Postmaster Theft and Loft Insulation Scams

It has been an interesting week that has just passed by.  I have finally succumbed to the iPhone age and acquired the latest version that will keep me connected to the Internet and my emails as well as work and friends – not sure if this is all a good thing but at least I know where the “off” button is!

Post Office Horizon Accounting System

On Monday I was asked by the BBC Inside Out program to give my views on a current issue that appears to have been raging on and off over the past few years – a criticism by postmasters that the Post Office accounting system is flawed! Apparently there are reports where Postmasters say they are finding black holes in their accounts and being forced to pay large sums of money back to the Post Office.

I understand that there has been a long running battle between postmasters, who are essentially franchise holders of a Post Office branch, and the Post Office. When a postmaster buys a Post Office as a business to run, he will invest money in the bricks and mortar (or rent) the premises and ancillary business such as newsagency, confectionery, grocery etc. The Post Office business is a separate business activity and is kept distinct from any other sales that might be going on. An agreement is signed with the Post Office that includes a clause whereby the postmaster is responsible for all the funds and must account for any losses that occur.

The business is recorded on the Horizon accounting system which is networked within all the branches as well as the head offices of the Post Office. The Post Office business within a branch is reconciled daily to ensure that the amount of business it records on the Horizon system agrees with the amount of money, stamps, postal orders etc that are locked away in the safe each night. Any errors are investigated immediately and overs/under reported to the Post Office. This is typical practice for any bank.

The allegations are that the Horizon accounting system is flawed and throwing out errors that the postmaster has to make up. I do not know if this is the case – it would need a team of forensic computer systems analysts to check the system. My involvement was in two cases in around 2004-2006 where postmasters were being accused of each stealing about £50,000 each.

That this amount of money was missing was undeniable. That the missing money had accrued over a period of a year or so was evident. That the defendants had personal money problems or gambling habits were facts…I could go on. The point is that if an error arises, the postmaster must report it to the Post Office, not simply ignore it! If the errors keep on coming, sticking your head in the sand won’t help. If you let the errors rise to £50,000 and know you have signed an agreement agreeing to make good any losses – then there is little to mitigate your position!

Loft Insulation Scam?

I do not know if this is a scam – if not it demonstrates my fraud investigator’s suspicious mind! I have now received several calls from an Indian call centre offering me a government grant to insulate my loft. Normally I politely say that I am not interested, but this week I let the caller speak for a while. I was asked seemingly innocuous questions about the length of ownership of my home and the thickness of the insulation already in place. Then I was told that I was eligible for a government grant to renew the insulation. I would be telephoned by a local agent and he would arrange to inspect my loft and provide the papers for making my application. I was asked for a piece of memorable information as a password so that I would know the agent was bone fide! This is where my antennae really started twitching – recalling the support publishing scams that I had investigated in the past for the DTI where exactly the same modus was used. I declined, but the caller didn’t seem to mind.

Finally the caller asked me to visit “their” web site at http://actonco2.direct.gov.uk. I did this and could find no information about a current grant scheme.

Now this might all be above board. In this financially austere climate there might be public funds available for insulating lofts that are already insulated. I would question why a public organisation in the UK would use an Indian call centre though. I have passed the information to my contacts at Companies Investigation Branch within the Department for Innovation and Skills (DTI). If I am able to get to the bottom of this one way or the other I will post the details on my blog.

About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

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