CO129-361 - Public Offices - 1909 — Page 50

[This Document

the Property of His Britannic Majesty's Government.]

Your Highness,

Inclosure 6 in No. 1.

Sir J. Jordan to Prince Ch'ing.

Peking, February 9, 1909. I AM in receipt of communications from Mr. Bland, agent of the Chinese Central Railways (Limited), making the following series of complaints in regard to the transaction of business connected with the southern section of the Tien-tsia-Pukow Railway:

1. The auditor, Mr. Henderson, applied on the 7th January officially to the Director-General to be supplied with the monthly statements of materials purchased during the past six months, and to be informed when he might examine the accounts. This application was made in accordance with Article 1 of the Loan Agreement, which states that "during the period of construction the said accounts and vouchers will be open at any time to the inspection of the auditor appointed and paid by the Syndicate.' On the 18th January Mr. Bland himself saw the Director- General, and urged the importance of the matter, and on the 1st February the auditor again applied officially to be allowed to perform the duties assigned to him under Article 14. No attenipt has yet been made to comply with this provision of the Loan Agreement.

"

2. Between the 6th July and the 1st October the Managing Director drew from the loan funds sums amounting to 9.2,000 taels. Article 14 lays down that requisitions on the loan funds will be drawn in amounts to suit the progress of con- struction of the railway," and that the funds transferred in this way "shall remain on deposit with the Deutsch-Asiatische and Hong Kong and Shanghae Banks until required for railway purposes." This requirement has not been fulfilled. To take one instance, on the 1st October Loh Taotai drew the sum of 250,000 taels for steel rails, but up to the end of December construction had not begun, and no contract had been made or funds disbursed for steel rails.

3. Under Article 18 it is stipulated that the Chinese Central Railways (Limited) will act as agents for the Railway Administration during construction. That stipu lation has been ignored.

4. Article 18 also states that all foreign materials required shall be purchased in the open market, preference being given to goods of British manufacture at equal rates and qualities. Mr. Bland is in a position to prove that in calling for and allotting tenders Loh Taotai has not observed the conditions above stated,

5. The Loan Agreement was signed on the 13th January, 1908, and the Managing Director and Engineer-in-chief were appointed in February 1908. Between that date and the end of December the Engineer-in-chief made repeated applications to be authorized to engage the necessary secretariat and accounts staff without result. Article 14 provides that the "accounts of the railway will be kept in Chinese and English in accordance with accepted modern methods," and the Managing Director's refusal to engage the necessary staff makes it impossible to carry out this provision.

I regret to be compelled to invite the immediate and serious attention of the Chinese Government to Mr. Bland'statements, and especially to the irregular treat- ment of the loan funds by Taotai I.ch. Your Highness will readily see that it is of the first importance in the interests of railway construction with foreign capital in China that there should be no doubt that the funds raised under Loan Agreements are expended honestly, and in strict conformity with the terms of those Agreements. From the facts stated by Mr. Bland there is strong reason to believe that the moneys drawn by Taotai Loh have not been properly dealt with, and I bave the honour to request that an investigation may be made into the facts forthwith, and that the most stringent instructions be issued to the Director-General to carry out the provisions of the Loan Agreement to the letter.

The favour of an early reply is requested.

I avail, &c.

(Signed) J. N. JORDAN.

CHINA RAILWAYS.

CONFIDENTIAL.

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Reco REG APR OC

[March 11.]

SECTION 3.

No. 1.

Sir Edward Grey to Sir J. Jordan.

Foreign Office, March 11, 1909.

(No. 43.) (Telegraphic.) P.

HANKOW-CANTON Railway Loan. Pauling's ask for our support in offering terms of which will, they allege, be more acceptable to Chinese Government than those proposed by the German group. If approached by the Chinese Government, you are authorized to say that Pauling's are thoroughly reliable, of good standing, and capable of satisfactorily executing any contracts they undertake. Pauling's are being informed accordingly, but it is impossible to extend our support as regards this particular railway beyond this, in view of the Arrangement concluded between the British and Chinese Corporation and a French group and recognized by their respective Governments.

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