CO129-560-7 Permission to write off money stolen or embezzled 19-2-1937 - 14-6-1937 — Page 8

Na. CONFIDENTIAL(2).

Sir,

1957.

8

53521/37

GOVERNMENT HOUSE,

WE

HONG KONG,

19th February, 1937.

my

Counter Infer

I have the honour to report a serious loss of

public funds due to defalcation and abscondment by a

Chinese shroff employed in the Radio Branch of the

General Post Office.

2.

The loss amounts to $4,461.12.

The officer in question, Mr. Chan Yik Shing, has been in Government employment as a shroff for nearly eleven years, and was secured in the amount of $500.

Steps have been taken to enforce Government's claim to this amount, and a warrant has been issued for the

arrest of the absconding shroff.

3. The usual practice was for this shroff to present the paying-in slip of the previous day's takings to the Assistant Accountant (Mr. E. V. Reed) for signature and then to accompany the Post Office shroff and detective to the Bank. On November 12th, 1936, the shroff presented the paying-in slip as usual, left the office and returned, but had not actually accompanied his colleague or paid the money into the bank. Before it was noticed that the paying-in slip had not been returned, receipted by the Bank, he appropriated a further $231.06 and absconded with, in all, $3,019.68 in cash.

THE RIGHT HONOURABLE

W.G.A. ORMS BY-GORE, P.C., M.P.,

&c.

&C.,

&C.

Page

Page

G

- 2 -

age 9

9

Enclosure No.1.

Enclosure No.2.

Departmental correspondence on this aspect of

the loss is attached.

4•

Subsequent enquiries revealed that he had during

the previous week embezzled a further $1,441.44 by intentionally incorrect accounting, the method used being as follows: When cheques are received in payment of accounts, it is a common practice for the payers, trusting to the security of the crossed cheque, not to obtain a receipt immediately. The shroff who received the che que prepared no receipt, and the amounts received by those cheques were therefore not brought to account in the books. When paying money into the Bank the shroff was enabled to abstract a sum in cash and replace that sum with the cheques, so that the total amount paid in, as described on the paying- in slip, tallied with the total, but not with the several items, in the cash account books.

5. It is apparent that this loss could have been entirely prevented if the Assistant Accountant, Mr. Reed, had, before signing the paying-in slip, ascertained whether its particulars, and not merely its totals, agreed with the receipts shown in the cash book, and with the receipt counterfoils. He should also have checked the paying-in slip with a small account book specially prepared for this purpose and submitted to him with the paying-in slips.

The Postmaster General's report and Mr. Reed's explanations dated 13th November, 1936, and 11th January, 1937, are enclosed but it will be observed from the latter

that no such check was made.

6. Mr. Reed is a fully qualified Chartered Accountant but has only had four years Government service. As his

monthly net salary now amounts to less than $400 I am not disposed to call for any substantial deductions from this,

age 9