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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
Ageifunder Over 18 (If over 18 insert ‘over 18')
18
This statement (consisting of 30 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 7th dayof October 2010
the
Signature
This statement is made in addition Further to my statements of 2nd
February, 8th February 2010 and 9" March 2010 I-weuld—like-to-add-the
following.
I have been asked by Post Office Ltd to consider the following in this
statement:
o To provide some background information about the Horizon system
Signatur Signature witnessed
e by
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011 (Side A)
yal Mail is @ trading nane of Royal Mail Group plc. Registered nunber 4138203. Registered in
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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.
o To provide comments on 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.
Tnow have a later version received on 7 October.
o To carry out some analysis on the levels of Cash held in Branch 126023
during the period December 2006 to December 2007.
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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.
1 Background Information on the Horizon system
The Horizon system was initially put together as a pilot in 1996, and
following an extensive pilot was rolled out to all Post Offices between 1999
and 2002. It has recently been replaced by the Horizon Online system
which was piloted at the start of 2010 and the last Horizon system was
replaced in September 2010.
Within Horizon, each Post Office stores details of all its transactions on the
Hard disk of each PC within the Branch. There is a separate PC for each
counter position. I understand that at Branch 126023 there are 3 counter
positions and hence 3 PCs.
Data from the branch is transmitted from each branch to Fujitsu’s Data
Centres using a variety of Communications mechanisms. The software
used to transmit the data from the Branches to the Data Centre is
specifically designed to ensure that whenever contact is made between the
Branch and the Data Centre any outstanding data is exchanged between
the two. In particular for many transactions there is no need for the Branch
to be online.
I understand that there is a suggestion that the equipment in the Branch
may be faulty. I am not aware of any fundamental issues (though this is
being be covered by Mr Dunks). I have also been showen the witness
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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.
statement of Mr Varsani who I understand took over the Branch from the
defendant, which says that there have been no problems with the equipment
as far as he is concerned.
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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
2 Comments on Professor McLachlan’s Report
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.
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 by a 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 any real athereugh justification as to why these might be
relevant. The purpose of these statements appears to be to plant seeds of
doubt without a factual basis.
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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.
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 order to support this, I have extracted some information from a design
document Referenced SD/STD/001 version 10.1 dated 25" July 2002 Titled
Horizon Office Platform Service Style Guide. Specifically:
Appendix B: This appendix contains the design principles that have been
°
followed in deriving the Human Computer Interface (HCI), and the design
standards that have been applied to keyboard-to-screen mapping, panels
and buttons. It also summarises the approach to designing a new
application that uses the HCI.
°
Chapter 2: This chapter describes briefly the main types of screens that
make up the system, their function, layout and characteristics.
o Chapter 3: This shows how amounts can be entered into the system
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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.
As can be seen in Figure 2-1, the screen layout is fairly simple and consists
of 3 main areas:
o Navigation buttons at the top
o Menu buttons in the lower left hand side
5
o A “Stack” area in the lower right hand side
The Menu buttons are used to either select a sub menu or to transact a
specific product. Each button includes both the abbreviated name of the
function that it carried out and also a pictorial “icon” representing the
function.
The Stack area shows what items the Customer has purchased in the
current session with a running total at the bottom making it clear what
money is owed either to or from the customer.
When the value of an item needs to be entered, then a careen such as that
shown in Figure 3-8 allows the value to be entered. This can be done either
by using the numeric keys on the keyboard or by touching the numbers on
the screen. The box at the top shows what has already been typed.
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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.
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
for database systems to use “‘two-phase’ commit” technologies. Again, Horizon
is designed using such concepts. Howeverin—a-distributed-envirenment
what-happens-when-the-outcome-of-a-2-phase-commit-is-indeterminate-and
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 has on the Branch’s accounts. There are
no cases where external systems can manipulate the Branch’s accounts
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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.
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
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. In particular there are 3 examples of
this occurring: Firstly on 13° December 2006 and for two other transaction
Corrections on 14" March 2007. Therefore, I would say that it is not
necessary to examine the process for generating Transaction Corrections.
It may be helpful at this point to explain what a Transaction Correction is. It
is a mechanism whereby staff in Post Office Ltd’s Head Office can request a
sub-postmaster to undertake a transaction that amends the branch’s
accounts. This process is used when an error is identified by some manual
means and it is necessary to correct this in the Branch’s accounts. I do not
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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.
understand Post Office Ltd’s processes well enough to provide an example.
However when such a Transaction Correction is being processed a
message is shown on the screen to the user so that they are aware of what
its effect would be. For example on the Transaction Correction processed
on 03/07/2006 the message displayed was:
302117598419 Cash Centre Reference For queries/disputes you must
contact the Cash Centre. 400.00 Pounds Transaction Correction is
issued for a shortage you sent to the Cash Centre. Press “accept
now” then “make good” (or “assign to nominee” if you are a franchise
office and assign the resulting branch discrep also to nominee) If this
amount is in your surplus suspense dated 28/06/07 then redeem using
F1, F13, F16, F8. The date above refers to when the Cash Centre
Processed the rem.
