WITNO9270100
WITNO9270100
Witness Name: Richard Cross
Statement No.: WITN09270100
Dated: 31 August 2023
POST OFFICE HORIZON IT INQUIRY
FIRST WITNESS STATEMENT OF RICHARD JOHN
CROSS
I, Richard John Cross, will say as follows...
1. I ama former employee of Post Office Ltd
2. This witness statement is made to assist the Post Office Horizon IT Inquiry
with the matters set out in the Rule 9 Request dated 18" August 2023.
3. I have been asked to set out a summary of my career and qualifications, an
account of my role and the policies/practices in place in relation to the audit,
and inspection process, and my recollections of three specific cases that had
resulted in prosecutions.
Career Summary
4. I first started working for Post Office, (later to become Post Office Ltd), as a
Postal Officer, in October 1978. My first branch was Tarporley Salaried Sub
Office. I remained there until 1990 when I became Assistant Branch Manager
at Whitchurch Branch Office. Following the closure of the branch in 1995 I
Page 1 of 16
10.
WITNO9270100
WITNO9270100
transferred to Ellesmere Port Branch Office. At Ellesmere Port I performed the
roles of Postal Officer, Assistant Branch manage, and occasionally Branch
Manager.
During 1999, a classroom for training new Postmasters, and POL staff was
being set up at Ellesmere Port. Talking with the trainer setting up the room, I
became very interested in the training process. When an advertisement for a
reserve trainer came up, I successfully applied for the position. This involved
completing Postmaster training when insufficient regular trainers were
available to satisfy the demand.
During 1999 the regional training team was temporarily expanded, and I was
seconded to the team full time.
After returning to the Branch Office, for a short time, I was offered a
permanent position in the regional training team.
My experience of working in the different types of crown post Offices, and my
extensive knowledge of transactions and procedures, having grown up ina
retail environment, and understanding the challenges facing Sub Postmasters
starting their first post offices, meant I was well suited to my role.
The regional training teams were united and became one national team. My
title became Field Support Officer. The role included training, and intervention
visits to branches that were experiencing specific problems they needed help
with.
As a national team, we were split into several teams of approximately 12
members. Each team had a team leader, of management level, who was our
immediate line manager. Above the Team Leader there were regional,
Page 2 of 16
WITNO9270100
WITNO9270100
managers, and a national manager. Unfortunately, I no longer remember their
correct titles.
11. During 2008 the National Field Support team merged with the national Audit
team. We were expected to perform each other’s roles. I was not given a
choice whether I wanted to become an auditor. The only other option would
have been to leave the team.
12. During my time in the Field Support Team. I found my colleagues to be
knowledgeable, committed to performing a good job, and genuinely trying to
give an excellent service to our customers.
13. On 30" October 2016 I left Post Office Ltd. I currently work on a part time
basis, for a Postmaster who runs nine post offices.
The Audi Process and policies/ practices
Recruitment and training
14.1 have been asked to consider the following documents: POL00032698,
POL00086765, POL00088453 and POL00088557.
15.My job as an auditor consisted of assisting at audits, and leading audits. The
lead audit would manage the audit and delegate tasks to other members of
the team performing the audit. The lead would explain to the Postmaster the
reason for the visit, and explain what is about to happen, liaise with the
Contracts Manager, and other departments. Explain to the Postmaster the
results of the audit, and finally complete all the reports.
16.I understood, as an auditor I must always remain impartial, and not apportion
blame to any individual if discrepancies were discovered. I knew any possible
investigation was outside of my role.
Page 3 of 16
WITNO9270100
WITNO9270100
17.As stated, I became an auditor in 2008. This was due to the merging of the
18
19.
20
Field Support Team and the Audit team. I had never considered applying for
the role of auditor. I am not aware of the process by which the members of the
existing audit team were recruited. To my knowledge they had all been
recruited internally.
.My training for the role of Auditor consisted of one day of induction training, by
an experienced audit manager, in a classroom. I went on three audits to
observe how they were performed. Most of my learning of the audit process
was gained by performing audits. I was lucky that my first Team Leader was
an experienced Audit Manager, and she gave excellent guidance. At regular
team meetings she would give useful advice on completing reports, and how
to conduct ourselves during audits. The experienced auditors in our team
were always available to guide me when unexpected developments were
come across for the first time.
I was never aware if there was a minimum qualification and/or experience an
auditor needed before conducting a branch audit. In my case, I had thirty
years of experience working in all types, and sizes, of post offices, I was well
aware of the rules and regulations, and I was accurate when counting cash
and stock. Above all, my experience of working with Sub Postmasters meant I
knew how their branches were run, and the pressures, they were very often
under.
