POL00029815
POL00029815
[ Dyan OG ed Sy Conon
Terms of Reference
Alice Perkins
From: Susan Crichton TO: baula Vennells
Date: 6" June 2012
Post Office Ltd — proposal for an independent review of past cases
Background
Post Office Limited has decided to conduct an independent review of a number of closed, and possibly
some open fraud and theft cases. The background is that the Post Office has, in accordance with its
statutorily-authorised powers, pursued cases involving fraud, theft and false accounting principally in
the criminal courts. This has resulted in a large number of prosecutions and restitution of stolen funds.
In recent years, a number of defendants have asserted that there are issues with the Post Office’s
National Computer System, ‘Horizon’. The defendants claim that the system has been throwing up
mysterious differences (shortages) for which they have taken the blame. Some of these cases have
been taken up by Members of Parliament and this has resulted in heightened publicity attaching to
individual cases and to the issue as a whole. This involvement and publicity has also lent support to
assertions that Horizon really is the root cause of the problem and that some of those convicted only
made false accounting entries because there seemed at the time to be no other viable course of action.
They claim, in effect, that they have been unfairly convicted and financially ruined.
Objectives & Scope
The Post Office has instructed an independent third party organisation, 2nd Sight Limited provide a
proposal to conduct a review which would include the following tasks:
Select a representative sample of cases that have led to prosecutions/court-appointed restitution.
The sample needs to cover cases:
e where defendants claim they didn’t take any cash
e where assertions have been made that ‘The System’ (i.e. Horizon) caused the shortage
(include old and new versions of Horizon if possible)
e which have been taken up by MPs.
Carefully review all company-held documentation focussing heavily on probable reasons why
shortfalls occurred or built up
Interview company investigators to gain insights and to verify fairness of findings
Review defence submissions focussing on evidence of innocence (consider separately False
Accounting and Theft)
Try to establish why the shortages arose (assign each case to a Probability Category such as: Skill
shortfall; Diversion to Failing Business; Straightforward Theft (by whom?); Mysterious Disappearance;
etc.)
Review all materials from the viewpoint of the Defence (seek Proof of Innocence and test evidence
indicative of guilt)
Study and selectively test, the ‘Horizon’ system in order to find any ‘Black Hole’, Program Bug; etc.
that might have caused mysterious shortages
Reach conclusions on each case and identify any systemic issues/concerns
Information re independent investigators
2nd Sight Limited investigators have extensive knowledge of complex financial computer systems; Ron
Warmington, one of the directors and investigators is a Fellow of the Institute of Chartered Accountants
and a member of the Association of Certified Fraud Examiners. He spent 35 years working for two of
the world’s largest banks in a number of positions including heading up Global Banking Investigations
POL00029815
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and European Director of Fraud Management. His fellow Director is lan Henderson, is also a Chartered
Accountant, IT Auditor and a Forensic Computer Examiner. His previous roles have included Head of
Investigations at the Personal Investment Authority and prior to that he held a number of roles with
Lloyds of London.
Timescales and Costs
It is anticipated that the review will commence in late June or early July, at present the costings that
have been provided are on a time and material basis, it may be possible to move from this once a
small number of cases have been reviewed and it is easier to assess how much time is required for
each review.
Susan Crichton
June 2012