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Post Office Mediation Scheme
Second Sight - Case Review Report
Case Reference: M097
Applicant: Janet SKINNER
Advisor: Graham Cade (Howe & Co)
23 March 2015
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
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)
b)
c)
d)
e)
the documents submitted by the Applicant and her Professional Advisor;
Post Office's Investigation Report (‘POIR’) including attachments;
comments by Post Office on the previously issued draft of this report;
Second Sight's Briefing Report - Part One; and
Second Sight's Briefing Report - Part Two.
The Applicant has informed us that she will not be making further 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 £59,216.43;
b) — adequacy of training and support, including Helpline and Audit;
c) limitations in the Audit Trail available to Subpostmasters;
d) Post Office's Investigations and Prosecutions processes; and
e) other consequential losses, not dealt with in this report, but which may be raised if the
case progresses to mediation.
1.6. This report focuses on the net losses of £59,216.43. 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 Applicant was appointed as temporary Subpostmistress of the North Bransholme branch on
27 May 2004. She was contracted to fulfil the role on a permanent basis from 1 January 2006
until her suspension on 31 May 2006. She had previous experience, dating back to 1994, as a
counter clerk working in Post Office branches owned by United News.
1.8. The branch is located within a general store which is owned and operated by a third party, from
whom the Applicant leased the space required to run the branch. She inherited four
experienced cashiers from the previous Subpostmaster upon taking over the branch.
1.9. The Applicant reports that the first sign of problems came in 2005 when one of the cashiers
discovered that they were £1,500 short of cash during a weekly balance. She says that she
assumed that the Horizon derived figure was correct and ordered the cashier to make good the
shortage. The practice of holding cashiers individually accountable for cash shortfalls had been
adopted by the previous Subpostmaster.
1.10. In June 2005 the branch abolished individual stock unit balancing, moving instead to shared
stock units. This was implemented because one of the members of staff was on sick leave and
this made balancing more convenient in the now short-staffed branch. At this point balances
were still carried out weekly.
1.11. When the branch staff later implemented monthly balancing, the shortfalls in the branch
accounts began to escalate. When balancing in January 2006, a £7,000 shortfall appeared,
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according to the Applicant. She says that she decided to hide the loss by transferring it to
another stock unit. She states that she knew that this was not the correct practice but did so
under the impression that the shortfall would correct itself. However, she said that, instead of
correcting itself, the shortfall doubled to £14,000 the next month and increased again to
£21,000 the month after that. In their comments on the previously issued draft of this report
Post Office states that the figures as set out do not correlate with any evidence that Post Office
has seen and that they should be treated with caution.
1.12. The losses at the branch continued to grow until, on 30 May 2006, Post Office carried out a
cash verification visit triggered by concerns about the volume of cash that the branch had been
requesting. A cash shortfall of approximately £54,000 was identified during the visit and the
Applicant was suspended immediately. An Audit, carried out the following day, revealed that
there was a cash and stock shortfall of £59,216.43 at the branch.
1.13. Post Office’s investigation team interviewed the Applicant and she admitted covering up
losses by manipulating the branch's figures and permitting one of her staff members, whom we
understand was the same person that the Applicant suspected of possible theft, to do the same.
The Applicant was charged with one count of theft and one count of false accounting.
1.14. At Hull Crown Court, the Applicant pleaded not guilty to theft but guilty to false accounting.
The prosecution accepted the not guilty plea to theft. The Applicant received a nine month
custodial sentence for false accounting of which she served around ten weeks in prison and the
remainder under curfew enforced by an electronic tag. The court also imposed a Confiscation
Order in the sum of £59,216.43.
1.15. This report was originally scheduled for completion in October 2014 but was delayed
awaiting receipt of copies of available documentation relating to the Applicant's prosecution in
addition to those that Post Office had already supplied and upon which we had based the earlier
report. We have been advised by Post Office that there are no further documents to be
provided beyond those already supplied to us as part of the investigation and POIR production
process. We comment on this in Section 6. below.
2. Points of common ground between the Applicant and Post Office
2.1. It is common ground that the Applicant failed to follow proper security procedures in relation to
the handling of cash in the branch and that daily cash declarations were not made at the branch
as they should have been.
2.2. It is also undisputed that monthly balancing was introduced in January 2006.
2.3. It is also agreed that the Applicant manipulated the cash on hand figure to match the Horizon-
derived figure in order to cover up the branch's losses and allowed her employees to do the
same. These losses totalled £59,216.43, as identified by the Audit carried out on 31 May 2006.
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3.
3.1.
3.2.
3.3.
4.
4.1.
4.2.
4.3.
4.4.