.I consider the training given to perform my role as an auditor was adequate. I
would have preferred more time shadowing an experienced auditor before
being sent to conduct live audits. Looking back, I do not think telling a whole
team they were going to be auditors was an ideal thing to do. I personally
Page 4 of 16
WITNO9270100
WITNO9270100
embraced the challenge, but telling people they must now perform a role they
had never considered could have led to lack of commitment for some.
The Planning and Schedule of Audits
21.
22.
23.
24.
I have been asked to consider document POL00084650.
I did not have any input in planning and scheduling audits. Audits were
scheduled for several reasons. At the time I was auditing there were very few
random audits, apart from ones used to give us new auditors experience.
Most audits were scheduled as a result of concerns shown by other
departments, such as cash management. There were other audits scheduled
for branch closures and transfers to new Postmasters.
I do not know how long it took from planning, and scheduling an audit, to it
being carried out. It would depend on the volume of work being undertaken at
any one time, and the availability of auditors. Audits following a branch
robbery or burglary would take precedence, and performed on the same, or
next, day.
I would be sent a schedule of duties, that could be updated daily. It would tell
me where I was to go, and the activity that was required. In my case this was
usually an audit or a training activity. When performing an audit all I would be
required to do is research the location, opening hours, and name of the
Postmaster. Occasionally I would be sent additional information relating to the
specific audit, for example the branch was not making daily cash declarations,
and cash management were suspicious of why this was happening, I am sure
enquiries and investigations were carried out before the audits, but I cannot
say who did them.
Page 5 of 16
WITNO9270100
WITNO9270100
25.1 am unaware of any variations in respect of scheduling audits at Crown
Offices and other branch.
The Auditing Process
26.1 have been asked to consider the following documents: POL00083966,
POL00084801, POL00085534, POL00087627, POL00088252,
POL00087672, POL00084003, POL00084813, POL00085652,
POL00086765, POL00087688, POL00087716 and POL00087614.
27.Before completing an audit, the only databases, I had access to, gave me the
details of the branch location, opening times, Postmaster’s name etc.
Occasionally I would be sent extra information about any concerns other
departments had about the branch. As a rule, I was just told where and when
to perform the audit. No investigations were carried out by me.
28. If a discrepancy or shortfall was found at an audit the lead auditor would
contact the relevant Contract Advisor who deals with that branch. The
Contract Advisor would decide what action was to be taken. No further
enquiries or investigations would be carried out by the auditor, except simply
asking if the Postmaster had any ideas what had caused the enquiry.
29.1 was not aware of Auditors asking Postmasters to make good discrepancies
on the day of the audit, in normal circumstances. My understanding was that
discrepancies had to be made good at the end of the next Trading Period.
However, I was sometimes asked by the Contract Advisors to ask the
Postmaster if they wanted to make good the discrepancy, if they were to be
suspended from the office. These were known as “without Prejudice
Payments” as they would not affect the outcome of any investigation, or
possible prosecution. These payments were voluntary. There was a proforma
Page 6 of 16
30.
3
32.
33.
34.
35.
36.
WITNO9270100
WITNO9270100
we carried specifically for these payments. The Postmaster would be given a
copy, and a second copy would be filed with the audit paperwork.
If a discrepancy or shortfall was discovered at audit the Postmaster was
always invited to undertake a check on the figures we had produced.
. The Postmaster would be kept fully informed at each step of the audit, and
invited to ask any questions, or voice any concerns throughout the process.
Any concerns raised would be addressed by the Lead auditor, if possible. Any
serious issues, or things the Lead Auditor was unable to deal with would be
escalated. If it was the conduct of a member of the audit team, the issue
would be raised to the Auditor’s line manager. If the issue was about the audit
result, or the Postmaster was unhappy that the audit was taking place, it
would be raised with the Contract Manager.
I am not aware of how an audit could have been carried out without the
Horizon IT system.
I don’t recall audits at Crown branches being any different to other branches,
apart from the Postmasters of sub offices were liable for any shortfall
discovered during the audit. In a Crown branch the person responsible for the
shortfall would be subject to internal disciplinary measures that may, or not,
lead to that person making good the shortfall.
I have been asked to consider the following documents: FUJ00001894 and
POL00002841.
I am totally unaware of what involvement Fujitsu had in the audit process, if
any.
