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Confidential
Initial Complaint Review
and
Mediation Scheme
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Contents
1. Executive Summary
2. Horizon and Second Sight’s Initial Investigation
3. Establishment of the Initial Complaint Review and Mediation Scheme
4. Investigations, Principal Findings and Headline Improvements
5. Mediations
6. Allegation of Inappropriate Information Control
7. Prosecution Policy and Process
8. Contract for Services between the Post Office and Postmasters
9. Conclusions
10. Appendices and Further Reading
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1, Executive Summary
1. The Post Office provides essential services to communities from tiny villages to large
cities with 18 million customers a week relying on its vast network for postal, government,
financial and telecoms services. It is of vital importance that all those who work in the
business, and their customers, can have confidence in the systems which underpin its
work.
2. In 2012, the Post Office commissioned Second Sight Support Services Limited to carry
out an independent review of its Horizon computer system, which is supplied to the Post
Office by Fujitsu Services Limited, in response to allegations by a small number of former
Postmasters about the integrity of that system. Second Sight reported on their
investigation in July 2013.
3. The investigation found no evidence of system-wide issues with Horizon and its
associated processes, However, it did point to areas where the Post Office could have
done more to support Postmasters — for instance on training and support. In response, the
Post Office set up a Branch Support Programme which has led to the introduction of a
number of important new measures, as set out in this report.
4. Following publication of Second Sight’s conclusions, the Post Office also decided to set
up the Complaint Review and Mediation Scheme (the Scheme) to examine individual cases
and, where appropriate, provide a forum for resolution through mediation. The Scheme
was set up in consultation with Members of Parliament (MPs), the Justice for
Subpostmasters Alliance (JFSA), Second Sight and overseen by a Working Group chaired by
Sir Anthony Hooper, a former Court of Appeal Judge.
5. 136 cases were admitted into the Scheme. The Post Office has now completed thorough
investigations into each one. Nothing has been found in any of the cases to suggest
Horizon has not worked as it should.
6. Whilst every case is different, the detailed investigations show that a range of issues
including human errors, a lack of awareness of or misunderstandings about processes and
procedures, and in some cases, dishonesty are at the heart of the complaints raised.
7. Where the facts indicate genuine grievances, for example that the support provided or
behaviour fell short of the desired standards, those issues are being discussed with
Applicants and the Post Office is reaching settlements where it is possible to do so.
8. However, allegations made in many cases are not supported by the evidence. Post
Office cannot ignore this evidence or be expected to provide redress in these cases.
9. Through the work of the Scheme, a number of cases have been resolved, including
through mediation.
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10. To date £6 million has been spent on this overall process, from the initial inquiry to the
on-going mediation scheme. Not least because the Post Office is subsidised by the
taxpayer, it needs to be mindful of the value for money aspects of this work.
11.The Post Office has also gone to considerable lengths throughout to provide
information and background to the Working Group, Second Sight and the Applicants
themselves. Confidentiality for individual cases was agreed by all parties, and this has
necessarily limited what the Post Office has been able to say publically about the
operation of the Scheme. Nonetheless the business has sought to be as open as possible
about the process for the investigations, and its actions have been transparent to the
Working Group.
12. In addition to the initial allegations made about Post Office’s computer system and
processes, it has been clear from comment in Parliament and in the media that the
Scheme has not satisfied all of those involved. The Post Office has listened and taken
action to address this where possible. However, it cannot act where the allegations and
assumptions have not been borne out by the facts.
13. It has also become clear that for some with an interest in the Scheme, the desired
outcome must result in the Post Office admitting liability and making compensation
payments — regardless of the evidence and facts. Similarly, despite nearly three years of
investigations, no evidence has been presented by any party to support claims of a
miscarriage of justice. Nor has any Applicant with a conviction related to their complaint
appealed their conviction or sentence.
14. The Centre for Effective Dispute Resolution (CEDR), the independent supplier of
mediation services to the Scheme, has now conducted its first review of the mediation
process and confirmed that some Applicants have approached mediation as a
compensation process rather than one “in which claims made by either party do require
some material evidence”. CEDR has also concluded that, whether settlement is reached or
not, the process has, in general, “left both sides ...with a much better understanding of
each other’s position.”
