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REVIEW OF POST OFFICE LIMITED
CRIMINAL PROSECUTIONS
A. INTRODUCTION
1. In an independent review on behalf of the Chairman of Post Office
Limited (“POL”), Tim Parker, Jonathan Swift QC and Christopher
Knight were requested to consider whether there was any further
action that might reasonably be taken by POL to address a series of
complaints raised by sub-postmasters (“SPMRs”) about their alleged
treatment by POL.
2. That review led to a written review document dated 8'* February 2016
(‘the Swift/Knight review”). In it, Messrs Swift QC and Knight
identified, among others, two particular areas of concern that are
germane to this review.
3. The first, which is found in a section headed, “Criminal Prosecutions”,!
is “whether POL acted appropriately in cases where it pursued charges
both of false accounting and of theft (or whether POL pursued theft
charges in cases where there was no proper basis in evidence to do so
simply to encourage a guilty plea to the false accounting charge).”
1 Paragraph 90 at 91(b), page 31
2 Paragraph 114 at 116(c), pages 39-40
4, The second area of concern, which is found in a section headed, “The
Horizon System”, ?is “whether branch balances can be affected by
third party alterations without SPMR knowledge.”
5. In respect of the first area of concern, having set out the competing
arguments, > Messrs Swift QC and Knight made the following
recommendations:*
“(1) Legal advice be sought from counsel as to whether the
decision to charge an SPMR with theft and false accounting
could undermine the safety of any conviction for false
accounting where (a) the conviction was on the basis of a
guilty plea, following which and/or in return for which the
theft charge was dropped, and (b) there had not been a
sufficient evidential basis to bring the theft charge.
(2) If such a conviction could be undermined in those
circumstances, that counsel review the prosecution file in such
cases to establish whether, applying the facts and law
applicable at the relevant time, there was a sufficient
evidential basis to conclude that a conviction was a realistic
prospect such that the charge was properly brought.”
6. As regards the second area of concern, which was dealt with in the
review,> they recommended:®
“POL seek specialist legal advice from external counsel as to
whether the Deloitte reports, or the information within them
concerning Balancing Transactions and Fujitsu’s ability to
2 Paragraph 114 at 116(c), pages 39-40
3 Paragraphs 100-109, pages 34-37
4 Paragraph 113, page 38
5 Paragraphs 130-148, pages 45-53
6 Paragraph 149(6), pages 53-54
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delete and amend data in the audit store, should be disclosed
to defendants of criminal prosecutions brought by POL. This
advice should also address whether disclosure should be
made, if it has not been, to the CCRC.”
As a result of these recommendations, I received a set of instructions
dated 18'* February 2016 directly from Rodric Williams at POL
enclosing the Swift/Knight review document and other material
germane to the issues in order to advise upon the two areas of concern
set out in their review.
Since receiving these instructions, a group civil claim has been filed
against POL, in which allegations have been made that are related to
the same subject-matter as was reviewed by Messrs Swift QC and
Knight. The review commissioned by Mr Parker has subsequently been
brought to a close, and POL is actively defending the civil claim. I
have, however, been instructed to continue with the work requested by
Mr Williams for the purpose of assisting POL’s defence of the civil
proceedings.
On 20 March 2016, I sent to Mr Williams by email my preliminary
views. As regards the theft/false accounting issue I said that the
recommendation, as formulated, suggested to me that the only
solution would be to proceed to a review of all such affected cases,
because the recommendation was predicated on the basis that "(b)
there had not been a sufficient evidential basis to bring the theft
charge".
In my view, the second limb to this recommendation was such that I
could not advise on any basis other than to move to a review of
affected case files, because it could never be appropriate, adopting the
Code for Crown Prosecutors (which POL has adopted, and applies in
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making charging decisions), to charge theft when there is no sufficient
evidential basis to support it.
The suggestion has been made that POL had been indicting charges of
theft without any evidential basis solely to encourage and secure pleas
of guilty to what was argued to be lesser false accounting charges.
The underlying, serious allegation is, it appears to me, that, as a matter
of deliberate policy, POL has been systematically manipulating the
criminal justice process in its position as private prosecutor as to
amount to an abuse of the process.
As I pointed out in the email to Mr Williams, the safety of a conviction
based even on a plea of guilty might be undermined by a serious abuse
of the process. There was, I pointed out, authority that material non-
disclosure might lead to the finding of an abuse even where the
defendant had pleaded guilty. This is because the defendant has, by
the non-disclosure, been deprived of the opportunity to deploy an
argument to stay the indictment. So too here, if there was undisclosed
evidence of a deliberate practice to do as has been alleged, then that
could lead to a finding of an abuse.
As regards the second issue (Balancing Transactions), I had been
informed that this issue had been disclosed to the CCRC. Accordingly,
I observed in the email that my remit was solely to advise on its
disclosure to “defendants of criminal prosecutions”.
In paragraphs 149(4) and (5) of the Swift/Knight review,
recommendations were made that POL instruct a suitably qualified
party to review “the use of Balancing Transactions throughout the
lifetime of the Horizon system, in so far as possible, to independently
confirm from Horizon system records the number and circumstances
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of their use” and to instruct a suitably qualified party to review “the
controls over and use of the capability of authorised Fujitsu personnel
to create, amend or delete baskets within the sealed audit store
throughout the lifetime of the Horizon system, in so far as possible.”
In the email, I advised that there was no point advising on the
recommendation set out in paragraph 149(6) unless and until the
reviews recommended in paragraphs 149(4) and (5) were complete,
and POL knew whether there was a real problem, rather than some
highly speculative possibility, my view being that premature
wholesale disclosure might lead to unjustifiable, new claims of third
party tampering being made.
In his response email of 4‘ April 2016, Mr Williams accepted that I
should move to a review of the relevant files affected by the first area
of concern, and, in so far as the second area is concerned, that could
and should await the outcome of the recommended further reviews.
Following a telephone conference with Mr Williams on 5'* April, I was
sent, on 11'* May 2016, the first tranche of two case files to review
falling within the first area of concern. I have since been sent six
further case files to read and comment upon. In total, therefore, I have
reviewed eight case files said to be affected by the first area of concern.
Together they comprise a total of 23 Lever Arch files.
To recap, therefore, this review deals only with the theft/false
accounting issue. I shall await the outcome of the recommended
further reviews before advising on the second area of concern.
I have not set out in this document the arguments rehearsed in the
Swift/Knight review, neither have I sought to repeat the content of my
advice of 8 March 2015, which dealt with certain aspects of the
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theft/false accounting issue, which has been raised by other parties,
and which has been the subject of on-going exchanges of
correspondence.
Before coming to deal with each case file in turn, I return to the issue of
abuse of process.
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ABUSE OF PROCESS
A prosecution may be stayed essentially on two bases: (1) where it is
impossible for the defendant to have a fair trial and (2) where a stay is
necessary to protect the integrity of the criminal justice system (in other
words where it is unfair to try the defendant). The allegation here
principally engages the second limb of abuse.
The decision whether or not to prosecute requires a judgment to be
made. Consequently, even if it could be shown that there was a failure
to follow relevant guidance or policy, it does not follow that will
amount to an abuse of the process. However, if the allegation is that
POL pursued an improperly motivated and deliberate policy of
disapplying the evidential stage of the full Code test in the Code for
Crown Prosecutors (which POL applies) by charging theft, where the
evidential sufficiency test was not met, solely to influence or encourage
a plea to a charge or charges of false accounting, then that could well
amount to an abuse of the process.
Material non-disclosure may lead to the quashing of a conviction even
where there has been a plea of guilty on grounds that engage the first
limb of abuse, namely, that the defendant did not have a fair trial.
In R. v. Smith and others’ it was held, “If material is indeed capable of
supporting [an argument to stay the indictment as an abuse of the
process] then the applicants have been deprived of the opportunity to
deploy it and therefore of having the indictment stayed. The failure to
disclose the material therefore denied them a fair trial ... the question
therefore is whether or not the material could indeed have had a
causative impact on a tenable abuse argument ... The applicants were
therefore denied the opportunity to deploy that material in support of
7 [2004] EWCA Crim 2212 at [19]-[21]
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the abuse of process application and were accordingly denied a fair
trial. Despite their pleas of guilty the convictions were unsafe.”
If such a policy existed, then the non-disclosure of it to those
defendants unsighted by it might lead to the safety of their convictions
(their pleas of guilty to false accounting) being called into question, the
argument being they were wrongfully misled into pleading guilty to
the “lesser” charge of false accounting, which they might otherwise
have contested, for fear of being convicted of the “greater” charge of
theft with which they had been unjustifiably charged (these being the
arguments, as I understand them, of Lord Arbuthnot and Second
Sight).
There are good arguments to resist such allegations, most or all of
which have been rehearsed in exchanges of correspondence: the
defendant was able to challenge the sufficiency of the evidence said to
underlie the theft charge, if so advised, and to seek its dismissal;
indeed, it was open to the defendant to contest all the charges and seek
to make a submission of no case to answer at the close of the
prosecution case, if so advised; the defendant could, through his
advisors, seek disclosure, which might reasonably assist his case;
finally, it is ultimately the defendant's decision to plead guilty to a
charge or charges of false accounting on the basis of the legally
privileged advice he received at the time.
