Filed on behalf of the: Defendant
Witness: Angela Van Den Bogerd
Statement No.2
Date Made: 16 November 2018
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
THE POST OFFICE GROUP LITIGATION
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ROYAL COURTS OF JUSTICE
BETWEEN:
ALAN BATES & OTHERS
Claimant
AND
POST OFFICE LIMTED
Defendant
SECOND WITNESS STATEMENT OF
ANGELA MARGARET VAN DEN BOGERD
I, ANGELA MARGARET VAN DEN BOGERD of 1* Floor, Ty Brwydran, Atlantic Close,
Llansamlet Swansea SA7 9FJ WILL SAY as follows:
1 I am the Business Improvement Director at Post Office Limited (Post Offi
am authorised to make this statement on behalf of Post Office.
2. The facts set out in this statement are within my own knowledge, or if they are
outside my knowledge, I have explained the source of my information or belief.
THIS STATEMENT
3. This statement is being filed for the purpose of a Horizon Issues Trial. It responds
to aspects of the evidence and allegations asserted by the Claimants through
their witness evidence and the report of their expert, Mr Coyne. It is a
compendium of individual responses to different allegations rather than a
narrative on the operation of Horizon. The following areas are covered:-
3.1 Corrections to factual points about Horizon made by Mr Henderson of Second
Sight in his witness statement
3.2 Responses to certain claims about Horizon made in six witness statements
served by the Claimants for the Horizon Issues Trial (namely Singh, Anup and
‘AC_152766498_3 1
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3.3
34
3.5
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Akash Patny, Tank, Latif and Burke, which together I refer to as the
‘Subpostmaster Evidence) — see paragraphs XX below.
Responses to certain claims about Horizon made by the 6 Lead Claimants in
their witness statements for the Common Issues Trial - see paragraphs XX
below.
Responses to certain claims made by Mr Coyne, the Claimants’ IT expert, in his
expert report — see paragraphs XX below.
Other relevant matters — see paragraphs XX below.
I understand from Post Office's solicitors that I have not been asked to respond to
every allegation in the above witness statements because, first, some of those
allegations are not relevant to the Horizon Issues and, second, the Horizon
Issues trial was not designed to determine individual claims. On the basis that
many issues raised in those documents are outside the scope of the Horizon
Issues trial,I have been informed that I should not respond to them in this
statement.
‘A common theme in my responses is that the evidence put forward by the
Claimants does not concern a bug, defect or error in Horizon (ie. a Horizon-
generated loss as defined in paragraph [x] of Post Office's Generic Defence).
They often appear to assume that alleged losses, shortfalls or other problems
must have been caused by Horizon. Given the unspecific nature of many of the
allegations made and that some relate to things that are said to have occurred
years ago, it is not now possible in this statement for me (and may not be
possible for anyone else) to definitively state what may or may not have
happened in each case. Instead, my evidence aims to give the Court a balanced
view of the range of possible causes behind each allegation because I believe
that, assuming the basic facts alleged by the Claimants are true, there is a
plausible and much more likely explanation than the problem being caused by
Horizon. The most common alternative explanation is that there may have been
an accounting mistake or a user error by the Subpostmaster, his assistants or
Post Office.
References below to paragraphs are to paragraphs of the witness statement I am
‘commenting on. For example, a reference to "paragraph 2.5" in the section
below regarding Mr Henderson's evidence means paragraph 2.5 of Mr
Henderson's statement.
Page references are to pages of my exhibit, AVDB2.
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
MY BACKGROUND
8.
My background is set out in my first witness statement. In the context of this
statement, I would emphasise that in many of my roles I have frequently had
direct contact with Subpostmasters and have frequently been involved in
investigating concems raised about operations of branches.
IAN HENDERSON
9.
At paragraph 2.4, Mr Henderson says that he analysed some transaction data
provided to him. I do not know to what transaction data he is referring or what he
means by him being able to "reverse-engineer" this data.
He goes on at paragraph 2.5 to assert that:
"My analysis of this sample data showed a number of matters which gave rise to
concerns:
a) Transactions occurring outside of normal working hours
b) Transaction associated with ID's other than the relevant sub-Subpostmaster;
and
c) Gaps in the numeric sequence of transactions”
I comment on matters (a) and (b) below. Point (c) I believe is about Journal
Sequence Numbers which are addressed in the statements of Torstein Godeseth
of Fujitsu.
Transactions outside of working hours
12,
Mr Henderson has not provided specific examples of transactions occurring
outside of normal working hours or transactions not associated with the
Subpostmaster. None are cited in Section 14 of Second Sight's Briefing Report ~
Part 2 ("the Part 2 Report") which addresses these issues. At paragraph 2.6 of
the Part 2 Report, he accepts that he did not reach a conclusion on these issues.
Nevertheless, the impression that Mr Henderson appears to be trying to give is
that there may be some improper conduct by Post Office or Fujitsu or an error in
Horizon that has led to transactions entering a branch's accounts without the
knowledge of a Subpostmaster.
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14.1
14.2
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
There are a number of plausible and legitimate explanations for this which I set
out below. For the sake of clarity, I categorically confirm that I am not aware of
any improper conduct by Post Office or Fujitsu like this, or of any reason why
Post Office or Fujitsu would engage in such conduct.
From my experience of working with Subpostmasters, there are a number of
situations that might explain alleged “out of hours" transactions rather than
hardware issues:
The core hours of a Post Office branch are typically around 9am to 530pm, but
have varied over the years and with the size of the branch. The wider retail
business in which the branch is located may be open earlier and / or later.
There are a small number of Post Office products that are transacted on
separate equipment which may then appear in Horizon like a transaction has
happened outside the core hours of 9am - 530pm. For example, Paystation
transactions are conducted on a separate terminal and therefore can be
processed out of hours (they appear as *PS98 in the transaction logs that are
available from Horizon). Also, branches accept transaction acknowledgments
(TAs) in relation to the previous day's Paystation transactions when they log into
Horizon in the morning and the TAs are associated with the user ID of the
person that accepts them.
Another example (rare in my experience) is that if a user has not completed any
work on Horizon for 59 minutes then there will be an enforced system log out.
This is a security feature and applies to every branch. If the user has started to
process a transaction or transactions but has not completed them before the
enforced log out, they are automatically completed when the user is logged out.
If there is a payment due to or from the customer, the session (ie. the.
transaction or transactions sitting in the stack that have not been completed) is
settled to cash and a receipt is automatically printed. This may then appear to
the Subpostmaster like a transaction being completed without their input. This
would however be a rare occurrence and only occur where the Subpostmaster
had not followed Post Office operating procedures as each transaction should
be immediately completed on Horizon in real-time whilst the customer is
present.
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14.3
144
145
14.6
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
One explanation I have come across before is that the Subpostmaster simply
forgets that they have completed the transaction out of hours. In my experience
this is more likely to happen if the Subpostmaster has not been doing their
accounts properly (je.in accordance with Post Office guidelines). One needs a
more general sense of whether the Subpostmaster is acting diligently in order to
assess whether this may have occurred in any particular case.
Alternatively, it may be that the transaction was undertaken by an assistant
without the Subpostmaster's knowledge. It should be kept in mind that some
branches have connected residential accommodation or are run by family
members and so it may be that assistants have unsupervised access to Horizon
outside core hours.
I would also not rule out the possibility of fraud by the Subpostmaster or an
assistant. A strange transaction processed outside of core operating hours
would warrant consideration of this possibility
Before looking at any of the above, I would want to confirm that the alleged
transaction actually exists and that the Subpostmaster is not innocently
mistaken. If raised in a timely manner with Post Office, this can be done by a
quick review of the transaction data, which can also be done by the
‘Subpostmaster accessing the transaction log (available in branch for 60 days;
42 days pre Horizon online) on Horizon.
Transactions not associated with a Subpostmaster's user ID
15.
16.1
In relation to Mr Henderson's statement that he found transactions associated
with IDs other than the relevant Subpostmaster, this is an unsurprising finding for
the reasons set out below.
Subpostmasters have a unique user ID and password for Horizon with
authorisation status so that they can grant a unique user ID and password to
each assistant. User IDs and passwords should not be shared. This requirement
is detailed in several places, including:
the SPMC (see section 1 clauses 5, 14 and 15);
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16.2 the Horizon System User Guide (hard copy) (which was provided to branches
16.
18.
18.
18.
when Horizon was first introduced)! and Horizon Online Help (which came into
use when Horizon Online was rolled out); and
3 the Security Operational Manual (the booklet that is provided to all
‘Subpostmasters in branch and provides staff with the information required to
adopt basic good security practices with the aim of keeping branch staff safe
and Post Office assets secure).
Whenever a user logs on or off Horizon, the logon and logoff is recorded. All
iD.
Transactions are conducted across the Post Office network every day by
transactions conducted by that user are logged against that user's
assistants with those transactions not being associated with the User ID of the
Subpostmaster, but being associated with the assistant's User ID. Mr
Henderson's finding reflects the ordinary conduct of business in branches.
If Mr Henderson means that transactions are associated with the Subpostmaster's
User ID that the Subpostmaster did not conduct, then there are a variety of
explanations for this.
4 The most obvious explanation is that the Subpostmaster has shared his User ID
and password with someone else. I have seen this happen in many branches
over the years and have even walked into branches to see the passwords
pinned to a noticeboard or on a Post-it note stuck to the Horizon screen.
.2 Amore technical explanation (but very rare) is if there is a connectivity issue
when a user (User A) is processing a transaction. A different user (User B) is
then the first to log onto the Horizon terminal when the connectivity issue has
been resolved. Any recovery action taken by User B will be logged against their
user ID. However, Horizon will also record that User A undertook the original
interrupted transaction, which may appear as if a transaction was completed by
User A when it was not.
3 I am not aware of any other reason the user ID could be affected. (Note: we are
+ Equivalent instructions have been given in all user guides provided to Subpostmasters
since the introduction of Horizon.
2
Equivalent instructions have been given in all such manuals provided to
Subpostmasters since the introduction of Horizon
6
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‘Commented [ALP11]: Rod Comment - the logs could also
show people other than the SPMR / assistant. IE if there was
‘an audit that then would be logs showing the auditors user ID.
Could also see the user IDs of FJ or other POL staff.
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Foreign currency transactions
19.
20.
