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Witness Statement
(CJ Act 1967, s9; MC Act 1980, ss
5A(3)(a)
and 5B, MC Rules 1981, r 70)
Statement of Gareth Idris JENKINS
Age ifunder Over 18 (If over 18 insert ‘over 18')
18
This statement (consisting of 31 pages each signed by me) is true to the
best of my knowledge and belief and I make it knowing that, if it is tendered
in evidence, I shall be liable to prosecution if I have wilfully stated in it
anything which I know to be false or do not believe true.
Dated 8th dayof October 2010
the
Signature
This statement is made in addition to my statements of 2"! February, 8"
February 2010 and 9" March 2010.
I have been asked by Post Office Ltd to consider the following in this
statement:
o To provide some background information about the Horizon system
o To provide comments on the “Technical expert’s report to the Court
prepared by Charles Alastair McLachlan, a Director of Amsphere
Consulting Ltd” which I received on 1st October 2010. I have
subsequently received an updated version on 7th October taking into
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GSO011 (Side A) Version 5.0 05/07
Royal Mailis a trading name of Royal Mail Group pe, Registered number 4138203. Registered in England and Wales, Registered office: 148 Old Street, LONDON, EC1V
Ha
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Continuation of statement of Gareth Idris JENKINS
account some comments I made on the first draft and in particular
highlighting points of difference between Professor McLachlan and myself.
This statement takes that version into account.
o To carry out some analysis on the levels of Cash held in Branch 126023
during the period December 2006 to December 2007.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
1 Background Information on the Horizon system
The Horizon system was initially put together as a pilot in 1996, and following
an extensive pilot was rolled out to all Post Offices between 1999 and 2002.
It has recently been replaced by the Horizon Online system which was piloted
at the start of 2010 and the last Horizon system was replaced in September
2010. Horizon is used in every Post Office in the United Kingdom, which
currently means about 11,400 branches, but at the time that we are
considering here would have been 14,000 branches or more. During that
time, Horizon has processed millions of transactions each day with peak
volumes of nearly 20 million transactions in a single day in the run up to
Christmas.
Within Horizon, each Post Office stores details of all its transactions on the
Hard disk of each PC within the Branch. There is a separate PC for each
counter position. I understand that at Branch 126023 there are 3 counter
positions and hence 3 PCs.
Data from the branch is transmitted from each branch to Fujitsu’s Data
Centres using a variety of communications mechanisms. The software used
to transmit the data from the Branches to the Data Centre is specifically
designed to ensure that whenever contact is made between the Branch and
the Data Centre any outstanding data is exchanged between the two. In
particular for many transactions there is no need for the Branch to be online.
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I understand that there is a suggestion that the equipment in the Branch
might be faulty. I am not aware of any fundamental issues though this is
being covered by Mr Dunks. Specifically, in his witness statement he states
that “All the calls are of a routine nature and do not fall outside the normal working parameters
of the system or would affect the working order of the counters.”.
I have also been shown the witness statement of Mr Varsani who I
understand took over the Branch from the defendant, which says that there
have been no problems with the equipment as far as he is concerned. This
suggests that there were no fundamental system issues when the defendant
was sub-postmaster since it would be surprising if any hypothetical problems
should stop occurring as a result of a change of sub-postmaster.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
2 Comments on Professor McLachlan’s Report
As mentioned earlier, I have examined the “Technical expert’s report to the
Court prepared by Charles Alastair McLachlan, a Director of Amsphere
Consulting Ltd” which I initially received on 1st October 2010, followed by an
updated version on 7th October 2010.
I would like to re-iterate that my expertise relates to the Horizon system only
and not to Post Office Ltd’s Back End systems. However such systems are
irrelevant to the Branch accounts that are produced on Horizon since any
externally initiated transactions (such as Transaction Corrections and
Remittances which will be discussed later) must be authorised by a User of
the Horizon system in the Branch before they are included in the Branch’s
accounts.