The next Bullet states “It 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. Following this, the User
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Continuation of statement of Gareth Idris JENKINS
has the opportunity physically to count the cash. Should the amount on the
receipt 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 “It 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
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
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Continuation of statement of Gareth Idris JENKINS
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. This was so as to minimise the
time taken to serve each customer and so attempt to keep queue sizes
down to a reasonable length. 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.
However I don’t understand how Professor McLachlan is suggesting that
such a misalignment would cause discrepancies within the accounts.
Perhaps he would like to provide an example of where such an error may
have occurred?
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
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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.
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.
For simplicity I will repeat the summary of that analysis here (it is also in
Appendix I of Professor McLachlan’s report):
What I did was to search through all transaction in the 13 month
period from December 2006 to December 2007 them looking for all
examples of Debit Card transactions which have not been successful,
since this seems to be one of the defence’s main attacks on the
system.
There are 92 such failed transactions for a total value of £117,149.98.
I've analysed all those with an individual value of more than £1,000
(leaving £6,113.55 worth that I’ve not analysed).
In all the cases I’ve analysed one of 3 things happened:
1. The Customer session was then settled by a Cheque (and so the
failure must have been noticed by the clerk)
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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.
2. The Customer session was abandoned (ie any goods were
returned and the transactions cancelled and the only item from the
session is the failed Debit Card payment).
3. The Customer session was settled to Cash (which could have been
accidental). However in all such cases the transaction was
subsequently reversed resulting in the cash also being reversed.
There are business rules that control whether transactions can be
cancelled or if they have to be committed and then reversed (which is
the main difference between cases 2 and 3 above). I suspect (but
can't necessarily prove) that in case 2 the sessions were for purchase
of Foreign Currency. I case 3 the sessions were all for purchase of
Premium Bonds.
I think this refutes the assertion that failed Debit Card Payments are
the cause of the losses.
In particular Professor McLachlan has identified a transaction for £7,000
which took place on 11 January 2007 and states that this could have been
processed as Fast Cash. I have re-checked this transaction for-£7,000-0n
44-January-2007-and it this-transaction was actually settled by a Cheque
and not Cash. This was covered by point 1 above. case-t+-in-my-emailte
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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.
his-which-is-reproduced_in-Appendixtofhis-+epert. 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.
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-discrapancies-in-cashan
almoest-every-period. In particular, he states: “The Declared Branch position had
discrepancies vis-a-vis the Horizon totals at the end of almost every period.” and “The Variance
Checks conducted to reconcile the branch position vis-a-vis Horizon showed a discrepancy on the
vast majority of occasions ranging from 18 pence to more than £11,000.”. I agree with both
these statements. However to me these seem to indicate at the least poor
management within the Branch and probably something more serious.
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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.
What is meant by the first statement is that when a Stock Unit is being
Balanced (which is a process that occurs at least once each month) a
difference is found between the cash level as input by the User (known as a
Cash Declaration) and the cash level as calculated by the system (which is
calculated by taking the starting cash position at the start of the period and
adding on all cash that has been received and subtracting all cash that has
been taken out of the stock unit). Calculations of the system cash level are
irrespective of whether the cash was passed to or from a customer or to or
from some external entity such as another Stock Unit or a Remittance into
or out of the Branch. The Balancing process results in the system cash
position being altered to match the Cash Declaration and the difference
being put into a Discrepancy account (which may be for a Surplus or a
Deficit).
The second statement is referring to Cash Declarations that are supposed
to be done for each Stock Unit on every day that the Stock Unit is used.
Again, when the Cash Declaration is done, the system can compare the
declaration with the system calculated cash level and record a Variance if
they differ. In this case, checks will not have taken place for any errors and
so some Variances are to be expected, but the assumption is that the sub-
postmaster would monitor these and ensure that they are dealt with prior to
Balancing the Stock Unit each month.
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Continuation of statement of Gareth Idris JENKINS.
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. I would have thought that seeing such variances would
have alerted the sub-postmaster that there was a problem and to investigate
what is going on.
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
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Continuation of statement of Gareth Idris JENKINS
that Post Office investigators expect such small discrepancies in normal
operation.
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
I would dispute that. It was clear from the Events generated
such as Misra. ”
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.
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Continuation of statement of Gareth Idris JENKINS.
To simplify matters, I’ve included a summary of the issue that is included in
Appendix C of Professor McLachlan’s report:
I've now dug back into the archives to provide the following summary:
1. The problem occurred when transferring Cash or Stock between
Stock Units. Note that West Byfleet does operate multiple Stock
Units so the issue could have occurred.
2. It manifests itself by the Receiving Stock Unit not being able to
“see” the Transfer made by the “sending” Stock Unit and is
compounded by attempting to make a further transfer. Note that
such transactions usually reappear the next day.
