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61. At all material times it was the duty of Chan Tsz Un to prepare the sub-vouchers and paylists.
The officers who performed the duties of Inspector of Vernacular Schools during the material periods were:-
Mr. Robert Andrew Dermod Forrest, Cadet Officer, March to November, 1923. Mr. Arthur Ramsden Cavalier, November, 1923, until March, 1925.
Mr. Yan Pak Law, April, 1925, to September, 1927.
62. During the administration of Mr. Irving i.e. up to February, 1924, a total of $7,048.00 was lost through frauds in connection with subsidies. It was then customary for the payment of the subsidies to be entrusted to the Inspector of Vernacular Schools.
63. Certain managers of schools who had bank accounts were paid by cheque, but others whose subsidies would amount to between $6,000.00 and $7,000.00 a quarter were paid in cash.
It was the practice for the Director to sign the individual cheques for those who were to be paid by cheque and a single open cheque, drawn in favour of the Inspector of Verna- cular Schools, for the aggregate amount to be paid in cash. These cheques were handed over to the Inspector and a date was fixed on which the School Managers were required to attend to receive payment.
This placed the Inspector in some difficulty for there was not in the departmental office any safe wherein he could keep the cheque until the time for payment arrived, and thus we find that in the quarters ending March and June, 1923, Mr. Forrest, for safety, paid into his private account cheques for $6,825.00 and $6,750.00 respectively, with- drawing the amount in cash some three days later in order to effect the payments.
In a like manner he paid into his own account those moneys which remained over after he had completed paying out, and, after verifying his payments, repaid to the De- partment the amounts so paid in.
64. In March, 1923, Chan Tsz Un prepared and obtained the signature of Mr. Irving to a paylist for a sum of $2,670.00 which was represented on the accompanying sub- voucher as required for payment of subsidies to twenty-one schools which were specified.
It transpired subsequently that none of these schools existed.
In June, 1923, he prepared and obtained signature to an identical paylist for $2,670.000.
Both paylists bear initials resembling those of Mr. Ralphs but the sub-vouchers do not bear the initials of any Inspector of Vernacular Schools.
Mr. Ralphs says that after the lapse of five years it is difficult for him to give an opinion as to whether the initials are his, and he points to the improbability of Chan sub- mitting for initialling a paylist covering sub-vouchers which had not been initialled by the Inspector. He also suggests that as Chan is known at a later date to have forged the initials of Mr. Y. P. Law, the initials may in this case also be forged.
65. At this time it was customary for Mr. Ralphs to initial cheques before they were signed by Mr. Irving, and, if he did not initial without seeing the supporting vou- chers, it would seem that he must have seen these vouchers, as cheques undoubtedly were drawn to cover these amounts. He suggests that there may possibly have been genuine vouchers for a like amount and that Chan may have withdrawn these and sub- stituted the bogus vouchers. This theory seems untenable for that procedure would have resulted in non-payment to the schools specified on the genuine vouchers, and this would have led to complaints which Mr. Ralphs informs us were not made.
66. We regard it as highly improbable that Mr. Forrest, who made the payments of subsidies on behalf of the Director in March and June, 1923, ever saw these two bogus Paylists mentioned in paragraph 64, supra, and the accompanying vouchers.
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