15. Against this background the Post Office has decided to change the process, whilst
continuing to meet the commitments it made to all those who brought complaints
forward.
16.To that end, the Post Office will now offer mediation to all cases remaining in the
Scheme, with the exception of those where Court has ruled on the subject of the
Applicant’s complaint, which will continue to be considered on a case by case basis. This
will ensure that those Applicants whose cases have not previously been dealt with in Court
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can move to a swifter conclusion. This does not change the process in relation to what an
applicant can expect through their participation in the Scheme.
17. Applicants will still be able to receive an independent review of their case and the Post
Office intends to continue to work with Second Sight to enable this. Post Office also
intends to continue to work with Second Sight to produce a final background document to
aid mediation - Briefing Report Part Two - on issues raised through the Scheme. The Post
Office will also continue to discuss any case with an Applicant’s MP if that is their wish. The
Post Office decision means that the Working Group’s main role, deciding which cases
should be recommended for mediation, is overridden and the group will therefore cease.
18. Where cases have been the subject of a Court ruling, the Post Office has taken
allegations of miscarriages of justice extremely seriously and, with external legal experts,
has re-examined every such case, with the question of any potentially unsafe convictions in
mind. Nothing has been found to date that has given reason to conclude that any
convictions are unsafe. They will continue to be considered on a case by case basis, with all
the evidence and findings from investigations and reviews shared with Applicants.
Mediation cannot alter Court rulings but Applicants remain able to pursue normal legal
avenues open to them, for instance through appeal.
19.It has been a long and difficult process to reach this position. However, while it has been
challenging, it has also been productive. The Post Office is a better business for the steps
that have been taken.
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2. Horizon and Second Sight’s Initial Investigation
20. Horizon is the electronic point of sale system used across all Post Office branches to
process and record a wide range of transactions. The term ‘Horizon’ is used throughout
this report to refer to the original Horizon system, which was introduced in 1995, as well
as the current version of Horizon, introduced in 2010, known as Horizon On Line.
21. Horizon processes six million transactions every working day and nearly 500,000 users
have worked with Horizon since it was introduced, serving millions of customers.
22. In early 2012, a group of Members of Parliament lead by Rt Hon James Arbuthnot MP.
raised a number of concerns over the reliability of Horizon with the Post Office, having
been approached by a small number of mainly former Postmasters under the banner of
the Justice for Subpostmasters Alliance (JFSA). These Postmasters considered that
apparently unexplained accounting issues in their Post Office branches might be the
product of a flaw in the Horizon operating system.
23. Given the serious nature of the issues raised, the Post Office agreed to appoint an
independent firm of forensic accountants, Second Sight Support Services Ltd (Second
Sight), to investigate these claims as a matter of urgency. The basis of Second’s Sight’s
initial engagement, was reflected in a document for Postmasters entitled “Raising
Concerns with Horizon”, a copy of which is available at Annex A, and included to:
“Consider and advise on whether there were any systemic issues and or concerns with
the Horizon system including training and support processes, giving evidence and
reasons for the conclusions reached.”
24. The document, produced by the Post Office at the request of the JFSA, was intended to
facilitate Second Sight’s work, not least by reassuring Postmasters that they should have
absolutely no hesitation in raising any concerns they might have about the operation of
the Horizon system and assisting Second Sight in their work. The content of the document
was agreed jointly between the Post Office, Second Sight and the JFSA. A copy was posted
on the JFSA’s website to ensure maximum coverage among those with a potential interest.
25. The Post Office agreed with Second Sight that, in order to undertake their work, they
would:
° review all company-held documentation focusing on why shortfalls occurred;
. interview company investigators to gain insights and to verify their findings;
° review defence submissions;
. consider and analyse relevant evidence with regard to Horizon.
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26. A year-long investigation took place during which the Post Office provided Second Sight
with an enormous amount of information concerning the operation of the Horizon system
in postmasters’ branches. To answer Second Sight’s questions about the specific issues
raised by Postmasters, the Post Office also conducted a significant number of ‘spot
reviews’, designed to explain how a particular transaction or procedure should be
processed (where possible) and apply that to a specific example raised by a postmaster.