Pa)
22,
At paragraphs 2.8 - 2.10, Mr Henderson talks about foreign currency
transactions. He does not allege that there was any defect in Horizon that was
causing shortfalls in branches related to foreign currency transactions. Instead,
his belief is that prior to 2004 the way foreign currency was recorded on Horizon
meant that it "was not able to identify any of the individual transactions”,
Prior to 2004 the Bureau de Change in branches used the Forde Moneychanger
machine (FMC). The FMC was a foreign exchange calculator that performed
various functions, primarily the selling and buying back of currencies and
travellers cheques. Customers would receive from the FMC printed receipts for
each transaction and the branch would receive a paper record for each
transaction performed. There was therefore available to the Subpostmaster a
complete record of all individual transactions, albeit this information was held in
paper form rather than on Horizon. This information could be compared to the
figures entered onto Horizon and could be used to identify and challenge any
discrepancy. This point is acknowledged at paragraph 9.5 of the Part 2 Report.
Further, branches were required to check all foreign currency entries into Horizon
against the FMC entries on a daily and weekly basis. As part of the process for
entering foreign currency figures onto Horizon, branches were asked ‘are you
sure? before the figures were accepted into Horizon. This should have helped
branches to identify any discrepancies at an earlier stage.
For the sake of completeness, I note that the Part 2 Report also refers to a
particular Subpostmaster who had a £645,000 loss relating to foreign currency
(paragraph 9.1). I believe that this relates to Mr Carl Page, who is a Claimant in
these proceedings, and who was convicted of theft in February 2006 after
entering a guilty plea.
Lottery transactions
23,
At paragraphs 2.11 — 2.13 Mr Henderson comments on the accounting process
for Lottery transactions. This point is also addressed at section 10 of the Part 2
Report. I note that neither in his statement, nor in the Part 2 Report, is there any
evidence that the alleged problems with Lottery products stem from a bug or
defect in Horizon. Rather, this appears to be a challenge against Post Office's
accounting processes for reconciling the records of Lottery transactions in branch
against records kept by Camelot (the provider of Lottery products and Post
Office's client). Specifically, Mr Henderson suggests that the processes led to
discrepancies which, although remedied by transaction corrections (TCs), hid
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24,
25,
26.
26.1
26.2
26.3
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
“real discrepancies from view, such that they remained un-investigated and
uncorrected, thereby turning potentially recoverable errors into real losses." I do
not therefore believe that this evidence is relevant to the Horizon Issues.
Nevertheless, for the sake of completeness I quickly explain below what is meant
when Mr Henderson says "a branch's Horizon system would get ‘out of sync’ with
the quite separate Camelot system” and why this does not mean that there is a
defect or bug in Horizon
Lottery products sold in Post Office branches need to be transacted on a separate
piece of equipment supplied by Camelot, the lottery terminal. The lottery terminal
is a separate system to Horizon — there is no direct data feed from one system to
the other. There are a variety of lottery products (lottery tickets, scratch-cards,
etc.) and a number of different types of transaction (remittance in of stock, sales,
prize payouts etc.) but Mr Henderson's evidence is focused on the process for
scratchcard activations. The process for this changed following the introduction
of a solution called PING in 2012 because some branches were not following the
original process and this was leading to discrepancies in their accounts.
Although those discrepancies were corrected by TCs, the practice that developed
in some branches (which was contrary to correct procedure) may have made it
more difficult for them to identify and remedy other errors in their accounts.
Ihave summarised both processes below.
Before PING
Packs of lottery scratch-cards need to first be activated on the lottery terminal
(prior to sale) by scanning the barcode on the pack. This would send data from
the lottery terminal to Camelot confirming that the pack of scratch-cards was
activated. Failure to do this would result in customers being unable to claim
prizes on un-activated winning scratch-cards. Because of this, un-activated
scratch-cards had no value and were not classed as branch stock even though
they might be physically in the branch.
Once activated, Lottery scratch-cards had a stock value and needed to be
booked in on Horizon as a "Remittance In”.
Camelot's data on activations was compared to the "remittances in" recorded on
Horizon on a regular basis. If everything was done correctly, the two should
match. If not, a discrepancy would be flagged which could have (depending on
the circumstances) resulted in a TC being sent to the branch. Where the two
figures did not match, this is where Mr Henderson says that they are "out-of-
syne". There are many explanations as to why the two figures do not match, the
8
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26.4
26.5
26.6
26.7
26.8
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
simplest of which is that the branch had (i) activated a pack without remitting it in
to Horizon or (ii) remitted a pack in to Horizon without activating it.
By around 2010, the level of TCs from lottery soratch-cards had begun to grow.
A practice had developed in some branches whereby they would activate the
scratch-cards but wait for the transaction correction a few days / weeks later
rather than actively remitting in each pack on Horizon. They did this because it
saved them a litle bit of time, but it caused their accounts to become confused
(because they would be selling scratch-cards without first having recorded the
inbound scratch-card stock).
Post Office therefore changed the accounting process in 2012 with the
introduction of PING,
After PING
The process post PING for activating Lottery scratch-cards is unchanged. They
are still required to be activated on the lottery terminal
The requirement to enter the scratch-cards by way of a "Remittance In’ on
Horizon ceased. Instead, Transaction Acknowledgments ("TAs") were
introduced. Every night, Camelot reports to Post Office the number of
activations in each branch and Post Office sends that information overnight to
each branch as a TA. The TA then needs to be checked and accepted by the
branch when they first logon the next morning.
Following the introduction of PING, the volume of Lottery TCs reduced
‘substantially.
Other matters raised by Mr Henderson
27. Paragraphs 2.2 - 2.3 are addressed by other witnesses, namely Torstein
Godeseth and Steve Parker who work for Fujitsu. I have not responded to
paragraph 2.7 as this appears to relate purely to the reconciliation process and
not to the Horizon system, Paragraphs 2.14 - 2.16 are addressed by my
colleague, Dave Uohnson.
SUBPOSTMASTER EVIDENCE
28. The Claimants have submitted evidence from 4 former Subpostmasters, a son of
a Subpostmaster and 1 assistant of their personal experiences of alleged
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(Commented [ALP13]: Do we have data to prove this? _}
(Commented [AV4]: WBD ~ can you insert please )
(Commented [ALP15]: Which relate to what?
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29.
29.4
29.2
29.3
29.4
30,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
problems in Horizon. I respond below to this evidence explaining why I believe
there is a plausible and far more likely alternative explanation for the difficulties
each witness encountered such that the Claimants’ evidence does not support
the view that they suffered from bugs or defects in Horizon.
It has been a difficult process to investigate the claims made in this evidence for a
number of reasons:
Post Office had only very limited time in which to respond to it.
‘Some of the matters date back a long time, meaning that relevant records do
not exist or have been difficult to find.
A number of allegations are very vague referring to general shortfalls over long
periods without associating those shortfalls to particular issues, events,
transactions or dates. I do not address those sweeping allegations in this
‘statement as there has been insufficient time to do the sort of investigation
needed before I could form a view on them.
Mixed in amongst the allegations about Horizon are allegations about other
matters such as calls to the Post Office helpline and audit processes. I have
been told that these matters are not relevant to the Horizon Issues and I have
not addressed them in this statement.
To prepare this evidence, I have had to rely on a small team of people at Post
Office (predominately former trainers and auditors who have complimented their
hands on branch knowledge with investigative skills honed from several years of
investigating claims of accounting issues in branches) to help me investigate the
allegations raised. We have only had time to investigate the clearly particularised
allegations. Where an allegation is not addressed below, it should not be taken
to mean that I agree with it.
SETPAL SINGH
31.
Mr Singh has described a number of matters during his time as Subpostmaster at
Reddish Post Office between January 2001 and October 2003. It has been
difficult to obtain any documentary evidence relating to the matters referred to as
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32,
32.1
32.2
32.3
33,
34,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
they occurred over 15 years ago and is outside Post Office's normal periods for
retaining documents.
By way of further explanation of the data held both in branch and available to
Subpostmasters by requesting the same from Post Office, including the standard
retention periods:
Filtered Transactional data - including transactions processed by the particular
Post Office branch relating to customers. The standard retention period for this
data held in branch was between 2 and 6 years (daily documentation/reports
were held for 2 years and weekly reports/documents were held for 6 years). In
addition, users can access a log of the transactions conduced in branch over the
last 60 days on Horizon (42 days in Legacy Horizon).
Unfiltered Transactional data — also referred to as ‘event data’ including all
transactions processed by the branch — for example if a connection was lost to
the network then this would show on the event data/ Unfiltered Transaction data
log and would be seen as a transaction. Users can access events logs on
Horizon which cover the previous 60 days' activity (42 days in Legacy Horizon).
Audit Request Query data ("ARQ Data”) — this includes all Filtered and
Unfiltered Transactional data and is held by Fujitsu on behalf of Post Office.
ARQ Data is normally retained by Fujitsu for 7 years from the date of the
transaction. Due to the Mediation Scheme and this litigation, Fujitsu is currently
holding Transaction data back to around October 2007.
We do still retain call logs for the NBSC (which is often referred to as the Helpline)
which date back to 2000 and where these are relevant, I refer to them below.
Mr Singh has referred to four groups of issues in his statement and I comment on
each of them below adopting the headings used by Mr Singh for ease of
reference only.
The Phantom Transaction
35.
At paragraphs 6 — 11, Mr Singh refers to a "Phantom Transaction". As this event
is alleged to have happened 15 years ago, Post Office has not been able to find
any relevant documents in the time available relating to it. The data described
above is no longer available and, while NBSC call logs are available, there is no
record of Mr Singh reporting such an issue. I am not therefore able to confirm or
deny definitively whether a "Phantom Transaction” did or did not occur.
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I note however that there are a number of inconsistencies and gaps in Mr Singh's
evidence which lead me to believe that there is likely to be an alternative
explanation as to what may have happened.
Mr Singh says that he "opened the Branch and saw that Horizon was showing a
discrepancy of £1m". At no time has Horizon automatically displayed a
“discrepancy” when a user first logs on to a terminal at the start of the day. To
generate a discrepancy, a comparison is needed between the actual cash and
stock in the branch and the position recorded on Horizon. The former requires a
manual count of cash and stock and for the relevant figures to be manually input
into Horizon. For Horizon to show a discrepancy, Mr Singh must therefore have
pressed the sequence of buttons needed to call up that information on Horizon.
