CO129-619-4 Department of Supplies- Trade and Industry- organization and finance 19-3-1949 - 31-3-1949 — Page 26

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11.

The volume of trade dealt with under these arrange- ments commenced to expand rapidly, and when I was informed of the position in the early part of last year, I directed that in view of the increasing strain being thrown on the Department, particularly upon its accounting staff, the possibility of restoring trade to banking channels should be explored. The Hong Kong and Shanghai Banking Corporation came to the assistance of this Government, and as from the 15th March, 1948, trade with Japan commenced to be financed through Hong Kong dollar accounts maintained by Government in the Bank.

12.

The new system leaves radically unaltered the basic principle of trade with Japan through an open account. Its advantages are that traders are facilitated by having the use of normal banking channels, and that the Department of Supplies, Trade and Industry is relieved, without cost to Government, of much routine work that should properly be done by banks.

13.

Four accounts were opened with the Hong Kong and

Shanghai Banking Corporation

(1)

ii)

No. 2 (Japan Trade) Account; Import Margin Account;

(iii) Export Margin Account;

(iv)

Commission Account.

Payments in respect of imports and exports are credited and debited to the No. 2 (Japan Trade) Account at exchange rates of 4.02 and 3.95 respectively. A commission of on all transactions is charged by the Department of Supplies, Trade and Industry, and is credited to the Commission Account.

14.

The old Suspense Account in the Treasury has not yet been closed, being utilized for Government imports and certain auxiliary services. It will be closed to all debits and credits after the 31st March, 1949, and, as with the other discontinued Suspense Accounts, will be cleared as soon as possible thereafter. It will be necessary to open a Deposit Account to deal with incidental recoverable costs arising in connection with trade with Japan.

1.5.

The Director of Audit is particularly concerned about the maintenance of the four Japan Trade Accounts in the Bank, making the following points

(a)

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the receipts and payments handled by the Hong Kong and Shanghai Banking Corporation are not under the "general management and supervision" of the Accountant General, and the transactions are not "subsequently embodied in the final accounts rendered by the Accountant General" (Colonial Regulation 188 refers);

(b) the Accountant General, as the Chief

Accounting Officer, is precluded from carrying out the duties laid down in Colonial Regulations 189(ii) to (viii), 190 and 238;

(c)

Public money received by, or on behalf of, a public officer is not being paid over, or accounted, to the Accountant General (Colonial Regulations 231 and 232);

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