October 2, 1909.]
in the early days of the construction, before defendant arrived, or during his absence. In the absence of Mr. Butler Wright cash was obtained for the works in progress, and during that time it was operated upon by His Excel- lency Wei Han and witness. He had not a very distinct recollection as to where the account was, or the manner in which it was operated on. Was not an account for $10,000 opened by you? I don't remember.
But you do remember there was an account at that time? Yes, there was an account from which we drew cash, but whether it was supplied with $10,000 at my request or not I can't remember.
ac-
Mr. H. S. Chow, Secretary to His Excellency Wei Han, stated that the defendant kept the quarterly balance sheets he prepared. Witness produced a book of such statements up to the end of March, 1909. The balance sheet for the quarter ended March 31st was not companied by the usual statement, and had not yet been received It was the duty of witness to get these statements of expenditure translated for the Board of Posts and Communications. The statements of expenditure were not accompanied by the
it
CHINA OVERLAND TRADE REPORT. account for $9,848.78, and on the same day an- other cheque for $4,000 was drawn. Still on the same day there was a transfer of $20,000 Hongkong dollars from that account to the local currency account.
In cross-examination witness said defendant had told him that he intended to close the Hongkong currency account.
At this stage the Court adjourned until Tuesday.
+
SECOND DAY'S PROCEEDINGS.
Mr E. A. M. Williams, assistant to Messrs. Lowe, Bingham and Matthews, accountants and auditors, Hongkong, was the next witness. He stated that in July last his firm was instruct- ed to audit the accounts of the railway. The audit was commenced on August 31st, and the firm hoped to complete it in three weeks, but they were delayed because tho accounts were all in a muddle. Witness inves- tigated three banking accounts and another small account, The cash book kept was inade. quate for the large transactions of the railway, while the question of exchange was one which it would take some time to unravel. The cheques which were drawn in Hongkong currency were afterwards transferred to the
297
monthly payments to the credit of defendant's private account:-December, 1907, $350; Jan- uary, 1908, $1,000; March, $13,099.42; April, $2,400; May, $4,50; August, $1,500; September, $5,000; December, $15,404.56; January, 1909, $1,000; February, $5,179; March, $328 April, $1,481; May, $10,370; June, $1,862.50; July, $249.48; August, $2,988.85. Defendant's pass-book also shows that £682 2s had been
remitted Home.
ac-
Cross-examined by Mr. Douglas, witness said the accounts did not readily enable him to arrive at the profit on exchange. The sum of $100 drawn on the construction countant and transferred to the local currency account in the Canton branch of the Intern- ational Bank would amount to between $105- and $108.
And the odd $5 or $8 would be in the local currency account ?-Yes.
Will you explain how, in case of $100 going through that process, the profit could be any- where else ?-It could be nowhere else.
Do you know out of which account allowances to servants of the Company were paid ?—I can't say.
You have no knowledge of Mr. Butler
vouchers for money paid. Witness used to ask International Bank local currency account. Wright's income from other sources than those
to see the vouchers when he did not understand any item, and the chief accountant would show them to him. In buying lands joint cheques were drawn on the construction account by the managing director and the defendant. This money was paid to the managing direc tor. The statement of expenditure did not show how the monies drawn from the Interna-result tional Bank were spent.
In cross-examination witness said the whole of the railway expenditure was shown in the quarterly accounts. The vouchers were kept in the Chief Accountant's office:
Mr. H. W. Kenney deposed to being acting manager of the International Banking Cor-
Witness poration at Canton.
gave evidence regarding the opening of two accounts at his branch which were drawn upon by Mr. Butler
sup-
which was
Wright as Chief Accountant of the railway. Defendant was the only party who had au- thority to draw on them. In most instances the Hongkong currency account was plied with funds by cheques drawn on the construction account at the Hongkong and Shanghai Bank. Mr. Wright also had a private account at the Canton branch established ou December 7th, 1907. A cheque was drawn on the Hongkong currency account for $5,000 on 14th September, 1908. The Railway Co.'s Hongkong currency account was debited with the amount of this cheque, and Mr. utler Wright's private ac- count was credited with it. Prior to the credit- ing of that cheque the balance at credit of defendant's private account was 83,767.98. On the same date a cheque for $5,000 was drawn in favour of E. C. Wilks, and that cheque was debited to defendant's account. On Decem- drawn cheque for 2
$13,000 was
ber
Defendant's general practice was to draw a series of cheques on the construction account. In drawing money from the construction account to pay cheques which were to be paid in Hongkong and Canton currency, defendant drew as if they were all payable in Hongkong currency, and this would in a profit where the cheques were payable in Canton currency. The profit would result in this way: Mr. Wright would transfer a lump sum from the Hongkong to the local currency account in the International Bauk at Canton, and then he would pay done, and in each in Canton currency. This was frequently
Canton
was
case where there were made,: there payments to be a resulting profit owing to exchange. The result frould be that from time to time the defendant would have a profit on his hands in
one or other of the Canton accounts. Witness should say that the lowest amount of profit made on exchange would be $50,000. He could prac- tically account for that sum, and was of opinion that the profit would eventually turn out to be larger. Up to June 30th witness knew that the profits on exchange were $49,456.08 Canton dollars.