27. After a year’s work, Second Sight had neither completed their investigations into the
cases brought to their attention, nor had they been able to reach any definitive
conclusions in respect of any of the concerns raised with them, save that they had found
no evidence of a system-wide flaw with Horizon. As a result, it was agreed with Second
Sight that they would produce an ‘Interim Report’ of their findings to date which was
published on 13 July 2013 and is available at: http://www.postoffice.co.uk/post-office-
statement-horizon.
28.The report set out six preliminary conclusions, chief among which was that Second Sight
had found “no evidence of system-wide (systemic) problems with the Horizon software”.
However, Second Sight considered that a limited number of other issues may have
contributed to difficulties being experienced by those Postmasters who had raised
concerns, most notably around the effectiveness of the training and support offered to
them by the Post Office and suggesting that these merited further examination.
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3. The Establishment of the Complaint and Mediation Scheme
29. As Second Sight had not found any evidence of systemic issues with Horizon that could
affect all Subpostmasters, the Post Office decided to establish the Scheme in order to
provide an avenue for any Postmasters to raise their specific concerns directly with the
Post Office.
30.The Scheme, developed jointly by Post Office, Second Sight, and the JFSA as the way of
focussing Second Sight’s investigations on the issues raised in individual cases, also
provided any other postmasters with a relevant complaint the opportunity to make an
application to the Scheme. The Scheme was open to both serving and former
Subpostmasters, as well as to counter clerks employed by Post Office. Applications were
invited through the Post Office’s internal communications channels as well as through the
JFSA over a 12 week period between 27 August and 18 November 2013.
31. The Scheme was overseen by a Working Group comprising representatives from the
Post Office, Second Sight, and the JFSA. The Working Group's role was to ensure the
Scheme was run ina fair and efficient manner and to make decisions on how particular
cases should be progressed. To ensure its impartiality, the Working Group appointed an
independent chair, Sir Anthony Hooper, a former Court of Appeal judge. The press release
announcing Sir Anthony Hoper’s appointment and the Working Group’s Terms of
Reference are available at Annexes F and G respectively.
32. In an initial application process, Postmasters with a complaint were invited to submit
details of their case to Second Sight. The Working Group’s role at this juncture was to
ensure that the application met the Scheme’s entry criteria.
33. On acceptance into the Scheme proper, Applicants were given the opportunity to apply
for a funding contribution of £1,500 +VAT, payable by the Post Office, so that they could
appoint a professional advisor to assist with setting out the detail of their complaint. Full
details of Scheme funding may be found at Annex I, but this element has amounted to a
total cost to the Post Office of £300,000. When a complaint was made, this was passed to
the Post Office for comprehensive investigation. It is important to bear in mind that,
except in a small number of cases where the issue had not previously been raised with the
Post Office, this new investigation constituted a further detailed examination of all the
available facts, including a review of the investigation which took place at the time of the
original incident.
34. It is important to note that the purpose of Second Sight’s engagement by the Post
Office changed fundamentally following the establishment of the Scheme. Whereas
Second Sight had previously been concerned with making inquiries of the Post Office
about the workings of the Horizon system, their remit was now to:
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® serve as a member of the Working Group and attend Working Group meetings as
required, acting in accordance with any directions from the Working Group chair;
e advise, as requested by the Post Office or the Working Group, on the format, style
and content of documents submitted by the Post Office and/or Applicants during the
Scheme;
© investigate the specific complaints raised by each Applicant accepted into the
Scheme with the aim of providing (to the Working Group):
- an assessment of points of common ground between the Post Office and the
Postmaster;
- anassessment of points of disagreement between the Post Office and the
Postmaster;
- in the event of disagreement, a logical and fully evidenced opinion on the
merits of that Postmaster’s complaint where it is possible to do so;
- asummary of any points on which it is not possible to offer a fully evidenced
opinion due to a lack of evidence/information;
- Apreliminary view on whether a case might be suitable for mediation.
e Give any assessment or opinion without bias and based on the evidence available ;
and
e Act with the skill and care of qualified and experienced accountants.
