2.
Garr
2
Desp. 8 Cont Tel No 206 Conf
27/1/51
22:11:57
ac. 2 to (1)_/
para.7. of (1)
1949.
Mr. Hall.
2.
The purpose of the despatch at (1) is threefold:
(a)
to seek approval of the adoption of the Statement of Accounts of the Department of Supplies and Distribution from 1st May, 1945, to 31st March, 1950, as presented by Messrs. Lowe, Bingham & Matthews.
(b) to seek agreement in principle to the setting
up of the Development and Essential Commodities Equalization Funds.
(c) to seek approval of the charging of interest
on advances to the trading Suspense Accounts.
As to (a). (Paragraphs 2-6).
As is apparent from (1)/1949, following the
re-occupation of Hong Kong and the handover by the British Military Administration, the accounting of the Department of Supplies, Trade & Industry, became very confused. The
in the fact that an overworked
cause of this lay
轉
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•
staff, struggling to re-establish order out of a disorder that ap roached chaos, found itself too overwhelmed with work to find time to prepare the necessar; clear picture which should have been presented ............... In paragraph 2 of (2)/1949 general covering approval was given for the unauthorized departures from Colonial Regulations which had occurred in view of the "very exceptional and difficult circumstances of the period immediately following the resumption of civil government". It was also agreed exceptionally that the certificate of Messrs. Lowe, Bingham & Matthews, when it was produced, would be accepted as adequate.
3.
It is this certificate that has been sent to us as Enclosure 2 to (1) and which the Secretary of State is asked to approve (see paragraphs 3 and 4 of (1) ). The auditors are the first to admit that "in the preparation of the accounts
we (adopted) a number of unorthodox short cuts as we did not believe we were justified in spending an unpredictable and unreasonable amount of time and labout in further
research of doubtful items". (See page 17 of Enclosure 2 to (1) ). The Governor is of the opinion that their enquiries have not brought to light further irregularities which need investigation. In view of this and in view of X/ in (2)/1949 I think the adoption of the accounts should be approved, subject to the suggestions in paragraph 6.
400
As to (b).(paragraphs 7
-
9).
No doubt Mr. Watt, Mir. L. S. Smith and Mr. Maynard (through whom I pass these papers) will wish to comment on this proposal. I do not feel competent to do so in detail. But I would venture to say that since it is impossible at the moment to return to normal commercial trading (see paragraph 8) it seems reasonable and essential for Hong Kong to make extra-ordinary arrangements to conduct bulk- buying. Certainly it is essential for the Government to hold a reserve of essential stocks and I think we shall have to accept the possibility of future losses on these stocks.
5./