction Corrections.
The next Bullet states “tt was not possible to examine the processes for Remittances (the
movement of cash and stock) into and out of the branch that changes the cash and stock that
Horizon records at the branch.” Again, any Remittance into the Branch has to be
explicitly accepted by the User and a receipt is produced stating the amount
that is being introduced into the Branch accounts. Should this differ in any
way from the amount recorded on the cash pouch or the amount of cash
found inside the pouch, there are processes to query such differences.
Therefore, I would say that it is not necessary to examine the process for
generating Remittances.
The third bullet states “Ii was not possible to examine the processes for revaluing foreign
currency which could change the value of cash held at the branch.”. Revaluation of
currency doesn’t affect the cash position. It purely affects the notional value
of the Foreign Currency as it is reported in the accounts, but has no impact
on the Cash (sterling) position. It’s only impact might be on the liability of
the postmaster for any currency that is subsequently lost (which would need
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Continuation of statement of Gareth Idris JENKINS
to be repaid at the current value). Note that revaluation can be positive or
negative.
Finally, the 4” bullet states “It was not possible to examine the processes of reconciliation
conducted by the Post Office that could give rise to Transaction Corrections.”. As stated
earlier this is not really relevant since any Transaction Corrections will have
been accepted by the User into the Branch accounts and should not be
accepted if not understood. Accepting a Transaction Correction implicitly
means taking responsibility for that in accounting terms.
Moving on to Section 2.2.2 of Professor McLachlan’s report which is titled
Opportunities for Reconciliation. I accept that the Horizon system has not
been designed to automatically provide vouchers for every transaction. It
was not a requirement for Horizon to produce such vouchers and in fact
there were specific requirements from Post Office Ltd regarding transaction
times that preclude printing such records. My experience as a user of Retail
systems (such as supermarkets) is that such vouchers are not normally
generated there either.
In Section 2.3 of his report, Professor McLachlan’ looks at hypothetical
issues with Data Entry. Section 2.3.1 looks at the calibration of the touch
screen. I accept the fact that a misaligned touch screen could certainly
cause confusion to the User and result in incorrect buttons being activated.
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(CJ Act 1967, s9; MC. Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
However I don’t understand how Professor McLachlan is suggesting that
such a misalignment would cause discrepancies within the accounts.
In section 2.3.2, Professor McLachlan states that “Poor user interface design can
contribute to poor data entry quality and user errors.”. I agree with this as a statement.
However Professor McLachlan makes no attempt to explain in what way the
Horizon User Interface design is “Poor”. As I stated earlier one of the key
goals of the User Interface was. that it would be easy to use and that it could
be used by. Users with.no IT experience. A significant amount of effort was
put into designing and agreeing the User Interface with Post Office Ltd.
In Section 2.3.3 of his report Professor McLachlan hypothesises that errors
can be introduced by incorrect use of the “Fast Cash” button. In particular
he challenges my analysis of unsuccessful Debit Card Transactions. I have
re-checked the transaction for £7,000 on 11" January 2007 and this
transaction was actually settled by a Cheque and not cash. This was
covered by case 1 in my email to his which is reproduced in Appendix I of
his report. Therefore in this case the User must have been aware that the
Debit Card transaction had failed in order to ask for a cheque. Even
supposing the Cheque button was pressed in error for Fast Cash, then there
would have been a discrepancy in the value of cheques and there is no
evidence of such discrepancies.
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(CJ Act 1967, s9;.MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS.
Later in this section, Professor McLachlan claims “the “Fast Cash’ button is
demonstrated to be a source of data entry error (the reversals confirm this).”. I don’t agree
with that. I can see no evidence to support this statement. The fact that
there are reversals following a failed Debit card transaction is due to the fact
that some transactions cannot be abandoned and need to be settled and
then reversed. This was a specific requirement on Horizon from Post Office
Ltd. The fact that this has been done shows that the user was well.aware of
the failure of the Debit Card transaction and followed normal process when
the failure occurred.
Professor McLachlan explores issues with training of the Users in section
2.3.4 of his report. I support his finding regarding discrepancies in cash in
almost every period. I also did an analysis of the daily cash movements
compared with the daily cash declarations and could see very little
correlation between the two which indicates that the variances between the
declared cash and the system cash figures were not being monitored very
well within the Branch. I! would agree that this could be down to Theft /
Fraud, or incompetence by the Branch staff. However there is no evidence
that this is:down to any sort of System failure. Further I! would suggest that
small discrepancies are to be expected in such an environment due to
mistakes in giving change etc. My understanding is that Post Office
investigators expect such small discrepancies in normal operation.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
Section 2.4 of Professor McLachlan’s report than describes 2 possible
issues with Horizon.
I accept that there was an issue with the Post Office in Calendar Square
Falkirk as descried in the email reproduced in Appendix C of the report and
covered by a previous Witness statement I made on 8" February 2010. As I
stated in the email, the problem was fixed in March 2006 and so is not
relevant to the period of data that I have examined in this branch. Also,
when the problem manifested itself it was clear from the various logs that
there was a problem in the system. There is no evidence of such problems
from the various logs that have been examined for this branch. Therefore I
see no relevance for this problem to the period of data that is being looked
at for this case. In particular, Professor McLachlan says “It demonstrates that
there have been faults with the Horizon system which give rise to discrepancies that can cause
losses. It is not reasonable to exclude the possibility of system problems when considering a case
such as Misra. ”. I would dispute that. It was clear from the Events generated
at the time in Calendar Square that there was.a problem. No such events
have been seen in West Byfleet in the period in question and so this cannot
be responsible for the losses in that period.