2.1 Section 1.2 of the report: Hypothetical issues with the
Horizon system
In Section 1.2 of his report, Professor McLachlan lists a number of
“Hypothetical issues” with the Horizon system. However there doesn’t
appear to be any real justification as to why these might be relevant. In
particular, I can see no evidence to support these hypotheses in the data I
have examined.
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Continuation of statement of Gareth Idris JENKINS
2.1.1 Section 1.2.1 of the report
Specifically, in section 1.2.1 he hypothesises that “The User Interface gives rise to
incorrect data entry: poor user experience design and inadequately user experience testing can give
rise to poor data entry quality.”. Although I was not responsible for the Design and
development of the Horizon User Interface, I do know that one of the key
goals of the User Interface was that it would be easy to use and that it could
be used by Users with no IT experience.
In order to support this, I have extracted some information from a design
document Referenced SD/STD/001 version 10.1 dated 25th July 2002 Titled
Horizon Office Platform Service Style Guide. Specifically:
o Appendix B: This appendix contains the design principles that have been
followed in deriving the Human Computer Interface (HCI), and the design
standards that have been applied to keyboard-to-screen mapping, panels
and buttons. It also summarises the approach to designing a new
application that uses the HCI.
o Chapter 2: This chapter describes briefly the main types of screens that
make up the system, their function, layout and characteristics.
o Chapter 3: This shows how amounts can be entered into the system
As can be seen in Figure 2-1, the screen layout is fairly simple and consists
of 3 main areas:
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o Navigation buttons at the top
o Menu buttons in the lower left hand side
o A “Stack” area in the lower right hand side
The Menu buttons are used to either select a sub menu or to transact a
specific product. Each button includes both the abbreviated name of the
function that it carried out and also a pictorial “icon” representing the function.
The Stack area shows what items the Customer has purchased in the current
session with a running total at the bottom making it clear what money is owed
either to or from the customer.
When the value of an item needs to be entered, then a screen such as that
shown in Figure 3-8 allows the value to be entered. This can be done either
by using the numeric keys on the keyboard or by touching the numbers on
the screen. The box at the top shows exactly what has already been entered.
2.1.2 Section 1.2.2 of the report
In Section 1.2.2 there is the hypothesis that ‘The Horizon system fails to properly
process transactions: accounting systems are usually carefully designed to ensure that accounts
balance after each “double entry” transaction.’ Horizon is indeed designed to use
“double entry” transactions. Further Professor McLachlan refers to the need
for database systems to use “‘two-phase’ commit” technologies. Again, Horizon
is designed using such concepts.
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Continuation of statement of Gareth Idris JENKINS
2.1.3 Section 1.2.3 of the report
Finally, in Section 1.2.3 there is the Hypothesis that “External systems across the
wider Post Office Limited Operating Environment provide incorrect externally entered information
to the Horizon accounts through system or operator error outside Horizon.”. I was not quite
clear what Professor McLachlan was referring to here. In the updated
version of the report, Professor McLachlan has clarified this by adding “For
example, incorrect transaction corrections are submitted from the central systems for acceptance by
the sub post master.” However in my view this is not really relevant since any
transaction that is recorded on Horizon must be authorised by a User of the
Horizon system who is taking responsibility for the impact that such a
transaction has on the Branch’s accounts. There are no cases where
external systems can manipulate the Branch’s accounts without the Users in
the Branch being aware of what is happening and authorising the
transactions.
2.2 Section 2.2 of the report
2.2.1 Section 2.2.1 of the report: Independent investigation
In Section 2.2.1 of his report, Professor McLachlan outlines a number of
limitations in the scope of his investigation. In some of these cases, they are
irrelevant to the processing of transactions in Horizon.
