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POLTD/0506/0401
OFFENCE
Theft
False Accountin
Name: Hughie Noel Thomas
Rank: Subpostmaster Identification 1
Code:
Office: Gaerwen FAD Code 160604
Age: 58 years 10 Date of Birth:
months
Service: 11 years 4 Date Service 09/06/1994
months Commenced:
Personnel Printout: At Appendix: C
Nat Ins No:
Home Address:
Contract for Services 13" October 2005 on the a of
Suspended:
Handed into custody: 13" October 2005 by
At: Holyhead Police Station
To be prosecuted by: Royal Mail Group (including Post Office Ltd)
Prosecution Authority:
Discipline Manager: I
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Corporate Security Criminal Law Team
These papers refer to an audit shortage at Gaerwen Post Office on Thursday
13" October 2005. This branch is situated in a small rural village on Anglesey
in North Wales.
Mr Hughie Noel Thomas has been Subpostmastmaster at Gaerwen since
June 1994, when he acquired ownership of the branch from [EE The
office has 2 counter positions and is located within Mr Thomas's residence.
The branch has 4 users listed on Horizon, these being Mr Thomas, JE
and .
The audit findings shown a loss of Post Office funds of £48,454.87.
At 1015 hours on Thursday 13" October 2005, I received a call from J
HEE s informing me of the audit shortage at Gaerwen Post Office. I
contacted the lead auditor, ae and was informed that the
majority of the loss was in the cash element of the balance. No loss or gain
had been declared in the previous nights cash account for week 29.
HER stated that Mr Thomas had told her that he was having trouble
with the Horizon system and that his on line banking reports had several
transactions showing nil amounts. He said that these transactions are for
amounts of money which have been paid out to customers but the system is
not recording the value. Consequently his accounts have been short with
losses accruing to some £48,000 over a period of time. A statement was
obtained by = from Mr Thomas stating that he balanced each
week by adding the amount of the shortage to the cash on hand in his
branch. Mr Thomas duly signed this statement.
Accompanied by my colleague, EEE, we arrived at the branch at
12.42 hours. We introduced ourselves to Mr Thomas and shown him our
identity passes. I informed Mr Thomas of the reason for our involvement and
that I would discuss the situation with him once I had established the facts
with (EE. We were then informed that the office had been
transferred to the Federation Representative; [EE as Interim
Subpostmaster and the branch has resumed service some 60 minutes earlier
at the request of the Service & Contracts Manager,
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HE informed me that her colleague, Branch Auditor JE,
who was assisting at the audit, had contacted Horizon System Helpdesk
(HSH) to obtain advice on the nil transactions. He spoke to [J and was
given reference number H21903612. i” said to obtain a report every hour
of Horizon and check the transactions. This was undertaken and contained
one nil transaction which [EE remembered as a customer not
completing the transaction.
We spoke to Mr Thomas who stated that he was willing to attend a tape
recorded interview, however, he required his solicitor to be present. He
stated that his solicitor was away until some time next week and there was
nobody available at the practise to attend straight away. Due to the amount
involved, I decided that the interview could not be delayed.
At 1400 hours, IEEE and myself attended Gaerwen Police Station
and relayed the facts of the case to PC After clearing it
with his superiors, PC [J was to arrest Mr Thomas on suspicion of theft of
£48,454.87 of Post Office funds. The arrest took place at Gaerwen Post
Office at 1420 hours. A notebook entry was made of the approach and arrest
and a copy is enclosed in appendix B of this file.
Mr Thomas was taken to Holyhead Police Station where he was booked into
custody. Mr [, solicitor fro [iS
was acting on behalf of Mr Thomas. During advanced information, Mr
advised that Mr Thomas might wish to conduct the interview in
Welsh. Mr Thomas had stated to the custody seargent, when booked in, that
he would be happy to undertake any interview in English. I was also
informed at this point that Mr Thomas would be answering no comment to the
questions put to him during the interview.
The interview commenced at 19.52 hours. Mr Thomas was recautioned. Mr
was happy that his client fully understood the meaning of the
caution.
Mr Thomas was asked for an explanation for £48,454.87 being short in his
account at the audit earlier that day. He replied at the moment I am not
commenting. No comment.
Mr Thomas stated that he did not know when the loss first started without
looking through his papers. He said he was finding it difficult to remember
what happened 2 weeks ago so cannot remember the figures from 29 weeks
ago. He said he was an old fashioned chap who was used to pen and paper
rather than a computer. Mr Thomas added that there was no paperwork
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directly referring to the losses, only the cash accounts and the envelopes
containing the weekly work. Mr Thomas stated that the loss built up over a
period of time.
