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receipt to Alves and Alves thereupon altered the amount.
I mean in this way. Supposing a man to have come to Alves and said "Here is $100 I wish to pay" in bank notes. Alves would make out the receipt like this (printed form produced). He would say "Received from X. Y. Z the sum of -" and instead of writing "$100" he would write "$10" "being the amount of rent due for Lot so and so." As to the written amount, as the shroff could not read English, he might fill that in in any way he liked, or leave it blank. In the receipt he would write "Lot so and so Received $10," would then hand the shroff $10, and the other $90 he would put in his pocket. The shroff would put his chop on, and as the person had come to Alves personally, the shroff did not know whom to return it to. Alves would then say "If you give it to me I will know him." The shroff would then hand back the receipt to Alves, who would add another "0", which satisfied the holder, and he left the counterfoil untouched. At the end of the day, the shroff would come and say "have received $10, does this correspond with your book?" The cashier would tell him that there was $10 to come in the cash book and it was duly passed in. The Auditor would come in and look at the counterfoil and see "Received $10" and go to the cash book and find the $10 entered.
The Chairman.—Somebody ought to have looked at the Rent Roll.
Mr. Bird—He would have seen that such and such a lot ought to have paid more than $10.
Witness.—The Auditor has told me that with the staff at his disposal, he did not see how he could check every item, but he checked very frequently.
The Chairman.—Had you any check on your own men?
A.—The system was supposed to be checked by the periodic surveys by the Audit Office.
Q—It seems that it did not, when a man could put down say "Lot 200 received $10" and that passed when the rent was perhaps $100, and the Auditor might have seen it in a second by looking at the Roll. You say according to your explanation that everything was left in the hands of Alves because the person who received the money did not know English and could not see how much he was to receive. That is why I asked you whether there was anything to show the shroff how much he ought to receive.
A. He could read figures. I have counterfoils also with a forged chop upon them. Mr. Bird. Have you counterfoils of $10 when it ought to be $100?
The Chairman.—I should like to see more of these counterfoils with the incorrect amount.
Witness.—Yes. I am keeping them in the safe. I will bring them round. Mr. Bird.—Is that the only way he could have done it?
A.—The two ways we suppose are: by altering what the shroff had passed and by using a bogus receipt book and forging the shroff's chop. We have some instances of that.
Mr. Bird.—How did he forge the chop?
A. He evidently has done so. The chop has been submitted to Chinese experts—dye cutters—and they say it is a forgery.
The Chairman.—You say it was no part of Alves' duty to receive money. Was there any check to prevent him from receiving money? How was it that he was allowed to receive so much money if it was no part of his duty?
A.—It is a system in Government Offices for people to walk in and out; and if they went into Alves and paid him money, it would not come to my notice, and they would pay him. The cashier, however, ought to have noticed it and put a stop to it. The cashier, however, says that he never saw it done; but that I do not believe.
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Mr. Bird.—Are these defalcations confined to Alves?
A. Yes, as far as we know. We have examined all the books. There is one check which of course banks usually employ—and mercantile houses too I suppose—which was not available in the Treasury very easily, and I believe it was because he saw that the check coming on that gave Alves his first idea that something would be found out. I mean the check of putting different people to different work. When I joined the Treasury, I found three or four senior men, none of whom could leave their desks for a moment, and being leading men in the Treasury, it was difficult to get them to do anything but what they were accustomed to. At the end of last year, I got the new men to work, and as soon as that was done, I believe Alves made preparations for going.
The Chairman.—Have you ascertained when these defalcations began? A.—We only know by comparison with the Rent Roll, which shows what ought to have been collected. Apparently they began at the beginning of 1887 or 1888.
Mr. Thurburn.—The balances ought to have been done periodically.
Mr. Bird.—You ought to know the total of the Crown Rents collected and the amount that ought to be collected.
Mr. Thurburn.—That is the mistake in the system.
Mr. Bird.—If the book was not written up, who was to see how much was in arrear?
A.—Alves said that he was working overtime and doing it as he could. I am sorry now that I did not get in somebody from outside and have it done by main force, but I did not expect that money was passing through his hands, or that the arrears were really dangerous.
The Chairman.—Were any arrears ever reported to you—arrears of money being due?
A. Yes, we used to send notices to people in arrear. Alves constantly told me of people who were in arrear, and he would see them or write to them. Sometimes I told them that proceedings would be taken.
Q—You never saw a regular list of arrears?
A.—No, I don't think I ever saw that. It was supposed to be shown in these books at the end of the year.
Q—When you joined in 1891 were any of the previous books made up—the Rent Roll books?
A.—I did not look at the books previous to my year when I went to the Treasury. Those now in the Treasury, I can see have been balanced. I cannot say about previous years, whether they were made up.
Q.—You do not know whether the book for 1889 or 1890 was balanced?
A.—1889 I do not know. 1890 was not balanced. 1889 was missing.
Q.—Nor 1888?
A.—No, I believe he took them from the Office a year or two ago with the intention of balancing them.
Mr. Bird.—Did you know they were missing?
A.—No. The books were kept in his desk, and I had not the slightest idea when they went. I should think it was about a year ago.
Mr. Thurburn.—You would take it for granted, I suppose, that in the books for 1889 everything was closed up?
A. Certainly. I was new to the work and I did not know anything about these arrears.
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