Post Office's operating practices have never required Subpostmasters to run
discrepancy reports at the start of the trading day. If this discrepancy was shown
at the start of the day as Mr Singh says, this leads me to believe that Mr Singh
must have had some (unstated) reason for running a discrepancy report then,
suggesting that he was perhaps aware of an issue before Horizon provided him
with information on the "Phantom Transaction".
Mr Singh also says that there was a "discrepancy of £1m relating to the purchase
of stamps". This gives rise to two possibilities: either that the stock holdings for
stamps were overstated leading to a shortfall of actual Stamps in branch or the ‘Commented [ALP16]: Rod comment — actual stamps in
branch
cash holdings were overstated leading to a shortfall of cash. Mr Singh's evidence
is unclear on this point as in paragraph 8 he talks about tallying up all the stock
and says his branch ‘never held £1m worth of stamps at any one time"
suggesting that the discrepancy was a shortage of stamps. This does not
however align with the problem being caused by a "purchase of stamps" which
for the reasons explained below would lead to shortage of cash and surplus of
stamps. I suspect he means that there was a shortage in the cash holdings and I
assume this to be the case in my comments below but without the branch
transaction data, I cannot now check this point.
Assuming it was a cash discrepancy, Horizon would simply have stated that there
was a shortfall of cash. It did not (and still does not) have the ability to determine
that a £1m shortfall of cash related to any particular erroneous transaction or
product. It was not therefore possible that "Horizon was showing a discrepancy
relating to a purchase of stamps". Horizon would only show a cash shortfall and
would not know that it related to stamps, nor has there ever been any report
generated from Horizon that automatically would show this information.
The above analysis leads me to believe that Mr Singh must have undertaken
some form of investigation into the £1m shortfall in order to make the association
12
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4.
42.
43.
44,
45.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
with a suspected stamp transaction. He may have done this by running a
transaction log showing all transactions over the last few days and then filtering
to only high-value transactions, say anything over £100,000. Given that it would
be very unusual for a branch to conduct a transaction for over £100,000, a stamp
purchase for £1m would clearly stand out.
Mr Singh goes on to say that he "immediately printed out a receipt from Horizon
which stated that the Phantom Transaction occurred on a Monday at 12:45am". I
do not believe this to be correct. Horizon does not have the functionality to
retrospectively produce a receipt for a particular transaction. The more likely
explanation is that Mr Singh ran a transaction log (as described above) perhaps
with manually applied filters that meant that the log only showed one transaction
meeting that criteria
Mr Singh says the erroneous / improper transaction related to a “purchase of
stamps". By purchase of stamps I presume he means a sale of stamps to a
customer, rather than an inbound remittance of stamp stock to the Branch from
Post Office. I also assume that the sale of stamps was recorded on Horizon as
being paid for by cash (and not cheque or card payment - in relation to a card
payment, this would not have generated a discrepancy). Clearly no customer
would ever walk into a Post Office branch and buy £1m worth of stamps.
Nevertheless, had this transaction been put through Horizon, it would have
resulted in a £1m increase in the cash position and a £1m decrease in the stamp
position, At this time in 2003, branches balanced their accounts every week on a
Wednesday afternoon. Had the "Phantom Transaction" occurred on Monday
morning, it would have been corrected in the natural course of branch accounting
by Wednesday afternoon when the branch declared the number of stamps on
hand in the branch.
The above analysis is in addition to the obvious point that Post Office would never
demand a £1m payment from a Subpostmaster as that amount would be so
extraordinary that I would be very surprised if it would not prompt much deeper
enquiries into what had happened at the Branch before any action was taken.
Based on the above, the £1m discrepancy in the branch could have simply been
‘a mis-key error by branch staff. Or, it may have been that someone was
attempting to balance the accounts, made a manual adjustment to the stamp.
position (which could have been misread and taken as a purchase of stamps)
and accidentally created the discrepancy.
I have investigated a number of issues over the years where Subpostmasters
have claimed that there have been transactions conducted that they did not do,
13
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46.
47.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
sometimes because they say they happened outside of trading hours. These
investigations have revealed a variety of true explanations, including
Subpostmasters forgetting that they actually did the transaction (as shown by
CCTV in the branch), transactions being conducted by assistants or family
members (including cases where passwords have been shared so that Horizon
thinks that the Subpostmaster has logged on but it was someone else) or the
Subpostmaster claiming that they did not undertake a certain transaction in an
attempt to cover up their own errors. In the current case, if we had the
transaction logs, the first thing I would have looked at was the user ID against the
“purchase of stamps” transaction as that may then help find the root cause.
Mr Singh has also described an independent audit of his branch and has claimed
that he was not permitted to enter his branch or flat when the audit was being
carried out. This is not the normal procedure. For any audit undertaken at a
branch, it is normally done in the presence of the Subpostmaster (or a nominated
assistant) who will be required to check the audit as it proceeds. The only
circumstances I can think of where the Subpostmaster would be excluded from
‘an audit being undertaken within their branch would be where there are
allegations of theft or fraudulent conduct. In Mr Singh's case, he recalls what the
auditors said to him during the audit (para 10 of his statement) that the alleged
limitations in Horizon “appeared to cause the auditors difficulty as well". It
appears to me that Mr Singh could only recall these things if he did attend the
audit, but I have so far not been able to find any further information on the
conduct of this audit to confirm this.
As to the allegation that Post Office or Fujitsu "reversed the transaction", one
possible explanation for this was that an error was made (see above) and then
corrected by way of a manual adjustment to the level of stamp stock. If the level
of stamps was manually adjusted upward (offsetting the "purchase of stamps")
this would automatically move the cash position down, thereby eliminating the
discrepancy. As short-hand a Subpostmaster might refer to this as a "reversal"
but in fact itis two opposite and offsetting transactions within the accounts. This
could have been done by Mr Singh or an assistant (with or without his
knowledge) or by an auditor during an audit using global user access (though this
would have recorded the transaction against a unique user ID being
distinguishable from transaction by branch staff. Alternatively, an error notice
(the forerunner to TCs) may have been sent to the branch and accepted by
someone at the branch. Again, this might have looked like a reversal but would
actually have been an offsetting additional transaction
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48.
49.
50.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
In my view there are other viable explanations for the "Phantom Transaction” (if it
did happen at all) other than that it must be a bug in Horizon or the editing of
transaction data by Post Office or Fujitsu and these alternative explanations are
far more likely in my view.
Mr Singh also alleges (in paragraph 11) that "Horizon's limitations in terms of
access to data and reporting functions made it impossible for me to find the
source of the error’. I don't understand this allegation when (on his evidence) he
says that Horizon told him that the error related to a purchase of stamps that
occurred at 12:45am on a Monday morning. It seems to me that, on his story, Mr
Singh had all the necessary data and indeed was able to find the source of the
error.
Finally, I would expect any Subpostmaster with a problem on this scale to have
contacted Post Office immediately for help. I note that the NBSC call logs have
no record of Mr Singh contacting Post Office to complain about, or seek
assistance in relation to, a major stamp problem or a missing £1m.
Further technical issues
51.
52.
At paragraphs 12 — 16, Mr Singh refers to occasions when he says Horizon froze
or the screen would go black or otherwise close down. This could happen if the
system crashes, there is a loss in power, or the system loses connectivity to the
internet. The latter two matters are outside of Post Office's control. The former
is too vague an allegation for me to comment on specifically. However, as
explained below, Horizon has processes built in to address all three of these
situations.
Before doing so, I note that had Mr Singh's issues been raised today (i.e. at a
time when the relevant data would still be available), the first step would have
been to review the Horizon transaction and event logs. These would record any
loss of connectivity. A loss of power or full system crash can be seen where a
user logs on, but due to the system crash or loss of power, there is no
corresponding log off recorded. Back to back logons is a sign of a power failure
or crash. This initial step of investigation would then allow a targeted review of
specific events or times to see what transactions were in progress at the time of
the failure. In my experience, the number of transactions affected by these
events are very small compared to the total number of transactions conducted in
a branch and therefore targeted investigations can usually be undertaken. This is
of course not now possible in the case of Mr Singh because the data is no longer
available.
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
53. When the system, power or connection is restored, the user is (and has always
been) presented with a recovery process if they were in the middle of processing
a transaction or transactions when the system went down. They are asked to
confirm through a series of questions presented on the screen whether cash was
handed to or taken from the customer. This is to ensure that any interrupted
transactions are recorded correctly. Depending on the information provided by
the user the transaction would either be completed or cancelled. If the user puts
incorrect information into the recovery process then this can lead to a shortfall or
surplus. In this way, a shortfall following a crash of Horizon (or a power failure or
a loss of connectivity) does not automatically mean that a defect or error in
Horizon was the cause of the shortfall. It is more likely to be a subsequent user
error. If there was no transaction underway at the time of power loss then the
recovery process would not be initiated.
54. User error may also explain the "doubling up" of transactions asserted in
paragraph 12. A good example of this is a cash withdrawal from a bank account.
Say, a customer wants to withdraw £100 but the Subpostmaster accidentally
presses cash deposit. Horizon will record £100 in cash being received, but the
Subpostmaster will have handed £100 cash to the customer. This in effect
creates a £200 shortfall. Without identifying the specific transaction that has
"doubled up", reviewing the transaction data for Mr Singh's branch and getting Mr
Singh's recollection of the real transaction undertaken with the customer, it is not
now possible for me to determine the root cause of this allegation.
Balancing at the Branch
55. I do not understand what Mr Singh is saying in paragraph 17 and 18 of his
statement. He appears to suggest that there was a shortfall "[ejven if all items
showed and the money balanced", which does not make sense. I cannot
‘comment further on this without more information but my guess is that Mr Singh
may be confused about what was being shown in the branch accounts.
56. _ I also do not recognise the process that he describes in paragraph 19. Records
show that two calls were made to NBSC about reversals on 22 February 2001
and 13 February 2002 [] (exhibit), but it is not clear whether or not this complaint
relates to any of these calls as Mr Singh has not provided specific dates. One of
these calls was resolved by NBSC and one was transferred to the Horizon
Service.
