(b) Paras. 18 and 76(f).
5 -
The Director of Audit suggests that certain barter
transactions resulted in unauthorised loss of public funds.
The transactions in question were carried out at a time when
Government stocks of rice were extremely low and their effect
was to procure extra supplies of average quality rice in
exchange for flour, sugar, certain higher grades of rice of
which supplies were inadequate to provide a normal ration
issue, and certain grades of rice not ordinarily acceptable
in Hong Kong(glutiñous). This resulted in an increase in the rice available for rationing and made it possible to issue a special ration
to 20,000 key workers without prejudicing the normal ration.
The actual quantities involved were as follows (in piculs): -
Rice
Flour
Delivered.
19,479.51
Rice Received.
22,070.88
28,011.78
24, 891.39
Sugar
1,098.53
1,647.80
Net gain in Rice.
2,591.37
24,891.39
1,647.80
29,130.56 = 1,734
tons.
On the financial side, the total sum received
for the rice exceeded the actual cost of the original rice,
flour and sugar by HK$958,563.30; this represents a net
profit and exceeds the net profit which would have been
realised by the sale of the original commodities at then
current prices by HK 763,795.48. The transaction, therefore,
resulted not only in an appreciable increase in the quantity
of rice available for rationing but also in a very con-
siderable financial gain.
In a few isolated cases of flour/rice and rice/rice
barter, the return was less than the original cost, but in
every case the loss would have been greater if the original
flour or rice had been sold at current prices. This
phenomenon resulted from the accepted practice of averaging costs to arrive at the basic ration price, which involves setting off losses on the more expensive grades against profits on the less expensive. These apparent losses therefore were
the result of our general price policy and not of the barter