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Post Office Ltd — Strictly Confidential
DRAFT - Legally privileged and confidential
POST OFFICE LTD BOARD
Subject: Post Office Ltd —- Prosecution Policy Paper
1. Purpose
The purpose of this paper is to:
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1.2
1.3
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Detail the current Post Office Ltd prosecution policy in regards to dishonesty
by agents and employees.
Outline the benefits and disadvantages of the current approach.
Provide a number of alternative approaches for consideration.
Provide a recommendation for a prosecution policy that is fit for purpose for
Post Office Ltd.
2. Current Situation
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2.2
Current policy: Post Office Ltd currently adheres to the prosecution policy
set out in Annex 1 (which is largely based on the previously applied Royal
Mail Group policy) as regards the prosecution of staff and agents involved in
dishonesty affecting the business. This policy sees Security Team personnel
investigate suspected internal crime (adhering to relevant legislation) and
privately prosecuting individuals through the Criminal Courts.
Criminal Prosecutions in 2011/12: The year 2011/12 saw 50 prosecutions
concluded of which 48 resulted in guilty pleas or verdicts. The costs and
recovery figures for that period are:
Sums Stolen £1.4m
Costs recovered £878k (including £90K towards costs)
Cost of Prosecuting £951k being £180k legal costs and
£771k apportioned Security Team
costs)
Apportioning the time spent on fraud activity (Security Team operational
personnel also perform physical crime activity across the estate) the costs for
2011/12 would appear as follows:
Role Total Salary Workload Cost (£)
£ investigation I related to all
related investigations
F.l. 3b x 3 135,000 85% 115,000
Team Ldr 3b 135,000 30% 40,000
x3
Sec Mgr 2ax 880,000 70% 616,000
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Total Cost £ 1,150,000 771,000
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Civil Debt Recovery comparison for 2011/12:
Debts arising £8.9m.
Costs recovered £2.1m
Cost of Suing £140k approximately for legal costs
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Staffing: Post Office Ltd currently utilise one in house Criminal Lawyer
(supported in part by a paralegal) and a network of external legal agents and
counsel in order to manage the prosecution process. The Police and the CPS
are not normally utilised in the course of investigation and prosecution. This is
not a unique process and similar approaches are adopted by a number of
organisations such as Department for Business, Innovation and Skills,
Department for the Environment, Food and Rural Affairs, Environment
Agency, Financial Services Authority and Gambling Commission. The CPS
would rarely become involved in a Post Office Ltd prosecution to the point of
performing the lead prosecuting role. This would be based on the fact that the
Police do not conduct the majority of our investigations nor do they manage
the majority of the exhibits as traditionally both areas are performed by
Security Team personnel.
Proceeds of Crime: Since 2005 a number of Post Office Security Team
personnel have held accreditation in regards to Proceeds of Crime Act
legislation (POCAL). This enables Post Office Ltd to apply various techniques
to facilitate the identification, restraint and the recovery of funds dishonestly
obtained by agents and employees. The restraint and recovery elements
Post Office Ltd utilised are reliant on the subject being prosecuted for
acquisitive offences, in essence proving monetary gain. Post Office Ltd does
not apply PoCAL for civil cases as this ability would be reserved to an
audience before the High Court only. The successful application of POCAL
supported by internal prosecution processes have seen fraud losses versus
recovery rates rise from 20% recovered (2005/06) to 66% recovered
(2011/12). Intervening years have seen:
2005 -
06
2006 -
07
2007 -
08
2008 —
09
2009 -
10
2010 -
11
2011 -
12
44.54% I 27.15% I 34.29% I 48.91% I 49.31% I 66.4%
20.23%
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3.
Northern Ireland and Scotland: Cases originating in Northern Ireland and
Scotland are dealt with differently with far greater reliance being placed on the
involvement of outside agencies (Police and Procurator Fiscal respectively) in
order to bring prosecutions. Relatively low numbers of prosecutions in these
two geographical areas provide insufficient management information as to
whether recovery amounts suffer as a result.
Benefits & Disadvantages of the Current Situation
Pros
Cons
A clear deterrent: this form of
sanction is clearly understood within
the organisation and is the strongest
deterrent in regards to preventing
crime from those in positions of
trust.
Erosion of Deterrent Effect — if
prosecution is over used it can lose
impact and therefore it is appropriate
to adopt a policy for prosecution
which is proportionate, focused and
transparent. Post Office Ltd is
currently reviewing its Criminal
Prosecution Policy following
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Separation. It is also difficult to
measure the cost savings provided
by the deterrent effect of
prosecution, but it would be
appropriate to take it into account as
having a financial impact particularly
when assessing the cost of
prosecution.
Better than civil option: The
application of Proceeds of Crime Act
legislation offers significant recovery
opportunities that far outweigh
available options (in terms of scope
and impact) of civil remedies. The
Act is heavily weighted towards the
prosecutor and provides the best
possible legal framework to identify,
restrain and recover stolen value.