In section 2.4.2 Professor McLachlan describes a “travellers cheque stock
problem”. I disagree with his description of what happens in this scenario.
Horizon doesn't attempt to control Travellers’ Cheques at a denominational
level. In other words it only manages the total value (in dollars) of
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Continuation of statement of Gareth Idris JENKINS
Travellers’ Cheques and doesn’t distinguish between $1,000 being held as
10 $100 Travellers’ Cheque of as 50 $20 Travellers’ Cheques or any other
combination. Horizon is only concerned with the fact that it holds Travellers’
Cheques to a face value of $1,000. Therefore following through Professor
McLachlan’s . scenario, the system initially has $1,000. of Travellers’
Cheques. When a customer purchases one Travellers’ Cheque for $100,
then this will be reflected by reducing the stock of Travellers’ Cheques by
100, leaving 900 Travellers’ Cheques in stock. This would be reflected on
the Stock Report.
I also note that in this section Professor McLachlan states that he has
discussed this scenario with me and that I “acknowledge that this is a known feature
of Horizon and that the Post Office have not instructed Fujitsu to change.the system to produce a
meaningful stock report.”. I don’t recall any such discussion. I have seen such a
scenario described in a separate report that Professor McLachlan has
written for a separate case, and did explicitly check out the scenario and
produced a report for Post Office Ltd refuting the description. I do accept
that there are some cases where the way in which Travellers’ Cheques can
appear to be slightly misleading, however there is nothing as blatantly
incorrect with the system as Professor McLachlan suggests.
Therefore I would contend that section 2.4.2 of the report is irrelevant.
In Section 2.5.1, Professor McLachlan looks again at Transaction
Corrections. Here he refers to Appendix G of his report which describes
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(CJ Act 1967, s9; MC Act 1980, ss‘5A(3)(a) and 5B, MC Rules 1981, r.70)
Continuation of statement of Gareth Idris JENKINS
some analysis I have done concerning transaction Corrections (my email on
this is actually is in Appendix D of the report). This shows that if we analyse
all Transaction Corrections during the 13 month period that the net value is
£1,840. I've subsequently gone over the data again and found some
additional transaction corrections that have been processed and the total
net value of all such Transaction Corrections is actually slightly less namely
£1,619.43.
He then refers to.a slightly wider scope that he has taken in Appendix J
where he comes up with an absolute value of £82,918.35 (though a net
value of £19.257.21). I have now had a chance to examine this data in
more detail and have the following observations to make on Professor
McLachlan’s analysis:
still need to do this analysis, so I'll come back to this!
Later on in the section Professor McLachlan states “There is no record of Misra
requesting evidence in the transactions provided between 1 Dec 06 and 31 Dec 07. ”. This is
incorrect. There was one such example on 13" December 2006 and two
more on 14" March 2007. I accept that I had omitted these from my initial
analysis.
Finally, towards the end of the section Professor McLachlan hypothesises
“There are missing Transaction Corrections which would reduce the cash balance expected by the
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Continuation of statement of Gareth Idris JENKINS
Horizon system (i.e. be in:favour of Misra).”. This may indeed be true. However my
understanding is that normally branches are well aware of such errors and
would have contacted Post Office Ltd to enquire as to why no Transaction
Correction was being made in favour of the branch.
Section 2.5.2 of the report discusses remittances. However I don't
understand the relevance of this discussion to the case. Professor
McLachlan mentions that my analysis “identified a pattern or remittance transactions
which is consistent with Misra’s statement that she declared cash held in remittance pouches in the
safe which was not actually present.”. In my view is this not an indication of guilt?
Section 2.5.3 then refers to incorrect transaction processing. However there
is no indication as to what types of transaction processing may be incorrect.
It should be noted that the Horizon counter application has recently been
replaced and the last Horizon Counter migrated to the new system in
September 2010 and so there are no longer any Horizon counter systems to
examine.
Professor McLachlan’s report than attempts to draw some conclusions in
section 3.
Section 3.1queries why it took Post Office Ltd so long to notice the pattern
of discrepancies. _ Much of the detailed information regarding such
discrepancies is only available within the branch to assist the sub-
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Continuation of statement of Gareth Idris JENKINS
postmaster in managing their branch and so is not routinely available to
Post Office Ltd until and investigation is carried out as in this case.
Section 3.2 mentions screen calibration issues. While I can’t 10% rule out
such issues as causing some issues. However I can’t see how this could
account for anything like the full extent of the losses.
Section 3.3 refers to Horizon issues. As stated earlier, the Calendar Square
issue is ‘irrelevant and there is no issue with Travellers’ Cheques.
. Finally in 3.4 is challenging the integrity of Post Office Ltd’s back end
systems. My view is that any faults in these systems are irrelevant to the
Branch accounts and hence the losses. This is because, as stated earlier,
any transactions generated from a Post Office Ltd back end system must be
explicitly accepted onto Horizon by a User and cannot be introduced into the
Branch accounts without their knowledge.
I have not examined the data in the appendices in detail. I acknowledge
that any emails included there from myself are correct, but have not
examined. the embedded spreadsheets in detail other than where explicitly
referenced in this statement. I note that many of the appendices are not
referenced from the report and there-is no explanation as to the basis used
to construct them. I assume that they are all generated from the raw
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Continuation of statement of Gareth Idris JENKINS
transaction and event logs that were supplied to Professor McLachlan by
Fujitsu at the request of Post Office Ltd.
In addition to examining Professor McLachlan’s report, I have also been
asked to look at Cash Balances and Cash held in Pouches awaiting
collection through the period from December 2006 to December 2007.
¢ back to.thisI
this analysis, so:L'll
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