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Witness Name: Mr John Kenneth Macaldowie
Statement No. 1: WITNO607
Exhibits: none
Dated: 05/09/2022
IN THE POST OFFICE HORIZON IT INQUIRY
WITNESS STATEMENT OF Mr John Kenneth Macaldowie
I, Mr JOHN KENNETH MACALDOWIE will say as follows:
Introduction
1. I am grateful to the Chair to be invited to provide a statement concerning my
involvement in the case of my former subpostmaster son, Keith Macaldowie, regarding
the Horizon IT system and Post Office Limited’s actions toward him.
2. I confirm that I have read the witness statement of Keith Macaldowie of the 14 March
2022. My statement addresses events and issues within my own knowledge and
experience.
Background
I and qualified as a member of the Institute of Chartered
Accountants of Scotland in 1968.
4. I was awarded an honorary LLD degree by Glasgow Caledonian University in 1997 for,
inter alia, work involving family business mentoring.
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Until my retirement on 30 April 2004 I was the senior forensic accounting partner of
BDO Scotland, a large accountancy firm.
My experience as a forensic accountant included acting as an expert (for both
prosecution and defence) witness in cases of professional negligence, fraud, personal
injury, business valuations and partnership dispute cases, and I have given evidence in
both the Court of Session and Sheriff Courts in Scotland and also in the Commercial
Courts in London and Cardiff.
Since my retirement from BDO, I have appeared as an expert witness at a Joint
Disciplinary Accountants Scheme case, also involving accounting negligence. I also
appeared as an expert witness in a high profile case involving the Royal Bank of Scotland
and a firm of Chartered Accountants, Bannerman Johnstone Maclay.
I have always enjoyed my profession, as accountancy is logical. At its simplest, 2 + 2
make 4. I have worked with accounting systems for some 40 years, both paper based
and computer based. As a senior forensic accountant I have been involved in numerous
investigations of accounting irregularities involving persons, companies and other
bodies.
An adequate accounting system records all transactions, in and out. As such, if problems
arise with an adequate accounting system, these can be identified, reconciled or
rectified.
. Should a problem arise or, for example, an individual or organisation be accused of
mishandling or misappropriating monies, an adequate accounting system can provide
evidence of wrong doing. Conversely, an adequate accounting system can provide proof
of innocence or other cause of an irregularity. My work as a forensic accountant and
expert witness centred on, inter alia, analysing transactions in accounting systems and
the application of accounting and auditing standards in transactions.
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Experiences with Post Office Limited
11. My son Keith Macaldowie was the subpostmaster in Greenock from 2006 until 2011.
12. Keith had a number of problems with the Horizon IT system reporting shortfalls in his
post office’s accounts.
13.1 first became aware of Keith’s issues with Horizon in 2009 when a £5,000 shortfall was
found. Keith told me of this incident. He told me that he did not understand how this
shortfall had arisen. Keith had to borrow money from his mother in law to pay this
shortfall.
14. In November 2011 Keith’s post office was audited. The auditors maintained that the
Horizon System showed a shortfall of £9,312.81. Keith was suspended at this audit.
15. Keith came to my home that evening. He broke down and was crying. He could not
understand how this shortfall had arisen. Keith was certain that neither he nor any other
person could have taken this sum. Keith told me that he had tried to find a reasons as to
how this shortfall had occurred, by going into the Horizon System.
16. Keith explained that the problem was that there was no way of checking the cause of
the shortfall using the Horizon System. Normally with any accounting system,
computerised or otherwise, you can go back through entries in the records to identify
where an irregularity has arisen. However, the Horizon system did not provide this basic
functionality for Keith. For example, one could not print out the transactions in a format
that allowed one to interrogate the data and identify the cause of a discrepancy. This
was a serious deficiency in the system.
17. Keith told me that the Post Office auditors said that he would be called to a formal
meeting. I told him that I would accompany him, as I believed I could assist given my
background in forensic accounting.
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Keith found the audit and subsequent investigation deeply upsetting and during the Post
Office’s investigation into the shortfall, Keith’s mental health deteriorated rapidly. His
psychologist advised him not to attend a taped interview under caution with Post Office
Limited investigators, scheduled for 7 December 2011.