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Continuation of statement of Gareth Idris JENKINS
2.2.1.1First Bullet
Specifically, the report states “It was not possible to examine the process for introducing
Transaction Corrections that can give rise to changes in the cash that Horizon records at the
branch”. As I have stated earlier in this statement, any Transaction Correction
that has been generated by the external Post Office Ltd systems must be
explicitly accepted into the Branch’s accounts by an appropriate User. In
many cases there is the opportunity to reject the Transaction Correction
allowing a separate process to agree whether or not it is valid before it is
accepted into the accounts. In particular there are 3 examples of this
occurring: Firstly on 13" December 2006 and for two other transaction
Corrections on 14" March 2007. Therefore, I would say that it is not
necessary to examine the process for generating Transaction Corrections.
It may be helpful at this point to explain what a Transaction Correction is. It is
a mechanism whereby staff in Post Office Ltd’s Head Office can request a
sub-postmaster to undertake a transaction that amends a Branch’s accounts.
This process is used when an error is identified by some manual means and
it is necessary to correct this in the Branch’s accounts. However, when such
a Transaction Correction is being processed a message is shown on the
screen to the User so that they are aware of what its effect would be. For
example on the Transaction Correction processed on 03/07/2006 the
message displayed was:
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302117598419 Cash Centre Reference For queries/disputes you must
contact the Cash Centre. 400.00 Pounds Transaction Correction is
issued for a shortage you sent to the Cash Centre. Press “accept now”
then “make good” (or “assign to nominee” if you are a franchise office
and assign the resulting branch discrep also to nominee) If this amount
is in your surplus suspense dated 28/06/07 then redeem using F1, F173,
F16, F8. The date above refers to when the Cash Centre Processed
the rem.
2.2.1.2Second Bullet
The next Bullet states “It was not possible to examine the processes for Remittances (the
movement of cash and stock) into and out of the branch that changes the cash and stock that
Horizon records at the branch.” Again, any Remittance into the Branch has to be
explicitly accepted by the User and a receipt is produced stating the amount
that is being introduced into the Branch accounts. Following this, the User
has the opportunity physically to count the cash. Should the amount on the
receipt differ in any way from the amount recorded on the cash pouch or the
amount of cash found inside the pouch, there are processes to query such
differences. Therefore, I would say that it is not necessary to examine the
process for generating Remittances.
2.2.1.3Third Bullet
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The third bullet states “It was not possible to examine the processes for revaluing foreign
currency which could change the value of cash held at the branch.”. Revaluation of currency
doesn’t affect the cash position. It purely affects the notional value of the
Foreign Currency as it is reported in the accounts, but has no impact on the
Cash (sterling) position. Its only impact might be on the liability of the
postmaster for any currency that is subsequently lost (which would need to
be repaid at the current value). Note that revaluation can be positive or
negative.
2.2.1.4Forth Bullet
Finally, the 4" bullet states “It was not possible to examine the processes of reconciliation
conducted by the Post Office that could give rise to Transaction Corrections.”. As stated
earlier this is not really relevant since any Transaction Corrections will have
been accepted by a User into the Branch accounts and should not be
accepted if not understood. Accepting a Transaction Correction implicitly
means taking responsibility for it in accounting terms.
2.2.2 Section 2.2.2 of the report: Opportunities for reconciliation
Moving on to Section 2.2.2 of Professor McLachlan’s report. I accept that the
Horizon system has not been designed to automatically provide vouchers for
every transaction. It was not a requirement for Horizon to produce such
vouchers and in fact there were specific requirements from Post Office Ltd
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Continuation of statement of Gareth Idris JENKINS
regarding transaction times that preclude printing such records. This was so
as to minimise the time taken to serve each customer and so attempt to keep
queue sizes down to a reasonable length. My experience as a user of Retail
systems (such as supermarkets) is that such vouchers are not normally
generated there either.
2.3 Section 2.3 of the report: Problems of data entry at sub post
office
In Section 2.3 of his report, Professor McLachlan looks at hypothetical issues
with Data Entry.