So the argument would be that the alleged deliberate failure by POL to
apply the Code (otherwise adopted and applied by it), coupled with
the failure to disclose the alleged policy of charging theft without any
proper basis to do so, just to secure a plea to false accounting, rendered
any trial process unfair and the allegedly deliberate policy to
manipulate the process made it unfair to try the defendant.
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29. As I have said before, because of the narrow terms of the
recommendation on this issue,8I see no option other than for me to
review each affected case file, which I do now in no particular order.
8 Paragraph 113(1)(b), page 38
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CASE FILES
Jacqueline McDonald
This defendant was born in
} and is now 51 years of age.
She was 45 years old at the time of the proceedings against her in 2009.
She was then SPMR at Broughton Sub-Post Office in Preston, which
was part of a shop, that she and her husband ran.
On 1s October 2008, a Business Development Manager, Caroline
Richards, visited the post office in order to carry out a check of cash
held at the branch. The post office had been declaring that it had
excessive amounts of cash of over £100,000 and Ms Richards intended
requiring the return of the excess cash.
The overnight cash holdings for 1st October 2008 had been declared as
£120,102.98. On inspection, there was only £17,000 cash in the safe but
there was no further cash.
Mrs McDonald was suspended and an audit team who went into the
branch discovered there was a shortage of £94,380.69. Of that total,
£85,505.38 was the difference in the cash figure, £6,524.24 the difference
in stock figures, £1,673.49 the difference in cheque figures and £244.82
the difference in foreign currency figures. The total is arrived at when a
debt of £432.76 is deducted.
In interview under caution, Mrs McDonald said she had taken over the
post office in December 2006 and had started working full time in it in
March 2007. In July 2007, the premises were closed for refurbishment
and they were reopened in November that year.
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She claimed that cash and stock were balanced every Wednesday, that
she alone controlled the safe, that usually no more than £20,000 was
kept in the safe, and she claimed she would physically count the cash
three times a week at least. She added the last correct cash declaration
had been made in March 2008.
She conceded that the cash declarations falsely represented the balance
of cash at the post office and, in interview, admitted offences of false
accounting. She refuted any suggestion that her assistant was
responsible for stealing any money and she denied stealing the money
herself.
She claimed to have called the helpline but enquiries of the helpline
revealed that none of the calls from the post office concerned any cash
shortage. She claimed also that mistakes were made when cash was
remitted to the post office from the branch, but the claims was
untenable in light of POL systems and processes, which ensured that
there would have been an audit trail of any remitted cash.
Alice Smith, a former accountant to Mr and Mrs McDonald acted for
the couple when the post office was bought in 2006. She made a
witness statement in October 2009. In March 2007, she said, she had
been concerned that the business did not have sufficient cash flow to
service its borrowings and it became apparent that Mrs McDonald had
not provided accurate information about creditors. This resulted in the
actual profit of the business being overstated in the accounts.
Following the closing of the business for refurbishment in July 2007, in
July 2008, she discovered that banking plus cash payments were
around £23,000 more than recorded takings for the quarter ending July
2007. In the following quarter ending October 2008 there was an excess
of £28,000. When Ms Smith questioned Mrs McDonald about this, she
claimed that she and her husband had entered the UK from the USA
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(where they had previously lived) with £100,000, which she had kept
in the safe and used as and when required. The McDonalds ceased
employing Ms Smith following her enquiries into a £51,000
discrepancy in the cash control account. A POL Security Team
memorandum of 30' April 2009 indicates that the accountant made a
suspicious activity report under the Money Laundering Regulations in
relation to a sum of £50,000 deposited into their business account. lam
unclear if this is the same sum as the £51,000 Ms Smith refers to in her
witness statement, in which she makes no reference to any suspicious
activity report.
This case, like others I deal with below, occurred before the separation
of Royal Mail and POL in April 2012, and it predates the coming online
of Horizon Online, which was rolled out into all POL branches
between January and September 2010. I assume that this case has been
included in my review for the same reasons given in footnote 5 of the
Swift/Knight review, namely, before 2012 prosecutorial decisions
relating to SPMRs were taken by the Royal Mail part of the business,
but they were being done in the name of, and on behalf of, POL. For
this reason, in this review I do not distinguish between pre and post-
separation cases but am treating them, for all purposes, as POL cases.
In a memorandum dated 15'* December 2008, Jarnail Singh, then a
senior lawyer in the Criminal Law Division of the Royal Mail, later of
POL, recorded his decision that the evidence was sufficient to provide
a realistic prospect of conviction of Mrs McDonald upon the charges he
had set out in a schedule attached to the memorandum, They were
charges of theft of £94,380.69 (the audit shortage) and, in view of her
admissions in interview, charges of false accounting.
On 21% April 2009, Mr Singh instructed counsel, John Gibson, to
prosecute, advise on the evidence and to settle the indictment.
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The brief to counsel indicates that a draft indictment based on the
schedule of charges was sent to counsel. As I understand it, counsel
approved the draft.
The draft indictment indicted the defendant on seven counts. Count 1
was a general deficiency count alleging theft relating to the total loss of
£94,380.69. Counts 2 to 7 were discrete allegations of false accounting. I
have seen two Advices in writing from counsel. The first is dated 234
April 2009. In it, counsel advised, among other things, that he was
“satisfied that the statements and exhibits ... are sufficient to support
the counts on the draft indictment ...” °
The second, further Advice, dated 2°¢ June 2009, dealt with matters
arising from the Plea and Case Management Hearing (“PCMH”) at
Preston Crown Court at which the trial date was fixed for 9» December
2009.
At a further hearing on 27 November 2009, the trial date was vacated
at the behest of the defence due to the time required by their expert,
and a new provisional trial date was fixed for 6' April 2010 (the date
was later moved to 12'» April). It appears that at the November hearing
an approach was made to the prosecution to see whether they would
be prepared to accept pleas of guilty to the counts alleging false
accounting in return for discontinuing the theft charge once the losses
had been repaid.
A memorandum of 2"¢ December 2009 from Phil Taylor of the Royal
Mail Criminal Law Division, and a letter of the same date from Mr
Taylor to counsel, indicated that counsel’s view was that “the
defendant must also be guilty of theft and that he would be prepared
° Paragraph 4
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to run it”, and that the investigation team probably shared the same
view.
The plea offer was put in writing by Mrs McDonald’s solicitors on 30"
November 2009. In it, among other things, they proposed the
prosecution discontinue or withdraw the allegation of theft, that Mrs
McDonald would plead guilty to the counts of false accounting, and
that a repayment plan would be put into operation whereby the sum of
£85,000 would be repaid to POL over a period of 12 to 18 months.
In an email from counsel to Mr Singh, counsel said he had told defence
counsel that the proposals mentioned to him at court were not
practical. In a memorandum of 9* December 2009 the investigation
team confirmed their view that Mrs McDonald was also guilty of theft.
In a letter dated 23"! December 2009, Mr Taylor wrote to the defence
solicitors saying the prosecution would be prepared to accept a plea to
the missing cash in the sum of £85,505.38 rather than the audit shortage
of £94,380.69 but would require compensation/confiscation in that
sum.
On 12 April 2010, Mrs McDonald did plead guilty to the counts
alleging false accounting (Counts 2 to 7). However, the prosecution did
not accept the pleas, and because the defence expert required yet more
time to provide a further report, the trial of the theft count went off to
9» November 2010.
Many months later, on 8 November 2010, Mrs McDonald in fact
pleaded guilty to the count alleging theft (Count 1). On 21% January
2011, she was sentenced to 18 months’ imprisonment on each count to
run concurrently. Confiscation was dealt with on 28 July 2011, when
the court found that Mrs McDonald had benefited in the sum of
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£99,759 odd, that the realisable amount was nil, and that the amount to
be recovered was a nominal £1.!°
Given these facts, the case falls outside the terms of the
recommendations for this review because, although the defence
proposed that Mrs McDonald would plead guilty to the false
accounting charge if the prosecution were to withdraw the theft
charge, in fact the prosecution continued to pursue the count of theft in
spite of Mrs McDonald’s guilty pleas to the false accounting charges,
and sought a conviction on it, to which, in the end, Mrs McDonald also
pleaded guilty.
In this case, the prosecution did not regard the false accounting
charges as alternative allegations to the charge of theft, but as evidence
of additional criminality deserving of proof to conviction. This was one
of those cases, therefore, where the offender was falsely accounting not
to conceal muddle but to conceal the theft, that is to say the dishonest
appropriation of property belonging to POL, with the intention of
permanently depriving POL of it, rather than dishonestly securing
some temporary gain only,!! which is sufficient evidence to support a
charge of false accounting, but is insufficient evidence to support a
charge of theft.
Despite the fact the case falls outside the strict remit for this review, I
have chosen deliberately to deal with it at some length, not only
because the case file has been provided to me for review, but also
because it shows the approach the prosecution took to the case where
there was evidence both of theft and false accounting, to which,
ultimately, Mrs McDonald pleaded guilty.