My understanding of an Audit Global User Account was it was a personal log
on ID given to Auditors that enabled them to log on to the horizon IT system,
Page 7 of 16
WITNO9270100
WITNO9270100
at any terminal in the network. Usually when obtaining access to the Horizon
system the Auditor would ask the Postmaster to create a user ID for them.
The Global User ID was only to be used to log on when there was no one of
manager level available to add the Auditor to the system.
Prosecution of Ms Allison Hall
37.1 have been referred to the following documents: POL00091046 and
POL00091109.
38. The audit of 3 September 2010, at Hightown, took place during the migration
to the Next Generation Horizon system. As part of the migration process the
migration officer would check the cash on hand on the evening prior to the
migration. On the evening of 2 September 2010, the migration officer, Tracey
Bedford, found a shortfall in the cash Of £13,624.41. She reported it to the
migration team, and they requested an audit of branch, before the migration
could take place.
39. The lead auditor was Jeff Roper. I went along to assist him. I counted all the
cash and stock in the branch. Jeff entered all the figures onto the audit tool,
known as a P32. After completing the audit, it was discovered the overall
branch shortfall was £14,842,37. Jeff Roper relayed the findings to the
Contract Advisor, Karen Arnold, who suspended Ms Hall.
40.1, personally did not have any discussions with Ms Hall. Jeff Roper was Lead
Auditor; any discussions were between the two of them.
41. The only documents considered during the audit were daily cash declaration
print outs, these clearly showed Ms Hall had been falsifying her cash
declarations to conceal the shortfall.
Page 8 of 16
42.
43
44.
45.
46.
WITNO9270100
WITNO9270100
Ms Hall told Jeff Roper, in my presence, that she had been having problems
with accounting for National Lottery scratch cards. The Post Office Lottery
team confirmed this. They said Ms Hall had been receiving transaction
corrections caused by failing to enter scratch card receipts on to the Horizon
system, over a period of eighteen months.
. The size of the shortfall was not particularly unusual, considering that Ms Hall
had been experiencing problems over a long period.
I had no awareness of any previous audits, carried out at Hightown. This was
I the first, and last time, I visited the branch.
Following the audit, I had no further involvement this case. I had no contact
with either Paul Whittaker or Christopher Knight and was not required to give
a witness statement. The audit result was reported to the Contract manager,
Karen Arnold. Karen made the decision to suspend Ms Hall. After the audit I
was never informed of the investigation, and, to today’s date, I never been
told of the outcome to the case and was unaware Ms Hall had been
prosecuted.
I would like to add, in my opinion, given that the problems with the lottery
accounting had been continuing over an extended period, help should have
been offered to Ms Hall earlier. The shortfall would have been minimised, or,
possibly, avoided.
The Prosecution of Angela Sefton and Anne Nield
47.
48.
I have been referred to the following documents: POL00094273,
POL00044159, POL00057374 and POL00044198.
I was assigned, by the audit scheduling team, to attend an audit of Fazakerley
branch, on 5‘ September 2012. The lead auditor was Tim Gordon-Pounder.
Page 9 of 16
WITNO9270100
WITNO9270100
49. During the audit, my role was to count the cash and valued stock. Tim, as
leader, input my figures onto the Horizon system, and to produce the audit
reports. It was his job to contact the Contracts Adviser, and liaise with Fraud
Investigators, following the audit.
50. During the audit Steve Bradshaw and Kevin Ryan, Fraud Investigators, were
both present at the branch. The Postmaster, Mr Asker, was not at the branch
during the audit.
51.1 was told, by Tim Gordon Pounder, that the audit had been requested by
Steve Bradshaw, following complaints by Santander bank that cash deposits
made at Fazakerley were being held back. From what Tim said, I understood
that one of the staff had told Steve Bradshaw that they had been suppressing
the bank payments to cover an ongoing shortfall at the branch.
52. The audit resulted in a surplus of £559.07. The audit was concluded. The
result would not normally have raised any concerns.
53. Our role in this case was concluded. After the audit, the Fraud Investigators
took over. They discovered bank debit slips, in the branch, that had not been
inputted onto Horizon. If they had been inputted the branch would have had a
shortfall. The role of Tim Gordon-Pounder and I was to verify the cash and
stock on hand. Any shortfall that was later found was outside the parameters
of the audit.
54. Tim Gordon-Pounder was asked to complete an audit report. He would not
normally have made a report unless there had been a shortfall at the audit. I
do not recall who asked him to make the report. I have no knowledge of any
delayed reports.
