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Post Office Mediation Scheme
DRAFT
Second Sight - Case Review Report
Case Reference: M087
Applicant: Rubbina SHAHEEN
Advisor: Mahebub Chatur
18 November 2014
This draft report and accompanying documents are confidential and are not to be disclosed
to any person other than a person involved in the processing of the Applicant’s claims
through the Scheme
1. Introduction
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1.1. This report has been prepared by Second Sight, which is the trading name of Second Sight
Support Services Limited, the company appointed to conduct an independent investigation of
a number of matters raised by Subpostmasters, or former Subpostmasters.
1.2. This report should be read in conjunction with the following:
a)
b)
¢)
d)
the documents submitted by the Applicant and her Professional Advisor;
Post Office's Investigation Report (‘POIR’) including attachments;
Second Sight's Briefing Report - Part One; and
Second Sight's Briefing Report - Part Two.
1.3. The Terms of Reference for Second Sight as set by the Mediation Working Group for this work
are as follows:
a)
To investigate the specific complaints raised by each Subpostmaster who has been
accepted into the Scheme with the aim of providing:
vi.
an assessment of points of common ground between Post Office and that
Subpostmaster;
an assessment of points of disagreement between Post Office and that
Subpostmaster;
where there is disagreement, a logical and fully evidenced opinion on the merits of
that Subpostmaster's complaint where it is possible to do so;
a summary of any points on which it is not possible to offer a fully evidenced
opinion due to a lack of evidence/information;
a view on whether a case is suitable for mediation; and
assisting with any reasonable requests made by the Working Group and/or Post
Office.
1.4. Second Sight has been provided with the following documents:
a)
b)
)
the Initial Application to the mediation scheme submitted by the Applicant;
the Case Questionnaire Response ('CQR') submitted by the Applicant's Professional
Advisor; and
Post Office's Investigation Report (’POIR’), prepared in response to the above
mentioned documents.
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1.5. The following are the issues raised by the Applicant:
a) responsibility for direct losses that total £43,269.10;
b) transaction anomalies associated with:
I. Transactions seemingly altered by persons other than the Subpostmistress or her
staff
Il. Cash or Stock Remittances (REMs)
¢) adequacy of training and support, including Helpline and Audit;
d) limitations in the Audit Trail available to Subpostmasters;
e) the contract between Post Office and its Subpostmasters;
f) Post Office's Investigations and Prosecutions processes; and
g) other consequential losses, not dealt with in this report, but which may be raised if the
case progresses to mediation.
1.6. Given that the main issue here is financial loss, this report focuses primarily on the overall direct
loss of £43,269.10. Other issues, not all of which are dealt with in detail in this report because
we could not find a causative link to the financial loss, may however be relevant to the
mediation process.
1.7. The main drivers of the losses are alleged by the Applicant to relate to cash remittances and
inadequate training and support.
1.8. The Applicant was in post as Subpostmistress of the Greenfield branch from 24 August 2006
until her suspension on 3 September 2009, following an Audit that identified a discrepancy of
£43,269.10, predominantly made up of a shortage in the cash on hand. The branch was audited
following complaints that it had run out of cash on several occasions.
1.9. Acriminal prosecution ensued, and following a plea of guilty to false accounting, the Applicant
was sentenced to 12 months’ imprisonment.
1.10. Post Office says that the outstanding debt amounts to £47,097.22, which includes a £3,520.12
loss settled centrally on 6 August 2009, and three further errors totalling £308.00, identified
after the Applicant’s contract had been terminated.
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2.
2.1.
2.2.
3.1.
3.2.
3.3.
3.4,
3.5.
3.
3.7.
3.8.
4.
4.1.
a
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Points of common ground between the Applicant and Post Office
It is common ground that an Audit of the Applicant’s branch revealed a shortfall of £43,269.10,
and that the Applicant pleaded guilty to false accounting, receiving a sentence of 12 months’
imprisonment.
It is also common ground that the Applicant had experienced discrepancies in her branch
accounts in late 2007, which resulted in her making good a shortfall of £8,371.94 through her
monthly remuneration.