35. Consideration of Second Sight’s final reports by the Working Group resulted, more
frequently than not, in a recommendation that mediation should take place. Where that
occurred, the case details were then passed to the Centre for Effective Dispute Resolution
(CEDR), the independent organisation appointed to administer the mediations.
36. Since Mediation is a voluntary process, it is a matter for each party to decide whether
they actually wish to proceed to mediation. This is consistent with the process set out in
the original documentation, which established the Scheme and was agreed by the Working
Group.
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4. Post Office Investigations, Principal Findings and Improvements to Date
37. The Post Office comprehensively investigated all complaints and applications made to
the Scheme except those which were not eligible and those that were resolved prior to the
completion of a full investigation. In all other instances, a full investigation report was
completed, passed to Second Sight and sent to the Applicant. Although cases varied in
their complexity, investigation reports totalled more than 2,000 pages in length and were
supported by up to 80 pieces of evidence in each case.
38. Whilst these investigations took longer than it would have wanted, the Post Office is
satisfied, and generally Second Sight and the JFSA agree, that they were comprehensive
and thorough. Although some cases were very old and outside the standard retention
periods for keeping information, the Post Office went to considerable lengths to search its
records and provide as much evidence as possible. In total, thousands of pages of
information were identified, recovered and made available both to Applicants and Second
Sight.
39.The investigation team comprised 20 members of staff drawn from across the business
with the requisite skills and expertise to undertake this type of work. They were managed
by one of the Post Office’s most experienced and long-serving senior managers, who
personally signed off each investigation report before it was passed to Second Sight.
40. The cost to the Post Office of conducting the investigations and supporting the
business of the Working Group stands at approximately £3 million. Full details of Scheme
funding are available at Annex I.
41. Second Sight identified a number of ‘thematic issues’ arising from their assessment of
the Applicants’ complaints generally. Although a number of cases do have some features
in common, Post Office’s assessment is that each case is demonstrably different and
influenced by its own particular facts and, as a result, the notion of ‘thematic issues’ was,
and continues to be of limited practical utility.
42. Nonetheless, now that the Post Office has completed all its investigations into each
complaint made under the Scheme, the findings of those investigations, together with
opportunities for the Post Office to make improvements to various processes, procedures
and ways of working have been cross referenced with the ‘thematic issues’ identified in
Second Sight’s report. These were:
A. Transactions or transaction corrections not entered by the Postmaster or staff;
B. Transaction anomalies associated with cash or stock remittances;
C. Transaction anomalies associated with Pensions and Allowances;
D. Transaction anomalies following telecommunication or power failures;
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Transaction anomalies associated with Automatic Teller Machines;
Transaction anomalies associated with Lottery Terminal or Scratch Cards;
. Transaction anomalies associated with Motor Vehicle Licences;
I. Transaction anomalies associated with Foreign Currency;
Transaction anomalies associated with Bank / GIRO / Cheques;
Transaction anomalies associated with the handling of Stamps, Postage Labels,
Phone Cards or Premium Bonds;
Hardware issues including printer problems, PIN pads, touch screens and PayStation;
Failures to follow correct procedures or imperfect advice provided by POL's
HelpLine;
. Training and Support issues including Helpline and Audit;
. Limitations in the Transaction Audit Trail available to Postmasters;
. Process issues at the end of each Trading Period;
The contract between the Post Office and Postmasters;
The lack of an outreach investigations function;
43. The Post Office’s headline findings in respect of these thematic issues as a whole,
following the detailed investigations it conducted, were that:
Nine issues were, in fact, attributable to user error (A, B, D, E, F, G, H, I, and J);
Two issues were, in fact, the product of fraud (C and O);
Four issues were, in fact, the product of a lack of awareness on the part of the
Postmaster and/or his staff of existing processes, leading to user error (K, L, Nand
Q);
One issue could not be substantiated (P).