In defendant's accounts have you found any entries to show how this profit is accounted for ?—I found entries which I presume were intended to show the profit. The total of these. entries is $21,286.95.
On the assumption that the total of these payments is in Canton currency, what balance does that leave unaccounted for through profit on exchange?-$28,169.13.
talked about ?—No.
Are there any months in which there were should say that every month there was a profit. no profits on exchange ?-I cannot say, but I
Mr. E. A. Stanton testified to being the prior to the institution of the Canten branch Deacon and Co., and manager of Messrs.
of the Hongkong and Shanghai Bank, his firm. acted as the agents of that bank. On June to the value of $22,848.78, which he said were 29th Mr. Buther Wright handed him cheques
to be placed to the credit of construction ac- count in the Hongkong and Shanghai Bank, Hongkong.
Mr. G. Richarme said he was the manager of the silk department in Messrs. Jardine, Matheson and Co.'s Canton branch. Mr. Butler Wright approached him with regard to the investment of money in December
last. He asked if there was any money to
be made by investments in silk, and witness said there was at times. Defendant said he would take an opportunity when one offered. Subsequently he made an Defendant handed advance of $10,000 on silk. him a cheque made out in a Chinese name, and witness handed the cheque to the Chinaman. The silk on which the money was advanced was in Jardine, Matheson and Co.'s godown. The interest attaching to the loan was $7 per month per $1,000, and for four months it amounted to $280. The cheque in repayment of the $10,000 was signed by the firm who purchased the silk.
In cross-examination witness said the whole of this transaction was on behalf of a friend of his. The transaction took Have the accounts been kept in such a man-place just before Chinese new year, and ner as to enable the profits made on exchange money was tight then. $7. H mouth
tainly not.
was
by Mr. W. Butler Wright on the Hongkong / to be easily ascertained by an auditor?-Cor not a low rate of interest for an outside person
|
If the accounts had been properly kept ought it to have been easy for an auditor to ascertain these profits ?-Yes.
Mr. H. W. Kenney, manager of the Canton branch of the International Bank, recalled, said in cross-examination that standing orders were given the bank by Mr. Butler Wright with reference to the transfer of funds from the Hongkong currency account to the local currency account.
to advance to a Chinaman.
Do you remember whether you broached this subject on behalf of the Chinaman, or whether the defendant broached it?—Yes, I spoke to the Chinaman before seeing Mr. Wright.
Mr. J. O. Power, sworn, said he was assistant accountant at the head office of the Cantou- Kowloon Railway, Imperial Chinese section. He knew the defendant intimately prior to his arrival here. Witness had no knowledge as to defendant's means prior to his coming out here. He stayed with defendant from March 6th till July 4th.
currency account, and the railway account was debited with that amount, which was placed to the credit of defendant's private account..
The amount to his credit prior to this was $180.35. The first cheque he drew after this credit was for $10,000 in favour of Tai Loe. On February 4th, 1909, a cheque for $4,000 was drawn on the chief accountant's account, which was debited with the amount on that day. The amount was credited to defendant's private account, the balance of that account then standing at $2,025.46. There were two debits Mr. E. A. M. Williams, recalled, said there was on that day, one for $39.82 and one for nothing in the books to show why the defendant $113.16. The next debit was $100, the next should pay $4,000 out of his private account $43.75, and the next $5,000, which was into the Hongkong currency account. Witness drawn in favour of Captain Walcott. On had not discovered anything in the railway May 4th a sum of $10,025 was credited to accounts which necessitated the transfer of any defendant's private account by two cheques. sums from the currency accounts to the con- The total amount paid to the credit of defend-struction account. The construction account ant's private account from December, 1907, to was only supposed to be credited with funds the last entry of credit was $55,086.87. On from Home. Witness had seon defendant's June 29th a cheque for $4,000 was drawn private account, and knew his salary. He had on defendant's private account and credited nct found anything to show what he did to the chief accountant's Hongkong with the £10 balance of salary which was not Mr. Douglas took a formal objection to the currency account on the same day. Prior to paid at Home. The defendant's monthly expen-evidence. The facts which his friend had to this credit $16,000 stood to the credit diture averaged $2,300 a month after the open- prove were facts bearing in some way on the of that account. On June 29th a chequeing of a private account by him at the Interna- charges. A man might have a most expensive was drawn on the Hongkong currency tional Bank, Canton. The following were the chair in his house, but the fact that he had that
How was his flat furnished P
Mr. Douglas-Is.this relevant?
Mr. Looker said he was entitled to prove that the flat was furnished in an extremely luxurious fashion, that the defendant was ad- dicted to gambling, and that his expenditure was very largo. He was putting in this evì- dence because it Was evidence from which inference of fact could be drawn.