Points of disagreement between Post Office and the Subpostmistress
The Applicant believes that a fault in the Horizon system meant that the computer generated
remmed-in figures, in relation to cash remittances, “were different and higher than the amount
of physical cash received”.
The Applicant asserts that she thinks that it must have been possible for third parties to access
the Horizon system and alter the remittance data.
There is disagreement as to whether the training and support provided by Post Office to the
Applicant was adequate.
The Applicant says that she was not provided with detailed transaction audit trails to show her
how the differences leading to the shortfalls in 2007 and 2009 had arisen.
Instead of receiving the help she requested to find the differences, the Applicant says that she
was suspended, her Contract was terminated, and the branch was closed.
She says that there was no investigation into her complaints that the Horizon system was at
fault, and that the police should have been asked to investigate independently.
Post Office says that its criminal investigation found no evidence to support the Applicant’s
explanation for the shortfall discovered by the Audit, and concludes it is “likely that the
shortfalls incurred by the Applicant were caused by human error’.
Whilst the Applicant admits that she falsified the figures, she denies misappropriating Post
Office funds and says that she is “convinced that the differences and the money missing have
been, and are still within the Post Office systems”.
Where there is disagreement, a logical and fully evidenced opinion on the merits of that
Subpostmaster's complaint where it is possible to do so
The Applicant says that when the auditor arrived on 3 September 2009, she told him that she
had informed Post Office in July 2009 that she was holding less cash than that which Post Office
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4.2.
4.3.
4.4.
4.5.
4.6.
4.7.
4.8.
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expected her to have. She says she showed the auditor the cash remmed-in figures, which she
believed to be the cause of the difference in the cash on hand figures.
In her written submission appealing against the termination of her contract, the Applicant cited
nine examples of occasions when she says that the value of cash remittances she received
matched the amount of cash actually received on the day of the deliveries, but the figure on the
trial balance sheet was different to the remmed in sheet and the cash received.
In answer to this, Post Office says that cash pouches contain an advice note, which can be
checked against the report which is automatically generated by scanning the pouch, and that if
there was a discrepancy between the two, the Applicant should have contacted the Network
Business Support Centre (NBSC). It adds that there were no Transaction Corrections (TCs)
issued as a result of the Finance Service Centre (FSC) having detected cash remittance errors
made by the branch.
Post Office also says that its criminal investigation showed that the Applicant had not included
some stock and foreign currency remittances in the list of figures she used to challenge the
shortfall at the time. It says that, during a security interview on 13 October 2009, the Applicant
was shown evidence that she had signed for remittances, with an approximate value of
£28,000, that did not appear on a table produced by her at the first interview.
Post Office adds that it is clear from the interview that the Applicant was unaware that the
figure on the trial balance included other remittances received by the branch over a four or five
week period, such as bags of coins and the sterling value of foreign currency.
Other than the conclusion that the Applicant had not included those other remittances, Post
Office does not appear to offer an opinion as to the cause of the shortfall. We have been
unable to ascertain the cause of the shortfall, not least because we have been unable to verify
the Applicant's complaints that she had received less cash than she had remmed into Horizon.
We cannot therefore support her claim that those incoming Rems were the principal cause of
her branch's shortfalls.
Post Office says that the losses reported by the Applicant were, in all probability, caused by the
Applicant’s operational errors. Post Office refers to an intervention visit on 11 October 2007
during which the trainer found a difference of £24,216.32, which after he had detected and
corrected errors made by branch staff, was reduced to £8,371.94. This was then centrally
settled by the Applicant and repaid through her monthly remuneration. Post Office says that
this discrepancy was the cumulative result of a series of discrepancies, and that in excess
ofv£14,000 of the amount was “caused by stock figures that the Applicant had incorrectly
entered onto Horizon”.
Post Office says that the Applicant “experienced significant discrepancies throughout the first
year of her tenure, with large losses and gains being settled centrally almost every month”, and
that the Applicant was prone to making errors in the way she operated Horizon. The Post Office
employee who undertook the intervention visit noted that the Applicant was “very careless
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when entering things onto the Horizon system and that some of the errors were so obvious that
they should have easily been spotted by the Applicant”.