. T have taken this from the endorsements on the backsheet to counsel's brief
41 See paragraphs 16-19 of my Advice of 8 March 2015, and R. v. Eden (1971) 55 Cr. App. R.
193
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Thus, there can be no question whether it was appropriate to charge
both theft and false accounting in this case. The in-house lawyer for
Royal Mail (as he was then) decided that the evidence satisfied the
evidential stage of the full Code test. Counsel whom he had instructed
agreed with his decision and with the content of the draft indictment
and endorsed both in an Advice in writing. I agree with the approach
and the decision.
When pleas to false accounting were offered, they were rejected on the
basis there was evidence also of theft, that is to say, evidence that
satisfied the evidential stage of the full Code test. The decision to seek
Mrs McDonald’s conviction upon the count of theft was amply
justified by her later plea to it.
Josephine Hamilton
Born onI_
Josephine Hamilton was 49 years of age. She is now 59 years old. She
had been SPMR at South Warnborough Sub-Post Office since October
2003. The post office formed part of a general store and a coffee shop in
a semi-rural location in Hampshire. She had been trained in the use of
Horizon and in the running of the post office.
Mrs Hamilton employed June Partridge, who told investigators in her
witness statement of 31‘ July 2006 that she would assist in the post
office by selling stamps and by dealing with pension and allowance
customers, but she never had access to the safe or balanced or declared
cash holdings.
On 6'* March 2006, Rebecca Portch of POL’s Retail Cash Management
Team contacted the post office and, it is believed, spoke to Mrs
Hamilton about the very high levels of cash reported as kept on the
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premises. Ms Portch asked that at least £25,000 be returned to POL by
8 March 2006. On that same day, Mrs Hamilton contacted her union
representative to claim there had been problems at the post office.
On the day following contact by Ms Portch, on 7 March, Mrs
Hamilton went and was signed off work by her doctor for I
Due to concerns about the information provided and Mrs Hamilton’s
failure to return the cash requested, a POL investigator, an area
intervention manager and an auditor attended the post office on 9%
March 2006. Following a check of all the documents and accounts it
was discovered that the post office was short by £36,644.89. Later that
day the investigators attended Mrs Hamilton’s home address, where
she was suspended, and they invited her to be interviewed.
Analysis of the records showed that the cash on hand figure recorded
on the weekly cash accounting documents had increased from about
£15,000 at the end of 2004 to over £35,000 by February 2006.
Mrs Hamilton was interviewed under caution in May 2006 in the
company of her solicitor, having been provided with documentation
outlining the allegations against her. She made no comment to the
questions asked of her but provided a prepared statement in which she
claimed to have received inadequate training, she said that POL
systems were shambolic and she detailed problems she had
encountered running the post office; she said she had made calls to the
helpline. She denied theft or acting dishonestly.
Graham Brander, the investigation manager, reported on 17" May
2006, and, in response to certain queries made of him by Juliet
McFarlane, a lawyer in the Royal Mail Criminal Law Division, which
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she detailed in a memorandum of 26'» June 2006, Mr Brander
supplemented his report on 11!" August 2006.
In his first report he said, “Having analysed the Horizon printouts and
accounting documentation I was unable to find any evidence of theft or
that the cash figures had been deliberately inflated.” That must have
been a reference solely to Horizon records, because a little later he
added that he could not identify “the period of offending, mainly due
to the fact that Mrs Hamilton responded no comment to my questions.
You may wish to consider a charge of theft for the audit deficit of
£36,644.89, covering the period from when Mrs Hamilton became
Postmaster (21/10/03) to the date of the audit (09/03/06). The only
evidence appears to be the fact that the audit identified the money as
missing.”
In his supplementary report in August he said, “The audit completed
the Branch Trading Statement for Period 11 on 09 March 2006. It would
appear that Mrs Hamilton must have been the person who completed
Branch Trading Statement for period 10 (13/01/06 - 08/02/06). This
statement showed a shortage of £6.74 and the cash on hand as being
£35,515.83. As the cash on hand for Trading Period 11 (08/02/06 -
09/03/06) was £1,933.48 then either the whole audit deficit of
£36,644.89 went missing between those two periods (no evidence to
suggest it has) or the cash figure on Trading Statement period 10 must
have been false.”
In so far as calls to the helpline go, the investigator had examined the
Network Business Support Centre (“NBSC’”) call logs and calls to the
Horizon helpdesk. A number of losses of various sums ranging
between £750 and £4,188 had been reported to the NBSC between 3*¢
December 2003 and 5‘ January 2006, but the investigator concluded he
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could not see “anything that relates to a single or multiple
discrepancies that would account for the audit deficit of £36,644.89.”
The Hamilton case is also a pre-separation case and it predates the
rollout of Horizon Online. I have assumed that this case has been
included in this review for identical reasons as those given above in
relation to the McDonald case.
In her 26 June 2006 memorandum, the case lawyer, Juliet McFarlane,
had expressed the opinion that the evidence “gave rise to offences of
theft / false accounting against the offender.” However, before
advising she had asked Mr Brander to deal with a number of points
that were to result in his 11 August report.
In a further memorandum dated 11" October 2006, Ms McFarlane
advised that in her opinion, “the evidence is sufficient to afford a
realistic prospect of conviction of the above named (Hamilton) on the
charges set out on the attached Schedule. In my opinion there is a
low/medium prospect of success. The defendant will no doubt argue
that she got into a muddle due to confusion with the Post Office
system and lack of training. The prosecution will need to refute this.”
She added, “In due course an approached (sic) may be made by the
defence regarding consideration of false accounting charges. If this
happens I will need to review the file.”
Although she expressed it as a schedule of “charges” (plural), the only
charge I have found in any schedule that Ms McFarlane drafted is a
single charge alleging theft of £36,644.89 on or before 7» March 2006.
Her advice regarding future “consideration of false accounting
charges”, coupled with an internal memorandum of 18'* October 2006
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from a casework advisor on the investigation team, which refers to “a
schedule of 1 charge” confirms that theft was the sole charge Ms
McFarlane considered available on the evidence at that time.
If I have any criticism at all of her decision-making it is the glaring
inconsistency in advising that there is a realistic prospect of conviction,
but then advising there was only a low/medium prospect of success. I
highlight this issue now for the first and only time during my case
reviews, although I have come across similar forms of assessment of
the prospects of success in other charging decisions during the course
of this process. Either there is or there is not a realistic prospect of
conviction, but to qualify a decision that there is a realistic prospect of
conviction with a view on the chances of success is not only to put a
wholly unnecessary gloss on the evidential test, but also it risks the
charge of irrationality in the decision-making process.
In this case, independent counsel, Richard Jory, was briefed on 13'
February 2007 to settle the indictment and advise on evidence, as well
as to appear for the prosecution at the PCMH at Winchester Crown
Court on 12' March 2007.
Mr Jory settled the indictment on or about 27'* February 2007. I have in
fact seen two versions of it, one containing 14 counts, and the other 15.
I am confident it is the 15 count indictment, which was preferred.
Count 1 was an allegation of theft of £36,644.89 between 1st October
2003 and 9'* March 2006, and Counts 2 to 15 alleged a series of offences
of false accounting covering a period of from “on or about 1*
December 2004” to “on or about 8' February 2006”.
At the PCMH of 12'* March 2007, among other directions, the trial was
fixed for 10! September 2007. I have assumed Mrs Hamilton pleaded
not guilty to all the counts on the indictment at this hearing.
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On 25th May 2007, the case was mentioned at the behest of the defence
on the question of disclosure. It is apparent to me from the endorsed
backsheet of counsel who attended the hearing that day that the judge
requested the prosecution to review the indictment to see whether it
would be more appropriate to cover a longer period. A further
endorsement shows that Mr Jory drafted an amended indictment on
30 May 2007. This might explain the different versions of the
indictment I have seen.
In his email of 30'* May 2007 attaching the new draft indictment, Mr
Jory opined, “Our case is that she has been carrying an increasing loss
for some time. The purpose of this is to see whether she accepts this
falsification [implicit in her prepared statement] or whether she
contends that she completed the documentation accurately.” He
added, “Is there any evidence of lifestyle/debts/extravagance etc? ie
where did the money go?”
The indictment counsel settled and the content of his email indicates he
was Satisfied there was sufficient evidence to support all the counts,
including theft.
It appears from the content of a memorandum sent to the investigation
team by Ms McFarlane on 9h August 2007, that this indictment, a set of
draft admissions also drafted by counsel, and his opening note, had
been sent to the defence.
The opening note is dated 25» June 2007. In it, the prosecution made
clear its case. In so far as the increasing amounts of the cash on hand
figures between the end of 2004 and February 2006 go, counsel wrote,
“The prosecution indicates that this represents the defendant's efforts
to hide the fact that she was in fact taking money from the post office
21
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83.
84.
85.
86.
87.
during this time, and by recording the high cash figure was trying to
cover up the fact she had taken it.” !?
In concluding, he alleged, “The truth is that the defendant had been
inflating the cash on hand figure at the post office over a period of
several months prior to the audit on 9' March 2006. She had done this
in order to disguise her thefts of cash ... There is no doubt that the
money has been taken and the Post Office have therefore lost over
£36,000.”
Thus, the prosecution was clearly alleging that she had covered up the
theft of money by false accounting.