A recognised approach: The
approach sits comfortably within the
culture of compliance and indeed,
echoes the FSA views on
enforcement in that prosecution is a
key tool to ensure that sanctions are
applied when rules and principles
are broken. Other, non-Police,
organisations utilise the PoCAL
legislation such as Local Authorities
& Trading Standards, HMRC and
DWP.
[Low on transparency and no
independence: Whilst cases are
progressed in line with Crown
Prosecutor guidelines, the internal
prosecution decision making fails,
arguably, to provide a layer of
transparent and independent
decision making around the
sufficiency of evidence to support a
prosecution and the extent to which
mitigating factors should influence
progression. This is particularly
pertinent to the recent JFSP
appellants and subsequent Member
of Parliament challenges. This can
be addressed in some significant
way in a revised Criminal
Prosecutions Policy (and a review of
the existing one is underway).] [Do
we want to say this in a Board
document?]
Maintains control and helps
maximise recovery: The existing
process of performing an end to end
investigation, prosecution and
recovery service in house ensures
that the maximum amount of control
is exercised around case conduct
and asset recovery. Opportunities to
maximise recovery can only be
achieved by the presentation to a
Court, of the acquisitive nature of
the particular offence. This
opportunity may not exist should
elements of the existing process sit
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externally (for example if the CPS
decide it is within the public interest
to accept charges of false
accounting when theft would have
been more appropriate).
No dependence on Police and
CPS: The existing process enables
case prioritisation and progression
without reliance on the Police and
CPS support. This is a key
advantage with, historically,
considerable difficulties in
successfully engaging with the
Police and particularly in forces
where the strategy is to apply
resource primarily to public
impacting offences (domestic
burglary and street crime) leaving
commercial white collar crime to be
investigated on a best efforts and
prioritised basis (particularly
pertinent within the Metropolitan
force area). This strategy may be
further enforced with the newly
created regional Police & Crime
Commissioners focussing on local
issues. Where there is dependence
on Police to investigate there is still
a need for not inconsiderable
resource to be invested on behalf of
a business (management time , a
hidden cost ) to ensure that the
Police have and understanding of
processes and procedures to enable
them to start any investigation and
this will have to be repeated on each
occasion.
Blurs of the role of the Security
Team: The whole concept of a
prosecution process that sees
employer responsible for the end to
end delivery from detection through
to prosecution is apt to cause angst
with internal stakeholders and can
cause difficulties in that it confuses.
the role of a security function from
that of the winner of hearts and
minds in regards to best practise
and asset security, to that of
organisational policeman with all the
connotations that image portrays.
A flexible approach: The existing
process allows both due cognisance
of the Code of Prosecutors as
regards prosecution rationale and
also secondary and tertiary
considerations around customer,
client and wider network impacts (for
example our stance on challenging
each and every Horizon run defence
- the CPS may not adopt a similar
position).
Synergies: The existing process
promotes synergies with a number
of our government clients along with
the FSA; the appetite to bring
internal offences to the attention of
Significant costs: The existing
process involves considerable staff
costs and other costs in regards to
maintaining external agent services
to help undertake the prosecution
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the Courts (and therefore within the
public domain) matches theirs and
provides complete transparency
around this element of our operating
landscape.
process. The year 2011/12 saw
£180k incurred in relation to agents
and counsel costs and this arguably
may increase if Horizon challenges
continue as a theme of defence with
contested and protracted
prosecutions. However, whilst legal
costs are considerable, they are not
disproportionate when if one takes
account of the losses recovered in
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criminal proceedings.
4. Alternative Approaches
4.1 There are several alternate approaches:
Option
Pros
Cons
Pass some cases to the
Police but Post Office
investigate & prosecute
selected cases.
Reduce the costs of
criminal investigations and
prosecutions.
May allow Post Office to
mitigate bad PR.
Post Office loses some
control of those cases
passed to the Police &
CPS.
Pass all cases to the
Police and Post Office
cease prosecuting.
Reduce the costs of
criminal investigations and
prosecutions.
Mitigate bad PR by making
the CPS and Police
accountable for
prosecutions.
The quality of response
would vary across each
of the 43 force areas
and the ability to
influence recovery, the
brokering of plea
acceptance and general
pace of enquiry to
conclusion would
diminish accordingly.
Become enabled under
the CPS Prosecutor's
Convention.
The convention enables the
CPS to lead on prosecution
activity on behalf of
authorities who ordinarily
act as their own authority
(examples include Civil
Aviation Authority,
Department for Business,
Innovation and Skills, FSA
and Office of Fair Trading).
This may offer Post Office
the ability to drive an
independent layer of
governance and decision
making to cases which are
particularly contentious.
CPS agreement is
required.
If successful there will
need to be considerable
investment in terms of
Post Office specific
training to each of the 13
CPS Central Casework
Divisions.
