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Post Office Ltd Internal Review of Agents Processes in
Managing Suspected Financial Irregularities
1 Purpose
The Network Services and Transformation Team have been tasked with
conducting a full review of those internal polices and processes
involved with managing agents suspected financial irregularities
and subsequent contractual breaches. The purpose of this document
is to define the scope and deliverables of this review, and seek
ET agreement on the approach outlined within.
2 Background
Post Office Ltd holds legally binding contracts with independents
or companies operating Post Office outlets. Within the framework
of existing contracts, responsibility for cash and stock sits
firmly with the independent or company who are “expressly
forbidden to make use of the balance.. for any purpose other than
the requirements of the Post Office® service”. If misuse of Post
Office funds occurs, Agents may be liable for prosecution and, or,
termination of their Contract.
In order that Post Office Ltd may manage suspected financial
irregularities, internal policies and processes have developed
over time, providing guidance to those employees, namely Contracts
Advisors, whose role it is to manage potential breaches and
implement corrective action. These policies and processes assist
Post Office Ltd in determining the appropriate course of action
for cases of suspected financial irregularity, be it:
e Precautionary suspension
e Written warning
e Contract Termination
The last policy update in relation to the above took place in
January 2002 and existing guidance documentation is ‘black and
white’ and inflexible in terms of its application across the
network. For example, precautionary suspension is considered the
only appropriate course of action where there are financial
irregularities. As a consequence of this approach, several
suspension and termination cases over recent months have resulted
in negative PR and enquiries from Government as to whether our
approach is fair. The NFSP have also raised concerns regarding the
inflexibility of policies and have specifically requested a review
here.
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It is now recognised both internally and externally that existing
policy here may be antiquated, inflexible and may not allow
Contracts Advisors sufficient scope to tailor corrective action to
individual cases, through recognition of mitigating or aggravating
factors. A review of the policy is therefore essential.
This paper seeks to set out the overall aims and objectives of
this policy review and covers:
the scope of the project
its key deliverables
Resource & stakeholder input
an outline project plan
e key interdependencies
3 Scope
The following areas are in scope and will be reviewed in full for
all agents groups with differing levels of priority:
e Business policy for issuing of corrective action such as
written warnings
e Business policy for precautionary suspension
e Business policy for contract termination
e Business policy for Agents appeal hearings
e Business policy for recovery of losses
e Existing processes and procedures involved in all of the
above, including a review of any documentation used and
agent communications.
e Any resultant training required as a result of policy
changes
e Clarification of staff responsibility and senior management
accountability
In addition to the above, a review of the criminal investigation
process is required. This policy and process is currently owned
and administered by the Security team within Royal Mail Group and
is managed independently. It is recommended that this policy is
explored in more detail and if appropriate, handed to the Agents
Development Team for future ownership.
The following areas are out of scope and will not be reviewed:
e Existing contracts - agents’ contractual obligations should
not be weakened although it is recognised that contract
wording will vary through the introduction of new operating
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model contracts as a result of the Network Transformation
Programme.
4 Key Deliverables
a) New and updated policies would be developed for internal use
only that:
e Treat agents fairly and in line with the business’ core
values
e Allow Post Office Ltd to continue to enforce its contracts
where appropriate
e Are clear and easy for Contract Advisors and other internal
teams to follow, offering clear guidance to allow them to
make appropriate and defensible decisions in a consistent
manner
e Provide clarity on accountability and responsibility in Post
Office Ltd Network Services and Transformation Team.
b) A suite of new and improved documentation is required for both
internal and external use that has been approved legally and by
the Internal Communications team.
c) Policies should receive buy in from the Post Office Ltd ET and
the National Federation of Sub-postmasters and provide a means for
all parties to defend the decisions made with some comfort.
d) Any policy or process changes will be communicated to all
relevant parties via the usual policy communication channels, and
documented in an Agency Change Communique.
5 Resource and Stakeholder Input
Project Lead Tracy Marshall (Agents Development
Manager)
Internal Stakeholders Kevin Gilliland (Network & Sales
Director)
Angela Van-den-Bogerd (Head of Network
Services)
John Breeden & Lin Norbury (Contracts
Managers)
Jessica Madron (Legal Services)
Richard Weaver (Internal Communications)
Nick Beal (NFSP relationships)
Mike Granville (BIS relationship & Strategy)
John Bigley (Security)
External Stakeholders George Thomson, Mervyn Jones, David
Milner (NFSP)
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6 Project Plan
No I Milestone Complete
by
1] TOR sign off 24/01/11
2I Existing processes mapped 24/01/11
3I Information gathering and stakeholder input to 04/02/11
precautionary suspensions, contract termination
and appeals policy completed
4I Revised policy for precautionary suspension, 14/02/11
contract termination and appeals policy drafted
and associated documentation reviewed
5I Stakeholder review completed 21/02/11
6I Revised policy for precautionary suspension, 28/02/11
contract termination and appeals completed and
communicated
7I Appeals training completed 18/03/11
8I Criminal investigation process reviewed, mapped 25/03/11
and communicated
9I Losses and recovery policy reviewed and completed I 01/04/11
7 Risks & Issues
No I Risk Description Mitigating Action Value
1I Insufficient time to Review milestones regularly M
complete information and adjust resourcing as
gathering required
2I Lack of NFSP agreement Ensure regular engagement M
to new policy may lead and clear rationale for
to ongoing PR issues policy
Tracy Marshall
17 January 2011
Appendix 1: Precautionary Suspension and Contract Termination Process
38) ofr to box 78
Managing suspected financial irregularities,):precautionary suspension
2) Agert acts misuse of ures?
