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A. That is correct.
Q. You say that on the 4th December you wrote to the Colonial Secretary and asked if
the commencement of the Ordinance might be deferred?
A. Yes.
Q.
And it was postponed from the 17th December until 14th January ? A. Yes.
Q. And your reasons for that was that your preliminary spade work was not completed?
Yes.
A.
Q. Did that preliminary spade work include devising an accounting system?
A.
1 bad far far too much to do.
16. Mr. Forrest as from 1st December had among his staff Mr. A. J. G. Taylor of the Senior Clerical and Accounting Staff whom Mr. Forrest himself describes as one of the best accountants in the service. He made no attempt to utilize Mr. Taylor's services as accounting officer until after Mr. Barton, Mr. Pudney and the Auditor, Mr. Pollard, had successively reported on the financial chaos which reigned in the office. Mr. Taylor was brought into the head office a few days before the end of January and when he appeared before us on 25th March he was unable to explain to us what rudimentary system of book-keeping or records had been in force as the whole of his time had been occupied in instituting a system of accounting for deposits received and repaid. Before Mr. Taylor came into the head office there had been no deposit ledger kept, though the aggregate of deposits received and repaid was a very large sum indeed.
17.
Much has been said during our public inquiry about the deposit system and the inadequacy of the imprest account. The arrival in the Colony of large numbers of Chinese who were without any immigration papers, the paramount necessity to clear ships without avoidable delay, and the natural reluctance to saddle the shipping com- pany with the responsibility for repatriating all such passengers made the introduction of a system of deposits inevitable. The fact that many such passengers had no Hong Kong currency further complicated the situation. It was unavoidable that the officers of boarding squads, though unsecured, should have to handle very large sums of money in all sorts of currencies. No one could accurately estimate just how much money would be taken in by way of deposit or how much would have to be refunded on any particular day or on any voyage of a ship. In such circumstances we do not regard as heinous Mr. Forrest's expedients to find the cash which had to be got to satisfy depositors, nor the fact that perforce his officers had to handle large sums though financially unsecured. Such situations are apt to arise when a new system is enforced, and until some suitable arrangement could be made for collecting deposits before passengers embarked for Hong Kong some such expedient had to be resorted to in order to avoid protracted delays.
18. Summarizing our conclusions on this term of reference we are satisfied that there was no adequate financial system instituted in the Immigration Department; that Mr. Forrest was aware of this fact, as shown by his minute of 28th November and inferentially by his applying on 4th December for a postponement of the commencement of the Ordinance; and that, well aware as he was of this very serious flaw in his machinery, he appears to have regarded it as a matter of little or no moment.
The Agency System.
19. We turn now to the fourth of our terms of reference the agency system instituted by the Immigration Department.
20. When a system of control necessitates the completion of long and apparently complicated forms by unintelligent and illiterate members of the community it is not surprising that, in aid of applicants for permits, there sprang up a multiplicity of agents who, for a consideration, held themselves out as able to obtain permits expeditiously and with the minimum of trouble to the applicant. With such a little gold mine in view it is only natural that many of these agents were found to be corrupt and in- efficient, or that they should seek to cloak their inefficiency by attempting to bribe officers of the department. The Immigration Officer had no option but to recognize the fact of these agencies. He went further, rightly, we think, and extended recognition
to some while blacklisting others. Troubles, however, still arose and Mr. Forrest was at his wits end for a solution. Mr. Kobza as from 20th November had operated a photographic studio in the Immigration Office (that was one of the recommendations of the Middlebrook report) and on 1st December he applied for a monopoly not only of the photographic work required but also of the completion of application forms. That application was refused on Mr. Forrest's recommendation. On 11th December Mr. Forrest had reconsidered the matter and strongly advocated the grant of a monopoly, The question was referred to the Governor in Executive Council, and the decision there taken was that the proposed long term monopoly should not be granted, but that there would be no objection to the selection of a few authorized agencies by the method of tender on short term contracts. That was on 24th December, 1940, and Mr. Forrest was present at the meeting of Council and further had the decision conveyed to him on 27th December. What happened after that may best perhaps be told in Mr. Forrest's
own words:
On 1st December. 1940, I had written to Governinent deprecating strongly the grant of a monopoly; the minutes extracted from €.8.0. 2868 40 are already in the hands of the Commission. Before 11th December I had come to the conclusion that I was wrong in the attitude which I had taken on the question of a monopoly and had approached Government with the recommendation that tenders be asked for the combined monopoly for the photographic and clerical assistance in connexion with the department's work; I defended my new position before Executive Commeil on 24th December but the decision was adverse; I was however left with the discretion to treat with agencies on such ternis as I might think desirable. I might add on that point the fact that the complete meming of the Executive Council's decision, which I had at first interpreted as meaning that I was not permitted to establish anything in the way of a general agency, was explained to me in a meeting with His Excellency the date of which I cannot for the moment quote, but which the present Colonial Secretary will remember as he was also present. The meeting took place in Goverurnent House.
As matters became worse, I determined on the course of cancelling all recog nitions already granted to agencies, and then inviting the agencies still in good standing to ask for recognition again on new and stricter terms. A copy of the new terms of recognition I shall submit; the conditions as now imposed deal with three principal things the method of submission of applications (so devised as to prevent as far as possible competition between agencies, with the resultant temptation to bribe my staff, as had already been done); restriction of the charges to be made for their services; and supervision of their practice by the General Agent. As a pendant I at the same time made with the latter a contract, already referred to by the Accountant-General in terms of disapproval which incline me to the conclusion that he had completely unisinterpreted its scope. I lay before the Commission a verbatiin copy of that agree- ment. This new system has apparently been the cause of more criticism than any other one detail in my administration. The criticism began almost immediately after the coming into operation of the new agency system, and was first voleed in an article in the Chinese press signed with the name of a person who had just previously tried to bribe one of my staff to secure help in obtaining the general agency for himself. Thereafter the criticism became anonymous, but its perennial source in the ranks of those whom I have elsewhere called disappointed mcketeers may be legitimately inferred from the fact that Government is called upon to close down an institution to which no one resorts except voluntarily, and which will, as a commercial venture. itself apply the closure if it is, as alleged. inefficient and incapable of real service to the public who go to it. Ignorance ny excuse some of the attacks on the system; but my conviction that most of it is motivated by loss of opportunities for racketeering amounts to a moral certainty.
To summarize the advantages to the public, to my department, and to Govern- ment of the General Agency system, it is sufficient to say that charges to the public were reduced, standardized and controlled; that photography was made reliable and guaranteed as regards suitability; that overcrowding and over work in my office were reduced, though far from being abolished; that a measure of control over the opera- tions of agencies was established, so that it was at length possible to prevent the more flagrant malpractices, such as corruption of my staff with a view to securing priority of treatment, and the selling of false evidence: that the method of subruission of applications was concentrated and coordinated which made possible the introduc. tion of a system of complete records of applications from the time of their nmking until the time of issue of the completed document demanded; that provision was made for supply of photographic facilities at spots where facilities were necessary because of incoming passenger traffic, but where owing to the sparsity or irregularity of such traffic a photographie studio could not be established on the basis of isolated commercial prospects.
To offset these advantages I know of one disadvantage only, and that one which I did not think should be regarded seriously from the standpoint of administration. It amounts to no more than this, that an advantage is given to one firm as against its competitors. This objection becomes important only if one regards a public depart-
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