Appendix A (2)
REPORT OF THE AUDITOR, HONG KONG
ON THE AUDIT OFFICE,
and the examination of the various accounts in connection with Revenue, Expenditure, and Store Accounts of the Colony of Hong Kong, and Kowloon-Canton Railway (British Section) for the financial year 1928.
OUTSTANDING QUESTIONS.
1. With reference to the final paragraph of my report on the Accounts for the financial year 1927, dealing with the defalcations by the Treasury Water Account Clerk, Carvalho Yeo, I have to report that the accused was apprehended and charged before a Special Jury at the Criminal Sessions on six counts relating to forging and uttering three cheques purporting to be drawn on the Hong Kong & Shanghai Banking Corporation, by Mr. C. Mcl. Messer, Colonial Treasurer, and Mr. T. Black, Cashier, on behalf of the Government in favour of certain fictitious firms to the total amount of $260,407.93.
The trial commenced on the 20th of November, 1928, and lasted until the 6th of December when the accused was found "Not Guilty" in respect of the three counts of forgery, and "Guilty" in respect of the three counts of uttering. The accused was sentenced to ten years hard labour on each of the three counts of uttering, the sentences to run concurrently.
The Government has intimated that no criminal proceedings against Carvalho Yeo in respect of certain defalcations in connection with the Water Accounts will be taken and the amount involved viz., $15,329.95 will require the sanction of the Secretary of State to be written off.
Arising out of these frauds in the Treasury Department, Government commenced proceedings against the Hong Kong and Shanghai Banking Corporation for the re-crediting of the sum of $260,407.93 contending that the cheques were forgeries.
The case was heard before the Chief Justice and a Special Jury between the 22nd of April and the 25th of May, 1929, when His Lordship delivered judgement in favour of the plaintiff in the following terms, with costs :-
"That the said Government is entitled to be credited by the defendant corporation with the said three amounts, namely $86,965.33, $78,300.41 and $95,142.19, together with interest thereon at the customary or contractual rate of two per centum per annum from the dates whereon the amounts of the said three cheques were respectively debited to the general account of the said Government till payment or judgement",