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Points of disagreement between Post Office and the Subpostmaster
The Applicant asserts that the losses were caused by a fault in Horizon that occurred with the
introduction of monthly balancing. Post Office notes that no faults related to Horizon were
mentioned during her tenure or at the investigative interview and that, instead, the Applicant
stated that she suspected a member of staff of stealing the money.
There is disagreement on whether the training and support provided by Post Office to the
Applicant in this case was adequate.
The Applicant claims that Post Office failed to properly investigate the cause of the shortfalls.
Post Office reports that the investigations would have been unable to identify when and where
the shortfalls arose due to the fact that the Applicant had manipulated the accounts.
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
In regard to training and support, the Applicant reports that she received what she considered
to be inadequate support from Post Office, stating that “we were left very much to our own
devices”. She complains that the visits that she received from her Regional Managers focused
on making sure the branch was clean and tidy and that correct literature was displayed rather
than giving further training on the technical aspects of running the branch. In their comments
on the previously issued draft of this report Post Office confirms that it provides only "a reactive
support function" and therefore appears not to find the Applicant's comments surprising.
Post Office asserts that the purpose of visits from Retail Line Managers or Rural Support
Managers is to check on the “day to day operation” of the branch and that Horizon related
technical issues are not within their remit. It reports that there is no record of the Applicant
requesting further training or assistance in relation to balancing. Post Office states that the
NBSC call logs show that the Applicant made 116 calls between January 2004 and May 2006
requesting transactional or procedural guidance and that appropriate advice was given in these
circumstances.
The Applicant argues that the cause of the losses was not investigated and that the Horizon
system was never considered as a potential culprit. In her CQR, she states that “I think the Post
Office investigators automatically assumed guilt” and goes on to say that “I strongly feel during
the interviews that the investigators were aware of my divorce settlement and assumed that I
had taken the money from the Post Office to pay off my husband, which is simply not the case”.
Post Office refutes this, reporting that “there is no mention in any of the three summaries of the
tape recorded interview that suggests the investigators were even aware of the Applicant’s
personal circumstances”. \t argues that the taped interview focuses on the circumstances
surrounding the losses. It also notes that an investigation would have involved analysis of the
branch accounts and accounting processes, but investigators would have been unable to
identify when and how shortfalls arose due to the fact that the accounts had been falsified.
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4.5. From our own analysis of the interview notes (Post Office Documents 003 and 010), we have
found no mention of the Applicant’s personal circumstances regarding her divorce. An
accusation of theft was put to her directly, to which she answered “no”. Long periods of the
interview were spent on questions surrounding a member of the Applicant's staff, who she said
she suspected had stolen the money. Despite this, the interviewers do not appear to accept this
as a possibility, stating that “you have offered no explanation as to where that money’s gone”.
It is unclear whether or not the investigators made any further enquiries regarding the staff
member in question. During the course of the interview, neither the Applicant nor the
interviewers raised Horizon as a potential cause of the losses.
4.6. It appears that Post Office's investigators concluded that the Applicant had stolen the money
and Post Office then initiated a charge of theft against her. The evidence against her, in regard
to theft, was never tested in court because that theft charge was later dropped, although she
did plead guilty to false accounting.
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. In her CQR, the Applicant states that “the losses showed up as a result of faults in the Horizon
system rather than as a result of any action that I might have taken”. She suggests that there is
a causative link between the switch from weekly to monthly balancing and the losses, saying
“the problems I encountered with the Horizon system happened after the change of the weekly
to the monthly Audit”.
5.2. Post Office does not offer its own explanation of how the losses were caused due to the lack of
accurate accounting records, which, had they not been manipulated by the Applicant and her
employee, might have enabled both parties to form a view on how the shortages arose. It
notes that the figures stated by the Applicant in her CQR (the £7,000 shortfall in January 2006,
£14,000 in February and so forth) do not correlate with the figures she mentioned during the
interview with its investigators. It also notes that, during this interview, the Applicant made
clear that she suspected that one of her members of staff might have stolen the money.
5.3. Post Office reports that the Applicant made a number of calls to the National Business Support
Centre (NBSC) Helpline during January 2006 and that six of these were transferred to the
Horizon Support Desk (HSD), where Horizon-related queries are dealt with. As the HSD records
are no longer available for this branch, it is unclear what problems were reported and whether
they were resolved. One call could be identified, from the NBSC logs, as being related to a
printer issue.
5.4. In the absence of any better evidence of specific transactions that might have generated the
losses, we are unable to reach a firm opinion on what the real underlying root cause(s) of the
losses in the branch were. The onset of the losses does appear to correlate with the
introduction of monthly balancing procedures, but this is not indicative of any specific fault in
Horizon and may be a coincidence.
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5.5.
5.6.
5.7.
5.8.
5.9.
5.10.