2.3.1 Section 2.3.1 of the report: Incorrectly calibrated touch screen
Section 2.3.1 looks at the calibration of the touch screen. I accept the fact
that a misaligned touch screen could certainly cause confusion to the User
and result in incorrect buttons being activated. However I don’t understand
how Professor McLachlan is suggesting that such a misalignment would
cause discrepancies within the accounts. Perhaps he would like to provide
an example of where such an error may have occurred?
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Continuation of statement of Gareth Idris JENKINS
2.3.2 Section 2.3.2 of the report: Poor User Interface Design
In section 2.3.2, Professor McLachlan states that “Poor user interface design can
contribute to poor data entry quality and user errors.”. I agree with this as a statement.
However Professor McLachlan makes no attempt to explain in what way the
Horizon User Interface design is “Poor”. As I stated earlier one of the key
goals of the User Interface was that it would be easy to use and that it could
be used by Users with no IT experience. A significant amount of effort was
put into designing and agreeing the User Interface with Post Office Ltd.
2.3.3 Section 2.3.3 of the report: Use of the FASTCASH button
In Section 2.3.3 of his report Professor McLachlan hypothesises that errors
can be introduced by incorrect use of the “Fast Cash” button. In particular he
challenges my analysis of unsuccessful Debit Card Transactions.
For simplicity I will repeat the summary of that analysis here (it is also in
Appendix I of Professor McLachlan’s report):
What I did was to search through all transaction in the 13 month period
from December 2006 to December 2007 them looking for all examples
of Debit Card transactions which have not been successful, since this
seems to be one of the defence’s main attacks on the system.
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There are 92 such failed transactions for a total value of £117,149.98.
I've analysed all those with an individual value of more than £1,000
(leaving £6,113.55 worth that I’ve not analysed).
In all the cases I’ve analysed one of 3 things happened:
1. The Customer session was then settled by a Cheque (and so the
failure must have been noticed by the clerk)
2. The Customer session was abandoned (ie any goods were returned
and the transactions cancelled and the only item from the session is
the failed Debit Card payment).
3. The Customer session was settled to Cash (which could have been
accidental). _ However in all such cases the transaction was
subsequently reversed resulting in the cash also being reversed.
There are business rules that control whether transactions can be
cancelled or if they have to be committed and then reversed (which is
the main difference between cases 2 and 3 above). I suspect (but can’t
necessarily prove) that in case 2 the sessions were for purchase of
Foreign Currency. In case 3 the sessions were all for purchase of
Premium Bonds.
I think this refutes the assertion that failed Debit Card Payments are the
cause of the losses.
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In particular Professor McLachlan has identified a transaction for £7,000
which took place on 11 January 2007 and states that this could have been
processed as Fast Cash. I have re-checked this transaction and it was
actually settled by a Cheque and not Cash. This was covered by point 1
above. Therefore in this case the User must have been aware that the Debit
Card transaction had failed in order to ask for a cheque. Even supposing the
Cheque button was pressed in error for Fast Cash, then there would have
been a discrepancy in the value of cheques and there is no evidence of such
discrepancies.
Later in this section, Professor McLachlan claims “the ‘Fast Cash’ button is
demonstrated to be a source of data entry error (the reversals confirm this).”. I don’t agree
with that. I can see no evidence to support this statement. The fact that
there are reversals following a failed Debit Card transaction is due to the fact
that some transactions cannot be abandoned and need to be settled and
then reversed. This was a specific requirement on Horizon from Post Office
Ltd. The fact that this has been done, shows that the User was well aware of
the failure of the Debit Card transaction and followed normal process when
the failure occurred.
2.3.4 Section 2.3.4 of the report: Insufficient training
Professor McLachlan explores issues with training of the Users in section
2.3.4 of his report. In particular, he states: “The Declared Branch position had
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discrepancies vis-a-vis the Horizon totals at the end of almost every period.” and “The Variance
Checks conducted to reconcile the branch position vis-a-vis Horizon showed a discrepancy on the
vast majority of occasions ranging from 18 pence to more than £11,000.”. I agree with both
these statements. However to me these seem to indicate at the least poor
management within the Branch and probably something more serious.
