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Horizon Integrity - summary report
Overview
Over the years some Post Offices under investigation for losses have claimed that the
Horizon system is at fault. As the Post Office® is dependent on the reliability of our
system to be able to prosecute offenders; we have to be able to defend our system in
the courts.
This project will highlight any recent cases that have been defended, and will also put
into place a process to continually monitor this issue.
Brief summaries of some recent challenges
1. Yetminster - FAD 267518 - POL 1112-0163
Brief overview
This case came to light from a tip off made by a Holiday relief postmistress. It was
established that Miss Tracey Merritt also operated the outreach Post Office at Chetnole.
Both these offices were audited on Thursday 29"" September 2011. At audit Yetminster
was reported to be £8415.27 short and Chetnole Outreach was £3471.55 short, giving
an overall total shortage of £11886.77.
Summary
e During the interview Miss Merritt produced a large document regarding an
ongoing enquiry by Shoosmiths solicitors in respect of the Justice for
Postmasters Alliance stating that she believed that the Post Office Horizon
equipment was the actual cause of this loss.
e At the start of the interview Miss Merritt blamed the horizon system and stated
she had problems with transferring cash from Yetminster to Chetnole outreach.
Halfway through the first tape Miss Merritt states ‘because there are issues with
your computers and I know the Post Office are not going to admit it but there is”
* 6 minutes into the second tape Miss Merritt states “I’m not trying to blame the
Horizon system I am saying that my office kept coming up with losses”.
Towards the end of the second tape transcript Miss Merritt admitted that the
losses had been accumulating since the end of July 2011 and that she had not
been putting money in for these losses, simply rolling the losses and inflating
the cash.
¢ Mr Gary Thomas, lead Officer in this case commented at the end of his report
that it should also be noted that this case is likely to be a further challenge
towards the integrity of the Horizon System.
Outcome
e Recoveries received of £8,415.07, with £3,178.52 (Still owing against
Yetminster Outreach - Cheque bounced. Currently repaying £1 per week)
¢ 3 Charges of False Accounting raised but dropped - Yeovil & Somerset
Magistrates informed. Letter sent to Ms Merritt on 2"? July 2012.
e Dear Ms Merritt, I write in connection with the investigation carried out into the
audit shortage of £11,886.77 which occurred during the period of your
appointment as sub postmaster of the Yetminster Post Office®. Post Office Ltd
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remains entirely satisfied as to the evidential strength of its case against you
and remains of the view that any criminal prosecution would, if pursued, be
entirely successful. Post Office Ltd has, however, carefully considered the
representations made on your behalf by Mr Oliver Letwin MP and has decided
on this occasion not to pursue this matter further. The decision not to proceed
to prosecution does not in any way constitute an admission that the losses were
the result of an error with the Horizon computer system. Any such allegations
will be robustly defended. Post Office Ltd continues to have absolute confidence
in the integrity of the Horizon computer system and its branch accounting
processes.
2. Barkham — 212939 - POL 1011-0160
Brief overview
This case was raised following an ongoing dispute between Mrs Stubbs and
Post Office Ltd regarding an outstanding debt of £28829.05. Mrs Stubbs is
suggesting that HORIZON is at fault when it was moved into a port-a-cabin
during renovations.
Summary
Mike Wilcox stated: - Along with Graham Brander I met with Mrs Stubbs on 17"
January and she was convinced that HORIZON was at fault. She has retained
daily transaction logs for December — January in which time she lost £9000 and
is not prepared to release this until she can compare it to Fujitsu data. I have
examined the Fujitsu data and cannot see any indications of fraud. She has
declared all the losses and has been asking for assistance for some time. There
is a possibility (although she will not accept it) that an assistant has been taking
the money but that puts the onus back on her to report it to the police. I have
sent her the Fujitsu data to reconcile with her daily transaction logs but from a
criminal / fraud point of view there is no scope for further investigation into any
criminal activity.
3. Rinkfield - 252418 - POL 0910-0041
Brief overview
An audit took place on the 8" June 2009 and a loss of £24,911.96 was
identified. The postmistress Mrs Katherine Jane McQue acknowledged that she
knew the audit at her office would be about £25k short.
Summary
Mrs McQue admitted that she knew about the shortage through out the interview
and admitted to covering up the shortage by falsifying the accounts.
During the interview Mrs McQue stated that she did not feel 100% comfortable
with the horizon system, but did not appear to directly blame the system for the
losses.
Mrs McQue did admit to false accounting but did not admit to theft
At a court hearing on the 2" Feb 2010 the Defence indicated that they intended
to instruct a Forensic Accountant. They were ordered to serve the Accountant's
Report by 22" March 2010.
Expert Witness report was submitted prior to the final court hearing
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Outcome
Rinkfield case was heard at Carlisle Crown Court on the 28th February 2011
when the matter was listed for Trial. Prior to the case being called on there was
some discussions between all parties with a view to establishing whether or not
the pleas offered by the Defence would be acceptable.
An indication was given that a plea to Count 2 fraud might be acceptable so
long as the Defendant stipulated in her Basis of Plea that there was nothing
wrong with Horizon and that she was responsible for the loss and recognised
the confiscation would be sought should the loss not be repaid.
In the afternoon the matter was called on and the Indictment was put again to
the Defendant. She pleaded Guilty to the charge of fraud accepting that there
was nothing wrong with Horizon and that she was responsible for the loss.
In the interim the Defendant signed a Consent Order to vary the restraint to
allow the lease on the Rinkfield Post Office to be transferred. This provided that
a £25,000 up front payment be paid to Royal Mail account to be identified within
21 days.
