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On behalf of the Claimants
Witness: lan Henderson
No of Statement: 1
Dated: 28 September 2018
CLAIM NO: HQ16X01238, HQ17X02637 AND HQ17X04248
IN THE THE HIGH COURT OF
JUSTICE ROYAL COURTS OF
JUSTICE
THE POST OFFICE GROUP LITIGATION
BEFORE: THE HON. MR JUSTICE FRASER
BETWEEN:
ALAN BATES & OTHERS
Claimants
- and —
POST OFFICE LIMITED
Defendant
WITNESS STATEMENT OF IAN HENDERSON
I, AN RUTHERFORD HENDERSON of
do say as follows.
1. INTRODUCTION
1.1. Ihave been asked to give a factual witness statement for the purposes of
the Post Office Group Litigation. I am aware of the need to focus this
upon the Horizon Issues as defined for determination at the March 2019
trial. Insofar as I refer to other matters, these are intended to provide
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background information to explain how I have knowledge of the Horizon
system and the basis upon which I have prepared this statement.
Tam a Director of Second Sight Support Services Limited ("SSSL"). My knowledge
of the Horizon system derives from the fact that SSSL was appointed by Post Office
Limited ("POL") to conduct a limited scope review into alleged problems with POL's
‘Horizon System' in July 2012. We produced a number of detailed reports (which
POL has copies of) as follows:
e Interim Report 8 July 2013
«Briefing Report - Part One — 25 July 2014
e Briefing Report - Part Two — Version 1 — 21 August 2014
«Briefing Report - Part Two — Version 2 — 9 April 2015
On 10 March 2015 SSSL's appointment by POL was terminated and we were
subsequently instructed to return all documents created or obtained during our
work for POL. We returned all documents in October 2015. This comprised
approximately 16,500 emails and 18,500 other documents organised in 1,700
subject matter folders. Prior to preparing this witness statement I asked for
copies of the documents previously prepared or held by SSSL which were
returned to POL in October 2015.
The documents now made available to me, which I am informed are ordered in
the manner disclosed by POL in the litigation, have no folder structure, have had
meta-data removed and no longer have the date and time stamps associated
with the original documents. There are some documents which I would also
regard as important, such as the Fujitsu XML transaction reports, which have not
been provided. Given these issues, this witness statement has been provided on
the basis of my direct recollections from documents such as SSSL reports that
are in the public domain.
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1.5 Prior to preparing this Witness Statement I agreed to sign at POL's request, a
confidentiality release and protocol document prepared by POL. The
purpose and effect of that document was to permit me to discuss matters
of relevance with the Claimants’ solicitors, Freeths LLP, without risking
alleged breaches by POL of various confidentiality commitments that POL
required upon termination of our work, to which I refer below. I believe that
this Witness Statement complies with the terms of the POL confidentiality
release and protocol document.
2. HORIZON ISSUES
21. As a consequence of my work which I had been instructed to undertake as to the
operation of the Horizon system, there are certain matters within my
knowledge which I consider are specifically relevant to the Horizon issues which
the court has directed should be determined.
2.2. Issues 7, 10 and 12: On 13 September 2012, I met with senior representatives of
Fujitsu at their Bracknell office. One of the people who attended was
Gareth Jenkins, who I believe was the Fujitsu lead engineer on the POL
contract. He subsequently provided me with a number of technical reports
describing the Horizon system and architecture and, as would be
expected, he was obviously knowledgeable about its operation. At the
meeting on 13 September 2012, one of the matters discussed in the meeting
on 13 September was remote access to terminals located in branches. Gareth
Jenkins confirmed to me that this capability existed and was occasionally used
to troubleshoot problems in branch.