44. Chiefly through the Branch Support Programme (details of which are available at Annex
K of this report), the Post Office has, with input from the NFSP, already introduced
improvements to address, where it has been appropriate and possible to do so, some of
the issues identified by Second Sight. The Post Office has also made other improvements it
identified itself as a result of its detailed investigations, over and above those identified by
Second Sight. These are set out below:
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e Thematic issues relating to user error — to mitigate the risk of user error within
branch the Post Office has, for six of the thematic issues, already introduced
improvements. Further improvement opportunities have been identified in respect
of a further seven.
e Thematic Issues relating to fraud — the two relevant issues are false accounting and
Pension and Allowance reintroduction fraud. Improvements have already been
introduced to raise further awareness of false accounting and to offer increased
support to Postmasters at the earliest opportunity. The Post Office Card Account
(POCA) has replaced Pension and Allowances processes in circa 2005.
e Thematic issues relating to a lack of awareness on the part of staff — in three of the
four issues in this group, improvements have already been made to raise awareness
with and improve the understanding of Postmasters. Further improvement
opportunities have been identified for all issues raised.
e Thematic Issue which has not been substantiated — this relates to situations in which
Postmasters have claimed they were not aware of the terms of the Postmaster
contract they entered into and/or had never received a copy of that contract.
Although there is no evidence to support this claim, steps to raise awareness of the
terms of the contract still further have been implemented.
45. In addition, training and support was claimed by a number of Applicants to have been
insufficient. The Post Office’s investigations have found that its training practices
(principally when a postmaster is first appointed) were adequate and did give postmasters
the skills needed to operate their branches. However, in some cases, where certain
postmasters were struggling, the Post Office has accepted that it might have delivered
additional training sooner.
46. Annex J of this report provides further comprehensive detail about the issues identified
and the results of investigations into the identified thematic issues.
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5. Mediations
47. The Centre for Effective Dispute Resolution (CEDR) was engaged to provide mediation
services for the Scheme. The arrangements put in place by CEDR, and agreed by the
Working Group, are in line with CEDR's own Code of Conduct and the European Code of
Conduct for Mediators which the Civil Mediation Council requires all UK providers to
observe in order to maintain accreditation.
48. The reason independent, well established and reputable mediation experts were
appointed to conduct the mediations was specifically to ensure that the mediations are
undertaken in line with best practice. The process and procedure agreed by the Working
Group for these mediations is included at Annex Q.
49. Consistent with its approach of supporting Applicants to the Scheme throughout the
process, the Post Office further agreed to provide each with £1,250 + VAT (full day) or
£750 + VAT (half day) towards costs of a professional advisor in preparing for and
attending mediations. In addition, it provides Applicants and up to two representatives
with reasonable expenses in respect of travelling to and from the mediation. Full details of
Scheme Funding may be found at Annex I.
50. Every mediation is conducted by an experienced and entirely independent mediator
appointed by CEDR, and Applicants typically attend mediation with their own professional
advisor. When a case is passed to mediation, the Applicant and their advisor are
contacted by CEDR to arrange a date for mediation and provided with information about
the process.
51. In deciding who attends individual mediations on its behalf, the Post Office considers
the particulars of the case and selects a team which it considers best able to contribute to
a successful outcome. The team is drawn from a pool of senior Post Office staff with long
experience working within the Post Office network and a pool of experienced lawyers who
are familiar with mediation, the Scheme and case investigations.
52. As is standard mediation practice, parties sign a confidentiality agreement prior toa
mediation session. Under those confidentiality arrangements, which are a key component
of every mediation, no one other than the parties involved is entitled to know the
outcome of individual mediations. This includes the Working Group. However, to enable
the Working Group to monitor how mediations were proceeding, CEDR agreed to provide
regular updates in a manner which preserved confidentiality.
53. It was accepted by the Working Group that the final decision on whether or not to
mediate a case rested with the parties involved. Mediation is, by its nature, a voluntary
process designed to help reach a resolution through compromise and, accordingly, the
Working Group agreed that it could not compel either party to participate in mediation. At
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the time of writing this report the Post Office has only declined to mediate 6 of the 46
cases where the Working Group recommended mediation. .
