Secretariat file 7/2526/48. Colonial office 409/17A A/cs.
SAVINGRAM
To the Secretary of State for the Colonies.
From the Governor, Hong Kong.
Date 28th February, 1952.......
No.
359
5 MAR 1952
12
54403/5748
24
30
Your accounts savingram of 1st December, 1951.
Colonial Development and Welfare scheme D.994:
annual audited statements.
With reference to paragraphs 3 and 4 of the report of the Director General of Colonial Audit, paragraphs 1 and 2 of my savingram 350 of 29th March 1951 set out the history of the incorporation of the accounts of the agricultural village depots in those of the Vegetable Marketing Organiza- tion. Although the original intention was to keep the two organizations separate they were merged, both administratively and financially, as a result of your savingram 945 of 22nd September 1948. Consequently, both the grant and loans for the agricultural village depots have been incorporated in the general funds of the Vegetable Marketing Organization. Profits arising from the operation of the depots cannot, except by arbitrary division, be separated from the profits of the Vegetable Marketing Organization. In so far as the payment, from the profits of the Organization, of rates, rents, and petrol duties, which are proper charges, is concerned it may be held that the original conditions governing the grant to the depots are not being fulfilled in that the surplus available indirectly to the depots is diminished. On the other hand reference to the accounts of the Organization reveals that the expenditure on the depots is only a very small proportion of the total expenditure of the organization. It may be argued, equally well, that none of the profits arising from the operation of the depots which, even on an arbitrary basis, are only a mall proportion of the total profits of the organization, are, in fact, being diverted to general revenue in the form of taxes and duties but that only the remaining profits earned by the organization proper are used to meet these charges.
As the Director of Audit has again raised this question in his report for 1950/51 I should be grateful if you would approve the continuation of the present practice of levying taxes and duties on the Vegetable Marketing Organization and of the existing methods of accounting for the expenditure incurred in respect of the village agricultural depots under Colonial Development and Welfare scheme D.994 as part of the general expenditure of the Vegetable Marketing Organization.
With reference to paragraph 5 of the report I stated, in paragraph 4 of my savingram 350 of 29th March, 1951, that it was regretted that no detailed estimates covering expenditure on village agricultural depots in 1949/50 were originally prepared. Expenditure was approved in principle and subsequently authorized retrospectively in detail.
RMH: IS