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minute addressed to the Colonial Secretary reporting the over expenditure of certain votes, including that for subsidies to Elementary Vernacular Schools which was stated to have been underestimated. Mr. Ralphs submitted with this minute a special warrant for the sum required to cover the excesses, including $3,255 for subsidies.
Mr. Ralphs informed us that there was no investigation as to the reason for the excess, and that it was a matter of routine for the clerk to present a note showing the expenditure for the first three quarters and the amount required for the last quarter. He says that at the time they were developing education, particularly on the vernacular side, very extensively, which we assume would lead to a complacent disregard of over-expendi-
ture.
We find on enquiry that there had been no over-expenditure in connection with subsidies during the three preceding years and the suggested routine seems therefore to have been somewhat exceptional; and we find also that there was no development of education on the vernacular side entailing payments to additional schools in 1924, for in that year the number of subsidized schools was in fact smaller than it had been in 1923.
We should have anticipated that the necessity for a special warrant would at least have put Mr. Ralphs on enquiry and have caused him to refer to the Inspector of Ver- nacular Schools; but he appears to have regarded the matter as being of little or no im- portance, and thus an opportunity for the discovery of the frauds was lost.
71. During the administration of Mr. Wood the loss due to frauds in connection with subsidies amounted in all to $3,285.00.
Of this $2,270.00 was obtained by Chan Tsz Un by means of vouchers in respect of non-existent schools, $895.00 by means of the forgery of recipients' signatures and $120.00 by failure to refund to the Government sums which had not been paid out.
Mr. Wood at all times required the vouchers to be initialled by Mr. Y. P. Law, and we are satisfied that the initials appearing on the bogus vouchers and purporting to be those of Mr. Y. P. Law, are forgeries.
Mr. Wood continued the practice of his predecessor in entrusting to Chan Tsz Un all payments in respect of subsidies. He had always heard of this officer as a man of high capabilities and unquestioned integrity, and the danger of entrusting such large financial responsibilities to a Class III clerk did not occur to him.
72. In 1916 the predecessor of Chan Tsz Un was convicted at the Criminal Sessions on charges in connection with misappropriations of which he had been guilty. At the trial of this case Mr. Ralphs, who was then performing the routine duties of Director of Education, was present and gave evidence. It transpired that considerable responsibili- ties in connection with the department's finances had been entrusted to this clerk and counsel for the defence commented severely on the temptations to which this system ex- posed a clerk in receipt of a small salary.
That Mr. Ralphs realized the danger involved in entrusting the financial duties to Chan Tsz Un is clearly indicated by his statement to us that, when he acted as Director during Mr. Wood's absence, he himself carried out the work as in Mr. Irving's time, and again assumed control.
It is regrettable that, when Mr. Wood first took charge of the Department Mr. Ralphs, as Senior Permanent Official, should not have called Mr. Wood's attention to the dangers which he ran in continuing the practice which had prevailed in Mr. Orme's time.
Section IV.
THE LOSSES AT QUEEN'S COLLEGE.
73. Mr. Alfred Herbert Crook, M.A., joined the Government Service in October, 1902, as an Assistant Master, and was appointed Headmaster of Queen's College on the 1st March, 1926.
74. Shortly before Mr. Crook's appointment as Headmaster the School Clerk at Queen's College was required for service in another Government department, and a former pupil at the School, by name Pau Tat Shing, was appointed Probationary Clerk at a salary of $37.50 per month.
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