Page 10 of 16
WITNO9270100
WITNO9270100
55. After completing the audit part, of this case, I had no further involvement. I
was never asked to write any reports, or witness statements. I was never told
about what subsequently happened to Angela Sefton and Anne Nield and was
never aware of any prosecution.
Prosecution of Grant Allen
56.1 have been referred to the following documents: POL00089081,
POL00089229, POL00089426, POL00089670 and POL00089071.
57.On 2" February 2012 I was scheduled to lead an audit at Winsford Post
Office. I had been told by the Contract Advisor, Denise Reid, that the reason
for the audit was Mr Allen’s landlord had reported the rent for the premises
had not been paid for several months. I was sent to verify the assets of Post
Office Ltd, in the branch, were correct.
58.1 was accompanied on the audit by, my colleagues, Rob Lyon, Jane Timms,
Paul Hayhurst, and Tim Gordon-Pounder. This was a branch with eleven
individual stock units.
59. My role was to lead the audit by managing the other team members,
assigning them tasks to perform, and inputting all the figures onto the audit
reporting tool (P32). My colleagues were there to count, and verify the cash
and stock on hand,
60. Before the audit was started, at 8.40, Mr Grant Allen, took me aside, and
asked if he could talk to me in private. We went into his office. There, Mr Allen,
informed me that when his personal stock unit (KK) was checked it would be
found to be approximately £10,000 short.
61.Mr Grant told me he had been having financial difficulties running the branch,
and he had not been able to make good some large losses that had occurred
Page 11 of 16
WITNO9270100
WITNO9270100
at the branch. Mr Grant had asked the Post Office for an overscale payment
to enable him to carry on running the branch. And he had been inflating the
daily cash on hand figures, in the hope that the payment would be granted,
enabling him to make good the shortfall.
62.1 prepared a Record of Conversation, and asked Mr Allen to sign it. He
declined to do so. I believed he would not sign the record because at that
stage it was only between the two of us, and signing could have been seen as
an admission of guilt.
63.At 8.45 I contacted the Contracts Advisor, Denise Reid, with what Mr Allen
had told me, and to expect a shortfall of £10,000. At 8.45 I contacted Steve
Bradshaw, Fraud Investigator, to relay my concerns.
64.1 told my team members that we were now performing what is known as a tier
2 audit. This meant the cash, and all items of stock was checked down to the
last penny. The audit revealed a shortfall of £17,811.18, this included a
previously declared shortage of £4645,24 that had not been made good.
65.1 contacted Denise Reid and gave her the audit result. She decided to
suspend Mr Allen. I did not have any input in this decision, but agreed it was
necessary to suspend him until an investigation had been carried out.
66.1 collected documents from the branch that included copies of Branch Trading
Statements, and Overnight Cash Holdings, to give to a Fraud Investigator
later.
67.1 wrote an audit report. It was sent to Lesley Frankland, Fraud Team Leader,
Denise Reid, Contracts Adviser, and David Patrick, Field Support Leader.
68. This was end of my involvement in the case, except for writing a witness
statement requested by Steve Bradshaw, Fraud Investigator, in October 2012
Page 12 of 16
WITNO9270100
WITNO9270100
(POL00089071). I was never involved in any investigation of Mr Grant Allen. I
was never involved in the proceedings against Mr Allen. I was never told of
the outcome of any proceedings against him.
69.I have been asked were ARQ logs sought by POL from Fujitsu. I do not know.
I don’t know what ARQ logs are. They are not something auditors would have
been expected to deal with during my time in POL.
70.1 am not aware of any previous audits at Winsford post office while Mr Allen
was Postmaster. I had attended an audit at the branch for a transfer to Mr
Allen from the previous Postmaster.
71.1 would like to state here that as a POL auditor my role was very clear. I was
to carry out an impartial check, of a branch, to verify the amounts of cash and
stock were what they should be. If a discrepancy was found it was my duty to
inform the relevant Contracts adviser. I was never involved in any of the
subsequent investigations, except to occasionally be asked to complete a
witness statement. On only two occasions did I get summoned to a court. And
only once did I have to give evidence. I was never told the results of the
investigations and was never told the outcomes.
General
72.During my time with POL, possible bugs, errors and defects in Horizon were
never openly discussed. I still do not know what these consisted of. Had I
been given more information on what was believed to be happening I would
have known what to look for when visiting branches.
73.POL used to tell me it was a company that listened to its staff, but I was made
to feel that included anything but bugs and errors on Horizon.