During the interview, Mr Thomas demonstrated that he was fully aware of his
obligations as Subpostmaster with relation to making good his losses and
gains. He stated that he has to make good all losses and can remove the
gains. Making the necessary adjustments within the week in which they
occur.
Mr Thomas was asked if the cash accounts accurately reflect the state of his
office in any particular week. He replied well I couldn’t really comment on
that. Mr Thomas stated that he has tried to make the shortages good but did
not know which weeks he has put the money in and which he has not made
the loss good. He then declined to answer any further questions put to him
surrounding the making good of shortages. With regard to the specific loss of
over £48,000 in week 29, Mr Thomas stated that he did not make good this
shortage and would not comment on why there was such a shortage at
Gaerwen Post Office.
During the interview, Mr Thomas was asked if the cash accounts were a true
reflection of his branch, he replied no comment. He stated that he is
responsible for completing the balance each week and he signs the cash
account document. Mr Thomas said the only other person who has access
to the Horizon system is [J and that nobody else has a user identity or
assword allowing access to Horizon. Mr Thomas stated that neither =
— has ever worked behind the counter. This however is not the
case as a user summary report taken at the time of the audit shows that [i
, who was subject to a previous investigation for Giro
suppression and where Mr Thomas repaid £11,000, and
both have access.
Mr Thomas stated that he secures the cash away each evening and he also
declares the ONCH figures on a nightly basis. Mr Thomas was asked if the
ONCH declared was a true record. He replied no comment. Mr Thomas was
asked if he had stolen £48,000 of Post Office funds, he replied no comment.
Mr Thomas is in the process of selling the Post Office and has a buyer. He
was asked if he was hoping to repay the money prior to the transfer. He
replied no comment. Mr Thomas stated that he was aware that a full
verification of his office would take place on the day of the transfer but
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had not thought about what would happen if the money was not there. He
was asked if he was making provision to put the money back prior to the
transfer in order that the transaction could go ahead. He replied no comment.
During the interview, Mr Thomas was asked if there was any reason that he
knew of as to why he was having losses in his office. He replied that it was
due to basic mistakes on the Horizon system and not understanding it. He
added that we should check the error notices that he receives.
The latest error notice that Mr Thomas remembers if for a transaction for
£1,500, which he believes, he put through as £15.00. He was asked if the
loss or gain for this was shown on his cash account. He replied no. When
asked why a corresponding loss or gain was not declared he replied no
comment.
Mr Thomas stated that the Horizon system was installed in his office around
2001. He added at first he had some problems and complained to his retail
line manager, after which, he received one extra training session on a
balance day. Prior to Horizon being installed, Mr Thomas stated that he
operated the Capture accounting system to aid balancing. Mr Thomas stated
that there was a previous problem with Horizon where he had to pay half the
total of a loss with the Post Office contributing the other half. After discussing
this with the Contracts Manager, [EE the Post office wrote off a loss
of approx £1,200 as part of the exceptions process, in the immediate months
after migration onto Horizon.
During the interview, Mr Thomas was asked what other complaints he has
made regarding Horizon. He stated that he has contacted the Helpline on 2
or 3 occasions regarding small matters mainly when having to reboot his
system. Mr Thomas was asked if it is his opinion that Horizon has contributed
to or is responsible for the £48,000 loss. He replied that he has got doubts
about it. When asked if there was any other explanation for the loss he stated
no.
Mr Thomas then stated that he was concerned over the number of zero
entries that was contained on his weekly on line withdrawals summary. He
stated that although the report shows nil entries on some of the transactions,
he has handed the money over the counter to the customer and that the
losses are accruing, as the amount has not registered properly on his
system. Mr Thomas agreed that the majority of on line banking transactions
did have an amount and that the zeros were not confined to one specific
group, for example all the Barclays transactions. [EEE offered two
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possibilities where nil entries will appear on the summary. These are due to
incorrect PIN numbers entered or no funds available for withdrawal from a
Post Office card account.
Mr Thomas was asked that if £48,000 has not been handed out over the
counter to customers, then would he not agree that it has to be by somebody
having access to the counter. He replied no comment. Mr Thomas was
shown the cash account for Gaerwen for week 29, week ending 12" October
2005. Mr Thomas agreed that he prepared this document and his signature is
on page 1. Mr Thomas was then asked if the cash locked up figure of
£69,534.23 was a true reflection of the cash on hand at his office last night.
He replied yes. [J added that if he went to the safe last night
would he have found £69,534.23 in his safe. Mr Thomas stated no comment.
