COPY.
Auditor, Hong Kong to Director of Colonial Audit.
Confidential.
No: 47/80.
28th October, 1926.
Sir,
I have the honour to report for your information
that in the course of the monthly examination by this
department of the Colonial Secretary's Account for
January 1926 a receipt and payment entry was found in
the account for the sum of $40,000.00 in favour of the
Colonial Secretary. The payment was not supported by
a receipt. On further investigation being made it was
observed that the sum in question had been paid out of
the Trade Loan Account with the authority of His
Excellency the Governor.
In view of the unusual nature of the procedure
of this transaction the Acting Auditor withheld making
any observation until my arrival in the Colony from
leave of absence. When I had investigated the matter
I had an interview with His Excellency the Governor who
kindly gave me some details of the transaction. At the
same time His Excellency requested that the matter should
remain strictly confidential, and further expressed the
desire that I should not report the matter at that time.
The matter has now been fully reported to the Secretary
of State, and I hope that in view of the exceptional
conditions which have prevailed in the Colony you will
consider I have acted correctly in acting in accordance
with the wishes of His Excellency the Governor.
I have, etc.,
(Sgd)
H.R.PHELIPS.
Auditor.