WBD_000067.000016
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Shortfall of £2,000 - October 2003
57. At paragraphs 20 - 21, Mr Singh refers to a shortfall that he says was "in relation
to the Lottery termina. Again, due to the fact that this happened 15 years ago,
Post Office has been unable to obtain the details about this particular issue other
than the NBSC call logs that detail no discrepancies were reported in Oct 2003.
However, if there was an error it appears to have been corrected based on Mr
Singh's statement
58. I refer to paragraphs XX above responding to Mr Henderson's criticisms of Post
Office's lottery processes. As stated above, a shortfall associated with Lottery
products may be an accounting issue or the shortfall may have been caused by
user error rather than this being evidence of a problem with Horizon.
ANUP AND AKASH PATNY
59. The above witnesses are father and son, with the father (Mr Anup Patny) being
the Subpostmaster and Mr Akash Patny being his assistant. They refer to two
principal issues.
Monthly Balance - 11 May 2016
60. The Patnys allege that a Horizon system outage on 9 May 2016 caused their
branch accounts to show a £17,000 shortfall when they produced the end of
month accounts two days later. There are a number of inconsistencies in this
story which make me believe that this shortfall was likely caused by user error.
62. _ I refer to paragraphs XX = XX above, regarding the recovery processes built into
Horizon in this situation
63. Mr Anup Patny states in paragraph 7 that he contacted the Helpline, but the call
logs (page XX) do not show that any call was made by this branch on 9 May
2016 as alleged. However on 11 May two calls were made. One was a foreign
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(Commented [AV7]: WED - I don't have this info - do you? I
WBD_000067.000017
64,
65.
66,
67,
68,
69,
70,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
currency query and the other was that the branch was balancing and had a
£17,000 shortage.
Fujitsu have extracted the transaction and event data for the Patnys’ branch
around this time (exhibit), The data shows signs of a system outage on 9 May
2016. At the time of the outage a transaction was underway for the sale of two
postage labels at a value of £{x], The labels were printed but the transaction was
interrupted before it could complete. In a worst case scenario, the
Subpostmaster may have given the postage labels to the customer and collected
the payment (which would have had to have been cash, because the pinpad will
not work without the Horizon terminal) without following the correct recovery
process. This would have resulted in a very small surplus, not a shortage.
On 11 May 2016, the Patnys allege that there was an incorrect entry in their
branch accounts for the remittance in of £16,000 of £1 coins, which they then say
led to a shortfall at the end of day of over £17,000 at the end of 11 May 2016.
The branch's transaction and event data does not support this version of events
as explained below:
‘Three pouches of cash were remitted into the branch on 11 May containing a total
of £48,100. There was only £1,000 of £1 coins, however one of the pouches
totalling £20,500 did contain £16,000 of £10 notes in addition to £4500 of £5
notes
Looking at the cash declaration carried out that evening by the Patnys, I would
suggest that at least some of these £10 notes were not counted as the
declaration shows just £22,000 of £10 notes, even though £16,000 of £10 notes
had been declared the previous evening and the branch had received a further
£16,000 of £10 notes that moming (i.e. the branch should have been holding
something closer to £32,000 in £10 notes). The cash declarations on 12 and 13
May are for £37,000 and £35,000 respectively of £10 notes which suggests that
the missing £10 notes were found the next day.
When the branch was balanced on 11 May, a cash loss discrepancy of
£17,339.37 was recorded, which accords with the above theory that the branch
had not counted some of its £10 notes. It could have been the case, for example,
that a bundle of £10 notes had been placed in the safe and forgotten about.
Following this loss, cash declarations over subsequent nights had increasing
gains in cash such that by the 13 May there was an apparent cash gain of
18
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‘Commented [AV8]: HORIce data shows
(09/05/2016 Declare CASH Total £48021.94 For SU AA Till
and Variance Check Discrepancy for SU AA with £-1238.21
Discrepancy
stock unit balance was done on the 11" May [14/11/2018
1740} Paul Smith:
£17198.97 loss
WBD_000067.000018
1.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
£17,964.41 which would cancel out with the loss recorded on 11 May 2018.
‘Again, this supports the view that this was an error by the Subpostmaster or his
assistant(s) in counting cash and there was not shortfall in the branch once the
cash count had been done correctly.
Thereafter the picture gets confused as the apparent cash gain decreases over
the next few days. Specifically, on 17 May there were 2 separate cash
declarations made an initial one for £68k followed by a second one for £52k
recording an apparent loss of £16k of cash between these two declarations. The
only transactions between these two declarations was for a £300 cash
withdrawal. This suggests to me that something was going wrong in the branch
with the manual counting of cash and the making of cash declarations
MoneyGram Issue
72.
73.
74,
75.
Mr Akash Patny refers at paragraph 18 - 24 to a shortfall following a MoneyGram
transaction which he says was the result of a technical or processing error in
Horizon. The transaction data (exhibit) shows a very different pattern of events
from Mr Patny's version and clearly demonstrates user error played a material
role in events.
Mr Patny is correct that on 23 February 2016, he processed a Moneygram
transaction for £3,100 and the customer's debit card payment for the transaction
was declined by the customer's bank. Mr Patny says that he therefore cancelled
the transaction. The data shows that he in fact completed the transaction for a
cash payment and then tried to cancel the transaction showing the cancellation at
nil value, the effect being that the £3,100 transaction still showed in the accounts.
I do not know whether the customer actually paid in cash — I suspect not as few
people carry that much cash on them. If no cash was paid, this would generate a
£3,100 cash shortfall. This was due to user error in recording a cash payment on
a transaction when in fact no cash was taken.
As to the allegation that there was a total shortfall of £6,200 caused by this
MoneyGram transaction, this is also not supported by the data.
On 23 February 2016, the branch declared a cash shortfall of £6,825.95. On 22
February (the day before) the branch declared cash holdings of £34,405.46. On
23 February, the branch declared cash holdings of £25,803.87, a net downward
movement of £8,601.59. . The net value of transactions during this period
resulted in a £1,806.71 decrease in cash. The Moneygram transaction described
above would account for a further £3,100, bringing the total explainable cash
19
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WBD_000067.000019
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
movement to a £4,906.71 decrease. However, this leaves £3,694.88 of cash
movement unaccounted for. I cannot say for certain what caused this additional
loss of cash but there is nothing in the accounts that suggest a problem with
Horizon. It appears more likely to me to be a problem with cash handling in the
branch or a user error when making cash declarations.
JAYESH TANK
76.
In his statement, Mr Tank raises the two issues set out below.
Power Failure
7.
78.
79,
Mr Tank refers to a shortfall of £600 which he claims arose following a complete
electrical failure in his branch "in or around 2010 - 2011."
Mr Tank claims that he contacted the Post Office banking team in Chesterfield.
NBSC call logs show that between 2010 - 2011 Mr Tank contacted NBSC
regarding a shortfall of £195.04 relating to a cash withdrawal. This call was made
‘on 13 December 2011 and [WBD to review call log and summarise]. I
understand from Post Office's solicitors and Fujitsu that this particular issue was
resolved following an investigation as Peak PC0214226. [WBD to review the
Peak] It is possible that Mr Tank contacted the banking team direct (if he had
their contact details), but such calls are not logged.
I have described above [x+ref] the process which Subpostmasters need to follow
when there is a system outage or power failure and, providing this process is
followed, Horizon will either recover or cancel the transaction. The online
banking transaction which Mr Tank has described is a recoverable transaction
and therefore if the correct recovery process had been properly followed in
accordance with the Horizon Online Quick Reference Guide, a copy of which
appears at [INSERT REF], the branch would not have sustained any shortfall. Mr
Tank's witness statement indicates that he gave all relevant receipts to the
customer. In accordance with this quick reference guide, Mr Tank should have
retained a copy of the associated discontinued session receipt, as well as the
recovery receipt.
Mr Tank describes a recurring issue that he says took place in or around 2007
with mail transactions where no label could be printed leading to a loss of around
20
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81
82.
83,
84,
85,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
£2.50 each time. These events took place so long ago that I cannot find any
record of this alleged problem being reported to Post Office. There is nothing in
the NBSC call logs that refer to this type of issue being raised in or around 2007.
Sometimes postage labels do not print correctly, either because of problems with
the printing equipment or if the user fails to insert the label into the printer
correctly or on time. As a result there is a process on Horizon so that users can
record the label as rejected which allows a new label to be printed with no cost to
the branch.
Horizon prompts the user to specify whether or not the label has printed correctly.
If the user answers no then it allows them to record the label as spoiled and print
afresh label. In such cases, there would be no financial loss to the branch.
Also, it is possible to process a completely separate transaction for spoiled
postage labels and printing a replacement, so even if Horizon did not prompt this,
or the Subpostmaster presses the wrong button on the prompt, they can always
correct the error. This option would also have been open to Mr Tank had, as he
alleges, the printer not produced a label at all. [Is the process for correcting
the error in any of the Horizon guides? If so please provide references]
Mr Tank did raise an issue regarding postage labels and software updates initially
via the NBSC in 2014 and then again in 2015 during a conduct meeting with Mr
Keith Bridges, a Contracts Advisor. Mr Bridges investigated the issue and met
with Mr Tank on 5 November 2015. At that time, Mr Tank was issued with a
written warning in relation to his misuse of official postage as he admitted to
wrongly using the facility to reclaim alleged losses from postage labels and to
compensate himself for his time resolving an issue with a DVLA transaction,
Based on the above, there is a plausible alternative explanation for why postage
labels may not have printed correctly or at all and in my view much more likely
than any issue with Horizon.
ADREES LATIF
86,
In his statement, Mr Latif raises the specific issues which I discuss below. He
also raises some general issues which are expressed far too vaguely to make it
possible for me to deal with them.
21
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{
‘Commented [AV9]: Process is on HOL help. Screenshots
ssent in covering email
WBD_000067.000021
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Transfer of £2,000 between stock units
87.
88.
89.
90,
1
In paragraphs 6 - 8, Mr Latif describes a transfer of the sum of £2,000 between
stock units in his branch which was unsuccessful and resulted in a shortfall in the
branch account of £2,000. Stock units is the term which simply describes the sub
sets of accounts within the main branch accounts on Horizon. Stock units can be
set up for a variety of reasons. In larger branches each person may be allocated
to their own stock unit (in effect their own tll) with their own cash and stock. This
is a good way of managing the accounts in branch and pinpointing any errors
when they occur. Where branches have out of hours services eg Lottery and
‘ATM, having stock units for these again enables any errors to be isolated to
these stock units but also enables the main branch accounts to be balanced
pending the out of hours stock units to be balanced at a later time ie when the
post office is closed.