2.3. In order to investigate the extent of possible usage of this facility and as to whether it
was being undertaken without the knowledge or consent of the
relevant
Postmasters, I requested complete email records from POL for 2008 for the 7 POL
employees known to be working at Bracknell at that time. I believed that these
contemporaneous records would be the best way of establishing exactly what was
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going on. I was never provided with the email records requested, although a small
number of records were provided, which when examined were found to be
inconclusive. This issue was covered in our Interim Report dated 8 July 2013 in
respect of Spot Review 5.
2.4. Issues 1 and 4: My view was that the key to understanding transactions within the
Horizon system was to be provided with access to the raw transaction data, known
as XML reports. Mr Jenkins provided me with some sample XML data shortly after
our meeting on 13 September 2012 and I was subsequently able to "reverse
engineer" this data and see a level of detail that was not made available to sub-
postmasters or to POL.
25. My analysis of this sample data showed a number of matters which gave rise to
concern :
a) Transactions occurring outside of normal working hours;
b) Transactions associated with ID's other than the relevant sub-postmaster;
and
c) Gaps in the numeric sequence of transactions.
2.6 SSSL's instruction was terminated before I could reach a conclusion as to
whether these issues were the result of Horizon system errors and/or, insertion or
editing of transaction data other than by sub-postmasters.
2.7 I was also aware there were problems with ATMs, which were referred to in
SSSL's Briefing Report Part 2. Reconciliation reports provided by third parties
such as the Bank of Ireland were accepted as being accurate by POL, which
would then cause a discrepancy being recorded as though the Branch was at
fault. There appeared to be an inconsistency between the information available
on the Horizon system and that provided by the third party, which appeared to
cause a shortfall that was passed onto the Branch.
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2.8 Issues 8 and 9: As a result of reviewing the documents provided to me by sub-
postmasters and by POL, I established that in the period prior to 2004 the
accounting by POL for foreign currency transactions at individual branches was
fundamentally flawed. This issue was covered in more detail in our Briefing
Report - Part Two.
2.9 Horizon was, and as far as I am aware still is, a single-currency system and is
therefore only able to account for transactions in pounds sterling. It cannot hold
records of individual foreign currency holdings. Each week's figures, for each
branch, were consequently entered into Horizon by the branch as ‘bulk totals’ in
pounds sterling.
2.10 The in-branch accounting process involved staff recording in Horizon, once a
week, the net sterling impact of all of that week's foreign currency transactions
and this was shown as one 'revaluation’ figure representing the branch's profit or
loss on its foreign currency dealings. This meant that the Horizon system was
not able to identify any of the individual transactions and therefore neither POL
nor a sub-postmaster would be able to identify any alleged transactional errors or
discrepancies or as to what may have caused them.
2.11 Issues 4, 5 and 15: As a result of reviewing the documents provided to me by
sub-postmasters and by POL, I established that in a significant number of cases
a branch's Horizon system would get ‘out-of-sync' with the quite separate
Camelot system, thereby generating material surpluses or deficiencies that were
eventually corrected by Post Office issuing Transaction Corrections (TCs)
through the Horizon system
212 When that happened, relatively high-value Debit and Credit TCs, that when
viewed over an extended period would almost completely offset each other,
would routinely be issued to the branch.
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2.13 The routinely out-of-balance situation caused by the Horizon system would hide
real discrepancies from view, such that they remained un-investigated and
uncorrected, thereby turning potentially recoverable errors into real losses. This
issue was also covered in SSSL's Report Part Two.
2.14 Issue 9: As a result of the work, I established that it could be problematic for sub-
postmasters to determine the root causes of discrepancies (both shortfalls and
surpluses) reported by Horizon because the underlying transaction data was not
available to them.
2.15 This issue falls broadly into three areas;
a) data that was not available even on the day of the transaction;
b) data that was at first available, but after 42 days (later extended to 60 days
when Horizon On-Line was introduced) was no longer available; and
c) data that was not available after suspension.
2.16 This issue was also covered in SSSL's Briefing Report Part Two.
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STATEMENT OF TRUTH
I believe that the facts stated in this witness statement are true.