Mrs McQue pleaded guilty at Carlisle Crown Court on 28 February 2011.
Katherine Jane McQue was sentenced to 9 months imprisonment suspended
for 2 years together with a requirement to do 150 hours of unpaid work at
Carlisle Crown Courton 10 May 2011. No evidence was offered on the count 1
(Theft)
4. Newsome - 208320 - POL 0809-0047
Brief overview
An audit took place at Newsome Post Office on the 5" June 2008, and the
auditor was informed prior to the start of the audit that he should expect a
shortage in cash of about £60k. (signed statement was obtained by the auditor)
The postmaster of Newsome Post Office was Mr Gurdeep Singh Dhale
Mr Dhale told the auditor that he had used the Post Office funds “to pay off an
individual’ over the period of around one year, However during interview he
claims to have made this up.
Mr Dhale also denies saying to the auditor that he would be £60k short and says
he meant to say £600.00. He said he had been drinking heavily the night
before and had just got out of bed. He says he signed the statement for the
sake of wanting them (the auditors) to go away.
Summary
Mr Dhale claimed that the loss was all a big misunderstanding
Mr Dhale also claimed that he didn’t know how much the audit was short until he
received a letter on the Saturday 14" June 2008 (2 weeks after the audit) and
then he remembered £105k in a private safe that belonged to the Post Office
Mr Dhale claimed throughout the audit that he was not really listening to anyone
and did not know how much was short or why he was suspended even though
he had signed statements for the auditors.
At no point during the audit or interview was the integrity of the Horizon system
questioned.
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e The defence challenged the integrity of the horizon system and employed a
forensic accountant. This was ordered to be served to the courts on 10"
February 2011.
Outcome
¢ On the 27" January 2011 Mr Dhale pleaded guilty to false accounting
e Mr Dhale was sentenced to 12 months imprisonment suspended for 2 years and
was also ordered to undertake unpaid work in the community of 250 hours.
5. West Byfleet - 126023 - POL 0708-0249
Brief overview
e An audit took place on the 14" January 2008 at West Byfleet Post Office which
revealed a shortage of £74609.84.
¢ The postmistress, Mrs Seema Misra, informed the auditors that the account
would be short by between £50k and £60k. She completed a hand written
signed statement to the auditors blaming previous staff for the shortage.
Summary
e Mrs Misra admitted during the interview that she knew the office accounts would
be short.
¢ Mrs Misra continued to blame old staff for the large losses and said the police
had been informed, however they had only been told about a loss for
approximately £1000.00.
e Mrs Misra says the office had been running short of cash for about a year and
she had been tying to reduce the loss by putting in money from her own shop
business.
e Atno point during the audit or interview was any horizon integrity issue raised.
e Mrs Misra was charged of theft and false accounting
¢ Comment from a legal memo from 25" March 2009:- The Defence have also
asked the question which I set out here verbatim: - “When was it that the Post
Office first became aware that there were irregularities with regard to the
accounts. Was it when the final audit was carried out or had there been
concerns at an earlier stage?”
¢ This was the first time that the Integrity of the Horizon system was mentioned
e In May 2009 Mrs Misra’s defence team offered a plea to false accounting but
not to theft
e At the end of May 2009 the Post Office prosecution team did not accept the
reduced plea
e An expert witness was put forward by the defence to challenge the Integrity of
the Horizon system
Outcome
¢ After a length trial at Guildford Crown Court commencing on the 11" October
2010, the Jury came to a verdict on the 21%‘ October 2010 when they found the
Defendant guilty of theft. The case turned from a relatively straightforward
general deficiency case to an unprecedented attack on the Horizon system. We
were beset with unparallel degree of disclosure requests by the Defence.
Through the hard work of everyone, Counsel Warwick Tatford,, Investigation
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Officer, Jon Longman and through the considerable expertise of Gareth Jenkins
of Fujitsu we were able to refute all suggestions made by the Defence that the
Horizon system was faulty..
e It is to be hoped the case will set a marker to dissuade other Defendants from
jumping on the Horizon bashing bandwagon.
e Mrs Misra was found guilty of theft and sentenced to 15 months imprisonment
e Mrs Misra was also found guilty of false accounting and sentenced to 6 months
imprisonment concurrent
Conclusion
Although there have been attempts to discredit the Horizon system via the courts, to
date the Post Office have been able to defend the Integrity of the Horizon system at all
levels.
When questioning the Integrity of the Horizon system the defence solicitors are making
similar disclosure requests, indicating that disclosure requests in future challenges will
be similar to those made in past Horizon Integrity challenges.
Depending on where the loss was identified this can sway the disclosure requests
slightly into requiring further details and operating procedures around specific
transactions including background processes, i.e. the processing of cheques once they
have left the office and electronic funds transfer records.
There have also been requests for information on training materials and training
records, including call logs to NBSC. In the Misra case the defence questioned a lot of
technical aspects regarding the data held at fujitsu, these challenges were refuted by
Gareth Jenkins.
Future actions
e A process has already been put in place to ensure that where there is any
possible chance that the horizon system will be questioned this will be reported
in the 48 hour offender report.
e All operational personnel have been asked to report directly to me when at any
point through out the interviews/court process that the Integrity of the Horizon
system has been mentioned.
e This will be continually monitored / updated to ensure that we are aware of any
Horizon Integrity challenges at the earliest opportunity and are prepared for any
future challenges at all stages of the investigation and prosecution process.
Helen Rose
Post Office Security Team
30th August 2012
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