6) Aa seres rows ot
‘ra and submit to legal services for an opinion before serving notice of ermal
proceeaings.
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Appendix 2: Agent suspensions, re-instatement, contract terminations and appeals:
process map narrative.
Key to Post Office Personnel
Contract Advisor cA Field Support FSA Temporary Subpostmaster TSA
Advisor Advisor
Appeals Manager AM Appeals Admin BAS National Contract Manager NCM
Support
Timescales
Suspension On average this process takes 6 weeks to complete
process (Box 1 —
24)
Appeals process
(Box 26 — 35)
On average this process takes an additional 4 weeks to complete
Box I Supporting narrative
#
1 Branch is audited by FSA(S). Internally a threshold level of £1000 is used to
determine the appropriate course of action at the time.
2a IThere are no issues identified at audit and if the loss is less than £1000, the
of future action. Precautionary suspension is not applied here.
audit is concluded and a report sent to the CA for their review and identification
2b If the audit has resulted in a loss of less than £1000 but the agents has admit
a breach of contract in respect of either a falsification of accounts or misuse
funds, the Contracts Advisor is notified and will issue precautionary suspensio
(see Box 10)
ted
of
mn
3 The CA is informed that there has been a loss identified at audit by the FSA of
more than £1000. The CA is therefore immediately required to intervene.
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4 The CA asks the agent to explain the shortage
5 If the Agent admits that a loss (of any value) is a result of deliberate
falsification by themselves then the decision will be to precautionary suspend as
Post Office Ltd funds have been put at risk.
6 The Agent denies knowledge of the loss
7 The CA will contact the accounts department to check if any issues are known which
might account for the loss.
8 If the accounts department confirm that Transaction Corrections have been received
which would account for the loss proceed to box 9,If not, box 10.
9 The Agent would be advised of this and asked to bring these to account to rectify
the loss. In this case the Agent would not be suspended.
10 I If nothing is known to account for the loss then the CA would most likely
precautionary suspend the Agent on the basis that funds may be at risk because a
large loss has been identified that the Agent cannot account for.
11 ICA confirms contact details for the suspended agent and enquires as to whether
they would be willing to make their premises available to ensure continued service
provision in the community.
12 ICA notifies TSA of the suspension and whether premises are being made available.
13 I If premises are available the TSA would then seek to find a suitable and available
temporary Agent.
14 If premises are not available, arrangements are made to remove cash and stock from
the office as the suspended Agent cannot be expected to be responsible for PO cash
and stock whilst they are suspended.
15 ICA sends letter to Agent confirming terms of precautionary suspension
16 I CA contacts the suspended Agent by telephone to discuss next steps which are: CA
will review of all evidence available. This will include carrying out further
investigations if required. The CA will then;
- Consider whether precautionary suspension is the correct continued course of
action or if the Agent can be reinstated based on the evidence
- Explains that reinstatement may have conditions attached and that if the
evidence points to possible serious breach of the Agent’s contract he/she will be
issued with a ‘charge’ letter inviting him/her to interview to discuss the alleged
contractual breaches,
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- Explains that at any interview the Agent may be accompanied by a friend (must be
POL employee, Agent, registered sub post office assistant or NFSP representative)
to help and support them during the interview and this will be explained further
in any interview invitation
- Explains that if a ‘charge’ letter is issued the Agent can opt to send in
written representation if he/she wishes although we would always encourage them
the attend for interview
To ensure the case is dealt with as quickly as possible and without prejudice to
the outcome of the evidence review the CA will;
- Provisionally book a date and venue for the interview.
- Establish whether the Agent has any specific circumstances or special
requirements which need to be considered when arranging an interview.
- Create electronic case file
- Make notes during the telephone conversation on ‘Contract/Culpability telephone
log’
17
CA reviews the audit report, event capture log & any supporting evidence provided
by the FSA and any other evidence available e.g. from P&BA , Security &
Investigations CA will conduct any further investigations as necessary with other
teams who may be able to contribute. This may include a fact finding interview
with the Agent. CA will decide whether precautionary suspension is the correct
continued course of action or if the Agent can be reinstated based on the facts of
the case.