He also answered no comment when asked if he had inflated the cash and
thereby falsifying the accounts for the Post Office for that week.
Cash account weeks 28 and 27 were shown to Mr Thomas. He stated that he
had prepared both the documents and that it was his signature recorded on
the front pages. Mr Thomas then replied no comment to questions relating to
the inflating of cash and falsifying the accounts. Mr Thomas stated that he
couldn’t remember when the shortages started. He added that he did not tell
anyone about the losses, as he was too worried. He is a member of the
Federation of Subpostmasters but made no approach to them for help or
advice.
Mr Thomas stated that it was not one large loss that had been stolen and
that he did not suspect anybody else in his family. He stated that if the losses
were proven, he would accept full responsibility for the £48,000 audit
shortage.
The interview was concluded at 20.36 hours. The master tape was sealed in
the presence of Mr Thomas and EEE. Seal number 37924 was used
which was signed by all parties.
Mr Thomas was released from custody and bailed until 29°" November 2005.
Please note that the bail date on the bail sheet is incorrect as it says
October. I have contacted [EY at Holyhead custody, who has made
the amendments and forwarded a copy to Mr Thomas. A copy of the custody
record is enclosed in the relevant appendix at the rear of this file.
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Mr Thomas has not divulged exactly how long he has been he has been
covering up the losses, only that it built up over a period of time. He has
indicated to the audit team that it was over a 12 month period.
Mr Thomas is convinced that the Horizon system is affecting his balance
results, as the On Line Banking summary contains several zero totals. These
are not confined to one particular group ie Barclays or Alliance and Leicester
and similarly only a small number of transactions in each group are zero.
There are a number of legitimate reasons why a zero entry would be present
on the summary.
e Accustomer places their card into the pinpad terminal and enters an
incorrect PIN number.
« Acustomer requests a withdrawal but no funds are present in their
account
e Accustomer has previously entered an incorrect PIN on 3 separate
occasions and the card provider blocks the transaction
e The card has been reported stolen and the card has been cancelled.
e The transaction does not receive online authorisation from the card
provider even with a correct PIN entered.
There are no calls recorded on the helpline logs in respect of this issue. A
copy of the calls made by Mr Thomas in respect of problems at Gaerwen, are
enclosed in this file. a has stated that Mr Thomas has made no
representation to him regarding the zero entries or any concerns he has with
the aan eeeHle the loss rising to over £48,000. ay
The loss has not been recorded on the cash accounts. Since week 1 to week
29, the branch has been declaring some losses and gains however, the latter
weeks seem to show straight balances.
In week 24, a total of 3 charge error notices have been cleared for the sum of
£540.06 however, the office cash account shows a straight balance for the
week. Similary, no corresponding gain was shown in the weeks in which they
refer. A schedule showing the declared balance figures with any error
notices returned and cleared has been produced and enclosed in appendix B
of this file.
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HE Was the subject of a previous investigation some 6 or 7 years
ago. There was evidence of giro suppression at the branch as clients had
made complaints. an made some admissions in relation to this,
which resulted in Mr Thomas repaying £11,000 to Post Office Ltd. It seems
Mr Thomas kept control of the office but signed a document statin
not to carry out any Post Office work.
Information was given to me by
who was the RLM at the time.
HE has been working at the branch since August 2004. She has
recently left to have a child.
The branch has remained closed since lunchtime on Thursday 13" October
2005. This is in order to check the Horizon system in relation to the defence
put forward by Mr Thomas. The interim Subpostmaster balanced the office
aided by the auditor. There was a zero amount on the summary, which was a
known incorrect PIN transaction. The office balanced.
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Qe
Loss to Post Office Ltd £48,454.87
— eee
Copies of all exhibits or documents mentioned in this report can be found in
the relevant appendix of this file. The master tape is held at Capstan House,
with a copy enclosed in this file.
This report is submitted for the present position to be noted and for
consideration as to whether the evidence is sufficient to support a
prosecution at this stage. Mr Thomas is bailed to appear at Holyhead Police
Station on 29th November 2005. Please can this file be returned to me in
time for this hearing. If insufficient evidence, please could you advise on what
further evidence is required and if a second interview at this stage is
necessary.
Investigation Manager
25" October 2005
Db Capstan House, 35 Broadway, Salford Quays, Manchester, M41 6FW
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Criminal Law Team
POLTD/0506/0401 — Hughie Noel Thomas
Gaerwen Post Office — Audit Shortage £48,454.87
This purpose of this report is to provide additional information on the nil
transactions undertaken at Gaerwen Post office, for which Mr Thomas has
stated, is the reason for the audit shortage which occurred on October 43°
2005. Mr Thomas claimed this loss had started some twelve months prior to
this audit.