On or about 20" July 2007, the case investigator visited counsel’s
chambers to inspect 91 ring binders containing material provided by
the defence, which they claimed POL had overlooked. According to the
investigator, the documentation contained within the 91 ring binders
was of the kind he expected to find in every post office. But he found
nothing that offered any explanation for the audit deficit in this case.
At a further mention hearing on 26'» July 2007, the trial date was
moved to 10'* December 2007.
On or about 9k October 2007,'5 Mr Jory emailed Juliet McFarlane and
Jennifer Andrews of the Criminal Law Division to inform them that
defence counsel had offered pleas to false accounting. He said he
presumed the offer was to Counts 2 to 9, and he had been asked to take
instructions as to the acceptability of the offer.
2 Paragraph 7
5 The actual date of the email is not in fact revealed on the copy I have seen
22
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88.
89.
90.
91.
92.
93.
I am not clear whether the offer was made at a hearing or informally.
Moreover, I fail to understand the basis of the presumption that the
offer only embraced Counts 2 to 9. Neither issue is critical to my
review.
Importantly, however, in the context of this review, Mr Jory added to
the email, “My view is that there is evidence she has taken the money,
and that there is sufficient evidence to support theft, but Royal Mail
may be content with guilty pleas to dishonesty matters if she
undertook to repay the amount of the shortage at the audit, ie
£36,644.89.” He advised that the investigators be spoken to for their
view.
Thus, counsel’s advice was clear: there was a sufficiency of evidence to
support the charge of theft but, for pragmatic reasons, pleas might be
acceptable if the money was repaid.
Mr Jory’s email was forwarded to the investigators. On 10" October
2007, Mr Brander responded, saying he was in agreement with counsel,
that in his opinion “the evidence clearly shows theft (charge 1),
however, if the defence are offering up guilty pleas to all False
Accounting charges (2 - 15 on my copy of the indictment), then I would
suggest we accept this on the understanding that Mrs Hamilton agrees
to repay the full amount (£36,644.89).”
He added that any decision to accept the pleas would be made by Dave
Pardoe (1 think I am correct in saying Mr Pardoe was the then
Designated Prosecution Authority).
A memorandum of 15‘ November 2007 from Juliet McFarlane to the
investigation team noted that counsel had requested the case be
relisted for mention on 19'* November 2007 to see whether the trial
23
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94,
95.
96.
97.
might be vacated should Mrs Hamilton plead guilty to the counts of
false accounting. One option that was canvassed in the memorandum
was leaving the count of theft on the file pending repayment by the
date of trial (fixed for 10 December 2007) or some later date.
A subsequent exchange of emails on 16" November 2007 canvassed
views about the efficacy of accepting pleas to false accounting as
regards confiscation proceedings. Ms McFarlane’s view, of which she
informed counsel, was that whilst there was “no outright objection to
proceeding with False Accounting, there is concern as to recovery of
money. We have to date been able to recover where False Accounting
only is charged though on one or two cases the Defence will argue
against. Whilst a plea to Theft would be preferable, in the event of non-
payment the intent would be to proceed to confiscation.”
Counsel’s endorsed backsheet reveals that, at the 19'* November
hearing, the prosecution sought and obtained leave to amend the
indictment, and that the defendant pleaded guilty to Counts 2 to 15
(the false accounting allegations). Sentence was adjourned to 25'*
January 2008 for reports.
The endorsement continues, “Pros. made it plain pleas acceptable only
if repayment by 25.1.08 [NB: will consider confiscation in the event of
non-compliance]”.
In a further memorandum of 19' November 2007, Juliet McFarlane
informed the investigation team that Mrs Hamilton had been informed
that full payment must be made prior to 25'* January 2008, and that the
theft count had remained on the file “on the understanding that it
should be proceeded with if the money is not paid”. That was
incorrect. The order for the count of theft to lie on the file was not
made on 19't November 2007. In fact it was made at a hearing on 4‘
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98.
99.
100.
101.
February 2008 once the prosecution had received reassurance that the
money would be repaid.
It is clear that the repayment was not to be made under any court
order, but as a condition of the dropping of the theft charge.
By 1* February 2008, no repayment had been made. Ms Andrews
informed Mr Brander in a memorandum of 1* February 2008 that the
theft charge could be proceeded with “in the event the money was not
repaid before sentence, or compensation and confiscation could be
sought in relation to the basis of her plea as she appears to accept
responsibility for the loss.”
Counsel's backsheet shows that, on 4‘ February 2008, Mrs Hamilton
was sentenced to a community order with a 12 month supervision
order and £1,000 was ordered to be paid towards prosecution costs.
Her solicitor signed an undertaking that the £36.644.89 would be paid
within the week. As indicated above, the count of theft was
accordingly ordered to lie on the file. On 18‘ February 2008, the
investigation team confirmed receipt of a cheque for £37,644.89, which
included the £1,000 costs.
The review of this case shows that consideration was given to the
nature of the indictment both by the in-house lawyer and independent
counsel, who considered there was evidence of theft to support the
charge in Count 1. I agree that absent any tenable explanation from
Mrs Hamilton consistent with her being not guilty of theft, there was
indirect evidence to support the charge of theft: she had increasingly
declared excessive cash holdings that were not to be found in the post
office. In her prepared statement, which is the only word she uttered
about the audit shortage, she appeared to blame a lack of training and
shambolic POL systems. However, further investigation of her calls to
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102.
103.
104.
the Horizon helpdesk and to the NBSC helpline failed to explain the
loss of over £36,000, and, more importantly, the reason why she should
need to falsify the declarations to such an extent if it had been for
reasons unrelated to her taking the cash over time, such as to cover up
a genuine muddle.
As regards her pleading guilty to the counts of false accounting, Mrs
Hamilton’s own counsel clearly initiated discussion about pleading
guilty to them in early October 2007, which, given the terms of the
email Mr Jory sent Ms McFarlane about it, can only have been on Mrs
Hamilton’s instructions. The prosecution accepted the pleas on
condition that she repaid the losses, which she did, voluntarily, by 18
February, which is a powerful indication of her acceptance that the loss
had been caused by her having taken the money, even though she was
contractually bound to repay it.
There is no evidence whatsoever that Mrs Hamilton was pressured
into pleading guilty to the false accounting charges by the indicting of
the theft charge. As I have indicated, in my view, the theft charge was
legitimately indicted, and, having reviewed the material, it is my
opinion on the whole of the available evidence, that there was a
realistic prospect of conviction of Mrs Hamilton upon that offence such
that the convictions for false accounting are perfectly safe.
However, I do observe that the means by which repayment of the
shortage was secured was liable to leave the prosecution open to other
complaints of pressure. Where the plea or pleas of guilty entered by an
offender are regarded by the prosecution as an adequate plea to the
indictment as a whole then it is the customary practice for the judge to
order the remaining count or counts to which the offender has pleaded
not guilty be left on the file marked “not to be proceeded with without
the leave of the court or the Court of Appeal.” The judge’s consent is
26
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105.
106.
107.
required for this order and as a matter of practice the judge will
usually give his consent provided the defence agrees.
The order for the count to remain on the file means the count is
available to be proceeded with if the court so orders it. It is thus left in
suspense.'* It would have been inappropriate for the prosecution to
offer no evidence resulting in the judge directing a not guilty verdict
under section 17 of the Criminal Justice Act 1967, because there was
evidence supporting the count of theft, which, in this case, was not
intended as a viable alternative, but as an additional, self-standing
allegation.
The proposal here, however, ultimately to invite the court to order the
count be left on the file as a condition of repayment was highly
unusual if not exceptional, and was, it seems to me, fraught with
difficulty, despite the judge approving this course.
First, the effect of the arrangement was that the prosecution was in
effect allowing Mrs Hamilton to buy her way out of a charge upon
which the in-house lawyer and counsel had advised there was a
sufficiency of evidence. Second, the question might be asked why if the
prosecution felt the evidence was sufficient to support the count of
theft it was content to drop it for repayment of the losses. Third, if Mrs
Hamilton did have a tenable defence to the count of theft (although I
have seen no defence statement providing any defence, and doubt a
defence statement was ever served) then it might be argued that the
suggestion she should repay the losses in return for the dropping of
the theft count, which was an idea originating with the prosecution,
placed undue pressure on her, despite the fact she was represented,
and despite having pleaded guilty to false accounting.
4 R.v. C.C.C,, ex parte Randle and Potter [1991] 1 WLR 1087 at 1097D
27
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108.
109.
110.
111.
112.
While it cannot be said on the material I have seen in this case that the
count of theft was charged and indicted solely (and improperly) to
influence or encourage guilty pleas to the counts of false accounting, at
the stage at which Mrs Hamilton had indicated she would plead guilty
to the false accounting charges, the condition of repayment in return
for the dropping of the count of theft, in my view, could lend itself to
the possible, unfortunate allegation that what occurred provides
evidence of the manipulation by the prosecution of the criminal
process by securing the repayment of its losses through the criminal
process, in particular, by the charging of theft.
Seema Misra
Seema Misra was at all material times SPMR at the West Byfleet Sub-
Post Office. She is now 41 years of age, having been born on
{GRO} At the time of the commencement of proceedings against her she
was 32 years of age.