4.9. The Applicant asserts that the training provided to her by Post Office was not sufficient. The
POIR concludes that the Applicant received the standard training package plus additional
balancing support. We have seen no evidence that the Applicant was offered or provided
with further training, despite the necessity of the intervention in 2007. However, it would
appear, from the number of errors that the Applicant was making from the beginning of her
appointment and which continued until the time of her suspension, that whatever training
she received would not have prevented her from making careless mistakes. Indeed, the POIR
notes that “the Applicant continued to create the same issues in accounting for stock, despite
the intervention visit and earlier problems”.
4.10. The Applicant says that Post Office was aware that she needed assistance and support, and
that she was expecting the ‘Post Office Management Team’ to go to the branch to assist her to
explain and find the differences in the cash. She appears to have been expecting this because
of the very helpful October 2007 intervention visit, when £16,000 worth of errors were found,
thus reducing the amount she was liable to make good.
4.11. The Applicant telephoned the Network Business Support Centre (NBSC) on 3 August 2009 to
report a discrepancy and request further assistance. As a result of the call, Post Office says
that the Network Support Area (NSA) were informed, but that there is no record of what, if
any, action was taken. It adds however that the Contracts Advisor and Post Office Security
Team were informed, which suggests that the matter had progressed to an investigation into
the Applicant’s contract and potential criminal responsibility, as opposed to being a response
to the Applicant's calls for assistance in tracing the causes of anomalies.
4.12. Post Office says it is not able to now investigate the Applicant’s claims that she reported the
cash shortfall and asked for assistance sometime in July 2009 (before the Audit) because
“requests for cash are made to the Cash Management Team and [those] calls were not
recorded in 2009”.
4.13. Post Office concludes that the available evidence shows that the Applicant raised an issue
regarding remittances in August 2009, which it suggests is five months after she began to
falsify her accounts, and that there is no record that she informed Post Office that she was
incurring losses during this time. Post Office adds that the Applicant’s plea of guilty to false
accounting “contradicts the Applicant’s claim that she made Post Office aware of shortfalls
and requested help”. On this point the Applicant says “Since I could not find any reason for the
missing monies, except what I discovered in the remmea-in figures, I put the whole amount as
a balancing figure. I expected [Post Office] to send in somebody to immediately help and
investigate the differences”. In relation to her plea of guilty, she says she did that in an
attempt to receive a reduced, or suspended, sentence.
4.14. The Applicant says that the differences she experienced, and made good in 2007, and the
result of the 2009 Audit, were never explained to her, nor was she provided with a breakdown
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or transactional audit trail. She says that Post Office assumed that the shortage was
attributable to missing cash, and that she had misappropriated the funds, whereas it was, in
her view, just a reconciliation difference’.
4.15. Post Office responds that the Applicant was provided with a report in a letter dated 10
September 2009 (Post Office Document 015 refers). That report, which breaks down the total
amount of the shortfall, does not explain how the losses occurred for the simple reason that
Post Office had not established how they had arisen, though the Applicant seems to have
expected Post Office to have done so.
4.16. In regard to the Applicant's expectations of answers from the Helpline, and of practical on-
site help from Post Office's Investigations team, to help her find out how discrepancies had
arisen, it is clear to us that, as in other cases that we have reviewed, this Applicant had an
expectation that the Helpline would be able to tell her how discrepancies had arisen and
perhaps also that she could call for experienced investigators to come to her branch and help
her to isolate and correct them. It is also clear that the Applicant felt, at the time, that she had
aright to call for on-site investigative support from Post Office. However, the Standard
Contract denies Subpostmasters such support.
4.17. Post Office says that shortfalls incurred by the Applicant were caused by human error, and in
relation to the Applicant’s requests for assistance in tracing the cause, say that “/t would be
extremely difficult for Post Office to identify transactions which contributed to the shortfall
because the nature of certain operational errors is such that they involve incorrect data being
entered onto Horizon and as such errors can only usually be identified by the Horizon user or
the customer. Further, cash handling errors and acts of theft cannot be identified on a review
of transaction records”.
4.18. It would appear that the Applicant also experienced extreme difficulty in tracing the cause of
the branch's shortfalls, which were probably caused by human error, and exacerbated by her
apparent lack of understanding of Horizon accounting (and end of Trading Period) procedures.
