Sessional_Paper_1893 — Page 537

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16. It is so obviously the duty of every Treasurer to take some steps to prevent Government moneys being stolen in his Office that I should not have thought it possible for any Officer appointed to such a post to imagine that he was free from all responsibility in that respect. The raison d'être of the establishment of the post of Treasurer in Hongkong as a separate and substantive appointment, and of strengthening the subordinate Staff of the Treasury, as described above in paragraph No. 7, was in order that the late system, which had previously obtained when the post of Treasurer was held as an adjunct office in conjunction with another appointment, might be superseded, and that the Government might have the security of its interests being safeguarded by an officer whose whole time would be available for the purpose. That Mr. MITCHELL-INNES, who was inexpe- rienced in Treasury work, should have failed to introduce all the reforms that were required in the Office might well admit of excuse; but that he should have been content to take no precautions, and that he should have considered, as he himself states, that it was no part of his duty to take any, affords ground for legitimate complaint.

On page 7 of the Evidence he states: "the system itself was supposed to be a check."

But the slightest investigation would have sufficed to show him that a system which allowed receipts to be signed by the clerk who made them out, a practice which he personally confirmed in writing when it was brought to his notice (vide page 52 of the Evidence), was fraught with danger. And a little consideration would have made him alive to the fact that if such a system were subjected to the strain of the same clerk's also receiving Government money, it would then become perilous in the extreme.

17. In his defence he appeals to his letter above mentioned of the 22nd March, 1892, and he points out with truth that he there distinctly stated that he could not possibly, with his existing Staff, do all the work of a thorough Audit of his own books, and that if he were required to do such work, which though it was imposed on him by the Financial Instructions, he contended that the Secretary of State had not intended that he should undertake, he would require an addition to his Staff. This would be a fair defence if he were charged with not having performed such work; but as has already been shewn, this is not the case. If he had done what he is doing now, that is, if he had signed all receipts himself and taken the other precautions mentioned at the end of the last paragraph but one, he would effectually have rendered defalcation impossible without necessitating any addition to his Staff. On the whole I deeply regret that, with every desire to take the most favourable view of his case; I am unable to acquit him of blame,

18. As stated in the Colonial Secretary's letter of 11th instant, it became my duty, after reading the Report of the Commission and the Evidence taken by them, to consider whether it was necessary in the public interest to interdict Mr. MITCHELL-INNES from the discharge of his duties as Treasurer. I decided that it was not necessary. He has had a sharp lesson, the Rent Rolls have now been balanced up to the end of 1892, and he is now exercising a proper supervision over his department and signing all receipts himself; and this being so, I did not consider that there was any such risk of further misappropriations as to necessitate his interdiction from duty during the time that must elapse before the settlement of his case. In the next place, I had to consider whether it was my duty to take steps under the Colonial Regulations with a view to his suspension from office. On that point I decided that it was not, but that it would be sufficient to lay the case fully before Your Lordship for your decision as to what course should be taken.

19. My reason for arriving at this conclusion was as follows:-On the one hand it is unfortunately beyond question that up to the time of the discovery of the defalcations he neglected to take ordinary precautions for the safeguarding of the Government moneys that reached his Office, and that the result of his neglect has been that a large sum of public money has been misappropriated. On the other hand it should be remembered that when he was appointed Treasurer he had had no previous experience of Treasury work; that the dangerous system of allowing the clerk who was in charge of the Rent Roll and prepared the receipts for payments of rent to sign the receipts (which largely contributed to the facilitation of the frauds) was established by his predecessor; and that he was burdened with an in- competent Staff whom he was reluctant, out of deference for their standing and length of service, to report to Government. In view of all the circumstances, includ- ing his letter of March 22nd, 1892, his case should in fairness be judged not by the