54. The Post Office has entered into mediations in some cases following a Working Group
recommendation to do so even where on the face of it there appeared to be little prospect
of either resolution or even just further progress in bringing clarity to a case (including
where Second Sight concluded that the case was ‘weak’). However, the Post Office took
the view that it should adopt a general default position in favour of mediation, at least for
the initial cases, and await feedback from CEDR. However, in all cases where Post Office
has attended mediation it has done so in good faith, giving each Applicant the opportunity
to voice their concerns and attempting to address those concerns.
55. CEDR provided its first report to the Working Group after 11 cases had been mediated.
A copy of that report may be found at Annex S. The report notes that, while the number of
cases which have been through mediation is currently small, a number of steps can already
be identified which may increase the likelihood of cases being satisfactorily resolved.
The Post Office considering how best to achieve this with CEDR.
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6. Allegations of Improper Information Control
56. Accusations have recently been made that the Post Office has been unwilling to
provide information to assist in Second Sight’s work or has otherwise been attempting to
frustrate that work through the inappropriate control of information. Those accusations
are incorrect.
57. The specific allegations concerned information in three broad areas, covered in the
following paragraphs.
Legal files
58. As Post Office made plain in its evidence to the Business, Innovation and Skills
Committee on 3 February 2015, it has made the appropriate documentation from its
prosecution files available to Second Sight. Post Office has not however provided the
legally privileged material. This is standard practice for prosecutors, including the Crown
Prosecution Service, and it is well understood that this information is not even shared with
the Court. The Working Group endorsed this approach in October 2014 .
Emails
59. In 2013, Second Sight asked for email accounts for a number of Post Office employees
dating from 2008. This was in response to an issue raised by Second Sight as part of its
initial investigation, prior to the publication of its report in July 2013. The allegation
related to whether the Horizon test environment in the basement of Fujitsu’s office in
Bracknell could have been used to edit live branch data. The Post Office explained at the
time that it may be difficult to provide such information in view of its age but did, in May
2013, provide the email data it was able to retrieve.
60. In order to address the allegation more comprehensively, the Post Office also provided
Second Sight with a witness statement from a key member of staff who worked at
Bracknell. This confirmed that the basement was a secure test environment, there was no
connection to any live transaction data, live transaction data could not be accessed from
the basement and the basement was never used to access, change or manipulate live
transaction data in branches. In addition, the Post Office provided Second Sight with a
considerable amount of policy documentation relating to the Bracknell office covering
systems access, building access and security.
61. In light of this, the Post Office has asked Second Sight to clarify its request for further
data with reference to the specific questions it is seeking to address beyond those that the
Post Office has already answered. The Post Office does not consider it reasonable at this
stage of the process to undertake a further transfer of bulk data without any clarity as to
what it could add to the comprehensive answer the Post Office has already provided on
this point.
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Suspense Account Data
62. In June 2014, Second Sight asked the Post Office to explain the operation of its
suspense account. The Post Office replied to that request in a written paper in July 2014.
Second Sight then made a request for further data on the accounting entries being posted
to the suspense account. Given that the purpose of this request was unclear, Second Sight
agreed to provide further clarity on the nature of the enquiry, which they did in October
2014. Following some residual uncertainty over the focus and purpose of the request, the
Post Office sent a further written paper to Second Sight..
63. Second Sight was invited to meet with the Post Office's Chief Financial Officer to
discuss the issue, so that the nature of the exercise could be understood and, at the
meeting which took place in January 2015, it became apparent that the information being
requested was to allow Second Sight to assess a theoretical risk to Postmasters in general,
rather than address a specific complaint raised in the Scheme. It was therefore agreed
that the Post Office would provide ‘contextual data’ giving a sense of the scale and
complexity of the account and the information available. An initial set of data has now
been provided and a further meeting has been arranged with Second Sight to agree the
next steps.
64. Whilst the Post Office acknowledges it has taken longer to respond to Second Sight’s
requests than it would have wished, it has not withheld access to information about its
suspense accou nt.
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7. Prosecutions Policy and Practice
65. All cases of potentially criminal conduct are thoroughly investigated and decisions
about appropriate courses of action are taken on the basis of the available facts and
evidence.
66. Post Office records show that in the financial years 2011-12 and 2012-13, for example,
approximately 12% of all audits conducted led to the suspension of a Postmaster and
approximately half of those Postmasters suspended saw their contracts terminated.