Whilst precise protocols
would need to be
established, it would be
fair to assume that Post
Office’s ability to
ultimately continue or
discontinue prosecution
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cases would diminish (a
successful Horizon
challenge by virtue of a
position adopted by the
CPS could have
disastrous
consequences for
prosecution and indeed
civil activity going
forward) along with the
ability to accept or reject
pleas around specific
charges.
Outsource all or part of
the Investigations and/or
Legal function dealing
with criminal
prosecutions.
Reduce the costs of
criminal investigations and
prosecutions.
Quality may suffer if not
carefully managed.
Cease prosecuting all
cases under a certain
financial threshold
(unless they have a
significant client or
customer impact or
there are other
significant reasons
which favour
prosecution), instead
pursing those using civil
procedures.
Reduce the number of
cases raised and the costs
of servicing them.
PR wise it would allow high
profile cases to be
prosecuted whilst people
would no longer be sent to
jail over smaller sums.
In order to ensure that the
appropriate cost saving is
achieved this would involve
a triage approach not only
to prosecution but also to
investigation.
May encourage agents
and employees an
appetite for dishonesty
from the organisation
(albeit reacted to using
civil remedy) which itself
may lead to greater
individual incidences of
lower level offending.
Always a risk that
greater irregularities
which would have been
exposed during an
investigation will not be
picked up. It would be
appropriate to continue
to measure both the cost
and the benefits
obtained by taking this
approach so that the
threshold/ criteria in
relation to prosecution
can be kept under
review.
Further if the threshold
figure is not publicised
this would mitigate the
risk of encouraging low
level offending/ repeat
offending at a low level.
People should be
capable of being
prosecuted to retain the
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deterrent effect.
Cease prosecuting Eliminates the costs of May encourage crime to
entirely and rely instead I criminal investigations and increase.
on civil debt recovery. prosecutions.
If such civil cases are
defended and Horizon
challenged they are still
likely to involve
significant costs.
5. Recommendation
[WHAT?]
6. Decision sought
The Post Office Ltd Board is asked to consider the proposals detailed within
this paper and to:
5.1 Decide upon a prosecution approach proper to Post Office Ltd.
OR
5.2 Commission further research, if required, into one or more of the proposals
above.
OR
5.3 If applicable, direct areas of research for Post Office Ltd Board proposals
not covered above.
Name of sponsor: Susan Crichton
Month: January
Year: 2013
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ANNEX 1
Post Office Prosecution Policy
Version 1.0
Effective From: 1 April 2012
Review of this policy due: 1 April 2013
Owner: Jarnail Singh, Post Office Legal
1. Purpose
1.1. The Post Office Prosecution Policy:
1.1.1. Supports Post Office’s related crime and investigation policies in prosecuting,
in all circumstances in which prosecution is appropriate, those who have been
investigated and are believed to have stolen property from Post Office or to
have defrauded Post Office.
1.1.2. Recognises the importance of the integrity of the mail and accordingly will
consider prosecuting offenders who are believed to have interfered with postal
packets (S83 of the Postal Services Act 2000).
1.1.3. Applies equally to employees at every level, whether front-line, management
or executive, and to non-employees equally, whether contractors, customers or
having no formal relationship with Post Office.
2. Scope of Policy
2.1. This policy applies to criminal conduct only.
2.2. This policy applies to anyone who is suspected of committing a crime as outlined
in paragraph 1 above.
3. Criminal Investigation
3.1. Prosecution will normally follow a criminal investigation, conducted by members
of Post Office Security and other law enforcement bodies such as the Police, with
a view to ascertaining whether a person:
3.1.1. Should be charged with a criminal offence; or
3.1.2. If charged with an offence is guilty of it.
4. Prosecutorial Decisions
4.1. England & Wales: The decision to prosecute Post Office investigations in
England and Wales will be made by the Post Office Head of Security taking
advice from Post Office Legal and HR as appropriate and relevant.
4.2.
4.3.
44.
5.1.
5.2.
5.3.
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Scotland: In Scotland the Procurator Fiscal’s office will make all prosecution
decisions on Post Office investigations.
Northern Ireland: In Northern Ireland the office of the Director of the Public
Prosecution Service will make all prosecution decisions on Post Office
investigations.
In the event of any issue or disagreement arising in relation to any investigations
or prosecutions, the matter will be referred to the Director of HR & Corporate
Services who will consider the case and provide guidance and advice to ensure
that Post Office maintains a consistent prosecution policy.
. Test for Prosecution and Public Interest
The decision to prosecute will be reached by applying the general principles and
guidance offered by ‘The Code for Crown Prosecutors’, in particular ‘The Full
Code Test’.
‘The Full Code Test’ will be applied and adhered to before commencing a
criminal prosecution. The ‘Test’ has two stages. If the evidence passes the
evidential stage, the Prosecutor must proceed to the second stage and decide if
a prosecution is needed in the public interest. A prosecution will be required if it
is in the public interest to do so.
Where a criminal investigation identifies an employee’s behaviour that falls short
of requiring a criminal prosecution the employee will normally be subject to the
relevant HR processes.