What is meant by the first statement is that when a Stock Unit is being
Balanced (which is a process that occurs at least once each month) a
difference is found between the cash level as input by the User (known as a
Cash Declaration) and the cash level as calculated by the system (which is
calculated by taking the starting cash position at the start of the period and
adding on all cash that has been received and subtracting all cash that has
been taken out of the stock unit). Calculations of the system cash level are
irrespective of whether the cash was passed to or from a customer or to or
from some external entity such as another Stock Unit or a Remittance into or
out of the Branch. The Balancing process results in the system cash position
being altered to match the Cash Declaration and the difference being put into
a Discrepancy account (which may be for a Surplus or a Deficit).
The second statement is referring to Cash Declarations that are supposed to
be done for each Stock Unit on every day that the Stock Unit is used. Again,
when the Cash Declaration is done, the system can compare the declaration
with the system calculated cash level and record a Variance if they differ. In
this case, checks will not have taken place for any errors and so some
Variances are to be expected, but the assumption is that the sub-postmaster
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would monitor these and ensure that they are dealt with prior to Balancing the
Stock Unit each month.
I also did an analysis of the daily cash movements compared with the daily
cash declarations and could see very little correlation between the two which
indicates that the variances between the declared cash and the system cash
figures were not being monitored very well within the Branch. I would agree
that this could be down to Theft / Fraud, or incompetence by the Branch staff.
I would have thought that seeing such variances would have alerted the sub-
postmaster that there was a problem and caused her to investigate what was
going on.
However there is no evidence that this is down to any sort of System failure.
Further I would suggest that small discrepancies are to be expected in such
an environment due to mistakes in giving change etc. My understanding is
that Post Office investigators expect such small discrepancies in normal
operation.
2.4 Section 2.4 of the report: Problems with Horizon
Section 2.4 of Professor McLachlan’s report than describes 2 possible issues
with Horizon.
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2.4.1 Section 2.4.1 of the report: The Calendar Square, Falkirk Problem
I accept that there was an issue with the Post Office in Calendar Square
Falkirk as described in the email reproduced in Appendix C of the report and
covered by a previous Witness statement I made on 8" February 2010. As I
stated in the email, the problem was fixed in March 2006 and so is not
relevant to the period of data that I have examined in this branch. Also, when
the problem manifested itself it was clear from the various logs that there was
a problem in the system. There is no evidence of such problems from the
various logs that have been examined for this branch. Therefore I see no
relevance for this problem to the period of data that is being looked at for this
case. In particular, Professor McLachlan says “tt demonstrates that there have been
faults with the Horizon system which give rise to discrepancies that can cause losses. It is not
reasonable to exclude the possibility of system problems when considering a case such as Misra. ”
I would dispute that. It was clear from the Events generated at the time in
Calendar Square that there was a problem. No such events have been seen
in West Byfleet in the period in question and so this cannot be responsible for
the losses in that period.
To simplify matters, I’ve included a summary of the issue that is included in
Appendix C of Professor McLachlan’s report:
I’ve now dug back into the archives to provide the following summary:
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1. The problem occurred when transferring Cash or Stock between
Stock Units. Note that West Byfleet does operate multiple Stock
Units so the issue could have occurred.
2. It manifests itself by the Receiving Stock Unit not being able to “see”
the Transfer made by the “sending” Stock Unit and is compounded
by attempting to make a further transfer. Note that such
transactions usually reappear the next day.
3. It is clearly visible to the User as a “Receipts and Payments
mismatch” at the time that one of the Stock Units is Balanced. This
usually results in the Branch raising a call. There are no such calls
in Andy Dunks’ Witness Statement which summarises the calls
raised by West Byfleet. Also this can be checked on any Balance
Reports or Branch Trading Statements that are available from the
Branch which should show that Receipts and Payments do match
and that the Trading Position is zero.
4. The problem is also visible when looking at system events
associated with the Branch. The System events from 30/06/2005 to
31/12/2009 for West Byfleet have been checked and no such events
have been found.