She had been an English graduate of the University of New Delhi and
she had also held a computer qualification, and had worked in
computer programming. Her service as SPMR had begun in June 2005.
On 14 January 2008, branch auditors attended the West Byfleet post
office, where they reported a shortage in cash and stock of around
£77,000, which included a known debt of £3,034.03. Mrs Misra
informed one of the auditors that there would be a shortage of between
£50,000 and £60,000, and that the balances had been adjusted to
produce a clear trading statement.
Mrs Misra provided two written reports to an investigation manager
who attended the post office, in which she claimed that the shortages
were due to staff thefts around a year previously. She stated that she
28
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113.
114.
115.
116.
was going to borrow money to repay the money and wanted to pay
POL its losses.
In an interview under caution, Mrs Misra denied theft but admitted
false accounting. She said that previous staff members were
responsible for stealing from her and that the losses had been carried
for over a year. She said she had reported a theft of £1,000 to the
police, and members of staff had been sacked or resigned, or they left
the country, as losses were uncovered. Although only the alleged theft
of £1,000 had been reported to police, Mrs Misra estimated the loss to
be between £89,000 and £90,000. She said the losses had been carried
since about November 2006.
She explained that she hid shortages by falsifying the cash on hand
figure, and also by falsely declaring cash in pouches or currencies
awaiting despatch. She conceded this was dishonest, but said she
wanted to save her business. She added she had been repaying money
into the account. She confirmed that she was the only person who had
completed the Branch Trading Statements at the sub-post office since
2007.
The actual loss to POL was assessed as £74,609.84.
In a memorandum dated 1st April 2008, Jarnail Singh, the then senior
lawyer in the Criminal Law Division of the Royal Mail, later POL,
recorded his decision that the evidence was sufficient to provide a
realistic prospect of conviction of Mrs Misra upon the charges set out
in a schedule attached to the document, which was a charge of theft of
£74,609.84 (the losses accrued over the course of a year) together with
four further charges of false accounting.
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117.
118.
119.
120.
121.
Counsel instructed to prosecute the matter settled the indictment,
which contained the allegation of theft (Count 1) and, in fact, a total of
six allegations of false accounting (Counts 2 to 7).
By letter dated 16'* March 2009, The Castle Partnership, Mrs Misra’s
then solicitors, informed the prosecution that it was Mrs Misra’s
intention to plead guilty to all the false accounting allegations, but she
was maintaining her plea of not guilty to theft.
Mrs Misra’s first defence statement dated 20' March 2009 confirmed
she would plead guilty to the allegations of false accounting but not
guilty to theft. In the document, she denied dishonestly appropriating
monies belonging to POL and said she would “assert that the theft was
undertaken by other employees working at the Post Office at the time
the monies went missing” .
A memorandum from Phil Taylor, a Criminal Law Division legal
executive, dated 25 March 2009, indicates that when Mrs Misra
appeared at Guildford Crown Court on 20" March 2009 for the PCMH
she pleaded not guilty. The memorandum does not make clear
whether she pleaded not guilty to theft only and guilty to the rest, but
the way it reads, as well as subsequent correspondence I have seen,
tends to suggest Mrs Misra pleaded not guilty across the board.
By a further letter dated 9» April 2009 from The Castle Partnership, the
defence solicitors identified those persons who had worked for Mrs
Misra who she “suspected of having been responsible for the theft of
the monies”. They were identified as Shikhar Saxena, Javed Bidiwalla
and Nadia Batliwalla, and their last known addresses and other
personal details were provided to the prosecution.
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122.
123.
124.
125.
126.
Thus, at that time, Mrs Misra was asserting that there had been a theft
of money from POL, but that she was not the person responsible for it.
No issue was then being raised about Mrs Misra’s training or the
reliability of Horizon.
Mr Taylor, the Criminal Law Division legal executive, wrote to counsel
on 13'* May 2009 informing him that enquiries of the whereabouts of
the named staff members revealed that none lived at the addresses
given for them and one was believed now to be living in India.
Counsel was asked for his advice whether in light of this and other
issues the defence were raising it was sensible to continue with the
prosecution or to accept the false accounting charges.
On 22°¢ May 2009, Mr Taylor sent prosecuting counsel an email
indicating that while the investigation team were content to accept the
proposed pleas to false accounting, acceptance would make
confiscation and compensation for the losses very difficult and he
sought counsel's further advice. Counsel, Warwick Tatford, responded
by email later the same day, saying he had spoken to the investigator
about the case, and, “The case for theft is strong and we should not
accept the pleas. Confiscation would be a non-starter if we did.”
The trial, which began on 2"¢ June 2009, had to be aborted because the
defence belatedly raised issues about the reliability of Horizon without
notice to the prosecution, which they could not meet.
At some point in spring/summer 2009, Mrs Misra changed her
solicitors, and her defence: a second defence statement dated 21
January 2010 (which I have not seen) apparently resiled in part from
the allegation that her past employees had stolen from her, and she
now asserted that her training had been deficient and the Horizon
system was responsible for the losses. In a letter dated 13" November
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127.
128.
129.
130.
2009, which predated her second defence statement, Mrs Misra’s new
solicitors, Coomber Rich, indicated to POL, “Possible theft by other
employees is still a live issue”.
Mrs Misra’s trial took place finally on 11 October 2010. I have
retained the transcripts of the trial from a previous submission to me.
The transcript of the judge’s summing-up of 19'* October 2010 makes
clear that at some point prior to the trial (I have not been able to
discover when exactly) Mrs Misra did plead guilty to the counts of
false accounting. !°
The jury convicted Mrs Misra of theft on 21st October 2010. She was
sentenced on 11* November 2010 by which time she was [GRO
The judge sentenced her to 15 months’ imprisonment for theft and to
concurrent terms of 6 months’ imprisonment for false accounting,
totalling, therefore, 15 months’ imprisonment.
In subsequent confiscation proceedings that took place in July 2011, the
benefit figure was determined to be £83,469.59; and the realisable
amount was fixed at £40,000, which was ordered to be paid by 7
January 2012 by way of compensation to POL.
It is clear from this summary of the proceedings, that Mrs Misra had
first admitted the offences of false accounting to investigators, and had
subsequently formally pleaded guilty to counts of false accounting,
although when precisely she did so is not clear to me. Mrs Misra’s case
from the January 2008 audit to the first abortive trial (as demonstrated
by the terms of the March 2009 defence statement) had been that her
previous staff had stolen the money.
5 Pages S3H-5S4A
32
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131.
133.
134.
Indeed, in order to make good that claim, she asserted that she had
reported the theft of £1,000 to police. Investigation showed that the
only report made to police about any previous theft had in fact been
made by Javed Bidiwalla, a former member of staff Mrs Misra had
(according to him) falsely accused of stealing £2,000 in February 2006.
She also named him as one of three suspects for theft or thefts in her
solicitors’ letter to POL in April 2009.
It appears that Mrs Misra had complained to the police that she
suspected Nadia Batliwalla (who was Mr Bidiwalla’s sister-in-law) was
an illegal immigrant and was causing trouble at the post office, and
that she suspected her of stealing from the post office. The transcript of
the judge’s summing-up of 19'* October 2010 deals with this
complaint.'®
This case falls outside the narrow compass of this review because Mrs
Misra pleaded guilty to counts of false accounting, but not as an
acceptable alternative to a charge of theft, for which there had been no
proper basis. Indeed, far from withdrawing the count of theft once Mrs
Misra had pleaded guilty to the false accounting offences, POL
pursued it, and Mrs Misra, who contested it, was duly convicted of it
by the jury in the second trial.
It is clear that at the time of the first trial her case was there had been a
theft of the monies, which she had tried covering up, and, by the time
of her second trial, her case had remained so, as evidenced by her new
solicitors’ letter of 13" November 2009, albeit running in parallel with
claims about Horizon fallibility and her training. Indeed, in his
summing-up, the judge summarised her defence thus: “There was a
shortfall apparent on (sic) the tills at the time of the audit, she tells you,
but the cause of that was not her taking the money. She thinks it was
16 Page 72C-G
33
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135.
136.
137.
138.
staff theft, problems with the computer system and general (sic) just
problems of coping with the demands of running the post office
leading to disorganisation and incompetence. That is what the defence
case is.” 17
Later he summed up her own evidence to the jury: “... it is her case ...
that those offences [i.e. false accounting] were committed not because
she had committed theft but because she was trying to keep the post
office going when there were deficiencies not caused by her
dishonesty.”!8 It is clear from the judge’s summary of her evidence
that she had maintained her claimed suspicions about her staff stealing
from her.!9
The importance of this line of defence was that to the extent she was
arguing that the losses were in whole or in part due to theft by others,
she was accepting that, at the very least, there might have been thefts
at the post office. But if so, if not by her then by whom? The jury
resolved that question against her.
Even though the present case falls outside the strict terms of reference
for this review, in my judgment there was ample evidence to justify the
charge of theft, not least Mrs Misra’s own case that she suspected there
had in fact been thefts; simply that she had not been responsible for
them.