If Subpostmasters wish to move cash or stock between stock units, there is a
process which must be followed. Firstly, the item which is being transferred (in
this case cash) must be transferred by the user via Horizon using the back office
function (transfer out) from the outgoing stock unit. The cash must then be
physically removed from that particular stock unit. Providing these two actions are
completed, the stock unit from where the cash is transferred should not show a
discrepancy.
Once the above process has been completed, the stock unit to which the cash is
being transferred must then accept the transfer via Horizon using the back office
function (transfer in). The cash to be transferred must then be physically
introduced to the receiving stock unit. Again, providing these actions are
completed there is no discrepancy in the branch accounts. However, if the
transfer is not accepted, Horizon will prompt the user when doing the monthly
balance to complete any outstanding transfers. In addition, Horizon automatically
prints out a receipt when transferring in and out, detailing the transaction. These
transfer receipts have a place for signature which allows for an audit trail in
branch in the event of there being more than one user.
Mr Latif indicates that he completed the first two steps, followed by a cash
declaration which appears to have confirmed that, at that point, the transfer out
had been successful. He then indicates that an issue arose when he went to
accept the transfer in but there was no such transfer to accept in the receiving
stock unit. He says that this caused a £2,000 shortfall.
My strong belief is that Mr Latif has recalled these events incorrectly. The
transaction data for the branch (@xhibit) shows that in the relevant period (June to
22
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92,
92.1
92.2
92.3
93.
94,
95.
96.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
August) every transfer out has a corresponding transfer in. I also note that the
ARQ data show that there is no stock unit SJ1 as asserted by Mr Latif, however
there is a stock unit SP1.
Specifically, the transaction data shows that:
In June 2015 there were no transfers between AA and SP1 stock units for
£2,000.
In July 2015, there were two transfers of £2,000 from the AA stock unit to the
‘SP1 stock unit, both of which were successful.
There were 4 separate transfers of £2,000 in August 2015 (on the 1st, 3°, 5",
26") all of which were successfully transferred into stock unit SP1
I also note that no £2,000 discrepancy was recorded on any balance done
between June and August 2015.
Further, from a review of the NBSC call logs, there are no calls logged of the
branch having any issues with transfers during July 2015 or a month earlier or
later ie June and August 2015
Mr Latif also claims that Horizon's "reporting functions made it difficult to
interrogate the system and locate the source of the error’. There is a back office
function specific to transfers, which allows the user to view or print reconciled and
unreconciled transfers. However, as noted above transaction data for the branch
shows that in the relevant period (June to August) every transfer out has a
corresponding transfer in.
Accordingly, the records that Post Office have reviewed do not support what Mr
Latif has said and I believe that he may have mis-recollected events from 3 years
ago.
Transaction Correction Issue
97,
98,
In paragraphs 9 - 14, Mr Latif describes an issue which is said to have ocourred in
March 2018 where a transaction correction of £[x] from Post Office did not
properly record in his branch accounts.
I refer to paragraph XX above which describes the activation and remittance
process for soratchcards.
23
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99,
100.
101.
102.
104,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
The transaction data (exhibit), including data relating to TCs, shows that the
branch received two TAs on 18 January 2018. However, due to an error by Post
Office, instead of increasing the scratch-card stock, the TAs decreased the stock.
To be clear, this was a data entry error by Post Office and not an issue with
Horizon. Horizon processed the TAs accurately. I note that the TAs were
accepted by the branch, which could have been challenged at that point if the
user had noticed that the TAs were not for a positive number, as they should
have been
The event log for 18 January 2018 shows that the branch attempted a balance
but they were not able to do so due to a negative stock of scratch-cards. Later
the same day, a sales reversal was completed by a user in the branch which
brought the stock level back to zero but automatically decreased the branch's
cash holdings. One of the rules of Horizon is that manual adjustments of stock
must have an equal and opposite effect on the cash holdings otherwise
significant fraud could be perpetrated by manipulating stock levels. At this point,
the scratch-card position was correct, but the branch was running a cash surplus.
The branch was then issued with a credit volume TC on 24 January 2018 which
cancelled out the incorrect TAs and recorded the positive increase in soratch-
card stock. Due to the sales reversal by the Subpostmaster, this would have had
the net effect of leaving a shortfall of scratch-card stock (because the scratch-
card stock was adjusted up twice, once by the TC and once by the sales
reversal).
At this point, the branch would have been carrying a stock shortfall and a cash
surplus. These two would net off to leave the branch in balance. A manual stock
adjustment by the branch to decrease the scratch-card stock level and increase
the cash holdings would correct this, essentially reversing the Subpostmaster's
earlier sales reversal.
The transaction data clearly shows that Horizon processed the TAs and TC
correctly. I can understand why Mr Latif has become confused and believes that
Horizon performed incorrectly as the sequence of above stock and cash
movements is tricky to follow. But when properly analysed it shows that there
was not a problem with Horizon.
(Mr Latif says that he has been in touch with Post Office about this issue. Can we
describe what has been said?]
24
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‘Commented [AV10]: Kath — would you check that Ive
‘made the correct amendments to sales reversals as per your
earlier comments
‘Commented [AV33]:. Kath — following your conversation
with Rhi on this would you please insert the appropriate
narrative.
WBD_000067.000024
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
ANGELA BURKE
105. NEED TO GET THE BELOW CONFIRMED BY GARETH JENKINS
106,
107,
108.
109.
In her statement, Mrs Burke describes suffering a shortfall which arose out of the
Horizon system outage on 9 May 2016. I have’ described this outage at
Paragraph XX above. On the basis of the ARQ Data (@xhibit) I believe that this
shortfall arose due to Mrs Burke not following the recovery process after a
system outage rather than any error in Horizon.
The account provided by Mrs Burke means that it is clear that she did not follow
Post Office's standard processes for processing transactions. Specifically, each
customer's transactions should be separately recorded on Horizon in what is
called a "basket" or sometimes referred to as a stack (because the transactions
appear to stack up on the screen). After each customer, the transactions needed
to be submitted to the branch accounts ie the transaction needs to be completed,
which is sometimes called "clearing the stack”. Mrs Burke did not do this and
bundled together two customers’ transactions into one basket (see paragraph 14
of her statement). From Horizon's perspective, this would have looked like a set
of transactions relevant to a single customer.
When processing bank withdrawals, Horizon first checks that the customer's bank
account has sufficient funds for the withdrawal. If the bank's system confirms
this, Horizon adds the withdrawal to the stack and prints an “authorisation
receipt" (see page 12 of AB1, timed at 9:28). Multiple transactions can be added
to a stack. It is not uncommon for a customer to withdraw cash and then, say,
pay a bill or buy some stamps. Once all the transactions are added to the stack,
Horizon calculates the net amount due to or from the customer, the user
completes the basket (which submits the entire basket of transactions into the
branch accounts) and cash is physically handed over the counter. Because there
can be multiple transactions in the stack, there can be a delay between a cash
withdrawal being authorised by the bank and the full basket being submitted to
the branch accounts. This raises the possibility of some form of intervening act
such as a power outage or loss of connectivity. If that happens, the bank's
system may be showing a withdrawal of cash but Horizon has no record of the
transaction.
This is where the recovery process is initiated if there is a connectivity failure,
Horizon will make multiple attempts to complete the basket, but after several
attempts it will record a failure and log out the user. It will also print a
disconnected session receipt showing the transactions in the stack at that point
(which happened in this case: see page 2 of AB1, timed at 9:30).
25
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(Commented [AP612]: Might need deleting }
WBD_000067.000025
110.
111.
112.
113.
114,
115.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Once Horizon comes back up, it will check whether there are any cash
withdrawals logged by the bank but not on Horizon. Where it gets confirmation
from the bank that the cash withdrawal has gone through, Horizon will then add
that cash withdrawal (and any other recovered transactions) to a new basket and
complete that basket so that it forms part of the branch accounts. It will then print
arecovery receipt telling the user what cash to give to the customer.
In Mrs Burke's case, the first two withdrawals (of £73 and £180) were recovered
but the withdrawal of £150 was not recovered. This is shown on the recovery
receipt, at page 5 of AB1 and timed at 9:36, which instructs Mrs Burke to only pay
£73 and £180 to the customer. This is also reflected in the transaction list at
page 6 of AB1 which only shows the withdrawals for £73 and £180, and not the
withdrawal for £150.
Had Mrs Burke followed the recovery receipt, she would not have given the £150
to the customer and would have suffered no shortfall.
If Mrs Burke had followed the correct process the failed recovery would have
disadvantaged the customer, whose account would have been debited but who
would have not received any cash from Mrs Burke. From the Subpostmaster's
perspective, Horizon accurately recorded the recovered transactions and told Mrs
Burke not to pay the £150 to the customer. The problem was caused by Mrs
Burke not following the procedure which would have instructed her not to pay out
the £150
Following Mrs Burke's investigation, Post Office generated a transaction
correction for the £150 withdrawal. I believe it was quite proper for Mrs Burke to
do this investigation as it was her original error that caused the loss. Once Post
Office was presented with evidence that the customer had received the cash and
the customer's bank had recorded the withdrawal, a transaction correction was
issued to bring the branch accounts back in line thereby correcting Mrs Burke's
mistake.
Mrs Burke states (at paragraph 26) that the TC "had settled the amount to Lloyds
bank and not TSB". TSB was part of Lloyds bank until September 2013 and I
suspect this is the reason for this. The identity of the financial institution is not
relevant from a branch accounts perspective.
26
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WBD_000067.000026
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
LEAD CLAIMANTS
116.
117.
I understand from Post Office's solicitors that the Claimants’ IT expert, Mr Coyne
refers to the witness statements of the Lead Claimants and asserts that there are
‘examples of instances where either (a) the cause of the shortfall has not been
correctly identified; or (b) the reporting and logging facilities have not identified a
true picture of events; or (c) the actual event not being detected in the first
instance. In this statement, I have sought to address the allegations raised by the
Lead Claimants only to the extent that they may be relevant to the Horizon
Issues. My evidence is not intended to be a comprehensive responsive to every
allegation made, many of which go to wider issues of breach that I understand
will be dealt with in a separate trial
As far as I can see from their evidence, Mr Sabir and Mrs Dar do not raise any
allegation that Horizon had a bug or error (as distinct from allegations that
Horizon was difficult to use or provided insufficient information). These two cases
are therefore not specifically addressed below.