Approximately 2.5% of the audits during this period led to criminal prosecutions.
67. The decision to prosecute a Postmaster or employee, in the small number of instances
where this occurs, is always taken following numerous checks and balances. The Post
Office is confident that its approach complies with all legal requirements.
68.When the Post Office decides to prosecute a case, its conduct of the prosecution is
scrutinised by defence lawyers and ultimately by the Courts themselves. Possible
miscarriages of justice in the criminal courts of England, Wales and Northern Ireland can
also be reviewed by the Criminal Cases Review Commission, which refers appropriate
cases to the appeal courts.
69. In deciding whether a case is suitable for prosecution, the Post Office considers (among
other factors) whether it meets the tests set out in the Code for Crown Prosecutors. The
Code requires prosecutors to be satisfied that there is sufficient evidence for a realistic
prospect of conviction and that the prosecution is in the public interest. The Code is issued
by the Director of Public Prosecutions and followed by Crown Prosecutors. The Post Office
is not required to inform the Crown Prosecution Service (CPS) that a private prosecution
has commenced but the CPS can take over a private prosecution if circumstances warrant.
Like the CPS, the Post Office keeps cases under continuous review all the way up to and
during any trial.
70. Once a decision has been made to prosecute and a defendant is charged, he/she is
entitled to receive private and confidential legal advice. As with all criminal prosecutions,
the Post Office has a duty to disclose the evidence in the case to the defendant and his/her
lawyers, including all evidence that would assist the defence or undermine the
prosecution.
71. The Post Office is duty bound to communicate with a defendant’s lawyers, and any
decision by a defendant to plead guilty is made after he or she has had the opportunity to
take private and confidential legal advice and consider, with lawyers, all the available
evidence. The evidential requirements for proving the offences of theft or false accounting
are a matter of law.
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The suggestion that the offence of false accounting is a less serious offence to
that of theft has appeared in a number of contexts, most commonly where it is
alleged that an Applicant has pleaded guilty to the former offence so as to avoid
“the more serious” charge of theft, or has pleaded guilty to “the lesser offence” of
false accounting. In fact, both offences are equal in law, both are offences of
dishonesty and both carry the same maximum sentence (7 years imprisonment).
Post Office does not advise a defendant on their response to a criminal charge.
Every person charged with a criminal offence is entitled to representation by
independent solicitors (and in the Crown Court, a barrister). Further, Legal Aid is
available to any defendant where the offence carries a risk of imprisonment (as
do the charges levelled by the Post Office);
The decision to plead guilty is always one for the defendant only, having taken
advice from their own lawyers;
When deciding to plead guilty, the defendant will have been advised by his or her
own lawyer that a guilty plea represents a complete admission to having
committed the offence and, where the offence is one of dishonesty (theft, false
accounting, fraud), to that dishonest act. This is advice a defence lawyer must
give;
Where an audit discloses a loss in circumstances where there is evidence of false
accounting, the fact of the loss together with the false entries is sufficient
evidence upon which to base a charge of theft. Simply put, the fact that money is
missing and the defendant has adjusted the figures is sufficient evidence (in
accordance with the Code for Crown Prosecutors) to form the basis of a theft
charge;
The Post Office has always been prepared to accept a guilty plea to false
accounting where theft is charged, not least because it has a duty to protect
public (and its own) funds. Given that both charges are equal in the eyes of the
law, the added expense of going to trial where a guilty plea to an offence of
dishonesty is offered would often (but not always) jeopardise that duty;
In any event, the initial suggestion that a defendant pleads guilty will come from
the defendant’s lawyers, usually motivated by the defendant’s instructions that
they are guilty of that offence;
Finally, it is the duty of the defence lawyers to identify to the court where there is
insufficient evidence to sustain a charge. If the court agrees, then the Judge must
dismiss that charge. Thus a charge upon which there is no evidence will inevitably
fail.