3. It is clearly visible to the User as a “Receipts and Payments
mismatch” at the time that one of the Stock Units is Balanced. This
usually results in the Branch raising a call. There are no such calls
in Andy Dunks’ Witness Statement which summarises the cails
raised by West Byfleet. Also this can be checked on any Balance
Reports or Branch Trading Statements that are available from the
Branch which should show that Receipts and Payments do match
and that the Trading Position is zero.
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4. The problem is also visible when looking at system events
associated with the Branch. The System events from 30/06/2005
to 31/12/2009 for West Byfleet have been checked and no such
events have been found.
5. The problem was fixed in the S90 Release which went live in March
2006 and so would not have been relevant at the time of the
detailed Transaction Logs obtained for West Byfleet between
December 2006 and December 2007
Therefore I can conclude that the problems identified in Calendar
Square, Falkirk are not relevant to West Byfleet.
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
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level. In other words it only manages the total value (in dollars) of
Travellers’ Cheques and doesn’t distinguish between $1,000 being held as
10 $100 Travellers’ Cheque or 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.
GI: Vil come back to this when I go through Charles’ latest report.
I do accept that there are some cases where the way in which Travellers’
Cheques can appear to be slightly misleading
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GI: Vil come back to this when I go through Charles’ latest report.
however there is nothing as blatantly incorrect with the system as Professor
McLachlan suggests.
Finally, at the end of the section Professor McLachlan states “In my opinion,
this stock report could give rise to counter staff or sub post masters seeking to correct the
perceived problem through manual adjustments leading to real discrepancies. ”. Given that
there is no problem with the reporting of Travellers Cheques, this statement
is irrelevant.
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
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
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Continuation of statement of Gareth Idris JENKINS.
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:
o Many of the figures listed do not represent Transaction Corrections
o A number of the figures that do relate to a Transaction Correction do
not affect the Cash Position, since those particular Transaction
Corrections were used to correct the value of cash pouches that were
in the branch awaiting collection or Remittance errors held in
Suspense.
This results in a net total of Cash Transaction Corrections of £302.72 and
even adding up the absolute values as Professor McLachlan has done
(though I don’t understand why) only results in a total of £5,167.28.
My findings are presented in a separate document.
Signature Signature witnessed 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.
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
Horizon system (i.e. be in favour of Misra).”. -FRis-mayindeed-be-true. It is not clear
to me on what basis that this statement is made. However It is 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.”. 44-FAy-view-is-this-net-an-indication-of guik? I
was very surprised to see such a statement in the Defences Expert’s report.
My analysis of cash movements later on in this statement does confirm this
pattern occurring on 2 occasions which could have been used to “hide” a
cash shortage. I can’t think of any legitimate reason for processing a
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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.
remittance transaction telling the system that money is being put into a
pouch and then putting an empty pouch into the safe.
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,
or as to what sort of errors the users may have made. 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 3.1 queries why it took Post Office Ltd so long to notice the pattern
of discrepancies. Much of the detailed information regarding such
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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.
discrepancies is only available within the branch to assist the sub-
postmaster in managing their branch and so is not routinely available to
Post Office Ltd until an investigation is carried out as in this case.
Section 3.2 mentions screen calibration issues. VWhile-+cant40%-+rule-cut
such-issues-as-causing-someissues.—However-I can’t see how this could
account for anything like the full extent of the losses and no scenario has
been presented that could account for any losses due to the mis-calibration
of the screen.
GI: is this better?
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
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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
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
transaction and event logs that were supplied to Professor McLachlan by
Fujitsu at the request of Post Office Ltd.
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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.
3 Analysis of Cash held in Branch 126023
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.
I have taken values of Cash and Value Stock (as shown on the Stock Unit
Balance reports and Branch Trading Statements) from the detailed logs at
the start of each Trading Period from December 2006 to December 2007.
I've also looked at the Cash and Currency held in Pouches from the
Suspense Account for the same periods and plotted these on a graph. This
effectively reflects the amount of Post Office Ltd money held in the Branch
each month. It can clearly be seen to be increasing and in particular the
Cash and Currency in Pouches increases significantly.
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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.
Cash Movements
£140,000.00
£120,000.00
£100,000.00
£80,000.00
Value
£60,000.00
£40,000.00
£20,000.00
£0.00
ve also spotted that £3,930.07 of Euros was packed in a pouch on 7th July
and there is no sign of that pouch having been despatched from the Branch
or the pouch being reversed. This accounts for some of the increase in
Cash in Pouches at TP 4.
I also have details of a few pouches which were packed before the Branch
was balanced and the reversed after the Balance was complete:
o A Pouch for £15,000 packed on 10th October in TP 6 and Reversed
on 22nd October in TP 7
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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.
o A Pouch for £18,000 packed on 14th November in TP 7 and reversed
on 19th November in TP 8
I can also see that over the 13 month period that £49,120 more of Sterling
was packed into a Pouch than was despatched from the Branch. However
it isn’t easy to identify exactly which transactions match up and how this ties
together. Note that this includes the benefit of a Transaction Correction for
£19,260 (the difference would have been £68,380 otherwise).
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