Julian Wilson
Julian Wilson was SPMR at Astwood Bank Sub-Post Office in
Redditch, Worcestershire. He is 67, having been born on
» Page 59D-E
8 Page 81B-C
Page 83E-H, page 84F
34
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139,
140.
141.
142.
143,
He was jer! years of age at the time proceedings were commenced
against him.
On 11" September 2008, POL auditors attended the sub-post office. Mr
Wilson informed them that there would be a shortage of about £27,000,
which he explained had been an accumulation of shortages over the
past five years or so. He added that he had been inflating the cash on
hand figures to show that the office accounts would balance weekly
and, more recently, on the monthly trading period.
The audit revealed a deficit of £27,811.98. In a later interview under
caution, he admitted false accounting over a period of five years to
cover losses. He denied using the money for his own purposes.
Anthony Vines, independent counsel, was briefed on 14 May 2009,
and asked, among other things, to advise whether theft should be
added to the schedule of charges, which until then had contained a
series of false accounting charges.
In an Advice in writing dated 22"¢ May 2009, counsel advised that it
was not a straightforward case “because of the difficulties in
establishing theft and the fact that the charges of false accounting do
not necessarily result in the claim to the full loss” but, having
discussed the case with Juliet McFarlane (the then Royal Mail lawyer in
the Criminal Law Division) he had drafted an indictment with counts
“which ... are made out on the evidence and admissions, which have
been served, which enables a proper claim to be made for the full sum
of £27,811 odd ...”
That draft indictment contained five counts. According to counsel’s
case summary, Counts 1 to 3 were allegations of false accounting over
the four years Mr Wilson admitted falsely accounting in the period
35
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144.
145.
146,
prior to the coming into force of the Fraud Act 2006 on 15'* January
2007. Counts 4 and 5 were allegations of fraud by abuse of position, the
start date in Count 4 being 15‘ January 2007 (the commencement date
of the Fraud Act 2006), both counts representing two relevant trading
statements periods post-dating the offences alleged in Counts 1 to 3,
which related to the falsification of cash on hand figures between 1%
January 2004 and 15'* January 2007.
The fraud counts alleged that between 15'k January 2007 and 17%
December 2008 Mr Wilson had “dishonestly and intending thereby to
make a gain for himself or another abused his position as sub-
postmaster of Astwood Bank Post Office in which he was expected to
safeguard the financial interests of Post Office Limited by enabling a
substantial deficiency to rise, by failing to make good that deficiency
whilst pretending that he had done so and by falsifying entries in Final
Branch Trading statements in breach of section 4 of the Fraud Act
2006.”
I make three observations: (1) the fraud counts were self-evidently not
designed as alternative counts to the false accounting allegations
because they post-dated the allegations made in Counts 1 to 3, and so
did not cover the same period; (2) they reflected the falsification of
Final Branch Trading statements rather than cash on hand figures; and
(3) as is evident from the Advice of counsel originally instructed, the
fraud counts were added to ensure confiscation or compensation
orders might be made on conviction.
New counsel, Richard Cole, appeared at Worcester Crown Court on
15t June 2009 for the PCMH. Counsel’s backsheet shows that on this
occasion Mr Wilson pleaded not guilty to Counts 1 to 3 but guilty to
36
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147.
148.
149.
150.
Counts 4 and 5. The backsheet is endorsed “G pleas to counts 4 + 5 on
basis. Acceptable to Rob Wilson.”° See e-mail post hearing.”
I have not discovered the email referred to, but, by the terms of the
basis of plea document, which I have found in the case files, Mr Wilson
pleaded guilty to Counts 4 and 5 on the basis that he had failed to
make good losses, which accumulated in the years 2007 to 2008. He
said he had falsified entries in the Final Branch trading statements, and
in so doing had avoided repayment, as was his contractual obligation.
He said the losses had occurred as a result of staff or systemic errors,
he did not believe any of the money was stolen, he had not stolen the
money, and he had made no financial gain.
Sentence was adjourned to 3 August 2009 on which date Mr Wilson
was sentenced to 200 hours’ unpaid work and costs. Counts 1 to 3 were
ordered to lie on the file. On 17‘ December 2009 a confiscation order
was made in the sum of £28,434.95.
This case also falls outside the strict terms of my remit on this review,
because Mr Wilson did not in fact plead guilty to any of the false
accounting charges; also no alternative count of theft was indicted. Mr
Wilson pleaded guilty to the two non-alternative counts of fraud,
which related to the latter part of the indicted period (2007 to 2008
only), rather than to charges of false accounting, which covered an
earlier period and the falsification of different records.
The rationale behind charging offences of fraud, as against false
accounting, post-15' January 2007, was, it appears, to secure
confiscation or compensation orders on conviction. I think the
allegation of fraud was legally legitimate, if a little tortuous, on these
facts. But, for the avoidance of doubt, from everything I have read
2 Then Royal Mail Group Head of Criminal Law
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151.
152.
153.
154.
there is nothing that undermines the safety of Mr Wilson’s convictions
in this case.
Peter Holmes
Peter Holmes was born on
making him
When proceedings were commenced against him in 2008, he was
Mr Holmes was post office manager at Jesmond Sub-Post Office in
Gosforth, Newcastle upon Tyne. The sub-post office was part of a
pharmacy and located at the back of the shop owned and run by Sunil
Khanna, who was SPMR in name only, and took no part in the running
of the post office, but had employed Mr Holmes to do so.
On 18" July 2008, POL auditors carried out an audit at the post office
when a total shortage of £46,049.16 was discovered, consisting for the
most part in differences in cash, stock, foreign currency and cheques on
hand figures. In interview under caution, Mr Holmes denied theft but
admitted false accounting over a period of between six and nine
months. He said that deposits into a bank account totalling £48,000
between July 2007 and August 2008 were the takings from his wife’s
business. Mr Holmes made allegations that Horizon had been faulty in
2008. Analysis suggested that Mr Holmes had been false accounting
since October 2007.
In a memorandum dated 16 February 2009, Juliet McFarlane, the
Royal Mail lawyer in the Criminal Law Division, advised that in her
opinion the evidence was sufficient to afford “a realistic prospect of
conviction on the charges set out in the attached Schedule”. The
schedule set out one offence only: an allegation of theft alleging that
between 1st August 2007 and 19 September 2008 Mr Holmes had
stolen £46,049.16 belonging to POL. It was upon this offence that, on
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155.
156.
157.
158.
18 February 2009, Mr Holmes was summoned to Gosforth
Magistrates’ Court, where he appeared on 30! March 2009 and
indicated a not guilty plea. Jurisdiction was declined and he was in
due course committed for trial.
From the terms of the PCMH form completed during the hearing at
Newcastle Crown Court on 22°¢ June 2009, Mr Holmes, through his
counsel, indicated he was prepared to plead guilty to false accounting
and that he was likely to be relying on a forensic accountant. It appears
from an attendance note of the PCMH that the prosecution indicated
that an additional charge of false accounting would be added to the
indictment, which the defence indicated they would accept in
accordance with Mr Holmes’ interview admissions. However, the
prosecution indicated that such a plea would not be acceptable and
that they would proceed to trial on theft. The trial was provisionally
listed for the week of 14‘ September 2009.
An expert accountant’s report dated 28'* July 2009 commissioned on
behalf of Mr Holmes concluded that deposits into his and his wife’s
joint bank account amounting to £43,605 during the period of the
alleged theft charge had derived from the takings from Mrs Holmes’
business and not from monies stolen from POL.
In his defence statement (confusingly dated in different places 16" July
2009 and 30 July 2009), Mr Holmes denied theft, said he believed that
Horizon had occasionally been at fault, asserted that the monies
deposited in the joint bank account were proceeds from his wife's
business, but accepted he had falsified documents to cover
discrepancies.
He added he did not believe that “the Royal Mail [had] conducted a
thorough investigation and did not consider any alternative in relation
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159.
160.
161.
162.
to the allegation.” In other words, he was accusing Royal Mail of
having a closed mind and failing to consider sufficiently or at all that
he had been guilty of false accounting rather than theft.
It is clear from a report by a POL fraud investigator dated 19 August
2009 that the investigator did not agree with the expert’s conclusions
on the source of the deposits, saying that the manner in which the
deposits were made suggested differently. However, because he did
not have access to the daily takings for the period, he could not be
certain. (The daily takings were subsequently attached to a letter from
the defence dated 16‘ November 2009.)
By letter dated 24** August 2009, the defence solicitors wrote to the
prosecution suggesting in light of their expert report that the
prosecution would be in difficulty pursuing theft, and inviting the
prosecution to offer no evidence on the theft charge and adding to the
indictment an alternative charge of false accounting, the proposed
particulars of which they set out in the letter. Of course, the
prosecution had indicated at the June PCMH that it was minded to add
false accounting to the indictment, but had rejected taking any plea to
false accounting as an acceptable alternative to theft.
At some point the provisional September date for trial was vacated and
the trial apparently relisted for 14" December 2009.
A memorandum dated 10'* December 2009 from a member of Royal
Mail’s Criminal Law Division recorded the investigation officer’s view
that, having viewed the documentation provided by the defence (i.e.
that provided by the letter of 16‘? November 2009), he “could find no
sufficient evidence to bring any part of the Expert's report in to
question”. Subject to further checks, the memorandum acknowledged
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163.