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72. Any suggestion that the CPS would have acted differently from the Post Office as a
prosecutor, perhaps by not prosecuting at all, or by accepting a different outcome, is
misplaced:
Both the Post Office and the CPS are bound by the Code for Crown Prosecutors;
the courts oversee both and both must act in accordance with the principles of
fairness;
The Post Office is not unique in prosecuting its own cases. Many organisations
conduct prosecutions within their own sphere of interest, including for example
the Driver and Vehicle Standards Agency, Transport for London, the
Environmental Agency, and many local authorities;
The Post Office prosecutors are all experienced criminal lawyers, many of whom
have wide experience of prosecuting both for the Post Office and the CPS. These
lawyers advise the Post Office in full, including by reference to the Code for
Crown Prosecutors and its application in the courts, before a prosecution is
commenced and continued. The CPS does not have any role in this process;
Neither does the CPS ‘review’, ‘oversee’ or otherwise regulate non-CPS
prosecutions — that function is reserved for the Courts.
73. As a prosecutor, Post Office is under a positive duty immediately to disclose any
information that might undermine its prosecution case or support the case of the
defendant. That duty continues after the prosecution has concluded, and Post Office has
taken the steps it has in the Scheme with it firmly in mind.
74.This has included ensuring that specialist external criminal law solicitors have seen each
Application, Case Questionnaire Report, Post Office Investigation Report, Second Sight
Case Review Report, and Post Office response to the Case Review Reports, as well as
Second Sight’s “Part Two” report and Post Office’s responses to that report, so that they
can consider whether any disclosure issues arise in prosecutions both inside and outside
the Scheme.
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8. The Contract between Postmasters and the Post Office
75. The Scheme was established to consider complaints about Horizon and associated
issues, not wider matters about the Post Office’s business model, including contracts.
Matters of contract are legal issues are, in any event, outside of the expertise and
qualifications of Second Sight as forensic accountants.
76. However, Post Office has responded to various points made by Second Sight so that
Applicants are not misled by an opinion or conclusion which is beyond Second Sight’s
expertise. This Section provides a summary of the information Post Office has provided to
Second Sight and others in response to questions about the postmaster’s Contract (‘the
Contract’.
78.The current version of the Contract dates back to 1994 and has been subject to a
number of amendments since then. Post Office discusses variations to the Contract with
the National Federation of Subpostmasters (NFSP) on behalf of Postmasters. In a network
of several thousand Postmasters, it is sensible for the Contract to be negotiated
collectively on behalf of Postmasters.
79. The basis on which a postmaster is bound to the Contract, e.g. by signing it or an
“Acknowledgment of Appointment” letter, is determined by the particular circumstances
of each individual case. Either method is legally binding. It is worth noting that in the
“Acknowledgment of Appointment” letter which is frequently used to record a
postmaster’s appointment, the postmaster states that he or she has been given and
accepted the terms of the Contract.
80. Under the terms of the Contract, Postmasters are only responsible for losses caused
through their "own negligence, carelessness or error" or for losses caused by their
assistants. Thus, Postmasters are only liable for losses arising from those operations that
are under their control and responsibility. Postmasters employ their assistants directly and
are responsible for organising their staff and implementing controls to prevent
opportunities for losses to occur. They are therefore responsible for the actions of their
employees, even if those employees act dishonestly.
81. Postmasters’ assistants are employees of the Postmaster and not the Post Office. The
Postmaster is accordingly responsible for the management and performance of their staff
including any disciplinary action which the postmaster may consider appropriate.
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Postmasters must also assure themselves that any assistants they employ are suitable for
the role e.g. by conducting interviews and seeking references, and that they are
appropriately trained
82. Postmasters should undertake a number of basic clerks when they recruit a new
member of staff (e.g. right to work in the UK, proof of identity, and proof of address along
with five-year work history). In addition, the assistant must be registered with the Post
Office so that security checks can be undertaken (e.g. criminal record check). There is an
annual check of all assistants to ensure they have been cleared through the pre-
employment checking system.
83. Under their Contract for services with the Post Office, every Postmaster must establish,
maintain and adhere to a formal disciplinary policy in respect of any assistants who fail to
comply with the Postmaster obligations as detailed in the contract. The disciplinary policy
must include the content as defined in the Contract and records must be retained.
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9. Conclusions
84.Placeholder
10. Appendices and Further Reading
85.Placeholder
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