5. The problem was fixed in the S90 Release which went live in March
2006 and so would not have been relevant at the time of the detailed
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Transaction Logs obtained for West Byfleet between December
2006 and December 2007
Therefore I can conclude that the problems identified in Calendar
Square, Falkirk are not relevant to West Byfleet.
2.4.2 Section 2.4.2 of the report: The travellers cheque stock problem
In section 2.4.2 Professor McLachlan describes a “travellers cheque stock problem”.
I disagree with his description of what happens in this scenario. Horizon
doesn’t attempt to control Travellers’ Cheques at a denominational level. In
other words it only manages the total value (in dollars) of Travellers’ Cheques
and doesn’t distinguish between $1,000 being held as 10 $100 Travellers’
Cheque or as 50 $20 Travellers’ Cheques or any other combination. Horizon
is only concerned with the fact that it holds Travellers’ Cheques to a face
value of $1,000. Therefore following through Professor McLachlan’s
scenario, the system initially has $1,000 of Travellers’ Cheques. When a
customer purchases one Travellers’ Cheque for $100, then this will be
reflected by reducing the stock of Travellers’ Cheques by 100, leaving 900
Travellers’ Cheques in stock. This would be reflected on the Stock Report.
I also note that in this section Professor McLachlan states that he has
discussed this scenario with me and that I “acknowledge that this is a known feature of
Horizon and that the Post Office have not instructed Fujitsu to change the system to produce a
meaningful stock report.”. I don’t recall any such discussion. I have seen such a
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scenario described in a separate report that Professor McLachlan has written
for a separate case, and did explicitly check out the scenario and produced a
report for Post Office Ltd refuting the description. The latest version of
Professor McLachlan’s report does include in Appendix M information I have
now provided to him as a result of his draft report.
In response to the specific scenario my comments are as follows:
o Professor McLachlan says: “Take the example of 10 travellers cheques of value
USD 100 at the beginning of the day. If you run a stock report it will show 10 x USD TC
»
100 which corresponds to a value of USD 1,000. This is incorrect. The stock
report will show that a stock of 1000 USD Travellers Cheques are held.
The stock report doesn’t distinguish between the denominations of the
Travellers Cheques.
o He then goes on “A customer comes in and purchases one travellers cheque at
USD100 and pays for it using a debit card.”.. This will be reflected as selling 100
USD Travellers Cheques.
o Next he states: “If you then run a stock report it will show -90 x USD TC 100 which
corresponds to a value of USD -9,000.”.. This is incorrect. A Stock report at this
point will show 900 USD Travellers Cheques held.
o Finally he says: “In other words, the report has treated deducted the USD 100 from
the travellers cheque item count of 10 to get -90. Clearly you can’t hold a negative stock of
a physical item such as a travellers cheque so the report is both meaningless and completely
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misleading.”. This is not correct, the system is indeed reporting the
correct amount of USD Travellers’ Cheques.
I do accept that there are some cases where the way in which Travellers’
Cheques can appear to be slightly misleading. In particular, on the Stock
Unit Balance report, when Sales of Travellers Cheques are shown, then the
“volume” column represents the number of Travellers’ Cheque transactions
and not the number of Travellers’ Cheques sold. However this has no effect
on the volumes of Travellers’ Cheques held on the system or appearing in
the stock reports.
However there is nothing as blatantly incorrect with the system as Professor
McLachlan suggests.
Finally, at the end of the section Professor McLachlan states “In my opinion, this
stock report could give rise to counter staff or sub post masters seeking to correct the perceived
problem through manual adjustments leading to real discrepancies. ”. Given that there is no
problem with the reporting of Travellers Cheques, this statement is irrelevant.
Therefore I would contend that section 2.4.2 of the report is irrelevant.