We have been told by other Applicants that their initial training was not sufficient to enable
them to trace and deal with discrepancies, and that it was their understanding that, in order
to be able to enter transactions the next day, they had to 'roll over’ into the next Trading
Period.
4.19. Whilst it is true that a branch could only roll over into the next Trading Period when the prior
one had been closed out (with the books in balance), it was a commonly-held
misunderstanding that the Trading Period had to be rolled over on the allotted day. In reality,
it was and still is possible to extend a Trading Period, without rolling over into the next one
and, by doing that, the branch could continue entering transactions into the Trading Period
that should have just ended. Not realising that this option was open to them, some
Subpostmasters, including this one, seem to have felt compelled to alter their figures (i.e.
potentially committing the criminal offence of false accounting) in order to open up their
branch the following day.
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4.20. The Applicant says that her Contract was terminated, with no real investigation into the
cause of the shortfall, and that Post Office “assumed wrongly that their system accounting
differences were in fact money which was missing or stolen by me”. She says Post Office
“should never have initiated any proceedings let alone criminal proceedings, without a
detailed and a thorough investigation”.
4.21. Post Office responds by saying that criminal proceedings were initiated following an
investigation, which found no evidence to support the Applicant’s explanations for the
shortfall. It adds that the Applicant admitted to having inflated the cash figures to cover up
shortfalls in the accounts.
4.22. The Applicant inflated the branch’s cash on hand figures in order to conceal discrepancies.
Our understanding of Post Office's position is that false accounting can exacerbate losses, by
delaying their detection, investigation, mitigation and correction. Whilst we concur with that
position, we observe that false accounting cannot itself be the initial cause of any loss.
4.23. It is clear from Post Office’s Document 011, that the Applicant was making errors, and that
they were very difficult to trace, the more so because of the Applicant's false accounting. The
2007 intervention visit referred to in that document found more than £16,000 worth of errors
that the Applicant had made, reducing the figure she was responsible for making good from
£24,000 to £8,000. The intervention officer said: “The huge list of misbalances meant I could
only look at a small part of the work done. As a result I focussed on the largest loss £18,000.
As can be seen above I have hopefully found the causes of this one. To do the job properly it
will need someone who has the time to wade back through twelve months worth of work...” It
is clear that the Applicant holds the view that Post Office could, if it had persevered, found
other errors that would have further reduced the £43,000 figure that she was expected to
make good. It is however clear that, contractually, the Applicant had no right to call for such
on-site investigative support.
5. Asummary of any points on which it is not possible to offer a fully evidenced opinion due toa
lack of evidence/information
5.1. The Applicant raises the question as to whether it is possible for third parties to access and
change Horizon data in relation to the cash pouches. Post Office says that: "While accessing
branch data is an important part of Post Office’s ability to monitor activity in a branch and is
critical to it spotting errors that need to be rectified, Post Office issues Transaction Corrections
to do this and a branch has the opportunity to accept or challenge Transaction Corrections".
Post Office does not, in its POIR, deny that it has the ability to change branch data as suggested
by this Applicant, although it has done so in its responses to other CQRs.
5.2. Post Office has rejected the Applicant's assertion that the system itself somehow caused the
losses, concluding that the losses reported were due to human error. While we find this
argument reasonably compelling, we have been unable, as has Post Office, to identify those
specific "human errors" that generated the branch's remaining losses. It follows that we have
been unable to reach a firm opinion as to the real underlying root cause(s) of the losses that
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this branch suffered, so we can only refer here to the possibility that errors made at the counter
or in the branch's balancing processes, such as those outlined in our Briefing Report - Part Two,
could have generated some of those losses.
6. Is this case suitable for mediation?
6.1. In our opinion this case is suitable for mediation, not least because it will offer both parties
the opportunity to achieve resolution on the matter of the Applicant’s perception that Post
Office provided inadequate training, support and assistance and inadequately investigated the
root causes of the shortfall that led to her prosecution and the termination of her contract.
The following issue should also be considered:
a) _ whether Post Office or the Applicant is responsible in part or in whole for the losses
made good by the Applicant of £43,269.10.
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