164.
165.
21 The report in fact give:
that in the absence of the identification of any further account, “there is
nothing further I could consider to assist with the theft charge”.
The documentary material from the case file thereafter is lacking. I
have not been able to discover the final amended indictment or any
results sheet other than a case closure report that indicates on 29'»
January 2010,*! having pleaded guilty to four counts of false
accounting, and asked for 13 similar offences to be considered, Mr
Holmes, who wa:
was sentenced to a home detention
curfew order for three months. I am unable to tell how the theft count
to which he had pleaded not guilty was disposed of.
In my view, it is clear that there was a realistic prospect of conviction
of Mr Holmes for theft on all the available evidence at the time of
initial charge. However, the prosecution had properly kept the matter
under review, and, following the service of the expert report, and
further analysis of documentation underlining it that cast doubt upon
the view that Mr Holmes had deposited money stolen by him from
POL, alternative charges of false accounting were added to the
indictment, to which, ultimately Mr Holmes pleaded guilty.
In my view this was a proper exercise of prosecutorial discretion and
cannot be faulted. Theft had been properly charged on the evidence as
it had been understood, and it was only when Mr Holmes provided an
answer to the deposit of funds that the prosecution reviewed the
evidence and accepted the pleas to false accounting. I have found
nothing about this case on review that renders the convictions unsafe.
29/1/09” as the hearing date but the year date is clearly incorrect
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166.
167.
168.
169.
170.
Alison Hall
The single file regarding this case is lacking the relevant
documentation for me to make any assessment of the case. I have,
however, been able to glean that on 2"¢ September 2010 a visit was
made to Hightown Sub-Post Office, Liversedge, West Yorkshire, as
part of the Horizon Next Generation roll out programme. This was a
sub-post office located within a retail outlet. Alison Hall was SPMR
there, and had been so since February 2005.
Prior to the visit, Ms Hall had said that she had been having trouble
with her lottery. A cash count showed that there was a cash
discrepancy of £13,624.41. The following day auditors discovered a
total shortage of £14,842.37 in large part comprising differences in cash
and stock.
Ms Hall told the auditors that the losses had occurred due to lottery
accounting problems and she produced a report from Lottery
Accounting Chesterfield detailing errors.
For the rest, her interviews under caution are absent from the case file,
there is no indication of what offences she was charged with, and
when, the progress of any proceedings against her, far less their
outcome. Consequently, I am unable to review this case within the
terms of reference for this review.
Margery Williams
Margery Williams is now isto! years of age, having been born on
At the time of proceedings against her she wa:
She had been SPMR of the sub-post office at Llanddaniel in Anglesey,
no! years old.
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171.
172.
173,
North Wales, since April 2009. The post office formed part of a general
store.
On 3 June 2011, POL investigators attended the sub-post office in
order to perform an intervention visit on cash management and a cash
check. Mrs Williams allowed the investigators access to the safe. A
cash check revealed a cash shortage of £14,010.69. She said she could
not explain the shortage. An audit revealed a total shortage of
£14,633.57, representing the difference in cash, stock, postage and
foreign currency figures.
Mrs Williams was interviewed under caution on 30' June 2011. She
explained that she had been having trouble with balancing from the
end of February to the beginning of March 2011. She was unable to
explain the shortfall in the cash on hand figures, but implied the losses
might have been linked to Horizon. She had first noticed a discrepancy
in the accounts around February/March 2011. She admitted producing
a false Branch Trading Statement by inflating the cash on hand figures;
she had done this by inflating the cash figures of one denomination
rather than across all denominations. She confirmed knowing it was
wrong to do this. She admitted inflating the cash for a period of about
three months, but she denied theft. She admitted inflating the number
of stamp books on hand which were out by bundles of 50, explaining
that in April 2011 the stamp books had changed and in the following
balances they were out. She had concluded that she must have
‘remmed’ them wrongly into the Horizon system.
By a memorandum dated 23'¢ August 2011, Jarnail Singh then senior
lawyer in the Criminal Law Division of the Royal Mail, later POL,
recorded his decision that the evidence was sufficient to provide a
realistic prospect of conviction of Mrs Williams upon the charge he had
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174,
175.
176.
177.
set out in a schedule attached to the memorandum, which was a single
charge of fraud by representation.
Mrs Williams first appeared before Holyhead Magistrates’ Court on
25 October 2011 charged with fraud by false representation. John
Gibson, counsel briefed by POL to prosecute the case, was instructed to
advise, among other things, on charge. He advised on 25th January
2012, and drafted an indictment containing four counts of fraud by
false representation covering the three month period between 2n¢
March 2011 and 2°¢ June 2011.
The PCMH was listed before Caernarfon Crown Court for 10!
February 2012. The case appears to have been relisted for 16‘
February, when Mrs Williams pleaded guilty to the indictment: the
four counts of fraud by false representation. Prosecution counsel's brief
has endorsed on it, “Adj for PSR (adjourned for pre-sentence report) to
9/3/12 Def accepts will be sentenced on basis stole money 16.2.12”.
The pre-sentence report (incorrectly dated 7 February 2012; more
likely 7 March 2012) contained several significant admissions,
including, “Mrs Williams later in the interview stated that she had
deliberately ‘cooked the books’ from February onwards ...” and “Mrs
Williams was unable to fully give an account of her reasons for taking
the money, only stating that she had used some of it to support her
shop which was underperforming ...” The author of the report noted
“... she was not open with regard to what had happened to (all of) the
money”.
Sentencing did not, however, take place on 9'* March 2012. The case
returned to court on 19% March 2012, when Mrs Williams’ mitigation
through counsel was that with increasing competition from large
supermarkets the business was failing and she had in effect “robbed
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178.
179.
180.
181.
182.
Peter to pay Paul”. Because the money had not been repaid, the judge
adjourned sentence to 10" April 2012, by which time a cheque dated 5'"
April 2012 drawn on Mrs Williams’ brother-in-law’s account had been
presented, but had not yet cleared.
Mrs Williams was in fact sentenced on 3" May 2012, by which time the
cheque had cleared, to 52 weeks’ imprisonment concurrent on each
count suspended for 18 months coupled with a supervision order for
12 months and an unpaid work requirement of 200 hours.
Again, this case does not fall within the strict terms of this review
because Mrs Williams was not charged with offences of theft and false
accounting; she was only ever charged with offences of fraud by false
representation, so the issue that has been raised for my consideration
on this review does not arise in this case.
For the sake of completeness, however, in my view, it was legitimate to
charge the offences of fraud by false representation covering the period
on the facts as revealed by the evidence; there was a clear evidential
basis underlying them.
I should, however, add that it is perfectly clear from what Mrs
Williams had to say in mitigation, as well as to the author of the pre-
sentence report, and, as was clearly understood by prosecuting counsel
to be the basis for sentence, she accepted liability for taking and using
some or all of the money to support her failing business, albeit she was
not indicted with theft.
The fact that the full sum was repaid on her behalf reflects her
admissions in this regard, but it also reflects the SPMR’s contractual
obligation to repay losses.
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183.
184.
185.
186.
187.
Alison Henderson
Alison Henderson had been SPMR at Worstead Sub-Post Office in
North Walsham, Norwich, for some 13 years. The sub-post office is
located inside Mrs Henderson’s private address in the village of
Worstead. She is now isroiyears of age, having been born o1
3. At the material time she wa
On 10" February 2010, an audit at the branch revealed that the cash on
hand figure did not equate to the Horizon expected cash on hand
figure. The deficit was £11,957.78.
In the course of an interview under caution that took place on 11
March 2010, Mrs Henderson said she could not tell the investigators
anything about the audit shortage. She said it was a shock and she had
no idea why there was a shortage.
She explained that the branch was small and operated out of her
private property; there was no retail aspect to it and the branch opened
for a limited period each week. She said no one else had stolen the
money, and she denied stealing the money herself. She also denied
falsifying Branch Trading Statements. She offered to repay the money.
It was pointed out to her that, on 6'* January 2010, a Branch Trading
Statement declared a cash on hand figure of £16,712. It was further
pointed out to her that up until the time of the audit, when it was
discovered that there was £8,000 in cash at the post office, there had
been an average sum of about £20,000 in cash held at the post office. If
that was right, then the loss of almost £12,000 must have occurred
within a four week period when the post office was only open for
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188.
189,
190,
191.
192.
business in total three days a week; that would mean she had lost
around £1,000 a day.
The investigator’s report suggested she be charged with theft and false
accounting.
Mrs Henderson was summoned to appear at Norwich Magistrates’
Court on 12‘ August 2010 on a single charge of theft of the full amount
(£11,957.78) between 1s January 1997 and 11'* February 2010. The case
was adjourned and, having indicated a not guilty plea, on 7 October
2010, she was committed to the Crown Court for trial.
Counsel, Dianne Chan, was briefed to prosecute the case, and she was
instructed to settle the indictment. Counsel’s backsheet indicates that,
on 14 October 2010, she drafted the indictment to contain an
allegation of theft (Count 1) and an allegation of false accounting
(Count 2), both covering the identical period of 1s January 1997 to 11%
February 2010.