INFORMATION ON HORIZON
118.
119,
120.
‘A number of the Lead Claimants have raised allegations about the availability of
information from Horizon. These allegations all complain about a lack of
information in general terms but do not specify the information that was missing
or needed. I am not therefore able to provide anything more than general
responses until such time as these complaints are better explained. I make two
‘comments in response to this general allegation.
First, the witness statement of my colleague David Johnson describes the
information available to Subpostmasters through Horizon.
Second, the introduction of Horizon allowed Subpostmasters to undertake the
same checking exercises as they previously would have done with paper receipts
but protected against instances where receipts were not kept or dockets/ paper
slips were inadvertently handed back to the customer (for example). Prior to the
implementation of Horizon, if receipts were not retained, details of the relevant
transactions would have been unavailable and consequently the branch would
have been unable to investigate the authenticity of the transaction! verify it took
place. Horizon therefore should offer a greater protection to Subpostmasters and
provides them with multiple ways to investigate transactions and shortfalls/
issues. [Angela - The Claimants will, say that if Horizon even occasionally
caused false figures to be included in the branch's accounts, this made it
27
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
PAMELA STUBBS
121
Mrs Stubbs describes a number of matters during her time as Subpostmistress at
Barkham Post Office between August 1999 and June 2010 that appear to touch
on the operation of Horizon.
Power outages
122.
123,
124,
125,
Mrs Stubbs describes a number of power outages within the branch which she
claims were caused by the installation of Horizon and caused shortages and
gains in weekly balances.
An investigation into these outages was commissioned by Post Office at the time.
ICL Pathway Limited, whose report of 8 March 2001 is exhibited at [AV4/pX]
200000366}, established that these were caused by Mrs Stubbs’ own electrical
‘equipment, specifically, the incoming mains circuit breaker which was in need of
replacement. The power outages were therefore not related to the installation of
Horizon or Horizon itself.
With regards to the discrepancies in weekly balances, I have described above [k=
féf] the process which Subpostmasters have needed to follow when there is a
system outage or power failure since Horizon Online was introduced. Horizon
will either recover or cancel the relevant transaction and provided that the branch
follows the correct procedure when they log back onto Horizon, the failure will not
create a discrepancy in the branch accounts.
In Legacy Horizon, which was in place when Mrs Stubbs was in post, the
recovery processes differed depending on whether or not a transaction involved
an automated payment. The processes are described in sections 9 and 13 of the
Horizon System User Guide [exhibit], Provided that a branch followed the
correct process, a power outage would not cause a discrepancy in a branch's
accounts.
28
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‘Commented [AV13]: What do you mean by false figures?
Atleast with Horizon the transactions are associated with a
user ID so they can be identified and there's an audit trail ie
time, date, user
WBD_000067.000028
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Shortfall of £1,000 - between 2001 - 2002
126. Mrs Stubbs seeks to attribute the £1,000 shortfall to the power outages, which
she claims required Horizon to be rebooted multiple times per day. The ARQ data
in respect of this period is at [exhibit].
127. I have already described the process which Subpostmasters need to follow when
there is a system outage or power failure and, providing this process is followed,
there would be no discrepancy sustained, absent of any other errors in branch.
128. The only shortages that Post Office have a record of being reported by Mrs
Stubbs between 2001 and 2002 totalled £617.49 and were reported in May 2001
The details of Mrs Stubbs’ report to Post Office and Post Office's decision are
confirmed within Mrs Stubbs letter at (AV1/pX][200000355] and Post Office's
response dated at [AV1/px][200000352] as follows:
128.1 Shortfall in the sum of £367.34 — there was a robbery at the branch in week 42
of the year and when Post Office investigated this shortfall it was established
that the shortfall occurred prior to the robbery.
128.2 Shortfall in the sum of £182.78 — appeared after the audit following a robbery:
while this was investigated by Post Office there was no signs of error on the
audit and all receipts, payments and stock aligned with the estimated figure.
128.3 Shortfall in the sum of £67.37 — previous week's shortage ~ Mrs Stubbs
volunteered to make good this amount. It should be noted that the letter dated
5th April 2001 refers to a mis-key by branch staff (£308.00 entered instead of
£38.00).
129. In my view, the losses in around 2001 were actually the aggregation of several
smaller losses likely due to a variety of different factors, including the possibility
of human error in the branch. Should Mrs Stubbs have needed assistance in
ascertaining the cause of the claimed £1,000 shortfall and/ or any of the above
shortfalls, she could have contacted NBSC. Instead, as per Mrs Stubbs’ witness
statement, it appears that she paid this shortfall. I note that the NBSC call logs
have no record of Mrs Stubbs contacting Post Office to complain about, or seek
assistance.
Shortfall of £2,584.65 - December 2009
130. Mrs Stubbs describes a shortfall in the sum of £2,584.65 that was identified within
the Branch Trading Statement (BTS) submitted on 9 December 2009 and
29
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(Commented [A614]: Do we have tis fom 20017 +)
WBD_000067.000029
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
explains that she was unable to ascertain the source of this disparity from her
investigation into the data available on Horizon. Mrs Stubbs also queries why this
figure suddenly appears in this line as the other BTS appear as nil / zero.
131. The reason for this figure on this particular BTS in was that she told Horizon that
she had settled the shortage to cheque, which would then report as an asset on
hand in the branch. In instances when she told Horizon that she had made good
to cash, then this would show on the cash line. The difference would be visible
from the last cash declaration she had submitted — the amount of loss/gain would
have changed by the amount made good to cash. It would seem that Mrs Stubbs
has not understood what happens to the cheque that she told Horizon she used
to make good the loss. The reason why there are zeros on other BTS is that the
“make good!" option by cash was elected on other occasions.
132. I note that the call logs have no record of Mrs Stubbs contacting Post Office to
complain about, or seek assistance in relation to this shortfall. It appears that
Mrs Stubbs chose to make good the shortfall by way of cheque on 10 December
2009 which was recorded by Horizon as confirmed by [AV1/px][C-0714-0000005]
and did not seek any further assistance from Post Office in investigating the
shortfall. On this basis, I cannot see that this shortfall gives rise to any evidence
of their being a problem in Horizon
Shortfall of £8,436.86 - February 2010
133. Mrs Stubbs contacted NBSC on 6 January 2010 in relation to a reported loss of
£9,000. [What happened? Did Post Office investigate? What was the
uitcome?] It is possible that this is the issue referred to by Mrs Stubbs in her
statement.
134. The FSC customer account (i.e. the record of all branch discrepancies, TCs,
credits and debits on the Subpostmaster's account) confirms that Mrs Stubbs
chose to settle this shortfall centrally and did not seek any further assistance from
Post Office in investigating the shortfall.
ALAN BATES
135. Mr Bates has described a number of matters during his time as Subpostmaster at
Craig-y-Don Post Office between March 1998 and November 2003 that appear to
touch on the operation of Horizon
30
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I
‘Commented [AV15]: Jonny — are you providing this
information?
‘Commented [KA16]: This is under the wrong heading as.
there was a further shortfall of £8436.86 was also settled
centrally. The £9033.79 loss in Jan settled centrally on
(07/01/2010 was covered in the POIR pgs9/10and in the
addendum to QSA
CA became aware of it on 09/02/2010 when FSC alerted him
‘and CA then arrange suppor etc (Doc 004 POIR)
WBD_000067.000030
136.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Due to the fact that this happened 15 - 20 years ago, Post Office has been unable
to obtain any further details about these particular issues other than any call logs
for the NBSC/Helpline (which date back to 2000). Also, it appear that during the
latter part of his tenure, Mr Bates was not declaring losses to Post Office so Post
Office was not able to investigate any issues relating to Horizon at the time they
‘occurred because it was not aware of there being any underlying shortfall that
may indicate a problem in Horizon.
Shortfall of £1,000 in February 2001
137.
At paragraph 143.8 of Mr Bates' witness statement he raises his experience of an
unexplained shortfall of over £1,000 on 28 February 2001. While Mr Bates
indicates he tried to call the Post Office Helpline for assistance and there was no
support, the call logs from the Helpline confirm Mr Bates simply chose not to hold
on or receive a call back until someone became available on Service support to
take the call at that time. Mr Bates could have arranged for a call back at a time
that would have been convenient for him to seek advice from NBSC.
Shortfall of £5,000 in December 2000
138,
139,
Mr Bates asserts that this shortfall can be explained by Horizon incorrectly
duplicating a number of Giro items. Giro transactions were manually entered into
Horizon by branch staff. If there were duplicate entries it is likely that this was the
result of human error by branch staff rather than an issue with Horizon.
NBSC calls [C-0019-0000014] confirm that a loss of approximately £6,000 was
reported by Mr Bates. However, this was reduced to £368.50 which suggests
that the cause(s) of loss(es) to the value of £5,631.50 were identified by Mr
Bates, suggesting that this was an issue caused in branch rather than by
Horizon.
ELIZABETH STOCKDALE
140.
Mrs Stockdale has described a number of matters during her time as
Subpostmistress at Sandacre Post Office between May 2014 and May 2016
when she was suspended (later terminated in September 2016) that appear to
touch on the operation of Horizon.
31
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WBD_000067.000031
141.
142.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Mrs Stockdale consistently refers to her "robust paper system" that she had
separately implemented in branch, requiring her staff to complete a manual till
and safe log each time cash was paid in and out, including the relevant
denominations and the double protection of CCTV. No details of how the CCTV
was used in branch have been provided by Mrs Stockdale. While the paper
system was intended to prevent against errors, this did not change the need for
all transactions to be properly recorded in Horizon. From the documents relating
to her paper system, it would appear that Mrs Stockdale failed to restrict access
to the branch safe. ex!
