Sir,
1
Chief Justice Chambers. Courts of Justice,
Hong Kong,
25th July, 1928.
PRELIMINARY.
The Committee appointed by His Excellency the Governor on the 31st March, 1928, to enquire into the responsibilities for certain defalcations, losses and financial irregulari- ties in certain Government Departments and to make recommendations for safeguarding the collection of revenue and the prevention of financial irregularities generally in Govern- ment Departments have the honour to report as follows:-
1. In the terms of reference specific mention was made of defalcations, losses or financial irregularities in the Treasury, the Education Department, Queen's College, the Registry of the Supreme Court and the Police Department. We realize that the terms of reference expressed the desire of His Excellency that we should make recommendations for safeguarding public moneys in all departments of the Government, but after careful consideration we came to the conclusion that this would entail such detailed investigation of the accounting systems in all departments that the submission of this Report would be unduly delayed, and have therefore limited its scope to the matters specifically mentioned in the terms of reference; leaving other Departments to be dealt with subsequently, if His Excellency should decide that this was advisable.
2. The particular defalcations, losses and financial irregularities which have been investigated by us are:-
(a) A loss of $260,407.93 brought about by fraud in connection with three che- ques on the General Account of the Government with the Hong Kong and Shanghai Banking Corporation operated by the Treasurer;
(b) A loss in the Treasury of $15,329.95 due to the misappropriation of moneys
paid in respect of Hong Kong Water Accounts;
(c) A loss of $1,206.00 due to the misappropriation of moneys refunded to the Education Department in respect of unpaid personal emoluments, and a fur- ther loss of $19,108.00 in the same Department by fraudulent misrepresen- tations as to moneys payable in respect of subsidies to Elementary Vernacular Schools;
(d) A loss of $325.00 at Queen's College by the forgery and falsification of certain
bills; and
(e) Discrepancies shown by stocktaking in the Stores of the Police Department.
Matters touching irregularities in the Registry of the Supreme Court have already been investigated by a Committee of Enquiry and a Board of Survey appointed by His Excellency the Governor, and we have seen and considered the Reports submitted in respect of these matters.
3. Fifty-six witnesses have submitted statements or given evidence before us; and while we had no power to hear evidence on oath or to insist upon an answer to any question, the witnesses in general have been extremely frank in their answers, and we believe that we have been able to elicit all the facts which are relevant to the subject mat- ter of our investigation.
4. We propose to divide our Report into five parts :-
(a) In Part I we propose to deal with the staff arrangements and internal admin-
istration of the Treasury;
(b) In Part II with the fraud in connection with the three cheques on the General Government Account, the misappropriation of Water Accounts, the loss at the Education Department, the loss at Queen's College, the discrepancies in the Store Accounts of the Police Department and the matters touching the Registry of the Supreme Court;
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