Page 13 of 16
WITNO9270100
WITNO9270100
74.1 was told never to speak to Postmasters about the subject. If asked I was to
say it was a robust system, and don’t worry there is nothing wrong. I no longer
remember who I spoke to, but I was told off by a manager who suspected I
had agreed with a Postmaster that there were possible errors.
75.As bugs and errors were rarely discussed I was unaware of what
investigations were being carried out, and corrections being made. It would
have been good to have regular updates. As I was in a role that involved
working in branches, and talking to Postmasters, on a daily basis I may have
been able to feed back any potential problems before they fully developed if
had known if Horizon could be the cause.
76. Finally, this episode in the history of POL highlights the need for open, and
timely, communication between all levels of employees. No one should be
afraid to raise genuine concerns.
Statement of Truth
I believe the content of this statement to be true.
Signed: R J Cross
Dated:315t August 2023
Page 14 of 16
Index to First Witness Statement of Richard John Cross
WITNO9270100
WITNO9270100
No. I URN Document Description Control Number
1 POL00032698 I Assurance Review - Recruitment (Vetting & POL-0029633
Training) (27 October 2009)
2 POL00086765 I Network auditing approach, methods and POL-0083823
assurance
3 POL00088453 I POL's advert for training and audit advisor role POL-0085511
(undated)
4 POL00088557 I POL job poster for audit advisor role within loss I POL-0085615
prevention team (undated)
5 POL00084650 I Chapter 1 of Audit Process Manual — Audit Plan I POL-0081708
& Scheduling
6 POL00083966 I Audit Charter: Branch and Cash Centre Audit POL-0081024
Activity - undated This policy document sets out
the standards and code of ethics that apply to
those staff performing audits of branches and
cash centres within Post Office Ltd.
7 POL00084801 I Audit Process Manual: Chapter 3 - Performing a I POL-0081859
Branch Audit (v5.1)
8 POL00085534 I Audit Process Manual: Chapter 3a - Core & POL-0082592
Outreach Audit Process (v1.0)
9 POL00087627 I Audit Process Manual POL-0084685
10 I POLO0088252 I Audit Process Manual Volume 4 - Chapter 7 POL-0085310
Performing a cash centre audit
11 I POLO0087672 I Audit Process Manual Volume 4: Chapter 11 - POL-0084730
Quality Assurance V5.0
12 I POLO0084003 I Audit Process Manual for compliance team POL-0081061
process for auditing branches without access to
horizon
13 I POLO00084813_ I Condensed Guide For Audit Attendance POL-0081871
14 I POLO0085652 I Requirement of Network Field Support Advisors I POL-0082710
at audit, following discovery of discrepancy
15 I POLO0087688 I Training Guide - Compliance audit tool v 6.1 POL-0084746
16 I POLO0087716 I Training-Aide for Branch Asset Checking (v1.7) I POL-0084774
17 I POLO0087614 I Terms of Reference Audits POL-0084672
18 I FUJ00001894 Fujitsu Services Audit Trail Function POINQO008065F
Specification (v8.0)
19 I POLO0002841 I Global User Accounts Guidance for Sandra VIS00003855
McBride
20 I POLO0091046 I Note of Audit of Post Office, Hightown (Alison POL-0090690
Hall) from Jeff Roper to Karen Arnold, V6.5
Page 15 of 16
WITNO9270100
WITNO9270100
21 I POLO0091109 I Post Office Investigation - Theft & False POL-0090753
Accounting, Miss Alison Loraine Hall, Hightown
branch
22 I POLO0094273 I Excel spreadsheet showing message from Time I POL-0093219
Gordon-Pounder to Mr Ali Asker re Audit of Post
Office branch.
23 I POLO0044159 I Email from Paul X Williams to Tim Gordon- POL-0040638
Pounder re audit of Fazakerley Branch (Code
214420).
24 I POLO0057374 I Field Support Team- Event Capture Form POL-0053853
Fazakerley - Sefton & Nield
25 I POLO0044198 I Angela Sefton and Anne Nield case study: List POL-0040677
of Offences Report by Stephen Bradshaw re:
Fazakerley Branch
26 I POLO0089081 I Branch Audit Report of Winsford Post Office POL-0086056
(217401) - Identifying Mark: RC2
27 I POLO0089229 I Branch Audit Report for Winsford POL-0086204
28 I POLO0089426 I Post Office Ltd: Legal Investigation - Offences POL-0086401
report
29 I POL00089670 I POST OFFICE LTD Record of Taped Interview I POL-0086645
of Mr Grant lan Allen
30 I POLO0089071 I Witness Statement of Richard John Cross POL-0086046
(Version April 2012)
Page 16 of 16