It is clear at paragraph 109 of Mrs Stockdale's statement that she does not
consider it to have been the branch's responsibility and/ or fault that a duplicate
Lottery transaction had been manually entered and processed. While this
discrepancy was easily resolved by Post Office, it appears that Mrs Stockdale
was unable to identify other errors on the system and indeed appeared to have
not properly understood how Horizon worked. As a result of a continued pattern
of Mrs Stockdale not undertaking accurate cash declarations, often resulting in
erratic cash declarations, whose changing variances will render it very difficult for
Post Office to analyse the Horizon data. Furthermore Post Office's Helpline
records show that very few queries were raised by Mrs Stockdale and most of
these were general operational queries and as such do not give any insight into
the likely causes of the shortfalls. Mrs Stockdale received the support of the
training team, the Contract Advisor, FSC Relationship Manager and the NFSP.
NAUSHAD ABDULLA
143.
Mr Abdulla has described a number of matters during his time as Subpost master
at Chariton Post Office between January 2007 and May 2009 that appear to
touch on the operation of Horizon.
The process for issuing TCs
144,
145.
Mr Abdulla raises questions regarding the process and methodology behind the
Post Office's investigation into shortfalls and the decision to issue TCs. For the
reasons explained below, all these issues do not appear to relate to a suspected
problem in Horizon, but rather relate to the accounting and operating process for
issuing and processing TCs.
TCs issued by Post Office are accompanied by supporting evidence or
documentation and / or a contact number of someone at Post Office who is able
32
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‘Commented [ALP117]: Rod comment how does this
follow?
‘Commented [ALP118]: Rod comment - this para needs
tightening
(Commented [ALP119]: X-REF? J
WBD_000067.000032
146,
147.
148
149.
150.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
to provide further information. Mr Abdulla would have been aware of all TCs
issued to his branch, the reason behind them being issued and would have had
the opportunity to raise any questions or concerns that he may have had at the
time the TC was raised with the individual contact at Post Office who had
knowledge of the reason for issuing the TC.
Mr Abdulla questions the TC data disclosed by Post Office at paragraph 90 of his
witness statement, confirming that he does not believe this is a report he has had
sight of before. This report was produced by FSC and was not available to
Subpostmasters in branch. Mr Abdulla would, however, at all times have access
to information about TCs as described above.
Mr Abdulla raises concerns at paragraph 94 of his witness statement regarding
three consecutive TCs issued in May 2008, June 2008 and July 2008 in relation
to lottery transactions.
Ihave already explained the lottery system in place in branches which is separate
to Horizon above at {INSERT REFERENCE TO PARA IN WS]. In short, at the
close of business every day a user must obtain two reports from the separate
Lottery terminal (one for online sales and one for a scratch card summary) and
then the Subpostmaster is responsible for ensuring that all relevant Lottery
transactions, save for those recorded by TAs, activations or online sales, are
declared on Horizon. This can then be checked against the balance snapshot on
the balance day, allowing for any discrepancies to be corrected.
The first two of the TCs were issued as a result of the branch over-stating its
lottery sales by £1,092 for two consecutive months through the manual input of
incorrect information into Horizon. Those TCs were followed by evidence of the
relevant over-stated transactions to allow the branch to reconcile with its receipts
which the Subpostmasters were required to retain. Contact details were also
supplied to the branch for the lottery team should they have wished to query any
specifics direct with them. The third of these TCs was another invoice TC which
was incorrectly issued on 12 July 2008 and which resulted in an offsetting TC.
All of these matters relate to the accounting and issuance of TCs. They do not
suggest that there is any problem in Horizon.
Customer account
151.
Mr Abdulla raises concems at paragraph XX regarding entries appearing as
credits or debits on the FSC copy of the Subpostmaster customer account. This
33
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(
‘Commented [ALP120]: Rod comment. please use
consistent terms,
WBD_000067.000033
WBON0000197
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
‘Commented [ALP121]: Rod comment — here to the end
needs tightening.
Duplicate transactions in the sum of £250.00
Duplicate transactions corrections in the sum of £960.00
MR COYNE'S REPORT
154. I address below a small number of factual points raised by Mr Coyne in his report.
Failed reversals
155. At paragraph XX of his report, Mr Coyne has referred to a report prepared by
WBD_000067.000034
155.1
155.2
155.3
156,
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
context and mistakenly claim that the relevant reversal was issued in error by
Horizon, not the Subpostmaster. The Rose report makes it clear that:
the concerns were based on the fact that reversals were not being shown on the
particular data sets reviewed / reports typically run by Subpostmasters in branch
on Horizon;
transaction reversal data can be extracted from Horizon;
the issue was therefore surrounding how the transaction reversals were
displayed / accessible in branch and that there was no issue with Horizon itself.
There is therefore no indication that the reversal was not notified to the
Subpostmaster. When recovery was carried out a discontinued session receipt
would have been printed and messages would have been clearly displayed to the
user in branch during the recovery process.
Changes to improve Horizon in branch
157,
158.
159.
159.1
159.2
Mr Coyne has made reference at paragraph 5.125 of his report to an internal
presentation from Post Office [xref], which repeats the statement made
previously that "relatively small changes to Horizon could avoid errors/mistakes
made in branch’.
‘The examples in the slides varied greatly in terms of detailed assessment of
feasibility and cost and were in my view high level potential opportunities rather
clearly defined recommendations. Nevertheless my understanding is that these
examples were considered by Post Office along with other potential
improvements at the time.
Examples of where we have made changes to Horizon to mitigate the risk of error
in branch are below. These predominately are for the benefit of the Horizon user
and the customer:
Drop & Go. In November 2014 as a result of some branches settling Drop & Go
sessions to cash instead of the customers pre-paid account, a screen-prompt
was added to the Horizon journey advising branches to not press Settle at the
end of the session before they had pressed End Mails.
In June 2017 this was taken further as a new Drop & Go transaction was
introduced, which prevented users pressing the Settle button before End Mails
35
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159.3
159.4
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
(the settle function is disabled in transaction). The screen prompt was removed
at the same time as it was now redundant.
Cheque rem out. This was a change to bring all the steps in the cheque rem out
process onto a single screen and automate the calculation of the cheques total
for the counter. This was prompted because branch staff occasionally forgot to
complete the process fully due to interruptions, allowing extra cheque
transactions to occur mid process from other counter positions. This change
went live to all counters on June 26 2015.
Bureau de Change automated 2” receipt. This was a change to Horizon in Sept
2014 to introduce a function defining the number of copies of a receipt for a
transaction which will automatically be printed. This was prompted because
some branches were being defrauded by the use of fraudulent debit cards for
bureau transactions. If the counter clerk did not print a second receipt for the
branch to keep (showing 4 digits from the card number and the form of ID
given), a fraudulent transaction would not be refunded by the card issuer.
Criticism of changes implemented by Post Office
160.
Mr Coyne has made reference, at paragraph 5.183 of his report, to "[pjoorly
handles changes introduced by Post Office", asserting that these have “also
caused errors in accounts". (Angela, again Catherine asked us to pick this up
with you — it would be brilliant if you could include information in response
~ Coyne’s report focuses on MoneyGram in particular]
OTHER MATTERS
161.
The process for disputing discrepan
162.
In this section, I address a number of ad hoc matters that have arisen in the
course of this litigation and which may be relevant to the Horizon Issues.
s
Ihave read the witness statement provided by my colleague, Dawn Phillips who is
a Team Leader of a parallel team in FSC, which explains the processes by which
Subpostmasters have been able to dispute discrepancies that have been in place
since Dawn was appointed as a Team Leader for Agent Accounting and
Santander Banking in November 2016. I confirm that the content of Dawn's
statement is accurate. In summary, Dawn's statement confirms that:
36
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‘Commented [AV22]: I am awaiting info on this to enable
‘me to insert some comments. Should have no later than
midday tomorrow.
WBD_000067.000036
162.1
162.2
163,
164.
165.
166,
167.
167.1
167.2
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
a branch can always contact the NBSC for assistance to identify the cause of a
discrepancy of any size; and
where a Subpostmasters settles a shortfall of more than £150 centrally at the
end of a Trading Period (TP), they may contact Dawn's team (usually after
receiving a request for payment) to dispute the discrepancy. As explained in
paragraph 8 of Dawn's statement, the letter sent to Subpostmasters regarding a
shortfall that has been settled centrally provides contact details for Dawn's team
should they have any queries or questions.
Dawn's statement describes the processes by which Subpostmasters have been
able to dispute discrepancies that have been in place since November 2016
(when Dawn was appointed as a Team Leader for Agent Accounting and
Santander Banking). The processes for disputing shortfalls since Horizon was
rolled out in 1999 are briefly described below.
NBSC
NBSC is the support centre operated by Post Office that branches may contact,
for assistance with a wide range of issues and is the first line of help should the
Subpostmaster have a query or need assistance in relation to an operational
issue. It was introduced in December 1999 as part of the launch of Horizon.
Since Horizon was introduced branches have always been able to contact NBSC
for help to identify the cause of a discrepancy.
NBSC call advisors have access to a knowledge base that they use to provide
advice to callers. If a call advisor is unable to provide an answer themselves,
they can escalate the call to a senior colleague, a specific team in the FSC or
Fujitsu.
isputing discrepancies
I understand from Post Office's solicitors that my colleague David Johnson has
provided a witness statement which explains that:-
when Horizon was first introduced branches had to balance their accounts every
week and produce a Cash Account; and
in 2005 the Cash Account system was replaced with the Branch Trading system,
which requires branches to balance their accounts and produce a Branch
Trading Statement (BTS) at the end of each 4-5 week Trading Period (TP).
Cash Account process (1999 - 2005)
37
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WBD_000067.000037
168.
170,
170.4
170.2
170.3
170.4
170.5
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
Before Horizon was introduced branches were issued with a guide entitled
"Balancing with horizon” [POL-0171229] (Horizon Balancing Guide).
In the Introduction Alan Barrie, Post Office's former Operations Director, stated
that he wanted branches to use the guide as their “fst reference point when you
have any questions about or problems with balancing" and went on to invite
branches to contact NBSC "if you have any queries about this manual or about
any business as usual procedures’. Mr Barrie also directed branches to ring the
Horizon System Helpdesk (which was operated by Fujitsu) "for help with using
the Horizon system’.