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We cannot rule out the possibility of theft by a member of the Applicant’s staff as the switch
from individual stock units to shared stock units, the change to monthly balancing and the fact
that daily cash declarations were not being carried out presented the ideal opportunity for theft
to take place without individual culpability. Security processes at the branch had become lax
due to the fact that they were short-staffed and members of staff had unsupervised access to
the safe. The staff member that the Applicant suspected of theft had keys to the branch. The
staff member in question returned from sick leave in December 2005 and the losses started
appearing the next month. The Applicant mentions, during the investigative interview, that
there were several instances where customers had complained about being short-changed by
the staff member for £100 each time. We are unable to verify this as it was not documented at
the time.
The Applicant complains that the training she was given, when Horizon was implemented, was,
in her opinion, inadequate, stating that “/ do not think that the training was detailed, it was far
more to do with how to process transactions rather than what to do if you thought there was
an error or problem in the system”.
Post Office states that the appropriate level of training required would have been agreed with
the Applicant during the appointment process. It reports that training records are, however, no
longer available for this branch, therefore it is unable to verify what level of training was
delivered. It notes that the Applicant had a number of years experience using the Horizon
system prior to her appointment as Subpostmistress and that, in an interview with Post Office’s
security team, she described herself as “an expert on the use of Horizon”.
Due to the lack of records, we are unable to arrive at a fully evidenced conclusion as to the
adequacy of the Applicant's Horizon training. From what the Applicant has described, it appears
that the only training she received was in reference to processing transactions, which would
have been adequate at the time given she was working as a counter clerk and she may well
have considered herself to be an expert at that type of work. However, she had no experience
in managing the accounts for an entire branch or being responsible for the investigation of
discrepancies and accounting for losses. Therefore, she may well have needed training in
balancing procedures and in identifying the cause of shortfalls prior to being promoted to the
level of Subpostmistress. We suspect, though there is no evidence to substantiate this, that she
received no such further training. We have, however, reached the conclusion that it is unlikely
that training inadequacies are the key issue in this case.
What we have concluded as being the key issue, and the root cause of the losses arising in this
branch, is that the Applicant had allowed her staff member full and unsupervised access to the
branch and to the safe in order to ensure that the branch was opened on time, and every day,
since she was unable to always arrive on time and anyway only worked there part-time. This
opportunity to access all of the cash, coupled with the move to monthly balancing and shared
stock units presented that employee with a perfect opportunity to commit theft.
It is disappointing that the possibility that one of the branch's employees might have stolen
substantial funds, perhaps all of the missing £59,216.43, does not appear to have been
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5.11.
6.
6.1.
6.2.
6.3.
7.
7.1.
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thoroughly investigated at the time. The inference, given that Post Office initiated a charge of
theft charge against the Applicant, is that it had, by that point, gathered sufficient evidence of
the Applicant's guilt (of theft) but we have not seen that evidence.
In attempting to establish the real cause of the loss, we were unable to dismiss the
possibility that the money was stolen, not by the Applicant, but by her employee. The Applicant
received a custodial sentence and was ordered to repay the £59,216.43. Post Office comments
that it does not dispute that theft by the Applicant's employee cannot be ruled out but it has
seen no evidence that definitely eliminates theft by the Applicant as a possible cause of the loss.
Limitation in scope of work performed
In preparing this report we requested access to the complete legal and prosecution files and
associated documentation held by Post Office. In our opinion, access to this material was
needed in order to properly understand the actions that were taken when investigating this
matter and considering whether to prosecute the Applicant. Because of that request, the
finalisation of this report was postponed.
We have now been advised by Post Office that, after making due enquiry, "there were no more
documents to be provided".
Post Office’s position is that it will not provide us with access to the complete legal files we have
requested, as it is not prepared to waive Legal Professional Privilege. Accordingly, the
statement "there were no more documents to be provided", may indicate that Post Office holds
further relevant documents, but that it is not prepared to release those documents to us. In the
light of this position, we have completed our report based on the documents that were made
available to us.
Is this case suitable for mediation?
In our opinion this case is suitable for mediation, notwithstanding the Applicant's false
accounting, as it may offer both parties the opportunity to reach closure on the matter, not of
why the losses arose and whether they were exacerbated by the Applicant's behaviour, but
what sort of errors generated those losses or, if the money was stolen, what evidence was
examined in order to determine who stole it. The following issues should also be considered:
a) whether Post Office, the Applicant or another party is responsible in part or in whole
for causing the losses of £59,216.43; and
b) whether the investigation carried out by Post Office was sufficiently objective in
attempting to find the cause of the losses and whether the possibility that the
Applicant's employee had stolen the money was adequately investigated prior to the
Applicant being charged with theft.
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