2.5 Section 2.5 of the report: System problems from beyond
Horizon
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
2.5.1 Section 2.5.1 of the report: Transaction Corrections
In Section 2.5.1, Professor McLachlan looks again at Transaction
Corrections. Here he refers to Appendix G of his report which describes
some analysis I have done concerning transaction Corrections (my email on
this is actually is in Appendix D of the report). This shows that if we analyse
all Transaction Corrections during the 13 month period that the net value is
£1,840. I’ve subsequently gone over the data again and found some
additional transaction corrections that have been processed and the total net
value of all such Transaction Corrections is actually slightly less namely
£1,619.43.
He then refers to a slightly wider scope that he has taken in Appendix J
where he comes up with an absolute value of £82,918.35 (though a net value
of £19,257.21). I have now had a chance to examine this data in more detail
and have the following observations to make on Professor McLachlan’s
analysis:
o Many of the figures listed do not represent Transaction Corrections
o A number of the figures that do relate to a Transaction Correction do
not affect the Cash Position, since those particular Transaction
Corrections were used to correct the value of cash pouches that were
in the branch awaiting collection or Remittance errors held in
Suspense.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
This results in a net total of Cash Transaction Corrections of £302.72 and
even adding up the absolute values as Professor McLachlan has done
(though I don’t understand why) only results in a total of £5,167.28.
My findings are presented in a separate document.
Later on in the section Professor McLachlan states “There is no record of Misra
requesting evidence in the transactions provided between 1 Dec 06 and 31 Dec 07. ”. This is
incorrect. There was one such example on 13" December 2006 and two
more on 14 March 2007. I accept that I had omitted these from my initial
analysis. In the later version of the report Professor McLachlan attempts to
clarify this by modifying it to read “In my analysis I was unable to find evidence that Misra
did ‘request evidence’ in the transactions provided between 1 Dec 06 and 31 Dec 07 although I
understand from Jenkins that there are some such requests during her tenure at West Byfleet.”.
As I have stated above, there are clear examples of this in the data that
Professor McLachlan and I examined. In particular they are included in his
analysis in Appendix J of his report.
Finally, towards the end of the section Professor McLachlan hypothesises
“There are missing Transaction Corrections which would reduce the cash balance expected by the
Horizon system (i.e. be in favour of Misra).”. It is not clear to me on what basis that
this statement is made. There doesn’t appear to be any evidence to support
it. My understanding is that normally branches are well aware of such errors
and would have contacted Post Office Ltd to enquire as to why no
Transaction Correction was being made in favour of the branch.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
2.5.2 Section 2.5.2 of the report: Remittances
Section 2.5.2 of the report discusses remittances. However I don’t
understand the relevance of this discussion to the case. Professor
McLachlan mentions that my analysis “identified a pattern or remittance transactions
which is consistent with Misra’s statement that she declared cash held in remittance pouches in the
safe which was not actually present.”. I was very surprised to see such a statement
in the Defences Expert's report. My analysis of cash movements in section 3
of this statement does confirm this pattern occurring on 2 occasions which
could have been used to “hide” a cash shortage. I can’t think of any
legitimate reason for processing a remittance transaction telling the system
that money is being put into a pouch and then putting an empty pouch into
the safe.
2.5.3 Section 2.5.3 of the report: Reproducing the problems
Section 2.5.3 then refers to incorrect transaction processing. However there
is no indication as to what types of transaction processing may be incorrect,
or as to what sort of errors the users may have made. It should be noted that
the Horizon counter application has recently been replaced and the last
Horizon Counter migrated to the new system in September 2010 and so
there are no longer any Horizon counter systems to examine.
2.6 Section 3 of the report: Conclusions
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Professor McLachlan’s report than attempts to draw some conclusions in
section 3.
2.6.1 Section 3.1 of the report
Section 3.1 queries why it took Post Office Ltd so long to notice the pattern of
discrepancies. Much of the detailed information regarding such
discrepancies is only available within the branch to assist the sub-postmaster
in managing their branch and so is not routinely available to Post Office Ltd
until an investigation is carried out as in this case.