As requested by the Criminal Law Team, I obtained and analysed 3 periods
of Horizon data covering a twelve month period. The periods are Nov 18" to
Nov 24" 2004, May 19" to May 25" 2005 and Sept 14" to Oct 12" 2005. A
schedule of these findings can be found in appendix B of this file.
Fujitsu had no concerns with the integrity of the data received from Gaerwen
Post Office, similarly, the Horizon System Helpdesk (HSH) who monitor the
working of the system have not been alerted to any hardware problems
through there off site monitoring or by any complaints raised by the staff at
the branch.
I will summarise each week in detail.
November 18" to November 24" 2004
During this period a total of 70 on line banking transactions were undertaken
with a nil value. Of this 70, 59 are standard balance enquiries. At the
conclusion of this transaction, the Horizon system will request that the
customer removes their card and a printed balance will be produced and
handed to the customer. If the customer then wishes to make a withdrawal,
they will be required to reinsert the card into the pinpad and enter their PIN
number again.
On 4 occasions, the nil transaction related to the customer requesting to
change their PIN number. In order to do this, the customer must first
correctly enter their original PIN number. The pinpad machine will then
request the customer to input their new PIN number twice.
On 3 of these occasions this was undertaken correctly. On one occasion, a
customer entered his original PIN number incorrectly, thus invalidating the
transaction and the customer having to restart the process.
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During this period a total of 4 withdrawal requests were declined, all due to
the customer incorrectly entering their PIN number. Out of the 4 declined, 3
seem to be attributed to the same customer as all took place consecutively,
by the same clerk, QB and within 1 minute 41 seconds from the
first request to the last. This time lapse is consistent with a customer having
to start the transaction each time from the beginning. If the customer makes
three failed attempts to enter their PIN number, the system will lock them out
requiring intervention from the relevant card provider.
On 3 occasions the on line facility at Gaerwen Post Office was not
operational and requests for a withdrawal of funds could not be verified from
the card provider.
May 19" to May 25" 2005
During this period a total number of 45 on line banking transactions with a nil
value were undertaken. 30 of these were for standard balance enquiries, all
of which were authorised and processed.
A total of 12 withdrawal transactions were undertaken which were declined.
The reason for this were incorrect PIN number being entered by the
customer or the card provider failing to authorise the transaction due to
insufficient funds or other concerns with the card or account.
On 3 occasions, the card provider declined a debit card payment for services.
September 14" to October 12" 2005
During this 4 week period, a total of 82 on line banking transactions with a nil
value were undertaken. 39 of these were for standard balance enquiries that
were authorised and processed.
A total of 43 withdrawals produced a nil entry. The main reason for this is due
to an incorrect PIN number entered by the customer. Other reasons were
insufficient funds, Usage violated, which means the withdrawal limit has been
exceeded, or where the customer has been timed out and taken too long to
enter their PIN number.
A schedule of the nil transactions was compiled which also includes the
following transaction undertaken. It was found that in the majority of cases, a
nil transaction was immediately followed by a further transaction of the same
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type that was authorised. For example on Nov 22™ 2004, at 11.09.07, a
customer requested a withdrawal from their Post Office Card Account
(POCA). This was declined as the incorrect PIN number had been entered.
The next transaction undertaken at the branch was at 11.09.41, again for a
POCA withdrawal. This was authorised and £89.00 was entered. These
transactions were undertaken by the same clerk, (i
BB and on the same terminal number 1.
This pattern is repeated throughout the data examined. Out of 42 declined
withdrawals, 38 (90%) were immediately followed by an authorised
withdrawal that was performed on the same terminal and by the same clerk.
It was also noted that the nil transactions were performed on both of the
terminals installed at the branch and by
A schedule of this information can be found in appendix B of this file.
In conclusion:
¢ No problems highlighted with the integrity of the data or the system
e All nil on line banking transactions examined have valid reasons for the
transactions having no value attached to them.
¢ The majority of declined withdrawals with nil value are immediately
followed by an authorised withdrawal for various amounts and are
undertaken by the same clerk on the same terminal.
e The nil transactions are undertaken by both qa
QED 2:0 on either terminal 1 or 2.
This report is submitted for the present position to be noted. Mr Thomas is
bailed to appear at Holyhead Police Station on 10th January 2006. Please
can this file be returned to me by this date with advice on if a further interview
is required based on the evidence or if charges are to be made at the bail or
if Mr Thomas is to be released from bail pending charges by summons at a
later date.
Investigation Manager
12" December 2005
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