I attended the investigation meeting with Post Office Ltd.’s investigators on 7 December
2011, along with a Mr Andrew Gilhooley of the National Federation of Subpostmasters.
Keith came to the interview, but he stayed outside during the meeting.
I had previously attended a meeting with Andrew Gilhooley, of the National Federation.
From my diary entry, I believe this was on the evening of 26 November 2011. This
meeting occurred on a Saturday evening at a service station on the M8 motorway. We
had agreed to meet half way between our respective homes.
Keith had contacted the Federation, as he needed their assistance as his representative
organisation, so I went to this meeting with him.
At the meeting with Mr Gilhooley on 26 November 2011, he told me that in his view
nothing was wrong with the Horizon System. He made it clear that he did not believe
that the Horizon System could cause any errors to arise. The meeting was not helpful, as
Mr Gilhooley gave no indication that he wished to, or intended to, support Keith.
However, he said he would attend the formal meeting on 7 December 2011.
I attended the meeting on the 7 December along with Mr Gilhooley. Keith attended also,
but was not well enough to enter the room and take part in the meeting. He was
mentally and emotionally incapable of participating.
During the meeting I found Mr Gilhooley to be deferential to Post office Limited. Rather
than seeking to represent Keith, Mr Gilhooley acted like a cheerleader for the Post
Office, and was insistent that the Horizon system did not make mistakes. He said that
the Horizon system had no errors and was robust.
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25. I was deeply surprised by Mr Gilhooley’s attitude and conduct, as he was supposed to be
attending the meeting to represent Keith. I could not understand why Mr Gilhooley was
effectively acting for the Post Office. I felt that Keith’s best interests were not
represented at the meeting by Mr Gihooley, and that only I was representing Keith.
26. Post Office Limited sent a Mr Glen Chester and a Mr Michael Stanley to be its
representatives at the meeting. They were very matter of fact in their conduct. They
made it clear that the Post Office records were clear and correct.
27. At the meeting I made it clear to the investigators that my professional background was
as a forensic accountant. I asked to be shown Post Office Limited’s evidence of the
shortfall to back up their allegation that Keith was responsible for it. I specifically asked
to see the Horizon records and transaction logs, so that I could examine them with the
benefit of my experience. The Post Office officials told me that I was not entitled to see
any evidence.
28. I had asked for the evidence as I wanted to carry out my own investigation and I wanted
to review the evidence. I found the refusal to provide me with basic evidence, to which
in my view Keith was clearly entitled, astonishing. It was totally at odds with my
experience as a forensic accountant, and denied Keith the opportunity to defend himself
from the allegation.
29.1 told Post Office Limited’s investigators that they must be the only organisation in the
country, apart from HM Revenue and Customs where individuals are classed as guilty
until proven innocent. I would emphasise that in the context of HM Revenue matters,
there are robust appeals procedures in place to prevent miscarriages of justice.
30. The Post Office investigators told me that they did not like people like me who asked for
such evidence. I found this very surprising.
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31.1 was told by the investigators that Keith had to pay the £9,000 shortfall. The
investigators were only concerned with getting this sum of money, they showed no
interest in ‘investigating’ what had happened or the cause of the shortfall.
32.1 was astonished by what the investigators told me, and their disinterested attitude. It
was clear that they were simply there to collect money, and not to investigate the cause
of the shortfall.
33. However, I felt that if I protested too much, the Post Office would refuse to transfer the
subpostmaster contract t (Keith’s wife at the time). If this happened, then Keith
I would lose their business and livelihood. I therefore felt constrained as to
the protests that I could make.
34.1 am usually a calm man and I do not lose my temper. I have appeared as a witness in
court many times, and even when robustly cross examined, I have always been treated
with professional courtesy. I therefore sought to hide my deep disquiet at the conduct of
the Post Office investigators.
35.During the meeting I specifically asked the investigators how many other
subpostmasters had suffered similar problems of unexplained shortfalls, and I was told
by the Post Office investigators that no other subpostmaster had experienced a similar
problem.
36. I accepted the investigators answer at face value, as I could not believe that a Post Office
investigator would provide untrue information to a direct question.
37. This answer (that no other subpostmasters were experiencing problems with Horizon or
with shortfalls) led Keith to believe that he was the only person who had experienced
such unexplained shortfalls, and that he must be at fault. He became further depressed,
as he felt that he had let everyone down.