There are a number of factors taken into account by the CA during the course of
the investigation (both aggravating and mitigating factors). Examples include the
following:
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Aggravating factors:
e The agent had, or had tried to cover up the offence at the time.
e The agent has not admitted the offence from the outset.
e The agent’s record shows that they have a disregard for rules, or that their
general performance is poor.
Mitigating factors:
e The agent was acting under some form of duress, or threat.
e The agent has accepted full personal responsibility for the offence.
e The agent’s behaviour was out of character compared to their track record
generally.
After full consideration of the evidence and factors, a decision is made by the CA
as to whether precautionary suspension is the correct approach.
18
If the decision is to reinstate, the CA will consider whether any further action
is required e.g. whether there are conditions which should be attached to the
reinstatement and whether a warning is required. This will determine whether a
meeting with the Agent is required before the Agent can be reinstated.CA must
document the rationale for his/her decision and inform internal stakeholders to
ensure any associated conditions of reinstatement e.g. debt repayment, additional
training are actioned. Where no temporary Agent is in place the TSA will arrange
to fund the branch with cash and stock.
19
CA will advise NCM of reinstatement cases and the date that the case is
finalised.CA will arrange for formal reinstatement letter to be sent. CA will
complete and close the electronic case file
20
Arrange for TSA to give notice to the temporary Agent once date of reinstatement
known and for the transfer of the branch from the temporary Agent
21
CA notifies suspended Agent of ‘charge(s)’ and confirms suspension interview
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date/time/venue. Send ‘charge’ letter to Agent
22
Suspension interview takes place or written submission received. If an interview
takes place the Agent may be accompanied by a friend, family member or a
representative from the NFSP. The interview is recorded and the Agent is given a
copy of the recorded interview along with the interview notes. The CA will then
conduct any further investigation that may be required following the interview or
receipt of the written submission.
23
CA completes all investigations, reviews all of the information available to
him/her and compiles a decision document which summarises the case and their
conclusions with rationale for their decision. CA updates electronic case file
with further investigation material, any papers produced at the interview by the
Agent, their decision document and the decision letter
24
Notify suspended Agent of decision. Discuss next steps. Send decision letter. If
decision is to summarily terminate the Agent is offered opportunity to appeal. An
appeal would constitute a ‘’re-hearing’ of the case by a trained appeals manager
with no previous involvement in the case. This is to guarantee a fair and
impartial hearing for the appellant. If the decision is to reinstate put steps in
place for this to happen (refer to box 19.)
25
Contact Network Change team to analyse future service provision in the location
26
Establish if notification has been received from terminated Agent in respect of
his/her right of appeal. If no appeal, arrangements to be made for vacancy report
to be prepared, debarment form completed where appropriate and arrangements made
for debt recovery if debt is still outstanding.
27
Send acknowledgement of receipt of request for an appeal hearing to terminated
Agent.
28
Complete appeal case facing sheet and refer to Appeals Allocation Duty. Confirm
with allocated AM whether any hard copies are required of the case papers. Arrange
for transcription of the suspension interview notes and send copy to the Agent.
Prepare electronic case papers and send to AM along with an electronic version of
the decision document.
29
AAS contacts appellant and NFSP representative to discuss how appeal will be
conducted (face to face encouraged but can be by written representation) and
agrees provisional date. AAS confirms appellant has copies of all the papers which
the AM will use during the appeal
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10
30
Date of appeal notified formally by letter and copies of any documents not already
provided supplied to appellant. It is also made clear that the appellant is
entitled to be accompanied by a friend, family member or a representative from the
NFSP
31
AM reviews case file and carries out any additional enquiries in advance of the
interview. Any enquiries documented and any additional paperwork provided to
appellant
32
AM conducts appeal interview. The appeal hearing is recorded on request of the
appellant. If recorded, the appellant will receive a copy on the same day. AM
conducts any further investigations required as a result of information provided
during the appeal hearing or as part of the written submission
33
AM completes all investigations, reviews all of the information available to
him/her and compiles a decision document which summarises the case and their
conclusions
34
AAS updates electronic case file with further investigation material, any papers
produced at the interview by the Agent, the AM’s decision document and the
decision letter
35
Final decision notified to appellant in writing.
36
Refer to box 18. Deals with cases where appeal is upheld.
37
A vacancy report will be completed so that the resulting vacancy can be
advertised, if the premises are made available it will be advertised ‘at or near’
the existing premises. The CA will complete the debarment forms so that the
offender is not able to become a POL agent in the future. If there is an
outstanding debt further action will be taken, see below.
38
The ex-agents debt team will write to the ex-agent to recover any outstanding
debts, including those that have arisen from normal counter transactions.
39
Should the ex-agent not repay any monies owed, recovery by civil litigation will
be considered by way of a risk assessment. That process is separate to the process
described above.
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