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Post Office Mediation Scheme
Second Sight - Case Review Report
Case Reference: M071
Applicant: David YATES
Advisor: Robert Holland (James Cowper)
15 December 2014
This 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
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Scheme
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Introduction
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) the documents submitted by the Applicant and his Professional Advisor;
b) Post Office's Investigation Report (‘POIR’) including attachments;
c) comments by Post Office on the previously issued draft of this report;
d) Second Sight's Briefing Report - Part One; and
e) Second Sight's Briefing Report - Part Two.
The Applicant has not provided any comments on the previously issued draft of this report.
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:
i, an assessment of points of common ground between Post Office and that
Subpostmaster;
ii.an assessment of points of disagreement between Post Office and that
Subpostmaster;
iii. 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;
iv. a summary of any points on which it is not possible to offer a fully evidenced
opinion due to a lack of evidence/information;
v.a view on whether a case is suitable for mediation; and
vi. 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) _ the Initial Application to the mediation scheme submitted by the Applicant;
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b) the Case Questionnaire Response ('CQR') submitted by the Applicant's Professional
Advisor; and
c) Post Office's Investigation Report (’POIR’), prepared in response to the above
mentioned documents.
1.5. The following are the issues raised by the Applicant:
a) responsibility for direct losses that total £359,325.71;
b) transaction anomalies associated with Cash and Stock Remittances (REMs);
c) adequacy of training and support, including Helpline and Audit;
d) process issues at the end of each Trading Period;
e) Post Office's Investigations and Prosecutions processes; and
f) 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 £359,325.71. 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 be the lack of competent and
adequate Helpline support, and the inability to ‘park’ differences in order to allow time for them
to be fully investigated.
1.8. The Applicant was in post as Subpostmaster of the Walton on Thames branch from September
1993 to 7 March 2003.
1.9. On 7 March 2003, an Audit took place which revealed a cash shortage of approximately
£350,000. In interview, the Applicant admitted to theft and false accounting over a three to five
year period. He said that the money had been used to pay staff wages and general living
expenses.
1.10. The Applicant pleaded guilty to theft and was sentenced to three years imprisonment, of
which he served 13 months in custody, and 13 weeks on Home Detention Curfew.
1.11. The Applicant maintains that he has since repaid the sum of £41,000, which he states has
been accepted by Post Office in full and final settlement. In its comments on the previously
issued draft of this report Post Office states that "there is no evidence that the sum of £41,000
was ever repaid by the Applicant. There is no evidence that Post office accepted any sum in full
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and final settlement of the losses suffered. There is insufficient evidence available to establish
the result of the civil recovery proceedings were or to what extent sums remain outstanding to
Post Office". We observe from this surprising statement that Post Office is not able to state how
much it considers as being due from the Applicant.
2. Points of common ground between the Applicant and Post Office
2.1. It is common ground that an Audit of the Applicant’s branch was carried out on 7 March 2003
and that it revealed a cash shortage of approximately £350,000. It is also common ground that
the Applicant was prosecuted for theft, and received a sentence of imprisonment.
3. Points of disagreement between Post Office and the Subpostmaster
3.1. In his CQR the Applicant says that unexplained differences only started to occur after the
Horizon system was installed in branch. He says that the Helpline advice was to make good the
difference, but that the differences increased to a point where it was impossible for him to do
that. Post Office responds to this by noting that Horizon was introduced in July 2000 yet the
Applicant admitted to the shortfall building up since 1998.
3.2. He says that the lack of competent Helpline support meant that he was not able to resolve the
differences he encountered, and that there was no facility to ‘park’ the differences whilst he
continued to investigate them.
3.3. Post Office responds that there is no evidence to suggest that the Applicant was not adequately
supported, or that an inability to resolve the differences contributed to the loss, and concludes
that the Applicant stole cash amounting to £359,325.71.
4. 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
4.1. We find that there are no areas of the Applicant’s complaint that are sufficiently substantiated
for us to be able to provide an evidenced opinion.
5. Asummary of any points on which it is not possible to offer a fully evidenced opinion due to a
lack of evidence/information
5.1. The Applicant says six or seven weeks after Horizon was installed in his branch, he started
experiencing unexplained differences. He says he cannot remember the precise details, but
believes it was mostly cash rather than stock differences. The Applicant provides no more
detail in support of his complaint. Post Office's response is set out in section 3.1 above.
5.2. Post Office says that there is no Horizon data available for this period, and that therefore it is
not possible to show how the shortfall occurred, by reference to accounting data. They also say
that, even if accounting data was still available from that period, the Applicant's admitted
falsification of the branch's books would mean that it would have been almost impossible to
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5.3.
5.4.
5.5.
5.6.
5.7.
5.8.
5.9.
5.10.
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establish the causes of loss. The false accounting would have meant that the branch's cash
declarations were incorrect and that it would have been impossible for Post Office or branch
staff to have determined on which days differences occurred.
Due to a lack of available information, we are unable to offer an evidenced opinion as to how
the shortfall occurred.
The Applicant says that when he contacted the Helpline for support they “effectively told me to
make good the difference myself”.
He says that he ‘abandoned’ contacting the Helpline thereafter, as the advice was to make good
the losses, but they “grew to the point where this was no longer possible”.
In answer to this point, Post Office says that despite ‘numerous’ calls to the Network Business
Support Centre (NBSC), the Applicant made no complaints about Error Notices or the
investigation of shortfalls.
In relation to the Applicant’s complaint regarding process difficulties at the end of each Trading
Period, he says that there was no option to ‘park’ the differences while he investigated how
they had arisen. He says that he was simply asked to make them good without any
investigation, and that no other options were made available to him.
Post Office responds by saying that, during the period of the Applicant’s tenure, paper Error
Notices were issued to correct discrepancies. The ‘settled centrally’ process was introduced in
2005 and so would not have been available to the Applicant at that time. He would have been
able to hold the discrepancy in the branch suspense account until the end of the Trading Period,
when it would have been necessary to remove it by processing an Error Notice, or by making
the discrepancy good. Post Office adds that the Applicant could have contacted the Finance
Service Centre (FSC) for further assistance if necessary, but that there is no evidence that he
complained to NBSC about the issue of ‘parking’ and investigating shortfalls.
Having read the transcript of the Applicant’s recorded interview under caution, we accept that
the Applicant made an unequivocal admission to having inflated the Cash on Hand figures for
three to five years before his final Audit in order to conceal a growing discrepancy, which finally
amounted to £359,325.71. The Applicant admitted that he used the cash to pay staff wages and
for general living expenses.
Whilst we note the Applicant's suggestion that he experienced inexplicable differences
immediately following the installation of Horizon in his branch, we also note that in addition to
his false accounting, he acknowledged that, during an Audit carried out at his branch in
November 2002, he lied to the Auditor to cover the cash shortfall. The Applicant also lied to the
Auditor on 7 March 3003, in an attempt to cover up the final shortfall. We conclude that the
shortfalls experienced by the Applicant were relatively minor in comparison to the sums the
Applicant admitted to stealing in order to pay staff wages and general expenses over the three
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to five year period. Had the Applicant alerted Post Office to the shortfall at an earlier stage, or
at the earlier Audit, the loss may not have reached the level it did.
6. Is this case suitable for mediation?
6.1. In our opinion this case is not suitable for mediation, due to the Applicant’s unequivocal
admission to, and conviction for, theft.
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