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It was also found that there were no duplicate receipts in respect of the 277 accounts which had not been brought to account, but that these had nevertheless been struck off as paid on the Water Authority's Schedules in the hands of the Collection Book Clerk, and that in those cases in which certain accounts for the 3rd quarter, 1926, had been referred to the Treasury Solicitor for collection, the Collection Book Clerk had notified him that payments had been received such notifications being in many cases over the signature of the Accountant.
44. In approximately ten per cent of the cases the consumers were requested to pro- duce their receipts, and these have been scrutinized and compared with the duplicates in the Treasury, and checked against the Collection Book entries. All the receipts pro- duced bear distinct signs of erasures and alterations.
In some cases the consumer's name, the account number and the amount have been altered and a genuine receipt for a small sum paid by one person has been issued as a receipt for a large sum to an entirely different person.
In other cases account numbers have been added and the amount on the receipt greatly increased, and in these cases it appears that, while the consumer paid the greater amount due for all the accounts shown on the altered receipt, the Collection Book Clerk prepared a receipt only for one account, usually for a small amount.
In all cases the duplicate receipts and the Collection Books show only the smaller amount and there can be no doubt that the Cashier's signature was appended to the re- ceipt before the alteration took place.
In most cases the consumers produced their bills and on some of these we find, in what appears to be the handwriting of the Collection Book Clerk, notes of the accounts to which the receipt truly related and of the gain effected by the alteration.
45. The Collection Book Clerk during the relevant period was one Carvalho Yeo, who is stated to be of Sino-Siamese extraction. He had during the relevant period the custody of the receipt books, the Water Authority's Schedules, the Collection Books and the Revenue Files and therefore held the means of concealing, or at least of delaying discovery, of any misappropriation.
This man was employed in the Treasury from the 1st. September, 1926, until the 6th January, 1928, when he left after making a payment in lieu of notice; and there can be no doubt that he was implicated in the defalcations as the falsified Revenue Files and other documents in connection with the fraud are in his handwriting.
If this person had been entrusted with the actual receipt of moneys paid by con- sumers it would be easy to perceive how the frauds were carried out. The Collection Book Clerks are not, however, charged with the duty of receiving money; they are, in fact, expressly forbidden to accept payment of moneys. This duty falls entirely on the Shroffs.
46. During the period when these misappropriations took place, namely, December, 1926, to September, 1927, two shroffs have been employed in the receipt of Hong Kong Water Accounts.
One shroff was responsible for the receipts from the beginning of December, 1926, until the end of February, 1927, and again from the end of May, 1927, until the last fraud took place. The other was responsible for the period March to May, 1927, inclu- sive.
The former, to whom we will refer as the present shroff, is still employed in the Treasury, while the latter retired and is managing his father's business in Canton. Both have attended and given evidence before us.
The defalcations are spread over both periods, though by far the greater part occurred while the present shroff was receiving the moneys.
47. If the theory of collusion between the Collection Book Clerk and the successive shroff is accepted, the method of carrying out the defalcations is easily seen, for it would only be necessary for the shroff to refrain from paying into the bank those sums which
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