The balancing process and the processes for dealing with losses and gains are
described on pages 65 to 79 of the Horizon Balancing Guide. In summary: -
ifa branch had authority from their Retail Network Manager to hold a loss or a
gain, they could move them to its Suspense Account® after the production of the
final balance and Cash Account Period (CAP) rollover (pages 73 and 75);
any losses or gains held in the Suspense Account needed to be redeemed in
line with Post Office business rules and branches were directed to Part two of
the Horizon System User Guide (dealing with a loss or gain) [POL-0184485] for
further information (pages 74 and 76),
some agency offices (i.e. offices operated by Subpostmasters had an
agreement with Post Office to hold all losses and gains in the Suspense
Account for a specified period and, in such cases, amounts could be held in the
‘Suspense Account and adjusted in accordance with the relevant agreement
(page 76);
branches without authority from their Retail Network Manager to hold a loss or a
gain were:-
required to make good losses directly after the rollover to the next CAP by
placing cash for the amount of a loss into the til, unless the loss was the result
of a "known error" (i.e. a mistake made within the branch) for which the branch
expected an error notice (the forerunner to Transaction Corrections) to be
issued, in which case the loss could be moved into the Suspense Account and
authority sought to hold the amount via NBSC (page 77); and
2 As the name suggests, a Suspense Account is an account within the branch accounts
where branches may temporarily hold losses or gains in certain circumstances. If a
discrepancy is moved into a Suspense Account, it has no impact on a branch's accounts
for the current trading period. This is sometimes also referred to as "Local Suspense”.
38
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WBD_000067.000038
170.6
171.
172.
173,
174,
174.4
174.2
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
able to deal with gains either by moving the gain to the Suspense Account or
removing cash equal to the amount of the gain from the till, although branches
were directed to move "/arge counter gains" to the Suspense Account (this is
because if an error notice was issued in relation to an issue which gave rise to
the large gain and the large gain had been taken out of the till by the
Postmaster, the Postmaster would have been required to make good the
corresponding large loss produced by the relevant error notice (page 79)).
If a loss was moved into a Suspense Account in accordance with the process
described in paragraph 17.4.1 above, the branch's retail network manager would
provide a written authority to hold the loss which would have an end date; if a
compensating error notice had not been issued by the end of the authority period
the branch would be required to remove the loss from the Suspense Account and
make it good by adding cash to the til
If authority was not given to hold a loss or gain, or if a compensating error notice
was not received, it was still open to a branch to contact NBSC for assistance
with identifying the cause of a discrepancy, as noted in paragraph 12 above. The
nature of the assistance provided and the people who provide it depend on the
nature of the issue.
Branch trading (from 2005)
In 2005 Post Office changed the accounting process from the Cash Account to
Branch Trading. This was done for a number of reasons, but one reason I recall
is that there were a small but growing number of branches who were placing
losses and gains into a Suspense Account without authorisation. This was
difficult for Post Office to monitor unless it reviewed the Suspense Accounts of
every branch every month and got the Retail Network Manager to confirm
whether authorisation was given or not.
The Post Office Product and Branch Accounting Team (PBA) (being part of FSC)
produced a guide entitled "Debt Recovery Processes under Branch Trading” in
October 2005 [POL-0007501]. This document was provided to all branches prior
to the change to Branch Trading and explained the following:-
The previous error notices would be replaced by TCs. On receipt of a TC, the
Subpostmaster had effectively 2 choices; he could accept and make good the
TC (either with cash or cheque) or he could accept and settle centrally the TC.
Where a Subpostmaster accepted a TC, he should select either the cash or
cheque accept and make good options. Upon making good the TC, Horizon
would automatically adjust the cash, cheque or stock figures.
39
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WBD_000067.000039
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
174.3 All TCs and branch discrepancies under £150 had to be dealt with via the
accept and make good option. The £150 threshold was to keep volume of settle
centrally discrepancies to be processed by PBA (discussed further below) within
a manageable range. However, if the Subpostmaster wished to challenge the
TC or branch discrepancy, he could do so by contacting NBSC and submitting
his reasons and evidence for the dispute. If accepted PBA may issue a
compensatory TC. All TCs and branch discrepancies, irrespective of amounts
can be disputed by Subpostmasters, there are just different ways of accounting
for this depending on the value.
174.4 The new branch trading system introduced the accept and settle centrally
option. As explained in the guide, by choosing the option to accept and settle
centrally the Subpostmaster was moving the shortage or surplus off the branch
accounts and to central account held by PBA in the Subpostmaster’s name.
174.5 Subpostmasters may accept and settle centrally TCs or branch discrepancies
provided they are above the £150 threshold).
174.6 If no step is taken by the Subpostmaster to dispute the TC or branch
discrepancy, PBA will take steps to recover the sum settled centrally from the
Subpostmaster as a debt.
174.7 However, a Subpostmaster may dispute any TC issued to him by contacting the
phone number given on the TC or otherwise contacting NBSC and submitting
his evidence. Similarly, a Subpostmaster may dispute a branch discrepancy he
has settled centrally. The Subpostmaster's dispute will be referred to PBA who
will consider the Subpostmaster's evidence. If the Subpostmaster's explanation
and/or evidence is accepted, PBA will not pursue the debt. However, if the PBA
does not agree with the Subpostmaster steps will be taken to recover the sum
from the Subpostmaster.
Volume of branches and volume of customer sessions
175. My colleague, Kjetil Fuglestad, Senior Programme Analyst, has prepared the
table which appears at [x-ref] which sets out the number of Subpostmaster
branches in place each year, from 1951 to 2018. This shows that when Horizon
was rolled out to branches between 1999 and 2000, there were respectively
18,175 and 17,795 Subpostmaster-operated branches in place in these periods.
4 Branch discrepancies are deficiencies declared when the branch trading statement is
prepared ie a surplus or a shortfall.
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176.
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
In relation to the individual branches associated with the group litigation, Kjetil has
also prepared the spreadsheet which appears at [x-ref] which aims to provide a
snapshot of the branches’ weekly customer sessions at 2001, 2007 and 2018.
Please note that there were some errors in the raw data obtained by Kjetil when
preparing the spreadsheet which meant that there were some gaps in relation to
the 2007 customer data available. Following further investigation, these have
been completed and for transparency have been included within a separate
column titled '2007 gaps’. Taking the Barkham branch as an example, being the
branch that Mrs Stubbs was Subpostmistress for and raises a number of matters
that I have responded to at [insert para ref] above, you are able to see that that
the workload for this particular branch in 2001 involved an average of 1,047
weekly customer sessions and in 2007 this had increased to 1,836.
Implementation of Horizon and Horizon Online in branches
177.
178.
179.
180.
In relation to the practical implementation of Horizon and Horizon Online in
branches, Post Office representatives were present as explained below.
Horizon
Itis my understanding that branches were required to do their final paper based
cash account before the changeover to Horizon. The information was then
transferred onto the Horizon system including the physical cash / stock held in
branch so a starting / opening figure could be established and agreed with the
‘Subpostmaster as reflecting the closing paper based account.
The transfer onto Horizon was supported by the Horizon field support officer
(‘HFSO") and also the RNM. If there were any issues as to discrepancies /
general functionality of Horizon then the HFSO / RNM would assist the branch.
Horizon Online
Before the change to Horizon Online, a cash check was completed in branch by
the HFSOs. Branches were notified in advance that this cash check would be
carried out. I recall that this mandatory cash check across the entire network
caused a temporary spike in declared losses. I suspect that this was due to
branches tidying up their accounts before the cash check and therefore losses
coming to the surface that had previously been ignored or covered up.
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
NBSC
181. _ In terms of the use of the Helpline and NBSC generally, my colleague, Dean
Whitehead, WFM & Telephony Manager, has prepared the attached spreadsheet
which appears at [x-ref] which includes the NBSC call data volumes from 30
March 2015 to 11 November 2018.
182. _ By way of explanation of the spreadsheet:
182.1 _ Offered’ means calls to the NBSC that entered the queue and were either
answered or abandoned;
182.2 ‘Answered’ means calls answered by NBSC advisors;
182.3 ‘Forecasted’ means the predicted volume of calls that NBSC planned to receive;
and
182.4 ‘Difference between Calls Offered and Answered’ includes calls that entered the
queue and were abandoned/ unanswered. Please note that it is difficult to be
certain what happened in relation to these calls, as it is plausible the relevant
Subpostmaster/ user called back at a later time/ date, for example, so it does not
necessarily mean issues were left unresolved;
182.5 __In terms of the period of the available call volume data, to confirm, while Post
Office hold records of the calls received that predate 30 March 2015, we do not
‘ld in a readily accessible place any aggregated call volume data from before
this date.
183. This spreadsheet shows that over the relevant period:
183.1 NBSC have answered [insert number] calls per day on average; and
183.2 there have been 158 abandoned/ unanswered calls to NBSC per day on
average.
184. I
=
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‘Commented [AV23]: Currently o average 1200- 1500 per
day but needs to be checked against the spreadsheet
referenced that I have seen yet
WBD_000067.000042
Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
185,
Feedback from Subpostmasters on Horizon
186. Feeback from Subpostmasters on Horizon has always been collated through a
number of channels:
186.1 The NFSP will raise issues with branch accounting and Horizon with Post Office
‘on behalf of their members.
186.2 Calls to helplines are monitored and re-occurring issues escalated for deeper
investigation.
186.3 Concerns with Horizon can be escalated through RNMSs and later contracts
advisors.
186.4 There have been various forums and focus groups over the years through which
Subpostmasters can raise questions about branch accounting and Horizon. The
most recent of these has been the branch user forum setup in 2013. Any
Subpostmaster could apply to be a member of this and through this forum
feedback was provided on the operation of Horizon.
Statement of truth
I believe that the facts stated in this witness statement are true
Signed:
Name: Angela Van Den Bogerd
Date’
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‘Commented [AV24]: This is dificult to answer as the cal
categorisation doesnt goto that level of detal. It would record
2s balancing enquiry but not report at the macro level on the
‘amount ofthe discrepancy. From a Spmr perspective what is
regarded as a trivial amount would depend on the Spmr and
the type and size of branch. The smaller branch with only one
‘or two members of staff may balance close tothe penny whilst
the larger branch may think that £50 per month was an
acceplable tolerance level given the volume and value of
transactions they do on a monthy basis. When discrepancies
{get into the hundreds then I would expect Spmrs to start
discussing these with us. Thousands definitely so
WBD_000067.000043
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Claim No: HQ16X01238, HQ17X02637 & HQ17X04248
44
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