Fir Extract from a letter to Mr.Gent from Hr.G.A.S.Northcote
dated the 8th September, 1941.
VERY CONFIDENTIAL.
3.
THE CRESSALL ANTI-GRAFT COMMISSION END
You know by this time, I take it, the story of the Bank Window and Mr. Layden, late Overseer, P.W.D. The inquiry into that case threw some suspicion on Capt. Hobbs, late Engineer, P.W.D., who had been seconded to A.R.P. work. I had enquiries made but the result was that Hobbs seemed to have been cleared. However, before long Alabaster came along with a lot of incriminating facts which resulted in the appointment of a Commission with Cressall as Chairman and two unofficial members, a leading Accountant and the Manager of the Hongkong Tramway Co. Hobbs, as you know, shot himself rather than face certain condemnation but other things had come out meanwhile and several Government Officers are under the gravest suspicion of having taken bribes or presents. I will mention no names: if they are found guilty you will know soon enough. How far into the Civil Service it will be proved that graft extends or has extended no one can say at the moment, but I instructed Cressall to probe every suspicious matter, regardless of whose heads would fall into the basket as the result. I fear that at least two cadets may be shewn to have taken bribes, though not in connection with A.R.P., investigations into which still hold the stage.
It has, of course, been common talk here for years that certain Government Departments were rotten with graft, the Police, I. & E., P.W.D., and Urban Council being most commonly cited. Three years ago I made an ineffectual attempt to catch some of the grafters but could not get the necessary evidence. Now it seems to be a case of "One damned thing... 11 I feel sure that in Downing Street you will agree that, now that the chance has shown itself, these stables should be swept as clean as possible. I fear that the other disturbing outcome from the Commission report is going to be the revelation of serious laxity in the control of Government Expenditure, at any rate on defence works. For instance, I discovered during the week prior to sailing that the tunnelling arrangements made with Marsman Ltd. last September on a cost plus percentage basis were not only subject to the sketchiest supervision but had not been reduced to a formal contract and still rest on a few letters exchanged between a P.W.D. Senior Officer and Marsmans, being subject to termination at one month's notice by either side!!
Now, we are spending millions on these tunnels and, as you know, a 'cost plus' basis calls for a regular 'tiger' in the way of a resident engineer. There seems to be good reason to think that Marsman & Co. have been unnecessarily dilatory and which of course is to their advantaxe; unquestionably they have charged Government up with all sorts of expenditure which was not warrantable - for example they charged 10% on the purchase cost of machinery which was paid for by Government itself! And I fear that a great deal of expenditure may have had Treasury covering approval without proper scrutiny. I hope that I am wrong.
I learned most of this aboard this vessel between my official good-bye and up-anchoring, having asked Cressall to come to see me after my perusal of the morning's paper. I could do no more than request him to see Smith at once, tell him what he had told me and urge upon him (a) to have the contract with Marsman & Co. drawn up by the Crown Solicitor without delay and (b) to see to it that supervision of a strict kind was imposed upon the P.W.D. over the contractor.
You may imagine that all this leaves me with a nasty taste in my mouth on my departure hence and I feel somewhat culpable myself. But when I got back here in March and found tunnelling and other defence works in full swing it did not occur to me to "dig down" and find out what the Treasury and Audit seemed content with. I do not wish, however, to exculpate myself unduly in a matter in which I must bear responsibility.
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