CO129-258 - Governor Sir Robinson - 1893 [1-4] — Page 670

664

[vi]

In case (c) he made out no counterfoil nor entry in his cash book, but so far as we have been able to ascertain, he entered the amount in the Rent Roll as paid, thus affording ample proof of his fraud if this book had been added up and balanced as it should have been.

16. The result of this system and want of supervision as to the receipt of money by ALVES has been that he was able, whenever money was paid directly to him, to hand over the whole or part of it to the shroff or to appropriate the whole of it without any chance of detection so long as a discrepancy was not discovered between an entry in a counterfoil and the corresponding entry in the Rent Roll, and so long as the Rent Roll was not added up and balanced.

17. It appears that it was also part of his duty as accountant to prepare the Estimates of Revenues. It was therefore easy for him, by under-estimating the Revenue, to abstract a considerable sum every year and yet bring the receipts up to the Estimates.

18. The defalcations appear to have commenced in 1888.

19. The Rent Roll for 1887 was audited and examined only on the 9th May, 1889. There is no evidence that the Rent Rolls for 1888 and 1889 were ever added up or balanced, and everything points to their not having been added up and closed; they have never been audited or examined by the Auditor General. The Rent Rolls for 1890, 1891, and 1892 have lately been added up, only since the discovery of the defalcations.

20. Mr. LISTER was Treasurer from 1883 till June, 1888, when he went home on leave, being replaced by Mr. WODEHOUSE who acted as Treasurer from June, 1888, till the 18th January, 1890. Mr. LISTER resumed his duties on that date until the 21st June, 1890, when he was again replaced by Mr. WODEHOUSE who acted till the 1st January, 1891, date of the appointment of Mr. MITCHELL-INNES as Treasurer. Mr. MITCHELL-INNES was absent on leave for six months in 1892, being replaced by Mr. F. H. May.

21. With respect to the neglect of adding up the total amount received for Crown Rent and balancing the Rent Roll at the end of each year since 1887, Mr. CARVALHO says that after Mr. LISTER had authorised ALVES to sign the receipts there was no check over him, that the Rent Roll book was supposed to be closed within three months after the end of the year, that it could have been balanced every six months, that if properly balanced it would have been a complete check, and that there was no reason why it should not have been balanced. He first said it was the Auditor's duty and then the Treasurer's duty to see that the book was duly balanced but it was no part of his duty; that he went after the clerks to balance these books as soon as possible, but they had always some excuse; he did not complain to Mr. LISTER that the books were not balanced. Mr. FREIRE who audited the book told him that he had complained to Mr. LISTER, who told him to mind his own business.

22. Mr. FREIRE says it was his duty to examine the Rent Roll when completed; that was the instruction that he got from Dr. STEWART. He asked for the Rent Roll of 1887 but was told that ALVES had to wait for a certain book from the Land Office or the Surveyor General. Then ALVES said he was always busy and he reported this to Dr. STEWART and Mr. LISTER. He recollected on another occasion when he spoke to Mr. LISTER he told him to mind his own business. This was in 1886 or 1887 and he then reported to Dr. STEWART that the book had not been balanced.

23. Mr. NICOLLE, who was appointed Local Auditor in January, 1890, and who arrived in April of that year, says that a few days after his arrival he went to the Treasury and began his examination. He required for that purpose the counterfoil receipt books, the daily receipts, a book kept by ALVES, the Rent Roll, Cash Book, Journal, and Ledger. He does not know whether the books of 1888 or 1889 have been balanced; those for 1890 and 1891 were not balanced. He was responsible for seeing that the books for 1890 were balanced. He called the attention several times of the Treasurer and Acting Treasurer to this fact but he cannot give any dates. He did not do so in writing but only in conversation. He could not audit the books properly until this book was added up. As far as the Treasurer furnished him with books and vouchers, he checked the accounts. He did not discover the defalcation sooner because the book was not added up or balanced, and however minute his examination was, the system followed by ALVES would screen him until the book was balanced, or until he—the Local Auditor—by chance lighted upon one of the cases in which the counterfoil of the receipt did not agree with the Rent Roll.

24. Mr. F. H. MAY, who was Acting Treasurer from 31st March till the 7th October, says that Mr. NICOLLE on two occasions spoke to him about the Rent Roll not being balanced. The first time was not long after he took charge and again as far as he can remember in August. He spoke to ALVES, who was very busy and who was working at it. ALVES showed Mr. MAY the book and he (Mr. MAY) regarded it as a clerical arrear which would be soon wiped off. In August he urged ALVES to get on with it as quickly as possible on Mr. NICOLLE's words. That was the Rent Roll for 1891. The words were to the effect "I wish you would hurry up ALVES about the Rent Roll, he has not closed his book yet."

[vii]

25. Mr. WODEHOUSE, in his evidence, states that he relied only on the audit as the practicable check. If money was taken to ALVES the only check would be the audit. He constantly examined the Rent Roll and he considered that to enable the auditor to properly check the accounts it was necessary that the Rent Roll should have been written up and balanced. He was of opinion that there was no real check except the balancing and continuous auditing, and he admitted after some questions that if the books had been balanced within a month of the expiry of the year the deficit would have been ascertained at once.

26. Having considered the evidence which has been given on this point, we beg to report as follows:— The order of Mr. LISTER dated the 14th December, 1883, authorizing Mr. ALVES to sign the receipts, placed the whole control of the receipt of rent in his hands, without any control over him in respect of monies which he might have received personally, and should any fraud be committed in the course of the year, the only means of detection lay in the balancing of the Rent Roll at the end of the year. That seeing that the Land Office furnished an account of all monies which ought to have been received, and that the Audit or Treasury Ledger showed what had been paid into the Treasury for the year on account of Crown Rents, the fraud would have been discovered at once, if the columns in the Rent Roll for sums received had been added up soon after the end of the year, for it is proved that ALVES kept these correctly.

27. Both Mr. WODEHOUSE and Mr. MITCHELL-INNES say they now see and acknowledge that balancing the books was the only check, but they did not at the time realize the importance, and they looked to the Audit Office to detect any fraud, but they did not furnish the Audit with the necessary books. They both knew of the power which had been placed in ALVES' hands by his signing the receipts. They were responsible for the proper keeping of the books and accounts; it was therefore their duty to see that no arrears of rent were being allowed to accumulate, yet they did not insist on ALVES adding up and balancing this book. They should not have accepted his excuse that he had too much work, but should, if necessary, have enquired what the other work was, and have relieved him of it if they had insisted on the book being balanced within a reasonable time after the end of the year.

28. The fact that there was an Audit did not relieve them of the responsibility that all revenue be properly received, that proper rules are observed, and proper precautions taken.