2.6.2 Section 3.2 of the report
Section 3.2 mentions screen calibration issues. I can’t see how this could
account for anything like the full extent of the losses and no scenario has
been presented that could account for any losses due to the miss-calibration
of the screen.
2.6.3 Section 3.3 of the report
Section 3.3 refers to Horizon issues. As stated earlier, the Calendar Square
issue is irrelevant and there is no issue with Travellers’ Cheques.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
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2.6.4 Section 3.4 of the report
Finally in 3.4 Professor McLachlan is challenging the integrity of Post Office
Ltd’s back end systems. My view is that any faults in these systems are
irrelevant to the Branch accounts and hence the losses. This is because, as
stated earlier, any transactions generated from a Post Office Ltd back end
system must be explicitly accepted onto Horizon by a User and cannot be
introduced into the Branch accounts without their knowledge.
I have not examined the data in the appendices in detail. I acknowledge that
any emails included there from myself are correct, but have not examined the
embedded spreadsheets in detail other than where explicitly referenced in
this statement. I note that many of the appendices are not referenced from
the report and there is no explanation as to the basis used to construct them.
I assume that they are all generated from the raw transaction and event logs
that were supplied to Professor McLachlan by Fujitsu at the request of Post
Office Ltd.
2.7 Section 4 of the report: Points of difference between Charles
McLachlan and Gareth Jenkins
Following my initial feedback from the version of Professor McLachlan’s
report I received on 1*t October, he has added in the section highlighting the
points of difference between us. Much of this has been covered earlier in my
statement.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
In general this section accurately reflects comments I have made and
differences in our views. However in section 4.15, there is the statement:
“My understanding from Jenkins is that all Horizon data is passed to the Post Office central systems and
to their data warehouse.”. This may well be Professor McLachlan’s understanding,
but it is not quite correct. Horizon does indeed pass details of all
Transactions to Post Office Ltd’s back end systems, but it does not pass
details of individual Cash Declarations or Variance checks through to Post
Office Ltd’s back end systems. These are recorded purely for the use of staff
in the local branch.
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
3 Analysis of Cash held in Branch 126023
In addition to examining Professor McLachlan’s report, I have also been
asked to look at Cash Balances and Cash held in Pouches awaiting
collection through the period from December 2006 to December 2007.
I have taken values of Cash and Value Stock (as shown on the Stock Unit
Balance reports and Branch Trading Statements) from the detailed logs at
the start of each Trading Period from December 2006 to December 2007.
lve also looked at the Cash and Currency held in Pouches from the
Suspense Account for the same periods and plotted these on a graph. This
effectively reflects the amount of Post Office Ltd money held in the Branch
each month. It can clearly be seen to be increasing and in particular the
Cash and Currency in Pouches increases significantly.
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Cash Movements.
£140,000.00
£120,000.00
£100,000.00
80,000.00
Opening Pouch
‘Opening Cash
Value
£60,000.00
£40,000.00
£20,000.00
£0.00
I’ve also spotted that £3,930.07 of Euros was packed in a pouch on 7th July
and there is no sign of that pouch having been despatched from the Branch
or the pouch being reversed. This accounts for some of the increase in Cash
in Pouches at TP 4.
I also have details of a few pouches which were packed before the Branch
was balanced and the reversed after the Balance was complete:
o A Pouch for £15,000 packed on 10th October in TP 6 and Reversed on
22nd October in TP 7
o A Pouch for £18,000 packed on 14th November in TP 7 and reversed
on 19th November in TP 8
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(CJ Act 1967, s9; MC Act 1980, ss 5A(3)(a) and 5B, MC Rules 1981, r 70)
Continuation of statement of Gareth Idris JENKINS
I can also see that over the 13 month period that £49,120 more of Sterling
was packed into Pouches than was despatched from the Branch. However it
isn’t easy to identify exactly which transactions match up and how this ties
together. Note that this includes the benefit of a Transaction Correction for
£19,260 (the difference would have been £68,380 otherwise).
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