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Mr. Edwin Ralphs, the senior Inspector of English Schools, acted as Director during the absence of Mr. G. N. Orme and Mr. A. E. Wood on short leave from the 11th July to the 6th September, 1925, and from the 22nd July to the 5th September, 1926, respectively.
51. Chan Tsz Un, the defaulting clerk, was entrusted with the preparation of the paylists for all persons in receipt of remuneration from the Education Department. On the receipt of funds from the Treasury the relevant portions of the lists were sent out with appropriate cheques, signed by the Director of Education, to the various schools and to the Registrar of the University in order that they might effect payment and obtain the requisite signatures of the recipients.
It frequently occurred that persons who should have received payment were absent on leave and payment therefore could not be made. In such circumstances it was the long. established custom for the Head of the School, or the Registrar of the University, to return to the Education Department the paylist, completed as far as possible, but unsigned by the absent payee.
At the same time the amount due to the absent payee would be returned to the Department. Both the paylist and the money were most frequently delivered to Chan Tsz Un, an action which was not unreasonable on the part of the Heads of the Schools or the Registrar as the funds were always received by them from Chan.
52. Chan does not appear to have received instructions as to the procedure to be adopted in such cases, but he should have taken steps to ensure that the moneys refunded to him were paid into the departmental bank account and brought to account in the department's Fee Book and Cash Book. In many cases he failed to do this and having written in red ink the word "refunded" opposite the payee's name, on the paylist, returned this to the Treasury and appropriated the money.
In 1925, during Mr. Orme's administration, he misappropriated in this manner sums amounting to $964.00, which should have been paid to twenty-four persons.
During Mr. Wood's administration he misappropriated in like manner $254.00 in the year 1926 and $2,235.00 in the first nine months of the year 1927.
53. On the discovery of the frauds in September, 1927, he handed over to Mr. Wood a sum of $1,800.00 and after he had absconded a further sum of $447.00 was found in his desk. Taking credit for these sums the actual loss from this source during Mr. Wood's administration is reduced to $242.00.
Chan had in the first eight months of the year 1926 withheld moneys to the extent of $1,547.00, but these he more than made good on the 26th September of that year when he paid in a sum of $1,750.00 for reasons that we have not been able to discover.
54. Some of the frauds during Mr. Orme's and Mr. Wood's administrations were effected during the periods when Mr. Ralphs acted as Director, and though they are included in the above figures we will deal with these separately.
55. Mr. Orme and Mr. Wood reposed such confidence in Chan Tsz Un that, with the exception of the actual signature of cheques, they left to him all matters in connection with the payment of personal emoluments on which the department now expends over $800,000.00 annually.
Mr. Orme is no longer in the service of the Government and has not been available as a witness, but Mr. Wood has told us quite frankly that he did not ever see the paylists after he had signed the cheques and did not expect those lists to be examined by any officer of the department other than Chan Tsz Un.
56. It is clear that refunds were in point of fact made from time to time and were actually brought to account by Chan Tsz Un and these refunds duly appear in the Collector's Account and Cash Book which were required to be signed by Mr. Wood; but it does not appear to have occurred to him to enquire as to the source of or reason for such refunds or to see whether there were any refunds which had not been brought to account.
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