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38.1 also asked the investigators about Post Office Limited’s duty of care to subpostmasters
(considering the severe toll that the investigation was taking on Keith’s mental health)
and the investigators simply shrugged.
39.1 was astonished that the Post Office could conduct an investigation, regarding a
shortfall of a large sum of money, and reach a determination, without allowing the
accused party (Keith or his representative) to see the evidence supporting the allegation.
40. The investigators made it very clear during the meeting that if the shortfall was not paid,
that they would take further action against Keith. I was left in no doubt that this
included a criminal prosecution. Further, the Post Office investigators made it clear that
if the shortfall was paid, and Keith resigned as the subpostmaster, no further action
would be taken, including no criminal prosecution.
41. Keith and usiness and livelihood were at immediate risk, and it was clear that
the Post Office investigators were not going to permit any kind of investigation by me to
assess the true cause of the shortfall. It was clear also that if we attempted to resist the
Post Office Investigators demands, that they would dismiss and prosecute Keith for theft
or fraud. I felt powerless, as did Keith.
42.As such, to prevent a criminal prosecution Keith borrowed the money to pay the
shortfall. He also agreed to resign as subpostmaster. He took these steps under threat of
prosecution. In my view the Post Office applied improper duress to force Keith to give
them money and to force him to resign.
43. Having paid the money and having resigned, the Post Office allowed! GRO I Keith’s
then wife, to apply to be subpostmaster. This allowed us to protect the family
investment.
44.1 was truly astonished and disgusted by the conduct of the Post Office during this
investigation process. In my professional view, there was no, or no adequate,
investigation. Keith was denied access to basic evidence or the opportunity to defend
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himself from the allegation. The Post Office acted as supposed victim, investigator,
police office, judge and jury. The conduct of the investigation and the investigators was
contrary to everything I would, from my long experience, expect to see in an adequate
or fair investigation into a serious allegation of theft or fraud.
45. Further, if the Post Office truly believed that Keith had misappropriated this money, why
were they willing to accept an application from his wife to continue as the
subpostmaster? This made no sense. If they believed that Keith was a thief or a fraud,
then there was no rational basis to allow him to have access to the post office, where he
would naturally continue to work.
46. Additionally, the Post Office investigators were effectively acting in the capacity of police
officers. If the Post Office truly believed that Keith was a thief or a fraud, then they had a
duty to prosecute him, as theft from an employer is a serious matter. I cannot see on
what basis they could or should have been content to simply obtain the money,
supposedly misappropriated, and have Keith resign. A police office could not and would
not simply demand money and a resignation and forgo a prosecution.
47. As I say, the conduct of the Post Office and its investigators was completely at odds with
anything I had ever witnessed in investigations over my long career.
Conclusion
48. Despite my shock at the conduct of the Post Office, it was our aim, if at all possible, to
have the post office contract transferred to my daughter-in-law; GRO “land to avoid
Keith being prosecuted. As such, I did not pursue matters further. In my view Keith was
denied a fair process.
49. Following an application by my daughter-in-law shortly after the meeting with the Post
Office Investigators, the contract was indeed transferred to her and thus saved part of
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the family capital investment. The business was only viable so long as it had a post
office.
50. Prior to the problems with the Horizon System and the actions of the Post Office, Keith
was happy and hardworking, and he enjoyed meeting customers and dealing with
people. He and were happy and had a good business and a nice house. Sadly,
these events led to the breakdown of Keith’s mental health and confidence, it also led to
the breakdown of his marriage and his life more generally.
51. These events had taken a heavy toll on Keith that has continued until the present day.
52. As a father I felt helpless. I have always been an optimist, and to see how Keith was
treated by the Post Office, where he was accused of theft or fraud, denied the means to
defend himself and compelled to make payments to the Post Office and to resign his
position under duress, made me feel exceedingly frustrated. I wished to use my
professional expertise as a forensic accountant to assist Keith, but was denied the
opportunity to do so.
53. As a result of my long professional experience of fraud investigations over decades, I am
sure that the conduct of the Post Office’s so called investigation was entirely at odds
with normal British standards of just conduct.
Statement of Truth
I believe the content of this statement to be true.
Kenneth Macaldowie
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