Ms Chan advised in writing on the same date, but did not indicate her
rationale for adding a false accounting allegation to the indictment. It
seems to me that the false accounting allegation can only have been
added to the indictment as a viable alternative to the allegation of theft
on the available evidence, upon which there was a sufficiency of
evidence that met the evidential stage of the full Code test. If that was
the rationale, and I can see no other, then I agree with it on what I have
seen.
The PCMH took place at Norwich Crown Court on 3" November 2010,
when other counsel took over the brief for the prosecution, whereupon
Mrs Henderson pleaded not guilty to both counts, and the case was
adjourned for trial.
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193,
194,
195.
196,
On or about 16 November 2010, the defence served an amended
defence statement in which Mrs Henderson accepted that £11,957.78
appeared to be missing; she had no explanation as such for the
discrepancy, but believed that Horizon may have malfunctioned. She
categorically denied theft, and accepted she was contractually bound
to repay the money and would do so.
By letter dated 18'" November 2010, Mrs Henderson’s solicitors wrote
to Rob Wilson, then Head of Royal Mail Criminal Law Division,
offering a plea to false accounting as well as full repayment of the
outstanding figure. I am unclear if this was acceptable to the
prosecution at that time, but a letter from Jennifer Andrews of Royal
Mail Criminal Law Division to the agents dealing with the case
indicated that communication between counsel had confirmed that the
basis of plea was that the money had gone missing, but that Mrs
Henderson had not stolen it; also that there was no Horizon issue. The
sense of the letter is that the prosecution was at this time
countenancing acceptance of the plea.
On 1st December 2010, the case was listed at Norwich Crown Court for
a ‘Goodyear’ indication. The judge did not give any ‘Goodyear’
indication as such, but he adjourned the case to 15‘ December so that
Mrs Henderson could repay the money, saying that if the money were
repaid in the intervening period he would look upon the matter more
favourably. No plea was entered.
I have seen and read in the case file an undated defence document
headed “Factual Basis/Application for ‘Goodyear’ Indication”, in
which it was asserted, among other things, that Mrs Henderson
maintained her denial of theft, and that her plea to false accounting
2 An indication of the likely maximum sentence on a plea of guilty
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197.
198.
199.
was on the basis that she became aware of a discrepancy in the
accounts, which she dishonestly covered up by entering false figures in
the branch accounts; she accepted she was contractually bound to
repay the deficit.
Ina letter from POL’s local agents to POL dated 2"4 December 2010 the
agents wrote that although counsel (by which I take this to mean
defence counsel) had the written basis of plea in his brief “my
representative was not shown it’, indicating that by that stage
prosecution counsel had not seen the document. Clearly at some stage
it was served on the prosecution, as it is in the case file; I cannot tell,
however, when it was served and the final status of it. In the end, it
may not matter overmuch.
A cheque for the full amount was sent to POL later that same day by
letter from Mrs Henderson’s solicitors. By the return date for sentence
(158 December) the cheque had not yet cleared. However, prosecuting
counsel invited the judge to proceed. The judge duly gave an
indication that there would be a non-custodial sentence, whereupon
Mrs Henderson pleaded guilty to the false accounting offence (Count
2), and the prosecution offered no evidence upon theft (Count 1), in
respect of which the judge entered a formal verdict of not guilty.
As I have observed above, in my judgment, it was inappropriate for
the prosecution to offer no evidence resulting in the judge entering a
not guilty verdict under section 17 of the Criminal Justice Act 1967, if
there was evidence supporting the count of theft, albeit in this case,
theft and false accounting were almost certainly intended as alternative
allegations. It would have been better to invite the court to order the
count to remain on the file. Although this may be viewed as a
procedural technicality, which it will be in most cases, nonetheless
3 Paragraph 105
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200.
201.
202.
where serious allegations are being made that POL is only charging
theft to encourage pleas to false accounting when there is no proper
basis to charge theft, to offer no evidence sends out the wrong
message, and exposes POL to potential criticism.
Returning to the sentence, a fast delivery, stand-down pre-sentence
report was ordered to assess Mrs Henderson’s suitability for unpaid
work, which was positive. The judge then sentenced Mrs Henderson to
a community order with 200 hours’ unpaid work together with costs.
In his sentencing remarks he observed, “I take it that your plea was
based on muddle and confusion.”
I have not been able to find any memorandum recording the charging
decision in this case, and, as observed above, have seen no rationale
from counsel who settled the indictment for adding the offence of false
accounting. This case falls squarely within the terms of reference for
this review. Despite finding nothing to indicate the rationale for the
charges, I am satisfied that the evidence did provide a realistic
prospect of conviction of Mrs Henderson for theft, and the alternative
charge of false accounting to which, ultimately, she pleaded guilty.
Additionally, I emphasise there is nothing I have seen to indicate that
the theft charge was unjustifiably laid in order to influence or
encourage a plea to false accounting, not least because until counsel
drafted the indictment the sole charge Mrs Henderson faced was theft,
and it was independent counsel who added the charge to which Mrs
Henderson was eventually to plead guilty. There is nothing about this
case that affects the safety of the conviction for false accounting.
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203.
204.
205.
206.
CONCLUSIONS
I have reviewed eight case files, only three of which (Hamilton,
Holmes and Henderson) fall within the narrow terms of this review. I
am unable to tell whether the case of Hall falls within the terms of this
review, given the dearth of information within the file. Although the
facts of the cases of McDonald, Misra, Wilson and Williams do not fit
the review criteria 1 have nonetheless examined them all. If nothing
else, they demonstrate that POL adopts a fact-specific approach to their
cases. There is no “one size fits all” approach.
The effect of my review is that those cases that do fall squarely within
the remit for this review were, in my judgment, conducted in such a
way that any allegation that POL (or Royal Mail pre-separation)
operated a deliberate policy to charge theft when there was no or no
sufficient evidential basis to support it, just to encourage or influence
pleas of guilty to charges (said to be lesser charges) of false accounting,
is fundamentally misplaced; not only is there no evidence of such a
policy, there is positive evidence that each case was approached both
by internal and external lawyers professionally and with propriety,
and, unquestionably, case-specifically.
Not only have I found absolutely no evidence of the existence of any
such policy, I have also not discovered any evidence in the cases I have
been invited to review that theft (or fraud for that matter) was charged
without any proper basis to do so and/or in order only to encourage or
influence guilty pleas to offences of false accounting.
Although the Code for Crown Prosecutors stipulates that it would be
wrong for a prosecutor to proceed with a more serious charge just to
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207.
208.
209.
encourage a plea to a lesser charge,*4 in those cases following within
the remit of this review, there is simply no evidence that the thinking
underlying the charging of offences of theft was to encourage a plea to
the “lesser” offence of false accounting.
In the course of this review, I have, however, made slight criticisms
about the use of inconsistent language in the recording of charging
decisions, and about offering no evidence on the theft count, resulting
in the judge formally entering a not guilty verdict, when the count
ought technically to have been left on the file.
More substantive criticism, albeit beyond the remit of this review,
involves the risk of challenge, not that POL has been charging theft
where there was no proper basis to do so only to encourage or
influence pleas of guilty to false accounting charges, but that POL has
been using the criminal justice system as a means of enforcing
repayment from offenders by charging and pursuing offences that will
result in confiscation and compensation orders. It might be argued that
as SPMRs are contractually bound to repay losses, POL is using (and
abusing) the criminal justice process rather than civil litigation to
recover from offenders.?>
In fact, the Code for Crown Prosecutors (which POL adopts and
applies) stipulates that it is appropriate to consider, among other
things, when selecting charges, the court’s sentencing powers and the
imposition of appropriate post-conviction orders.?° In the cases I have
reviewed, I am satisfied that where offences were indicted with an eye
to the making of applications for confiscation and/or compensation
orders on conviction, there was, in each case, a proper legal and
24 Paragraph 6.3 of the Code for Crown Prosecutors
3 Indeed, this is one claim made by the claimants in the proposed group action in their pre-
action letter of claim of 28 April 2016 at paragraph 147
2 Paragraph 6.1(b) of the Code for Crown Prosecutors
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210.
211.
evidential basis for so doing, which included consideration of the
orders that might follow conviction.
In fact, on analysis, there are only two cases falling within the review
(Hamilton and Henderson), where POL recovered its losses from the
offenders through voluntary repayment. In Hamilton, the charge of
theft was left on the file in return for repayment of POL’s losses. In
Henderson (no evidence offered), the offender offered to repay the
money voluntarily, because she felt contractually bound to do so, albeit
she denied theft. In Williams (a case that falls outside the narrow terms
of the review), the offender pleaded guilty to the indictment, which
contained only four counts of fraud. From the available information,
Mrs Williams made repayment on a voluntary basis. In all three cases,
where there is evidence of repayment, none of the offenders did so
under any post-conviction court order.
In McDonald, Misra and Wilson (all of which fall outside the review)
there were confiscation orders of varying amounts. In Holmes (which
does fall within the review), there is no information available to me
about any post-conviction orders. The paucity of information in the
Hall case did not even permit of an assessment within the terms of the
review.
Brian Altman QC
2 Bedford Row
London WCI1R 4BU
26% July 2016
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